Attached files
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| 8-K - SAPIENT CORP. 8-K - SAPIENT CORP | a6185458.htm |
Exhibit 99.1
Sapient Reports Fourth Quarter 2009 Results and Declares $0.35 Special Dividend
Service Revenues Up 11% Both Year Over Year and Sequentially
Fourth Quarter Non-GAAP Operating Margin of 13.5%
BOSTON--(BUSINESS WIRE)--February 18, 2010--Sapient (NASDAQ: SAPE) today reported the following financial results for the fourth quarter ended December 31, 2009:
- Service revenues were $183.5 million compared to $164.7 million in the fourth quarter of 2008, an increase of 11%. Sequentially, service revenues were up $17.9 million, or 11%, from $165.5 million in the third quarter of 2009. On a constant currency basis, revenues increased 8% over the prior year’s quarter and increased 10% sequentially.
- GAAP income from operations was $19.2 million, down from the $26.0 million, reported in the fourth quarter of 2008.
- Non-GAAP income from operations was $24.8 million, or 13.5% of service revenues. This compared to non-GAAP income from operations of $27.9 million, or 16.9% of service revenues, in the fourth quarter of 2008.
-
GAAP diluted net income per share was $0.51, compared to $0.20 in the
fourth quarter of 2008.
- During the quarter, the company released its valuation allowance on U.S. deferred tax assets, resulting in a tax benefit of $58.3 million, as well as recorded a provision of $3.4 million related to realignment of its international tax structure, resulting in a net tax benefit in the quarter of $54.8 million, or $0.40 per share.
- Non-GAAP diluted net income per share was $0.11, compared to $0.21 in the fourth quarter of 2008.
“We finished the year strongly and are very proud of our accomplishments given the difficult economic conditions last year,” said Sapient President and Chief Executive Officer Alan J. Herrick. “As we look to 2010, we believe we are well positioned to grow our business and improve our operating performance as we help our clients succeed.”
The company generated cash from operations of $21.0 million in the fourth quarter of 2009, compared to $36.7 million of cash in the fourth quarter of 2008. As of December 31, 2009, the company had cash, cash equivalents and marketable securities of $215.8 million. Days sales outstanding was 66 days for the fourth quarter of 2009, unchanged from the third quarter of 2009 and up from 61 days for the fourth quarter of 2008.
Special Dividend
The company also announced that its Board of Directors has declared a special dividend in the amount of $0.35 per share payable on March 15, 2010 to shareholders of record at the close of business on March 1, 2010.
“We are pleased that we are able to return excess capital to shareholders based on our solid financial position and confidence in our performance outlook,” continued Herrick.
Outlook
Sapient management provided the following guidance:
- For the first quarter ending March 31, 2010, service revenues are expected to be in the range of $177 million to $181 million.
- First quarter non-GAAP operating margin is expected to be 7% or more.
- For the year ending December 31, 2010, service revenues are expected to grow by 20% or more.
- Non-GAAP operating margin for 2010 is expected to be in the range of 11% to 12%.
Webcast and Conference Call
Sapient will host a discussion of its fourth quarter results at 4:30 p.m. ET today, which will be broadcast live on the Internet. The dial-in information for the conference call is:
U.S.: (888) 713-4216
International: (617) 213-4868
Passcode: 66331011
Please use the following link to pre-register for the conference call:
https://www.theconferencingservice.com/prereg/key.process?key=PDVWH3ANU
Please use the following link to access the live webcast of this event as well as an archive of the webcast:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=65979&eventID=2710000
The link to the webcast will also be posted at:
http://www.sapient.com/about+us/Investors.htm.
