|
x
|
Annual
report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 for the fiscal year ended December 31,
2006
|
|
o
|
Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
(State
or other jurisdiction of
incorporation
or organization)
|
No.
74-2853258
(I.R.S.
Employer Identification No.)
|
Large
accelerated filer o
|
Accelerated
filer þ
|
Non-accelerated
filer o
|
PART
I
|
||
Item
1.
|
Business.
|
1
|
Item
1A.
|
Risk
Factors.
|
9
|
Item
1B.
|
Unresolved
Staff Comments.
|
14
|
Item
2.
|
Properties.
|
15
|
Item
3.
|
Legal
Proceedings.
|
15
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
15
|
PART
II
|
||
Item
5.
|
Market
for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
16
|
Item
6.
|
Selected
Financial Data.
|
17
|
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
18
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
27
|
Item
8.
|
Financial
Statements and Supplementary Data.
|
28
|
Item
9.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure.
|
52
|
Item
9A.
|
Controls
and Procedures.
|
52
|
Item
9B.
|
Other
Information.
|
53
|
PART
III
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance.
|
55
|
Item
11.
|
Executive
Compensation.
|
57
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
57
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
57
|
Item
14.
|
Principal
Accounting Fees and Services.
|
57
|
PART
IV
|
||
Item
15.
|
Exhibits
and Financial Statement Schedules.
|
58
|
|
§
|
Domain
Expertise.
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 relationship
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, Oracle-Seibel, Cognos and Documentum,
among
others.
|
|
§
|
Delivery
Model and Methodology.
We believe our significant domain expertise enables us to provide
high-value solutions through 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
small firms 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 references for us. In the year ending
December 31, 2006, an average of 81% of revenues, excluding from
the
calculation for any single period revenues from acquisitions completed
in
that single period, was derived from clients who continued to utilize
our
services from the prior year.
|
|
§
|
Vendor
Partnerships and Endorsements.
We have built meaningful partnerships with software providers, including
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, a Certified Oracle Partner, and a Documentum Select
Services Team Partner.
|
|
§
|
Geographic
Focus.
We believe we have built one of the leading independent information
technology consulting firms in the United States. We serve our clients
from our network of fifteen offices throughout the United States
and
Canada. In addition, we have over 350 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 through expansion of our
national travel practices, both organically and through acquisition.
We
believe our network provides a competitive platform from which to
expand
nationally.
|
|
§
|
Emerging
Offshore Capability.
We have an exclusive supplier relationship with 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 enhance our ability
to
deliver 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 core 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 them 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 and
be
immediately accretive to our financial results. 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 three years, we have acquired and successfully integrated
eight privately held information technology consulting firms including
three in 2006. We continue to actively look for attractive acquisitions
that leverage our core expertise and look to expand our capabilities
and
geographic presence.
|
|
§
|
Expand
Nationally.
We
believe we have built one of the leading independent information
technology consulting firms in the United States. We serve our
customers
from our network of fifteen offices throughout the central United
States
and Canada. In addition, we have over 350 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, both through expansion of our national travel practices and
through opening new offices, both organically and through acquisition.
We
believe our network provides a competitive platform.
|
|
§
|
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. In addition, we believe we have 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 highlight to customers and prospective
customers our thought leadership in eBusiness solutions and infrastructure
software technology platforms.
|
|
§
|
Invest
in Our People and Culture.
We have developed 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 ensure that client team best practices are
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 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, result in our partners, or their clients, utilizing us as the
services firm of choice.
|
|
§
|
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 an
exclusive arrangement with an offshore development and delivery firm
in
Macedonia.
|
|
§
|
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 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; and
|
|
§
|
government
regulation and legal developments regarding the use of the
Internet.
|
Item 2.
|
Properties.
|
Item 3.
|
Legal
Proceedings.
|
Item 4.
|
Submission
of Matters to a Vote of Security
Holders.
|
|
For
|
Withheld
|
Abstentions
|
|||||||
John
T. McDonald
|
19,025,109
|
255,767
|
--
|
|||||||
David
S. Lundeen
|
18,409,291
|
871,585
|
--
|
|||||||
Max
D. Hopper
|
18,420,491
|
860,385
|
--
|
|||||||
Kenneth
R. Johnsen
|
19,215,652
|
65,224
|
--
|
|||||||
Ralph
C. Derrickson
|
18,429,736
|
851,140
|
--
|
Item 5.
|
Market
for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity
Securities.
|
|
High
|
Low
|
|||||
Year
Ending December 31, 2006:
|
|
|
|||||
First
Quarter
|
$
|
12.01
|
$
|
8.76
|
|||
Second
Quarter
|
14.29
|
11.52
|
|||||
Third
Quarter
|
15.68
|
11.55
|
|||||
Fourth
Quarter
|
19.16
|
15.31
|
|||||
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,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
(In
thousands)
|
||||||||||||||||
Revenues
|
$
|
160,926
|
$
|
96,997
|
$
|
58,848
|
$
|
30,192
|
$
|
22,450
|
||||||
Gross
margin
|
53,756
|
32,418
|
18,820
|
11,375
|
8,911
|
|||||||||||
Selling,
general and administrative
|
32,268
|
17,917
|
11,068
|
7,993
|
8,568
|
|||||||||||
Depreciation and
intangibles amortization
|
4,406
|
2,226
|
1,209
|
1,281
|
1,973
|
|||||||||||
Restructuring,
severance, and other
|
--
|
--
|
--
|
--
|
579
|
|||||||||||
Income
(loss) from operations
|
17,082
|
12,275
|
6,543
|
2,102
|
(2,209
|
)
|
||||||||||
Interest
expense (net of income)
|
(407
|
)
|
(643
|
)
|
(134
|
)
|
(283
|
)
|
(186
|
)
|
||||||
Other
income (expense)
|
174
|
43
|
32
|
(13
|
)
|
--
|
||||||||||
Income
(loss) before income taxes
|
16,849
|
11,675
|
6,441
|
1,805
|
(2,395
|
)
|
||||||||||
Net
income (loss)
|
$
|
9,567
|
$
|
7,177
|
$
|
3,913
|
$
|
1,050
|
$
|
(2,395
|
)
|
|
As
of December 31,
|
|||||||||||||||
|
2006
|
2005
|
2004
|
2003
|
2002
|
|||||||||||
Balance
Sheet Data:
|
(In
thousands)
|
|||||||||||||||
Cash
and cash equivalents
|
$
|
4,549
|
$
|
5,096
|
$
|
3,905
|
$
|
1,989
|
$
|
1,525
|
||||||
Working
capital
|
$
|
24,859
|
$
|
17,078
|
$
|
9,234
|
$
|
4,013
|
$
|
1,854
|
||||||
Property
and equipment, net
|
$
|
1,806
|
$
|
960
|
$
|
806
|
$
|
699
|
$
|
1,211
|
||||||
Goodwill
and intangible assets, net
|
$
|
81,056
|
$
|
52,031
|
$
|
37,340
|
$
|
11,694
|
$
|
12,380
|
||||||
Total
assets
|
$
|
131,000
|
$
|
84,935
|
$
|
62,582
|
$
|
20,260
|
$
|
19,593
|
||||||
Current
portion of long term debt and line of credit
|
$
|
1,201
|
$
|
1,581
|
$
|
1,379
|
$
|
367
|
$
|
1,025
|
||||||
Long-term
debt and line of credit, less current portion
|
$
|
137
|
$
|
5,338
|
$
|
2,902
|
$
|
436
|
$
|
745
|
||||||
Total
stockholders' equity
|
$
|
107,352
|
$
|
65,911
|
$
|
44,622
|
$
|
16,016
|
$
|
14,521
|
Item 7. |
Management's
Discussion and Analysis of Financial Condition and Results of
Operations.
