Exhibit 99.2
[LOGO]
BearingPoint(TM)
Performance Report
Third Quarter
March 31, 2003
BearingPoint, Inc.
BearingPoint - Overview
BearingPoint is one of the world's largest business consulting, systems
integration and managed services firms serving Global 2000 companies,
medium-sized businesses, government agencies and other organizations. We provide
business and technology strategy, systems design, architecture, applications
implementation, network, 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.
BearingPoint delivers its consulting and systems integration services through
five industry groups in which we possess significant industry-specific
knowledge. These groups are Public Services, Communications & Content, Financial
Services, Consumer and Industrial Markets and High Technology. Our focus on
specific industries provides us with the ability to tailor our service offerings
to reflect an understanding of the marketplaces in which our clients operate,
and enables our clients to achieve their business objectives more quickly and
efficiently. We have existing operations in North America, Latin America, the
Asia Pacific region, and Europe, Middle East and Africa (EMEA). We utilize our
multi-national resources to provide consistent services to our clients
throughout the world.
We have approximately 50 alliances with key technology providers that support
and complement our service offerings. We conduct joint marketing and product
development projects with Cisco Systems, Inc., Microsoft Corporation, Oracle
Corporation, PeopleSoft, Inc., SAP AG, Siebel Systems, Inc. and Sun
Microsystems, Inc., among others, which we believe strengthens our market
approach. We work together to develop comprehensive solutions to common business
issues, offer the expertise required to deliver those solutions, lead in the
development of new products, capitalize on joint marketing opportunities and
remain at the forefront of technology advances.
Our principal executive offices are located at 1676 International Drive, McLean,
Virginia 22102. Our Internet address is www.bearingpoint.com.
The company's fiscal year begins on July 1 and ends on June 30. Typically,
client service hours, which drive revenue levels based on chargeable hours, are
adversely affected during the first half of our fiscal year (especially the
second quarter ending December 31) due to a large number of vacation days and
holidays that fall during this period. As a result of this seasonality, the
first and second quarters of the fiscal year are historically the lowest revenue
generating and income producing quarters of the year.
The financial data contained herein is unaudited. This information reflects the
performance of BearingPoint for the quarter ended March 31, 2003, and does not
adjust historical data to incorporate financial results related to acquisitions
and other transactions before their consummation. Please refer to our press
releases and SEC filings for additional information pertaining to these
transactions.
2
BearingPoint, Inc.
Quarterly Highlights and Operating Overview
Trends in the economy and geopolitical events continue to create a challenging
environment for the company, but continued strong demand in the Public Services
sector and growth in our core (pre-acquisition) business, coupled with our
global presence, have led to a productive third quarter. In response to the
economic environment, recent actions were taken in the quarter to reduce the
size of our workforce to properly balance personnel with the overall client
demand for our services. This, and other cost management actions, coupled with
our continued drive to take market share, supported our quarterly performance
and positions the company to grow revenue and income in the future.
Highlights for the quarter follow:
. Net income of $12.4 million, or $0.06 per share in the third quarter
of fiscal year 2003, was consistent with guidance set forth at the
beginning of the quarter. These results compare to net income and
earnings per share of $16.4 million and $0.09 for the three months
ended December 31, 2002, and $23.7 million and $0.15 for the three
months ended March 31, 2002. The company's operating earnings and
operating earnings per share in the third quarter were $24.3 million
and $0.13, respectively, which excludes the impact of the previously
announced reduction in workforce charge of $11.9 million (net of tax).
. Gross revenue in the third quarter of fiscal year 2003 was $821.3
million, an increase of $239.0 million, or 41.0%, from $582.3 million
in the third quarter of fiscal year 2002. This increase was
predominantly due to the impact of the international acquisitions and
other transactions and growth in the North American portion of the
Company's core (pre-acquisition) business, which was up 6.0% year over
year. Gross revenue also increased $13.4 million from $807.9 million
in the previous quarter. Gross revenue increased 4.7% in North America
over the previous quarter. Our core (pre-acquisition) business
includes our operations in North America (including the personnel
hired from Andersen Business Consulting in the United States) and our
operations in the Asia Pacific and Latin America regions, Israel, and
Ireland before the acquisitions and other transactions involving
international Andersen Business Consulting units, and the German,
Austrian and Swiss consulting practices formerly known as KPMG
Consulting AG (KCA).