In addition, a re-broadcast of the conference call will be available from February 18 at 7:30 p.m. ET through February 25 at 11:59 p.m. ET. The replay information is as follows:
U.S.: (888) 286-8010
International: (617) 801-6888
Passcode: 59734261
Adjusted (Non-GAAP) Financial Measures
Sapient provides non-GAAP financial measures to complement reported GAAP results. Management believes these measures help illustrate underlying trends in the company's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing the company’s business and evaluating its performance. The company anticipates that it will continue to report both GAAP and certain non-GAAP financial measures in its financial results, including non-GAAP results that exclude stock-based compensation expense, restructuring and other related charges, amortization of purchased intangible assets, acquisition costs and other related charges and expense relating to the stock-based compensation review and restatement and income tax benefits or provisions resulting from changes in the valuation allowance. In addition, the company’s results of operations may include a comparison of service revenues and operating expenses in constant currency terms, which excludes the effect of currency fluctuations between the U.S. dollar and the local functional currencies in countries where the company operates. The effect is excluded by translating the current period's local currency service revenues and operating expenses into U.S. dollars using the average local currency exchange rates that were in effect during the prior period of comparison. However, because the company’s reported non-GAAP financial measures are not calculated according to GAAP, these measures may not necessarily be comparable to GAAP or similarly described non-GAAP measures reported by other companies within the company’s industry. Consequently, Sapient’s non-GAAP financial measures should not be evaluated in isolation or supplant comparable GAAP measures, but, rather, should be considered together with its consolidated financial statements, which are prepared according to GAAP.
Safe Harbor Statement
This press release contains forward-looking statements – in particular, the financial guidance for the first quarter and full-year 2010 – that involve a number of risks and uncertainties. Actual results could differ materially from management’s expectations. A number of factors could cause actual events to differ materially from those indicated, including, without limitation: the continued acceptance of the company’s services; a reduction in the demand for the company’s services in light of the current economic environment; the company’s ability to accurately set fees for and complete its current and future client projects on a timely basis, successfully manage risks associated with its international operations, manage its growth and projects effectively, successfully integrate and achieve anticipated benefits from acquisitions, and continue to attract and retain high-quality employees; and other risk factors set forth in the company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as filed with the SEC.
About Sapient
Sapient is a global services company that helps clients transform in the areas of business, marketing, and technology. The company operates three divisions that enable clients to gain a competitive advantage and succeed in an increasingly digital world. SapientNitro, Sapient Global Markets and Sapient Government Services fuse insight, creativity and technology to drive innovation and to help clients navigate complex business problems. Our approach is the subject of case studies used by MBA programs at Harvard and Yale. The company has operations in North America, Europe, and Asia-Pacific. For more information, visit www.sapient.com.
