Answerthink Announces First Quarter Results.Business Editors/High-Tech Writers MIAMI--(BUSINESS WIRE)--April 25, 2002 -- Information Technology (IT) study found that centralizing IT operations correlates with 24% lower operational support costs without reducing quality of service. -- Human Resources (HR) study validated that the cost of implementing data standards and ERP systems is more than offset by the resulting 38% decrease in HR administrative costs. -- Finance study indicated that contrary to the assumption that tech-heavy practices such as self-service and information-on-demand drive up finance costs, world-class companies that adopt these and other value-adding best practices have 47% lower total finance costs. -- Procurement study found that when the procurement organization is a part of the initial product design team, providing information about supply conditions and market trends for example, the cost of procurement as a percent of spending falls 24%. -- Strategic Decision-Making revealed that only 33% of executives (including CEOs) take advantage of electronic decision-support tools that would help them make better-informed business decisions. Answerthink, Inc. (Nasdaq:ANSR ANSR Autonomous Naval Support Round ANSR Adaptive Network Solutions Research, Inc. ANSR Advanced Neutron Source Reactor ANSR Active No Swashplate Rotor (Army) ), a leading provider of technology-enabled business transformation solutions, today announced financial results for the first quarter ended March 29, 2002. Revenues for the first quarter of 2002 were $52.8 million compared to $81.7 million in the comparable period of 2001. The Company's net loss before the cumulative effect of a change in accounting principle for the first quarter of 2002 was $923,000, or $0.02 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net loss of $200,000, or $0.00 per diluted share in the first quarter of 2001. The Company's cash balance increased by $2.8 million during the quarter to $62.7 million. As required, the Company adopted Statement of Financial Accounting Standards No. 142 during the quarter. This new accounting rule eliminates the amortization of goodwill and changes the method of determining whether there is a goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. from an undiscounted cash flow method to a fair value method. The Company incurred a non-cash transitional charge of $31.2 million due to the cumulative effect of the change in accounting principle. With this charge, the Company's net loss was $32.1 million, or $0.70 per diluted share. "Consistent with all of 2001, we continued to strengthen our competitive position and operate within previously provided guidance during a very challenging economic environment," stated Ted A. Fernandez, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Answerthink. "Our strong financial position, which includes $62.7 million of cash and no debt, will continue to allow us to aggressively pursue strategic acquisitions that will be an important part of our future growth. We are cautiously cau·tious adj. 1. Showing or practicing caution; careful. 2. Tentative or restrained; guarded: felt a cautious optimism that the offer would be accepted. optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about improved market conditions and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. trends in IT spending for the second half of this year. Given our strategy, outstanding client base and the continued dedication of our associates, we are well positioned to serve the increasing demand when it resumes." Highlights for the first quarter Service Expansion: Formation of a joint venture with HCL Technologies HCL Technologies is India’s 5th largest [2] and a leading global IT Services companies, providing software-led IT solutions, remote infrastructure management services and BPO. , a leading global IT services company, to provide Fortune 1000 companies with cost-competitive offshore development services, including custom application and system development services, on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" application support and application reporting services. Acquisition of Exult Process Intelligence Center (EPIC) from Exult, Inc. to expand Hackett Hackett may refer to: In places:
