x |
Annual
report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
o |
Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
For
the transition period from__________ to
__________
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
No.
74-2853258
(I.R.S.
Employer Identification
No.)
|
PART
I
|
||
Item
1.
|
Business.
|
1
|
Item
1A.
|
Risk
Factors.
|
11
|
Item
1B.
|
Unresolved
Staff Comments.
|
17
|
Item
2.
|
Properties.
|
17
|
Item
3.
|
Legal
Proceedings.
|
17
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
17
|
PART
II
|
||
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
18
|
Item
6.
|
Selected
Financial Data.
|
18
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
19
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
29
|
Item
8.
|
Financial
Statements and Supplementary Data.
|
29
|
Item
9.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure.
|
29
|
Item
9A.
|
Disclosure
Controls and Procedures.
|
29
|
Item
9B.
|
Other
Information.
|
33
|
PART
III
|
||
Item
10.
|
Directors
and Executive Officers of the Registrant.
|
34
|
Item
11.
|
Executive
Compensation.
|
36
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
40
|
Item
13.
|
Certain
Relationships and Related Transactions.
|
41
|
Item
14.
|
Principal
Accountant Fees and Services.
|
42
|
PART
IV
|
||
Item
15.
|
Exhibits,
Financial Statement Schedules.
|
43
|
§ |
DomainExpertise.
Through our experience developing and delivering solutions for
more than
500 Global 2000 and midsize companies, we have acquired significant
domain
expertise in a core set of eBusiness solutions and software platforms.
These solutions include custom applications, portals and collaboration,
eCommerce, customer management, enterprise content management,
business
intelligence, business integration, mobile technology solutions,
technology platform implementations and service oriented architectures
and
enterprise service bus. The platforms in which we have significant
domain
expertise and on which these solutions are built include IBM WebSphere,
TIBCO BusinessWorks, Microsoft.NET, Cognos and Documentum, among
others.
|
§ |
Delivery
Model and Methodology.
We believe our significant domain expertise enables us to provide
high-value solutions through small, expert project teams that deliver
measurable results by working collaboratively with clients through
a
user-centered, technology-based and business-driven solutions methodology.
Our eNable Methodology, a unique and proven execution process map
we
developed, allows for repeatable, high quality services delivery.
The
eNable Methodology leverages the thought leadership of our senior
strategists and practitioners to support the client project team
and
focuses on transforming our clients’ business processes to provide
enhanced customer value and operating efficiency, enabled by Web
technology. As a result, we believe we are able to offer our clients
the
dedicated attention that boutiques usually provide and the delivery
and
project management that larger firms usually
offer.
|
§ |
Client
Relationships.
We have built a track record of quality solutions and client satisfaction
through the timely, efficient and successful completion of numerous
projects for our clients. As a result, we have established long-term
relationships with many of our clients who continue to engage us
for
additional projects and serve as excellent references for us. Over
the
past three years ending December 31, 2005, an average of 85% of revenue,
excluding from the calculation for any single period revenue from
acquisitions completed in that single period, was derived from customers
that were clients in the prior year.
|
§ |
Vendor
Partnerships and Endorsements.
We have built meaningful partnerships with software providers, most
notably IBM, whose products we use to design and implement solutions
for
our clients. These partnerships enable us to reduce our cost of sales
and
sales cycle times and increase win rates by leveraging our partners’
marketing efforts and endorsements. We also serve as a sales channel
for
our partners, helping them market and sell their software products.
We are
a Premier IBM business partner, a TeamTIBCO partner, a Microsoft
Gold
Certified Partner and a Documentum Select Services Team
Partner.
|
§ |
Geographic
Focus.
We believe we have built the leading independent information technology
consulting firm in the central United States. We serve our central
United
States customers from our network of twelve offices throughout the
central
United States and Canada. In addition, we have over 100 colleagues
who are
part of “national” business units, who travel extensively to serve clients
throughout the United States. Our future growth plan includes expanding
our business throughout the United States, both through expansion
of our
national travel practices and through opening new offices, both
organically and through acquisition, in areas outside the central
United
States. We believe our central United States network provides a
competitive platform from which to expand
nationally.
|
§ |
Emerging
Offshore Capability.
We maintain a small offshore development facility in Bitoli, Macedonia.
Through this facility we contract with a team of professionals with
expertise in IBM, TIBCO and Microsoft technologies and with
specializations that include application development, adapter and
interface development, quality assurance and testing, monitoring
and
support, product development, platform migration, and portal development.
This expertise, as well as our partnerships with offshore services
providers based in India, will enable us to more effectively deliver
our
solutions.
|
§ |
give
managers and executives the information they need to make quality
business
decisions and dynamically adapt their business processes and systems
to
respond to client demands, market opportunities or business
problems;
|
§ |
improve
the quality and lower the cost of customer acquisition and care through
Web-based customer self-service and
provisioning;
|
§ |
reduce
supply chain costs and improve logistics by flexibly and quickly
integrating processes and systems and making relevant real-time
information and applications available online to suppliers, partners
and
distributors;
|
§ |
increase
the effectiveness and value of legacy enterprise technology infrastructure
investments by enabling faster application development and deployment,
increased flexibility and lower management costs;
and
|
§ |
increase
employee productivity through better information flow and collaboration
capabilities and by automating routine processes to enable focus
on unique
problems and opportunities.
|
§ |
Custom
applications.
We design, develop, implement and integrate custom application solutions
that deliver enterprise-specific functionality to meet the unique
requirements and needs of our clients. Perficient’s substantial experience
with platforms including J2EE, .Net and open-source - plus our flexible
delivery structure - enables enterprises of all types to leverage
cutting-edge technologies to meet business-driven
needs.
|
§ |
Enterprise
portals and collaboration.
We design, develop, implement and integrate secure and scalable enterprise
portals for our clients and their customers, suppliers and partners
that
include searchable data systems, collaborative systems for process
improvement, transaction processing, unified and extended reporting
and
content management and
personalization.
|
§ |
eCommerce.
We design, develop and implement secure and reliable ecommerce
infrastructures that dynamically integrate with back-end systems
and
complementary applications that provide for transaction volume scalability
and sophisticated content
management.
|
§ |
Online
customer relationship management (eCRM).
We design, develop and implement advanced eCRM solutions that facilitate
customer acquisition, service and support, sales, and marketing by
understanding our customers’ needs through interviews, facilitated
requirements gathering sessions and call center analysis, developing
an
iterative, prototype driven solution and integrating the solution
to
legacy processes and applications.
|
§ |
Enterprise
content management.
We design, develop and implement Enterprise Content Management (ECM)
solutions that enable the management of all unstructured information
regardless of file type or format. Our ECM solutions can facilitate
the
creation of new content and/or provide easy access and retrieval
of
existing digital assets from other enterprise tools such as enterprise
resource planning (ERP), customer relationship management or legacy
applications. Perficient’s ECM solutions include Enterprise Imaging and
Document Management, Web Content Management, Digital Asset Management,
Enterprise Records Management, Compliance and Control, Business Process
Management and Collaboration and Enterprise
Search.
|
§ |
Business
intelligence.
We design, develop and implement business intelligence solutions
that
allow companies to interpret and act upon accurate, timely and integrated
information. By classifying, aggregating and correlating data into
meaningful business information, business intelligence solutions
help our
clients make more informed business decisions. Our business intelligence
solutions allow our clients to transform data into knowledge for
quick and
effective decision making and can include information strategy, data
warehousing and business analytics and
reporting.
|
§ |
Business
integration.
We design, develop and implement business integration solutions that
allow
our clients to integrate all of their business processes end-to-end
and
across the enterprise. Truly innovative companies are extending those
processes, and eliminating functional friction, between the enterprise
and
core customers and partners. Our business integration solutions can
extend
and extract 'Green-Screen' applications, reduce infrastructure strains
and
cost, Web-enable legacy applications, provide real-time insight into
business metrics and introduce efficiencies for customers, suppliers
and
partners.
|
§ |
Mobile
technology solutions.
We design, develop and implement mobile technology solutions that
deliver
wireless capabilities to carriers, Mobile Virtual Network Operators
(MVNO), Mobile Virtual Network Enablers (MVNE), and the enterprise.
Perficient’s expertise with wireless technologies such as SIP, MMS, WAP,
and GPRS are coupled with our deep expertise in mobile content delivery.
Our secure and scalable solutions can include mobile content delivery
systems; wireless value-added services including SIP, IMS, SMS, MMS
and
Push-to-Talk; custom developed applications to pervasive devices
including
Symbian, WML, J2ME, MIDP, Linux; and customer care solutions including
provisioning, mediation, rating and
billing.
|
§ |
Technology
platform implementations.
We design, develop and implement technology platform implementations
that
allow our clients to establish a robust, reliable Internet-based
infrastructure for integrated business applications, which extend
enterprise technology assets to employees, customers, suppliers and
partners. Our Platform Services include application server selection,
architecture planning, installation and configuration, clustering
for
availability, performance assessment and issue remediation, security
services and technology migrations.
|
§ |
Service
oriented architectures and enterprise service bus.
We design, develop and implement service oriented architecture and
enterprise service bus solutions that allow our clients to quickly
adapt
their business processes to respond to new market opportunities or
competitive threats by taking advantage of business strategies supported
by flexible business applications and IT
infrastructures.
|
§ |
iterative
and results oriented;
|
§ |
centered
around a flexible and repeatable framework;
|
§ |
collaborative
and customer-centered in that we work with not only our clients but
with
our clients’ customers in developing our
solutions;
|
§ |
focused
on delivering high value, measurable results; and
|
§ |
grounded
by industry leading project management.
|
§ |
Grow
Relationships with Existing and New Clients.
We intend to continue to solidify and expand enduring relationships
with
our existing clients and to develop long-term relationships with
new
clients by providing our customers with solutions that generate a
demonstrable, positive return-on-investment. Our incentive plan rewards
our project managers to work in conjunction with our sales people
to
expand the nature and scope of our engagements with existing
clients.
|
§ |
Continue
Making Disciplined Acquisitions.
The information technology consulting market is a fragmented industry
and
we believe there are a substantial number of smaller privately held
information technology consulting firms that can be acquired on
financially accretive terms. We have a track record of successfully
identifying, executing and integrating acquisitions that add strategic
value to our business. Our established culture and infrastructure
positions us to successfully integrate each acquired company, while
continuing to offer effective solutions to our clients. Over the
past six
years, we have acquired and successfully integrated seven privately
held
information technology consulting firms. We continue to actively
look for
attractive acquisitions that leverage our core expertise and look
to
expand our capabilities and geographic presence, including
offshore.
|
§ |
Expand
Nationally.
We
believe we have built the leading independent information technology
consulting firm in the central United States. We serve our central
United
States customers from our network of twelve offices throughout the
central
United States and Canada. In addition, we have over 100 colleagues
who are
part of “national” business units, who travel extensively to serve clients
throughout the United States. Our future growth plan includes expanding
our business throughout the United States, both through expansion
of our
national travel practices and through opening new offices, both
organically and through acquisition, in areas outside the central
United
States. We believe our central United States network provides a
competitive platform from which to expand
nationally.
|
§ |
Enhance
Brand Visibility.
Our focus on a core set of eBusiness solutions, applications and
software
platforms and a targeted customer and geographic market has given
us
significant market visibility for a firm of our size. In addition,
we
believe we have in the past year achieved critical mass in size,
which has
significantly enhanced our visibility among prospective clients,
employees
and software vendors. As we continue to grow our business, we intend
to
increase our marketing activities to highlight our thought leadership
in
eBusiness solutions and infrastructure software technology
platforms.
|
§ |
Invest
in Our People and Culture.
We have cultivated a culture built on teamwork, a passion for technology
and client service, and a focus on cost control and the bottom line.
As a
people-based business, we continue to invest in the development of
our
professionals and to provide them with entrepreneurial opportunities
and
career development and advancement. Our technology, business consulting
and project management councils ensure that each client team learns
best
practices being developed across the company and our recognition
program
rewards teams for implementing those practices. We believe this results
in
a team of motivated professionals armed with the ability to deliver
high-quality and high-value services for our
clients.
|
• |
Leverage
Existing and Pursue New Strategic Alliances.
We intend to continue to develop alliances that complement our core
competencies. Our alliance strategy is targeted at leading business
advisory companies and technology providers and allows us to take
advantage of compelling technologies in a mutually beneficial and
cost-competitive manner. Many of these relationships, and in particular
IBM, also lead to a sales channel whereby our partners, or their
clients,
utilize us as the services firm of choice to help a partner’s client
integrate their technology.
|
§ |
Use
Offshore Services When Appropriate.
