Danka Reports First Quarter Results.Business Editors/High-Tech Writers ST. PETERSBURG Petersburg, city (1990 pop. 38,386), politically independent and in no county, SE Va., on the Appomattox River; inc. 1850. A port of entry and an important tobacco market, it has industries producing chemicals, pharmaceuticals, furniture, structural steel, lumber, , Fla.--(BUSINESS WIRE)--Aug. 5, 2003 Danka Business Systems PLC (Nasdaq:DANKY) today announced results for the first quarter of fiscal year 2004 ended June June: see month. 30, 2003. The company will hold a conference call today at 11:00 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 these results. First Quarter Results Danka reported operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before of $5.0 million in the first quarter of fiscal year 2004 compared to operating earnings of $15.0 million in the comparable year-ago quarter. The company's net loss for the first quarter was $0.8 million, compared to net earnings of $5.8 million in the year-ago quarter. After allowing for the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of dividends and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the on participating shares, Danka posted a loss in the first quarter of $.09 per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. American Depositary Share American Depositary Share (ADS) Foreign stock issued in the US and registered in the ADR system. (ADS) compared to earnings of $.02 per basic and diluted ADS in the year-ago quarter. Total revenues were $333.8 million in the first quarter of fiscal year 2004, a decline of $13.3 million or 3.8% from the $347.1 million posted in the year-ago quarter. The decline in total revenues during the quarter was partially offset by a $26.5 million foreign currency benefit. Excluding the impact of foreign currency gains, total revenues would have been $307.3 million, an 11.4% decrease from the year-ago quarter. Revenues continue to be affected by increasingly competitive economic and market conditions, especially in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , technology convergence and the global slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. . Retail equipment and related revenues were $112.8 million in the first quarter, a 2.4% increase from the year-ago quarter. This increase was primarily due to increased revenues in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. business, which was the result of foreign currency gains of $7.1 million in the first quarter. Retail service revenues were down 7.4% from the year-ago quarter to $165.9 million. This decline was due to the continuing industry-wide conversion from analog-to-digital equipment which was offset, in part, by a $12.0 million foreign currency gain. Retail supply and rental revenues were $31.8 million during the first quarter, a 14.1% decrease from the year-ago quarter, primarily due to the downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing of the U.S. rental business. Wholesale revenues were $23.2 million during the first quarter, a 12.1% increase from the year-ago quarter, primarily due to a $4.5 million foreign currency gain. Total gross margins decreased to 36.7% in the first quarter from 38.6% in the year-ago quarter. Total United States gross margins declined to 40.3%, from 44.1% in the year-ago quarter while European gross margins were relatively flat at 32.3% and International gross margins increased to 37.5% from 30.7% in the year-ago quarter. The retail equipment and related sales margin decreased to 30.7% in the first quarter from 35.4% in the year-ago quarter primarily due to lower margins in the U.S. business. The first quarter retail equipment and related sales revenue gross margin was negatively impacted by a $3.5 million decrease in lease and residual payments from a diminishing di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. external lease funding program which contributed $4.5 million to gross margin in the year-ago quarter. Gross margins for service decreased slightly to 41.9% from 42.0%. The European wholesale gross margins increased to 20.0% from 18.3%. "We saw continued progress in mitigating mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. the decline in our revenues in certain key aspects of our business; however, we experienced a decline in our gross margins, almost exclusively in the U.S. equipment and related sales area," said Lang Lang language LANG Louisiana Army National Guard Lang Langobardian (linguistics) LANG Los Angeles Newspaper Guild Lowrey, Danka's Chairman and Chief Executive Officer. "Some of this decline can be attributed to a larger than expected shift in the mix of our sales toward lower margin, large enterprise accounts. Additionally, toward the end of the quarter, we were affected by changing market conditions in our industry, which appear to now be dictating lower average sales prices in certain segments of our equipment portfolio. On the positive side, we did see stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. trends in the performance in our retail equipment and related business, continued positive trends in our service annuity annuity: see insurance. annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. business and a turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. in our International business, which contributed measurable, positive results for the first time in several quarters." Overall, SG&A expenses in the first quarter decreased by $1.0 million or 0.9% to $118.5 million from $119.5 million in the year-ago quarter. This decrease was offset, in part, by a positive foreign currency movement of $7.2 million. During the quarter, the Company incurred approximately $3.2 million in Vision 21 and ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. expenses as well as almost $650,000 in expenditures related to the new corporate headquarters building. As a percentage of revenue, SG&A costs increased to 35.5% from 34.4%. "We continue to be challenged with a cost structure which is too high," stated Lowrey. "Our ability to reduce SG&A costs will be instrumental to our achieving acceptable financial results for the balance of this year. Realization of a large measure of cost savings requires us to continue making significant expenditures on our Vision 21, Oracle 11i See Oracle database. ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. system and its related, ancillary cost which we do not expect to continue in the second half of the year. We currently expect that we can complete our implementation during our third fiscal quarter, which will allow us to continue the transition away from the expensive manual operation of our outdated out·dat·ed adj. Out-of-date; old-fashioned. outdated Adjective old-fashioned or obsolete Adj. 1. legacy systems and processes. The efficiencies we expect to achieve from a single, integrated ERP system, coupled with the anticipated decline in ancillary expenses, should provide a significant SG&A opportunity, particularly in the second half of the fiscal year." Net cash provided by operating activities during the quarter was approximately $0.9 million compared to $34.2 million in the prior year. Free cash flow (defined as net cash provided by operating activities, less capital expenditures, plus proceeds from the sale of property and equipment) was ($13.7) million during the year compared to $25.7 million in the prior year. (See reconciliation to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). at page 9). Total capital expenditures in the first quarter were $14.8 million compared to $8.6 million in the prior year. Total capital expenditures during the quarter related to the Vision 21 project and the new corporate headquarters building were $6.5 million and $1.1 million, respectively. In addition, inventories increased by $2.9 million and the Company reduced accounts payable by $17 million during the quarter. "We expect to improve our working capital performance during the second quarter," stated Mark Wolfinger, Danka's Chief Financial Officer. "Cash generation and management of working capital has been the cornerstone cornerstone Ceremonial building block, dated or otherwise inscribed, usually placed in an outer wall of a building to commemorate its dedication. Often the stone is hollowed out to contain newspapers, photographs, or other documents reflecting current customs, with a view to of our balance sheet improvements over the past two years. During the quarter we incurred significant, necessary capital expenditures on Vision 21 and on the consolidation out of our expensive, inefficient corporate campus buildings into our new corporate headquarters building. We are very focused on the investments in working capital that occurred this quarter and expect improvement in this area during the second quarter, which is our slowest quarter seasonally, and during which we will continue to have significant expenses on Vision 21 and our corporate campus consolidation." On July July: see month. 1, 2003, the Company closed the offering of $175 million in new 11% senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes due 2010 and a $50 million senior secured revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. The company used a portion of the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the new senior notes to repay the remaining $107.1 million of outstanding 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. under its existing bank credit facility. The Company will also use a portion of such net proceeds to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. its $47.6 million of zero coupon A certificate evidencing the obligation to pay an installment of interest or a dividend that must be cut and presented to its issuer for payment when it is due. Coupons are usually attached to a document, such as a promissory note, bond, share of stock, or a bearer senior subordinated notes due April 1, 2004. The Company has issued notice to holders of its zero coupon notes that it will redeem the notes at their par value on or about August 18, 2003. "The refinancing Refinancing An extension and/or increase in amount of existing debt. was clearly a bright spot for the quarter, and is the culmination of years of management effort to provide long term financing for the Company," said Wolfinger. "In the process, we have lowered our overall cost of capital and significantly extended the maturities of a large portion of our capital structure. We believe this refinancing has solidified so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. the financial position of the Company and will allow our management team to focus on executing our business and process improvement plans. For the past several years we have been operating under a credit facility which was extremely expensive, and contained very onerous on·er·ous adj. 1. Troublesome or oppressive; burdensome. See Synonyms at burdensome. 2. Law Entailing obligations that exceed advantages. financial covenants, which often hampered our ability to exploit new opportunities," concluded Wolfinger. The senior notes have a fixed annual interest rate of 11%, and an 11.5% yield to maturity. The new senior credit facility will bear interest at a range of between 1.75% and 2.5% over LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). , depending on the amount of borrowings outstanding. Because the refinancing closed on July 1, 2003, unamortized debt issuance costs, anniversary fees and amendment fees of $20.6 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the prior credit facility at June 30, 2003 will be charged to pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings in the quarter ending September September: see month. 