Danka Reports Fourth-Quarter and Fiscal Year 2004 Year-End 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)--May 19, 2004 Danka Business Systems PLC (Nasdaq:DANKY) today announced fourth-quarter and fiscal 2004 year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. results for the period ended March 31, 2004. Fourth-Quarter Results Summary For the fourth-quarter the Company reported a net loss of $96.4 million, which was largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to certain significant items, including a $50.8 million non-cash charge 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. against deferred tax assets; a $30.5 million 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. ; and a $7.8 million provision for income tax expense. The charge against the deferred tax assets was a result of the Company's analysis under FAS 109 which evaluates the likelihood that such net deferred tax assets and net loss carryforwards Loss Carryforward An accounting technique with which a company applies net operating losses of the current year to future year's profits in order to reduce tax liability. Notes: will ultimately be realized. Excluding the restructuring charge, the Company achieved 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 approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1 million. Digital Transition, Growth Initiatives Drive Revenue Danka's fourth-quarter revenue was $343.5 million, 3.5% lower than the year-ago period but a 3.7% increase from the third quarter. Adjusting for currency exchange, revenue was 10.9% lower than in the year-ago period. Within that total, retail service revenue was $160.8 million, 6.0% lower than the year-ago period but 2.8% and 3.5% higher than the third and second quarters, respectively. Revenue from retail equipment and related sales, which include software and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. , was $125.3 million, a slight decline from the year-ago quarter, but 9.3% higher than the third quarter. The sequential One after the other in some consecutive order such as by name or number. revenue improvements were driven in part by the continued digital transformation of the company's business, including an increase in the digital portion of the worldwide equipment base to 55%. "I am pleased that, as expected, the increased digital base has eased downward pressure on service revenue which has been a major driver of our year on year revenue declines," said 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, Danka's Chief Executive Officer. "The increased digital base has also resulted in an increase in connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. rates, due to more digital placements as well as increased installations of Danka @ the Desktop(TM) solutions and color systems. Increasing connectivity is important because it helps to drive volumes in our installed base and, as a result, the volume decline that we've we've Contraction of we have. we've have experienced for some time is finally beginning to flatten flatten - To remove structural information, especially to filter something with an implicit tree structure into a simple sequence of leaves; also tends to imply mapping to flat ASCII. "This code flattens an expression with parentheses into an equivalent canonical form." ." Continued progress in the company's growth initiatives also contributed to the sequential increase in revenues. Revenue from these offerings - which include software, professional services, TechSource(TM) multi-vendor services, and printers - was 180% higher than the year-ago quarter and 12% higher sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . "We exited the fourth quarter with an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. run rate of approximately $65 million in our growth initiatives, which play a vital role in enabling sales of our traditional offerings," said Mavis. "I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in particularly pleased with our TechSource(TM) business development, including the increase in our IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) business and the recent establishment of a new service relationship with H-P, which we expect to drive future growth in our service business." "Our strategies for the analog-to-digital transition have resulted this quarter in the stabilization Stabilization The action undertakes a country when it buys and sells its own currency to protect its exchange value. Actions registered competitive traders undertake by on the NYSE to meet the exchange requirement that 75% of their traded be stabilizing, meaning that sell orders of our service revenue," commented Todd Mavis. "This success, combined with the positive impact from our growth initiatives, enabled us to increase total revenue sequentially and achieve our largest revenue quarter of the year. At the same time, we generated operating and free cash flows of approximately $18 million and funded the implementation of expense reductions in pursuit of our previously announced target of $50 million-plus in annualized cost savings." Gross margins in the fourth quarter were 35.0%, 270 basis points lower than a year ago. The fourth-quarter margins were negatively impacted versus the year-ago period by some larger, lower-margin equipment transactions and a reduction in lease and residual Residual See:Residual value 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. Sequentially, gross margins were down 130 basis points. Fourth-quarter SG&A was $118.9 million or 34.6% of revenue. SG&A was 6.6% lower than the year-ago quarter. Adjusting for currency exchange SG&A would have been 12.7% lower than the year-ago period. SG&A was 9.4% higher sequentially; however, this sequential increase was largely due to several events in the fourth quarter, such as the seasonal restart To resume computer operation after a planned or unplanned termination. See boot, warm boot and checkpoint/restart. of calendar-year employee tax and vacation VACATION. That period of time between the end of one term and beginning of another. During vacation, rules and orders are made in such cases as are urgent, by a judge at his chambers. accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. , an increase in bad debt expense, unfavorable foreign exchange rates, and an increase in sales commissions associated with higher equipment sales. In addition, the third quarter was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by a $3 million pension adjustment in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .
