Norstan Exceeds Earnings Expectations in Q4 and Full-Year Fiscal 2002.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--June 13, 2002 Norstan, Inc. (Nasdaq:NRRD NRRD National Royal Rangers Department (international ministry) ), a leading provider of communications technology Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry solutions, today reported revenues of $62.0 million for the fourth fiscal quarter ended April 30, 2002. Net income 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 , including nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. items, totaled $8.1 million, or $0.63 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 $5.0 million, or $0.42 loss per diluted share, in the fourth quarter of fiscal 2001. Gross margin of 30.7% for the fourth quarter remained relatively flat, as compared to the same period last year, but improved sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , from 28.9% in the third quarter of fiscal 2002. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $363,000 improved significantly, compared to a loss of $3.1 million in the same period last year. Net income totaled $6.9 million, or $0.53 per share, versus a loss of $12.7 million, or $1.08 per share, in the fourth quarter of fiscal 2001. Beginning with the fourth quarter of fiscal 2002, Norstan is reporting its Network Services segment as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. (See press release dated February February: see month. 4, 2002 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the pending sale to NetWolves, Inc.) All periods reflected have been restated. Pretax income pretax income Reported income before the deduction of income taxes. Pretax income is sometimes considered a better measure of a firm's performance than aftertax income because taxes in one period may be influenced by activities in earlier periods. per share, including the results of the discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: Network Services segment and excluding the nonrecurring items discussed below, was $0.04 for the fourth quarter and $0.09 for the year ended April 30, 2002, as shown in the attached exhibit. Norstan recorded the following nonrecurring items in the fourth quarter of fiscal 2002: -- Best Buy Co., Inc. selected Norstan Communications, Inc. to expand its voice and data conferencing services. The new conferencing solution allows Best Buy to control all aspects of its voice and Web conferencing capabilities, resulting in increased security. -- Time Warner Cable's Green Bay, Wisconsin division selected Norstan to design and install a new contact center system based on Aspect Communications Corporation's Automatic Call Distributor (ACD) platform. The installation, which was completed in March, is designed to help the Green Bay division increase the efficiency of its contact center with a solid technology platform that is scaleable and multimedia capable. -- Manpower Inc., a worldwide leader in the workforce management and staffing industry, chose Norstan Communications, Inc., to perform a Contact Center Strategic Assessment as part of Manpower's overall eCommerce strategic initiative. Norstan assessed Manpower's current and anticipated customer support requirements and recommended the method and approach to provide these services. -- American Freightways, a FedEx Freight operating company, chose Norstan Communications, Inc. to design and install a new enterprise communications network based on Siemens' HiPath convergence technology. Thirty additional locations will be using this technology in conjunction with the existing seventy-four American Freightways locations already supported by Norstan, a Siemens Certified Enterprise Partner. -- Thomson Learning, a leading education company and part of The Thomson Corporation, selected Norstan Communications, Inc. to design and install a leading-edge Interactive Voice Response (IVR) system based on technology from Norstan partner, InterVoice-Brite. The system will allow Thomson Learning to improve contact-center attendant efficiencies and reduce customer-call wait time by automating customer transaction information access. -- Norstan purchased from Dukane Corporation the southern California sales and service office of its Communications Systems division, which provides communications platforms targeting healthcare and education markets. This addition to Norstan's Sound and Signal division will offer emergency call communications to hospitals and acute-care facilities and communications infrastructure and voice applications for K-12 grade educational facilities. 2002 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 Revenue for the fiscal year ended April 30, 2002 decreased 8% to $247.5 million compared to $269.5 million at the end of fiscal 2001. During this period, gross margin improved to 30.7% as compared to 28.1% in the comparable period of fiscal 2001. Operating income for the year increased to $1.9 million versus an 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. of $12.0 million in fiscal 2001. Net loss from continuing operations before taxes improved $18.8 million from a loss of $21.1 million in 2001 to a loss of $2.3 million in 2002. This improvement reflects the successful execution of the Company's 2002 operating plan. Net income from continuing operations increased to $6.6 million, or $0.52 per diluted share, in fiscal 2002 compared to a loss of $21.1 million, or $1.86 per share, in the comparable period of 2001. Net income for the year totaled $7.5 million, or $0.59 per share, versus a loss of $36.3 million, or $3.19 per share, in fiscal 2001. "The fiscal year 2002 was a great year for Norstan, both in terms of our financial performance and the strengthening of our business through addition of best-in-class See best-of-class. technology partners and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. expansion, " said James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. C. (Jim) Granger, Norstan's president and chief executive officer. "We sized the company appropriately in 2001 to meet the challenges anticipated for the economic conditions in 2002. Four quarters of consistent revenue and profitability for fiscal year 2002 are evidence of our success." Norstan Expands Channel Partnerships On June June: see month. 