AMS Faces Drop in 3rd Quarter Revenue, New Layoffs

American Management Systems Inc. of Fairfax, Va., announced Sept. 24 the company's third-quarter revenue will be about 5 percent less than predicted.

Third-quarter revenue will be between $283 million and $289 million, about 10 percent less than second-quarter revenue of $319 million, said William Purdy, interim chief executive officer and president.

In response to the shortfall and projections of flat revenue for the fourth quarter, AMS will reduce its U.S.-based staff an additional 5 percent, cutting 350 to 400 positions during the next month, Purdy said in a conference call Sept. 24.

AMS, a business and information technology consulting firm, had 2000 revenue of $1.28 billion. Approximately half its revenue comes from work provided to federal, state and local governments. The company employs about 8,000 people in 51 offices around the world.

The staff cuts are in addition to an ongoing 10 percent reduction in U.S. staff that AMS announced in February. That reduction is ongoing.

The newest staff reductions mean 1,100 AMS employees will be let go this year, Purdy said. He said the new cuts would result in an additional $10 million to $14 million restructuring charge in the third quarter to cover restructuring expenses through the end of 2001.

The third-quarter revenue shortfall occurred because of continued softness in the financial services market and because of a Defense Department decision to stretch out the schedule for deployment of a procurement software program and postpone the development of next-generation versions, Purdy said.

The Defense Department decisions resulted in a 15 percent reduction in AMS' federal defense business for the third quarter, said Vice President Al Rogers during the conference call.

Earnings per share for the third quarter, before restructuring charges, will be between 20 cents and 24 cents, compared with 34 cents in the second quarter, the company said.

AMS will provide updated estimates for fourth-quarter revenue and earnings in its scheduled release of third-quarter earnings Oct. 18.

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