Benchmarking (also "best practice benchmarking" or "process benchmarking") is a process used in management and particularly strategic services to include subscription offering and best practices studies addressing Global Shared Services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. , Accounts Payable, Travel and Expense, Payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. and General Ledger General Ledger A company's accounting records. This formal ledger contains all the financial accounts and statements of a business. Notes: The ledger uses two columns: one records debits, the other has offsetting credits. . Client engagements: -- Information Technology (IT) study found that centralizing IT operations correlates with 24% lower operational support costs without reducing quality of service. -- Human Resources (HR) study validated that the cost of implementing data standards and ERP systems is more than offset by the resulting 38% decrease in HR administrative costs. -- Finance study indicated that contrary to the assumption that tech-heavy practices such as self-service and information-on-demand drive up finance costs, world-class companies that adopt these and other value-adding best practices have 47% lower total finance costs. -- Procurement study found that when the procurement organization is a part of the initial product design team, providing information about supply conditions and market trends for example, the cost of procurement as a percent of spending falls 24%. -- Strategic Decision-Making revealed that only 33% of executives (including CEOs) take advantage of electronic decision-support tools that would help them make better-informed business decisions. 2002 Hackett Best Practices benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. study results: -- Information Technology (IT) study found that centralizing IT operations correlates with 24% lower operational support costs without reducing quality of service. -- Human Resources (HR) study validated that the cost of implementing data standards and ERP systems is more than offset by the resulting 38% decrease in HR administrative costs. -- Finance study indicated that contrary to the assumption that tech-heavy practices such as self-service and information-on-demand drive up finance costs, world-class companies that adopt these and other value-adding best practices have 47% lower total finance costs. -- Procurement study found that when the procurement organization is a part of the initial product design team, providing information about supply conditions and market trends for example, the cost of procurement as a percent of spending falls 24%. -- Strategic Decision-Making revealed that only 33% of executives (including CEOs) take advantage of electronic decision-support tools that would help them make better-informed business decisions. Answerthink will host a conference call for investors today at 5:00PM EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to further discuss the earnings results for the first quarter and future outlook. To participate in the conference call, please dial 1-888-809-8969 approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10 minutes before the call. International callers may dial 1-712-271-3634. The passcode for the call is "first quarter" and the conference leader is Ted A. Fernandez. The call will also be webcast at http://www.answerthink.com and http://www.streetevents.com. A replay of this call will be available through Thursday Thursday: see week. , May 2, 2002 at 5:00PM EDT by dialing 1-888-335-7289. About Answerthink: Answerthink, Inc. (http://www.answerthink.com) is a leading provider of technology-enabled business transformation solutions. The Company brings together multi-disciplinary expertise in benchmarking best practices, business transformation, interactive direct marketing, business applications and technology integration to serve the needs of Global 2000 clients. Answerthink's solutions span all functional areas of a company including finance, human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , information technology, sales, marketing, customer service and supply chain, as well as across a variety of industry sectors. The Company is also part of a joint venture called HCL-Answerthink which provides custom application development services and application maintenance services through 15 facilities in India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . Founded in 1997, Answerthink has more
than 1,000 associates and offices in 14 cities throughout the United
States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and in Europe.
Certain statements in this press release are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by the forward looking statements. Factors that impact such forward looking statements include the ability of the Company to attract additional business, the timing of projects and the potential for project cancellations Project cancellation hits around half of U.S. software development projects, whether developed for in-house corporate use or for sale as retail software. When a project is cancelled early on, it has little financial impact but if project sponsors wait until the project has gone by our customers, changes in expectations regarding the information technology industry, the ability of the Company to attract and retain skilled employees, possible changes in collections of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , risks of competition, price and margin trends, changes in general economic conditions and interest rates as well as other risks detailed in the Company's reports filed with the Securities and Exchange Commission.
