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Perot Systems Announces Fourth Quarter 2006 Financial Results
PLANO, Texas, Feb. 6 /PRNewswire-FirstCall/ -- Perot Systems Corporation (NYSE: PER) today announced financial results for the fourth quarter of 2006. For the quarter: * Revenue was $601.0 million, an increase of $74.3 million, or 14%,
year-to-year over fourth quarter 2005 revenue of $526.7 million, and
includes $12.2 million of revenue growth, equal to two percentage
points, from the first quarter 2006 acquisition of eServ, LLC.
* Earnings per share (diluted) for the fourth quarter of 2006 was $.26.
As discussed in the accompanying financial statement notes, Perot
Systems fourth quarter effective tax rate was lower than expected,
resulting in a benefit to fourth quarter earnings of approximately
$.02 per share.
* New contract signings totaled $464.1 million for the quarter, bringing
the total value of new contracts signed during 2006 to $2.7 billion.
* Operating Cash Flow and Capital Expenditures for the fourth quarter of
2006 totaled $102.1 million and $38.7 million, respectively. Operating
Cash Flow and Capital Expenditures for full year 2006 were $213.2
million and $93.5 million, respectively. As of December 31, 2006,
Cash and Cash Equivalents and Short-term Investments were
$249.6 million and $132.5 million, respectively.
For the first quarter of 2007, Perot Systems expects:
* Revenue to range from $590 million to $605 million, with this range
including approximately $40 million of revenue from the acquisition of
QSS Group, Inc. (QSS), which Perot Systems closed on January 30, 2007.
* Earnings per share (diluted) to range from $.17 to $.20 with this
range including approximately $.01 per share of dilution from the
acquisition of QSS.
"We ended 2006 on a strong note, marking an end to a very good year for Perot Systems," said Peter Altabef, president and CEO of Perot Systems. "We are proud of our global team's accomplishments in 2006. With an outstanding year of new sales and existing contract extensions, we grew our backlog by 35%. We achieved the highest annual revenue in our history. We also continued to invest in our business. Perot Systems expanded operations to Mexico, the Philippines and China, while also expanding to a fourth city within India. We initiated the construction of two new technology centers in the United States. We also continued to acquire, adding engineering services to our business mix and strengthening our Government Services business. With these accomplishments and a strong market position, we enter 2007 well positioned for continued success." Perot Systems Corporation
Revenue by Line of Business
For the Three Months Ended December 31, 2006
(Millions of USD)
Unaudited
Year-to-Year
Line of Business Revenue Growth
Industry Solutions 1) 2) $477.8 18%
Government Services 70.4 (4%)
Consulting & Apps. Solutions, gross 1) 3) 67.2 10%
Inter-segment Eliminations 3) (14.4) 23%
Total $601.0 14%
1. Revenue from UBS for the fourth quarter of 2006 was $80.3 million, or
13% of consolidated revenue, an increase of 6% year-to-year. Revenue
from the UBS outsourcing contract reported within the Industry
Solutions line of business was $67.8 million for the fourth quarter of
2006, an increase of 4% year-to-year. This outsourcing contract
expired on January 1, 2007 at the end of its term. Revenue from UBS
reported within the Consulting and Applications Solutions line of
business was $12.5 million for the fourth quarter of 2006, an increase
of 25% year-to-year. We do not expect significant changes in the
services we provide to UBS through our Consulting and Applications
Solutions line of business as a result of the end of the outsourcing
contract.
2. Revenue for the Industry Solutions line of business includes
$12.2 million of revenue growth related to the acquisition of eServ,
LLC in the first quarter of 2006.
3. Gross revenue measures all services provided by Consulting and
Applications Solutions, both direct-to-market and through our other
lines of business. Inter-segment eliminations relate to the revenue
recognized through the Industry Solutions line of business. Net
revenue represents only direct-to-market revenue for Consulting and
Applications Solutions. Net revenue for Consulting and Applications
Solutions was $52.8 million, an increase of 7% year-to-year.
