SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CIBER, Inc.
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(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form of Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[CIBER, Inc. Logo]
CIBER, Inc.
5251 DTC Parkway, Suite 1400
Greenwood Village, Colorado 80111
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 2001
TO THE SHAREHOLDERS OF CIBER, INC.:
NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Shareholders (the
"Meeting") of CIBER, Inc., a Delaware corporation (the "Company"), will be held
on Thursday, May 10, 2001 at 9:00 a.m. local time, at the Hyatt Regency Tech
Center, Chasm Creek Room, 7800 East Tufts Avenue, Denver, Colorado 80237, for
the following purposes:
(1) To elect two Class I Directors of the Company to serve for a term of
three years.
(2) To elect two Class III Directors of the Company to serve for a term of
two years.
(3) To approve a proposal to amend the Employee Stock Purchase Plan (the
"Plan") to increase the number of shares of Common Stock reserved for
issuance pursuant to the Plan from 2,000,000 to 4,750,000 shares, and
a proposal to permit employees of the Company's subsidiaries to
participate in the Plan.
(4) To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the
accompanying Proxy Statement. The Board of Directors of the Company fixed the
close of business on March 21, 2001 as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting and at any
adjournments or postponements thereof. Consequently, only holders of the
Company's Common Stock at the close of business on March 21, 2001 will be
entitled to notice of and to vote at the Meeting. A complete list of
shareholders entitled to vote at the Meeting will be available for
examination during business hours by any shareholder, for purposes related to
the Meeting, for a period of ten days prior to the Meeting at the Company's
corporate offices at 5251 DTC Parkway, Suite 1400, Greenwood Village,
Colorado.
Whether or not you plan to attend the Meeting in person, please complete,
date and sign the accompanying proxy card and return it promptly in the enclosed
envelope to ensure your representation at the Meeting. Telephone and Internet
voting are also available by following the instructions accompanying the proxy
card. You are cordially invited to attend the Meeting and, if you do so, you may
personally vote, regardless of whether you have previously submitted a valid
proxy. Thank you.
By order of the Board of Directors,
/s/ Bobby G. Stevenson
Bobby G. Stevenson
Chairman of the Board
Greenwood Village, Colorado
April 3, 2001
[MAP]
CIBER, INC.
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 10, 2001
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This Proxy Statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by and on behalf of the Board of
Directors (the "Board") of CIBER, Inc., a Delaware corporation (the "Company"),
to be used at the 2001 Annual Meeting of Shareholders of the Company (the
"Meeting") to be held on Thursday, May 10, 2001 at 9:00 a.m. local time, at the
Hyatt Regency Tech Center, Chasm Creek Room, 7800 East Tufts Avenue, Denver,
Colorado 80237, and at any adjournments or postponements thereof. This Proxy
Statement and the accompanying proxy card are first being mailed to the holders
of record of the Company's Common Stock, $.01 par value per share (the "Common
Stock"), on or about April 3, 2001.
Shareholders of the Company represented at the Meeting will consider and
vote upon (i) the election of two Class I Directors to serve on the Board until
the 2004 Annual Meeting of Shareholders or until their successors have been duly
elected and qualified; (ii) the election of two Class III Directors to serve on
the Board until the 2003 Annual Meeting of Shareholders or until their
successors have been duly elected and qualified; (iii) the adoption of
amendments to the Employee Stock Purchase Plan (the "Plan"), which include a
proposal to increase the number of shares of Common Stock reserved for issuance
pursuant to the Plan from 2,000,000 to 4,750,000 shares, and a proposal to
permit employees of the Company's subsidiaries to participate in the Plan and
(iv) such other business as may properly come before the Meeting or any
adjournments or postponements thereof. The Company is not aware of any other
business to be presented for consideration at the Meeting. If any other matters
properly come before the Meeting, the persons designated as agents in the
enclosed proxy will vote on such matters in accordance with their best judgment.
VOTING AND SOLICITATION OF PROXIES
Only holders of record of the Company's Common Stock at the close of
business on March 21, 2001 (the "Record Date") will be entitled to notice of and
to vote at the Meeting. As of the Record Date there were 57,386,819 shares of
Common Stock issued and outstanding. Issued and outstanding shares do not
include treasury shares. Each shareholder is entitled to one vote for each share
of Common Stock held of record on the Record Date for each proposal submitted
for shareholder consideration at the Meeting. The presence, in person or by
proxy, of the holders of not less than one-third of the shares of Common Stock
entitled to vote at the Meeting is necessary to constitute a quorum for the
conduct of business at the Meeting. In all matters other than the election of
directors, the affirmative vote of the majority of shares present in person or
by proxy at the meeting and entitled to vote on the subject matter shall be the
act of the shareholders. Directors shall be elected by a plurality of the votes
of the shares present in person or by proxy at the Meeting and entitled to vote
on the election of directors. Abstentions will have the same effect as a vote
against such proposals and broker non-votes will have no impact on the outcome
of such proposals. "Broker non-votes" are proxies with respect to shares held in
record name by brokers or nominees, as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have discretionary voting power under applicable
national securities exchange rules or the instrument under which it serves in
such capacity.
All shares represented by properly executed proxies will, unless such
proxies have previously been revoked, be voted at the Meeting in accordance with
the directions on the proxies. A proxy may be revoked at any time prior to final
tabulation of the votes. Shareholders may revoke proxies by written notice to
the Secretary of the Company, by delivery of a proxy bearing a later date, or by
personally appearing at the Meeting and casting a contrary vote. If no direction
is indicated, the shares will be voted IN FAVOR of the Board of Directors'
nominees for Class I directors, IN FAVOR of the Board of Directors' nominees for
Class III directors
1
and FOR the adoption of amendments to the Employee Stock Purchase Plan, which
include a proposal to increase the number of shares of Common Stock reserved
for issuance pursuant to the Plan from 2,000,000 to 4,750,000 shares, and a
proposal to permit employees of the Company's subsidiaries to participate in the
Plan. The persons named in the proxies will have discretionary authority to vote
all proxies with respect to additional matters that are properly presented for
action at the Meeting.
The executive officers and directors of the Company as a group own or may
be deemed to control approximately 16% of the outstanding shares of Common Stock
of the Company. Each of the executive officers and directors has indicated his
intent to vote all shares of Common Stock owned or controlled by him in favor of
each item set forth herein.
The proxy solicitation is made by and on behalf of the Board of Directors.
Solicitation of proxies for use at the Meeting may be made in person or by mail
by directors, officers and regular employees of the Company. Such persons will
receive no additional compensation for any solicitation activities. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. The Company will
bear the entire cost of solicitation of proxies, including the preparation,
assembly, printing and mailing of this Proxy Statement, the proxy and any
additional information furnished to shareholders.
Effective December 31, 1999, the Company changed its fiscal year end from
June 30, to December 31. The change in fiscal year end was reported to the
Securities and Exchange Commission on Form 10-KT filed on February 29, 2000, and
was mailed to shareholders on April 25, 2000. Several tabular and other
disclosures in this proxy statement present information for the period July 1
through December 31, 1999, designated as the "Transition Period." The Transition
Period represents the 6-month period between the previous fiscal year end and
the new fiscal year end.
PROPOSALS 1 and 2 - ELECTION OF DIRECTORS
Each year at the Company's Annual Meeting of Shareholders, directors
constituting approximately one-third of the Board are elected for a three-year
term or until their successors are duly elected by the shareholders. The terms
of Messrs. Bobby G. Stevenson, Richard A. Montoni and Archibald J. McGill
expired in 2000 (the "Class III Directors"); the term of Mr. James G.
Brocksmith, Jr. expires in 2001 (the "Class I Director") and the terms of
Messrs. Mac J. Slingerlend and James A. Rutherford expire in 2002 (the "Class II
Directors").
In an effort to synchronize the Annual Shareholder Meetings with the new
fiscal year end and to avoid the costs to the Company associated with conducting
a special meeting of Shareholders within six months of the last Annual Meeting,
no Annual Meeting was held in 2000. The Class III Directors who would have been
nominated for election at the 2000 Annual Meeting of Shareholder's agreed to
serve until the 2001 Annual Meeting and are nominated for election at this time,
along with the Class I Directors. Accordingly, the Board has nominated Messrs.
Archibald J. McGill and Richard A. Montoni to serve as Class III Directors for
two-year terms to expire at the 2003 Annual Meeting of Shareholders or until
their successors are elected and qualified. The Board has further nominated
Messrs. Bobby G. Stevenson (moved from Class III to Class I to balance board
composition) and James G. Brocksmith, Jr. to serve as Class I Directors for
three-year terms to expire at the 2004 Annual Meeting of Shareholders or until
their successors are elected and qualified.
Vacancies on the Board may be filled by the affirmative vote of a majority
of the remaining directors then in office. A director elected to fill a vacancy
(including a vacancy created by an increase in the Board) shall serve for the
remainder of the full term of the new directorship or of the class of directors
in which the vacancy occurred. If the number of directors has changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible, but in no
case, will a decrease in the number of directors shorten the term of any
incumbent director. Officers are elected by and serve at the discretion of the
Board.
2
Shares represented by all proxies and not marked so as to withhold
authority to vote for Messrs. Bobby G. Stevenson and James G. Brocksmith, Jr.
(Class I) will be voted for the election of Messrs. Stevenson and Brocksmith.
Shares represented by all proxies and not marked so as to withhold authority to
vote for Messrs. Archibald J. McGill and Richard A. Montoni (Class III) will be
voted for the election of Messrs. McGill and Montoni. To be elected, each
nominee must receive the favorable vote of a plurality of the votes cast. If any
of the nominees are unavailable or unwilling to serve as director, persons named
in the proxy intend to cast votes for which they hold proxies in favor of the
election of such other person as the Board may designate. The Board knows of no
reason why any of Messrs. Bobby G. Stevenson, James G. Brocksmith, Jr.,
Archibald J. McGill or Richard A. Montoni should be unable or unwilling to serve
on the Board. See "Directors and Executive Officers" below for biographical
information about the persons nominated as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
3
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the Company's directors and executive
officers, their ages, positions currently held with the Company, the year
elected as director or appointed as officer and class of directorship. Executive
Officers serve at the pleasure of the Board for a term of one year, renewable
annually. For information about the ownership of the Company's voting securities
held by each director, director nominee or executive officer, see "Securities
Ownership of Certain Beneficial Owners and Management."
Served as
Officer or Class
Name Age Position Director Since (Term Exp.)
- ---------------------------------------------------------------------------------------------------------------------------
Bobby G. Stevenson 58 Chairman of the Board and Founder 1974 Class I (2004)
Mac J. Slingerlend 53 Chief Executive Officer, President, 1989 Class II (2002)
Secretary and Director
David G. Durham 39 Chief Financial Officer, Senior 1995 --
Vice President and Treasurer
Joseph A. Mancuso 54 Chief Operating Officer and Senior 1994 --
Vice President
James A. Rutherford 55 Director 1994 Class II (2002)
Richard A. Montoni 49 Director 1996 Class III (2003)
James G. Brocksmith, Jr. 60 Director 1998 Class I (2004)
Archibald J. McGill 69 Director 1998 Class III (2003)
Stephen D. Boyd 48 Chief Executive Officer, Director 2000 --
and Chairman of the Board of
DigiTerra, Inc.
BOBBY G. STEVENSON. Mr. Stevenson is Chairman of the Board of Directors and
one of the original founders of the Company. Mr. Stevenson was Vice President in
charge of recruiting and management of the technical staff from 1974 until
November 1977 when he became Chief Executive Officer. As Chief Executive
Officer, he had been responsible for all operations of the Company from 1977 to
1998.
MAC J. SLINGERLEND. Mr. Slingerlend joined the Company in January 1989 as
Executive Vice President and Chief Financial Officer and was elected a director
in 1994. He was made President and Chief Operating Officer in 1996, was promoted
to Chief Executive Officer in March 1998 and became Secretary in August 1998.
Prior to joining the Company, Mr. Slingerlend spent 15 years in the banking
industry, primarily as a commercial lender, and five years in corporate
financial positions in the cable television and hospitality industries. Mr.
Slingerlend also serves as a director of Agilera, Inc., a former subsidiary of
CIBER in which the Company continues to hold an approximate 19% interest.
DAVID G. DURHAM. Mr. Durham joined the Company in May 1995. He was promoted
to the office of Chief Financial Officer and Treasurer in January 2001.
Previously, as Senior Vice President, Mr. Durham was responsible for various
financial and operating tasks within the Company and most recently served as
Chief Financial Officer and acting-President of Neovation, Inc., a CIBER
subsidiary. Prior to joining the Company, Mr. Durham was Vice President and
Chief Financial Officer of Spencer & Spencer Systems, Inc. of St. Louis, which
was acquired by CIBER in 1995.
4
JOSEPH A. MANCUSO. Effective March 2000, Mr. Mancuso was named Chief
Operating Officer while continuing to serve as Senior Vice President
responsible for the Company's branch office operations, a position held since
July 1, 1999. From March 1998 to July 1999, Mr. Mancuso was President of the
CIBER Information Services Division (i.e., CIBER branch offices) and was
Divisional Vice President in charge of eastern operations from 1996 to 1998. Mr.
Mancuso joined the Company when it acquired CPU, Inc. in 1994, and served as
Regional Vice President in charge of southeast branch operations from 1994 to
1996. From 1993 to 1994, Mr. Mancuso was a Vice President of CPU, Inc.
JAMES A. RUTHERFORD. Mr. Rutherford has been a director of the Company
since February 1994. He is currently a managing director of Wingset Investments
Ltd., a private venture capital company located in New Albany, Ohio. Prior to
forming Wingset in 1995, Mr. Rutherford was one of the founders of Goal Systems
International, Inc., where he served in various executive positions, including
Chief Executive Officer, and as a director from its incorporation in 1977 until
its sale in 1992. Mr. Rutherford is also a trustee of Case Western Reserve
University and a director of Frontstep, Inc., formerly Symix Systems, Inc.,
Columbus, Ohio, as well as several private corporations.
RICHARD A. MONTONI. Mr. Montoni has been a director of the Company since
October 1996. Mr. Montoni served as the Company's Executive Vice President and
Chief Financial Officer from October 1996 until December 2000, and served as
Treasurer from 1998 until December 2000. In December 2000, Mr. Montoni resigned
his executive officer position with the Company to join Managed Storage
International, Inc., where he serves as Executive Vice President and Chief
Financial Officer. Prior to joining the Company, Mr. Montoni was a partner with
KPMG LLP, where he worked for approximately 20 years with companies in the high
technology, manufacturing, merchandising and distribution industries. Mr.
Montoni is a member of the American Institute of Certified Public Accountants
and the Colorado Society of Certified Public Accountants. Mr. Montoni serves as
a director of Agilera, Inc., a former subsidiary of CIBER in which the Company
continues to hold an approximate 19% interest.
JAMES G. BROCKSMITH, JR. Mr. Brocksmith has been a director of the Company
since July 1998. Mr. Brocksmith served as a partner of KPMG LLP from 1971 to
January 1997. From 1990 to October 1996, Mr. Brocksmith served as the Deputy
Chairman of the Board and Chief Operating Officer of KPMG LLP. Since January
1997, Mr. Brocksmith has been a self-employed business consultant for several
companies. Mr. Brocksmith is a member of the board of directors of two publicly
traded companies: Nationwide Financial Services, Inc., a provider of life
insurance, mutual funds and pension products and AAR Corp., a provider of
products and services to the aerospace and aviation industries.
ARCHIBALD J. MCGILL. Mr. McGill has been a director of the Company since
September 1998. Mr. McGill has served in executive capacities at IBM and AT&T
and was President of Rothschild Venture Capital. He is on the board of directors
of several small high-technology companies. From 1985 to the present, Mr. McGill
has been the President of Chardonnay, Inc., a venture capital investment
company.
STEPHEN D. BOYD. Mr. Boyd joined DigiTerra, Inc., a wholly owned subsidiary
of the Company, in October 2000. Prior to joining DigiTerra, Mr. Boyd served
Media One International as Executive Vice President, European Wireless
Operations from 1998-2000, and served U S West New Vector Group, Inc. as
President and Chief Executive Officer from 1997-1998. From 1995-1997, Mr. Boyd
served as President and CEO of U S West Dex, Inc. Mr. Boyd was Chief Financial
Officer of U S West Marketing Resources Group, Inc. from 1994-1995 and worked at
U S West, Inc. from 1989-1992 as Executive Director, Corporate Strategy and Vice
President, Wireless Business Strategy and Development.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's directors, executive officers and
persons who beneficially own greater than 10% of a registered class of the
Company's equity securities file initial reports of ownership and changes in
ownership of such securities with the Securities and Exchange Commission (the
"Commission") and the Company. Based solely upon its review of copies of the
Section 16(a) reports received by the Company, and written representations from
5
certain reporting persons, the Company believes that during the year ended
December 31, 2000, all of its directors, executive officers and greater than 10%
beneficial owners were in compliance with their filing requirements except that
Richard A. Montoni, Joseph A. Mancuso and Christopher L. Loffredo each reported
one exempt transaction three weeks late on Form 5, in March 2001, and Mr.
Archibald J. McGill reported one transaction 4 days late on a Form 4. None of
the exempt transactions triggered a matching purchase and sale event.
BOARD COMMITTEES AND MEETINGS
The Board met five times in regularly scheduled and special meetings
(including telephone meetings) during 2000. Each director participated in all of
the board meetings and committee meetings (of which such director was a member)
held in 2000. The Board has a standing Audit Committee and a Compensation
Committee, but does not have a Nominating Committee or any committee performing
a similar function.
COMPENSATION COMMITTEE. The principal responsibilities of the Compensation
Committee are the administration and grant of awards under the Company's Equity
Incentive Plan and Employee Stock Purchase Plan, which are stock-based plans,
and the Non-employee Directors' Stock Option Plan and the Directors Compensation
Plan, and the recommendation of annual salaries for executive officers and
senior management to the Company's Board. The current members of the
Compensation Committee are Messrs. Rutherford, Brocksmith, McGill and Montoni.
The Compensation Committee met one time in 2000.
AUDIT COMMITTEE. The principal responsibilities of the Audit Committee are
to meet periodically with representatives of the Company's independent auditors
and management to review the general scope of audit coverage, including
consideration of the Company's accounting practices and procedures and system of
internal accounting controls, to review any transactions that may involve a
conflict of interest, and to report to the Board with respect thereto. The Audit
Committee also recommends to the Board the appointment of the Company's
independent auditors. The current members of the Audit Committee are Messrs.
Brocksmith, Rutherford and McGill, each of whom are independent of management
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of independent judgment as a committee member, as
defined in Sections 303.01(b)(2)(a) and (3) of the listing Standards of the New
York Stock Exchange, as modified or supplemented. The audit committee met three
times with all members in attendance, pursuant to provisions of the Audit
Committee Charter. Mr. Brocksmith, as Chairman representing the entire Audit
Committee, reviewed quarterly financial results and conducted relevant
discussions prior to the release of quarterly earnings.
REPORT OF THE AUDIT COMMITTEE.(1)
In accordance with its written charter adopted by the Board of Directors
of CIBER, Inc., the Audit Committee of the Board (the "Committee") assists
the Board in fulfilling its responsibility for oversight of the quality and
integrity of the accounting, auditing and financial reporting practices of
CIBER, Inc. During 2000, the Committee met three times with all members in
attendance. In addition to those meetings, the Committee Chair as
representative of the Committee, reviewed and discussed the interim financial
information contained in each quarterly earnings announcement prior to public
release with the Chief Financial Officer, the Chief Accounting Officer and
the independent auditors. The Audit Committee Charter is attached to this
Proxy Statement as Appendix A, located on pages A-1 through A-2.
The Audit Committee has reviewed and discussed the audited financial
statements for 2000, separately and jointly with management and with KPMG LLP,
the Company's independent auditors. The Audit Committee discussed with the
independent auditors matters required to be discussed by the Statement on
Auditing Standards No. 61, Communication with Audit Committees, as modified or
supplemented, by the Auditing Standards Board of the American Institute of
Certified Public Accountants. The Audit Committee has received and reviewed the
written disclosures and the letter from KPMG LLP required by Independence
Standard No. 1, Independence
- -------------------
(1) This section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
6
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and has discussed with KPMG LLP the independence of such auditors. The
Audit Committee considered whether the auditor's provision for non-audit service
is compatible with independence and concluded that the services rendered to the
Company by its auditors are compatible with maintaining the principal
accountant's independence.
