DALLAS, Aug. 7 /PRNewswire-FirstCall/ -- Affiliated Computer Services,
Inc., (NYSE: ACS), today announced fourth quarter fiscal year 2008 revenues
of $1.61 billion, an increase of 6% compared to the fourth quarter of the
prior year. Adjusted non-GAAP diluted earnings per share for the fourth
quarter of fiscal years 2008 and 2007 were $0.95 and $0.88, respectively,
representing an 8% increase. See "Reconciliation of Reported GAAP Results
to Adjusted Non-GAAP Results" below.
Fiscal year 2008 revenues were a record at $6.16 billion, an increase
of 7% compared to the prior fiscal year. Adjusted non-GAAP diluted earnings
per share for fiscal year 2008 was a record at $3.53 and represents a 13%
increase over fiscal year 2007 adjusted non-GAAP diluted earnings per share
of $3.12.
Fiscal year 2008 new business signings were a company record. During
the fourth quarter, new business signings totaled $210 million of annual
recurring revenue. Fiscal year 2008 new business signings were $801 million
of annual recurring revenue, a 32% increase over the prior year period.
Fiscal year 2008 was a record year for cash flow. Fourth quarter free
cash flow was $177 million, or 11% of revenues. Fiscal year 2008 free cash
flow was $518 million, or 8% of revenues.
"The fourth quarter of fiscal 2008 was the culmination of an excellent
year. We signed the most new business in our history while ending the year
with the largest new business pipeline that we have ever pursued. I am very
pleased with our success in sales because I believe we are well positioned
to accelerate internal revenue growth in fiscal 2009," said Lynn Blodgett,
ACS' president and chief executive officer. "Our adjusted earnings per
share was the highest in our history and the record amount of cash flow we
generated in fiscal 2008 is evidence of the strength of our earnings. We
continued to fortify our vertical markets by developing innovative new
solutions and by completing seven acquisitions that added new vertical
capabilities and geographic reach. All of this was made possible by our
wonderful customers and our 65,000 dedicated employees in more than 100
countries worldwide."
Key highlights from ACS' fiscal year 2008 fourth quarter results:
-- During the quarter, the Company generated new business signings of
$210 million in annual recurring revenue with an estimated total contract
value of $685 million. Commercial signings represented 75% of new business
signings and Government contributed 25%. From a service line perspective,
business process outsourcing contributed 82% of new business signings and
18% were information technology outsourcing.
-- During the quarter, total revenues were $1.61 billion and
represented 6% growth, of which 4% was internal. The Commercial segment
contributed 60% of revenues and grew 11%, excluding divestitures, of which
8% was internal. The Government segment contributed 40% of revenues and was
flat, excluding divestitures, over the prior year period with negative 2%
internal revenue growth.
-- Adjusted non-GAAP diluted earnings per share for the fourth quarter
of fiscal years 2008 and 2007 were $0.95 and $0.88, respectively,
representing an 8% increase. Fourth quarter fiscal year 2008 reported GAAP
diluted earnings per share was $1.01 as compared to $0.37 in the prior year
period. See "Reconciliation of Reported GAAP Results to Adjusted Non-GAAP
Results" below.
-- Cash flow from operations during the fourth quarter was $267
million, or 17% of revenues. Free cash flow during the quarter was $177
million, or 11% of revenues. Capital expenditures and additions to
intangibles were $90 million, or 6% of revenues.
-- In June 2008, the Company expanded its service offerings and global
capabilities by closing the acquisition of Orbital Sciences Corporation's
Transportation Management Systems (TMS) business for a purchase price of
$43 million. TMS deepens the Company's transportation vertical and had
trailing twelve-month revenue of approximately $50 million.
Key highlights from ACS' fiscal year 2008 results:
-- Fiscal year 2008 new business signings were $801 million of annual
recurring revenue, with an estimated total contract value of $3.2 billion.
