SCB COMPUTER TECHNOLOGY INC 8-K/A

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 4, 2003

SCB Computer Technology, Inc.

(Exact name of registrant as specified in its charter)


Tennessee (State or other jurisdiction of incorporation)		000-27694 (Commission File Number)		62-1201561 (IRS Employer Identification Number)


3800 Forest Hill-Irene Road, Suite 100, Memphis, Tennessee (Address of principal executive offices)		38125 (Zip Code)

Registrant’s telephone number, including area code: (901) 754-6577

N/A
(Former name or former address, if changed since last report)

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SIGNATURE
EX-23.1 CONSENT OF STOCKMAN, KAST, RYAN & CO.

This Current Report on Form 8-K/A amends the Current Report on Form 8-K (the “Original Form 8-K”) filed with the Securities and Exchange Commission (the “Commission”) on September 8, 2003 by SCB Computer Technology, Inc. (the “Company”) relating to the acquisition of National Systems & Research Co. (“NSR”). This amendment is being filed to amend Item 7 of the Original Form 8-K in its entirety.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

(a) Financial Statements of Business Acquired


Report of Independent Auditor				F-1
Balance Sheets as of September 30, 2002 and 2001				F-2
Statements of Operations for the years ended September 30, 2002 and 2001				F-4
Statements of Stockholders’ Equity for the years ended September 30, 2002 and 2001				F-5
Statements of Cash Flows for the years ended September 30, 2002 and 2001				F-6
Notes to Financial Statements				F-7

(b) Pro Forma Financial Information


Unaudited Pro Forma Condensed Consolidated Balance Sheet as of July 31, 2003			F-13
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the three months ended July 31, 2003			F-14
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended April 30, 2003			F-15
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements			F-16


	The Exhibits to this Report are listed in the Exhibit Index as set forth elsewhere herein.

INDEPENDENT AUDITORS’ REPORT

Board of Directors
National Systems & Research Co. & Subsidiaries

We have audited the accompanying consolidated balance sheets of National Systems & Research Co. & Subsidiaries (the Company) as of September 30, 2002 and 2001, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of National Systems & Research Co. and Subsidiaries as of September 30, 2002 and 2001, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Stockman Kast Ryan & Co., L.L.P.

Colorado Springs, Colorado
November 10, 2003

F-1

NATIONAL SYSTEMS & RESEARCH CO. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 AND 2001


		2002		2001

ASSETS
CURRENT ASSETS
Cash and cash equivalents				$	1,286,511
Accounts receivable
	Billed	$	6,613,171		4,392,856
	Unbilled		1,131,992		268,681
Inventories			138,649		242,714
Prepaid expenses and other assets			166,355		111,655
Current portion of related party note receivable			85,813		81,946
Deferred income taxes			248,823		177,000

Total current assets			8,384,803		6,561,363

PROPERTY AND EQUIPMENT			117,477		162,137

OTHER ASSETS
Cash surrender value of life insurance policies			1,465,275		1,303,241
Retainages receivable			950,055		843,898
Related party note receivable			494,305		580,091
Deferred income taxes			96,691		185,045
Other			20,643		37,080

Total other assets			3,026,969		2,949,355

TOTAL		$	11,529,249	$	9,672,855

— Continued -

See notes to consolidated financial statements.

F-2

NATIONAL SYSTEMS & RESEARCH CO. & SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 AND 2001


	2002		2001

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable including bank overdrafts of $106,515 in 2002		1,257,930		413,939
Accrued expenses		1,703,752		1,278,728
Deferred revenue		558,603		483,872

Total current liabilities		3,520,285		2,176,539

OTHER LIABILITIES
Deferred compensation		67,158		292,760

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock, no par value — 1,000,000 shares authorized; 456,000 shares issued and outstanding		87,289		87,289
Retained earnings		7,854,517		7,116,267

Total stockholders’ equity		7,941,806		7,203,556

TOTAL	$	11,529,249	$	9,672,855

— Concluded -

See notes to consolidated financial statements.

F-3

NATIONAL SYSTEMS & RESEARCH CO. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001


	2002			2001

REVENUES	$	28,761,473		$	25,206,207
COST OF REVENUES		27,688,345			25,043,342

INCOME FROM OPERATIONS		1,073,128			162,865

OTHER INCOME (EXPENSE)
Interest income		43,670			76,936
Interest expense		(35,072	)		(99,363	)

Other income (expense) — net		8,598			(22,427	)

INCOME BEFORE INCOME TAXES		1,081,726			140,438

PROVISION FOR INCOME TAXES
Current provision (benefit)		326,945			(7,402	)
Deferred provision		16,531			28,955

Provision for income taxes		343,476			21,553

NET INCOME	$	738,250		$	118,885

See notes to consolidated financial statements.

