Epiq Systems, Inc. Announces First Quarter 2006 Results with 50% Operating Revenue Growth.KANSAS CITY Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). , Kan Kan, river, China: see Gan. . -- EPIQ EPIQ Estes Park IQ (Reel Mountain Theater; Estes Park, CO, USA) Systems, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : EPIQ) today announced results of operations for the first quarter of 2006 with operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. (total revenue less reimbursed expenses) of $39.0 million, a 50% increase compared to $26.0 million for the year ago quarter. First quarter 2006 net income was $2.0 million or $0.10 per share compared to $3.3 million or $0.17 per share for the year ago quarter. Non-GAAP net income for the first quarter of 2006 was $4.4 million or $0.20 per share compared to $4.1 million or $0.21 per share for the year ago quarter. Non-GAAP net income adjusts net income for amortization of acquisition related intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , share based compensation, acquisition-related expenses, capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. loan fee amortization, and embedded option Embedded Option An option that is an inseparable part of another instrument. Compare this to a normal (or bare) option, which trades separately from the underlying security. Notes: A common embedded option is the call provision in most corporate bonds. mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. expense/convertible debt accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the , all net after tax. A reconciliation statement is attached. EPIQ Systems' management primarily analyzes financial results adjusted for certain items that are non-operational and not necessarily ongoing in nature, as well as cash flow generated from operations. Management evaluates the following key metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. : (i) Non-GAAP Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest/ financing, taxes, depreciation, amortization, share based compensation, and acquisition related expenses) and (ii) net cash provided by operating activities. Non-GAAP Adjusted EBITDA was $12.4 million for the first quarter of 2006, a 27% increase compared to $9.7 million for the year ago quarter. A reconciliation statement is attached. Net cash provided by operating activities was $5.7 million for the first quarter of 2006 compared to $1.7 million for the year ago quarter. A condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: cash flow statement is attached. Tom W. Olofson, 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. , and Christopher E. Olofson, president and COO (Cell Of Origin) See mobile positioning. of EPIQ Systems stated, "We are very pleased with the first quarter operating results of the company and the integration of nMatrix, our electronic discovery business. By combining our capabilities in electronic discovery, claims administration, controlled disbursement Controlled disbursement A service that provides for a single presentation of checks each day (typically in the early part of the day). and legal notification, EPIQ Systems today is a leading national provider of integrated technologies for the legal market. nMatrix has strong momentum and is well positioned in the high growth electronic data discovery market, which is projected to grow to $2.0 billion in revenue in 2007." Recent key events include: --EPIQ Systems released TCMS TCMS Taylor County Middle School (Georgia) TCMS Transcranial Magnetic Stimulation (treatment of Parkinson's disease) TCMS Theater Construction Management System TCMS Trouble Call Management System (R) 11.0, the latest version of its Chapter 7 case management software, and DocuMatrix(TM) 11.0, the latest version of its electronic discovery and document review platform. Both releases further establish the Company's technology leadership in the legal market. --A record 2.08 million bankruptcies were filed in the U.S. Court's annual period ended December December: see month. 31, 2005; up 30% from the 1.60 million level reached in 2004. --The Federal Reserve reported that both corporate debt and consumer credit increased compared to the prior year, approaching $5.5 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. and $2.2 trillion, respectively, as of December 31, 2005. --Since June June: see month. 2003, the Federal Open Market Committee has raised the federal funds rate Federal Funds Rate The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. 