Based upon the reviews and discussions referenced above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements referred to above be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000. The Committee also recommended the
reappointment of KPMG LLP as the Company's independent auditors and the Board
concurred in such recommendation.
The total fees billed to the Company in 2000, for all services performed by
its principal accountant, KPMG LLP were $882,578, categorized as follows:
AUDIT FEES. The aggregate fees billed by KPMG LLP for professional services
rendered both for the audit of the Company's annual financial statements for
2000, and for the reviews of the financial statements included in the Company's
Forms 10-Q for 2000 were $82,155.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The aggregate
fees billed for the professional services described in Paragraph (c)(4)(ii) of
Rule 2-01 of Regulation S-X (17 CFR 210.2-01(c)(4)(ii) rendered by KPMG LLP for
2000: none.
ALL OTHER FEES: The aggregate fees billed for services rendered by KPMG
LLP, other than the services set forth above for 2000 were $722,923. This amount
includes audit work performed for and paid by DigiTerra, Inc., a wholly owned
subsidiary of the Company, in the amount of $140,000.
Audit Committee
James G. Brocksmith, Jr., Chairman
James A. Rutherford
Archibald J. McGill
7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership
of the Company's Common Stock at February 28, 2001, and stock options
exercisable for shares of Common Stock within sixty days of such date, held by
(i) each person or group of persons known by the Company to own beneficially
more than five percent (5%) of the outstanding Common Stock, (ii) each director
and nominee for director of the Company, (iii) each Named Executive Officer (as
defined under "Executive Compensation" below) and (iv) all executive officers
and directors of the Company as a group. All information is taken from or based
upon ownership filings made by such persons with the Commission or upon
information provided by such persons to the Company. Unless otherwise indicated,
the shareholders listed below have sole voting and investment power with respect
to the shares reported as owned.
Name of Amount and nature of Percent of
beneficial owner(1) beneficial ownership class
- ------------------- -------------------- -----
Bobby G. Stevenson(2) 7,799,971 14%
Mac J. Slingerlend(3) 1,154,661 2%
David G. Durham(4) 82,707 *
Joseph A. Mancuso(5) 94,068 *
Richard A. Montoni(6) 127,705 *
James A. Rutherford(6) 91,482 *
James G. Brocksmith, Jr.(6) 27,256 *
Archibald J. McGill(6) 27,256 *
All directors and executive(7)
officers as a group (9 persons) 9,405,106 16%
* less than 1%
(1) The address of each of the beneficial owner and management is c/o CIBER,
Inc., 5251 DTC Parkway, Suite 1400, Greenwood Village, CO 80111.
(2) Includes shares held by the Bobby G. Stevenson Revocable Trust, of which
Mr. Stevenson is the settlor, trustee and beneficiary. Excludes 30,000 shares of
Common Stock held in the Irrevocable First Stevenson Charitable Remainder
Unitrust, of which shares Mr. Stevenson disclaims beneficial ownership.
(3) Includes options to purchase 365,975 shares of Common Stock.
(4) Includes options to purchase 82,250 shares of Common Stock.
(5) Includes options to purchase 90,233 shares of Common Stock.
(6) Includes options to purchase 125,083, 45,250, 25,250, and 25,250 shares of
Common Stock for Messrs. Montoni, Rutherford, Brocksmith and McGill,
respectively.
(7) Includes options to purchase 759,291 shares of Common Stock.
8
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS
All non-employee directors receive shares of CIBER Common Stock valued at
approximately $2,500 for each meeting attended and are paid a $6,000 semi-annual
retainer. All directors are reimbursed for their expenses in attending meetings.
Non-employee directors receive stock options under the Non-employee Directors'
Stock Option Plan (the "Directors' Plan") for serving on the Board. Employee
directors do not receive additional compensation for serving on the Board.
Under the terms of the Directors' Plan, the Company may grant to
non-employee directors awards of stock options. The Directors' Plan provides for
an initial authorization of 200,000 shares of Common Stock and is administered
by the Board. Each option granted under the Directors' Plan expires ten years
from the date of grant. The Directors' Plan provides for an initial grant of
options to purchase 20,000 shares of Common Stock to each non-employee director
when such director takes office, which options vest in equal annual installments
over two years. Additionally, after each year of service, each non-employee
director receives a grant of options to purchase 4,000 shares of Common Stock;
such options vest one year after the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There were no Compensation Committee Interlocks in 2000.
9
EXECUTIVE COMPENSATION
The following table sets forth compensation information with respect to the
Company's Chief Executive Officer, and the Company's most highly paid Executive
Officers with annual compensation in excess of $100,000 (the "Named Executive
Officers") for services rendered for the year ended December 31, 2000, the six
months ended December 31, 1999 ("Transition Period"), and the years ended June
30, 1999 and 1998. See "Employment Agreements".
SUMMARY COMPENSATION TABLE
Long-term
Annual Compensation Compensation
------------------------ ------------
Securities All Other
Name and Fiscal Underlying Compensation
Principal Position Year (1) Salary ($) Bonus ($) Options (#) ($) (2)
------------------ -------- ---------- --------- ----------- ------------
Mac J. Slingerlend 2000 395,000 142,535 -- 11,900
Chief Executive Officer, Transition Period 237,500 70,000 200,000 8,439
President and Secretary 1999 362,500 132,372 45,000 7,523
1998 325,000 150,000 400,000 6,864
David G. Durham 2000 175,000 25,000 10,000 3,849
Chief Financial Officer, Transition Period -- -- -- --
Senior Vice President 1999 -- -- -- --
and Treasurer 1998 -- -- -- --
Joseph A. Mancuso 2000 318,750 37,867 75,000 2,233
Chief Operating Officer Transition Period 150,000 20,000 36,000 345
and Senior Vice President 1999 232,500 61,250 45,000 3,888
1998 -- -- -- --
Richard A. Montoni(3) 2000 306,300 116,091 100,000 3,735
Chief Financial Officer, Transition Period 162,500 55,000 60,000 3,887
Executive Vice President 1999 267,500 73,935 60,000 5,284
and Treasurer 1998 250,000 98,846 20,000 6,394
(1) CIBER changed its year end to December 31 from June 30, effective December
31, 1999. Accordingly, fiscal years 1999 and 1998 refer to the 12 months
ended June 30. The Transition Period refers to the six months ended
December 31, 1999. Fiscal year 2000 refers to the 12 months ended December
31, 2000.
(2) Consists of amounts contributed under the Company's 401(k) Savings Plan and
amounts paid by the Company for life insurance benefits. Savings Plan
contributions for the year ended December 31, 2000, the six months ended
December 31, 1999 and the years ended June 30, 1999 and 1998 were: Mr.
Slingerlend - $3,212, $625, $2,760 and $2,615; Mr. Durham - $3,000, 0, 0
and 0; Mr. Mancuso - $1,543, 0, $3,357 and 0; and Mr. Montoni - $2,726, 0,
$3,150 and $4,319, respectively.
(3) Resigned from positions of Chief Financial Officer, Executive Vice
President and Treasurer prior to year end.
10
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information regarding options granted to the
Named Executive Officers during the year ended December 31, 2000.
Potential Realizable Value
Number of at Assumed Annual Rates
Securities Percent of Total of Stock Price Appreciation
Underlying Options Granted Exercise or for Option Term (1)
Options to Employees in Base Price Expiration ------------------------
Name Granted (#) Fiscal Year ($/Share) Date 5%($) 10%($)
---- ----------- ---------------- ----------- ---------- ------- --------
Mac J. Slingerlend -- -- -- -- -- --
David G. Durham (2) 10,000 0.4% $ 4.38 12/11/10 27,514 69,726
Joseph A. Mancuso(3) 25,000 1.0% $ 13.25 5/25/10 205,516 519,222
50,000 1.9% $ 4.38 12/11/10 137,571 348,631
Richard A. Montoni(4) 50,000 1.9% $ 13.25 5/25/10 411,032 1,038,444
50,000 1.9% $ 6.38 10/16/10 200,460 508,005
(1) Amounts reflect certain assumed rates of appreciation set forth in the
Commission's executive compensation disclosure rules. Actual gains, if any,
on stock option exercises will depend on the future performance of the
Common Stock. No assurance can be made that the amounts reflected in these
columns will be achieved.
(2) Options were granted on 12/11/00 that vest in four equal annual
installments beginning 12/11/00.
(3) Options for 25,000 shares were granted on 7/3/00 that vest in three equal
annual installments beginning 5/25/01. Options for 50,000 shares were
granted on 12/11/00 that vest in four equal annual installments
beginning 12/11/00.
(4) Options for 50,000 shares were granted on 7/3/00 that vest in three equal
annual installments beginning 5/25/01. Options for 50,000 shares were
granted on 10/16/00 that vest in three equal annual installments
beginning 10/16/01.
OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning options exercised in
2000 and outstanding options held by the Named Executive Officers as of December
31, 2000.
Shares Number of Securities Underlying Value of Unexercised
Acquired Unexercised Options at In-The-Money Options at
On Value Fiscal Year End (#) Fiscal Year End ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------------------------- -------------------------
Mac J. Slingerlend -- -- 933,475 / 433,749 3,903,367 / 0
David G. Durham 5,000 44,743 82,250 / 38,250 3,388 / 10,163
Joseph A. Mancuso -- -- 90,233 / 107,749 16,938 / 50,813
Richard A. Montoni -- -- 125,083 / 210,917 0 / 0
11
EMPLOYMENT AGREEMENT
The Company has entered into employment agreements with each of the Named
Executive Officers. Each officer's agreement has a term of one year and is
renewable annually. Each employment agreement provides that an officer's
compensation will include a base and a bonus. In the event that an officer's
employment is terminated upon a change in control of the Company, upon death or
disability of the officer or without cause, the officer will be entitled to a
severance payment of up to three times his annual compensation, which varies
based upon the cause of termination and officer position. Officers are also
entitled to receive continuation of medical, dental and disability benefits for
up to 18 months following termination, which varies based upon the officer's
position. One officer received a loan from the Company in July 1999, the terms
of which are described under "Certain Relationships and Related Transactions."
LONG-TERM DEFERRED COMPENSATION PLAN
The Company has agreed to make certain post-employment payments to Mr.
Slingerlend, or his designated beneficiaries, except in the event of a
termination for cause. The payments will be made for 15 years after Mr.
Slingerlend's termination of employment with the Company, beginning at age 60,
and will range from $65,000 to $100,000 per year, based on Mr. Slingerlend's age
at the time of termination of employment.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICY
The Compensation Committee (the "Committee") of the Board consists of
independent non-employee directors. The purpose of the Committee is to develop
policies and make specific recommendations with respect to the compensation of
the Company's executive officers, with the objective that a fair relationship
exists between executive pay and the creation of shareholder value.
The Committee considers, among other things, performance of the Company's
operations, compensation of executive officers of competitors, salary surveys of
industry-related positions and the salary history of the particular officer,
including other compensation in place and stock option awards. There is no
singular objective formula by which compensation is determined and the decisions
are ultimately subjective.
2000 COMPENSATION
With respect to the Company's chief executive officer and the other Named
Executive Officers, the Committee focused principally upon establishing
appropriate base salary and incentive compensation. The chief executive officer
and each of the other Named Executive Officers are parties to employment
agreements with the Company that provide for base salary and bonuses at
stipulated performance levels. The base salary and bonuses granted the chief
executive officer and the other Named Executive Officers with respect to 2000
are consistent with the Committee's objectives.
The Company has periodically granted stock options in order to provide
certain of its executives with a competitive total compensation package and to
reward them for their contribution to the Company's long-term performance, as
well as to align a portion of their compensation with the market value of the
Common Stock. During 2000, stock options were granted to Messrs. Durham, Mancuso
and Montoni (prior to his resignation) and to other members of management based
upon their actual and potential contributions to the Company.
Compensation Committee
James A. Rutherford, Chairman
James G. Brocksmith, Jr.
Archibald J. McGill
Richard A. Montoni
12
PERFORMANCE GRAPH
The following provides a comparison of the 5 year cumulative total return*
among CIBER, Inc., the S & P 500 Index and a self-constructed Peer Group.
COMPARISON OF 66 MONTH CUMULATIVE TOTAL RETURN*
AMONG CIBER, INC., THE S&P 500 INDEX
AND A PEER GROUP
[GRAPH DEPICTING THE PLOT POINTS BELOW]
Peer Group includes: Cambridge Technology Partners, Inc., Computer Horizons
Corp., Computer Task Group, Inc., Keane, Inc., marchFirst, Inc. (f/k/a Whittman
Hart, Inc.), Renaissance Worldwide, Inc., Sapient Corp., and Technology
Solutions Co.
*Assumes $100 invested on June 30, 1995 in stock or index including reinvestment
of dividends. Effective December 31, 1999, the Company changed its year-end from
June 30 to December 31.
Corresponding index value and Common Stock price values are given below:
6/95 6/96 6/97 6/98 6/99 12/99 12/00
---- ---- ---- ---- ---- ----- -----
CIBER, Inc. 100.00 297.89 385.21 856.34 430.99 619.72 109.36
Peer Group 100.00 248.40 392.28 618.39 332.31 749.46 110.63
S & P 500 100.00 126.00 169.73 220.92 271.18 292.09 265.50
CIBER, Inc. Closing Stock Price $ 4.44 $11.00 $17.09 $38.00 $19.13 $27.50 $4.88
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1999, CIBER loaned Joseph A. Mancuso, Senior Vice President and Chief
Operating Officer, $300,000 for the purchase of a home. The promissory note
requires partial repayment annually, with the balance payable in full in five
years or sooner in the event Mr. Mancuso is no longer an employee of CIBER. The
loan is secured by a second mortgage on Mr. Mancuso's residence. CIBER's
outstanding balance on the loan receivable from Mr. Mancuso was $291,098 at
December 31, 2000.
PROPOSAL 3 - AMEND THE EMPLOYEE STOCK PURCHASE PLAN
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE
UNDER THE PLAN
AND
TO PERMIT EMPLOYEES OF THE COMPANY'S SUBSIDIARIES TO PARTICIPATE IN THE PLAN
The Employee Stock Purchase Plan (the "Plan") was adopted by the Board of
Directors in September 1994 and approved by the shareholders in October 1994.
The Plan was amended and restated effective February 11, 1998 and subsequently
amended effective October 7, 1998. A total of 2,000,000 shares of Common stock
have been reserved for issuance under the Plan. On May 18, 2000 and February 15,
2001, the Board of Directors approved amendments to the Plan to (1) increase the
number of shares reserved for issuance thereunder by an additional 2,000,000
shares and by an additional 750,000 shares, respectively, and (2) to amend the
requirements for participation in the Plan by expanding the definition of the
"Company" to include any Affiliated Corporation of CIBER (any subsidiary
corporation of the Company), subject to approval of the Company's shareholders
at the Meeting. The request to increase the number of shares authorized under
the Plan is in response to depletion of the Plan's authorized shares due to high
employee participation and falling stock price. As of February 28, 2001, the
Plan had issued 847,093 shares registered under the Company's Equity Incentive
Plan to cover the shortfall.
PROPOSED AMENDMENTS TO CIBER'S PLAN
Sections I. and V. of the Plan, as amended and restated as of October 7, 1998,
shall be deleted in their entirety and replaced with the following:
I. PURPOSE
THE CIBER, INC. EMPLOYEE STOCK PURCHASE PLAN (THE "PLAN") IS INTENDED TO
PROVIDE ELIGIBLE EMPLOYEES OF CIBER, INC. AND ITS AFFILIATED CORPORATIONS
(COLLECTIVELY, THE "COMPANY"), WITH AN OPPORTUNITY TO ACQUIRE A PROPRIETARY
INTEREST IN THE COMPANY THROUGH THEIR PARTICIPATION IN A PLAN DESIGNED TO
QUALIFY AS AN EMPLOYEE STOCK PURCHASE PLAN UNDER SECTION 423 OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"). "AFFILIATED CORPORATION" MEANS "SUBSIDIARY
CORPORATION" (AS SUCH TERM IS DEFINED IN SECTION 424(f) OF THE CODE) OF CIBER,
INC.
V. STOCK SUBJECT TO PLAN
(a) COMMON STOCK. THE STOCK WHICH IS PURCHASABLE BY PARTICIPANTS SHALL BE
THE AUTHORIZED BUT UNISSUED OR REACQUIRED COMMON STOCK, PAR VALUE $.01 PER
SHARE, OF CIBER, INC. (THE "COMMON STOCK"). IN ORDER TO HAVE SHARES AVAILABLE
FOR SALE UNDER THE PLAN, THE COMPANY MAY REPURCHASE SHARES OF COMMON STOCK ON
THE OPEN MARKET, ISSUE AUTHORIZED BUT UNISSUED STOCK OR OTHERWISE. THE MAXIMUM
NUMBER OF SHARES WHICH MAY BE SOLD TO EMPLOYEES DURING ANY SINGLE PURCHASE
PERIOD SHALL BE ESTABLISHED BY THE PLAN ADMINISTRATOR PRIOR TO THE BEGINNING OF
THE PURCHASE PERIOD; PROVIDED HOWEVER, THAT THE TOTAL NUMBER OF SHARES WHICH MAY
BE SOLD TO EMPLOYEES THROUGHOUT THE ENTIRE DURATION OF THE PLAN SHALL NOT EXCEED
4,750,000 SHARES (WHICH AMOUNT REFLECTS THE 1996 AND 1998 STOCK SPLITS IN THE
NATURE OF A DIVIDEND, AND IS SUBJECT TO FURTHER ADJUSTMENT UNDER SUBPARAGRAPH
(b) BELOW).
14
PURPOSE. The purpose of the Plan is to provide employees of the Company
with an opportunity to acquire a proprietary interest in the Company through
their participation in a tax-qualified plan and to purchase Common Stock of the
Company through payroll deductions. The Plan provides for one offering during
each three-month period. The purchase price per share is the lower of 85% of the
fair market value of a share of Common Stock (the closing price on the New York
Stock Exchange) on the first date of an offering period or on the last date of
the offering period. The three-month offering periods commence on January 1,
April 1, July 1 and October 1 of each year. The first offering period commenced
on January 1, 1995. The Board of Directors has the power to alter the offering
periods without shareholder approval.
PARTICIPATION. Except as otherwise provided, every employee of the Company
who, on the commencement date of each offering period is employed by the Company
on a basis which customarily requires not less than 20 hours of service per
calendar week, is eligible to participate in the Plan and can elect to
participate by delivering to the Plan Administrator an enrollment form
(including a purchase agreement authorizing payroll deductions) prior to the
applicable offering date (the "Participant"). The purchase price of the shares
is accumulated by payroll deductions over the offering period. The deductions
cannot exceed ten percent (10%) or be less than one percent (1%), or such other
rates as determined from time to time by the Plan Administrator, of a
Participant's compensation. A Participant may discontinue participation during
an offering period, but a Participant may not increase or decrease the rate of
payroll deductions in the Plan during the offering period. Unless an employee's
participation is discontinued by delivery of a notice of withdrawal prior to the
end of an applicable offering period, the purchase of shares occurs
automatically at the end of the offering period at the applicable price. A
Participant's withdrawal from an offering does not have any effect upon such
participant's eligibility to participate in subsequent offerings under the Plan.
The number of shares to be purchased by individual Participants under the
Plan is a function of Participant elections and the market price of the
Company's Common Stock, and therefore is not determinable.
Notwithstanding the foregoing, no employee is permitted to subscribe for
shares under the Plan if, immediately after the grant of the right to purchase
shares, the employee would own stock (including options) possessing five percent
(5%) or more of the total voting power or value of all classes of stock of the
Company or of any Affiliated Corporation (as defined in the Plan), or if the
grant of such right would permit the employee to buy pursuant to the Plan more
than $25,000 worth of stock for any calendar year.
TERMINATION OF EMPLOYMENT. If a Participant ceases to be an employee of the
Company for any reason, including retirement or death during the purchase
period, the Participant or Participants shall receive a cash refund of all
payroll deductions made on behalf of the Participant during the offering period
including any dollars carried over from the prior quarter, if any, through the
date of the Participant's cessation of employment.
NON-ASSIGNABILITY. No rights or accumulated payroll deductions of an
employee under the Plan may be assigned or transferred for any reason other than
by will or by the laws of descent and distribution.
