PeopleSupport, Inc. (Nasdaq:PSPT), a leading offshore business process
outsourcing (BPO) provider, today announced financial results for its
second quarter ended June 30, 2008. Revenues for the second quarter were
$36.4 million, a 6% increase from $34.3 million in the second quarter of
2007. Income loss from operations for the second quarter was $0.7
million, as compared to income from operations of $0.5 million in the
year-ago quarter. Net loss was $1.3 million, or a loss of $0.06 per
diluted share based on 20.2 million diluted weighted average shares
outstanding, compared to a net income of $3.9 million, or $0.16 per
diluted share based on 24.0 million diluted weighted average shares
outstanding in the same quarter last year.
Second quarter 2008 cost of revenues was $25.3 million or 70% of
revenues, as compared to $24.0 million or 70% of revenues in the
year-ago quarter. Second quarter 2008 operating margins were negative
1.9%, as compared to a positive 1.5% in the year-ago quarter. Operating
margins were impacted by increased employee compensation costs, facility
costs, and the Philippine Peso appreciation compared to a year-ago, on
average.
The appreciation of the Philippine Peso against the U.S. dollar,
including the impact of our foreign exchange hedge, compared to a
year-ago reduced PeopleSupport’s second
quarter 2008 operating income by an estimated $2.3 million, and
operating margins by approximately 6% compared to the second quarter of
2007. Non-cash, stock-based compensation expense was $1.6 million in the
second quarter, compared to $1.4 million in the year-ago quarter,
further reducing operating margins by 4.5% in the second quarter of 2008
and 5.0% in the second quarter of 2007.
Net cash provided by operating activities for the quarter was negative
$0.8 million. Net cash used for financing activities included $21.7
million in the acquisition of PeopleSupport’s
common stock as a part of the Company’s
second $25 million common stock repurchase program, which was started in
the first quarter and completed in the second quarter. Capital
expenditures were $0.7 million in the second quarter of 2008, as
compared to $3.1 million in the second quarter of 2007. As of June 30,
2008, PeopleSupport had $114.1 million in cash and cash equivalents and
marketable securities and no debt.
In July 2008, PeopleSupport sold its interest in its undeveloped
property in Manila and expects cash proceeds of approximately $12
million net of estimated taxes and expenses.
About PeopleSupport
PeopleSupport, Inc. (Nasdaq:PSPT), is a leading offshore business
process outsourcing (BPO) provider that offers customer management,
transcription and captioning and additional BPO services for global
enterprise clients. From its world-class service delivery centers in the
Philippines and Costa Rica, PeopleSupport offers high performance
services with deep industry domain knowledge and expertise, resulting in
customizable and best practice solutions. By delivering high quality
services from offshore locations, PeopleSupport’s
service delivery centers reduce costs, improve performance and increase
revenues. A majority of PeopleSupport's services are performed in the
Philippines, where PeopleSupport is one of the largest outsourcing
companies, employing approximately 8,000 college-educated, fluent
English speaking personnel. Headquartered in Los Angeles, California,
with approximately 8,500 employees worldwide, PeopleSupport serves
clients in a variety of industries, such as travel, consumer, financial
services, healthcare, insurance, technology, telecommunications,
entertainment and education. For more information, visit www.peoplesupport.com.