This represents a 32% increase over fiscal year 2007 new business signings.
Commercial signings contributed 60% of fiscal year 2008 new business
signings and Government contributed 40%. From a service line perspective,
business process outsourcing generated 80% of new business signings and 20%
were information technology outsourcing.
-- Fiscal year 2008 revenues were $6.16 billion. Total revenue growth
was 7%, of which 5% was internal. The Commercial segment accounted for 60%
of revenues, and grew 8%, excluding divestitures, of which 6% was internal.
The Government segment accounted for 40% of revenues and grew 5%, excluding
divestitures, of which 4% was internal.
-- Adjusted non-GAAP diluted earnings per share for the fiscal years
2008 and 2007 were $3.53 and $3.12, respectively, representing a 13%
increase. Fiscal year 2008 reported GAAP diluted earnings per share was
$3.32 compared to $2.49 in the prior year. See "Reconciliation of Reported
GAAP Results to Adjusted Non-GAAP Results" below.
-- Cash flow from operations for fiscal year 2008 was $827 million, or
13% of revenues, and free cash flow was $518 million, or 8% of revenues.
Capital expenditures and additions to intangibles were $308 million, or 5%
of revenues.
-- During the second quarter of fiscal year 2008, the Company completed
a $200 million share repurchase program, purchasing 4.5 million shares at
an average price of $44 per share.
-- During fiscal year 2008 we expanded our service offerings and global
capabilities by closing the following acquisitions:
-- In January 2008, to support its global expansion, the Company
acquired Syan Holdings Limited, a U.K.-based provider of information
technology outsourcing services, for a purchase price of $69 million. Syan
generated trailing twelve-month revenue of approximately $75 million.
-- In February 2008, to deepen its healthcare vertical, the Company
acquired Bowers & Associates, Inc., a Wisconsin-based provider of quality
care and productivity management services and healthcare data analytics,
for a purchase price of $8 million. Bowers had trailing twelve-month
revenue of approximately $5 million.
-- In March 2008, to further support its global expansion, the Company
acquired sds business services GmbH, a Germany-based provider of data
center, infrastructure services, and application related solutions, for a
purchase price of $63 million. sds generated trailing twelve-month revenue
of approximately $40 million.
-- In March 2008, to broaden its transportation vertical, the Company
acquired Communications Development, Inc., an Arkansas-based provider of
outsourced marketing, consulting, and advertising services to the
commercial transportation industry.
-- In April 2008, to broaden its healthcare payer vertical market, the
Company acquired CompIQ Corporation (CompIQ), a California-based provider
of workers' compensation claims review, re-pricing and software solutions
for $22 million, plus contingent payments based upon future performance.
CompIQ had trailing twelve month revenue of approximately $17 million.
-- In June 2008, the Company acquired Orbital Sciences Corporation's
Transportation Management Systems (TMS) business for a purchase price of
$43 million. TMS deepens the Company's transportation vertical market and
had trailing twelve-month revenue of approximately $50 million.
ACS will discuss its financial results on a conference call and web
cast on http://www.acs-inc.com at 3:30 p.m. central time today. During the
conference call, management will refer to a presentation provided on the
Investor Relations page of ACS' website and will use certain non-generally
accepted accounting principles ("GAAP") financial measures for which
reconciliations to the most directly comparable GAAP financial measures
will also be provided.
ACS, a FORTUNE 500 company with 65,000 people supporting client
operations in more than 100 countries, provides business process
outsourcing and information technology solutions to world-class commercial
and government clients. The Company's Class A common stock trades on the
New York Stock Exchange under the symbol "ACS." Visit ACS on the Internet
at http://www.acs-inc.com.