. Gross revenue, based on management's estimates, in the third quarter
of fiscal year 2003 for our core (pre-acquisition) business increased
when compared to the previous quarter and the quarter ended March 31,
2002. The quarterly increase was primarily the result of increases in
four of our five North America business units (Public Services,
Consumer and Industrial Markets, Financial Services and High
Technology) and our core Asia Pacific practice. Year over year growth
was primarily attributable to three of our five North America business
units (Public Services, Consumer and Industrial Markets and Financial
Services) plus our Asia Pacific and Latin America core practices.
. Our acquisitions and other transactions in the first half of fiscal
year 2003 significantly expanded our international presence and
diversified our revenue base. For the quarter ended March 31, 2003,
North America generated 68.6% of consolidated gross revenue, while
EMEA, Asia Pacific and Latin America contributed 19.2%, 10.2% and
2.0%, respectively. By comparison, for the third quarter of the prior
fiscal year, North America contributed 91.4% of gross revenue, with
EMEA, Asia Pacific and Latin America providing 1.0%, 5.9% and 1.7%,
respectively.
3
BearingPoint, Inc.
. Other direct contract expenses were $193.1 million during the quarter,
which represents an increase over the previous quarter of $14.0
million, or 7.8%. The increase in other direct contract expenses is
mainly attributable to the increased use of subcontractors on specific
engagements within the Public Services business unit. Other direct
contract expenses as a percentage of gross revenue was 23.5% during
the current quarter compared to 22.2% and 24.6% for the previous
quarter and the third quarter of the prior year, respectively.
. Professional compensation for the quarter ended March 31, 2003 was
$377.0 million. Professional compensation as a percentage of revenue
increased to 45.9% during the current quarter compared to 44.2% and
38.5% in the previous quarter and the third quarter of the prior year,
respectively. Excluding the effect of the $17.8 million reduction in
workforce charge, professional compensation during the current quarter
was $359.2 million, or 43.7% of gross revenue. This represents an
increase of $2.4 million over second quarter professional compensation
of $356.7 million. The increase in professional compensation is
primarily the result of the increase in payroll taxes associated with
the beginning of a new calendar year. These items are partially offset
by approximately two months of compensation savings in the North
America and Asia Pacific regions due to the reduction in workforce.
Compared to the quarter ended March 31, 2002, professional
compensation increased $134.9 million, or 60.2%, from $224.2 million,
due mainly to the addition of approximately 7,000 employees as a
result of acquisitions and other transactions occurring during the
first half of fiscal year 2003.
. Other costs of service of $66.9 million for the current quarter
represents a decrease of $6.6 million from the previous quarter, and
an increase of $15.5 million from the third quarter in the prior year.
Contributing to the decrease in other costs of service from the
previous quarter is the continued cost control initiatives around
discretionary spending. Other costs of service increased over the
third quarter of the prior year primarily from acquisitions and other
transactions occurring during the first half of fiscal year 2003.
Other costs of service as a percentage of gross revenue improved to
8.1% this quarter, compared to 9.1% and 8.8% in the previous quarter
and the third quarter of the prior year, respectively.
. Selling, general and administrative expenses declined $8.4 million to
$154.2 million in the current quarter compared to $162.6 million in
the previous quarter and increased $40.2 million from $114.0 million
in the third quarter of the prior year. When compared to the previous
quarter, selling, general and administrative expenses declined
primarily from reduced rebranding expense, and increased when compared
to the prior year from the acquisitions and other transactions. As a
percentage of gross revenue, selling, general and administrative
expenses were 18.8% during the third quarter, compared to 20.1% and
19.6% in the previous quarter and the third quarter of the prior year,
respectively.
. After the successful launch of our rebranding initiative during the
second quarter of this fiscal year, rebranding expenses have
substantially declined in the current quarter. Rebranding expense was
reduced to $4.7 million ($2.8 million net of tax), or $0.01 per share,
this quarter from $15.0 million ($8.9 million net of tax), or $0.05
per share, in the previous quarter. The company expects total
rebranding costs for fiscal year 2003 to be in the range of $28
million to $30 million as previously reported.
4
BearingPoint, Inc.
. The company generated operating income during the third quarter of
$30.2 million. Operating income declined when compared to the previous
quarter and the third quarter of the prior year by $5.9 million and
$19.3 million, respectively. Excluding the effect of the $17.8 million
reduction in workforce charge, operating income increased from the
previous quarter to $48.1 million, or 5.9% of gross revenue, primarily
due to the $10.3 million reduction in rebranding expense. When
compared to the third quarter of the prior year, operating income
declined primarily due to the increase in professional compensation as
a percentage of gross revenue related to the acquisitions and other
transactions. Although the company was proactive in aligning its
workforce with market demand for services, a full quarter impact of
the reduction in workforce will not be realized until the fourth
quarter.
