EX-99.1 3 d93679ex99-1.txt PRESS RELEASE DATED JANUARY 22, 2002 FOR IMMEDIATE RELEASE ANALYST CONTACT MEDIA CONTACT Warren Edwards Lesley Pool Executive Vice President/ Vice President/ Chief Financial Officer Chief Marketing Officer ACS, Inc. ACS, Inc. 214-841-8082 214-841-8028 warren.edwards@acs-inc.com lesley.pool@acs-inc.com ACS ANNOUNCES RECORD REVENUES, NET INCOME AND EPS --ALSO ANNOUNCES 2-FOR-1 STOCK SPLIT-- DALLAS, TEXAS - January 22, 2001 - ACS (NYSE: ACS), a leading full-service provider of business process and technology outsourcing solutions, announced today that diluted earnings for the second quarter ended December 31, 2001 was 84 cents per share, an increase of 42%, compared to 59 cents per share for the same quarter last year, in-line with consensus analysts' estimates. Revenues for the second quarter ended December 31, 2001 increased 50% to $750.4 million, compared to $500.9 million for the same period last year. Net income for the second quarter was $55.6 million, an increase of 74% over net income of $32.0 million for the same quarter last year. Revenues for the six months ended December 31, 2001 increased 43% to $1.4 billion compared to revenues of $979.5 million for the same period last year. Net income for the six months ended December 31, 2001 was $99.5 million, an increase of 59% compared to net income of $62.5 million for the six months ended December 31, 2000. Diluted earnings per share was $1.62 for the six months ended December 31, 2001, a 40% increase compared to $1.16 for the same period last year. Additionally, the ACS Board of Directors declared a two-for-one stock split in the form of a 100% stock dividend on the common stock, payable on February 22, 2002 to shareholders of record on February 15, 2002. For every one share of Class A and Class B common stock held on the record date, the stockholders will receive one additional share. "Our second quarter results were extremely solid and continued the excellent results we had in the first quarter," said Jeff Rich, ACS President and Chief Executive Officer. "We achieved record revenues, net income and earnings per share with strong growth across all these measures. We once again met or exceeded consensus analysts' estimates for revenues and earnings' objectives extending our streak to 29 consecutive quarters in a row of achieving consensus analysts' earnings per share estimates. I am also extremely pleased with our new business signings and cash flow during the quarter. Our new business bookings were a near record, signing over $122 million of annualized new business." 1 ACS ANNOUNCES RECORD REVENUES, NET INCOME AND EPS- PAGE 2 "Our cash flow from operations was a company record, generating approximately $110 million of cash, beating our previous quarterly high by 38%. Our balance sheet is very healthy and we continue to see significant new business opportunities in the markets we are serving." ACS' SECOND QUARTER RESULTS INCLUDE THE FOLLOWING KEY HIGHLIGHTS: o Revenue growth for the second quarter of fiscal year 2002 was 50% versus the prior year quarter. Internal revenue growth for the quarter accelerated to 12% from the 10% growth reported in the September 2001 quarter. The remaining revenue growth for the quarter resulted from acquisitions. o Second quarter diluted earnings per share of $0.84 was in-line with consensus analysts' estimates and increased 42% when compared to the prior year reported diluted earnings per share. This is the 29th consecutive quarter that ACS has met or exceeded consensus analysts' estimates and achieved double-digit earnings growth. After adjusting for the elimination of goodwill amortization in prior year periods resulting from the impact of Statement of Financial Accounting Standards No. 142, "Goodwill and Intangible Assets" which was adopted effective July 1, 2001, diluted earnings per share increased 24% and 21%, respectively, for the quarter ended and six months ended December 31, 2001. o New business bookings for the quarter represented $122 million of annualized new revenue, a 49% increase over the same period last year. Our new business pipelines remain very robust and we believe the current economic environment will continue to drive outsourcing decisions. o Cash flow from operations of approximately $110 million for the second quarter was a company record and compares to $65 million in the prior year quarter. o ACS' senior debt rating was upgraded by both Standard and