Our solutions and services are typically delivered at the customer
site
and require a significant degree of customer participation, interaction
and specialized technology expertise which tends to offset the potential
savings from utilizing offshore resources. However, there are projects
in
which we can use lower cost offshore technology professionals to
perform
less specialized roles on our solution engagements, enabling us to
fully
leverage our United States colleagues while offering our clients
a highly
competitive blended average rate. We have established partnerships
with a
number of offshore staffing firms from whom we source offshore technology
professionals on an as-needed basis. Additionally, we maintain a
small
offshore development and delivery facility in Macedonia.
|
§ |
IBM
Corporation;
|
§ |
Cingular;
|
§ |
Assurant/Fortis,
Inc.;
|
§ |
Wachovia
Corporation;
|
§ |
Centene
Corporation;
|
§ |
Union
Bank of California;
|
§ |
Tufts
Health Plan;
|
§ |
Nationwide
Services Company;
|
§ |
Anheuser-Busch;
and
|
§ |
EMC
Corporation.
|
§ |
small
local consulting firms that operate in no more than one or two geographic
regions;
|
§ |
regional
consulting firms such as Software Architects, Inc., Haverstick Consulting,
Inc. and Quilogy, Inc.;
|
§ |
national
consulting firms, such as Answerthink, Inc., Accenture, BearingPoint,
Inc., Ciber, Inc., Electronic Data Systems Corporation and Sapient
Corporation;
|
§ |
in-house
professional services organizations of software companies;
and
|
§ |
to
a limited extent, offshore providers such as Cognizant Technology
Solutions Corporation, Infosys Technologies Limited, Satyam Computer
Services Limited and Wipro Limited.
|
§ |
we
believe in long-term client and partner relationships built on investment
in innovative solutions, delivering more value than the competition
and a
commitment to excellence;
|
§ |
we
believe in growth and profitability and building meaningful
scale;
|
§ |
we
believe each of us is ultimately responsible for our own career
development and has a commitment to mentor
others;
|
§ |
we
believe that Perficient has an obligation to invest in our consultants’
training and education;
|
§ |
we
believe the best career development comes on the job; and
|
§ |
we
love challenging new work opportunities.
|
• |
difficulties
in the integration of the technologies, services and personnel of
the
acquired business;
|
• |
the
failure of management and acquired services personnel to perform
as
expected;
|
• |
the
risks of entering markets in which we have no, or limited, prior
experience;
|
• |
the
failure to identify or adequately assess any undisclosed or potential
liabilities or problems of the acquired business including legal
liabilities;
|
• |
the
failure of the acquired business to achieve the forecasts we used
to
determine the purchase price; or
|
• |
the
potential loss of key personnel of the acquired business.
|
• |
continue
to develop our technology expertise;
|
• |
enhance
our current services;
|
• |
develop
new services that meet changing customer needs;
|
• |
advertise
and market our services; and
|
• |
influence
and respond to emerging industry standards and other technological
changes.
|
• |
security;
|
• |
intellectual
property ownership;
|
• |
privacy;
|
• |
taxation;
and
|
• |
liability
issues.
|
§ |
demand
for Internet software and services;
|
§ |
customer
budget cycles;
|
§ |
changes
in our customers’ desire for our partners’ products and our
services;
|
§ |
pricing
changes in our industry;
|
§ |
government
regulation and legal developments regarding the use of the Internet;
and
|
§ |
general
economic conditions.
|
Item IB. |
Unresolved
Staff Comments.
|
Item 2. |
Properties.
|
Item 3. |
Legal
Proceedings.
|
Item 4. |
Submission
of Matters to a Vote of Security
Holders.
|
For
|
Withheld
|
Abstentions
|
||||||||
John
T. McDonald
|
17,626,978
|
227,805
|
—
|
|||||||
David
S. Lundeen
|
17,286,986
|
567,797
|
—
|
|||||||
Max
D. Hopper
|
17,488,478
|
366,305
|
—
|
|||||||
Kenneth
R. Johnsen
|
17,554,551
|
300,232
|
—
|
|||||||
Ralph
C. Derrickson
|
17,661,203
|
193,580
|
—
|
Shares
Voted
For:
|
17,489,120
|
Shares Voted Against: |
343,332
|
Shares Abstained: |
22,331
|
Shares Voted For: |
10,631,434
|
Shares Voted Against: |
390,644
|
Shares Abstained: |
78,763
|
Item 5. |
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity
Securities.
|
High
|
Low
|
||||||
Year
Ending December 31, 2004:
|
|||||||
First
Quarter
|
$
|
4.32
|
$
|
2.36
|
|||
Second
Quarter
|
5.00
|
3.10
|
|||||
Third
Quarter
|
4.00
|
2.91
|
|||||
Fourth
Quarter
|
6.96
|
3.84
|
|||||
Year
Ending December 31, 2005:
|
|||||||
First
Quarter
|
$
|
9.44
|
$
|
6.80
|
|||
Second
Quarter
|
7.99
|
5.30
|
|||||
Third
Quarter
|
8.35
|
6.74
|
|||||
Fourth
Quarter
|
9.55
|
7.20
|
Item 6. |
Selected
Financial Data.
|
Year
Ended December 31,
|
||||||||||||||||
2001
|
2002
|
2003
|
2004
|
2005
|
||||||||||||
Revenue:
|
||||||||||||||||
Services
|
$
|
20,416,643
|
$
|
20,391,587
|
$
|
24,534,617
|
$
|
43,330,757
|
$
|
83,739,808
|
||||||
Software
|
—
|
402,889
|
3,786,864
|
13,169,693
|
9,386,983
|
|||||||||||
Reimbursable
expenses
|
—
|
1,655,808
|
1,870,441
|
2,347,223
|
3,870,410
|
|||||||||||
Total
revenue
|
20,416,643
|
22,450,284
|
30,191,922
|
58,847,673
|
96,997,201
|
|||||||||||
Cost
of revenue(1):
|
||||||||||||||||
Project
personnel costs
|
11,879,224
|
11,210,272
|
13,411,762
|
26,072,516
|
51,140,335
|
|||||||||||
Software
costs
|
—
|
343,039
|
3,080,894
|
11,341,145
|
7,722,166
|
|||||||||||
Reimbursable
expenses
|
—
|
1,655,808
|
1,870,441
|
2,347,223
|
3,870,410
|
|||||||||||
Other
project related expenses
|
—
|
330,100
|
453,412
|
267,416
|
1,845,873
|
|||||||||||
Total
cost of revenue
|
11,879,224
|
13,539,219
|
18,816,509
|
40,028,300
|
64,578,784
|
|||||||||||
Gross
margin
|
8,537,419
|
8,911,065
|
11,375,413
|
18,819,373
|
32,418,417
|
|||||||||||
Selling,
general and administrative
|
9,001,405
|
8,567,698
|
7,993,008
|
11,067,792
|
17,917,330
|
|||||||||||
Depreciation
|
494,586
|
687,570
|
670,436
|
512,076
|
614,803
|
|||||||||||
Intangibles
amortization
|
15,312,280
|
1,285,524
|
610,421
|
696,420
|
1,611,082
|
|||||||||||
Restructuring,
severance, and other
|
766,477
|
579,427
|
—
|
—
|
—
|
|||||||||||
Impairment
charge
|
26,798,178
|
—
|
—
|
—
|
—
|
|||||||||||
Income
(loss) from operations
|
(43,835,507
|
)
|
(2,209,154
|
)
|
2,101,548
|
6,543,085
|
12,275,202
|
|||||||||
Interest
income
|
31,093
|
17,732
|
3,286
|
2,564
|
15,296
|
|||||||||||
Interest
expense
|
(122,395
|
)
|
(203,569
|
)
|
(285,938
|
)
|
(137,278
|
)
|
(658,597
|
)
|
||||||
Other
income (expense)
|
(1,608
|
)
|
(53
|
)
|
(13,459
|
)
|
32,586
|
42,561
|
||||||||
Income
(loss) before income taxes
|
(43,928,417
|
)
|
(2,395,044
|
)
|
1,805,437
|
6,440,957
|
11,674,462
|
|||||||||
(Provision)
benefit for income taxes
|
42,261
|
—
|
(755,405
|
)
|
(2,527,669
|
)
|
(4,497,710
|
)
|
||||||||
Net
income (loss)
|
$
|
(43,886,156
|
)
|
$
|
(2,395,044
|
)
|
$
|
1,050,032
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
Beneficial
conversion charge on preferred stock
|
—
|
(1,672,746
|
)
|
—
|
—
|
—
|
||||||||||
Accretion
of dividends on preferred stock
|
—
|
(163,013
|
)
|
(157,632
|
)
|
—
|
—
|
|||||||||
Net
income (loss) available to common stockholders
|
$
|
(43,886,156
|
)
|
$
|
(4,230,803
|
)
|
$
|
892,400
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
Basic
net income (loss) per share available to common stockholders
|
$
|
(7.01
|
)
|
$
|
(0.46
|
)
|
$
|
0.08
|
$
|
0.22
|
$
|
0.33
|
||||
Diluted
net income (loss) per share available to common stockholders
|
$
|
(7.01
|
)
|
$
|
(0.46
|
)
|
$
|
0.07
|
$
|
0.19
|
$
|
0.28
|
||||
Shares
used in computing basic net income (loss) per share
|
6,261,053
|
9,173,657
|
11,364,203
|
17,648,575
|
22,005,154
|
|||||||||||
Shares
used in computing diluted net income (loss) per share
|
6,261,053
|
9,173,657
|
15,306,151
|
20,680,507
|
25,242,496
|
|||||||||||
As
of December 31,
|
||||||||||||||||
2001
|
2002
|
2003
|
2004
|
2005
|
||||||||||||
Balance
Sheet Data:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
1,412,238
|
$
|
1,525,002
|
$
|
1,989,395
|
$
|
3,905,460
|
$
|
5,096,409
|
||||||
Working
capital
|
$
|
2,494,191
|
$
|
1,854,276
|
$
|
4,013,373
|
$
|
9,233,577
|
$
|
17,078,086
|
||||||
Property
and equipment, net
|
$
|
533,948
|
$
|
1,211,018
|
$
|
699,145
|
$
|
805,831
|
$
|
960,136
|
||||||
Intangible
assets, net
|
$
|
3,550,100
|
$
|
12,380,039
|
$
|
11,693,834
|
$
|
37,339,891
|
$
|
52,031,825
|
||||||
Total
assets
|
$
|
9,117,695
|
$
|
19,593,103
|
$
|
20,259,983
|
$
|
62,582,365
|
$
|
84,934,901
|
||||||
Current
portion of long term debt and line of credit
|
$
|
703,144
|
$
|
1,025,488
|
$
|
366,920
|
$
|
1,379,201
|
$
|
1,581,361
|
||||||
Long-term
debt and line of credit, less current portion
|
$
|
3,667
|
$
|
745,318
|
$
|
436,258
|
$
|
2,902,306
|
$
|
5,338,501
|
||||||
Total
stockholders’ equity
|
$
|
6,836,301
|
$
|
14,521,483
|
$
|
16,016,038
|
$
|
44,622,367
|
$
|
65,910,616
|
Revenue:
|
2003
|
2004
|
2005
|
|||||||
Services
revenue
|
86.6
|
%
|
76.7
|
%
|
89.9
|
%
|
||||
Software
revenue
|
13.4
|
23.3
|
10.1
|
|||||||
Reimbursed
expenses
|
6.6
|
4.2
|
4.2
|
|||||||
Total
revenue
|
106.6
|
104.2
|
104.2
|
|||||||
Cost
of revenue (exclusive of depreciation shown separately
below):
|
||||||||||
Project
personnel costs
|
47.4
|
46.1
|
54.9
|
|||||||
Software
costs
|
10.9
|
20.1
|
8.3
|
|||||||
Reimbursable
expenses
|
6.6
|
4.2
|
4.2
|
|||||||
Other
project related expenses
|
1.5
|
0.5
|
2.0
|
|||||||
Total
cost of revenue
|
66.4
|
70.9
|
69.4
|
|||||||
Services
gross margin
|
43.5
|
39.2
|
36.7
|
|||||||
Software
gross margin
|
18.6
|
13.9
|
17.7
|
|||||||
Total
gross margin
|
40.2
|
33.3
|
34.8
|
|||||||
Selling,
general and administrative
|
28.2
|
19.6
|
19.2
|
|||||||
Depreciation
and amortization
|
4.5
|
2.1
|
2.4
|
|||||||
Income
from operations
|
7.5
|
11.6
|
13.2
|
|||||||
Interest
expense, net
|
(1.0
|
)
|
(0.2
|
)
|
(0.7
|
)
|
||||
Income
before income taxes
|
6.5
|
11.4
|
12.5
|
|||||||
Provision
for income taxes
|
2.7
|
4.5
|
4.8
|
|||||||
Net
income
|
3.8
|
%
|
6.9
|
%
|
7.7
|
%
|
||||
Acquisition
Date
|
Approximate
Annual
Revenue
Run-Rate at
Acquisition
Date
|
||
Genisys
|
4/2/04
|
$10
million
|
|
Meritage
|
6/18/04
|
$12
million
|
|
Zettaworks
|
12/20/04
|
$16
million
|
|
iPath
|
6/10/05
|
$8
million
|
|
Vivare
|
9/2/05
|
$10
million
|
As
of December 31
|
|||||||
|
2004
|
2005
|
|||||
Cash
and cash equivalents
|
$
|
3.9
|
$
|
5.1
|
|||
Working
capital
|
$
|
9.2
|
$
|
17.1
|
Payments
Due by Period
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
Than
1
Year
|
1-3
Years
|
3-5
Years
|
More
Than
5
Years
|
|||||||||||
Long-term
debt obligations, including estimated interest
|
$
|
3,122
|
$
|
1,733
|
$
|
1,389
|
$
|
—
|
$
|
—
|
||||||
Operating
lease obligations
|
3,922
|
1,203
|
1,662
|
983
|
74
|
|||||||||||
Total
|
$
|
7,044
|
$
|
2,936
|
$
|
3,051
|
$
|
983
|
$
|
74
|
Payments
Due by Period
|
||||||||||||||||
|
Total
|
Less
Than
1
Year
|
1-3
Years
|
3-5
Years
|
More
Than
5
Years
|
|||||||||||
Operating
lease obligations
|
$
|
5,027
|
$
|
1,064
|
$
|
2,091
|
$
|
1,493
|
$
|
379
|
§ |
A “modified
prospective” method in which compensation cost is recognized beginning
with the effective date (a) based on the requirements of Statement
123(R) for all share-based payments granted after the effective
date and
(b) based on the requirements of Statement 123 for all awards granted
to employees prior to the effective date of Statement 123(R) that
remain
unvested on the effective date.
