PEC Solutions Reports Third Quarter Fully Diluted EPS of 15 Cents.Business Editors/High-Tech Writers FAIRFAX, Va.--(BUSINESS WIRE)--Oct. 21, 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 eGovernment solutions, today reported third quarter 2003 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 15 cents (on 30.0 million shares) for the quarter, compared to 25 cents (on 29.6 million shares) in the comparable quarter a year ago. Net income was $4.4 million in the third quarter of 2003, compared to $7.4 million in the third quarter 2002. PEC also reported third quarter 2003 revenue of $43.3 million, compared to $52.8 million for the same period in 2002. The company noted that in the year ago quarter it was engaged in a highly concentrated effort relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the hiring of airport security personnel. The year-over-year comparison in part reflects that activity. Stuart Lloyd, PEC's Chief Financial Officer, commented, "We continue to have strong operating and net income margins. As a result, we achieved the high-end of our earnings guidance range for the quarter. We also saw a pick-up in contract activity at the end of the quarter. Revenue is expected to be between $45 and $49 million for the fourth quarter 2003, with diluted 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 15 and 16 cents. Our guidance for the full year 2004 for revenue is between $205 and $215 million. EPS is expected to be between 67 and 73 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 experienced increased contracting activity over the past several months as the Government's Fiscal Year 2003 closed. Based on the number of near-term opportunities the company is pursuing, and the timely anticipated enactment of key components of the FY2004 Federal appropriations, we expect this accelerated rate of funding actions and new contract awards to continue as the FY2004 Federal budget is engaged and committed." Rice noted several key recent contract announcements. -- The company recently announced that the Department of Homeland Security's Bureau of Customs and Border Protection (CBP CBP competitive protein binding. ) awarded the company a task order to help develop and maintain CBP's Numerically Integrated Information System (NIIS NIIS Nonimmigrant Information System (US Immigration and Naturalization Service) NIIS National Institute of Industrial Safety (UK Independent Administrative Institution) ), valued at $6.9 million over 32 months. The NIIS program allows agents and analysts to easily manipulate, compare, and analyze large volumes of data indicative of criminal activity, including illicit actions in support of terrorism, money laundering The process of taking the proceeds of criminal activity and making them appear legal. Laundering allows criminals to transform illegally obtained gain into seemingly legitimate funds. , tax evasion, weapons proliferation proliferation /pro·lif·er·a·tion/ (pro-lif?er-a´shun) the reproduction or multiplication of similar forms, especially of cells.prolif´erativeprolif´erous pro·lif·er·a·tion n. , fraud, and drug smuggling smuggling, illegal transport across state or national boundaries of goods or persons liable to customs or to prohibition. Smuggling has been carried on in nearly all nations and has occasionally been adopted as an instrument of national policy, as by Great Britain . -- The company received a contract from the Army Office of The Surgeon General The U.S. Surgeon General is charged with the protection and advancement of health in the United States. Since the 1960s the surgeon general has become a highly visible federal public health official, speaking out against known health risks such as tobacco use, and promoting disease (OTSG OTSG Office of the Surgeon General OTSG Once-Through Steam Generator ), valued at $9.8 million over 4 years, to assist the OTSG implement information management tools and technology to support administrative, policy, and military healthcare medical information processing information processing: see data processing. information processing Acquisition, recording, organization, retrieval, display, and dissemination of information. Today the term usually refers to computer-based operations. for approximately 400 Army, civilian, and contractor staff at numerous locations, including the Walter Reed Army Medical Center Walter Reed Army Medical Center, major hospital complex in Washington, D. C., and Forest Glen, Md.; est. 1923 and named for U.S. army surgeon Walter Reed. It is composed of seven units including a general hospital and a research institute. There are several thousand beds. , the Pentagon, and Ft. Belvoir. -- The company was awarded a 3-year, $12 million contract to provide support to the Navy Office of General Counsel (OGC OGC Office of Government Commerce (UK government) OGC Open Geospatial Consortium, Inc. OGC Office of the General Counsel OGC