The Board of Directors has authority to amend or terminate the Plan without
shareholder approval; providing, however, that no amendment may be made to the
Plan without the approval of the shareholders of the Company if such amendment
would increase the number of shares reserved under the Plan, extend the term of
the Plan, alter the per share price formula so as to reduce the purchase price
per share specified in the Plan, materially modify the eligibility requirements,
or materially increase the benefits which may accrue to Participants under the
Plan.
TAX INFORMATION. The Plan, and the right of the Participant to make
purchases thereunder, is intended to qualify under the provisions of Section 423
of the Internal Revenue Code of 1986 (the "Code"). Amounts deducted from a
Participant's paychecks in order to purchase shares under the Plan are taxable
as ordinary compensation income. The purchase of shares under the Plan, however,
is not itself a taxable event even though the Participant pays less than market
price for the shares (i.e., the "compensation" consisting of the difference
between the market price and the purchase price - the discount - is not taxable
at the time of purchase).
15
SALES OF SHARES PURCHASED UNDER THE PLAN AND HELD FOR MORE THAN TWO YEARS
AFTER DATE OF GRANT:
If the Participant sells shares purchased under the Plan more than two
years after the beginning of the purchase period during which he or she
purchased the shares under the Plan: (i) any gain up to the amount of the 15%
discount from market price on the first day of the purchase period will be
taxable as ordinary income, and any further gain will be taxable as long term
capital gain; and (ii) any loss will be treated as a long-term capital loss.
SALES OF SHARES PURCHASED UNDER THE PLAN AND HELD TWO YEARS OR LESS AFTER
DATE OF GRANT:
If the Participant sells shares within two years after the beginning of the
purchase period during which he or she purchased shares under the Plan: (i) the
difference between the purchase price and the value of the stock on the date of
the purchase will be taxable as ordinary income in the year of sale (regardless
of the market price of the shares at the time of sale), and any gain above this
amount will be taxable as a capital gain (short-term or long-term, depending
upon how long he or she held the stock); and (ii) any loss, after inclusion in
the Participant's tax basis of the amount treated as ordinary income pursuant to
(i) above, will be treated as a capital loss (short-term or long-term).
The foregoing is only a summary of the effect of federal income taxation
upon the Participant and the Company with respect to the shares purchased under
the Plan. Participants should consult with an advisor for more complete
information regarding tax consequences of the individual's participation in the
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
AMENDMENTS TO THE EMPLOYEE STOCK PURCHASE PLAN
INDEPENDENT AUDITORS
Representatives of KPMG LLP are expected to attend the Meeting. The
representatives will have an opportunity to make a statement and will be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders may submit proposals on matters appropriate for shareholder
action at the Company's annual shareholder meetings. Such proposals must be
received by the Company not later than December 4, 2001 to be considered for
inclusion in the proxy statement and proxy relating to the 2002 Annual Meeting
of Shareholders. Proposals submitted after February 16, 2002 are considered
untimely. The persons named in the Company's proxy card will have discretionary
authority to vote all proxies with respect to any untimely proposals. Any
shareholder proposals should be addressed to: Corporate Secretary, CIBER, Inc.,
5251 DTC Parkway, Suite 1400, Greenwood Village, CO 80111.
16
ANNUAL REPORT TO SHAREHOLDERS, MANAGEMENT'S DISCUSSION
AND ANALYSIS AND CONSOLIDATED FINANCIAL STATEMENTS
The Company's 2000 Annual Report to Shareholders is being mailed to the
shareholders with this Proxy Statement. The 2000 Annual Report to Shareholders
is not to be considered part of the soliciting material.
Management's Discussion and Analysis of Financial Condition and Results of
Operations and the Company's audited consolidated financial statements and notes
thereto, as contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000, are included herein on pages F-1 through F-34. The
Company's Annual Report on Form 10-K was filed with the Commission on March 23,
2001.
By order of the Board of Directors,
/s/ Bobby G. Stevenson
Bobby G. Stevenson
Chairman of the Board
Greenwood Village, Colorado
April 3, 2001
17
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Charter of the Audit Committee of the Board of Directors of CIBER, Inc.
(the "Charter") was adopted by the Board of Directors on May 18, 2000. In
accordance with Section III.1. of the Charter and SEC regulations which direct
that audit committee charters be published at least once every three years, the
complete text of the Charter follows:
CIBER, Inc.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
- Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting and legal
compliance.
- Monitor the independence and performance of the Company's independent
auditors.
- Provide an avenue of communication among the independent auditors,
management and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to
the independent auditors as well as anyone in the Company. The Audit
Committee has the ability to retain, at the Company's expense, special
legal, accounting, or other consultants or experts it deems necessary in
the performance of its duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the New York Stock
Exchange. The Audit Committee shall be comprised of three or more directors
as determined by the Board, each of whom shall be independent non-executive
directors, free from any relationship that would interfere with the
exercise of his or her independent judgment. All members of the Committee
shall have a basic understanding of finance and accounting and be able to
read and understand fundamental financial statements, and at least one
member of the Committee shall have accounting or related financial
management expertise.
Audit Committee members shall be appointed by the Board of Directors. If an
audit committee Chair is not designated or present, the members of the
Committee may designate a Chair by majority vote of the Committee
membership.
The Committee shall meet at least three times annually, or more frequently
as circumstances dictate. Meetings of the Audit Committee will be held at
such time, on such notice and at such places as a majority of the members
thereof shall determine and may be held by conference telephone call; and
actions taken by unanimous written consent of the Audit Committee shall be
as effective as actions taken at a meeting thereof. The Committee should
meet privately in executive session at least annually with management, the
independent auditors, and as a committee to discuss any matters that the
Committee or each of these groups believe should be discussed. In addition,
the Committee, or at least its Chair, should communicate with management
and the independent auditors quarterly to review the Company's financial
statements and significant findings based upon the auditors limited review
procedures.
A-1
III. Auditor Committee Responsibilities and Duties
REVIEW PROCEDURES
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant risk exposures
and the steps management has taken to monitor, control, and report
such exposures. Review significant findings prepared by the
independent auditors together with management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings
and/or the Company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with SAS 61 (see Item 9). The Chair
of the Committee may represent the entire Audit Committee for purposes
of this review.
INDEPENDENT AUDITORS
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review
the independence and performance of the auditors and annually
recommend to the Board of Directors the appointment of the independent
auditors or approve any discharge of auditors when circumstance
warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditor's independence.
8. Review the independent auditors audit plan - discuss scope, staffing,
locations, reliance upon management and general audit approach.
9. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to audit committees in accordance with AICPA SAS
61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
11. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be included in
the Company's annual proxy statement.
12. Perform any other activities consistent with this Charter, the
Company's bylaws, and governing law, as the Committee or the Board
deems necessary or appropriate.
13. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
A-2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND
NOTES THERETO. WITH THE EXCEPTION OF HISTORICAL MATTERS AND STATEMENTS OF
CURRENT STATUS, CERTAIN MATTERS DISCUSSED BELOW ARE FORWARD-LOOKING STATEMENTS
THAT INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM TARGETS OR PROJECTED RESULTS. WITHOUT LIMITING THE
FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS" AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY ARE DISCUSSED HEREIN UNDER THE
CAPTION "FACTORS THAT MAY AFFECT FUTURE RESULTS." MANY OF THESE FACTORS ARE
BEYOND OUR ABILITY TO PREDICT OR CONTROL. WE DISCLAIM ANY INTENT OR OBLIGATION
TO UPDATE PUBLICLY SUCH FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE. IN ADDITION, AS A RESULT OF THESE AND
OTHER FACTORS, OUR PAST FINANCIAL PERFORMANCE SHOULD NOT BE RELIED ON AS AN
INDICATION OF FUTURE PERFORMANCE.
OVERVIEW
CIBER, Inc. and its subsidiaries DigiTerra, Inc., Solution Partners B.V.,
Waterstone, Inc. and Enspherics, Inc. provide information technology ("IT")
system integration consulting and other services and to a lesser extent, resell
certain hardware and software products. Our clients consist primarily of Fortune
2000 and middle market companies across most major industries and governmental
agencies. We operate from branch offices across the United States, plus offices
in Canada and the Netherlands. At December 31, 2000, we had approximately 5,000
employees. We operate our business as follows: CIBER Operations, DigiTerra,
Solution Partners, Waterstone and Enspherics. CIBER Operations refers to the
branch offices doing business under the CIBER name. CIBER Operations provides a
wide range of IT services and products including project execution, supplemental
IT staffing and consulting in leading-edge practice areas such as IT
architecture and strategy, business intelligence/customer loyalty, Internet
solutions, network infrastructure and security, wireless integration and IT
outsourcing. DigiTerra provides package software implementation services ranging
from enterprise resource planning (ERP) to supply chain optimization, customer
relationship management and e-business components. DigiTerra works with software
from PeopleSoft, J.D. Edwards, Oracle, SAP, Lawson, Siebel, Ariba, Rightworks
and Commerce One, among others. DigiTerra also provides related hardware sizing
and procurement services as an authorized remarketer of certain computer
hardware. Solution Partners, located in the Netherlands, provides SAP software
implementation consulting and e-business solutions in custom environments.
Waterstone provides strategic, technical and creative services including
e-business planning, assessments and solutions, customer relationship
management, supply chain management, web content development and design and
custom integration services. Enspherics provides custom designed IT security
solutions to clients who operate in high-risk environments.
We have grown through mergers and acquisitions, as well as through internal
growth. For purposes of this Report, the term "acquisition" refers to business
combinations accounted for as a purchase and the term "merger" refers to
business combinations accounted for as a pooling of interests. Acquisitions
result in the recording of goodwill, which we amortize over periods of up to 20
years. Our consolidated financial statements include the results of operations
of an acquired business since the date of acquisition. Mergers result in a
one-time charge for costs associated with completing the business combination.
Unless the effects are immaterial, our consolidated financial statements are
restated for all periods prior to a merger to include the results of operations,
financial position and cash flows of the merged company. CIBER completed one
business combination during the year ended December 31, 2000, five business
combinations during the six months ended December 31, 1999 and ten business
combinations in each of the fiscal years ended June 30, 1999 and 1998. As a
result of a sale of stock to new investors by our former subsidiary, Agilera,
Inc., effective January 1, 2000, we no longer consolidate the accounts of
Agilera. (See Note 5 to Consolidated Financial Statements.)
Other revenues include sales of computer hardware products, commissions on
computer hardware and software product sales and software license and
maintenance fees. We sold our software business in September 1999.
F-1
Effective December 31, 1999, we changed our year end from June 30 to December
31. As used herein, the term fiscal year refers to our fiscal year ended June
30.
The following table sets forth certain items from our consolidated statements of
operations, expressed as a percentage of revenues:
Six Months
Years Ended Ended Years Ended
June 30, December 31, December 31,
1998 1999 1999 1999 2000
----------- ------------ -------------- ----------- -------------
Revenues 100.0% 100.0% 100.0% 100.0% 100.0%
----------- ------------ -------------- ----------- -------------
Gross margin 34.9% 35.6% 33.1% 34.6% 32.1%
Selling, general and administrative expenses 23.4 21.9 23.2 22.6 25.5
----------- ------------ -------------- ----------- -------------
Operating income before amortization
and goodwill impairment and other
charges 11.5 13.7 9.9 12.0 6.6
Amortization of intangible assets .7 1.1 1.8 1.7 2.3
Goodwill impairment and other charges .8 .2 - - 13.5
----------- ------------ -------------- ----------- -------------
Operating income (loss) 10.0 12.4 8.1 10.3 (9.2)
Interest and other income, net .3 .4 .4 .4 .2
----------- ------------ -------------- ----------- -------------
Income (loss) before income taxes 10.3 12.8 8.5 10.7 (9.0)
Income tax expense 4.0 5.2 3.6 4.4 1.7
----------- ------------ -------------- ----------- -------------
Net income (loss) 6.3% 7.6% 4.9% 6.3% (10.7)%
=========== ============ ============== =========== =============
Pro forma net income (1) 5.9%
===========
(1) Includes the effects of pro forma adjustments to income tax expense as a
result of merged companies.
YEAR ENDED DECEMBER 31, 2000 AS COMPARED TO YEAR ENDED DECEMBER 31, 1999
Total revenues decreased 16% to $621.5 million for the year ended December 31,
2000 from $741.9 million for the year ended December 31, 1999. This represents a
16% decrease in consulting services revenues and a decrease in other revenues.
Other revenues decreased to $35.1 million for the year ended December 31, 2000
from $43.6 million for the year ended December 31, 1999 due to decreased
hardware sales and reduced software revenues. CIBER Operations revenues
decreased 16% while DigiTerra revenues decreased 23%, when compared to last
year. CIBER Operations accounted for approximately 74% of revenues in 2000 and
1999. DigiTerra revenues decreased to approximately 23% of revenues for the year
ended December 31, 2000 from 26% in 1999. Our other businesses accounted for
approximately 3% of revenues for the year ended December 31, 2000 compared to
less than 1% in 1999. The majority of revenues from our other businesses in 2000
came from Waterstone and Solution Partners, which we acquired late in 1999, and
therefore 1999 included revenue for fewer than 12 months.
During 2000, there continued to be an industry-wide shift in IT spending,
principally resulting from the resolution of the Y2K issue and ERP curtailments.
Many companies reduced IT expenditures beginning mid-1999 due to completion of
Y2K and ERP specific projects and a general tendency to minimize new IT
initiatives during the end of 1999. This adversely impacted us, particularly in
our mainframe staffing and ERP related service offerings. There was a
significant industry trend towards new IT services driven by the Internet and
increased bandwidth availability. These new services include web-designed,
e-business technologies, customer relationship management ("CRM") and supply
chain software, wireless integration, among others. We have focused more of our
efforts to deliver these newer IT services. These efforts include new alliances
with independent software vendors, such as Commerce One and Siebel, and the
realignment of our professional and sales personnel towards a greater focus on
new technology services. In addition, commencing in the Spring of 2000, the IT
services industry was negatively impacted by the shift in investor sentiment
away from development and early stage dot.com businesses. As a result, industry
F-2
demand for IT services by dot.com companies decreased significantly. This has
lead to greater competition within the IT services industry.
Gross margin percentage decreased to 32.1% of revenues for the year ended
December 31, 2000 from 34.6% of revenues for the year ended December 31, 1999.
This decrease is due to declining gross margins on consulting services offset
partially by improved gross margins on other revenues. Consulting services gross
margins declined primarily due to a decrease in the utilization levels of
professional staff. CIBER Operations gross margin on consulting services
declined to 29.8% for the year ended December 31, 2000 from 30.9% in 1999, while
DigiTerra consulting gross margin declined to 34.7% in 2000 from 44.1% in 1999.
Gross margin percentage on other revenues increased due to decreased sales of
lower margin computer hardware products.
Selling, general and administrative expenses ("SG&A") decreased to $158.6
million for the year ended December 31, 2000 from $167.6 million in 1999, while
as a percentage of sales, SG&A increased to 25.5% for the year ended December
31, 2000 from 22.6% in 1999. This reflects the semi-fixed nature of SG&A. We
also incurred additional SG&A in 2000 related to new marketing and branding
initiatives as well as costs to prepare DigiTerra to be a stand-alone entity. As
our focus continues to shift to more solutions-oriented and project work, SG&A
is expected to increase as a percentage of sales and partially offset the
expected higher gross margins on such work.
Amortization of intangible assets increased to $14.0 million for the year ended
December 31, 2000 from $12.1 million for the year ended December 31, 1999. This
increase was due to the additional intangible assets resulting from acquisitions
during the past year, partially offset by the effects of the goodwill write-down
in the September 2000 quarter.
Goodwill impairment and other charges of $83.8 million were incurred during the
year ended December 31, 2000. We recorded a goodwill impairment charge of $80.8
million during the quarter ended September 30, 2000 to write-down the goodwill
associated with certain acquisitions. This charge represents the amount required
to write-down the goodwill to our best estimate of the future discounted cash
flows of these operations. The other charges are comprised of $1.3 million of
severance costs resulting from involuntary terminations related to personnel
realignment, $975,000 for an asset write-down, and $720,000 of professional fees
resulting from our planned spinoff of DigiTerra. Subject to Board approval and a
favorable tax ruling from the IRS, as well as favorable market conditions, we
expect to complete the spinoff of DigiTerra to our shareholders in 2001. We also
expect to incur additional costs in 2001 in connection with our plan to spinoff
DigiTerra.
Net other income, including interest income and interest expense, decreased to
$1.0 million for the year ended December 31, 2000 from $2.8 million for the year
ended December 31, 1999. Other income in 2000 includes gains of $504,000 from
sales of investments and other income in 1999 includes a gain of $827,000 on the
sale of our LogisticsPRO software business. The fluctuations in interest income
and expense are the result of changes in our average cash balance invested or
amounts borrowed under our line of credit.
Tax expense of $10.9 million was recorded during the year ended December 31,
2000 even though a pre-tax loss was reported. Tax expense was recorded for the
year ended December 31, 2000 because most of the goodwill impairment charge was
not deductible for income tax purposes since the majority of the impaired
goodwill related to non-taxable acquisitions. Excluding the effects of the
goodwill impairment charge, our effective tax rate would have been approximately
50.8% in 2000 as compared to 41.2% for the year ended December 31, 1999. Tax
expense for 2000 also reflects the effects of increased non-deductible goodwill
amortization, increased other non-deductible expenses and increased state income
taxes.
SIX MONTHS ENDED DECEMBER 31, 1999 AS COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1998
Our total revenues increased 7% to $362.0 million for the six months ended
December 31, 1999 from $339.7 million for the six months ended December 31,
1998. This represents a 13% increase in consulting services revenues offset by a
decrease in other revenues, primarily sales of computer hardware products. Other
revenues decreased to $20.9 million for the six months ended December 31, 1999
from $36.6 million
F-3
for the same period of 1998. Of the 13% increase in consulting services
revenues, approximately 12% was due to revenues from acquired businesses and
approximately 1% was due to organic growth of existing operations. CIBER
operations consulting revenues increased 4.6%, while DigiTerra consulting
revenues increased 34.0%. DigiTerra consulting revenues increased to
approximately 26% of total consulting revenues for the six months ended
December 31, 1999 from 22% in the same period of 1998.
Gross margin percentage decreased to 33.1% of revenues for the six months ended
December 31, 1999 from 35.3% of revenues for the same period of 1998. This
decrease was due to declining gross margins on consulting services offset by
improved gross margins on other revenues. Consulting services gross margins
declined primarily due to a decrease in the utilization levels of professional
staff. CIBER Operations gross margin on consulting services declined to 29.5%
for the six months ending December 31, 1999 from 33.0% for the same period of
1998, while DigiTerra consulting gross margin declined to 41.5% from 46.1% for
the same period of 1998. Gross margin on other revenues increased due to
decreased sales of lower margin computer hardware products.
Selling, general and administrative expenses were 23.2% of revenues for the six
months ended December 31, 1999 compared to 21.9% of revenues for the same period
of 1998. This increase was due primarily to additional costs incurred for new
programs implemented to position us for future growth, including the addition of
senior and executive management team members, branding and marketing
initiatives, and internal systems development.
Amortization of intangible assets increased to $6.8 million for the six
months ended December 31, 1999 from $2.2 million for the same period of 1998.
This increase was due to the additional intangible assets resulting from
acquisitions.
No other charges were incurred during the six months ended December 31, 1999,
while merger costs of $1.5 million, primarily transaction related broker and
professional costs related to pooling of interests business combinations, were
incurred during the six months ended December 31, 1998.
Interest income decreased to $920,000 for the six months ended December 31,
1999 from $1.3 million for the same period of 1998 due to decreased average
cash balances available for investment. Interest expense was $190,000 for the
six months ended December 31, 1999, while no interest expense was incurred
during the same period of 1998. This increase was due to borrowings under our
line of credit during the six months ended December 31, 1999. Included in
other income for the six months ended December 31, 1999 is an $827,000 gain
on the sale of our LogisticsPRO software business.
Our effective tax rate for the six months ended December 31, 1999 was 42.6%
compared to 41.2% for the same period of 1998. Our effective tax rate for the
six months ended December 31, 1999 increased due to increased nondeductible
amortization resulting from certain acquisitions.