F-4

NATIONAL SYSTEMS & RESEARCH CO. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2002 and 2001


	Common Stock
					Retained
	Shares		Amount		Earnings		Total

BALANCES, October 1, 2000		456,000	$	87,289	$	6,997,382	$	7,084,671
Net income						118,885		118,885

BALANCES, September 30, 2001		456,000		87,289		7,116,267		7,203,556
Net income						738,250		738,250

BALANCES, September 30, 2002		456,000	$	87,289	$	7,854,517	$	7,941,806

See notes to consolidated financial statements.

F-5

NATIONAL SYSTEMS & RESEARCH CO. & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2002 and 2001


			2002			2001

OPERATING ACTIVITIES
Net income			$	738,250		$	118,885
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
	Depreciation and amortization			95,376			123,168
	Deferred income taxes			16,531			28,955
	Changes in operating assets and liabilities:
		Receivables, including retainage		(3,189,783	)		(1,012,168	)
		Inventories		104,065			161,602
		Income taxes receivable					226,177
		Accounts payable and accrued liabilities		1,043,413			443,804
		Deferred revenue		74,731			335,601
		Other operating assets and liabilities		(54,700	)		18,738

Net cash provided by (used) in operating activities				(1,172,117	)		444,762

INVESTING ACTIVITIES
Acquisitions of property and equipment				(34,279	)		(36,257	)
Payments received on related party note receivable				81,919			82,237
Increase in cash surrender value of life insurance policies				(162,034	)		(170,266	)

Net cash used in investing activities				(114,394	)		(124,286	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				(1,286,511	)		320,476
CASH AND CASH EQUIVALENTS, Beginning of year				1,286,511			966,035

CASH AND CASH EQUIVALENTS, End of year			$	—		$	1,286,511

SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest			$	35,071		$	99,363

See notes to consolidated financial statements.

F-6

NATIONAL SYSTEMS & RESEARCH CO. & SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

		Description of Business — National Systems & Research Co. and Subsidiaries (the Company) is an Information Technology company that provides products and services to customers across the entire information system life cycle. The Company furnishes information system development, integration and consulting services to government and commercial clients. The Company also provides outsourcing and other related professional, technical and professional on-site support services to government clients. The Company’s primary market focus is in IT Support Services, e-Business/e-Government Solutions, Global Positioning Technologies and Judicial Case Management.

		Principles of Consolidation — The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries; NSR Information, Inc. and Automated Government Systems, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

		Revenue Recognition — Revenue from long-term, fixed-price contracts is recognized on the percentage-of-completion method by comparing costs of progress completed during the period to total expected costs of the contracts. Revenue on cost-plus contracts are recognized when costs are incurred. Provisions for estimated losses on uncompleted contracts are recognized in the period in which such losses are identified.

		Cash and Cash Equivalents — The Company considers highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

		Substantially all excess cash is invested in overnight repurchase agreements. The deposits are invested in high quality commercial paper and money market instruments and are collateralized by the underlying securities of the fund.

		Accounts Receivable — The Company considers accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts has been recorded. If amounts become uncollectible, they will be charged to operations when that determination is made.

		Inventories — Inventories are stated at the lower of first-in, first-out (FIFO) cost or market.

		Property and Equipment — Property and equipment are stated at cost. Depreciation is computed using an accelerated method over the estimated useful lives of the assets. The lives range from three to seven years.

		Retainages Receivables — Retainages receivable represent the amount earned but not yet billed under cost reimbursable type governmental contracts. The Company can bill for the retainage on these contracts after the Company’s actual indirect cost rates have been audited by the appropriate governmental agency. The Company considers retainage to be a non-current asset until after such amounts are available for invoicing.

F-7

		Use of Estimates — The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

		Stock-Based Compensation — Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” encourages, but does not require companies to record compensation cost for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company’s stock at the date of grant over the amount an employee must pay to acquire the stock. See Note 12.