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PEOPLESUPPORT, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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(Unaudited, in thousands, except share amounts)
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|
|
|
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June 30,
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December 31,
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|
|
|
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2008
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2007
|
|
|
|
|
|
|
|
|
|
|
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|
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ASSETS
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Current assets:
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|
|
|
|
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Cash and cash equivalents
|
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$
|
84,269
|
|
|
$
|
78,403
|
|
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Marketable securities
|
|
|
5,813
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|
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19,996
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|
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Accounts receivable, net of allowance for doubtful accounts of $375
and $329
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18,446
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|
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19,206
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Land held for sale
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6,948
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|
|
|
-
|
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Prepaid expenses and other current assets
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4,417
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|
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17,149
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Total current assets
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|
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119,893
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|
|
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134,754
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Property and equipment, net
|
|
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24,085
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|
|
|
33,761
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Marketable securities
|
|
|
24,028
|
|
|
|
23,326
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|
Deferred tax assets
|
|
|
3,292
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|
|
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23,366
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Goodwill and other intangible assets, net
|
|
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8,182
|
|
|
|
8,267
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Other non-current assets
|
|
|
2,425
|
|
|
|
9,736
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Total assets
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$
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181,905
|
|
|
$
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233,210
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|
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|
|
|
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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|
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Accounts payable
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$
|
1,933
|
|
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$
|
2,446
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|
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Accrued compensation
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|
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5,128
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|
|
|
4,218
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|
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Accrued liabilities
|
|
|
5,626
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|
|
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6,965
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|
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Deferred revenue
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|
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2,797
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|
|
|
5,252
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|
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Deferred tax liabilities
|
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|
850
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|
|
|
4,205
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Derivative liabilities
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4,647
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|
-
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Other current liabilities
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|
23
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|
|
|
66
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|
Total current liabilities
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21,004
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|
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|
23,152
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Deferred rent
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|
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3,028
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|
|
|
2,580
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Other non-current liabilities
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|
|
38
|
|
|
|
47
|
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Total liabilities
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|
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24,070
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|
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25,779
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Commitments and contingencies
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Stockholders' equity:
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Common stock; $0.001 par value; authorized 87,000 shares; 19,034
and 21,599 shares issued and outstanding at June 30, 2008 and
December 31, 2007, respectively