. The company's North America utilization rate was 69% for the quarter
ended March 31, 2003. Utilization increased by seven percentage points
from the previous quarter's result of 62%, due to the impact of
increased revenue, the reductions in workforce and the reduced number
of holidays and vacation days. The North America utilization rate was
slightly down from 70% for the quarter ended March 31, 2002. The North
America efficiency rate of 75% for the quarter, which excludes
personal time and holidays, was up from the previous quarter's result
of 74%.
. The company generally maintained steady billing rates over the
previous quarter despite continuous pricing pressures. The North
America gross billing rate of $222 per hour increased when compared to
$217 per hour in the previous quarter and decreased from $229 in the
third quarter in the prior year. The North America net billing rate of
$167 per hour increased slightly compared to $166 per hour in the
previous quarter and decreased from $171 in the third quarter in the
prior year.
5
BearingPoint, Inc.
The following table displays the past five quarters of selected financial data
and reconciles net income to operating earnings.
SELECTED FINANCIAL DATA
------------ ------------ ------------ ------------ ------------
Q3 Q2 Q1 Q4 Q3
Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31,
US dollars in thousands, 2003 2002 2002 2002 2002
------------ ------------ ------------ ------------ ------------
except per share data
Revenue $ 821,325 $ 807,911 $ 747,560 $ 583,213 $ 582,305
Expenses 797,035 774,801 716,892 560,421 532,831
Net Income - GAAP Basis 12,388 16,389 15,181 404 23,748
Operating Earnings (a) 24,253 16,389 15,181 24,128 23,748
Net Income Applicable to
Common Shares 12,388 16,389 15,181 404 23,748
Common Shares Outstanding:
Average - Diluted 190,855,015 189,620,419 172,176,041 159,332,023 159,620,010
Period End 191,701,143 189,545,120 189,529,120 157,666,159 158,009,240
Earnings per Share:
GAAP Basis - Basic and Diluted $ 0.06 $ 0.09 $ 0.09 $ 0.00 $ 0.15
Operating Basis - Basic and Diluted (a) $ 0.13 $ 0.09 $ 0.09 $ 0.15 $ 0.15
Utilization Rate (Total NA) 69% 62% 64% 71% 70%
Gross Billing Rate (Total NA) $ 222 $ 217 $ 217 $ 226 $ 229
Average Billable Headcount (Global) 13,915 14,361 12,692 7,815 7,875
Total Headcount (Period End) 15,847 16,689 16,915 9,328 9,176
Reconciliation of Net Income to Operating Earnings (a)
Net Income - GAAP Basis $ 12,388 $ 16,389 $ 15,181 $ 404 $ 23,748
Add Back (net of tax):
Impairment of Equity Investments - - - 16,023 -
Workforce Reduction Program 11,865 - - 3,091 -
Software Licenses Impairment Charge - - - 3,017 -
Other - - - 1,593 -
------------ ------------ ------------ ------------ ------------
Operating Earnings (a) $ 24,253 $ 16,389 $ 15,181 $ 24,128 $ 23,748
============ ============ ============ ============ ============
(a) Operating earnings and operating earnings per share are non-GAAP financial
measures. The company believes that adjusting net income to reflect either
non-recurring items (e.g., software license impairment charge) or items that do
not contribute to the operating earnings of the company (i.e., workforce
reduction program) provides useful information to investors regarding the
company's results of operations.
6
BearingPoint, Inc.
The following table provides the quarterly income statement with the previous
and prior year quarters for comparative purposes.
STATEMENTS OF INCOME - QUARTERLY
--------- --------- ------------ --------- ------------ ---------
Q3 Pct. Q2 Pct. Q3 Pct.
