þ
|
Annual
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended December 31, 2009
|
|
o
|
Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 Commission file number
001-15169
|
(State
or other jurisdiction of
incorporation
or organization)
|
No.
74-2853258
(I.R.S.
Employer Identification No.)
|
Title
of each class:
Common
Stock, $0.001 par value
|
Name
of each exchange on which registered:
The
Nasdaq Global Select Market
|
Large
accelerated filer
o
|
Accelerated
filer
þ
|
|
Non-accelerated
filer
o
|
Smaller
reporting company
o
|
PART
I
|
|||||
Item
1.
|
Business.
|
1
|
|||
Item
1A.
|
Risk
Factors.
|
9
|
|||
Item
1B.
|
Unresolved
Staff Comments.
|
17
|
|||
Item
2.
|
Properties.
|
17
|
|||
Item
3.
|
Legal
Proceedings.
|
17
|
|||
Item
4.
|
Reserved.
|
17
|
|||
PART
II
|
|||||
Item
5.
|
Market
for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
18
|
|||
Item
6.
|
Selected
Financial Data.
|
19
|
|||
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
20
|
|||
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
30
|
|||
Item
8.
|
Financial
Statements and Supplementary Data.
|
31
|
|||
Item
9.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure.
|
52
|
|||
Item
9A.
|
Controls
and Procedures.
|
52
|
|||
Item
9B.
|
Other
Information.
|
52
|
|||
PART
III
|
|||||
Item
10.
|
Directors,
Executive Officers and Corporate Governance.
|
53
|
|||
Item
11.
|
Executive
Compensation.
|
54
|
|||
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
54
|
|||
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
54
|
|||
Item
14.
|
Principal
Accounting Fees and Services.
|
54
|
|||
PART
IV
|
|||||
Item
15.
|
Exhibits,
Financial Statement Schedules.
|
55
|
Item 1.
|
Business.
|
·
|
Domain Expertise. We
have acquired significant domain expertise in a core set of technology
solutions and software platforms. These solutions include, among others,
custom applications, portals and collaboration, eCommerce, CRM, enterprise
content management, business intelligence, business integration, mobile
technology solutions, technology platform implementations and service
oriented architectures, and enterprise service bus. The platforms in which
we have significant domain expertise and on which these solutions are
built include IBM WebSphere, Lotus, Information Management and Rational,
TIBCO BusinessWorks, Microsoft.NET, Oracle, Cognos (acquired by IBM), and
Documentum, among others.
|
·
|
Delivery Model and
Methodology. We believe our significant domain expertise enables us
to provide high-value solutions through expert project teams that deliver
measurable results by working collaboratively with clients through a
user-centered, technology-based and business-driven solutions methodology.
Our methodology includes a proven execution process map we developed,
which allows for repeatable, high quality services delivery. The
methodology leverages the thought leadership of our senior strategists and
practitioners to support the client project team and focuses on
transforming our clients' business processes to provide enhanced customer
value and operating efficiency, enabled by web technology. As a result, we
believe we are able to offer our clients the dedicated attention that
small firms usually provide and the delivery and project management that
larger firms usually offer.
|
·
|
Client Relationships.
We have built a track record of quality solutions and client satisfaction
through the timely, efficient and successful completion of numerous
projects for our clients. As a result, we have established long-term
relationships with many of our clients who continue to engage us for
additional projects and serve as references for us. Over the past three
years ending December 31, 2009, an average of 86% of revenues were derived
from clients who continued to utilize our services from the prior year,
excluding any revenues from acquisitions completed in that
year.
|
·
|
Vendor Relationship and
Endorsements. We have built meaningful relationships with software
providers, whose products we use to design and implement solutions for our
clients. These relationships enable us to reduce our cost of sales and
sales cycle times and increase win rates by leveraging our partners'
marketing efforts and endorsements. We also serve as a sales channel for
our partners, helping them market and sell their software products. We are
a Premier IBM business partner, a TeamTIBCO partner, a Microsoft Gold
Certified Partner, a Certified Oracle Partner, and an EMC Documentum
Select Services Team Partner. Our vendors have recognized our
relationships with several awards. Most recently, we were named
IBM's 2009 Information Agenda Partner of the Year. The honor marked the
fourth consecutive year that we have received a major business partner
award from IBM. Also in 2009, we ranked #11 on Healthcare Informatics
magazine's 2009 list of the largest healthcare consulting firms and were
selected by the readership of CGT Magazine as one of
the Top 10 Consulting Partners for consumer goods companies in North
America.
|
·
|
Geographic Focus. We
believe we have built one of the leading independent information
technology consulting firms in the United States. We serve our clients
from locations in 17 markets throughout North America. In addition, as of
December 31, 2009, we had 423 colleagues who are part of “national”
business units and travel extensively to serve clients primarily in North
America and Europe. Our future growth plan includes expanding our business
both organically and through acquisitions, with a primary focus on the
United States.