30, 2003. The Company resumed the rollout of its Oracle 11i, ERP system to the remainder of its U.S. business on August 1, 2003. The Company had halted further geographical rollouts over the past six months to focus on adding needed system functionality and to adequately address certain issues such as systems performance and data conversion, and to focus on key areas of needed improvement. The Company had previously implemented the system to approximately one-third of its U.S. business. The August 1 rollout will convert an additional 15% of the Company's U.S. business, bringing the total conversion to approximately fifty percent. The Company currently expects to complete the final two phases of the rollout by Fall of this year, on budget, as previously announced. Danka's Chief Information Officer, Gene Hatcher Ronald Hatcher Jr. (born June 28, 1959, in Fort Worth, Texas), better known as "Gene Hatcher," is a former boxer who was world light welterweight champion. His nickname ws "Mad Dog." Amateur career Hatcher was a United States Amateur Champion. , commented: "I am pleased that we have met the necessary requirements to continue with the rollout. We learned a great deal from the problems encountered in the first one-third of our rollout and have improved the integration and communication between our corporate IT and U.S. business units. As a result, we have been able to develop functionality to support our improved business processes. We believe these efforts have set the stage for the substantial completion of our U.S. implementation by this fall." "While we are disappointed with our first quarter financial results, we saw progress in the mitigation MITIGATION. To make less rigorous or penal. 2. Crimes are frequently committed under circumstances which are not justifiable nor excusable, yet they show that the offender has been greatly tempted; as, for example, when a starving man steals bread to satisfy of our past revenue declines in certain aspects of our business, encouraging signs in our service business and progress with our Oracle implementation," stated Lowrey. "Toward the end of the quarter, however, we encountered increasingly competitive market conditions which placed downward pressure on sales and margins, particularly in the U.S. field sales force. Our ability to successfully respond and improve sales and margin performance in light of these industry conditions, better manage our working capital, timely complete our Oracle rollout, realize capital spending reductions and cost savings from the new IT system and move to our new headquarters building remain the most significant factors to achieving our financial forecast for the fiscal year," concluded Lowrey. Conference Call A conference call to discuss Danka's first quarter fiscal year 2004 results has been scheduled for today, Tuesday Tuesday: see week. , August 5 at 11:00 a.m. EDT. U.S., Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and some U.K. callers please dial (800) 894-4904; International callers please dial (212) 748-2716. If you are unable to join the call, a recording will be available via an instant replay approximately two hours after the call's completion. To access the replay of the call, U.S., Canada and some U.K. callers may dial (800) 633-8284; International callers may dial (402) 977-9140. You must also enter reservation number 21155894. This playback Playback could mean:
About Danka Danka delivers value to clients worldwide by using its expert technical and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. to implement effective document information solutions. As one of the largest independent providers of office imaging equipment, document solutions and related services and supplies Danka enables choice, convenience and continuity. Danka's vision is to empower empower verb To encourage or provide a person with the means or information to become involved in solving his/her own problems customers to benefit fully from the convergence of image and document technologies in a connected environment. This approach should strengthen the company's client relationships and expand its strategic value. 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. : Certain statements contained in this press release, or otherwise made by our officers, including statements related to our future performance and our outlook for our businesses and respective markets, projections, statements of our plans or objectives, forecasts of market trends and other matters, are forward-looking statements, and contain information relating to us that is based on our beliefs as well as assumptions, made by, and information currently available to, our management. The words "goal", "anticipate", "expect", "believe" and similar expressions as they relate to us are intended to identify forward-looking statements, although not all forward looking statements contain such identifying words. No assurance can be given that the results in any forward-looking statement will be achieved. For the forward-looking statements, we claim the protection of the 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. for forward-looking statements provided for in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause actual results to differ materially from those reflected in any forward-looking statements include, but are not limited to, the following: (i) any inability to successfully implement our strategy; (ii) any inability to comply with the financial or other covenants in our debt instruments; (iii) any material adverse change in financial markets, the economy or in our financial position; (iv) increased competition in our industry and the discounting of products by our competitors; (v) new competition as the result of evolving technology; (vi) any inability by us to procure To cause something to happen; to find and obtain something or someone. Procure refers to commencing a proceeding; bringing about a result; persuading, inducing, or causing a person to do a particular act; obtaining possession or control over an item; or making a person , or any inability by us to continue to gain access to and successfully distribute, new products, including digital products, color products, multifunction products and highvolume copiers, or to continue to bring current products to the marketplace at competitive costs and prices; (vii) any inability to arrange financing for our customers' purchases of equipment from us; (viii) any inability to successfully enhance and unify 1. (database, product) Unify - A relational database produced by Unify Corporation. 