Continued Positive Cash Flow Free cash flow for the fourth quarter was $18.5 million. Significant cash items in the quarter included net working capital contributions of $12.0 million, cost 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). expenditures of $8.7 million, and capital expenditures of $7.5 million. The Company's cash balance increased by $7.7 million, to $112.8 million. "Our continued ability to generate positive cash enabled us to make significant progress in implementing our cost restructuring program and invest in our growth initiatives," continued Mavis. "We have seen a meaningful reduction in capital expenditures, primarily because most of the spending on our Vision 21 reengineering Using information technology to improve performance and cut costs. Its main premise, as popularized by the book "Reengineering the Corporation" by Michael Hammer and James Champy, is to examine the goals of an organization and to redesign work and business processes from the ground up program is behind us. In addition, although SG&A expenses increased in the fourth quarter because of several quarter-specific events, we still succeeded in attaining more of our previously identified cost reductions. We will vigorously vig·or·ous adj. 1. Strong, energetic, and active in mind or body; robust. See Synonyms at healthy. 2. Marked by or done with force and energy. See Synonyms at active. execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution on our cost reduction plans and expect to realize the balance of our $51 to $56 million in annualized cost savings during the middle of fiscal 2005." Full-Year Results Summary and CFO See Chief Financial Officer. Comments For fiscal 2004 year, Danka reported: -- Revenue of $1.3 billion, 4.9% less than the prior year. Much of the decline is attributable to the impact on retail service revenues by the previously discussed digital transition. -- Free cash flow of $32.9 million, including a $31.3 million increase in the company's cash balance from $81.5 million to $112.8 million during the course of the year. -- Gross debt at year-end was $244 million and Net debt at year end was $131.2 million, a 13.3% decrease from the end of the prior fiscal year. -- SG&A of $465.2 million, a 4.1% decline from the prior year. -- Capital expenditures of $44.5 million, 8.4% lower than the prior year. "Looking at the past year, we're we're Contraction of we are. we're we are pleased that we were able to complete our senior note offering last July July: see month. , finish the U.S. conversion to Oracle, continue to generate cash, and continue reducing our net debt. Going forward we will be very focused on reducing costs in pursuit of our goal of SG&A not exceeding 30% of total revenue," stated Mark Wolfinger, Danka's chief financial officer. "With our strong liquidity and cash positions we are now well positioned to meet and fund both our growth opportunities and our restructuring initiatives." Conference Call and Webcast A conference call and Webcast to discuss Danka's fourth-quarter and full-year 2004 results has been scheduled for today, Wednesday Wednesday: see week. , May 19 at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . To 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 800-299-9630; other International callers should dial 617-786-2904. The conference number is 41813268. A recording of the call will be available from approximately 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. EDT on Wednesday, May 26. To access this recording, please call either 888-286-8010 or 617-801-6888 and use conference number 31905237. About Danka Danka delivers value to clients worldwide by using its expert technical and professional services 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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" 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, or the Exchange Act. 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 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 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 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 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 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; and (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 , 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, or the SEC. 