-----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, KmgQhrs7bm/WBtOr82ZhHiPVjECIlBr6sMtqwByyWUu+nw7XN3MWCVZ+fVei6xHI r3T1E6PVDkllcnxh6BThsA== 0000950137-98-000577.txt : 19980218 0000950137-98-000577.hdr.sgml : 19980218 ACCESSION NUMBER: 0000950137-98-000577 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980217 SROS: NONE 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-22125 FILM NUMBER: 98543103 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 10-Q 1 10-Q 1 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 QUARTER ENDED DECEMBER 31, 1997 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 000-22125 DIAMOND TECHNOLOGY PARTNERS INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE 36-4069408 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 875 N. MICHIGAN AVENUE, SUITE 3000 CHICAGO, ILLINOIS 60611 (Address of Principal Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 255-5000 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 requirements 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 January 31, 1998, there were 6,892,093 shares of Class A Common Stock and 5,123,678 shares of Class B Common Stock of the Registrant outstanding. 1 2 DIAMOND TECHNOLOGY PARTNERS INCORPORATED QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1997 TABLE OF CONTENTS PART I -- FINANCIAL INFORMATION: Item 1: Financial Statements Consolidated Balance Sheets as of December 31, 1997 and March 31, 1997 3 Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 1997 and 1996 4 Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 1997 and 1996 5 Notes to Consolidated Financial Statements 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II -- OTHER INFORMATION: Item 6: Exhibits and Reports on Form 8-K 12 SIGNATURES 13
2 3 DIAMOND TECHNOLOGY PARTNERS INCORPORATED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
DECEMBER 31, MARCH 31, 1997 1997 ------------ --------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $27,831 $ 8,184 Cash in escrow from subscribed stock -- 9,363 Accounts receivable, net of allowance of $532 and $566 as of December 31, 1997 and March 31, 1997, respectively 3,856 4,496 Prepaid expenses 371 564 Deferred income taxes 312 312 ------- ------- Total current assets 32,370 22,919 Computers, equipment, and training software, net 1,619 1,989 Other assets 508 476 Deferred organization costs, net 77 110 ------- ------- Total assets $34,574 $25,494 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ -- $ 2,000 Accounts payable 1,463 1,609 Accrued compensation 4,490 -- Income taxes payable 218 562 Deferred revenue 923 710 Accrued stock issuance costs -- 609 Other accrued liabilities 2,612 1,704 ------- ------- Total current liabilities 9,706 7,194 ------- ------- Stockholders' equity: Preferred Stock, $1.00 par value, 2,000 shares authorized, no shares issued -- -- Class A common stock, $.001 par value, 40,000 shares authorized, 6,857 issued as of December 31, 1997 and 4,594 issued as of March 31, 1997 7 5 Class B common stock, $.001 par value, 20,000 shares authorized, 5,033 issued as of December 31, 1997 and 4,967 issued as of March 31, 1997 5 5 Class A common stock subscribed, 1,755 shares -- 8,476 Additional paid-in capital 20,433 9,329 Notes receivable from sale of common stock (208) (122) Retained earnings 4,631 607 ------- ------- Total stockholders' equity 24,868 18,300 ------- ------- Total liabilities and stockholders' equity $34,574 $25,494 ======= =======
See accompanying notes to consolidated financial statements 3 4 DIAMOND TECHNOLOGY PARTNERS INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
FOR THE QUARTER FOR THE NINE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------ ------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net revenues $15,390 $10,156 $41,850 $26,245 ------- ------- ------- ------- Operating expenses: Project personnel and related expenses 8,261 5,593 22,859 16,307 Professional development and recruiting 1,728 1,518 4,448 4,478 Marketing and sales 689 296 2,378 1,189 Management and administrative support 2,214 1,514 6,302 4,840 ------- ------- ------- ------- Total operating expenses 12,892 8,921 35,987 26,814 ------- ------- ------- ------- Income (loss) from operations 2,498 1,235 5,863 (569) Interest income 327 47 830 121 Interest expense (-) 24 (10) (39) ------- ------- ------- ------- Income (loss) before taxes 2,825 1,306 6,683 (487) Income taxes (1,101) (587) (2,659) 107 ------- ------- ------- ------- Net income (loss) $ 1,724 $ 719 $ 4,024 $ (380) ======= ======= ======= ======= Basic earnings (loss) per share of common stock $ 0.15 $ 0.08 $ 0.35 $ (0.04) Diluted earnings (loss) per share of common stock $ 0.12 $ 0.07 $ 0.29 $ (0.04) Shares used in computing basic earnings (loss) per share of common stock 11,801 9,505 11,659 9,391 Shares used in computing diluted earnings (loss) per share of common stock 14,255 11,062 14,052 10,439