Open GIS Consortium, Inc. ). PEC will assist the Navy and its Iran 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. Program by providing research support and documentary evidence A type of written proof that is offered at a trial to establish the existence or nonexistence of a fact that is in dispute. Letters, contracts, deeds, licenses, certificates, tickets, or other writings are documentary evidence. for Department of State responses to Iranian claims. PEC will provide numerous support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services including: management; research, collection and analysis of claims documentation; reconciliation; and enhancement and maintenance of the Navy's Iran Reconciliation Information System. -- PEC announced that the company had received two task order awards under an existing blanket purchase agreement with the Department of Homeland Security's 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, valued at $4.6 million over one year. PEC will provide a host of management, acquisition, technical, quality assurance, and other support services to sustain a complex and diverse set of initiatives within the Customer Service Division, a major component of the Bureau of Citizenship and Immigration Services (BCIS BCIS Bureau of Citizenship and Immigration Services (US Department of Homeland Security) BCIS Building Cost Information Service (Royal Institution of Chartered Surveyors - UK) ). -- The company announced that 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. (DEA DEA - Data Encryption Algorithm ) had awarded the company two contracts under its Concorde Program, an initiative to improve the effectiveness of executive functions Executive functions is a term synonymous with cognitive control, and used by psychologists and neuroscientists to describe a loosely defined collection of brain processes whose role is to guide thought and behaviour in accordance with internally generated goals or plans. of the DEA through a common, integrated system. Under the first contract, PEC will provide business process reengineering services including requirements analysis, business modeling, and engineering of an enterprise-wide architecture. PEC was also awarded a contract to provide design, development, and documentation support services for the Concorde Program. Under this contract, PEC will provide engineering, design, development and implementation support to components of the DEA Concorde Program. Rice also noted a number of recently completed contract actions across a wide-range of Federal clients. 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. Rice, the combined value of the indicated awards amounts to roughly $19 million. -- The company was awarded several tasks under the Drug Enforcement Administration's Concorde Program, to develop a Web-based application See Web application. to support the work of the DEA's Office of Inspections, and to provide enhancements to the Statistical Management and Reporting Tools System, a data warehouse and reporting system used for tracking key statistical data by DEA headquarters and field division offices. PEC will also engineer case management system enhancements that will allow DEA personnel to better document investigations using Web-based interfaces. PEC will provide tools that allow electronic sharing of digital fingerprints and "mug-shots," as well as the ability to introduce multimedia content, such surveillance video and audio files. In addition, PEC will continue development and deployment of the Plan Enforcement Tracking System, used by DEA agents to plan and permit real-time monitoring of operations. -- PEC was awarded a task order to prepare an analysis of alternatives to recommend a selected Federal Civilian Human Resource Information System for the Department of Homeland Security (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) ). In addition, PEC will assist in preparing a business case analysis for submission to the Office of Management and Budget and will assist in the development of a project plan to sequence all the components of DHS into the selected systems. -- PEC was awarded a contract by the Bureau for Management/Office of Information Resources (1) The data and information assets of an organization, department or unit. See data administration. (2) Another name for the Information Systems (IS) or Information Technology (IT) department. See IT. Management (M/IRM) for the U.S. Agency for International Development. PEC will perform a wide range of activities including information technology acquisition and budget support, management support, business case analysis, performance-based project metrics, and training. -- The Social Security Administration (SSA (Serial Storage Architecture) A fault tolerant peripheral interface from IBM that transfers data at 80 and 160 Mbytes/sec. SSA uses SCSI commands, allowing existing software to drive SSA