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NEWS RELEASE
BearingPoint, Inc. Reports Preliminary Results for Quarter Ended
December 31, 2003
McLean, VA, February 26, 2004 – BearingPoint, Inc. (NYSE: BE) today reported preliminary results for the quarter ended December 31, 2003. Revenue is expected to be approximately $792 million and the loss per share is expected to be approximately $0.60. The expected revenue increased 7 percent over the quarter ended September 30, 2003, and declined 2 percent compared to the quarter ended December 31, 2002. The Company’s expected net loss for the quarter ended December 31, 2003 of approximately $117 million includes a previously announced lease and facilities charge of $2 million, an expected goodwill impairment charge of $120 million1, and a tax rate of 86% due to the change in fiscal year-end and the timing of losses in certain foreign entities. Cash generated from operations for the quarter is expected to be approximately $69 million.
As was previously announced, the Company recently changed its fiscal year-end from June 30 to December 31 and is currently undergoing a transition period audit for the six months ended December 31, 2003. As a result, these preliminary results are subject to audit procedures and final reconciliations and adjustments, if any. Following completion of these procedures and final preparation of the Form 10-K, the Company expects to report its final earnings for the quarter and six-month period ended December 31, 2003, on or around April 16, 2004, in accordance with the required filing period.
“In what is traditionally a seasonally slow quarter for our industry, our preliminary results indicate quarter over quarter increases in revenue in our three international regions and in two of our four North America industry segments,” commented Rand Blazer, chairman and chief executive officer. “We continue to focus on improving utilization and expanding our billable workforce in targeted areas to improve our operating efficiency.”
“We have strengthened our balance sheet and generated positive cash flow for the quarter,” noted Bob Falcone, executive vice president and chief financial officer. “We also maintained strong utilization of our resources globally, which is a positive sign for our business.”
Quarterly Highlights
The preliminary December quarter results include the following key performance items and other information.
| · | In addition to the quarter over quarter revenue growth, the Company also realized solid bookings for the business as a whole and especially in North America, led by the Financial Services and Public Services segments, and in the EMEA region. Cancellations and postponements of only approximately $6 million demonstrate greater stability in client spending, while the pipeline of sales opportunities continues to grow, reaching a six-month high for the Company. |
1Subject to completion of the Company’s valuation analysis, the Company expects that the goodwill impairment charge will be between $100 million and $140 million. The Company currently estimates the amount of the charge to be $120 million.
NEWS RELEASE
| · | The Company expects utilization in the North America region of 67 percent, which exceeds utilization of 62 percent for the quarter ended December 31, 2002. The expected utilization rates for the quarter reflect improvements from the prior December quarter in all North America segments as well as in the EMEA and Asia Pacific operations. |
| · | The challenging economic environment in Europe has caused the Company to lower its growth expectations for this region and to reevaluate the recorded goodwill for its EMEA business in accordance with generally accepted accounting principles. As a result of this review, the Company expects to record a goodwill impairment charge of approximately $120 million1 during the quarter ended December 31, 2003. |
For additional information concerning revenue and gross margin results for the Company’s operating segments, see the attached Schedule A and the Business Update for the quarter ended December 31, 2003 available at the Company’s website atwww.bearingpoint.com.
As announced in the Company’s press release dated February 2, 2004, a teleconference will be held today at 8:00 a.m. EST to discuss the preliminary results of the quarter ended December 31, 2003. To participate in the call, please dial (888) 593-8429, passcode: 0226; International callers should dial (630) 395-0019, passcode: 0226. A rebroadcast will be available approximately two hours after the end of the call until Friday, March 12, 2004. To access the rebroadcast, dial (800) 283-4212 and International callers should dial (402) 220-9731.
This teleconference can be accessed in a listen only mode from the Company’s website atwww.bearingpoint.com. Online replay, available approximately two hours after the end of the call, and all written materials associated with this call will be available until Friday, March 12, 2004.
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NEWS RELEASE
About BearingPoint, Inc.
BearingPoint, Inc. (NYSE:BE), is a large business consulting, systems integration and managed services firm serving Global 2000 companies, medium-sized businesses, government agencies and other organizations. We provide business and technology strategy, systems design, architecture, applications implementation, network infrastructure, systems integration and managed services. Our service offerings are designed to help our clients generate revenue, reduce costs and access the information necessary to operate their business on a timely basis. Based in McLean, Va., BearingPoint has been named by Fortune as one of America’s Most Admired Companies in the computer and data services sector. For more information, visit the Company’s website atwww.bearingpoint.com.
This press release may contain forward-looking statements relating to our operations that are based on our current expectations, estimates and projections. Words such as “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” and similar expressions are used to identify these forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Our actual results may differ from the forward-looking statements for many reasons, including: the business decisions of our clients regarding the use of our services; the timing of projects and their termination; the availability of talented professionals to provide our services; the pace of technological change; the strength of our joint marketing relationships and the actions of our competitors. In addition, these statements could be affected by domestic and international economic and political conditions. For a more detailed discussion of these factors, see Exhibit 99.1 in our Form 10-Q for the quarter ended September 30, 2003.
