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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 - 0001
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Form 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2001
Or
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 000-30271
PEC SOLUTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1339972
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12750 FAIR LAKES CIRCLE, FAIRFAX, VA 22033
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 679-4900
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for the past 90 days. Yes [X] No [ ]
As of May 11, 2001, 22,551,800 of the registrant's Common Stock, par value
$.01 per share, were outstanding.
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PEC SOLUTIONS, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2001
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets -- March 31, 2001 and December 31, 2000.................... 2
Consolidated Statements of Income -- Three months ended March 31, 2001 and 2000........ 3
Consolidated Statements of Cash Flows -- Three months ended March 31, 2001 and 2000... 4
Notes to Consolidated Financial Statements............................................. 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations........................................................................ 7
Item 3. Qualitative and Quantitative Disclosure about Market Risk...................... 12
PART II. OTHER INFORMATION
Items 1 -- 6........................................................................... 13
Signatures............................................................................. 15
-1-
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
PEC SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
AS OF AS OF
MARCH 31, DEC. 31,
2001 2000
---------- ----------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents ....................... $12,514 $14,655
Short-term investments .......................... 22,087 21,017
Accounts receivable, net ........................ 21,029 15,764
Other current assets ............................ 1,674 1,491
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Total current assets ................................. 57,304 52,927
Property and equipment, net .......................... 2,554 2,585
Goodwill, net ........................................ 3,184 3,365
Other assets ......................................... 2,639 2,523
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Total assets ......................................... $65,681 $61,400
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ........... $ 1,870 $ 2,150
Advance payments on contracts ................... 736 1,258
Retirement plan contribution payable ............ 284 2
Accrued payroll ................................. 4,147 4,214
Accrued vacation ................................ 1,519 1,183
Other current liabilities ....................... 2,247 938
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Total current liabilities ............................ 10,803 9,745
Long-term liabilities:
Supplemental retirement program liability ....... 505 482
Deferred rent payable ........................... 567 459
Other long-term liabilities ..................... 8 14
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Total long-term liabilities .......................... 1,080 955
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Total liabilities .................................... 11,883 10,700
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Commitments and contingencies:
Stockholders' equity
Undesignated capital stock, 10,000,000 shares
authorized ................................ -- --
Common stock, $0.01 par value, 75,000,000 shares
authorized, 22,499,880 and 22,345,440 shares
issued and outstanding, respectively ....... 225 223
Additional paid-in capital ...................... 29,418 28,692
Retained earnings ............................... 24,158 21,779
Accumulated other comprehensive income (loss) ... (3) 6
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Total stockholders' equity ........................... 53,798 50,700
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Total liabilities and stockholders' equity ........... $65,681 $61,400
======= =======
See notes to consolidated financial statements.
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PEC SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
----------------------
MARCH 31, MARCH 31,
2001 2000
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(UNAUDITED)
Revenues ................................... $21,920 $15,582
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Operating costs and expenses:
Direct costs .......................... 11,798 8,903
General and administrative expenses ... 5,368 3,941
Sales and marketing expenses .......... 895 540
Amortization of goodwill .............. 180 --
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Total operating costs and expenses 18,241 13,384
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Operating income ........................... 3,679 2,198
Other income, net .......................... 468 115
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Income before income taxes ................. 4,147 2,313
Provision for income taxes ................. 1,709 900
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Net income ................................. $ 2,438 $ 1,413
======= =======
Earnings per share:
Basic ................................. $ 0.11 $ 0.08
======= =======
Diluted ............................... $ 0.10 $ 0.06
======= =======
Weighted average shares used in
computing earnings per share:
Basic ................................. 22,472 18,257
======= =======
Diluted ............................... 25,536 23,442
======= =======
See notes to consolidated financial statements.
