Comdisco, Inc., Announces Record 1999 Results From Normal Operations On Strength of Services, Leasing and Ventures Businesses; Continues Rollout of Prism's National High-Speed Network.ROSEMONT Rosemont can have many meanings, including: Places
Comdisco (Comdisco, Inc., Rosemont, IL, www.comdisco.com) A technology services company, originally founded as Computer Discount Company in 1969 by Ken Pontikes. By the mid-1990s, Comdisco had become one of the largest independent computer and electronics equipment leasing companies as well as a , Inc. today reported operating results for its fourth quarter and fiscal year ended September September: see month. 30, 1999. Operating results: For the fourth quarter, Comdisco reported earnings from normal operations Generally and collectively, the broad functions that a combatant commander undertakes when assigned responsibility for a given geographic or functional area. Except as otherwise qualified in certain unified command plan paragraphs that relate to particular commands, "normal operations" of of $44 million, or $.27 per common share, compared with $37 million, or $.23 per common share, for the year earlier period. Including the operational losses from Prism Communication Services, Inc., the company reported net earnings of $30 million, or $.19 per common share for the quarter. Total revenue for the fourth quarter was $984 million, compared with $904 million, for the prior year period. For the year ended September 30, 1999, the company reported earnings from normal operations of $167 million, or $1.03 per common share, compared with $151 million, or $.93 per common share, for the prior year period. Including the operational losses from Prism Communication Services, Inc., and the previously announced $150 million charge due to the sale of Comdisco's non-strategic assets during the second quarter, the company reported net earnings of $48 million, or $.30 per common share, for the year ended September 30, 1999. Total revenue for the twelve months was $4.2 billion, compared with $3.2 billion for the prior year period. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. commentary: "We continue to benefit from the strategic shifts that we made to our business model earlier this year," said President and Chief Executive Officer Nick Pontikes. "We ended 1999 with the best quarter in the Company's history. Our technology services division recorded 30% and 35% increases respectively in revenue and pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings compared to the prior years quarter. Our leasing business experienced another strong remarketing quarter. Also having a record quarter was the Comdisco Ventures Group. On a mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. basis, at September 30, 1999, Comdisco Ventures had a value of $194 million of publicly traded securities within the Ventures portfolio. This compares to $140 million at June June: see month. 30, 1999, and $56 million at March 31, 1999." Continued Pontikes, "During the quarter we introduced to the U.S. and other markets a suite of global, Web-enabled IT CAP (Information Technology Control and Predictability) Solutions designed to help CIOs and CFOs better manage their technology investments. Our goal is to enable our customers to concentrate on growing their businesses while we ensure their technology is working to its full potential. IT CAP Solutions are already experiencing major success in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). with multi-national clients."
Concluded Pontikes, "1999 was another year of extraordinary change at Comdisco. We continued a 30-year tradition of reinventing ourselves to address evolving market needs. Our team of dedicated employees are executing according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. plan and delivering record results. We enter fiscal 2000 with a record services backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. over $1.2 billion. With the combination of our strong financial position and global business model we look forward to the opportunities the millennium will bring." Prism Communication Services, Inc.: On November November: see month. 2, 1999, Prism announced approval of state filing for CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) status in Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Ohio, Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces , Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee and Texas. In addition to state approvals, Prism has signed Interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. Agreements with Ameritech AMERITECH American Information Technologies for Illinois, Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). , Ohio and Wisconsin. On November 1, 1999, Prism announced the expansion of its REDSM high-speed service See broadband. to key cities in northern New Jersey, including Newark Newark, cities, United States Newark. 