See accompanying notes to consolidated financial statements 4 5 DIAMOND TECHNOLOGY PARTNERS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
FOR THE NINE MONTHS ENDED DECEMBER 31, ------------------- 1997 1996 -------- ------- Cash flows from operating activities: Net income (loss) $ 4,024 $ (380) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 642 884 Cancellation of note receivable -- 226 Changes in assets and liabilities: Accounts receivable 640 144 Prepaid expenses and other 193 371 Accounts payable (146) 25 Deferred compensation -- (709) Accrued compensation 4,490 (1,089) Deferred revenue 213 -- Income taxes payable (134) (406) Other accrued liabilities 1,024 98 -------- ------- Net cash provided by (used in) operating activities 10,946 (836) -------- ------- Cash flows from investing activities: Capital expenditures, net (238) (1,151) Other assets (273) -- -------- ------- Net cash used in investing activities (511) (1,151) -------- ------- Cash flows from financing activities: Proceeds from notes payable -- 2,250 Repayment of notes payable (2,000) (198) Stock issuance costs (649) -- Common stock issued and subscribed 2,591 2,432 Repurchase of common stock (93) -- -------- ------- Net cash provided by (used in) financing activities (151) 4,484 -------- ------- Net increase in cash and cash equivalents 10,284 2,497 Cash and cash equivalents at beginning of period 17,547 4,635 -------- ------- Cash and cash equivalents at end of period $ 27,831 $ 7,132 ======== ======= Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 10 $ 43 Cash paid during the period for income taxes 2,793 298 Supplemental disclosure of noncash investing and financing activities: Issuance of common stock for notes $ 235 $ 201 Deferred and incentive compensation applied to payment for common stock -- 130
See accompanying notes to consolidated financial statements 5 6 DIAMOND TECHNOLOGY PARTNERS INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. BASIS OF REPORTING The accompanying consolidated financial statements of Diamond Technology Partners Incorporated (the "Company") include the accounts of the Company and its wholly owned subsidiary. All significant intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform with current period presentation. In the opinion of management, the consolidated financial statements reflect all normal and recurring adjustments which are necessary for a fair presentation of the Company's financial position, results of operations, and cash flows as of the dates and for the periods presented. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Consequently, these statements do not include all the disclosures normally required by generally accepted accounting principles for annual financial statements nor those normally made in the Company's Annual Report on Form 10-K. Accordingly, reference should be made to the Company's Annual Report on Form 10-K for additional disclosures, including a summary of the Company's accounting policies, which have not changed. The consolidated results of operations for the quarter and nine months ended December 31, 1997, are not necessarily indicative of results for the full year. B. EARNINGS PER SHARE The Company calculated earnings per share in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share", which became effective during the quarter ended December 31, 1997. SFAS 128 establishes standards for computing and presenting earnings per share (EPS) and requires a dual presentation of basic and diluted earnings per share. Basic earnings per share is computed using the weighted average number of common shares outstanding. Diluted earnings per share is computed using the weighted average number of common shares outstanding and the assumed exercise of stock options and warrants (using the treasury stock method). Both basic and diluted earnings per share include the assumed issuance of a stock dividend at the beginning of the nine months ended December 31, 1996 to effect a stock split. 6 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following information should be read in connection with the information contained in the Consolidated Financial Statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. See "Forward Looking Statements" below. OVERVIEW Diamond Technology Partners Incorporated ("Diamond" or the "Company") is a management consulting firm that devises and implements business strategies enabled by information technology ("IT") to improve its clients' competitive positions. Diamond was founded upon, and continues to stress, a business culture in which strategic consulting and IT expertise are integrated to provide client solutions. The Company's revenues are comprised of professional fees for services rendered to clients which are billed either monthly or semi-monthly in accordance with the terms of the client engagement. Prior to the commencement of a client engagement, the Company and its client agree on fees for services based