|
Revenues:
|
2006
|
2005
|
2004
|
|||||||
Services
revenues
|
85.6 |
%
|
86.3 |
%
|
73.6 |
%
|
||||
Software
revenues
|
9.0
|
9.7
|
22.4
|
|||||||
Reimbursed
expenses
|
5.4
|
4.0
|
4.0
|
|||||||
Total
revenues
|
100.0
|
100.0
|
100.0
|
|||||||
Cost
of revenues (exclusive of depreciation and amortization, shown separately
below):
|
||||||||||
Project
personnel costs
|
52.3
|
52.7
|
44.3
|
|||||||
Software
costs
|
7.5
|
8.0
|
19.3
|
|||||||
Reimbursable
expenses
|
5.4
|
4.0
|
4.0
|
|||||||
Other
project related expenses
|
1.3
|
1.9
|
0.5
|
|||||||
Total
cost of revenues
|
66.5
|
66.6
|
68.1
|
|||||||
Services
gross margin
|
37.4
|
36.7
|
39.2
|
|||||||
Software
gross margin
|
16.1
|
17.8
|
13.9
|
|||||||
Total
gross margin
|
35.3
|
34.8
|
33.3
|
|||||||
Selling,
general and administrative
|
20.1
|
18.5
|
18.8
|
|||||||
Depreciation
and amortization
|
2.7
|
2.3
|
2.1
|
|||||||
Income
from operations
|
10.7
|
12.6
|
11.0
|
|||||||
Interest
expense, net
|
(0.2
|
)
|
(0.7
|
)
|
(0.2
|
)
|
||||
Income
before income taxes
|
10.5
|
11.9
|
10.8
|
|||||||
Provision
for income taxes
|
4.5
|
4.6
|
4.3
|
|||||||
Net
income
|
6.0
|
%
|
7.3
|
%
|
6.5
|
%
|
|
As
of December 31,
|
||||||
|
2006
|
2005
|
|||||
Cash
and cash equivalents
|
$
|
4.5
|
$
|
5.1
|
|||
Working
capital
|
$
|
24.9
|
$
|
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
|
$
|
1,390
|
$
|
1,251
|
$
|
139
|
$
|
--
|
$
|
--
|
||||||
Operating
lease obligations
|
4,683
|
1,355
|
2,148
|
1,119
|
61
|
|||||||||||
Total
|
$
|
6,073
|
$
|
2,606
|
$
|
2,287
|
$
|
1,119
|
$
|
61
|
|
December
31,
|
||||||
|
2006
|
2005
|
|||||
ASSETS
|
(In
thousands, except share data)
|
||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
4,549
|
$
|
5,096
|
|||
Accounts
receivable, net of allowance for doubtful accounts of $707 in 2006
and
$367
in 2005
|
38,600
|
23,251
|
|||||
Prepaid
expenses
|
1,171
|
887
|
|||||
Other
current assets
|
2,799
|
1,530
|
|||||
Total
current assets
|
47,119
|
30,764
|
|||||
Property
and equipment, net
|
1,806
|
960
|
|||||
Goodwill
|
69,170
|
46,263
|
|||||
Intangible
assets, net
|
11,886
|
5,768
|
|||||
Other
non-current assets
|
1,019
|
1,180
|
|||||
Total
assets
|
$
|
131,000
|
$
|
84,935
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
5,025
|
$
|
3,774
|
|||
Current
portion of long-term debt
|
1,201
|
1,337
|
|||||
Other
current liabilities
|
16,034
|
8,331
|
|||||
Note
payable to related parties
|
--
|
244
|
|||||
Total
current liabilities
|
22,260
|
13,686
|
|||||
Long-term
debt, less current portion
|
137
|
5,338
|
|||||
Deferred
income taxes
|
1,251
|
--
|
|||||
Total
liabilities
|
23,648
|
19,024
|
|||||
Commitments
and contingencies (see Note 5 and 10)
|
|||||||
Stockholders'
equity:
|
|||||||
Common
stock ($0.001 par value per share; 50,000,000 shares authorized and
26,699,974 shares issued and outstanding as of December 31, 2006;
23,294,509 shares issued and outstanding as of December 31, 2005)
|
27
|
23
|
|||||
Additional
paid-in capital
|
147,028
|
115,120
|
|||||
Accumulated
other comprehensive loss
|
(125
|
)
|
(87
|
)
|
|||
Accumulated
deficit
|
(39,578
|
)
|
(49,145
|
)
|
|||
Total
stockholders' equity
|
107,352
|
65,911
|
|||||
Total
liabilities and stockholders' equity
|
$
|
131,000
|
$
|
84,935
|
|
Year
Ended December 31,
|
|||||||||
|
2006
|
2005
|
2004
|
|||||||
Revenues
|
(In
thousands, except share data)
|
|||||||||
Services
|
$
|
137,722
|
$
|
83,740
|
$
|
43,331
|
||||
Software
|
14,435
|
9,387
|
13,170
|
|||||||
Reimbursable
expenses
|
8,769
|
3,870
|
2,347
|
|||||||
Total
revenues
|
160,926
|
96,997
|
58,848
|
|||||||
Cost
of revenues (exclusive of depreciation and amortization, shown separately
below):
|
||||||||||
Project
personnel costs
|
84,161
|
51,140
|
26,073
|
|||||||
Software
costs
|
12,118
|
7,723
|
11,341
|
|||||||
Reimbursable
expenses
|
8,769
|
3,870
|
2,347
|
|||||||
Other
project related expenses
|
2,122
|
1,846
|
267
|
|||||||
Total
cost of revenues
|
107,170
|
64,579
|
40,028
|
|||||||
Gross
margin
|
53,756
|
32,418
|
18,820
|
|||||||
Selling,
general and administrative
|
32,268
|
17,917
|
11,068
|
|||||||
Depreciation