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| For Media: | | For Investors: |
John Schneidawind | | Deborah Mandeville |
BearingPoint, Inc. | | BearingPoint, Inc. |
jschneidawind@bearingpoint.net | | dmandeville@bearingpoint.net |
(703) 747-5853 | | (508) 549-5207 |
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BearingPoint
INDUSTRY RESULTS
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| | | Public Services
| | Communications & Content
| | Financial Services
| | CIT
| | EMEA
| | Asia Pacific
| | Latin America
| | Corporate/ Other
| | | Total
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Quarter Ended Dec. 31, 2003(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 290,112 | | $ | 77,596 | | $ | 59,577 | | $ | 103,552 | | $ | 153,065 | | $ | 81,628 | | $ | 25,338 | | $ | 1,226 | | | $ | 792,094 |
Other Direct Contract Expenses | | | 94,427 | | | 19,344 | | | 11,367 | | | 30,580 | | | 35,160 | | | 20,997 | | | 7,090 | | | (846 | ) | | | 218,119 |
Costs of Service | | | 101,156 | | | 39,002 | | | 31,881 | | | 45,894 | | | 97,457 | | | 43,684 | | | 12,356 | | | 37,421 | | | | 408,851 |
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Gross Margin | | $ | 94,529 | | $ | 19,250 | | $ | 16,329 | | $ | 27,078 | | $ | 20,448 | | $ | 16,947 | | $ | 5,892 | | $ | (35,349 | ) | | $ | 165,124 |
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Quarter Ended Sept. 30, 2003 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 271,473 | | $ | 63,254 | | $ | 60,561 | | $ | 107,427 | | $ | 136,815 | | $ | 80,505 | | $ | 21,929 | | $ | 994 | | | $ | 742,958 |
Other Direct Contract Expenses | | | 81,086 | | | 12,007 | | | 10,581 | | | 27,058 | | | 25,987 | | | 19,398 | | | 6,995 | | | (378 | ) | | | 182,734 |
Costs of Service | | | 104,872 | | | 35,035 | | | 31,751 | | | 58,960 | | | 96,590 | | | 41,239 | | | 11,305 | | | 93,229 | | | | 472,981 |
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Gross Margin | | $ | 85,515 | | $ | 16,212 | | $ | 18,229 | | $ | 21,409 | | $ | 14,238 | | $ | 19,868 | | $ | 3,629 | | $ | (91,857 | ) | | $ | 87,243 |
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Quarter Ended June 30, 2003 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 283,163 | | $ | 75,246 | | $ | 60,914 | | $ | 116,218 | | $ | 138,721 | | $ | 81,745 | | $ | 26,283 | | $ | (2,155 | ) | | $ | 780,135 |
Other Direct Contract Expenses | | | 84,847 | | | 14,986 | | | 11,078 | | | 26,591 | | | 20,235 | | | 24,044 | | | 6,921 | | | (1,746 | ) | | | 186,956 |
Costs of Service | | | 110,364 | | | 36,346 | | | 30,626 | | | 56,145 | | | 97,270 | | | 41,528 | | | 10,892 | | | 37,719 | | | | 420,890 |
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Gross Margin | | $ | 87,952 | | $ | 23,914 | | $ | 19,210 | | $ | 33,482 | | $ | 21,216 | | $ | 16,173 | | $ | 8,470 | | $ | (38,128 | ) | | $ | 172,289 |
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Quarter Ended Mar. 31, 2003 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 276,707 | | $ | 88,407 | | $ | 59,056 | | $ | 136,833 | | $ | 157,607 | | $ | 83,990 | | $ | 16,093 | | $ | 177 | | | $ | 818,870 |
Other Direct Contract Expenses | | | 80,839 | | | 15,192 | | | 10,610 | | | 32,417 | | | 23,645 | | | 27,563 | | | 2,271 | | | 61 | | | | 192,598 |
Costs of Service | | | 110,172 | | | 47,709 | | | 32,837 | | | 66,954 | | | 112,398 | | | 41,849 | | | 9,117 | | | 30,588 | | | | 451,624 |
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Gross Margin | | $ | 85,696 | | $ | 25,506 | | $ | 15,609 | | $ | 37,462 | | $ | 21,564 | | $ | 14,578 | | $ | 4,705 | | $ | (30,472 | ) | | $ | 174,648 |
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Quarter Ended Dec. 31, 2002 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue | | $ | 269,680 | | $ | 90,846 | | $ | 54,791 | | $ | 131,157 | | $ | 166,229 | | $ | 77,047 | | $ | 19,041 | | $ | (1,218 | ) | | $ | 807,573 |
Other Direct Contract Expenses | | | 71,197 | | | 17,414 | | | 9,386 | | | 28,807 | | | 28,019 | | | 22,419 | | | 4,513 | | | 99 | | | | 181,854 |
Costs of Service | | | 108,397 | | | 40,222 | | | 29,186 | | | 68,061 | | | 92,184 | | | 40,866 | | | 8,140 | | | 40,397 | | | | 427,453 |
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Gross Margin | | $ | 90,086 | | $ | 33,210 | | $ | 16,219 | | $ | 34,289 | | $ | 46,026 | | $ | 13,762 | | $ | 6,388 | | $ | (41,714 | ) | | $ | 198,266 |
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Note: Prior quarters have been reclassified to conform with current presentation.
| (1) | The Company currently is undergoing a transition period audit for the six months ended December 31, 2003. As a result, these preliminary results are subject to audit procedures and final reconciliations and adjustments, if any. |
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