Keane Reports Q1 2001 Revenue of $208M, and Net Income of $8.5M Cash EPS1 of $.15 versus $.10 in 2000

First Quarter Outsourcing Revenue Grew 17% to $100M



Apr 25, 2001, 01:00 ET from Keane, Inc.

    BOSTON, April 25 /PRNewswire/ -- Keane (Amex:   KEA), a leading business and
 information technology (IT) consulting firm, today reported revenue and
 earnings for the First Quarter ended March 31, 2001.  Total revenues for the
 First Quarter of 2001 were $208.3 million, down from $216.2 million for the
 First Quarter of 2000.  Keane's revenues during the First Quarter of 2001,
 excluding revenue generated from the company's recently divested Help Desk
 operation, were $203.2 million, up 2 percent from comparable non-Y2K revenues
 in the First Quarter of 2000.  Revenues from Keane's Application Development
 and Management (ADM) Outsourcing service were $100 million during the First
 Quarter, up 17 percent from $85.2 million during the First Quarter of 2000.
 ADM Outsourcing represented 48 percent of Keane's revenues during the First
 Quarter.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19991110/KEANELOGO)
     Net income for the First Quarter was $8.5 million, up 53% from $5.5
 million in net income for the First Quarter of 2000.  Diluted Cash EPS for the
 First Quarter was $.15 per share, compared to $.10 per share for the First
 Quarter of 2000.  Prior to the gain on the sale of the Company's Help Desk
 operations and the write-off of certain equity investments, Keane's First
 Quarter net income was $7.3 million and Cash EPS was $.14 per share.
     "Although Keane is not immune to economic and IT spending shifts, we
 believe Keane is well positioned for the current business environment," stated
 Brian Keane, president and CEO.  "We are benefiting from our large and loyal
 customer base, a flight to quality, recurring outsourcing revenue, predictable
 government business, and our cost-effective distribution network of branch
 offices."
     "Increased employee utilization and the divestiture of Keane's lower-
 margin Help Desk operations enabled us to expand gross margins to 30.3%, an
 increase of 180 basis points from First Quarter 2000," said senior vice
 president of finance and CFO John Leahy.  "Operating cash flow remained strong
 at $17.2 million, with free cash flow of $30.4 million for the quarter, driven
 by the sale of our Help Desk unit.  This was after our investment of $4.0
 million for stock repurchases.  Keane's Days Sales Outstanding (DSOs) improved
 to 76 days in Q1, and the company ended the quarter with $145 million in cash
 and marketable securities."
     On February 5, Keane completed the divestiture of its Help Desk operation
 for $15.7 million in cash, which resulted in a one-time gain of $4.0 million.
 The company also made the decision to write-off certain equity investments
 totaling $2.1 million.  As a result of these transactions, the company
 realized a net benefit to non-operating income of $1.9 million or $.01 Cash
 EPS in the quarter.  Keane's Help Desk operation and the business units closed
 during its recent restructuring efforts accounted for $52 million in revenue
 in 2000.
     The Company's business is comprised of three main service lines: Plan,
 Build and Manage services.  The following is a summary of revenues and
 bookings during the First Quarter of 2001.
 
     First Quarter 2001                               Revenue       Bookings
     Plan Services
       Business Innovation Consulting,
       IT Consulting, etc.                      $20.7 million  $19.1 million
     Build Services
       e-architecture, Enterprise
       Application Integration, B2B, CRM,
       Custom Development, Healthcare
       Solutions, etc.                          $76.2 million  $74.5 million
     Manage Services
       ADM Outsourcing, Application
       Maintenance Services, Migrations, etc.  $106.3 million $114.9 million
     Help Desk
       Operations discontinued 2/2001           $ 5.2 million           ----
 
     Total                                     $208.4 million $208.5 million
 
     Based on its current outlook, and taking into account the divestiture of
 its Help Desk business and branch closures, the Company anticipates that the
 Second Quarter will be relatively flat with the First Quarter, with revenues
 in the range of $195 - $205 million, and Cash EPS of $.13 - $.15.  Due to
 continued economic uncertainty, the Company is declining to project financial
 results for the full year 2001, and any prior projections for the full year
 2001 should be disregarded.
 