upon the scope of the project, Diamond staffing requirements and the level of client involvement. The Company recognizes revenues as services are performed in accordance with the terms of the client engagement. Out-of-pocket expenses are reimbursed by clients and offset against expenses incurred and are not included in recognized revenues. Provisions are made for estimated uncollectible amounts based on the Company's experience. Although the Company from time to time has been required to make revisions to its clients' estimated deliverables, to date none of such revisions has had a material adverse effect on the Company's operating or financial results. The largest portion of the Company's costs consist primarily of employee-related expenses for its client-serving professionals and other direct costs, such as third-party vendor costs and unbilled travel costs associated with the delivery of services to clients. The remainder of the Company's costs are comprised of the expenses associated with the development of the business and the support of its client-serving professionals, such as professional development and recruiting, marketing and sales, and management and administrative support. Professional development and recruiting expenses consist primarily of recruiting and training costs. Marketing and sales expenses consist primarily of the costs associated with the Company's development and maintenance of its marketing materials and programs, in addition to other marketing programs. Management and administrative support expenses consist primarily of the costs associated with operations, finance, information systems, facilities and other administrative support for project personnel. The Company regularly reviews its fees for services, professional compensation and overhead costs to ensure that its services and compensation are competitive within the industry. In addition, Diamond periodically monitors the progress of client projects with client senior management. The Company manages activities of its professionals by closely monitoring engagement schedules and staffing requirements for new engagements. Because most of the Company's client engagements are, and may be in the future, terminable by the client without penalty, an unanticipated termination of a client project could require the Company to maintain underutilized employees. While professional staff must be adjusted to reflect active engagements, the Company must maintain a sufficient number of senior professionals to oversee existing client engagements and participate in the Company's sales efforts to secure new client assignments. 7 8 RESULTS OF OPERATIONS The following table sets forth for the periods indicated, selected statements of operations data as a percentage of net revenues:
FOR THE QUARTER FOR THE NINE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------ ------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net revenues 100.0% 100.0% 100.0% 100.0% ----- ----- ----- ----- Operating expenses: Project personnel and related expenses 53.7 55.1 54.6 62.1 Professional development and recruiting 11.2 14.9 10.6 17.1 Marketing and sales 4.5 2.9 5.7 4.5 Management and administrative support 14.4 14.9 15.1 18.4 ------ ------ ------ ------ Total operating expenses 83.8 87.8 86.0 102.1 ------ ------ ------ ------ Income (loss) from operations 16.2 12.2 14.0 (2.1) Interest income, net 2.1 0.7 2.0 0.3 ------ ------ ------ ------ Income (loss) before taxes 18.3 12.9 16.0 (1.8) Income taxes (7.1) (5.8) (6.4) 0.4 ------ ------ ------ ------ Net income (loss) 11.2% 7.1% 9.6% (1.4)% ====== ====== ====== ======
QUARTER ENDED DECEMBER 31, 1997 COMPARED TO QUARTER ENDED DECEMBER 31, 1996 The Company's net income of $1.7 million during the quarter ended December 31, 1997 improved from $700,000 during the same period in the prior year as a result of increased revenues, combined with an improvement in the utilization of client-serving professionals, partially offset by an increase in expenses required to support the Company's growth during the period. The Company's results in the year-earlier period reflect the impact of the loss of two projects as a result of clients' cancellations of business initiatives during the last quarter of fiscal 1996 and the first quarter of fiscal 1997. The Company responded to these project cancellations and the resulting business circumstances during the quarter ended September 30, 1996, by reducing spending levels, including the elimination of its bonus programs for the year ended March 31, 1997, while maintaining the consulting capacity required to support growth. The Company has reinstated its bonus programs and will award bonuses to Partners and employees at the end of the fiscal year ending March 31, 1998 if the Company's overall performance during the nine months ended December 31, 1997 is sustained for the remainder of the fiscal year. Accordingly, the Company recognized