PEC Solutions Reports First Quarter Results.Business Editors FAIRFAX, Va.--(BUSINESS WIRE)--April 20, 2004 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 technology services firm specializing in high-end e-Government solutions, today reported first quarter 2004 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 12 cents (on 29.8 million shares) for the quarter, compared to 12 cents (on 29.9 million shares) in the comparable quarter a year ago. Net income was $3.6 million in the first quarter of 2004, compared to $3.5 million in the first quarter 2003. PEC also reported first quarter 2004 revenue of $40.4 million, compared to $43.5 million for the same period in 2003. PEC is currently in negotiations regarding one of its state and local contracts. The customer has indicated that it wants to restructure the contract and the Company is actively negotiating with the customer in this regard. Based upon the current negotiations and under contract accounting, the Company has revised the expected contract value and estimated costs to complete this contract, which resulted in a reduction in revenue and pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. during the quarter of approximately $700,000. Stuart Lloyd, PEC's Chief Financial Officer, commented, "Aside from the adjustment related to this state and local contract, our financial performance for the quarter was consistent with our expectations. Revenue is expected to be between $41 and $42 million for the second quarter 2004, with 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. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. for the quarter expected to be between 12 to 13 cents. Our guidance for full year 2004 revenue is between $172 and $177 million. EPS is expected to be between 52 and 55 cents." 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, "The company is focused on capitalizing on our strong legacy position in the Federal technology marketplace through aggressive pursuit of new prime contract opportunities, and durable partnerships with large-scale systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. in our core sectors. Several of these partnerships paid off with key contract awards within the Departments of Justice and Homeland Security Noun 1. Homeland Security - the federal department that administers all matters relating to homeland security Department of Homeland Security executive department - a federal department in the executive branch of the government of the United States during the last quarter, and we are positioned well in a number of other opportunities going forward." New Business Awards Year to date, PEC received aggregate contract awards and funding valued in the amount of $35.7 million. The awards included 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. funding across a variety of existing client project activities, as well as new activities or enhanced scope for a number of new project awards. Homeland Security - Under new or enhanced program activities in the Homeland Security sector, PEC will support initiatives that encompass the full-life cycle of information technology services for components of the Department of Homeland Security Noun 1. Department of Homeland Security - the federal department that administers all matters relating to homeland security Homeland Security executive department - a federal department in the executive branch of the government of the United States (DHS DHS Department of Homeland Security (USA) DHS Department of Human Services DHS Department of Health Services DHS Demographic and Health Surveys DHS Dirhams (Morocco national currency) ). PEC was a member of the successful Business Systems Services Team led by IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , which was awarded a contract to provide software development and life-cycle support for the DHS Bureau of Citizenship and Immigration immigration, entrance of a person (an alien) into a new country for the purpose of establishing permanent residence. Motives for immigration, like those for migration generally, are often economic, although religious or political factors may be very important. Services. PEC will assist IBM in a variety of legacy systems areas as the program moves forward. Under other new activities, the Company will perform software development for the Bureau of Immigration and Customs Enforcement, and the U.S. Secret Service; provide strategic management support to the U.S. Coast Guard; and provide expanded biometric collection activities for the Transportation Security Administration. Criminal Justice and Intelligence - In the Criminal Justice and Intelligence sector, PEC will continue to support components of the Justice Management Division; the Drug Enforcement Administration The Drug Enforcement Administration (DEA) was established in 1973 by President richard m. nixon as part of the Justice Department, thus uniting a number of federal drug agencies that had often worked at cross-purposes. ; the Bureau of Alcohol, Tobacco and Firearms This is an extensive list of small arms — pistol, machine gun, grenade launcher, anti-tank rifle — that includes variants. : Top - 0–9 A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A