|
·
|
Offshore Capability. We
own and operate a CMMI Level 5 certified global development center in
Hangzhou, China. This facility is staffed with colleagues who provide
offshore custom application development, quality assurance and testing
services. Additionally, we have a relationship with an offshore
development facility in Bitola, Macedonia. Through these facilities we
contract with a team of professionals with expertise in IBM, TIBCO and
Microsoft technologies and with specializations that include application
development, adapter and interface development, quality assurance and
testing, monitoring and support, product development, platform migration,
and portal development. In addition to our offshore capabilities, we
employ a substantial number of foreign nationals in the United States on
H1-B visas. We also maintain a recruiting facility in Chennai,
India, to continue to grow our base of H1-B foreign national
colleagues. As of December 31, 2009, we had 136 colleagues at
the Hangzhou, China facility and 198 colleagues with H1-B
visas. We intend to continue to leverage our existing offshore
capabilities to support our growth and provide our clients flexible
options for project delivery.
|
·
|
give
managers and executives the information they need to make quality business
decisions and dynamically adapt their business processes and systems to
respond to client demands, market opportunities or business
problems;
|
·
|
improve
the quality and lower the cost of customer acquisition and care through
web-based customer self-service and
provisioning;
|
·
|
reduce
supply chain costs and improve logistics by flexibly and quickly
integrating processes and systems and making relevant real-time
information and applications available online to suppliers, partners and
distributors;
|
·
|
increase
the effectiveness and value of legacy enterprise technology infrastructure
investments by enabling faster application development and deployment,
increased flexibility and lower management costs;
and
|
·
|
increase
employee productivity through better information flow and collaboration
capabilities and by automating routine processes to enable focus on unique
problems and opportunities.
|
·
|
Business Analysis. We
design, develop and implement business strategy solutions, technology
roadmaps, competitor benchmarks, and current-state assessments. Our
business consultants analyze existing initiatives, infrastructure and
investments, and counsel our clients on how to leverage technology to
achieve maximum return-on-investment and business
impact.
|
·
|
Enterprise portals and
collaboration. We design, develop, implement, and integrate secure
and scalable enterprise portals for our clients and their customers,
suppliers and partners that include searchable data systems, collaborative
systems for process improvement, transaction processing, unified and
extended reporting, and content management and
personalization.
|
·
|
Business integration.
We design, develop and implement business integration solutions that allow
our clients to integrate all of their business processes end-to-end and
across the enterprise. Truly innovative companies are extending those
processes, and eliminating functional friction, between the enterprise,
core customers, and partners. Our business integration solutions can
extend and extract core applications, reduce infrastructure strains and
cost, web-enable legacy applications, provide real-time insight into
business metrics, and introduce efficiencies for customers, suppliers and
partners.
|
·
|
Enterprise content management
(ECM). We design, develop and implement ECM solutions that enable
the management of all unstructured information regardless of file type or
format. Our ECM solutions can facilitate the creation of new content
and/or provide easy access and retrieval of existing digital assets from
other enterprise tools such as enterprise resource planning (ERP),
customer relationship management or legacy applications. Our ECM solutions
include Enterprise Imaging and Document Management, Web Content
Management, Digital Asset Management, Enterprise Records Management,
Compliance and Control, Business Process Management and Collaboration, and
Enterprise Search.
|
·
|
Customer relationship
management (CRM). We design, develop and implement advanced CRM
solutions that facilitate customer acquisition, service and support,
sales, and marketing by understanding our customers' needs through
interviews, requirement gathering sessions and call center analysis,
developing an iterative, prototype driven solution, and integrating the
solution to legacy processes and
applications.
|
·
|
Service oriented architectures
(SOA) and enterprise service bus (ESB). We design, develop and
implement SOA and ESB solutions that allow our clients to quickly adapt
their business processes to respond to new market opportunities or
competitive threats by taking advantage of business strategies supported
by flexible business applications and IT
infrastructures.
|
·
|
Business intelligence.
We design, develop and implement business intelligence solutions that
allow companies to interpret and act upon accurate, timely and integrated
information. By classifying, aggregating and correlating data into
meaningful business information, business intelligence solutions help our
clients make more informed business decisions. Our business intelligence
solutions allow our clients to transform data into knowledge for quick and
effective decision making and can include information strategy, data
warehousing, and business analytics and
reporting.
|
·
|
eCommerce. We design,
develop and implement secure and reliable eCommerce infrastructures that
dynamically integrate with back-end systems and complementary applications
that provide for transaction volume scalability and sophisticated content
management.
|
·
|
Mobile technology
solutions. We design, develop and implement mobile technology
solutions that deliver wireless capabilities to carriers, Mobile Virtual
Network Operators (MVNO), Mobile Virtual Network Enablers (MVNE), and the
enterprise. Our expertise with wireless technologies such as SIP, MMS,
WAP, and GPRS is coupled with our extensive knowledge in mobile content
delivery. Our secure and scalable solutions can include mobile content
delivery systems, wireless value-added services, custom developed
applications to pervasive devices, and customer care
solutions.
