SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
April 26, 2005 (April 26, 2005)
Date of Report (Date of earliest event reported)
EPIQ SYSTEMS, INC.
(Exact name of company as specified in its charter)
Missouri 0-22081 48-1056429
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
501 Kansas Avenue
Kansas City, KS 66105
(Address of principal executive offices) (Zip Code)
(913) 621-9500
(Company's telephone number, including area code)
Not Applicable
(Former name or former address if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
Quarterly Earnings Release and Investor Call. On April 26, 2005, EPIQ
Systems, Inc. issued a press release announcing its financial results for the
first quarter ended March 31, 2005. A copy of the press release is attached as
Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by
reference.
Management of EPIQ Systems believes that certain non-GAAP financial
measures provide additional insight for investors into the operating results and
business trends of the Company. The Company uses these non-GAAP financial
measures (i) in its strategic planning for the Company and (ii) in evaluating
the results of operations of the Company. Consistent with prior periods, in this
period, the Company has provided investors with non-GAAP net income from
continuing operations, calculated as net income from continuing operations plus
amortization of acquisition-related intangibles, acquisition-related expenses,
amortization and write-off of capitalized loan fees and embedded option
mark-to-market expense/convertible debt accretion, all net of tax, as well as
non-GAAP net income per share from continuing operations. Reconciliations of
non-GAAP net income and earnings per share from continuing operations to GAAP
net income and earnings per share from continuing operations are included in
schedules to the press release filed with this Current Report on Form 8-K. The
Company also uses non-GAAP adjusted EBITDA. EBITDA is a component of virtually
all the financial covenants contained in the Company's current and previous debt
agreements, and management regularly reviews EBITDA as it assesses its current
and prospective compliance with these financial covenants. The debt agreement
covenants adjust EBITDA to exclude certain non-cash costs, non-recurring costs
and acquisition related costs. These adjustments are consistent with how
management evaluates results of operations and are consistent with the Company's
non-GAAP net income calculation. Accordingly, non-GAAP adjusted EBITDA is
calculated as net income from continuing operations plus the provision for
income taxes, interest expense, depreciation, amortization, other non-cash
expenses, and acquisition related expenses. A reconciliation of non-GAAP
adjusted EBITDA to GAAP net income from continuing operations is included in a
schedule to the press release filed with this Current Report on Form 8-K.
The information in this Item 2.02 and in Exhibit 99.1 is not filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section or Section 11 or 12(a)(2)
of the Securities Act of 1933, as amended. The information contained in this
Item 2.02 and in Exhibit 99.1 is not incorporated by reference into any filing
with the SEC made by the Company, whether made before or after the date hereof,
regardless of any general incorporation language in that filing.
Item 8.01. Other Events.
Reclassification of Historic Segment Information. The information included
in this Item 8.01 affects the disclosure of segment results only and in no way
revises or restates the Consolidated Statements of Income, Consolidated Balance
Sheets, Consolidated Statements of Stockholders' Equity or Consolidated
Statements of Cash Flows for EPIQ Systems, Inc. and consolidated subsidiaries.
The Company has determined that, beginning in the first quarter 2004,
certain revenues from reimbursed expenses and certain expenses, including
reimbursed expenses, related to its Poorman-Douglas subsidiary were incorrectly
allocated between the Company's case management segment and document management
segment. The Company's management and audit committee have discussed this matter
with Deloitte & Touche LLP, the Company's independent registered public
accountants.
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The anticipated classification errors between the two segments are not
material to the Company's audited or unaudited financial statements for any
prior period, and the Company, in consultation with its audit committee, has
determined that no amendments to previously filed financial statements will be
required. The classification errors will affect the segment notes to the
Company's unaudited financial statements included in its quarterly reports on
Form 10-Q for the quarters ended March 31, June 30, and September 30, 2004 and
the segment note to the Company's audited financial statements included in its
annual report on Form 10-K for the year ended December 31, 2004. Based on the
Company's preliminary analysis, the estimated correction will increase operating
income for the case and document management segments by less than $0.1 million
each and decrease the unallocated segment's operating income by approximately
$0.1 million for the three months ended March 31, 2004, increase document
management and unallocated operating income by approximately $1.1 million and
$0.1 million, respectively and decrease case management operating income by
approximately $1.2 million for the three months ended June 30, 2004, increase
document management operating income and decrease case management operating
income by approximately $0.1 million for the three months ended September 30,
2004, and increase document management operating income and decrease case
management operating income by approximately $0.9 million for the year ended
December 31, 2004. The classification errors between the case management and the
document management segments will have no impact on the Company's previously
reported consolidated revenues or net earnings or any other income statement, or
balance sheet, or statement of cash flows line item for these periods.
The Company anticipates reporting the final results of its analysis of the
classification error between the two operating segments for all periods impacted
in its quarterly report on Form 10-Q for the quarter ended March 31, 2005, which
the Company expects to file by May 10, 2005.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibit is filed as part of this report:
Exhibit No. Description
----------- -----------
99.1 EPIQ Systems, Inc. Press Release issued April 26, 2005,
reporting first quarter ended March 31, 2005 financial
results.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EPIQ SYSTEMS, INC.
Date: April 26, 2005
By: /s/ Tom W. Olofson
-----------------------------------
Name: Tom W. Olofson
Title: Chairman of the Board, Chief
Executive Officer and Director
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