Company Provides Increased Outlook for Q1 and Initial Outlook for Q2 and 2003
Full Year
DALLAS, Feb. 19 /PRNewswire-FirstCall/ -- SOURCECORP(TM) (Nasdaq: SRCP),
one of the nation's leading providers of business process outsourcing
solutions, today reported 2002 annual revenues of $429.4 million and diluted
earnings per share of $1.65. Compared with pro-forma 2001 annual results,
revenues increased 2.4 percent and diluted earnings per share decreased
25 percent. Fourth quarter 2002 revenues and diluted earnings per share were
$112.8 million and $.45, respectively, both at the upper end of the increased
guidance for the quarter provided by the Company last month.
Summary of Financial Highlights (A)
(in $ millions, except for earnings per share data)
(Unaudited)
Fourth Quarter Full Year
2002 2001 2002 GAAP 2002 2001 2002 GAAP
Pro- vs. 2001 Pro- vs. 2001
GAAP forma GAAP Pro-forma GAAP forma GAAP Pro-forma
(B) (B)
$112.8 $99.7 $99.7 13% Revenue $429.4 $419.4 $454.7 2%
14.2 11.3 8.8 26% Operating 53.4 69.4 (6.7) -23%
Income
7.8 6.0 4.3 30% Net Income 29.0 38.4 (18.1) -24%
$0.45 $0.34 $0.25 32% Diluted EPS $1.65 $2.20 $(1.08) -25%
(A) Except as noted, all amounts are being reported using U.S. generally
accepted accounting principals (GAAP).
(B) 2001 GAAP amounts have been adjusted to provide year-over-year
comparability. Refer to the attached income statements for a
detailed explanation of pro-forma adjustments.
"SOURCECORP extended its sequential improvement in financial performance
with fourth quarter revenues and earnings per share results," said Ed H.
Bowman, Jr., President and CEO of SOURCECORP. "Revenue has increased four
quarters and net income and earnings per share have grown three consecutive
quarters.
"During 2002, the Company closed new sales expected to produce total
revenues of approximately $139 million. All of our divisions showed solid
profits for the year and annual cash flow from operations grew to a record
$67.8 million. We reduced our debt by $26.6 million and our debt to total
capital ratio to 23 percent during the year.
"During 2003, we plan to increase our investments in our Information
Management national sales organization to pursue more large contract wins and
invest in new sales resources in our legal claims business to broaden our
high-margin project services and market coverage in this area. We also expect
to continue making investments in technology that began during 2002 and
Fastrieve, our electronic document repository, to reduce our overall labor
costs and further strengthen and integrate our service platform."
Outlook for First and Second Quarters and Full Year of 2003
The Company is providing its 2003 guidance as follows:
First Quarter, 2003 -
The Company is raising its previous guidance for first quarter revenues
to $105 to $110 million from $104 to $108 million and diluted earnings
per share to $.43 to $.47 from $.40 to $.46 to account for 1) the
extension of work under the New York HRA contract, 2) strong seasonal
first quarter performance from the Statement Solutions business and 3)
increased overall visibility for the quarter.
Second Quarter, 2003 -
The Company is issuing initial guidance for the second quarter to include
revenues of $100 to $105 million and diluted earnings per share of
$.34 to $.40. This guidance includes, in particular 1) the expected
impact of the end of the New York HRA and 2) Statement Solutions
returning to normalized run-rates following the completion of year-end
reports and annual statements during the first quarter.
Full Year 2003 -
The Company is issuing initial guidance for the full year 2003 to include
revenues of $425 to $450 million, diluted earnings per share of $1.60 to
$1.75 and annual cash flow from operations of $60 to $65 million.
In addition to the aforementioned, this 2003 guidance includes the
expected impact of the following significant factors: 1) the increase in the
annual effective income tax rate to 40% from 38% due to the Company's expected
income mix increasing in higher tax states, an anticipated impact of about
$.05 in diluted earnings per share, 2) investments across our businesses
during 2003 described above, and 3) internal revenue and earnings growth from
our businesses and corporate initiatives to make up for the loss of the New
York HRA contract.
Mr. Bowman concluded, "We have made solid progress throughout 2002,
winning larger contracts and increasing revenue and earnings per share in the
continuing uncertain business environment. We feel confident that the
investments we expect to make in our business during 2003 will best position
it for internal growth, margin expansion and strong competitive market
presence for 2004 and beyond. We remain very positive about SOURCECORP and
our long-term prospects as commercial and public sector enterprises expand the
use of business process outsourcing to help achieve their goals, reducing
costs and allowing them to focus on their core competencies."
