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8-K - 8-K - CMTSU Liquidation, Inc.a11-9436_38k.htm

Exhibit 99.1

 

GRAPHIC

 

CIBER, Inc.

6363 S. Fiddler’s Green Circle, Suite 1400

Greenwood Village, CO  80111

www.ciber.com

 

 

Contact:

Gary Kohn

Robin Caputo

 

 

Investor Relations

Media Relations

 

 

303-625-5256

303-267-3876

 

 

gkohn@ciber.com

rcaputo@ciber.com

 

CIBER REPORTS REVENUE GROWTH OF 8% AND EPS OF $0.06

International Division Robust Results Continue

2011 Outlook Reaffirmed

 

GREENWOOD VILLAGE, Colo., May 3, 2011— CIBER, Inc. (NYSE: CBR), a global information technology consulting, services and outsourcing company, today reported results for the first quarter of 2011.

 

Financial highlights for the first quarter 2011 included:

 

·                  Revenue increased 8% to $282.5 million, the largest year-over-year increase in 10 quarters

·                  Constant currency adjusted revenue increased 7%

·                  Gross Margin was 25.8%, the highest in the last 9 quarters

·                  Operating income of $7.7 million, up 8%

·                  Net income of $4.1 million, up 17%

·                  Earnings per share of $0.06

 

Strategic and operational highlights in the first quarter:

 

·                  Launched “10 in 30” focused product initiative

·                  Added Chief Information Officer and new Chief Financial Officer

·                  Realigned North America management team to improve operational effectiveness

 

President and Chief Executive Officer Dave Peterschmidt said, “The transformation of CIBER continues to progress.  Our goal is to improve financial performance utilizing a refined strategic approach, improved operational regimens, and increased as well as narrowed focus on higher margin, well developed offerings.  Our financial performance this quarter, particularly our improved gross margin, underscores the progress we are making.”

 

Peterschmidt continued, “The ongoing transformation will have its ups and downs during this transitional year.  Our International division, which delivered another great quarter, has made substantial progress.  The North America division however, has not progressed as quickly.  We made specific changes to the North American leadership to address the operational issues and to ensure that we have a plan in place to deliver financial performance at this division in line with our expectations.”

 

1



 

Consolidated Results

 

(Note: In 2011 CIBER combined Custom Solutions and U.S. ERP into a single reporting segment, CIBER North America.  The discussion of consolidated results includes comparison to 2010 as if the new reporting structure was in place last year.  Additionally, quarterly results for 2010 in the new reporting structure have been provided in the tables of this release.)

 

First quarter revenue of $282.5 million increased 8%, or 7% on a constant currency basis, compared to last year’s first quarter.  The International division, CIBER’s largest at 42% of total revenue, grew the top line 28%, or 27% adjusted for currency.  The Segmenta acquisition completed in 2010 added 2% and 7% to consolidated revenue growth and International revenue growth, respectively.  International growth continues to be driven by strengthening demand for CIBER’s SAP expertise across key verticals including Utilities, Manufacturing and Retail as well as success within the CIBER Managed Services offering in Germany.

 

The North America division, which comprised 40% of consolidated revenue, saw revenue decline 5%.   The decline was driven in part by the expected completion of several engagements at the end of last year and in the first quarter of 2011, as well as delays in the commencement of new projects.  The revenue from these engagements was not replaced at the expected rate as new sales performance was weaker than expected since several sales positions remain unfilled and as the newly added sales members are not yet at their full effectiveness.  The challenges in North America have continued, but are being addressed aggressively to ensure that the division’s results begin to improve.

 

Consolidated gross margin for the first quarter increased to 25.8% from 25.1% in the same period last year.  The International division contributed to this improvement with higher utilization and more efficient project delivery.  Offsetting the improvements in International gross margin was the continuing impact from the previously identified small number of troubled fixed-price contracts in North America.

 

Sales, general and administrative expenses (SG&A) in the quarter increased 11% and equaled 23% of revenue compared to 22% in last year’s first quarter.  On-going investments in growth initiatives comprised the majority of the increase.  Also in this quarter’s SG&A were expenses related to recruitment and hiring of sales people as well as incurred severance.

 

First quarter operating income was $7.7 million, up 8% from last year’s first quarter, resulting in an operating income margin of 2.7%.  Net income was $4.1 million or $0.06 per share, compared to $3.5 million or $0.05 per share in the first quarter 2010.

