-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VG22nq/9SyZplsYCxeeQRJP+2lFw4l0ZNN18e8UNI1PMLA5+m+vqEhjttvJhXa7n WG/qpUObM8KjwbF6Djk5Hw== 0000950131-01-500025.txt : 20010308 0000950131-01-500025.hdr.sgml : 20010308 ACCESSION NUMBER: 0000950131-01-500025 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010305 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAMOND TECHNOLOGY PARTNERS INC CENTRAL INDEX KEY: 0000924940 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT CONSULTING SERVICES [8742] IRS NUMBER: 364069408 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22125 FILM NUMBER: 1562406 BUSINESS ADDRESS: STREET 1: 875 NORTH MICHIGAN AVE SUITE 3000 CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3122555000 MAIL ADDRESS: STREET 1: 875 NORTH MICHIGAN AVE STE 3000 CITY: CHICAGO STATE: IL ZIP: 60611 8-K 1 d8k.txt FORM 8-K UNITED STATES 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 Date of Report (Date of earliest event reported): March 5, 2001 DiamondCluster International, Inc. (Exact name of registrant as specified in its charter) Delaware 000-22125 36-4069408 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification Number)
John Hancock Center 875 North Michigan Avenue, Suite 3000 60611 Chicago, Illinois 60611 (Zip Code) (Address of principal executive offices) 312-255-5000 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Item 5. Other Items The registrant issued a press release and held a conference call with analysts, investors and members of the public on March 5, 2001 preannouncing preliminary fourth quarter results for fiscal year 2001. The press release and the script of the presentation delivered on the conference call is filed herewith under Item 7(c). Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (a) None (b) None (c) Exhibits Exhibit No. Document - ----------- -------- 99 Press Release 99.1 Script of Conference Call -2- SIGNATURE 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. DIAMONDCLUSTER INTERNATIONAL, INC. By:_______________________________ Chief Financial Officer February 8, 2001 -3- EXHIBIT INDEX
Exhibit No. Document Page - ----------- -------- ---- 99 Press Release 1 99.1 Script of Conference Call 2
-4- EX-99 2 dex99.txt PRESS RELEASE DATED 03/05/01 EXHIBIT 99 News Release FOR IMMEDIATE RELEASE Investor Contacts: Julia Potter (312) 255-5055 julia.potter@diamondcluster.com Margaret Boyce (312)-255-5784 margaret.boyce@diamondcluster.com Media Contact: David Moon (312) 255-4560 david.moon@diamondcluster.com DIAMONDCLUSTER INTERNATIONAL ANNOUNCES PRELIMINARY FOURTH QUARTER RESULTS CHICAGO, March 5, 2001--DiamondCluster International, Inc. (Nasdaq: DTPI), a business strategy and technology solutions firm, today announced that it lowered its revenue and earnings outlook for the fiscal fourth quarter. Revenue for the fourth quarter of fiscal 2001 (ending March 31, 2001) is expected to be $73-$77 million, compared with the company's previous guidance of $93-$97 million. In addition, the company anticipates taking a non-operating charge in the fourth quarter of approximately $7.5 million to make downward adjustments in the valuation of several equity holdings. Excluding the one-time charge, the company is expecting cash earnings per diluted share for the quarter to be $0.19, compared with previous guidance of $0.30-$0.32. DiamondCluster attributes the lower estimated fourth quarter results to an abrupt deterioration in the North American economy. Mel Bergstein, DiamondCluster's chairman and CEO, said, "We are disappointed that we did not achieve the growth we originally projected in North America. The economic environment in North America has deteriorated very quickly during the quarter. Our European and Latin American practices still remain strong and we are expecting continued growth in those regions moving forward. In addition, we are pleased that we continue to generate cash profits and positive cash flow. Until the macro-economic situation in North America stabilizes, however, we expect total revenue to be $70-$80 million per quarter. "We remain very confident in our business model," continued Bergstein. "This is a very good business with good growth, very good profitability and extraordinary cash flow. When the economy stabilizes, we would expect to quickly return to our normal industry-leading operating metrics. (more) DiamondCluser International Preliminary Q4 FY01 Results/PAGE 2 "We have two basic tenets: we will remain operating cash flow positive and we will protect our assets," said Bergstein. "The assets in this business are people, client relationships and intellectual capital. While we will cut costs across all programs, we are not planning layoffs. We believe we can maintain a 5% pre-tax cash margin (before goodwill amortization and non-cash compensation) until the North American economy