SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 June 30, 2003.
| ¨ | 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: 000-49796
COMPUTER PROGRAMS AND SYSTEMS, INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 74-3032373 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| 6600 Wall Street, Mobile, Alabama | 36695 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(251) 639-8100
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 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 requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of July 31, 2003, there were 10,488,000 shares of the issuer’s common stock outstanding.
COMPUTER PROGRAMS AND SYSTEMS, INC.
Form 10-Q
(For the period ended June 30, 2003)
| PART I. |
FINANCIAL INFORMATION | |||
| Item 1. |
Financial Statements | 1 | ||
| Condensed Balance Sheets (unaudited)—June 30, 2003 and December 31, 2002 | 1 | |||
| Condensed Statements of Income (unaudited)—Three and Six Months Ended June 30, 2003 and 2002 | 2 | |||
| Condensed Statements of Cash Flows (unaudited)—Six Months Ended June 30, 2003 and 2002 | 3 | |||
| Notes to Condensed Financial Statements (unaudited) | 4 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 | ||
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 13 | ||
| Item 4. |
Controls and Procedures | 14 | ||
| PART II. |
OTHER INFORMATION | |||
| Item 1. |
Legal Proceedings | 14 | ||
| Item 2. |
Changes in Securities and Use of Proceeds | 14 | ||
| Item 3. |
Defaults Upon Senior Securities | 14 | ||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 14 | ||
| Item 5. |
Other Information | 15 | ||
| Item 6. |
Exhibits and Reports on Form 8-K | 15 |
PART I
FINANCIAL INFORMATION
COMPUTER PROGRAMS AND SYSTEMS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
| June 30, 2003 |
December 31, 2002 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 8,389,074 | $ | 6,352,452 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $802,000 and $768,000, respectively |
10,830,286 | 12,598,511 | ||||||
| Financing receivables, current portion |
821,355 | 1,341,047 | ||||||
| Inventories |
1,241,417 | 1,615,312 | ||||||
| Deferred tax assets |
1,099,398 | 1,006,470 | ||||||
| Prepaid expenses |
451,045 | 327,533 | ||||||
| Prepaid income taxes |
266,258 | — | ||||||
| Total current assets |
23,098,833 | 23,241,325 | ||||||
| Property and equipment |
||||||||
| Land |
936,026 | 936,026 | ||||||
| Maintenance equipment |
3,028,277 | 2,679,766 | ||||||
| Computer equipment |
3,956,528 | 3,486,030 | ||||||
| Office furniture and equipment |
1,242,787 | 1,023,771 | ||||||
| Automobiles |
89,934 | 89,934 | ||||||
| 9,253,552 | 8,215,527 | |||||||
| Less accumulated depreciation |
(4,006,704 | ) | (3,388,704 | ) | ||||
| Net property and equipment |
5,246,848 | 4,826,823 | ||||||
| Financing receivables |
1,112,795 | 840,603 | ||||||
| Total assets |
$ | 29,458,476 | $ | 28,908,751 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 1,093,566 | $ | 2,093,812 | ||||
| Deferred revenue |
1,619,153 | 2,347,816 | ||||||
| Sales and use taxes payable |
274,536 | 1,258,553 | ||||||
| Accrued vacation |
1,514,875 | 1,317,247 | ||||||
| Other accrued liabilities |
1,160,506 | 1,218,741 | ||||||
| Income taxes payable |
— | 193,546 | ||||||
| Total current liabilities |
5,662,636 | 8,429,715 | ||||||
| Stockholders’ equity: |
||||||||
| Common stock, par value $0.001 per share; 30,000,000 shares authorized; 10,488,000 shares issued and outstanding |
10,488 | 10,488 | ||||||
| Additional paid-in capital |
17,259,403 | 17,259,403 | ||||||
| Deferred compensation |
(199,903 | ) | (225,423 | ) | ||||
| Retained earnings |
6,725,852 | 3,434,568 | ||||||
| Total stockholders’ equity |
23,795,840 | 20,479,036 | ||||||
| Total liabilities and stockholders’ equity |
$ | 29,458,476 | $ | 28,908,751 | ||||
See accompanying notes.
1
COMPUTER PROGRAMS AND SYSTEMS, INC.
