Danka Reports Record Results For Fourth Quarter, Fiscal 1997 Revenues Exceed $2 Billion.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 13, 1997-- DANKA DANKA Don't Ask Nobody Knows Anyway BUSINESS SYSTEMS PLC: (DANKY) Fourth Quarter & Fiscal 1997 Highlights: -- Revenues for the fourth quarter increase 118% to $837 million -- Fourth quarter earnings from operations rose 44% to $45 million -- Revenue for the fiscal year reached $2.1 billion, a 69% increase -- Completed the largest acquisition in Danka's history - acquiring Eastman Kodak's Office Imaging and facilities management businesses in December December: see month. 1996 -0-
Quarter and Year Ended March 31, 1997
Three Months % Increase Fiscal Year % Increase
(in thousands, except per ADS amounts)
Revenue $837,418 118% $2,101,047 69%
Earnings from
operations(a) 45,238 44% 136,862 31%
Net earnings(b) 18,965 26% 64,195 24%
Net earnings per
ADS(b) $0.33 $1.11
(a) Before restructuring charges
(b) Before non-recurring items
Dan Doyle, Chief Executive, commented on the year, "Fiscal 1997
was a year of significant milestones for Danka. In addition to
achieving record revenues of over $2 billion, we completed the
largest acquisition in Danka's history with the purchase of the
sales, service and facilities management operations of Eastman
Kodak's Office Imaging business. We also made great strides in
positioning the Company to capitalize on the changing market demands
and to better support our customers."
DANKA REPORTS RECORD RESULTS FOR FOURTH QUARTER, FISCAL 1997
REVENUES EXCEED $2 BILLION
Results
Danka Business Systems PLC (NASDAQ: DANKY) today announced
results for its fiscal year and fourth quarter ended March 31, 1997.
For the quarter ended March 31, 1997 revenue increased 118% to $837.4
million, while earnings from operations grew 44% to $45.2 million.
Net earnings for the three months increased to $19.0 million, or
$0.33 per American Depositary Share ("ADS"), as compared to $15.1
million last year, or $0.28 per ADS before the effect of an
extraordinary item of $0.02 per ADS. The Company's revenue and
earnings were impacted by foreign exchange rate fluctuations in the
fourth quarter. Had exchange rates remained unchanged from a year
ago, earnings from operations, excluding the acquired Office Imaging
business, would have increased by an additional $1.3 million.
Revenue for fiscal 1997 increased 69% to $2.1 billion, while
earnings from operations, before non-recurring items, grew 31% to
$136.9 million. Non-recurring items include a $35.0 million
restructuring charge related to the integration of Kodak's Office
Imaging division and the transition to the Company's Market Based
Approach in North America, and an extraordinary item of $0.9 million
for the early extinguishment of debt. Both the restructuring charge
and extraordinary item were incurred during the third quarter.
Excluding the impact of these non-recurring items of $0.39 per ADS,
net earnings increased 24% to $64.2 million, or $1.11 per ADS
compared to $1.00 per ADS last year. After consideration of
non-recurring items, Danka reported earnings from operations of
$101.9 million and net earnings of $41.8 million, or $0.72 per ADS.
Operating cash flow for fiscal 1997 came in at a record $192.7
million. The Company's cash flow was aided by the acquisition of the
Office Imaging business which had low levels of trade payables when
acquired. Operating cash flow was positively affected by the
build-up of trade payables to normal levels following the
acquisition. This strong operating cash flow allowed Danka to reduce
the outstanding debt under its credit agreement by $150.0 million in
the fourth quarter, to a balance at March 31, 1997 of $862.0 million.
Dan Doyle, Chief Executive, commented on the year, "Fiscal 1997 was a
year of significant milestones for Danka. In addition to achieving
record revenues of over $2 billion, we completed the largest
acquisition in Danka's history with the purchase of the sales,
service and facilities management operations of Eastman Kodak's
Office Imaging business. We also made great strides in positioning
the Company to capitalize on the changing market demands and to
better support our customers."
Acquisition of Eastman Kodak's Office Imaging Division
As previously announced, effective December 31, 1996, the Company
acquired the sales, marketing and equipment service operations of
Kodak's Office Imaging business, as well as Kodak's facilities
management business, formerly known as Kodak Imaging Services. Dan
Doyle commented on the acquisition, "The acquisition strengthens our
service network while extending our presence to over 30 countries.
It has provided us with significant opportunities to expand our
distribution of high-volume copiers and printers, and positions us as
a leader in the high growth outsourcing industry."
Subject to post-closing adjustments, Danka paid $688.0 million
for the acquisition which was funded exclusively with bank debt under
a new $1.275 billion credit agreement that closed in December. Based
on the December 31, 1996 audited balance sheet provided by Eastman
Kodak, Danka will receive a refund under the purchase price
adjustment provision of the Asset Purchase Agreement totaling
approximately $86 million. The Company is currently engaged in a
review process of the closing balance sheet.
