Danka Reports Fourth Quarter and Year End Operating Results; Chief Financial Officer Mark Wolfinger to Retire Effective June 30, 2005.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. -- Danka Business Systems PLC (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 : DANKY) today reported fourth quarter revenue of $300.2 million and an operating loss 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. of $48.7 million excluding restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges. For the full year, Danka reported revenue of $1.233 billion and an operating loss of $41.6 million excluding restructuring and goodwill impairment charges. The results include an increase to its U.S. trade 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 allowance for doubtful accounts Allowance for Doubtful Accounts An estimation made by a company and documented on its balance sheet for receivables that might go uncollected. Notes: It is standard practice for a company to have funds set aside for money that cannot be collected. of $17.8 million in the fourth quarter. Including the previously announced goodwill impairment charges of $70.9 million and restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $12.7 million, the Company reported a total operating loss of $132.3 million for the fourth quarter and $122.6 million for the full year. "I was disappointed by our fourth quarter results, including some of the significant one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. , non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. we had to take in the quarter," commented Danka Chief Executive Officer Todd Todd , Sir Alexander Robertus 1907-1997. British chemist. He won a 1957 Nobel Prize for his study of nucleic acids and nucleotide structures. Mavis. "I was encouraged by the progress we made during the quarter in executing on several elements of our ongoing Vision 21 program, including reducing worldwide headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. , facility closures and other initiatives which, when completed, are expected to reduce expenses by $60-$73 million annually when fully realized. We improved aspects of our working capital position in the quarter, including decreases in inventories of 19%, a two day improvement in Days Sales Outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). and positive cash generation. We also put into place the foundation to create broader and more profitable relationships with our best customers, upgraded and added to our sales forces in the U.S. and U.K., and enhanced our products and services matrix in support of our high-value Managed Print Services solution. Overall, the fourth quarter capped a very difficult year for Danka," continued Mavis. "In fiscal year 2006, we must move quickly to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. our market opportunities, continue refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar our product offerings, ensure a cost structure that works for our business and achieve consistency Consistency can refer to:
For the fourth quarter: --Total revenue was $300.2 million, 13% lower than the year-ago quarter. The revenue decrease was largely driven by a 17% year over year decline in retail service revenue, mostly in the Americas A·mer·i·cas , the See America. Group. Contributing to the revenue decline was an $8.5 million service revenue and supplies adjustment, a $2.7 million retail equipment adjustment (both included in the $17.8 million trade receivables allowance for doubtful accounts adjustments) and a significant decline in revenue from our analog machine base. --Consolidated gross margins were 27.6% of revenue, compared to 35.0% in the year-ago quarter. Margins were primarily impacted by several key factors: the $8.5 million service and supplies revenue adjustment, the reduction in service revenues related to the analog machine base, softer than expected retail equipment margins in the Americas segment, the write down of rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. equipment and parts inventories Noun 1. parts inventory - an inventory of replacement parts inventory, stock list - a detailed list of all the items in stock and lower manufacturer purchase incentives. --SG&A expenses were $133.1 million, compared to $118.9 million in the year-ago quarter. The year over year increase was largely driven by $9.2 million in external expenses for Sarbanes-Oxley compliance, a $6.6 million bad debt adjustment related to the U.S. trade receivables allowance for doubtful accounts, $2.2 million for consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" related to the cost restructuring initiative and a $2.1 million year on year increase due to currency exchange. --The operating loss was $48.7 million, excluding the $70.9 million goodwill impairment charge (related to the Company's Europe/Australia Group) and the $12.7 million cost restructuring charge. In the year-ago quarter, the Company reported an operating loss of $29.9 million, which included a $30.5 million restructuring charge. --Free cash flow (net cash provided by operating activities less capital expenditures) was $8.8 million, compared to a negative $18.6 million in the third quarter. Reasons for the sequential One after the other in some consecutive order such as by name or number. improvement include a $22.0 million reduction in inventories and a two day decrease in Days Sales Outstanding. Capital expenditures were $8.5 million, compared to $5.9 million in the third quarter, primarily due to investments in rental equipment. --For the full year ended March 31, 2005, total revenue was $1.233 billion, compared to $1.331 billion in the prior year, and gross margins were 34.7%, compared to 36.3% a year ago. SG&A of $468.4 million was essentially flat with the prior year. The Company recorded an operating loss of $41.6 million for the year, excluding goodwill and restructuring charges, compared to an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $15.5 million excluding restructuring charges in the prior year. Danka intends to timely file its 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. filing for fiscal 2005. As required by Section 404 of the Sarbanes-Oxley Act See SOX. , the Company will be disclosing that it has material weaknesses in internal controls relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its information technology general controls, revenue and billing processes, inventory and rental assets custody The care, possession, and control of a thing or person. The retention, inspection, guarding, maintenance, or security of a thing within the immediate care and control of the person to whom it is committed. The detention of a person by lawful authority or process. and tracking processes, its financial statement close process and its income tax process. "We conducted an exhaustive