Sapient is a registered service mark of Sapient Corporation.
| Sapient Corporation | ||||||||||||||
| Consolidated Unaudited Condensed Statements of Operations | ||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||
| (in thousands, except per share amounts) | ||||||||||||||
| Revenues: | ||||||||||||||
| Service revenues | $ | 183,450 | $ | 164,684 | $ | 638,884 | $ | 662,412 | ||||||
| Reimbursable expenses | 7,851 | 7,825 | 27,794 | 25,076 | ||||||||||
| Total gross revenues | 191,301 | 172,509 | 666,678 | 687,488 | ||||||||||
| Operating expenses: | ||||||||||||||
| Project personnel expenses | 119,523 | 103,896 | 435,859 | 435,508 | ||||||||||
| Reimbursable expenses | 7,851 | 7,825 | 27,794 | 25,076 | ||||||||||
| Total project personnel expenses and reimbursable expenses | 127,374 | 111,721 | 463,653 | 460,584 | ||||||||||
| Selling and marketing expenses | 9,460 | 6,223 | 31,931 | 36,233 | ||||||||||
| General and administrative expenses | 33,693 | 27,530 | 118,018 | 123,188 | ||||||||||
| Restructuring and other related (benefit) charges | (273 | ) | 95 | 4,548 | 194 | |||||||||
| Amortization of purchased intangible assets | 1,700 | 968 | 5,146 | 2,660 | ||||||||||
| Acquisition costs and other related charges | 179 | - | 2,962 | - | ||||||||||
| Total operating expenses | 172,133 | 146,537 | 626,258 | 622,859 | ||||||||||
| Income from operations | 19,168 | 25,972 | 40,420 | 64,629 | ||||||||||
| Interest and other income, net | 689 | 1,282 | 3,156 | 7,086 | ||||||||||
| Income before income taxes | 19,857 | 27,254 | 43,576 | 71,715 | ||||||||||
| Provision for income taxes (1) | 8,043 | 1,535 | 13,735 | 9,239 | ||||||||||
| Benefit from release of valuation allowance | (58,285 | ) | - | (58,285 | ) | - | ||||||||
| (Benefit from) provision for income taxes | (50,242 | ) | 1,535 | (44,550 | ) | 9,239 | ||||||||
| Net income | $ | 70,099 | $ | 25,719 | $ | 88,126 | $ | 62,476 | ||||||
| Basic net income per share | $ | 0.54 | $ | 0.20 | $ | 0.69 | $ | 0.50 | ||||||
| Diluted net income per share | $ | 0.51 | $ | 0.20 | $ | 0.66 | $ | 0.48 | ||||||
| Weighted average common shares | 129,273 | 126,528 | 127,969 | 125,988 | ||||||||||
| Weighted average dilutive common share equivalents | 7,089 | 2,401 | 4,912 | 3,176 | ||||||||||
|
Weighted average common shares and dilutive common share equivalents |
136,362 | 128,929 | 132,881 | 129,164 | ||||||||||
|
(1) Included in the provision for income taxes for the three and twelve months ended December 31, 2009 is $3,440 related to the realigment of our international tax structure. |
||||||||||||||
| Sapient Corporation | ||||||
| Consolidated Unaudited Condensed Balance Sheets | ||||||
| December 31, 2009 | December 31, 2008 | |||||
| (in thousands) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 195,678 | $ | 169,340 | ||
| Marketable securities, current portion | 16,082 | 3,462 | ||||
| Restricted cash, current portion | 393 | 372 | ||||
| Accounts receivable, less allowance for doubtful accounts | 111,987 | 88,930 | ||||
| Unbilled revenues | 47,426 | 43,665 | ||||
| Deferred tax assets, current portion | 27,762 | 1,835 | ||||
| Prepaid expenses and other current assets | 24,893 | 18,388 | ||||
| Total current assets | 424,221 | 325,992 | ||||
| Marketable securities, net of current portion | 1,362 | 17,267 | ||||
| Restricted cash, net of current portion | 2,308 | 2,139 | ||||
| Property and equipment, net | 29,229 | 32,397 | ||||
| Purchased intangible assets, net | 23,061 | 9,644 | ||||
| Goodwill | 76,004 | 51,711 | ||||
| Deferred tax assets, net of current portion | 52,753 | 7,520 | ||||
| Other assets | 5,359 | 5,600 | ||||
| Total assets | $ | 614,297 | $ | 452,270 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 19,238 | $ | 6,977 | ||