|
948
|
615
|
512
|
|||||||
Amortization
of intangible assets
|
3,458
|
1,611
|
697
|
|||||||
Income
from operations
|
17,082
|
12,275
|
6,543
|
|||||||
Interest
income
|
102
|
15
|
3
|
|||||||
Interest
expense
|
(509
|
)
|
(658
|
)
|
(137
|
)
|
||||
Other
income
|
174
|
43
|
32
|
|||||||
Income
before income taxes
|
16,849
|
11,675
|
6,441
|
|||||||
Provision
for income taxes
|
7,282
|
4,498
|
2,528
|
|||||||
Net
income
|
$
|
9,567
|
$
|
7,177
|
$
|
3,913
|
||||
Basic
net income per share
|
$
|
0.38
|
$
|
0.33
|
$
|
0.22
|
||||
Diluted
net income per share
|
$
|
0.35
|
$
|
0.28
|
$
|
0.19
|
||||
Shares
used in computing basic net income per share
|
25,033,337
|
22,005,154
|
17,648,575
|
|||||||
Shares
used in computing diluted net income per share
|
27,587,449
|
25,242,496
|
20,680,507
|
Common
Stock Shares |
Common
Stock Amount |
Additional
Paid-in Capital |
Accumulated
Other Comprehensive Loss |
Accumulated
Deficit |
Total
Stockholders' Equity |
||||||||||||||
Balance
at January 1, 2004
|
14,039
|
$
|
14
|
$
|
76,289
|
$
|
(52
|
)
|
$
|
(60,235
|
)
|
$
|
16,016
|
||||||
Warrants
exercised
|
1,277
|
1
|
2,539
|
--
|
--
|
2,540
|
|||||||||||||
Stock
options exercised
|
492
|
1
|
656
|
--
|
--
|
657
|
|||||||||||||
Issuance
of stock for Genisys, Meritage, and ZettaWorks
acquisitions
|
4,049
|
4
|
18,770
|
--
|
--
|
18,774
|
|||||||||||||
Issuance
of stock for private placement
|
800
|
1
|
2,359
|
--
|
--
|
2,360
|
|||||||||||||
Tax
benefit of stock option exercises
|
--
|
--
|
342
|
--
|
--
|
342
|
|||||||||||||
Stock
compensation
|
--
|
--
|
27
|
--
|
--
|
27
|
|||||||||||||
Foreign
currency translation adjustment
|
--
|
--
|
--
|
(6
|
)
|
--
|
(6
|
)
|
|||||||||||
Net
income
|
--
|
--
|
--
|
--
|
3,913
|
3,913
|
|||||||||||||
Total
comprehensive income
|
--
|
--
|
--
|
--
|
--
|
3,907
|
|||||||||||||
Balance
at December 31, 2004
|
20,657
|
21
|
100,982
|
(58
|
)
|
(56,322
|
)
|
44,623
|
|||||||||||
Warrants
exercised
|
88
|
--
|
157
|
--
|
--
|
157
|
|||||||||||||
Stock
options exercised
|
1,354
|
1
|
2,703
|
--
|
--
|
2,704
|
|||||||||||||
Issuance
of stock for iPath and Vivare acquisitions
|
1,196
|
1
|
8,708
|
--
|
--
|
8,709
|
|||||||||||||
Tax
benefit of stock option exercises
|
--
|
--
|
2,306
|
--
|
--
|
2,306
|
|||||||||||||
Stock
compensation
|
--
|
--
|
264
|
--
|
--
|
264
|
|||||||||||||
Foreign
currency translation adjustment
|
--
|
--
|
--
|
(29
|
)
|
--
|
(29
|
)
|
|||||||||||
Net
income
|
--
|
--
|
--
|
--
|
7,177
|
7,177
|
|||||||||||||
Total
comprehensive income
|
--
|
--
|
--
|
--
|
--
|
7,148
|
|||||||||||||
Balance
at December 31, 2005
|
23,295
|
23
|
115,120
|
(87
|
)
|
(49,145
|
)
|
65,911
|
|||||||||||
Issuance
of stock for Bay Street, Insolexen, and EGG
acquisitions
|
1,499
|
2
|
17,989
|
--
|
--
|
17,991
|
|||||||||||||
Warrants
exercised
|
145
|
--
|
146
|
--
|
--
|
146
|
|||||||||||||
Stock
options exercised
|
1,672
|
2
|
4,001
|
--
|
--
|
4,003
|
|||||||||||||
Purchases
of stock from Employee Stock
Purchase
Plan
|
6
|
--
|
86
|
--
|
--
|
86
|
|||||||||||||
Tax
benefit of stock option exercises
|
--
|
--
|
6,554
|
--
|
--
|
6,554
|
|||||||||||||
Stock
compensation
|
--
|
--
|
3,132
|
--
|
--
|
3,132
|
|||||||||||||
Vested
stock compensation
|
83
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||
Foreign
currency translation adjustment
|
--
|
--
|
--
|
(38
|
)
|
--
|
(38
|
)
|
|||||||||||
Net
income
|
--
|
--
|
--
|
--
|
9,567
|
9,567
|
|||||||||||||
Total
comprehensive income
|
--
|
--
|
--
|
--
|
--
|
9,529
|
|||||||||||||
Balance
at December 31, 2006
|
26,700
|
$
|
27
|
$
|
147,028
|
$
|
(125
|
)
|
$
|
(39,578
|
)
|
$
|
107,352
|
|
Year
Ended December 31,
|
|||||||||
|
2006
|
2005
|
2004
|
|||||||
OPERATING
ACTIVITIES
|
|
(In
thousands)
|
|
|||||||
Net
income
|
$
|
9,567
|
$
|
7,177
|
$
|
3,913
|
||||
Adjustments
to reconcile net income to net cash provided by
operations:
|
||||||||||
Depreciation
|
948
|
615
|
512
|
|||||||
Amortization
of intangibles
|
3,458
|
1,611
|
697
|
|||||||
Non-cash
stock compensation
|
3,132
|
264
|
27
|
|||||||
Non-cash
interest expense
|
6
|
24
|
--
|
|||||||
Tax
