Comdisco, Inc. Announces Best Quarter Ever and All-Time Record Results From Continuing Operations, for Fiscal 2000; 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 fourth quarter and fiscal year ended September September: see month. 30, 2000. Operating results: For the fourth 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 earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $70 million, or $.44 per common share, compared with $44 million, or $.27 per common share, for the year earlier period. Including the 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. , the net loss for the fourth quarter was $168 million, or a loss of $1.05 per share, compared to earnings of $30 million, or $.19 per common share, for the prior year period. Total revenue for the fourth quarter was $1.03 billion, compared with $1.0 billion, for the prior year period. For the year ended September 30, 2000, the company reported all-time record earnings from continuing operations, of $255 million, or $1.58 per common share, compared to $70 million, or $.44 per common share in the prior year period. Including the loss from discontinued operations, the net loss for the year was $67 million, or $.41 per common share, compared to earnings of $48 million, or $.30 per common share for the prior year period. Net earnings for the prior year period also includes a $150 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge related to the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of low-margin businesses and the realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of the company's service businesses. Total revenue for the twelve months was $3.9 billion, compared to $4.2 billion, for the prior year period. The prior year period includes $598 million of revenue from the sale of non-strategic assets. Discontinued operations: On October October: see month. 3, 2000, Comdisco announced that it would cease funding ongoing operations of its subsidiary, Prism Communication Services, Inc. Since that time, Prism has decided to cease operations and dispose of dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. its assets. Accordingly, Comdisco has presented its losses associated with its investment in Prism, including the writedown writedown A reduction in the value of an asset carried on a firm's financial statements. For example, the firm's accountants, believing the inventory is overvalued, may decide to take a writedown by reducing inventory valuation. of its investment to estimated fair market value, as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . The company recorded pre-tax 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. of $196 million during fiscal year 2000, of which $64 million was recorded in the fourth quarter. In addition, during the fourth quarter, the company recorded the above mentioned asset writedown, which totaled $331 million pre-tax, net of the anticipated proceeds from the sale of Prism's telecommunications network A telecommunications network is a of telecommunications links and nodes arranged so that messages may be passed from one part of the network to another over multiple links and through various nodes. equipment. Therefore, the loss from discontinued operations, net of tax, for the quarter ended September 30, 2000, was $238 million, or $1.49 per common share, compared with a loss of $14 million, or $.08 per common share for the prior year period. For the twelve months ended September 30, 2000, the loss from discontinued operations, net of tax, was $322 million, or $1.99 per common share, compared to a loss of $22 million, or $.14 per common share, 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 fourth quarter results, Nick Pontikes, President and Chief Executive Officer, stated, "While the loss on our Prism operations was a disappointment, it is clear from our fiscal 2000 results that our continuing operations remain strong. Last week we pre-announced our fiscal fourth quarter results stating that we anticipated that we would exceed consensus Wall Street estimates. I am happy to report that this was the strongest quarter in the company's history. We set a record for earnings from continuing operations for both the quarter and the fiscal year. We met or exceeded our targets for the quarter in each of our three core businesses. Our leasing business, due to a strong remarketing quarter, exceeded targeted pre-tax profitability of $25 million by $3 million, or 12%. Our technology services business met our pre-tax profitability expectations of $13 million and our Ventures division experienced another outstanding quarter, exceeding our pre-tax profitability targets by 31%, earning $68 million for the quarter. 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 over $750 million as of November November: see month. 1, 2000." Continued Pontikes, "Our cash flow 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 at September 30, 2000 was over $3.3 billion and our liquidity (consisting of cash on hand and available commercial paper and bank facilities) was over $1 billion. We are well positioned to fund future growth and operating requirements." "We look forward to the opportunities that lie ahead in fiscal 2001 as we continue towards our goal of maximizing max·i·mize tr.v. max·i·mized, max·i·miz·ing, max·i·miz·es 1. To increase or make as great as possible: shareholder value." Dividend Information: On November 7, 2000, 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 December December: see month. 11, 2000, to stockholders of record on November 10, 2000. Comdisco had 152,569,367 shares of common stock outstanding at September 30, 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 network services, 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 and the willingness of the banks to renew these lines. 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-Q Form 10-Q See 10-Q. for the quarter ended June June: 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, Web-Availability(SM), network, and IT Control and Predictability Solutions(SM). Comdisco also offers equipment solutions to key vertical industries, including electronics, 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 is providing equipment leasing Equipment Leasing is a financing option to lease equipment for a certain amount of time. Leasing Benefits
A new business. . The company's revenue for the 12 months ended September 30, 2000 was $3.9 billion.