FISCAL YEAR ENDED JUNE 30, 1999 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1998
Total revenues increased 24.8% to $719.7 million in fiscal 1999 from $576.5
million in fiscal 1998. This represents a 27.8% increase in consulting revenues
offset by a decrease in other revenues, primarily sales of computer hardware
products. Other revenues decreased to $59.3 million in fiscal 1999 from $59.8
million in fiscal 1998. The increase in consulting revenues was derived
primarily from an increase in hours billed and, to a lesser extent, an increase
in average billing rates.
Of the 27.8% increase in consulting revenues for fiscal 1999 in comparison to
fiscal 1998, approximately 9% was due to revenues from acquired businesses or
immaterial poolings of interests and approximately 19% was due to organic
growth of existing operations. Organic growth for fiscal 1999 was driven by a
strong demand for ERP implementation services and was lessened, to some
extent, due to declining direct Year 2000 service revenues. CIBER Operations
consulting revenues increased 20.9%, while DigiTerra consulting revenues
increased 59.0%. DigiTerra consulting revenues increased to approximately 24%
of total consulting revenues in fiscal 1999 from 19% in 1998.
F-4
Gross margin percentage improved to 35.6% of revenues in fiscal 1999 from 34.9%
in fiscal 1998. This improvement was due to improved gross margins on both
consulting services and other revenues. Gross margins on consulting services
increased as a larger percentage of our revenues were derived from higher margin
solutions-oriented and project work. DigiTerra consulting margins improved to
46.4% in fiscal 1999 from 44.9% in 1998, which was offset somewhat by a decline
in CIBER Operations consulting margin to 32.6% in 1999 from 33.4% in 1998.
Selling, general and administrative expenses were 21.9% of revenues for fiscal
1999 compared to 23.4% of revenues for fiscal 1998. The decrease as a percentage
of revenues is primarily due to greater economies of scale, including reduced
administrative costs of certain merged companies.
Amortization of intangible assets increased to $7.5 million in fiscal 1999 from
$3.9 million in fiscal 1998. This increase was due to the additional
amortization of intangible assets resulting from mergers and acquisitions.
Other charges of $1.5 million in fiscal 1999 and $4.5 million in fiscal 1998
represent merger costs, which are primarily transaction-related broker and
professional costs resulting from pooling of interests business combinations.
Interest income, net of interest expense, increased to $2.6 million in fiscal
1999 from $1.5 million in fiscal 1998 due to increased average cash balances
available for investment and the elimination of borrowings of certain merged
companies.
Including the effects of pro forma adjustments to income tax expense, if any,
our effective tax rates for fiscal 1999 and 1998 were 40.8% and 42.3%,
respectively. The effective tax rate for fiscal 1999 decreased due to reduced
nondeductible merger costs in fiscal 1999 compared to fiscal 1998, which was
partially offset by increased nondeductible amortization resulting from fiscal
1999 acquisitions. The pro forma adjustment to income tax expense in fiscal 1998
reflects the exclusion of the one-time income tax effects related to changes in
the tax status of certain merged companies and imputes income tax expense for S
corporation operations that were not subject to income taxes.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2000, we had $102.9 million of working capital and a current
ratio of 2.9:1. We believe that our cash and cash equivalents, our operating
cash flow and our available line of credit will be sufficient to finance our
working capital needs through at least the next year.
In June 1999, our Board of Directors authorized the repurchase of up to
5,888,000 shares (10%) of our common stock. As of December 31, 2000, we have
purchased 4,680,000 shares for $59,560,000 under this program. We may use
significant amounts of cash for the repurchase of our stock or to acquire other
businesses. As a result, we may borrow to finance such activities. Future
borrowings may include bank, private or public debt.
Net cash provided by operating activities was $26.2 million and $63.4 million in
fiscal 1998 and 1999, respectively, $28.7 million for the six months ended
December 31, 1999, and $62.9 million and $36.5 million for the years ended
December 31, 1999 and 2000, respectively. The decrease in 2000 primarily
reflects reduced income, excluding the non-cash goodwill impairment charge.
Accounts receivable totaled $127.2 million at December 31, 2000 compared to
$139.4 million at December 31, 1999. Accounts receivable days sales outstanding
("DSO") was 80 days at December 31, 2000.
Net cash used in investing activities was $11.2 million and $40.5 million in
fiscal 1998 and 1999, respectively, $67.3 million for the six months ended
December 31, 1999, and $99.3 million and $11.2 million during the years ended
December 31, 1999 and 2000, respectively. We used cash for acquisitions of
$351,000 and $26.5 million during fiscal 1998 and 1999, respectively, $60.1
million during the six months ended December 31, 1999, and $82.5 million and
$16.2 million during the years ended December 31, 1999 and 2000, respectively.
In 2000, we received $9.9 million from Agilera as repayment of advances. We
F-5
purchased property and equipment of $11.7 million and $14.0 million during
fiscal 1998 and 1999, respectively, $7.2 million during the six months ended
December 31, 1999, and $16.8 million and $8.5 million during the years ended
December 31, 1999 and 2000, respectively. Purchases of property and equipment
have decreased in 2000 because we made a number of significant purchases in 1999
related to back office systems, technology infrastructure and facility
expansion.
Net cash provided by (used in) financing activities was ($4.9 million) and $1.8
million in fiscal 1998 and 1999, respectively, ($20.5 million) in the six months
ended December 31, 1999, and ($22.9 million) and $8.9 million during the years
ended December 31, 1999 and 2000, respectively. We obtained net cash proceeds
from employee stock purchases and options exercised of $5.8 million and $14.8
million in fiscal 1998 and 1999, respectively, $10.9 million in the six months
ended December 31, 1999, and $19.7 million and $10.9 million during the years
ended December 31, 1999 and 2000, respectively. We purchased 706,000 shares of
treasury stock for $13.0 million during fiscal 1999, 2,255,000 shares for $36.7
million during the six months ended December 31, 1999, 2,860,000 shares for
$47.9 million and 1,925,000 shares for $14.1 million during the years ended
December 31, 1999 and 2000, respectively. We have reissued some of the treasury
shares under our stock plans and in connection with acquisitions.
We have a $35 million unsecured revolving line of credit with a bank. There were
no outstanding borrowings under this bank line of credit at December 31, 2000
and June 30, 1999. At December 31, 1999, there was $5,355,000 outstanding under
this line of credit. Outstanding borrowings bear interest at the three month
London Interbank Offered Rate ("LIBOR") plus 2%. The credit agreement requires a
commitment fee of 0.225% per annum on any unused portion of the line of credit
up to $20 million. The credit agreement expires on July 1, 2001. We expect,
although there can be no assurance, to be able to renew this line of credit on
similar terms.
SEASONALITY
We experience a moderate amount of seasonality. Typically, operating income as a
percentage of revenues is lowest in the fourth quarter of each calendar year
because more holidays and vacations are taken at that time of year resulting in
fewer hours billed in that period.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Included in this Report and elsewhere from time to time in other written reports
and oral statements, including but not limited to, the Annual Report to
Shareholders, quarterly shareholder letters, news releases and investor
presentations, are forward-looking statements about our business strategies,
market potential, future financial performance and other matters which reflect
our current expectations. Without limiting the foregoing, the words "believes,"
"anticipates," "plans," "expects" and similar expressions are intended to
identify forward-looking statements. We disclaim any intent or obligation to
update publicly such forward-looking statements. Actual results may differ
materially from those projected in any such forward-looking statements due to a
number of factors, including, without limitation, those set forth below.
We operate in a dynamic and rapidly changing environment that involves numerous
risks and uncertainties. The following section lists some, but not all, of the
risks and uncertainties that may have a material adverse effect on our business,
financial condition, results of operations and the market price of our common
stock.
GROWTH THROUGH BUSINESS COMBINATIONS AND INTERNAL EXPANSION - As an integral
part of our business strategy, we intend to continue to expand by acquiring
information technology businesses. We regularly evaluate potential business
combinations and aggressively pursue attractive transactions. From July 1, 1997
through December 31, 2000, we completed 26 business combinations. The success of
this strategy depends not only upon our ability to identify and acquire
businesses on a cost-effective basis, but also upon our ability to successfully
integrate the acquired business with our organization and culture. Business
combinations involve numerous risks, including: the ability to manage
geographically remote operations; the diversion of management's attention from
other business concerns; risks of losing clients and employees of the acquired
business and the risks of entering markets in which we have limited or no direct
experience. There can be no assurance we will be able to acquire additional
business, or that any business
F-6
combination will result in benefits to us. In addition, we may open new
offices in attractive markets with our own personnel. Many of our branch
offices were originally start-up operations. Not all branch offices, whether
start-up or acquired, have been successful. There can be no assurances that
we will be able to successfully start up, identify, acquire, or integrate
future successful branch office operations.
ABILITY TO ATTRACT AND RETAIN QUALIFIED CONSULTANTS - Our future success depends
in part on our ability to attract and retain adequately trained personnel who
can address the changing and increasingly sophisticated technology needs of our
clients. Our ongoing personnel needs arise from turnover, which is generally
high in the industry, and client needs for consultants trained in the newest
software and hardware technologies. Few of our employees are bound by
non-compete agreements. Competition for personnel in the information technology
services industry is significant. We have had, and expect to continue to have,
difficulty in attracting and retaining an optimal level of qualified
consultants. There can be no assurance that we will be successful in attracting
and retaining the personnel we require to conduct and expand our operations
successfully.
DEPENDENCE ON SIGNIFICANT RELATIONSHIPS AND THE ABSENCE OF LONG-TERM
CONTRACTS -Our five largest clients accounted for 14% of our revenues in 2000
with our largest client accounting for 6% of revenues. We strive to develop
long-term relationships with our clients. Most individual client assignments
are from three to 12 months, however, many of our client relationships have
continued for many years. Although they may be subject to penalty provisions,
clients may generally cancel a contract at any time. In addition, under many
contracts, clients may reduce their use of our services under such contract
without penalty. If any significant client terminates its relationship with
us or substantially decreases its use of our services, it could have a
material adverse effect on our business, financial condition and results of
operations. Additionally, we have a significant relationship with PeopleSoft
as an implementation partner. Approximately 8% of our revenues are from
services related to PeopleSoft software. In the event PeopleSoft products
become obsolete or non-competitive, or if we should lose our "implementation
partner" status with PeopleSoft, we could suffer a material adverse effect.
We have other similar relationships and strategic alliances with other
technology vendors. The sudden loss of any significant relationship or
substantial decline in demand for their products could also adversely affect
us.
MANAGEMENT OF A RAPIDLY CHANGING BUSINESS - Our market is characterized by
rapidly changing technologies, such as the evolution of the Internet, frequent
new product and service introductions and evolving industry standards. If we
cannot keep pace with these changes, our business could suffer. Our success
depends, in part, on our ability to develop service offerings that keep pace
with continuing changes in technology, evolving industry standards and changing
client preferences. Our success will also depend on our ability to develop and
implement ideas for the successful application of existing and new technologies.
We may not be successful in addressing these developments on a timely basis or
our ideas may not be successful in the marketplace. Products and technologies
developed by our competitors may also make our services or product offerings
less competitive or obsolete.
PROJECT RISKS - We provide and intend to continue to provide project services to
our clients. Projects are distinguishable from CIBER's professional services
staff supplementation contracts by the level of responsibility we assume. With
professional services staff supplementation contracts, our clients generally
maintain responsibility for the overall tasks. In a typical project, we assume
major responsibilities for the management of the project and/or the design and
implementation of specific deliverables based upon client-defined requirements.
As our project engagements become larger and more complex and must be completed
in shorter time frames, it becomes more difficult to manage the project and the
likelihood of any mistake increases. In addition, our projects often involve
applications that are critical to our client's business. Our failure to timely
and successfully complete a project and meet our client's expectations could
have a material adverse effect on our business, results of operations or
financial condition. Such adverse effects may include delayed or lost revenues,
additional services being provided at no charge and a negative impact to our
reputation. In addition, claims for damages may be brought against us,
regardless of our responsibility, and our insurance may not be adequate to cover
such claims. Our contracts generally limit our liability for damages that may
arise in rendering our services. However, we cannot be sure these contractual
provisions will successfully protect us from liability if we are sued.
F-7
We sometimes undertake projects on a fixed-fee basis or cap the amount of fees
we may bill on a time and materials basis. Any increased or unexpected costs or
unanticipated delays could make such projects less profitable or unprofitable
and could have a material adverse effect on our business, results of operations
and financial condition.
COMPETITION - We operate in a highly competitive industry. We believe that we
currently compete principally with IT and Internet professional services firms,
technology vendors and internal information systems groups. Many of the
companies that provide services in our markets have significantly greater
financial, technical and marketing resources than we do. In addition, there are
relatively few barriers to entry into our markets and we have faced, and expect
to continue to face, competition from new entrants into our markets. There can
be no assurance that we will be able to continue to compete successfully with
existing or future competitors or that competition will not have a material
adverse effect on our business, results of operations and financial condition.
INTERNET GROWTH AND USAGE - Our business is dependent upon continued growth of
the use of the Internet by our clients and prospective clients as well as their
customers and suppliers. If Internet usage and commerce conducted over the
Internet does not continue to grow, the demand for our services may decrease
and, as a result, our revenues would decline. Capacity constraints of the
Internet, unless resolved, could impede further growth of Internet usage. In
addition, any laws and regulations relating to the Internet that are adopted by
governments in the United States or abroad that could reduce growth or usage of
the Internet as a commercial medium may impact our business. We cannot predict
how any such government regulations may affect our business. However, if such
regulations were to result in a decrease in the demand for our services, they
could have a material adverse effect on our business, results of operations and
financial condition.
INTERNATIONAL EXPANSION - We expect to expand our international operations. We
currently have offices in Toronto and Vancouver, Canada and Eindhoven, the
Netherlands. We have limited experience in marketing, selling and providing our
services internationally. International operations are subject to political and
economic uncertainties, fluctuations in foreign currency exchange rates and new
tax and legal requirements. Other risks inherent in international operations
include managing geographically distant locations and customers, employees
speaking different languages and different cultural approaches to the conduct of
business. If any of these risks materialize, they could have a material adverse
effect on our business, results of operations and financial condition.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS - Our quarterly operating
results may fluctuate significantly in the future as a result of a variety of
factors, many of which are outside our control. Factors that may affect our
quarterly revenues or operating results generally include: costs relating to the
expansion of our business; the extent and timing of business acquisitions; our
ability to obtain new and follow-up on client engagements; the timing of
assignments from customers; our consultant utilization rate (including our
ability to transition employees quickly from completed assignments to new
engagements); the seasonal nature of our business due to variations in holidays
and vacation schedules; the introduction of new services by us or our
competitors; price competition or price changes and our ability to manage costs
and economic and financial conditions specific to our clients. Quarterly sales
and operating results can be difficult to forecast, even in the short term. Due
to all of the foregoing factors, it is possible that our revenues or operating
results in one or more future quarters will fail to meet or exceed the
expectations of security analysts or investors. In such event, the price of our
common stock would likely be materially adversely affected.
PRICE VOLATILITY - The market price of our common stock could be subject to
significant fluctuations in response to: variations in quarterly operating
results; changes in earnings estimates by securities analysts; any
differences between our reported results and securities analysts'
expectations; general economic, financial and other factors; and market
conditions that can affect the capital markets. In addition, reaction to
announcements made by us or by our competitors, such as new contracts or
service offerings, acquisitions or strategic investments may impact our stock
price.
F-8
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks from foreign currency fluctuations and changes in
interest rates on any borrowings we may have. We currently do not use derivative
financial or commodity instruments.
FOREIGN EXCHANGE. We are exposed to foreign exchange rate fluctuations as the
financial results of our foreign operations are translated into U.S. dollars in
consolidation. As exchange rates vary, these results, when translated, may vary
from expectations and adversely impact our financial position or results of
operations. During the year ended December 31, 2000, approximately 2% of our
total revenues was attributable to foreign operations. CIBER does not enter into
forward exchange contracts as a hedge against foreign currency exchange risk on
transactions denominated in foreign currencies or for speculative or trading
purposes. We believe that our exposure to foreign currency exchange risk at
December 31, 2000 is not material.
INTEREST RATES. We have a $35 million revolving line of credit with a bank.
There were no outstanding borrowings under this bank line of credit at
December 31, 2000. The interest rate on the line of credit is based on LIBOR,
plus 2%. Therefore, as LIBOR fluctuates, we would experience changes in
interest expense related to any outstanding borrowings.
F-9
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
CIBER, Inc.:
We have audited the accompanying consolidated balance sheets of CIBER, Inc. and
subsidiaries as of June 30, 1999, December 31, 1999 and 2000, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the two-year period ended June 30, 1999, the six-month
period ended December 31, 1999 and the year ended December 31, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CIBER, Inc. and
subsidiaries as of June 30, 1999, December 31, 1999 and 2000, and the results of
their operations and their cash flows for each of the years in the two-year
period ended June 30, 1999, the six-month period ended December 31, 1999 and the
year ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
Denver, Colorado
February 8, 2001
F-10
CIBER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS
YEARS ENDED ENDED YEARS ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
IN THOUSANDS, EXCEPT PER SHARE DATA 1998 1999 1999 1999 2000
------------- ------------- ---------------- -------------- ------------
(unaudited)
Consulting services $516,692 $660,384 $341,123 $698,354 $586,481
Other revenues 59,796 59,277 20,877 43,593 35,053
-----------------------------------------------------------------------------
Total revenues 576,488 719,661 362,000 741,947 621,534
-----------------------------------------------------------------------------
Cost of consulting services 332,356 423,131 229,853 458,324 401,359
Cost of other revenues 43,150 40,176 12,239 27,194 20,719
Selling, general and administrative expenses 134,640 157,959 83,929 167,649 158,553
Amortization of intangible assets 3,936 7,520 6,754 12,123 14,032
Goodwill impairment and other charges 4,538 1,535 - - 83,768
-----------------------------------------------------------------------------
Operating income (loss) 57,868 89,340 29,225 76,657 (56,897)
Interest income 1,767 2,640 920 2,230 1,093
Interest expense (232) - (190) (190) (436)
Other income, net - - 778 778 381
-----------------------------------------------------------------------------
Income (loss) before income taxes 59,403 91,980 30,733 79,475 (55,859)
Income tax expense 22,926 37,485 13,090 32,774 10,916
-----------------------------------------------------------------------------
Net income (loss) $36,477 $54,495 $17,643 $46,701 $(66,775)
=============================================================================
Pro forma information (unaudited) (Note 1(k)):
Historical net income $36,477
Pro forma adjustment to income tax expense (2,207)
-------------
Pro forma net income $34,270
=============
Earnings (loss) per share - basic $0.67 $0.98 $0.31 $0.81 $(1.15)
Earnings (loss) per share - diluted $0.64 $0.95 $0.30 $0.80 $(1.15)
Weighted average shares - basic 51,355 55,362 57,345 57,377 57,900
Weighted average shares - diluted 53,843 57,141 58,496 58,727 57,900
See accompanying notes to consolidated financial statements.
F-11
CIBER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
IN THOUSANDS, EXCEPT SHARE DATA 1999 1999 2000
---------------- ------------------ ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 61,951 $ 2,858 $ 19,193
Accounts receivable, net 150,976 139,418 127,217
Prepaid expenses and other current assets 5,602 7,595 5,689
Income taxes refundable - - 2,775
Deferred income taxes 2,915 2,960 2,538
-----------------------------------------------------
Total current assets 221,444 152,831 157,412
-----------------------------------------------------
Property and equipment, at cost 47,997 55,510 55,388
Less accumulated depreciation and amortization (22,866) (26,947) (30,082)
-----------------------------------------------------
Net property and equipment 25,131 28,563 25,306
-----------------------------------------------------
Intangible assets, net 157,012 233,975 137,057
Deferred income taxes 1,694 1,773 3,173
Other assets 3,351 5,426 3,399
-----------------------------------------------------
Total assets $ 408,632 $ 422,568 $ 326,347
=====================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,502 $ 18,102 $ 17,092
Acquisition costs payable 2,098 15,268 3,134
Accrued compensation and payroll taxes 36,845 31,841 24,342
Deferred revenues 3,850 874 528
Other accrued expenses and liabilities 8,020 4,945 8,826
Income taxes payable 7,181 3,751 572
Deferred income taxes - 67 -
-----------------------------------------------------
Total current liabilities 71,496 74,848 54,494
Bank line of credit - 5,355 -
-----------------------------------------------------
Total liabilities 71,496 80,203 54,494
-----------------------------------------------------
Minority interest - 109 836
Contingent redemption value of put options - - 775
Commitments and contingencies
Shareholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares
authorized, no shares issued - - -
Common stock, $0.01 par value, 100,000,000 shares
authorized, 58,933,000, 59,414,000 and 59,579,000 shares
issued 589 594 596
Additional paid-in capital 222,652 230,615 229,732
Retained earnings 122,607 139,312 70,098
Accumulated other comprehensive loss - - (1,470)
Treasury stock, 500,000, 1,717,000 and 2,804,000 shares, at cost (8,712) (28,265) (28,714)
-----------------------------------------------------
Total shareholders' equity 337,136 342,256 270,242
-----------------------------------------------------
Total liabilities and shareholders' equity $ 408,632 $ 422,568 $ 326,347
=====================================================
See accompanying notes to consolidated financial statements.