benefit on stock option exercises
|
--
|
2,306
|
342
|
|||||||
|
||||||||||
Changes
in operating assets and liabilities, net of acquisitions:
|
||||||||||
Accounts
receivable
|
(5,771
|
)
|
148
|
(8,120
|
)
|
|||||
Other
assets
|
(152
|
)
|
(1,866
|
)
|
76
|
|||||
Accounts
payable
|
1,251
|
(3,155
|
)
|
5,297
|
||||||
Other
liabilities
|
(2,824
|
)
|
563
|
1,294
|
||||||
Net
cash provided by operating activities
|
9,615
|
7,687
|
4,038
|
|||||||
INVESTING
ACTIVITIES
|
||||||||||
Purchase
of property and equipment
|
(1,518
|
)
|
(691
|
)
|
(430
|
)
|
||||
Capitalization
of software developed for internal use
|
(136
|
)
|
(599
|
)
|
--
|
|||||
Purchase
of businesses, net of cash acquired
|
(13,678
|
)
|
(9,704
|
)
|
(10,734
|
)
|
||||
Payments
on Javelin notes
|
(250
|
)
|
(250
|
)
|
--
|
|||||
Net
cash used in investing activities
|
(15,582
|
)
|
(11,244
|
)
|
(11,164
|
)
|
||||
FINANCING
ACTIVITIES
|
||||||||||
Proceeds
from revolving line of credit
|
34,900
|
12,000
|
4,000
|
|||||||
Payments
on revolving line of credit
|
(38,900
|
)
|
(8,000
|
)
|
--
|
|||||
Payments
on long-term debt
|
(1,338
|
)
|
(1,135
|
)
|
(522
|
)
|
||||
Deferred
offering costs
|
--
|
(942
|
)
|
--
|
||||||
Tax
benefit on stock option exercises
|
6,554
|
--
|
--
|
|||||||
Proceeds
from the exercise of stock options and Employee Stock Purchase
Plan
|
4,089
|
2,704
|
657
|
|||||||
Proceeds
from the exercise of warrants
|
146
|
157
|
2,540
|
|||||||
Proceeds
from stock issuances, net
|
--
|
--
|
2,373
|
|||||||
Net
cash provided by financing activities
|
5,451
|
4,784
|
9,048
|
|||||||
Effect
of exchange rate on cash and cash equivalents
|
(31
|
)
|
(37
|
)
|
(6
|
)
|
||||
Change
in cash and cash equivalents
|
(547
|
)
|
1,190
|
1,916
|
||||||
Cash
and cash equivalents at beginning of period
|
5,096
|
3,906
|
1,990
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
4,549
|
$
|
5,096
|
$
|
3,906
|
||||
Supplemental
disclosures:
|
||||||||||
Interest
paid
|
$
|
540
|
$
|
594
|
$
|
141
|
||||
Cash
paid for income taxes
|
$
|
3,156
|
$
|
3,684
|
$
|
2,256
|
||||
Non-cash
activities:
|
||||||||||
Common
stock and options issued in purchase of businesses
|
$
|
17,991
|
$
|
8,709
|
$
|
18,774
|
||||
Change
in goodwill
|
$
|
318
|
$
|
670
|
$
|
644
|
|
Year
Ended December 31,
|
|||||||||
|
2006
|
2005
|
2004
|
|||||||
Net
income
|
$
|
9,567
|
$
|
7,177
|
$
|
3,913
|
||||
Basic:
|
||||||||||
Weighted-average
shares of common stock outstanding
|
23,783
|
20,868
|
16,964
|
|||||||
Weighted-average
shares of common stock subject to contingency (i.e. restricted
stock)
|
1,250
|
1,137
|
685
|
|||||||
Shares
used in computing basic net income per share
|
25,033
|
22,005
|
17,649
|
|||||||
Effect
of dilutive securities:
|
||||||||||
Stock
options
|
2,281
|
3,088
|
2,836
|
|||||||
Warrants
|
74
|
149
|
196
|
|||||||
Restricted
stock subject to vesting
|
199
|
--
|
--
|
|||||||
Shares
used in computing diluted net income per share
|
27,587
|
25,242
|
20,681
|
|||||||
Basic
net income per share
|
$
|
0.38
|
$
|
0.33
|
$
|
0.22
|
||||
Diluted
net income per share
|
$
|
0.35
|
$
|
0.28
|
$
|
0.19
|
|
Goodwill
|
|||
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
|
|||
Acquisitions
consummated during 2006 (Note 13)
|
22,589
|
|||
Utilization
of net operating loss carryforwards and adjustment to goodwill related
to
deferred taxes associated with acquisitions
|
318
|
|||
Balance
at December 31, 2006
|
$
|
69,170
|
|
Year
ended December 31,
|
||||||||||||||||||
|
2006
|
2005
|
|||||||||||||||||
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Carrying
Amount
|
|||||||||||||
|
|
|
|
|
|
||||||||||||||
Customer
relationships
|
$
|
12,860
|
$
|
(2,808
|
)
|
$
|
10,052
|
$
|
4,820
|
$
|
(1,122
|
)
|
$
|
3,698
|
|||||
Non-compete
agreements
|
2,393
|
(1,094
|
)
|
1,299
|
2,073
|
(621
|
)
|
1,452
|
|||||||||||
Customer
backlog
|
--
|
--
|
--
|
130
|
(57
|
)
|
73
|
||||||||||||
Internally
developed software
|
755
|
(220
|
)
|
535
|
599
|
(54
|
)
|
545
|
|||||||||||
Total
|
$
|
16,008
|
$
|
(4,122
|
)
|
$
|
11,886
|
$
|
7,622
|
$
|
(1,854
|
)
|
$
|
5,768
|
Customer
relationships
|
3
- 8 years
|