This news release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and the
provisions of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (which
Sections were adopted as part of the Private Securities Litigation Reform
Act of 1995). Actual performance may differ materially from those
statements due to risks, uncertainties and other factors, domestically and
internationally, including factors related to competitive conditions and
their impact; our debt and debt service costs, including any reductions in
our credit rating; the effect of claims and litigation; the impact of the
legal and regulatory environment; the loss or failure of significant
clients, including the impact of economic and political conditions;
fluctuation in our non-recurring revenue; the recoverability of capital
investments in connection with our contracts; our success in managing the
business, controlling costs and in identifying, acquiring and integrating
businesses and technologies; the impact of contract provisions, such as
pricing provisions and service level penalties, and contract terminations;
our success in signing and commencing new businesses; the loss of any
significant software vendor relationships; risks in our international
operations, including foreign currency exchange rates; and other factors,
including those set forth under "Risk Factors" in our filings with the
Securities and Exchange Commission. In addition, we operate in a highly
competitive and rapidly changing environment, and new risks may arise.
Accordingly, investors should not place any reliance on forward-looking
statements as a prediction of actual results. We disclaim any intention to,
and undertake no obligation to, update or revise any forward-looking
statement.
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
In thousands, except per share amounts
(Unaudited)
Three months ended
June 30,
2008 2007
Revenues $1,613,655 $1,519,734
Operating expenses:
Cost of revenues:
Wages and benefits 754,648 724,951
Services and supplies 377,258 348,721
Rent, lease and maintenance 191,334 171,413
Depreciation and amortization 98,976 91,338
Software impairment - 76,407
Other 6,796 5,279
Total cost of revenues 1,429,012 1,418,109
Other operating expenses 6,771 18,447
Total operating expenses 1,435,783 1,436,556
Operating income 177,872 83,178
Interest expense 35,591 42,176
Other non-operating income, net (2,373) (4,494)
Pretax profit 144,654 45,496
Income tax expense 46,022 7,922
Net income $98,632 $37,574
Earnings per share:
Basic $1.02 $0.38
Diluted $1.01 $0.37
Shares used in computing earnings per share:
Basic 96,703 99,378
Diluted 97,719 101,039
Note: See "Summary Reconciliation of Reported GAAP Results to Adjusted
Non-GAAP Results" for certain items impacting the reported numbers above.
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
In thousands, except per share amounts
(Unaudited)
Twelve months ended
June 30,
2008 2007
Revenues $6,160,550 $5,772,479
Operating expenses:
Cost of revenues:
Wages and benefits 2,908,290 2,748,717
Services and supplies 1,383,801 1,262,435
Rent, lease and maintenance 746,077 701,620
Depreciation and amortization 380,571 346,199
Software impairment - 76,407
Other 27,967 33,440
Total cost of revenues 5,446,706 5,168,818
Other operating expenses 68,766 66,706
Total operating expenses 5,515,472 5,235,524
Operating income 645,078 536,955
Interest expense 161,935 182,665
Other non-operating income, net (13,076) (29,123)
Pretax profit 496,219 383,413
Income tax expense 167,209 130,323
Net income $329,010 $253,090
Earnings per share:
Basic $3.36 $2.53
Diluted $3.32 $2.49
Shares used in computing earnings per share:
Basic 98,013 100,181
Diluted 98,993 101,572
Note: See "Summary Reconciliation of Reported GAAP Results to Adjusted
Non-GAAP Results" for certain items impacting the reported numbers above.