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|
|
19
|
|
|
|
22
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|
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Additional paid-in capital
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|
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175,031
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|
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195,472
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Retained (deficit) earnings
|
|
|
(13,433
|
)
|
|
|
10,700
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|
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Accumulated other comprehensive (loss) income
|
|
|
(3,782
|
)
|
|
|
1,237
|
|
Total stockholders' equity
|
|
|
157,835
|
|
|
|
207,431
|
|
Total liabilities and stockholders' equity
|
|
$
|
181,905
|
|
|
$
|
233,210
|
|
|
|
|
|
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|
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PEOPLESUPPORT, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
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AND OTHER COMPREHENSIVE INCOME
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(Unaudited, in thousands, except share amounts)
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|
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|
|
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|
|
|
|
|
|
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Three Months Ended June 30,
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Six Months Ended June 30,
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|
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2008
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2007
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2008
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2007
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|
|
|
|
|
|
|
|
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Revenues
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$
|
36,375
|
|
|
$
|
34,328
|
|
|
$
|
72,095
|
|
|
$
|
67,925
|
|
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Cost of revenues
|
|
|
25,269
|
|
|
|
23,985
|
|
|
|
49,103
|
|
|
|
45,679
|
|
|
Selling, general and administrative
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|
|
9,234
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|
|
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7,491
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|
|
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17,599
|
|
|
|
15,849
|
|
|
Depreciation and amortization
|
|
|
2,582
|
|
|
|
2,334
|
|
|
|
5,197
|
|
|
|
4,795
|
|
|
|
(Loss) income from operations
|
|
|
(710
|
)
|
|
|
518
|
|
|
|
196
|
|
|
|
1,602
|
|
|
Interest income, net
|
|
|
881
|
|
|
|
1,530
|
|
|
|
2,113
|
|
|
|
3,003
|
|
|
Other (expense) income
|
|
|
(1,239
|
)
|
|
|
2,115
|
|
|
|
(7,701
|
)
|
|
|
3,238
|
|
|
(Loss) income before provision for income taxes
|
|
|
(1,068
|
)
|
|
|
4,163
|
|
|
|
(5,392
|
)
|
|
|
7,843
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|
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Income tax provision
|
|
|
(203
|
)
|
|
|
(256
|
)
|
|
|
(17,712
|
)
|
|
|
(72
|
)
|
|
Net (loss) income
|
|
$
|
(1,271
|
)
|
|
$
|
3,907
|
|
|
$
|
(23,104
|
)
|
|
$
|
7,771
|
|
|
|
|
|
|
|
|
|
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|
|
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Basic (loss) earnings per share
|
|
$
|
(0.06
|
)
|
|
$
|
0.17
|
|
|
$
|
(1.11
|
)
|
|
$
|
0.33
|
|
|
Diluted (loss) earnings per share
|
|
$
|
(0.06
|
)
|
|
$
|
0.16
|
|
|
$
|
(1.11
|
)
|
|
$
|
0.32
|
|
|
Basic weighted average shares outstanding
|
|
|
20,219
|
|
|
|
23,561
|
|
|
|
20,878
|
|
|
|
23,531
|
|
|
Diluted weighted average shares outstanding
|
|
|
20,219
|
|
|
|
24,025
|
|
|
|
20,878
|
|
|
|
24,197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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PEOPLESUPPORT, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2008
|
|
2007
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(23,104
|
)
|
|
$
|
7,771
|
|
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
5,197
|
|
|
|
4,795
|
|
|
|
Allowance for doubtful accounts
|
|
|
27
|
|
|
|
588
|
|
|
|
Stock-based compensation expense
|
|
|
3,315
|
|
|
|
2,515
|
|
|
|
Amortization of deferred compensation costs
|
|
|
-
|
|
|
|
171
|
|
|
|
Unrealized loss on derivatives
|
|
|
5,868
|
|
|
|
-
|
|
|
|
Deferred income taxes
|
|
|
16,718
|
|
|
|
(612
|
)
|
|
|
Tax benefits from employee stock option exercises
|
|
|
-
|
|
|
|
(37
|
)
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
734
|
|
|
|
(2,643
|
)
|
|
|
Prepaid expenses and other assets
|
|
|
13,952
|
|
|
|
(1,187
|
)
|
|
|
Accounts payable and accrued liabilities
|
|
|
(1,066
|
)
|
|
|
(1,352
|
)
|
|
|
Deferred rent
|
|
|
416
|
|
|
|
467
|
|
|
|
Deferred revenue
|
|
|
(2,462
|
)
|
|
|
1,623
|
|
|
Net cash provided by operating activities
|
|
|
19,595
|
|
|
|
12,099
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Proceeds from sale/maturities of marketable securities
|
|
|
24,726
|
|
|
|
58,951
|
|
|
|
Purchases of marketable securities
|
|
|
(11,475
|
)
|
|
|
(62,411
|
)
|
|
|
Purchases of property and equipment
|
|
|
(2,181
|
)
|
|
|
(17,434
|
)
|
|
Net cash provided by (used for) investing activities
|
|
|
11,070
|
|
|
|
(20,894
|
)
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Payments of capital lease obligation
|
|
|
(10
|
)
|
|
|
(29
|
)
|
|
|
Tax benefits from employee stock option exercises
|
|
|
-
|
|
|
|
37
|
|
|
|
Proceeds from the exercise of stock options
|
|
|
355
|
|
|
|
361
|
|
|
|
Repurchase of common stock
|
|
|
(25,144
|
)
|
|
|
-
|
|
|
|
Public offering costs
|
|
|
-
|
|
|
|
(168
|
)
|
|
Net cash (used for) provided by financing activities
|
|
|
(24,799
|
)
|
|
|
201
|
|
|
Effect of exchange rate changes on cash
|
|
|
-
|
|
|
|
(4
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
5,866
|
|
|
|
(8,598
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
78,403
|
|
|
|
80,880
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
84,269
|
|
|
$
|
72,282
|
|
|
|
|
|
|
|
|
|
NON-CASH ACTIVITIES
|
|
|
|
|
|
|
Unrealized holding losses on marketable securities
|
|
$
|
(230
|
)
|
|
$
|
(525
|
)
|
|
|
Non-cash other comprehensive (loss) income adjustment for pension
liabilities
|
|
|
(163
|
)
|
|
$
|
(26
|
)
|
PeopleSupport, Inc.
Peter Hargittay, Head of Marketing &
Investor Relations
310-824-6182
F: 310-824-6299
phargittay@peoplesupport.com
www.peoplesupport.com
or
Joele
Frank, Wilkinson Brimmer Katcher
Joele Frank / Jamie Moser /
Marin Kaleya
212-355-4449
F: 212-355-4554