|
·
|
Technology platform
implementations. We design, develop and implement technology
platform implementations that allow our clients to establish a robust,
reliable Internet-based infrastructure for integrated business
applications which extend enterprise technology assets to employees,
customers, suppliers, and partners. Our platform services include
application server selection, architecture planning, installation and
configuration, clustering for availability, performance assessment and
issue remediation, security services, and technology
migrations.
|
·
|
Custom applications. We
design, develop, implement, and integrate custom application solutions
that deliver enterprise-specific functionality to meet the unique
requirements and needs of our clients. Our substantial experience with
platforms including J2EE, .Net and Open-source enables enterprises of all
types to leverage cutting-edge technologies to meet business-driven
needs.
|
·
|
iterative
and results oriented;
|
·
|
centered
around a flexible and repeatable
framework;
|
·
|
collaborative
and customer-centered in that we work with not only our clients but with
our clients' customers in developing our
solutions;
|
·
|
focused
on delivering high value, measurable results;
and
|
·
|
grounded
by industry leading project
management.
|
·
|
Grow Relationships with
Existing and New Clients. We intend to continue to solidify and
expand enduring relationships with our existing clients and to develop
long-term relationships with new clients by providing them with solutions
that generate a demonstrable, positive return-on-investment. Our incentive
plan rewards our project managers to work in conjunction with our sales
people to expand the nature and scope of our engagements with existing
clients.
|
·
|
Resume Making Disciplined
Acquisitions. Given the economic conditions during 2008 and 2009,
we suspended acquisition activity, pending improved visibility into the
health of the economy. With the expected return to growth in
2010, we plan to resume our disciplined acquisition
strategy. The information technology consulting market is a
fragmented industry and we believe there are a substantial number of
smaller privately held information technology consulting firms that can be
acquired and be accretive to our financial results. We have a track record
of successfully identifying, executing and integrating acquisitions that
add strategic value to our business. Our established culture and
infrastructure positions us to successfully integrate each acquired
company, while continuing to offer effective solutions to our
clients.
|
·
|
Expand Geographic Base.
We believe we have built one of the leading independent information
technology consulting firms in the United States. We serve our customers
from locations in 17 markets throughout North America. In addition, as of
December 31, 2009, we had 423 colleagues who are part of “national”
business units and travel extensively to serve clients primarily in North
America and Europe. Our future growth plan includes expanding our business
both organically and through acquisitions, with a primary focus on the
United States.
|
·
|
Continue Repurchasing Our
Equity Securities. In an ongoing effort to provide the
most value to our stockholders, the Board of Directors authorized the
repurchase of up to $40.0 million of our common stock as part of a program
that expires at the end of June 2011. As of December 31, 2009,
we had repurchased approximately $27.5 million, or 4.5 million shares, of
our outstanding common stock. We believe, at certain price
levels, our stock is undervalued and the repurchase program provides the
best way to return the value to our stockholders. We will
continually re-evaluate the position of our stock price and will seek
additional authorization to repurchase our common stock as
necessary.
|
·
|
Enhance Brand
Visibility. Our focus on a core set of technology solutions,
applications and software platforms, and a targeted customer and
geographic market has given us brand visibility. In addition, we believe
we have achieved the size necessary to enhance our visibility among
prospective clients, employees and software vendors. As we continue to
grow our business, we intend to highlight to current and prospective
customers our leadership in technology solutions and infrastructure
software technology platforms.
|
·
|
Leverage Offshore
Capabilities. Our solutions and services are primarily delivered at
the customer site and require a significant degree of customer
participation, interaction and specialized technology
expertise. We can compliment this with lower cost offshore
technology professionals to perform less specialized roles on our solution
engagements, enabling us to fully leverage our United States colleagues
while offering our clients a highly competitive blended average rate. We
own and operate a CMMI Level 5 certified global development center in
Hangzhou, China that is staffed with colleagues who provide offshore
custom application development, quality assurance and testing services and
we have a relationship with an offshore development facility in Bitola,
Macedonia. In addition to our offshore capabilities, we employ a
substantial number of H1-B foreign nationals in the United
States. We also maintain a recruiting facility in Chennai,
India, to continue to grow our base of H1-B foreign national
colleagues. As of December 31, 2009 we had 136 colleagues at
the Hangzhou, China facility and 198 colleagues with H1-B
visas. We intend to continue to leverage our existing offshore
capabilities to support our growth and provide our clients flexible
options for project delivery.
|
·
|
Invest in Our People and
Culture. We have developed a culture built on teamwork, a passion
for technology and client service, and a focus on cost control and the
bottom line. As a people-based business, we continue to invest in the
development of our professionals and to provide them with entrepreneurial
opportunities, and career development and advancement. Our technology,
business consulting and project management ensure that client team best
practices are being developed across the company and our recognition
program rewards teams for implementing those practices. We believe this
results in a team of motivated professionals with the ability to deliver
high-quality and high-value services for our
clients.