management assessment of internal controls as required by Sarbanes-Oxley," said Mavis. "This assessment has identified several areas in which the Company's processes require improvement. The Company implemented important improvements within fiscal 2005 and will continue aggressive remediation activities throughout fiscal 2006." The Company also announced that Chief Financial Officer, Mark Wolfinger, will retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. from the Company effective at the end of June June: see month. . Mr. Wolfinger has been the company's CFO See Chief Financial Officer. since 1998 and has played an integral role in guiding the company through a series of financial transactions and restructuring. "We thank Mark deeply for his many significant contributions to Danka and wish him the best in his retirement," said Mavis. Conference Call and Webcast A conference call and Webcast to discuss Danka's third-quarter results has been scheduled for today (Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , June 10) at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . To access the Webcast, please go to www.danka.com. To participate in the conference call, callers 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. and 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 United Kingdom callers) can dial 800-309-1555; other international callers should dial 706-643-7754. No conference number is needed. A recording of the call will be available from approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. two hours after it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have completed through 5:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on Friday, June 17. To access this recording, please call either 800-642-1687 or 706-645-9291, or visit Danka's Web site. 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 enterprise imaging systems and services, the company 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 convergence Mathematical property of infinite series, integrals on unbounded regions, and certain sequences of numbers. An infinite series is convergent if the sum of its terms is finite. of image and document technologies in a connected environment. This approach will strengthen the company's client relationships and expand its strategic value. For more information, visit Danka at www.danka.com. Certain statements contained herein, 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 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. , and contain information relating to us that is based on our beliefs as well as assumptions made by, and information currently available to us. The words "goal," "anticipate," "expect," "believe," "could," "should," "intend" 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, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and Section 21E of the Securities Exchange Act of 1934, as amended. 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 such 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 successfully implement our cost restructuring plan to achieve and maintain cost savings; (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 COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; (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, multi-function products and high-volume 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, unify 1. (database, product) Unify - A relational database produced by Unify Corporation. 2. (algorithm) unify - To perform unification. and effectively utilize 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 of our senior or key management 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 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 or tax payments beyond our current expectations, which could adversely affect our liquidity; (xvi) any inability to comply with the financial or other covenants in our debt instruments; (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 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 , and the fear of additional terrorist attacks; 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. United Kingdom Companies Act: The financial information contained in this announcement for the quarter and year ended December December: see month. 31, 2004 is unaudited and does not constitute full statutory accounts within the meaning of Section 240 of the United Kingdom Companies Act 1985. This press release contains information regarding adjusted 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 (loss) that is computed as operating earnings before restructuring charges, free cash flow that is computed as net cash provided by (used in) operating activities less capital expenditures plus proceeds from the sale of property and equipment and net debt that is computed as current maturities of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. and notes payable plus long-term debt and notes payable less cash and cash equivalents. 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 generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , or GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 adjusted operating earnings (loss), free cash flow and net debt represent non-GAAP financial measures, we consider 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. We use these measures in our planning and budgeting processes, to monitor and evaluate our financial and operating results and to measure performance of our separate divisions. We also believe that adjusted operating earnings (loss), free cash flow and net debt are useful to investors because they provide an analysis of financial and operating results using the same measures that we use in evaluating the company. We expect that such measures provide investors with the means to evaluate our financial and operating results against other companies within our industry. We believe that these measures are meaningful to investors in evaluating our ability to meet our future debt service requirements and 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 adjusted operating earnings (loss), free cash flow and net debt may not be consistent with the calculation of these measures by other companies in our industry. Adjusted operating earnings (loss), free cash flow and net debt are not measurements of financial performance under GAAP and should not be considered as an alternative to net earnings (loss) as an indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of our operating performance or cash flows from operating activities as a measure of liquidity or any other measures of performance derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. in accordance with GAAP. Danka is a registered trademark and Danka @ the Desktop and TechSource are trademarks of Danka Business Systems PLC. All other trademarks are the property of their respective owners.
