MPS GROUP ANNOUNCES FOURTH QUARTER AND
YEAR-END RESULTS
JACKSONVILLE, Fla. (February 5, 2003) -- MPS Group, Inc. (NYSE:MPS), a leading
provider of specialty staffing and business solutions, today announced financial
results for the fourth quarter and year ended December 31, 2002. For the fourth
quarter, the Company reported revenue of $280 million and a GAAP loss of $0.23
per diluted share including the previously announced charge of $0.28 per diluted
share. Excluding the effect of the charge, the Company would have reported
earnings of $0.05 per diluted share for the fourth quarter, which was at the
high end of the management guidance range of $0.03 to $0.05.
For the year ended December 31, 2002, the Company reported revenue of $1.2
billion. Effective January 1, 2002, the Company was required to adopt SFAS 142,
which resulted in a charge of $5.49 per diluted share to reflect the cumulative
effect of accounting change, net of the tax benefit. Due to the accounting
change and the $0.28 per diluted share fourth quarter charge, the Company
reported a GAAP loss per diluted share for 2002 of $5.62. Excluding the effect
of the charge and before the cumulative effect of accounting change, the Company
would have reported earnings of $0.16 per diluted share for 2002.
Fourth Quarter Summary
o Revenue of $280 million;
o EBITDA of $14.5 million, excluding charge;
o Diluted operating earnings per share of $0.05, excluding charge;
o Long-term debt paid off in full;
o Cash at year-end of $67 million;
o Legal services unit Special Counsel revenue increased 4% versus the
third quarter of 2002;
o E-Solutions unit Idea Integration achieved sequential revenue growth
and EBITDA profitability for both the fourth quarter and for 2002 as a
whole;
o Healthcare staffing unit achieved 13% sequential revenue growth.
On January 23, 2003, the Company disclosed that it had incurred a charge of
$34.5 million ($29.1 million, or $0.28 per diluted share, after consideration of
the related tax benefit) in the quarter ended December 31, 2002, to account for
three distinct items that arose during the fourth quarter. First, the Company
elected not to participate in a recapitalization of a minority investment
originally made in 1996, which resulted in the investment being impaired. As a
result, the Company wrote off the investment in its entirety, incurring a
non-cash charge of $16.1 million. Second, the Company finalized a plan for the
settlement of excess real estate obligations for certain vacant office space.
The anticipated cost of the settlement of these excess real estate obligations
is $9.7 million. Third, the Company recorded a tax provision of $8.7 million for
a proposed adjustment with the IRS related to its ongoing audit of prior years'
tax returns.
Business Unit Performance
Despite the poor economy and its effect on employment and technology spending, a
number of the Company's business units had strong performances during the fourth
quarter. Special Counsel, the Company's legal services unit, increased revenue
4% versus the third quarter of 2002 and 6% versus the fourth quarter of 2001.
Soliant Health, the Company's healthcare services unit, achieved sequential
revenue growth of 13% versus the third quarter. Idea Integration, the Company's
e-solutions unit, achieved a modest sequential increase in revenue versus the
third quarter and was profitable on an EBITDA basis for both the fourth quarter
and 2002. Modis, the Company's IT services unit, maintained its consistent
profitability. Beeline, the Company's human capital solutions unit, continued to
win new customer contracts and achieved success in delivering its solutions to
key clients.
Cash Flow
The Company generated cash flow from operations of $43 million for the fourth
quarter of 2002 and $116 million for 2002. The Company's strong cash flow is the
result of its back-office integration and consolidation efforts over the past
two years, aggressive collection of accounts receivable, and diligent
operational and financial management by MPS Group divisional leaders. Cash was
used to eliminate the Company's long-term debt completely. Cash on hand at the
close of the fourth quarter totaled $67 million.
Management Comments
"While 2002 was a challenging year for both our company and our industry, we are
hopeful that we will see a better business environment in 2003," commented
Timothy Payne, Chief Executive Officer. "I really appreciate the efforts and
talents of our people, who did a tremendous job in 2002 under very trying
circumstances."
"With an efficient operating infrastructure, a strong financial position, and
positive cash flow, we are well positioned for the current economic conditions,"
said Robert P. Crouch, Senior Vice President and Chief Financial Officer. "Even
more important, we believe we are in an excellent position to capitalize on
business opportunities when the global economy and business environment begin to
improve."
First Quarter 2003 Management Guidance
Near year-end, it is common for staffing and consulting businesses to experience
a decrease in billable headcount and utilization as clients wrap up projects for
the year. MPS Group experienced this seasonal effect on a moderate basis in late
December of 2002 and early January of 2003. In addition, during the first
quarter of each new year, staffing and consulting businesses experience higher
expenses due to the resetting of payroll tax limits. Taking these seasonal
factors into account, MPS Group provides the following management guidance for
the expected results for the first quarter of 2003:
First Quarter 2003
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Revenue $265 million - $275 million
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Diluted earnings per share $0.02 - $0.04
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Conference Call Scheduled Today
The live broadcast of MPS Group's conference call will begin at 10:00 a.m.
Eastern Time today. The link to this event may be found at the Company's
website: www.mpsgroup.com. If you do not have Internet access, you may listen to
the call by dialing (913) 981-5510. If you are unable to participate at that
time, online and telephonic replays will be available two hours after the call
ends and will continue until 6:00 p.m. ET on February 12. To access the
telephonic replay, please dial (719) 457-0820 and enter 625843 when prompted for
the reservation code. The link for the online replay may also be found on the
Company's website.
