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NORSTAN, INC. REPORTS FISCAL 1993 NET INCOME INCREASED 42 PERCENT ON 37 PERCENT HIGHER REVENUES; NEW UNITS DRIVE SALES INCREASE

 MAPLE GROVE, Minn., June 16 /PRNewswire/ -- Norstan, Inc. (NASDAQ: NRRD), a full-range provider of communications solutions that include business telephone systems, videoconferencing equipment, long distance services and voice processing products and services, today reported 42 percent higher fiscal 1993 earnings. Paul Baszucki, Norstan vice chairman and chief executive officer, said, "All business units except for the start-ups outperformed their respective business plans to produce an excellent year. We are effectively complementing our traditional telephone systems business with nontraditional products and services required by our customers."
 For the fiscal year ended April 30, 1993, Norstan had net income of $5.1 million or $1.25 per share vs. net income of $3.6 million or 94 cents per share in the previous year. Results for fiscal 1993 include a pretax gain of $225,000, or 3 cents per share of net income related to the sale of Norstan's Omaha-area ROLM business. Operating income totaled $9.0 million compared to $6.8 million in fiscal 1992, an increase of 32 percent. Revenues in fiscal 1993 increased 37 percent to $195.9 million from $142.4 million in fiscal 1992. Start-ups in Canada and the southern United States contributed almost half of the sales increase, Baszucki noted. The company's southwest and east regions registered sales growth of approximately 40 percent and 20 percent, respectively.
 Net income for the fourth quarter ended April 30, 1993, totaled $1.3 million or 32 cents per share vs. $1.2 million or 31 cents per share in the year-earlier quarter. Revenues in the quarter were an all- time record $54.6 million, a 31 percent increase from the company's 1992 fiscal fourth quarter of $41.6 million.
 Norstan's traditional business -- the sale, installation and servicing of ROLM private branch exchange (PBX) systems -- represented approximately 60 percent of sales in fiscal 1993. The remaining sales included the sale, installation and servicing of other complementary products such as long distance services, representing about 6 percent; voice processing products and services, representing approximately 12 percent; and videoconferencing equipment, representing about 1.5 percent.
 In fiscal 1993, the company achieved significant new volume in call transaction processing (CTP) applications such as voice mail, voice response units and call centers. Another strong operation was the company's ROLM Resale Systems (RRS), according to Baszucki.
 Because follow-on business such as service, upgrades, moves, adds and changes represents two-thirds of the company's revenues, Norstan strives to
deliver what it calls "legendary service." According to results from an independent polling firm, Norstan's customers gave the company a 94 percent satisfactory rating, the company said. Baszucki said Norstan typically retains more than 90 percent of its customer base after initial installations.
 Norstan's gross margin for fiscal 1993 was 34.5 percent compared to 36.2 percent for the previous year, a decrease due principally from Norstan becoming a reseller of long distance services. Previously, these sales were recorded on a net basis.
 Operating margin in fiscal 1993 was 4.6 percent vs. 4.8 percent in fiscal 1992. Selling, general and administrative expenses represented 29.9 percent of revenues compared to last year's SG&A of 31.4 percent, due to the change in reporting for long distance services and greater efficiencies, the company said.
 Baszucki said the company's goal in fiscal 1994 is to increase revenues by 12 percent to 15 percent. The company said it will record a one-time charge of approximately $375,000 or about 9 cents per share in the first quarter of fiscal 1994 for FASB 109, for the cumulative effects of the change in method of accounting for income taxes.
 "Strategic expansion is an integral part of our long-term growth plans, and we expect that the south region will contribute to profitability in fiscal 1994," Baszucki said. "Although improvements in Canada have taken longer than planned and an operating loss is expected again in the coming year, we see Canada becoming an important contributor to future revenues and earnings."
 In addition to expecting improved performance from the Canadian and southern U.S. operations, Norstan expects to enter into new strategic partnerships and alliances to bring additional technologies and services to its customers. In April 1993, Norstan established Norstan Resale Services (NRS) to sell refurbished Northern Telecom equipment, an operation similar to RRS.
 "Our long-term growth is predicated on expanding our core competencies and expertise in outsourcing and facilities management," Baszucki said. "Tomorrow's communications services provider must be able to offer a wider range of products and services to meet more sophisticated business communications requirements."
 Norstan, Inc., based in Maple Grove, Minnesota, is a full-range provider of communications solutions that include business telephone systems, videoconferencing equipment, long distance services and voice processing products and services. Its 1,500 employees serve 12,500 customers representing 1.25 million telephone lines in all of, or parts of, 18 states and Canada.
 NORSTAN, INC. FINANCIAL HIGHLIGHTS
 Quarter Ended
 4/30/93 4/30/92
 Revenues $54,559,000 $41,615,000
 Gross Profit 19,858,000 15,372,000
 Selling, General and
 Administrative Expenses 17,498,000 13,171,000
 Operating Income 2,360,000 2,201,000
 Income Before Income Taxes 2,245,000 2,038,000
 Net Income 1,347,000 1,243,000
 Earnings Per Share $0.32 $0.31
 Weighted Average Number of
 Common and Common Equivalent
 Shares Outstanding 4,220,000 4,013,000
 Year Ended
 4/30/93 4/30/92
 Revenues $195,865,000 $142,426,000
 Gross Profit 67,628,000 51,603,000
 Selling, General and
 Administrative Expenses 58,609,000 44,790,000
 Operating Income 9,019,000 6,813,000
 Income Before Income Taxes 8,501,000 5,893,000
 Net Income 5,100,000 3,595,000
 Earnings Per Share $1.25 $0.94
 Weighted Average Number of
 Common and Common Equivalent
 Shares Outstanding 4,083,000 3,843,000
 -0- 6/16/93
 /CONTACT: Paul Baszucki, vice chairman, CEO, 612-420-1100 or Richard Cohen, vice chairman, CFO, 612-420-1104; both of Norstan; or Fred Nachman or Pat Allen, 312-266-7800, both of the Financial Relations Board, for Norstan/
 (NRRD)


CO: Norstan, Inc. ST: Minnesota IN: TLS SU: ERN

DB -- MN007 -- 2677 06/16/93 14:28 EDT
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Publication:PR Newswire
Date:Jun 16, 1993
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