ABOUT SOURCECORP(TM)
SOURCECORP, Incorporated is a leading provider of value-added business
process outsourcing solutions to clients nationwide. SOURCECORP targets
information intensive, technology oriented, application driven industry
segments, such as healthcare, legal, financial services and government,
leveraging its expertise and experience in business processes for these and
other similar business profiles. Headquartered in Dallas, the Company employs
approximately 9,000 people and operates in over 40 states, Washington D.C. and
Mexico.
SOURCECORP is a component of both the S&P SmallCap 600 Index and the
Russell 2000 Index. In June 2001, the Company was cited among the Top 100 Hot
Growth Companies by BusinessWeek magazine. SOURCECORP has previously been
recognized twice by Forbes magazine as one of the 200 Best Small Companies,
based on return equity, sales growth, and EPS growth, and by FORTUNE magazine
as one of America's 100 Fastest Growing Public Companies. For more
information about SOURCECORP's solutions, including case-study examples, visit
the SOURCECORP website at http://www.srcp.com .
The statements in this press release, which are not historical fact, are
forward-looking statements that involve risks and uncertainties, which could
cause actual results to differ materially from such forward-looking
statements. These forward-looking statements include, but are not limited to,
any financial estimates and projections included in this press release and the
Company disclaims any intention or obligation to update or revise such
estimates or forecasts, except as required by law. The aforementioned risks
and uncertainties include, but are not limited to, the risks of integrating
our operating companies, of managing our growth, of the timing and magnitude
of technological advances, of the occurrences of future events that could
diminish our existing customers' needs for our services, of a change in the
degree to which companies continue to outsource business processes, as well as
the risks detailed in SOURCECORP's filings with the Securities and Exchange
Commission, including without limitation, those detailed under the heading
"Risk Factors" in the company's most recent annual report on
Form 10-K. SOURCECORP disclaims any intention or obligation to revise any
forward-looking statements, including financial estimates, whether as a result
of new information, future events, or otherwise, except as required by law.
SOURCECORP(TM)
Summary of Financial Data
In Thousands (Except Earnings Per Share)
(Unaudited)
Three Months Ended
December 31, September 30,
2002 2002
Actual Actual
Total Revenue $112,844 $107,465
Cost of Services 69,183 64,683
Depreciation 3,612 3,578
Gross Profit 40,049 39,204
SG&A 25,774 25,154
Amortization 89 89
Operating Income 14,186 13,961
Other (income) expense 1,547 1,602
Income before income taxes 12,639 12,359
Provision for income taxes 4,803 4,696
Net Income $7,836 $7,663
Weighted Avg. Shares
Basic 17,378 17,358
Diluted 17,373 17,369
Earnings Per Share
Basic $0.45 $0.44
Diluted $0.45 $0.44
SOURCECORP(TM)
Summary of Financial Data
In Thousands (Except Earnings Per Share)
(Unaudited)
Year Ended
December 31,
2002 2001
GAAP Pro-Forma Adjustments GAAP
(A),(B)
Total Revenue $429,380 $419,400 $(35,295) $454,695
Cost of Services 259,399 245,503 (26,973) 272,476
Special Charges --- --- (417) 417
Depreciation 14,284 13,075 (1,557) 14,632
Gross Profit 155,697 160,822 (6,348) 167,170
SG&A 101,956 91,456 (10,177) 101,633
Special Charges --- --- (62,167) 62,167
Amortization 356 --- (10,032) 10,032
Operating Income 53,385 69,366 76,028 (6,662)
Other (income)
expense 6,599 8,954 (409) 9,363
Income before income
taxes 46,786 60,412 76,437 (16,025)
Provision for
income taxes 17,779 22,050 19,926 2,124
Net Income $29,007 $38,362 $56,511 $(18,149)
Weighted Avg. Shares
Basic 17,334 16,748 16,748
Diluted 17,609 17,402 16,748
Earnings Per Share
Basic $1.67 $2.29 $(1.08)
Diluted $1.65 $2.20 $(1.08)
Operating results for 2001 include the following pro-forma adjustments in
order to provide year-over-year comparability:
(A) 2001 strategic realignment plan
-- Operating results of businesses divested in the second and third
quarters of 2001;
-- Acceleration of unamortized deferred debt costs associated with
the credit facility terminated by the Company in April 2001.