15 times from its low of 1.0% to the current 4.75%. --The electronic data discovery market has a 2-year projected 55% CAGR CAGR See: Compound Annual Growth Rate , with 2005 revenue of $0.8 billion projected to reach $2.0 billion in 2007, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. an independent source. Conference Call The Company will host a conference call today at 3:30 p.m. central time to discuss these results. The Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the broadcast of the call with corresponding slides can be accessed at www.epiqsystems.com. To listen by phone, call 877-694-4769 before 3:30 p.m. central time. The archive of the Internet broadcast will be available on the company's website until the next earnings update. A recording of the call will be available through May 31, 2006 beginning approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. two hours after the call ends. To access the replay, call 877-519-4471 and enter pin #7304385. Company Description EPIQ Systems is a national leader in the market for fiduciary fiduciary (fĭd  `shēĕ'rē), in law, a person who is obliged to discharge faithfully a responsibility of trust toward another. management and claims administration systems and provides an advanced
offering of integrated technology-based products and services. Our
solutions enable clients to optimize optimize - optimisation the administration of complex legal
proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. , including electronic litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.When a person begins a civil lawsuit, the person enters into a process called litigation. discovery, bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most administration, class action administration, mass tort A mass tort is a civil action involving numerous plaintiffs against one or a few corporate defendants in state or federal court. As the name implies a mass tort includes many plaintiffs and law firms have used the mass media to reach possible plaintiffs. and other similar legal proceedings. EPIQ Systems' clients include corporations, attorneys, trustees and administrative professionals who require sophisticated case administration and document management capabilities, extensive subject matter expertise, and a high service capacity. We provide clients an integrated offering of both proprietary technology and value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. that comprehensively addresses their extensive business requirements. For more information, visit us online at www.epiqsystems.com. Forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and Cautionary Statements This press release and the referenced conference call may contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act, including those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the possible or assumed future results of our operations and financial condition. These forward-looking statements are based on our current expectations and may be identified by terms such as "believe," "expect," "anticipate," "should," "planned," "may," "goal," "objective" and "potential." Because forward-looking statements involve future risks and uncertainties, listed below are a variety of factors that could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. These factors include (1) any material changes in our total number of client engagements and the volume associated with each engagement, (2) any material changes in our Chapter 7 deposit portfolio, the services required or selected by our electronic discovery, Chapter 11, Chapter 13, class action or mass tort engagements, or the number of cases processed by our Chapter 13 bankruptcy trustee clients, (3) material changes in the number of bankruptcy filings, class action filings or mass tort actions each year, (4) our reliance on our marketing and pricing arrangements with Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. and other depository banks A depository bank (U.S. usage) is a bank organized in the United States which provides all the stock transfer and agency services in connection with a depository receipt program. , (5) the impact of recently enacted tort tort, in law, the violation of some duty clearly set by law, not by a specific agreement between two parties, as in breach of contract. When such a duty is breached, the injured party has the right to institute suit for compensatory damages. reform and bankruptcy reform legislation on the volume and timing of disposition of client engagements, (6) risks associated with the integration of acquisitions, particularly nMatrix, into our existing business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets , (7) risks associated with our indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , and (8) other risks detailed from time to time in our SEC filings, including our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . In addition, there may be other factors not included in our SEC filings that may cause actual results to differ materially from any forward-looking statements. We undertake no obligations to update any forward-looking statements contained herein to reflect future events or developments. (Tables follow)
EPIQ SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three months ended
March 31,
--------------------
2006 2005
--------------------
REVENUE:
Case management $26,024 $19,885