About MPS Group
MPS Group is one of the world's largest providers of business services and
solutions. MPS Group helps its client companies thrive by delivering a unique
mix of consulting, solutions, and staffing services. A Fortune 1000 company with
headquarters in Jacksonville, Florida, MPS Group serves leading businesses
throughout the United States, Canada, the United Kingdom, and continental
Europe. For more information about MPS Group, please visit www.mpsgroup.com.
Except for materials described above, none of the information on our website
should be considered included in this release.
Forward-Looking Statements
The statements contained in this press release should be considered
forward-looking statements that are subject to risks, uncertainties or
assumptions described above and may be affected by other factors, including but
not limited to: fluctuations in the economy and financial markets in general and
in the Company's industry segments in particular; industry trends towards
consolidating vendor lists; the demand for the Company's services, including the
impact of changes in utilization rates; consolidation or bankruptcy of major
customers; the effect of competition, including the Company's ability to expand
into new markets and to maintain profit margins in the face of pricing
pressures; the Company's ability to retain significant existing customers or
obtain new customers; the Company's ability to recruit, place and retain
consultants and professional employees; the Company's ability to identify and
complete acquisition targets and to successfully integrate acquired operations
into the Company; possible changes in governmental regulations affecting the
Company's operations, including possible changes to regulations relating to
benefits for consultants and temporary personnel; unexpected fluctuations in
interest rates or foreign currency exchange rates; loss of key employees; and
other factors discussed in the Company's filings with the Securities and
Exchange Commission. In some cases, you can identify forward-looking statements
by terminology such as "will," "may," "should," "could," "expects," "plans,"
"hopes," "indicates," "projects," "anticipates," "believes," "estimates,"
"appears," "predicts," "potential," "continues," "would," or "become," or the
negative of these terms or other comparable terminology. Readers are urged to
review and consider the factors listed under "Forward-Looking Statements" on
page 2 of the Company's Annual Report on Form 10-K for 2001 and in subsequent
filings with the Securities and Exchange Commission.
Should one or more of these risks, uncertainties or other factors materialize,
or should underlying assumptions prove incorrect, actual results, performance or
achievements of the Company may vary materially from any future results,
performance or achievements expressed or implied by the forward-looking
statements. Forward-looking statements are based on beliefs and assumptions of
the Company's management and on information then currently available to
management. Undue reliance should not be placed on such forward-looking
statements. Forward-looking statements are not guarantees of performance. Such
forward-looking statements were prepared by the Company based upon information
available at the time of such statements. Forward-looking statements speak only
as of the date they are made, and the Company undertakes no obligation to update
publicly any of them in light of new information or future events.
MPS Group, Inc.
Unaudited Operating Highlights
(in thousands, except per share amounts)
Operating Highlights: Three Months Ended Dec. 31, Year Ended Dec. 31,
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2002 2001 2002 2001
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Revenue:
IT Services $ 134,941 $ 164,940 $ 575,312 $ 770,830
Professional Services 124,864 129,850 495,157 608,850
e-Business Solutions 20,631 30,797 84,501 168,809
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Total revenue 280,436 325,587 1,154,970 1,548,489
Gross profit:
IT Services $ 29,336 $ 34,672 $ 122,294 $ 168,317
Professional Services 38,417 41,123 151,061 197,997
e-Business Solutions 7,319 8,223 28,431 54,731
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Total gross profit 75,072 84,018 301,786 421,045
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General and administrative expenses 60,555 72,128 248,959 336,577
Lease restructuring charge 9,699 - 9,699 -
Impairment of investment 16,165 - 16,165 -
Depreciation and amortization 5,638 14,943 21,017 60,122
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Total operating expenses 92,057 87,071 295,840 396,699
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(Loss) income from operations (16,985) (3,053) 5,946 24,346
Interest and other, net (186) (1,918) (3,947) (9,199)
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(Loss) income before provision for income taxes
and cumulative effect of accounting change (17,171) (4,971) 1,999 15,147
Tax provision (benefit) 6,833 (2,237) 14,591 6,804
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(Loss) income before cumulative effect of accounting change (24,004) (2,734) (12,592) 8,343
Cumulative effect of accounting change, net of tax benefit - - (553,712) -
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Net income (loss) $ (24,004) $ (2,734) $ (566,304) $ 8,343
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Diluted (loss) earnings per share before cumulative effect
of accounting change $ (0.23) $ (0.03) $ (0.12) $ 0.08
Cumulative effect of accounting change, net of tax benefit - - (5.49) -
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Diluted (loss) earnings per share $ (0.23) $ (0.03) $ (5.62) $ 0.08
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Diluted common shares outstanding 102,320 98,868 100,833 98,178
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Note:Excluding the effect of the $34.5 million charge ($29.1 million net of
related tax benefit), diluted earnings per share in the fourth quarter were
$0.05. The charge is comprised of the following ($ in millions):
Impairment of investment $ 16.1
Lease restructuring charge $ 9.7
Proposed IRS audit adjustment $ 8.7
If the provisions of SFAS 142 were in effect during 2001, then diluted
earnings per share for the three and twelve months ended December 31, 2001,
would have been $0.04 and $0.36, respectively.
As of
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Dec. 31, Dec. 31,
2002 2001
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Working capital $ 171,931 $ 204,722
Total assets 897,983 1,543,622
Long-term debt - 101,000
Stockholders' equity 781,559 1,310,811