2. (algorithm) unify - To perform unification. our management information systems; (ix) any inability to record and process key data due to ineffective implementation of business processes and policies; (x) any negative impact from the loss of a key vendor or customer; (xi) any negative impact from the loss of any our senior management or key personnel; (xii) any change in economic conditions in domestic or international markets where we operate or have material investments which may affect demand for our products or services; (xiii) any negative impact from the international scope of our operations; (xiv) fluctuations in foreign currencies; (xv) any inability to achieve or maintain cost savings; (xvi) any incurrence In`cur´rence n. 1. The act of incurring, bringing on, or subjecting one's self to (something troublesome or burdensome); as, the incurrence of guilt, debt, responsibility, etc. s> Noun 1. of tax liabilities beyond our current expectations, which could adversely affect our liquidity; (xvii) any delayed or lost sales and other impacts related to the commercial and economic disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. caused by past or future terrorist attacks, the related war on terrorism Terrorist acts and the threat of Terrorism have occupied the various law enforcement agencies in the U.S. government for many years. The Anti-Terrorism and Effective Death Penalty Act of 1996, as amended by the usa patriot act , the fear of additional terrorist attacks or any outbreak of the severe acute respiratory syndrome Severe Acute Respiratory Syndrome (SARS) Definition Severe acute respiratory syndrome (SARS) is the first emergent and highly transmissible viral disease to appear during the twenty-first century. ; and (xviii) other risks including those risks identified in any of our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our analysis only as of the date they are made. Except as required by applicable law, we undertake no obligation, and do not intend, to update these forward-looking statements to reflect events or 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 that arise after the date they are made. Furthermore, as a matter of policy, we do not generally make any specific projections as to future earnings nor do we endorse To sign a paper or document, thereby making it possible for the rights represented therein to pass to another individual. Also spelled indorse. endorse (indorse) v. any projections regarding future performance which may be made by others outside our company. Danka is a registered trademark and Danka @ the Desktop is a trademark of Danka Business Systems PLC. United Kingdom Companies Act: The financial information contained in this announcement for the quarter ended June 30, 2003 is unaudited and does not constitute full statutory accounts within the meaning of Section 240 of the United Kingdom Companies Act 1985. Statutory accounts for the quarter ended June 30, 2003 have not been delivered to the Registrar of Companies The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. for England and Wales England and Wales are both constituent countries of the United Kingdom, that together share a single legal system: English law. Legislatively, England and Wales are treated as a single unit (see State (law)) for the conflict of laws. . This press release contains information regarding EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become that is computed as 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 before income taxes, interest expense, depreciation and amortization and free cash flow that is computed as net cash provided by operating activities less capital expenditures plus proceeds from the sale of property and equipment. These measures are non-GAAP financial measures, defined as numerical numerical expressed in numbers, i.e. Arabic numerals of 0 to 9 inclusive. numerical nomenclature a numerical code is used to indicate the words, or other alphabetical signals, intended. measures of our financial performance that exclude or include amounts so as to be different than the most directly comparable measure calculated and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP in our statement of operations See Income statement. , balance sheet or statement of cash flows. Pursuant to the requirements of Regulation G, we have provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures. Although EBITDA and free cash flow represent non-GAAP financial measures, management considers these measures to be key operating metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. of our business. Management uses these measures in its planning and budgeting processes, to monitor and evaluate its financial and operating results and to measure performance of its separate divisions. Management also believes that EBITDA and free cash flow are useful to investors because they provide an analysis of financial and operating results using the same measures that management uses in evaluating the Company. Management expects that such measures provide investors with the means to evaluate our financial and operating results against other companies within our industry. In addition, management believes that these measures are meaningful to investors in evaluating our ability to meet our future debt service requirements, to fund our capital expenditures and working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Our calculation of EBITDA and free cash flow may not be consistent with the calculation of these measures by other companies in our industry. EBITDA and free cash flow are not measurements of financial performance under GAAP and should not be considered as an alternative to operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (loss) as an indicator of our operating performance or cash flows from operating activities as a measure of liquidity or any other measures of performance derived in accordance with GAAP.