AFFILIATED COMPUTER SERVICES, INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Dollars in thousands
(Unaudited)
June 30, June 30,
2008 2007
Assets
Cash and cash equivalents $461,883 $307,286
Accounts receivable, net 1,378,285 1,257,108
Income taxes receivable 7,076 13,268
Other current assets 255,872 232,872
Total current assets 2,103,116 1,810,534
Property, equipment, and software, net 920,637 897,319
Goodwill 2,785,164 2,612,368
Other intangible assets, net 444,479 481,378
Other assets 216,003 180,830
Total Assets $6,469,399 $5,982,429
Liabilities:
Accounts payable $198,191 $97,951
Accrued compensation and benefits 244,888 246,742
Other accrued liabilities 338,861 400,238
Deferred taxes 82,017 14,418
Current portion of long-term debt 47,373 47,039
Current portion of unearned revenue 173,809 164,484
Total current liabilities 1,085,139 970,872
Long-term debt 2,357,541 2,342,272
Deferred taxes 411,836 367,565
Other long-term liabilities 306,509 235,552
Total Liabilities 4,161,025 3,916,261
Total Stockholders' Equity 2,308,374 2,066,168
Total Liabilities and
Stockholders' Equity $6,469,399 $5,982,429
Frequently Used Terms
New business signings -- while there are no third party standards or
requirements governing the calculation of new business signings, we define
new business signings as annual expected recurring revenue from new
contracts and the incremental portion of renewals that are signed during
the period, which represents the estimated first twelve months of revenue
to be recorded under the contracts after full implementation. We use new
business signings as a measure of estimated recurring revenues represented
by contractual commitments, both to forecast prospective revenues and to
estimate capital commitments. Revenues are measured under GAAP.
Trailing twelve month new business -- is the preceding twelve months of
new business signings at a point in time expressed in annual revenue, not
total contract value.
Total contract value -- represents estimated total revenue over the
term of the contract.
Restatement of Operating Segment Results
During the first quarter of fiscal year 2008, the Company reorganized
the internal operating and reporting structures in its Commercial and
Government segments to more formally align its sales, service delivery and
financial organizations under their appropriate leadership. As a result,
the Company has restated its Commercial and Government segment results for
the three and twelve months ended June 30, 2007 to reflect its current
operating and reporting structure. The restatement has no impact on the
Company's consolidated results for the period of restatement.
Use of Non-GAAP Financial Information
The Company reports its financial results in accordance with GAAP.
However, the Company uses certain non-GAAP performance measures, including
adjusted non-GAAP earnings per share, free cash flow and internal revenue
growth to provide both management and investors a more complete
understanding of the Company's underlying operational trends and results.
Management uses these non-GAAP measures to provide additional
meaningful comparisons between current results and prior results, and as a
basis for planning and forecasting for future periods.
Reconciliation of Reported GAAP Results to Adjusted Non-GAAP Results --
In addition to reporting operating income, pretax income, net income and
earnings per share on a GAAP basis, the Company has also made certain
non-GAAP adjustments which are described in "Description of Non-GAAP
Adjustments" and are reconciled to the corresponding GAAP measures in the
attached financial schedules titled "Reconciliation of Reported Results to
Income Adjusted for Certain Non-GAAP Items" included in this earnings
release. In making these non-GAAP adjustments, the Company takes into
account the impact of items that are infrequently occurring or that are
non-operational in nature. Management believes that the exclusion of these
items provides a useful basis for evaluating underlying business
performance, but these adjusted non-GAAP measures should not be considered
in isolation and are not in accordance with, or a substitute for,
evaluating business unit performance utilizing GAAP financial information.
Management uses non-GAAP measures in its budgeting and forecasting
processes and to further analyze its financial trends, as well as making
financial comparisons to prior periods presented on a similar basis. The
Company's management uses each of these non-GAAP financial measures in its
own evaluation of the Company's performance, particularly when comparing
performance to prior periods and the Company believes that providing such
adjusted results allows investors and other users of the Company's
financial statements to better understand the Company's comparative
operating performance for the periods presented.
The Company's non-GAAP measures may differ from similar measures by
other companies, even if similar terms are used to identify such measures.
Although the Company's management believes non-GAAP measures are useful in
evaluating the performance of its business, the Company acknowledges that
items excluded from such measures may have a material impact on the
Company's income from operations, pretax income, net income and earnings
per share calculated in accordance with GAAP. Therefore, management uses
non-GAAP measures in conjunction with GAAP results. Investors and users of
our financial information should also consider the above factors when
evaluating our results.
