CompuCom Reports 2nd Quarter 2002 Results.Business Editors & High Tech Writers DALLAS--(BUSINESS WIRE)--July 24, 2002 CompuCom Systems, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CMPC CMPC Classified Matter Protection and Control CMPC Compañia Manufacturera de Papeles y Cartones S.A. CMPC Cisco Multi-Path Channel CMPC Children's Media Policy Coalition CMPC Central Milk Producers Cooperative CMPC Connecticut Minority Purchasing Council ), a provider of outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. and systems integration services, today announced net earnings grew to $4.72 million, or $.09 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of . Second quarter 2001 net earnings were $2.07 million or $.04 diluted earnings per share while first quarter 2002 net earnings were $3.36 million, or $.06 diluted earnings per share. Second quarter 2001 results include goodwill amortization of $.85 million or $.02 per share that is no longer required to be recorded under new SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142 accounting requirements for goodwill and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. adopted this year. First quarter 2002 net earnings include $0.71 million, or $.01 per share, relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a cumulative effect of a change in accounting principle for negative goodwill. Second quarter net revenues were $426.2 million, down 12.8% when compared to second quarter 2001. The revenue decline was attributable to product revenue, as services revenue of $75.9 million increased 10.0% over last year. On a sequential basis, net revenues increased 30.3%. Product revenue increased 35.1% while services revenue posted a 12.1% gain over the first quarter 2002. J. Edward Coleman Edward Coleman may refer to:
tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. capabilities with a growing set of outsourcing and system integration services to better meet our clients' requirements. In addition, after indicating that we believed product revenue was beginning to stabilize stabilize See peg. in the first quarter, we are pleased to report 35.1% sequential growth in overall product revenue for the second quarter, with hardware-only revenue growing 16.1% compared to the first quarter." Gross margins were 12.7% compared to 13.0% in the second quarter 2001 and 15.4% in the first quarter 2002. Services gross margin dollars as a percentage of total gross margin dollars increased to 51.6%, up from 40.3% a year ago and 46.8% in the first quarter 2002. The sequential decline in the gross margin percentage was primarily related to lower product gross margins. This decline in the product gross margin percentage was primarily caused by a higher mix of lower margin software related sales and lower volume incentives earned from suppliers spread over a higher revenue base. Mr. Coleman Cole·man , Cy Originally Seymour Kauffman. Born 1929. American composer and theatrical producer whose best known Broadway productions include Sweet Charity (1966) and The Will Rogers Follies (1991). concluded, "Highlighted by a 10% growth in services revenue compared to the year ago period, CompuCom continued its transformation to a services-led business. We achieved a major milestone as, for the first time in our history, services accounted for more than 50% of total gross margin dollars." "Our balance sheet remains strong, as we ended the quarter with $117 million in cash," said M. Lazane Smith, CompuCom's senior vice president and chief financial officer. "We have continued to focus on the operational aspects of our business with strong results in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying performance and inventory management. In addition, our continued focus on expense management together with greater leverage of our infrastructure resulted in a decrease in operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. as a percentage of revenue to 10.8%, down from 12.1% a year ago." Management from CompuCom Systems, Inc. will host a conference call on Thursday Thursday: see week. , July July: see month. 25, 2002 at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to discuss the results of the second quarter. To access the call, please dial 800/875-6883 and reference conference ID No. 4925392. The call will also be broadcast on World Investor Link's Vcall web site at www.vcall.com. A replay will be available by calling 800/642-1687 and referencing Conference ID No. 4925392 through August 1, 2002. CompuCom Systems, Inc., (Nasdaq:CMPC-news) headquartered in Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. , is a provider of outsourcing and systems integration services. CompuCom's clients include Fortune 1000 enterprises, Federal, state and local government, vertical industry leaders, major technology equipment providers, leading-edge systems integrators An individual or organization that builds systems from a variety of diverse components. With increasing complexity of technology, more customers want complete solutions to information problems, requiring hardware, software and networking expertise in a multivendor environment. and wireless technology providers. CompuCom leverages people, process and technology to offer best in class solutions that enable, optimize optimize - optimisation and operate the digital technology infrastructure. CompuCom is accessible via the 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 at www.compucom.com. This press release contains certain 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 revenues, gross margin, operating and financing expense, earnings, growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. and certain business trends that involve risks and uncertainties that could cause actual results to differ materially from the results discussed herein. Specifically, the following trends may not continue: the ability to grow services revenue and gross margins; the decline in product revenue and product gross margin may continue and may be greater than anticipated; the product revenue increase on a sequential basis may not continue; the ability to continue to decrease costs including, among others, financing costs; the ability to improve operational efficiency; the ability to improve services gross margin dollars and services gross margin as a percentage of total gross margin; the ability to continue to improve the balance sheet; the ability to win new clients; the expansion of the services the Company provides may not be as broad as the Company currently expects or widely accepted by clients; the manufacturers who use the Company's direct services may elect not to use those services. Other factors that could cause actual results to differ materially are: acquisition integration issues; competitive pricing and supply; the potential impact of the Compaq (Compaq Computer Corporation, Houston, TX, www.compaq.com) Compaq was the leading PC manufacturer when it was acquired by HP in 2002. Founded in 1982 by Rod Canion, Jim Harris and Bill Murto, one year later the company shipped 53,000 PC-compatible COMPAQ Portables, resulting in $111 and Hewlett Hewlett may refer to: People with the surname Hewlett:
Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. interest rate fluctuations; general economic conditions; the impact of general economic conditions on investments the Company has in other businesses; employee turnover; potential impact of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; and the ability to collect trade and vendor accounts receivable, as well as the risks and uncertainties set forth from time to time in CompuCom's Annual Report on 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. and other public filings and disclosures. Readers should refer to those documents and should not place undue reliance on these forward-looking statements.