2.		INVENTORIES

		Inventories consisted of the following at September 30:


	2002		2001

Raw materials	$	138,649	$	113,862
Finished products				128,852

Total	$	138,649	$	242,714

3.		PROPERTY AND EQUIPMENT

		Property and equipment consists of the following at September 30:


	2002		2001

Equipment	$	1,475,213	$	2,217,085
Furniture and fixtures		205,546		236,148
Leasehold improvements		62,922		62,922

Total		1,743,681		2,516,155
Less accumulated depreciation		1,626,204		2,354,018

Property and equipment — net	$	117,477	$	162,137

F-8

4.		LINE OF CREDIT

		The Company has a revolving line of credit agreement with a financial institution that expired on February 28, 2003 and was subsequently extended through August 29, 2003. Advances were limited to the lesser of $4,000,000 or the Company’s borrowing base, as defined in the agreement. The line of credit bore interest equal to the bank’s prime rate. Borrowings on the line of credit were collateralized by accounts receivable, inventory and equipment. The Company agreed to maintain certain financial ratios and may not pay dividends or enter into certain types of transactions without prior approval under the provisions of the agreement. There were no outstanding borrowings on the line as of September 30, 2002 and 2001.

5.		STOCKHOLDERS’ EQUITY

		In May 2001, the Company’s Board of Directors authorized a 60-for-1 split of the Company’s common stock. All references to numbers of shares, options and per share amounts, including exercise prices, in the accompanying financial statements and related notes have been restated to reflect the stock split.

6.		EMPLOYEE BENEFIT PLAN

		The Company has a defined contribution 401(k) plan for employees not subject to a collective bargaining agreement. Employees may contribute up to the maximum amount allowable under current federal tax regulations. The Company will match 50% of the employee contribution up to a maximum of 5% of the employee’s compensation. Expense for the plan for the years ended September 30, 2002 and 2001 was $133,193 and $402,184, respectively.

7.		OPERATING LEASES

		The Company leases office space and equipment under noncancelable operating leases expiring at various dates through 2006. Certain agreements contain escalation clauses or options to renew. Rental expense relating to the operating leases was $719,028 and $604,699 for the years ended September 30, 2002 and 2001, respectively.

		Future minimum rentals under noncancelable operating leases are as follows:


2003	$	545,455
2004		552,984
2005		115,056
2006		118,512

Total	$	1,332,007

Included in the future minimum rentals is $583,368 due under a lease with a related party. See Note 11.

F-9

8.		INCOME TAXES

		The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities using current tax rates. Changes in tax rates are recognized in the period of the enactment date. The deferred tax assets relate primarily to compensation accrued and expensed for financial statement purposes which are not deductible for tax purposes until paid.

		The provision for income taxes for 2002 and 2001 differs from the amount computed using the federal statutory rate principally as the result of non-taxable increases in value of key man life insurance policies and non-deductible key man life insurance payments.

		As of September 30, 2002, the Company had available state net operating loss carryforwards of approximately $690,000 which begin to expire in 2015.

9.		MAJOR CUSTOMERS

		The Company has sales to major customers under various contracts which approximates the following percentages for the years ended September 30, as follows:

10.		CONTINGENCIES

		Contractor disputes, indirect rate adjustments, and other claims may arise in connection with government contracts and subcontracts. A substantial portion of the Company’s sales are subject to subsequent audit and potential adjustment by the government. In the opinion of the Company’s management, a provision for potential government claims is not necessary.

11.		RELATED PARTY TRANSACTIONS

		At September 30, 2002 and 2001, the Company had a note receivable in the amount of $580,118 and $662,037, respectively from a company owned primarily by an officer and stockholder of the Company. The note bears interest at 4.62% and is due in monthly principal and interest payments of $9,232 through February 1, 2008.

		During the years ended September 30, 2002 and 2001, the Company made rental payments of $385,979 and $385,031, respectively, under a lease agreement to the same related party noted above. See Note 7.

F-10

12.		STOCK OPTIONS

		In October 2000, the Company adopted a stock-based compensation plan for its employees. Under the plan, the Company is authorized to grant options for up to 200,000 shares of the Company’s common stock. The exercise price of each option is equal to the market price of the Company’s stock on the date of the grant. There was no compensation cost charged to operations during the years ended September 30, 2002 and 2001.

		Options vest based on the valuation of a division of the Company. This valuation is based on the fair market value of the division as a stand alone company. In addition, the options become fully vested five years from the date of grant if at least 50% vesting has been achieved in accordance with the vesting schedule. Options are not exercisable until the plan has been in effect for two years and the option holder has been employed for two years.

