Danka Reports Third Quarter Results.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)--Jan. 30, 2003 Danka Business Systems PLC (Nasdaq:DANKY) today announced results for the three and nine-month periods ended December December: see month. 31, 2002 that show improved earnings, higher overall gross margin percentages and increased free cash flow 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 . The company will hold a conference call today at 11:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy to discuss these results. Third Quarter Results Danka reported operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before from continuing operations of $12.8 million in the third quarter of its fiscal 2003, a $3.7 million improvement over the $9.1 million posted in the comparable period a year-ago. Earnings from continuing operations before discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and extraordinary items were $3.3 million, compared to $0.6 million in the year-ago quarter. After allowing for the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of dividends and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the on participating shares, the company posted a $.02 loss in the third quarter for 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. That compares to a $.06 loss per basic and diluted share in the year-ago 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 No. 142, the loss would have been $.04 per basic and diluted share in the year-ago quarter. Total revenues from continuing operations were $353.1 million in the third quarter, a decline of $47.4 million or 11.8% from the $400.6 million posted in the year-ago quarter. Excluding a large hardware transaction in the year-ago quarter, the decline in total revenue would have been $30.5 million or 7.6%. The decline in total revenues was partially offset by a $1.4 million increase in revenues related to lease and residual Residual See:Residual value payments from an external lease funding program and a $13.6 million favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency movement. Retail equipment revenues were $121.8 million in the third quarter, a 15.1% decrease from the year-ago quarter. Excluding the transaction referenced above, the retail equipment revenue decline would have been 3.6%. This decrease was primarily due to the company's continued focus on higher-margin sales, 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. , 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. , offset in part by a $4.4 million favorable foreign currency movement. Retail service, supply, 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. revenues were $209.2 million, a 11.6% decrease from the year-ago quarter, offset in part by a $6.8 million favorable foreign currency movement. Primary reasons for this decline were the continuing industry-wide conversion from analog-to-digital equipment and technology convergence. Overall gross margins improved to 37.2% in the third quarter from 35.2% in the comparable period a year ago. The retail equipment sales margin increased to 34.0% from 25.0%. Gross margins for service, supplies, and rentals decreased to 41.0% from 42.7%. "We are encouraged by our overall gross profit margin 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. which has been a key strategic goal of the Company and has been instrumental in our cash generation, debt reduction and profitability improvement," said Lang Lang language LANG Louisiana Army National Guard Lang Langobardian (linguistics) LANG Los Angeles Newspaper Guild Lowrey, Danka's chairman and chief executive officer. "We saw significant improvements this quarter in free cash flow which was led by our U.S. operations. In addition, we had strong overall performance in our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. operations and experienced 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 in our Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. operations, which had a significant negative impact on our second quarter results." Overall SG&A expenses in the third quarter were $119.9 million, or 34.0% of revenues, compared to $131.0 million, or 32.7% of revenues, in the year-ago quarter. Current quarter SG&A as a percentage of revenue was positively affected by a $1.7 million workers compensation premium refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies offset by rising payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. costs as a percentage of revenue and increased bad debt expense of $4.5 million. The increase in bad debt expense was due, in part, to the company's increased emphasis on the improvement of its U.S. financial and credit policies. These new policies have been enabled, in part, by the implementation of the new Oracle financial systems. Free cash flow was $39.9 million in the third quarter, compared to $30.5 million in the prior-year period. Total debt increased by $2.7 million during the third quarter to $240.4 million due in part to the addition of a $3.3 million capital lease for equipment purchases related to the Vision 21 project. Total capital expenditures during the quarter related to the Vision 21 project were $5.0 million. Although total debt increased slightly during the quarter, the company's cash balance was $71.6 million at the end of the third quarter, an increase of $33.8 million from $37.8 million at the end of the second quarter. The company's total debt of $240.4 million was 21.0% or $64.0 million lower than total debt as of March 31, 2002. The company's total leverage ratio (total debt divided by the trailing 12-month 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) is a non-GAAP metric that can be used to evaluate a company's profitability.