bonus expense of $2.0 million during the quarter ended December 31, 1997 as compared to none during the same period in the prior year. The Company's net revenues increased 51.5% to $15.4 million during the quarter ended December 31, 1997 as compared to the same period in the prior year. The increase in the Company's net revenues reflects the addition of new clients, as well as the leveraging of the Company's existing client base. For the quarter ended December 31, 1997, $6.7 million of revenue was derived from services delivered to new clients and $8.7 million related to the completion of projects or the undertaking of additional projects from the Company's client base of the previous fiscal year. The Company served 35 clients during the quarter ended December 31, 1997 (of which 14 were clients during the prior fiscal year) as compared to 29 clients served during the same period in the prior year. Project personnel and related expenses increased $2.7 million, or 47.7%, to $8.3 million during the quarter ended December 31, 1997 as compared to the same period in the prior year. This increase resulted from an increase in the number of client-serving professionals to respond to anticipated growth, combined with the reinstatement of the Company's bonus programs during the current year. The Company increased its client-serving professional staff from 143 at December 31, 1996 to 162 at December 31, 1997. As a percentage of net revenues, project personnel and related expenses decreased from 55.1% to 53.7% during fiscal 1997, reflecting the improvement in utilization of its client-serving professionals. 8 9 Professional development and recruiting expenses increased $210,000 during the quarter ended December 31, 1997 as compared to the same period in the prior year. This increase reflects the Company's training of a higher number of client-serving professionals, combined with the reinstatement of the Company's bonus programs during the current year. As a percentage of net revenues, these expenses decreased to 11.2% as compared to 14.9% during the same period in the prior year as a result of the Company's improved operating leverage resulting from the net revenue growth. Marketing and sales expenses increased from $296,000 to $689,000 during the quarter ended December 31, 1997 as compared to the same period in the prior year as a result of the Company's investment in its marketing and branding programs. The Company's marketing activities for the quarter were focused on (a) the development of its magazine, "Context", which was launched in the quarter ended December 31, 1997, and (b) the promotion of intellectual capital through the Diamond Exchange, the Company's executive learning forum for senior executives. As a percentage of net revenues, these expenses increased from 2.9% to 4.5%. Management and administrative support expenses increased from $1.5 million to $2.2 million, or 46.2%, during the quarter ended December 31, 1997 as compared to the same period in the prior year. This increase resulted from the cost of additional facilities, equipment and personnel necessary to support the Company's growth and increased consulting capacity, combined with the impact of the reinstatement of the bonus programs during the current year. As a percentage of net revenues, these expenses decreased from 14.9% to 14.4% as a result of the Company's improved operating leverage resulting from the net revenue growth. NINE MONTHS ENDED DECEMBER 31, 1997 COMPARED TO NINE MONTHS ENDED DECEMBER 31, 1996 The Company's net income improved $4.4 million during the nine months ended December 31, 1997 as compared to the same period in the prior year. The Company's net income of $4.0 million during the nine months ended December 31, 1997 improved from the net loss of $380,000 during the same period in the prior year as a result of increased revenues combined with an improvement in the utilization of client-serving professionals, partially offset by an increase in expenses required to support the Company's growth during the period. The Company's net loss in the year-earlier period resulted primarily from the loss of two projects as a result of clients' cancellations of business initiatives during the last quarter of fiscal 1996 and the first quarter of fiscal 1997. The Company responded to these project cancellations and the resulting business circumstances during the quarter ended September 30, 1996, by reducing spending levels, including the elimination of its bonus programs for the year ended March 31, 1997, while maintaining the consulting capacity required to support growth. The Company has reinstated its bonus programs and will award bonuses to Partners and employees at the end of the fiscal year ending March 31, 1998 if the Company's overall performance during the nine months ended December 31, 1997 is sustained for the remainder of the fiscal year. Accordingly, the Company has recognized bonus expense