|
§ |
A “modified retrospective” method which
includes the requirements of the modified prospective method described
above, but also permits entities to restate based on the amounts
previously recognized under Statement 123 for purposes of pro forma
disclosures based upon either (a) all prior periods presented or
(b) prior interim periods of the year of adoption.
|
§ |
Lack
of segregation of duties, with certain accounting personnel being
assigned
inappropriate access to the automated general ledger system, such
as in
our procure to pay and order to cash processes;
|
§ |
The
design of our internal control structure emphasized significant reliance
on manual detect controls, primarily performed by a single individual,
and
limited reliance on application and prevent controls;
|
§ |
Lack
of detail review of key financial spreadsheets, including spreadsheets
supporting journal entries affecting revenue such as unbilled revenue
and
deferred revenue.
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
||
John
T. McDonald
|
|
|
42
|
|
|
Chairman
of the Board and Chief Executive Officer
|
Jeffrey
S. Davis
|
|
|
41
|
|
|
President
and Chief Operating Officer
|
Michael
D. Hill
|
|
|
37
|
|
|
Chief
Financial Officer
|
Richard
T. Kalbfleish
|
50
|
Controller
and VP of Finance and Administration
|
||||
Ralph
C. Derrickson
|
|
|
47
|
|
|
Director
|
Max
D. Hopper
|
|
|
71
|
|
|
Director
|
Kenneth
R. Johnsen
|
|
|
52
|
|
|
Director
|
David
S. Lundeen
|
|
|
44
|
|
|
Director
|
Richard
T. Kalbfleish
|
VP
of Finance and Administration
|
John
T. McDonald
|
Chairman
of the Board and Chief Executive Officer
|
|
David
S. Lundeen
|
Director
|
|
Robert
Pickering, Jr.
|
Former
Director
|
|
Max
D. Hopper
|
Director
|
Annual
Compensation
|
Long
Term Compensation Awards
|
|||||||||||||||||||||
Name
and Principal Position
|
Year
|
Salary($)
|
Bonus($)
|
Other
Annual
Compensation($)(1)
|
Restricted
Stock
Awards($)(2)
|
Securities
Underlying
Options(#)(3)
|
All
Other
Compensation
($)(4)
|
|||||||||||||||
John
T. McDonald
|
2005
|
$
|
250,000
|
$
|
338,359
|
$
|
16,273
|
—
|
—
|
$
|
420
|
|||||||||||
Chief
Executive Officer
|
2004
|
$
|
237,500
|
$
|
355,408
|
$
|
12,959
|
$
|
1,104,250
|
400,000
|
$
|
420
|
||||||||||
and
|
2003
|
$
|
225,000
|
$
|
200,048
|
$
|
3,000
|
—
|
425,000
|
|
||||||||||||
Chairman
of the Board
|
||||||||||||||||||||||
Jeffrey
S. Davis
|
2005
|
$
|
228,000
|
$
|
197,301
|
$
|
9,489
|
—
|
—
|
$
|
420
|
|||||||||||
President
and
|
2004
|
$
|
216,629
|
$
|
161,992
|
$
|
15,324
|
$
|
552,125
|
200,000
|
$
|
420
|
||||||||||
Chief
Operating Officer
|
2003
|
$
|
205,000
|
$
|
145,813
|
$
|
3,000
|
—
|
250,000
|
|
||||||||||||
|
||||||||||||||||||||||
Michael
D. Hill
|
2005
|
$
|
110,000
|
$
|
41,696
|
$
|
—
|
$
|
100,000
|
—
|
$
|
183
|
||||||||||
Chief
Financial Officer
|
2004
|
$
|
96,250
|
$
|
43,210
|
$
|
—
|
—
|
50,000
|
$
|
160
|
|||||||||||
Richard
T. Kalbfleish
|
2005
|
$
|
130,000
|
$
|
42,227
|
$
|
—
|
$
|
100,000
|
—
|
$
|
580
|
||||||||||
VP
of Finance and Administration
|
(1) |
Mr. McDonald’s employment agreement, which was
approved by the Board of Directors on March 29, 2004 and was in
effect until December 31, 2005, specifies a salary increase to
$250,000
per annum if our net revenue per quarter equals or exceeds ten
million
dollars at any time following January 1,
2004.
|
(2) |
In
December 2004, Mr. McDonald was granted 175,000 shares of
restricted stock and Mr. Davis was granted 87,500 shares of
restricted stock, the fair market value of which was $6.31 per
share. The
restricted stock shall vest over seven years in the following increments:
15% on December 15, 2006; 10% on each of December 15, 2007 and
December 15, 2008; 15% on December 15, 2009; 25% on
December 15, 2010; and 25% on December 15, 2011. This vesting
schedule includes certain accelerated vesting provisions that provide
for
conversion to pro-rata or straight-line vesting over the seven
year period
in the event certain performance targets are met.
In
December 2005, Mr. Hill and Mr. Kalbfleish
were each granted 11,236 shares of restricted stock, the fair market
price
of which was $8.90 per share. The restricted stock shall vest over
six
years in the following increments: 15% on December 15, 2006; 10% on
each of December 15, 2007 and December 15, 2008; 15% on
December 15, 2009; 25% on December 15, 2010; and 25% on
December 15, 2011. This vesting schedule includes certain accelerated
vesting provisions that provide for conversion to pro-rata or
straight-line vesting over the six year period in the event certain
performance targets are met.
There
have be no dividends paid with respect to
the restricted stock. The value of the restricted stock disclosed
above as
of December 31, 2005 was: Mr. McDonald, $1,559,250; Mr. Davis,
$779,625;
Mr. Hill, $100,113; Mr. Kalbfleish, $100,113. This amount was calculated
by multiplying the number of shares subject to each award by the
$8.91
closing price of our Common Stock on December 30, 2005 as reported
by the
NASDAQ National Market.
|
(3)
|
In
December 2004, Mr. McDonald was granted options to purchase
400,000 shares of our Common Stock with an exercise price of $6.31.
In
December, 2004, Mr. Davis was granted options to
purchase 200,000 shares of our Common Stock with an exercise price
of
$6.31 per share. In January 2004, Mr. Hill was granted options
to purchase 50,000 shares of our Common Stock with an exercise
price of
$3.00 per share.
|
(4)
|
Value
of benefit from the Company match portion of contributions to the
Company’s 401k Plan.
|
|
|
|
|
|
|
|
||||||||||||
|
Shares
|
|
Number
of
|
|
||||||||||||||
|
Acquired
on
|
Value
|
Securities
Underlying
|
Value
of Unexercised
|
||||||||||||||
|
Exercise
|
Realized
|
Unexercised
Options
|
in-the-Money
Options
|
||||||||||||||
Name
|
(#)
|
($)
|
at
December 31, 2005(#)
|
at
December 31, 2005($)(1)
|
||||||||||||||
|
|
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
||||||||||||
John
T. McDonald
|
36,316
|
$
|
280,145
|
1,008,978
|
560,417
|
$
|
6,769,662
|
$
|
2,122,107
|
|||||||||
Jeffrey
S. Davis
|
120,300
|
$
|
830,050
|
238,582
|
272,917
|
$
|
1,825,464
|
$
|
1,021,982
|
|||||||||
Michael
D. Hill
|
—
|
$
|
—
|
21,875
|
28,125
|
$
|
129,281
|
$
|
166,219
|
|||||||||
Richard
T. Kalbfleish
|
—
|
$
|
—
|
5,000
|
15,000
|
$
|
13,350
|
$
|
40,050
|
(1) |
Based on the fair market value of Perficient’s Common
Stock at December 30, 2005 ($8.91 per share), as reported on the
NASDAQ National Market.
|
|
§
|
Each
new member of the board will receive an option for 15,000 shares,
vesting
ratably over a three-year period.
|
||
|
||||
|
§
|
Each
non-employee board member will receive $500 for each board meeting
attended.
|
||
|
||||
|
§
|
Each
audit committee member will receive $1,250 for each audit committee
meeting.
|
||
|
||||
|
§
|
Each
compensation committee member will receive $500 for each compensation
committee meeting.
|
||
|
||||
|
§
|
The
chairman of the audit committee will receive an additional $5,000
quarterly and 5,000 vested options annually.
|
||
|
||||
|
§
|
The
chairman of the compensation committee will receive an additional
$2,500
quarterly.
|
||
|
||||
|
§
|
Each
non-employee board member will receive 5,000 vested options
annually.
|
||
|
||||
|
§
|
Each
board member who serves on any committees of the board will receive
an
additional 5,000 vested options annually.
|
§ |
an
annual salary of $225,000 with an increase to $250,000 per annum
if the
Company’s net revenue per quarter equaled or exceeded ten million dollars
at any time following January 1, 2004;
|
§ |
the
grant of options to purchase 150,000 shares of our Common Stock for
each
year of service under the agreement, vesting over a four year period,
and
all granted at the beginning of the employment agreement;
|
§ |
an
annual performance bonus equal to 100% of Mr. McDonald’s annual salary in
the event we achieved certain performance targets approved by our
Board of
Directors; and
|
§ |
24
months’ severance pay plus bonus, option vesting acceleration and benefits
and the use of his office and administrative assistance if
Mr. McDonald was terminated without cause (or if he voluntarily
terminated his employment following a change in control).
|
§ |
an
annual salary of $250,000;
|
§ |
an
annual performance bonus of up to 200% of Mr. McDonald’s annual salary in
the event we achieve certain performance targets approved by our
Board of
Directors;
|
§ |
death
benefits of a lump-sum payment equal to two year’s annual salary and
bonus;
|
§ |
disability
benefits of two year’s annual salary and maximum target bonus, paid over
24 months;
|
§ |
severance
benefits of a lump-sum payment equal to two year’s annual salary and
maximum target bonus, option and restricted stock vesting acceleration,
and welfare benefits and the use of his office and administrative
assistance for 24 months if Mr. McDonald is terminated without cause;
and
|
§ |
severance
benefits as specified above if Mr. McDonald’s employment is terminated for
any reason at any time within the two year period following a change
in
control, as well as compensation for any excise taxes paid as a result
of
excess parachute payments arising from the change in
control.