US dollars in thousands, Mar. 31, of Dec. 31, of Mar. 31, of
except per share data 2003 Revenue 2002 Revenue 2002 Revenue
--------- --------- ------------ --------- ------------ ---------
Revenue $ 821,325 100.0% $ 807,911 100.0% $ 582,305 100.0%
Other Direct Contract Expenses (193,053) (23.5) (179,035) (22.2) (143,254) (24.6)
--------- --------- ------------ --------- ------------ ---------
Net Revenue 628,272 76.5 628,876 77.8 439,051 75.4
--------- --------- ------------ --------- ------------ ---------
Costs of Service
Professional Compensation 376,979 45.9 356,728 44.2 224,206 38.5
Other Costs of Service 66,870 8.1 73,431 9.1 51,322 8.8
--------- --------- ------------ --------- ------------ ---------
Total Costs of Service 443,849 54.0 430,159 53.2 275,528 47.3
--------- --------- ------------ --------- ------------ ---------
Gross Margin 184,423 22.5 198,717 24.6 163,523 28.1
Selling, General & Administrative 154,188 18.8 162,576 20.1 113,995 19.6
--------- --------- ------------ --------- ------------ ---------
Operating Income 30,235 3.7 36,141 4.5 49,528 8.5
Interest Income / (Expense), Net (4,513) (0.5) (2,753) (0.3) 277 0.0
Other (1,432) (0.2) (278) (0.0) (331) (0.1)
--------- --------- ------------ --------- ------------ ---------
Income before Taxes 24,290 3.0 33,110 4.1 49,474 8.5
Income Tax Expense 11,902 1.4 16,721 2.1 25,726 4.4
--------- --------- ------------ --------- ------------ ---------
Net Income - GAAP Basis 12,388 1.5 16,389 2.0 23,748 4.1
Workforce Reduction Program (net of tax) 11,865 1.4 - - - -
--------- --------- ------------ --------- ------------ ---------
Operating Earnings (a) $ 24,253 3.0 $ 16,389 2.0 $ 23,748 4.1
========= ========= ============ ========= ============ =========
Performance Metrics
Net Income Applicable to Common $ 12,388 $ 16,389 $ 23,748
Basic and Diluted Net Income
per Share - GAAP Basis $ 0.06 $ 0.09 $ 0.15
Basic and Diluted Operating
Earnings per Share (a) $ 0.13 $ 0.09 $ 0.15
Utilization Rate (Total NA) 69% 62% 70%
Efficiency Rate (Total NA) 75% 74% 75%
Days Sales Outstanding (DSO) 69 66 58
(a) Operating earnings and operating earnings per share are non-GAAP financial
measures. The company believes that adjusting net income to reflect either
non-recurring items (e.g., software license impairment charge) or items that do
not contribute to the operating earnings of the company (i.e., workforce
reduction program) provides useful information to investors regarding the
company's results of operations.
7
BearingPoint, Inc.
Gross Revenue
Gross revenue for this quarter was $821.3 million, compared to $807.9 million in
the previous quarter and $582.3 million in the prior year. Overall, gross
revenue was up 41.0% year over year due to the growth in the core
(pre-acquisition) business plus the impact of the acquisitions and other
transactions in fiscal year 2003. North America revenue growth was 6.0% year
over year and 4.7% over the previous quarter, driven primarily by increases in
the Public Services, Financial Services and Consumer and Industrial Markets
business units. Internationally, compared to the prior quarter, revenue growth
in the Asia Pacific region was offset by revenue declines in EMEA and Latin
America.
GROSS REVENUE
---------- ---------- ---------- ---------- ----------
Q3 Q2 Q3 vs. Q2 Q3 Q3 vs. Q3
Mar. 31, Dec. 31, % Mar. 31, %
US dollars in thousands 2003 2002 Change 2002 Change
---------- ---------- ---------- ---------- ----------
Public Services $ 279,098 $ 261,133 6.9% $ 256,829 8.7%
Communications & Content 88,407 90,846 (2.7%) 115,371 (23.4%)
Financial Services 59,056 54,791 7.8% 47,218 25.1%
Consumer & Industrial Markets 95,132 93,340 1.9% 69,041 37.8%
High Technology 41,701 37,817 10.3% 43,269 (3.6%)
---------- ---------- ---------- ---------- ----------
North America 563,394 537,927 4.7% 531,728 6.0%
EMEA 157,502 174,400 (9.7%) 4,985 3059.5%
Asia Pacific 84,159 77,762 8.2% 34,220 145.9%
Latin America 16,093 19,041 (15.5%) 10,129 58.9%
---------- ---------- ---------- ---------- ----------
Total International 257,754 271,203 (5.0%) 49,334 422.5%
Other 177 (1,219) (114.5%) 1,243 (85.8%)
---------- ---------- ---------- ---------- ----------
Global $ 821,325 $ 807,911 1.7% $ 582,305 41.0%
========== ========== ========== ========== ==========
Net Revenue
Net revenue of $628.3 million remained flat compared to the previous quarter and
increased 43.1% compared to the prior year quarter ended March 31, 2002. The
growth of net revenue year over year was greater than the growth in gross
revenue, due largely to our reduced use of subcontractors.