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 year ended March 31, 2004 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 year ended March 31, 2003 have 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 Adjusted operating earnings (loss) is computed as operating earnings (loss) before restructuring charges, Adjusted net income (loss) is computed as operating earnings (loss) before restructuring charges, 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 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 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), adjusted net income (loss), free cash flow and net debt 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 adjusted operating earnings (loss), adjusted net income (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 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 adjusted operating earnings (loss), adjusted net income (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), adjusted net income (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 income (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 and twelve months
ended March 31, 2004 and 2003
(In thousands, except per American Depositary Share ("ADS") amounts)
(Unaudited)
For the Three For the Twelve
Months Ended Months Ended
-------------------- ----------------------
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
---------- --------- ---------- ----------
Revenue:
Retail equipment and
related sales $125,291 $126,816 $467,900 $476,729
Retail service 160,801 171,039 638,519 697,011
Retail supplies and
rentals 30,439 35,056 127,615 141,698
Wholesale 26,963 23,137 97,290 84,536
-------------------------- ---------- --------- ---------- ----------
Total revenue 343,494 356,048 1,331,324 1,399,974
-------------------------- ---------- --------- ---------- ----------
Costs and operating
expenses:
Retail equipment and
related sales costs 82,651 79,768 308,912 310,892
Retail service costs 97,774 103,144 382,119 416,441
Retail supplies and rental
costs 21,522 20,330 79,143 81,050
Wholesale costs 21,410 18,726 78,241 68,429
Selling, general and
administrative expenses 118,903 127,244 465,225 484,887
Restructuring charges
(credits) 30,547 - 50,000 (555)
Other (income) expense 582 (996) 2,234 (6,081)
-------------------------- ---------- --------- ---------- ----------
Total costs and operating
expenses 373,389 348,216 1,365,874 1,355,063
-------------------------- ---------- --------- ---------- ----------
Operating earnings (loss) (29,895) 7,832 (34,550) 44,911
Interest expense (8,160) (9,785) (33,912) (32,822)
Interest income 273 510 1,252 1,249
Writeoff of debt issuance
costs - - (20,563) -
-------------------------- ---------- --------- ---------- ----------
Earnings (loss) before
income taxes (37,782) (1,443) (87,773) 13,338
Provision (benefit) for
income taxes 58,582 (386) 43,587 3,604
-------------------------- ---------- --------- ---------- ----------
Net earnings (loss) $(96,364) $(1,057) $(131,360) $9,734
========================== ========== ========= ========== ==========
Calculation of net
earnings (loss) per ADS
Net earnings (loss) $(96,364) $(1,057) $(131,360) $9,734
Dividends and accretion on
participating shares (4,883) (4,597) (19,099) (17,981)
---------- --------- ---------- ----------
Net earnings (loss)
attributable to common
shareholders $(101,247) $(5,654) $(150,459) $(8,247)
========== ========= ========== ==========
Basic earnings (loss)
attributable to common
shareholders per ADS:
Net earnings (loss) per
ADS $(1.62) $(0.09) $(2.41) $(0.13)
========== ========= ========== ==========
Weighted average ADSs 62,658 62,338 62,545 62,141
========== ========= ========== ==========
Diluted earnings (loss)
attributable to common
shareholders per ADS:
Net earnings (loss) per
ADS $(1.62) $(0.09) $(2.41) $(0.13)
========== ========= ========== ==========
Weighted average ADSs 62,658 62,338 62,545 62,141
========== ========= ========== ==========
Danka Business Systems PLC
Condensed Consolidated Balance Sheets as of March 31, 2004 and 2003
(In Thousands)
(Unaudited)
March 31, March 31,
2004 2003
