Comdisco, Inc. Announces Best Earnings Quarter Ever, Announces Quarterly Cash Dividend.Business Editors 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. (NYSE NYSE See: New York Stock Exchange : CDO (Collaborative Data Objects) A programming interface from Microsoft for accessing MAPI-based e-mail, calendaring and scheduling servers. Originally called "OLE Messaging" and "Active Messaging," CDO wraps the Enhanced MAPI library into a COM object that provides the ) today reported operating results for its first quarter ended December December: see month. 31, 2000. Operating results: For the quarter, Comdisco reported all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal record net earnings of $88 million, or $.56 per common share, compared with $42 million, or $.26 per common share, for the year earlier period. The prior year period includes a $17 million, or $.11 per common share, loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . Total revenue for the first quarter was $909 million, compared with $876 million, 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: Commenting on first quarter results, Phil PHIL Philosophy Phil Philippine PHIL Philippians PHIL Philadelphia, PA, USA PHIL Public Health Image Library (US CDC) Hewes, President and Chief Executive Officer, stated, "On December 22, 2000, we stated that as a result of the strength of Comdisco's leasing and ventures business during the first quarter, the company anticipated it would exceed consensus Wall Street estimates by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $.10 per share. I am happy to report the strongest quarter in the company's history and that we exceeded the consensus Wall Street estimates of December 22, 2000, by $.16 per share. We set an all-time record for net earnings and exceeded our targets for the quarter in two of our three businesses. Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings for our leasing business were $20 million for the quarter, exceeding our target by $2 million, or 11%. This was a significant accomplishment for a first quarter, as historically, first quarters tend to be our most challenging for leasing pre-tax earnings. Our ventures division experienced another outstanding quarter, exceeding our pre-tax profitability targets by 57%, earning $110 million for the quarter as Comdisco Ventures continues to recognize gains from its portfolio of publicly held securities. The mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. valuation for publicly traded securities within the Comdisco Ventures portfolio was approximately $240 million as of December 31, 2000. Also, during the quarter, the company paid down approximately $505 million, or 32%, of the $1.6 billion of senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. (excluding commercial paper or revolving bank lines) that is scheduled to mature in fiscal 2001. The company paid down this debt with a combination of cash on hand, cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and the financing of lease receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed ." Continued Hewes, "Although two of our three businesses exceeded our targets, we are disappointed with the performance of our technology services business during the quarter. We experienced larger than expected costs in technology services due to our level of investment in the web services (1) Loosely, any online service delivered over the Web. Such usage appears in articles from non-technical sources, but not in IT-oriented publications, because definition #2 below describes the correct use of the term. business as well as losses associated with our network services business." The company announced on January January: see month. 9, 2001 that it will stop providing managed network services. "We need to make dramatic profitability improvements in our services business. We have a number of initiatives currently in place to address the problems. I have made it the number one priority of senior services management to focus and execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution on our strategic plans," concluded Hewes. Dividend Information: On January 30, 2001, the Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a quarterly cash dividend of $.025 per share to common stockholders. The common stock cash dividend will be payable on March 12, 2001, to stockholders of record on February February: see month. 9, 2001. Comdisco had 151,415,848 shares of common stock outstanding at December 31, 2000. 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 2001 the company will have to meet its obligations under the agreements underlying its sales 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. . Also, the company must expand its contract subscription base (through new contract signings and contract renewals), increase its revenues through other technology services, primarily, web availability 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 on a global basis and achieve delivery of services that meet customer requirements on a domestic and global basis. In addition, with respect to new business opportunities, the company must successfully compete with organizations offering similar services. The company's liquidity depends, in part, on its access to capital markets, specifically medium-term and senior notes, and commercial paper, and on its lines of credit. If the company was not able to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. its indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. or obtain new financing under these circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , the company would have to consider other options, including: sales of some assets; sales of equity; negotiations with lenders to restructure applicable indebtedness; or other options available to the company under applicable law. Further, the Company's cash flow from operating activities is dependent on a number of variables, including, but not limited to, the ability of the Company to implement its strategic plan and respond to external market conditions, 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 Comdisco Ventures, timely payment by its customers, global economic conditions and controlling operating costs operating costs npl → gastos mpl operacionales and expenses. Securities held by Comdisco Ventures are generally subject to lockups restricting re·strict tr.v. re·strict·ed, re·strict·ing, re·stricts To keep or confine within limits. See Synonyms at limit. [Latin restringere, restrict- : re-, 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 With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. . Such volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the may adversely affect the ability of the company to dispose of the securities held by Comdisco Ventures and the value of those securities on the date of sale. Unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. are based upon market and business data available to the Company as of today's date and is subject to change based on additional market and business data as it becomes available. Additional factors that would cause results to differ are discussed in the company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended September September: see month. 30, 2000. 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: Comdisco (www.comdisco.com) provides global technology services to help its customers maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. 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 business continuity, managed web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. , storage, and IT Control and Predictability Solutions(SM). Comdisco offers equipment solutions to key vertical industries, including semiconductor manufacturing and electronic assembly, healthcare, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , pharmaceutical, biotechnology biotechnology, the use of biological processes, as through the exploitation and manipulation of living organisms or biological systems, in the development or manufacture of a product or in the technological solution to a problem. and manufacturing. Through its Ventures division, Comdisco provides equipment leasing Equipment Leasing is a financing option to lease equipment for a certain amount of time. Leasing Benefits
Comdisco, Inc.