Branch of government in which judicial power is vested. The principal work of any judiciary is the adjudication of disputes or controversies. Regulations govern what parties are allowed before a judicial assembly, or court, what evidence will be admitted, what ; and the intelligence community. PEC was a member of the EDS (Electronic Data Systems, Plano, TX, www.eds.com) Founded in 1962 by H. Ross Perot (independent candidate for the President of the U.S. in 1992), EDS is the largest outsourcing and data processing services organization in the country. team that was awarded the ATF's Enterprise Standard Architecture Program, a managed infrastructure services contract. PEC will support this activity in the areas of enterprise and configuration management. Other new activities in this sector include implementation of an Electronic Commerce Fraud System for the Administrative Office of the U.S. Courts (AOUSC AOUSC Administrative Office of the United States Courts ), Lotus Notes Messaging and groupware software from IBM Lotus that was introduced in 1989 for OS/2 and later expanded to Windows, Mac, Unix, NetWare, AS/400 and S/390. Notes provides e-mail, document sharing, workflow, group discussions and calendaring and scheduling. engineering support for the AOUSC, and corporate systems assessment for an intelligence agency. PEC was also awarded a contract to provide program resources to Louisville/Jefferson County Metro Government for a consolidated communications center An agency charged with the responsibility for handling and controlling communications traffic. The center normally includes message center, transmitting, and receiving facilities. Also called COMCEN. See also telecommunications center. for public safety including police, fire, and emergency medical departments. Civilian e-Government - PEC's continued business in the Civilian e-Government sector includes systems engineering and development, strategic management services, and business process support. PEC was awarded new contracts and enhanced funding to support civilian agencies including the Department of Labor, Bureau of the Census Noun 1. Bureau of the Census - the bureau of the Commerce Department responsible for taking the census; provides demographic information and analyses about the population of the United States Census Bureau , and the Patent and Trademark Office. The company will also support new programs for the Maryland Department of Health and Mental Hygiene mental hygiene, the science of promoting mental health and preventing mental illness through the application of psychiatry and psychology. A more commonly used term today is mental health. , and Department of Transportation. Defense - PEC continues to support it's major activities in the Defense sector including the Navy Marine Corps Intranet (NMCI NMCI Navy/Marine Corps Intranet NMCI National Multi-Cultural Institute ) program, business and financial management services for the uniformed services The Army, Navy, Air Force, Marine Corps, Coast Guard, National Oceanic and Atmospheric Administration, and Public Health Services. See also Military Department; Military Service. , and technology and consulting support for military healthcare organizations. New activities were undertaken in providing business and financial management support for the U.S. Navy's Integrated Warfare The conduct of military operations in any combat environment wherein opposing forces employ non-conventional weapons in combination with conventional weapons. Systems (IWS See iPlanet Web Server. ) Above Water Sensors Program. About PEC Solutions, Inc. PEC, founded in 1985, is a professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. firm that helps government clients harness the power of the Internet and other advanced technologies to improve mission performance. The company specializes in Web-Enabling Government(R) by providing secure, interoperable The ability for one system to communicate or work with another. See interoperability. technology solutions for clients in homeland security, criminal justice and intelligence, defense, and civilian agencies within the federal government and at state and local levels. PEC is based in Fairfax County, Virginia Fairfax County is a county in Northern Virginia, in the United States. As of 2005, the estimated population of the county is 1,041,200;[1] making it by far the most populous jurisdiction in the Commonwealth of Virginia, and larger than seven states. , with offices around 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. . Visit the company on the Web at www.pec.com. For more information, contact Martha Hill Martha Hill (December 1, 1900 – November 19, 1995) was an influential American dance instructor. She was the first Director of Dance at the Juilliard School, and held that position for 34 years. Biography Hill was born in East Palestine, Ohio. , PEC Director of Investor Relations Investor relations The process by which the corporation communicates with its investors. , at 703-679-4900. This press release may contain forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject 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. created by those sections. PEC assumes no obligation to update the information contained in this press release. PEC's future results may be affected by its ability to continue to implement its government technology solutions, its dependence on the Federal Government and state and local governments and other Federal Government contractors A government contractor is a private company that produces goods or services under contract for the government. Often the terms of the contract specify cost plus – i.e., the contractor gets paid for its costs, plus a specified profit margin. as its major customers, timely passage of components of the Federal budget, timely obligations of funding by the Federal and state governments, its dependence on procuring Procuring, in general, is the act of acquiring goods or services, usually by contract. It may refer to:
A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. and specific risks, please refer to PEC's recent SEC filings, including the company's 10-K filing on March 15, 2004.
PEC SOLUTIONS, INC.
