AMS to Appeal $474.5 Million Jury Award

By Nick Wakeman, Staff Writer


AUG. 24 ? American Management Systems Inc. of Fairfax, Va., plans to appeal a jury verdict that ordered the systems integrator to pay $474.5 million actual and punitive damages to the state of Mississippi.


Mississippi filed suit against AMS in April 1999 over problems with the delivery of a tax system. The state had sought $984 million in actual and punitive damages.


AMS' stock took a big hit in Thursday's trading, dropping $6.813 to close at $15 on the Nasdaq Stock Market--a 31 percent drop from the previous day's close of $21.813.


"We are disappointed, of course, but we are confident the verdict will be overturned on appeal," said Paul Brands, AMS chairman and chief executive. "The evidence presented in trial clearly demonstrated that AMS worked hard to resolve issues that arose during the acceptance testing, and was on schedule to have the system in production when the tax commission prematurely terminated the contract."


Mississippi saw it differently. "They breached their contract. They didn't perform and didn't deliver what they said they would," the Associated Press quoted Ed Buelow, chairman of the state tax commission, as saying after the verdict. "We gave them 64 months of tries, and they never completed one tax."


The value of the contract was $11.2 million, of which $6 million already had been paid to AMS, Brands said.


The amount of the jury award was "inexplicable," he said.