Description of Non-GAAP Adjustments:
The following items are included in our presentation of Non-GAAP
adjustments:
1. Costs related to our internal investigation of our stock option
grant practices, investigations begun by the Securities and Exchange
Commission and Department of Justice, and shareholder derivative suits, net
of insurance reimbursements: The Company has incurred costs related to our
internal investigation, as well as those of the SEC and DOJ. In addition,
several derivative lawsuits have been filed in connection with our stock
option grant practices, generally alleging claims related to breach of
fiduciary duty and unjust enrichment by certain of our directors and senior
executives and the Company has incurred costs related to these lawsuits.
Management expects that the Company will continue to incur costs related to
the ongoing investigations and derivative lawsuits (collectively, "Option
Investigation Related Costs") and has made and will continue to make claims
under its directors' and officers' insurance policies for reimbursement of
these costs, although the Company cannot predict the timing or amount, if
any, of any insurance reimbursements. Management believes that these costs
and related insurance reimbursements, if any, although material and
recurring, are not related to the Company's ongoing operations and that
excluding them helps to provide a more meaningful representation of the
Company's operating performance.
2. Costs related to buyout offers and related shareholder derivative
suits: The Company has incurred costs in fiscal years 2008 and 2007 to
evaluate our strategic alternatives, including the proposal from Darwin
Deason, Chairman of the Board of Directors, and Cerberus. In addition,
several lawsuits have been filed in connection with the announced buyout
transaction, generally alleging claims related to breach of fiduciary duty,
and seeking class action status ("Buyout Related Cost"). Management expects
that the Company may continue to incur costs related to our evaluation of
strategic alternatives and these lawsuits. Management believes that these
costs, although material and possibly recurring, are not related to the
Company's ongoing operations and that excluding them helps to provide a
more meaningful representation of the Company's operating performance.
3. Cost related to amending certain employee stock options: During
fiscal year 2007 and the first quarter of fiscal year 2008, the Company
amended the exercise price of certain outstanding stock options in order to
reprice all, or a portion, of the respective stock option grants to the
correct accounting measurement date to avoid adverse tax consequences to
individual holders under Section 409A of the Internal Revenue Code
("Section 409A"). During the first quarter of fiscal year 2008, the Company
expensed approximately $1.2 million related to these amended stock options
("Amended Options"). Management believes that these costs and cash payments
are not related to the Company's ongoing operations and that excluding them
helps to provide a more meaningful representation of our operating
performance.
4. Cost related to certain former employees' stock options: The
exercise price of certain former employees' vested, unexercised and
outstanding stock options were less than the fair market value per share of
ACS stock on the revised measurement dates for such stock options. During
the first quarter of fiscal year 2008, the Company notified certain former
employees that the Company will pay them the additional 20% income tax
imposed by Section 409A if a triggering event occurs and if the employee is
required to recognize and report W-2 income under Section 409A, subject to
certain limitations. During the three and twelve months ended June 30,
2008, the Company accrued approximately $0.3 million and $1.4 million,
respectively, based on the market price of ACS common stock at June 30,
2008 and will adjust this accrual to the fair market value of ACS stock
each quarter until the options are exercised ("Income Tax Reimbursements").
Management believes that these costs are not related to the Company's
ongoing operations and that excluding them helps to provide a more
meaningful representation of our operating performance.
5. Gain related to sale of our decision support business: In the second
quarter of fiscal year 2008, the Company divested its decision support
business and recognized a pre-tax gain of $2.4 million. Management believes
that the decision support business is not strategic to our ongoing
operations and its sale is an isolated event. Management believes excluding
the gain on its sale better reflects the performance of our continuing
operations.