Revenue and Earnings Breakdown
By Lines of Business
Below are the results by lines of business for the three months
ended December 31, 2000 and 1999 (dollars in millions):
Three Months Ended
12/31/00 12/31/99
-------- --------
Revenue
Leasing $ 491 $ 588
Services 162 147
Ventures 256 141
---------------------
Total $ 909 $ 876
======== ========
Pretax Earnings from normal operations
Leasing $ 20 $ 8
Services 5 22
Ventures 110 61
---------------------
Total $ 135 $ 91
======== ========
Earnings Per Share
Normal operations $ 0.55 $ 0.36
Discontinued operations - (0.10)
Cumulative effect of change in
accounting principle 0.01 -
---------------------
Diluted EPS $ 0.56 $ 0.26
======== ========
Comdisco, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2000 and 1999 and September 30, 2000
(dollars in millions)
Dec 31, Sept 30, Dec 31,
---------- ----------- ----------
1999 2000 2000
ASSETS
Cash and cash equivalents $ 226 $ 316 $ 383
Cash - legally restricted 32 54 68
Receivables, net 881 1,181 1,135
Inventory of equipment 140 127 121
Net leased assets 5,778 5,477 5,483
Property, plant and equipment, net 370 287 224
Equity securities 517 899 444
Other assets 489 413 414
---------- ----------- ----------
$ 8,433 $ 8,754 $ 8,272
========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 1,059 $ 1,314 $ 1,244
Term notes payable 550 695 718
Senior debt 3,686 3,452 3,183
Accounts payable 219 182 214
Income taxes 487 415 286
Other liabilities 658 688 625
Discounted lease rentals 546 794 1,037
---------- ----------- ----------
7,205 7,540 7,307
---------- ----------- ----------
Stockholders' equity:
Common stock 22 23 23
Additional paid-in capital 337 360 361
Accumulated other comprehensive
income 182 317 30
Retained earnings 1,172 1,051 1,135
---------- ----------- ----------
1,713 1,751 1,549
Common stock held in treasury,
at cost (485) (537) (584)
---------- ----------- ----------
Total stockholders' equity 1,228 1,214 965
---------- ----------- ----------
$ 8,433 $ 8,754 $ 8,272
========== =========== ==========
Comdisco, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended December 31, 2000 and 1999
(in millions)
2000 1999
Increase (decrease) in cash (Unaudited) (Unaudited)
and cash equivalents: ----------- -----------
Cash flows from operating activities:
Leasing $ 515 $ 613
Services 34 24
Ventures 345 142
-------- --------
Subtotal 894 779
Prism (49) (11)
-------- --------
Net cash provided by operating
activities 845 768
-------- --------
Cash flows from investing activities:
Leasing (358) (776)
Services (53) (55)
Ventures (227) (245)
-------- --------
Subtotal (638) (1,076)
Prism - (76)
-------- --------
Net cash used in investing activities (638) (1,152)
-------- --------
Net cash provided by (used in)
financing activities (140) 249
-------- --------
Net increase (decrease) in cash and
cash equivalents 67 (135)
Cash and cash equivalents at
beginning of period 316 361
-------- --------
Cash and cash equivalents at end
of period $ 383 $ 226
======== ========
Comdisco, Inc.