Comdisco, Inc.
Revenue and Earnings Breakdown
By Lines of Business
Below are the results by lines of business for the three and
twelve months ended September 30, 2000 and 1999 (dollars in millions):
Three Months Ended Twelve Months Ended
9/30/00 9/30/99 9/30/00 9/30/99
------- ------- ------- -------
Revenue
Leasing $ 645 $ 671 $ 2,557 $ 2,829
Services 161 146 637 522
Ventures 221 91 673 229
------- ------- ------- -------
Normal operations 1,027 908 3,867 3,580
Mainframe and
medical sale (1) - - - 503
Vendor sale (2) - 95 - 95
------- ------- ------- -------
Total $ 1,027 $ 1,003 $ 3,867 $ 4,178
======== ======== ========= =========
Pretax Earnings from normal operations
Leasing $ 28 $ 18 $ 87 $ 78
Services 13 23 65 82
Ventures 68 25 246 71
------- ------- ------- -------
Normal operations 109 66 398 231
Mainframe and
medical sale (1) - - - 27
Vendor sale (2) - 2 - 2
Charge (3) - - - (150)
------- ------- ------- -------
Total $ 109 $ 68 $ 398 $ 110
======== ======== ========= =========
Earnings Per Share
Normal operations $ 0.44 $ 0.27 $ 1.58 $ 1.03
Discontinued
Operations (1.49) (0.08) (1.99) (0.14)
Charge (3) - - - (0.59)
------- ------- ------- -------
Diluted EPS $ (1.05) $ 0.19 $ (0.41) $ 0.30
======== ======== ========= =========
(1) The sale of the mainframe portfolio and the sale of the
medical refurbishing business were both concluded in the fiscal
Quarter ended June 30, 1999.
(2) In the fourth quarter of fiscal 1999, the company completed
the sale of substantially all of its vendor portfolio.
(3) In the second quarter of fiscal 1999, the company recorded a
pre-tax charge of $150 million ($96 million after-tax, [pilcrow (paragraph
sign)] or $.59 per
common share) related to the divestiture of low-margin businesses and
the realignment of the company's service businesses.
Comdisco, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 2000 and 1999 and June 30, 2000
(dollars in millions)
Sept 30, Sept 30, June 30,
2000 1999 2000
-------- -------- --------
ASSETS
Cash and cash equivalents $ 316 $ 361 $ 259
Cash -- legally restricted 54 46 40
Receivables, net 1,261 735 1,073
Inventory of equipment 127 115 130
Net leased assets 5,477 5,623 5,503
Property, plant and equipment, net 207 229 463
Equity securities 899 252 606
Other assets 413 446 477
--------- --------- ---------
$ 8,754 $ 7,807 $ 8,551
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 2,009 $ 1,370 $ 2,143
Senior debt 3,452 3,686 3,384
Accounts payable 182 263 155
Income taxes 415 382 448
Other liabilities 688 531 651
Discounted lease rentals 794 515 526
--------- --------- ---------
7,540 6,747 7,307
--------- --------- ---------
Stockholders' equity:
Common stock 23 22 22
Additional paid-in capital 360 302 375
Accumulated other comprehensive
income 317 58 162
Retained earnings 1,051 1,134 1,223
--------- --------- ---------
1,751 1,516 1,782
Common stock held in treasury,
at cost (537) (456) (538)
--------- --------- ---------
Total stockholders' equity 1,214 1,060 1,244
--------- --------- ---------
$ 8,754 $ 7,807 $ 8,551
========= ========= =========
Comdisco, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
For the Years Ended September 30, 2000 and 1999
(in millions)
Increase (decrease) in
cash and cash equivalents: 2000 1999
--------- ---------
Cash flows from operating activities:
Leasing $ 2,357 $ 2,388
Services 139 95
Ventures 835 253
---------- ---------
Subtotal 3,331 2,736
Mainframe and medical sale - 502
Prism (120) (19)
---------- ---------
Net cash provided by operating activities 3,211 3,219
---------- ---------
Cash flows from investing activities:
Leasing (2,209) (2,618)
Services (208) (151)
Ventures (1,206) (575)
---------- ---------
Subtotal (3,623) (3,344)
Prism (248) (117)
---------- ---------
Net cash used in investing activities (3,871) (3,461)
---------- ---------
Net cash provided by financing activities 615 540
---------- ---------
Net increase (decrease) in cash
and cash equivalents (45) 298
Cash and cash equivalents
at beginning of period 361 63
---------- ---------
Cash and cash equivalents at end of period $ 316 $ 361
========== =========
Comdisco, Inc.