of $4.5 million during the nine months ended December 31, 1997 as compared to the comparable period in the prior year. The amount of the bonus expense for the full fiscal year will depend on the Company's results of operations and other measures for the remainder of the fiscal year. The Company's net revenues increased 59.5% to $41.9 million during the nine months ended December 31, 1997 as compared to the same period in the prior year. The increase in the Company's net revenues reflects an increase in the volume of services delivered to new clients, as well as the leveraging of the Company's existing client base. For the nine months ended December 31, 1997, $12.1 million of revenue was derived from services delivered to new clients and $29.8 million related to the completion of projects or the undertaking of additional projects from the Company's client base of the previous fiscal year. The Company served 54 clients during the nine months ended December 31, 1997 (of which 26 were clients during the prior fiscal year) as compared to 39 clients served during the same period in the prior year. Project personnel and related expenses increased $6.6 million, or 40.2%, to $22.9 million during the nine months ended December 31, 1997 as compared to the same period in the prior year. This increase resulted from an increase in the number of client-serving professionals to respond to anticipated growth, combined with the 9 10 impact of the reinstatement of the bonus program during the current year. The Company increased its client-serving professional staff from 143 at December 31, 1996 to 162 at December 31, 1997. As a percentage of net revenues, project personnel and related expenses decreased from 62.1% to 54.6% during fiscal 1998, reflecting the improvement in utilization of its client-serving professionals. Professional development and recruiting expenses decreased $30,000 during the nine months ended December 31, 1997 as compared to the same period in the prior year. This decrease reflects the initial investment in certain intellectual capital programs during the nine months ended December 31, 1996, partially offset by the Company's training of a higher number of client-serving professionals during the nine months ended December 31, 1997. The Company has continued its recruiting and training programs to support the growth of the business. As a percentage of net revenues, these expenses decreased to 10.6% as compared to 17.1% during the same period in the prior year as a result of the Company's improved operating leverage resulting from the net revenue growth. Marketing and sales expenses increased $1.2 million to $2.4 million during the nine months ended December 31, 1997 as compared to the same period in the prior year as a result of the Company's investment in its marketing and branding programs. The Company's marketing activities in the current fiscal year were focused on (a) the development of its magazine, "Context", which was launched during the quarter ended December 31, 1997 and (b) the promotion of Intellectual Capital through the Diamond Exchange, the Company's executive learning forum for senior executives. As a percentage of net revenues, these expenses increased from 4.5% to 5.7%. Management and administrative support expenses increased from $4.8 million to $6.3 million, or 30.2%, during the nine months ended December 31, 1997 as compared to the same period in the prior year. This increase resulted from the cost of additional facilities, equipment and personnel necessary to support the Company's growth and increased consulting capacity, combined with the impact of the reinstatement of bonus programs in the current year. As a percentage of net revenues, these expenses decreased from 18.4% to 15.1% as a result of the Company's improved operating leverage resulting from the net revenue growth. LIQUIDITY AND CAPITAL RESOURCES The Company closed its initial public offering of common stock in April 1997 and received net proceeds totaling approximately $10.1 million. The Company used $2.0 million of the proceeds from the initial public offering to repay a loan from Safeguard Scientifics, Inc.. The Company also maintains a revolving line of credit pursuant to the terms of a secured credit agreement from a commercial bank under which the Company may borrow up to $3.0 million at an annual interest rate based on the prime rate or based on the LIBOR rate plus 2.5%, at the Company's discretion. This line of credit has been reduced to account for letters of credit and other contingent obligations of the Company that are outstanding. As of December 31, 1997, the Company had approximately $2.3 million available under this line of credit. The Company's billings for the quarter ended December 31, 1997 totaled $17.8 million. These amounts include billings to clients for out-of-pocket expenses that are reimbursed by clients which are not included in recognized revenues. The