6. Waiver fee on our Credit Facility: In the first quarter of fiscal
year 2007, the Company received an amendment, consent and waiver from the
lenders under our Credit Facility with respect to, among other provisions,
waiver of any default or event of default arising under the Credit Facility
as a result of our failure to comply with certain reporting covenants
("Waiver Fee") and paid a fee of $1.6 million. Management believes that our
delayed filings of our Annual Report on Form 10-K for the year ended June
30, 2006 and Quarterly Report on Form 10-Q for the period ended September
30, 2006, which necessitated the waiver, are infrequently occurring events
and excluding the Waiver Fee provides a more meaningful representation of
our results of operations for the first quarter of fiscal year 2007.
7. Gain related to sale of minority interests: In the third quarter of
fiscal year 2007, the Company divested its minority interest in a
professional service business and recognized a pre-tax gain of $8.2 million
($5.3 million, net of income tax). Management believes that this sale is an
isolated event related to non-core operations and not representative of our
ongoing operations. This business was not considered strategic to our
ongoing operations and excluding the gains on the sale helps to isolate the
performance of our continuing operations.
8. North Carolina contract settlement ("NC Settlement"): In the third
quarter of fiscal year 2007, we mutually agreed to terminate the North
Carolina MMIS contract, settled all issues related to the contract, and
recognized $3.4 million in revenue related to this settlement. The Company
believes that the contract termination and settlement was an infrequent
occurrence and that excluding this settlement helps to provide a more
meaningful representation of the performance of our continuing operations.
9. Litigation settlement: In the third and fourth quarters of fiscal
year 2007, we recorded charges of approximately $2.2 million and $2.3
million, respectively, related to the settlement of a pre-acquisition claim
related to our fiscal year 2005 acquisition of the human resources
consulting business of Mellon Financial Corporation. In the third quarter
of fiscal year 2008, we recovered approximately $1.8 million of this
settlement. We believe that the settlement and subsequent recovery of this
pre-acquisition claim is not related to our ongoing operations and that
excluding them helps to provide a more meaningful representation of the
performance from our continuing operations.
10. Non-cash impairment charge related to our agreement with the
Department of Education to cease development of certain in-process
capitalized software. In 2003, we were awarded a contract with the
Department of Education for its "Common Services for Borrowers" initiative
("CSB"). Under this contract we provide comprehensive loan servicing,
consolidation loan processing, debt collection services on delinquent
accounts, IT infrastructure operations and support, maintenance and
development of information systems, and portfolio management services for
the Department of Education's Direct Student Loan program. In May 2007, we
agreed with the Department to cease development of certain software
contemplated under the CSB contract. As a result of the agreement to cease
development, we recorded a non-cash impairment charge ("CSB Impairment") of
approximately $76.4 million (approximately $48.3 million, net of income
tax) related to in-process capitalized development costs. Management
believes that excluding this infrequent charge helps to isolate the
underlying operational trends of our business and facilitates comparisons
among periods.
11. Resolution of taxes, interest and penalty reversal related to
Section 162(m) deductions. We included in our restatements of our fiscal
year 2004, 2005 and the first three quarters of fiscal year 2006 financial
statements an accrual for additional income tax liabilities and estimated
penalties and interest related to certain cash executive compensation
deductions previously taken under Section 162(m), which we believed may be
non-deductible as a result of information that had been obtained by us in
connection with our internal investigation, due to factors both related and
unrelated to revised measurement dates. In the fourth quarters of fiscal
years 2007 and 2008, we reversed approximately $6.0 million and $4.8
million, respectively, of accrued income taxes, penalties and interest
associated with Section 162(m) issues, as we believe an accrual for these
amounts is no longer required ("162 (m) Resolution"). These deductions were
related to prior fiscal years, and management believes that excluding them
provides a more meaningful representation of our results of operations in
the fourth quarters of fiscal years 2007 and 2008.
12. Gain related to sale of our Unclaimed Property Reporting and
Recovery ("UPRR") business. In the fourth quarter of fiscal year 2008, the
Company divested its UPRR business and recognized a pre-tax gain of $1.0
million. Management believes that the UPRR business is not strategic to our
ongoing operations and its sale is an isolated event. Management believes
excluding the gain on its sale better reflects the performance of our
continuing operations.
