EXHIBIT 99.2
NEWS BULLETIN FROM
[COVANSYS LOGO]
FOR FURTHER INFORMATION
Covansys: Joele Frank, Wilkinson Brimmer Katcher:
David Roady Eden Abrahams / Andrew Siegel
Tel: (248) 848-2221 Tel: (212) 355-4449
droady@covansys.com ea@joelefrank.com / abs@joelefrank.com
COVANSYS UPDATES FIRST QUARTER 2004 FINANCIAL DATA
INCLUDED IN ITS AUGUST 5, 2004 PRESS RELEASE
COMPANY ALSO ANNOUNCES FILING OF FIRST QUARTER 2004 FORM 10-Q
FARMINGTON HILLS, MICH., AUGUST 6, 2004 -- Covansys Corporation (Nasdaq: CVNSE),
a leading global provider of strategic outsourcing and integration services,
today announced a revision to the first quarter and first half 2004 financial
data which it disclosed yesterday. The revision is reflected in the Company's
first quarter 2004 Form 10-Q, which was filed with the Securities and Exchange
Commission today. This revision does not affect the Company's previously
announced cash flow, net income or earnings per share.
Covansys adjusted its first quarter and half year 2004 financial information to
reclassify the $5.5 million adjustment of billed and unbilled receivables
related to two troubled fixed price projects from cost of revenue and selling,
general and administrative ("SG&A") to revenue. The adjustment reduced first
quarter revenues from $90.4 million to $84.9 million, cost of revenue from $75.2
million to $70.0 million and SG&A from $19.7 million to $19.4 million. The
Company also adjusted its half year results, with revenue decreasing from $184.5
million to $179.0 million, cost of revenue from $144.0 million to $138.8 million
and SG&A from $39.4 million to $39.1 million.
These revisions are reflected in the attached financial statement schedules.
ABOUT COVANSYS
Covansys Corporation, (NASDAQ: CVNSE), 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 Level 5 quality ratings at two of its offshore development centers in India.
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
actions by governmental or regulatory agencies, 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.
COVANSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share amounts)
Three Months Ended March 31,
2004 2003
-------------- --------------
(restated)
Revenues $ 84,892 $ 96,559
Cost of Revenues 70,001 74,777
-------------- --------------
Gross Profit 14,891 21,782
Selling, general and administrative 19,362 21,988
-------------- --------------
Income (loss) from operations (4,471) (206)
Other income, net 6 493
-------------- --------------
Income (loss) from operations before income taxes (4,465) 287
Provision (benefit) for income taxes (1,517) 108
-------------- --------------
Net income (loss) (2,948) 179
Convertible redeemable preferred stock dividends 1,130 1,095
-------------- --------------
Net (loss) available for
common shareholders $ (4,078) $ (916)
============== ==============
Earnings Per Share:
Basic Diluted Basic Diluted
-------------- --------------
NET (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $(0.15) $(0.15) $(0.03) $(0.03)
============== ==============
Weighted average common shares 26,849 26,849 27,285 27,285
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MORE
COVANSYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited, in thousands)
MARCH 31, DECEMBER 31,
2004 2003
-------------- --------------
Current Assets:
Cash and cash equivalents $ 106,689 $ 89,671
Short-term investments 19,274 37,804
-------------- --------------
125,963 127,475
Accounts receivable, net 71,683 69,755
Revenues earned in excess of billing, net 26,001 32,127
Prepaid expenses and other 15,745 14,759
-------------- --------------
Total current assets 239,392 244,116
Property and equipment, net 35,720 36,683
Goodwill, net 18,240 18,441
Other assets 16,634 16,119
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Total Assets $ 309,986 $ 315,359
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Current liabilities $ 51,286 $ 55,845
Other liabilities 1,033 889
Preferred Stock 169,785 168,655
Shareholders' equity 87,882 89,970
-------------- --------------
Total Liabilities and
Shareholders' Equity $ 309,986 $ 315,359
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COVANSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended
March 31,
2004 2003
-------------- --------------
(restated)
Net income(loss) $ (2,948) $ 179
Adjustments to reconcile net income to net cash used by
operating activities:
Depreciation and amortization 3,275 3,788
Loss on disposal and obsolescence of property and equipment 1,066 55
Provision for and write-off of doubtful accounts 194 78
Gain from sale of short-term investments (41) (207)
Change in assets and liabilities (1,318) (8,710)
-------------- --------------
Net cash provided by (used in) operating activities 228 (4,817)
Cash flows from investing activities:
Investment in property, equipment and other (2,717) (2,148)
Proceeds from sale of available-for-sale securities 39,872 25,588
Purchases of available-for-sale securities (20,633) (33,484)