|
·
|
Leverage Existing and Pursue
New Strategic Alliances. We intend to continue to develop alliances
that complement our core competencies. Our alliance strategy is targeted
at leading business advisory companies and technology providers and allows
us to take advantage of compelling technologies in a mutually beneficial
and cost-competitive manner. Many of these relationships, and in
particular IBM, result in our partners, their clients or clients using IBM
platforms, utilizing us as the services firm of
choice.
|
·
|
Expand and Enhance Our
Industry Vertical Focus. We have industry focused
practices such as healthcare, communications and consumer
products. The goal of these industry verticals is to recruit
and retain consultants with specific industry expertise and to ‘mine’ and
leverage the intellectual property we have as we serve clients within
these industries. Expanding these verticals will help us in
terms of revenue generation as well as market expansion beyond our
geographic and solution focused business
units.
|
·
|
small
local consulting firms that operate in no more than one or two geographic
regions;
|
·
|
regional
consulting firms such as Prolifics and MSI Systems
Integrators;
|
·
|
national
consulting firms, such as Accenture, Deloitte Consulting, Ciber, and
Sapient;
|
·
|
in-house
professional services organizations of software companies;
and
|
·
|
to
a limited extent, offshore providers such as Infosys Technologies Limited
and Wipro Limited.
|
·
|
we
believe in long-term client and vendor relationships built on investment
in innovative solutions, delivering more value than the competition and a
commitment to excellence;
|
·
|
we
believe in growth and profitability and building meaningful
scale;
|
·
|
we
believe each of us is ultimately responsible for our own career
development and has a commitment to mentor
others;
|
·
|
we
believe that Perficient has an obligation to invest in our consultants'
training and education;
|
·
|
we
believe the best career development comes on the job;
and
|
·
|
we
love challenging new work
opportunities.
|
Item 1A.
|
Risk
Factors.
|
·
|
continue
to develop our technology
expertise;
|
·
|
enhance
our current services;
|
·
|
develop
new services that meet changing customer
needs;
|
·
|
advertise
and market our services; and
|
·
|
influence
and respond to emerging industry standards and other technological
changes.
|
·
|
security;
|
·
|
intellectual
property ownership;
|
·
|
privacy;
|
·
|
taxation;
and
|
·
|
liability
issues.
|
·
|
political
and economic instability;
|
·
|
global
health conditions and potential natural
disasters;
|
·
|
unexpected
changes in regulatory requirements;
|
·
|
international
currency controls and exchange rate
fluctuations;
|
·
|
reduced
protection for intellectual property rights in some countries;
and
|
·
|
additional
vulnerability from terrorist groups targeting American interests
abroad.
|
·
|
demand
for software and services;
|
·
|
customer
budget cycles;
|
·
|
changes
in our customers' desire for our partners' products and our
services;
|
·
|
pricing
changes in our industry; and
|
·
|
government
regulation and legal developments regarding the use of the
Internet.
|
·
|
difficulties
in the integration of services and personnel of the acquired
business;
|
·
|
the
failure of management and acquired services personnel to perform as
expected;
|
·
|
the
acquisition of fixed fee customer agreements that require more effort than
anticipated to complete;
|
·
|
the
risks of entering markets in which we have no, or limited, prior
experience, including offshore operations in countries in which we have no
prior experience;
|
·
|
the
failure to identify or adequately assess any undisclosed or potential
liabilities or problems of the acquired business including legal
liabilities;
|
·
|
the
failure of the acquired business to achieve the forecasts we used to
determine the purchase price; or
|
·
|
the
potential loss of key personnel of the acquired
business.
|
Item
1B.
|
Unresolved
Staff Comments.
|
Item 2.
|
Properties.
|
Item 3.
|
Legal
Proceedings.
|
Item 4.
|
Reserved.
|
Item 5.
|
Market
for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
High
|
Low
|
|||||||
Year
Ending December 31, 2009:
|
||||||||
First
Quarter
|
$
|
5.71
|
$
|
3.10
|
||||
Second
Quarter
|
7.44
|
5.12
|
||||||
Third
Quarter
|
8.64
|
6.31
|
||||||
Fourth
Quarter
|
9.50
|
7.73
|
||||||
Year
Ending December 31, 2008:
|
||||||||
First
Quarter
|
$
|
17.08
|
$
|
6.43
|
||||
Second
Quarter
|
11.91
|
7.82
|
||||||
Third
Quarter
|
10.94
|
6.04
|
||||||
Fourth
Quarter
|
6.80
|
2.31
|
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid Per
Share
(1)
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Approximate
Dollar Value of Shares that May Yet Be Purchased Under the Plans or
Programs (2)
|
||||||||||||
Beginning
Balance as of October 1, 2009
|
3,872,730
|
$
|
5.66
|
3,872,730
|
$
|
8,079,423
|
||||||||||
October
1-31, 2009
|
245,790
|
8.42
|
245,790
|
$
|
6,018,392
|
|||||||||||
November
1-30, 2009
|
260,000
|
8.48
|
260,000
|
$
|
13,813,900
|
|||||||||||
December
1-31, 2009
|
160,000
|
8.39
|
160,000
|
$
|
12,471,648
|
|||||||||||
Ending
Balance as of December 31, 2009
|
4,538,520
|
$
|
6.07
|
4,538,520
|
(1)
|
Average
price paid per share includes
commission.
