DALLAS, Nov. 6 /PRNewswire-FirstCall/ -- SOURCECORP(TM) (Nasdaq: SRCP),
one of the nation's leading providers of business process outsourcing
solutions, today reported 2002 third quarter diluted earnings per share of
$.44 with revenue of $107.5 million, in line with the financial guidance
provided by the Company in August.
Third Quarter Summary
Ed H. Bowman, Jr., President and CEO of SOURCECORP said, "The Company's
overall business and financial results continued to improve sequentially
during the third quarter. Revenue increased by approximately 1.6 percent,
compared with the Company's revenue for the second quarter of 2002. The
Company's revenue mix for the quarter reflected continued increases from its
Legal Claims Administration business compared to the most recent three
quarters, in addition to increases from its Legal Consulting Services segment.
The Company produced strong cash flow results and reduced its outstanding debt
balance during the quarter."
During the third quarter, the Company closed sales anticipated to produce
total revenue of approximately $47.4 million, including amounts expected to be
recognized in future years. These new sales included six large sales, each
for more than $1 million in total expected revenue, five of which were with
new customers. Mr. Bowman added, "These third quarter new business results
represented a significant increase over our second quarter results, as
expected. Year-to-date, we have added approximately $118 million in new
business sales, which give us additional revenue visibility into 2003 and
beyond."
Summary of Financial Highlights
(in $ millions, except for earnings per share data)
Q3 2002 Q2 2002 Change
Revenue $107.5 $105.8 1.6%
Operating Income $14.0 $14.0 0%
Net Income $7.7 $7.5 2.7%
Diluted EPS $.44 $.42 4.8%
The Company produced cash flow from operations of $19.6 million for the
third quarter of 2002, a sequential increase of 54 percent from the second
quarter of 2002. Days sales outstanding during the third quarter declined
sequentially by 3 business days to 49 business days, within the Company's
expected range for the quarter. As of September 30, the Company's debt to
total capital ratio was 25 percent and the outstanding balance on the
Company's credit facility was $100.5 million.
Company Financial Outlook
The following statements are based on current expectations and do not
include the potential impact of any future acquisitions. These statements are
forward-looking, and actual results may differ materially. Please refer to
the cautionary language included in this press release when considering this
information.
The Company's guidance for its fourth quarter of 2002 and first quarter of
2003 for revenue and earnings per share is as follows:
-- Fourth quarter, 2002 revenues and earnings per share of
approximately $104 to $108 million and $.42 to $.46, respectively,
and
-- First quarter, 2003 revenues and earnings per share of approximately
$104 to $108 million and $.40 to $.46, respectively.
This guidance is based upon a number of key business factors, which
include the timing and volume of customer projects, particularly with Legal
Claims; continued ramp-up of transaction volumes with the Company's newer
large business process outsourcing contracts; continuing volumes at expected
levels with existing business process outsourcing engagements; and continued
funding for existing state and local government outsourcing engagements. The
range of earnings per share guidance reflects an expected increase in the
effective tax rate from 38% to 40% beginning in 2003, based upon preliminary
analysis to be completed during the first quarter of 2003.
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
September 30, June 30,
2002 2002
(Unaudited)
Actual Actual
Total Revenue $107,465 $105,787
Cost of Services 64,683 63,332
Depreciation 3,578 3,644
Gross Profit 39,204 38,811
SG&A 25,154 24,754
Amortization 89 89
Operating Income 13,961 13,968
Other (income) expense 1,602 1,863
Income before income taxes 12,359 12,105
Provision for income taxes 4,696 4,600
Net Income $7,663 $7,505
Weighted Avg. Shares
Basic 17,358 17,304
Diluted 17,369 17,887
Earnings Per Share
Basic $0.44 $0.43
Diluted $0.44 $0.42
SOURCECORP(TM)
Summary of Financial Data
In Thousands (Except Earnings Per Share)
Three Months Ended
September 30,
2002 2001
(Unaudited)
Actual Pro-Forma (A),(B)
Total Revenue $107,465 $105,150
Cost of Services 64,683 60,628
Depreciation 3,578 3,010
Gross Profit 39,204 41,512
SG&A 25,154 23,110
Amortization 89 --- (B)
Operating Income 13,961 18,402
Other (income) expense 1,602 2,260
Income before income taxes 12,359 16,142
Provision for income taxes 4,696 5,892 (B)
Net Income $7,663 $10,250
Weighted Avg. Shares
Basic 17,358 16,969
Diluted 17,369 17,779
Earnings Per Share
Basic $0.44 $0.60 (B)
Diluted $0.44 $0.58 (B)
Operating results for 2001 include the following pro-forma adjustments in
order to improve year-over-year comparability. Refer to SOURCECORP's Form
8-K 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 September 30, 2001, goodwill amortization of $2,445 and
the related tax benefit of $687 have been excluded for comparative
purposes.
