Pomeroy IT Solutions, Inc. Reports Fiscal 2005 Results.HEBRON Hebron, city (2003 est. pop. 155,000), the West Bank, called Al-Khalil in modern Arabic. Hebron is situated at an altitude of 3,000 ft (910 m) in a region where grapes, cereal grains, and vegetables are grown. , Ky. -- Pomeroy Pomeroy may refer to:
in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :PMRYE) a technology and services solution provider, today filed its annual report on 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. for the fiscal year ended January January: see month. 5, 2006. "The reporting of our financial results is important for two reasons," said Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and E. Pomeroy, 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. of the Company. "First, our results show that the Company continues to be well positioned with a strong balance sheet with over one hundred million dollars of tangible net worth Tangible Net Worth Total assets less intangible assets and total liabilities. Notes: In terms of a consumer, tangible net worth is the sum of all your tangible assets (cash, home, cars, etc). and solid financial ratios. Second, we have now filed all of our financial statements for 2005, and we can focus our full attention on serving our customers, growing our business and improving margins", added Pomeroy.
Consolidated Full Year 2005 Financial Results
-- Revenue declined 3.7 percent to $714.7 million compared to
$742.3 million in fiscal 2004.
-- Product sales declined 11.3 percent to $483.4 million
compared to $545.1 million in fiscal 2004.
-- Service revenue increased 17.3 percent to $231.3 million
compared to $197.2 million in fiscal 2004.
-- EBIT (earnings from operations before interest and income taxes)
was $(15.8) million compared to $18.4 million in fiscal 2004.
For 2005, excluding unusual one-time charges, EBIT was
$5.9 million. The unusual one-time charges are as follows:
-- $0.9 million in professional fees related to financial
review and late filing issues.
-- $2.0 million for provision for doubtful accounts and
$0.5 million related to non-trade accounts receivables
reserve.
-- $2.3 million related to restructuring and severance.
-- $16.0 million related to the non-cash charge for goodwill
write-down.
-- Net income/(loss) was $(10.7)million or $(0.85) per fully
diluted share compared to $10.9 million or $0.88 per fully
diluted share in fiscal 2004. For 2005, excluding unusual
one-time charges, net income was $2.8 million or $0.22 per
fully diluted share.
With regard to the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of goodwill, the Company undertook its annual review of goodwill at year end. The determination of the value of goodwill is based on several factors, but the primary factor that needs to be considered is the market value of the Company's stock at year end. Primarily as a result of decline in the Company's stock price during the fourth quarter, goodwill needed to be reduced to reflect the Company's value. The Company has not finalized See finalization. its determination of the exact amount of the write-down of goodwill, but has reflected an estimate in the fiscal 2005 financial statements. The actual write-down of goodwill, when determined, may differ significantly from this estimate. Any adjustment to this estimated impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. loss will be recognized in the subsequent reporting period as a change in estimate. Nasdaq Update On April 5, 2006, the Company notified the Nasdaq Listing Qualifications Panel (the "Panel") that it would be unable to timely file the fiscal year 2005 Form 10-K and requested from the Panel an extension of time until April 14, 2006 to complete and file this report . To date, the Company has not received a decision by the Panel. Although the Company believes that, with the filing of the fiscal 2005 Form 10-K, it has regained compliance with Nasdaq Marketplace Rule 4310(c)(14), neither Nasdaq nor the Panel has made such an acknowledgement. The Company is aware that Nasdaq has a standard process to review annual and quarterly reports before such an acknowledgement could be made. On April 12, 2006, the Company received a Nasdaq Staff Determination notification stating that, because it did not file its Form 10-K for fiscal year 2005 (the "fiscal year 2005 Form 10-K") within the 15-day extension period provided by its Notification of Late Filing filed on Form 12b-25 on March 22, 2006, it failed to comply with Nasdaq's filing requirement, as set forth in Nasdaq Marketplace Rule 4310(c)(14). The Company was therefore advised that this deficiency A shortage or insufficiency. The amount by which federal Income Tax due exceeds the amount reported by the taxpayer