--------- ---------
Assets
Current assets:
Cash and cash equivalents $112,790 $81,493
Accounts receivable, net 246,996 257,329
Inventories 93,295 111,471
Prepaid expenses, deferred income taxes
and other current assets 16,862 45,879
------------------------------------------------- --------- ---------
Total current assets 469,943 496,172
Equipment on operating leases, net 29,478 39,829
Property and equipment, net 65,888 67,782
Goodwill, net 282,430 256,990
Intangibles, net 2,340 799
Deferred income taxes 7,688 78,480
Other assets 25,801 41,568
------------------------------------------------- --------- ---------
Total assets $883,568 $981,620
================================================= ========= =========
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt
and notes payable $3,212 $58,443
Accounts payable 135,460 140,207
Accrued expenses and other current liabilities 128,963 101,749
Taxes payable 47,200 112,311
Deferred revenue 45,090 40,628
------------------------------------------------- --------- ---------
Total current liabilities 359,925 453,338
Long-term debt and notes payable, less current
maturities 240,761 174,412
Deferred income taxes and other long-term
liabilities 68,029 29,785
------------------------------------------------- --------- ---------
Total liabilities 668,715 657,535
------------------------------------------------- --------- ---------
6.5% senior convertible participating shares 279,608 258,376
------------------------------------------------- --------- ---------
Shareholders' equity:
Ordinary shares, 1.25 pence stated value 5,194 5,167
Additional paid-in capital 328,070 327,173
Accumulated deficit (342,586) (189,995)
Accumulated other comprehensive loss (55,433) (76,636)
------------------------------------------------- --------- ---------
Total shareholders' equity (64,755) 65,709
------------------------------------------------- --------- ---------
Total liabilities & shareholders' equity $883,568 $981,620
================================================= ========= =========
Danka Business Systems PLC
Consolidated Statements of Cash Flows for the years ended
March 31, 2004 and 2003
(In Thousands)
(Unaudited)
For the Years Ended
March 31,
-------------------
2004 2003
---------- --------
Operating activities:
Net earnings (loss) $(131,360) $9,734
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 55,505 57,828
Deferred income taxes 35,867 (966)
Amortization of debt issuance costs 5,601 10,944
Writeoff of debt issuance costs 20,563 -
Loss on sale of property and equipment and
equipment on operating leases 4,632 5,933
Proceeds from sale of equipment on operating
leases - 1,986
Restructuring charges (credits) 50,000 (555)
Loss on sale of business - 462
Changes in net assets and liabilities:
Accounts receivable 10,671 35,021
Inventories 18,222 19,128
Prepaid expenses and other current assets 7,494 (6,658)
Other non-current assets and other items (3,756) (18,597)
Accounts payable (6,958) 29,621
Accrued expenses and other current
liabilities (12,932) 10,490
Deferred revenue 4,462 (1,715)
Other long-term liabilities 9,469 2,362
-------------------------------------------------- ---------- --------
Net cash provided by operating activities 67,480 155,018
-------------------------------------------------- ---------- --------
Investing activities:
Capital expenditures (39,470) (48,550)
Proceeds from the sale of property and
equipment 4,841 633
Payment for purchase of subsidiary (457) -
Net proceeds from the sale of business - 5,940
-------------------------------------------------- ---------- --------
Net cash used in investing activities (35,086) (41,977)
-------------------------------------------------- ---------- --------
Financing activities:
Net payments under line of credit agreements (112,830) (55,615)
Net proceeds/(payments) under capital lease
arrangements (2,955) 1,602
Payments of debt (49,233) (18,301)
Proceeds from debt issuance 170,905 -
Proceeds from stock options exercised 575 -
Payment of debt issue costs (11,150) (20,435)
-------------------------------------------------- ---------- --------
Net cash used in financing activities (4,688) (92,749)
-------------------------------------------------- ---------- --------
