CompuCom Reports 2nd Quarter 2003 Results.Business Editors/High-Tech Writers DALLAS--(BUSINESS WIRE)--July 28, 2003 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 operating results for the second quarter ended June June: see month. 30, 2003. Second quarter 2003 net earnings were $3.28 million, or $.06 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 , essentially flat with first quarter 2003 net earnings of $3.35 million and $.06 diluted earnings per share, but down from the second quarter 2002, when net earnings were $4.72 million, or $.09 per share. Second quarter total revenues were $377.7 million, up 14.4% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen but down approximately 11.4% when compared to the second quarter 2002. The sequential One after the other in some consecutive order such as by name or number. increase in revenue was primarily related to product revenue, which was 18.4% higher than the first quarter 2003. The year over year decline was attributable to both product and service revenue, down 13.0% and 3.8%, respectively. As a percentage of revenue, second quarter service revenue was 19.3% compared to 22.1% in the first quarter and 17.8% a year ago. Gross margin as a percentage of revenue was 11.6% compared to 13.5% in the first quarter 2003 and 12.7% in the same period in 2002. Product gross margin as a percentage of product revenue was 6.5%, down from 8.6% in the first quarter 2003 and 7.5% in the second quarter 2002. Contributing to both the sequential and year over year decline in product gross margin was a higher mix of software-related sales and a reduction in vendor incentive dollars. Service gross margin as a percentage of service revenue was 33.0%, up from 31.0% on a sequential basis, but down from the 36.9% level of a year ago. Service gross margin dollars as a percentage of total gross margin dollars grew to 54.9% compared to 50.5% in the first quarter 2003 and 51.6% in the same period of the prior year. J. Edward Coleman Edward Coleman may refer to:
RESALE. business, which continues to be impacted by soft corporate demand for technology. In addition, we saw a higher than expected mix of software sales, which typically carry a lower gross margin, and lower vendor incentive dollars. We did see some evidence of a pickup Pickup A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup." Notes: When the present yield is relatively low compared to the longer-term yields, pickups will be done by investors trying to increase the yield and duration of their in demand towards the end of the quarter." "Service revenue was, in part, impacted by delays in projects that we had expected to begin in the second quarter. We are encouraged by the sequential improvement in service gross margin percent to 33%. Reflecting our ongoing shift towards a services-led business model, services now account for nearly 55% of our total gross margin dollars." "Our balance sheet remains strong, as we ended the second quarter with $128 million in cash with continued 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 and inventory performance," said M. Lazane Smith, CompuCom's senior vice president and chief financial officer. "We have also maintained our focus on managing costs. As a result, our 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 declined to 10.2% for the quarter compared to 11.8% in the first quarter and 10.8% in the second quarter last year." CompuCom received significant recognition for its services during the second quarter. In May, its Enterprise Help Desk received the Support Center Practices certification for the sixth consecutive year. In that same month, CompuCom earned Microsoft's Gold Certification for Support Services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services . In June, CompuCom associate Tim Mellinger received IBM's Customer Engineer of the Year award. In addition, earlier this month Computer Associates ("CA") recognized CompuCom as CA's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Enterprise Solution Partner of the Year. "We are proud to be recognized by all of these organizations and proud of our associates who make it possible," 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. Management from CompuCom Systems, Inc. will host a conference call on July July: see month. 28, 2003 at 8:30 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 conference call, please visit the Company's web site at www.compucom.com or dial 800/875-6883 and reference conference ID No. 1889210. The conference call will also be broadcast on World Investor Link's Vcall web site at www.vcall.com. A replay will be available two hours following the call for approximately one week by calling 800/642-1687 and referencing Conference ID No. 1889210. 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. based on the Company's beliefs and expectations as of the date of this release 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; declines in product revenue and product gross margin may continue and may be greater than anticipated; the ability to continue to decrease 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: competitive pricing and supply; the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. effect of the 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 including uncertainty created by military action; 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,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenue:
Product $304,731 $350,290 $562,149 $609,559
Service 72,997 75,868 145,876 143,547
--------- --------- --------- ---------
Total revenue 377,728 426,158 708,025 753,106
--------- --------- --------- ---------
Gross Margin:
Product 19,792 26,279 41,911 53,010
Service 24,105 27,975 46,678 51,523
--------- --------- --------- ---------
Total gross margin 43,897 54,254 88,589 104,533
--------- --------- --------- ---------
Gross Margin Percentage:
Product 6.5% 7.5% 7.5% 8.7%
Service 33.0% 36.9% 32.0% 35.9%
--------- --------- --------- ---------
Total gross margin
percentage 11.6% 12.7% 12.5% 13.9%
--------- --------- --------- ---------
Operating Expenses:
Selling 10,328 11,510 20,987 23,819
Service 8,863 11,090 18,114 21,916
General and administrative 15,022 18,863 29,957 36,495
Depreciation and amortization 4,138 4,687 8,318 9,474
--------- --------- --------- ---------
Total operating expenses 38,351 46,150 77,376 91,704
--------- --------- --------- ---------
Earnings from operations 5,546 8,104 11,213 12,829
Financing expenses, net 86 241 171 550
--------- --------- --------- ---------
Earnings before income taxes
and cumulative
effect of a change in
accounting principle for
negative goodwill 5,460 7,863 11,042 12,279
Income taxes 2,184 3,144 4,417 4,910
--------- --------- --------- ---------
Earnings before cumulative effect of a
change in
accounting principle for
negative goodwill 3,276 4,719 6,625 7,369
Cumulative effect of a change in
accounting
principle for negative
goodwill, net of
income taxes - - - 707
--------- --------- --------- ---------
Net earnings $3,276 $4,719 $6,625 $8,076
========= ========= ========= =========
Basic earnings per common share:
Earnings before cumulative effect of a
change in accounting principle
for negative goodwill $.06 $.09 $.13 $.14
Cumulative effect of a change in
accounting principle
for negative goodwill,
net of income taxes - - - .01
--------- --------- --------- ---------
Net earnings $.06 $.09 $.13 $.15
========= ========= ========= =========
Diluted earnings per common
share:
Earnings before cumulative effect of a
change in accounting principle
for negative goodwill $.06 $.09 $.12 $.14
Cumulative effect of a change in
accounting principle
for negative goodwill,
net of income taxes - - - .01
--------- --------- --------- ---------
Net earnings $.06 $.09 $.12 $.15
========= ========= ========= =========
Average common shares
outstanding:
Basic 49,389 48,429 49,349 48,401
Diluted 51,096 50,034 51,090 49,547
Compucom Systems, Inc.
Summary Balance Sheet
(All Amounts in Thousands)
(Unaudited)
June 30, December
31,
2003 2002
--------- ---------
Cash and cash equivalents $127,971 $128,039
Receivables 152,746 146,732
Inventories 28,847 27,732
Other current assets 6,181 6,899
--------- ---------
Total current assets 315,745 309,402
Property and equipment, net 21,948 23,924
Other assets 109,467 111,532
--------- ---------
Total assets $447,160 $444,858
========= =========
Accounts payable $132,816 $117,252
Accrued liabilities 50,893 71,115
--------- ---------
Total current liabilities 183,709 188,367
Stockholders' equity 263,451 256,491
--------- ---------
Total liabilities and stockholders' equity $447,160 $444,858
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