peripherals, which are typically disk drives. ) awarded the company a contract to assist in the development of an agency-wide knowledge based authentication (1) Verifying the integrity of a transmitted message. See message integrity, e-mail authentication and MAC. (2) Verifying the identity of a user logging into a network. implementation employing the Federal E-authentication Gateway. Knowledge based authentication technology provides a secure, convenient, and cost effective method for managing user identities and validating citizen identities as they access e-Government online services. PEC will conduct a market survey to evaluate knowledge based authentication service providers, and will work in cooperation with the General Services Administration The General Services Administration (GSA) was established by section 101 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C.A. § 751). The GSA sets policy for and manages government property and records. (GSA (1) (Global mobile Suppliers Association, Sawbridgeworth, U.K., www.gsacom.com) A membership organization of suppliers of GSM products and services. Its goal is to promote GSM as the worldwide mobile communications standard. See GSM Association and GSM. ) to develop a Pilot implementation using the Federal E-authentication Gateway. -- PEC will provide continued development and implementation support for the Department of Homeland Security's Bureau of Immigration and Customs Enforcement. The company will support a number of legacy software applications and will provide enhancements of the software system and databases. -- The Nuclear Regulatory Commission Nuclear Regulatory Commission (NRC), an independent U.S. government commission, created by the Energy Reorganization Act of 1974 and charged with licensing and regulating civilian use of nuclear energy to protect the public and the environment. (NRC NRC abbr. 1. National Research Council 2. Nuclear Regulatory Commission Noun 1. NRC - an independent federal agency created in 1974 to license and regulate nuclear power plants ) awarded PEC two optional tasks to develop and deliver the production capabilities for the Digital Data Management System (DDMS DDMS DoD Discovery Metadata Specification DDMS Deputy Director of Medical Services (British, World War II) DDMS Department of Defense Manned Space Flight Support Office DDMS Defense Debt Management System ). The system will support proceedings related to the Department of Energy's application for construction authorization for a High Level Waste repository at Yucca Mountain Yucca Mountain, mountain in the SW Nevada desert about 100 mi (161 km) northwest of Las Vegas. It is the proposed site of a Dept. of Energy (DOE) repository for up to 77,000 metric tons of nuclear waste (including commercial and defense spent fuel and high-level , Nevada. Under the new tasks, PEC will design and install state-of-the-art electronic courtroom capabilities in the NRC's facility. PEC will also implement enhancements to the proof-of-concept implementation developed under previous tasking. The full DDMS provides synchronized syn·chro·nize v. syn·chro·nized, syn·chro·niz·ing, syn·chro·niz·es v.intr. 1. To occur at the same time; be simultaneous. 2. To operate in unison. v.tr. 1. video and transcript features, and a highly integrated environment for introducing, accessing, and reviewing trial materials in support of the largest NRC proceeding ever undertaken. -- PEC was awarded an order from Customs and Border Protection (CBP), Office of Asset Management, to provide program management and oversight support services to the Asset Management Facilities Program. PEC will provide design, construction, and on-going facilities management The management of a user's computer installation by an outside organization. All operations including systems, programming and the datacenter can be performed by the facilities management organization on the user's premises. support services. -- The Administrative Office of the U.S. Courts exercised options to task PEC to continue development of the Defender Services Management Information System (DSMIS), which supports the Defender Services Division in its preparation and tracking of budgets and appropriation requests Appropriation request Formal request for funds for capital investment project. to Congress. PEC will develop the underlying system and functionality for budget preparation and execution, and appropriation creation. -- In other newly awarded activities for the U.S. Courts, the company will develop instructional materials for the Office of Probation and Pretrial pre·tri·al n. A proceeding held before an official trial, especially to clarify points of law and facts. adj. 1. Of or relating to a pretrial. 