EXHIBIT 99.1
NEWS BULLETIN FROM 32605 W. Twelve Mile Rd.
Suite 250
[COVANSYS LOGO] Farmington Hills, MI 48334
NASDAQ: CVNS
FOR FURTHER INFORMATION
AT THE COMPANY: AT JOELE FRANK, WILKINSON BRIMMER KATCHER:
David Roady Eden Abrahams / Andrew Siegel
(248) 848-2221 (212) 355-4449
droady@covansys.com ea@joelefrank.com / abs@joelefrank.com
MONDAY, MAY 17, 2004
COVANSYS REPORTS SELECTED FIRST QUARTER OPERATING RESULTS
POSTPONES FILING 10-Q FOR PERIOD ENDING MARCH 31, 2004 PENDING
COMPLETION OF REVIEW AND ANALYSIS OF CERTAIN
PROPERTY AND EQUIPMENT
FARMINGTON HILLS, MI, MAY 17, 2004 -- Covansys Corporation (NASDAQ: CVNS), a
worldwide provider of information technology services, today announced that the
filing of its report on Form 10-Q for the quarter ended March 31, 2004 will be
delayed pending completion of the proper accounting for physical losses and
obsolescence for certain of the Company's property and equipment, mainly
computers and related peripherals, as a result of a recently completed physical
inventory. The physical losses and obsolescence identified in the first quarter
of 2004 had a current net book value of approximately $2.5 million (an original
cost of $15.7 million). The Company has been unable to identify the periods to
which the physical losses and obsolescence occurred and the related impact on
the previously reported financial information. The physical losses and
obsolescence represent less than 1% of total assets. The Company's Form 10-Q for
the quarter ended March 31, 2004 will be filed with the Securities and Exchange
Commission as soon as possible after the completion of this analysis.
While Covansys awaits resolution of the aforementioned item, the Company is
reporting revenues of $93.4 million compared with $96.6 million in the first
quarter of 2003 and $91.5 million in the fourth quarter of 2003.
Highlights of Covansys' first quarter 2004 included:
- - A directive from People Soft, Inc. to expand the company's India Development
Center;
- - An agreement with BearingPoint to assist with the opening and operation of
BearingPoint's first Global Development Center in India;
- - A $3.4 million contract with the Idaho Secretary of State's Office to
implement a new voter registration system;
- - Continued strong revenue growth in India, accounting for 26% of Covansys'
total first quarter revenue compared with 15% for the first quarter of 2003
and 25% in the fourth quarter of 2003;
- - An increase of 7% in hours billed in India and a 4% improvement in its India
billing rates;
- - A rise in billable headcount to nearly 5000 employees with 245 added in India
during the period.
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"We are pleased with our success in building out our India platform while
continuing to improve the quality and productivity of our operations there,"
said Martin Clague, President and Chief Executive Officer of Covansys. "The
strength of our capabilities in India is reflected in the increasing percentage
of total revenues generated in the region, and further enhancing the scale and
scope of our presence in India will remain an important strategic goal for us in
the quarters ahead."
Of the Company's reported revenue in the period, 71% was generated in the
commercial sector and 29% in the public sector.
Domestic utilization was 84% in the first quarter 2004, up from 80% for the
fourth quarter 2003 and up from 83% for the first quarter 2003. Utilization in
India was 71% for the first quarter compared with 73% for the first quarter 2003
and 76% in the fourth quarter of 2003. Utilization in India was negatively
impacted as Covansys began to aggressively hire to meet an anticipated increase
in demand. The Company expects to moderately improve its Indian utilization
rates during the second half of the year.
"Looking ahead, we are confident that the new commercial and public sector
projects we were awarded, together with the five-year Master Service Agreement
we announced last month with Fidelity National Financial ("FNF"), will help us
generate strong revenue growth and continue to enhance our reputation as a
leading provider of innovative IT solutions. We are excited about the
opportunity to work with FNF, BearingPoint and our other valued partners to help
their clients reap the same competitive advantages of offshore outsourcing that
Covansys clients have been enjoying for more than a decade -- rapid deployment,
world-class quality and reduced costs," concluded Mr. Clague.
Covansys will host a conference call to discuss select first quarter 2004
financials on Tuesday, May 18, 2004 at 1:00 p.m. Eastern Time. Interested
parties may access the call by dialing 877-407-8033 (or 201-689-8033 from
outside North America). The call may also be accessed via the Internet at the
company's website, www.covansys.com. Please note that the call will not include
a question and answer session.
A replay of the call will be available beginning at approximately 1:00 p.m. on
May 19th through midnight on May 26th by dialing 877-660-6853 or 201-612-7415
and referencing account number 1628 and conference ID 104256. The replay will
also be available on the Company's website, www.covansys.com, for 90 days.
ABOUT COVANSYS
Covansys Corporation, (NASDAQ: CVNS), is a global consulting and technology
services company specializing in industry-specific solutions, strategic
outsourcing and integration services through a unique onsite, off-site, offshore
delivery model that helps clients achieve rapid deployment, world-class quality
and reduced costs. Founded in 1985, Covansys has successfully delivered an array
of innovative and cost-effective business and technical solutions to leaders in
the private and public sectors. With one of the largest offshore capabilities of
any technology services provider based in the United States, Covansys has
achieved the SEI's CMM(R) Level 5 quality ratings at two of its offshore
development centers in India.
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SAFE HARBOR STATEMENT
With the exception of statements regarding historical matters and statements
concerning our current status, certain matters discussed herein are
forward-looking statements that involve substantial risks and uncertainties.
Such forward-looking statements may be identified by the words "anticipate,"
"believe," "estimate," "expect" or "intend" and similar expressions. Our actual
results, performance or achievements could differ materially from these
forward-looking statements.
Factors that could cause or contribute to such material differences include
general economic conditions and conditions in the IT industry such as the demand
for IT services, public sector government budgetary constraints, potential cost
overruns on fixed-price projects, effective application of the percentage of
completion method of accounting for fixed priced contracts, risks related to
merger, acquisition and strategic investment strategy, variability of operating
results, government regulation of immigration, exposure to regulatory, political
and economic conditions in India and Asia, competition in the IT services
industry, the short-term nature and termination provisions of contracts,
economic conditions unique to clients in specific industries and limited
protection of intellectual property rights. These and other factors are
described in the Company's filings with the U.S. Securities and Exchange
Commission.
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