on his or her return; also, the amount owed by a taxpayer who has not filed a return. would serve as an additional issue before the Panel which could result in the delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. of the Company's securities. The Nasdaq Staff Determination notification is standard procedure. Although, the Company believes that, with the filing of the fiscal 2005 Form 10-K, it has regained compliance with Nasdaq Marketplace Rule 4310(c)(14), neither Nasdaq nor the Panel has made such an acknowledgement. Conference Call To participate in a conference call and questions and answer session with senior management regarding the 2005 results, call 800-369-1126 using passcode 1402777, at 5:00 p.m. (ET) on Tuesday Tuesday: see week. April 18, 2006. For your convenience, a replay will be available shortly after the call. This replay will be available until May 2, 2006 by calling 866-414-6059. About Pomeroy IT Solutions, Inc. As a national solutions provider, Pomeroy provides services that include: outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. , application development, systems integration and other maintenance and support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services . The Company maintains a workforce of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 3,000 skilled, technical employees with the capabilities to plan, design, implement and support all categories of its consulting, infrastructure and lifecycle solutions offerings. Pomeroy helps clients leverage IT as an enabler to increase productivity, reduce costs and improve profitability. Pomeroy has clientele across a broad spectrum of industries, governments and educational organizations. 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 of the statements in the preceding paragraphs regarding financial results constitute forward-looking statements. These statements related to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our markets' actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward looking statements. These risks and other factors you should specifically consider include but are not limited to: changes in customer demands or industry standards, adverse or uncertain economic conditions, loss of key personnel, 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. , the nature and volume of products and services anticipated to be delivered, the mix of the products and services businesses, the type of services delivered, the ability to successfully attract and retain customers, sell additional products and service to exiting customers, the ability to maintain a broad customer base to avoid dependence on any single customer, the need to successfully attract and retain outside consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" , new acquisitions by the Company, terms of vendor agreements and certification programs and the assumptions regarding the ability to perform thereunder, the ability to implement the company's best practices strategies, the ability to manage risks associated with customer projects, existing market and competitive conditions including the overall demand for IT products and services, and the ability to attract and retain technical and other highly skilled personnel. In some cases, you can identify forward-looking statements by such terminology The terminology used in the computer and telecommunications field adds tremendous confusion not only for the lay person, but for the technicians themselves. What many do not realize is that terms are made up by anybody and everybody in a nonchalant, casual manner without any regard or such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "continue", "projects", "intends", "prospects", "priorities", or negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands) January 5, January 5,
2006 2005
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $5,115 $17,669
---------- ----------
Accounts receivable:
Trade, less allowance of $4,355 and $1,462
at January 5, 2006 and 2005, respectively 130,814 143,113
Vendor receivables, less allowance of $100
at January 5, 2006 and 2005, respectively 4,952 5,790
Net investment in leases 1,998 3,814
Other 2,894 2,902
---------- ----------
Total receivables 140,658 155,619
---------- ----------
Inventories 13,665 17,188
Other 11,730 10,302
---------- ----------
Total current assets 171,168 200,778
---------- ----------
Equipment and leasehold improvements:
Furniture, fixtures and equipment 32,655 30,113
Leasehold Improvements 6,796 6,187
---------- ----------
Total 39,451 36,300
Less accumulated depreciation 24,656 21,061
---------- ----------
Net equipment and leasehold
improvements 14,795 15,239
---------- ----------
Net investment in leases, net of current portion 995 1,650
