Quarter, Fourth, Million, Answerthink, Company, Results, 2003

Answerthink announces fourth quarter results

10 Feb 2005 | (News)

Answerthink, Inc. today announced financial results for the fourth quarter ended January 2, 2004. Revenues in the fourth quarter of 2003 were $31.2 million compared to $39.4 million in the fourth quarter of 2002.

The Company's net income in the fourth quarter of 2003 was $1.0 million, or $0.02 per diluted share, compared to a net loss of $14.7 million, or $0.32 per diluted share in the fourth quarter of 2002. The fourth quarter of 2002 results included a restructuring charge related to severance and lease exit costs of $0.24 per diluted share and a loss from discontinued operations of $0.10 per diluted share. The Company's pro forma net income in the fourth quarter of 2003 was $1.3 million, or $0.03 per diluted share, compared to a net loss of $367 thousand, or $0.01 per diluted share in the fourth quarter of 2002. Pro forma information is provided to enhance the understanding of the Company's financial performance and is reconciled to the Company's GAAP information in the accompanying tables. The Company's cash balances, including restricted cash and marketable investments, were $67.4 million at the end of the fourth quarter of 2003, an increase of $2.7 million from the third quarter of 2003.

For fiscal year 2003, revenues were $132.4 million compared to $176.8 million reported in fiscal year 2002. The Company's net loss in 2003 was $4.8 million, or $0.11 per diluted share, compared to a net loss of $69 million, or $1.49 per diluted share in fiscal year 2002. Fiscal year 2003 results included restructuring costs of $0.11 per diluted share related to an increase in previously established restructuring reserves for the closure and consolidation of facilities. The Company's pro forma net income for fiscal year 2003 was $1.5 million or $0.03 per diluted share, compared to a net loss of $757 thousand or $0.02 per diluted share in fiscal year 2002.

"We are confident that the strategic foundation we created in 2003 will help drive our momentum in 2004," said Answerthink's Chairman and CEO, Ted A. Fernandez. "In 2003, we aggressively grew the revenues of The Hackett Group, while transitioning its offerings to multi-year or subscription based services. We leveraged the Hackett growth to improve the lead flow and competitiveness of our implementation services. Lastly, we used our proprietary best practice offerings to enter into a strategic alliance with Accenture that holds great promise. These developments, along with an improving economic environment, have strongly positioned the organization as we start the new year."

The Company also announced that the consolidated complaint in the pending securities class action suit against it was dismissed without prejudice by the court. As a result of the judge's decision, the plaintiffs have informed the Company that they will not pursue the matter further.

Based on the current economic outlook, the Company estimates total revenues in the first quarter of 2004 to be in the range of $33 million to $35 million. The Company also estimates net income per diluted share to be in the range of $0.01 to $0.04 and pro forma net income per diluted share to be in the range of $0.02 to $0.04 in the first quarter of 2004.

Other Highlights

Accenture Alliance - On October 14, 2003, Accenture, Answerthink, and its wholly owned subsidiary, The Hackett Group, announced an alliance to jointly market benchmarking, consulting and Business Process Outsourcing services in the areas of finance, performance management and business intelligence aimed at introducing clients to the best practices of the world's top companies. Although the initial focus was limited to the finance vertical, this agreement is expected to expand across additional service areas as well as geographically. During the fourth quarter, the companies pursued and won several phase one client engagements that integrated The Hackett Group's benchmarking offerings and/or Answerthink's best practice implementation approach. Answerthink also announced the hiring of former Accenture partner Steve McMinn to lead the Company's efforts with Accenture.

BAS Services Offerings - During the quarter, The Hackett Group formally launched its new Business Advisory Service offerings. The premium-value, membership-based programs for executives in finance, information technology, human resources, procurement, and shared services offer: confidential, one-on-one telephone inquiry service with Hackett business advisors; analyses of best practices, survey results, and management issues in a members-only research publication titled Hackett Perspective; plus conferences, Webcasts, and other opportunities for peer interaction.

Hackett Executive Appointments - The Hackett Group named Wayne Mincey President and Chief Operating Officer. Mincey now reports to Bruce Barlag, who had held the title of Hackett President, and has been named Chief Executive Officer. Most recently, Mincey served as President of the Spherion Technology Group, a $300+ million information technology consulting, managed services, and staffing company. In addition, Alan Wolfe joined Hackett as Vice President responsible for sales. Wolfe comes to The Hackett Group from Gartner Group, where he served in various sales management positions over the past seven years. Wolfe most recently served as Southern Region Area Sales Manager for Gartner.

InfoWorld 100 Award Win - Answerthink was named a winner of a prestigious 2003 InfoWorld 100 award for its Best Practices Implementation (BPI) knowledge repository. The annual awards honor companies that demonstrate the most creative use of cutting-edge technologies to further their business goals. Answerthink's BPI is an interactive database containing tools and analysis that enables consultants to leverage proven best practices from the renowned database of The Hackett Group as part of their technology implementations.

Representative Client Engagements

Air Transportation Provider - A multi-faceted enterprise transformation program designed to use a Hackett finance benchmark as a starting point to significantly improve the efficiency and effectiveness of the company's finance operations and enhance performance measurement and reporting. Answerthink will help with a comprehensive redesign of the company's finance processes to foster best practices adoption, a definition of requirements, evaluation of the existing enabling systems infrastructure, and an evaluation of commercially available ERP financial applications to support redesigned processes. The project also includes a comprehensive effort to streamline and automate the company's time & attendance capabilities, including process redesign, requirements analysis, tool selection validation, and implementation planning.

Defense Electronics Manufacturer - A Hackett IT benchmark and membership in Hackett's ERP Optimization BAS designed to enable the company to move its IT organization towards world-class in costs and service delivery, and help it serve as a better business partner to internal customers. The effort will involve individual drill-downs into IT support for each of the company's core business units.

Global Technology Corporation - A Hackett SG&A benchmark for a newly-acquired subsidiary, which will be used as the foundation for a broad action plan to be developed by Accenture analyzing how the subsidiary can restructure its back office operations to cut costs, consolidate and centralize, and outsource as necessary.

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