(B) Adoption of new accounting pronouncement
Effective January 1, 2002, the Company adopted SFAS No. 142,
"Goodwill and Other Intangible Assets". SFAS No. 142 discontinues
amortization expense of goodwill and other intangible assets with
indefinite useful lives on a prospective basis. For comparative
purposes, goodwill amortization expense and the related tax benefit
have been excluded for the year ended December 31, 2001.
SOURCECORP(TM)
Summary of Financial Data
In Thousands (Except Earnings Per Share)
(Unaudited)
Three Months Ended
December 31,
2002 2001
GAAP Pro-Forma Adjustments (A) GAAP
Total Revenue $112,844 $99,683 --- $99,683
Cost of Services 69,183 60,664 --- 60,664
Depreciation 3,612 3,429 --- 3,429
Gross Profit 40,049 35,590 --- 35,590
SG&A 25,774 24,264 --- 24,264
Amortization 89 --- (2,526) 2,526
Operating Income 14,186 11,326 2,526 8,800
Other (income)
expense 1,547 1,825 --- 1,825
Income before income
taxes 12,639 9,501 2,526 6,975
Provision for
income taxes 4,803 3,468 817 2,651
Net Income $7,836 $6,033 $1,709 $4,324
Weighted Avg. Shares
Basic 17,378 17,271 17,271
Diluted 17,373 17,637 17,637
Earnings Per Share
Basic $0.45 $0.35 $0.25
Diluted $0.45 $0.34 $0.25
(A) Adoption of new accounting pronouncement
Effective January 1, 2002, the Company adopted SFAS No. 142,
"Goodwill and Other Intangible Assets". SFAS No. 142 discontinues
amortization expense of goodwill and other intangible assets with
indefinite useful lives on a prospective basis. For comparative
purposes, goodwill amortization expense and the related tax benefit
have been excluded for the three months ended December 31, 2001.
SOURCECORP(TM)
CONSOLIDATED BALANCE SHEETS
In Thousands
(Unaudited)
December 31, December 31,
ASSETS 2002 2001
CURRENT ASSETS
Cash $3,217 $7,182
Accounts receivable (net) 78,160 88,547
Deferred tax asset 8,254 9,805
Other current 6,247 8,999
Total current assets 95,878 114,533
Property, plant & equipment (net) 40,581 41,942
Goodwill and other intangibles (net) 321,574 298,519
Other noncurrent 8,382 8,077
Total Assets $466,415 $463,071
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $55,431 $51,087
Current maturities of long-term obligations 113 324
Income taxes payable, current and deferred 142 4,588
Total current liabilities 55,686 55,999
Long-term debt 89,640 116,055
Deferred taxes and other long-term
liabilities 17,613 19,844
Total Liabilities 162,939 191,898
STOCKHOLDERS' EQUITY
Common stock 175 174
Additional paid-in-capital 206,467 204,086
Treasury stock (982) (982)
Other Comprehensive Income (329) (1,242)
Retained earnings 98,145 69,137
Total stockholders' equity 303,476 271,173
Total liabilities and stockholders'
equity $466,415 $463,071
SOURCECORP(TM)
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Year Ended
December 31,
2002 2001
Net Income (loss) $29,007 $(18,149)
Adjustments to reconcile net income (loss)
to cash provided by operating activities
Non-cash loss from divestitures & closures --- 54,559
Depreciation and amortization 14,640 24,664
Deferred tax provision (benefit) 11,390 (7,572)
Loss on sale of property, plant, and
equipment 243 ---
Changes in working capital 12,493 502
Net cash provided by operating activities 67,773 54,004
Net cash used for investing activities (44,720) (60,701)
Net cash (used for) provided by financing
activities (27,018) 4,375
Net decrease in cash and cash equivalents (3,965) (2,322)
Cash and cash equivalents, beginning of
period 7,182 9,504
Cash and cash equivalents, end of period $3,217 $7,182
SOURCE SOURCECORP
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Related links:
http://www.srcp.com
Company News On-Call:
http://www.prnewswire.com/comp/117986.html
CONTACT:
Barry Edwards, EVP & Chief Financial Officer,
+1-214-740-6690, or Lon Baugh, Director, Investor Relations,
+1-214-740-6683, both of SOURCECORP
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