CONDENSED STATEMENTS OF INCOME (Unaudited)
| Three months ended June 30 |
Six months ended June 30 |
|||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||
| Sales revenues: |
||||||||||||||
| System sales |
$ | 9,637,510 | $ | 8,914,120 | $ | 19,740,114 | $ | 17,714,352 | ||||||
| Support and maintenance |
8,450,918 | 7,377,216 | 16,749,051 | 14,467,144 | ||||||||||
| Outsourcing |
1,819,670 | 1,220,108 | 3,493,857 | 2,250,655 | ||||||||||
| Total sales revenue |
19,908,098 | 17,511,444 | 39,983,022 | 34,432,151 | ||||||||||
| Costs of sales: |
||||||||||||||
| System sales |
6,500,953 | 6,313,630 | 13,633,660 | 12,360,414 | ||||||||||
| Support and maintenance |
4,017,018 | 3,275,248 | 7,928,252 | 6,506,160 | ||||||||||
| Outsourcing |
1,069,938 | 723,977 | 2,064,246 | 1,347,699 | ||||||||||
| Total costs of sales |
11,587,909 | 10,312,855 | 23,626,158 | 20,214,273 | ||||||||||
| Gross profit |
8,320,189 | 7,198,589 | 16,356,864 | 14,217,878 | ||||||||||
| Operating expenses: |
||||||||||||||
| Sales and marketing |
1,667,651 | 1,326,909 | 3,035,863 | 2,672,894 | ||||||||||
| General and administrative |
3,344,263 | 3,108,938 | 6,788,459 | 5,983,647 | ||||||||||
| Total operating expenses |
5,011,914 | 4,435,847 | 9,824,322 | 8,656,541 | ||||||||||
| Operating income |
3,308,275 | 2,762,742 | 6,532,542 | 5,561,337 | ||||||||||
| Other income (expense): |
||||||||||||||
| Interest income |
48,192 | 51,338 | 93,329 | 93,867 | ||||||||||
| Miscellaneous income |
17,620 | 63,438 | 57,501 | 108,488 | ||||||||||
| Interest expense |
— | (9,334 | ) | — | (23,677 | ) | ||||||||
| Total other income |
65,812 | 105,442 | 150,830 | 178,678 | ||||||||||
| Income before taxes |
3,374,087 | 2,868,184 | 6,683,372 | 5,740,015 | ||||||||||
| Income taxes (benefit) |
1,262,560 | (448,115 | ) | 2,500,608 | (448,115 | ) | ||||||||
| Net income |
$ | 2,111,527 | $ | 3,316,299 | $ | 4,182,764 | $ | 6,188,130 | ||||||
| Net income per share—basic |
$ | 0.20 | $ | 0.34 | $ | 0.40 | $ | 0.65 | ||||||
| Net income per share—diluted |
$ | 0.20 | $ | 0.34 | $ | 0.40 | $ | 0.65 | ||||||
| Weighted average shares outstanding |
||||||||||||||
| Basic |
10,488,000 | 9,815,473 | 10,488,000 | 9,553,193 | ||||||||||
| Diluted |
10,543,577 | 9,829,027 | 10,556,319 | 9,560,008 | ||||||||||
| Pro forma income data: |
||||||||||||||
| Historical income before provision for income taxes |
$ | 2,868,184 | $ | 5,740,015 | ||||||||||
| Pro forma income taxes |
1,075,569 | 2,157,723 | ||||||||||||
| Pro forma net income |
$ | 1,792,615 | $ | 3,582,292 | ||||||||||
| Pro forma net income per share—basic |
$ | 0.18 | $ | 0.37 | ||||||||||
| Pro forma net income per share—diluted |
$ | 0.18 | $ | 0.37 | ||||||||||
See accompanying notes.
2
COMPUTER PROGRAMS AND SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
| Six months ended June 30 |
||||||||
| 2003 |
2002 |
|||||||
| Operating Activities: |
||||||||
| Net income |
$ | 4,182,764 | $ | 6,188,130 | ||||
| Adjustments to net income: |
||||||||
| Depreciation |
618,000 | 416,000 | ||||||
| Provision for bad debt |
34,000 | 99,000 | ||||||
| Deferred taxes |
||||||||