 

The effective tax rates were 22% and 38% for the first quarters 2011 and 2010, respectively.  The primary difference in the rates was the result of changes in geographic mix of income and losses.  Improved foreign results along with a domestic loss for the first quarter 2011 combined for the 22% effective rate.

 

Capital Deployment and Liquidity

 

CIBER’s total cash balance at March 31, 2011 was $57.6 million.  Cash used by operating activities for the quarter was $16.9 million.    CIBER continues to expect to generate $30 million of cash flow from operations this year with a step-up in the back half when significant amounts of the existing unbilled revenue will be invoiced and collected.  First quarter capital expenditures totaled $3.8 million.

 

DSO’s were 66 days compared with 62 days at December 31, 2010.  Sales growth in the quarter drove a portion of this increase.  DSO’s at the end of the first quarter 2010 were 66 days.

 

The total outstanding balance on the senior credit facility at quarter end was $87.5 million.  The Company is in the process of refinancing the existing facility, which is set to expire in August of next year.

 

2



 

Outlook

 

Management reaffirmed its long-term outlook and its expectations for 2011.

 

Long-term outlook:

·                  Double-digit revenue growth

·                  Gross profit margin exceeding 30%

·                  Operating margin exceeding 8%

·                  Double-digit EPS growth

·                  Cash flow from operations to approximate net income

 

2011 expectations:

·                  Revenue growth exceeding 4%

·                  Gross profit margin exceeding 25.5%

·                  Operating margin exceeding 3.5%

·                  EPS exceeding $0.30

·                  Tax rate in the high-twenty to low-thirty range (original expectation was mid thirties)

·                  Cash flow from operations of approximately $30 million

·                  Capital expenditures of approximately $20 million, mostly to fund IT infrastructure improvements and the India build-out

 

2011 Key Success Factors

·                  Higher quality deal wins in key verticals

·                  Improved DSO and cash collection

·                  Gross and operating margin improvement

·                  Expanded India delivery

·                  Enhanced operational execution

 

“While lagging sales performance within our North America division has impacted financial results into the second quarter, we are confident that we are taking the necessary steps to improve the trend in the back half of this year and to deliver on our full-year expectations,” Peterschmidt concluded.

 

Investor and Analyst Conference Call

 

CIBER President and Chief Executive Officer Dave Peterschmidt invites you to participate in a conference call today at 11:00 a.m. Eastern Time to discuss the Company’s financial results and outlook.

 

To participate in the conference call, dial 866-800-8649 (U.S.) or +1-617-614-2703 (outside the U.S.) ten minutes prior to the start of the call and provide the operator with the pass code 97703581.  This conference call will also be available via webcast at www.ciber.com/cbr.

 

A replay of the call and webcast will be available one hour after the call ends through June 3, 2011. To access the telephone replay, dial 888-286-8010 (U.S.) or +1- 617-801-6888 (outside the U.S.) and use the pass code 79308581. The webcast replay will be available at www.ciber.com/cbr.

 

3



 

Non-GAAP Financial Information

 

CIBER presents a number of non-GAAP measurements because management believes that these metrics provide meaningful supplemental information in addition to the GAAP metrics and provide comparability and consistency to prior periods.  These non-GAAP measurements include revenue change constant currency adjusted and International revenue change adjusted for currency.

 