|
§ |
an
annual salary of $205,000;
|
§ |
an
annual performance bonus equal to 50% of his annual salary in the
event we
achieve certain performance targets approved by our Board of Directors;
|
§ |
12 months’
severance pay, option vesting acceleration and other health and medical
benefits if Mr. Davis was terminated without cause, and if the
termination followed a change in control, he would also have received
the
performance bonus of 50% of his annual salary.
|
Name
and Address of Beneficial Owner(1)
|
|
Amount
and Nature of
Shares
Beneficially Owned
|
|
|
Percent
of Class(2)
|
|
||
John
T. McDonald(3)
|
|
|
1,642,316
|
|
|
|
6.5
|
%
|
Jeffrey
S. Davis(4)
|
|
|
308,020
|
|
|
|
1.3
|
%
|
Michael
D. Hill(5)
|
|
|
36,236
|
|
|
|
*
|
|
Richard
T. Kalbfleish(6)
|
17,486
|
*
|
||||||
David
S. Lundeen(7)
|
|
|
428,962
|
|
|
|
1.8
|
%
|
Max
D. Hopper(8)
|
|
|
55,000
|
|
|
|
*
|
|
Kenneth
R. Johnsen(9)
|
|
|
28,750
|
|
|
|
*
|
|
Ralph
C. Derrickson(10)
|
|
|
23,750
|
|
|
|
*
|
|
Robert
H. Drysdale(11)
|
1,466,013
|
6.1
|
%
|
|||||
Morton
Meyerson(12)
|
|
|
2,358,013
|
|
|
|
9.7
|
%
|
2M
Technology Ventures, L.P.(13)
|
|
|
2,166,500
|
|
|
|
8.9
|
%
|
All
executive officers and directors as a group (8 persons)
|
|
|
2,540,520
|
|
|
|
9.9
|
%
|
TOTAL
|
|
|
6,364,546
|
|
|
|
24.8
|
%
|
(1)
|
|
Unless
otherwise indicated, the address of each person or entity is 1120
South
Capital of Texas Highway, Suite 220, Building 3, Austin, Texas
78746.
|
|
||
(2)
|
|
The
percentage of common stock owned is based on total shares outstanding
of
24,212,964 as of March 8, 2006.
|
|
||
(3)
|
|
Includes
1,027,795 shares of common stock issuable upon the exercise of options.
Does not include options to purchase 531,250 shares of common stock
that
are not exercisable within 60 days of the date hereof. Mr. McDonald’s
total share ownership, including options that are not exercisable
within
60 days of the date hereof, is 2,173,566.
|
|
||
(4)
|
|
Includes
136,811 shares of common stock issuable upon the exercise of options.
Mr. Davis’s address is 622 Emerson Road, Suite 400, Creve Coeur,
Missouri 63141.
|
|
||
(5)
|
|
Includes
25,000 shares of common stock issuable upon the exercise of
options.
|
|
||
(6)
|
Includes
6,250 shares of common stock issuable upon the exercise of
options.
|
|
(7)
|
|
Includes
125,000 shares of common stock issuable upon the exercise of
options.
|
|
||
(8)
|
|
Includes
55,000 shares of common stock issuable upon the exercise of
options.
|
|
||
(9)
|
|
Includes
28,750 shares of common stock issuable upon the exercise of
options.
|
|
||
(10)
|
|
Includes
23,750 shares of common stock issuable upon the exercise of
options.
|
|
||
(11)
|
|
Robert
H. Drysdale’s address is 142 Hanapepe Loop, Honolulu, Hawaii
96825
|
|
||
(12)
|
|
Includes
2,166,500 shares beneficially owned by 2M Technology Ventures, L.P.
Morton
H. Meyerson’s address is 3401 Armstrong Avenue, Dallas, Texas
75205.
|
|
||
(13)
|
|
2M
Technology Ventures, L.P.’s address is 3401 Armstrong Avenue, Dallas,
Texas 75205.
|
Plan
Category
|
Number
of Securities to
be
Issued upon Exercise
of
Outstanding Options, Warrants
and
Rights
|
Weighted-Average
Exercise
Price of
Outstanding
Options, Warrants
and Rights
|
Number
of Securities Remaining Available for
Future
Issuance under
Equity
Compensation Plans
|
|||||||
Equity-Compensation
Plans Approved by Security Holders (1)
|
4,851,526
|
$
|
3.56
|
1,444,619
|
||||||
Equity-Compensation
Plans Not Approved by Security Holders (2)(3)(4)
|
416,784
|
$
|
3.08
|
—
|
||||||
TOTAL
|
5,268,310
|
$
|
3.53
|
1,444,619
|
(1) |
Represents
shares issuable from the 8,189,063 shares authorized for issuance
under
the Perficient, Inc, 1999 Stock Option/Stock Issuance Plan. The automatic
share increase program provides for an increase each year equal to
8% of
the outstanding Common Stock on the last trading day in December
of the
previous year, but in no event will any such annual increase exceed
1,000,000 shares of Common Stock. Pursuant to our automatic share
increase
program, 1,000,000 additional shares were authorized for issuance
under
the Plan as of January 1, 2006. Also includes 500,000 shares reserved
for
issuance under the Perficient, Inc. Employee Stock Purchase Plan,
which
was approved by stockholders on November 17, 2005 Annual
Meeting.
|
(2) |
Represents
options to purchase 106,383 shares of Common Stock with an exercise
price
of $0.31 per share that were granted in September 2001 to John T.
McDonald, our Chief Executive Officer and Chairman of the Board,
in lieu
of a $50,000 cash bonus. These options are fully vested and exercisable
for a period of 10 years from the date of grant. Upon termination
of
employment the options will be exercisable for 90
days.
|
(3) |
In
connection with our acquisition of Javelin Solutions, Inc. and our
acquisition of Primary Webworks, Inc. d/b/a Vertecon, Inc., we assumed
Javelin’s stock option plan and Vertecon’s stock option plan and all the
outstanding options thereunder. Each outstanding option under the
Javelin
plan and the Vertecon plan was converted into an option to purchase
our
Common Stock. No future awards may be made under the respective plans.
These amounts include (i) options to purchase approximately 68,154
shares
of our Common Stock exercisable for a weighted-average exercise price
of
$1.43 per share issued in connection with our assumption of the Javelin
plan and (ii) options to purchase approximately 55,937 shares of
our
Common Stock exercisable for a weighted-average exercise price of
$4.40
per share issued in connection with our assumption of the Vertecon
plan.
These options are fully vested and exercisable for a period of
approximately 10 years from the date of grant. Upon termination of
employment the options will be exercisable for 90
days.
|
(4) |
The
amounts include options to purchase 32,136 shares of our Common Stock
with
an exercise price of $16.94 per share, options to purchase 107,475
shares
of our Common Stock with an exercise price of $3.36 per share, and
options
to purchase 46,699 shares of our Common Stock with an exercise price
of
$0.02 per share that were issues to certain employees of Compete,
Inc. and
assumed in connection with our May 2000 acquisition of Compete, Inc.
These
options are fully vested and exercisable for a period of 10 years
from the
date of grant. Upon termination of employment the options will be
exercisable for the remainder of their option
term.
|
Year
Ended December 31,
|
||||||||||
2005
|
2004
|
|||||||||
Audit
fees
|
$
|
1,056,000
|
$
|
145,000
|
||||||
Audit-related
fees
|
$
|
5,000
|
$
|
4,000
|
||||||
Tax
fees
|
$
|
—
|
$
|
—
|
||||||
All
other fees
|
$
|
—
|
$
|
—
|
(a)
The
following documents are filed as part of this Report:
|
|
(1)
Financial
Statements:
|
|
Page
|
|
Report
of Independent Registered Public Accounting Firm (BDO Seidman,
LLP)
|
F
-
2
|
Report
of Independent Registered Public Accounting Firm (Ernst & Young,
LLP)
|
F
-
3
|
Consolidated
Balance Sheets at December 31, 2004 and 2005
|
F
-
4
|
Consolidated
Statements of Operations for the years ended December 31, 2003,
2004
|
|
and
2005
|
F
-
5
|
Consolidated
Statements of Changes in Stockholders’ Equity and Comprehensive
Income
|
|
for
the years ended December 31, 2003, 2004 and 2005
|
F
-
6
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2003,
2004
|
|
and
2005
|
F
-
7
|
Notes
to Consolidated Financial Statements
|
F
-
8
|
(2) Financial
Statement Schedules:
|
|
Schedule
II - Valuation and Qualifying Accounts and
Reserves
|
F
- 27
|
(b) Exhibits: | |
See
Index to Exhibits.
|
PERFICIENT, INC. | ||
|
|
|
Date: March 30, 2006 | By: | /s/ John T. McDonald |
John T. McDonald |
||
Chief Executive Officer |
Date: March 30, 2006 | By: | /s/ Michael D. Hill |
Michael D. Hill |
||
Chief
Financial Officer
Principal
Financial and Accounting
Officer
|
Signature
|
Title
|
Date
|
|
/s/
John T. McDonald
|
Chief
Executive Officer and
|
March
30,
2006
|
|
John
T. McDonald
|
Chairman
of the Board (Principal Executive Officer)
|
||
/s/
Ralph C. Derrickson
|
Director
|
March
30,
2006
|
|
Ralph
C. Derrickson
|
|||
/s/
Max D. Hopper
|
Director
|
March
30,
2006
|
|
Max
D. Hopper
|
|||
/s/
Kenneth R. Johnsen
|
Director
|
March
30,
2006
|
|
Kenneth
R. Johnsen
|
|||
/s/
David S. Lundeen
|
Director
|
March
30,
2006
|
|
David
S. Lundeen
|
Exhibit
Number
|
|
Description
|
2.1
|
Agreement
and Plan of Merger, dated as of April 2, 2004, by and among Perficient,
Inc., Perficient Genisys, Inc., Genisys Consulting, Inc. and certain
shareholders of Genisys Consulting, Inc., previously filed with the
Securities and Exchange Commission as an Exhibit to our Current Report
on
Form 8-K filed on April 16, 2004 and incorporated herein by
reference
|
|
2.2
|
Agreement
and Plan of Merger, dated as of June 18, 2004, by and among Perficient,
Inc., Perficient Meritage, Inc., Meritage Technologies, Inc., and
Robert
Honner, as Stockholder Representative, previously filed with the
Securities and Exchange Commission as an Exhibit to our Current Report
on
Form 8-K filed on June 23, 2004 and incorporated herein by
reference
|
|
2.3
|
Asset
Purchase Agreement, dated as of December 17, 2004, by and among
Perficient, Inc., Perficient ZettaWorks, Inc. and ZettaWorks LLC,
previously filed with the Securities and Exchange Commission as an
Exhibit
to our Current Report on Form 8-K filed on December 22, 2004 and
incorporated herein by reference
|
|
2.4
|
Asset
Purchase Agreement, dated as of June 10, 2005, by and among
Perficient, Inc., Perficient iPath, Inc. and iPath Solutions, Ltd.,
previously filed with the Securities and Exchange Commission as an
Exhibit
to our Current Report on Form 8-K filed on June 15, 2005 and incorporated
herein by reference
|
|
2.5
|
Asset
Purchase Agreement, dated as of September 2, 2005, by and among
Perficient, Inc., Perficient Vivare, Inc., Vivare, LP and the other
signatories thereto, previously filed with the Securities and Exchange
Commission as an Exhibit to our Current Report on Form 8-K filed
on
September 9, 2005 and incorporated herein by reference
|
|
3.1
|
Certificate
of Incorporation of Perficient, Inc., previously filed with the Securities
and Exchange Commission as an Exhibit to our Registration Statement
on
Form SB-2 (File No. 333-78337) declared effective on July 28, 1999
by the
Securities and Exchange Commission and incorporated herein by
reference
|
|
3.2
|
Certificate
of Amendment to Certificate of Incorporation of Perficient, Inc.,
previously filed with the Securities and Exchange Commission as an
Exhibit
to our Form 8-A filed with the Securities and Exchange Commission
pursuant
to Section 12(g) of the Securities Exchange Act of 1934 on February
15,
2005 and incorporated herein by reference
|
|
3.3
|
Certificate
of Amendment to Certificate of Incorporation of Perficient, Inc.,
previously filed with the Securities and Exchange Commission as an
Exhibit
to our Registration Statement on Form S-8 (File No. 333-130624) filed
on
December 22, 2005 and incorporated herein by reference
|
|
3.4
|
Bylaws
of Perficient, Inc., previously filed with the Securities and Exchange
Commission as an Exhibit to our Registration Statement on Form SB-2
(File
No. 333-78337) declared effective on July 28, 1999 by the Securities
and
Exchange Commission and incorporated herein by
reference
|
|
4.1
|
Specimen
Certificate for shares of common stock, previously filed with the
Securities and Exchange Commission as an Exhibit to our Registration
Statement on Form SB-2 (File No. 333-78337) declared effective on
July 28,
1999 by the Securities and Exchange Commission and incorporated herein
by
reference
|
|
4.2
|
Warrant
granted to Gilford Securities Incorporated, previously filed with
the
Securities and Exchange Commission as an Exhibit to our Registration
Statement on Form SB-2 (File No. 333-78337) declared effective on
July 28,
1999 by the Securities and Exchange Commission and incorporated herein
by
reference
|
Exhibit
Number
|
Description
|
|
4.3
|
Form
of Common Stock Purchase Warrant, previously filed with the Securities
and
Exchange Commission as an Exhibit to our Current Report on Form 8-K
filed
on January 17, 2002 and incorporated herein by
reference
|
|
4.4
|
Form
of Warrant, previously filed with the Securities and Exchange Commission
as an Exhibit to our Registration Statement on Form S-3 (File No.