BALANCE SHEETS
(DOLLARS IN THOUSANDS)
As of As of
March December
31, 31,
2004 2003
----------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 30,487 $ 33,401
Short-term investments 39,292 38,274
Accounts receivable, net 52,125 48,356
Other current assets 1,994 1,745
----------- ----------
Total current assets 123,898 121,776
Property and equipment, net 26,317 26,674
Investments 39,681 37,587
Goodwill 16,932 16,932
Intangibles, net 2,637 2,849
Other assets 4,593 4,553
----------- ----------
Total assets $ 214,058 $ 210,371
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 4,714 $ 5,576
Advance payments on contracts 686 439
Accrued payroll 3,055 5,503
Accrued vacation 3,407 2,839
Other current liabilities 3,414 1,163
----------- ----------
Total current liabilities 15,276 15,520
Long-term liabilities:
Supplemental retirement program
liability 1,466 1,417
Deferred rent 1,884 1,790
Long-term lease obligation 23,111 23,062
----------- ----------
Total long-term liabilities 26,461 26,269
----------- ----------
Total liabilities 41,737 41,789
----------- ----------
Commitments and contingencies
Stockholders' equity:
Undesignated capital stock, 10,000,000
shares authorized -- --
Common stock, $0.01 par value,
75,000,000 shares authorized,
27,311,371 and 27,303,041 shares issued
and outstanding, respectively 273 273
Additional paid-in capital 95,314 95,219
Retained earnings 76,728 73,140
Accumulated other comprehensive income
(loss) 6 (50)
----------- ----------
Total stockholders' equity 172,321 168,582
----------- ----------
Total liabilities and stockholders' equity $ 214,058 $ 210,371
=========== ==========
PEC SOLUTIONS, INC.
STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months
Ended
-----------------
March March
31, 31,
2004 2003
-------- --------
(Unaudited)
Revenues $40,369 $43,466
-------- --------
Operating costs and expenses:
Direct costs 24,623 26,971
General and administrative expenses 8,495 9,159
Sales and marketing expenses 1,127 1,447
Amortization of intangibles 213 213
-------- --------
Total operating costs and expenses 34,458 37,790
-------- --------
Operating income 5,911 5,676
Investment and other income 499 637
Interest expense (667) (660)
-------- --------
Income before income taxes 5,743 5,653
Provision for income taxes 2,155 2,162
-------- --------
Net income $ 3,588 $ 3,491
======== ========
Earnings per share:
Basic $ 0.13 $ 0.13
======== ========
Diluted $ 0.12 $ 0.12
======== ========
Weighted average shares used in computing earnings
per share:
Basic 27,307 26,935
======== ========
Diluted 29,799 29,925
======== ========
PEC SOLUTIONS, INC.
STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
Three Months
Ending
-----------------
March March
31, 31,
2004 2003
-------- --------
(Unaudited)
Cash flows from operating activities:
Net income $ 3,588 $ 3,491
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 713 665
Amortization of intangibles 213 213
Amortization of bond premium and discounts,
net 88 (79)
Gain on sale of assets (4) --
Deferred rent payable 95 118
Deferred income taxes (106) (172)
Gain from investment in building (245) (237)
Bad debt expense 102 --
Non-cash charge related to building 49 64
Changes in operating assets and liabilities:
Accounts receivable, net (3,872) 2,962
Other current assets (149) 1,313
Other assets (57) (94)
Accounts payable and accrued expenses (862) (3,202)
Advance payments on contracts 248 696
Retirement plan contribution payable -- 647
Accrued payroll (2,448) (3,351)
Accrued vacation 568 636
Other current liabilities 2,274 842
Supplemental retirement program liability 43 86
-------- --------
Net cash provided by operating
activities 238 4,598
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (293) (420)
Proceeds from sale of property and
equipment 4 --
Purchases of short-term investments (13,023) (8,035)
Proceeds from sale of short-term
investments 12,006 11,414
Capitalized software (43) --
Purchase of long-term investments (10,616) (5,000)
Proceeds from sale of long-term investments 8,641 1,271
Distribution from building investment 101 310
-------- --------
Net cash used by investing activities (3,223) (460)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 71 1,052
-------- --------
Net cash provided by financing
activities 71 1,052
-------- --------
Net (decrease) increase in cash (2,914) 5,190
Cash and cash equivalents at beginning of period 33,401 21,176
-------- --------
Cash and cash equivalents at end of period $30,487 $26,366
======== ========
Income taxes paid $ 12 $ 2
======== ========
Interest paid $ 667 $ 660
======== ========
Non-cash transactions:
Mature common stock repurchased and retired in
exchange for
shares in cashless exercise of stock options $ -- $ 197
======== ========
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