F-12
CIBER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON STOCK PAID-IN RETAINED COMPREHENSIVE TREASURY SHAREHOLDER'S
IN THOUSANDS SHARES AMOUNT CAPITAL EARNINGS LOSS STOCK EQUITY
------ ------ ------- -------- ---- ----- ------
BALANCES AT JUNE 30, 1997 49,547 $495 $ 73,040 $44,079 $ - $ - $117,614
Note payable paid with stock 51 1 1,105 - - - 1,106
Employee stock purchases and options
exercised 1,407 14 5,752 - - - 5,766
Acquisition consideration 96 1 1,150 - - - 1,151
Immaterial poolings of interests 1,145 11 347 1,834 - - 2,192
Tax benefit from exercise of stock options - - 9,149 - - - 9,149
Termination of S corporation tax status of
merged company - - 3,287 (3,287) - - -
Stock compensation expense 2 - 59 - - - 59
Net income - - - 36,477 - - 36,477
Distributions by merged companies - - - (7,670) - - (7,670)
--------- --------- ----------- ---------- --------------- ---------- --------------
BALANCES AT JUNE 30, 1998 52,248 522 93,889 71,433 - - 165,844
Employee stock purchases and options
exercised 1,435 14 14,738 (3,225) - 3,225 14,752
Acquisition consideration 4,286 43 106,492 (96) - 1,049 107,488
Immaterial pooling of interests 961 10 806 - - - 816
Tax benefit from exercise of stock options - - 5,499 - - - 5,499
Stock compensation expense 3 - 395 - - - 395
Stock options exchanged for compensation - - 833 - - - 833
Net income - - - 54,495 - - 54,495
Purchases of treasury stock - - - - - (12,986) (12,986)
--------- --------- ----------- ---------- --------------- ---------- --------------
BALANCES AT JUNE 30, 1999 58,933 589 222,652 122,607 - (8,712) 337,136
Employee stock purchases and options
exercised 457 4 4,485 (923) - 7,326 10,892
Acquisition consideration - - 1,590 (15) - 9,850 11,425
Tax benefit from exercise of stock options - - 1,664 - - - 1,664
Stock compensation expense 24 1 224 - - - 225
Net income - - - 17,643 - - 17,643
Purchases of treasury stock - - - - - (36,729) (36,729)
--------- --------- ----------- ---------- --------------- ---------- --------------
BALANCES AT DECEMBER 31, 1999 59,414 594 230,615 139,312 - (28,265) 342,256
--------- --------- ----------- ---------- --------------- ---------- --------------
Net loss - - - (66,775) - - (66,775)
Unrealized loss on investments, net of
tax of $353,000 - - - - (529) - (529)
Foreign currency translation - - - - (941) - (941)
--------------
Comprehensive loss (68,245)
Employee stock purchases and options
exercised 160 2 (313) (2,439) - 13,670 10,920
Gain on sale of stock by subsidiary - - 71 - - - 71
Tax benefit from exercise of stock options - - 389 - - - 389
Sales and settlement of put options - - (444) - - - (444)
Contingent liability for put options - - (775) - - - (775)
Stock compensation expense 5 - 189 - - - 189
Purchases of treasury stock - - - - - (14,119) (14,119)
--------- --------- ----------- ---------- --------------- ---------- --------------
BALANCES AT DECEMBER 31, 2000 59,579 $596 $229,732 $70,098 $(1,470) $(28,714) $270,242
========= ========= =========== ========== =============== ========== ==============
See accompanying notes to consolidated financial statements.
F-13
CIBER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS
YEARS ENDED ENDED YEARS ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
IN THOUSANDS 1998 1999 1999 1999 2000
------------------------------------------------------------------
OPERATING ACTIVITIES: (unaudited)
Net income (loss) $36,477 $54,495 $17,643 $46,701 $(66,775)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Goodwill impairment charge - - - - 80,773
Depreciation 5,532 7,590 4,443 8,809 9,190
Amortization of intangible assets 3,936 7,520 6,754 12,123 14,032
Deferred income taxes (4,672) (2,049) (77) 516 (716)
Other, net 48 395 (598) (240) (782)
Changes in operating assets and liabilities,
net of the effect of acquisitions:
Accounts receivable (35,442) (17,789) 17,295 12,953 10,881
Other current and long-term assets (4,454) 416 (3,968) (4,801) (2,103)
Accounts payable (2,072) 1,782 4,420 (896) 850
Accrued compensation and payroll taxes 6,610 9,212 (7,446) (115) (7,045)
Deferred revenues 2,034 (247) (1,760) (1,370) 147
Other accrued expenses and liabilities 3,402 (4,211) (5,782) (9,974) 3,563
Income taxes payable/refundable 14,783 6,252 (2,227) (774) (5,565)
------------------------------------------------------------------
Net cash provided by operating activities 26,182 63,366 28,697 62,932 36,450
------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchases of property and equipment (11,665) (13,972) (7,218) (16,825) (8,474)
Acquisitions, net of cash acquired (351) (26,500) (60,090) (82,452) (16,184)
Repayment of advances to Agilera - - - - 9,908
Collection of note receivable - - - - 2,000
Purchases of investments (905) - - - (463)
Sales of investments 1,695 - - - 2,001
------------------------------------------------------------------
Net cash used in investing activities (11,226) (40,472) (67,308) (99,277) (11,212)
------------------------------------------------------------------
FINANCING ACTIVITIES:
Employee stock purchases and options exercised 5,766 14,752 10,892 19,660 10,920
Sale of stock by subsidiary - - - - 123
Proceeds from sale of put options - - - - 692
Cash settlement of put options - - - - (1,136)
Net (payments) borrowings on bank lines of credit (1,985) - 5,355 5,355 (5,355)
Borrowings on notes payable 247 - - - -
Payments on notes payable (2,650) - - - -
Purchases of treasury stock - (12,986) (36,729) (47,920) (14,119)
Distributions by merged companies (6,300) - - - -
------------------------------------------------------------------
Net cash (used in) provided by financing activities (4,922) 1,766 (20,482) (22,905) (8,875)
------------------------------------------------------------------
Effect of foreign exchange rate changes on cash - - - - (28)
Net increase (decrease) in cash and cash equivalents 10,034 24,660 (59,093) (59,250) 16,335
Cash and cash equivalents, beginning of period 27,257 37,291 61,951 62,108 2,858
------------------------------------------------------------------
Cash and cash equivalents, end of period $37,291 $61,951 $2,858 $ 2,858 $19,193
==================================================================
See accompanying notes to consolidated financial statements.
F-14
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) NATURE OF OPERATIONS
CIBER, Inc. and its subsidiaries DigiTerra, Inc., Solution Partners B.V.,
Waterstone, Inc. and Enspherics, Inc. provide information technology ("IT")
system integration consulting and other services and to a lesser extent, resell
certain hardware and software products. Our clients consist primarily of Fortune
2000 and middle market companies across most major industries and governmental
agencies. We operate from branch offices across the United States, plus offices
in Canada and the Netherlands. At December 31, 2000, we had approximately 5,000
employees. We operate our business as follows: CIBER Operations, DigiTerra,
Solution Partners, Waterstone and Enspherics. CIBER Operations refers to the
branch offices doing business under the CIBER name. CIBER Operations provides a
wide range of IT services and products including project execution, supplemental
IT staffing and consulting in leading-edge practice areas such as IT
architecture and strategy, business intelligence/customer loyalty, Internet
solutions, network infrastructure and security, wireless integration and IT
outsourcing. DigiTerra provides package software implementation services ranging
from enterprise resource planning (ERP) to supply chain optimization, customer
relationship management and e-business components. DigiTerra works with software
from PeopleSoft, J.D. Edwards, Oracle, SAP, Lawson, Siebel, Ariba, Rightworks
and Commerce One, among others. DigiTerra also provides related hardware sizing
and procurement services as an authorized remarketer of certain computer
hardware. Solution Partners, located in the Netherlands, provides SAP software
implementation consulting and e-business solutions in custom environments.
Waterstone (formerly known as Neovation, Inc.) was formed in 2000 by combining
our Interactive Papyrus, Inc. subsidiary with the business operations we
acquired from Waterstone Consulting, Inc. Waterstone provides strategic,
technical and creative services including e-business planning, assessments and
solutions, customer relationship management, supply chain management, web
content development and design and custom integration services. Enspherics
provides custom designed IT security solutions to clients who operate in
high-risk environments.
(b) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of CIBER, Inc. and
all wholly owned and majority owned subsidiaries. All material intercompany
balances and transactions have been eliminated. Agilera, Inc. was consolidated
with us through December 31, 1999 (see Note 5).
(c) CHANGE IN FISCAL YEAR END AND INTERIM FINANCIAL INFORMATION
We changed our year end to December 31 from June 30, effective December 31,
1999.
Unaudited consolidated statements of operations and cash flows for the year
ended December 31, 1999 have been included in the accompanying consolidated
financial statements for comparative purposes.
(d) CASH EQUIVALENTS
All highly liquid investments purchased with a maturity of three months or less
are considered to be cash equivalents. Cash equivalents consist of money market
funds of $19,601,000 and investment grade commercial paper of $33,213,000 at
June 30, 1999, and money market funds of $11,752,000 at December 31, 2000. There
were no cash equivalents at December 31, 1999.
(e) INVESTMENTS
Investments in marketable equity securities are classified as available-for-sale
and are recorded at fair market value, which is determined based on quoted
market prices. Investments are included in prepaid expenses and other current
assets on the consolidated balance sheet. The net unrealized gain or loss, net
of tax, is included in accumulated other comprehensive loss on the consolidated
balance sheet. Realized gains and losses on the
F-15
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
sale of investments are based on average cost and are included in other
income in the consolidated statements of operations.
(f) PROPERTY AND EQUIPMENT
Property and equipment, which consists primarily of computer equipment, software
and furniture, is stated at cost. Depreciation is computed using straight-line
and accelerated methods over the estimated useful lives, ranging primarily from
three to seven years.
(g) COSTS OF DEVELOPING COMPUTER SOFTWARE FOR INTERNAL USE
Direct costs of time and material incurred for the development of software for
internal use are capitalized as property and equipment. These costs are
depreciated using the straight-line method over the estimated useful life of the
software, ranging from three to seven years.
(h) INTANGIBLE ASSETS
Intangible assets consist of goodwill and noncompete agreements. Goodwill is
amortized over 6 to 20 years. Noncompete agreements are amortized over the terms
of the contracts, which range from one to three years. Amortization is recorded
using the straight-line method.
Intangible assets are reviewed for impairment when events or changes in
circumstances indicate the carrying amount of intangible assets may not be
recoverable. Conditions that may trigger an impairment assessment include a
history of operating losses of the related business, a significant reduction in
the revenues of the related business, and a loss of a major customer, among
others. An impairment would be considered to exist when the estimated
undiscounted future cash flows expected to result from the use of the intangible
asset are less than the carrying amount of the asset. Future cash flows are
estimated at the lowest business unit level which includes all of the operations
that directly benefit from the intangible asset. This level may be a practice,
branch office, region or subsidiary. If the acquired business has been fully
integrated into operations, enterprise-wide goodwill would be evaluated at the
consolidated level. Estimated cash flows at the business unit level are net of
taxes and do not include any allocation of interest or other corporate level
items. Impairment, if any, is measured based on forecasted future discounted
operating cash flows. Considerable management judgment is necessary to estimate
future cash flows. Accordingly, actual results could vary significantly.
(i) REVENUE RECOGNITION
We provide consulting services under time-and-material and fixed-priced
contracts. The majority of our service revenues are recognized under
time-and-material contracts as hours and costs are incurred. Revenues include
reimbursable expenses separately billed to clients. For fixed-priced contracts,
revenue is recognized on the basis of the estimated percentage of completion
based on costs incurred relative to total estimated costs. The cumulative impact
of any revisions in estimated revenues and costs are recognized in the period in
which they become known. Losses, if any, on fixed-price contracts are recognized
when the loss is determined. Under certain national IT services contracts, we
are required by our customer to act as a billing agent for other service
providers to such client. We recognize the net fee under these arrangements as
revenue.
Other revenues include sales of computer hardware products, commissions on
computer product sales and software license and maintenance fees. Revenues
related to the sale of computer products are recognized when the products are
shipped. Where we are the remarketer of certain computer products, commission
revenue is recognized when the products are drop-shipped from the vendor to the
customer. On September 30, 1999, we sold our software business. Software license
fee revenues were recognized over the period of the software implementation and
revenues from maintenance agreements were recognized ratably over the
maintenance period.
F-16
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Unbilled accounts receivable represent amounts recognized as revenue based on
services performed in advance of billings in accordance with contract terms.
Deferred revenues consist of amounts received or billed in advance of services
to be provided.
(j) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. A
tax benefit or expense is recognized for the net change in the deferred tax
asset or liability during the period. The effect on deferred tax assets and
liabilities due to a change in tax rates is recognized in income tax expense in
the period that includes the enactment date.
(k) PRO FORMA NET INCOME
Pro forma net income has been presented for the year ended June 30, 1998 because
certain companies that merged with us in business combinations accounted for as
poolings of interests were S corporations and generally not subject to income
taxes. Accordingly, no provision for income taxes has been included in the
historical consolidated financial statements for the operations of these
companies prior to their merger with us. The related net deferred tax asset or
liability of these companies at the date of their respective mergers with us was
recorded as income tax benefit or expense. The pro forma adjustment to income
taxes has been computed as if the merged companies had been taxable entities
subject to income taxes for all periods prior to their merger with us at the
marginal rates applicable in such periods.
(l) STOCK-BASED COMPENSATION
As permitted by Statement of Financial Accounting Standards No. 123 ("SFAS
123"), we account for stock-based employee compensation in accordance with the
provisions of Accounting Principles Board Opinion 25, and related
interpretations, including FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation (an Interpretation of APB Opinion No.
25)", issued in March 2000. We measure stock-based compensation cost as the
excess, if any, of the quoted market price of CIBER common stock (or the
estimated fair value of subsidiary stock) at the grant date over the amount the
employee must pay for the stock. We generally grant stock options at fair market
value at the date of grant. The pro forma disclosures, as if the fair-value
based method defined in SFAS 123 had been applied, are provided in Note 15.
(m) MINORITY INTEREST
At December 31, 1999, we owned 78% of Interactive Papyrus, Inc. In April
2000, we contributed to Interactive Papyrus the business operations and net
assets that we acquired from Waterstone Consulting, Inc. and increased our
ownership to 88%. We subsequently changed its name to Waterstone, Inc. In
January 2001, we purchased most of the shares that represented the minority
interest in Waterstone for $1.7 million. As a result, in 2001, we will record
goodwill of $792,000, which will be amortized over 10 years. This transaction
increased our ownership in Waterstone to 99%. On November 27, 2000, we
acquired 51% of Enspherics, Inc. The minority stockholders' proportionate
share of the equity of these subsidiaries is reflected as minority interest
in the consolidated balance sheet. The minority stockholders' proportionate
share of the net income (loss) of these subsidiaries is included in other
income, net in the consolidated statement of operations. The minority
interest in the net income of subsidiaries was $4,000 for the six months
ended December 31, 1999. For the year ended December 31, 2000, the minority
interest in the net loss of subsidiaries was $467,000.
(n) COMPREHENSIVE LOSS
Comprehensive loss includes changes in the balances of items that are reported
directly as a separate component of shareholders' equity in the consolidated
balance sheet. Comprehensive loss includes net income (loss) plus changes in the
net unrealized gain/loss on investments and the cumulative foreign currency
translation adjustment.
F-17
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(o) FOREIGN CURRENCY TRANSLATION
The assets and liabilities of our foreign subsidiaries are translated into U.S.
dollars at current exchange rates and revenues and expenses are translated at
average exchange rates for the period. The resulting cumulative translation
adjustment is included in accumulated other comprehensive loss on the
consolidated balance sheet. Foreign currency transaction gains and losses have
not been significant and are included in the results of operations as incurred.
(p) SUBSIDIARY STOCK SALES
Gains and losses on sales of stock by our subsidiaries are recognized directly
in shareholders' equity through an increase or decrease to additional paid-in
capital in the period in which the transaction occurs.
(q) ESTIMATES
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. These
estimates and assumptions relate to estimates of collectibility of accounts
receivable, the realizability of goodwill, the costs to complete fixed-priced
projects, certain accrued liabilities and other factors.
(r) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of our financial instruments approximates our carrying amounts
due to the relatively short periods to maturity of the instruments and/or
variable interest rates of the instruments which approximate current market
rates.
(s) RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current year
presentation.
(2) GOODWILL IMPAIRMENT AND OTHER CHARGES
Goodwill impairment and other charges are comprised of the following (in
thousands):
YEARS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 1999 2000
----------------- ---------------- -----------------
Goodwill impairment $ - $ - $ 80,773
Employee severance costs - - 1,300
Asset write-down - - 975
DigiTerra professional fees - - 720
Merger costs for poolings of interests 4,538 1,535 -
----------------- ---------------- -----------------
$ 4,538 $ 1,535 $ 83,768
================= ================ =================
During the quarter ended September 30, 2000, we recorded a goodwill impairment
charge of $80.8 million to write-down the goodwill associated with certain
acquisitions. These acquisitions include: Business Impact Systems, Inc. ("BIS"),
Integration Software Consultants, Inc. ("ISC"), York & Associates, Inc.,
Interactive Papyrus, Inc. and Paragon Solutions, Inc. Of the total goodwill
impairment charge, $53.2 million relates to CIBER Operations, $22.2 million
relates to DigiTerra and $5.4 million relates to Waterstone. These businesses
were acquired at a time when the value of IT services companies was much higher
than at the time of the impairment charge. In addition, approximately 88% of the
goodwill impairment charge related to businesses acquired for consideration paid
100% in our stock. Stock consideration typically involves a premium over cash
consideration. These acquired operations experienced a decrease in the demand
for their
F-18
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
services as post Year 2000 IT spending of many companies decreased. In
addition, in the spring of 2000, the IT services requirements of dot.com
companies decreased significantly. This has led to greater competition within
the IT services industry for the remaining business, and as a result,
revenues, cash flows and expected future growth rates of these operations
have decreased.
Due to the significance of the change in conditions, we performed an evaluation
of the recoverability of the goodwill related to these operations in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." Because the estimated future undiscounted cash flows of these operations
were less than the carrying value of the related goodwill, an impairment charge
was required. The impairment charge represents the amount required to write-down
this goodwill to our best estimate of these operations' future discounted cash
flows.
In addition, we reduced the remaining goodwill amortization periods for BIS and
ISC to 10 years and 14 years, respectively. This reduction resulted in
additional goodwill amortization of $330,000 during the year ended December 31,
2000, which increased the net loss by the same amount.
In March 2000, we announced our intent to spin-off our DigiTerra subsidiary to
our shareholders, subject to receiving Board approval and a favorable tax
ruling, as well as favorable market conditions. We expect to complete the
spin-off of DigiTerra in 2001, however, there can be no assurance that such
transaction will be completed. As a result of our planned separation of
DigiTerra, we have incurred certain charges for an asset write-down as well as
professional fees.
Merger costs represent professional fees, primarily broker fees, associated with
certain pooling of interests business combinations.
(3) ACQUISITIONS
We have acquired certain businesses, as set forth below. Each of these
acquisitions has been accounted for under the purchase method of accounting for
business combinations and accordingly, the accompanying consolidated financial
statements include the results of operations of each acquired business since the
date of acquisition.