Goodwill 101,048 109,913
Intangible assets, net 3,007 3,702
Other assets 4,132 1,606
---------- ----------
Total assets $295,145 $332,888
========== ==========
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data) January 5, January 5,
2006 2005
---------- ----------
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of notes payable $ - $ 912
Short-term borrowings 15,304 20,153
Accounts payable:
Floor plan financing 15,451 19,393
Trade 31,187 53,263
---------- ----------
Total accounts payable 46,638 72,656
Deferred revenue 3,444 3,490
Employee compensation and benefits 8,039 8,245
Accrued restructuring and severance charges 5,791 7,585
Other current liabilities 11,443 6,778
---------- ----------
Total current liabilities 90,659 119,819
---------- ----------
Notes payable, net of current portion - 250
Deferred income taxes - 97
Equity:
Preferred stock, $.01 par value; authorized
2,000 shares, (no shares issued or
outstanding) - -
Common stock, $.01 par value; authorized
20,000 shares, ( 13,400 and 13,188 shares
issued at January 5, 2006 and 2005,
respectively) 135 132
Paid in capital 89,126 85,231
Unearned compensation (1,198) -
Accumulated other comprehensive income (loss) 24 (78)
Retained earnings 125,521 136,183
---------- ----------
213,608 221,468
Less treasury stock, at cost ( 810 and 778
shares at January 5, 2006 and 2005,
respectively) 9,122 8,746
---------- ----------
Total equity 204,486 212,722
---------- ----------
Total liabilities and equity $ 295,145 $ 332,888
========== ==========
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands,except per share data) Three Months Ended
---------------------
January 5, January 5,
2006 2005
---------- ----------
Net sales and service revenues:
Product - equipment, supplies and leasing $107,814 $137,391
Service 64,077 71,026
---------- ----------
Total net sales and service revenues 171,891 208,417
---------- ----------
Cost of sales and service:
Product - equipment, supplies and leasing 99,945 126,380
Service 50,695 51,451
---------- ----------
Total cost of sales 150,640 177,831
---------- ----------
Gross profit 21,251 30,586
---------- ----------
Operating expenses:
Selling, general and administrative 21,456 21,879
Rent expense 815 997
Depreciation 1,181 1,061
Amortization 139 163
Restructuring and severance charges 511 -
Write down of goodwill 16,000 -
---------- ----------
Total operating expenses 40,102 24,100
---------- ----------
Income (loss) from operations (18,851) 6,486
---------- ----------
Other expense (income):
Interest, net 256 250
Other 12 (1)
---------- ----------
Total other expense (income) 268 249
---------- ----------
Income (loss) before income tax (19,119) 6,237
Income tax expense (benefit) (7,007) 2,538
---------- ----------
Net income (loss) $(12,112) $3,699
========== ==========
Weighted average shares outstanding:
Basic 12,591 12,284
========== ==========
Diluted (1) 12,591 12,512
========== ==========
Earnings (loss) per common share:
Basic $(0.96) $0.30
========== ==========
Diluted (1) $(0.96) $0.30
========== ==========
(1) Dilutive loss per common share for the three months ended
January 5, 2006 would have been anti-dilutive if the number of
weighted average shares outstanding were adjusted to reflect the
dilutive effect of outstanding stock options and unearned restricted
shares.
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands,except per share data) Fiscal Years Ended
--------------------------------
January 5, January 5, January 5,
2006 2005 2004
---------- ---------- ----------
Net sales and service revenues:
Product - equipment, supplies and
leasing $483,431 $545,115 $470,518
Service 231,318 197,175 127,905
---------- ---------- ----------
Total net sales and service
revenues 714,749 742,290 598,423
---------- ---------- ----------
Cost of sales and service:
Product - equipment, supplies and
leasing 447,383 504,018 435,048
Service 175,636 143,136 92,982
---------- ---------- ----------
Total cost of sales 623,019 647,154 528,030
---------- ---------- ----------
Gross profit 91,730 95,136 70,393
---------- ---------- ----------
Operating expenses:
Selling, general and administrative 78,317 66,449 46,769
Rent expense 3,371 3,448 3,149
Depreciation 4,805 4,029 4,915
Amortization 763 364 404
Provision for doubtful accounts 2,000 - 200
Litigation settlement - - 150
Restructuring and severance charges 2,305 2,423 -
Write down of goodwill 16,000 - -
---------- ---------- ----------
Total operating expenses 107,561 76,713 55,587
---------- ---------- ----------
Income (loss) from operations (15,831) 18,423 14,806
---------- ---------- ----------
Other expense (income):
Interest, net 835 251 (75)
Other 17 26 11
---------- ---------- ----------