Consolidated Statements of Earnings
For the Three and Twelve Months Ended September 30, 2000 and 1999
(dollars in millions except per share data)
Three Months Twelve Months
Ended Ended
Sept 30, % Sept 30, %
2000 1999 +/- 2000 1999 +/-
------ ------ ---- ------ ------ ----
Revenue
Leasing
Operating $ 412 $ 457 -10% $1,700 $1,938 -12%
Direct financing 47 40 18% 178 162 10%
Sales-type 100 101 -1% 381 543 -30%
------ ------ ---- ------ ------ ----
Total leasing 559 598 -7% 2,259 2,643 -15%
Equipment sales 131 106 24% 440 293 50%
Mainframe, medical
and vendor sale (1) - 95 -100% - 598 -100%
Continuity and network
services 161 146 10% 637 522 22%
Other 176 58 203% 531 122 335%
------ ------ ---- ------- ------ ----
Total revenue 1,027 1,003 2% 3,867 4,178 -7%
------ ------ ---- ------- ------ ----
Costs and expenses
Leasing
Operating 329 368 -11% 1,368 1,563 -12%
Sales-type 73 69 6% 285 406 -30%
------ ------ ---- ------- ------ ----
Total leasing 402 437 -8% 1,653 1,969 -16%
Equipment sales 115 91 26% 358 250 43%
Mainframe, medical
and vendor sale (1) - 93 -100% - 596 -100%
Continuity and
network services 148 123 20% 572 440 30%
Selling, general
and administrative 158 107 48% 532 326 63%
Interest 95 84 13% 354 337 5%
Other (2) - - N/A - 150 -100%
------ ------- ---- ------- ------ ----
Total costs
and expenses 918 935 -2% 3,469 4,068 -15%
------ ------- ---- ------- ------ ----
Earnings from continuing operations before
income taxes 109 68 60% 398 110 262%
Income taxes 39 24 63% 143 40 258%
------ ------- ---- ------- ------ ----
Earnings from
continuing operations 70 44 59% 255 70 264%
Loss from discontinued
operations (238) (14) 1600% (322) (22) 1364%
------- ------- ----- ------- ------- -----
Net earnings (loss) to
common stockholders $ (168) $ 30 -660% $ (67) $ 48 -240%
======= ======= ===== ======= ======= =====
Retained earnings at
beginning of period $1,223 $1,107 $1,134 $1,101
Net earnings (loss) to
common stockholders (168) 30 (67) 48
Cash dividends paid
on common stock (4) (3) (16) (15)
------- ------- ------- -------
Retained earnings
at end of period $1,051 $1,134 $1,051 $1,134
======= ======= ======= =======
Basic earnings per common share:
Earnings from continuing
operations $ 0.46 $ 0.29 59% $ 1.68 $ 0.46 265%
===== =====
Loss from discontinued
operations (1.56) (0.09) (2.12) (0.14)
------- ------- ------- -------
Net earnings (loss) $ (1.10) $ 0.20 $(0.44) $ 0.32
======== ======= ======= =======
Diluted earnings per common share:
Earnings from continuing
operations $ 0.44 $ 0.27 63% $ 1.58 $ 0.44 259%
===== =====
Loss from discontinued
operations (1.49) (0.08) (1.99) (0.14)
------- ------- ------- -------
Net earnings (loss) $ (1.05) $ 0.19 $(0.41) $ 0.30
======= ======= ======= =======
Common shares outstanding:
Average common shares
outstanding--basic 152 153 152 152
Average common shares
outstanding--diluted 160 162 162 162
(1) The sale of the mainframe portfolio and the sale of the
medical refurbishing business were both concluded in the fiscal
quarter ended June 30, 1999. The company completed the sale of
substantially all of its vendor portfolio in the fourth quarter of
fiscal 1999.