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 over this same time frame from 51.3% to 42.2%. "We decided to abstain from abstain from verb refrain from, avoid, decline, give up, stop, refuse, cease, do without, shun, renounce, eschew, leave off, keep from, forgo, withhold from, forbear, desist from, deny yourself, kick ( making additional debt repayments during the quarter in order to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. our liquidity," stated Mark Wolfinger, Danka's chief financial officer. "In addition, we modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. the credit facility with our senior bank lenders to allow us greater flexibility in refinancing Refinancing An extension and/or increase in amount of existing debt. our senior debt and addressing other elements of our capital structure. We believe that maintaining the flexibility which comes with increased liquidity is important as we explore various opportunities to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. our debt and reduce our cost of borrowing." The company had $71.6 million in cash at the end of the quarter and liquidity of $121.7 million that includes unused borrowing capacity of $50.1 million. Nine-Month Results For the nine-month period ended December 31, 2002, Danka's operating earnings from continuing operations were $37.1 million, compared to $12.1 million in the same period a year-ago. Earnings from continuing operations before discontinued operations and extraordinary items were $10.8 million, compared to a loss of $14.5 million in the year-ago period. After allowing for the dilutive effect of dividends and accretion on participating shares, the company recorded a $.04 loss in the current nine-month period for basic and diluted earnings per ADS from continuing operations before extraordinary items. That compares to a loss of $.44 per basic and diluted share in the prior period. Assuming the impact of not amortizing goodwill in accordance with SFAS No. 142, the loss would have been $.35 per basic and diluted share in the prior period. Total revenues from continuing operations were $1,043.9 million in the first nine-months of the year, a decline of 11.8% from the $1,183.5 million posted in the same period a year-ago. Overall gross margins were 37.3% in the current nine-month period, compared to 34.7% in the year-ago period. SG&A expenses in the current nine-month period were $357.6 million, or 34.3% of revenues, compared to $394.1 million, or 33.3% of revenues, in the prior-year period. Net cash provided by operating activities and free cash flow in the first nine-months of fiscal 2003 was $121.8 million and $90.3 million, compared to $90.2 million and $56.4 million a year ago. Total capital expenditures in the current nine-month period were $32.1 million compared to $34.0 million in the prior year. The company reduced total debt in the first nine-months of fiscal 2003 by 21.0%, from $304.5 million to $240.4 million. Conference Call A conference call to discuss Danka's third quarter results has been scheduled for today Thursday Thursday: see week. , January January: see month. 30 at 11:00 a.m. EST. The dial-in number is (800) 399-7982. If you are unable to join the call, a replay will be available until Monday Monday: see week. , February February: see month. 3 at 5:00pm EST. To access the replay, please call (800) 642-1687 and enter conference ID number 7764112. 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 of image and document technologies in a connected environment. This approach should strengthen the company's client relationships and expand its strategic value. For more information, visit Danka's web site at http://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 in this press release, or otherwise made by our officers, including statements related to our future performance and our outlook for our businesses and respective markets, projections, statements of 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, (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 and (viii) 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. 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 nine-month period ended December 31, 2002 and December 31, 2001 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, 2002 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. . The auditors' report on those statutory accounts was unqualified and did not contain a statement either under Section 237(2) or 237(3) of the Companies Act 1985. 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 and nine months
ended December 31, 2002 and 2001
(In thousands, except per American Depositary Share ("ADS") amounts)
(Unaudited)
For the Three For the Nine
Months Ended Months Ended
------------------- ---------------------
December December December December
31, 31, 31, 31,
2002 2001 2002 2001
--------- --------- ---------- ----------
Revenue:
Retail equipment sales $121,768 $143,370 $349,913 $408,484
Retail service, supplies
and rentals 209,211 236,792 632,614 716,618
Wholesale 22,136 20,392 61,399 58,430