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (GAAP)
TO ADJUSTED OPERATING INCOME (Non-GAAP)
(UNAUDITED)
(In millions)
Three Months Twelve Months
Ended Ended
June 30, June 30,
2008 2007 2008 2007
Operating Income (GAAP) $177.9 $83.2 $645.1 $537.0
Adjusting items, pre-tax:
Option investigation related costs (1.4) 6.3 32.6 32.3
Buyout related costs 1.0 5.4 9.9 5.9
Amended options (409(a)) - - 1.2 -
Income tax reimbursement 0.3 - 1.4 -
Sale of decision support business - - (2.4) -
NC Settlement - - - (3.4)
Pre-acquisition litigation settlement - 2.3 (1.8) 4.5
CSB Impairment - 76.4 - 76.4
162(m) resolution - (0.9) - (0.9)
Sale of UPRR (1.0) - (1.0) -
Adjusted Operating Income (Non-GAAP)* $176.8 $172.7 $685.0 $651.9
RECONCILIATION OF NET INCOME (GAAP)
TO ADJUSTED NET INCOME (Non-GAAP)
(UNAUDITED)
(In millions)
Three Months Twelve Months
Ended Ended
June 30, June 30,
2008 2007 2008 2007
Net Income (GAAP) $98.6 $37.6 $329.0 $253.1
Adjusting items, net of tax:
Option investigation related costs (0.9) 4.2 21.0 20.8
Buyout related costs 0.6 3.6 6.4 3.9
Amended options (409(a)) - - 0.8 -
Income tax reimbursement 0.2 - 0.9 -
Sale of decision support business - - (1.6) -
Waiver fee - - - 1.6
Sale of minority interests - 0.6 - (5.3)
NC settlement - - - (2.1)
Pre-acquisition litigation settlement - 1.5 (1.1) 2.9
CSB Impairment - 48.3 - 48.3
162(m) resolution (4.8) (6.0) (4.8) (6.0)
Sale of UPRR (0.6) - (0.6) -
Adjusted Net Income (Non-GAAP)* $93.1 $89.7 $350.0 $317.2
*Differences in schedule due to rounding.
AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES
RECONCILIATION OF DILUTED EARNINGS PER SHARE (GAAP)
TO ADJUSTED DILUTED EARNINGS PER SHARE (Non-GAAP)
(UNAUDITED)
Three Months Twelve Months
Ended Ended
June 30, June 30,
2008 2007 2008 2007
Diluted Earnings Per Share (GAAP) $1.01 $0.37 $3.32 $2.49
Adjusting items, net of tax:
Option investigation related costs (0.01) 0.04 0.21 0.20
Buyout related costs 0.01 0.03 0.06 0.04
Amended options (409(a)) - - 0.01 -
Income tax reimbursement - - 0.01 -
Sale of decision support business - - (0.02) -
Waiver fee - - - 0.01
Sale of minority interests - - - (0.05)
NC settlement - - - (0.02)
Pre-acquisition litigation settlement - 0.02 (0.01) 0.03
CSB Impairment - 0.48 - 0.48
162(m) resolution (0.05) (0.06) (0.05) (0.06)
Sale of UPRR (0.01) - - -
Adjusted Diluted Earnings Per Share
(Non-GAAP)* $0.95 $0.88 $3.53 $3.12
*Differences in schedule due to rounding.
Internal revenue growth -- is measured as total revenue growth less
acquired revenue from acquisitions and revenues from divested operations.
Acquired revenue from acquisitions is based on pre-acquisition normalized
revenue of acquired companies. We use the calculation of internal revenue
growth to measure revenue growth excluding the impact of acquired revenues
and the revenue associated with divested operations and we believe these
adjustments to historical reported results are necessary to accurately
reflect our internal revenue growth.
