Danka Reports Higher First Quarter Operating Earnings From Continuing Operations; Strong Cash Flow Used to Continue Debt Reduction.Business Editors 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. 2, 2002 Danka Business Systems PLC (Nasdaq:DANKY) today announced results for its first quarter ended June June: see month. 30, 2002 that show increased 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 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 , continued strong cash flow, and significant debt reduction. The company also announced that it has scheduled a conference call for Tuesday Tuesday: see week. , August 13, 2002 to discuss these results. Danka reported operating earnings from continuing operations of $15.0 million in the first quarter of fiscal year 2003, compared to a loss of $1.2 million in the comparable period a year ago. Earnings from continuing operations before extraordinary items were $5.8 million, compared to a loss of $13.2 million in the year-ago quarter. 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. earnings per American Depositary Share American Depositary Share (ADS) Foreign stock issued in the US and registered in the ADR system. (ADS) from continuing operations before extraordinary items 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 Danka's participating shares were $.02 in the current quarter. This compares to a $.24 loss in the year-ago first quarter assuming the impact of not amortizing goodwill 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 SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142. Total revenues from continuing operations decreased by 13.6% to $347.1 million in the first quarter from $401.7 in the year-ago first quarter. This decline was the result of multiple factors world-wide, including the impact of the continuing industry-wide analog to digital transition on service revenues, technology 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. , reduced equipment sales, the company's focus on higher-margin sales, a reduction of the sales force and a 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. . This decrease was partially offset by increased equipment leasing Equipment Leasing is a financing option to lease equipment for a certain amount of time. Leasing Benefits
adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.8 million resulting from payments on account of residual values Residual value Usually refers to the value of a lessor's property at the time the lease expires. residual value The price at which a fixed asset is expected to be sold at the end of its useful life. of equipment subject to expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. leases. "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 pleased with the senior management team's execution of our strategies in the first quarter. We continued to de-leverage the company, resulting in a reduction of total debt from $375.1 million to $258.1 million over the last 12 months", commented Lang Lang language LANG Louisiana Army National Guard Lang Langobardian (linguistics) LANG Los Angeles Newspaper Guild Lowrey, Danka's Chairman and Chief Executive Officer. "Over the past year, we have exited or de-emphasized unprofitable areas of our business. As a result of that and other positive factors, our equipment gross profit margins Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. improved by almost 12 percentage points in the first quarter compared to the prior year comparable quarter. That gave us an overall improvement in gross margins to 38.6% in the first quarter compared to 34.8% in the year-ago quarter. We achieved these profit improvements despite our revenues being negatively impacted by market and economic conditions", continued Lowrey. "Fortunately, we have set the foundation for pursuing targeted opportunities to expand our business. In addition to seeing initial sales of our Danka @ the Desktop TM solution in the first quarter, we have formed a dedicated professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. business 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. , begun rebuilding our sales force in key areas of focus, and started expanding our technical services into complimentary areas." Free cash flow (cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses less capital expenditures) was $25.6 million in the first quarter, compared to $19.3 million in the prior-year period. "Our strong cash generation enabled us to continue our debt reduction program," said Mark Wolfinger, Danka's chief financial officer. "We retired the remaining $16.0 million of 6.75% convertible subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes in the first quarter and we also paid approximately $29.5 million of our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. bank debt, resulting in significantly improved debt ratios." Total debt was reduced by 15.2% in the first quarter to $258.1 million. With first quarter 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 (earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. ) of $29.8 million, the total leverage ratio (total debt divided by the trailing 12-month EBITDA) improved during the current quarter to 2.2 to 1 from 2.8 to 1 as of March 31, 2002, and the ratio of total debt to total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. (including participating shares) decreased during the quarter from 51.3% at March 31, 2002 to 44.9% at June 30, 2002. SG&A expenses were $119.5 million, or 34.4% of revenues, in the first quarter. That compares to $135.7 million (including a $6.0 million charge related to the exit of certain facilities), or 33.8% of revenues, in the year-ago quarter. Capital expenditures were $8.6 million in the current quarter, much of them related to the acquisition 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 as well as the company's ongoing 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 designed to enhance customer service and provide long-term productivity benefits. "We remain focused on expanding the value we provide to our clients, including the further enhancement of our industry-leading technical services," noted CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Lowrey. "We began the rollout of new, integrated business systems in the first quarter, which will further improve our customer service. And we were honored hon·or n. 1. High respect, as that shown for special merit; esteem: the honor shown to a Nobel laureate. 