Trend Information and Business Outlook
The information contained within the following section and the accompanying footnotes to the financial statements are important to understanding current and future performance. Some of the statements included in this press release involve projections of Perot Systems' future financial performance. These statements, which are based on current expectations, are forward-looking, and actual results may differ materially. In formulating these projections, we have considered recent and potential sales, acquisitions, current market conditions and long-term opportunities and risks, with these factors being subject to risks and uncertainties, including those described within this press release. On January 30, 2007, Perot Systems completed the acquisition of QSS. For the first quarter of 2007, Perot Systems expects QSS to contribute approximately $40 million of revenue, but this acquisition will be dilutive to earnings per share by approximately $.01 per share. The dilution is primarily attributable to acquisition-related intangible asset amortization and transition expenses. Including the effect of QSS, Perot Systems expects first quarter 2007: * Revenue to range from $590 million to $605 million * Earnings per share (diluted) to range from $.17 to $.20 Conference Call Perot Systems will hold a conference call to review fourth quarter 2006 results of operations on February 6, 2007 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 fourth quarter 2006 financial results at http://www.perotsystems.com/ . Perot Systems Corporation
Condensed Consolidated Income Statements
For the Three Months Ended December 31, 2005 and 2006
(Millions of USD, except per share amounts)
Unaudited
Three Months Ended December 31
2005 1) 2006 % Change
Revenue $526.7 $601.0 14%
Direct cost of services 423.9 485.1 14%
Gross profit 102.8 115.9 13%
Selling, general & admin 63.0 72.4 15%
Operating income 39.8 43.5 9%
Other income (expense), net 2.1 (0.1) n/m
Interest income, net 0.8 1.7 n/m
Income before taxes 42.7 45.1 6%
Provision for income taxes 2) 16.1 13.7 (15%)
Net income $26.6 $31.4 18%
Earnings per share (diluted) data:
Earnings per share (diluted) $.22 $.26 18%
Shares outstanding (diluted) 121.7 122.9 1%
Perot Systems Corporation
Revenue Summary
For the Three Months Ended December 31, 2006
(Millions of USD)
Unaudited
Revenue % Pts. of
Growth
4Q 2005 $526.7 ---
Growth Related to:
Commercial accounts 37.3 7.1
New contracts 23.9 4.5
Acquisition 12.2 2.3
Industry Solutions 73.4 13.9
Government Services (2.6) (0.5)
Consulting and Apps. Sol. 3.5 0.7
4Q 2006 $601.0 14.1
Year-to-Year
Revenue Growth % of Total
Healthcare $295.1 21% 49%
Commercial Solutions & Other 3) 182.7 14% 30%
Industry Solutions 477.8 18% 79%
Government Services 70.4 (4%) 12%
Consulting and Applications
Solutions, gross 67.2 10% 11%
Inter-segment eliminations (14.4) 23% (2%)
Consulting and Apps. Sol. 52.8 7% 9%
Total $601.0 14% 100%
Perot Systems Corporation
Condensed Consolidated Balance Sheets
As of December 31, 2005 and 2006
(Millions of USD)
Unaudited
As of As of
12/31/2005 12/31/2006 % Change
Cash and cash equivalents $259.6 $249.6 (4%)
Short-term investments --- 132.5 ---
Accounts receivable, net 277.8 338.4 22%
Prepaid expenses and other 66.0 62.0 (6%)
Total current assets 603.4 782.5 30%
Property, equip. & software, net 180.0 219.9 22%
Goodwill 443.4 462.8 4%
Other non-current assets 143.8 115.6 (20%)
Total assets $1,370.6 $1,580.8 15%
Current liabilities $259.6 $300.7 16%
Long-term liabilities 150.5 175.5 17%
Stockholders' equity 960.5 1,104.6 15%
Total liabilities &
stockholders' equity $1,370.6 $1,580.8 15%
Perot Systems Corporation
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 2005 and 2006
(Millions of USD)
Unaudited
Three Months Ended
12/31/2005 12/31/2006
Net income $26.6 $31.4
Depreciation and amortization 17.2 21.3
Changes in assets and liabilities
(net of effects from acquisitions
of businesses) and other non-cash items 21.9 49.4
Net cash provided by operating activities 65.7 102.1
Purchases of property, equipment & software (16.3) (38.7)
Purchases of short-term investments, net --- (28.0)
Other investing, net (4.4) (0.1)
Net cash used in investing activities (20.7) (66.8)
Proceeds from issuance of common stock 6.3 9.7
Repurchases of common stock (21.6) ---
Other financing activities --- 4.1
Net cash (used in) provided by
financing activities (15.3) 13.8
Effect of exchange rate changes on cash (0.9) 3.4
Net cash flow $28.8 $52.5
Financial Statement Notes
1) Effective January 1, 2006, Perot Systems adopted Statement of
Financial Accounting Standards No. 123R, "Share-Based Payment" (FAS
123R). On a pro forma basis assuming FAS 123R was in effect for 2005,
Perot Systems would have incurred additional stock compensation
expense of $23.7 million, or $.12 per share, for the fourth quarter of
2005, which would have reduced quarterly earnings per share (diluted)
to $.10.
Included in this pro forma expense for the fourth quarter is
$18.5 million of expense resulting from an exchange of certain
unvested stock options for fully vested replacement options to
purchase 90% of the original number of shares of Perot Systems Class A
common stock. The stock options that were eligible to be exchanged
were only those options to purchase shares of our Class A common stock
at $25.00 per share that were scheduled to vest in March 2010.
2) For the fourth quarter of 2006, Perot Systems effective tax rate was
approximately five percentage points lower than expected for the
quarter, resulting primarily from increased project work and a long-
term contract signed in the second half of 2006 that increased profit
for the fourth quarter of 2006 in several of our foreign operations.
In addition, the effective tax rate for the fourth quarter of 2006 was
approximately seven percentage points lower than the rate in the
fourth quarter of 2005. This reduction is primarily related to a
greater impact from foreign operations and the impact in 2006 of tax-
exempt investments.
3) Growth for Commercial Solutions includes $12.2 million of revenue from
the acquisition of eServ, LLC.
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 2006 revenue of $2.3 billion. The company has more than 21,000 associates located in North America, Europe, and Asia. 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, 2005, as filed with the U.S. Securities and Exchange Commission and available at http://www.sec.gov/ , 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. Company News On-Call: http://www.prnewswire.com/comp/122686.html Website: http://www.perotsystems.com/ |
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