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PEC SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDING
-------------------------
MARCH 31, MARCH 31,
2001 2000
(Unaudited)
Cash flows from operating activities:
Net income ..................................................... $ 2,438 $ 1,413
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.............................. 272 139
Amortization of goodwill .................................. 180 --
Deferred rent payable ..................................... 108 --
Deferred income taxes ..................................... (48) --
Changes in operating assets and liabilities:
Accounts receivable, net .................................. (5,265) 1,076
Other current assets ...................................... (164) (66)
Other assets .............................................. (3) (59)
Accounts payable and accrued expenses ..................... (259) (109)
Advance payments on contracts ............................. (523) (359)
Retirement plan contribution payable ...................... 282 248
Accrued payroll ........................................... (61) (632)
Accrued vacation .......................................... 337 268
Other current liabilities ................................. 1,802 117
Supplemental retirement program liability ................. 23 55
Other long-term liabilities ............................... (5) --
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Net cash provided (used) by operating activities ...... (886) 2,091
-------- --------
Cash flows from investing activities:
Purchases of property and equipment ....................... (188) (230)
Purchases of short-term investments........................ (1,045) --
Capitalized software ................................... (177) --
-------- --------
Net cash used by investing activities ................. (1,410) (230)
-------- --------
Cash flows from financing activities:
Dividends paid ............................................ -- (413)
Proceeds from issuance of common stock .................... 155 2,179
Common stock offering costs ............................... -- (162)
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Net cash provided by financing activities ........... 155 1,604
-------- --------
Net increase (decrease) in cash ..................................... (2,141) 3,465
Cash and cash equivalents at beginning of period .................... 14,655 7,981
-------- --------
Cash and cash equivalents at end of period .......................... $ 12,514 $ 11,446
======== ========
Income taxes paid ................................................... $ 100 $ 171
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Interest paid ....................................................... $ 1 $ --
======== ========
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See notes to consolidated financial statements.
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PEC SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
(UNAUDITED)
1. Financial Statements
The accompanying consolidated financial statements, except for the December
31, 2000 balance sheet, are unaudited and have been prepared in accordance with
accounting standards generally accepted in the United States for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally in the United States have been omitted. In the opinion of
management, all adjustments, consisting of normally recurring accruals,
considered necessary for a fair presentation, have been included. It is
suggested that these condensed financial statements be read in conjunction with
the Company's audited financial statements for the years ended December 31, 1999
and 2000 and for each of the three years in the period ended December 31, 2000
included on Form 10-K, as amended, as filed with the Securities and Exchange
Commission. The results of operations for the three months ended March 31, 2001,
are not necessarily indicative of the operating results to be expected for the
full year.
2. Principles of Consolidation
The consolidated financial statements include all majority-owned or
controlled subsidiaries. All significant intercompany balances and transactions
have been eliminated.
3. Initial Public Offering
The Company completed an initial public offering of common stock during
April 2000. The Company sold 3,000,000 shares of common stock generating $25.6
million in proceeds to the Company, net of offering expenses.
4. Accounts Receivable
Accounts receivable consist of the following as of:
MARCH 31, DECEMBER 31,
2001 2000
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(Dollars in thousands)
Billed accounts receivable $ 18,646 $ 14,597
Unbilled accounts receivable 3,297 2,449
Progress payments (736) (1,104)
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21,207 15,942
Allowance for doubtful accounts (178) (178)
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Accounts receivable, net $ 21,029 $ 15,764
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Unbilled accounts receivable comprise recognized recoverable costs and
accrued profits on contracts for which billings had not been presented to
clients as of the balance sheet date. Management anticipates the collection of
these amounts within 90 days of the balance sheet date. Payments to the Company
on contracts with agencies and departments of the U.S. Government are subject to
adjustment upon audit by the U.S. Government. All years subsequent to 1997 are
subject to U.S. Government audit. Management believes the effect of audit
adjustments, if any, on periods not yet audited, will not have a material effect
on the financial statements.
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5. Acquisitions
On August 28, 2000, the Company acquired all of the outstanding capital
stock of Viking Technology, Inc. ("Viking") for $2 million cash plus the
assumption of debt in a business combination accounted for as a purchase. Viking
is a leading provider of integrated software and advanced technology solutions
for state and local law enforcement, fire and emergency medical service
agencies. The excess of purchase price over the fair value of the net assets was
approximately $3.6 million. At the time of the acquisition, Viking had 20
employees.