Total other expense (income) 852 277 (64)
---------- ---------- ----------
Income (loss) before income tax (16,683) 18,146 14,870
Income tax expense (benefit) (6,021) 7,213 5,799
---------- ---------- ----------
Net income (loss) $(10,662) $10,933 $9,071
========== ========== ==========
Weighted average shares outstanding:
Basic 12,554 12,253 12,305
========== ========== ==========
Diluted (1) 12,554 12,442 12,375
========== ========== ==========
Earnings (loss) per common share:
Basic $(0.85) $0.89 $0.74
========== ========== ==========
Diluted (1) $(0.85) $0.88 $0.73
========== ========== ==========
(1) Dilutive loss per common share for the year ended January 5, 2006
would have been anti-dilutive if the number of weighted average
shares outstanding were adjusted to reflect the dilutive effect of
POMEROY IT SOLUTIONS, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands,except per share data) Three Months Ended
----------------------------------
As Reported Adjustments Proforma
January 5, January 5,
2006 2006
----------- ----------
Net sales and service revenues:
Product - equipment, supplies and
leasing $107,814 $107,814
Service 64,077 64,077
----------- ----------
Total net sales and service
revenues 171,891 171,891
----------- ----------
Cost of sales and service:
Product - equipment, supplies and
leasing 99,945 99,945
Service 50,695 50,695
----------- ----------
Total cost of sales 150,640 150,640
----------- ----------
Gross profit 21,251 21,251
----------- ----------
Operating expenses:
Selling, general and
administrative 21,456 (725) 20,731
Rent expense 815 815
Depreciation 1,181 1,181
Amortization 139 139
Restructuring and severance
charges 511 (511) -
Write down of goodwill 16,000 (16,000) -
----------- ----------
Total operating expenses 40,102 22,866
----------- ----------
Income (loss) from operations (18,851) (1,615)
----------- ----------
Other expense (income):
Interest, net 256 256
Other 12 12
----------- ----------
Total other expense
(income) 268 268
----------- ----------
Income (loss) before income tax (19,119) (1,883)
Income tax expense (benefit) (7,007) 6,617 (390)
----------- ----------
Net income (loss) $(12,112) $(1,493)
=========== ==========
Weighted average shares outstanding:
Basic 12,591 12,591
=========== ==========
Diluted (1) 12,591 12,591
=========== ==========
Earnings (loss) per common share:
Basic $(0.96) $(0.12)
=========== ==========
Diluted (1) $(0.96) $(0.12)
=========== ==========
(1) Dilutive loss per common share for the three months ended
January 5, 2006 would have been anti-dilutive if the number of
weighted average shares outstanding were adjusted to reflect the
dilutive effect of outstanding stock options and unearned restricted
shares.
POMEROY IT SOLUTIONS, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands,except per share data) Fiscal Year Ended
----------------------------------
As Reported Adjustments Proforma
January 5, January 5,
2006 2006
----------- ----------
Net sales and service revenues:
Product - equipment, supplies and
leasing $483,431 $483,431
Service 231,318 231,318
----------- ----------
Total net sales and service
revenues 714,749 714,749
----------- ----------
Cost of sales and service:
Product - equipment, supplies and
leasing 447,383 447,383
Service 175,636 175,636
----------- ----------
Total cost of sales 623,019 623,019
----------- ----------
Gross profit 91,730 91,730
----------- ----------
Operating expenses:
Selling, general and
administrative 78,317 (1,435) 76,882
Rent expense 3,371 3,371
Depreciation 4,805 4,805
Amortization 763 763
Provision for doubtful accounts 2,000 (2,000) -
Restructuring and severance
charges 2,305 (2,305) -
Write down of goodwill 16,000 (16,000) -
----------- ----------
Total operating expenses 107,561 85,821
----------- ----------
Income (loss) from operations (15,831) 5,909
----------- ----------
Other expense (income):
Interest, net 835 835
Other 17 17
----------- ----------
Total other expense
(income) 852 852
----------- ----------
Income (loss) before income tax (16,683) 5,057
Income tax expense (benefit) (6,021) 8,235 2,214
----------- ----------
Net income (loss) $(10,662) $2,843
=========== ==========
Weighted average shares outstanding:
Basic 12,554 12,554
=========== ==========
Diluted (1) 12,554 12,668
=========== ==========
Earnings (loss) per common share:
Basic $(0.85) $0.23
=========== ==========
Diluted (1) $(0.85) $0.22
=========== ==========
(1) Dilutive loss per common share for the year ended January 5, 2006
would have been anti-dilutive if the number of weighted average
shares outstanding were adjusted to reflect the dilutive effect of
outstanding stock options and unearned restricted shares.
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