Datalink Corporation Reports 2004 First-Quarter Operating Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--April 14, 2004 Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of customer orders increases for second quarter; Live Webcast of Conference Call at 9:30 AM Central Time today, April 14, 2004 Datalink Corporation Datalink Corporation (NASDAQ: DTLK) is an American data storage corporation with operations throughout the United States. The company engages in the design, installation, and support of data storage infrastructures that store, protect, and provide continuous access to (Nasdaq:DTLK), a leading independent information storage architect, reported that revenues for the quarter ended March 31, 2004, were $20.2 million compared to $23.7 million in the prior year. The Company reported a net loss of $1.8 million, or $.18 per 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. share compared to a net loss of $860,000, or $.08 per diluted share in the year ago first quarter. Greg GREG Great Egg Harbor National Scenic and Recreational River (US National Park Service) Meland Meland is a municipality in the county of Hordaland, Norway. Meland was separated from Alversund October 15, 1923. The northern part of Holsnøyni was transferred from Herdla to Meland January 1, 1964. , Datalink's 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. , commented, "We have implemented the changes from our 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). initiatives in 2003. We are seeing positive momentum in our business and have contractual orders from customers totaling nearly $13 million in revenues for the second quarter. This is a significant improvement over the same time period in the first quarter. "The level of the operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the quarter was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. what we had expected. Our revenues declined sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen from our calendar fourth quarter by approximately 4%. As is typical in much of the storage industry, we experienced customer spending declines from the last quarter of the calendar year to the first quarter. Also, our expenses increased in the first quarter reflecting seasonal increases for public reporting costs and payroll taxes Payroll Tax Tax an employer withholds and/or pays on behalf of their employees based on the wage or salary of the employee. In most countries, including the U.S., both state and federal authorities collect some form of payroll tax. ." Net losses do not include any tax benefit of the operating loss. Beginning in 2003, Datalink ceased recording tax benefit on operating losses. The tax benefit of the company's operating losses may be realized in the future when Datalink has taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . Meland noted that Datalink's first-quarter highlights include: -- A $675,000 professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. engagement to provide networked storage consulting and design work for a new Fortune 500 telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. customer. -- $1.1 million in revenues from a large financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. customer in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with a high availability/dual data center project. Meland concluded, "Datalink remains a national leader in delivering data storage solutions. We are seeing a gradual The Gradual (Latin: graduale, sometimes called the Grail) is a chant in the extraordinary form of the Roman Catholic Mass, sung after the reading or singing of the Epistle and before the Alleluia, or, during penitential seasons, before the Tract. strengthening in customer demand for networked storage solutions from our customers, and we are encouraged by the business we are carrying into our second quarter. It has been a difficult operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. . However, we believe our strategy to maintain and grow our technical and customer support capabilities has further strengthened Datalink in the marketplace." Outlook: For the second quarter ending June June: see month. 30, 2004, Datalink expects revenues to range from $21 to $25 million, with a net loss of $.06 to $.14 per diluted share. The net loss guidance does not include operating tax benefit. Webcast A live Webcast of the Datalink conference call to discuss operating results is scheduled for today, April 14, 2004 at 9:30 a.m. Central Time and can be heard via Datalink's Website, www.datalink.com. Datalink Corporation is an information storage architect. The Company analyzes, designs, implements, and supports information storage infrastructures that store, protect, and provide continuous access to information. Datalink's specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. capabilities and solutions span storage area networks, network-attached storage See NAS. , direct-attached storage Direct-attached storage (DAS) refers to a digital storage system directly attached to a server or workstation, without a storage network in between. It is a retronym, mainly used to differentiate non-networked storage from SAN and NAS. , and IP-based storage, using industry-leading hardware, software, and technical services. 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 provides a "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 certain 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. . This press release contains forward-looking statements, including our internal projections of anticipated second quarter 2004 operating results, which reflect our views regarding future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words "aim," "believe," "expect," "anticipate," "intend," "estimate" and other expressions which indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending upon a variety of factors, including, but not limited to: the level of continuing demand for storage, including the effects of current economic conditions; competition and pricing pressures and timing of our installations that may adversely affect our revenues and profits; fixed employment costs that may impact profitability if we suffer revenue shortfalls; revenue recognition policies that may unpredictably defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. reporting of our revenues; our ability to hire and retain key technical and sales personnel; our dependence on key suppliers; our ability to adapt to rapid technological change; risks associated with possible future acquisitions; fluctuations in our quarterly operating results; future changes in applicable accounting rules; and volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in our stock price. The Company also cannot assure that its recent cost reduction initiatives and management changes will lead to profitability. Further, the Company's revenues for any particular quarter are not necessarily reflected by the Company's backlog of contracted orders.