2. Services and a Firearms Training Manual that will be used to educate officers on the use of a new semi-automatic handgun. The company will also develop a website research project where training information will be collected and analyzed for the AO from various court websites. PEC was also awarded a contract to develop a total cost of ownership (TCO (1) (Total Cost of Ownership) The cost of using a computer. It includes the cost of the hardware, software and upgrades as well as the cost of the inhouse staff and/or consultants that provide training and technical support. See ROI. ) model for the Judiciary's information technology infrastructure. Additionally, PEC was awarded tasking to perform an Analysis of Alternatives and functional requirements verification for a new Bankruptcy Administrators' Case Management System. -- The U.S. Department of Agriculture (USDA USDA, n.pr See United States Department of Agriculture. ) awarded PEC an order for the design and development of Microsoft Windows Since 1985, Microsoft Windows has become a series of versatile 32-bit and 64-bit operating systems, compared to the early 16-bit graphical DOS operating environments. At the 2004 IDC Directions conference, IDC Vice President Avneesh Saxena stated that Windows had approximately 90% .NET versions of the Survey Net and Recipe Processing System applications currently used by the Agricultural Research Service for processing human food consumption data. PEC was also awarded a contract to implement a variety of enhancements to the USDA Livestock Mandatory Price Reporting System (MPR (MultiProtocol Router) Software from Novell that provides router capabilities for its NetWare servers. It supports IPX, IP, AppleTalk and OSI protocols as well as all the major LANs and WANs. ), a system to provide real-time livestock market pricing data to producers. Activities under this tasking include the development of a data mart A subset of a data warehouse for a single department or function. A data mart may have tens of gigabytes of data rather than hundreds of gigabytes for the entire enterprise. See data warehouse. that provides public access to livestock prices through a Web-based interface with the ability to search and download report data. -- The Navy's Program Executive Officer (PEO) Ships awarded PEC a contract to provide business and financial management, accounting, program planning, acquisition and logistics management. The PEO Ships' mission also includes fleet maintenance, modernization and readiness for surface combatants, crew training, combat system and weapon system maintenance, and all related logistical issues. -- PEC was a member of the winning Anteon Inc. team to provide support to the Comptroller Directorate of the Naval Surface Warfare Center. As a member of the Anteon team, PEC will provide problem disbursement DISBURSEMENT. Literally, to take money out of a purse. Figuratively, to pay out money; to expend money; and sometimes it signifies to advance money. 2. reconciliation, contract closeout closeout, closure the finalization of a feeding program in a feedlot. The cattle are sold and a balance sheet is struck which includes the costs of feeding and housing or confining them. , and other accounting support assisting in the maximization of program funding. 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 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 technology solutions for clients in law enforcement, intelligence, defense, and civilian 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. For more information, contact John McNeilly, PEC Solutions Manager of Media and 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 Solutions assumes no obligation to update the information contained in this press release. PEC Solutions' future results, including the company's fourth quarter 2003 and full year 2004 guidance, may be affected by its ability to continue to implement its eGovernment solutions, its dependence on the Federal government and other Federal government contractors as its major customers, timely passage of components of the Federal budget, its dependence on procuring, pricing and performing short-term government contracts, its dependence on hiring and retaining qualified professionals, potential fluctuations in its quarterly operating results, its dependence on certain key employees and its ability to timely and effectively integrate the businesses it may acquire. For further information about 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. and specific risks, please refer to PEC's recent SEC filings, including the company's 10-K/A filing on April 17,2003.
PEC SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
AS OF AS OF
SEPTEMBER DEC.
30, 2003 31, 2002
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 22,818 $ 21,176
Short-term investments 40,958 35,551
Accounts receivable, net 49,511 52,974
Other current assets 2,547 3,452
--------- ---------
Total current assets 115,834 113,153
Property and equipment, net 27,108 27,967
Investments 38,562 26,790
Goodwill 16,932 16,932
Intangibles, net 3,062 3,700
Other assets 4,478 3,749