Reconciliations of non-GAAP to comparable GAAP measures are available in the accompanying schedules and in the Investor Relations section of the Company’s website at www.ciber.com/cbr.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 relating to our operations, results of operations and other matters that are based on our current expectations, estimates, forecasts and projections.  Words, such as “anticipate,” “believe,” “could,” “expect,” “estimate,” “intend,” “may,” “opportunity,” “plan,” “potential,” “project,” “should,” and “will” and similar expressions, are intended to identify forward-looking statements.  For example, we make certain forward-looking statements regarding our current estimates for revenue and profitability for certain of our business units for 2011.  These statements reflect a number of risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by our forward-looking statements.  These risks include, without limitation, risks that: (1) economic and political conditions, including regulatory or legislative action, adversely affect us or our clients’ businesses and levels of business activity; (2) we cannot expand and develop our services and solutions in response to changes in technology and client demand; (3) we cannot compete effectively in the highly competitive consulting, systems integration and technology and outsourcing markets; (4) our work in the government contracting environment exposes us to additional risks; (5) our clients may terminate their contracts with us or they may be unable or unwilling to pay us for our services, which may impact our accounting assumptions; (6) our outsourcing services subject us to operational and financial risk; (7) the type and level of technology spending by our clients may change; (8) we cannot maintain favorable pricing and utilization rates; (9) our business is restricted by our current level of indebtedness and we could breach our financial covenants, and/or be unable to amend, extend or replace our current debt facility under favorable terms; (10) legal liability may result from solutions or services we provide; (11) we cannot anticipate the cost and complexity of performing our work or we are not able to control our costs; (12) our global operations are subject to complex risks, some of which might be beyond our control, including, but not limited to, fluctuations in foreign exchange rates; (13) we cannot balance our resources with client demand or hire sufficient employees with the required skills and background; (14) we may incur liability from our subcontractors’ or other third parties’ failure to deliver their project contributions on time or at all; (15) we cannot manage the organizational challenges associated with our size or our business strategy; (16) consolidation in the industries that we serve could adversely affect our business; (17) our ability to attract and retain business depends on our reputation in the marketplace; (18) our share price could fluctuate due to numerous factors, including variability in revenues, operating results and profitability; and/or (19) other factors discussed from time to time in the Company’s news releases and public statements, as well as the risks, uncertainties and other factors discussed under the “Risk Factors” heading the Company’s Form 10-Q and most recent Annual Report on Form 10-K and other documents filed with or furnished to the Securities and Exchange Commission.  Most of these factors are beyond CIBER’s ability to predict or control.  Forward-looking statements are not guarantees of performance and speak only as of the date they are made, and CIBER undertakes no obligation to publicly update any forward-looking statements in light of new information or future events.  Readers are cautioned not to put undue reliance on forward-looking statements.

 

About CIBER, Inc.

 

CIBER, Inc. is a global information technology consulting, services and outsourcing company applying practical innovation through services and solutions that deliver tangible results for both commercial and government clients. Services include application development and management, ERP implementation, change management, project management, systems integration, infrastructure management and end-user computing, as well as strategic business and technology consulting. Founded in 1974 and headquartered in Greenwood Village, Colorado, CIBER has more than 8,500 employees and subcontractors and operates in 18 countries, serving clients in North America, Europe and Asia/Pacific. Annual revenue in 2010 was $1.1 billion. CIBER trades on the New York Stock exchange (NYSE: CBR), and is included in the Russell 2000 Index and the S&P Small Cap 600 Index. For more information, visit www.ciber.com.

 

4



 

CIBER, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2011

 

2010

 

REVENUES

 

 

 

 

 

Consulting services

 

$

269,281

 

$

247,982

 

Other revenue

 

13,169

 

14,708

 

Total revenues

 

282,450

 

262,690

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

Cost of consulting services

 

201,441

 

186,460

 

Cost of other revenue

 

8,229

 

10,222

 

Selling, general and administrative

 

64,204

 

57,597

 

Amortization of intangible assets

 

835

 

1,254

 

Total operating expenses

 

274,709

 

255,533

 

 

 

 

 

 

 

OPERATING INCOME

 

7,741

 

7,157

 

 

 

 

 

 

 

Interest income

 

57

 

95

 

Interest expense

 

(1,615

)

(2,013

)

Other income (expense), net

 

(785

)

61

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

5,398

 

5,300

 

Income tax expense

 

1,202

 

2,000

 

 

 

 

 

 

 

CONSOLIDATED NET INCOME

 

4,196

 

3,300

 

Net income (loss) attributable to noncontrolling interests

 

73

 

(225

)

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO CIBER, INC.

 

$

4,123

 

$

3,525

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

 

$

0.06

 

$

0.05

 

Diluted

 

$

0.06

 

$

0.05

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

 

70,936

 

69,353

 

Diluted

 

72,091

 

69,633

 

 

5



 

CIBER, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

March 31,
2011

 

December 31,
2010

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

57,580

 

$

69,329

 

Accounts receivable, net of allowances of $9,972 and $9,413, respectively

 

242,858

 

239,214

 

Prepaid expenses and other current assets

 

28,234

 

24,608

 

Deferred income taxes

 

12,176

 

12,161

 

Total current assets

 

340,848

 

345,312

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $64,731 and $60,732, respectively

 

27,597

 

26,443

 

Goodwill

 

346,664

 

338,908

 

Other intangible assets, net

 

1,616

 

2,357

 

Other assets

 

9,102

 

9,344

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

725,827

 

$

722,364

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Liabilities:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term debt

 

$

10,461

 

$

10,473

 

Accounts payable

 

33,301

 

49,835

 

Accrued compensation and related liabilities

 

70,518

 

72,918

 

Deferred revenue

 

20,785

 

21,194

 

