To Our Shareholders and Employees:
Keane Associates continued to grow during 1974 Revenues rose to a record high up 18 per cent from the previous year. Net income so improved excluding the effects on net income from the sale in 1973 of a portion of our business Working capital, net worth and our current ratio also reached their highest levels.
As a result, the board of directors at its meeting on February 12.1975 voted to declare a special dividend of ten cents per share payable on March 21, 1975 to shareholders of record as of February 28, 1975. This is the second such dividend in the past two years, and is a reflection of the confidence the company has in its financial strength, even during these times of severe economic disturbance. Keane is one of very few companies in the computer services industry that has paid a dividend in recent years.
Inflation and recession put increasing pressure on the company's operations in 1974 The energy crisis early in the year, the escalating costs of doing business throughout the year, and the retrenchment by many client companies brought about by the economic downturn in the fourth quarter had an adverse effect on both net income and revenue goals. Cost overruns on several forced price contracts also contributed to relatively flat earnings in the second half.
Despite these negative forces, Keane Associates' financial posture enabled it to carry out its planned expansion programs in 1974. The company entered the large New York-New Jersey market in May by opening a branch office in Clifton, NJ., from which marketing representatives service computer users in both New York City and northern New Jersey in addition, Keane conducted systems development efforts in the healthcare field, which will continue in 1975. Finally, the company expanded its total staff by 27 per cent.
Our acquisition program became increasingly active during the year. Prevailing economic uncertainties have created a number of acquisition situations. Keane Associates has entered negotiations with several firms, but to date no acquisitions have been consummated With our acknowledged success in running a computer-oriented service business, and our very strong financial position, we are able to present a desirable posture to potential acquisition candidates
The company's business mix during 1974 maintained the pattern set in recent years. Service revenues for complex data base and tie processing systems grew at a steady sate reflecting the trend by larger users to centralize information files and make data available through dispersed communications networks Tactical programming services while ac counting for over half the company's revenues, were made more effective by the implementation in 1974 of two new managerial approaches Productivity Management and Project Consultation
The company plans, in the near future, to list its stock on the Boston Stock Exchange, thereby leaving the Over-the-Counter market. This shift reflects in part the concentration of our shareholder base in the East. It also assures more attention to the mechanics of stock trading than we might otherwise expect
Our assessment of 1975 is one of caution. We believe that the rapid retrenchment of US industry in recent months will impair the growth of our traditional services, at least in the first half of the year. The challenge for Keane Associates in 1975 is to manage our current business well, and to act judiciously to take advantage of the opportunities that this most difficult year will provide.
John F. Keane
President
March 7, 1975
Annual Report
Key Information
Keane Associates Inc, is traded Over the Counter on the NASDAQ under the symbol KEAN
Notes