CompuCom Reports 4th Quarter and Full Year 2003 Results.Business Editors/High-Tech Writers DALLAS--(BUSINESS WIRE)--Feb. 4, 2004 CompuCom Systems, Inc. (Nasdaq: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 national leader in helping companies plan, implement and manage multi-vendor, industry-standard computing computing - computer environments, today announced operating results for the fourth quarter and year ended December December: see month. 31, 2003. Fourth quarter 2003 net earnings were $4.41 million, or $.08 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 , compared to net earnings of $5.49 million, or $.10 diluted earnings per share in the fourth quarter of 2002 and $2.14 million, or $.04 diluted earnings per share in the third quarter 2003. Full year 2003 net earnings were $13.18 million, or $.24 diluted earnings per share. This compares to 2002 net earnings of $18.32 million, or $.34 diluted earnings per share, excluding the cumulative effect of a change in accounting principle for negative goodwill of $0.7 million. Including the cumulative effect of a change in accounting principle, 2002 net earnings were $19.02 million, or $.35 diluted earnings per share. J. Edward Coleman Edward Coleman may refer to:
RESALE. , IT 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, and software licensing offerings. Throughout 2003 we continued to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our steady shift to a more service-centric organization with service representing nearly 53% of our total gross margin dollars for the year, up 3.5 points from a year ago. This is the first time service gross margin dollars have exceeded 50% on a full year basis. While the importance of this shift is underscored by the pressure we continue to see on product gross margins, it is also our ability to combine world class product fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. with a high quality national IT service capability that brings unique value to our clients." "Our balance sheet remains strong," said M. Lazane Smith, CompuCom's senior vice president and chief financial officer. "During the fourth quarter we made the decision to pay down our receivable securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. $50 million. This action did not negatively impact working capital, as the decline in cash was offset by a corresponding increase in 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 . In fact, due to our continued profitable performance and focus on operational management, our working capital grew to $147 million, increasing for the eighth consecutive quarter. For the full year 2003, working capital increased 21%." Fourth quarter total revenues were $416.4 million, representing an increase of 25.9% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen and 3.1% when compared to the fourth quarter 2002. The growth in revenue was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to increases in both product and service revenue. Product revenue of $336.6 million increased 29.6% when compared to the third quarter 2003. This increase was primarily due to higher commercial hardware sales, up 19.6%, while software-related sales increased 61.5%. Fourth quarter product revenue increased 3.1% over the prior year primarily as a result of software-related sales growth of 23.9% partially offset by a decline in commercial hardware sales of 1.5%. Service revenue grew to $79.9 million, representing an increase of 12.4% when compared to the third quarter 2003 and 3.1% compared to the same period last year. Gross margin as a percentage of revenue was 11.0% compared to 12.1% in the third quarter 2003 and 12.2% in the same period in 2002. Product gross margin as a percentage of product revenue was 6.5%. This compares to 7.1% in the third quarter 2003 and 7.8% in the fourth quarter 2002. The year over year and sequential declines in product gross margin percent were primarily due to lower vendor incentive dollars as a percentage of revenue, more aggressive pricing and higher mix of software-related sales. Service gross margin as a percentage of service revenue was 30.0% compared to 30.4% in the third quarter 2003 and 30.9% in the fourth quarter last year. Service gross margin dollars as a percentage of total gross margin dollars were 52.2% compared to 54.0% in the third quarter 2003 and 48.6% in the same period of the prior year. 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. were $38.8 million for the fourth quarter 2003, compared to $40.2 million in the fourth quarter 2002 and $36.3 million in the third quarter 2003. As a percentage of revenue, operating expenses were 9.3%, down from 10.0% in the same period in 2002 and 11.0% in the third quarter 2003. Management from CompuCom Systems, Inc. will host a conference call on February February: see month. 