PEC Solutions, Inc. Reports First Quarter Results and 52% Improvement in Net Income; Strong Operating Performance Results in $0.08 EPS.Business Editors/Hi-Tech Writers FAIRFAX Fairfax, city (1990 pop. 19,622), historic seat of Fairfax co., NE Va., a residential suburb of Washington, D.C.; inc. 1892, as a city 1961 (at which time it became independent and no longer included in a county). There is some light manufacturing. , Va.--(BUSINESS WIRE)--May 15, 2000 PEC Peć (pĕch), Albanian Peja, town (1991 pop. 68,163), S Serbia, in the Kosovo region. A trade center, it has industries that produce leather goods, foodstuffs, and handicrafts. Solutions, 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 : PECS), a professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. firm specializing in high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. solutions that helps government organizations capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. 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 , today reported revenues for the first quarter of $15.6 million, compared to $11.8 million in the same period in 1999, a 31.9% increase. Net income was $1.4 million in the first quarter compared to $932,000 in the first quarter of last year, an increase of 52%. Earnings per share from operations in the first quarter were 8 cents basic (on 18.3 million shares) and 6 cents fully 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. (on 23.6 million shares) compared to basic and fully 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 of 5 cents and 4 cents, respectively, in the first quarter of 1999. The Company completed an initial public offering of common stock during April 2000. The Company sold 3 million shares of common stock generating $25.6 million in proceeds to the Company, net of offering expenses. Paul Rice Paul Rice is the founder and CEO of the non-profit organisation Transfair USA. He lived in Nicaragua for 11 years working with local coffee farmers before he returned to the US to found what is now the largest fair trade organisation in the US. , Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , commented, "These strong revenue and operating results for our first quarter are the result of extended activities across our existing client base, as well as important new starts in programs that we believe hold long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. potential for the company. We are proud of the milestones accomplished during this quarter. -- At the Departments of Treasury, Justice, Interior, and Veteran's Affairs, we secured acceptance of a wide range of case management, tax and regulatory processing, and information sharing and repository solutions. We also defined and developed enhanced functional capabilities for these systems, which will be implemented throughout the remainder of Fiscal 2000. -- The Company continued to make significant progress in both domestic and international deployment activities of a secure world-wide intranet system for a major Federal law enforcement organization, and undertook integration and deployment of post-Y2K releases of software into this 12,000 seat intranet. -- We initiated staging and production deployment activities for a LINUX-based system that provides communications services between legacy Veteran's Affairs (VA) processing systems and modernized intranet infrastructures. Our engineering and integration support activities for the local and wide-area network environments were expanded, and this month PEC was selected by the VA to perform the management of the department's nation-wide network. -- We extended our strategic management consulting engagements in civilian agencies of the Federal government, and undertook significant new privatization programs in the intelligence community. -- In our state & local business, we made significant progress on functional enhancements to our Internet-based automated land records repository solution-set. We completed strategic planning and undertook detailed design activities for a web-based hunting and fishing licensing system for the State of Colorado. In a new client engagement for the Judicial Information Systems division of the State of Maryland we completed the development of a strategic technical architectural plan for state's judicial systems." PEC Solutions is a professional services firm that helps clients harness harness, comprehensive term for the gear of a draft animal, excluding the yoke, by which it is attached to the load that it pulls. Although harnesses are used on dogs (for drawing travois and dogsleds), on goats, and sometimes on oxen, the typical harness is for the power of the Internet and other advanced technologies to improve organizational performance Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). Specialists in many fields are concerned with organizational performance including strategic planners, operations, . The Company specializes in Web-enabling Government(SM) -- by planning , designing, building and managing high-technology solutions that enhance productivity and improve services to the public. Statements included in this news release which are not historical in nature are 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. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions 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 including, without limitation, statements regarding increased demand for the Company's services, the Company's ability to secure new business, and those factors highlighted in PEC Solutions, Inc.'s Prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. dated April 19, 2000 and Quarterly Report on Form 10-Q Form 10-Q See 10-Q. , which could cause the Company's actual results to differ materially from forward-looking statements made by the Company.
