Revenue Exceeds Company's Previous Guidance
Earnings Per Share Increases 23.5 Percent Over First Quarter, 2002 Results
DALLAS, Aug. 7 /PRNewswire-FirstCall/ -- SOURCECORP(TM) (Nasdaq: SRCP),
one of the nation's leading providers of business process outsourcing
solutions, today reported 2002 second quarter diluted earnings per share of
$.42 on revenue of $105.8 million. "SOURCECORP's second quarter earnings per
share results were in line with the financial guidance provided by the Company
in May," said Ed H. Bowman, Jr., President and CEO of SOURCECORP.
Second Quarter Summary
Mr. Bowman continued, "The Company's overall business and financial
results were within the range of expectations for the second quarter. Revenue
modestly exceeded our expected range of $100 million to $103 million for the
quarter and improved by approximately 2.4 percent, compared with the Company's
revenue for the first quarter of 2002. During the second quarter, operating
margins also increased sequentially by 230 basis points from 10.9 percent to
13.2 percent, as a result of both our cost reduction plan which we completed
during the first quarter and favorable revenue mix. The Company's revenue mix
for the quarter reflected increases from its Legal Claims Administration
business compared to the most recent two quarters, in addition to increases
from its HealthSERVE segment. Cash flows from operations continued to
strengthen the balance sheet by allowing us to reduce the Company's
outstanding debt balance by $5.3 million during the quarter."
During the second quarter, the Company closed sales expected to produce
total revenue of approximately $21 million. These new sales included
three large sales, each for more than $1 million in total expected revenue,
all of which were with new customers. Mr. Bowman added, "These second quarter
new business results followed the outstanding new business amounts we closed
during the first quarter. Additionally in the current quarter, we have
already signed four more large deals totaling approximately $18 million. We
are pleased with these 2002 year-to-date new business results, which give us
additional revenue visibility into 2003 and beyond."
Summary of Financial Highlights
(in $ millions, except for earnings per share data)
Q2 2002 Q1 2002 Change
Revenue $105.8 $103.3 2.4%
Operating Income $14.0 $11.3 23.9%
Net Income $7.5 $6.0 25%
Diluted EPS $.42 $.34 23.5%
The Company produced cash flow from operations of $12.7 million for the
second quarter of 2002, an increase of 18.7 percent from the first quarter of
2002. Days sales outstanding during the second quarter increased sequentially
by 3 days to 52 days, within the Company's expected range for the quarter. As
of June 30, the Company's debt to total capital ratio decreased sequentially
from 29.8 to 28.3 percent and the outstanding balance on the Company's credit
facility declined to $ 112.9 million.
Outlook for Third and Fourth Quarters of 2002
The Company is providing revenue and earnings per share guidance for its
third and fourth quarters as follows:
-- Third quarter revenue and earnings per share of approximately $103 to
$108 million and $.43 to $.47, respectively, and
-- Fourth quarter revenue and earnings per share of approximately $104 to
$109 million and $.45 to $.49, respectively.
For the full year, the Company currently expects revenue of approximately
$420 to $425 million and earnings per share of approximately $1.70. This
guidance is based upon a number of key business factors, which include the
timing and volume of customer projects, particularly with Legal Claims
Administration; continued ramp-up of transaction volumes with the Company's
newer large business process outsourcing contracts; and continued funding for
existing outsourcing arrangements.
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.,
Puerto Rico, 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 rapid 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)
Three Months Ended
June 30,
2002 2001
(Unaudited)
Actual Pro-Forma (A),(B)
Total Revenue $ 105,787 $110,168
Cost of Services 63,332 62,678
Depreciation 3,644 3,574
Gross Profit 38,811 43,916
SG&A 24,754 23,469
Amortization 89 --- (B)
Operating Income 13,968 20,447
Other (income) expense 1,863 2,611
Income before income taxes 12,105 17,836
Provision for income taxes 4,600 6,510 (B)
Net Income $7,505 $11,326
Weighted Avg. Shares
Basic 17,304 16,575
Diluted 17,887 17,471
Earnings Per Share
Basic $0.43 $ 0.68 (B)
Diluted $0.42 $ 0.65 (B)
Operating results for 2001 include the following pro-forma adjustments in
order to improve year-over-year comparability. Refer to SOURCECORP's form 8k
filed with the Securities and Exchange Commission on May 9, 2002 for further
explanation and disclosure of pro-forma adjustments.