NET REVENUE
---------- ---------- ---------- ---------- ----------
Q3 Q2 Q3 vs. Q2 Q3 Q3 vs. Q3
Mar. 31, Dec. 31, % Mar. 31, %
US dollars in thousands 2003 2002 Change 2002 Change
---------- ---------- ---------- ---------- ----------
Public Services $ 198,036 $ 189,979 4.2% $ 181,807 8.9%
Communications & Content 73,215 73,432 (0.3%) 88,005 (16.8%)
Financial Services 48,446 45,405 6.7% 40,051 21.0%
Consumer & Industrial Markets 72,540 73,511 (1.3%) 57,574 26.0%
High Technology 31,876 28,839 10.5% 29,575 7.8%
---------- ---------- ---------- ---------- ----------
North America 424,113 411,166 3.1% 397,012 6.8%
EMEA 133,625 149,157 (10.4%) 3,092 4221.6%
Asia Pacific 56,596 55,343 2.3% 28,663 97.5%
Latin America 13,822 14,528 (4.9%) 8,984 53.9%
---------- ---------- ---------- ---------- ----------
Total International 204,043 219,028 (6.8%) 40,739 400.9%
Other 116 (1,318) (108.8%) 1,300 (91.1%)
---------- ---------- ---------- ---------- ----------
Global $ 628,272 $ 628,876 (0.1%) $ 439,051 43.1%
========== ========== ========== ========== ==========
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BearingPoint, Inc.
Industry Overviews
A detailed table comparing the operating performance of the North American
business units on a quarterly basis is provided on page 11. A discussion of the
performance of the business units follows:
Public Services, the company's largest business unit, assists public services
clients with process improvement, enterprise resource planning and systems
integration service offerings. Public Services generated gross revenue for the
quarter of $279.1 million, representing an increase of 6.9% over the previous
quarter, and 8.7% over the third quarter of the prior year. The revenue growth
from the previous quarter was principally caused by an increase in revenue and
high utilization of resources. Public Services' other direct contract expenses
as a percentage of gross revenue increased to 29.0% during the quarter from
27.2% in the previous quarter mainly due to increased use of subcontractors on
specific international engagements. Other direct contract expenses as a
percentage of revenue remained flat compared to the third quarter of the prior
year. Public Services realized operating income of $78.6 million, or 28.2% of
gross revenue, in the current quarter, compared to $71.9 million, or 27.5% of
gross revenue, in the previous quarter and $83.7 million, or 32.6% of gross
revenue, in the third quarter of the prior year. Due to a significant amount of
subcontractor work in the Public Services industry, operating margins are also
presented as a percentage of net revenue. For the current quarter, the operating
margin was 39.7% of net revenue, compared to 37.8% of net revenue in the
previous quarter and 46.0% of net revenue in the third quarter of the prior
year. Excluding the reduction in workforce charges taken in the third quarter,
the operating margin was 28.6% of gross revenue and 40.3% of net revenue.
Communications & Content, which focuses on formulating and implementing
broadband and business systems strategies to reduce operating costs and improve
operating efficiencies and service levels in the telecommunications and content
industries, realized operating income of $21.6 million in the current quarter,
compared to $27.8 million in the previous quarter and $33.0 million in the third
quarter of the prior year. Gross and net revenue declined slightly compared to
the previous quarter due to the anticipated completion of several contracts
related to 271 testing, leading to an operating margin on gross revenue of 24.5%
compared to 30.6% in the previous quarter. The current quarter operating margin
declined to 24.5% from 28.6% in the prior year due primarily to the decline in
gross revenue related to the 271 testing contracts coupled with the overall
decline in spending in the telecommunications industry. Excluding the reduction
in workforce charges taken in the third quarter, the operating margin was 27.3%
of gross revenue.
Financial Services, which focuses on delivering business systems strategy,
operations and technology services to the financial services industry, produced
encouraging results during the quarter despite the sustained period of economic
difficulty. Gross revenue increased to $59.1 million, representing 7.8% and
25.1% growth over the previous quarter and the third quarter of the prior fiscal
year, respectively. Gross revenue improved compared to the previous quarter due
to positive signs in the Financial Services sector and seasonality. Financial
Services realized operating income of $12.3 million in the third quarter,
compared to $11.8 million in the previous quarter and $8.1 million in the third
quarter of the prior year. Operating margin on gross revenue was 20.9% in the
current quarter compared to 21.5% in the previous quarter and 17.2% in the prior
year. Excluding the reduction in workforce charges taken in the third quarter,
the operating margin was 22.6% of gross revenue.
9
BearingPoint, Inc.