     Keane will host a conference call today at 8:30am (EST) to discuss these
 results.  Interested parties may access the call via the Internet at
 www.keane.com or may dial 212-676-5213 and ask for the Keane call.  No
 advanced registration is required to participate. A replay of the call will be
 available beginning at approximately 10:30am (EST) today, through 5:00pm (EST)
 on May 4, 2001.  The replay may be accessed via the Internet at www.keane.com
 or by calling 1-800-633-8284 (858-812-6440 from outside North America) and
 entering the reservation number 18613886#.
 
     Founded in 1965, Keane, Inc. (Amex:   KEA) helps Global 2000 companies and
 government agencies plan, build, and manage application software to optimize
 business performance.  The Company's services include Business Innovation
 Consulting, e-Solutions, and Application Development and Management (ADM)
 Outsourcing.  Keane develops long-term relationships and recurring revenues
 with its customers based on multi-year outsourcing contracts and the
 consistent delivery of high quality, cost-effective, and responsive services.
 Keane does this by adhering to repeatable and proven process and management
 disciplines and performance metrics incorporated in its core IT and business
 consulting solutions.  Keane markets its services through a network of branch
 offices in North America and the United Kingdom, which work in conjunction
 with Keane Consulting Group, a centralized Strategic Practices Group, and two
 Advanced Development Centers.  Information on Keane is available on the web at
 www.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 important factors set forth under the
 caption "Certain Factors That May Affect Future Results" in the company's
 annual report on Form 10-K for the year ended December 31, 2000, which
 important factors are incorporated herein by reference.  Such factors include
 business conditions, the execution and successful completion of contracts
 evidencing the new bookings referred to in this release, 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,                           2001           2000
 
     Total revenues                                  $208,346       $216,208
 
     Salaries, wages and other direct costs           145,149        154,574
     Selling, general and administrative expenses      49,327         51,254
     Amortization of goodwill and other
      intangible assets                                 3,462          2,889
 
       Operating income                                10,408          7,491
 
     Interest and dividend income                       1,625          2,143
     Interest expense                                     113            186
     Other (income) expenses, net                     (2,291)            183
 
     Income before income taxes                        14,211          9,265
 
     Provision for income taxes                         5,757          3,754
 
       Net income                                      $8,454         $5,511
 
       Net income per share (basic)                      $.12           $.08
 
       Net income per share (diluted)                    $.12           $.08
 
       Cash earnings per share(1) (diluted)              $.15           $.10
 
     Cash earnings per share(2) (diluted)                $.14           $.10
 
     Weighted average shares outstanding (basic)       68,140         71,011
 
     Weighted average common and common share
     equivalents outstanding (diluted)                 68,877         71,686
 
 
     (1) Cash earnings per share excludes amortization of goodwill and other
 intangible assets, along with stock-based compensation. Cash EPS is not a
 measurement in accordance with Generally Accepted Accounting Principals.
 
     (2) Cash earnings per share excludes the impact of the gain on the sale of
 help desk operations and the write-off of certain equity investments.
 
 
     KEANE, INC. AND SUBSIDIARIES
     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
     (IN THOUSANDS)
                                                      3/31/01       12/31/00
     Assets
     Current:
      Cash and cash equivalents                       $92,885        $53,783
      Marketable securities                            52,512         59,179
 
     Accounts receivable, net
      Trade                                           166,688        164,706
      Other                                             1,401          1,428
     Prepaid expenses and deferred taxes               17,425         15,533
     Total current assets                             330,911        294,629
 
     Long-term investments                                250          2,250
     Property and equipment, net                       21,968         24,132
     Goodwill, net                                     73,916         75,497
     Intangible assets, net                            40,824         43,164
     Deferred taxes and other assets, net              22,508         23,922
                                                     $490,377       $463,594
     Liabilities
     Current:
      Accounts payable                                 13,709         16,820
      Accrued expenses and other liabilities           38,154         26,953
      Accrued compensation                             25,682         17,709
      Notes payable                                     4,033          5,006
      Accrued income taxes                             15,973          9,003
      Unearned income                                   3,673          4,611
      Current capital lease obligations                 1,179          1,230
     Total current liabilities                        102,403         81,332
 
     Deferred income taxes                              6,287          9,205
     Long-term portion of capital lease obligations     2,114          2,380
 
     Stockholders' Equity
      Common stock                                      7,245          7,245
      Class B common stock                                 28             28
      Additional paid-in capital                      115,687        121,444
      Accumulated other comprehensive income          (3,369)        (4,637)
      Retained earnings                               352,428        343,974
      Less treasury stock                            (92,446)       (97,377)
      Total stockholders' equity                      379,573        370,677
                                                     $490,377       $463,594
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X62284543
 
