Bearing Point Reports In-Line EPS But Light Revenues

BE reports earnings – op income a bit ahead; EPS inline; revs light; cash flow worsened (FCF missed forecasts); mgmt withdraws full year guidance; says still exploring strategic alternatives but is also contacting debt holdings re a restructuring of its debt and/or a debt-for-equity swap; unveils new CFO

• BearingPoint stated that its quarterly results continue to be reflective of the same dynamics that have driven its year-to-date results: improving operating income and margins on flat to decreasing revenues.
• Gross revenue was $801.0 million vs St $820MM – lighter than expected; revs fell 7.1%
• GMs came in 18% vs St 19% = lighter than expected
• Op profit came in $4.6MM (this is better than St forecast for a loss of $15MM); EPS came in (.14), which is inline w/the St.
• Cash balance, which includes restricted cash, was $333.0 million on Sept. 30, 2008, compared to $431.2 million on Sept. 30, 2007. cash was $350MM as of end of June Q.
• Bookings were $739.4 million compared to $764.1 million in the third quarter of 2007, a decrease of 3.2 percent year-over-year.
• "Our pipeline remains strong and we had record bookings in Public Services; and increased gross margins compared to the third quarter of last year,"
• The Company also announced that in early October it retained AlixPartners, an internationally known business and financial advisory firm, to assist in developing its 2009 plan, participate in its upcoming negotiations to restructure its indebtedness and lead a number of key cash management initiatives. The Company has also appointed AlixPartners managing director Kenneth A. Hiltz as BearingPoint's chief financial officer effective November 11, 2008. Hiltz will replace BearingPoint interim chief financial officer, Eddie Munson, who will continue to serve on BearingPoint's Board of Directors and resume his duties as a member of the Audit Committee of the Board of Directors.
• the recent and sudden downturns in global financial and credit markets have created significant challenges in the pursuit of a merger or sale of the Company, they have also presented other opportunities with interested parties, which the Company continues to pursue.
• "I feel very comfortable that we will have enough cash to allow us to work through the next couple of quarters as we focus, almost exclusively, on cash and other balance sheet improvements."
• Because the Company has not yet reached a strategic agreement regarding a merger or sale, its Board of Directors has also directed the Company's financial advisors to begin discussions with debt holders to explore the feasibility of restructuring its debt or exchanging existing convertible debt for equity. The Company has begun to make contact with debt holders in the past week. At this time, BearingPoint can provide no information regarding the outcome of these discussions or on the timing of when they will be completed.
• The Company announced it has withdrawn all remaining forward-looking guidance for fiscal year 2008.
• "We currently plan to provide a business update later in the quarter after we have finalized our 2009 budgeting process, and have moved further in discussions with debt holders and other possible transaction counterparties,"