UNITED STATES
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, 2004.
| ¨ | 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 x No ¨
As of August 6, 2004, there were 10,489,849 shares of the issuer’s common stock outstanding.
COMPUTER PROGRAMS AND SYSTEMS, INC.
Form 10-Q
(For the period ended June 30, 2004)
INDEX
FINANCIAL INFORMATION
COMPUTER PROGRAMS AND SYSTEMS, INC.
CONDENSED BALANCE SHEETS (Unaudited)
| June 30, 2004 |
December 31, 2003 |
|||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 10,972,101 | $ | 9,472,743 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $1,025,000 and $904,000, respectively |
10,552,106 | 11,916,414 | ||||||
| Financing receivables, current portion |
987,159 | 1,112,773 | ||||||
| Inventories |
1,232,408 | 1,102,061 | ||||||
| Deferred tax assets |
1,180,716 | 973,173 | ||||||
| Prepaid income taxes |
— | 120,025 | ||||||
| Prepaid expenses |
274,249 | 364,384 | ||||||
| Total current assets |
25,198,739 | 25,061,573 | ||||||
| Property and equipment |
||||||||
| Land |
936,026 | 936,026 | ||||||
| Maintenance equipment |
3,520,668 | 3,172,303 | ||||||
| Computer equipment |
4,491,570 | 4,320,011 | ||||||
| Office furniture and equipment |
1,402,149 | 1,391,110 | ||||||
| Automobiles |
89,934 | 89,934 | ||||||
| 10,440,347 | 9,909,384 | |||||||
| Less accumulated depreciation |
(5,275,417 | ) | (4,561,080 | ) | ||||
| Net property and equipment |
5,164,930 | 5,348,304 | ||||||
| Financing receivables |
1,131,880 | 793,870 | ||||||
| Total assets |
$ | 31,495,549 | $ | 31,203,747 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 1,077,877 | $ | 1,126,334 | ||||
| Deferred revenue |
1,619,740 | 1,633,887 | ||||||
| Accrued vacation |
1,650,842 | 1,561,577 | ||||||
| Other accrued liabilities |
931,168 | 1,129,976 | ||||||
| Income taxes payable |
420,603 | — | ||||||
| Total current liabilities |
5,700,230 | 5,451,774 | ||||||
| Deferred tax liabilities |
328,672 | — | ||||||
| Stockholders’ equity: |
||||||||
| Common stock, par value $0.001 per share; 30,000,000 shares authorized; 10,489,849 shares issued and outstanding |
10,490 | 10,490 | ||||||
| Additional paid-in capital |
17,292,079 | 17,289,910 | ||||||
| Deferred compensation |
(148,865 | ) | (174,385 | ) | ||||
| Retained earnings |
8,312,943 | 8,625,958 | ||||||
| Total stockholders’ equity |
25,466,647 | 25,751,973 | ||||||
| Total liabilities and stockholders’ equity |
$ | 31,495,549 | $ | 31,203,747 | ||||
See accompanying notes.
1
COMPUTER PROGRAMS AND SYSTEMS, INC.
