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Table of Contents
 
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
FORM 10-Q
 
 
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
 
    
 
SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 27, 2002
 
OR
 
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
    
 
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                      to                     
 
Commission File Number 0-24343
 
 
ANSWERTHINK, INC.
(Exact name of Registrant as specified in its charter)
 
Florida
  
65-0750100
(State or other jurisdiction of
  
(I.R.S. Employer
incorporation or organization)
  
Identification Number)
1001 Brickell Bay Drive, Suite 3000
    
Miami, Florida
  
33131
(Address of principal executive offices)
  
(Zip Code)
 
(305) 375-8005
(Registrant’s telephone number, including area code)
 
 
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 such filing requirement for the past 90 days.  Yes  x  No  ¨
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
 
As of October 31, 2002, there were 46,229,452 shares of common stock outstanding.
 

Table of Contents
 
Answerthink, Inc.
TABLE OF CONTENTS
 
        
Page
PART I    FINANCIAL INFORMATION
     
Item 1.    Financial Statements
     
      
3
      
4
      
5
      
6
  
10
  
14
Item 4.     Control and Procedures
  
14
PART II    OTHER INFORMATION
     
Item 1.     Legal Proceedings
  
15
  
15
  
16
  
17
  
19

2

Table of Contents
 
PART I—FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
Answerthink, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
    
September 27,
2002
     
December 28,
2001
  
    
(unaudited)
         
ASSETS
                  
Current assets:
                  
Cash and cash equivalents
   
$
58,515
 
   
$
59,888
 
Restricted cash
   
 
2,901
 
   
 
—  
 
Accounts receivable and unbilled revenue, net of allowance of $6,304 and $6,810 in 2002 and 2001, respectively
   
 
28,781
 
   
 
39,164
 
Other receivables
   
 
734
 
   
 
851
 
Prepaid expenses and other current assets
   
 
16,183
 
   
 
15,628
 
    
  
Total current assets
   
 
107,114
 
   
 
115,531
 
Property and equipment, net
   
 
17,717
 
   
 
18,468
 
Goodwill, net
   
 
26,720
 
   
 
77,920
 
    
  
Total assets
   
$
151,551
 
   
$
211,919
 
    
  
LIABILITIES AND SHAREHOLDERS’ EQUITY
                  
Current liabilities:
                  
Accounts payable
   
$
4,445
 
   
$
5,187
 
Accrued expenses and other liabilities
   
 
18,319
 
   
 
27,992
 
Media payable
   
 
736
 
   
 
1,039
 
    
  
Total current liabilities
   
 
23,500
 
   
 
34,218
 
Commitments and contingencies
                  
Shareholders’ equity
                  
Preferred stock, $.001 par value, 1,250,000 authorized, none issued and outstanding
   
 
—  
 
   
 
—  
 
Common stock, $.001 par value, authorized 125,000,000 shares; issued and outstanding: 46,592,852 shares at September 27, 2002; 45,880,118 shares at December 28, 2001
   
 
47
 
   
 
46
 
Additional paid-in capital
   
 
263,213
 
   
 
257,115
 
Treasury stock, at cost, 777,200 shares at September 27, 2002
   
 
(1,488
)
   
 
—  
 
Accumulated deficit
   
 
(133,721
)
   
 
(79,460
)
    
  
Total shareholders’ equity
   
 
128,051
 
   
 
177,701
 
    
  
Total liabilities and shareholders’ equity
   
$
151,551
 
   
$
211,919
 
    
  
 
The accompanying notes are an integral part of the consolidated financial statements.

3

Table of Contents
 
Answerthink, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
    
Quarter Ended
     
Nine Months Ended
  
    
September 27, 2002
     
September 28, 2001
     
September 27, 2002
     
September 28, 2001
  
Revenues:
                                    
Revenues before reimbursements (Net revenues)
   
$
38,461
 
   
$
60,016
 
   
$
127,552
 
   
$
197,307
 
Reimbursements
   
 
4,444
 
   
 
7,525
 
   
 
16,189
 
   
 
25,281
 
    
  
  
  
Total revenues
   
 
42,905
 
   
 
67,541
 
   
 
143,741
 
   
 