The integration of the acquired Office Imaging and facilities
management businesses, now known as Danka Office Imaging and Danka
Imaging Services, respectively, is proceeding as planned. David
Snell, Chief Operating Officer, commented, "We are pleased with the
progress we have achieved to date in the integration of the Office
Imaging acquisition. During the first three months we focused on
customer communications, harmonizing the sales and service
organizations and identifying synergies and margin improvement
opportunities. It is our goal to extract over $100 million in annual
cost savings from the combined organization over the next two years.
To achieve these savings, we will be making investments in the
integration of the organizations during this time frame."
The Company's revenue mix and gross profit margins were impacted
by the Office Imaging acquisition. While the Danka Office Imaging
operations have lower gross profit margins than the Company's core
business, the operations generate a significantly higher percentage
of their revenue from service, supplies and rentals. Service,
supplies and rentals, which primarily represent monthly recurring
revenue, generate the highest gross profit margin for the Company.
As a result, lower margins on equipment sales are partially offset by
Danka Office Imaging's high percentage of revenue from service,
supplies and rentals.
With Danka's purchase of Kodak's facilities management business,
management believes it has gained an important gateway to the rapidly
growing outsourcing industry. In addition to traditional facilities
management, Danka Imaging Services also provides strategic consulting
to customers on how to manage their document systems and which
products best suit their needs. Dan Doyle commented, "We believe the
acquisition of Kodak's facilities management business, coupled with
the Company's other businesses, provides Danka with the opportunity
to capitalize on the growing number of companies demanding a single
source to provide a full range of compatible products and services.
Danka Imaging Services and its strategic alliances are expected to
play a significant role in the ongoing placement of Kodak branded
products."
Other Acquisitions
Also during the year, the Company acquired acquisitions in North
America, Europe and Australasia with annualized revenues totaling
approximately $200 million. The most significant of these, which
provided Danka with an estimated 10% share of the Australian market,
were Tower Australia Pty Ltd. and Alcatel Datakey Pty Ltd.
Dividends
As a result of Danka's continued achievements, the Board of
Directors are recommending the payment of a final dividend of 1.30
pence per Ordinary Share (equivalent to $0.09 per ADS). The dividend
will be payable on July 28, 1997 to ADS holders of record as of June
27, 1997. This represents the ninth consecutive year that Danka has
increased its dividend.
Forward Looking-Statement
Certain statements contained in this press release are forward-
looking and information relating to the Company that is based on the
beliefs of management as well as assumptions made by and information
currently available to management. The words "goal," "expect,"
"believe" and similar expressions as they relate to the Company or
the Company's management, are intended to identify forward-looking
statements. Such statements reflect the current views of the Company
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 differences include, but
are not limited to (i) the demands that the Office Imaging
acquisition (the "Acquisition") will place on the Company's
resources, infrastructure and current operations, (ii) the Company's
inability to achieve substantial operating cost reductions and
efficiencies in productivity, (iii) the potential for unanticipated
increases in expenditures for labor, equipment , materials and
supplies required to manage the increased size of the Company as a
result of the Acquisition, (iv) the ability of the Company to retain
current management and other employees from the Acquisition
accustomed to different corporate culture, compensation arrangements
and benefits, (v) increased costs resulting from technological
developments, (vi) increased competition resulting from other
high-volume copier distributors and the discounting of such copiers
by competitors, (vii) the Company's ability to successfully manage
and reduce its outstanding debt, (viii) the ability of the Company to
continue to gain access to and successfully distribute new and
current products brought to the marketplace at competitive costs and
prices, and (ix) there can be no assurances that the implementation
of the Company's Market Based Approach and new computer system will
result in additional efficiencies. Readers are cautioned not to
place undue reliance on these forward looking statements, which
reflect management's analysis only as of the date hereof. The
Company undertakes no obligation and does not intend to update these
forward-looking statements to reflect events or circumstances that
arise after the date hereof.
Danka Business Systems PLC, headquartered in London, England and
St. Petersburg, Florida, is one of the world's largest independent
suppliers of photocopiers, facsimiles and other automated office
equipment. Danka employs over 20,000 people and provides office
products and services globally in over 30 countries throughout the
world. Danka's ADSs are listed on NASDAQ and its Ordinary Shares are
listed on the London Stock Exchange.