6. Net Income Per Share
Basic and diluted earnings per share for the three months ended March 31,
2001 and 2000 were determined as follows:
Three Months Ended March 31, 2001 Three Months Ended March 31, 2000
(Dollars in thousands, except for per share amounts)
----------------------------------- ----------------------------------
Net Net
Income Shares Per Share Income Shares Per Share
---------- ---------- --------- ---------- ---------- ---------
Basic EPS ................ $ 2,438 22,472,154 $ 0.11 $ 1,413 18,257,334 $ 0.08
Effect of dilutive options -- 3,064,115 (0.01) -- 5,184,255 (0.02)
---------- ---------- -------- ---------- ---------- --------
Diluted EPS .............. $ 2,438 25,536,269 $ 0.10 $ 1,413 23,441,589 $ 0.06
========== ========== ======== ========== ========== ========
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
PEC Solutions is a professional services firm specializing in high-end
solutions that help government organizations capitalize on the Internet and
other advanced technologies. We migrate paper-intensive procedures to
web-enabled processes using eGovernment solutions that help our clients enhance
their productivity and improve the services they offer to the public. As a total
solutions provider, we address the full technology lifecycle, including
formulating technology strategies, creating business solutions, performing
long-term operational management and continuing enhancement of the solution.
We derive substantially all of our revenues from fees for consulting
services. We generate these fees from contracts with various payment
arrangements, including time and materials contracts, fixed-price contracts and
cost-reimbursable contracts. During the three months ended March 31, 2001,
revenues from these contract types were approximately 77%, 12% and 11%,
respectively, of total revenues. We typically issue invoices monthly to manage
outstanding accounts receivable balances. We recognize revenues on time and
materials contracts as the services are provided. We recognize revenues on
fixed-price contracts using the percentage of completion method as services are
performed over the life of the contract, based on the costs we incur in relation
to the total estimated costs. We recognize and make provisions for any
anticipated contract losses at the time we know and can estimate them.
Fixed-price contracts are attractive to clients and, while subject to increased
risks, provide opportunities for increased margins. We recognize revenues on
cost-reimbursable contracts as services are provided. These revenues are equal
to the costs incurred in providing these services plus a proportionate amount of
the fee earned. We have historically recovered all of our costs on
cost-reimbursable contracts, which means we have lower risk and our margins are
lower on these contracts.
Our historical revenue growth is attributable to various factors, including
an increase in the size and number of projects for existing and new clients.
Existing clients from the previous year generated approximately 80% of our
revenues in the three months ended March 31 2001. As of March 31, 2001, we had
708 personnel.
In the three months ended March 31, 2001, we derived approximately 36% of
our revenues through relationships with prime contractors, who contract directly
with the end-client and subcontract with us. In most of these engagements, we
retain full responsibility for the end-client relationship and direct and manage
the activities of our contract staff.
Our most significant expense is direct costs, which consist primarily of
project personnel salaries and benefits, and direct expenses incurred to
complete projects. Our direct costs as a percentage of revenues are also related
to the utilization rate of our consulting personnel. We manage utilization by
frequently monitoring project requirements and timetables. The number of
consulting personnel assigned to a project will vary according to the size,
complexity, duration and demands of the project.
General and administrative expenses consist primarily of costs associated
with our executive management, finance and administrative groups, human
resources, unassigned consulting personnel, personnel training, occupancy costs,
depreciation and amortization, travel and all other branch and corporate costs.
Sales and marketing expenses include the costs of sales and marketing
personnel and costs associated with marketing and bidding on future projects.
Other income consists primarily of interest income earned on our cash, cash
equivalents and marketable securities.
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Results of Operations
The following table sets forth certain financial data as a percentage of
revenues for the periods indicated.