Non-compete
agreements
|
2
- 5 years
|
Customer
backlog
|
4
months to 1 year
|
Internally
developed software
|
5
years
|
2007
|
$
|
2,882
|
||
2008
|
$
|
2,689
|
||
2009
|
$
|
2,308
|
||
2010
|
$
|
1,748
|
||
2011
|
$
|
1,619
|
||
Thereafter
|
$
|
641
|
Shares
|
Range
of Exercise Prices
|
Weighted-Average
Exercise Price
|
Aggregate
Intrinsic Value
|
||||||||||
Options
outstanding at January 1, 2004
|
5,726
|
$
|
0.02
- $26.00
|
$
|
2.42
|
||||||||
Options
granted
|
1,459
|
$
|
3.00
- $ 6.31
|
$
|
4.67
|
||||||||
Options
exercised
|
(492
|
)
|
$
|
0.03
- $ 4.50
|
$
|
1.34
|
|||||||
Options
canceled
|
(254
|
)
|
$
|
0.50
- $13.25
|
$
|
3.37
|
|||||||
Options
outstanding at December 31, 2004
|
6,439
|
$
|
0.02
- $26.00
|
$
|
2.97
|
||||||||
Options
granted
|
415
|
$
|
7.34
- $ 9.19
|
$
|
7.81
|
||||||||
Options
exercised
|
(1,354
|
)
|
$
|
0.03
- $ 8.10
|
$
|
2.00
|
|||||||
Options
canceled
|
(232
|
)
|
$
|
0.03
- $16.00
|
$
|
5.37
|
|||||||
Options
outstanding at December 31, 2005
|
5,268
|
$
|
0.02
- $16.94
|
$
|
3.53
|
||||||||
Options
granted
|
--
|
--
|
--
|
||||||||||
Options
exercised
|
(1,672
|
)
|
$
|
0.02
- $12.13
|
$
|
2.40
|
|||||||
Options
canceled
|
(44
|
)
|
$
|
1.01
- $13.25
|
$
|
5.41
|
|||||||
Options
outstanding at December 31, 2006
|
3,552
|
$
|
0.02
- $16.94
|
$
|
4.03
|
43,975
|
|||||||
Options
vested, December 31, 2004
|
3,227
|
$
|
0.02
- $16.94
|
$
|
2.85
|
||||||||
Options
vested, December 31, 2005
|
3,305
|
$
|
0.02
- $16.94
|
$
|
3.00
|
||||||||
Options
vested or expected to vest, December 31, 2006
|
2,347
|
$
|
0.02
- $16.94
|
$
|
3.62
|
41,400
|
|
Shares
|
Weighted-Average
Grant
Date Fair
Value
|
|||||
Restricted
stock awards outstanding at January 1, 2006
|
614
|
$
|
7.69
|
||||
Awards
granted
|
911
|
$
|
15.61
|
||||
Awards
released
|
(83
|
)
|
$
|
7.62
|
|||
Awards
canceled
|
(13
|
)
|
$
|
8.04
|
|||
Restricted
stock awards outstanding at December 31, 2006
|
1,429
|
$
|
12.74
|
|
|
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
- $1.15
|
468
|
$0.62
|
4.94
|
468
|
$0.62
|
|
|||||||||||
$1.21
- $2.28
|
1,101
|
$2.09
|
6.53
|
808
|
$2.02
|
|
|||||||||||
$2.77
- $3.75
|
796
|
$3.42
|
5.50
|
578
|
$3.54
|
|
|||||||||||
$4.40
- $6.31
|
733
|
$6.04
|
7.61
|
182
|
$5.51
|
|
|||||||||||
$6.97
- $16.94
|
454
|
$10.10
|
6.22
|
311
|
$11.30
|
|
|||||||||||
$0.02
- $16.94
|
3,552
|
$4.03
|
6.27
|
2,347
|
$3.62
|
|
Year
End
December 31, |
Risk-Free
Interest
Rate
|
Dividend
Yield
|
Volatility
Factor
|
|||||||
2004
|
3.61%
|
|
0%
|
|
1.388
|
|||||
2005
|
3.72%
|
|
0%
|
|
1.405
|
Year
ended December 31,
|
|||||||
2005
|
2004
|
||||||
Net
income -- as reported
|
$
|
7,177
|
$
|
3,913
|
|||
Total
stock-based compensation costs, net of tax, included in the determination
of net income as reported
|
162
|
27
|
|||||
The
stock-based employee compensation cost, net of tax, that would have
been
included in the determination of net income if the fair value based
method
had been applied to all awards
|
(2,609
|
)
|
(1,016
|
)
|
|||
Pro
forma net income
|
$
|
4,730
|
$
|
2,924
|
|||
|
|||||||
Earnings
per share
|
|||||||
Basic
- as reported
|
$
|
0.33
|
$
|
0.22
|
|||
Basic
- pro forma
|
$
|
0.23
|
$
|
0.17
|
|||
Diluted
- as reported
|
$
|
0.28
|
$
|
0.19
|
|||
Diluted
- pro forma
|
$
|
0.20
|
$
|
0.14
|
Warrants
Outstanding and Exercisable
|
||||
Exercise
Price
|
Warrants
|
|||
$1.98
|
9
|
|||
$1.98
|
9
|
Debt
Payments
|
||||
2007
|
$
|
1,201
|
||
2008
|
137
|
|||
Present
value of debt commitments
|
1,338
|
|||
Less
current portion
|
1,201
|
|||
Long
term portion
|
$
|
137
|
|
Year
Ended December 31,
|
|||||||||
|
2006
|
2005
|
2004
|
|||||||
Current:
|
||||||||||
Federal
|
$
|
1,138
|
$
|
1,148
|
$
|
1,412
|
||||
Foreign
|
102
|
223
|
255
|
|||||||
State
|
260
|
241
|
235
|
|||||||
Total
current
|
1,500
|
1,612
|
1,902
|
|||||||
Tax
benefit on acquired net operating loss carryforward
|
246
|
353
|
312
|
|||||||
Tax
benefit from stock options
|
6,554
|
2,306
|
342
|
|||||||
Deferred:
|
||||||||||
Federal
|
(902
|
)
|
201
|
(26
|
)
|
|||||
Foreign
|
--
|
--
|
--
|
|||||||
State
|
(116
|
)
|
26
|
(2
|
)
|
|||||
Total
deferred
|
