PEC Solutions Reports Fourth Quarter EPS of 20 Cents on Revenue Growth of 54 Percent; Company Announces 67 Percent Top Line, 70 percent Bottom Line Growth for Full Year 2002.Business Editors/High-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)--Feb. 11, 2003 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 high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. eGovernment See e-government. solutions, today reported fourth quarter 2002 earnings per share of 20 cents before amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. (on 30.2 million shares), compared to 12 cents (on 29.8 million shares) in the comparable quarter a year ago. Earnings were 20 cents after amortization of intangibles, compared to 11 cents in the comparable quarter a year ago. Net income was $6.1 million before amortization of intangibles in the fourth quarter 2002, compared to $3.5 million before amortization of goodwill in the fourth quarter last year. Net income was $6.0 million after amortization of intangibles in the fourth quarter 2002, compared to $3.2 million after amortization of goodwill in the fourth quarter of last year, an increase of 85 percent. PEC also reported fourth quarter 2002 revenue of $48.3 million, compared to $31.3 million for the same period in 2001, an increase of 54% percent. For the full year of 2002, the company reported revenue of $182.2 million, compared to $109.2 in 2001, an increase of 67 percent. PEC also reported 2002 net income of $22.3 million, compared to $13.1 million in year 2001, also an increase of 70 percent. Earnings per share were 75 cents after amortization (on 29.5 million shares), compared to 47 cents (on 28.0 million shares) in the prior year. "PEC is pleased to report that fiscal year 2002 was a record year in growth and profitability for the company. Thanks to the hard work and dedication of all our staff, as well as our committed focus on the government IT market, PEC has grown at a 5-year compound annual growth rate of 45 percent for revenue and 50 percent for net income. We think these numbers demonstrate a strong, consistent record of performance," said Dr. David C. Karlgaard, President 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 PEC Solutions. Stuart Lloyd, PEC's Chief Financial Officer, indicated that revenue is expected to be between $48 to $49 million for the first quarter 2003, and 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. should be between 17 and 18 cents for the quarter. Guidance for 2003 is for revenue to grow between 30 percent to 40 percent, resulting in revenue between $240 to $255 million. EPS is estimated to be between 85 to 92 cents for the full year 2003. 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, "PEC's business during the fourth quarter was focused on providing continued support to our legacy clients under the continuing resolution A continuing resolution is a type of appropriations legislation used by the United States Congress to fund government agencies if a formal appropriations bill has not been signed into law by the end of the Congressional fiscal year. , while actively positioning the company for expansion and participation in large programs which are expected to emerge with final adoption of the Fiscal 2003 budget and the transition of agencies into the new 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 ." Rice also noted several key recent developments. -- The company was awarded five year, $10 Million contract by the Federal Aviation Administration (FAA). PEC will support the FAA's Aircraft Certification Service by providing mission software development and integration, Web development, systems testing and security services, quality assurance tracking and reporting, and systems and administrative training. The Vector Research Division of PEC's Civilian Government Solutions Operation will perform the program. -- The company completed deployment of PACTS, a transportable biometric solution set designed to capture fingerprints, photographic and other identification information in field locations, and provided bridge services in support of it's application for certain Federal government clients. -- The company was awarded a task order from the Immigration and Naturalization Service (INS) to support the Immigration Services Division to help coordinate and support the INS restructuring team, which will oversee the agency's transition to the new Homeland Security Department. PEC will also support implementation of the Legal Immigration Family Equity Act and the development and deployment of the System Wide Inventory Program that tracks all submitted and pending immigration services applications. -- The company received contracts to continue support of Alcohol, Tobacco & Firearms' (ATF) technology programs. PEC will upgrade regulatory enforcement case management applications and will also provide database migration services for the agency's asset forfeiture tracking system. The company will enhance an ATF information repository imaging system and incident reporting application, and will improve the functionality of web-based tools that provide data collection and submission services for state and local police and fire departments. -- PEC received funding commitments across 17 task areas on the NMCI program valued at roughly $13.5 million for work to be performed in the latter portion of the fourth quarter of 2002 through the first quarter of 2003. -- The company received a Software Capability Maturity Model (CMM) Level 2 Organizational Certification, performed by an independent team of evaluators certified by Carnegie Mellon University's Software Engineering Institute, the developers of the CMM certification process. Use of CMM principles and practices ensures that software development organizations employ mature, disciplined processes that yield predictable, effective results in large-scale development activities. -- The company added a fifth outside member to its board of directors, B. Gary Dando. Dando retired as a partner with the accounting firm Ernst & Young, where he held positions of national and regional operational responsibility. In addition to overseeing audit and tax services, he consulted on initial public offerings, private placements, joint ventures, venture capital, revenue recognition for complex strategic alliances and partnerships, valuations, and Audit Committee responsibilities. The addition of Dando increases PEC's board of directors membership to nine, including five outside directors and four inside directors. About PEC PEC Solutions 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 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 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 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 law enforcement, intelligence, defense, and civilian CIVILIAN. A doctor, professor, or student of the civil law. agencies within the Federal Government and at State and local levels. PEC Solutions 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.