COMPUCOM SYSTEMS, INC.
CONDENSED COMPARATIVE FINANCIAL DATA
(All amounts in thousands except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2002 2001 2002 2001
---- ---- ---- ----
Revenue
Product $ 350,290 $ 419,718 $ 609,559 $ 902,079
Service 75,868 68,991 143,547 140,918
--------- --------- --------- ---------
Total revenue 426,158 488,709 753,106 1,042,997
--------- --------- --------- ---------
Gross Margin
Product 26,279 37,894 53,010 79,984
Service 27,975 25,581 51,523 49,174
--------- --------- --------- ---------
Total gross margin 54,254 63,475 104,533 129,158
--------- --------- --------- ---------
Gross Margin Percentage
Product 7.5% 9.0% 8.7% 8.9%
Service 36.9% 37.1% 35.9% 34.9%
--------- --------- --------- ---------
Total gross margin
percentage 12.7% 13.0% 13.9% 12.4%
--------- --------- --------- ---------
Operating expenses
Selling 11,510 17,553 23,819 37,102
Service 11,090 13,745 21,916 27,315
General and
administrative 18,863 22,267 36,495 44,478
Depreciation and
amortization 4,687 5,720 9,474 11,389
--------- --------- --------- ---------
Total operating expenses 46,150 59,285 91,704 120,284
--------- --------- --------- ---------
Earnings from operations 8,104 4,190 12,829 8,874
Financing expense 241 748 550 2,477
--------- --------- --------- ---------
Earnings before income
taxes and cumulative
effect of a change in
accounting principle for
negative goodwill 7,863 3,442 12,279 6,397
Income taxes 3,144 1,377 4,910 2,559
--------- --------- --------- ---------
Earnings before cumulative
effect of a change in
accounting principle for
negative goodwill 4,719 2,065 7,369 3,838
Cumulative effect of a
change in accounting
principle for negative
goodwill, net of income
taxes - - 707 -
--------- --------- --------- ---------
Net earnings $ 4,719 $ 2,065 $ 8,076 $ 3,838
========= ========= ========= =========
Basic and diluted
earnings per common share
Earnings before
cumulative effect of
a change in accounting
principle for negative
goodwill $ .09 $ .04 $ .14 $ .07
Cumulative effect of a
change in accounting
principle for negative
goodwill, net of
income taxes - - .01 -
--------- --------- --------- ---------
Net earnings $ .09 $ .04 $ .15 $ .07
========= ========= ========= =========
Average common shares
outstanding
Basic 48,429 47,777 48,401 47,908
Diluted 50,034 48,205 49,547 48,120
COMPUCOM SYSTEMS, INC.
SUMMARY BALANCE SHEET
(All amounts in thousands)
(unaudited)
June 30, December 31,
2002 2001
-------- ------------
Cash and cash equivalents $ 117,315 $ 123,150
Receivables 162,901 134,980
Inventories 35,692 29,608
Other current assets 5,406 8,131
------------ -----------
Total current assets 321,314 295,869
Property and equipment, net 27,664 31,566
Other assets 115,668 116,648
------------ -----------
Total assets $ 464,646 $ 444,083
============ ===========
Accounts payable $ 156,550 $ 120,173
Accrued liabilities 64,574 88,598
------------ -----------
Total current liabilities 221,124 208,771
Stockholders' equity 243,522 235,312
------------ -----------
Total liabilities and
stockholders' equity $ 464,646 $ 444,083
============ ===========
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