Investment in computer software (68) (177)
-------------- --------------
Net cash provided by (used in) investing activities 16,454 (10,221)
Cash flows from financing activities:
Net proceeds from issuance of common stock 186 204
Net proceeds from exercise of stock options and other, net 122 127
-------------- --------------
Net cash provided by financing activities 308 331
Effect of exchange rate changes on cash 28 0
-------------- --------------
Increase (decrease) in cash and cash equivalents 17,018 (14,707)
Cash and cash equivalents at beginning of period 89,671 88,288
-------------- --------------
Cash and cash equivalents at end of period $ 106,689 $ 73,581
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COVANSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- --------------------------------
2004 2003 2004 2003
------------- --------------- ---------------- -----------
(RESTATED) (RESTATED)
REVENUES $ 94,109 $ 96,240 $ 179,001 $ 192,799
COST OF REVENUES 68,846 73,611 138,847 148,388
------------- --------------- ---------------- -----------------
GROSS PROFIT 25,263 22,629 40,154 44,411
SELLING, GENERAL AND ADMINISTRATIVE 19,685 22,815 39,047 44,803
------------- --------------- ---------------- -----------------
INCOME (LOSS) FROM OPERATIONS 5,578 (186) 1,107 (392)
OTHER INCOME, NET 1,303 579 1,309 1,072
------------- --------------- ---------------- -----------------
INCOME (LOSS) FROM OPERATIONS BEFORE INCOME TAXES 6,881 393 2,416 680
PROVISION (BENEFIT) FOR INCOME TAXES 2,339 409 822 517
------------- --------------- ---------------- -----------------
NET INCOME (LOSS) 4,542 (16) 1,594 163
CONVERTIBLE REDEEMABLE PREFERRED STOCK DIVIDENDS 1,139 1,104 2,269 2,199
------------- --------------- ---------------- -----------------
NET INCOME (LOSS) AVAILABLE FOR
COMMON SHAREHOLDERS $ 3,403 $ (1,120) $ (675) $ (2,036)
============= =============== ================ =================
EARNINGS PER SHARE:
BASIC DILUTED BASIC DILUTED BASIC DILUTED BASIC DILUTED
--------------- ---------------- ---------------- -----------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $ 0.10 $ 0.09 $(0.04) $ (0.04) $ (0.02) $(0.02) $(0.08) $ (0.08)
=============== ============== ================ =================
WEIGHTED AVERAGE COMMON SHARES 26,882 27,492 27,081 27,081 26,866 26,866 27,182 27,182
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COVANSYS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited, in thousands)
JUNE 30, DECEMBER 31,
2004 2003
------------- -------------
(RESTATED)
Current Assets:
Cash and cash equivalents $ 109,666 $ 89,671
Short-term investments 19,380 37,804
------------- -------------
129,046 127,475
Accounts receivable, net 74,629 69,755
Revenues earned in excess of billing, net 28,851 32,127
Prepaid expenses and other 14,749 14,759
------------- -------------
Total current assets 247,275 244,116
Property and equipment, net 33,786 36,683
Goodwill, net 18,119 18,441
Other assets 19,793 16,119
------------- -------------
Total Assets $ 318,973 $ 315,359
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Current liabilities $ 58,166 $ 55,845
Other liabilities 251 889
Preferred Stock 170,929 168,655
Shareholders' equity 89,627 89,970
------------- -------------
Total Liabilities and
Shareholders' Equity $ 318,973 $ 315,359
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COVANSYS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended
June 30,
2004 2003
------------- -------------
(restated)
Net income(loss) $ 1,594 $ 163
Adjustments to reconcile net income to net cash used by
operating activities:
Depreciation and amortization 6,658 7,744
Loss on disposal and obsolescence of property and equipment 1,066 398
Provision for and write-off of doubtful accounts 499 280
Gain from sale of short-term investments (109) (575)
Other 69
Change in assets and liabilities (4,387) (1,163)
------------- -------------
Net cash provided by (used in) operating activities 5,321 6,916
Cash flows from investing activities:
Investment in property, equipment and other (4,845) (4,777)
Proceeds from sale of available-for-sale securities 62,281 60,537
Purchases of available-for-sale securities (43,903) (67,175)
Investment in computer software (127) (619)
------------- -------------
Net cash provided by (used in) investing activities 13,406 (12,034)
Cash flows from financing activities:
Net proceeds from issuance of common stock 872 231
Net proceeds from exercise of stock options and other, net 370 129
Repurchases of common stock 0 (1,464)
------------- -------------
Net cash provided by financing activities 1,242 (1,104)
Effect of exchange rate changes on cash 26 0
------------- -------------
Increase (decrease) in cash and cash equivalents 19,995 (6,222)
Cash and cash equivalents at beginning of period 89,671 88,288
------------- -------------
Cash and cash equivalents at end of period $ 109,666 $ 82,066
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