Danka Business Systems PLC
Consolidated Statements of Operations for the
Three Months Ended March 31, 2005 and 2004
(In thousands, except per American Depository Share ("ADS") amounts)
(Unaudited)
For the Three Months Ended
------------------------------
March 31, March 31,
2005 2004
------------- -------------
Revenue:
Retail equipment and related sales $ 115,680 $ 125,292
Retail service 133,623 160,802
Retail supplies and rentals 26,166 30,439
Wholesale 24,761 26,962
---------- ----------
Total revenue 300,230 343,495
---------- ----------
Cost of sales:
Retail equipment sales costs 83,446 82,652
Retail service costs 95,448 97,775
Retail supplies and rental costs 18,340 21,521
Wholesale costs 20,246 21,409
---------- ----------
Total cost of sales 217,480 223,357
---------- ----------
Gross Profit 82,750 120,138
Operating expenses:
Selling, general and administrative
expenses 133,091 118,903
Restructuring charges 12,679 30,548
Impairment charges 70,854 -
Other expense (income) (1,616) 583
---------- ----------
Total operating expenses 215,008 150,034
---------- ----------
Operating earnings (loss) (132,258) (29,895)
Interest expense (8,675) (8,159)
Interest income 194 274
---------- ----------
Earnings (loss) before income
taxes (140,739) (37,782)
Provision (benefit) for income taxes (4,626) 58,582
---------- ----------
Net earnings (loss) $ (136,113) $ (96,364)
========== ==========
Calculation of net earnings (loss) per
ADS
Net earnings (loss) $ (136,113) $ (96,364)
Dividends and accretion on participating
shares (5,190) (4,883)
---------- ----------
Loss available to common shareholders $ (141,303) $ (101,247)
========== ==========
Basic and diluted net earnings (loss)
available to common shareholders per
ADS:
Net earnings (loss) per ADS $ (2.22) $ (1.62)
========== ==========
Weighted average ADSs 63,519 62,658
========== ==========
Danka Business Systems PLC
Consolidated Statements of Operations for the
Twelve Months Ended March 31, 2005 and 2004
(In thousands, except per American Depository Share ("ADS") amounts)
(Unaudited)
For the Twelve Months Ended
-----------------------------
March 31, March 31,
2005 2004
------------- -------------
Revenue:
Retail equipment and related sales $ 441,789 $ 467,900
Retail service 588,784 638,519
Retail supplies and rentals 107,638 127,615
Wholesale 94,781 97,290
---------- ----------
Total revenue 1,232,992 1,331,324
---------- ----------
Cost of sales:
Retail equipment sales costs 295,359 308,912
Retail service costs 365,585 382,119
Retail supplies and rental costs 66,633 79,143
Wholesale costs 78,123 78,241
---------- ----------
Total cost of sales 805,700 848,415
---------- ----------
Gross Profit 427,292 482,909
Operating expenses:
Selling, general and administrative
expenses 468,413 465,225
Restructuring charges 10,220 50,000
Impairment charges 70,854 -
Other expense (income) 432 2,234
---------- ----------
Total operating expenses 549,919 517,459
---------- ----------
Operating earnings (loss) (122,627) (34,550)
Interest expense (31,938) (33,912)
Interest income 1,008 1,252
Write-off of debt issuance costs - (20,563)
---------- ----------
Earnings (loss) before income
taxes (153,557) (87,773)
Provision (benefit) for income taxes (20,481) 43,587
---------- ----------
Net earnings (loss) $ (133,076) $ (131,360)
========== ==========
Calculation of net earnings (loss) per
ADS
Net earnings (loss) $ (133,076) $ (131,360)
Dividends and accretion on participating
shares (20,298) (19,099)
---------- ----------
Loss available to common shareholders $ (153,374) $ (150,459)
========== ==========
Basic and diluted net earnings (loss)
available to common shareholders per
ADS:
Net earnings (loss) per ADS $ (2.43) $ (2.41)
========== ==========
Weighted average ADSs 63,081 62,545
========== ==========
Danka Business Systems PLC
Consolidated Balance Sheets as of March 31, 2005 and 2004
(In Thousands)
March 31, March 31,
2005 2004
------------ ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 98,116 $ 112,790
Accounts receivable, net 228,504 246,996
Inventories 96,675 93,295
Prepaid expenses, deferred income taxes
and other current assets 15,474 16,862
--------- ---------
Total current assets 438,769 469,943
Equipment on operating leases, net 23,443 29,478
Property and equipment, net 50,654 65,888
Goodwill, net 216,482 282,430
Other intangible assets, net 2,476 2,340
Deferred income taxes 8,946 7,688
Other assets 28,256 25,801
--------- ---------
Total assets $ 769,026 $ 883,568
========= =========
Liabilities and shareholders' equity
(deficit)
Current liabilities:
Current maturities of long-term debt
and notes payable $ 2,396 $ 3,212
Accounts payable 173,112 135,460
Accrued expenses and other current
liabilities 127,299 128,963
Taxes payable 37,479 47,200
Deferred revenue 40,165 45,090