1 City (1990 pop. 37,861), Alameda co., W Calif., on the east side of San Francisco Bay; inc. 1955. , Jersey City and Rutherford Rutherford (rŭth`ərfərd), borough (1990 pop. 17,790), Bergen co., NE N.J., a residential suburb of the New York City–N New Jersey metropolitan area; inc. 1881. Several pre-Revolutionary houses remain there. . The extension is the latest in Prism's enterprising en·ter·pris·ing adj. Showing initiative and willingness to undertake new projects: The enterprising children opened a lemonade stand. strategy to provide high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. connectivity for data, voice, Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and other critical business communications needs to customers across the country. Also, on October 27, 1999, Prism announced the approval of state filing for CLEC status in Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). , Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. and Rhode Island Rhode Island, island, United StatesRhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. . Prism has also completed Interconnection Agreements with Bell Atlantic for New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , New Jersey and Massachusetts with like agreements in process for Connecticut and Rhode Island. Prism, which has already established a strong presence in New York, is rapidly constructing its robust communications network The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. to offer communications services to thirty-three markets in the U.S. and three markets in Canada. Dividend Information: On November 2, 1999, the Board of Directors declared a quarterly cash dividend of $.025 per share to common stockholders. The common stock cash dividend will be payable on December 13, 1999, to stockholders of record on November 12, 1999. Comdisco had 152,792,250 shares of common stock outstanding at September 30, 1999. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. : The foregoing contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. regarding Comdisco, which are based on current expectations and assumptions, and which involve risks and uncertainties that could cause results to differ. The company intends that such forward-looking statements be subject to the safe harbor created by Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. The following lists some of the factors, which could cause results to differ from expectations. As a result of the evolving nature of its services business, the company has limited meaningful historical data in which to base its planned operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . A significant portion of the company's expense levels are based in part on its expectations as to future services revenues, and, to a large extent, are fixed. To attain its services earnings contribution goals for fiscal 2000, the company will have to meet its obligations under the agreements underlying its sales backlog, expand its contract subscription base (through new contract signings and contract renewals), increase its revenues through other technology services, primarily managed network services and IT CAP Solutions, and contain costs. The company's ability to obtain new business and realize revenue on its sales backlog depends on its ability to anticipate technological changes, develop services to meet customer requirements and achieve delivery of services that meet customer requirements. In addition, with respect to new business opportunities, the company must successfully compete with organizations offering similar services. Securities held by the Company are generally subject to lockups restricting its ability to sell until several months after an initial public offering. The public market for high technology and other emerging growth companies is extremely volatile. Such volatility may adversely affect the ability of the Company to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use. See also: Dispose the securities held by the Comdisco Ventures Group and the value of those securities on the date of sale. Prism is a start up company that has incurred operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. since inception and the company expects that Prism's operating losses will continue to increase as it constructs its communications network to offer communication services to thirty-three markets in the U.S. and three in Canada. Additional factors that would cause results to differ are discussed in the company's 10-Q for the quarter ended June 30, 1999. The company undertakes no obligation to publicly update or revise any forward-looking statement whether as a result of new information, future events or otherwise. About Comdisco, Inc.: Comdisco (www.comdisco.com) provides global technology management services to help its customers maximize technology functionality, predictability and availability, while freeing them from the complexity of managing their technology. The Rosemont (IL) company offers a complete suite of information technology services including continuity, managed network services, and IT control and predictability solutions. Through its subsidiary, Prism Communication Services Inc., Comdisco is developing a high-speed, always-on digital network, which will provide customers with leading-edge connectivity. Comdisco also offers equipment acquisition services through its electronics, communications, medical, lab & scientific, and computer-integrated manufacturing computer-integrated manufacturing Data-driven automation that affects all systems or subsystems within a manufacturing environment: design and development, production (see CAD/CAM), marketing and sales, and field support and service. businesses, and through its ventures group. The company's revenue for the 12 months ended September 30, 1999, was $4.2 billion. Comdisco is a registered trademark of Comdisco, Inc. Other company names are trademarks of their respective organizations.
