PLANO, Texas, Nov. 4 /PRNewswire-FirstCall/ -- Perot Systems Corporation
(NYSE: PER) today announced third quarter 2008 financial results:
-- Revenue was $711 million, an increase of 9% year-to-year over third
quarter 2007 revenue of $655 million.
-- Earnings per share (diluted) was $.25, an increase of 25% over third
quarter 2007 earnings per share (diluted) of $.20.
-- Operating profit margin expanded year-to-year by 40 basis points to
6.8% for the third quarter of 2008.
-- New contract signings totaled $184 million for the third quarter of
2008, bringing the total value of new contracts signed during the past twelve
months to $1.4 billion. Total bookings, which include contract renewals,
totaled $473 million for the third quarter of 2008, bringing the total value
of bookings during the past twelve months to $3.0 billion.
-- Operating Cash Flow and Capital Expenditures for the third quarter of
2008 totaled $58 million and $11 million, respectively. Trailing twelve month
Operating Cash Flow and Capital Expenditures were $221 million and $47
million, respectively.
-- As of September 30, 2008, Cash totaled $246 million, and Debt totaled
$185 million.
"We are pleased with our third quarter financial results and the progress
we made building our business," said Peter Altabef, president and CEO for
Perot Systems. "We expanded revenue, profit margins, and earnings in the
quarter. The sound business model and market position we have developed has
continued to serve us well."
Business Outlook
In October, Perot Systems signed a new seven-year contract extension with
Catholic Healthcare West, extending the services relationship it originally
signed in 2001. With this new contract, Perot Systems has signed contract
extensions with two of its largest five clients during 2008.
As part of the new contract extension with CHW, Perot Systems will
transition the third party contract management function back to the client.
The pass-through revenue associated with this operation has grown
significantly since the beginning of the original contract, producing $60
million of revenue during the first nine months of 2008. While this change
will reduce revenue going forward, it will provide a profit margin benefit
because the revenue was predominately pass-through expenses. From the third
quarter of 2008 to the fourth quarter of 2008, this will result in a reduction
to revenue of approximately $16 million, but will have an insignificant
reduction to gross profit.
Other recent contract extension activity includes several successful
Federal Government contract extensions. On one of these re-competed
contracts, Perot Systems retained its core services, but moved from a prime
contractor role to a subcontractor role to meet the agency's requirements.
This will result in a $5 million quarterly reduction in previous subcontractor
revenue going from the third quarter of 2008 to the fourth quarter of 2008,
but essentially no profit impact.
For the fourth quarter of 2008, Perot Systems expects normal seasonality
to pressure revenue and earnings per share (diluted) by up to $4 million and
$.02 per share, respectively. Including this effect, Perot Systems expects
earnings per share (diluted) to range from $.23 to $.25.
Perot Systems expects revenue for the fourth quarter of 2008 to range from
$680 million to $695 million, which includes the $25 million reduction to
revenue associated with recent contract extensions and the effect of
seasonality, as noted above.
Conference Call
Perot Systems will hold a conference call to review third quarter 2008
results of operations on November 4, 2008, at 10:15 a.m. EST. Parties
interested in participating may join the conference call via the Internet at
http://www.perotsystems.com. Additionally, Perot Systems has published a
downloadable summary of its third quarter 2008 financial results at
http://www.perotsystems.com.
Perot Systems Corporation
Condensed Consolidated Income Statements
For the Three Months Ended September 30, 2007 and 2008
(Millions of USD, except per share amounts)
Unaudited
Three Months Ended
September 30
2007 2008
Revenue $655 $711
Direct cost of services 542 587
Gross profit 113 124
Selling, general & admin 71 76
Operating income 42 48
Interest expense, net (1) ---
Income before taxes 41 48
Provision for income taxes 16 18
Net income $25 $30
Earnings per share (diluted) data:
Earnings per share (diluted) $.20 $.25
Shares outstanding (diluted) 125 123
Perot Systems Corporation
Revenue Summary
For the Three Months Ended September 30, 2008
(Millions of USD)
Unaudited
Revenue
3Q 2007 $655
Growth/(Decrease) Related to:
New major contract signings 23
TTM acquisitions 1) 7
Accounts 6
Industry Solutions 36
Government Services 21
Inter-segment eliminations 2) (1)
3Q 2008 $711
Year-to-Year % of
Revenue Growth Total
Healthcare $330 2% 46%
Commercial 214 17% 30%
Industry Solutions 1) 544 7% 76%
Government Services 168 14% 24%
Inter-segment eliminations 2) (1) n/m n/m
Total $711 9% 100%
Perot Systems Corporation
Condensed Consolidated Balance Sheets
As of December 31, 2007 and September 30, 2008
(Millions of USD)