|
(2)
|
The
additional program to repurchase up to $10.0 million of our outstanding
common stock was approved by our Board of Directors on November 3,
2009. The repurchase program expires June 30,
2011.
|
Item 6.
|
Selected
Financial Data.
|
Year Ended December 31, | ||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
Income Statement
Data:
|
(In
thousands)
|
|||||||||||||||||||
Revenues
|
$
|
188,150
|
$
|
231,488
|
$
|
218,148
|
$
|
160,926
|
$
|
96,997
|
||||||||||
Gross
margin
|
$
|
48,333
|
$
|
73,502
|
$
|
75,690
|
$
|
53,756
|
$
|
32,418
|
||||||||||
Selling,
general and administrative
|
$
|
40,042
|
$
|
47,242
|
$
|
41,963
|
$
|
32,268
|
$
|
17,917
|
||||||||||
Depreciation and
amortization
|
$
|
5,750
|
$
|
6,949
|
$
|
6,265
|
$
|
4,406
|
$
|
2,226
|
||||||||||
Impairment
of intangible assets
|
$
|
--
|
$
|
1,633
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||||||
Income
from operations
|
$
|
2,541
|
$
|
17,678
|
$
|
27,462
|
$
|
17,082
|
$
|
12,275
|
||||||||||
Net
interest income (expense)
|
$
|
209
|
$
|
528
|
$
|
172
|
$
|
(407
|
)
|
$
|
(643
|
)
|
||||||||
Net
other income (expense)
|
$
|
260
|
$
|
(915
|
)
|
$
|
20
|
$
|
174
|
$
|
43
|
|||||||||
Income
before income taxes
|
$
|
3,010
|
$
|
17,291
|
$
|
27,654
|
$
|
16,849
|
$
|
11,675
|
||||||||||
Net
income
|
$
|
1,463
|
$
|
10,000
|
$
|
16,230
|
$
|
9,567
|
$
|
7,177
|
As
of December 31,
|
||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
||||||||||||||||
Balance
Sheet Data:
|
(In
thousands)
|
|||||||||||||||||||
Cash,
cash equivalents and short-term investments
|
$
|
24,302
|
$
|
22,909
|
$
|
8,070
|
$
|
4,549
|
$
|
5,096
|
||||||||||
Working
capital
|
$
|
50,205
|
$
|
56,176
|
$
|
41,368
|
$
|
24,859
|
$
|
17,078
|
||||||||||
Long-term
investments
|
$
|
3,652
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
||||||||||
Property
and equipment, net
|
$
|
1,278
|
$
|
2,345
|
$
|
3,226
|
$
|
1,806
|
$
|
960
|
||||||||||
Goodwill
and intangible assets, net
|
$
|
111,773
|
$
|
115,634
|
$
|
121,339
|
$
|
81,056
|
$
|
52,031
|
||||||||||
Total
assets
|
$
|
184,810
|
$
|
194,247
|
$
|
189,992
|
$
|
131,000
|
$
|
84,935
|
||||||||||
Current
portion of long term debt and line of credit
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
1,201
|
$
|
1,581
|
||||||||||
Long-term
debt and line of credit, less current portion
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
137
|
$
|
5,338
|
||||||||||
Total
stockholders' equity
|
$
|
168,348
|
$
|
174,818
|
$
|
165,562
|
$
|
107,352
|
$
|
65,911
|
Revenues:
|
2009
|
2008
|
2007
|
|||||||||
Services
revenues
|
88.4
|
%
|
89.6
|
%
|
87.8
|
%
|
||||||
Software
and hardware revenues
|
6.9
|
4.6
|
6.5
|
|||||||||
Reimbursable
expenses
|
4.7
|
5.8
|
5.7
|
|||||||||
Total
revenues
|
100.0
|
100.0
|
100.0
|
|||||||||
Cost
of revenues (depreciation and amortization, shown separately
below):
|
||||||||||||
Project
personnel costs
|
61.0
|
56.6
|
52.6
|
|||||||||
Software
and hardware costs
|
6.2
|
3.7
|
5.5
|
|||||||||
Reimbursable
expenses
|
4.7
|
5.7
|
5.7
|
|||||||||
Other
project related expenses