(A) 2001 strategic realignment plan
-- Operating results of businesses divested in the second and
third quarters of 2001;
-- Charges for doubtful accounts principally related to divested
businesses;
-- One-time charges principally related to losses and expenses on
divested units; and
-- One-time charge for previously 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 the three months ended June 30,
2001, goodwill amortization of $2,255 and the related tax benefit of
$589 have been excluded for comparative purposes.
SOURCECORP(TM)
Summary of Financial Data
In Thousands (Except Earnings Per Share)
Three Months Ended
June 30, March 31,
2002 2002
(Unaudited)
Actual Actual
Total Revenue $ 105,787 $ 103,284
Cost of Services 63,332 62,201
Depreciation 3,644 3,450
Gross Profit 38,811 37,633
SG&A 24,754 26,274
Amortization 89 89
Operating Income 13,968 11,270
Other (income) expense 1,863 1,587
Income before income taxes 12,105 9,683
Provision for income taxes 4,600 3,680
Net Income $7,505 $6,033
Weighted Avg. Shares
Basic 17,304 17,296
Diluted 17,887 17,817
Earnings Per Share
Basic $0.43 $ 0.35
Diluted $0.42 $ 0.34
SOURCECORP(TM)
Summary of Financial Data
In Thousands (Except Earnings Per Share)
Six Months Ended
June 30, June 30,
2002 2001
(Unaudited)
Actual Pro-Forma (A),(B)
Total Revenue $ 209,071 $214,103
Cost of Services 125,533 122,817
Depreciation 7,094 6,636
Gross Profit 76,444 84,650
SG&A 51,028 45,013
Amortization 178 --- (B)
Operating Income 25,238 39,637
Other (income) expense 3,450 4,867
Income before income taxes 21,788 34,770
Provision for income taxes 8,280 12,691 (B)
Net Income $13,508 $22,079
Weighted Avg. Shares
Basic 17,300 16,379
Diluted 17,854 17,159
Earnings Per Share
Basic $0.78 $ 1.35 (B)
Diluted $0.76 $ 1.29 (B)
Operating results for 2001 include the following pro-forma adjustments in
order to improve year-over-year comparability. Refer to SOURCECORP's form 8k
filed with the Securities and Exchange Commission on May 9, 2002 for further
explanation and disclosure of pro-forma adjustments.
(A) 2001 strategic realignment plan
-- Operating results of businesses divested in the second and
third quarters of 2001;
-- Charges for doubtful accounts principally related to divested
businesses;
-- One-time charges principally related to losses and expenses on
divested units; and
-- One-time charge for previously 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 the six months ended June 30, 2001,
goodwill amortization of $4,290 and the related tax benefit of $1,108
have been excluded for comparative purposes.
SOURCECORP(TM)
CONSOLIDATED BALANCE SHEETS
In Thousands
June 30, December 31,
ASSETS 2002 2001
(Unaudited)
CURRENT ASSETS
Cash $ 3,789 $ 7,182
Accounts receivable (net) 92,234 88,547
Deferred tax asset 10,841 9,805
Other current 7,680 8,999
Total current assets 114,544 114,533
Property, plant & equipment (net) 42,445 41,942
Goodwill and other intangibles (net) 320,440 298,519
Other noncurrent 9,034 8,077
Total Assets $486,463 $463,071
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $59,396 $51,087
Current maturities of long-term obligations 247 324
Income taxes payable, current and deferred 3,399 4,588
Total current liabilities 63,042 55,999
Long-term debt 112,641 116,055
Deferred taxes and other long-term liabilities 25,185 19,844
Total Liabilities 200,868 191,898
STOCKHOLDERS' EQUITY
Common stock 175 174
Additional paid-in-capital 204,639 204,086
Treasury stock (982) (982)
Other Comprehensive Income (882) (1,242)
Retained earnings 82,645 69,137
Total stockholders' equity 285,595 271,173
Total liabilities and stockholders' equity $486,463 $463,071
SOURCECORP(TM)
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
Six Months Ended
June 30,
2002 2001
(Unaudited)
Net Income $13,508 $(34,436)
Adjustments to reconcile net income to cash
provided by operating activities
Special Charges --- 68,325
Depreciation and amortization 7,272 13,200
Deferred tax provision (benefit) 3,390 (4,654)
Loss on sale of property, plant, and equipment 125 ---
Changes in working capital (819) (17,513)
Net cash provided by operating activities 23,476 24,922
Net cash used for investing activities (23,126) (52,451)
Net cash used for financing activities (3,743) 26,230
Net decrease in cash and cash equivalents (3,393) (1,299)
Cash and cash equivalents, beginning of period 7,182 9,504
Cash and cash equivalents, end of period $3,789 $8,205
SOURCE SOURCECORP, Incorporated
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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, Incorporated
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