Consumer and Industrial Markets, which designs and delivers solutions to assist
clients with business challenges such as pressure to reduce costs, industry
consolidation, global competition, and accelerated time-to-market, realized
operating income of $20.6 million in the third quarter, compared to $19.8
million in the previous quarter and $19.8 million in the third quarter of the
prior year. Gross and net revenue remained steady compared to the previous
quarter, with operating income as a percentage of gross revenue of 21.7%
compared to 21.2% in the previous quarter. The current quarter operating margin
declined to 21.7% from 28.7% in the prior year due to increased subcontractor
related expenses and costs of service as a result of increased resources.
Excluding the reduction in workforce charges taken in the third quarter, the
operating margin was 24.0% of gross revenue.
High Technology, which assists clients in responding to changes in their
business positions and revenue/cost relationships, and deploys teams that
deliver business process improvement, technology and enterprise integration
services for high technology companies, realized operating income of $9.6
million in the third quarter, compared to $6.7 million in the previous quarter
and $9.7 million in the third quarter of the prior year. Gross revenue increased
$3.9 million, or 10.3%, over the previous quarter. This increase represents High
Tech's second sequential quarter of revenue growth after five consecutive
quarters of gross revenue declines. Operating income as a percentage of gross
revenue improved to 23.1% compared to 17.8% in the previous quarter due to
revenue growth and cost control initiatives. The current quarter operating
margin improved to 23.1% from 22.3% in the prior year due to favorable trends in
other direct contract expenses, partially offset by increased professional
compensation expense. Excluding the reduction in workforce charges taken in the
third quarter, the operating margin was 25.1% of gross revenue.
International/Corporate comprises international operations (outside of North
America) and corporate services for the global business. Revenue for this
category is primarily attributable to international operations, with $157.5
million in gross revenue generated by the EMEA region, of which KCA contributed
$100.7 million. The total amount of net revenue was $204.2 million for this
category, of which the EMEA region generated $133.6 million and KCA contributed
$83.3 million. Expenses pertain to both international operations and overhead
costs derived from organic and outsourced infrastructure.
International/Corporate incurred an operating loss of $112.6 million this
quarter. This loss is derived from infrastructure and other corporate expenses,
partially offset by operating income from international operations.
10
BearingPoint, Inc.
The following table provides a breakout of each industry's quarterly operating
performance with the previous and prior year quarters for comparative purposes.
BearingPoint
INDUSTRY RESULTS
US dollars in thousands
Public Communications Financial High International/
Services & Content Services CIM Technology Corporate Total
--------- -------------- ----------- ---------- ---------- ------------- ---------
Third Quarter FY 2003
Revenue $ 279,098 $ 88,407 $ 59,056 $ 95,132 $ 41,701 $ 257,931 $ 821,325
Other Direct Contract Expenses (81,062) (15,192) (10,610) (22,592) (9,825) (53,772) (193,053)
---------- --------- ----------- ---------- ---------- ----------- ---------
Net Revenue 198,036 73,215 48,446 72,540 31,876 204,159 628,272
Costs of Service 110,941 47,652 32,796 47,137 19,763 185,560 443,849
---------- --------- ----------- ---------- ---------- ----------- ---------
Gross Margin 87,095 25,563 15,650 25,403 12,113 18,599 184,423
Selling, General & Administrative 8,472 3,936 3,303 4,772 2,482 131,223 154,188
---------- --------- ----------- ---------- ---------- ----------- ---------
Operating Income/(Loss) $ 78,623 $ 21,627 $ 12,347 $ 20,631 $ 9,631 $ (112,624) $ 30,235
========== ========= =========== ========== ========== =========== =========
Second Quarter FY 2003
Revenue $ 261,133 $ 90,846 $ 54,791 $ 93,340 $ 37,817 $ 269,984 $ 807,911
Other Direct Contract Expenses (71,154) (17,414) (9,386) (19,829) (8,978) (52,274) (179,035)
---------- --------- ----------- ---------- ---------- ----------- ---------
Net Revenue 189,979 73,432 45,405 73,511 28,839 217,710 628,876
Costs of Service 110,401 41,143 29,758 49,058 19,823 179,976 430,159
---------- --------- ----------- ---------- ---------- ----------- ---------
Gross Margin 79,578 32,289 15,647 24,453 9,016 37,734 198,717
Selling, General & Administrative 7,716 4,452 3,881 4,656 2,303 139,568 162,576
---------- --------- ----------- ---------- ---------- ----------- ---------
Operating Income/(Loss) $ 71,862 $ 27,837 $ 11,766 $ 19,797 $ 6,713 $ (101,834) $ 36,141
========== ========= =========== ========== ========== =========== =========
Third Quarter FY 2002
Revenue $ 256,829 $ 115,371 $ 47,218 $ 69,041 $ 43,269 $ 50,577 $ 582,305
Other Direct Contract Expenses (75,022) (27,366) (7,167) (11,467) (13,694) (8,538) (143,254)
---------- --------- ----------- ---------- ---------- ----------- ---------
Net Revenue 181,807 88,005 40,051 57,574 29,575 42,039 439,051
Costs of Service 90,739 50,520 28,335 32,163 17,320 56,451 275,528
---------- --------- ----------- ---------- ---------- ----------- ---------
Gross Margin 91,068 37,485 11,716 25,411 12,255 (14,412) 163,523
Selling, General & Administrative 7,380 4,515 3,588 5,572 2,590 90,350 113,995
---------- --------- ----------- ---------- ---------- ----------- ---------
Operating Income/(Loss) $ 83,688 $ 32,970 $ 8,128 $ 19,839 $ 9,665 $ (104,762) $ 49,528
========== ========= =========== ========== ========== =========== =========
Note:Prior quarters have been reclassified to conform with current presentation.