THREE MONTHS ENDED
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MARCH 31, MARCH 31,
2001 2000
(Dollars in thousands)
Statement of Income:
Revenues............................................. $21,920 $15,582
Direct costs......................................... 11,798 8,903
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Gross profit (a)..................................... 10,122 6,679
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Other operating costs and expenses:
General and administrative expenses................ 5,368 3,941
Sales and marketing expenses....................... 895 540
Amortization of goodwill .......................... 180 --
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Total other operating costs and expenses..... 6,443 4,481
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Operating income..................................... 3,679 2,198
Other income, net.................................... 468 115
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Income before income taxes........................... 4,147 2,313
Provision for income taxes........................... 1,709 900
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Net income........................................... $ 2,438 $ 1,413
======= =======
As a Percentage of Revenues:
Revenues............................................. 100.0% 100.0%
Direct costs......................................... 53.8 57.1
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Gross profit (a)..................................... 46.2 42.9
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Other operating costs and expenses:
General and administrative expenses............. 24.5 25.3
Sales and marketing expenses.................... 4.1 3.5
Amortization of goodwill ....................... 0.8 --
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Total other operating costs and expenses...... 29.4 28.8
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Operating income....................................... 16.8 14.1
Other income, net...................................... 2.1 0.8
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Income before income taxes............................. 18.9 14.9
Provision for income taxes............................. 7.8 5.8
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Net income............................................. 11.1% 9.1%
======= =======
- --------------------------
(a) Gross profit represents revenues less direct costs, which consist primarily
of project personnel salaries and benefits and direct expenses incurred to
complete projects.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 COMPARED WITH
THE THREE MONTHS ENDED MARCH 31, 2000
REVENUES. For the three months ended March 31, 2001, our total revenues
increased by 40.7%, or $6.3 million over the same period last year. The increase
in revenues primarily reflects an increase in the volume of services to existing
clients and services to new clients, which represents approximately 20% of
revenues.
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DIRECT COSTS. For the three months ended March 31, 2001, direct costs
increased by 32.5%, or $2.9 million, over the same period last year. The
increase was due primarily to an increase in project personnel to 627 as of
March 31, 2001 as compared to 384 as of March 31, 2000. Direct costs decreased
as a percentage of revenues for the period ended March 31, 2001, to 53.8% as
compared to 57.1% in the same period last year, due to normal fluctuations in
labor and other direct costs.
GROSS PROFIT. Gross profit increased by 51.5% to $10.1 million in the three
months ended March 31, 2001 from $6.4 million in the three months ended March
31, 2000. Gross profit as a percentage of revenues increased to 46.2% in the
three months ended March 31, 2001 from 42.9% in the three months ended March 31,
2000, as direct costs grew at a slower rate than revenues due to normal
fluctuations in labor and other direct costs.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased 36.2% to $5.4 million in the three months ended March 31, 2001 from
$3.9 million in the three months ended March 31, 2000. Facility costs increased
in the current quarter over last year due to the opening of new offices in
Fairfax, Virginia. Our total general and administrative headcount increased to
81 employees as of March 31, 2001 compared to 53 employees as of March 31, 2000,
consistent with our plans.
SALES AND MARKETING. Sales and marketing expenses increased 65.6% to $0.9
million in the three months ended March 31, 2001 from $0.5 million in the three
months ended March 31, 2000. This increase was due to an increase in our
marketing efforts.
AMORTIZATION OF GOODWILL. In the three months ended March 31, 2001, we
incurred $180,000 of amortization expense related to the $3.6 million of
goodwill we recorded in connection with the acquisition of Viking.
OPERATING INCOME. Operating income increased 67.4% to $3.7 million in the
three months ended March 31, 2001 from $2.2 million in the three months ended
March 31, 2000. This increase was due primarily to increased revenues and
decreased costs as a percentage of revenues.
-9-
Our revenues and operating results may be subject to significant variation
from quarter to quarter depending on a number of factors, including the progress
of contracts, revenues earned on contracts, the number of billable days in a
quarter, the timing of the pass-through of other direct costs, the commencement
and completion of contracts during any particular quarter, the schedule of the
government agencies for awarding contracts, the term of each contract that we
have been awarded and general economic conditions. Because a significant portion
of our expenses, such as personnel and facilities costs, are fixed in the short
term, successful contract performance and variation in the volume of activity as
well as in the number of contracts commenced or completed during any quarter may
cause significant variations in operating results from quarter to quarter.
The federal government's fiscal year ends September 30. If a budget for the
next fiscal year has not been approved by that date, our clients may have to
suspend engagements that we are working on until a budget has been approved.