Poor's and Moody's Investor Services to BBB and Baa1, respectively. Both firms also upgraded their rating on our subordinated debt and, as a result, all of ACS' debt now carries an investment grade rating. o As a result of the October 2001 secondary offering of 9.2 million Class A Common shares, and strong cash flow during the quarter, our debt to capitalization ratio improved to 25%, one of the lowest ratios in our history. FINANCIAL OUTLOOK The following is the Company's financial guidance for our fiscal year ended June 30, 2002: o Diluted EPS is expected to be $3.51, unchanged from previous guidance. o New revenue guidance for fiscal year 2002 is $3.065 billion, a 48% increase versus the prior year. This is approximately 1% lower than previous guidance, due primarily to lower revenues from acquisitions. We continue to estimate that our internal growth rate will be in the mid double-digit range. 2 ACS ANNOUNCES RECORD REVENUES, NET INCOME AND EPS - PAGE 3 o Quarterly revenues and earnings per share guidance is as follows: o Third quarter revenues and earnings per share are expected to be approximately $800 million and 92 cents, respectively. The internal revenue growth rate for the third quarter is expected to be in the 13% to 14% range. o Fourth quarter revenues and earnings per share are expected to be $860 million and 98 cents, respectively. The internal revenue growth rate for the fourth quarter is expected to be in the 17% to 18% range. o Full year operating and pretax profit margins should approximate the results recorded in the December 2001 quarter. o The effective tax rate for fiscal year 2002 is expected to be approximately 37.5%. Beyond fiscal year 2002, the Company continues to feel comfortable with 20% revenue and diluted EPS growth. Financial guidance, as it relates to earnings per share amounts, will be adjusted once the 2-for-1 stock split is completed to reflect the additional shares outstanding. ACS is a Fortune 1000 company comprised of 30,000 people in 29 countries providing business process and technology outsourcing 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". ACS makes technology work. Visit ACS on the Internet at www.acs-inc.com Statements about the Company's outlook and all other statements in this release other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all references to financial estimates rely on a number of assumptions concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the Company's control, that could cause actual results to differ materially from such statements. While the Company believes that the assumptions concerning future events are reasonable, it cautions that there are inherent difficulties in predicting certain important factors, especially the timing and magnitude of technological advances; the performance of recently acquired businesses; the prospects for future acquisitions; the possibility that a current customer could be acquired or otherwise be affected by a future event that would diminish their information technology requirements; the competition in the information technology industry and the impact of such competition on pricing, revenues and margins; the degree to which business entities continue to outsource information technology and business processes; uncertainties surrounding budget reductions or changes in funding priorities or existing government programs and the cost of attracting and retaining highly skilled personnel. These factors, when applicable, are discussed in the Company's filings with the Securities and Exchange Commission, including the most recent Form 10-K, a copy of which may be obtained through the Company without charge. ACS disclaims any intention or obligation to revise any forward-looking statements, including financial estimates, whether as a result of new information, future event, or otherwise. 