Modis Announces Integration and Strategic Repositioning Plan, Preliminary Fourth Quarter Expectations, and Completed Repurchase of 23 Million Shares.JACKSONVILLE, Fla.--(BUSINESS WIRE)--Dec. 31, 1998--Modis Professional Services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. , Inc. (NYSE NYSE See: New York Stock Exchange :MPS), a global provider of information technology and professional services, today announced an integration and strategic repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. plan (the "Plan") through which it will take a series of actions to reduce costs, improve operational performance, increase cash flow and earnings per share, and enhance the Company's long-term competitive position. The Company also announced preliminary expectations of fourth quarter results, including an update on its share repurchase plan share repurchase plan A corporation's plan for buying back a predetermined number of its own shares in the open market. Institution of a share repurchase plan derives from management's view that the company has limited outside investment opportunities and . Press Release Highlights Board of Directors Approves Comprehensive Integration and Strategic Repositioning Plan Consistent with its Strategy to Become a World Class Information Technology and Professional Services Firm - the Plan will better align the branch network and organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. and is expected to result in an estimated reduction in annual pre-tax operating costs operating costs npl → gastos mpl operacionales of approximately $15 million, $9.3 million net of tax, when fully implemented; benefits to enhance 1999 and 2000 results of operations and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . Preliminary Expectations of Fourth Quarter and Full Year Financial Results - total revenue for the fourth quarter is expected to be in line with analysts' estimates and diluted net income per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before one-time, non-recurring charges is expected to meet or exceed analysts' consensus estimates. Total revenue for the full year 1998 is expected to be in line with analysts' estimates and diluted net income per share from continuing operations is expected to meet or exceed analysts' estimates before one-time gain and one-time, non-recurring charges; cash position at year-end to approximate $80 million with $500 million credit facility unused. One-time, Non-recurring Charges - the Company plans to record a one-time, non-recurring, after-tax charge of between $17 million and $20 million to cover the costs of post-employment benefits, incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. occupancy costs and other incremental exit costs resulting from implementation of the Plan. In addition, the Company estimates it will record a $10 million non-tax-deductible, non-cash, one-time, non-recurring charge resulting from goodwill impairment of certain closed branches. Update on Share Repurchase Plan Approved During Fourth Quarter - as part of the Company's capital allocation strategy, approximately 23 million shares, which represented approximately 19% of the Company's previously outstanding shares, have been successfully repurchased during the quarter. Integration and Strategic Repositioning Plan The Plan approved by the Board of Directors is designed to strengthen overall profitability by further implementing a back office integration program and branch repositioning plan. The Plan is intended to support continued top line growth while better aligning the branch network and organizational structure to improve operating performance throughout the Company. The Plan calls for the consolidation or closing of 23 professional service branches, certain organizational improvements and the consolidation of 15 back office operations. The branch consolidations/closings and back office centralizations will eliminate approximately 290 of the current total estimated 3,500 positions held by employees at 265 locations worldwide. Employees affected by this Plan will be entitled to special benefits under the Company severance plan. The reduction in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue and gross profit from certain consolidated or closed branches as described in the Plan is estimated to be $12 million and $3.3 million, respectively, representing less than 1% of total revenue and less than 1% of total gross profit. The Plan, once fully implemented, will result in an estimated annual operating cost reduction of $15 million ($9.3 million after-tax), which more than offsets the $3.3 million reduction in gross profit, resulting in an annual increase of $11.7 million in pre-tax operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , or $7.3 million after-tax. These savings are expected to have a positive impact beginning in the second half of 1999 with the full benefit realized by the end of 2000. The Plan will be implemented over a 12 to 18-month period and, once complete, further positions Modis Professional Services as a world class information technology and professional service firm, which commenced upon the sale of Strategix. In order to realize the estimated $11.7 million operating income improvement, the Company will record a one-time, non-recurring, after-tax charge of $17 million to $20 million to cover the post-employment benefits, incremental occupancy costs and other incremental exit costs. In addition, the Company will record a non-tax-deductible, non-cash, one-time, non-recurring impairment charge of approximately $10 million, which results from the impairment of goodwill associated with certain closed branches. The one-time, non-recurring fourth quarter charges will be more than offset by the gain recognized in the third quarter from the sale of Strategix when determining full-year net income and diluted earnings per share. Excluding these charges, diluted net income per share is expected to either meet or exceed analysts' consensus earnings estimates for the fourth quarter ending December 31, 1998. Financial Expectations from Continuing Operations The Company sold Strategix, its commercial staffing division, at the end of the third quarter of 1998. The results of the Strategix division, prior to the sale, will be reported as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . The discussions set forth below include preliminary expectations from continuing operations for the fourth quarter and full year 1998. Total revenue for the fourth quarter and full year 1998 is anticipated to be in line with analysts' estimates. Net income per diluted share for the fourth quarter is expected to either meet or exceed analysts' consensus estimates. For the full year, net income per diluted common share is also expected to either meet or exceed analysts' consensus estimates. The fourth quarter and full year 1998 diluted per share preliminary expectations are before the one-time third quarter gain from the sale of Strategix and the one-time, non-recurring fourth quarter charges. Balance Sheet and Liquidity At year-end, the Company's balance sheet is estimated to reflect cash of approximately $80 million and the $500 million credit facility will remain unused. The Company anticipates using cash and a portion of the credit facility to pay taxes due in March 1999 which arose from the gain on sale of Strategix (commercial division). The combination of the unused portion of the credit facility, positive cash flow generated in the fourth quarter of 1998 and cash flow anticipated from 1999 operations provides the Company ample cash with which to fund acquisitions and capital allocation strategies. Share Repurchase Plan During the fourth quarter, the Company announced that its Board of Directors authorized the repurchase of up to $310 million of its common stock. Management reported that, given current stock market