stabilizes." Actual results for fourth quarter 2001, and further details related to the Company's expectations for fiscal year 2002, will be reported the first week of May 2001. In addition, the company announced that its Board of Directors has authorized the repurchase of up to one million additional shares of the company's outstanding common stock as part of the company's existing stock repurchase program. DiamondCluster plans to repurchase the shares on the open market from time to time or in privately negotiated transactions. The timing and volume of the purchases will be dependent upon market conditions. The company intends to fund the repurchases through its cash balances. Conference Call Management from DiamondCluster International will host a conference call on Monday, March 5, 2001 at 10:00 am EST to discuss the company's revised guidance. Domestic participants should call 800-482-5547, and international callers should dial 303-224-6999. The call will also be broadcast live and archived on DiamondCluster's web site at www.diamondcluster.com. A replay of the call will be available through March 12, 2001 by dialing 800-625-5288, domestically or 303-804-1855, outside the U.S. and entering passcode 947898 when prompted. About DiamondCluster International DiamondCluster International, Inc. (Nasdaq: DTPI) is a premier business strategy and technology solutions firm, delivering value to clients worldwide by developing and implementing innovative digital strategies that capitalize on the opportunities presented by new technologies. DiamondCluster was established in 2000 by the combination of Diamond Technology Partners, founded in 1994, and Cluster Consulting, originally established in 1993. The combined firm has more than 1,000 consultants serving Global 2000 clients in such industries as financial services, consumer and industrial products and services, telecommunications and energy, healthcare and insurance. Headquartered in Chicago, DiamondCluster also has offices in Barcelona, Boston, Dusseldorf, Lisbon, London, Madrid, Munich, New York, Paris, San Francisco and Sao Paulo. Visit www.diamondcluster.com for more information. DiamondCluser International Preliminary Q4 FY01 Results/PAGE 3 Forward Looking Statements Statements in this press release that do not involve strictly historical or factual matters are forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws. Forward-looking statements involve risks and uncertainties and speak only as of the date of this release. Actual results may differ materially due to such factors as the ability of the Company to successfully integrate acquisitions, possible termination of projects by major clients, variations in the timing, initiation or completion of client assignments, recruitment and retention of personnel, absence of long-term contracts with clients, growth management, project risks, and technological advances. Material risks and uncertainties are highlighted in our filings with the SEC including the Form 10-Q for the quarter ended December 31, 2000, as well as the Form S-4 associated with the combination of Diamond and Cluster, which was initially filed on October 12, 2000 and amended on November 6, 2000. # # # EX-99.1 3 dex991.txt SCRIPT OF CONFERENCE CALL EXHIBIT 99.1 DIAMONDCLUSTER INTERNATIONAL, INC. Fourth Quarter Preliminary Results--March 5, 2001 PREPARED COMMENTS Julia Potter - ------------ Good morning and thank you for joining us. I have with me today a number of members of our management team including DiamondCluster's chairman and CEO Mel Bergstein, our CFO Karl Bupp, our vice chairman Mike Mikolajczyk, and our recently announced senior vice president of finance and administration, Bill McClayton. Let me also remind you that during today's call, we will make both historical and forward-looking statements in order to help you better understand our business. Any forward-looking statements speak only as of today's date and you should realize that our actual results might differ materially. The risks and uncertainties associated with our business are highlighted in our filings with the SEC, including Form 10Q for the quarter ended December 31, 2000 as well as the Form S-4 filed on November 6 with the SEC in connection with the combination between Diamond and Cluster Consulting. With that, I will turn it over to our chairman and CEO, Mel Bergstein. Mel? Mel Bergstein - ------------- Thanks, Julia. Page 1 Thank you all for joining us. We are, of course, very disappointed to announce lower than expected revenue and earnings for the fourth quarter. In spite of the current economy, we remain very confident in our business model. This is a very good business with good growth, very good operating margins and extraordinary cash flow. And, when the economy stabilizes, we would expect to quickly return to our normal industry-leading operating metrics of . 