Such suspensions may cause us to realize lower revenues in the fourth quarter of
the year. Further, a change in Presidential administrations and in senior
government officials may negatively affect the rate at which the federal
government purchases technology, although we have not seen a negative impact
with the current change in administration.
As a result of the factors above, period to period comparisons of our
revenues and operating results may not be meaningful. You should not rely on
these comparisons as indicators of future performance as no assurances can be
given that quarterly results will not fluctuate, causing a material adverse
effect on our operating results and financial condition.
Liquidity and Capital Resources
Prior to the IPO, we funded our operations primarily through cash generated
from operations and the sale of common stock to employees. Net cash used by
operating activities was $0.9 million for the three months ended March 31, 2001.
Cash used by operating activities was primarily from net income, adjusted for
working capital changes, principally an increase in accounts receivable.
Net cash used by investing activities was $1.4 million for the three months
ended March 31, 2001. During the three months ended March 31, 2001, we purchased
$0.2 million of property and equipment and $1.0 million of short-term
investments and incurred $0.2 million for capitalized software development
costs.
-10-
Net cash provided by financing activities was $0.2 million from the sale of
common stock to employees upon the exercise of their stock options for the three
months ended March 31, 2001.
Although dividends have been paid in prior years, including $0.4 million in
the three months ended March 31, 2000, which were accrued at December 31, 1999,
we expect to retain future earnings, if any, for use in the operation and
expansion of our business and do not anticipate paying any further cash
dividends in the foreseeable future.
We believe that our current cash position is adequate for our short-term
and long-term working capital and capital expenditure needs.
We maintained a $2.7 million line of credit with Bank of America, bearing
interest at the bank's prime rate, which expired on April 30, 2001. We are
currently renegotiating the renewal of our line of credit. As of March 31, 2001,
we had no borrowings outstanding under the line of credit. We did have
outstanding $1.29 million in letters of credit in lieu of rent deposits.
Under some of our fixed-price contracts, we receive advance payments for
work to be performed in future months. If we do not perform the work, the
unearned portion of these advances will be returned to our clients. At March 31,
2001, our accounts receivable turn over rate, net of advance payments on
contracts, was approximately four times a year. This rate has decreased slightly
over the last eight quarters.
Recent Accounting Pronouncements
None Applicable
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
The matters discussed in this Form 10-Q include forward-looking statements
that involve risks or uncertainties. While forward-looking statements are
sometimes presented with numerical specificity, they are based on various
assumptions made by management regarding future circumstances over many of which
we have little or no control. Forward-looking statements may be identified by
words including "anticipate," "believe," "estimate," "expect" and similar
expressions. We caution readers that forward-looking statements, including
without limitation, those relating
-11-
to our future business prospects, revenues, working capital, liquidity, and
income, are subject to certain risks and uncertainties that would cause actual
results to differ materially from those indicated in the Forward-Looking
Statements. Factors that could cause actual results to differ from
Forward-Looking Statements include the concentration of our revenues from
government clients, risks involved in contracting with the government,
difficulties we may have in attracting, retaining and managing professional and
administrative staff, fluctuations in quarterly results, risks related to
acquisitions, risks related to competition and our ability to continue to win
and perform efficiently on contracts, and other risks and factors identified
from time to time in our reports filed with the SEC, including those identified
under the section entitled "Risk Factors" in our Registration Statement on Form
10-K (SEC File No. 000-30271) as amended which hereby is incorporated by
reference. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated or projected.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK
We invest our cash in a variety of financial instruments, including U.S.
Treasury and Agency obligations, money market instruments of domestic and
foreign issuers denominated in U.S. dollars of commercial paper, bankers'
acceptances, certificates of deposit, euro-dollar time deposits and variable
rate issues, corporate note and bonds, asset-backed securities, repurchase
agreements, municipal notes and bonds and auction rate preferred securities.
Investments in both fixed and floating rate interest earning instruments
carry a degree of interest rate risk. Fixed securities may have their fair
market value adversely impacted because of a rise in interest rates, while
floating rare securities may produce less income than expected if interest rates
fall. Due in part to these factors, the Company's future investment income may
fall short of expectations because of changes in interest rates or the Company
may suffer losses in principal if forced to sell securities which have seen a
decline in market value because of changes in interest rates.