conditions and the Company's strong balance sheet and cash flow, it believes the repurchase program is a meaningful way to enhance shareholder value and is consistent with its capital allocation strategies. To date, the Company has successfully repurchased approximately 23 million shares, or approximately 19% of the previously outstanding common shares. In connection with the share repurchase plan, the Company purchased $16.5 million face value of its 7% Convertible Subordinated Debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before , representing 1.5 million common shares if converted before the conversion date. This early repurchase will result in a one-time, non-recurring charge categorized cat·e·go·rize tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es To put into a category or categories; classify. cat as an extraordinary loss of $7.5 million, which represents the premium the Company paid in excess of the principal value of the bonds, to be recorded in the fourth quarter. The 1.5 million shares underlying the Convertible Subordinated Debentures are included in the aforementioned 23 million total shares repurchased. Strategies for 1999 and Management Comments "The execution of this Integration and Strategic Repositioning Plan will allow the Company to strengthen its local, regional and national customer service and support level while realizing many business process improvements and operating efficiencies throughout our entire organization." said Derek E. Dewan de·wan n. Any of various government officials in India, especially a regional prime minister. [Hindi d , Chairman, President and Chief Executive Officer. "We are all pleased with the record of revenue and profit growth we've demonstrated since the formation of the Company. Since the sale of Strategix, we have focused all our energy and resources on growing revenues and earnings per share. Our dedicated employees and valued clients are key to our continued success." "Our strategic plan for 1999 and beyond includes continued market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" by each of our divisions, including increased brand awareness, a greater emphasis and focus on sales development, and distinguishing our organization as a world class information technology and professional services provider. In the modis information technology division, we will be better able to serve existing clients and increase our breadth of services to include development of practices along vertical lines of business, such as financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and telecommunications. This will be in conjunction with the further expansion of modis Solutions' national practices in the ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. area -- SAP (NYSE:SAP); PeopleSoft (Nasdaq:PFST PFST Proactive Food Safety Training (Etowah, NC) ); Oracle (Nasdaq:ORCL ORCL Oracle (stock symbol) ); J.D. Edwards (J.D. Edwards & Company, Denver, CO, www.jdedwards.com) A developer of multinational, integrated enterprise software for distribution, finance, human resources, manufacturing and supply chain management. (Nasdaq:JDEC JDEC Joint Data Exchange Center (US/Russian missile warning) JDEC Joint Document Exploitation Center (US DoD) ) -- and other boutique areas such as data warehousing See data warehouse. data warehousing - data warehouse , web enablement, Internet services and electronic commerce development. "In the professional services division, our separate lines of business will unveil new solutions-oriented products and services. These will include areas such as 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. support and legal and accounting assistance in connection with mergers and acquisitions. Packaged human resource solutions will also be part of the professional division's service offerings. Cross-selling, which has always been a part of our strategic plan, will be further emphasized between our specialty units in both the professional services and information technology divisions." Dewan added, "Our operating and balance sheet liquidity remains strong as we continue to pursue strategic acquisitions. We expect to announce accretive acquisitions in the first quarter of 1999 that will augment our continued focus on internal growth." Dewan concluded, "All of these actions have been identified to better align our human and capital resources in order to continue our goals of improving our service delivery platforms, top line growth and building shareholder value by improving per share earnings. All of us at Modis Professional Services remain determined to deliver stellar financial performance for all shareholders. We look forward to the continuation of solid performance in 1999 and into the next century." Modis Professional Services, Inc. is a global provider of business services, including consulting, outsourcing, outplacement out·place·ment n. The process of facilitating a terminated employee's search for a new job by provision of professional services, such as counseling, paid for by the former employer. , training, and professional staffing services. The Company provides strategic solutions in the information technology, accounting, legal, engineering/technical, and scientific areas. Headquartered in Jacksonville, Florida “Jacksonville” redirects here. For other uses, see Jacksonville (disambiguation). Jacksonville is the largest city in the state of Florida and the county seat of Duval County. , the Company serves the Fortune 1000 and other leading businesses through its offices located in 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. , Canada, the United Kingdom, Continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. , and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . For more information about Modis Professional Services, please visit the following web site: www.modispro.com. This press release contains forward-looking statements regarding the Company's Integration and Strategic Repositioning Plan, anticipated fourth quarter and year-end financial results, including but not limited to revenue and profitability projections, one-time accounting charges, and the Company's strategic plans. Such forward-looking statements involve substantial risks and uncertainties that could cause the Company's actual results to differ materially from those set forth in, anticipated or contemplated by, or underlying the forward-looking statements. While the substantial risks and uncertainties cannot all be predicted or quantified, important factors that could cause the Company's actual results to differ from those expressed in the forward-looking statements include, but are not limited to, the factors set forth under Risk Factors and elsewhere in the Company's reports on Forms 10-K, 10-Q and 8-K made under the Securities Exchange Act of 1934; the Company's ability to successfully identify suitable acquisition candidates, complete acquisitions or integrate the acquired business into its operations; the general level of economic activity in the Company's markets; the impact of competitive factors on profit margins in various markets in which the Company competes; and the continued availability of qualified professionals -- particularly in the information technology and other segments of the Company's businesses. In addition, the market price of the Company's stock may from time to time be significantly volatile as a result of, among other things: the Company's operating results; the operating results of other information technology professional consulting and staff augmentation AUGMENTATION, old English law. The name of a court erected by Henry VIII., which was invested with the power of determining suits and controversies relating to monasteries and abbey lands. companies; and changes in the performance of the stock market in general. |
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