Consolidated Statements of Earnings
For the Three Months Ended December 31, 2000 and 1999
(dollars in millions except per share data)
Three Months Ended
Dec 31, %
2000 1999 +/-
------- -------- -----
Revenue
Leasing
Operating $ 391 $ 434 -10%
Direct financing 46 43 7%
Sales-type 42 78 -46%
------- -------- -----
Total leasing 479 555 -14%
Equipment sales 72 68 6%
Technology services 162 147 10%
Other 196 106 85%
------- -------- -----
Total revenue 909 876 4%
------- -------- -----
Costs and expenses
Leasing
Operating 310 351 -12%
Sales-type 25 60 -58%
------- -------- -----
Total leasing 335 411 -18%
Equipment sales 49 50 -2%
Technology services 157 125 26%
Selling, general and administrative 132 115 15%
Interest 101 84 20%
------- -------- -----
Total costs and expenses 774 785 -1%
------- -------- -----
Earnings from continuing
operations before income taxes and
cumulative effect of change in
accounting principle 135 91 48%
Income taxes 49 32 53%
------- -------- -----
Earnings from continuing operations
before cumulative effect of change
in accounting principle 86 59 46%
Loss from discontinued operations - (17) -100%
------- -------- -----
Earnings before cumulative effect
of change in accounting principle 86 42 105%
Cumulative effect of change in
accounting principle 2 - N/A
------- -------- -----
Net earnings to common
stockholders $ 88 $ 42 110%
======= ======== =====
Retained earnings at
beginning of period $ 1,051 $ 1,134
Net earnings to common
stockholders 88 42
Cash dividends paid on common stock (4) (4)
------- --------
Retained earnings at
end of period $ 1,135 $ 1,172
======= ========
Basic earnings per common share:
Earnings from continuing
operations $ 0.57 $ 0.38 50%
=====
Loss from discontinued
operations - (0.11)
Cumulative effect of change
in accounting principle 0.01 -
------- --------
Net earnings $ 0.58 $ 0.27
======= ========
Diluted earnings per common share:
Earnings from continuing
operations $ 0.55 $ 0.36 53%
=====
Loss from discontinued operations - (0.10)
Cumulative effect of change
in accounting principle 0.01 -
------- --------
Net earnings $ 0.56 $ 0.26
======= ========
Common shares outstanding:
Average common shares
outstanding--basic 152 152
Average common shares
outstanding--diluted 156 162
ADDITIONAL COMMENTARY ON DECEMBER 31, 2000 STATEMENT OF EARNINGS
Other income can be broken down as follows:
Quarter Ended Dec 31
2000 1999
-------- --------
(in millions)
Warrant income and stock sales gains $ 161 $ 85
Interest income on notes receivable 20 12
Miscellaneous 15 9
-------- --------
$ 196 $ 106
======== ========
The increase in SG&A can be explained as follows:
Quarter Ended Dec 31
2000 1999
-------- --------
(in millions)
Ventures bad debt expense $ 38 $ 22
Commissions due on Ventures earnings 17 15
Ventures additional SG&A 8 3
-------- --------
Total Ventures SG&A 63 40
Leasing SG&A 69 75
-------- --------
Total SG&A Statement of Earnings $ 132 $ 115
======== ========
Comdisco Ventures
Statements of Earnings
For the Three Months Ended December 31, 2000 and 1999
(dollars in thousands)
Three Months Ended
Dec 31, %
2000 1999 +/-
------- -------- -----
Revenue
Leasing
Operating $71,618 $ 37,882 89%
Direct financing 86 111 -23%
Sales-type - - N/A
------- -------- -----
Total leasing 71,704 37,993 89%
Equipment sales 1,851 2,318 -20%
Interest income on notes 19,714 11,759 68%
Warrant income and capital gains 161,368 88,725 82%
Other 1,005 408 146%
------- -------- -----
Total revenue 255,642 141,203 81%
------- -------- -----
Costs and expenses
Leasing
Operating 57,361 28,294 103%
Sales-type - - N/A
------- -------- -----
Total leasing 57,361 28,294 103%
Equipment sales 1,016 1,008 1%
Selling, general and
administrative 7,760 2,952 163%
Commission expense 17,201 15,470 11%
Interest 24,639 10,791 128%
Bad debt expense 38,000 21,800 74%
------- -------- -----
Total costs and expenses 145,977 80,315 82%
------- -------- -----
Earnings before income taxes 109,665 60,888 80%
Income taxes 43,729 23,685 85%
------- -------- -----
Net earnings $65,936 $ 37,203 77%
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