Company's gross accounts receivable of $4.4 million at December 31, 1997, represents 22 days of billings for the quarter. The Company currently anticipates that the its cash resources, together with amounts available under its current revolving line of credit and cash generated from 10 11 existing operations will be sufficient to satisfy its operating cash needs for the next twelve months. Should the Company's business expand more rapidly than expected, the Company believes that additional bank credit would be available to fund such operating and capital requirements. In addition, the Company could consider seeking additional public or private debt or equity financing to fund future growth opportunities. YEAR 2000 ISSUES Many existing computer programs were designed and developed without considering the impact of the upcoming change in the century and consequently use only two digits to identify a year in the date field. If not corrected, many computer applications could fail or create erroneous results by or at the Year 2000 (the "Year 2000 Issue"). The Company has reviewed the potential impact of the Year 2000 Issue on its operations and has concluded that it will not be material. FORWARD-LOOKING STATEMENTS Statements contained anywhere in this report that are not historical facts contain forward-looking statements including such statements identified by the words "anticipate", "believe", "estimate", "expect" or similar terminology used with respect to the Company and its management. These forward-looking statements are subject to risks and uncertainties which could cause the Company's actual results, performance and prospects to differ materially from those expressed in, or implied by, the forward-looking statements. The forward-looking statements speak only as of the date hereof and the Company undertakes no obligation to revise or update them to reflect events or circumstances that arise in the future. Readers are cautioned not to place undue reliance on forward-looking statements. Among the risks and uncertainties affecting the forward looking statements are the Company's ability to manage its rapid growth and keep pace with evolving technology, and the variability of the Company's quarterly operating results due to, among other things, variations in the number of active client projects, and the other risks described in "Risk Factors" in the registration statement on Form S-1 filed in connection with the initial public offering with the Securities and Exchange Commission (file No. 333-17785). 11 12 PART II. OTHER INFORMATION ITEM 1 - 5 None ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11. Statement Regarding Computation of Earnings per Share 27. Financial Data Schedule (b) Reports on Form 8-K None 12 13 SIGNATURES 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, thereunto duly authorized. DIAMOND TECHNOLOGY PARTNERS INCORPORATED Date: February 17, 1998 By: MELVYN E. BERGSTEIN Melvyn E. Bergstein Chairman, Chief Executive Officer, President Date: February 17, 1998 By: MICHAEL E. MIKOLAJCZYK Michael E. Mikolajczyk Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) and Director 13 14 DIAMOND TECHNOLOGY PARTNERS INCORPORATED EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION --- ----------- 11 Statement Regarding Computation of Earnings Per Share 27 Financial Data Schedule
14 EX-11 2 COMPUTATION OF EARNINGS 1 EXHIBIT 11 DIAMOND TECHNOLOGY PARTNERS INCORPORATED STATEMENT REGARDING COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE QUARTER FOR THE NINE MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, ------------------ ------------------ 1997 1996 1997 1996 -------- ------- -------- --------- Net income (loss) $ 1,724 $ 719 $ 4,024 $ (380) ======== ======= ======== ========= Weighted average common shares outstanding 11,801 9,433 11,659 9,063 Additional shares pursuant to SAB83 computation -- 72 -- 328 -------- ------- -------- --------- Shares used in computing basic earnings (loss) per share of common stock 11,801 9,505 11,659 9,391 ======== ======= ======== ========= Basic earnings (loss) per share of common stock $ 0.15 $ 0.08 $ 0.35 $ (0.04) Shares used in computing basic earnings (loss) per share of common stock 11,801 9,505 11,659 9,391 Dilutive effect of common equivalent shares of stock options and warrants 2,454 623 2,393 -- Additional options and warrants pursuant to SAB83 computation -- 934 -- 1,048 -------- ------- -------- --------- Shares used in computing diluted earnings (loss) per share of common stock 14,255 11,062 14,052 10,439 ======== ======= ======== ========= Diluted Earnings (loss) per share of common stock $ 0.12 $ 0.07 $ 0.29 $ (0.04)
15 EX-27 3 FINANCIAL DATA SCHEDULE
5 9-MOS MAR-31-1998 APR-01-1997 DEC-31-1997 27,831 0 4,388 532 0 32,370 3,514 1,895 34,574 9,706 0 0 0 12 24,856 34,574 0 41,850 0 0 35,897 0 (10) 6,683 2,659 4,024 0 0 0 4,024 .35 .29
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