(1,018
|
)
|
227
|
(28
|
)
|
|||||
Total
provision for income taxes
|
$
|
7,282
|
$
|
4,498
|
$
|
2,528
|
|
Year
Ended December 31,
|
|||||||||
|
2006
|
2005
|
2004
|
|||||||
Domestic
|
$
|
16,565
|
$
|
11,267
|
$
|
5,804
|
||||
Foreign
|
284
|
408
|
637
|
|||||||
Total
|
$
|
16,849
|
$
|
11,675
|
$
|
6,441
|
|
December
31,
|
||||||
|
2006
|
2005
|
|||||
Deferred
tax assets:
|
(In
thousands)
|
||||||
Current
deferred tax assets:
|
|||||||
Accrued
liabilities
|
$
|
298
|
$
|
140
|
|||
Net
operating losses
|
243
|
246
|
|||||
Bad
debt reserve
|
268
|
110
|
|||||
|
809
|
496
|
|||||
Valuation
allowance
|
(457
|
)
|
(361
|
)
|
|||
Net
current deferred tax assets
|
$
|
352
|
$
|
135
|
|||
Non-current
deferred tax assets:
|
|||||||
Net
operating losses
|
$
|
2,339
|
$
|
2,577
|
|||
Fixed
assets
|
53
|
49
|
|||||
Deferred
compensation
|
435
|
102
|
|||||
|
2,827
|
2,728
|
|||||
Valuation
allowance
|
(1,599
|
)
|
(1,984
|
)
|
|||
Net
non-current deferred tax assets
|
$
|
1,228
|
$
|
744
|
|||
|
|||||||
Deferred
tax liabilities:
|
|||||||
Current
deferred tax liabilities:
|
|||||||
Deferred
income
|
$
|
308
|
$
|
93
|
|||
Non-current
deferred tax liabilities:
|
|||||||
Deferred
income
|
$
|
431
|
$
|
94
|
|||
Foreign
withholding tax on undistributed earnings
|
65
|
45
|
|||||
Intangibles
|
1,983
|
461
|
|||||
Total
non-current deferred tax liabilities
|
$
|
2,479
|
$
|
600
|
|||
Net
current deferred tax asset
|
$
|
44
|
$
|
42
|
|||
Net
non-current deferred tax asset (liability)
|
$
|
(1,251
|
)
|
$
|
144
|
|
Year
ended December 31,
|
|||||||||
|
2006
|
2005
|
2004
|
|||||||
Balance,
beginning of year
|
$
|
2,345
|
$
|
3,027
|
$
|
1,057
|
||||
Benefit
realized
|
(289
|
)
|
(446
|
)
|
--
|
|||||
Additions
resulting from purchase accounting
|
--
|
--
|
1,970
|
|||||||
Write-offs
|
--
|
(236
|
)
|
--
|
||||||
Balance,
end of year
|
$
|
2,056
|
$
|
2,345
|
$
|
3,027
|
|
Year
Ended December 31,
|
|||||||||
|
2006
|
2005
|
2004
|
|||||||
Federal
corporate statutory rate
|
34.3
|
%
|
34.0
|
%
|
34.0
|
%
|
||||
State
taxes, net of federal benefit
|
4.6
|
4.3
|
2.8
|
|||||||
Intangibles
amortization
|
--
|
--
|
0.7
|
|||||||
Effect
of foreign operations
|
--
|
0.1
|
0.6
|
|||||||
Stock
compensation
|
2.1
|
--
|
--
|
|||||||
Other
|
2.2
|
0.1
|
1.1
|
|||||||
Effective
income tax rate
|
43.2
|
%
|
38.5
|
%
|
39.2
|
%
|
Operating
Leases
|
||||
2007
|
$
|
1,355
|
||
2008
|
1,128
|
|||
2009
|
1,020
|
|||
2010
|
768
|
|||
2011
|
351
|
|||
Thereafter
|
61
|
|||
Total
minimum lease payments
|
$
|
4,683
|
|
December
31,
|
||||||
|
2006
|
2005
|
|||||
(In
thousands)
|
|||||||
Accounts
receivable:
|
|
|
|||||
Accounts
receivable
|
$
|
29,461
|
$
|
17,037
|
|||
Unbilled
revenues
|
9,846
|
6,581
|
|||||
Allowance
for doubtful accounts
|
(707
|
)
|
(367
|
)
|
|||
Total
|
$
|
38,600
|
$
|
23,251
|
|||
|
|||||||
Other
current assets:
|
|||||||
Income
tax receivable
|
$
|
2,150
|
$
|
1,367
|
|||
Other
current assets
|
649
|
163
|
|||||
Total
|
$
|
2,799
|
$
|
1,530
|
|||
|
|||||||
Other
current liabilities:
|
|||||||
Accrued
bonus
|
$
|
9,851
|
$
|
3,525
|
|||
Accrued
subcontractor fees
|
1,803
|
1,842
|
|||||
Deferred
revenues
|
1,318
|
1,084
|
|||||
Payroll
related costs
|
$
|
1,258
|
$
|
503
|
|||
Sales
and use taxes
|
326
|
150
|
|||||
Accrued
acquisition costs related to Insolexen and EGG
|
563
|
--
|
|||||
Other
accrued expenses
|
915
|
1,227
|
|||||
Total
|
$
|
16,034
|
$
|
8,331
|
|||
Property
and
Equipment:
|
Hardware (useful
life of 2 years)
|
$
|
3,933
|
$
|
2,708
|
|||
Furniture
and fixtures (useful life of 5 years)
|
980
|
781
|
|||||
Leasehold
improvements (useful life of 3 years)
|
275
|
150
|
|||||
Software (useful
life of 1 year)
|
702
|
474
|
|||||
Accumulated
depreciation and amortization
|
(4,084
|
)
|
(3,153
|
)
|
|||
Property
and equipment, net
|
$
|
1,806
|
$
|
960
|
|
Year
ended December 31,
|
|||||||||
|
2006
|
2005
|
2004
|
|||||||
Balance,
beginning of year
|
$
|
367
|
$
|
654
|
$
|
623
|
||||
Charged
to expense
|
264
|
32
|
33
|
|||||||
Additions
resulting from purchase accounting
|
371
|
24
|
--
|
|||||||
Uncollected
balances written off, net of recoveries