3 AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (1) (UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended December 31, December 31, ------------------------- -------------------------- 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Revenues(2) $ 750,427 $ 500,882 $ 1,405,446 $ 979,508 Expenses: Wages and benefits 327,417 212,442 624,290 428,631 Services and supplies 224,707 151,477 397,578 280,982 Rent, lease and maintenance 65,980 52,683 138,860 115,389(3) Depreciation and amortization 27,499 22,576 51,914 43,668 Other operating expenses 7,403 4,977 13,841 11,938(3) ----------- ----------- ----------- ----------- Total operating expenses 653,006 444,155 1,226,483 880,608 Operating income 97,421 56,727 178,963 98,900 Interest expense 7,583 4,839 20,182 9,875 Other non-operating expense (income), net 942 (991) (374) (14,358)(3) ----------- ----------- ----------- ----------- Pretax profit 88,896 52,879 159,155 103,383 Income tax expense 33,336 20,887 59,682 40,836 ----------- ----------- ----------- ----------- Net income $ 55,560 $ 31,992 $ 99,473 $ 62,547 =========== =========== =========== =========== Earnings per common share: Basic $ 0.94 $ 0.64 $ 1.81 $ 1.26 =========== =========== =========== =========== Diluted(4) $ 0.84 $ 0.59 $ 1.62 $ 1.16 =========== =========== =========== =========== Diluted (excluding goodwill amortization)(5) $ 0.84 $ 0.68 $ 1.62 $ 1.34 =========== =========== =========== =========== Shares used in computing earnings per common share: Basic 59,286 49,811 55,038 49,625 Diluted 70,346 56,881 66,009 56,545
(1) All share and per share data are presented prior to the stock split payable on February 22, 2002. (2) During June 2000 and July 2001, the Company divested certain non-strategic operations. Revenues from these divested operations were $4.3 and $16.2 million for the three months ended December 31, 2000 and the six months ended December 31, 2000, respectively. (3) The first quarter of fiscal year 2001 includes a $10.4 million non-recurring charge to rent, lease and maintenance of certain terminated hardware leases and disaster recovery contracts, a $2.1 million charge related to non-recurring litigation cost and the writedown of property held-for-sale to market value included in other operating expenses and $12.8 million related to a gain from the sale of a convertible preferred stock investment included in other non-operating income, net. (4) The diluted earnings per share calculation includes the after tax impact of interest and amortization of offering costs on convertible notes in the amount of $3,614 and $1,540 for the three months ended December 31, 2001 and 2000, respectively and $7,203 and $3,080 for the six months ended December 31, 2001 and 2000. In addition, the diluted weighted shares include 9,040 for the three and six months ended December 31, 2001 and 5,392 shares for the three and six months ended December 31, 2000, representing shares that would be issued upon conversion of the notes. (5) The Company adopted Statement of Financial Accounting Standards No. 142 "Goodwill and Intangible Assets" in the first quarter of fiscal year 2002, which discontinues amortization expense of goodwill and indefinite lived assets. For comparative purposes, goodwill amortization of $6,106 and $11,815 are excluded from the three and six months ended December 31, 2000, respectively and the related tax benefit of $951 and $1,760 are also excluded from the three and six months ended December 31, 2000, respectively in the calculation of diluted earnings per share excluding goodwill amortization. 4 AFFILIATED COMPUTER SERVICES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
December 31, June 30, 2001 2001 (Unaudited) (Audited) -------------- ---------- ASSETS Current assets: Cash and cash equivalents $ 44,174 $ 242,458 Accounts receivable, net 623,121 472,042 Inventory 12,576 8,591 Prepaid expenses and other 89,993 77,572 Deferred taxes 6,707 8,952 -------------- ---------- Total current assets 776,571 809,615 Property, equipment and software, net 343,506 237,563 Goodwill and other intangible assets, net 1,585,771 794,920 Other long-term assets 53,402 49,589 -------------- ---------- Total assets $ 2,759,250 $1,891,687 ============== ========== LIABILITIES Current liabilities: Accounts payable $ 48,176 $ 40,265 Accrued compensation 82,839 82,043 Other accrued liabilities 209,591 126,875 Income taxes payable 15,922 7,742 Current notes payable 9,550 3,362 Current portion of unearned revenue 36,398 20,765 -------------- ---------- Total current liabilities 402,476 281,052 Convertible notes 546,927 546,927 Other long-term debt 308 102,386 Long-term deferred taxes 74,241 55,601 Other long-term liabilities 17,689 20,206 -------------- ---------- Total liabilities 1,041,641 1,006,172 -------------- ---------- STOCKHOLDERS' EQUITY Total stockholders' equity 1,717,609 885,515 -------------- ---------- Total liabilities and stockholders' equity $ 2,759,250 $1,891,687 ============== ==========
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