PEC SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
AS OF AS OF
DECEMBER DECEMBER
31, 31,
2002 2001
---------------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $21,176 $30,436
Short-term investments 35,551 31,105
Accounts receivable, net 52,974 36,423
Other current assets 3,452 4,134
---------------------
Total current assets 113,153 102,098
Property and equipment, net 27,967 6,497
Investments 26,790 13,762
Goodwill 16,932 12,565
Intangibles, net 3,700 2,969
Other assets 3,748 3,817
---------------------
Total assets $192,290 $141,708
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $8,415 $4,020
Advance payments on contracts 1,070 1,290
Accrued payroll 6,836 7,018
Accrued vacation 2,562 2,185
Other current liabilities 934 3,958
---------------------
Total current liabilities 19,817 18,471
---------------------
Long-term liabilities:
Supplemental retirement program liability 966 949
Deferred rent payable 1,341 923
Long-term lease obligation 22,822 2,883
Other long-term liabilities - 54
---------------------
Total long-term liabilities 25,129 4,809
---------------------
Total liabilities 44,946 23,280
---------------------
Commitments and contingencies
Stockholders' equity:
Undesignated capital stock, 10,000,000 shares
authorized -- --
Common stock, $0.01 par value, 75,000,000
shares authorized,
26,480,507 and 26,109,649 shares
issued and
outstanding, respectively 268 261
Additional paid-in capital 91,071 83,582
Retained earnings 56,046 34,585
Accumulated other comprehensive income (loss) (41) --
---------------------
Total stockholders' equity 147,344 118,428
---------------------
Total liabilities and stockholders' equity $192,290 $141,708
=====================
PEC SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS
ENDED YEAR ENDED
----------------- -------------------
DEC. 30, DEC. 30, DEC. 30, DEC. 30,
2002 2001 2002 2001
-------- -------- --------- ---------
(UNAUDITED)
Revenues $48,349 $31,326 $182,185 $109,213
----------------- --------- ---------
Operating costs and expenses:
Direct costs 28,489 18,452 107,277 60,416
General and administrative
expenses 9,288 7,133 33,973 24,387
Sales and marketing expenses 1,126 1,252 5,372 4,371
Goodwill and intangible
amortization 214 236 769 777
----------------- --------- ---------
Total operating costs and
expenses. 39,117 27,073 147,391 89,951
----------------- --------- ---------
Operating income 9,232 4,253 34,794 19,262
Other income, net 73 428 1,244 2,154
----------------- --------- ---------
Income before income taxes 9,305 4,681 36,038 21,416
Provision for income taxes 3,345 1,454 13,784 8,349
----------------- --------- ---------
Net income $5,960 $3,227 $22,254 $13,067
================= ========= =========
Earnings per share:
Basic $0.22 $0.12 $0.84 $0.54
================= ========= =========
Diluted. $0.20 $0.11 $0.75 $0.47
================= ========= =========
Weighted average shares used
in computing earnings per share:
Basic 26,629 25,990 26,381 24,258
================= ========= =========
Diluted 30,251 29,785 29,494 27,982
================= ========= =========
PEC SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
YEARS ENDING
-----------------
DEC. 30, DEC.30,
2002 2001
-------- --------
(UNAUDITED)
Cash flows from operating activities:
Net income $22,254 $13,067
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,675 1,078
Amortization of goodwill -- 721
Amortization of intangibles 769 56
Write-off of capitalized software 290 --
Deferred rent payable 417 465
Deferred income taxes 261 (26)
Loss from investment in building 85 6
Loss on disposal of property 2 --
Changes in operating assets and liabilities:
Accounts receivable, net (16,551) (12,477)
Other current assets 1,267 (545)
Other assets (777) (179)
Accounts payable and accrued expenses 4,395 442
Advance payments on contracts (219) (484)
Retirement plan contribution payable -- (2)
Accrued payroll (182) 1,486
Accrued vacation 377 523
Other current liabilities (1,688) (764)
Supplemental retirement program liability 203 234
Other long-term liabilities -- (14)
-------- --------
Net cash provided by operations
activities 12,578 3,587
-------- --------
Cash flows from investing activities:
Purchases of property and equipment (2,870) (1,600)
Net sales of short-term investments (4,365) (10,088)
Investment in affiliate (1,500) (3,000)
Purchase of subsidiary, net of cash
acquired -- (13,404)
Purchase of assets (5,867) --
Capitalized software (215) (679)
Purchases of long-term investments (11,618) (10,698)
Other 26 3
-------- --------
Net cash provided (used) by
investing
activities (26,409) (39,466)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock. 4,625 52,064
Common stock offering cost -- (398)
Payments on capital lease obligations (54) (8)
-------- --------
Net cash provided by financing
activities 4,571 51,660
-------- --------
Net increase (decrease) in cash (9,260) 15,781
Cash and cash equivalents at beginning of period 30,436 14,655
-------- --------
Cash and cash equivalents at end of period $21,176 $30,436
======== ========
Income taxes paid $12,509 $7,375
======== ========
Interest paid $227 $4
======== ========
Non-cash transactions:
Common stock repurchased and retired in exchange for
shares
in cashless exercise of stock options $878 $276
======== ========
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