Keane Reports First Quarter Net
Income Up 33%; Diluted EPS of 42 Cents Vs. 32 Cents
Year Ago; Revenues Climb Nearly 24% to $285 Million
Keane Emphasizes High-Margin Business Rapidly Replacing Y2K
Revenue Stream, and Strong Returns on Invested Capital
BOSTON, April 15 /PRNewswire/ -- Keane, Inc. (Amex: KEA - news) reported revenues
and earnings today for the first quarter ended March 31, 1999. Revenues were $285.0
million, up 24 percent from $230.1 million in the year-ago quarter. Pretax income for the
first quarter was $51.1 million, up 34 percent from $38.3 million for the same period last
year, while net income rose 33 percent from $22.8 million in 1998 to $30.2 million in
1999. Earnings per share (diluted) for the first quarter 1999 was $.42 on 72,392,000 shares
as compared to $.32 on 72,062,000 shares in 1998.
The company noted that revenues from its Year 2000 business were less than expected in
the latest quarter. ''By continuously improving our Y2K methods, we are helping our
client's to complete their Y2K efforts faster than we originally anticipated,'' said John F.
Keane, chief executive officer and chairman of the board, Keane, Inc.
''Our non-Year 2000 revenue, however, continues to grow strongly, up 32 percent to $205
million in the first quarter of 1999 compared to the year-ago quarter. Importantly, our
non-Y2K revenues are at least as profitable as our Y2K revenues. We are confident that our
non-Y2K revenues will continue to increase 30-35 percent during 1999 as compared to
1998.''
The company also announced that it was revising the earnings per share (diluted) estimates
for the entire year of 1999. ''On the basis of information available to date, we are
estimating a range of between $1.68 and $1.75 for full-year earnings per share from
operations, depending on several factors, including the rate of decline within our Y2K
business, growth in our non-Y2K business, and the general state of the economy,'' Keane
said. Total revenues in 1999 are estimated between $1.100 billion to $1.200 billion versus
$1.076 billion for 1998.
''The company's balance sheet remains exceptionally strong with $129 million in cash and
liquid investments, which will enable us to continue investing aggressively in the profitable
growth of the business,'' Keane said. The company, the executive emphasized, expects to
have ''continued high cash returns on invested capital, returns that exceed our cost of
capital.'' Headquartered in Boston, Massachusetts, Keane, Inc. is a $1 billion firm that helps
companies plan, build and manage application software to achieve business advantage.
Keane does this by adhering to rigorous process and management disciplines and
performance metrics incorporated in its core IT solutions. Keane's services include
operations improvement and IT consulting, custom application development, e-solutions,
customer relationship management (CRM), data warehousing, and application outsourcing.
These services are delivered through a network of more than 50 branch offices in North
America and the United Kingdom. Information about Keane, which was named the Wall
Street Journal's Best 10-Year Stock Performer in 1998, is available via the Internet's World
Wide Web at keane.com.
This release contains a number of forward-looking statements concerning the company's
current expectations as to future growth. Actual results may differ materially depending on
the various factors set forth under the caption ''Certain Factors That May Affect Future
Results'' in the company's annual report or Form 10-K for the year ended December 31,
1998, which important factors are incorporated herein by reference. Such factors include
business conditions, the successful completion of software development or management
projects, the availability of professional staff and various other factors which involve risk
and uncertainty.
KEANE, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(In Thousands Except Per Share Amounts)
Three Months Ended March 31, 1999 1998
Total revenues $ 285,004 $ 230,056
Salaries, wages and other direct costs 183,894 149,570
Selling, general and administrative expenses 49,583 41,518
Amortization of goodwill and other intangible assets 1,976 1,644
Operating income 49,551 37,324
Interest and dividend income 1,835 1,212
Interest expense 0 49
Other expenses, net 239 187
Income before income taxes 51,147 38,300
Provision for income taxes 20,969 15,516
Net income $ 30,178 $ 22,784
Net income per share (basic) $ .42 $ .32
Net income per share (diluted) $ .42 $ .32
Weighted average shares outstanding (basic) 71,553 70,611
Weighted average common and common share
equivalents Outstanding (diluted) 72,392 72,062
KEANE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(In Thousands)
3/31/99 12/31/98
Assets
Current:
Cash and cash equivalents $49,875 $51,696
Short term investments 2,857 6,165
Accounts receivable, net
Trade 255,487 229,457
Other 5,431 1,573
Prepaid expenses and other current assets 18,154 23,376
Total current assets 331,804 312,267
Long term investments 76,131 71,368
Property and equipment, net 29,372 29,973
Intangible assets, net 37,103 35,714
Other assets, net 8,584 8,238
$482,994 $457,560
Liabilities
Current:
Accounts payable 18,104 20,222
Accrued expenses and other liabilities 15,822 30,647
Accrued compensation 24,656 25,429
Note payable 1,500 1,000
Accrued income taxes 20,213 13,548
Current capital lease obligations 930 954
Total current liabilities 81,225 91,800
Long-term portion of capital lease obligations 1,959 1,976
Stockholders' Equity
Common Stock 7,171 7,136
Class B Common Stock 29 29
Additional paid-in capital 115,372 109,606
Foreign currency translation (622) (764)
Retained earnings 280,724 250,546
Less treasury stock (2,864) (2,769)
Total stockholders' equity 399,810 363,784
$482,994 $457,560
SOURCE: Keane, Inc. |