		As of September 30, 2002 no options have been exercised or have expired. The Company granted 40,000 stock options on October 1, 2000. These options expire on October 1, 2008 and have an exercise price per share of $29.87.

		The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation.” Accordingly, no compensation cost has been recognized for the stock option plan. There would have been no material effect on compensation cost for the Company’s stock option plan had the fair value at the grant date for awards in the year ended September 30, 2001 been determined consistent with the provisions of SFAS No. 123.

13.		SUBSEQUENT EVENTS

		On August 29, 2003 100% of the Company’s outstanding stock was acquired by an unrelated company.

F-11

(b) Pro forma financial information

The following unaudited pro forma condensed consolidated balance sheet as of July 31, 2003 is presented as if the transaction had occurred as of that date. The unaudited pro forma condensed consolidated statements of operations for the three months ended July 31, 2003 and the year ended April 30, 2003 are presented as if the transaction had occurred as of May 1, 2003 and May 1, 2002, respectively.

The pro forma adjustments represent, in the opinion of management, all adjustments necessary to present the Company’s pro forma results of operations and financial position in accordance with Article 11 of Regulation S-X and are based upon available information and certain assumptions considered reasonable under the circumstances.

The pro forma condensed consolidated financial statements should be read in conjunction with the Company’s unaudited condensed consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the period ended July 31, 2003 and the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2003. The pro forma information may not necessarily be indicative of what the Company’s results of operations or financial position would have been had the transaction been in effect as of and for the periods presented, nor is such information necessarily indicative of the Company’s results of operations or financial position for any future period or date.

F-12

SCB COMPUTER TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JULY 31, 2003
(in thousands, except par value)


ASSETS				Historical			Historical		Pro Forma					Pro Forma
				SCB			NSR		Adjustments					Consolidated

Current assets:
	Cash and cash equivalents			$	115		$	1,078	$	—				$	1,193
	Accounts receivable, net of allowance for doubtful accounts				16,517			5,924		—					22,441
	Prepaid expenses and other current assets				1,354			150		—					1,504
	Refundable income taxes				594			—		—					594
	Deferred income taxes				2,013			177		—					2,190

		Total current assets			20,593			7,329		—					27,922
Fixed assets, net					10,929			107		—					11,036
Other long-term assets:
	Intangible assets, net of accumulated amortization				9,568			7		7,711		(a	)		17,286
	Deferred income taxes — long-term				8,422			185		—					8,607
	Other long-term assets				1,445			2,431		(2,064	)	(b	)		1,812

					19,435			2,623		5,647					27,705

			TOTAL ASSETS	$	50,957		$	10,059	$	5,647				$	66,663

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable			$	2,023		$	216	$	—				$	2,239
	Accrued expenses				6,909			1,772		—					8,681
	Deferred revenue				471			—		—					471
	Current portion of long-term debt				6,212			—		—					6,212

		Total current liabilities			15,615			1,988		—					17,603
Long-term debt					13,861			—		12,018		(b	)		25,879

Total liabilities					29,476			1,988		12,018					43,482
Commitments and contingencies Shareholders’ equity:
	Preferred stock				—			—		—					—
	Common stock				251			87		(87	)	(a	)		260
										9		(b	)
	Treasury stock				(487	)		—		—					(487	)
	Additional paid-in capital				40,806			—		1,691		(b	)		42,497
	Retained earnings (deficit)				(19,089	)		7,984		(7,984	)	(a	)		(19,089	)

	Total shareholders’ equity				21,481			8,071		(6,371	)				23,181

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				$	50,957		$	10,059	$	5,647				$	66,663

See accompanying notes.

F-13

SCB COMPUTER TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JULY 31, 2003
(in thousands, except earnings per share)


			Historical		Historical		Pro Forma					Pro Forma
			SCB		NSR		Adjustments					Consolidated

Revenue			$	28,582	$	5,928	$	—				$	34,510
Cost of services				21,447		5,029		—					26,476

		Gross profit		7,135		899		—					8,034
Selling, general and administrative expenses				5,218		724		150		(c	)
								(96	)	(d	)
								(31	)	(e	)		5,965

		Income from operations		1,917		175		(23	)				2,069
	Interest expense, net			420		12		139		(f	)		571
	Other income			71		—		—					71

Income before income taxes				1,568		163		(162	)				1,569
Income tax expense (benefit)				619		60		(64	)	(g	)
								4		(h	)		619

		Net income (loss)	$	949	$	103	$	(102	)			$	950

Net income per share — basic			$	0.04								$	0.04

Net income per share — diluted			$	0.04								$	0.04

Weighted average number of common shares — basic				24,347				882		(i	)		25,229

Weighted average number of common shares — diluted				25,039				882		(i	)		25,921

See accompanying notes.