|
(295
|
)
|
(343
|
)
|
(2
|
)
|
||||
Balance,
end of year
|
$
|
707
|
$
|
367
|
$
|
654
|
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
|
Intangibles:
|
|
|||
Customer
relationships
|
$
|
1.6
|
||
Customer
backlog
|
0.2
|
|||
Non-compete
agreements
|
0.1
|
|||
|
||||
Goodwill
|
6.4
|
|||
|
||||
Tangible
assets acquired:
|
||||
Accounts
receivable
|
2.4
|
|||
Other
assets
|
0.6
|
|||
Property
and equipment
|
0.1
|
|||
Accrued
expenses
|
(1.6
|
)
|
||
Net
assets acquired
|
$
|
9.8
|
|
|
|||
Intangibles:
|
|
|||
Customer
relationships
|
$
|
2.8
|
||
Customer
backlog
|
0.4
|
|||
Non-compete
agreements
|
0.1
|
|||
|
||||
Goodwill
|
10.5
|
|||
|
||||
Tangible
assets and liabilities acquired:
|
||||
Accounts
receivable
|
3.9
|
|||
Other
assets
|
2.1
|
|||
Accrued
expenses
|
(4.7
|
)
|
||
Net
assets acquired
|
$
|
15.1
|
|
|
|||
Intangibles:
|
|
|||
Customer
relationships
|
$
|
3.7
|
||
Customer
backlog
|
0.5
|
|||
Non-compete
agreements
|
0.1
|
|||
|
||||
Goodwill
|
6.3
|
|||
|
||||
Tangible
assets and liabilities acquired:
|
||||
Accounts
receivable
|
3.7
|
|||
Other
assets
|
0.4
|
|||
Accrued
expenses
|
(1.6
|
)
|
||
Net
assets acquired
|
$
|
13.1
|
|
December
31,
|
||||||
|
2006
|
2005
|
|||||
Revenues
|
$
|
181,953
|
$
|
148,833
|
|||
Net
income
|
$
|
9,132
|
$
|
8,464
|
|||
Basic
income per share
|
$
|
0.36
|
$
|
0.35
|
|||
Diluted
income per share
|
$
|
0.32
|
$
|
0.31
|
|
Three
Months Ended,
|
||||||||||||
|
March
31,
2006
|
June
30,
2006
|
September
30,
2006
|
December
31,
2006
|
|||||||||
(Unaudited)
|
|||||||||||||
Revenues:
|
|||||||||||||
Services
|
$
|
25,606
|
$
|
32,751
|
$
|
40,219
|
$
|
39,145
|
|||||
Software
|
2,682
|
2,587
|
1,532
|
7,635
|
|||||||||
Reimbursable
expenses
|
1,356
|
2,172
|
2,543
|
2,698
|
|||||||||
Total
revenues
|
$
|
29,644
|
$
|
37,510
|
$
|
44,294
|
$
|
49,478
|
|||||
Gross
margin
|
$
|
9,288
|
$
|
13,178
|
$
|
15,854
|
15,437
|
||||||
Income
from operations
|
$
|
3,057
|
$
|
4,027
|
$
|
4,840
|
$
|
5,159
|
|||||
Income
before income taxes
|
$
|
3,034
|
$
|
3,900
|
$
|
4,675
|
$
|
5,241
|
|||||
Net
income
|
$
|
1,705
|
$
|
2,255
|
$
|
2,834
|
$
|
2,774
|
|||||
Basic
net income per share
|
$
|
0.07
|
$
|
0.09
|
$
|
0.11
|
$
|
0.10
|
|||||
Diluted
net income per share
|
$
|
0.07
|
$
|
0.08
|
$
|
0.10
|
$
|
0.10
|
|
Three
Months Ended,
|
||||||||||||
|
March
31,
2005
|
June
30,
2005
|
September
30,
2005
|
December
31,
2005
|
|||||||||
(Unaudited)
|
|||||||||||||
Revenues:
|
|||||||||||||
Services
|
$
|
17,657
|
$
|
19,234
|
$
|
23,157
|
$
|
23,691
|
|||||
Software
|
1,407
|
1,393
|
1,918
|
4,669
|
|||||||||
Reimbursable
expenses
|
660
|
1,034
|
1,048
|
1,129
|
|||||||||
Total
revenues
|
$
|
19,724
|
$
|
21,661
|
$
|
26,123
|
$
|
29,489
|
|||||
Gross
margin
|
$
|
6,720
|
$
|
7,283
|
$
|
9,298
|
9,117
|
||||||
Income
from operations
|
$
|
2,532
|
$
|
2,756
|
$
|
3,555
|
$
|
3,432
|
|||||
Income
before income taxes
|
$
|
2,420
|
$
|
2,650
|
$
|
3,359
|
$
|
3,245
|
|||||
Net
income
|
$
|
1,488
|
$
|
1,627
|
$
|
2,066
|
$
|
1,996
|
|||||
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
|
|
·
|
Verified
employee security access to our automated general ledger system is
appropriate related to the employee’s responsibilities and further
strengthened our controls surrounding general ledger access granted
to our
new accounting personnel;
|
|
·
|
Established
certain spreadsheet controls including required detail review of
key
spreadsheets, limited access to key spreadsheets on a central server
and
assignment of appropriate rights, a controlled process for requesting
changes to a spreadsheet, and a process to back up spreadsheets on
a
regular basis so that complete and accurate information is available
for
financial reporting;
|
|
·
|
Activated
certain additional application and prevent controls with the assistance
of
our general ledger software provider and our internal technology
personnel; and
|
|
·
|
Engaged
a third party to assist with project management and strategic oversight
of
our remediation of the 2005 significant deficiencies and material
weakness
and the 2006 control review process.