PEC SOLUTIONS, INC.
UNAUDITED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
AS OF AS OF
MARCH 31, DEC. 31,
2000 1999
-------- --------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $11,446 $7,981
Accounts receivable, net 12,165 13,241
Other current assets 990 924
-------- --------
Total current assets 24,601 22,146
Property and equipment, net 1,598 1,507
Other assets 968 747
-------- --------
Total assets $27,167 $24,400
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,316 $ 2,425
Advance payments on contracts 1,114 1,473
Dividends payable - 413
Retirement plan contribution payable 248 -
Accrued payroll 2,617 3,249
Accrued vacation 1,171 903
Other current liabilities 490 373
-------- --------
Total current liabilities 7,956 8,836
Supplemental retirement program liability 336 281
-------- --------
Total liabilities 8,292 9,117
-------- --------
Commitments and contingencies:
Stockholders' equity
Undesignated capital stock, 10,000,000 shares
authorized
Common stock, $0.01 par value,
75,000,000 shares authorized,
19,186,920 and 17,706,372 shares
issued and outstanding, respectively 192 177
Additional paid-in capital 2,765 601
Retained earnings 15,918 14,505
-------- --------
Total stockholders' equity 18,875 15,283
-------- --------
Total liabilities and
stockholders' equity $27,167 $24,400
======== ========
See notes to financial statements (unaudited).
PEC SOLUTIONS, INC.
UNAUDITED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended
-----------------------------
March 31, March 31,
2000 1999
Revenues $15,582 $11,813
------- -------
Operating costs and expenses:
Direct costs 8,903 6,989
General and administrative
expenses 3,941 2,895
Sales and marketing expenses 540 475
------- -------
Total operating costs and
expenses 13,384 10,359
------- -------
Operating income 2,198 1,455
Other income, net 115 47
------- -------
Income before income taxes 2,313 1,502
Provision for income taxes 900 570
------- -------
Net income $1,413 $932
------- -------
Earnings per share:
Basic $0.08 $0.05
------- -------
Diluted $0.06 $0.04
------- -------
Weighted average shares used in
computing earnings per share
Basic 18,257 17,156
------- -------
Diluted 23,442 23,645
------- -------
See notes to financial statements (unaudited).
PEC SOLUTIONS, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
QUARTERS ENDING
---------------------
MARCH 31, MARCH 31,
2000 1999
Cash flows from operating
activities:
Net income 1,413 932
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation 139 179
Changes in operating assets and
liabilities:
Accounts receivable, net 1,076 572
Other current assets (66) (8)
Other assets (59) (127)
Accounts payable and accrued
expenses (109) 113
Advance payments on contracts (359) (66)
Retirement plan contribution
payable 248 (1,024)
Accrued payroll (632) (588)
Accrued vacation 268 197
Other current liabilities 117 359
Supplemental retirement program
liability 55 41
-------- --------
Net cash provided by operating
activities 2,091 580
-------- --------
Cash flows from investing
activities:
Purchases of property and
equipment (230) (140)
Proceeds from sale of property
and equipment 0 6
-------- --------
Net cash used in investing
activities (230) (134)
-------- --------
Cash flows from financing
activities:
Dividends paid (413) (348)
Proceeds from issuance of common
stock 2,179 38
Repurchases of common stock 0 (1,262)
Common stock offering costs (162) 0
Notes payable 0 597
-------- --------
Net cash provided (used) by
financing activities 1,604 (975)
-------- --------
Net increase in cash 3,465 (529)
Cash and cash equivalents at
beginning of period 7,981 5,367
Cash and cash equivalents at end
of period $ 11,446 $ 4,838
======== ========
Income taxes paid 171 75
-------- --------
Interest paid 0 11
-------- --------
See notes to financial statements (unaudited).
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