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DANKA BUSINESS SYSTEMS PLC CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: STATEMENTS OF EARNINGS (In thousands, except per American Depositary Share American Depositary Share (ADS) Foreign stock issued in the US and registered in the ADR system. ("ADS") amounts) For the three months ended March 31, March 31, 1997 1996 (Unaudited) (Unaudited) Revenue: Retail equipment sales $ 234,441 $ 143,745 Retail service, supplies and 539,070 177,715 rentals Wholesale 63,907 62,176 Total revenue 837,418 383,636 Costs and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. : Cost of retail equipment sales 150,055 86,892 Retail service, supplies and 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. 316,720 93,895 costs Wholesale costs of revenue 51,179 51,045 Selling, general and administrative 256,806 115,892 expenses Amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. 4,920 4,534 Provision for committed research and development costs 12,500 -- Total costs and operating expenses 792,180 352,258 Earnings from operations 45,238 31,378 Interest expense and other, net 15,142 7,092 Earnings before income taxes 30,096 24,286 Provision for income taxes 11,131 9,191 Earnings before extraordinary item 18,965 15,095 Extraordinary item - loss on early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt, net of income tax -- 1,133 benefit (1996: $691) Net earnings $ 18,965 $ 13,962 Earnings per ADS: Earnings before extraordinary $ 0.33 $ 0.28 item Extraordinary item -- (0.02) Net earnings per ADS $ 0.33 $ 0.26 Weighted average ADSs 57,815 53,570 -0- DANKA BUSINESS SYSTEMS PLC CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per American Depositary Share ("ADS") amounts) For the year ended March 31, March 31, 1997 1996 Revenue: Retail equipment sales $ 698,996 $ 474,116 Retail service, supplies and 1,161,520 595,477 rentals Wholesale 240,531 170,711 Total revenue 2,101,047 1,240,304 Costs and operating expenses: Cost of retail equipment sales 437,387 288,000 Retail service, supplies and rental 647,787 315,060 costs Wholesale costs of revenue 196,470 140,595 Selling, general and administrative 650,655 378,407 expenses Amortization of intangible assets 19,386 13,587 Restructuring charges 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. 35,000 8,500 Provision for committed research and development costs 12,500 -- Total costs and operating expenses 1,999,185 1,144,149 Earnings from operations 101,862 96,155 Interest expense and other, net 33,985 21,566 Earnings before income taxes 67,877 74,589 Provision for income taxes 25,522 28,241 Earnings before extraordinary item 42,355 46,348 Extraordinary item - loss on early extinguishment of debt, net of income tax benefit of 578 1,133 $349 (1996: $691) Net earnings $ 41,777 $ 45,215 Earnings per ADS: Earnings before extraordinary $ 0.73 $ 0.90 item Extraordinary item (0.01) (0.02) Net earnings per ADS $ 0.72 $ 0.88 Weighted average ADSs 57,725 51,533 -0- DANKA BUSINESS SYSTEMS PLC CONSOLIDATED BALANCE SHEETS consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (In thousands) March 31, March 31, 1997 1996 Assets Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. : Cash and cash equivalents $ 73,875 $ 38,217 Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , net 847,258 247,479 Inventories 488,931 214,519 Prepaid expenses Prepaid Expense An asset that arises on a balance sheet because of the payment of something in advance (prepayment). Services for the payment will be received in the near future. and other current 39,534 9,534 assets Total current assets 1,449,598 509,749 Equipment on operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. , net 311,069 73,303 Property and equipment, net 87,768 42,795 Intangible assets: Goodwill, net 460,262 427,354 Noncompete agreements A contract limiting a party from competing with a business after termination of employment or completion of a business sale. Found in some business contracts, noncompete agreements are designed to protect a business owner's investment by restricting potential competition. , net 7,100 8,490 Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. 143,562 29,865 Total assets $ 2,459,359 $ 1,091,556 Liabilities and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. : 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. $ 41,385 $ 30,414 and notes payable Accounts payable 446,612 88,817 Accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. 323,596 108,621 Deferred revenue 69,149 64,223 Total current liabilities 880,742 292,075 Convertible subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes 200,000 200,000 Other long-term debt 859,823 118,262 Deferred income taxes and 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. 53,063 39,376 liabilities Total liabilities 1,993,628 649,713 Shareholders' equity: Ordinary shares, 1.25 pence pence n. Chiefly British A plural of penny. pence Noun a plural of penny USAGE: Since the decimalization of British currency and the introduction of the abbreviation p, stated 4,734 4,585 value Additional paid-in capital additional paid-in capital Stockholder contributions that are in excess of a stock's stated or par value. For example, if a firm issues stock with a par value of $1 per share but sells the stock to investors at $10 per share, the firm's financial statements 301,623 297,378 Retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. 186,306 148,501 Currency translation adjustment (26,932) (8,621) Total shareholders' equity 465,731 441,843 Total liabilities and shareholders' $ 2,459,359 $ 1,091,556 equity -0- 11201 Danka Circle North 107 Hammersmith Coordinates: Hammersmith is an urban centre in the London Borough of Hammersmith and Fulham in west London, approximately 5 miles (8km) west of Charing Cross on the north bank of the River Thames. Road St. Petersburg, FL 33716 London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , England England, the largest and most populous portion of the United Kingdom of Great Britain and Northern Ireland (1991 pop. 46,382,050), 50,334 sq mi (130,365 sq km). It is bounded by Wales and the Irish Sea on the west and Scotland on the north. W14 OQH CONTACT: WILLIAM William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack T. FREEMAN Freeman can mean:
813-576-6003 or PAUL G. DUMOND 011-44171-603-1515 |
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