333-117216) and incorporated by reference herein
|
|
10.1†
|
Perficient,
Inc. Amended and Restated 1999 Stock Option/Stock Issuance Plan,
previously filed with the Securities and Exchange Commission as an
Exhibit
to our quarterly report on Form 10-Q for the period ended September
30,
2005 and incorporated by reference herein
|
|
10.2†
|
Form
of Stock Option Agreement, previously filed with the Securities and
Exchange Commission as an Exhibit to our Annual Report on Form 10-KSB
for
the fiscal year ended December 31, 2004 and incorporated herein by
reference
|
|
10.3†
|
Perficient,
Inc. Employee Stock Purchase Plan, previously filed with the Commission
as
Appendix A to the Registrant's Schedule 14A (File No. 001-15169)
on
October 13, 2005 and incorporated herein by reference
|
|
10.4†*
|
Form
of Restricted Stock Agreement
|
|
10.5
|
Form
of Indemnity Agreement between Perficient, Inc. and each of our directors
and officers, previously filed with the Securities and Exchange Commission
as an Exhibit to our Registration Statement on Form SB-2 (File No.
333-78337) declared effective on July 28, 1999 by the Securities
and
Exchange Commission and incorporated herein by
reference
|
|
10.6
|
Employment
Agreement between Perficient, Inc. and John T. McDonald dated January
1,
2004, previously filed with the Securities and Exchange Commission
as an
Exhibit to our Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2003 and incorporated herein by reference
|
|
10.7†*
|
Employment
Agreement between Perficient, Inc. and John T. McDonald dated March
28,
2006, and effective as of January 1, 2006
|
|
10.8†
|
Employment
Agreement between Perficient, Inc. and Jeffrey Davis dated June 20,
2004,
previously filed with the Securities and Exchange Commission as an
Exhibit
to our Annual Report on Form 10-KSB for the fiscal year ended December
31,
2004 and incorporated herein by reference
|
|
10.9
|
Amended
and Restated Loan and Security Agreement by and among Silicon Valley
Bank,
KeyBank National Association, Perficient, Inc., Perficient Canada
Corp.,
Perficient Genisys, Inc., Perficient Meritage, Inc. and Perficient
Zettaworks, Inc. dated effective as of June 3, 2005, previously filed
with
the Securities and Exchange Commission as an Exhibit to our Current
Report
on Form 8-K filed on June 15, 2005 and incorporated herein by
reference
|
|
10.10*
|
Lease
dated April 7, 2003 by and between CarrAmerica Realty, L.P. and
Perficient, Inc.
|
|
10.11*
|
Amendment
dated May 31, 2005 to existing lease by and between CarrAmerica Realty,
L.P. and Perficient, Inc.
|
|
10.12*
|
Amendment
dated March 22, 2006 to existing lease by and between CarrAmerica
Realty,
L.P. and Perficient, Inc.
|
|
10.13*
|
Lease
by and between Cornerstone Opportunity Ventures, LLC and Perficient,
Inc.
|
|
10.14
|
First
Amended and Restated Investor Rights Agreements dated as of June
26, 2002
by and between Perficient, Inc. and the Investors listed on Exhibits
A and
B thereto, previously filed with the Securities and Exchange Commission
as
an Exhibit to our Current Report on Form 8-K filed on July 18, 2002
and
incorporated by reference herein
|
Exhibit
Number
|
Description
|
|
10.15
|
Securities
Purchase Agreement, dated as of June 16, 2004, by and among Perficient,
Inc., Tate Capital Partners Fund, LLC, Pandora Select Partners, LP,
and
Sigma Opportunity Fund, LLC, previously filed with the Securities
and
Exchange Commission as an Exhibit to our Current Report on Form 8-K
filed
on June 23, 2004 and incorporated by reference herein
|
|
14.1
|
Corporate
Code of Business Conduct and Ethics, previously filed with the Securities
and Exchange Commission on Form 10-KSB/A for the year ended December
31,
2003 and incorporated by reference herein
|
|
14.2
|
Financial
Code of Ethics, previously filed with the Securities and Exchange
Commission on Form 10-KSB/A for the year ended December 31, 2003
and
incorporated by reference herein
|
|
21.1*
|
Subsidiaries
|
|
23.1*
|
Consent
of BDO Seidman, LLP
|
|
23.2*
|
Consent
of Ernst and Young LLP
|
|
24.1
|
Power
of Attorney (included on the signature page hereto)
|
|
31.1*
|
Certification
by the Chief Executive Officer of Perficient, Inc. as required by
Section
302 of the Sarbanes-Oxley Act of 2002
|
|
31.2*
|
Certification
by the Chief Financial Officer of Perficient, Inc. as required by
Section
302 of the Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certification
by the Chief Executive Officer and Chief Financial Officer of Perficient,
Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of
2002
|
†
|
Identifies
an Exhibit that consists of or includes a management contract or
compensatory plan or arrangement.
|
*
|
Filed
herewith.
|
Page | |
Report
of Independent Registered Public Accounting Firm (BDO Seidman,
LLP)
|
F-2
|
Report
of Independent Registered Public Accounting Firm (Ernst & Young,
LLP)
|
F-3
|
Consolidated
Balance Sheets at December 31, 2004 and 2005
|
F-4
|
Consolidated
Statements of Operations for the years ended December 31, 2003, 2004
and
2005
|
F-5
|
Consolidated
Statements of Changes in Stockholders’ Equity and Comprehensive Income for
the years ended December 31,
2003,
2004 and 2005
|
F-6
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2003, 2004
and
2005
|
F-7
|
Notes
to Consolidated Financial Statements
|
F-8
|
Schedule
II - Valuation and Qualifying Accounts and Reserves
|
F-27
|
December
31,
|
|||||||
2004
|
2005
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
3,905,460
|
$
|
5,096,409
|
|||
Accounts
receivable, net of allowance for doubtful accounts of $654,180 in
2004
and
$343,238
in 2005
|
20,049,500
|
23,250,679
|
|||||
Other
current assets
|
336,309
|
2,416,782
|
|||||
Total
current assets
|
24,291,269
|
30,763,870
|
|||||
Property
and equipment:
|
|||||||
Hardware
|
2,079,521
|
2,708,269
|
|||||
Furniture
and fixtures
|
726,570
|
781,265
|
|||||
Leasehold
improvements
|
125,797
|
149,892
|
|||||
Software
|
427,178
|
473,554
|
|||||
Accumulated
depreciation and amortization
|
(2,553,235
|
)
|
(3,152,844
|
)
|
|||
Property
and equipment, net
|
805,831
|
960,136
|
|||||
Goodwill
|
32,818,431
|
46,263,346
|
|||||
Other
intangible assets, net of amortization
|
4,521,460
|
5,768,479
|
|||||
Other
assets
|
145,374
|
1,179,070
|
|||||
Total
assets
|
$
|
62,582,365
|
$
|
84,934,901
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
6,927,523
|
$
|
3,773,614
|
|||
Current
portion of long-term debt
|
1,135,354
|
1,337,514
|
|||||
Other
current liabilities
|
6,750,968
|
8,330,809
|
|||||
Current
portion of note payable to related party
|
243,847
|
243,847
|
|||||
Total
current liabilities
|
15,057,692
|
13,685,784
|
|||||
Note
payable to related party, less current portion
|
226,279
|
—
|
|||||
Long-term
debt, less current portion
|
2,676,027
|
5,338,501
|
|||||
Total
liabilities
|
17,959,998
|
19,024,285
|
|||||
Commitments
and contingencies (Note 10)
|
—
|
—
|
|||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $0.001 par value; 8,000,000 shares authorized; no shares issued
and
outstanding
as of December 31, 2004 and 2005
|
—
|
—
|
|||||
Common
stock, $0.001 par value; 50,000,000 shares authorized; 20,913,532
shares
issued and outstanding as of December 31, 2004 and 23,908,136 shares
issued and outstanding as of December 31, 2005
|
20,914
|
23,908
|
|||||
Additional
paid-in capital
|
102,637,699
|
119,572,658
|
|||||
Unearned
stock compensation
|
(1,656,375
|
)
|
(4,453,172
|
)
|
|||
Accumulated
other comprehensive loss
|
(57,837
|
)
|
(87,496
|
)
|
|||
Retained
deficit
|
(56,322,034
|
)
|
(49,145,282
|
)
|
|||
Total
stockholders’ equity
|
44,622,367
|
65,910,616
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
62,582,365
|
$
|
84,934,901
|
|||
Year
Ended December 31,
|
||||||||||
2003
|
2004
|
2005
|
||||||||
Revenue:
|
||||||||||
Services
|
$
|
24,534,617
|
$
|
43,330,757
|
$
|
83,739,808
|
||||
Software
|
3,786,864
|
13,169,693
|
9,386,983
|
|||||||
Reimbursable
expenses
|
1,870,441
|
2,347,223
|
3,870,410
|
|||||||
Total
revenue
|
30,191,922
|
58,847,673
|
96,997,201
|
|||||||
Cost
of revenue (exclusive of depreciation shown separately
below):
|
||||||||||
Project
personnel costs
|
13,411,762
|
26,072,516
|
51,140,335
|
|||||||
Software
costs
|
3,080,894
|
11,341,145
|
7,722,166
|
|||||||
Reimbursable
expenses
|
1,870,441
|
2,347,223
|
3,870,410
|
|||||||
Other
project related expenses
|
453,412
|
267,416
|
1,845,873
|
|||||||
Total
cost of revenue
|
18,816,509
|
40,028,300
|
64,578,784
|
|||||||
Gross
margin
|
11,375,413
|
18,819,373
|
32,418,417
|
|||||||
Selling,
general and administrative
|
7,993,008
|
11,067,792
|
17,917,330
|
|||||||
Depreciation
|
670,436
|
512,076
|
614,803
|
|||||||
Intangibles
amortization
|
610,421
|
696,420
|
1,611,082
|
|||||||
Income
from operations
|
2,101,548
|
6,543,085
|
12,275,202
|
|||||||
Interest
income
|
3,286
|
2,564
|
15,296
|
|||||||
Interest
expense
|
(285,938
|
)
|
(137,278
|
)
|
(658,597
|
)
|
||||
Other
income (expense)
|
(13,459
|
)
|
32,586
|
42,561
|
||||||
Income
before income taxes
|
1,805,437
|
6,440,957
|
11,674,462
|
|||||||
Provision
for income taxes
|
755,405
|
2,527,669
|
4,497,710
|
|||||||
Net
income
|
$
|
1,050,032
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
Accretion
of dividends on preferred stock
|
(157,632
|
)
|
—
|
—
|
||||||
Net
income available to common stockholders
|
$
|
892,400
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
Basic
net income per share available to common stockholders
|
$
|
0.08
|
$
|
0.22
|
$
|
0.33
|
||||
Diluted
net income per share available to common stockholders
|
$
|
0.07
|
$
|
0.19
|
$
|
0.28
|
||||
Shares
used in computing basic net income per share
|
11,364,203
|
17,648,575
|
22,005,154
|
|||||||
Shares
used in computing diluted net income per share
|
15,306,151
|
20,680,507
|
25,242,496
|
|||||||
Preferred
Stock Shares
|
Preferred
Stock Amount
|
Common
Stock Shares
|
Common
Stock Amount
|
Warrants
|
Additional
Paid-in
Capital
|
Deferred
Stock
Compen-
sation
|
Accumulated
Other
Comprehensive
Loss
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||