Danka Business Systems PLC
Consolidated Statements of Operations for the three months ended
June 30, 2003 and 2002
(In thousands, except per American Depositary Share ("ADS") amounts)
(Unaudited)
For the Three
Months Ended
-------------------
June 30, June 30,
2003 2002
--------- ---------
Revenue:
Retail equipment and related sales $112,777 $110,082
Retail service 165,923 179,191
Retail supplies and rentals 31,840 37,051
Wholesale 23,244 20,737
------------------------------------------------- ---------- ---------
Total revenue 333,784 347,061
------------------------------------------------- ---------- ---------
Costs and operating expenses:
Cost of retail equipment sales 78,208 71,165
Retail service costs 96,455 104,003
Retail supplies and rental costs 18,010 20,951
Wholesale costs of revenue 18,593 16,942
Selling, general and administrative expenses 118,475 119,529
Restructuring charges (credits) (594) -
Other (income) expense (362) (531)
------------------------------------------------- ---------- ---------
Total costs and operating expenses 328,785 332,059
------------------------------------------------- ---------- ---------
Operating earnings 4,999 15,002
Interest expense (9,753) (7,423)
Interest income 232 300
------------------------------------------------- ---------- ---------
Earnings (loss) before income taxes (4,522) 7,879
Provision (benefit) for income taxes (3,726) 2,127
------------------------------------------------- ---------- ---------
Net earnings (loss) $(796) $5,752
================================================= ========== =========
Calculation of (loss) earnings per ADS
Earnings (loss) $(796) $5,752
Dividends and accretion on participating shares (4,665) (4,393)
--------- ---------
Income (loss) available to common shareholders $(5,461) $1,359
========= =========
Basic (loss) earnings available to common
shareholders per ADS:
Net earnings (loss) per ADS $(0.09) $0.02
========= =========
Weighted average ADSs 62,401 62,021
Diluted (loss) earnings available to
common shareholders per ADS:
Net earnings (loss) per ADS $(0.09) $0.02
========= =========
Weighted average ADSs 62,401 64,052
Certain prior year amounts have been reclassified to conform to
current year presentation.
Danka Business Systems PLC
Condensed Consolidated Balance Sheets as of June 30, 2003 and
March 31, 2003
(In Thousands)
(Unaudited)
June 30, March 31,
2003 2003
--------- ---------
Assets
Current assets:
Cash and cash equivalents $60,322 $81,493
Accounts receivable, net 253,131 257,329
Inventories 114,425 111,471
Prepaid expenses, deferred income taxes and other
current assets 45,450 45,879
------------------------------------------------- ---------- ---------
Total current assets 473,328 496,172
Equipment on operating leases, net 36,349 39,829
Property and equipment, net 73,302 67,782
Goodwill, net 266,308 256,990
Noncompete agreements, net 758 799
Deferred income taxes 79,095 78,480
Other assets 36,709 41,568
------------------------------------------------- ---------- ---------
Total assets $965,849 $981,620
================================================= ========== =========
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt and notes
payable $82,803 $58,443
Accounts payable 122,700 140,207
Accrued expenses and other current liabilities 98,131 101,749
Taxes payable 111,555 112,311
Deferred revenue 41,894 40,628
------------------------------------------------- ---------- ---------
Total current liabilities 457,083 453,338
Long-term debt and notes payable, less current
maturities 142,114 174,412
Deferred income taxes and other long-term
liabilities 30,996 29,785
------------------------------------------------- ---------- ---------
Total liabilities 630,193 657,535
------------------------------------------------- ---------- ---------
6.5% convertible participating shares 263,010 258,376
------------------------------------------------- ---------- ---------
Shareholders' equity:
Ordinary shares, 1.25 pence stated value 5,175 5,167
Additional paid-in capital 327,306 327,173
Accumulated deficit (195,425) (189,995)
Accumulated other comprehensive loss (64,410) (76,636)
------------------------------------------------- ---------- ---------
Total shareholders' equity 72,646 65,709
------------------------------------------------- ---------- ---------
Total liabilities & shareholders' equity $965,849 $981,620
================================================= ========== =========
Certain prior year amounts have been reclassified to conform to
current year presentation.