| Accrued compensation | 49,147 | 55,605 | ||||
| Accrued restructuring costs, current portion | 3,727 | 3,123 | ||||
| Deferred revenues, current portion | 19,544 | 15,143 | ||||
| Other current liabilities | 56,001 | 47,082 | ||||
| Total current liabilities | 147,657 | 127,930 | ||||
| Accrued restructuring costs, net of current portion | 2,994 | 4,799 | ||||
| Deferred revenues, net of current portion | - | 289 | ||||
| Deferred tax liability, net of current portion | 20,812 | 5,092 | ||||
| Other long-term liabilities | 16,633 | 12,213 | ||||
| Total liabilities | 188,096 | 150,323 | ||||
| Stockholders' equity | 426,201 | 301,947 | ||||
| Total liabilities and stockholders’ equity | $ | 614,297 | $ | 452,270 | ||
| Sapient Corporation | ||||||||||||||||
| Consolidated Unaudited Statements of Cash Flows | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income | $ | 70,099 | $ | 25,719 | $ | 88,126 | $ | 62,476 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Loss recognized on disposition of fixed assets | 127 | 556 | 85 | 660 | ||||||||||||
| Unrealized (gain) loss on financial instruments | (17 | ) | (1,220 | ) | 44 | (264 | ) | |||||||||
| Unrealized loss (gain) on marketable securities and put right, net | - | 310 | (103 | ) | 310 | |||||||||||
| Depreciation and amortization expense | 5,649 | 4,972 | 21,130 | 19,878 | ||||||||||||
| Deferred income taxes | (833 | ) | (84 | ) | 869 | 45 | ||||||||||
| (Recovery of) provision for doubtful accounts, net | (614 | ) | (162 | ) | 215 | (54 | ) | |||||||||
| Income tax benefit from release of valuation allowance | (58,285 | ) | - | (58,285 | ) | - | ||||||||||
| Stock-based compensation expense | 3,993 | 1,785 | 14,921 | 15,122 | ||||||||||||
| Changes in operating assets and liabilities, net of acquisition and disposition: | ||||||||||||||||
| Accounts receivable | (17,486 | ) | 2,644 | (8,805 | ) | (7,132 | ) | |||||||||
| Unbilled revenues | 1,940 | (167 | ) | (1,286 | ) | (15,914 | ) | |||||||||
| Prepaid expenses and other current assets | 9,515 | 4,356 | (3,255 | ) | 753 | |||||||||||
| Other assets | (1,226 | ) | 280 | (141 | ) | (189 | ) | |||||||||
| Accounts payable | (196 | ) | (2,561 | ) | 3,484 | (685 | ) | |||||||||
| Accrued compensation | 4,028 | 3,436 | (17,048 | ) | 2,009 | |||||||||||
| Accrued restructuring costs | (1,449 | ) | (733 | ) | (1,207 | ) | (3,323 | ) | ||||||||
| Deferred revenues | 4,163 | (91 | ) | 3,325 | 3,002 | |||||||||||
| Other accrued liabilities | 525 | 399 | (5,373 | ) | 8,393 | |||||||||||
| Other long-term liabilities | 1,062 | (2,741 | ) | 2,016 | (27 | ) | ||||||||||
| Net cash provided by operating activities | 20,995 | 36,698 | 38,712 | 85,060 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Cash paid for acquisition, net of cash received | (4,888 | ) | - | (19,057 | ) | (23,517 | ) | |||||||||
| Cash received for sale of discontinued operations | - | - | - | 720 | ||||||||||||
| Purchases of property and equipment and cost of internally developed software | (2,489 | ) | (3,759 | ) | (9,419 | ) | (17,889 | ) | ||||||||
| Sales and maturities of marketable securities | 227 | 11,177 | 4,023 | 54,741 | ||||||||||||
| Purchases of marketable securities | - | - | - | (8,330 | ) | |||||||||||
| Designation of cash equivalent to marketable securities | - | - | - | (11,626 | ) | |||||||||||
| Cash received (paid) on financial instruments, net | 181 | (955 | ) | 479 | (955 | ) | ||||||||||
| Change in restricted cash | 8 | (4 | ) | (122 | ) | (908 | ) | |||||||||
| Net cash (used in) provided by investing activities | (6,961 | ) | 6,459 | (24,096 | ) | (7,764 | ) | |||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Principal payments under capital lease obligation | (26 | ) | (13 | ) | (34 | ) | (68 | ) | ||||||||