--------- ---------
Total current liabilities 380,451 359,925
Long-term debt and notes payable, less
current maturities 239,406 240,761
Deferred income taxes and other long-term
liabilities 65,949 68,029
--------- ---------
Total liabilities 685,806 668,715
--------- ---------
6.5% senior convertible participating
shares 299,907 279,608
Shareholders' equity (deficit):
Ordinary shares, 1.25 pence stated
value 5,277 5,194
Additional paid-in capital 329,152 328,070
Accumulated deficit (495,960) (342,586)
Accumulated other comprehensive loss (55,156) (55,433)
--------- ---------
Total shareholders' equity (deficit) (216,687) (64,755)
--------- ---------
Total liabilities and shareholders' equity
(deficit) $ 769,026 $ 883,568
========= =========
Danka Business Systems PLC
Consolidated Statements of Cash Flows for the
Twelve Months ended March 31, 2005 and 2004
(In Thousands)
(Unaudited)
March 31, March 31,
2005 2004
------------- -------------
Operating activities:
Net earnings (loss) $ (133,076) $ (131,360)
Adjustments to reconcile net earnings
(loss) to net cash provided by operating
activities:
Depreciation and amortization 42,249 55,505
Deferred income taxes (306) 35,867
Amortization of debt issuance costs 2,080 5,601
Write-off of debt issuance costs - 20,563
(Gain) loss on sale of property and
equipment and equipment on operating
leases 1,467 4,632
Proceeds from sale of equipment on
operating leases 3,582 -
Restructuring (credits) charges 10,220 50,000
Impairment charges 70,854
Changes in net assets and liabilities:
Accounts receivable, net 19,039 10,671
Inventories (3,115) 18,222
Prepaid expenses and other current
assets 1,407 7,494
Other non-current assets (7,500) (3,756)
Accounts payable 37,237 (6,958)
Accrued expenses and other current
liabilities (21,807) (12,932)
Deferred revenue (5,017) 4,462
Other long-term liabilities (7,175) 9,469
---------- ----------
Net cash (used in) provided by
operating activities 10,139 67,480
---------- ----------
Investing activities:
Capital expenditures (24,751) (39,470)
Proceeds from the sale of property and
equipment 443 4,841
Proceeds from sale of subsidiary 209 -
Purchase of subsidiaries, net of cash
acquired (2,110) (457)
---------- ----------
Net cash used in investing
activities (26,209) (35,086)
---------- ----------
Financing activities:
Net borrowings (payments) under line of
credit agreements (1,001) (112,830)
Net proceeds (payments) under capital
lease arrangements (1,766) (2,955)
Principal payments of debt - (49,233)
Proceeds from debt - 170,905
Proceeds from stock options exercised 1,165 575
Payment of debt issue costs - (11,150)
---------- ----------
Net cash (used in) provided by
financing activities (1,602) (4,688)
---------- ----------
Effect of exchange rates 2,998 3,591
---------- ----------
Net (decrease) increase in cash
and cash equivalents (14,674) 31,297
Cash and cash equivalents, beginning of
period 112,790 81,493
---------- ----------
Cash and cash equivalents, end of period $ 98,116 $ 112,790
========== ==========
Danka Business Systems PLC
Adjusted operating earnings (loss) for the
three and twelve months ended March 31, 2005 and 2004
(In Thousands)
(Unaudited)
For the Three Months For the Twelve Months
Ended Ended
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
--------- --------- --------- ---------
Operating earnings
(loss) $(132,258) $ (29,895) $(122,627) $ (34,550)
Restructuring charges 12,679 30,547 10,220 50,000
Impairment charges 70,854 - 70,854 -
--------- --------- --------- ---------
Adjusted operating
earnings $ (48,725) $ 652 $ (41,553) $ 15,450
========= ========= ========= =========
Danka Business Systems PLC
Free cash flow for the
three and twelve months ended March 31, 2005 and 2004
(In Thousands)
(Unaudited)
For the Three Months For the Twelve Months
Ended Ended
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
-------- -------- -------- --------
Net cash provided by
operating activities $ 17,119 $ 15,207 $ 10,139 $ 67,480
Capital expenditures (8,459) (3,598) (24,751) (39,470)
Purchase of subsidiary - (457) (2,110) (457)
Proceeds from sale of
subsidiary - - 209 -
Proceeds from the sale of
property and equipment 130 4,135 443 4,841
-------- -------- -------- --------
Free cash flow $ 8,790 $ 15,287 $(16,070) $ 32,394
======== ======== ======== ========
Danka Business Systems PLC
Net Debt as of March 31, 2005 and March 31, 2004
(In Thousands)
(Unaudited)
March 31, March 31,
2005 2004
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Current maturities of long-term
debt and notes payable $ 2,396 $ 3,212
Long-term debt and notes payable 239,406 240,761
Less: Cash and cash equivalents (98,116) (112,790)
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Net Debt $ 143,686 $ 131,183
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