ACQUISITION FROM JANUARY 1, 2000 THROUGH DECEMBER 31, 2000
ENSPHERICS, INC. ("ENSPHERICS") - On November 27, 2000, we acquired 51% of the
outstanding capital stock of Enspherics for $2.5 million. Per the terms of the
agreement, additional consideration may be paid based on Enspherics achieving
certain performance objectives. We have recorded initial goodwill of $2.5
million related to this acquisition, which will be amortized over 10 years. Any
additional consideration paid will be recorded as additional goodwill.
Enspherics, located in Greenwood Village, Colorado, provides custom designed IT
security solutions to clients who operate in high-risk environments.
ACQUISITIONS FROM JULY 1, 1999 THROUGH DECEMBER 31, 1999
SOLUTION PARTNERS B.V. ("SOLUTION PARTNERS") - On December 2, 1999, we acquired
all of the outstanding capital stock of Solution Partners for initial
consideration of $14.1 million. As part of the purchase price, we issued 171,580
shares of our common stock with a value of $4.0 million. In 2000, we agreed to
pay additional consideration of approximately $1.9 million, of which $1.0
million was paid in 2001 and the remainder is payable in January 2002. The
additional consideration has been recorded as goodwill and as a result, we have
recorded total goodwill of $15.3 million related to this acquisition, which is
being amortized over 20 years. Solution Partners, located in Eindhoven, the
Netherlands, provides e-business and supply chain solutions using SAP software
to companies throughout Europe.
F-19
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
INTERACTIVE PAPYRUS, INC. ("IPI") - On December 2, 1999, we acquired
approximately 78% of the outstanding capital stock of IPI for $6.2 million. As
part of the purchase price, we issued 22,500 shares of our common stock with a
value of $450,000. We originally recorded goodwill of $5.7 million related to
this acquisition, which was being amortized over 6 years. In 2000, we reduced
the goodwill associated with IPI to $924,000 (see Note 2). IPI, located in
Colorado Springs, Colorado, developed interactive web sites to build online
business ventures.
SOFTWARE DESIGN CONCEPTS, INC. ("SDC") - On November 15, 1999, we acquired
certain assets, liabilities and all of the business operations of SDC for $9.0
million in cash and the issuance of 160,378 shares of our common stock with a
value of $3.0 million. The aggregate purchase price was $12.0 million. We have
recorded goodwill of $11.5 million related to this acquisition, which is being
amortized over 20 years. SDC, located in Philadelphia, Pennsylvania, provided
software development and consulting services similar to us.
WATERSTONE CONSULTING, INC. ("WATERSTONE") - On October 29, 1999, we acquired
certain assets, liabilities and all of the business operations of Waterstone for
$30.7 million. As part of the purchase price, we issued 243,347 shares of our
common stock with a value of $4.0 million. We have recorded goodwill of $29.8
million related to this acquisition, which is being amortized over 20 years.
Waterstone, located in Chicago, Illinois, provided consulting services
specializing in supply chain and customer relationship management solutions.
THE ISADORE GROUP, INC. ("ISADORE") - On October 15, 1999, we acquired certain
assets, liabilities and all of the business operations of Isadore for $18.3
million. Additionally, the terms of the purchase provide for additional
consideration of up to $10.4 million based on certain revenue earned during the
3-year period ending December 31, 2002. We have recorded goodwill of $17.5
million related to this acquisition, which is being amortized over 20 years. Any
additional consideration paid will be accounted for as additional goodwill.
Isadore, located in Phoenix, Arizona, provided PeopleSoft higher education
consulting services.
ACQUISITIONS FROM JULY 1, 1998 THROUGH JUNE 30, 1999
DIGITAL SOFTWARE CORPORATION ("DSC") - On April 30, 1999, we acquired certain
assets, liabilities and all of the business operations of DSC for $6.9 million
in cash. We have recorded goodwill of $7.0 million related to this acquisition,
which is being amortized over 15 years. DSC, located in Aurora, Colorado,
provided software engineering services similar to us.
COMPAID CONSULTING SERVICES, INC. ("COMPAID") - On March 2, 1999, we acquired
all of the outstanding capital stock of Compaid for $10.3 million. We have
recorded goodwill of $8.0 million related to this acquisition, which is being
amortized over 15 years. Compaid, headquartered in Atlanta, Georgia, provided
services similar to us.
BUSINESS IMPACT SYSTEMS, INC. ("BIS") - On February 26, 1999, we issued
2,401,028 shares of our common stock and granted options for 3,634 shares of our
common stock (at an aggregate purchase price of $40,000) in exchange for
substantially all of the outstanding assets and liabilities of BIS. The
aggregate purchase price was $62.2 million, including acquisition costs. We had
originally recorded goodwill of $55.6 million related to this acquisition, which
was being amortized over 20 years. In 2000, we reduced the goodwill related to
BIS to $9.8 million and reduced the remaining goodwill amortization period to 10
years (see Note 2). BIS, headquartered in Herndon, Virginia, provided enterprise
integration services.
PARADYME HR TECHNOLOGIES CORPORATION ("PARADYME HRT") - On February 5, 1999, we
acquired certain assets, liabilities and all of the business operations of
Paradyme HRT for initial consideration of $5.0 million. We paid additional
consideration of $2.2 million during 2000 and additional consideration of
$816,000 is to be paid in 2001. Paradyme HRT, located in Columbia, South
Carolina, provided ERP outsourcing services and HR/Payroll business services.
The acquired business initially operated as CIBER Enterprise Outsourcing, Inc.
which became Agilera, Inc. (see Note 5).
F-20
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
INTEGRATION SOFTWARE CONSULTANTS, INC. ("ISC") - On February 2, 1999, we issued
1,280,289 shares of our common stock in exchange for all of the outstanding
common stock of ISC. The aggregate purchase price was $34.0 million, including
acquisition costs. We had originally recorded goodwill of $31.9 million related
to this acquisition, which was being amortized over 20 years. In 2000, we
reduced the goodwill related to ISC to $11.7 million and reduced the remaining
goodwill amortization period to 14 years (see Note 2). ISC, headquartered in
Philadelphia, Pennsylvania, provided SAP software implementation services.
YORK & ASSOCIATES, INC. ("YORK") - On January 29, 1999, we issued 548,857 shares
of our common stock and granted options for 30,643 shares of our common stock
(at an aggregate exercise price of $159,000) in exchange for substantially all
of the outstanding assets and liabilities of York. The aggregate purchase price
was $14.5 million, including acquisition costs. We had originally recorded
goodwill of $12.2 million related to this acquisition, which was being amortized
over 20 years. In 2000, we wrote-off all of the goodwill related to York because
we exited the primary business for which York was acquired (see Note 2).
PARAGON SOLUTIONS, INC. ("PARAGON") - On January 8, 1999, we acquired certain
assets, liabilities and all of the business operations of Paragon for $4.4
million. The original terms of the purchase provided for additional
consideration of up to $3.3 million based on certain performance criteria during
the 12-month periods ending December 31, 1999 and 2000. In 2000, we paid $2.5
million in final settlement of the purchase agreement. We had originally
recorded total goodwill of $6.8 million related to this acquisition, which was
being amortized over 15 years. In 2000, we reduced the goodwill associated with
Paragon to $1.9 million (see Note 2). Paragon, located in Pittsburgh,
Pennsylvania, provided Oracle software implementation services.
THE DORADUS CORPORATION ("DORADUS") - On November 15, 1998, we acquired all
of the outstanding capital stock of Doradus for $4.1 million. Additional
consideration of $288,000 was paid in during the year ended December 31,
1999. The additional consideration was accounted for as additional goodwill.
We have recorded total goodwill of $4.2 million related to this acquisition,
which is being amortized over 15 years. Doradus, located in Minneapolis,
Minnesota, provided IT consulting services similar to us.
(4) POOLINGS OF INTERESTS
We completed certain business combinations accounted for as poolings of
interests, as set forth below. Our financial statements have been restated for
all periods prior to each pooling of interests to include the accounts of the
merged company.
YEAR ENDED JUNE 30, 1999
THE CUSHING GROUP, INC. ("CUSHING") - On August 31, 1998, we issued 961,135
shares of our common stock in connection with the merger of Cushing.
EJR COMPUTER ASSOCIATES, INC. ("EJR") - On August 11, 1998, we issued 1,155,516
shares of our common stock in connection with the merger of EJR.
YEAR ENDED JUNE 30, 1998
THE SUMMIT GROUP, INC. ("SUMMIT") - On May 4, 1998, we issued 4,262,860 shares
of our common stock in connection with the merger of Summit.
STEP CONSULTING, INC. ("STEP") - On April 30, 1998, we issued 131,242 shares of
our common stock in connection with the merger of Step.
COMPUTER RESOURCE ASSOCIATES, INC. ("CRA") - On March 2, 1998, we issued 530,910
shares of our common stock in connection with the merger of CRA.
F-21
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
ADVANCED SYSTEMS ENGINEERING, INC. ("ASE") - On March 2, 1998, we issued 382,602
shares of our common stock in connection with the merger of ASE.
TECHWARE CONSULTING, INC. ("TECHWARE") - On November 26, 1997, we issued 747,836
shares of our common stock in connection with the merger of Techware.
FINANCIAL DYNAMICS, INC. ("FDI") - On November 24, 1997, we issued 1,128,054
shares of our common stock and granted options for 97,220 shares of our common
stock (at an aggregate exercise price of $217,000) in connection with the merger
of FDI.
THE CONSTELL GROUP, INC. ("CONSTELL") - On October 24, 1997, we issued 500,000
shares of our common stock in connection with the merger of Constell.
BAILEY & QUINN, INC. ("BQI") - On October 22, 1997, we issued approximately
148,000 shares of our common stock in connection with the merger of BQI.
SOFTWAREXPRESS, INC. D/B/A RELIANT INTEGRATION SERVICES, INC. ("RELIANT") - On
August 21, 1997, we issued 1,183,276 shares of our common stock in connection
with the merger of Reliant.
KCM COMPUTER CONSULTING, INC. ("KCM") - On July 18, 1997, we issued 861,700
shares of our common stock in connection with the merger of KCM.
(5) AGILERA INVESTMENT
In March 2000, our wholly owned subsidiary, Agilera, Inc. (formerly named CIBER
Enterprise Outsourcing, Inc.), sold $45 million of convertible preferred stock
to new investors. As a result of participating rights obtained by the preferred
stockholders in connection with their investment, we retained a 41% voting
interest in Agilera. Accordingly, effective January 1, 2000, for financial
reporting purposes, we no longer consolidate the results and accounts of Agilera
and account for our interest in Agilera using the equity method of accounting.
In connection with the preferred stock sale, Agilera paid us $9.9 million in
repayment of our advances to Agilera as of December 31, 1999, reducing our
historical cost basis in our remaining ownership in Agilera to zero. Since the
basis of our investment in Agilera is zero, beginning January 1, 2000 we do not
record our proportionate share of Agilera's net losses. Agilera provides
enterprise application hosting or application service provider ("ASP") services.
In August 2000, Agilera obtained additional equity financing that reduced our
voting interest to 24%. In January 2001, our voting interest in Agilera has been
reduced to approximately 19% as a result of an Agilera business combination.
We provide software implementation and other services to Agilera as a
subcontractor under certain Agilera customer contracts. We have recorded revenue
of $5,986,000 related to these services during the year ended December 31, 2000.
(6) SALE OF LOGISTICSPRO
On September 30, 1999, we sold our LogisticsPRO software business for $2.0
million resulting in a gain of $827,000 that is included in other income. The
after-tax gain was $496,000 or $.01 per diluted share. As consideration, we
received a $2.0 million, 8% promissory note that was paid in full in September
2000. The software business was sold to an entity owned by the management of the
LogisticsPRO business as well as two non-executive officers of DigiTerra.
F-22
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(7) EARNINGS (LOSS) PER SHARE
The computation of earnings (loss) per share - basic and diluted is as follows
(in thousands, except per share amounts):
SIX MONTHS
YEARS ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 2000
------------ ----------- --------------- ---------------
Numerator:
Pro forma net income $ 34,270
Net income (loss) $ 54,495 $17,643 $(66,775)
Denominator:
Basic weighted average shares outstanding 51,355 55,362 57,345 57,900
Dilutive effect of employee stock options 2,488 1,779 1,151 -
------------ ----------- --------------- ---------------
Diluted weighted average shares outstanding 53,843 57,141 58,496 57,900
============ =========== =============== ===============
Earnings (loss) per share - basic $0.67 $0.98 $0.31 $(1.15)
Earnings (loss) per share - diluted $0.64 $0.95 $0.30 $(1.15)
Loss per share - diluted for the year ended December 31, 2000 excludes common
stock equivalents because the effect of their inclusion would be anti-dilutive,
or would decrease the reported loss per share. The dilutive common equivalent
shares for the year ended December 31, 2000 were 876,000, had we reported net
income. In addition, the number of antidilutive stock options (options whose
exercise price is greater than the average CIBER stock price during the period)
omitted from the computation of weighted average shares - diluted was 1,182,000,
2,316,000 and 4,175,000 for the year ended June 30, 1999, the six months ended
December 31, 1999 and the year ended December 31, 2000, respectively.
(8) ACCOUNTS RECEIVABLE
Accounts receivable consist of the following (in thousands):
JUNE 30, DECEMBER 31,
1999 1999 2000
------------- -------------- --------------
Billed accounts receivable $ 129,547 $ 116,003 $ 105,193
Unbilled accounts receivable 24,773 26,058 24,087
------------- -------------- --------------
154,320 142,061 129,280
Less allowance for doubtful accounts (3,344) (2,643) (2,063)
------------- -------------- --------------
$ 150,976 $ 139,418 $ 127,217
============= ============== ==============
The activity in the allowance for doubtful accounts consist of the following (in
thousands):
ADDITIONS
--------------------------
BALANCE AT CHARGE BALANCE AT
BEGINNING TO COST AND DEDUCTIONS END
OF PERIOD EXPENSE OTHER (1) (WRITE-OFFS) OF PERIOD
---------- ----------- --------- ------------ ----------
Year ended June 30, 1998 $ 857 $ 2,409 $ 130 $ (886) $ 2,510
Year ended June 30, 1999 2,510 3,312 381 (2,859) 3,344
Six months ended December 31, 1999 3,344 1,784 4 (2,489) 2,643
Year ended December 31, 2000 2,643 5,019 6 (5,605) 2,063
(1) Represents additions due to business combinations accounted for as purchases
and immaterial poolings of interests.
F-23
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(9) INVESTMENTS
Investments (which are included in prepaid expenses and other current assets)
consist of the following at December 31, 2000 (in thousands):
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------------- --------------- --------------- ---------------
Equity securities $1,398 $12 $(895) $ 515
The following summarizes gains and losses from the sale of investments for the
year ended December 31, 2000 (in thousands):
Gross realized gains $564
Gross realized losses $(60)
In 2000, we purchased 134,400 shares of Merrill Lynch & Co., Inc. Structured
Yield Product Exchangeable for Stock ("STRYPES"), payable with shares of
common stock of CIBER, Inc. On February 1, 2001, we received 285,044 shares
of our common stock upon the maturity of the STRYPES. We have recorded these
shares as treasury stock at December 31, 2000, at a cost of $1,534,000. The
CIBER, Inc. common stock delivered by Merrill Lynch & Co. in settlement of
the STRYPES was purchased by Merrill Lynch & Co. from a trust controlled by
Bobby G. Stevenson, our Chairman, pursuant to a forward purchase contract
entered into in January 1998.
(10) PROPERTY AND EQUIPMENT
Property and equipment consist of the following (in thousands):
JUNE 30, DECEMBER 31,
1999 1999 2000
-------------- --------------- --------------
Computer equipment and software $ 32,499 $ 38,978 $ 38,946
Furniture and fixtures 11,187 11,557 11,447
Leaseholds and other 4,311 4,975 4,995
-------------- --------------- --------------
47,997 55,510 55,388
Less accumulated depreciation (22,866) (26,947) (30,082)
-------------- --------------- --------------
$ 25,131 $ 28,563 $ 25,306
============== =============== ==============
(11) INTANGIBLE ASSETS
Intangible assets consist of the following (in thousands):
JUNE 30, DECEMBER 31,
1999 1999 2000 (1)
---------------- ---------------- ----------------
Goodwill $ 167,019 $ 250,468 $ 167,331
Noncompete agreements 7,266 7,534 7,517
---------------- ---------------- ----------------
174,285 258,002 174,848
Less accumulated amortization (17,273) (24,027) (37,791)
---------------- ---------------- ----------------
$ 157,012 $ 233,975 $ 137,057
================ ================ ================
(1) As discussed in Note 2, during 2000, we reduced the value of certain
goodwill by $80,773,000.
F-24
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(12) REVOLVING LINE OF CREDIT
We have a $35 million unsecured revolving line of credit with a bank. There were
no outstanding borrowings under this bank line of credit at December 31, 2000
and June 30, 1999. At December 31, 1999, we had $5,355,000 outstanding under
this line of credit, which was classified as a long-term liability as the
maturity date was more than 12 months into the future. Outstanding borrowings
bear interest at the three-month London Interbank Offered Rate ("LIBOR") plus 2%
(8.40% at December 31, 2000). The credit agreement requires a commitment fee of
0.225% per annum on any unused portion of the line of credit up to $20 million.
The credit agreement expires on July 1, 2001. The terms and conditions of the
credit agreement include several covenants, including those whereby we agree to
the maintenance of certain net worth and debt service coverage ratios, among
other things. Amounts advanced under the line of credit can be used to
consummate an acquisition and may be required by the bank to be converted into a
five-year term note payable in equal amounts of interest and principal. In such
event, the line of credit would be reduced by the amount of the term note.
(13) LEASES
We have noncancelable operating leases for office space. Rental expense for
operating leases totaled $8,636,000, $10,730,000, $6,218,000 and $12,106,000 for
the years ended June 30, 1998 and 1999, the six months ended December 31, 1999
and the year ended December 31, 2000, respectively.
Future minimum lease payments as of December 31, 2000 are (in thousands):
Year ending December 31:
2001 $ 11,099
2002 9,772
2003 7,845
2004 4,550
2005 2,393
Thereafter 1,351
-------------
Total minimum lease payments $ 37,010
=============
(14) INCOME TAXES
Income tax expense (benefit) consists of the following (in thousands):
SIX MONTHS
YEARS ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 2000
--------------- --------------- --------------- ---------------
Current:
Federal $ 23,190 $ 34,005 $ 11,082 $ 8,211
State and local 4,005 5,297 1,829 2,157
Foreign 403 232 256 1,264
--------------- --------------- --------------- ---------------
27,598 39,534 13,167 11,632
--------------- --------------- --------------- ---------------
Deferred:
Federal (3,988) (1,773) (66) (582)
State and local (684) (276) (11) (113)
Foreign - - - (21)
--------------- --------------- --------------- ---------------
(4,672) (2,049) (77) (716)
--------------- --------------- --------------- ---------------
Income tax expense $ 22,926 $ 37,485 $ 13,090 $10,916
=============== =============== =============== ===============
F-25
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Income tax expense differs from the amounts computed by applying the statutory
U.S. federal income tax rate to income before income taxes as a result of the
following (in thousands):
SIX MONTHS
YEARS ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 2000
-------------- --------------- ---------------- ----------------
Income tax expense (benefit) at the federal
statutory rate of 35% $ 20,791 $ 32,193 $10,757 $(19,551)
Increase (decrease) resulting from:
State and local income taxes, net of federal
income tax benefit 2,152 3,263 1,182 1,329
Nondeductible U.S. goodwill amortization - 1,008 1,114 1,860
Nondeductible goodwill write-down - - - 26,752
Nondeductible merger costs 1,540 537 - -
S corporation income and change in tax
status of merged companies (1,703) - - -
Other 146 484 37 526
-------------- --------------- ---------------- ----------------
Income tax expense $ 22,926 $ 37,485 $13,090 $ 10,916
============== =============== ================ ================
The components of the net deferred tax asset or liability are as follows (in
thousands):
JUNE 30, DECEMBER 31,
1999 1999 2000
-----------------------------------------
Deferred tax assets:
Intangible assets, due to differences in amortization
periods $ 3,272 $ 3,481 $ 5,213
Accrued expenses, not currently tax deductible 3,008 2,825 2,413
Investments - - 353
Other 1,688 577 110
-----------------------------------------
7,968 6,883 8,089
Deferred tax liabilities:
Property and equipment (1,559) (1,527) (2,040)
Accounts receivable (1,800) (690) (239)
Other - - (99)
-----------------------------------------
Net deferred tax asset $ 4,609 $ 4,666 $ 5,711
=========================================
Balance sheet classification of deferred tax asset (liability):
Deferred tax asset - current $ 2,915 $ 2,960 $ 2,538
Deferred tax asset - long term 1,694 1,773 3,173
Deferred tax liability - current - (67) -
-----------------------------------------
Net deferred tax asset $ 4,609 $ 4,666 $ 5,711
=========================================
Based on our evaluation of current and anticipated future taxable income, we
believe sufficient taxable income will be generated to realize the deferred tax
assets.