10, 2002, Norstan's voice-network design and support expertise was selected by IBM Global Services IBM Global Services is the world's largest business and technology services provider. It is the fastest growing part of IBM, with over 190,000 professionals serving customers in more than 160 countries. to enhance its services offerings. This new channel relationship may increase Norstan's base of potential customers and will provide additional opportunities for Norstan to expand the company's national footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. while serving larger enterprise customers in today's marketplace. Norstan's channels organization provides implementation services, technical support and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. to customers through a network of manufacturers, integrators and service providers. Key Developments in the Fourth Quarter -- Best Buy Co., Inc. selected Norstan Communications, Inc. to expand its voice and data conferencing services. The new conferencing solution allows Best Buy to control all aspects of its voice and Web conferencing capabilities, resulting in increased security. -- Time Warner Cable's Green Bay, Wisconsin division selected Norstan to design and install a new contact center system based on Aspect Communications Corporation's Automatic Call Distributor (ACD) platform. The installation, which was completed in March, is designed to help the Green Bay division increase the efficiency of its contact center with a solid technology platform that is scaleable and multimedia capable. -- Manpower Inc., a worldwide leader in the workforce management and staffing industry, chose Norstan Communications, Inc., to perform a Contact Center Strategic Assessment as part of Manpower's overall eCommerce strategic initiative. Norstan assessed Manpower's current and anticipated customer support requirements and recommended the method and approach to provide these services. -- American Freightways, a FedEx Freight operating company, chose Norstan Communications, Inc. to design and install a new enterprise communications network based on Siemens' HiPath convergence technology. Thirty additional locations will be using this technology in conjunction with the existing seventy-four American Freightways locations already supported by Norstan, a Siemens Certified Enterprise Partner. -- Thomson Learning, a leading education company and part of The Thomson Corporation, selected Norstan Communications, Inc. to design and install a leading-edge Interactive Voice Response (IVR) system based on technology from Norstan partner, InterVoice-Brite. The system will allow Thomson Learning to improve contact-center attendant efficiencies and reduce customer-call wait time by automating customer transaction information access. -- Norstan purchased from Dukane Corporation the southern California sales and service office of its Communications Systems division, which provides communications platforms targeting healthcare and education markets. This addition to Norstan's Sound and Signal division will offer emergency call communications to hospitals and acute-care facilities and communications infrastructure and voice applications for K-12 grade educational facilities. 2003 Outlook Looking ahead to fiscal 2003, Norstan sees a year of continued growth, but at a time when the economy continues to challenge the enterprise marketplace. The Company currently expects revenues for the first fiscal quarter of 2003 to be in the range of $60-$62 million and for the fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. to be in the range of $260-$270 million. Based on this outlook and the continued challenging economic environment, Norstan currently anticipates earnings from continuing operations before taxes of $600,000 - $800,000 in quarter one of fiscal 2003 and from approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.5 - $3.0 million for the entire fiscal year. This compares to losses of $485,000 and $2.3 million in the similar periods for fiscal 2002 (excluding the results of Network Services). Taking into account income taxes and the anticipated results from discontinued operations, Norstan expects to report net income of approximately $1.5 - $2.0 million for quarter one of fiscal year 2003 and $3.5 - $4.0 million for the entire fiscal year. "The marketplace is rich with opportunities that play directly to our strengths," Granger said. "Partnering best-in-class technology with our legendary customer service are what make Norstan the largest product independent communications technology solutions and services company targeting the enterprise marketplace today." Conference Call and Webcast Norstan will discuss its fourth quarter and fiscal year end 2002 results and current outlook on a conference call scheduled today, June 13, 2002, at 5 p.m. Eastern time. The conference