|
2.4
|
2.2
|
1.5
|
|||||||||
Total
cost of revenues
|
74.3
|
68.2
|
65.3
|
|||||||||
Services
gross margin
|
28.2
|
34.4
|
38.4
|
|||||||||
Software
and hardware gross margin
|
10.2
|
19.4
|
15.9
|
|||||||||
Total
gross margin
|
25.7
|
31.8
|
34.7
|
|||||||||
Selling,
general and administrative
|
21.3
|
20.4
|
19.2
|
|||||||||
Depreciation
and amortization
|
3.0
|
3.0
|
2.9
|
|||||||||
Impairment
of intangible assets
|
0.0
|
0.7
|
0.0
|
|||||||||
Income
from operations
|
1.4
|
7.7
|
12.6
|
|||||||||
Net
interest income
|
0.1
|
0.2
|
0.1
|
|||||||||
Net
other income (expense)
|
0.1
|
(0.4
|
)
|
0.0
|
||||||||
Income
before income taxes
|
1.6
|
7.5
|
12.7
|
|||||||||
Provision
for income taxes
|
0.8
|
3.2
|
5.2
|
|||||||||
Net
income
|
0.8
|
%
|
4.3
|
%
|
7.5
|
%
|
Increase
/ (Decrease)
|
||||
Selling,
General and Administrative Expense
|
(in
millions)
|
|||
Stock
compensation expense
|
$
|
0.7
|
||
Bonus
expense
|
(0.1
|
)
|
||
Office
and technology-related costs
|
(0.5
|
)
|
||
Salary
expense
|
(0.6
|
)
|
||
Sales-related
costs
|
(1.7
|
)
|
||
Bad
debt expense
|
(3.1
|
)
|
||
Other
|
(1.9
|
)
|
||
Net
decrease
|
$
|
(7.2
|
)
|
Financial
Results
|
Explanation
for Increases/(Decreases) Over Prior Year Period
|
|||||||||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||||||
For
the Year Ended
December
31, 2008
|
For
the Year Ended
December
31, 2007
|
Total
Increase/ (Decrease) Over Prior Year Period
|
Increase
Attributable to Acquired Companies*
|
Increase/
(Decrease) Attributable to Base Business**
|
||||||||||||||||
Services
Revenues
|
$
|
207,480
|
$
|
191,395
|
$
|
16,085
|
$
|
29,611
|
$
|
(13,526
|
)
|
|||||||||
Software
and Hardware Revenues
|
10,713
|
14,243
|
(3,530
|
)
|
1,871
|
(5,401
|
)
|
|||||||||||||
Reimbursable
Expenses
|
13,295
|
12,510
|
785
|
1,372
|
(587
|
)
|
||||||||||||||
Total
Revenues
|
$
|
231,488
|
$
|
218,148
|
$
|
13,340
|
$
|
32,854
|
$
|
(19,514
|
)
|
Increase
/ (Decrease)
|
||||
Selling,
General and Administrative Expense
|
(in
millions)
|
|||
Stock
compensation expense
|
$
|
1.7
|
||
Office
and technology-related costs
|
1.5
|
|||
Salary
expense
|
1.4
|
|||
Sales-related
costs
|
1.0
|
|||
Bad
debt expense
|
0.8
|
|||
Customer
dispute settlement
|
0.8
|
|||
Other
|
0.6
|
|||
Bonus
expense
|
(2.6
|
)
|
||
Net
increase
|
$
|
5.2
|
As
of December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Cash,
cash equivalents and investments
|
$ | 28.0 | $ | 22.9 | $ | 8.1 | ||||||
Working
capital (including cash and cash equivalents)
|
$ | 50.2 | $ | 56.2 | $ | 41.5 | ||||||
Amounts
available under credit facilities
|
$ | 50.0 | $ | 49.9 | $ | 49.8 |
|
Payments
Due by Period
|
|||||||||||||||||||
Contractual
Obligations
|
Total
|
Less
Than
1
Year
|
1-3
Years
|
3-5
Years
|
More
Than
5
Years
|
|||||||||||||||
Operating
lease obligations
|
$
|
6,255
|
$
|
2,303
|
$
|
2,852
|
$
|
1,078
|
$
|
22
|
||||||||||
Total
|
$
|
6,255
|
$
|
2,303
|
$
|
2,852
|
$
|
1,078
|
$
|
22
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market
Risk.
|
Item
8.
|
Financial
Statements and Supplementary Data.