|
Name
|
|
Age
|
|
Position
|
||
John
T. McDonald
|
|
43
|
|
Chairman
of the Board and Chief Executive Officer
|
||
Jeffrey
S. Davis
|
|
42
|
|
President
and Chief Operating Officer
|
||
Paul
E. Martin
|
|
46
|
|
Chief
Financial Officer, Treasurer and Secretary
|
||
Richard
T. Kalbfleish
|
|
51
|
|
Controller
and Vice President of Finance & Administration
|
||
Ralph
C. Derrickson
|
|
48
|
|
Director
|
||
Max
D. Hopper
|
|
71
|
|
Director
|
||
Kenneth
R. Johnsen
|
|
53
|
|
Director
|
||
David
S. Lundeen
|
|
44
|
|
Director
|
(a) 1. |
Financial
Statements
|
Index
|
Page
|
|||
Consolidated
Balance Sheets
|
28
|
|||
Consolidated
Statements of Income
|
29
|
|||
Consolidated
Statements of Changes in Stockholders' Equity
|
30
|
|||
Consolidated
Statements of Cash Flows
|
31
|
|||
Notes
to Consolidated Financial Statements
|
32-50
|
|||
Report
of Independent Registered Public Accounting Firm
|
51
|
2. |
Financial
Statement Schedules
|
3. |
Exhibits
|
|
|
|
|
PERFICIENT,
INC.
|
|
|
|
|
Date:
March 1, 2007
|
By:
|
/s/ John
T. McDonald
|
|
John
T. McDonald
|
|
|
Chief
Executive Officer (Principal
Executive Officer)
|
|
|
|
Date:
March 1, 2007
|
By:
|
/s/ Paul
E. Martin
|
|
Paul
E. Martin
|
|
|
Chief
Financial Officer (Principal
Financial Officer)
|
Date:
March 1, 2007
|
By:
|
/s/ Richard
T. Kalbfleish
|
|
Richard
T. Kalbfleish
|
|
|
Vice
President of Finance and Administration
(Principal Accounting Officer)
|
Signature
|
Title
|
Date
|
|||||
|
|
|
|||||
/s/
John T. McDonald
|
Chief
Executive Officer and
|
March
1, 2007
|
|||||
John
T. McDonald
|
Chairman
of the Board (Principal
Executive Officer)
|
|
|||||
|
|||||||
/s/
Ralph C. Derrickson
|
Director
|
March
1, 2007
|
|||||
Ralph
C. Derrickson
|
|||||||
|
|||||||
/s/
Max D. Hopper
|
Director
|
March
1, 2007
|
|||||
Max
D. Hopper
|
|||||||
|
|||||||
/s/
Kenneth R. Johnsen
|
Director
|
March
1, 2007
|
|||||
Kenneth
R. Johnsen
|
|||||||
|
|||||||
/s/
David S. Lundeen
|
Director
|
March
1, 2007
|
|||||
David
S. Lundeen
|
Exhibit
Number
|
|
Description
|
2.1
|
|
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
|
2.2
|
|
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
|
2.3
|
|
Agreement
and Plan of Merger, dated as of April 6, 2006, by and among Perficient,
Inc., PFT MergeCo, Inc., Bay Street Solutions, Inc. 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 April
12, 2006 and incorporated herein by reference
|
2.4
|
|
Agreement
and Plan of Merger, dated as of May 31, 2006, by and among Perficient,
Inc., PFT MergeCo II, Inc., Insolexen, Corp., HSU Investors, LLC,
Hari
Madamalla, Steve Haglund and Uday Yallapragada, previously filed
with the
Securities and Exchange Commission as an Exhibit to our Current Report
on
Form 8-K filed on June 5, 2006 and incorporated herein by
reference
|
2.5
|
|
Asset
Purchase Agreement, dated as of July 20, 2006, by and among Perficient,
Inc., Perficient DCSS, Inc. and Digital Consulting & Software
Services, Inc., previously filed with the Securities and Exchange
Commission as an Exhibit to our Current Report on Form 8-K filed
on July
26, 2006 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 annual report on Form 10-K for the year ended December 31,
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 Securities
and Exchange 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, previously filed with the Securities
and
Exchange Commission as an Exhibit to our annual report on Form 10-K
for
the year ended December 31, 2005 and incorporated by reference
herein
|
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
|
Offer
Letter, dated July 20, 2006, by and between Perficient, Inc. and
Mr. Paul
E. Martin, previously filed with the
Securities
and Exchange Commission as an Exhibit to our Current Report on Form
8-K
filed on July 26, 2006 and
incorporated
herein by reference
|
|
10.7
|
Offer
Letter Amendment, dated August 31, 2006, by and between Perficient,
Inc.
and Mr. Paul E. Martin, previously
filed
with the Securities and Exchange Commission as an Exhibit to our
Current
Report on Form 8-K filed on September 1, 2006 and incorporated herein
by
reference
|
|
10.8†
|
|
Employment
Agreement between Perficient, Inc. and John T. McDonald dated March
28,
2006, and effective as of January 1, 2006, previously filed with
the
Securities and Exchange Commission as an Exhibit to our annual report
on
Form 10-K for the year ended December 31, 2005 and incorporated by
reference herein
|
10.9†
|
|
Employment
Agreement between Perficient, Inc. and Jeffrey Davis dated August
3, 2006,
and effective as of July 1, 2006 filed with the Securities and Exchange
Commission as an Exhibit to our Quarterly Report on Form 10-Q filed
on
August 9, 2006 and incorporated herein by reference
|
10.10
|
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 annual
report
on Form 10-K for the year ended December 31, 2005 and incorporated
herein
by reference
|
|
10.11
|
Amendment
to Amended and Restated Loan and Security Agreement, dated as of
June 29,
2006, by and among Silicon Valley Bank, KeyBank National Association,
Perficient, Inc., Perficient Genisys, Inc., Perficient Canada Corp.,
Perficient Meritage, Inc., Perficient Zettaworks, Inc., Perficient
iPath,
Inc., Perficient Vivare, Inc., Perficient Bay Street, LLC and Perficient
Insolexen, LLC, previously filed with the Securities and Exchange
Commission as an Exhibit to our Current Report on Form 8-K filed
on July
5, 2006 and incorporated herein by
reference
|
Exhibit
Number
|
|
Description
|
10.12
|
|
Lease
by and between Cornerstone Opportunity Ventures, LLC and Perficient,
Inc.,
previously filed with the Securities and Exchange Commission as an
Exhibit
to our annual report on Form 10-K for the year ended December 31,
2005 and
incorporated by reference herein
|
10.13
|
|
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
|
10.14
|
|
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
|
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.
|