4th at 5:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. to discuss the results of the fourth quarter and full year 2003. 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. 5172958. CompuCom Systems, Inc., (Nasdaq:CMPC) headquartered in Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. , is a national leader in helping companies plan, implement and manage multi-vendor, industry-standard computing environments. 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 service 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 grow service gross margin dollars and service gross margin dollars as a percentage of total gross margin dollars; 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 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 , 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 Twelve Months Ended
December 31, December 31,
--------------------- -----------------------
2003 2002 2003 2002
----------- --------- ----------- -----------
Revenue
Product $336,560 $326,486 $1,158,312 $1,269,126
Service 79,876 77,447 296,808 302,002
----------- --------- ----------- -----------
Total revenue 416,436 403,933 1,455,120 1,571,128
----------- --------- ----------- -----------
Gross Margin
Product 21,909 25,305 82,209 104,441
Service 23,928 23,921 92,200 101,878
----------- --------- ----------- -----------
Total gross margin 45,837 49,226 174,409 206,319
----------- --------- ----------- -----------
Gross Margin Percentage
Product 6.5% 7.8% 7.1% 8.2%
Service 30.0% 30.9% 31.1% 33.7%
----------- --------- ----------- -----------
Total gross margin
percentage 11.0% 12.2% 12.0% 13.1%
----------- --------- ----------- -----------
Operating Expenses
Selling 10,917 10,696 42,374 45,801
Service 9,240 9,691 35,979 41,830
General and
administrative 15,071 15,439 58,718 69,704
Depreciation and
amortization 3,585 4,378 15,458 18,232
----------- --------- ----------- -----------
Total operating
expenses 38,813 40,204 152,529 175,567
----------- --------- ----------- -----------
Earnings from operations 7,024 9,022 21,880 30,752
Financing expense, net 39 (46) 281 477
----------- --------- ----------- -----------
Earnings before income
taxes and cumulative
effect of a change in
accounting principle for
negative goodwill 6,985 9,068 21,599 30,275
Income taxes 2,579 3,577 8,424 11,958
----------- --------- ----------- -----------
Earnings before cumulative
effect of a change in
accounting principle for
negative goodwill 4,406 5,491 13,175 18,317
Cumulative effect of a
change in accounting
principle for negative
goodwill, net of
income taxes - - - 707
----------- --------- ----------- -----------
Net earnings $4,406 $5,491 $13,175 $19,024
=========== ========= =========== ===========
Basic earnings per common
share:
Earnings before cumulative
effect of a change in
accounting principle
for negative goodwill $.08 $.11 $.25 $.36
Cumulative effect of a
change in accounting
principle for negative
goodwill, net of income
taxes - - - .01
----------- --------- ----------- -----------
Net earnings $.08 $.11 $.25 $.37
=========== ========= =========== ===========
Diluted earnings per
common share:
Earnings before cumulative
effect of a change in
accounting principle
for negative goodwill $.08 $.10 $.24 $.34
Cumulative effect of a
change in accounting
principle for negative
goodwill, net of income
taxes - - - .01
----------- --------- ----------- -----------
Net earnings $.08 $.10 $.24 $.35
=========== ========= =========== ===========
Average common shares
outstanding:
Basic 49,920 49,043 49,583 48,647
Diluted 51,806 52,069 51,457 50,654
COMPUCOM SYSTEMS, INC.
SUMMARY BALANCE SHEET
(All amounts in thousands)
(unaudited)
December 31, December 31,
2003 2002
---------------- ---------------
Cash and cash equivalents $81,145 $128,039
Receivables 213,119 146,732
Inventories 35,612 27,732
Other current assets 4,252 6,899
---------------- ---------------
Total current assets 334,128 309,402
Property and equipment, net 19,134 23,924
Other assets 107,458 111,532
---------------- ---------------
Total assets $460,720 $444,858
================ ===============
Accounts payable $105,344 $117,252
Accrued liabilities 81,800 71,115
---------------- ---------------
Total current liabilities 187,144 188,367
Deferred income tax liability 2,008 -
Stockholders' equity 271,568 256,491
---------------- ---------------
Total liabilities and stockholders'
equity $460,720 $444,858
================ ===============
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