F-26
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(15) STOCK-BASED PLANS
Stock-based compensation plans are described below.
EMPLOYEES' STOCK OPTION PLAN - We have a stock option plan for employees and up
to 10,500,000 shares of CIBER, Inc. common stock are authorized for issuance
under this plan. At December 31, 2000, 1,087,000 options were available for
future grants. The plan administrators may grant to officers, employees and
consultants, restricted stock, stock options, performance bonuses or any
combination thereof. The Compensation Committee of the Board of Directors
determines the number and nature of awards. Options become exercisable as
determined at the date of grant by the Board of Directors and expire within 10
years from the date of grant.
1989 STOCK OPTION PLAN - We established a stock option plan in 1989 that was
discontinued during 1994. The options expire twenty years after the date of
grant through 2013. At December 31, 2000, options for 859,000 shares were
outstanding and vested at an average exercise price of $0.27.
DIRECTORS' STOCK OPTION PLAN - Up to 200,000 shares of CIBER, Inc. common stock
are authorized for issuance to non-employee, non-affiliate directors under this
plan. Such stock options are non-discretionary and granted annually at the fair
market value of our common stock on the date of grant. The number of options
granted annually is fixed by the plan. Options expire 10 years from the date of
grant.
At December 31, 2000, there were 9,098,000 shares of CIBER, Inc. common stock
reserved for future issuance under our stock option plans.
DIRECTORS' STOCK COMPENSATION PLAN - A total of 50,000 shares of CIBER, Inc.
common stock are authorized for issuance to non-employee directors under this
plan, of which 10,214 shares have been issued through December 31, 2000. Each
non-employee director is issued shares having a fair market value of
approximately $2,500 for attendance at each meeting of our Board of Directors.
During the years ended June 30, 1998 and 1999, the six months ended December 31,
1999 and the year ended December 31, 2000, we issued 1,233, 1,980, 1,445 and
3,892 shares, respectively, of common stock under this plan.
STOCK OPTION EXCHANGE PROGRAM - We offered each employee of our DigiTerra
subsidiary the option to cancel their outstanding CIBER, Inc. stock options in
exchange for options to be issued under a DigiTerra stock option plan on or
about July 5, 2001, with an exercise price equal to the fair market value on the
date of grant. DigiTerra's plan is not yet finalized, but is expected to have
similar terms as our Employees' Stock Option Plan. Under this exchange program,
on January 4, 2001, DigiTerra employees cancelled 1,079,000 options at an
average price of $18.55. Of these cancelled options, 409,000 were exercisable at
December 31, 2000.
On September 1, 1998, our Board of Directors authorized a repricing program for
non-executive employees who were originally granted options under our Employees'
Stock Option Plan from March 1, 1998 to August 31, 1998 at exercise prices
ranging from $28.88 to $38.00 that repriced all of these outstanding stock
options to an exercise price of $27.06 per share. Options to purchase 537,050
shares of common stock were repriced. On October 9, 1998, our Board of Directors
authorized another repricing program for non-executive employees who were
originally granted options under our Employees' Stock Option Plan on October 1,
1998 at an exercise price of $20.13 that repriced all of these outstanding stock
options to an exercise price of $16.00 per share. Options to purchase 71,200
shares of common stock were repriced. All of the repriced options follow the
vesting schedule of the original options granted.
On October 9, 1998, our Board of Directors authorized a program which allowed
certain directors, who were originally granted options under the Directors'
Stock Option Plan from October 1, 1997 to September 30, 1998 at exercise prices
ranging from $21.53 to $40.25, to cancel these stock options and replace them
with options under the Employees' Stock Option Plan at an exercise price of
$16.00 per share. Options to purchase 48,000 shares of common stock were
replaced.
F-27
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the status of the CIBER, Inc. stock option plans as of June 30,
1998 and 1999, and the six months ended December 31, 1999, and changes during
the periods ending on those dates is presented below (shares in thousands):
SIX MONTHS ENDED
YEARS ENDED JUNE 30, DECEMBER 31,
1998 1999 1999
---------------------- ---------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ----------- ---------- ----------- ---------- -----------
Outstanding at beginning of period 4,103 $ 4.17 5,187 $12.34 5,364 $15.36
Granted 2,541 21.04 2,760 22.57 2,457 18.46
Exercised (1,213) 2.11 (960) 4.73 (476) 10.17
Canceled (244) 16.61 (1,623) 24.34 (417) 21.39
---------- ---------- ----------
Outstanding at end of period 5,187 $12.34 5,364 $15.36 6,928 $16.45
========== ========== ==========
Options exercisable at period end 1,850 1,875 2,270
========== ========== ==========
A summary of the status of the CIBER, Inc. stock option plans as of December 31,
2000 and changes during the year ending on that date is presented below (shares
in thousands):
YEAR ENDED,
DECEMBER 31, 2000
-------------------------
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
---------- --------------
Outstanding at beginning of year 6,928 $16.45
Granted 2,594 9.96
Exercised (168) 7.96
Canceled (1,949) 19.54
----------
Outstanding at end of year 7,405 $13.55
==========
Options exercisable at year end 3,514
==========
The weighted average fair values of CIBER, Inc. options granted during the years
ended June 30, 1998 and 1999, the six months ended December 31, 1999 and the
year ended December 31, 2000 were $11.45, $16.24, $9.20 and $6.41, respectively.
F-28
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the range of exercise prices and the weighted-average contractual
life of outstanding CIBER, Inc. stock options at December 31, 2000 is as follows
(shares in thousands):
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------- -----------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE OF NUMBER EXERCISE REMAINING NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING PRICE LIFE (YEARS) EXERCISABLE PRICE
- --------------------- -------------- --------------- -------------- ------------- ------------
$ 0.01 - $ 4.38 1,778 $ 2.32 9.2 1,129 $ 1.15
4.44 - 11.00 929 8.31 8.4 369 9.93
11.38 - 17.09 2,344 15.64 7.7 1,017 16.60
17.25 - 33.38 2,354 22.03 8.2 999 22.80
- --------------------- -------------- --------------- -------------- ------------- ------------
$ 0.01 - $ 33.38 7,405 $ 13.55 8.3 3,514 $ 12.70
===================== ============== =============== =============== ============= =============
WATERSTONE, INC. EQUITY INCENTIVE PLAN - In 1999, our Waterstone subsidiary
adopted the Waterstone, Inc. Equity Incentive Plan (formerly the Interactive
Papyrus, Inc. Equity Incentive Plan). Under the plan, the plan committee may
grant to officers, employees and consultants stock options, restricted stock,
performance shares or performance units. A committee of the Board of Directors
of Waterstone determines the number and nature of awards. Options become
exercisable as determined at the date of grant by the committee and expire
within 10 years from the date of grant. Waterstone issued options for 664,000
and 1,514,900 shares of its stock during the six months ended December 31, 1999
and the year ended December 31, 2000, respectively, at exercise prices ranging
from $0.90 to $1.75 per share (estimated fair value at the date of grant). These
options vest over three to four years. During 2000, there were no options
exercised and options for 695,000 shares were canceled. As of December 31, 2000,
there were 1,472,900 options outstanding at a weighted average exercise price of
$1.37 and 212,375 options exercisable at a weighted average exercise price of
$0.90.
EMPLOYEE STOCK PURCHASE PLAN ("ESPP") - We have a stock purchase plan that
allows eligible employees to purchase, through payroll deductions, shares of
CIBER, Inc. common stock at 85% of the fair market value at specified dates. Up
to 2,000,000 shares of common stock are authorized to be issued under the ESPP.
An additional 2,750,000 shares may be issued subject to shareholder approval at
the 2001 annual meeting. If shareholder approval is not obtained, our Board of
Directors has authorized that any shares in excess of the 2,000,000 authorized
are to be issued pursuant to our Employees' Stock Option Plan. During the years
ended June 30, 1998 and 1999, the six months ended December 31, 1999 and the
year ended December 31, 2000, employees purchased 197,565, 633,405, 440,290 and
837,850 shares of common stock, respectively. Through December 31, 2000,
2,502,846 shares have been issued under the ESPP, of which 502,846 shares were
issued under the Employees' Stock Option Plan registration statement.
F-29
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
We apply APB 25 in accounting for our stock-based compensation plans. The
compensation expense that has been recorded for these plans for the years ended
June 30, 1998 and 1999, the six months ended December 31, 1999 and the year
ended December 31, 2000 was $59,000, $395,000, $225,000 and $189,000,
respectively. Had we determined compensation cost for our stock-based
compensation plans based on the fair value at the grant date, as calculated in
accordance with SFAS 123, our net income (loss), pro forma net income, and pro
forma income (loss) per share would have been as indicated in the pro forma
amounts below (in thousands, except per share data):
SIX MONTHS
YEARS ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 2000
----------- ----------- --------------- ----------------
Net income (loss) As reported $36,477 $54,495 $17,643 $(66,775)
Pro forma 31,516 41,373 11,323 (81,295)
Pro forma net income As reported 34,270 n/a n/a n/a
Pro forma 29,309 n/a n/a n/a
Earnings (loss) per share - basic As reported .67 .98 .31 (1.15)
Pro forma .57 .75 .20 (1.40)
Earnings (loss) per share - diluted As reported .64 .95 .30 (1.15)
Pro forma .54 .72 .19 (1.40)
The effect of applying SFAS 123 in this disclosure may not be indicative of the
effect on reported net income for future years. SFAS 123 does not apply to
options granted prior to July 1, 1995.
The fair value of options at the date of grant was estimated using the
Black-Scholes option pricing model with the following weighted-average
assumptions:
SIX MONTHS
YEARS ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 2000
--------------- --------------- ----------------- ----------------
Expected life 5 years 5 years 5 years 5 years
Risk free interest rate 6.0% 4.8% 6.0% 6.0%
Expected volatility 50% 80% 60% 80%
Dividend yield 0% 0% 0% 0%
(16) 401(k) SAVINGS PLAN
We have a savings plan under Section 401(k) of the Internal Revenue Code. Our
contributions are determined based on the employee's completed years of service,
the employee's contribution and our matching contribution percentage. In
addition, certain companies that have merged with us in business combinations
accounted for as poolings of interests have had similar defined contribution
retirement plans. We recorded expense of approximately $4,519,000, $4,555,000,
$2,464,000 and $3,593,000 for the years ended June 30, 1998 and 1999, the six
months ended December 31, 1999 and the year ended December 31, 2000,
respectively, related to these plans.
(17) STOCK PURCHASE RIGHTS
On September 21, 1998, CIBER, Inc. paid a dividend of one preferred stock
purchase right (a "Right") for each outstanding share of CIBER, Inc. common
stock ("Common Stock"). A Right is also attached to all shares of Common Stock
issued after the dividend date. Each Right entitles the registered holder to
purchase one one-hundredth of a share of Series A Junior Preferred Stock, par
value $0.01, at a purchase price of $250, subject to adjustment. The Rights
become exercisable ten business days following a public announcement that a
person or group has acquired, or has commenced or intends to commence a tender
F-30
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
offer for 15% or more of our outstanding Common Stock. In the event the Rights
become exercisable, each Right will entitle its holder, other than the Acquiring
Person (as defined in the Rights Agreement), to that number of shares of our
Common Stock having a market value of two times the exercise price of the Right.
In the event the Rights become exercisable because of a merger or certain other
business combination, each Right will entitle its holder to purchase common
stock of the acquiring company having a market value of two times the exercise
price of the Right. If the Rights are fully exercised, the shares issued would
cause substantial dilution to the Acquiring Person or the shareholders of the
acquiring company.
We can redeem the Rights in their entirety, prior to their becoming exercisable,
at $0.001 per Right. The Rights expire on August 28, 2008, unless extended or
earlier redeemed.
(18) SHARE REPURCHASE PROGRAM
On June 21, 1999, our Board of Directors authorized the repurchase of up to
5,888,000 shares (10%) of our common stock. As of December 31, 2000, we have
purchased 4,680,000 shares for $59,560,000 under this program.
(19) BUSINESS AND CREDIT CONCENTRATIONS
Our clients are located principally throughout the United States. Our revenue
and accounts receivable are concentrated with large companies in several
industries. Our largest client accounted for approximately 5%, 6%, 7% and 6% of
total revenues for the years ended June 30, 1998 and 1999, the six months ended
December 31, 1999 and the year ended December 31, 2000, respectively. In
addition, our five largest clients accounted for, in the aggregate,
approximately 14%, 15%, 16% and 14% of our total revenues for the years ended
June 30, 1998 and 1999, the six months ended December 31, 1999 and the year
ended December 31, 2000, respectively. We have a policy to regularly monitor the
creditworthiness of our clients and generally do not require collateral. We have
a concentration of revenues related to clients purchasing software from
PeopleSoft, Inc. Approximately 9%, 10%, 8% and 8% of our total revenues for the
years ended June 30, 1998 and 1999, the six months ended December 31, 1999 and
the year ended December 31, 2000, respectively, were generated from implementing
PeopleSoft software.
(20) SEGMENT INFORMATION
We manage our operations based on our legal operating entities that are
differentiated by products and services offered. We have two reportable
segments, CIBER Operations and DigiTerra. All Other includes our subsidiaries,
Waterstone, Solution Partners, Enspherics and, through December 31, 1999,
Agilera. A description of each of these operations' products and services is
included in Note 1. Beginning in 2000, our corporate department only serves
CIBER's branch operations and therefore, the related activity is included in the
CIBER Operations segment. Prior year information has been restated to conform to
this presentation including an allocation of certain corporate costs to
DigiTerra. We evaluate each segment based on operating income before
amortization of intangible assets and goodwill impairment and other charges. The
accounting policies of the reportable segments are the same as those disclosed
in the Summary of Significant Accounting Policies.
F-31
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following presents information about our segments (in thousands):
SIX MONTHS
YEARS ENDED ENDED YEARS ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 1999 2000
------------- -------------- ---------------- ------------- --------------
(unaudited)
Total revenues:
CIBER Operations $ 467,463 $ 549,779 $ 264,349 $ 547,211 $ 457,282
DigiTerra 109,910 172,938 94,705 193,252 148,247
All Other - 1,591 5,038 6,629 20,477
Inter-segment (885) (4,647) (2,092) (5,145) (4,472)
------------- -------------- ---------------- ------------- --------------
Total $ 576,488 $ 719,661 $ 362,000 $ 741,947 $ 621,534
============= ============== ================ ============= ==============
Inter-segment revenues:
CIBER Operations $ (625) $ (795) $ (211) $ (527) $ (136)
DigiTerra (260) (3,852) (1,881) (4,618) (2,936)
All Other - - - - (1,400)
------------- -------------- ---------------- ------------- --------------
Total $ (885) $ (4,647) $ (2,092) $ (5,145) $ (4,472)
============= ============== ================ ============= ==============
Income (loss) from operations:
CIBER Operations $ 48,656 $ 65,150 $ 21,936 $ 55,802 $ 32,974
DigiTerra 17,686 34,010 16,772 36,472 8,650
All Other - (765) (2,729) (3,494) (721)
------------- -------------- ---------------- ------------- --------------
Total 66,342 98,395 35,979 88,780 40,903
Amortization of intangibles (3,936) (7,520) (6,754) (12,123) (14,032)
Goodwill impairment and
other charges (4,538) (1,535) - - (83,768)
------------- -------------- ---------------- ------------- --------------
Operating income (loss) $ 57,868 $ 89,340 $ 29,225 $ 76,657 $ (56,897)
============= ============== ================ ============= ==============
Total capital expenditures:
CIBER Operations $ 7,800 $ 6,743 $ 3,851 $ 7,628 $ 5,240
DigiTerra 3,865 7,120 1,678 7,399 962
All Other - 109 1,639 1,748 2,272
------------- -------------- ---------------- ------------- --------------
Total capital expenditures $ 11,665 $ 13,972 $ 7,168 $ 16,775 $ 8,474
============= ============== ================ ============= ==============
Total assets:
CIBER Operations $ 195,222 $ 300,716 $ 265,654 $ 265,654 $ 306,961
DigiTerra 37,176 103,353 110,381 110,381 96,489
All Other - 6,026 62,135 62,135 26,553
CIBER investment in subsidiaries* (10,272) (994) (14,623) (14,623) (103,516)
Elimination of inter-segment
accounts receivable (341) (469) (979) (979) (140)
------------- -------------- ---------------- ------------- --------------
Total assets $ 221,785 $ 408,632 $ 422,568 $ 422,568 $ 326,347
============= ============== ================ ============= ==============
* As a result of our incorporation of DigiTerra on April 3, 2000, CIBER
Operations' investment in subsidiaries increased by $94,961,000.
Revenues from foreign operations were $11,418,000 for the year ended December
31, 2000, and were not significant during the prior periods presented. Total
assets of foreign operations were $17,528,000 and $21,305,000 at December 31,
1999 and 2000, respectively, and were not significant at June 30, 1999.
F-32
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(21) SUPPLEMENTAL STATEMENT OF CASH FLOW INFORMATION
Supplemental statement of cash flow information is as follows (in thousands):
SIX MONTHS
YEARS ENDED ENDED YEAR ENDED
JUNE 30, DECEMBER 31, DECEMBER 31,
1998 1999 1999 2000
---- ---- ---- ----
Acquisitions:
Fair value of assets acquired $ - $ 142,514 $ 84,373 $ 4,891
Liabilities assumed - (10,586) (5,371) (579)
Common stock issued - (106,285) (11,425) -
Change in acquisition costs payable - - (7,888) 11,862
Minority interest - - (105) 10
Additional cash consideration for previous
acquisitions 351 857 506 -
------------- ------------- ---------------- ----------------
Cash paid for acquisitions $ 351 $ 26,500 $ 60,090 $16,184
============= ============= ================ ================
Noncash investing and financing activities:
Issuance of common stock in satisfaction
of acquisition costs payable $ 1,151 $ 1,203 $ - $ -
Stock options exchanged for accrued compensation $ - $ 833 $ - $ -
Property and other assets distributed by merged
company $ 1,370 $ - $ - $ -
Cash paid for interest $ 182 $ - $ 94 $ 547
Cash paid for income taxes $12,194 $ 32,941 $ 15,139 $16,921
(22) COMPARATIVE FINANCIAL INFORMATION (UNAUDITED)
The following represents financial information for the six months ended December
31, 1998, which is included for comparative purposes (in thousands):
Total revenues $339,714
Operating income 41,908
Income before income taxes 43,238
Income tax expense 17,801
Net income 25,437
F-33
CIBER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(23) SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table sets forth certain statement of operations data for each of
the quarters indicated below and, in our opinion, contains all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation thereof.
FIRST SECOND THIRD FOURTH
IN THOUSANDS, EXCEPT PER SHARE DATA QUARTER QUARTER QUARTER QUARTER TOTAL
------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 2000 MARCH JUNE SEPT. DEC.
----- ---- ----- ----
Revenues $ 166,306 $ 157,357 $ 153,285 $ 144,586 $ 621,534
Amortization of intangible assets 4,046 4,041 2,931 3,014 14,032
Goodwill impairment and other charges 2,275 323 80,773 397 83,768
Operating income (loss) 5,493 6,894 (73,927) 4,643 (56,897)
Net income (loss) 3,325 3,980 (76,888) 2,808 (66,775)
Earnings (loss) per share - basic $0.06 $0.07 $(1.32) $0.05 $(1.15)
Earnings (loss) per share - diluted $0.06 $0.07 $(1.32) $0.05 $(1.15)
SIX MONTHS ENDED DECEMBER 31, 1999 SEPT. DEC.