CONDENSED STATEMENTS OF INCOME (Unaudited)
| Three months ended June 30, |
Six months ended June 30, | |||||||||||
| 2004 |
2003 |
2004 |
2003 | |||||||||
| Sales revenues: |
||||||||||||
| System sales |
$ | 7,686,047 | $ | 9,637,510 | $ | 14,789,984 | $ | 19,740,114 | ||||
| Support and maintenance |
9,309,425 | 8,450,918 | 18,563,762 | 16,749,051 | ||||||||
| Outsourcing |
2,018,522 | 1,819,670 | 3,872,457 | 3,493,857 | ||||||||
| Total sales revenues |
19,013,994 | 19,908,098 | 37,226,203 | 39,983,022 | ||||||||
| Costs of sales: |
||||||||||||
| System sales |
6,146,094 | 6,500,953 | 12,579,371 | 13,633,660 | ||||||||
| Support and maintenance |
4,113,057 | 4,017,018 | 8,257,460 | 7,928,252 | ||||||||
| Outsourcing |
1,212,724 | 1,069,938 | 2,351,516 | 2,064,246 | ||||||||
| Total costs of sales |
11,471,875 | 11,587,909 | 23,188,347 | 23,626,158 | ||||||||
| Gross profit |
7,542,119 | 8,320,189 | 14,037,856 | 16,356,864 | ||||||||
| Operating expenses: |
||||||||||||
| Sales and marketing |
1,445,136 | 1,667,651 | 2,729,471 | 3,035,863 | ||||||||
| General and administrative |
3,744,071 | 3,344,263 | 7,816,597 | 6,788,459 | ||||||||
| Total operating expenses |
5,189,207 | 5,011,914 | 10,546,068 | 9,824,322 | ||||||||
| Operating income |
2,352,912 | 3,308,275 | 3,491,788 | 6,532,542 | ||||||||
| Other income (expense): |
||||||||||||
| Interest income |
56,170 | 48,192 | 118,238 | 93,329 | ||||||||
| Miscellaneous income |
69,593 | 17,620 | 78,875 | 57,501 | ||||||||
| Total other income |
125,763 | 65,812 | 197,113 | 150,830 | ||||||||
| Income before taxes |
2,478,675 | 3,374,087 | 3,688,901 | 6,683,372 | ||||||||
| Income taxes |
1,029,040 | 1,262,560 | 1,484,352 | 2,500,608 | ||||||||
| Net income |
$ | 1,449,635 | $ | 2,111,527 | $ | 2,204,549 | $ | 4,182,764 | ||||
| Net income per share - basic |
$ | 0.14 | $ | 0.20 | $ | 0.21 | $ | 0.40 | ||||
| Net income per share - diluted |
$ | 0.14 | $ | 0.20 | $ | 0.21 | $ | 0.40 | ||||
| Weighted average shares outstanding |
||||||||||||
| Basic |
10,489,849 | 10,488,000 | 10,489,849 | 10,488,000 | ||||||||
| Diluted |
10,531,893 | 10,543,577 | 10,529,497 | 10,556,319 | ||||||||
| Dividends declared per share |
$ | 0.12 | $ | 0.085 | $ | 0.24 | $ | 0.085 | ||||
See accompanying notes.
2
COMPUTER PROGRAMS AND SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
| Six months ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Operating Activities |
||||||||
| Net income |
$ | 2,204,549 | $ | 4,182,764 | ||||
| Adjustments to net income: |
||||||||
| Provision for bad debt |
322,694 | 34,000 | ||||||
| Deferred taxes |
121,129 | (92,928 | ) | |||||
| Deferred compensation |
25,520 | 25,520 | ||||||
| Depreciation |
813,840 | 618,000 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
1,041,614 | 1,734,225 | ||||||
| Financing receivables |
(212,396 | ) | 247,500 | |||||
| Inventories |
(130,347 | ) | 373,895 | |||||
| Prepaid expenses |
90,135 | (123,512 | ) | |||||
| Accounts payable |
(48,457 | ) | (1,000,246 | ) | ||||
| Deferred revenue |
(14,147 | ) | (728,663 | ) | ||||
| Other liabilities |
(109,543 | ) | (624,271 | ) | ||||
| Income taxes payable |
540,628 | (459,804 | ) | |||||
| Net cash provided by operating activities |
4,645,219 | 4,186,480 | ||||||
| Investing Activities |
||||||||
| Purchases of property and equipment |
(630,466 | ) | (1,038,025 | ) | ||||
| Net cash used in investing activities |
(630,466 | ) | (1,038,025 | ) | ||||
| Financing Activities |
||||||||
| Dividends paid |
(2,517,564 | ) | (891,480 | ) | ||||
| Tax benefit from exercise of stock options |
2,169 | — | ||||||
| Distributions to stockholders |
— | (220,353 | ) | |||||
| Net cash used in financing activities |
(2,515,395 | ) | (1,111,833 | ) | ||||
| Increase in cash and cash equivalents |
1,499,358 | 2,036,622 | ||||||
| Cash and cash equivalents at beginning of period |
9,472,743 | 6,352,452 | ||||||
| Cash and cash equivalents at end of period |
$ | 10,972,101 | $ | 8,389,074 | ||||
See accompanying notes.
3
COMPUTER PROGRAMS AND SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
| 1. | BASIS OF PRESENTATION |
The accompanying unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are considered of a normal recurring nature. Quarterly results of operations are not necessarily indicative of annual results.
Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2003 and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2003.
| 2. | NET INCOME PER SHARE |