Balance
at January 1, 2003
|
3,095,000
|
$
|
3,095
|
10,537,226
|
$
|
10,537
|
$
|
603,240
|
$
|
75,390,104
|
$
|
(164,773
|
)
|
$
|
(35,366
|
)
|
$
|
(61,285,354
|
)
|
$
|
14,521,483
|
||||||||||
Conversion
of preferred stock
|
(3,095,000
|
)
|
(3,095
|
)
|
3,114,840
|
3,115
|
—
|
(20
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Forfeiture
of merger consideration
|
—
|
—
|
(44,787
|
)
|
(45
|
)
|
—
|
(64,448
|
)
|
—
|
—
|
—
|
(64,493
|
)
|
|||||||||||||||||
Series
A dividend payment
|
—
|
—
|
—
|
—
|
—
|
(45,457
|
)
|
—
|
—
|
—
|
(45,457
|
)
|
|||||||||||||||||||
Other
|
—
|
—
|
10,327
|
10
|
—
|
10,215
|
—
|
—
|
—
|
10,225
|
|||||||||||||||||||||
Warrants
exercised
|
—
|
—
|
151,500
|
151
|
(64,500
|
)
|
364,349
|
—
|
—
|
—
|
300,000
|
||||||||||||||||||||
Stock
options exercised
|
—
|
—
|
264,140
|
265
|
—
|
133,185
|
—
|
—
|
—
|
133,450
|
|||||||||||||||||||||
Deferred
stock compensation
|
—
|
—
|
—
|
—
|
—
|
(2,223
|
)
|
2,223
|
—
|
—
|
—
|
||||||||||||||||||||
Amortization
of unearned compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
135,927
|
—
|
—
|
135,927
|
|||||||||||||||||||||
Preferred
stock issuance costs
|
—
|
—
|
—
|
—
|
—
|
(8,665
|
)
|
—
|
—
|
—
|
(8,665
|
)
|
|||||||||||||||||||
Foreign
currency translation adjustment
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(16,464
|
)
|
—
|
(16,464
|
)
|
|||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,050,032
|
1,050,032
|
|||||||||||||||||||||
Total
comprehensive
income
|
1,033,568
|
||||||||||||||||||||||||||||||
Balance
at December 31, 2003
|
—
|
—
|
14,033,246
|
14,033
|
538,740
|
75,777,040
|
(26,623
|
)
|
(51,830
|
)
|
(60,235,322
|
)
|
16,016,038
|
||||||||||||||||||
Warrants
exercised
|
—
|
—
|
1,277,145
|
1,278
|
(477,374
|
)
|
3,015,966
|
—
|
—
|
—
|
2,539,870
|
||||||||||||||||||||
Stock
options exercised
|
—
|
—
|
491,804
|
492
|
—
|
656,473
|
—
|
—
|
—
|
656,965
|
|||||||||||||||||||||
Issuance
of stock for Genisys
Acquisition
|
—
|
—
|
1,687,439
|
1,687
|
—
|
6,780,864
|
—
|
—
|
—
|
6,782,551
|
|||||||||||||||||||||
Issuance
of stock for Meritage
Acquisition
|
—
|
—
|
1,168,219
|
1,168
|
—
|
4,198,832
|
—
|
—
|
—
|
4,200,000
|
|||||||||||||||||||||
Issuance
of stock for ZettaWorks
Acquisition
|
—
|
—
|
1,193,179
|
1,193
|
—
|
7,790,266
|
—
|
—
|
—
|
7,791,459
|
|||||||||||||||||||||
Issuance
of stock for private placement
|
—
|
—
|
800,000
|
800
|
388,800
|
1,970,191
|
—
|
—
|
—
|
2,359,791
|
|||||||||||||||||||||
Tax
effect of non-qualified stock option
exercises
|
—
|
—
|
—
|
—
|
—
|
341,789
|
—
|
—
|
—
|
341,789
|
|||||||||||||||||||||
Deferred
stock compensation
|
—
|
—
|
262,500
|
263
|
—
|
1,656,112
|
(1,656,375
|
)
|
—
|
—
|
—
|
||||||||||||||||||||
Amortization
of unearned compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
26,623
|
—
|
—
|
26,623
|
|||||||||||||||||||||
Foreign
currency translation adjustment
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(6,007
|
)
|
—
|
(6,007
|
)
|
|||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
3,913,288
|
3,913,288
|
|||||||||||||||||||||
Total
comprehensive
income
|
3,907,281
|
||||||||||||||||||||||||||||||
Balance
at December 31, 2004
|
—
|
—
|
20,913,532
|
20,914
|
450,166
|
102,187,533
|
(1,656,375
|
)
|
(57,837
|
)
|
(56,322,034
|
)
|
44,622,367
|
||||||||||||||||||
Warrants
exercised
|
—
|
—
|
88,157
|
88
|
(86,809
|
)
|
243,864
|
—
|
—
|
—
|
157,143
|
||||||||||||||||||||
Stock
options exercised
|
—
|
—
|
1,354,207
|
1,354
|
—
|
2,703,021
|
—
|
—
|
—
|
2,704,375
|
|||||||||||||||||||||
Issuance
of stock for iPath Acquisition
|
—
|
—
|
623,803
|
624
|
—
|
4,515,710
|
—
|
—
|
—
|
4,516,334
|
|||||||||||||||||||||
Issuance
of stock for Vivare Acquisition
|
—
|
—
|
618,500
|
618
|
—
|
4,347,437
|
—
|
—
|
—
|
4,348,055
|
|||||||||||||||||||||
Forfeiture
of merger consideration
|
—
|
—
|
(46,403
|
)
|
(46
|
)
|
—
|
(196,080
|
)
|
40,840
|
—
|
—
|
(155,286
|
)
|
|||||||||||||||||
Tax
effect of non-qualified stock option
exercises
|
—
|
—
|
—
|
—
|
—
|
2,306,199
|
—
|
—
|
—
|
2,306,199
|
|||||||||||||||||||||
Deferred
stock compensation
|
—
|
—
|
356,340
|
356
|
—
|
3,101,617
|
(3,101,973
|
)
|
—
|
—
|
—
|
||||||||||||||||||||
Amortization
of unearned compensation
|
—
|
—
|
—
|
—
|
—
|
—
|
264,336
|
—
|
—
|
264,336
|
|||||||||||||||||||||
Foreign
currency translation adjustment
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(29,659
|
)
|
—
|
(29,659
|
)
|
|||||||||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
7,176,752
|
7,176,752
|
|||||||||||||||||||||
Total
comprehensive income
|
7,147,093
|
||||||||||||||||||||||||||||||
Balance
at December 31, 2005
|
—
|
$
|
—
|
23,908,136
|
$
|
23,908
|
$
|
363,357
|
$
|
119,209,301
|
$
|
(4,453,172
|
)
|
$
|
(87,496
|
)
|
$
|
(49,145,282
|
)
|
$
|
65,910,616
|
Year
Ended December 31,
|
||||||||||
2003
|
2004
|
2005
|
||||||||
OPERATING
ACTIVITIES
|
||||||||||
Net
income
|
$
|
1,050,032
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
Adjustments
to reconcile net income to net cash provided by
operations:
|
||||||||||
Depreciation
|
670,436
|
512,076
|
614,803
|
|||||||
Intangibles
amortization
|
610,421
|
696,420
|
1,611,082
|
|||||||
Bad
debt expense, net of recoveries
|
444,544
|
33,500
|
(104,041
|
)
|
||||||
Non-cash
stock compensation
|
135,927
|
26,623
|
264,336
|
|||||||
Non-cash
interest expense
|
72,383
|
—
|
23,721
|
|||||||
Tax
benefit on stock option exercises
|
—
|
341,789
|
2,306,199
|
|||||||
Loss
on disposal of assets
|
30,954
|
—
|
—
|
|||||||
Changes
in operating assets and liabilities (net of the effect of
acquisitions):
|
||||||||||
Accounts
receivable
|
(2,021,803
|
)
|
(8,153,021
|
)
|
252,158
|
|||||
Other
assets
|
199,753
|
76,261
|
(1,865,635
|
)
|
||||||
Accounts
payable
|
(297,185
|
)
|
5,296,844
|
(3,155,200
|
)
|
|||||
Other
liabilities
|
990,015
|
1,293,999
|
563,239
|
|||||||
Net
cash provided by operating activities
|
1,885,477
|
4,037,779
|
7,687,414
|
|||||||
INVESTING
ACTIVITIES
|
||||||||||
Purchase
of property and equipment
|
(191,207
|
)
|
(430,169
|
)
|
(691,047
|
)
|
||||
Additions
to software developed for internal use
|
—
|
—
|
(598,508
|
)
|
||||||
Purchase
of businesses, net of cash acquired
|
—
|
(10,733,722
|
)
|
(9,703,984
|
)
|
|||||
Payments
on Javelin notes
|
(500,000
|
)
|
—
|
(250,000
|
)
|
|||||
Proceeds
from disposal of assets
|
1,950
|
—
|
—
|
|||||||
Net
cash used in investing activities
|
(689,257
|
)
|
(11,163,891
|
)
|
(11,243,539
|
)
|
||||
FINANCING
ACTIVITIES
|
||||||||||
Payments
on capital lease obligation
|
(569,695
|
)
|
—
|
—
|
||||||
Proceeds
from revolving line of credit
|
166,282
|
4,000,000
|
12,000,000
|
|||||||
Payments
on revolving line of credit
|
—
|
—
|
(8,000,000
|
)
|
||||||
Payments
on long-term debt
|
(706,293
|
)
|
(521,671
|
)
|
(1,135,366
|
)
|
||||
Deferred
offering costs
|
—
|
—
|
(941,968
|
)
|
||||||
Preferred
stock issuance costs
|
(8,665
|
)
|
—
|
—
|
||||||
Payment
of dividends
|
(45,457
|
)
|
—
|
—
|
||||||
Proceeds
from the exercise of stock options
|
133,450
|
656,965
|
2,704,375
|
|||||||
Proceeds
from the exercise of warrants
|
300,000
|
2,539,870
|
157,143
|
|||||||
Proceeds
from stock issuances, net
|
—
|
2,373,162
|
—
|
|||||||
Net
cash provided by (used in) financing activities
|
(730,378
|
)
|
9,048,326
|
4,784,184
|
||||||
Effect
of exchange rate on cash and cash equivalents
|
(1,449
|
)
|
(6,149
|
)
|
(37,110
|
)
|
||||
Change
in cash and cash equivalents
|
464,393
|
1,916,065
|
1,190,949
|
|||||||
Cash
and cash equivalents at beginning of period
|
1,525,002
|
1,989,395
|
3,905,460
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
1,989,395
|
$
|
3,905,460
|
$
|
5,096,409
|
||||
Supplemental
disclosures:
|
||||||||||
Interest
paid
|
$
|
207,326
|
$
|
141,456
|
$
|
594,227
|
||||
Cash
paid for income taxes
|
$
|
449,768
|
$
|
2,255,987
|
$
|
3,684,133
|
||||
Non
cash activities:
|
||||||||||
Common
stock and options issued in purchase of businesses
|
$
|
—
|
$
|
18,774,010
|
$
|
8,864,389
|
||||
Forfeiture
of merger consideration
|
$
|
—
|
$
|
—
|
$
|
155,286
|
||||
Reduction
of goodwill as a result of utilization of net tax operating losses
from
acquisitions which had previously been fully reserved,
forfeiture of restricted stock used for acquisition purchase consideration
and changes in estimated acquisition transaction costs
|
$
|
—
|
$
|
644,064
|
$
|
670,170
|
||||
Deferred
stock compensation from issuance of restricted stock
|
$
|
—
|
$
|
1,656,375
|
$
|
3,101,973
|
||||
Year End
December
31,
|
Risk-Free
Interest
Rate
|
Dividend
Yield
|
Volatility
Factor
|
2003
|
2.98%
|
0%
|
1.515
|
2004
|
3.61%
|
0%
|
1.388
|
2005
|
3.72%
|
0%
|
1.405
|
Year
ended December 31,
|
||||||||||
2003
|
2004
|
2005
|
||||||||
Net
income available to common stockholders as
reported
|
$
|
892,400
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
Total
stock-based compensation costs included in the determination of
net
income
available to common stockholders as reported, net of tax
|
135,927
|
26,623
|
162,567
|
|||||||
The
stock-based employee compensation cost that would have been included
in
the determination of net income available to common stockholders
if the
fair value based method had been applied to all awards, net of
tax
|
(1,147,235
|
)
|
(1,015,627
|
)
|
(2,609,154
|
)
|
||||
Pro
forma net income (loss)
|
$
|
(118,908
|
)
|
$
|
2,924,284
|
$
|
4,730,165
|
|||
Income
(loss) per share
|
||||||||||
Basic
- as
reported
|
$
|
0.08
|
$
|
0.22
|
$
|
0.33
|
||||
Diluted
- as
reported
|
$
|
0.07
|
$
|
0.19
|
$
|
0.28
|
||||
Basic
- pro forma
|
$
|
(0.01
|
)
|
$
|
0.17
|
$
|
0.23
|
|||
Diluted
- pro
forma
|
$
|
(0.01
|
)
|
$
|
0.14
|
$
|
0.20
|
|||
§ |
A “modified prospective” method in which
compensation cost is recognized beginning with the effective date
(a) based on the requirements of Statement 123(R) for all share-based
payments granted after the effective date and (b) based on the
requirements of Statement 123 for all awards granted to employees
prior to
the effective date of Statement 123(R) that remain unvested on the
effective date.
