Comdisco, Inc. Announces Record Quarterly Earnings On Strength of Equipment Services and Ventures Businesses; Posts Record Technology Services Revenue.Business Editors ROSEMONT Rosemont can have many meanings, including: Places
Prism Announces 1000 Line Contract With DistributedMedia.com; Declares Quarterly Cash Dividend 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 second quarter ended March 31, 2000. Operating Results: For the second quarter, Comdisco reported record net earnings of $43 million, or $.26 per common share, compared to a loss of $(56) million, or $(.37) per common share, for the prior year period. The prior year period included 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. 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 , which excludes the losses from Prism Communication Services, Inc. and, in the prior year, the $150 million pre-tax charge, were a record $69 million, or $.42 per common share, compared to $41 million, or $.26 per common share in the year earlier period. Total revenue for the second quarter was $1.01 billion, compared with $952 million, for the prior year period. For the six months ended March 31, 2000, the company reported record net earnings of $84 million, or $.52 per common share, compared to a loss of $(18) million, or $(.12) per common share, for the prior year period. The prior year period includes the $150 million pre-tax charge. Earnings from normal operations were a record $128 million, or $.78 per common share, compared with $80 million, or $.50 per common share for the year earlier period. Total revenue for the six months ended March 31, 2000, was $1.89 billion, versus $1.87 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: Commenting on second quarter results, Nick Pontikes, President and Chief Executive Officer, stated, "Comdisco ended the first half of fiscal 2000 with a record performance. On March 28, 2000, the company issued a press release announcing that the company expected to exceed consensus street estimates for the second quarter ended March 31, 2000. Our expectations were based on the strength of our equipment services business and Comdisco Ventures. We not only met those expectations but exceeded them." Continued Pontikes, "Our equipment services group experienced strong remarketing for the second quarter across all product lines and Comdisco Ventures turned in an outstanding performance. Our technology services revenue was a record $156 million, up 25% year over year. During the quarter we introduced Comdisco's Web Availability Solutions designed to protect companies against any downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. to their e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. operations. This is a logical evolution in our technology services business where we lead the market in continuity and availability solutions. As we enter the second half of fiscal 2000 we are excited about the progress made to date and the tremendous opportunities that our services initiatives will bring to Comdisco." Comdisco Ventures: On April 20, 2000, Comdisco announced that its shareholders voted to approve the company's proposal to amend its articles of incorporation The document that must be filed with an appropriate government agency, commonly the office of the Secretary of State, if the owners of a business want it to be given legal recognition as a corporation. to create a tracking stock that is intended to reflect the economic performance of Comdisco's venture financing business. Shareholders also approved: the amendment of the company's certificate of incorporation certificate of incorporation n. some states issue a certificate to prove a corporation's existence upon the filing of Articles of Incorporation. In most states the Articles are sufficient proof. to authorize To empower another with the legal right to perform an action. The Constitution authorizes Congress to regulate interstate commerce. authorize v. to officially empower someone to act. (See: authority) the issuance of multiple series of common stock; the increase in the number of authorized shares Authorized shares Number of shares authorized for issuance by a firm's corporate charter. of common stock to 1,800,000,000; the establishment of a stock incentive plan for Comdisco Ventures' management; and revisions to certain existing Comdisco stock plans to allow the issuance of Comdisco Ventures tracking stock under those plans. At March 31, 2000, 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, Comdisco Ventures had a value of $530 million of publicly traded securities within the Ventures portfolio. This compares to $435 million at December December: see month. 31, 1999, and $194 million at September September: see month. 30, 1999. The recent volatility present in the equity markets during April 2000, has impacted the value of the publicly traded securities within the Ventures portfolio. As of April 21, 2000, on a mark-to-market basis, the value of these securities was approximately $300 million. Prism Communication Services, Inc.: Prism announced today a 1000 line contract to provide RED PowerWork(SM) high-speed internet See broadband. connectivity to DistributedMedia.com, Inc., linking the company's microbroadcasting Microbroadcasting is the process of broadcasting a message to a relatively small audience. This is not to be confused with LPFM Radio broadcasting Microbroadcasting, in radio terms, is the use of low-power transmitters (often Part 15 or equivalent) to broadcast a radio network of Sight & Sound(TM) systems to customers nationwide. Through RED(SM), DistributedMedia.com will digitally control Sight & Sound systems from its control center in Stamford Stamford, town, England Stamford, town (1991 pop. 18,127), in the Parts of Kesteven, Lincolnshire, E central England, on the Welland River. It is a market town. Products include diesel engines, electrical