Danka Business Systems PLC
Consolidated Statements of Cashflows for the quarter ended
June 30, 2003 and 2002
(In Thousands)
(Unaudited)
June 30, June 30,
2003 2002
-------- --------
Operating activities:
Net earnings (loss) $(796) $5,752
Adjustments to reconcile net earnings (loss) to net
cash provided:
Depreciation and amortization 12,037 14,542
Deferred income taxes (528) (1,116)
Amortization of debt issuance costs 4,117 1,722
Loss on sale of property and equipment and
equipment on operating leases 2,028 1,759
Proceeds from sale of equipment on operating
leases 662 702
Restructuring and other special charges
(credits) (594) -
Changes in net assets and liabilities:
Accounts receivable 4,198 16,957
Inventories (2,954) 2,148
Prepaid expenses and other current assets (939) (3,921)
Other non-current assets 2,381 5,124
Accounts payable (17,507) (7,856)
Accrued expenses and other current
liabilities (3,639) (3,236)
Deferred revenue 1,265 (858)
Other long-term liabilities 1,124 2,530
------------------------------------------------- ----------- --------
Net cash provided by operating activities 855 34,249
------------------------------------------------- ----------- --------
Investing activities:
Capital expenditures (14,810) (8,607)
Proceeds from the sale of property and
equipment 261 31
------------------------------------------------- ----------- --------
Net cash used in investing activities (14,549) (8,576)
------------------------------------------------- ----------- --------
Financing activities:
Net payments under line of credit agreements (6,687) (29,949)
Principal payments of debt (1,489) (16,698)
Payment of debt issue costs (2,749) (4,072)
------------------------------------------------- ----------- --------
Net cash used in financing activities (10,925) (50,719)
------------------------------------------------- ----------- --------
Effect of exchange rates 3,448 3,035
------------------------------------------------- ----------- --------
Net increase (decrease) in cash and cash
equivalents (21,171) (22,011)
Cash and cash equivalents, beginning of period 81,493 59,470
------------------------------------------------- ----------- --------
Cash and cash equivalents, end of period $60,322 $37,459
================================================= =========== ========
Certain prior year amounts have been reclassified to conform to
current year presentation.
Danka Business Systems PLC
EBITDA (Earnings Before Interest, Taxes, Depreciation
and Amortization)
for the three months ended
(In Thousands)
(Unaudited)
June 30, March 31, Dec. 31, Sept. 30, Trailing
12
2003 2003 2002 2002 Months
-------- --------- --------- --------- --------
Operating earnings
(loss) before
income taxes (4,522) (1,443) 4,503 2,400 938
Interest expense 9,753 9,784 8,734 6,881 35,152
Depreciation and
amortization 12,037 14,716 13,991 14,579 55,323
-------- --------- --------- --------- --------
EBITDA 17,268 23,057 27,228 23,860 91,413
======== ========= ========= ========= ========
Danka Business Systems PLC
Free cash flow for the three months ended June 30, 2003
and June 30, 2002
(In Thousands)
(Unaudited)
For the Three Months Ended
----------------------------
June 30, June 30,
2003 2002
------------- --------------
Net cash provided by operating
activities 855 34,249
Capital expenditures (14,810) (8,607)
Proceeds from the sale of property
and equipment 261 31
------------- --------------
Free cash flow (13,694) 25,673
============= ==============
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