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[CBIZ LOGO] CENTURY BUSINESS SERVICES, INC. PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT: WARE GROVE
Chief Financial Officer
-or-
KATE KOWALSKI
Director, Corporate Relations
Century Business Services, Inc.
Cleveland, Ohio
(216) 447-9000
CBIZ TO REPORT LOWER-THAN-EXPECTED
FOURTH-QUARTER REVENUE AND EARNINGS
CBIZ ALSO TO RECORD FOURTH-QUARTER CHARGES
OF APPROXIMATELY $120 MILLION
Cleveland, Ohio (February 14, 2001)--Century Business Services, Inc. ("CBIZ")
(Nasdaq: CBIZ) today announced that its fourth-quarter 2000 results, before
fourth-quarter charges and the adoption of SAB 101 adjustments, will be lower
than analysts' earnings-per-share estimates of one to two cents, primarily
because of lower-than-projected revenue in the quarter. The Company expects to
release actual results for the three months and year ended December 31, 2000 on
March 7, 2001.
Excluding the impact of SAB 101 and fourth-quarter charges, revenue for the
quarter is expected to be slightly below last year's fourth-quarter revenue,
resulting in full-year revenue growth of approximately 9% over 1999, to
approximately $593 million, subject to final review and audit. On a preliminary
basis, operating margin for the Company's business units is expected to
increase, although corporate expenses, depreciation, and interest expense will
be higher than for the fourth quarter a year ago, due primarily to building
corporate infrastructure and systems to support growth. As a result, CBIZ
expects to report a fourth-quarter loss from continuing operations somewhat
larger than last year's fourth-quarter loss before unusual charges of $0.06 per
share.
"The aggressive expense reduction initiatives that were launched in the third
quarter, and internal concerns about strategic direction, had a negative effect
on business activity and contributed to the revenue shortfall in the fourth
quarter," stated Steven Gerard, who became CEO in October. "Notwithstanding the
organizational and integration challenges we faced in the fourth quarter, we
reduced debt, maintained a positive cash flow throughout the year, and are well
positioned for consistent and sustained growth and profitability in our core
business units for 2001."
The Company's EBITDA for 2000, before fourth-quarter charges, is expected to be
approximately $75 million. Long-term debt declined to $118 million in the
quarter, from $145 million at the end of the third
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6480 Rockside Woods Blvd., South - Suite 330 - Cleveland, OH 44131
- Phone (216) 447-9000 - Fax (216) 447-9007
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quarter. After fourth-quarter charges, the Company's debt-to-equity ratio stood
at approximately one to three and its current assets exceeded current
liabilities by approximately $170 million, resulting in a current ratio in
excess of three to one.
FOURTH-QUARTER CHARGES
CBIZ expects to record pre-tax adjustments and charges in the fourth quarter
totaling approximately $120 million, subject to final review and audit. Details
of the charges are as follows:
- - CBIZ will recognize a goodwill impairment charge associated with
certain underperforming business units. In addition, the assets of
three non-core business units that have been sold or were identified
for sale in the fourth quarter were written down to net realizable
value. Based on the goodwill impairment and asset write-downs from
these divestitures, CBIZ expects to record a non-cash charge between
$70 million and $75 million.
- - CBIZ adopted SEC Staff Accounting Bulletin No. 101 (SAB 101) on revenue
recognition in the fourth quarter and expects to record a non-cash
adjustment for the cumulative effect of this change in accounting
principle of $12 million to $15 million. In addition, the adoption of
SAB 101 is expected to negatively impact revenue by approximately $6
million and $18 million for the fourth quarter and full year,
respectively. Such adjustments are attributable primarily to two
business units that, prior to SAB 101, were recognizing revenue in a
manner consistent with industry practice.
- - In the fourth quarter, a thorough review and evaluation of receivable
collection policies at the business unit level was performed which
highlighted the need to write off and reserve for certain receivables.
This adjustment, combined with the effect of smaller asset write-downs,
litigation settlement and reserves, and consolidation and integration
charges, are expected to account for the remainder of the
fourth-quarter charge.
"In the fourth quarter, we conducted an intense review of our businesses, market
position, systems, operations, and balance sheet to strengthen our platform for
growth," commented Mr. Gerard. "Taking these charges will make our financial
statements more reflective of our current business activity and will support our
progress going forward. Our network of core business units is sound and we have
taken the necessary steps to strengthen this company to become a top performer."
OUTLOOK FOR 2001
At a November 2000 meeting with the Company's business unit leaders, Mr. Gerard
presented his plan for achieving consistent, strong, and profitable growth. The
first stages of the plan include a refinement of the Company's organizational
structure, continued debt reduction, and the divestiture of underperforming
units. In the third and fourth quarters of 2000, CBIZ realized approximately $16
million of its annualized $50 million expense reduction goal and expects to
continue aggressively managing expenses in 2001. With these revisions to CBIZ's
strategic plan, management expects EBITDA growth of at least 20% for 2001.
Achieving this level of growth is expected to result in earnings for 2001 in
excess of $0.20 per share, up significantly from expected results for 2000.
In the fourth quarter, CBIZ hired a new CFO and established a management
structure to facilitate more efficient operations, communication, reporting, and
accountability. Specific business leaders have been appointed for the Company's
Business Solutions, Benefits and Insurance, and National Practices groups, with
Business Solutions and Benefits and Insurance further supported by a regional
management structure.
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6480 Rockside Woods Blvd., South - Suite 330 - Cleveland, OH 44131
- Phone (216) 447-9000 - Fax (216) 447-9007
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Business development between the disciplines will facilitate local
market-building and cross-serving among all of its business units, which are
instrumental to CBIZ's operations.
A conference call with management will follow the release of actual
fourth-quarter results. Information to listen in on the conference call will be
included in the release; however, no additional details will be available until
that time.
Century Business Services, Inc. is a provider of outsourced business services to
small and medium-sized companies throughout the United States. The Company
provides integrated services in the following areas: accounting and tax;
employee benefits; wealth management; property and casualty insurance; payroll;
IS consulting; and HR consulting. CBIZ also provides valuation; litigation
advisory; performance consulting; government relations; commercial real estate;
wholesale insurance; healthcare consulting; medical practice management;
worksite marketing; and capital advisory services. These services are provided
throughout a network of more than 200 Company offices in 36 states and the
District of Columbia.
Forward-looking statements in this release are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Such risks
and uncertainties include, but are not limited to, the Company's ability to
acquire and finance additional businesses; the Company's ability to adequately
manage its growth; the Company's dependence on the current trend of outsourcing
business services; the Company's dependence on the services of its CEO and other
key employees; competitive pricing pressures; general business and economic
conditions; and changes in governmental regulation and tax laws affecting its
insurance business or its business services operations. A more detailed
description of such risks and uncertainties may be found in the Company's
filings with the Securities and Exchange Commission.
For further information regarding CBIZ, call our Investor Relations Office at
(216) 447-9000 or visit our web site at www.cbiz.com. To receive CBIZ press
releases via e-mail, please write to pressrelease@cbiz.com.
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