equipment, bricks, and tiles. , Conn. On April 19, 2000, Prism introduced RED Turbo(SM), a breakthrough 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 solution that offers users a powerful choice in bandwidth allocation Bandwidth allocation refers to various methods used in the communications industry to design and assign frequency channels to different wireless applications. Also on programs such as Bittorent or Limewire. . RED Turbo allows for speeds up to 4 megabits per second (unit) megabits per second - (Mbps, Mb/s) Millions of bits per second. A unit of data rate. 1 Mb/s = 1,000,000 bits per second (not 1,048,576). E.g. Ethernet can carry 10 Mbps. (Mbps), which may be allocated symmetrically sym·met·ri·cal also sym·met·ric adj. Of or exhibiting symmetry. sym·met  ri·cal·ly adv.Adv. 1. (i.e., 2 Mbps upstream/2 Mbps downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). ) or dynamically (i.e., all 4 Mbps upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger , or all downstream). With RED Turbo, Prism is one of the first CLECs to offer dynamically allocated broadband access See broadband and wireless broadband. at these speeds, confirming the company's commitment to developing innovative technologies to benefit its customers. On April 20, 2000, Prism announced availability of its RED(SM) high-speed Internet services to the Providence Providence, city (1990 pop. 160,728), state capital and seat of Providence co., NE R.I., a port at the head of Providence Bay; founded by Roger Williams 1636, inc. as a city 1832. market. Through its own national integrated voice and data network, Prism, one of the largest competitive local exchange carriers (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) ) in the U.S., is providing bundled communications solutions directly to business customers. Dividend Information: On April 25, 2000, 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 June June: see month. 12, 2000, to shareholders of record on May 12, 2000. Comdisco had 152,278,647 shares of common stock outstanding at March 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 2000, 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. , expand its contract subscription base (through new contract signings and contract renewals), increase its revenues through other technology services, primarily managed 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. Securities held by Comdisco Ventures 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 Comdisco Ventures 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 The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. . There can be no assurance that in the future Prism will be profitable on a quarterly or annual basis. In addition, Prism will require substantial additional capital to support its data network, to expand its services, to increase its sales and marketing efforts and to support its growth. Prism operates in a highly regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. environment and changes in policy could adversely impact Prism. 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 December 31, 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: Comdisco provides global technology services to help its customers maximize technology functionality, predictability and availability, while freeing them from the complexity of managing their technology. The Rosemont, Illinois Rosemont is a village in Cook County, Illinois, founded in 1956. The population was 4,224 at the 2000 census. Geography Rosemont is located at (41.990730, -87.873816)GR1. company offers a complete suite of information technology services including business continuity, web availability, managed network services, and IT Control and Predictability Solutions(SM). 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 services to key vertical industries, including electronics, communications, laboratory & scientific, and industrial automation. Through its Ventures group, Comdisco provides equipment leasing Equipment Leasing is a financing option to lease equipment for a certain amount of time. Leasing Benefits
A new business. . --TABLES TO FOLLOW-- Comdisco, Inc. and Subsidiaries Consolidated Statements of Earnings For the Three Months Ended March 31, 2000 and 1999 (Dollars in millions except per share data)
As As
As Reported As Reported Adjusted (1) Adjusted (2)
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2000 1999 2000 1999
------------- ------------- ------------- ------------
Revenue
Leasing
Operating $ 440 $ 507 $ 440 $507
Direct financing 43 41 43 41
Sales-type 128 191 128 191
------ ------ ----- -----
Total leasing 611 739 611 739
Sales 98 67 98 67
Technology services 156 125 156 125
Other 148 21 147 21
------ ------- ------ ------
Total revenue 1,013 952 1,012 952
------ ------ ------ -----
Costs and expenses
Leasing
Operating 356 407 356 407
Sales-type 102 157 102 157
------ ------ ----- -----
Total leasing 458 564 458 564
Sales 78 58 78 58
Technology services 138 105 138 105
Selling, general and
administrative 143 73 143 73
Interest 87 87 87 87
Prism Communication 42 3 - -
Other - 150 - -
--------- ------ ------ ---------
Total costs and
expenses 946 1,040 904 887
------ ------ ------ ------
Earnings (loss)
before income
taxes 67 (88) 108 65
Income taxes
(benefit) 24 (32) 39 24
------- -------- ------ ------
Net earnings (loss) $ 43 $ (56) $ 69 $ 41
====== ======== ====== =======
Net earnings (loss)
per common share:
Earnings (loss)
per common
share--basic $ .28 $(0.37) $ .46 $ 0.27
====== ======= ====== ======
Earnings (loss)
per common
share--diluted $ .26 $(0.37) $ .42 $ 0.26
====== ======= ====== ======
Common shares
outstanding:
Average common
shares
outstanding
--basic 151 151 151 151
Average common
shares
outstanding
--dilution 163 151 163 159
(1) The as adjusted March 2000 Statement of Earnings excludes the loss
of $41 million by Prism Communication.