Unaudited
As of As of
12/31/2007 9/30/2008
Cash and cash equivalents $187 $246
Short-term investments 23 ---
Accounts receivable, net 477 488
Prepaid expenses and other 70 91
Total current assets 757 825
Property, equip. & software, net 235 216
Goodwill 713 721
Other non-current assets 195 214
Total assets $1,900 $1,976
Current liabilities $330 $358
Long-term liabilities 327 313
Stockholders' equity 1,243 1,305
Total liabilities & stockholders' equity $1,900 $1,976
Perot Systems Corporation
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended September 30, 2007 and 2008
(Millions of USD)
Unaudited
Three Months Ended
9/30/2007 9/30/2008
Net income $25 $30
Depreciation and amortization 26 29
Changes in assets and liabilities (net of
effects from acquisitions of businesses)
and other non-cash items 6 (1)
Net cash provided by operating activities 57 58
Purchases of property, equipment & software (18) (11)
Acquisitions of businesses, net (86) 2
Other investing, net --- 1
Net cash used in investing activities (104) (8)
Proceeds from issuance of long-term debt 55 ---
Proceeds from issuance of common stock 6 2
Proceeds from issuance of treasury stock --- 11
Other financing activities (1) (1)
Net cash provided by financing activities 60 12
Effect of exchange rate changes on cash 4 (12)
Net cash flow $17 $50
Segment Information
In the third quarter of 2008, we combined our Consulting and Applications
Solutions line of business with our Industry Solutions line of business,
resulting in a reduction from three segments to two segments: Industry
Solutions and Government Services. This realignment helps us unify teams
where these two lines of business had an overlap in end markets, leverage our
domain expertise, and build upon the growing collaboration between these lines
of business in providing globally delivered services. The tables below
provide historical data for the newly realigned lines of business.
Perot Systems Corporation
Revenue and Pretax Income by Reporting Segment
(Millions of USD)
Unaudited
FY Three Months Ended (2007)
2006 Mar 31 Jun 30 Sep 30 Dec 31 3)
Industry Solutions $2,009 $477 $491 $508 $585
Government Services 291 114 145 147 148
Other (2) (1) (1) --- (1)
Total Revenue $2,298 $590 $635 $655 $732
Industry Solutions $101 $29 $31 $37 $81
Government Services 19 5 6 6 9
Other --- --- (1) (2) (19)
Total Pretax Income $120 $34 $36 $41 $71
Three Months Ended (2008)
Mar 31 Jun 30 Sep 30
Industry Solutions $519 $545 $544
Government Services 161 161 168
Other --- (1) (1)
Total Revenue $680 $705 $711
Industry Solutions $40 $44 $39
Government Services 5 3 9
Other --- --- ---
Total Pretax Income $45 $47 $48
Footnotes
1. During the past twelve months, Perot Systems acquired HighQ-IT for the
manufacturing industry GmbH (HighQ-IT) and Original Solutions Limited. These
acquisitions contributed $7 million of revenue for the third quarter of 2008,
which is reported in the Commercial area of our Industry Solutions line of
business.
2. Inter-segment eliminations relate to the revenue associated with
services provided by delivery organizations within our Industry Solutions line
of business to clients in our Government Services line of business.
3. For the three months ended December 31, 2007, Perot Systems recognized
revenue of $59 million and pretax income of $46 million related to a client
termination, all of which is reported within the Industry Solutions line of
business. In addition, Perot Systems recorded $18 million of expense related
to cost reduction activities, which is reported in the Other segment.
About Perot Systems
Perot Systems is a worldwide provider of information technology services
and business solutions. Through its flexible and collaborative approach, Perot
Systems integrates expertise from across the company to deliver custom
solutions that enable clients to accelerate growth, streamline operations and
create new levels of customer value. Headquartered in Plano, Texas, Perot
Systems reported 2007 revenue of $2.6 billion. The company has more than
23,000 associates located in the Americas, Europe, Middle East and Asia
Pacific. Additional information on Perot Systems is available at
http://www.perotsystems.com/.
This press release contains forward-looking statements that are subject to
known and unknown risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by such statements. For
factors that could affect our business and cause actual results to differ
materially, please refer to our Annual Report on Form 10-K for the fiscal year
ended December 31, 2007, as filed with the U.S. Securities and Exchange
Commission and available at http://www.sec.gov/, as updated in our Quarterly
Reports on Form 10-Q filed after such Form 10-K, for additional information
regarding risk factors. We disclaim any intention or obligation to revise any
forward-looking statements whether as a result of new information, future
developments, or otherwise.
MEDIA CONTACT:
PEROT SYSTEMS CORPORATION
Joe McNamara
+1 972 577-6165
joe.mcnamara@ps.net
INVESTOR CONTACT:
John Lyon
+1 972 577-6132
+1 972 577-6791 fax
john.lyon@ps.net