Income taxes payable

 

12,929

 

9,760

 

Other accrued expenses and liabilities

 

47,273

 

48,768

 

Total current liabilities

 

195,267

 

212,948

 

 

 

 

 

 

 

Long-term debt

 

78,168

 

77,879

 

Deferred income taxes

 

5,137

 

6,159

 

Other long-term liabilities

 

6,973

 

5,878

 

Total liabilities

 

285,545

 

302,864

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

CIBER, Inc. shareholders’ equity:

 

 

 

 

 

Preferred stock, $0.01 par value, 1,000 shares authorized, no shares issued

 

 

 

Common stock, $0.01 par value, 100,000 shares authorized, 74,487 shares issued

 

745

 

745

 

Treasury stock, at cost, 3,277 and 4,363 shares, respectively

 

(18,779

)

(25,003

)

Additional paid-in capital

 

326,533

 

325,177

 

Retained earnings

 

119,638

 

118,113

 

Accumulated other comprehensive income

 

12,260

 

661

 

Total CIBER, Inc. shareholders’ equity

 

440,397

 

419,693

 

Noncontrolling interests

 

(115

)

(193

)

Total equity

 

440,282

 

419,500

 

 

 

 

 

 

 

TOTAL LIABILITIES AND EQUITY

 

$

725,827

 

$

722,364

 

 

6



 

CIBER, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2011

 

2010

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Consolidated net income

 

$

4,196

 

$

3,300

 

Adjustments to reconcile consolidated net income to net cash used in operating activities:

 

 

 

 

 

Depreciation

 

2,997

 

2,999

 

Amortization of intangible assets

 

835

 

1,254

 

Deferred income tax expense (benefit)

 

(2,734

)

220

 

Provision for doubtful receivables

 

573

 

746

 

Share-based compensation expense

 

1,099

 

1,035

 

Other, net

 

1,159

 

1,480

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

1,108

 

(8,110

)

Other current and long-term assets

 

(1,813

)

(2,249

)

Accounts payable

 

(17,534

)

(3,880

)

Accrued compensation and related liabilities

 

(2,791

)

(2,715

)

Other current and long-term liabilities

 

(5,230

)

585

 

Income taxes payable/refundable

 

1,283

 

532

 

Net cash used in operating activities

 

(16,852

)

(4,803

)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Purchases of property and equipment, net

 

(3,757

)

(3,046

)

Net cash used in investing activities

 

(3,757

)

(3,046

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

Borrowings on long-term debt

 

107,842

 

78,135

 

Payments on long-term debt

 

(107,878

)

(82,771

)

Employee stock purchases and options exercised

 

3,593

 

536

 

Purchases of treasury stock

 

 

(2,127

)

Excess tax benefits from share-based compensation

 

315

 

53

 

Credit facility origination/amendment fees paid

 

(190

)

(501

)

Net cash provided by (used in) financing activities

 

3,682

 

(6,675

)

Effect of foreign exchange rate changes on cash and cash equivalents

 

5,178

 

(2,073

)

Net decrease in cash and cash equivalents

 

(11,749

)

(16,597

)

Cash and cash equivalents, beginning of period

 

69,329

 

67,424

 

Cash and cash equivalents, end of period

 

$

57,580

 

$

50,827

 

 

7



 

CIBER, Inc.

SUMMARY SEGMENT DATA

(Dollars in thousands)

(Unaudited)

 

Summary Segment Analysis

 

 

 

Three Months Ended March 31,

 

 

 

2011

 

2010

 

Change

 

Revenues:

 

 

 

 

 

 

 

International

 

$

118,105

 

$

92,006

 

28

%

North America

 

115,015

 

121,108

 

(5

)%

Federal

 

27,537

 

30,017

 

(8

)%

IT Outsourcing

 

23,596

 

20,443

 

15

%

Total segment revenues

 

284,253

 

263,574

 

8

%

Corporate/Inter-segment

 

(1,803

)

(884

)

 

 

Total revenues

 

$

282,450

 

$

262,690

 

8

%

 

 

 

 

 

 

 

 

Operating income:

 

 

 

 

 

 

 

International

 

$

8,114

 

$

4,099

 

98

%

North America

 

6,775

 

10,714

 

(37

)%

Federal

 

1,195

 

605

 

98

%

IT Outsourcing

 

400

 

(82

)

588

%

Total segment operating income

 

16,484

 

15,336

 

7

%

Corporate expenses

 

(7,908

)

(6,925

)

 

 

Amortization of intangible assets

 