| Repayment of bank loan | - | - | - | (1,364 | ) | |||||||||||
| Proceeds from stock option and purchase plans | 462 | 88 | 1,373 | 6,184 | ||||||||||||
| Windfall benefit from exercise and release of stock-based awards | 29 | 85 | 29 | 85 | ||||||||||||
| Repurchases of common stock | - | - | - | (9,902 | ) | |||||||||||
| Net cash provided by (used in) financing activities | 465 | 160 | 1,368 | (5,065 | ) | |||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 5,510 | (9,089 | ) | 10,354 | (21,588 | ) | ||||||||||
| Increase in cash and cash equivalents | 20,009 | 34,228 | 26,338 | 50,643 | ||||||||||||
| Cash and cash equivalents, at beginning of period | 175,669 | 135,112 | 169,340 | 118,697 | ||||||||||||
| Cash and cash equivalents, at end of period | $ | 195,678 | $ | 169,340 | $ | 195,678 | $ | 169,340 | ||||||||
| Sapient Corporation | ||||||||||||||||
| Unaudited Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Service revenues | $ | 183,450 | $ | 164,684 | $ | 638,884 | $ | 662,412 | ||||||||
| GAAP income from operations | $ | 19,168 | $ | 25,972 | $ | 40,420 | $ | 64,629 | ||||||||
| Stock-based compensation review and restatement benefit | - | (960 | ) | (992 | ) | (36 | ) | |||||||||
| Stock-based compensation expense | 3,993 | 1,793 | 14,921 | 15,213 | ||||||||||||
| Restructuring and other related (benefit) charges | (273 | ) | 95 | 4,548 | 194 | |||||||||||
| Amortization of purchased intangible assets | 1,700 | 968 | 5,146 | 2,660 | ||||||||||||
| Acquisition costs and other related charges | 179 | - | 2,962 | - | ||||||||||||
| Non-GAAP income from operations | $ | 24,767 | $ | 27,868 | $ | 67,005 | $ | 82,660 | ||||||||
| GAAP operating margin | 10.4 | % | 15.8 | % | 6.3 | % | 9.8 | % | ||||||||
| Effect of adjustments detailed above | 3.1 | % | 1.1 | % | 4.2 | % | 2.7 | % | ||||||||
| Non-GAAP operating margin | 13.5 | % | 16.9 | % | 10.5 | % | 12.5 | % | ||||||||
| GAAP net income | $ | 70,099 | $ | 25,719 | $ | 88,126 | $ | 62,476 | ||||||||
| Income tax benefit from release of valuation allowance | (58,285 | ) | - | (58,285 | ) | - | ||||||||||
| Stock-based compensation review and restatement benefit, net of tax | - | (960 | ) | (591 | ) | (36 | ) | |||||||||
| Stock-based compensation expense, net of tax | 2,481 | 1,793 | 9,239 | 15,213 | ||||||||||||
| Restructuring and other related (benefit) charges, net of tax | (163 | ) | 95 | 2,916 | 194 | |||||||||||
| Amortization of purchased intangible assets, net of tax | 1,013 | 968 | 3,065 | 2,660 | ||||||||||||
| Acquisition costs and other related charges, net of tax | 107 | - | 1,764 | - | ||||||||||||
| Non-GAAP net income | $ | 15,252 | $ | 27,615 | $ | 46,234 | $ | 80,507 | ||||||||
| GAAP basic income per share | $ | 0.54 | $ | 0.20 | $ | 0.69 | $ | 0.50 | ||||||||
| Effect of adjustments detailed above | $ | (0.42 | ) | 0.02 | (0.33 | ) | 0.14 | |||||||||
| Non-GAAP basic income per share | $ | 0.12 | $ | 0.22 | $ | 0.36 | $ | 0.64 | ||||||||
| GAAP and Non-GAAP weighted average common shares | 129,273 | 126,528 | 127,969 | 125,988 | ||||||||||||
| GAAP diluted income per share | $ | 0.51 | $ | 0.20 | $ | 0.66 | $ | 0.48 | ||||||||
| Effect of adjustments noted above and change in dilution noted below | $ | (0.40 | ) | 0.01 | (0.31 | ) | 0.14 | |||||||||
| Non-GAAP diluted income per share | $ | 0.11 | $ | 0.21 | $ | 0.35 | $ | 0.62 | ||||||||
| GAAP and Non-GAAP weighted average common shares and dilutive common share equivalents | 136,362 | 128,929 | 132,881 | 129,164 | ||||||||||||
CONTACT:
Investor Relations Contact:
Sapient
Dean
Ridlon, +1 617-963-1598
dridlon@sapient.com
or
Media
Contact:
Sapient
David LaBar, +1 646-478-9846
dlabar@sapient.com
or
Media
Contact:
Powell Communications
Theresa Tepper, +1 212-475-6303
ttepper@powellny.com