For the three months ended June 30, 2008, the Company generated internal
revenue growth of 4%. Internal revenue growth is measured as follows
(unaudited, $ in millions):
Three months ended June 30,
2008 2007 Growth %(a)
Consolidated
Total Revenues $1,614 $1,520 6%
Less: Divested (5) (8)
Adjusted Base $1,609 $1,512 6%
Acquired Revenues* $45 $4 2%
Internal Revenues 1,564 1,508 4%
Total $1,609 $1,512 6%
Commercial
Total Revenues $970 $872 11%
Less: Divested (5) (6)
Adjusted Base $965 $866 11%
Acquired Revenues* $33 $- 3%
Internal Revenues 932 866 8%
Total $965 $866 11%
Government
Total Revenues $644 $648 -1%
Less: Divested - (2)
Adjusted Base $644 $646 -
Acquired Revenues* $12 $4 2%
Internal Revenues 632 642 -2%
Total $644 $646 -
* Acquired revenues are based on pre-acquisition normalized revenues of
acquired companies.
(a) Differences in schedule due to rounding.
For the twelve months ended June 30, 2008, the Company generated internal
revenue growth of 5%. Internal revenue growth is measured as follows
(unaudited, $ in millions):
Twelve months ended June 30,
2008 2007 Growth%(a)
Consolidated
Total Revenues $6,161 $5,772 7%
Less: Divested (5) (11)
Adjusted Base $6,156 $5,761 7%
Acquired Revenues* $116 $4 2%
Internal Revenues 6,040 5,757 5%
Total $6,156 $5,761 7%
Commercial
Total Revenues $3,674 $3,405 8%
Less: Divested (5) (6)
Adjusted Base $3,669 $3,399 8%
Acquired Revenues* $83 $- 2%
Internal Revenues 3,586 3,399 6%
Total $3,669 $3,399 8%
Government
Total Revenues $2,487 $2,367 5%
Less: Divested - (5)
Adjusted Base $2,487 $2,362 5%
Acquired Revenues* $33 $4 1%
Internal Revenues 2,454 2,358 4%
Total $2,487 $2,362 5%
(*) Differences in schedule due to rounding.
Free Cash Flow
Free cash flow -- is measured as operating cash flow (net cash provided
by operating activities, as reported in our consolidated statements of cash
flows) less capital expenditures (purchases of property, equipment and
software, net of sales, as reported in our consolidated statements of cash
flows) less additions to other intangible assets (as reported in our
consolidated statements of cash flows). We believe that this free cash flow
metric provides an additional measure of available cash flow after we have
satisfied the capital expenditure requirements of our operations, and
should not be taken in isolation to be a measure of cash flow available for
us to satisfy all our obligations and execute our business strategies. We
also rely on cash flows from investing and financing activities which,
together with free cash flow, are expected to be sufficient for us to
execute our business strategies. Our measure of free cash flow may not be
comparable to similarly titled measures of other companies (unaudited, $ in
millions):
Three months Twelve months
ended ended
June 30, June 30,
2008 2007 2008 2007
Free Cash Flow
Net cash provided by operating
activities $267 $343 $827 $738
Less:
Purchase of property, equipment
and software, net of sales (75) (78) (268) (317)
Additions to other
intangible assets (15) (13) (40) (43)
Free Cash Flow* $177 $253 $518 $378
(*) Differences in schedule due to rounding.
SOURCE Affiliated Computer Services, Inc.
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Related links:
http://www.acs-inc.com
CONTACT:
Investors, Jon Puckett, Vice President,
Investor Relations, +1-214-841-8281, jon.puckett@acs-inc.com, or
Media, Kevin Lightfoot, Vice President, Corporate Communications,
+1-214-841-8191, kevin.lightfoot@acs-inc.com, both of Affiliated
Computer Services, Inc.
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