EPIQ Systems Inc. (EPIQ, Financial) filed Quarterly Report for the period ended 2010-03-31.
Epiq Systems Inc. has a market cap of $450.4 million; its shares were traded at around $12.45 with a P/E ratio of 24.4 and P/S ratio of 2. Epiq Systems Inc. had an annual average earning growth of 16.9% over the past 10 years.EPIQ is in the portfolios of Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors.
Operating revenue exclusive of revenue originating from reimbursed direct costs was $49.1 million in the three months ended March 31, 2010, a decrease of $3.5 million, or 7%, as compared to the prior year. This decrease was driven by a $13.5 million decrease in the settlement administration segment; partially offset by a $7.3 million increase in the bankruptcy segment, and a $2.7 million increase in the eDiscovery segment. Changes by segment are discussed below.
The direct cost of services, exclusive of depreciation and amortization, was $15.3 million for the three months ended March 31, 2010, a decrease of $4.4 million, or 22%, as compared to $19.7 million in the prior year. Contributing to this decrease was a $3.5 million decrease in the expense related to outside services, primarily related to temporary help and mailing, and a $1.6 million decrease in production supplies. These decreases were partially offset by a $0.3 million increase in compensation related expense, due primarily to increases in the bankruptcy segment resulting from the growth in corporate restructuring engagements; and a $0.3 million increase in building and equipment expense. Changes by segment are discussed below.
General and administrative costs increased $1.9 million, or 10%, to $20.2 million for the three months ended March 31, 2010. The litigation provision for a shareholder derivative action increased $1.6 million, travel expense increased $0.6 million, and share-based compensation expense increased $0.3 million. These increases were partially offset by a $0.4 million decrease in compensation and benefits, and a $0.3 million decrease in outside services and professional fees. Changes by segment are discussed below.
Bankruptcy direct and administrative costs, including reimbursed direct costs, increased $2.9 million, or 27%, to $13.3 million for the three months ended March 31, 2010, compared to $10.4 million in the prior year. The increases in these costs were directly related to the increase in active corporate restructuring engagements discussed above, as we expanded our capacity to support increased volumes. Compensation related expense increased $1.2 million, legal notification costs increased $0.4 million, and expense related to outside services increased $0.3 million. Also contributing to the increase in costs was a $0.8 million increase in reimbursed direct costs, which directly corresponds to the increase in operating revenue from reimbursed direct costs.
As of March 31, 2010, our borrowings consisted of $50.3 million (including the fair value of the embedded option) from the contingent convertible subordinated notes, which bears interest at 4% per annum based on the $49.9 million principal amount outstanding, and approximately $7.8 million of obligations related to capital leases and deferred acquisition price payments. The contingent convertible subordinated notes will require the use of up to approximately $49.9 million of cash at the extended maturity date of June 15, 2010 if the note holders do not convert the remainder of the notes into shares of our common stock. The holders of the notes have the right to convert at a price of approximately $11.67 per share. We will use a combination of cash on hand and our revolving credit facility, if necessary, to fund the payment of any notes that are not converted prior to maturity. For any of the notes that are converted into shares of our common stock prior to their scheduled maturity there will be no cash requirements associated with those converted notes, other than the regular payment of interest earned prior to the conversion date. One holder of the notes converted a nominal principal amount of the notes into shares of common stock in 2009.
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Epiq Systems Inc. has a market cap of $450.4 million; its shares were traded at around $12.45 with a P/E ratio of 24.4 and P/S ratio of 2. Epiq Systems Inc. had an annual average earning growth of 16.9% over the past 10 years.EPIQ is in the portfolios of Paul Tudor Jones of The Tudor Group, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Consolidated Results Revenue Total revenue was $55.4 million for the three months ended March 31, 2010, a decrease of $5.5 million, or 9%, as compared to the prior year. A portion of our total revenue consists of reimbursement for direct costs we incur, such as postage related to document management services. We reflect the operating revenue from these reimbursed direct costs as a separate line item on our accompanying Condensed Consolidated Statements of Income. Revenue originating from reimbursed direct costs was $6.3 million, a decrease of $1.9 million, or 24%, from $8.2 million in the prior year. Although operating revenue from reimbursed direct costs may fluctuate significantly from quarter to quarter, these fluctuations have a minimal effect on our income from operations as we realize little or no margin from this revenue.Operating revenue exclusive of revenue originating from reimbursed direct costs was $49.1 million in the three months ended March 31, 2010, a decrease of $3.5 million, or 7%, as compared to the prior year. This decrease was driven by a $13.5 million decrease in the settlement administration segment; partially offset by a $7.3 million increase in the bankruptcy segment, and a $2.7 million increase in the eDiscovery segment. Changes by segment are discussed below.
The direct cost of services, exclusive of depreciation and amortization, was $15.3 million for the three months ended March 31, 2010, a decrease of $4.4 million, or 22%, as compared to $19.7 million in the prior year. Contributing to this decrease was a $3.5 million decrease in the expense related to outside services, primarily related to temporary help and mailing, and a $1.6 million decrease in production supplies. These decreases were partially offset by a $0.3 million increase in compensation related expense, due primarily to increases in the bankruptcy segment resulting from the growth in corporate restructuring engagements; and a $0.3 million increase in building and equipment expense. Changes by segment are discussed below.
General and administrative costs increased $1.9 million, or 10%, to $20.2 million for the three months ended March 31, 2010. The litigation provision for a shareholder derivative action increased $1.6 million, travel expense increased $0.6 million, and share-based compensation expense increased $0.3 million. These increases were partially offset by a $0.4 million decrease in compensation and benefits, and a $0.3 million decrease in outside services and professional fees. Changes by segment are discussed below.
Bankruptcy direct and administrative costs, including reimbursed direct costs, increased $2.9 million, or 27%, to $13.3 million for the three months ended March 31, 2010, compared to $10.4 million in the prior year. The increases in these costs were directly related to the increase in active corporate restructuring engagements discussed above, as we expanded our capacity to support increased volumes. Compensation related expense increased $1.2 million, legal notification costs increased $0.4 million, and expense related to outside services increased $0.3 million. Also contributing to the increase in costs was a $0.8 million increase in reimbursed direct costs, which directly corresponds to the increase in operating revenue from reimbursed direct costs.
As of March 31, 2010, our borrowings consisted of $50.3 million (including the fair value of the embedded option) from the contingent convertible subordinated notes, which bears interest at 4% per annum based on the $49.9 million principal amount outstanding, and approximately $7.8 million of obligations related to capital leases and deferred acquisition price payments. The contingent convertible subordinated notes will require the use of up to approximately $49.9 million of cash at the extended maturity date of June 15, 2010 if the note holders do not convert the remainder of the notes into shares of our common stock. The holders of the notes have the right to convert at a price of approximately $11.67 per share. We will use a combination of cash on hand and our revolving credit facility, if necessary, to fund the payment of any notes that are not converted prior to maturity. For any of the notes that are converted into shares of our common stock prior to their scheduled maturity there will be no cash requirements associated with those converted notes, other than the regular payment of interest earned prior to the conversion date. One holder of the notes converted a nominal principal amount of the notes into shares of common stock in 2009.
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