-------------------------- --------- --------- ---------- ----------
Total revenue 353,115 400,554 1,043,926 1,183,532
-------------------------- --------- --------- ---------- ----------
Costs and operating
expenses:
Cost of retail equipment
sales 80,427 107,478 231,124 310,260
Retail service, supplies
and rental costs 123,387 135,705 374,017 415,535
Wholesale costs of revenue 18,048 16,562 49,703 47,498
Selling, general and
administrative expenses 119,926 130,983 357,643 394,115
Amortization of intangible
assets 84 2,699 408 8,063
Restructuring charges
(credits) - - (556) (1,992)
Other (income) expense (1,575) (1,970) (5,493) (2,070)
-------------------------- --------- --------- ---------- ----------
Total costs and operating
expenses 340,297 391,457 1,006,846 1,171,409
-------------------------- --------- --------- ---------- ----------
Operating earnings (loss)
from continuing
operations 12,818 9,097 37,080 12,123
Interest expense (8,734) (7,867) (23,038) (34,791)
Interest income 419 199 739 1,357
-------------------------- --------- --------- ---------- ----------
Earnings (loss) from
continuing operations
before income taxes 4,503 1,429 14,781 (21,311)
Provision (benefit) for
income taxes 1,219 869 3,990 (6,840)
-------------------------- --------- --------- ---------- ----------
Earnings (loss) from
continuing operations
before extraordinary items 3,284 560 10,791 (14,471)
Discontinued operations,
net of tax - (2,901) - 108,859
Extraordinary gain (loss)
on early retirement of
debt, net of tax - 1,415 - 27,936
------------------------------------ --------- ---------- ----------
Net earnings (loss) $3,284 $(926) $10,791 $122,324
========================== ========= ========= ========== ==========
Basic (loss) earnings available to
common shareholders per ADS:
Net earnings (loss) per
ADS, continuing
operations $(0.02) $(0.06) $(0.04) $(0.44)
Net earnings (loss) per
ADS, discontinued
operations - (0.04) - 1.76
Net earnings per ADS,
extraordinary item - 0.02 - 0.45
--------- --------- ---------- ----------
Net earnings (loss) per
ADS $(0.02) $(0.08) $(0.04) $1.77
========= ========= ========== ==========
Weighted average ADSs 62,194 62,021 62,078 61,950
Diluted (loss) earnings available to
common shareholders per ADS:
Net earnings (loss) per
ADS, continuing
operations $(0.02) $(0.06) $(0.04) $(0.44)
Net earnings (loss) per
ADS, discontinued
operations - (0.04) - 1.76
Net earnings per ADS,
extraordinary item - 0.02 - 0.45
--------- --------- ---------- ----------
Net earnings (loss) per
ADS $(0.02) $(0.08) $(0.04) $1.77
========= ========= ========== ==========
Weighted average ADSs 62,194 62,021 62,078 61,950
Certain prior year amounts have been reclassified to conform to
current year presentation.
Danka Business Systems PLC
Condensed Consolidated Balance Sheet as of December 31, 2002 and
March 31, 2002
(In Thousands)
(Unaudited)
December 31, March 31,
2002 2002
--------- ---------
Assets
Current assets:
Cash and cash equivalents $71,642 $59,470
Accounts receivable, net 251,992 292,350
Inventories 108,579 130,599
Prepaid expenses, deferred income taxes and other
current assets 46,307 35,935
------------------------------------------------- --------- ---------
Total current assets 478,520 518,354
Equipment on operating leases, net 44,176 57,432
Property and equipment, net 61,014 60,549
Goodwill, net 255,353 231,908
Noncompete agreements, net 830 1,078
Deferred income taxes and other assets 96,453 103,502
------------------------------------------------- --------- ---------
Total assets $936,346 $972,823
================================================= ========= =========
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt and notes
payable $38,163 $36,293
Accounts payable 113,735 110,586
Accrued expenses and other current liabilities 90,338 109,219
Taxes payable 96,460 94,237
Deferred revenue 40,014 42,343
------------------------------------------------- --------- ---------
Total current liabilities 378,710 392,678
Long-term debt and notes payable, less current
maturities 202,264 268,161
Deferred income taxes and other long-term
liabilities 25,427 23,415
------------------------------------------------- --------- ---------
Total liabilities 606,401 684,254
------------------------------------------------- --------- ---------
6.5% convertible participating shares 253,811 240,520
------------------------------------------------- --------- ---------
Shareholders' equity:
Ordinary shares, 1.25 pence stated value 5,160 5,139
Additional paid-in capital 326,887 325,880
Retained earnings (accumulated deficit) (184,372) (181,872)
Accumulated other comprehensive (loss) income (71,541) (101,098)
------------------------------------------------- --------- ---------
Total shareholders' equity 76,134 48,049
------------------------------------------------- --------- ---------
Total liabilities & shareholders' equity $936,346 $972,823
================================================= ========= =========
Certain prior year amounts have been reclassified to conform to
current year presentation.