 

SOURCE Keane, Inc.
    BOSTON, April 25 /PRNewswire/ -- Keane (Amex:   KEA), a leading business and
 information technology (IT) consulting firm, today reported revenue and
 earnings for the First Quarter ended March 31, 2001.  Total revenues for the
 First Quarter of 2001 were $208.3 million, down from $216.2 million for the
 First Quarter of 2000.  Keane's revenues during the First Quarter of 2001,
 excluding revenue generated from the company's recently divested Help Desk
 operation, were $203.2 million, up 2 percent from comparable non-Y2K revenues
 in the First Quarter of 2000.  Revenues from Keane's Application Development
 and Management (ADM) Outsourcing service were $100 million during the First
 Quarter, up 17 percent from $85.2 million during the First Quarter of 2000.
 ADM Outsourcing represented 48 percent of Keane's revenues during the First
 Quarter.
     (Photo:  http://www.newscom.com/cgi-bin/prnh/19991110/KEANELOGO)
     Net income for the First Quarter was $8.5 million, up 53% from $5.5
 million in net income for the First Quarter of 2000.  Diluted Cash EPS for the
 First Quarter was $.15 per share, compared to $.10 per share for the First
 Quarter of 2000.  Prior to the gain on the sale of the Company's Help Desk
 operations and the write-off of certain equity investments, Keane's First
 Quarter net income was $7.3 million and Cash EPS was $.14 per share.
     "Although Keane is not immune to economic and IT spending shifts, we
 believe Keane is well positioned for the current business environment," stated
 Brian Keane, president and CEO.  "We are benefiting from our large and loyal
 customer base, a flight to quality, recurring outsourcing revenue, predictable
 government business, and our cost-effective distribution network of branch
 offices."
     "Increased employee utilization and the divestiture of Keane's lower-
 margin Help Desk operations enabled us to expand gross margins to 30.3%, an
 increase of 180 basis points from First Quarter 2000," said senior vice
 president of finance and CFO John Leahy.  "Operating cash flow remained strong
 at $17.2 million, with free cash flow of $30.4 million for the quarter, driven
 by the sale of our Help Desk unit.  This was after our investment of $4.0
 million for stock repurchases.  Keane's Days Sales Outstanding (DSOs) improved
 to 76 days in Q1, and the company ended the quarter with $145 million in cash
 and marketable securities."
     On February 5, Keane completed the divestiture of its Help Desk operation
 for $15.7 million in cash, which resulted in a one-time gain of $4.0 million.
 The company also made the decision to write-off certain equity investments
 totaling $2.1 million.  As a result of these transactions, the company
 realized a net benefit to non-operating income of $1.9 million or $.01 Cash
 EPS in the quarter.  Keane's Help Desk operation and the business units closed
 during its recent restructuring efforts accounted for $52 million in revenue
 in 2000.
     The Company's business is comprised of three main service lines: Plan,
 Build and Manage services.  The following is a summary of revenues and
 bookings during the First Quarter of 2001.
 
     First Quarter 2001                               Revenue       Bookings
     Plan Services
       Business Innovation Consulting,
       IT Consulting, etc.                      $20.7 million  $19.1 million
     Build Services
       e-architecture, Enterprise
       Application Integration, B2B, CRM,
       Custom Development, Healthcare
       Solutions, etc.                          $76.2 million  $74.5 million
     Manage Services
       ADM Outsourcing, Application
       Maintenance Services, Migrations, etc.  $106.3 million $114.9 million
     Help Desk
       Operations discontinued 2/2001           $ 5.2 million           ----
 
     Total                                     $208.4 million $208.5 million
 
     Based on its current outlook, and taking into account the divestiture of
 its Help Desk business and branch closures, the Company anticipates that the
 Second Quarter will be relatively flat with the First Quarter, with revenues
 in the range of $195 - $205 million, and Cash EPS of $.13 - $.15.  Due to
 continued economic uncertainty, the Company is declining to project financial
 results for the full year 2001, and any prior projections for the full year
 2001 should be disregarded.
 
     Keane will host a conference call today at 8:30am (EST) to discuss these
 results.  Interested parties may access the call via the Internet at
 www.keane.com or may dial 212-676-5213 and ask for the Keane call.  No
 advanced registration is required to participate. A replay of the call will be
 available beginning at approximately 10:30am (EST) today, through 5:00pm (EST)
 on May 4, 2001.  The replay may be accessed via the Internet at www.keane.com
 or by calling 1-800-633-8284 (858-812-6440 from outside North America) and
 entering the reservation number 18613886#.
 