11
BearingPoint, Inc.
Key Metrics
The following tables display the past five quarters of selected key metrics.
NORTH AMERICA BASED STATISTICS
-------- -------- ----------- --------- ----------
Q3 Q2 Q1 Q4 Q3
Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31,
2003 2002 2002 2002 2002
-------- -------- ----------- -------- ----------
Gross Billing Rate Per Hour $ 222 $ 217 $ 217 $ 226 $ 229
Net Billing Rate Per Hour $ 167 $ 166 $ 167 $ 170 $ 171
Quarterly Revenue Per Average Billable
Headcount (in thousands) $ 78 $ 70 $ 73 $ 83 $ 81
Utilization 69% 62% 64% 71% 70%
DSO 50 47 57 53 56
12
BearingPoint, Inc.
Key Metrics (continued)
EARNINGS PER SHARE (EPS) - GAAP BASIS
Computation of earnings per common share
-------------- ------------- -------------- ------------ -------------
Q3 Q2 Q1 Q4 Q3
Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31,
Dollars in thousands, except per share data 2003 2002 2002 2002 2002
-------------- ------------- -------------- ------------ -------------
Earnings per Share:
Net Income Available $ 12,388 $ 16,389 $ 15,181 $ 404 $ 23,748
============== ============= ============= ============ =============
Basic Weighted Average Shares Outstanding 190,814,779 189,534,511 172,077,633 157,767,425 157,368,815
Options 40,236 85,908 98,408 1,564,598 2,251,195
-------------- ------------- ------------- ------------ -------------
Diluted Weighted Average Shares Outstanding 190,855,015 189,620,419 172,176,041 159,332,023 159,620,010
Basic Earnings per Share $ 0.06 $ 0.09 $ 0.09 $ 0.00 $ 0.15
============== ============= ============= ============ =============
Diluted Earnings per Share - GAAP Basis $ 0.06 $ 0.09 $ 0.09 $ 0.00 $ 0.15
============== ============= ============= ============ =============
EARNINGS PER SHARE (EPS) - OPERATING BASIS (a)
--------------- -------------- -------------- --------------- --------------
Q3 Q2 Q1 Q4 Q3
Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31,
Dollars in thousands, except per share data 2003 2002 2002 2002 2002
--------------- -------------- -------------- --------------- --------------
Earnings per Share:
Operating Earnings Available (a) $ 24,253 $ 16,389 $ 15,181 $ 24,128 $ 23,748
=============== ============== ============== =============== ==============
Basic Weighted Average Shares Outstanding 190,814,779 189,534,511 172,077,633 157,767,425 157,368,815
Options 40,236 85,908 98,408 1,564,598 2,251,195
--------------- -------------- -------------- --------------- --------------
Diluted Weighted Average Shares Outstanding 190,855,015 189,620,419 172,176,041 159,332,023 159,620,010
Basic Earnings per Share $ 0.13 $ 0.09 $ 0.09 $ 0.15 $ 0.15
=============== ============== ============== =============== ==============
Diluted Earnings per Share - Operating Basis (a) $ 0.13 $ 0.09 $ 0.09 $ 0.15 $ 0.15
=============== ============== ============== =============== ==============
(a) Operating earnings and operating earnings per share are non-GAAP financial
measures. The company believes that adjusting net income to reflect either
non-recurring items (e.g., software license impairment charge) or items that do
not contribute to the operating earnings of the company (i.e., workforce
reduction program) provides useful information to investors regarding the
company's results of operations.