--------- ---------
Total assets $205,976 $192,291
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 7,627 $ 8,415
Advance payments on contracts 471 1,070
Retirement plan contribution payable 1,581 --
Accrued payroll 3,356 6,836
Accrued vacation 3,021 2,562
Other current liabilities 1,211 935
--------- ---------
Total current liabilities 17,267 19,818
--------- ---------
Long-term liabilities:
Supplemental retirement program liability 1,454 966
Deferred rent payable 1,680 1,341
Long-term lease obligation 22,995 22,822
--------- ---------
Total long-term liabilities 26,129 25,129
--------- ---------
Total liabilities 43,396 44,947
--------- ---------
Commitments and contingencies
Stockholders' equity:
Undesignated capital stock, 10,000,000
shares authorized -- --
Common stock, $0.01 par value, 75,000,000
shares authorized, 27,164,883 and
26,792,565 shares issued and
outstanding, respectively 272 268
Additional paid-in capital 93,981 91,071
Retained earnings 68,471 56,046
Accumulated other comprehensive loss (144) (41)
--------- ---------
Total stockholders' equity 162,580 147,344
--------- ---------
Total liabilities and stockholders' equity $205,976 $192,291
========= =========
PEC SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------- -------------------
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
30, 2003 30, 2002 30, 2003 30, 2002
--------- --------- --------- ---------
(Unaudited)
Revenues $43,295 $52,844 $131,025 $133,836
--------- --------- --------- ---------
Operating costs and expenses:
Direct costs 25,821 30,359 78,503 78,789
General and
administrative
expenses 8,758 9,164 26,992 24,685
Sales and marketing
expenses 1,250 1,205 4,331 4,246
Amortization of
intangibles 213 175 638 556
--------- --------- --------- ---------
Total operating costs and
expenses 36,042 40,903 110,464 108,276
--------- --------- --------- ---------
Operating income 7,253 11,941 20,561 25,560
Investment and other income 604 205 1,781 1,179
Interest expense (664) (1) (1,986) (7)
--------- --------- --------- ---------
Income before income taxes 7,193 12,145 20,356 26,732
Provision for income taxes 2,751 4,743 7,786 10,439
--------- --------- --------- ---------
Net income $ 4,442 $ 7,402 $ 12,570 $ 16,293
========= ========= ========= =========
Earnings per share:
Basic $ 0.16 $ 0.28 $ 0.46 $ 0.62
========= ========= ========= =========
Diluted $ 0.15 $ 0.25 $ 0.42 $ 0.56
========= ========= ========= =========
Weighted average shares used
in computing earnings per
share:
Basic 27,151 26,463 27,045 26,298
========= ========= ========= =========
Diluted 29,978 29,566 29,811 29,176
========= ========= ========= =========
PEC SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
NINE MONTHS ENDING
-------------------
SEPTEMBER SEPTEMBER
30, 2003 30, 2002
--------- ---------
(Unaudited)
Cash flows from operating activities:
Net income $12,570 $16,293
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,096 1,094
Amortization of intangibles 638 556
Amortization of bond premium and
discounts, net 164
Write-off of capitalized software -- 289
Deferred rent 340 294
Bad debt expense 15 --
Deferred income taxes (540) (339)
(Gain) loss from investment in building (708) 69
Non-cash charge related to building 172 --
Other (3) --
Changes in operating assets and
liabilities:
Accounts receivable, net 3,448 (14,116)
Other current assets 1,293 1,690
Other assets (332) 258
Accounts payable and accrued expenses (789) 8,311
Advance payments on contracts (599) 773
Retirement plan contribution payable 1,581 1,801
Accrued payroll (3,481) (3,356)
Accrued vacation 460 664
Other current liabilities 277 (1,828)
Supplemental retirement program
liability 487 (35)
--------- ---------
Net cash provided by operating
activities 17,089 12,418
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (990) (1,009)
Purchases of short-term investments (47,115)
Proceeds from sale of short-term
investments 41,446
Purchase of assets -- (5,890)
Capitalized software (493) (215)
Purchases of long-term investments (16,834)
Proceeds from sale of long-term
investments 5,130
Distributions from building investment 640 --
--------- ---------
Net cash used by investing
activities (18,216) (22,257)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock 2,769 3,714
Payments on capital lease obligations -- (50)
--------- ---------
Net cash provided by financing
activities 2,769 3,664
--------- ---------
Net increase in cash 1,642 (6,175)
Cash and cash equivalents at beginning of period 21,176 30,436
--------- ---------
Cash and cash equivalents at end of period $22,818 $24,261
========= =========
Income taxes paid $ 5,934 $ 8,819
========= =========
Interest paid $ 1,765 $ 7
========= =========
Non-cash transactions:
Common stock repurchased and retired in
exchange for shares in cashless
exercise of stock options $ 204 $ 195
========= =========
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