F-14

SCB COMPUTER TECHNOLOGY, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2003
(in thousands, except earnings per share)


			Historical		Historical			Pro Forma					Pro Forma
			SCB		NSR			Adjustments					Consolidated

Revenue			$	90,547	$	25,684		$	—				$	116,231
Cost of services				68,475		21,708			—					90,183

		Gross profit		22,072		3,976			—					26,048
Selling, general and administrative expenses				18,032		2,576			600		(c	)
									(520	)	(d	)
									(124	)	(e	)		20,564

		Income from operations		4,040		1,400			44					5,484
	Interest expense, net			868		(17	)		555		(f	)		1,406
	Other income			298		—			—					298

Income before income taxes				3,470		1,417			(511	)				4,376
Income tax expense (benefit)				665		524			(202	)	(g	)
Income tax expense (benefit)									36		(h	)		1,023

		Net income (loss)	$	2,805	$	893		$	(345	)			$	3,353

Net income per share — basic			$	0.11									$	0.13

Net income per share — diluted			$	0.11									$	0.13

Weighted average number of common shares — basic				24,647					882		(i	)		25,529

Weighted average number of common shares — diluted				24,949					882		(i	)		25,831

See accompanying notes.

F-15

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The accompanying pro forma condensed consolidated financial statements give effect to the following pro forma adjustments necessary to reflect the purchase of all the common stock of NSR as if the transaction occurred at the date indicated in the introduction:

(a)

Represents the preliminary purchase accounting entries required for NSR. These entries are subject to change as a result of the finalization of the valuation of assets and liabilities of NSR. The components of NSR’s initial purchase price allocation as of July 31, 2003 are as follows:


Current assets		$	7,329
Non-current assets			2,730
Identifiable intangible assets			3,000
Current liabilities			(1,988	)
Long-term liabilities			—

	Net identifiable assets		11,071
Purchase price			15,782

Goodwill		$	4,711

(b)		Represents the purchase price of $15,782, which consists of $14,082 in debt and $1,700 in SCB common stock. The debt was reduced by $2,064 immediately after the transaction closing date due to the sale of $2,064 in NSR assets.

(c)		Represents amortization expense for identifiable intangible assets based on the preliminary valuation of NSR’s assets and liabilities. Preliminarily, identifiable intangible assets of $3.0 million are being amortized over 60 months.

(d)		Represents the operating expenses for the former owner of NSR since he will no longer be an employee of SCB after the transaction closing date.

(e)		Represents the rent expense incurred by NSR in excess of market value.

(f)		Represents interest expense for $12,018 of the debt issued in connection with the purchase of NSR under SCB’s existing credit facilities and seller debt with interest rates of 3.6% and 6.0%, respectively. The $14,082 in debt issued at the transaction closing date was reduced by $2,064 due to the sale of specific NSR assets as noted in (b) above.

(g)		Represents the income tax benefit related to the pro forma adjustments above based on SCB’s historical effective tax rate of 39.5%.

(h)		Represents the additional income tax expense for NSR based on SCB’s historical tax rate of 39.5% less NSR’s historical tax rate of 37%.

(i)		Represents the 882,000 shares issued as part of the purchase price.

F-16

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 12, 2003


		SCB COMPUTER TECHNOLOGY, INC.

		By:		/s/ Michael J. Boling

				Michael J. Boling Executive Vice President and Chief Financial Officer


Exhibit
Number		Description of Exhibit

2		Stock Purchase Agreement dated as of September 4, 2003, by and among the Company, NSR, and Celestino Archuleta, Marcella E. Archuleta, Walter Claxton, Anthony T. Archuleta, and Maria C. Archuleta, who are the shareholders of NSR. Schedules and exhibits have been omitted from this filing. The Company will furnish, as supplementary information, a copy of the omitted material to the Securities and Exchange Commission upon request. *

23.1		Consent of Stockman, Kast, Ryan & Co.

* Incorporated by reference to exhibits to Current Report on Form 8-K filed on September 8, 2003.

Customer A

Customer B

Customer C