Effect of exchange rates 3,591 1,731
-------------------------------------------------- ---------- --------
Net increase in cash and cash equivalents 31,297 22,023
Cash and cash equivalents, beginning of year 81,493 59,470
-------------------------------------------------- ---------- --------
Cash and cash equivalents, end of year $112,790 $81,493
================================================== ========== ========
Danka Business Systems PLC
Adjusted operating earnings (loss) for the three and twelve months
ended March 31, 2004 and 2003
(In Thousands)
(Unaudited)
For the Three For the Twelve
Months Ended Months Ended
------------------ -------------------
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
--------- -------- ---------- --------
Operating earnings (loss) $(29,895) $7,832 $(34,550) $44,911
Restructuring charges 30,547 - 50,000 (555)
--------- -------- ---------- --------
Adjusted operating earnings
(loss) $652 $7,832 $15,450 $44,356
========= ======== ========== ========
Danka Business Systems PLC
Adjusted net income (loss) for the three and twelve months
ended March 31, 2004 and 2003
(In Thousands)
(Unaudited)
For the Three For the Twelve
Months Ended Months Ended
------------------ -------------------
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
--------- -------- ---------- --------
Net earnings (loss) $(96,364) $(1,057) $(131,360) $9,734
Restructuring charges 30,547 - 50,000 (555)
Write-off of debt issuance
costs - - 20,563 -
Valuation allowance provided
for deferred taxes -
4th Quarter 50,800 - 50,800 -
--------- -------- ---------- --------
Adjusted net earnings (loss) $(15,017) $(1,057) $(9,997) $9,179
========= ======== ========== ========
Danka Business Systems PLC
Free cash flow for the three and twelve months ended
March 31, 2004 and 2003
(In Thousands)
(Unaudited)
For the Three For the Twelve
Months Ended Months Ended
------------------ -------------------
March 31, March 31, March 31, March 31,
2004 2003 2004 2003
--------- -------- ---------- --------
Net cash provided by operating
activities $17,999 $33,105 $67,480 $155,018
Capital expenditures (3,598) (16,496) (39,470) (48,550)
Proceeds from the sale of
property and equipment 4,135 170 4,841 633
-------- -------- -------- ---------
Free cash flow $18,536 $16,779 $32,851 $107,101
======== ======== ======== =========
Danka Business Systems PLC
Net Debt as of March 31, 2004 and 2003
(In Thousands)
(Unaudited)
March 31, March 31,
2004 2003
--------- ---------
Current maturities of long-term debt and notes
payable $3,212 $58,443
Long-term debt and notes payable 240,761 174,412
Less: Cash and cash equivalents (112,790) (81,493)
--------- ---------
Net Debt $131,183 $151,362
========= =========
Danka Business Systems PLC
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation,
Amortization, Restructuring and Write-off of Debt Issuance Costs)
for the three months ended
(In Thousands)
(Unaudited)
March 31, Dec. 31, Sept. 30, June 30,
2004 2003 2003 2003
--------- --------- --------- --------
Net earnings (loss) $(96,364) $(16,941) $(17,259) $(796)
Provision (benefit) for
income taxes 58,582 (1,166) (10,103) (3,726)
Interest expense 8,160 7,931 8,069 9,753
Depreciation and
amortization 16,231 14,578 12,659 12,037
Restructuring
charge/(credit) 30,547 20,046 - (594)
Write off of debt issuance
costs - - 20,562 -
--------- --------- --------- --------
Adjusted EBITDA $17,156 $24,448 $13,928 $16,674
========= ========= ========= ========
Danka Business Systems PLC
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation,
Amortization, Restructuring and Write-off of Debt Issuance Costs)
for the three months ended
(In Thousands)
(Unaudited)
March 31, Dec. 31, Sept. 30, June 30,
2003 2002 2002 2002
---------- --------- --------- --------
Net earnings (loss) $(1,057) $3,284 $1,756 $5,752
Provision (benefit) for
income taxes (386) 1,219 644 2,127
Interest expense 9,785 8,734 6,881 7,423
Depreciation and
amortization 14,715 13,991 14,579 14,542
Restructuring
Charge/(Credit) - - (555) -
Write off of debt issuance
costs - - - -
----------- --------- ---------- --------
Adjusted EBITDA $23,057 $27,228 $23,305 $29,844
=========== ========= ========== ========
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