Document management 12,975 6,081
--------------------
Operating revenue 38,999 25,966
Reimbursed expenses 5,657 5,495
--------------------
Total Revenue 44,656 31,461
--------------------
COSTS AND EXPENSES:
Direct costs 21,131 13,736
General and administrative 11,699 7,992
Depreciation and software amortization 2,297 1,774
Amortization of identifiable intangible assets 2,767 1,623
--------------------
Total Operating Expenses 37,894 25,125
--------------------
INCOME FROM OPERATIONS 6,762 6,336
--------------------
EXPENSES RELATED TO FINANCING:
Interest income (46) (39)
Interest expense 3,310 801
--------------------
Net Expenses Related to Financing 3,264 762
--------------------
INCOME BEFORE INCOME TAXES 3,498 5,574
PROVISION FOR INCOME TAXES 1,468 2,324
--------------------
NET INCOME $2,030 $3,250
====================
NET INCOME PER SHARE INFORMATION:
Net income per share - Diluted $0.10 $0.17
====================
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - DILUTED 23,325 21,112
====================
EPIQ SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
2006 2005
--------------------------
ASSETS
ASSETS:
Cash and cash equivalents $6,827 $13,563
Trade receivables, net 35,765 33,504
Property and equipment, net 24,295 23,751
Goodwill 249,729 249,427
Other intangibles, net 50,302 53,399
Other 20,284 21,226
--------------------------
Total Assets $387,202 $394,870
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable $7,684 $7,954
Indebtedness 164,141 173,548
Other liabilities 34,644 36,827
STOCKHOLDERS' EQUITY 180,733 176,541
--------------------------
Total Liabilities and Stockholders' Equity $387,202 $394,870
==========================
EPIQ SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended
March 31,
--------------------
2006 2005
--------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,030 $3,250
Non-cash adjustments to net income:
Depreciation and amortization 5,064 3,397
Other, net 905 470
Changes in operating assets and liabilities, net (2,343) (5,410)
--------------------
Net cash provided by operating activities 5,656 1,707
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for business combinations, net (150) -
Other (3,922) (4,458)
--------------------
Net cash used in investing activities (4,072) (4,458)
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments on indebtedness (9,712) (2,118)
Other 1,392 46
--------------------
Net cash used in financing activities (8,320) (2,072)
--------------------
NET DECREASE IN CASH $(6,736) $(4,823)
====================
EPIQ SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO
NON-GAAP NET INCOME
(In thousands)
(Unaudited)
Three months ended
------------------------
March 31, March 31,
2006 2005
------------------------
NET INCOME $2,030 $3,250
Plus (net of tax):
Amortization of acquisition intangibles 1,674 946
Share based compensation 350 -
Acquisition related expense - -
Loan fee amortization 221 166
Non-cash embedded option charges 164 (221)
------------------------
2,409 891
------------------------
NON-GAAP NET INCOME $4,439 $4,141
========================
EPIQ SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF EPS TO
NON-GAAP EPS
(Unaudited)
Three months ended
------------------------
March 31, March 31,
2006 2005
------------------------
EPS (on a diluted basis) $0.10 $0.17
Plus (net of tax):
Amortization of acquisition intangibles 0.07 0.04
Share based compensation 0.01 -
Acquisition related expense - -
Loan fee amortization 0.01 0.01
Non-cash embedded option charges 0.01 (0.01)
------------------------
0.10 0.04
------------------------
NON-GAAP EPS (on a diluted basis) $0.20 $0.21
========================
EPIQ SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO
NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three months ended
------------------------
March 31, March 31,
2006 2005
------------------------
NET INCOME $2,030 $3,250
Acquisition related expense - -
Depreciation and amortization 5,064 3,397
Share based compensation 530 -
Expenses related to financing 3,264 762
Provision for income taxes 1,468 2,324
------------------------
10,326 6,483
------------------------
NON-GAAP ADJUSTED EBITDA $12,356 $9,733
========================
EPIQ SYSTEMS, INC. AND SUBSIDIARIES
EPS CALCULATION
(In thousands, except per share data)
(Unaudited)
Three months ended
------------------------
March 31, March 31,
2006 2005
------------------------
NET INCOME $2,030 $3,250
Interest expense adjustment for
convertible debt 298 288
------------------------
ADJUSTED FOR DILUTED CALCULATION $2,328 $3,538
========================
DILUTED WEIGHTED AVERAGE SHARES 19,284 17,887
Adjustment to reflect stock options 1,184 368
Adjustment to reflect convertible
debt shares 2,857 2,857
------------------------
ADJUSTED FOR DILUTED CALCULATION 23,325 21,112
========================
INCOME PER SHARE - DILUTED $0.10 $0.17
========================
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