|
§ |
A “modified retrospective” method which
includes the requirements of the modified prospective method described
above, but also permits entities to restate based on the amounts
previously recognized under Statement 123 for purposes of pro forma
disclosures based upon either (a) all prior periods presented or
(b) prior interim periods of the year of
adoption.
|
Year
Ended December 31,
|
||||||||||
2003
|
2004
|
2005
|
||||||||
Net
income
|
$
|
1,050,032
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
Accretion
of dividends on preferred stock
|
(157,632
|
)
|
—
|
—
|
||||||
Net
income available to common stockholders
|
$
|
892,400
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
Basic:
|
||||||||||
Weighted-average
shares of common stock outstanding
|
10,818,417
|
16,963,708
|
20,868,562
|
|||||||
Weighted-average
shares of common stock subject to contingency
|
545,786
|
684,867
|
1,136,592
|
|||||||
Shares
used in computing basic net income per share
|
11,364,203
|
17,648,575
|
22,005,154
|
|||||||
Effect
of dilutive securities:
|
||||||||||
Preferred
stock
|
2,531,436
|
—
|
—
|
|||||||
Stock
options
|
1,410,512
|
2,835,672
|
3,104,758
|
|||||||
Warrants
|
—
|
196,260
|
149,089
|
|||||||
Unamortized
stock compensation shares, tax benefit shares and
unvested
restricted stock shares, net
|
—
|
—
|
(16,505
|
)
|
||||||
Shares
used in computing diluted net income per share
|
15,306,151
|
20,680,507
|
25,242,496
|
|||||||
Basic
net income per share
|
$
|
0.08
|
$
|
0.22
|
$
|
0.33
|
||||
Diluted
net income per share
|
$
|
0.07
|
$
|
0.19
|
$
|
0.28
|
||||
Goodwill
|
||||
Balance
at December 31, 2003
|
$
|
11,329
|
||
Acquisitions
consummated during 2004 (Note 13)
|
22,133
|
|||
Utilization
of net operating loss carryforwards
|
(644
|
)
|
||
Balance
at December 31, 2004
|
$
|
32,818
|
||
Acquisitions
consummated during 2005 (Note 13)
|
14,115
|
|||
Utilization
of net operating loss carryforwards, forfeiture of restricted stock
used
for
acquisition
purchase consideration and changes in estimated acquisition transaction
costs
|
(670
|
)
|
||
Balance
at December 31, 2005
|
$
|
46,263
|
Year
ended December 31,
|
|||||||||||||||||||
2004
|
2005
|
||||||||||||||||||
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
||||||||||||||
Business
combinations:
|
|||||||||||||||||||
Customer
relationships
|
$
|
3,000
|
$
|
(410
|
)
|
$
|
2,590
|
$
|
4,820
|
$
|
(1,122
|
)
|
$
|
3,698
|
|||||
Non-competes
|
1,950
|
(213
|
)
|
1,737
|
2,073
|
(621
|
)
|
1,452
|
|||||||||||
Customer
backlog
|
400
|
(206
|
)
|
194
|
130
|
(57
|
)
|
73
|
|||||||||||
Internally
developed software
|
599
|
(54
|
)
|
545
|
|||||||||||||||
$
|
5,350
|
$
|
(829
|
)
|
$
|
4,521
|
$
|
7,622
|
$
|
(1,854
|
)
|
$
|
5,768
|
Customer relationships | 5 - 8 years |
Non-compete agreements | 3 - 5 years |
Customer backlog | 6 months to 1 year |
Internally developed software | 5 years |
2006
|
$
|
1,595,000
|
||
2007
|
$
|
1,443,000
|
||
2008
|
$
|
1,250,000
|
||
2009
|
$
|
869,000
|
||
2010
|
$
|
325,000
|
||
Thereafter
|
$
|
287,000
|
Shares
|
Range
of
Exercise
Prices
|
Weighted-
Average
Exercise
Price
|
||||||||
Options
outstanding at January 1, 2003
|
4,390,726
|
$
|
0.02
- $26.00
|
$
|
2.82
|
|||||
Options
granted
|
2,416,373
|
$
|
0.50
- $ 2.81
|
$
|
1.53
|
|||||
Options
exercised
|
(264,140
|
)
|
$
|
0.03
- $ 1.39
|
$
|
0.51
|
||||
Options
canceled
|
(816,767
|
)
|
$
|
0.03
- $26.00
|
$
|
2.66
|
||||
Options
outstanding at December 31, 2003
|
5,726,192
|
$
|
0.02
- $26.00
|
$
|
2.42
|
|||||
Options
granted
|
1,458,700
|
$
|
3.00
- $ 6.31
|
$
|
4.67
|
|||||
Options
exercised
|
(491,804
|
)
|
$
|
0.03
- $ 4.50
|
$
|
1.34
|
||||
Options
canceled
|
(253,829
|
)
|
$
|
0.50
- $13.25
|
$
|
3.37
|
||||
Options
outstanding at December 31, 2004
|
6,439,259
|
$
|
0.02
- $26.00
|
$
|
2.97
|
|||||
Options
granted
|
415,000
|
$
|
7.34
- $ 9.19
|
$
|
7.81
|
|||||
Options
exercised
|
(1,354,207
|
)
|
$
|
0.03
- $ 8.10
|
$
|
2.00
|
||||
Options
canceled
|
(231,742
|
)
|
$
|
0.03
- $16.00
|
$
|
5.37
|
||||
Options
outstanding at December 31, 2005
|
5,268,310
|
$
|
0.02
- $16.94
|
$
|
3.53
|
|||||
Options
vested, December 31, 2003
|
2,684,572
|
$
|
0.02
- $16.94
|
$
|
3.46
|
|||||
Options
vested, December 31, 2004
|
3,226,827
|
$
|
0.02
- $16.94
|
$
|
2.85
|
|||||
Options
vested, December 31, 2005
|
3,305,168
|
$
|
0.02
- $16.94
|
$
|
3.00
|
|||||
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
Range
of Exercise
Prices
|
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Options
|
Weighted
Average
Exercise
Price
|
|||||||||||
$
0.02 - $ 0.50
|
686,220
|
$
|
0.38
|
6.19
|
624,875
|
$
|
0.37
|
|||||||||
$
0.74 - $ 1.15
|
647,596
|
$
|
1.11
|
6.45
|
646,552
|
$
|
1.11
|
|||||||||
$
1.21 - $ 2.28
|
1,384,037
|
$
|
2.09
|
7.53
|
799,037
|
$
|
1.95
|
|||||||||
$
2.77 - $ 3.75
|
1,072,111
|
$
|
3.38
|
6.67
|
687,985
|
$
|
3.54
|
|||||||||
$
4.40 - $ 6.31
|
839,446
|
$
|
5.86
|
8.41
|
179,754
|
$
|
4.76
|
|||||||||
$
6.97 - $16.94
|
638,900
|
$
|
9.66
|
7.43
|
366,965
|
$
|
11.27
|
|||||||||
$
0.02 - $16.94
|
5,268,310
|
$
|
3.53
|
7.17
|
3,305,168
|
$
|
3.00
|
|||||||||
Warrants
Outstanding and Exercisable
|
||||
Exercise
Price
|
Warrants
|
|||
$21.00.......................
|
25,000
|
|||
$12.00.......................
|
100,000
|
|||
$8.00.........................
|
3,750
|
|||
$4.64.........................
|
138,000
|
|||
$1.98.........................
|
61,131
|
|||
$1.98-$21.00...............