30% top line growth, . 18-20% operating cash margin, . 12-14% after-tax cash margin, and . $400,000 annualized revenue per professional That said we are in an extremely challenging economy in North America right now. The shortfall we announced today is entirely North American related, and although it cuts across all vertical industry segments, it is focused primarily in the financial services and consumer and industrial products and services industries. When we last gave guidance, on January 30th, we told you we saw CEOs in North America being very wary and keeping a careful eye on their short-term financial results, but they were still investing in initiatives that provided a healthy return on investment in a reasonable timeframe. In the December quarter we also saw a rapid shift away from carve outs to transformations. We were able to replace 30% of our revenue associated with carve outs in our third quarter, but the momentum has not continued. Page 2 In the last five weeks, the environment has continued to seriously deteriorate. Our relationships with our core clients remain strong, and, with the exception of carve outs, we have not lost a single core client that was with us at the start of the fiscal year. However, current clients are delaying a number of their existing initiatives until the economic environment stabilizes. And, new work is very difficult to find. It is not an issue with one or two clients, or even a particular category of clients, it is an across-the-board slowdown with both existing and new clients. Europe and Latin America are very different demand environments. Demand is still strong for wireless, particularly in Southern and Central Europe. We continue to win new work and continue with our existing work at our core European and Latin American clients. There has been a good deal of talk lately about the delay of 3G rollouts in Europe. We believe that they will welcome the extra time and will use 2.5G technologies to build a bridge to the imminent roll-out of 3G. You need to keep in mind that the telecoms, having invested billions of dollars to acquire licenses, will need to develop successful strategies, with the help of consultants, to ensure that they realize a return on their investment. We are expecting revenue from Europe and Latin America to exceed $35 million in the fourth quarter and represent greater than 45 percent of our total revenue in the quarter. The exceptional growth in Europe and Latin America will partially offset the shortfall in North America. As we look forward, in Northern Europe, we believe we are starting to see some of the economic issues that are plaguing the US, and we believe clients are tending to take longer to make decisions across all European regions. We believe our focus on the telecommunications industry, particularly broadband wireless, somewhat insulates us from macro-economic issues in Europe, but we are planning conservatively. Page 3 We have two basic tenets of this business. Understanding these will help you understand what we are about and how we run the business. . First, we are dedicated to operating a business with positive cash flow. This business, when properly managed, is a great business with good growth, very good operating margins and extraordinary cash flow. Even in these difficult times, we feel that the business model is strong enough to generate positive cash flow. . Second, we will protect our assets. In this business, our assets are our people, our client relationships and our intellectual capital. That is why we do not plan to do layoffs. We believe this is the bottom. The issue is that we don't know how long we will be at the bottom. The reason we believe this is the bottom is because we have very strong relationships at our clients in North America, Europe and Latin America and we are at a sustained monthly run rate at our core clients. So, the question is what could happen to change that? If we were to have a big issue at a core client, that could move the bottom for us. We don't expect that to happen, but it is possible. Reflecting our confidence in our business model, we also announced today that our Board of Directors has authorized the repurchase of up to one million additional shares of the company's outstanding common stock as part of the company's existing stock repurchase program, which has continued to be active this quarter. With that, let me turn it over to Karl to review our financial guidance. Karl? Page 4 Karl Bupp - --------- Thanks, Mel. As you all saw in the release, we are revising our revenue and cash EPS guidance for the fourth quarter and fiscal year 2002 due to market conditions in North America. We are now expecting revenue for our fourth fiscal quarter to come in at $73-$77 million and cash earnings per diluted share, excluding a one-time