|
December
31,
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
(In
thousands, except share information)
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$
|
17,975
|
$
|
22,909
|
||||
Short-term
investments
|
6,327
|
--
|
||||||
Total
cash, cash equivalents and short-term investments
|
24,302
|
22,909
|
||||||
Accounts
and note receivable, net of allowance for doubtful accounts of $315 in
2009 and $1,497 in 2008
|
38,244
|
47,584
|
||||||
Prepaid
expenses
|
1,258
|
1,374
|
||||||
Other
current assets
|
1,534
|
3,157
|
||||||
Total
current assets
|
65,338
|
75,024
|
||||||
Long-term
investments
|
3,652
|
--
|
||||||
Property
and equipment, net
|
1,278
|
2,345
|
||||||
Goodwill
|
104,168
|
104,178
|
||||||
Intangible
assets, net
|
7,605
|
11,456
|
||||||
Other
non-current assets
|
2,769
|
1,244
|
||||||
Total
assets
|
$
|
184,810
|
$
|
194,247
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$
|
3,657
|
$
|
4,509
|
||||
Other
current liabilities
|
11,476
|
14,339
|
||||||
Total
current liabilities
|
15,133
|
18,848
|
||||||
Other
non-current liabilities
|
1,329
|
581
|
||||||
Total
liabilities
|
$
|
16,462
|
$
|
19,429
|
||||
Commitments
and contingencies (see Note 11)
|
--
|
--
|
||||||
Stockholders'
equity:
|
||||||||
Common
stock ($0.001 par value per share; 50,000,000 shares authorized and
31,621,089 shares issued and 27,082,569 shares outstanding as of December
31, 2009; 30,350,700 shares issued and 28,502,400 shares outstanding as of
December 31, 2008)
|
$
|
32
|
$
|
30
|
||||
Additional
paid-in capital
|
208,003
|
197,653
|
||||||
Accumulated
other comprehensive loss
|
(273
|
)
|
(338
|
)
|
||||
Treasury
stock, at cost (4,538,520 shares as of December 31, 2009; 1,848,300 shares
as of December 31, 2008)
|
(27,529
|
)
|
(9,179
|
)
|
||||
Accumulated
deficit
|
(11,885
|
)
|
(13,348
|
)
|
||||
Total
stockholders' equity
|
168,348
|
174,818
|
||||||
Total
liabilities and stockholders' equity
|
$
|
184,810
|
$
|
194,247
|
Year
Ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
Revenues:
|
(In
thousands, except share and per share information)
|
|||||||||||
Services
|
$
|
166,397
|
$
|
207,480
|
$
|
191,395
|
||||||
Software
and hardware
|
12,968
|
10,713
|
14,243
|
|||||||||
Reimbursable
expenses
|
8,785
|
13,295
|
12,510
|
|||||||||
Total
revenues
|
188,150
|
231,488
|
218,148
|
|||||||||
Cost
of revenues (exclusive of depreciation and amortization, shown separately
below):
|
||||||||||||
Project
personnel costs
|
114,877
|
131,019
|
114,692
|
|||||||||
Software
and hardware costs
|
11,641
|
8,639
|
11,982
|
|||||||||
Reimbursable
expenses
|
8,785
|
13,295
|
12,510
|
|||||||||
Other
project related expenses
|
4,514
|
5,033
|
3,274
|
|||||||||
Total
cost of revenues
|
139,817
|
157,986
|
142,458
|
|||||||||
Gross
margin
|
48,333
|
73,502
|
75,690
|
|||||||||
Selling,
general and administrative
|
40,042
|
47,242
|
41,963
|
|||||||||
Depreciation
|
1,483
|
2,139
|
1,553
|
|||||||||
Amortization
|
4,267
|
4,810
|
4,712
|
|||||||||
Impairment
of intangible assets
|
--
|
1,633
|
--
|
|||||||||
Income
from operations
|
2,541
|
17,678
|
27,462
|
|||||||||
Net
interest income
|
209
|
528
|
172
|
|||||||||
Net
other income (expense)
|
260
|
(915
|
)
|
20
|
||||||||
Income
before income taxes
|
3,010
|
17,291
|
27,654
|
|||||||||
Provision
for income taxes
|
1,547
|
7,291
|
11,424
|
|||||||||
Net
income
|
$
|
1,463
|
$
|
10,000
|
$
|
16,230
|
||||||
Basic
net income per share
|
$
|
0.05
|
$
|
0.34
|
$
|
0.58
|
||||||
Diluted
net income per share
|
$
|
0.05
|
$
|
0.33
|
$
|
0.54
|
||||||
Shares
used in computing basic net income per share
|
27,538,300
|
29,412,329
|
27,998,093
|
|||||||||
Shares
used in computing diluted net income per share
|
28,558,160
|
30,350,616
|
30,121,962
|
Common
|
Common
|
Additional
|
Accumulated
Other
|
Total
|
||||||||||||||||||||||||
Stock
|
Stock
|
Paid-in
|
Comprehensive
|
Treasury
|
Accumulated
|
Stockholders'
|
||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Loss
|
Stock
|
Deficit
|
Equity
|
||||||||||||||||||||||
Balance
at December 31, 2006
|
26,700 | $ | 27 | $ | 147,028 | $ | (125 | ) | $ | -- | $ | (39,578 | ) | $ | 107,352 | |||||||||||||
Acquisition
purchase accounting adjustments
|
1,250 | 1 | 24,975 | -- | -- | -- | 24,976 | |||||||||||||||||||||
Proceeds
from the exercise of stock options and sales of stock through the Employee