(835

)

(1,254

)

 

 

Total operating income

 

$

7,741

 

$

7,157

 

8

%

 

Segments as Percent of Total Segment Revenue and Total Segment Operating Income

(Excluding Corporate/Inter-segment and corporate expenses and amortization)

 

 

 

Three Months Ended March 31,

 

 

 

2011

 

2010

 

Revenues:

 

 

 

 

 

International

 

42

%

35

%

North America

 

40

%

46

%

Federal

 

10

%

11

%

IT Outsourcing

 

8

%

8

%

Total segment revenue

 

100

%

100

%

 

 

 

 

 

 

Operating income:

 

 

 

 

 

International

 

49

%

27

%

North America

 

41

%

70

%

Federal

 

7

%

4

%

IT Outsourcing

 

3

%

(1

)%

Total segment operating income

 

100

%

100

%

 

Segment Operating Margins

(Excluding corporate expenses and amortization)

 

 

 

Three Months Ended March 31,

 

 

 

2011

 

2010

 

Operating margin:

 

 

 

 

 

International

 

6.9

%

4.5

%

North America

 

5.9

%

8.8

%

Federal

 

4.3

%

2.0

%

IT Outsourcing

 

1.7

%

(0.4

)%

Total segment operating margin

 

5.8

%

5.8

%

 

8



 

CIBER, Inc.

NEW SEGMENT PRESENTATION

(Dollars in thousands)

(Unaudited)

 

 

Note: In 2011, CIBER combined Custom Solutions and U.S. ERP into a single reporting segment, CIBER North America.  All 2010 segment data has been adjusted to conform to the 2011 presentation.

 

 

 

Three Months Ended

 

Year Ended

 

 

 

March 31,
2010

 

June 30,
2010

 

September 30,
2010

 

December 31,
2010

 

December 31,
2010

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

International

 

$

92,006

 

$

88,613

 

$

91,977

 

$

112,559

 

$

385,155

 

North America

 

121,108

 

124,861

 

125,392

 

115,858

 

487,219

 

Federal

 

30,017

 

32,453

 

28,913

 

26,162

 

117,545

 

IT Outsourcing

 

20,443

 

21,416

 

22,325

 

24,784

 

88,968

 

Total segment revenues

 

263,574

 

267,343

 

268,607

 

279,363

 

1,078,887

 

Corporate/Inter-segment

 

(884

)

(1,950

)

(2,725

)

(1,985

)

(7,544

)

Total revenues

 

$

262,690

 

$

265,393

 

$

265,882

 

$

277,378

 

$

1,071,343

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

International

 

$

4,099

 

$

3,907

 

$

4,568

 

$

7,268

 

$

19,842

 

North America

 

10,714

 

9,492

 

9,836

 

668

 

30,710

 

Federal

 

605

 

926

 

1,046

 

(2,532

)

45

 

IT Outsourcing

 

(82

)

166

 

(363

)

(239

)

(518

)

Total segment operating income

 

15,336

 

14,491

 

15,087

 

5,165

 

50,079

 

Corporate expenses

 

(6,925

)

(12,634

)

(6,859

)

(10,382

)

(36,800

)

Goodwill impairment

 

 

(112,000

)

 

 

(112,000

)

Amortization of intangible assets

 

(1,254

)

(1,020

)

(1,087

)

(1,068

)

(4,429

)

Total operating income (loss)

 

$

7,157

 

$

(111,163

)

$

7,141

 

$

(6,285

)

$

(103,150

)

 

9



 

CIBER, Inc.

NON-GAAP FINANCIAL INFORMATION

(Dollars in thousands, except per share amounts)

(Unaudited)

 

CIBER reports its financial results in accordance with generally accepted accounting principles (“GAAP”).  However, management believes that certain non-GAAP financial measures used in managing our business may provide users of this financial information with additional meaningful comparisons between current results and prior reported results.  Certain of the information set forth in this press release constitutes non-GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission.  We have presented below a reconciliation of these measures to the most directly comparable GAAP financial measure.  The presentation of this additional information is not meant to be considered in isolation or as a substitute for comparable amounts determined in accordance with GAAP in the United States.

 

Components of Revenue

 

 

 

Three months ended March 31, 2011

 

 

 

Constant Currency

 

Foreign Exchange

 

GAAP Reported

 

Revenues:

 

 

 

 

 

 

 

Consolidated

 

7

%

1

%

8

%

 

 

 

 

 

 

 

 

International

 

27

%

1

%

28

%

 

10