Answerthink, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Quarter Ended
-----------------------------------------
March 29, 2002 March 30, 2001
------------------ -----------------
% of Net % of Net
Revenues Revenues
------------------ -----------------
Revenues:
Revenues before
reimbursements
(Net revenues) $ 46,413 100% $ 72,015 100%
Reimbursements 6,404 14% 9,664 13%
--------- -------- --------- --------
Revenues (1) 52,817 114% 81,679 113%
Costs and expenses:
Project personnel
and expenses:
Project personnel
and expenses
before
reimbursable
expenses 32,348 70% 45,381 63%
Reimbursable
expenses 6,404 14% 9,664 13%
--------- -------- --------- --------
Project personnel
and expenses 38,752 84% 55,045 76%
Selling, general
and administrative
expenses 15,728 34% 24,401 34%
Stock compensation
expense (2) - - 3,031 4%
--------- -------- --------- --------
Total costs
and operating
expenses 54,480 118% 82,477 114%
--------- -------- --------- --------
Loss from operations (1,663) -4% (798) -1%
Other income (expense):
Interest income 170 1% 476 1%
Interest expense (46) 0% (42) 0%
--------- -------- --------- --------
Loss before income
taxes (1,539) -3% (364) 0%
Income taxes (616) -1% (164) 0%
--------- -------- --------- --------
Loss before cumulative
effect of change in
accounting principle (923) -2% (200) 0%
Cumulative effect of
change in accounting
principle (3) (31,200) -67% - -
--------- -------- --------- --------
Net loss $ (32,123) -69% $ (200) 0%
========= ======== ========= ========
Loss per share - basic
and diluted: (4)
Loss before cumulative
effect of change in
accounting principle $ (0.02) $ (0.00)
Cumulative effect of
change in
accounting principle $ (0.68) $ -
Net loss per common
share $ (0.70) $ (0.00)
Weighted average
shares outstanding
- basic and diluted 45,868 42,181
Pro Forma Data: (5)
Loss before income
taxes $ (1,539) $ (364)
Non-cash and
non-recurring expenses - 4,688
--------- ---------
Pro forma income
(loss) before income
taxes (1,539) 4,324
Pro forma income taxes (616) 1,708
--------- ---------
Pro forma income
(loss) before
cumulative effect
of change in
accounting principle $ (923) $ 2,616
========= =========
Pro forma basic net
income (loss) per
common share $ (0.02) $ 0.06
Pro forma diluted net
income (loss) per
common share $ (0.02) $ 0.06
Weighted average common
shares outstanding 45,868 42,181
Weighted average common
and common equivalent
shares outstanding 45,868 46,096
(1) During the quarter, the Company adopted Emerging Issues Task
Force Topic No. D-103, "Income Statement Characterization of
Reimbursements Received for "Out-of-Pocket" Expenses
Incurred". In accordance with the provisions of Topic
No. D-103, reimbursements received for out-of-pocket
expenses incurred are classified as revenue. The Company has
historically accounted for reimbursements received for
out-of-pocket expenses incurred as a reduction to project
personnel and expenses. The statement of operations for the
quarter ended March 30, 2001 was reclassified to comply with
the guidance in Topic No. D-103. Adoption of the provisions
had no impact on the reported net loss or net loss per share.
(2) In the first quarter of 2001, the Company granted stock
options to participants in the Company's Employee Stock
Purchase Plan. These stock options were granted in lieu of the
Employee Stock Purchase Plan shares that could not be issued
because the plan was oversubscribed. The Company recorded a
non-cash stock compensation charge of $2,818 in the first
quarter of 2001 for the difference between the fair market
value of the stock on the option grant date and the exercise
price.
(3) The Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets",
during the quarter. The new accounting rule eliminates the
amortization of goodwill and changes the method of determining
whether there is a goodwill impairment from an undiscounted
cash flow method to a fair value method. As a result of the
adoption of this standard, the Company incurred a non-cash
transitional charge of $31.2 million due to the cumulative
effect of the change in accounting principle.
(4) Potentially dilutive shares were excluded from the diluted
loss per share calculation for the quarters as their effects
would have been anti-dilutive to the loss incurred by the
Company. The total number of weighted average common and
common equivalent shares outstanding, including any
anti-dilutive shares, for the quarters ended March 29, 2002
and March 30, 2001 were 47,211 shares and 46,096 shares,
respectively.
(5) Pro forma data in the first quarter of 2001 excludes non-cash
stock compensation of $3,031 and goodwill amortization of
$1,657. Pro forma data does not purport to be prepared in
accordance with Generally Accepted Accounting Principles.
Answerthink, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 29, December 28,
2002 2001
---------- ------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 62,727 $ 59,888
Accounts receivable and
unbilled revenue, net 34,152 39,164
Other receivables 856 851
Prepaid expenses and other
current assets 15,612 15,628
-------- --------
Total current assets 113,347 115,531
Property and equipment, net 17,828 18,468
Goodwill, net 46,720 77,920
-------- --------
Total assets $177,895 $211,919
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,970 $ 5,187
Accrued expenses and other
liabilities 21,368 27,992
Media payable 898 1,039
-------- --------
Total current liabilities 28,236 34,218
Shareholders' equity 149,659 177,701
-------- --------
Total liabilities and
shareholders' equity $177,895 $211,919
======== ========
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