charge for the write down of certain equity holdings, to be 19 cents, and including the one-time charge to be 6 cents per diluted share. This is below our previous guidance for revenue of $93-$97 million and cash earnings per diluted share of 30 to 32 cents. At the end of February, we had over $70 million in "closed" revenue for the fourth fiscal quarter with a pipeline of potential extension work at current clients and potential new work at new clients that makes us confident that we can achieve our new revenue guidance levels. By closed revenue, we mean that the work is being performed under a signed contract or with a verbal commitment by the client. Changing market conditions have also affected certain of the company's investments. We also announced that we anticipate taking a one-time, non- operating charge of approximately $7.5 million in the fourth quarter to make downward adjustments in the valuations of several equity holdings on our balance sheet. After this action we will have only two equity investments left on our balance sheet. On the expense side, while we will be cutting costs across all programs-- marketing, recruiting, training, innovation, finance, IT and so forth--we are committed to protecting our primary assets, which as Mel said, are our people, our client Page 5 relationships and our intellectual capital. Therefore, we are not planning on doing layoffs. Looking ahead to fiscal year 2002, we are expecting total company revenue to stay at $70-80 million per quarter until the economic situation in North America stabilizes. We have a plan in place that given this revenue run rate, we can maintain a 5% pre-tax cash margin (which is a margin before goodwill amortization and non-cash compensation). We will honor our campus recruiting offers, which are for professionals who will join us in the summer and fall, but we are cutting back on experienced hiring in North America. We will keep our European and Latin American recruiting plans in place and continue to add people in strategy and technology as we build out our DMS capability in those regions. However, we will closely monitor the economic conditions in those regions and adjust our experienced hiring if there are any changes. We will give you all the standard metrics for the quarter and the fiscal year when we report our quarter results the first week of May. Now, I would like to turn it back over to Mel. Mel? Mel Bergstein - ------------- Thanks, Karl. Page 6 Just to reiterate, this is a great business, but it is suffering short-term challenges. We believe it will sustain, in the long term, a healthy revenue growth rate of about 30%, with profitability and strong cash flow. And, we have always been about building this company for the long term. It is important to remember is that consulting is not normally a cycle sensitive business. These are extraordinary times and this is, in my view, in my experience, a 20-year cycle that we are in now. And, while it will be difficult, we are extremely confident that we will come out of this a stronger company and a better overall industry, for sure. Technology continues to disrupt business, however the macro-economic environment in North America has significantly dampened the demand for our services and frankly the services of all consultants. We believe this is purely an economic issue. The weakness is focused on North America. In Europe and Latin America, our demand remains strong and we continue to build critical wireless skills and credentials so that we can be poised to take advantage of the wireless revolution when it does reach North America--which we are confident it will do. DiamondCluster is about quality, growth and profitability and helping market leaders understand the disruptive nature of technology. We believe we are positioned well with global reach, an experienced management team on both sides of the Atlantic and a super high-quality consultant base, again on both sides of the Atlantic, with a strong culture. Page 7 Before I open the call for questions, I want to remind everyone that we are hosting an analyst day this Thursday in New York where investors and analysts will be able to spend time with all the members of our senior management and get an in depth briefing on our business in various parts of the world and various disciplines. If you would like to participate contact Julia Potter at 312-255- 5055. Now, I'd like to open the call for questions. After Q&A session concludes - --------------------------- Thank you. This is not a broken business. This is a very good business with good growth, very good operating margins and extraordinary cash flow, and we are confident in our ability to manage through this cycle and deliver value for our clients and our shareholders. Thank you all for participating. Page 8 -----END PRIVACY-ENHANCED MESSAGE-----