call can be accessed toll-free by callers at (888) 443-9986 or on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.norstan.com. Starting today at approximately 7:00 p.m. Eastern, the replay of the call can be accessed toll-free until June 20 by dialing (800) 642-1687 (conference ID number is 3946988) or on the Internet at www.norstan.com/company. Cautionary Statement Under the Private Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act of 1995 This release contains 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. within the meaning of the Private Securities Litigation Acts of 1995. A number of factors should be considered 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 the above forward-looking statements, including changes in economic and market conditions, factors related to the development of new technologies, product pricing, industry regulation, management of growth, integration of acquisitions, and other factors set forth in cautionary statements included in Norstan's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other documents as filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as of the date of this release. The company undertakes no obligation to update these forward-looking statements to reflect events and 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 may arise after the date of this release. About Norstan, Inc. Norstan, Inc. (Nasdaq:NRRD) - ...the technology services people who improve the way their customers communicate. A full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. solutions company that delivers voice and data technologies and services, and remanufactured equipment to select corporate end-users and channel partners. Norstan also offers a full range of technologies for call center design, messaging, infrastructure, conferencing See teleconferencing. and mobility. Headquartered in the Twin Cities, Norstan, a company small enough to care, yet big enough to serve, has offices located throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . To learn more, visit the Norstan website at www.norstan.com. Norstan and associated product In the context of fuels and lubricants, a petroleum or chemical product used as a hydraulic fluid, corrosion preventive, liquid propellant, or specialized product, required for the operation, maintenance, or storage of military equipment. names are trademarks or registered trademarks of Norstan, Inc. 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/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. other countries. All other products and services mentioned in this document may be trademarks of the companies with which they are associated.
NORSTAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
For the Quarter For the Twelve Months
Ended Ended
---------------------- -----------------------
April 30, April 30, April 30, April 30,
2002 2001 2002 2001
---------- ----------- ----------- -----------
Revenues
Communication Technology:
Solutions and Services $53,213 $56,027 $211,568 $233,700
Resale 7,644 6,427 30,402 26,250
Financial Services 1,186 2,685 5,527 9,570
---------- ----------- ----------- -----------
Total revenues 62,043 65,139 247,497 269,520
---------- ----------- ----------- -----------
Cost of sales 43,017 44,717 171,640 193,823
---------- ----------- ----------- -----------
Gross margin
Communication Technology:
Solutions and Services 14,970 16,305 60,045 59,178
Resale 2,870 2,238 11,156 9,842
Financial Services 1,186 1,879 4,656 6,677
---------- ----------- ----------- -----------
Total gross margin 19,026 20,422 75,857 75,697
---------- ----------- ----------- -----------
SG and A expenses 18,663 22,378 73,917 86,517
Restructuring charge -- 1,183 -- 1,183
---------- ----------- ----------- -----------
Operating income (loss) 363 (3,139) 1,940 (12,003)
Interest expense (1,064) (1,705) (4,887) (7,988)
Other income
(expense), net (99) (119) 651 (1,154)
---------- ----------- ----------- -----------
Net loss from continuing
operations before taxes (800) (4,963) (2,296) (21,145)
Income tax benefit (8,936) -- (8,936) --
---------- ----------- ----------- -----------
Net income (loss) from
continuing operations 8,136 (4,963) 6,640 (21,145)
Discontinued operations
(net of tax):
Income (loss) from
discontinued operations (4) (3,694) 2,140 (11,087)
Loss on sale of
discontinued operations (1,240) (4,038) (1,240) (4,038)
---------- ----------- ----------- -----------
Net income (loss) $6,892 $(12,695) $7,540 $(36,270)
========== =========== =========== ===========
Net income (loss) per
diluted share:
Continuing operations $0.63 $(0.42) $0.52 $(1.86)
Discontinued operations (0.10) (0.66) 0.07 (1.33)
---------- ----------- ----------- -----------
Net income (loss) per
diluted share $0.53 $(1.08) $0.59 $(3.19)
========== =========== =========== ===========
Weighted average diluted
shares outstanding 12,904 11,765 12,823 11,373
========== =========== =========== ===========
NORSTAN, INC. AND SUBSIDIARIES
EXHIBIT
(In thousands, except per share amounts)
Quarter Ended Year Ended
April 30, 2002 April 30, 2002
--------------- -----------------
Net income $6,892 $7,540
Income tax benefit - continuing
operations (8,936) (8,936)
Loss on sale of discontinued
operations 1,240 1,240
Tax impact of income from
discontinued operations 1,310 1,310
--------------- -----------------
$506 $1,154
=============== =================
Weighted average diluted
shares outstanding 12,904 12,823
=============== =================
Per share $0.04 $0.09
=============== =================
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