Comdisco, Inc. and Subsidiaries
Consolidated Statements of Earnings
For the Three and Twelve Months Ended September 30, 1999 and 1998
(Dollars in millions except per share data)
Three months ended % Twelve months ended %
September 30, +/- September 30, +/-
------------------ --- ------------------- ---
1999 1998 1999 1998
---- ---- ---- ----
Revenue
Leasing:
Operating $ 457 $ 510 -10% $1,938 $1,897 2%
Direct financing 43 40 8% 174 162 7%
Sales-type 101 145 -30% 543 376 44%
------- ------- ------- ------- ------- -----
Total leasing 601 695 -14% 2,655 2,435 9%
Sales 201 88 128% 406 329 23%
Mainframe
portfolio sale - - N/A 485 0 N/A
Technology
services 146 112 30% 522 433 21%
Other 36 9 300% 91 46 98%
------- ------- ------- ------- ------- -----
Total revenue 984 904 9% 4,159 3,243 28%
------- ------- ------- ------- ------- -----
Costs and expenses
Leasing:
Operating 368 414 -11% 1,563 1,528 2%
Sales-type 69 113 -39% 406 263 54%
------- ------- ------- ------- ------- -----
Total leasing 437 527 -17% 1,969 1,791 10%
Sales 184 73 152% 361 275 31%
Mainframe
portfolio sale - - N/A 485 0 N/A
Technology
services 123 95 29% 440 362 22%
Selling, general
and administrative 87 64 36% 306 249 23%
Interest 84 82 2% 337 326 3%
Prism Communications 22 - N/A 36 - N/A
Other - - N/A 150 - N/A
------- ------- ------- ------- ------- -----
Total costs
and expenses 937 841 11% 4,084 3,003 36%
------- ------- ------- ------- ------- -----
Earnings before
income taxes 47 63 -25% 75 240 -69%
Income taxes 17 23 -26% 27 87 -69%
Net earnings before
preferred dividends 30 40 -25% 48 153 -69%
Preferred dividends - - N/A - (2) -100%
------- ------- ------- ------- ------- ------
Net earnings
available to common
stockholders $ 30 $ 40 -25% $ 48 $ 151 -68%
======= ======= ======= ======= ======= =====
Retained earnings
at beginning
of period $1,107 $1,064 $ 1,101 $ 965
Net earnings
available to
common stockholders 30 40 48 151
Cash dividends
paid on common stock (3) (3) (15) (15)
------- ------- ------- -------
Retained earnings
at end of period $1,134 $1,101 $1,134 $1,101
======= ======= ======= =======
Net earnings per common share:
Earnings per common
share - basic $ 0.20 $ 0.26 -23% $ 0.32 $ 0.99 -68%
======= ======= ======= ======= ======= =====
Earnings per common
share - diluted $ 0.19 $ 0.25 -24% $ 0.30 $ 0.93 -68%
======= ======= ======= ======= ======= =====
Common shares outstanding:
Average common
shares outstanding --
basic 153 152 152 151
======= ======= ======= =======
Average common shares
outstanding --
diluted 162 162 162 163
======= ======= ======= =======
Comdisco, Inc. and Subsidiaries
Consolidated Statements of Earnings
For the Three Months Ended September 30, 1999 and 1998
(Dollars in millions except per share data)
As As As As
Reported Adjusted(1,2) Reported Adjusted(1,3)
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1999 1998 1998
---------- ------------- --------- -------------
Revenue
Leasing:
Operating $ 457 $ 457 $ 510 $ 454
Direct financing 43 43 40 36
Sales-type 101 101 145 107
----- ----- ----- -----
Total leasing 601 601 695 597
Sales 201 201 88 88
Technology services 146 146 112 112
Other 36 36 9 9
----- ----- ----- -----
Total revenue 984 984 904 806
----- ----- ----- -----
Costs and expenses
Leasing:
Operating 368 368 414 366
Sales-type 69 69 113 80
----- ----- ----- -----
Total leasing 437 437 527 446
Sales 184 184 73 73
Technology services 123 123 95 95
Selling, general and
administrative 87 87 64 60
Interest 84 84 82 73
Prism Communications 22 - - -
----- ----- ----- -----
Total costs and
expenses 937 915 841 747
----- ----- ----- -----
Earnings before
income taxes 47 69 63 59
Income taxes 17 25 23 22
----- ----- ----- -----
Net earnings before
preferred dividends 30 44 40 37
Preferred dividends - - - -
----- ----- ----- -----
Net earnings $ 30 $ 44 $ 40 $ 37
===== ===== ===== =====
Net earnings per
common share:
Earnings per common
share - basic $0.20 $0.29 $0.26 $0.25
===== ===== ===== =====
Earnings per common
share - diluted $0.19 $0.27 $0.25 $0.23
===== ===== ===== =====
Common shares outstanding:
Average common shares
outstanding - basic 153 153 152 152
Average common shares
outstanding - diluted 162 162 162 162
(1) The as adjusted Statements of Earnings was prepared to provide
the reader with quarter-to-quarter comparative results of
operations excluding the effect of the sale of the mainframe
portfolio and excluding the impact of Prism Communications.
(2) The as adjusted 1999 Statement of Earnings excludes the loss of
$22 million by Prism Communications.
(3) The as adjusted 1998 Statement of Earnings gives effect to the
sale of the mainframe portfolio as if it had occurred at the end
of the third fiscal quarter of fiscal 1998.
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