Danka Business Systems PLC
Consolidated Statements of Cashflow as of December 31, 2002 and 2001
(In Thousands)
(Unaudited)
Dec. 31, Dec. 31,
2002 2001
-------- ---------
Operating activities:
Net earnings (loss) $10,791 $122,324
Adjustments to reconcile net earnings (loss) to net
cash provided:
Extraordinary gain on debt retirement - (27,936)
Net earnings and gain from sale of discontinued
operations - (108,859)
Depreciation and amortization 43,112 63,460
Deferred income taxes (5,455) (9,529)
Amortization of debt issuance costs 7,090 3,297
Loss on sale of property and equipment and
equipment on operating leases 3,589 9,606
Proceeds from sale of equipment on operating
leases 1,922 4,057
Restructuring and other special charges (credits) - (1,992)
Changes in net assets and liabilities:
Accounts receivable 40,358 37,361
Inventories 22,020 47,696
Prepaid expenses and other current assets 5,280 1,050
Other non-current assets 5,938 (6,614)
Accounts payable 3,149 (36,532)
Accrued expenses and other current
liabilities (15,629) (9,564)
Deferred revenue (2,329) 3,386
Other long-term liabilities 2,013 (1,044)
--------------------------------------------------- -------- ---------
Net cash provided by operating activities 121,849 90,167
--------------------------------------------------- -------- ---------
Investing activities:
Capital expenditures (32,054) (33,981)
Proceeds from the sale of property and equipment 463 193
Net proceeds from the sale of business - 273,218
--------------------------------------------------- -------- ---------
Net cash provided by (used in) investing activities (31,591) 239,430
--------------------------------------------------- -------- ---------
Financing activities:
Net payments under line of credit agreements (50,223) (304,247)
Principal payments of debt (14,490) (25,299)
Payment of debt issue costs (17,162) (26,037)
--------------------------------------------------- -------- ---------
Net cash used in financing activities (81,875) (355,583)
--------------------------------------------------- -------- ---------
Effect of exchange rates 3,789 4,122
--------------------------------------------------- -------- ---------
Net increase (decrease) in cash 12,172 (21,864)
Cash and cash equivalents, beginning of period 59,470 69,085
--------------------------------------------------- -------- ---------
Cash and cash equivalents, end of period $71,642 $47,221
=================================================== ======== =========
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)
December September June March Trailing
31, 30, 30, 31, 12
2002 2002 2002 2002 Months
-------- --------- ------- -------
Operating earnings (loss)
from continuing
operations 12,818 9,261 15,002 (2,870) 34,211
Interest income 419 20 300 4,411 5,150
Depreciation and
amortization 13,991 14,579 14,542 28,887 71,999
-------- --------- ------- -------
EBITDA 27,228 23,860 29,844 30,428 111,360
======== ========= ======= ======= ========
For the Three For the Nine
Months Ended Months Ended
----------------- -----------------
December December December December
31, 31, 31, 31,
2002 2001 2002 2001
-------- -------- -------- --------
Net cash provided by operating
activities 54,266 42,693 121,849 90,167
Net capital expenditures (14,384) (12,206) (31,591) (33,788)
-------- -------- -------- --------
Free cash flow 39,882 30,487 90,258 56,379
======== ======== ======== ========
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