(2) The as adjusted March 1999 Statement of Earnings excludes the loss
of $3 million by Prism Communication and the $150 million one
time charge.
Comdisco, Inc. and Subsidiaries
Consolidated Statements of Earnings
For the Six Months Ended March 31, 2000 and 1999 (Dollars in millions
except per share data)
As As
As Reported As Reported Adjusted (1) Adjusted (2)
Mar. 31, Mar. 31, Mar. 31, Mar. 31,
2000 1999 2000
----------- ----------- ------------ ---------
Revenue
Leasing
Operating $ 874 $ 1,038 $ 874 $1,038
Direct financing 86 80 86 80
Sales-type 206 351 206 351
------ ------ ----- -----
Total leasing 1,166 1,469 1,166 1,469
Sales 166 125 166 125
Technology services 303 243 303 243
Other 255 36 254 36
------ ------- ------ ------
Total revenue 1,890 1,873 1,889 1,873
------ -------- ------ ------
Costs and expenses
Leasing
Operating 707 837 707 837
Sales-type 162 284 162 284
------ ------ ----- -----
Total leasing 869 1,121 869 1,121
Sales 128 109 128 109
Technology services 263 205 263 205
Selling, general and
administrative 258 142 258 142
Interest 171 171 171 171
Prism Communication 70 3 - -
Other - 150 - -
--------- ------ ------- ------
Total costs and
expenses 1,759 1,901 1,689 1,748
------- ------ ------ ------
Earnings (loss)
before income taxes 131 (28) 200 125
Income taxes
(benefit) 47 (10) 72 45
------- -------- ------- ------
Net earnings (loss) $ 84 $ (18) $ 128 $ 80
====== ======== ======= ======
Net earnings (loss)
per common share:
Earnings (loss)
per common
share--basic $ .55 $(0.12) $ 0.84 $ 0.53
====== ======= ====== ======
Earnings (loss)
per common
share--diluted $ .52 $(0.12) $ 0.78 $ 0.50
====== ======= ======= ======
Common shares
outstanding:
Average common
shares
outstanding
--basic 152 152 152 152
Average common
shares
outstanding
--dilution 163 152 163 160
(1) The as adjusted March 2000 Statement of Earnings excludes the loss
of $69 million by Prism Communication.
(2) The as adjusted March 1999 Statement of Earnings excludes the loss
of $3 million by Prism Communication and the $150 million one
time charge.
Segment Reporting
Below are the quarterly results by segment for the three months and
six months ended March 31, 2000, and 1999 (dollars in millions):
Three Months Ended Six Months Ended
3/31/00 3/31/99 3/31/00 3/31/99
------- ------ ------- -------
Revenue
Leasing $696 785 $1,284 $1,552
Services 156 125 303 243
Ventures 160 42 302 78
------- ------- ------- --------
Subtotal 1,012 952 1,889 1,873
Prism 1 - 1 -
--------- ------- -------- --------
Total $1,013 $ 952 $1,890 $1,873
====== ====== ====== ======
Pretax Earnings
Leasing $ 27 $ 31 $ 36 $63
Services 18 20 40 38
Ventures 63 14 124 24
------- ------- ------ --------
Subtotal 108 65 200 125
Charge - (150) (150)
Prism (41) (3) (69) (3)
------- ------ --------- ---------
Total $ 67 $ (88) $ 131 $ (28)
====== ====== ====== ========
EPS
Normal Operations $ 0.42 $ 0.26 $ 0.78 $ 0.50
With Prism and
Charge 0.26 (0.37) 0.52 (0.12)
Comdisco is a registered trademark of Comdisco, Inc. |
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