SOURCECORP(TM)
Summary of Financial Data
In Thousands (Except Earnings Per Share)
Nine Months Ended
September 30, September 30,
2002 2001
(Unaudited)
Actual Pro-Forma (A),(B)
Total Revenue $316,536 $319,253
Cost of Services 190,216 183,445
Depreciation 10,672 9,646
Gross Profit 115,648 126,162
SG&A 76,182 68,123
Amortization 267 --- (B)
Operating Income 39,199 58,039
Other (income) expense 5,052 7,127
Income before income taxes 34,147 50,912
Provision for income taxes 12,976 18,583 (B)
Net Income $21,171 $32,329
Weighted Avg. Shares
Basic 17,319 16,569
Diluted 17,688 17,352
Earnings Per Share
Basic $1.22 $1.95 (B)
Diluted $1.20 $1.86 (B)
Operating results for 2001 include the following pro-forma adjustments in
order to improve year-over-year comparability. Refer to SOURCECORP's Form
8-K 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 nine months
ended September 30, 2001, goodwill amortization of $6,735 and the
related tax benefit of $1,795 have been excluded for comparative
purposes.
SOURCECORP(TM)
CONSOLIDATED BALANCE SHEETS
In Thousands
September 30, December 31,
ASSETS 2002 2001
(Unaudited)
CURRENT ASSETS
Cash $5,976 $7,182
Accounts receivable (net) 87,486 88,547
Deferred tax asset 9,834 9,805
Other current 7,000 8,999
Total current assets 110,296 114,533
Property, plant & equipment (net) 40,862 41,942
Goodwill and other intangibles (net) 319,205 298,519
Other noncurrent 9,255 8,077
Total Assets $479,618 $463,071
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
liabilities $67,471 $51,087
Current maturities of long-term
obligations 208 324
Income taxes payable, current and
deferred 107 4,588
Total current liabilities 67,786 55,999
Long-term debt 100,310 116,055
Deferred taxes and other long-term
liabilities 15,112 19,844
Total Liabilities 183,208 191,898
STOCKHOLDERS' EQUITY
Common stock 176 174
Additional paid-in-capital 207,538 204,086
Treasury stock (982) (982)
Other Comprehensive Income (630) (1,242)
Retained earnings 90,308 69,137
Total stockholders' equity 296,410 271,173
Total liabilities and
stockholders' equity $479,618 $463,071
SOURCECORP(TM)
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
Nine Months Ended
September 30,
2002 2001
(Unaudited)
Net Income (loss) $21,171 $(22,473)
Adjustments to reconcile net income
(loss) to cash provided by
operating activities
Special Charges --- 62,584
Depreciation and amortization 10,939 18,709
Deferred tax provision (benefit) 6,512 (5,059)
Loss on sale of property, plant,
and equipment 242 ---
Changes in working capital 4,171 (15,517)
Net cash provided by operating
activities 43,035 38,244
Net cash used for investing
activities (28,053) (54,263)
Net cash (used for) provided by
financing activities (16,188) 12,269
Net decrease in cash and cash
equivalents (1,206) (3,750)
Cash and cash equivalents, beginning
of period 7,182 9,504
Cash and cash equivalents,
end of period $5,976 $5,754
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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