DATALINK CORPORATION
STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months
Ended
March 31,
2004 2003
-------- --------
Net sales:
Products $13,229 $16,267
Services 6,975 7,475
-----------------
Total net sales 20,204 23,742
-----------------
Cost of sales:
Cost of product sales 10,442 12,319
Cost of service sales 4,754 5,097
-----------------
Total cost of sales 15,196 17,416
-----------------
Gross profit 5,008 6,326
-----------------
Operating expenses:
Sales and marketing 3,069 3,156
General and administrative 2,866 2,808
Engineering 868 1,026
Amortization of intangibles 65 215
-----------------
6,868 7,205
-----------------
Loss from operations (1,860) (879)
Interest income, net 20 19
-----------------
Loss before income taxes (1,840) (860)
Income tax (benefit) expense - -
-----------------
Net loss $(1,840) $(860)
=================
Net loss per share:
Basic $(0.18) $(0.08)
Diluted $(0.18) $(0.08)
Weighted average shares outstanding:
Basic 10,395 10,214
Diluted 10,395 10,214
DATALINK CORPORATION
BALANCE SHEETS
(In thousands)
March 31, December 31,
2004 2003
------------- ------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $9,792 $12,565
Accounts receivable, net 12,461 8,541
Inventories 2,829 1,969
Inventories shipped but not installed 3,987 2,160
Other current assets 367 329
------------- ------------
Total current assets 29,436 25,564
------------- ------------
Property and equipment, net 4,087 4,500
Goodwill 5,500 5,500
Intangibles, net 420 485
Other assets 45 45
------------- ------------
Total assets $39,488 $36,094
============= ============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $13,583 $10,139
Accrued commissions 902 475
Accrued income tax 53 72
Accrued sales and use tax 594 350
Accrued expenses, other 894 837
Deferred profit 3,271 2,203
------------- ------------
Total current liabilities 19,297 14,076
Deferred rent 461 522
------------- ------------
Total liabilities 19,758 14,598
------------- ------------
Commitments and contingencies
Stockholders' equity
Common stock, $.001 par value,
50,000,000 shares authorized,
10,259,868 and 10,241,963 shares issued
and outstanding as of March 31, 2004
and December 31, 2003, respectively 10 10
Additional paid-in capital 26,232 26,158
Accumulated deficit (6,512) (4,672)
------------- ------------
Total stockholders' equity 19,730 21,496
------------- ------------
Total liabilities and stockholders'
equity $39,488 $36,094
============= ============
DATALINK CORPORATION
STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months
Ended
March 31,
2004 2003
-------- --------
Cash flows from operating activities:
Net loss $(1,840) $(860)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Provision for bad debts 9 32
Depreciation 509 511
Amortization of intangibles 65 215
Deferred rent (61) (9)
Stock compensation expense 15 22
Changes in operating assets and liabilities:
Accounts receivable (3,929) (663)
Inventories (2,687) 1,359
Other current assets (38) 3
Other assets - 19
Accounts payable 3,444 (214)
Accrued expenses 465 354
Sales and use taxes 244 214
Deferred revenue 1,068 806
-----------------
Net cash (used in) provided by operating
activities (2,736) 1,789
-----------------
Cash flows from investing activities:
Purchase of property and equipment (96) (217)
-----------------
Net cash used in investing activities (96) (217)
-----------------
Cash flows from financing activities:
Proceeds from issuance of common stock 59 22
-----------------
Net cash provided by financing activities 59 22
-----------------
Increase (decrease) in cash and cash equivalents (2,773) 1,594
Cash and cash equivalents, beginning of period 12,565 10,334
-----------------
Cash and cash equivalents, end of period $9,792 $11,928
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