2. a. Good name; reputation. b. to receive the Service Partnership Award from one of our largest clients, Staples staples U-shaped stainless steel or vitallium units with sharp points used for surgical fixation. epiphyseal staples used to staple epiphysis to metaphysis; have metal bracing at the corners. , for managing the highly successful upgrade of their copy centers and delivering the greatest uptime The time during which a system is working without failure. Contrast with downtime. See availability. performance in their history. We are pleased with the progress we made this quarter which should help us as we move into our second quarter, which is traditionally our weakest quarter on a seasonal basis." Conference Call A conference call to discuss Danka's first quarter results has been scheduled for Tuesday, August 13 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 . Please call 1-800-399-7982 to participate in the call. If you are unable to participate in the call, you may access a recorded audio playback Playback could mean:
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 leading 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 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's web site at www.danka.com. 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 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 management's plans or objectives, forecasts of market trends and other matters, are forward looking statements, 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 the beliefs of our management 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 or our management are intended to identify forward looking statements. 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. 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 material adverse change in financial markets or in our own position, (ii) any inability to achieve or maintain cost savings, (iii) increased competition from other high-volume and digital copier distributors and the discounting of such copiers 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. , (iv) 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 and high-volume copiers, or to continue to bring current products to the marketplace at competitive costs and prices, (v) any negative impact from the loss of any of our key upper management personnel, (vi) fluctuations in foreign currencies, and (vii) any change in economic conditions in domestic or international markets where we operate or have material investments which may affect demand for our services. 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. 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. All other trademarks are the property of their respective owners.
Danka Business Systems PLC
Consolidated Statement of Operations for the three months ended
June 30, 2002 and 2001
(In thousands, except per American Depositary Share ("ADS") amounts)
(Unaudited)
For the Three Months
Ended
---------------------
June 30, June 30,
2002 2001
---------- ----------
Revenue:
Retail equipment sales $ 110,082 $ 133,086
Retail service, supplies and rentals 216,242 247,528
Wholesale 20,737 21,054
---------------------------------------------- ---------- ----------
Total revenue 347,061 401,668
---------------------------------------------- ---------- ----------
Costs and operating expenses:
Cost of retail equipment sales 71,165 101,668
Retail service, supplies and rental costs 124,954 142,864
Wholesale costs of revenue 16,942 17,265
Selling, general and administrative expenses 119,529 135,690
Amortization of intangible assets 85 2,669
Restructuring charges (credits) - -
Other (income) expense (616) 2,702
---------------------------------------------- ---------- ----------
Total costs and operating expenses 332,059 402,858
---------------------------------------------- ---------- ----------
Operating earnings (loss) from continuing
operations 15,002 (1,190)
Interest expense (7,423) (15,871)
Interest income 300 701
---------------------------------------------- ---------- ----------
Earnings (loss) from continuing operations
before income taxes 7,879 (16,360)
Provision (benefit) for income taxes 2,127 (3,204)
---------------------------------------------- ---------- ----------
Earnings (loss) from continuing operations
before extraordinary items 5,752 (13,156)
Discontinued operations, net of tax - 113,052
Extraordinary gain on early retirement of debt,
net of tax - 26,762
---------------------------------------------- ---------- ----------
Net (loss) earnings $ 5,752 $ 126,658
============================================== ========== ==========
Calculation of (loss) earnings per ADS
Earnings (loss) from continuing operations $ 5,752 $ (13,156)
Dividends and accretion on participating
shares (4,393) (4,137)
---------- ----------
Income (loss) from continuing operations
available to common shareholders $ 1,359 $ (17,293)
========== ==========
Basic (loss) earnings available to common shareholders
per ADS:
Net earnings (loss) per ADS, continuing
operations $ 0.02 $ (0.28)
Net earnings per ADS, discontinued operations - 1.83
Net earnings per ADS, extraordinary item - 0.43
---------- ----------
Net earnings (loss) per ADS $ 0.02 $ 1.98
========== ==========
Weighted average ADSs 62,021 61,893
Diluted (loss) earnings available to common shareholders
per ADS:
Net earnings (loss) per ADS, continuing
operations $ 0.02 $ (0.28)
Net earnings per ADS, discontinued operations - 1.83
Net earnings per ADS, extraordinary item - 0.43
---------- ----------
Net earnings (loss) per ADS $ 0.02 $ 1.98
========== ==========
Weighted average ADSs 64,207 61,893
-- Certain prior year amounts have been reclassified to conform to
current year presentation.