13
BearingPoint, Inc.
Balance Sheet
The company ended the third quarter with total assets and total equity of $2.0
billion and $1.1 billion, respectively. The increase in total assets was
primarily driven by additional goodwill and other intangibles, as well as an
increase in accounts receivables and unbilled revenue. Liabilities and equity
increased as a result of additional debt and the issuance of common shares in
connection with the acquisitions and other transactions. The balance sheet
includes a cash balance of $44.4 million, net debt of $301.9 million and equity
as a percentage of assets standing at 56.5%. Accounts receivable and unbilled
revenue increased $244.0 million from June 30, 2002, due to the acquisitions and
other transactions, resulting in a global average days sales outstanding of 69
days.
BALANCE SHEET
------------ -------------
Mar. 31, Jun. 30,
US dollars in thousands 2003 2002
------------ -------------
ASSETS
Current Assets:
Cash and Cash Equivalents $ 44,360 $ 203,597
Accounts Receivable, Net 349,383 246,792
Unbilled Revenues, Net 270,307 128,883
Other Current Assets 110,597 67,941
----------- ----------
Total Current Assets 774,647 647,213
Property and Equipment, Net 106,039 60,487
Goodwill and Other Intangible Assets, Net 1,104,481 163,315
Other Assets 22,398 24,116
----------- ----------
Total Assets $ 2,007,565 $ 895,131
=========== ==========
LIABILITIES AND EQUITY
Current Liabilities:
Current Portion of Notes Payable $ 26,059 $ 1,846
Acquisition Obligation 22,497 16,653
Accounts Payable and Other Current Liabilities 463,968 264,796
----------- ----------
Total Current Liabilities 512,524 283,295
Long Term Portion of Notes Payable 297,685 -
Other Long Term Liabilities 62,968 9,966
----------- ----------
Total Liabilities 873,177 293,261
Total Equity 1,134,388 601,870
----------- ----------
Total Liabilities and Equity $ 2,007,565 $ 895,131
=========== ==========
14
BearingPoint, Inc.
Selected Definitions
Revenue includes all amounts that are billed or billable to clients, including
other direct contract expenses. Revenue is recognized on a time and materials or
percentage-of-completion basis, depending upon the type of contract with the
customer. Revenue related to time and material contracts are recognized in the
period in which services are performed. Revenue related to fixed price contracts
are recognized based upon professional costs incurred as a percentage of
estimated total professional costs of the respective contracts. The cumulative
impact of any revisions in estimated total revenue and direct contract costs are
recognized in the period they become known.
Other Direct Contract Expenses include costs directly attributable to client
engagements. These costs include items such as computer hardware and software,
travel expenses for professional personnel and costs associated with
subcontractors.
Other Costs of Service primarily consist of the costs attributable to the
support and maintenance of the professional staff, bad debt expense relating to
accounts receivable and other costs attributable to the servicing of our client
base. These costs include occupancy costs related to office space utilized by
professional staff, the costs of training and recruiting professional staff and
costs associated with professional support personnel.
Selling, General and Administrative expenses include organic expenses such as
marketing, costs for information systems, finance and accounting, human
resources, sales commissions, business development expenses and amortization of
purchased intangibles. In addition, BearingPoint has entered into a transition
services agreement and an outsourcing agreement with KPMG LLP, whereby the
company receives and is charged for certain shared services.
Utilization Rate represents total hours charged directly to engagements divided
by total hours in a specific time period. Personnel included in this calculation
are services, sales force and solutions employees. Infrastructure personnel are
excluded from this calculation.
Efficiency Rate represents total hours charged directly to engagements divided
by available hours. Available hours exclude vacation, holiday and personal time
in a specific time period. Personnel included in this ratio are the same as
those mentioned in the utilization rate definition.
Days Sales Outstanding (DSO) represents the trailing twelve months gross revenue
divided by 365 days. The resulting figure represents the average day's sales,
which is divided into the consolidated accounts receivables and unbilled revenue
balances to arrive at DSO at a point in time.
Net Debt represents total debt (long term debt plus current debt in current
liabilities (which includes short term portion of notes payable and acquisition
obligations)), less total cash and cash equivalents.
15
BearingPoint, Inc.
Forward-Looking Statement
This performance report 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 December 31, 2002. The financial statements included in this
performance report are unaudited.
16