Stock Purchase Plan
|
1,171 | 1 | 3,902 | -- | -- | -- | 3,903 | |||||||||||||||||||||
Tax
benefit of stock option exercises and restricted stock
vesting
|
-- | -- | 6,889 | -- | -- | -- | 6,889 | |||||||||||||||||||||
Stock
compensation related to restricted stock vesting
|
302 | -- | 6,204 | -- | -- | -- | 6,204 | |||||||||||||||||||||
Foreign
currency translation adjustment
|
-- | -- | -- | 8 | -- | -- | 8 | |||||||||||||||||||||
Net
income
|
-- | -- | -- | -- | -- | 16,230 | 16,230 | |||||||||||||||||||||
Total
comprehensive income
|
-- | -- | -- | -- | -- | -- | 16,238 | |||||||||||||||||||||
Balance
at December 31, 2007
|
29,423 | $ | 29 | $ | 188,998 | $ | (117 | ) | $ | -- | $ | (23,348 | ) | $ | 165,562 | |||||||||||||
Acquisition purchase
accounting adjustments
|
(19 | ) | -- | (290 | ) | -- | -- | -- | (290 | ) | ||||||||||||||||||
Proceeds
from the exercise of stock options and sales of stock through the Employee
Stock Purchase Plan
|
367 | 1 | 922 | -- | -- | -- | 923 | |||||||||||||||||||||
Net
tax shortfall from stock option exercises and restricted stock
vesting
|
-- | -- | (922 | ) | -- | -- | -- | (922 | ) | |||||||||||||||||||
Stock
compensation related to restricted stock vesting and retirement
savings plan contributions
|
579 | -- | 8,945 | -- | -- | -- | 8,945 | |||||||||||||||||||||
Purchases
of treasury stock
|
(1,848 | ) | -- | -- | -- | (9,179 | ) | -- | (9,179 | ) | ||||||||||||||||||
Foreign
currency translation adjustment
|
-- | -- | -- | (221 | ) | -- | -- | (221 | ) | |||||||||||||||||||
Net
income
|
-- | -- | -- | -- | -- | 10,000 | 10,000 | |||||||||||||||||||||
Total
comprehensive income
|
-- | -- | -- | -- | -- | -- | 9,779 | |||||||||||||||||||||
Balance
at December 31, 2008
|
28,502 | $ | 30 | $ | 197,653 | $ | (338 | ) | $ | (9,179 | ) | $ | (13,348 | ) | $ | 174,818 | ||||||||||||
Proceeds
from the exercise of stock options and sales of stock through the Employee
Stock Purchase Plan
|
298 | 1 | 974 | -- | -- | -- | 975 | |||||||||||||||||||||
Net
tax shortfall from stock option exercises and restricted stock
vesting
|
-- | -- | (459 | ) | -- | -- | -- | (459 | ) | |||||||||||||||||||
Stock
compensation related to restricted stock vesting and retirement
savings plan contributions
|
973 | 1 | 9,835 | -- | -- | -- | 9,836 | |||||||||||||||||||||
Purchases
of treasury stock
|
(2,690 | ) | -- | -- | -- | (18,350 | ) | -- | (18,350 | ) | ||||||||||||||||||
Net
unrealized loss on investments
|
-- | -- | -- | (5 | ) | -- | -- | (5 | ) | |||||||||||||||||||
Foreign
currency translation adjustment
|
-- | -- | -- | 70 | -- | -- | 70 | |||||||||||||||||||||
Net
income
|
-- | -- | -- | -- | -- | 1,463 | 1,463 | |||||||||||||||||||||
Total
comprehensive income
|
-- | -- | -- | -- | -- | -- | 1,528 | |||||||||||||||||||||
Balance
at December 31, 2009
|
27,083 | $ | 32 | $ | 208,003 | $ | (273 | ) | $ | (27,529 | ) | $ | (11,885 | ) | $ | 168,348 |
Year
Ended December 31,
|
||||||||||||
2009
|
2008
|
2007
|
||||||||||
OPERATING
ACTIVITIES
|
(In
thousands)
|
|||||||||||
Net
income
|
$
|
1,463
|
$
|
10,000
|
$
|
16,230
|
||||||
Adjustments
to reconcile net income to net cash provided by
operations:
|
||||||||||||
Depreciation
|
1,483
|
2,139
|
1,553
|
|||||||||
Amortization
|
4,267
|
4,810
|
4,712
|
|||||||||
Impairment
of intangible assets
|
--
|
1,633
|
--
|
|||||||||
Deferred
income taxes
|
(18
|
)
|
(1,769
|
)
|
(495
|
)
|
||||||
Non-cash
stock compensation and retirement savings plan
contributions
|
9,836
|
8,945
|
6,204
|
|||||||||
Tax
benefit from stock option exercises and restricted stock
vesting
|
(583
|
)
|
(700
|
)
|
(6,889
|
)
|
||||||
Changes
in operating assets and liabilities, net of acquisitions:
|
||||||||||||
Accounts
and note receivable
|
9,427
|
3,081
|
(1,589
|
)
|
||||||||
Other
assets
|
(342
|
)
|
(568
|
)
|
10,145
|
|||||||
Accounts
payable
|
(884
|
)
|
399
|
(1,694
|
)
|
|||||||
Other
liabilities
|
(2,086
|
)
|
(2,824
|
)
|
(5,126
|
)
|
||||||
Net
cash provided by operating activities
|
22,563
|
25,146
|
23,051
|
|||||||||
INVESTING
ACTIVITIES
|
||||||||||||
Purchase
of investments
|
(9,984
|
)
|
--
|
--
|
||||||||
Purchase
of property and equipment
|
(415
|
)
|
(1,320
|
)
|
(2,035
|
)
|
||||||
Capitalization
of software developed for internal use
|
(311
|
)
|
(185
|
)
|