Danka Business Systems PLC
Condensed Consolidated Balance Sheet as of
June 30, 2002 and March 31, 2002
(In Thousands)
(Unaudited)
June 30, March 31,
2002 2002
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 37,459 $ 59,470
Accounts receivable, net 275,393 292,350
Inventories 128,451 130,599
Prepaid expenses, deferred income taxes and
other current assets 43,442 35,935
------------------------------------------------ ---------- ----------
Total current assets 484,745 518,354
Equipment on operating leases, net 53,121 57,432
Property and equipment, net 59,752 60,549
Goodwill, net 245,310 231,908
Noncompete agreements, net 993 1,078
Deferred income taxes and other assets 54,621 56,366
------------------------------------------------ ---------- ----------
Total assets $ 898,542 $ 925,687
================================================ ========== ==========
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt and notes
payable $ 23,825 $ 36,293
Accounts payable 102,730 110,586
Accrued expenses and other current liabilities 102,370 109,219
Taxes payable 50,712 47,101
Deferred revenue 41,485 42,343
------------------------------------------------ ---------- ----------
Total current liabilities 321,122 345,542
Long-term debt and notes payable, less current
maturities 234,272 268,161
Deferred income taxes and other long-term
liabilities 25,945 23,415
------------------------------------------------ ---------- ----------
Total liabilities 581,339 637,118
------------------------------------------------ ---------- ----------
6.5% convertible participating shares 244,886 240,520
------------------------------------------------ ---------- ----------
Shareholders' equity:
Ordinary shares, 1.25 pence stated value 5,139 5,139
Additional paid-in capital 325,880 325,880
Retained earnings (accumulated deficit) (180,484) (181,872)
Accumulated other comprehensive (loss) income (78,218) (101,098)
------------------------------------------------ ---------- ----------
Total shareholders' equity 72,317 48,049
------------------------------------------------ ---------- ----------
Total liabilities & shareholders' equity $ 898,542 $ 925,687
================================================ ========== ==========
-- Certain prior year amounts have been reclassified to conform to
current year presentation.
Danka Business Systems PLC
Consolidated Statements of Cashflow as of
June 30, 2002 and June 30, 2001
(In Thousands)
(Unaudited)
June 30, June 30,
2002 2001
--------- ----------
Operating activities:
Net earnings (loss) $ 5,752 $ 126,658
Adjustments to reconcile net earnings (loss) to
net cash provided:
Extraordinary gain on debt retirement - (26,762)
Net earnings and gain from sale of discontinued
operations - (113,052)
Depreciation and amortization 14,542 22,600
Deferred income taxes - 6,640
Amortization of debt issuance costs 1,722 269
Loss on sale of property and equipment and
equipment on operating leases 1,759 2,051
Proceeds from sale of equipment on operating
leases 702 1,590
Changes in net assets and liabilities:
Accounts receivable 16,957 23,788
Inventories 2,148 3,107
Prepaid expenses and other current assets (5,156) 4,452
Other non-current assets 5,244 (35,099)
Accounts payable (7,856) (5,827)
Accrued expenses and other current
liabilities (3,236) 17,259
Deferred revenue (858) 5,266
Other long-term liabilities 2,529 (296)
------------------------------------------------- --------- ----------
Net cash provided by operating activities 34,249 32,644
------------------------------------------------- --------- ----------
Investing activities:
Capital expenditures (8,607) (13,368)
Proceeds from the sale of property and
equipment 31 37
Net proceeds from the sale of business - 273,994
------------------------------------------------- --------- ----------
Net cash provided by (used in) investing
activities (8,576) 260,663
------------------------------------------------- --------- ----------
Financing activities:
Net payments under line of credit agreements (29,949) (288,048)
Principal payments of debt (16,698) (7,358)
Payment of debt issue costs (4,072) (17,161)
------------------------------------------------- --------- ----------
Net cash used in financing activities (50,719) (312,567)
------------------------------------------------- --------- ----------
Effect of exchange rates 3,035 1,601
------------------------------------------------- --------- ----------
Net decrease in cash (22,011) (17,659)
Cash and cash equivalents, beginning of period 59,470 69,085
------------------------------------------------- --------- ----------
Cash and cash equivalents, end of period $ 37,459 $ 51,426
================================================= ========= ==========
-- 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, June 30, March 31,
2002 2001 2002
------- ------- -------
Operating earnings (loss) from continuing
operations 15,002 (1,190) (2,870)
Interest income 300 701 4,411
Depreciation and amortization 14,542 22,600 28,887
------- ------- -------
EBITDA 29,844 22,111 30,428
======= ======= =======
-- Certain prior year amounts have been reclassified to conform to
current year presentation.
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