     Founded in 1965, Keane, Inc. (Amex:   KEA) helps Global 2000 companies and
 government agencies plan, build, and manage application software to optimize
 business performance.  The Company's services include Business Innovation
 Consulting, e-Solutions, and Application Development and Management (ADM)
 Outsourcing.  Keane develops long-term relationships and recurring revenues
 with its customers based on multi-year outsourcing contracts and the
 consistent delivery of high quality, cost-effective, and responsive services.
 Keane does this by adhering to repeatable and proven process and management
 disciplines and performance metrics incorporated in its core IT and business
 consulting solutions.  Keane markets its services through a network of branch
 offices in North America and the United Kingdom, which work in conjunction
 with Keane Consulting Group, a centralized Strategic Practices Group, and two
 Advanced Development Centers.  Information on Keane is available on the web at
 www.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 important factors set forth under the
 caption "Certain Factors That May Affect Future Results" in the company's
 annual report on Form 10-K for the year ended December 31, 2000, which
 important factors are incorporated herein by reference.  Such factors include
 business conditions, the execution and successful completion of contracts
 evidencing the new bookings referred to in this release, 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,                           2001           2000
 
     Total revenues                                  $208,346       $216,208
 
     Salaries, wages and other direct costs           145,149        154,574
     Selling, general and administrative expenses      49,327         51,254
     Amortization of goodwill and other
      intangible assets                                 3,462          2,889
 
       Operating income                                10,408          7,491
 
     Interest and dividend income                       1,625          2,143
     Interest expense                                     113            186
     Other (income) expenses, net                     (2,291)            183
 
     Income before income taxes                        14,211          9,265
 
     Provision for income taxes                         5,757          3,754
 
       Net income                                      $8,454         $5,511
 
       Net income per share (basic)                      $.12           $.08
 
       Net income per share (diluted)                    $.12           $.08
 
       Cash earnings per share(1) (diluted)              $.15           $.10
 
     Cash earnings per share(2) (diluted)                $.14           $.10
 
     Weighted average shares outstanding (basic)       68,140         71,011
 
     Weighted average common and common share
     equivalents outstanding (diluted)                 68,877         71,686
 
 
     (1) Cash earnings per share excludes amortization of goodwill and other
 intangible assets, along with stock-based compensation. Cash EPS is not a
 measurement in accordance with Generally Accepted Accounting Principals.
 
     (2) Cash earnings per share excludes the impact of the gain on the sale of
 help desk operations and the write-off of certain equity investments.
 
 
     KEANE, INC. AND SUBSIDIARIES
     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
     (IN THOUSANDS)
                                                      3/31/01       12/31/00
     Assets
     Current:
      Cash and cash equivalents                       $92,885        $53,783
      Marketable securities                            52,512         59,179
 
     Accounts receivable, net
      Trade                                           166,688        164,706
      Other                                             1,401          1,428
     Prepaid expenses and deferred taxes               17,425         15,533
     Total current assets                             330,911        294,629
 
     Long-term investments                                250          2,250
     Property and equipment, net                       21,968         24,132
     Goodwill, net                                     73,916         75,497
     Intangible assets, net                            40,824         43,164
     Deferred taxes and other assets, net              22,508         23,922
                                                     $490,377       $463,594
     Liabilities
     Current:
      Accounts payable                                 13,709         16,820
      Accrued expenses and other liabilities           38,154         26,953
      Accrued compensation                             25,682         17,709
      Notes payable                                     4,033          5,006
      Accrued income taxes                             15,973          9,003
      Unearned income                                   3,673          4,611
      Current capital lease obligations                 1,179          1,230
     Total current liabilities                        102,403         81,332
 
     Deferred income taxes                              6,287          9,205
     Long-term portion of capital lease obligations     2,114          2,380
 
     Stockholders' Equity
      Common stock                                      7,245          7,245
      Class B common stock                                 28             28
      Additional paid-in capital                      115,687        121,444
      Accumulated other comprehensive income          (3,369)        (4,637)
      Retained earnings                               352,428        343,974
      Less treasury stock                            (92,446)       (97,377)
      Total stockholders' equity                      379,573        370,677
                                                     $490,377       $463,594
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X62284543
 
 SOURCE  Keane, Inc.