|
327,881
|
|||
|
|
|
(in
thousands)
|
|
2006
|
$
|
1,581
|
||
2007
|
1,202
|
|||
2008
|
137
|
|||
Present
value of debt commitments
|
2,920
|
|||
Less
current portion
|
1,581
|
|||
Long
term portion
|
$
|
1,339
|
Year
Ended December 31,
|
||||||||||
2003
|
2004
|
2005
|
||||||||
Current:
|
||||||||||
Federal
|
$
|
386,147
|
$
|
1,411,771
|
$
|
1,147,987
|
||||
Foreign
|
173,730
|
254,952
|
223,520
|
|||||||
State
|
94,343
|
235,552
|
240,706
|
|||||||
Total
current
|
654,220
|
1,902,275
|
1,612,213
|
|||||||
Tax
benefit on acquired net operating loss carryforward
|
101,185
|
312,357
|
352,259
|
|||||||
Tax
benefit from stock options
|
—
|
341,789
|
2,306,199
|
|||||||
Deferred:
|
||||||||||
Federal
|
—
|
(26,421
|
)
|
201,024
|
||||||
Foreign
|
—
|
—
|
—
|
|||||||
State
|
—
|
(2,331
|
)
|
26,015
|
||||||
Total
deferred
|
—
|
(28,752
|
)
|
227,039
|
||||||
$
|
755,405
|
$
|
2,527,669
|
$
|
4,497,710
|
|||||
Year
Ended December 31,
|
||||||||||
2003
|
2004
|
2005
|
||||||||
Domestic
|
$
|
1,517,251
|
$
|
5,803,578
|
$
|
11,266,939
|
||||
Canada
|
186,491
|
602,111
|
409,212
|
|||||||
United
Kingdom
|
101,695
|
35,268
|
(1,689
|
)
|
||||||
Total
|
$
|
1,805,437
|
$
|
6,440,957
|
$
|
11,674,462
|
December
31,
|
|||||||
2004
|
2005
|
||||||
Deferred
tax assets:
|
|||||||
Current
deferred tax assets:
|
|||||||
Accrued
liabilities
|
$
|
146,538
|
$
|
140,474
|
|||
Net
operating losses
|
326,277
|
245,844
|
|||||
Deferred
revenue
|
2,775
|
—
|
|||||
Bad
debt reserve
|
221,459
|
109,931
|
|||||
697,049
|
496,249
|
||||||
Valuation
allowance
|
(555,733
|
)
|
(360,847
|
)
|
|||
Net
current deferred tax assets
|
$
|
141,316
|
$
|
135,402
|
|||
Non-current
deferred tax assets:
|
|||||||
Net
operating losses
|
$
|
2,987,423
|
$
|
2,577,336
|
|||
Fixed
assets
|
112,376
|
49,269
|
|||||
Deferred
compensation
|
—
|
101,505
|
|||||
3,099,799
|
2,728,110
|
||||||
Valuation
allowance
|
(2,471,364
|
)
|
(1,983,740
|
)
|
|||
Net
non-current deferred tax assets
|
$
|
628,435
|
$
|
744,370
|
|||
Deferred
tax liabilities:
|
|||||||
Current
deferred tax liabilities:
|
|||||||
Deferred
income
|
$
|
208,336
|
$
|
93,661
|
|||
Non-current
deferred tax liabilities:
|
|||||||
Deferred
income
|
$
|
180,494
|
$
|
93,662
|
|||
Foreign
withholding tax on undistributed earnings
|
—
|
44,836
|
|||||
Intangibles
|
414,140
|
461,657
|
|||||
Total
non-current deferred tax liabilities
|
$
|
594,634
|
$
|
600,155
|
|||
Net
current deferred tax asset (liability)
|
$
|
(67,020
|
)
|
$
|
41,741
|
||
Net
non-current deferred tax asset
|
$
|
33,801
|
$
|
144,215
|
|||
Year
Ended December 31,
|
||||||||||
2003
|
2004
|
2005
|
||||||||
Tax
at statutory rate of 34%
|
$
|
613,849
|
$
|
2,189,926
|
$
|
3,969,317
|
||||
State
taxes, net of federal benefit
|
125,494
|
180,220
|
503,568
|
|||||||
Intangibles
amortization
|
207,542
|
44,961
|
—
|
|||||||
Effect
of foreign operations
|
75,739
|
38,243
|
9,249
|
|||||||
Change
in valuation allowance
|
(330,332
|
)
|
—
|
—
|
||||||
Other
|
63,113
|
74,319
|
15,576
|
|||||||
$
|
755,405
|
$
|
2,527,669
|
$
|
4,497,710
|
|||||
December
31,
|
Operating
Leases
|
|||
2006
|
$
|
1,203,238
|
||
2007
|
956,616
|
|||
2008
|
705,081
|
|||
2009
|
619,522
|
|||
2010
|
363,935
|
|||
Thereafter
|
73,836
|
|||
Total
minimum lease payments
|
$
|
3,922,228
|
||
Operating
Leases
|
||||
2006
|
$
|
1,063,671
|
||
2007
|
1,131,016
|
|||
2008
|
960,204
|
|||
2009
|
869,645
|
|||
2010
|
622,990
|
|||
Thereafter
|
379,089
|
|||
Total
minimum lease payments
|
$
|
5,026,615
|
Year
ended December 31,
|
||||||||||
2003
|
2004
|
2005
|
||||||||
Revenue: | ||||||||||
United
States
|
$
|
29,169,721
|
$
|
57,735,199
|
$
|
95,721,425
|
||||
Canada
|
905,905
|
1,112,474
|
1,275,776
|
|||||||
United
Kingdom
|
116,296
|
—
|
—
|
|||||||
Total
revenue
|
$
|
30,191,922
|
$
|
58,847,673
|
$
|
96,997,201
|
||||
Net
income:
|
||||||||||
United
States
|
$
|
863,929
|
$
|
3,511,335
|
$
|
6,769,229
|
||||
Canada
|
3,630
|
366,685
|
409,212
|
|||||||
United
Kingdom
|
182,473
|
35,268
|
(1,689
|
)
|
||||||
Total
net income
|
$
|
1,050,032
|
$
|
3,913,288
|
$
|
7,176,752
|
||||
As
of December
31,
|
|||||||
2004
|
2005
|
||||||
Identifiable assets: | |||||||
United
States
|
$
|
62,243,063
|
$
|
84,600,070
|
|||
Canada
|
300,662
|
334,831
|
|||||
United
Kingdom
|
38,640
|
—
|
|||||
Total
identifiable assets
|
$
|
62,582,365
|
$
|
84,934,901
|
|||
December
31,
|
|||||||
2004
|
2005
|
||||||
Accounts
receivable:
|
|||||||
Accounts
receivable
|
$
|
12,426,107
|
$
|
17,013,131
|
|||
Unbilled
revenue
|
8,277,573
|
6,580,786
|
|||||
Allowance
for doubtful accounts
|
(654,180
|
)
|
(343,238
|
)
|
|||
Total
|
$
|
20,049,500
|
$
|
23,250,679
|
|||
Other
current assets:
|
|||||||
Income
tax receivable
|
$
|
—
|
$
|
1,367,246
|
|||
Other
current assets
|
336,309
|
1,049,536
|
|||||
Total
|
$
|
336,309
|
$
|
2,416,782
|
|||
Other
current liabilities:
|
|||||||
Accrued
bonuses
|
$
|
2,094,987
|
$
|
3,524,847
|
|||
Accrued
subcontractor fees
|
510,018
|
1,841,955
|
|||||
Other
accrued expenses
|
1,702,853
|
1,202,188
|
|||||
Deferred
revenue
|
624,349
|
1,084,129
|
|||||
Other
payroll liabilities
|
714,049
|
502,983
|
|||||
Sales
and use taxes
|
221,249
|
149,442
|
|||||
Accrued
income taxes
|
170,354
|
25,265
|
|||||
Accrued
vacation
|
395,127
|
—
|
|||||
Accrued
acquisition costs related to ZettaWorks
|
317,982
|
—
|
|||||
Total
|
$
|
6,750,968
|
$
|
8,330,809
|
|||
Intangibles:
|
||||
Customer
relationships
|
$
|
1.1
|
||
Non-compete
agreements
|
0.4
|
|||
Customer
backlog
|
0.2
|
|||
|
||||
Goodwill
|
7.4
|
|||
Tangible
assets and liabilities acquired:
|
||||
Accounts
receivable
|
1.2
|
|||
Other
current assets
|
0.1
|
|||
Property
and equipment
|
0.1
|
|||
Accounts
payable and accrued expenses
|
(0.4
|
)
|
||
Deferred
income tax liability
|
(1.0
|
)
|
||
Income
tax payable
|
(0.3
|
)
|
||
Net
assets acquired
|
$
|
8.8
|
Intangibles:
|
||||
Customer
relationships
|
$
|
0.3
|
||
Non-compete
agreements
|
1.5
|
|||
Deferred
tax asset, net of valuation allowance
|
0.9
|
|||
Goodwill
|
6.3
|
|||
Tangible
assets and liabilities acquired:
|
||||
Accounts
receivable
|
2.2
|
|||
Property
and equipment
|
0.1
|
|||
Accounts
payable and accrued expenses
|
(0.9
|
)
|
||
Net
assets acquired
|
$
|
10.4
|
Intangibles:
|
||||
Customer
relationships
|
$
|
1.1
|
||
Customer
backlog
|
0.2
|
|||
Non-compete
agreements
|
0.1
|
|||
Goodwill
|
8.2
|
|||
Tangible
assets and liabilities acquired:
|
||||
Accounts
receivable
|
2.9
|
|||
Property
and equipment
|
0.1
|
|||
Accounts
payable and accrued expenses
|
(1.2
|
)
|
||
Net
assets acquired
|
$
|
11.4
|
Intangibles:
|
||||
Customer
relationships
|
$
|
0.7
|
||
Customer
backlog
|
0.2
|
|||
Non-compete
agreements
|
0.1
|
|||
Goodwill
|
7.3
|
|||
Tangible
assets and liabilities acquired:
|
||||
Accounts
receivable
|
1.6
|
|||
Property
and equipment
|
0.1
|
|||
Accrued
expenses
|
(0.1
|
)
|
||
Net
assets acquired
|
$
|
9.9
|
Intangibles:
|
||||
Customer
relationships
|
$
|
1.0
|
||
Customer
backlog
|
0.1
|
|||
Non-compete
agreements
|
0.1
|
|||
Goodwill
|
6.8
|
|||
Tangible
assets acquired:
|
||||
Accounts
receivable
|
1.7
|
|||
Property
and equipment
|
0.1
|
|||
Net
assets acquired
|
$
|
9.8
|
December
31,
|
|||||||
2004
|
2005
|
||||||
Revenues
|
$
|
105,448,105
|
$
|
107,884,342
|
|||
Net
income
|
$
|
3,000,808
|
$
|
7,690,201
|
|||
Basic
income per share
|
$
|
0.14
|
$
|
0.34
|
|||
Diluted
income per share
|
$
|
0.12
|
$
|
0.30
|
Three
Months Ended,
|
|||||||||||||
March
31,
2005
|
June
30,
2005
|
September
30,
2005
|
December
31,
2005
|
||||||||||
Revenue: |
(Unaudited)
|
||||||||||||
Services
|
$
|
17,657,101
|
$
|
19,233,997
|
$
|
23,157,484
|
$
|
23,691,226
|
|||||
Software
|
1,406,856
|
1,393,302
|
1,917,663
|
4,669,162
|
|||||||||
Reimbursable
expenses
|
660,193
|
1,033,485
|
1,047,576
|
1,129,156
|
|||||||||
Total
revenue
|
$
|
19,724,150
|
$
|
21,660,784
|
$
|
26,122,723
|
$
|
29,489,544
|
|||||
Gross
margin
|
$
|
6,720,248
|
$
|
7,283,114
|
$
|
9,298,452
|
9,116,603
|
||||||
Income
from operations
|
$
|
2,531,853
|
$
|
2,755,828
|
$
|
3,555,110
|
$
|
3,432,411
|
|||||
Income
before income taxes
|
$
|
2,419,849
|
$
|
2,650,112
|
$
|
3,359,257
|
$
|
3,245,244
|
|||||
Net
income
|
$
|
1,488,303
|
$
|
1,626,811
|
$
|
2,065,865
|
$
|
1,995,773
|
|||||
Basic
net income per share
|
$
|
0.07
|
$
|
0.08
|
$
|
0.09
|
$
|
0.09
|
|||||
Diluted
net income per share
|
$
|
0.06
|
$
|
0.07
|
$
|
0.08
|
$
|
0.08
|
Three
Months Ended,
|
|||||||||||||
March
31,
2004
|
June
30,
2004
|
September
30,
2004
|
December
31,
2004
|
||||||||||
Revenue:
|
(Unaudited)
|
||||||||||||
Services
|
$
|
6,663,786
|
$
|
9,653,450
|
$
|
13,454,616
|
$
|
13,558,905
|
|||||
Software
|
1,330,476
|
1,071,766
|
3,391,358
|
7,376,093
|
|||||||||
Reimbursable
expenses
|
378,165
|
602,928
|
677,158
|
688,972
|
|||||||||
Total
revenue
|
$
|
8,372,427
|
$
|
11,328,144
|
$
|
17,523,132
|
$
|
21,623,970
|
|||||
Gross
margin
|
$
|
3,035,493
|
$
|
3,973,255
|
$
|
5,676,887
|
$
|
6,133,738
|
|||||
Income
from operations
|
$
|
1,031,699
|
$
|
1,345,439
|
$
|
1,912,729
|
$
|
2,253,218
|
|||||
Income
before income taxes
|
$
|
1,019,518
|
$
|
1,331,023
|
$
|
1,881,427
|
$
|
2,208,989
|
|||||
Net
income
|
$
|
620,518
|
$
|
810,023
|
$
|
1,146,089
|
$
|
1,336,658
|
|||||
Basic
net income per share
|
$
|
0.04
|
$
|
0.05
|
$
|
0.06
|
$
|
0.07
|
|||||
Diluted
net income per share
|
$
|
0.04
|
$
|
0.04
|
$
|
0.05
|
$
|
0.06
|
Allowance
for Doubtful Accounts
|
Balance
at
Beginning
of
Year
|
Charge
to
Expense
|
Recoveries
|
Write-Offs
|
Balance
at
End
of
Year
|
|||||||||||
(In
thousands)
|
||||||||||||||||
December 31,
2003
|
$
|
661
|
$
|
445
|
$
|
—
|
$
|
(483
|
)
|
$
|
623
|
|||||
December 31,
2004
|
$
|
623
|
$
|
33
|
$
|
—
|
$
|
(2
|
)
|
$
|
654
|
|||||
December 31,
2005
|
$
|
654
|
$
|
32
|
$
|
(136
|
)
|
$
|
(207
|
)
|
$
|
343
|
Valuation
Allowance on Deferred Tax Assets
|
Balance
at
Beginning
of
Year
|
Benefit
Realized
|
Acquisitions
Purchase
Accounting
|
Write-Offs
|
Balance
at
End
of
Year
|
|||||||||||
(In
thousands)
|
||||||||||||||||
December 31,
2003
|
$
|
1,387
|
$
|
(330
|
)
|
$
|
—
|
$
|
—
|
$
|
1,057
|
|||||
December 31,
2004
|
$
|
1,057
|
$
|
—
|
$
|
1,970
|
$
|
—
|
$
|
3,027
|
||||||
December 31,
2005
|
$
|
3,027
|
$
|
(446
|
)
|
$
|
—
|
$
|
(236
|
)
|
$
|
2,345
|