- The Washington Times - Thursday, August 16, 2001

Lockheed Martin Corp. likely will reap about a month's worth of revenue from radar cameras designed to catch speeding motorists in the District.
That's because the Bethesda company's sale of its IMS subsidiary to a Dallas business is on the fast track and is expected to be completed within the next month.
Affiliated Computer Services Inc. said in July it would buy IMS from Lockheed Martin for $825 million. With completion of the sale imminent, ACS, not Lockheed Martin, will receive $29 for every speeding citation issued with the help of photo radar units in the District.
The photo radar units, which are operated by IMS, work like this: A vehicle moving through a pinpoint beam of radar faster than the speed limit triggers a camera to snap a picture of the license plate. IMS then mails a traffic citation to the violator.
IMS pulled in $300 million in sales during the first six months of the year. About 20 percent of those sales are from its transportation systems and services division, which houses the radar-camera operations.
Opponents of the technology call it an invasion of privacy and a sign of ever-encroaching Big Brother.
Such concerns don't bother ACS officials, and industry analysts say the issue is unlikely to hurt the company's business.
The radar cameras, one of many reasons ACS has purchased IMS, are likely to generate just a fraction of the company's revenue, said Lesley Pool, the company's vice president of corporate marketing.
"It's not like Big Brother is catching anybody who's law-abiding and doing the right thing," she said.
IMS has picked up the tab for five mobile and one fixed camera unit, estimated at $100,000 apiece.
The contract with the District projects that fines generated by red-light cameras will top $161 million by 2004, with $44 million of that going to IMS.
The Lockheed subsidiary calls itself a "business process outsourcing" company. It develops the systems used to collect tolls, traffic fines and child support payments when government agencies choose not to develop those systems themselves.
It collects more than $7 billion in child support revenues, $1.2 billion in toll revenues and $450 million in traffic violation revenues a year. Revenues from each municipality differ with each contract.
IMS products include the E-Z Pass system used at many highway tollbooths and cameras used by local police to catch red-light violators.
IMS headquarters will remain in the District, and ACS has no plans to lay off any of the subsidiary's 4,500 employees.
ACS, founded in 1988, is an outsourcing firm with a broader scope than IMS.
Operating more than 250 offices worldwide with 21,000 employees, its businesses include operating mainframe computers for companies, processing claims and record indexing, with outsourcing of technology for state and local governments.
Its services are divided into eight industry groups ranging from communications to retail and distribution.
Analysts say the sale of IMS will benefit both Lockheed Martin and ACS. Lockheed, which is in the middle of a large debt-reduction and reorganization plan, will receive at least $500 million in cash from the sale and will concentrate more on its core businesses of space and defense contracting.
"IMS has a really strong presence in the [business process outsourcing] market. I'm not sure that really fit in with Lockheed Martin's core business," said David Grossman, analyst with Thomas Weisel Partners in San Francisco.
Lockheed bought IMS in 1984 as part of its strategy to branch out from defense contracting. The division competes with business outsourcing divisions from several companies, including PricewaterhouseCoopers and Unysis.
ACS plans to use its new division to take advantage of opportunities in state and local markets and expand its government services division. ACS is not involved in the collection of child support payments, tolls or fines.
Ten percent of state and local governments use outsourcing firms for their business processes, representing a strong growth opportunity for the company.
With the acquisition of IMS, the company could become one of the largest players in the business process outsourcing industry, Mr. Grossman said.
"To the extent that they can leverage their existing infrastructure to state and local governments that can be a big bonus," he said.
ACS expects earnings per share to increase 25 cents as a result of the IMS purchase, providing a boost to an already thriving company. Analysts said a slow economy helps outsourcing firms like ACS and IMS, because companies find contracting out more cost-effective than establishing their own business systems.
The slow economy has meant a prime market for acquisitions, and ACS has taken advantage. IMS is the third acquisition for the company since May.
In June, ACS announced the purchase of Global Government Solutions, an information technology solution company, from Systems and Computer Technology Corp. for $85 million.
In early July, ACS announced the purchase of National Processing Co., a business process outsourcing firm, for $43 million.
ACS reported record earnings of $134.3 million ($2.46 per diluted share) on sales of $2.1 billion in fiscal 2001, which ended June 30. It posted quarterly earnings of $36.55 million (66 cents) on sales of $550.5 million.
Diluted shares reflect options, warrants and other securities convertible into common stock.
The company has seen its stock price climb throughout the year. Its shares hit a 52-week high of $80.80 on July 19 on the New York Stock Exchange, the day the IMS acquisition was announced.
The stock climbed further, hitting $85 on July 30. Shares of ACS Inc. closed at $83.81 yesterday.

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