Our investments are made in accordance with an investment policy approved
by the Board of Directors. Under this policy, no investment securities can have
maturities exceeding one year and the average duration of the portfolio can not
exceed six months.
-12-
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2001, we sold an aggregate of
75,146 shares of common stock at purchase prices ranging from $1.10 to $2.84
per share, for an aggregate consideration of $155,000 thousand upon exercise
of stock options granted under our stock option agreement and our
nonqualified stock option plan. These sales were covered by a registration
statement on Form S-8.
In April 2000, we commenced and completed a firm commitment underwritten
initial public offering of 3,000,000 shares of our common stock at a price of
$9.50 per share. The shares were registered with the Securities and Exchange
Commission pursuant to a registration statement on Form S-1 (No. 333-95331),
which was declared effective on April 19, 2000. The public offering was
underwritten by a syndicate of underwriters led by Donaldson, Lufkin & Jenrette
Securities Corporation; Chase Securities Inc.; Legg Mason Wood Walker,
Incorporated; and DLJDIRECT Inc. as their representatives. After deducting
underwriting discounts and commissions of approximately $2 million and expenses
of approximately $0.9 million, we received net proceeds of $25.6 million.
The primary purposes of this offering were to create a public market for
our common stock, to improve the incentive mechanism for our professionals
through stock options, to obtain additional equity capital and to facilitate
future access to public markets. We expect to use the net proceeds from this
offering for general corporate purposes, including working capital. On August
28, 2000, we acquired all of the outstanding capital stock of Viking for $2
million cash plus the assumption of debt in a business combination accounted for
as a purchase. Viking is a leading provider of integrated software and advanced
technology solutions for state and local law enforcement, fire and emergency
medical service agencies. Management will have broad discretion in the
allocation of the net proceeds. We may also use a portion of the net proceeds to
acquire businesses that are complementary to ours. We have no current plans,
agreements or commitments for, and are not currently engaged in any negotiations
with respect to, any such transaction. Pending their use, the proceeds of this
offering have been invested in short-term, investment grade, interest-bearing
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
-13-
ITEM 6 (A) EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------- -------------------
3.1* Certificate of Incorporation
3.2* By-Laws
10.1* Office Lease Agreement between Building IV
Associates L.P. and the Registrant
10.2* Amendment No. 1 to Office Lease Agreement between
Building IV Associates L.P. and the Registrant
10.3* Office Lease Agreement between Building V
Associates L.P. and the Registrant
10.4* Employment Agreement between the Registrant and
David C. Karlgaard, dated January 1, 2000
10.5* Employment Agreement between the Registrant and
Paul G. Rice, dated January 1, 2000
10.6* Employment Agreement between the Registrant and
Alan H. Harbitter, dated January 1, 2000
10.7* Employment Agreement between the Registrant and
Stuart R. Lloyd, dated December 31, 1998
10.8* 2000 Stock Incentive Plan
10.9* 1995 Nonqualified Stock Option
10.10* 1987 Stock Option Agreement, as amended
10.11* Nonqualified Executive Supplemental Retirement
Program Agreement dated December 1998
10.12* 2000 Employee Stock Option Plan
10.13* Amended and Restated Loan Agreement between the
Registrant and NationsBank, N.A.
10.14** Amendment No. 2 to Office Lease Agreement between Building
IV Associates L.P. and PEC Solutions, Inc.
10.15** Amendment No. 3 to Office Lease Agreement between Building
IV Associates L.P. and PEC Solutions, Inc.
10.16** Office Lease Agreement between Building VI L.C. and
PEC Solutions, Inc.
21.1** Subsidiaries of PEC Solutions, Inc.
* Incorporated herein by reference to the Company's Registration Statement on
Form S-1, No. 333-95331.
** Incorporated herein by reference to the Company's Annual Report on Form 10K/A
filed on April 19, 2001.
(b) Reports on Form 8-K
None.
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Signatures
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
COMPANY HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
BY: /s/ STUART R. LLOYD
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Stuart R. Lloyd
CHIEF FINANCIAL OFFICER, SENIOR VICE PRESIDENT AND
DIRECTOR (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
May 11, 2001
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