(2) In the second quarter of fiscal 1999, the company recorded a
pre-tax charge of $150 million ($96 million after- tax, or $.59 per
common share) related to the divestiture of low-margin businesses and
the realignment of the company's service businesses.
ADDITIONAL COMMENTARY ON SEPTEMBER 30, 2000 STATEMENT OF EARNINGS
-- Other income can be broken down as follows:
Quarter Ended Sept 30 Year Ended Sept 30
(in millions) (in millions)
2000 1999 2000 1999
---- ---- ---- ----
Warrant income and
stock sales gains $ 149 $ 44 $ 448 $ 72
Interest income on notes
receivable 17 10 56 23
Miscellaneous 10 4 27 27
------- ------- ------- -------
$ 176 $ 58 $ 531 $ 122
======= ======= ======= =======
The increase in SG&A can be explained as follows:
Quarter Ended Sept 30 Year Ended Sept 30
(in millions) (in millions)
2000 1999 2000 1999
---- ---- ---- ----
Ventures bad debt expense $ 50 $ 21 $ 112 $ 23
Commissions due on
Ventures earnings 26 5 78 10
Ventures additional SG&A 5 4 16 8
------- -------- -------- -------
Total Ventures SG&A 81 30 206 41
Leasing SG&A 77 77 326 285
------- -------- -------- -------
Total SG&A Statement
of Earnings $ 158 $ 107 $ 532 $ 326
======= ======== ======== =======
Comdisco Ventures
Statements of Earnings
For the Three and Twelve Months Ended September 30, 2000 and 1999
(dollars in thousands)
Three Months Twelve Months
Ended Ended
Sept 30, % Sept 30, %
2000 1999 +/- 2000 1999 +/-
------ ------ ---- ------ ------ ----
----------- ----------
----------- -----------
Revenue
Leasing
Operating $ 61,196 $ 33,792 81% $194,720 $116,678 67%
Direct financing 97 617 -84% 453 1,389 -67%
Sales-type - 336 -100% 1,858 336 453%
-------- ------- ---- -------- -------- ----
Total leasing 61,293 34,745 76% 197,031 118,403 66%
Equipment sales 3,382 2,299 47% 11,058 6,142 80%
Interest income
on notes 17,271 9,826 76% 55,727 22,580 147%
Warrant income and
capital gains 138,194 43,731 216% 405,759 80,731 403%
Other 1,256 176 614% 3,075 683 350%
-------- -------- ---- -------- -------- ----
Total revenue 221,396 90,777 144% 672,650 228,539 194%
-------- -------- ---- -------- -------- ----
Costs and expenses
Leasing
Operating 48,106 25,589 88% 149,747 87,860 70%
Sales-type - 254 -100% 1,134 254 346%
-------- -------- ---- -------- -------- ----
Total leasin g 48,106 25,843 86% 150,881 88,114 71%
Equipment sales 4,241 1,767 140% 8,625 4,460 93%
Selling, general
and administrative 5,149 4,039 27% 16,449 8,031 105%
Commission expense 25,607 5,321 381% 77,696 10,135 667%
Interest 19,491 8,208 137% 60,795 23,373 160%
Bad debt expense 50,333 20,800 142% 112,134 23,200 383%
-------- ------- ---- -------- -------- ----
Total costs
and expenses 152,927 65,978 132% 426,580 157,313 171%
-------- ------- ---- -------- -------- ----
Earnings before
income taxes 68,469 24,799 176% 246,070 71,226 245%
Income taxes 27,302 9,889 176% 98,120 28,402 245%
-------- ------- ---- -------- -------- ----
Net earnings $ 41,167 $ 14,910 176% $ 147,950 $ 42,824 245%
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