222,588
 
Costs and expenses:
                                    
Project personnel and expenses:
                                    
Project personnel and expenses before reimbursable expenses
   
 
25,537
 
   
 
36,955
 
   
 
88,008
 
   
 
123,004
 
Reimbursable expenses
   
 
4,444
 
   
 
7,525
 
   
 
16,189
 
   
 
25,281
 
    
  
  
  
Total project personnel and expenses
   
 
29,981
 
   
 
44,480
 
   
 
104,197
 
   
 
148,285
 
Selling, general and administrative expenses
   
 
14,041
 
   
 
22,122
 
   
 
45,024
 
   
 
70,123
 
Impairment of goodwill
   
 
20,000
 
   
 
—  
 
   
 
20,000
 
   
 
—  
 
Stock compensation expense
   
 
—  
 
   
 
211
 
   
 
—  
 
   
 
4,855
 
    
  
  
  
Total costs and operating expenses
   
 
64,022
 
   
 
66,813
 
   
 
169,221
 
   
 
223,263
 
    
  
  
  
Income (loss) from operations
   
 
(21,117
)
   
 
728
 
   
 
(25,480
)
   
 
(675
)
Other income (expense):
                                    
Interest income
   
 
220
 
   
 
250
 
   
 
574
 
   
 
985
 
Interest expense
   
 
(103
)
   
 
(42
)
   
 
(196
)
   
 
(126
)
    
  
  
  
Income (loss) before income taxes
   
 
(21,000
)
   
 
936
 
   
 
(25,102
)
   
 
184
 
Income taxes
   
 
(400
)
   
 
3,131
 
   
 
(2,041
)
   
 
2,514
 
    
  
  
  
Loss before cumulative effect of change in accounting principle
   
 
(20,600
)
   
 
(2,195
)
   
 
(23,061
)
   
 
(2,330
)
Cumulative effect of change in accounting principle
   
 
—  
 
   
 
—  
 
   
 
(31,200
)
   
 
—  
 
    
  
  
  
Net loss
   
$
(20,600
)
   
$
(2,195
)
   
$
(54,261
)
   
$
(2,330
)
    
  
  
  
Basic and diluted net loss per common share:
                                    
Loss before cumulative effect of change in accounting principle
   
$
(0.44
)
   
$
(0.05
)
   
$
(0.50
)
   
$
(0.05
)
Cumulative effect of change in accounting principle
   
$
—  
 
   
$
—  
 
   
$
(0.67
)
   
$
—  
 
Net loss per common share
   
$
(0.44
)
   
$
(0.05
)
   
$
(1.17
)
   
$
(0.05
)
Weighted average common and common equivalent shares outstanding
   
 
46,879
 
   
 
44,682
 
   
 
46,431
 
   
 
43,631
 
 
The accompanying notes are an integral part of the consolidated financial statements.

4

Table of Contents
 
Answerthink, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
    
Nine Months Ended
  
    
September 27,
2002
     
September 28, 2001
  
Cash flows from operating activities:
                  
Net loss
   
$
(54,261
)
   
$
(2,330
)
Adjustments to reconcile net loss to net cash provided by operating activities:
                  
Cumulative effect of change in accounting principle
   
 
31,200
 
   
 
—  
 
Impairment of goodwill
   
 
20,000
 
   
 
—  
 
Non-cash compensation expense
   
 
—  
 
   
 
4,855
 
Depreciation and amortization
   
 
4,023
 
   
 
9,267
 
Provision for doubtful accounts
   
 
229
 
   
 
4,776
 
Deferred income taxes
   
 
3,552
 
   
 
1,457
 
Changes in assets and liabilities, net of effects from acquisitions:
                  
Decrease in accounts receivable and unbilled revenue
   
 
10,155
 
   
 
8,082
 
Decrease in other receivables
   
 
117
 
   
 
1,893
 
Increase in prepaid expenses and other assets
   
 
(3,618
)
   
 
(1,708
)
Decrease in accounts payable
   
 
(743
)
   
 
(3,020
)
Decrease in accrued expenses and other liabilities
   
 
(9,737
)
   
 
(9,046
)
Decrease in media payable
   
 
(303
)
   
 
(5,448
)