----- ----
Revenues $ 187,042 $ 174,958 n/a n/a $ 362,000
Amortization of intangible assets 3,023 3,731 n/a n/a 6,754
Operating income 16,400 12,825 n/a n/a 29,225
Net income 10,260 7,383 n/a n/a 17,643
Earnings per share - basic $0.18 $0.13 n/a n/a $0.31
Earnings per share - diluted $0.18 $0.13 n/a n/a $0.30
FISCAL YEAR ENDED JUNE 30, 1999 SEPT. DEC. MARCH JUNE
----- ---- ----- ----
Revenues $ 165,658 $ 174,056 $ 184,901 $ 195,046 $ 719,661
Amortization of intangible assets 1,082 1,069 2,314 3,055 7,520
Goodwill impairment and other charges 1,535 - - - 1,535
Operating income 18,760 23,148 23,880 23,552 89,340
Net income 11,117 14,320 14,883 14,175 54,495
Earnings per share - basic $0.21 $0.27 $0.27 $0.24 $0.98
Earnings per share - diluted $0.20 $0.26 $0.26 $0.24 $0.95
F-34
APPENDIX B
CIBER, INC.
EMPLOYEE STOCK PURCHASE PLAN
(as amended and restated February 15, 2001)
I. PURPOSE
The CIBER, Inc. Employee Stock Purchase Plan (the "Plan") is intended to
provide eligible employees of CIBER, Inc. and its Affiliated Corporations
(collectively, the "Company"), with an opportunity to acquire a proprietary
interest in the Company through their participation in a plan designed to
qualify as an employee stock purchase plan under Section 423 of the Internal
Revenue Code of 1986 (the "Code"). "Affiliated Corporation" means any
"subsidiary corporation" (as such term is defined in Section 424(f) of the Code)
of CIBER, Inc.
II. ADMINISTRATION
(a) PLAN ADMINISTRATOR. The Plan shall be administered by the board of
directors of the Company (the "Board"), which may from time to time delegate all
or part of its authority to a committee (the "Committee") composed of at least
two members of the Board, all of whom shall be Non-Employee Directors. A Non-
Employee Director is a director who meets the definition of Non- Employee
Director under Rule 16b-3 of the Securities Exchange Act of 1934 (the "1934").
References herein to the Plan Administrator refer to the Board or, to the extent
the Board delegates its authority to the Committee, to the Committee. The Plan
Administrator shall have full authority to administer the Plan, and to adopt
such rules and regulations for administering the Plan as it may deem necessary
in order to comply with the requirements of Section 423 of the Code. The Plan
Administrator may delegate to an agent or agents any of its responsibilities
under the Plan except its responsibilities to establish the number of shares
available for purchase by employees during any purchase period, the maximum and
minimum percentage of base compensation to be paid by any single employee for
the purchase of stock during any of the periods and its authority to construe
and interpret the provisions of the Plan.
(b) ACTIONS OF PLAN ADMINISTRATOR. All actions taken and all
interpretations and determinations made by the Plan Administrator in good faith
(including determinations of fair market value) shall be final and binding upon
all Participants, the Company and all other interested persons. No member of the
Plan Administrator shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan, and all members of
the Plan Administrator shall, in addition to their rights as directors, be fully
protected by the Company with respect to any such action, determination or
interpretation.
III. PURCHASE PERIODS
The first purchase period under the Plan shall commence on January 1, 1995,
and shall terminate on March 31, 1995. Unless otherwise determined by the Plan
Administrator, a purchase period shall commence on the first day of each
succeeding calendar quarter and shall terminate on the last day of each such
quarter. The Plan Administrator may, from time to time, establish purchase
periods with differing commencement dates and durations. In no event,
however, shall a purchase period extend beyond 27 months. No two purchase
periods shall run concurrently.
IV. ELIGIBILITY AND PARTICIPATION
(a) Except as otherwise expressly provided herein, every employee of the
Company who, on the commencement date of the purchase period, is employed on a
basis which customarily requires not less than 20 hours of service per calendar
week is eligible to participate in the Plan during a purchase period.
(b) An eligible employee may become a participant in the Plan (a
"Participant") for a particular purchase period by completing the enrollment
forms prescribed by the Plan Administrator (including a purchase agreement and a
payroll deduction authorization) and filing such forms prior to the commencement
date of the purchase period with the person designated by the Plan
Administrator. No enrollment forms will be accepted from an individual who is
not on the active payroll of the Company on the filing date, unless such
individual is temporarily off the payroll by reason of illness, vacation, jury
duty or other employer-approved absence.
V. STOCK SUBJECT TO PLAN
(a) COMMON STOCK. The stock which is purchasable by Participants shall be
the authorized but unissued or reacquired common stock, par value $.01 per
share, of CIBER, Inc. (the "Common Stock"). In order to have shares available
for sale under the Plan, the Company may repurchase shares of Common Stock on
the open market, issue authorized but unissued stock or otherwise. The maximum
number of shares which may be sold to employees during any single purchase
period shall be established by the Plan Administrator prior to the beginning of
the purchase period; provided however, that the total number of shares which may
be sold to employees throughout the entire duration of the Plan shall not exceed
2,000,000 shares (which amount reflects the 1996 and 1998 stock splits in the
nature of a dividend, and is subject to further adjustment under subparagraph
(b) below).
(b) CHANGES IN CAPITAL STRUCTURE. In the event any change is made to the
Common Stock purchasable under the Plan (whether by reason of merger,
consolidation, reorganization, recapitalization, stock dividend in excess of 10%
at any single time, stock split, combination of shares, exchange of shares,
changes in corporate structure or otherwise), then appropriate adjustments shall
be made to the maximum number of shares purchasable under the Plan, the maximum
number of shares purchasable under any right to purchase stock outstanding under
the Plan, and the number of shares and price per share of stock subject to
rights to purchase stock outstanding under the Plan.
VI. PURCHASE OF COMMON STOCK
(a) RIGHT TO PURCHASE. An eligible employee who becomes a Participant for
a particular purchase period shall have the right, as of the beginning of the
purchase period, to purchase Common Stock upon the terms and conditions set
forth below and shall execute a purchase agreement embodying such terms and
conditions and such other provisions, not inconsistent with the Plan, as the
Plan Administrator may deem advisable.
2
(b) PURCHASE PRICE PER SHARE. Except as provided in Section VI(j), the
purchase price per share shall be eighty-five percent (85%) of the fair market
value of a share of Common Stock on the commencement date of the purchase
period. If the Common Stock is listed on a national stock exchange or national
market system, the fair market value of a share of Common Stock on any date
shall be the officially-quoted closing sales price (or the closing bid, if no
sales were reported) on such exchange or system on the date in question. If the
Common Stock is not traded publicly, the fair market value of a share of Common
Stock on any date shall be determined, in good faith, by the Plan Administrator
after consultation with outside legal, accounting or other experts as the Plan
Administrator may deem advisable, and the Plan Administrator shall maintain a
written record of its method of determining such value.
(c) TOTAL PURCHASE PRICE. Each Participant shall, for any purchase period,
have the right to purchase Common Stock with a total purchase price equal to a
designated percentage of the Participant's Compensation. A Participant's
"Compensation" for a particular purchase period shall be the amount of the
Participant's base salary or wages, overtime pay and, at the election of the
Participant, bonuses and other incentive payments, that are payable to the
Participant at any time or from time to time during the purchase period. Each
Participant shall designate in his or her purchase agreement the whole
percentage of his or her Compensation the Participant wishes to pay for the
purchase of stock for the particular purchase period, subject to the provisions
set forth below which shall be uniformly applied to all Participants in a
particular purchase period:
(i) The maximum percentage of a Participant's Compensation which may
be paid for the purchase of stock in a particular purchase period shall be
ten percent (10%); provided, however, that the Plan Administrator shall
establish prior to the beginning of the purchase period a maximum number of
shares (subject to adjustment under Section V(b)) that may be purchased
during the purchase period by each Participant.
(ii) The minimum percentage of a Participant's Compensation which may
be paid for the purchase of stock in a particular purchase period shall be
one percent (1%).
(iii) No right to purchase shares under the Plan shall be granted to
an employee if such employee would, immediately after the grant, own stock
possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of CIBER, Inc. or any Affiliated Corporation.
An employee's stock ownership shall be determined under Section 424(d) of
the Code and stock which an employee may purchase under any outstanding
options shall be treated as stock owned by the employee.
Notwithstanding the provisions of paragraphs (i) and (ii), above, the Plan
Administrator may, in its discretion, establish any other maximum and minimum
percentages of Compensation to be paid for stock under the Plan.
(d) ALLOCATION OF AVAILABLE SHARES. Should the total number of shares of
Common Stock which may be purchased under the purchase agreements of all
Participants for a particular purchase period exceed the number of shares
available for sale under the Plan, then the Plan
3
Administrator shall make a pro rata allocation of the available shares and shall
notify each Participant of such allocation.
(e) PAYMENT. Payment of the purchase price for stock under the Plan shall
be effected by means of payroll deductions, which shall begin with the first pay
period, the payment date for which occurs coincident with or immediately
following the commencement date of the relevant purchase period and shall
terminate with the last pay period the payment date for which occurs on or prior
to the last day of the purchase period. Each payroll deduction shall be an
amount equal to the percentage of the Compensation included in that payroll
payment that was designated by the Participant in the Participant's purchase
agreement (subject to termination as provided in Section VI(f)).
(f) TERMINATION OF RIGHT TO PURCHASE. A Participant may, at any time on or
before 15 days prior to the last day of the purchase period, terminate his or
her right to purchase stock under the Plan by filing the prescribed notification
form with the Plan Administrator or its delegate. Any amounts deducted from the
Participant's pay or otherwise collected from the Participant by reason of his
or her participation in the Plan for such purchase period shall be refunded
following the end of the purchase period, and no further amounts will be
collected from the Participant (by payroll deduction or otherwise) during the
remainder of the purchase period. A Participant's termination of his or her
right to purchase shall be irrevocable with respect to the purchase period to
which it pertains.
(g) CHANGE OF COMPENSATION PERCENTAGE. Except as set forth in Section
VI(f), a Participant may not reduce or increase the percentage of the
Participant's Compensation to be paid for shares of Common Stock under the
Participant's purchase agreement during a purchase period.
(h) TERMINATION OF EMPLOYMENT. If a Participant ceases to be an employee
of the Company for any reason (including death or retirement) during a purchase
period, the Participant or the Participant's personal representative shall
receive a cash refund of all sums previously collected from the Participant
during the purchase period, as well as any sums carried over from a prior
purchase period.
(i) EXERCISE. Each right to purchase stock under the Plan other than a
right to purchase stock which has been accelerated under the Plan or which has
been previously terminated under the Plan shall be exercised automatically on
the last day of the purchase period for the number of whole shares obtained by
dividing the sum on deposit from the Participant (and not refunded) by the
purchase price per share determined under Section VI(j), but in no event shall
any right to purchase stock under the Plan be exercised for more than the
specified number of shares, if any, (subject to adjustment under Section V(b))
established by the Plan Administrator pursuant to Section VI(c)(i) prior to the
beginning of the purchase period, and the balance shall be at the sole option of
the Company promptly refunded or left on deposit for the ensuing quarterly
period, and in any case refunded after termination. For example, if a
Participant has $100.00 on account and the Company's stock price pursuant to
this paragraph is determined to be $9.00 then eleven (11) shares will be issued
(11 x $9.00) and $1.00 will be left on deposit or refunded as herein stated.
Promptly after the date of exercise of any right to purchase stock under the
Plan, the Participant, or his or her nominee, shall receive, at the
4
Company's sole option, a physical certificate, an electronic deposit, or such
other evidence of ownership of the purchased shares as the Plan Administrator
determines is reasonable. No more than one certificate or deposit shall be
issued or made pursuant to the exercise of any right to purchase stock under the
Plan.
(j) REDUCTION OF PURCHASE PRICE. If the fair market value of a share of
Common Stock on the last day of the purchase period is less than the fair market
value of such share on the commencement date of the purchase period, then the
purchase price per share under the Plan on the last day of the purchase period
shall be reduced to 85 percent (85%) of the fair market value of such share on
the last day of the purchase period.
(k) RIGHTS AS STOCKHOLDER. A Participant shall have no rights as a
stockholder with respect to shares subject to a right to purchase stock granted
under the Plan until such right to purchase is exercised. No adjustments shall
be made for dividends, distributions or other rights for which the record date
is prior to the date of exercise.
(l) ASSIGNABILITY. No right to purchase stock granted under the Plan shall
be assignable or transferable by a Participant other than by will or by the laws
of the descent and distribution, and during the lifetime of the Participant such
rights to purchase stock shall be exercisable only by the Participant.
(m) ACCRUAL LIMITATIONS. No Participant shall be entitled to accrue rights
to purchase stock under this Plan which, when aggregated with purchase rights
accruable by him under other qualified employee stock purchase plans (within the
meaning of Section 423 of the Code) of the Company, would permit such
Participant to purchase more than $25,000 worth of Common Stock (determined on
the basis of the fair market value of such Common Stock on the date the
Participant accrues purchase rights under the Plan) for each calendar year such
purchase rights are at any time outstanding.
(n) MERGER OR LIQUIDATION OF COMPANY. In the event the Company or its
shareholders enter into an agreement to dispose of all or substantially all of
the assets or outstanding capital stock of the Company by means of sale, merger,
reorganization or liquidation, each Participant may, at the election of the Plan
Administrator, either:
(i) receive a stock certificate for the number of shares of Common
Stock paid for pursuant to payroll deductions made on behalf of the
Participant during the purchase period up to the day prior to the date of
such transaction; or
(ii) receive a cash refund of all sums previously collected from the
Participant during the purchase period.
(o) NO INTEREST. No interest shall be paid on any monies refunded to
Participants pursuant to the provisions of this Plan.
(p) WITHHOLDING. The Company may withhold, or require a Participant to
make other satisfactory arrangements for the payment of, any taxes required by
any law or regulation of any governmental authority, whether federal, state or
local, in connection with the purchase of stock
5
under the Plan or the sale of such stock that is not held for at least two years
after the beginning of the purchase period during which the stock was purchased.
Such withholding may include all or any portion of any payment or other
compensation payable to the Participant, unless the Participant reimburses the
Company for such amount.
(q) NOTICE OF DISPOSITION. Each Participant shall notify the Company in
writing if the Participant disposes of any of the shares purchased pursuant to
this Plan if such disposition occurs within two years from the first day of the
purchase period in which such shares were purchased or within one year from the
date on which the shares were purchased (the "Notice Period"). The Company may,
at any time during the Notice Period, place a legend or legends on any
certificate representing shares acquired pursuant to this Plan requesting the
Company's transfer agent to notify the Company of any transfer of the shares.
The obligation of the Participant to provide such notice shall continue
notwithstanding the placement of any legend on the certificates.
VII. AMENDMENT
The Board may from time to time alter, amend, suspend or discontinue the
Plan; provided, however, that no such action shall adversely affect rights and
obligations with respect to rights to purchase stock at the time outstanding
under the Plan; and provided, further, that no such action of the Board may,
without the approval of the stockholders of the Company, increase the number of
shares subject to the Plan or the maximum number of shares for which a right to
purchase stock under the Plan may be exercised (unless necessary to effect the
adjustments required by Section V(b)), extend the term of the Plan, alter the
per share purchase price formula so as to reduce the purchase price per share
specified in the Plan, otherwise materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility to participate in the Plan. Furthermore, the Plan may not, without
the approval of the stockholders of the Company, be amended in any manner which
will cause the Plan to fail to meet the requirements of an "employee stock
purchase plan" under Section 423 of the Code.
VIII. EFFECTIVE DATE
This Plan was originally approved by the Board and became effective on
January 1, 1995, and was approved by the stockholders of CIBER, Inc. on October
31, 1994. The Plan is hereby amended and restated effective as of February 15,
2001 and was previously amended and restated effective on February 11, 1998, and
subsequently amended effective October 7, 1998.
CIBER, Inc.
By: /s/ MAC J. SLINGERLEND
---------------------------------
Mac J. Slingerlend
President/Chief Executive Officer
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[CIBER, Inc. logo]
CIBER, Inc., 5251 DTC Parkway, Suite 1400, Greenwood Village, Colorado 80111
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
1. Vote by Internet
2. Vote by Phone
3. Vote by mailing your proxy in the enclosed envelope
VOTE BY INTERNET
Your Internet vote is quick, convenient and your vote is immediately
submitted. Just follow these easy steps:
1. Read the accompanying Proxy Statement
2. Visit our Internet Voting site at http://www.umb.com/proxy and follow
the instructions on the screen
Please note that all votes cast by Internet must be submitted prior to 5
p.m. Central Daylight Time, May 9, 2001. Your internet vote authorizes the
named proxies to vote your shares to the same extent as if you marked,
signed, dated and returned the proxy card.
IF YOU VOTE BY INTERNET, PLEASE DO NOT RETURN YOUR PROXY BY MAIL
VOTE BY TELEPHONE
Your telephone vote is quick, easy and immediate. Just follow these easy
steps:
1. Read the accompanying Proxy Statement
2. On a Touch-Tone Telephone call Toll Free 1-800-758-6973 and follow the
instructions.
3. When instructed, enter the Control Number, which is printed on the
lower right-hand corner of your proxy card below.
4. Follow the simple recorded instructions.
Please note that all votes cast by telephone must be submitted prior to 5
p.m. Central Daylight Time, May 9, 2001. Your telephone vote authorizes the
named proxies to vote your shares to the same extent as if you marked,
signed, dated and returned the proxy card.
IF YOU VOTE BY TELEPHONE, PLEASE DO NOT RETURN THE PROXY CARD BY MAIL
THANK YOU FOR YOUR VOTE
CUT OR TEAR ALONG PERFORATED EDGE
- --------------------------------------------------------------------------------
[CIBER, Inc. logo]
CIBER, Inc., 5251 DTC Parkway, Suite 1400, Greenwood Village, Colorado 80111
The undersigned hereby appoints Bobby G. Stevenson and Mac J. Slingerlend, or
either of them, with full power of substitution, as attorneys-in-fact, agents
and proxies (the "Proxies") to vote on behalf of the undersigned all shares of
common stock, $.01 par value, of CIBER, Inc. (the "Company"), that the
undersigned is entitled to vote at the 2001 Annual Meeting of Shareholders (the
"Meeting"), to be held the Hyatt Regency Tech Center, Chasm Creek Room, 7800
Tufts Avenue, Denver, Colorado 80237, on Thursday, May 10, 2001 at 9:00 a.m.
(local time), and at any and all adjournments or postponements thereof, as
follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE PROPOSITIONS
LISTED BELOW.
1. The election of the following nominees for Class I directors: 01 Mr. Bobby
G. Stevenson and 02 Mr. James G. Brocksmith, Jr.
/ / FOR (entire class) / / WITHHOLD (entire class)
INSTRUCTIONS: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
FOR ABOVE AND STRIKE OUT THE NOMINEES' NAME(S).
2. The election of the following nominees for Class III directors: 03 Mr.
Archibald J. McGill and 04 Mr. Richard A. Montoni.
/ / FOR (entire class) / / WITHHOLD (entire class)
INSTRUCTIONS: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
FOR ABOVE AND STRIKE OUT THE NOMINEES' NAME(S).
3. The amendments to the Employee Stock Purchase Plan (a) to increase the
number of shares of Common Stock reserved for issuance pursuant to the Plan
from 2,000,000 to 4,750,000 shares and (b) to permit employees of the
Company's subsidiaries to participate in the Plan.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, such Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournments or
postponements thereof.
[Reverse of Proxy Card]
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE PROXIES IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS.
Should the undersigned be present and elect to vote at the Meeting, or at any
adjournments or postponements thereof, and after notification to the Secretary
of the Company at the Meeting of the shareholder's decision to terminate this
proxy, the power of the Proxies shall be deemed terminated and of no further
force and effect. The undersigned may also revoke this proxy by filing a
subsequently dated proxy or by notifying the Secretary of the Company of his or
her decision to terminate this proxy prior to the final tabulation of the votes.
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of the Notice of the Meeting and a Proxy Statement.
Dated: ____________________________, 2001
-----------------------------------------
-----------------------------------------
Please sign exactly as your name appears
on this Proxy card. When signing as
attorney, executor, administrator, agent,
trustee or guardian, please give your
full title. If shares are held jointly,
each holder should sign. If signing on
behalf of a corporation, the full
corporate name should be indicated and a
corporate officer should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTY USING THE ENCLOSED
POSTAGE PREPAID ENVELOPE.
IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT RETURN YOUR PROXY BY MAIL.