Datalink Corporation Reports 2000 Fourth Quarter and Full Year Operating Results
Performance in Line With Recent Guidance Strong Growth in Sales; Live Webcast of Conference Call is Scheduled At 9:30 am Central Standard Time Today, February 14, 2001
MINNEAPOLIS--(BUSINESS WIRE)--Feb. 14, 2001-- Datalink Corporation (Nasdaq:DTLK - news), a premier independent information storage architect, reported that revenues for the quarter ended December 31, 2000 rose 22% to $38.6 million from $31.6 million in the same period a year ago. Net income was $502,000 or $.06 per diluted share, compared to $1.9 million, or $.20 per diluted share for the same period in the prior year.
For the 12 months ended December 31, 2000, revenues totaled $137.8 million, up 18% over the $116.6 million in revenues generated in 1999. Net income before the cumulative impact of a change in accounting principle for the year 2000 was $4.4 million or $.48 per diluted share, compared to $7.4 million or $.99 per diluted share in the same period a year ago.
Greg Meland, Datalink's President and CEO commented, ``We continued to expand our reach and capabilities during calendar year 2000. We added five new offices giving us 24 locations across the country. In November, we completed the acquisition of the Data Storage Solutions division of OpenSystems.com, Inc. With the additional locations and staff, we are well positioned to take advantage of the ever growing opportunities in the networked storage marketplace.
``As previously disclosed, we did not meet our earnings expectations in the fourth quarter. We incurred increased operating costs chiefly from hiring new employees, professional fees, marketing, travel and amortization of goodwill. Even with the higher expense levels in our fourth quarter, Datalink generated year 2000 operating margin of 5.1% and a return on invested capital of 17% for the year. We expect to improve our operating margins and shareholder returns in 2001.''
Mr. Meland continued. ``Industry analysts anticipate overall demand for networked storage to expand significantly in 2001. As an established expert in the design and implementation of these products, Datalink is well positioned to seize these new opportunities. We plan to rapidly expand our sales and technical staff in 2001. While the increased spending on people will have a modest unfavorable impact on our 2001 earnings growth, it reflects an investment critical to our future success and plans for accelerated growth.''
For 2001, Datalink reiterated that it expects revenues to range from $176 to $185 million, a 27% to 34% gain over 2000; and earnings to range from $.74 to $.76 per share, up 54% to 58% over 2000. For the three-month period ended March 31, 2001, Datalink expects revenues to range from $38 to $40 million and earnings to range from $.10 to $.12 per share.
Datalink Corporation, based in Minneapolis, Minnesota, is the nation's leading independent architect of enterprise-class information storage infrastructures. As an independent, Datalink designs, builds, and supports information storage architectures using the best possible technologies. Datalink's customized storage infrastructures ensure information availability, storage, protection, and continuity for clients.
A conference call will be held at 9:30 am Central Standard Time today, February 14, 2001 to discuss the operating results. To listen, please dial (800) 708-7727. Refer to the Datalink conference call. An audio replay will also be available through February 21, 2000. To listen, please dial (800) 839-6713. The pass-code for the replay is 102470. A replay is also available via web cast on Datalink's website, www.datalink.com.
The Private Securities Litigation Reform Act of 1995 provides a ``safe harbor'' for certain forward-looking statements. This press release contains forward-looking statements, 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: our ability to hire and retain key technical and other personnel; competition and pricing pressures and timing of our installations that may adversely affect our revenues and profits; the level of continuing demand for data storage; our dependence on key suppliers; the strain placed on our resources by growth and expansion; 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 in our stock price.
Datalink Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
(unaudited) (unaudited)
2000 1999 2000 1999
---- ---- ---- ----
Revenues $ 38,568 $ 31,565 $137,769 $116,603
Cost of revenues 28,433 23,143 101,469 86,034
------------------ ------------------
Gross profit 10,135 8,422 36,300 30,569
------------------ ------------------
Sales and marketing 4,972 3,130 15,230 11,702
General and administrative 2,625 2,081 8,792 6,883
Engineering 1,321 437 3,745 2,594
Amoritization of goodwill
and other intangibles 399 207 1,026 807
Offering costs (1) - - 381 173
------------------ ------------------
Total operating expenses 9,317 5,855 29,174 22,159
------------------ ------------------
Income from operations 818 2,567 7,126 8,410
Interest income (expense),
net 32 39 311 (141)
------------------ ------------------
Income before income taxes
and cumulative effect of a
change in accounting
principle 850 2,606 7,437 8,269
Income taxes 348 746 3,049 897
------------------ ------------------
Income before cumulative
effect of a change in
accounting principle 502 1,860 4,388 7,372
Cumulative impact of a
change in accounting
principle, net of income
taxes (2) - - (753) -
------------------ ------------------
Net income $ 502 $ 1,860 $ 3,635 $ 7,372
================== ==================
Net income per share:
Basic:
Income per share before
cumulative effect of a
change in accounting
principle $ 0.06 $ 0.21 $ 0.50 $ 1.01
Loss per share from the
cumulative effect of a
change in accounting
principle - - $ (0.09) -
------------------ ------------------
Net income per share $ 0.06 $ 0.21 $ 0.41 $ 1.01
================== ==================
Fully diluted:
Income per share before
cumulative effect of a
change in accounting
principle $ 0.06 $ 0.20 $ 0.48 $ 0.99
Loss per share from the
cumulative effect of a
change in accounting
principle - - (0.08) -
------------------ ------------------
Net income per share $ 0.06 $ 0.20 $ 0.40 $ 0.99
================== ==================
Weighted average shares
outstanding:
Basic 8,828 8,773 8,794 7,295
Fully diluted 9,061 9,125 9,166 7,437
(1) Reflects legal, accounting and other costs associated with the
Company's public offerings, which were postponed or cancelled due to
market conditions.
(2) Effective January 1, 2000, the Company changed its revenue
recognition policy related to hardware and software products. This
charge represents the cumulative impact of the new policy, net of
income taxes, effective January 1, 2000.
Pro forma income (loss) and income (loss) per share calculations:
Pro forma income before
cumulative effect of a
change in accounting
principle (1) $ 502 $ 1,525 $ 4,388 $ 4,837
Cumulative effect of a
change in accounting
principle, net of income
taxes - - (753) -
------------------ ------------------
Net income $ 502 $ 1,525 $ 3,635 $ 4,837
================== ==================
Pro forma income per share
before cumulative effect
of a change in accounting
principle (2) $ 0.06 $ 0.17 $ 0.48 $ 0.59
Cumulative effect per
share, of a change in
accounting principle,
net of income taxes - - (0.08) -
------------------ ------------------
Pro forma income per
share $ 0.06 $ 0.17 $ 0.40 $ 0.59
================== ==================
Weighted average shares
used in calculating pro
forma income per share:
Fully diluted weighted
average shares 9,061 9,125 9,166 7,437
Additional shares
required to fund
distribution to
shareholders - - - 778
------------------ ------------------
9,061 9,125 9,166 8,215
================== ==================
(1) Pro forma net income is calculated as if the Company was subject
to income taxes for all periods presented.
(2) Pro forma income per share is computed by dividing pro forma net
income by the fully diluted weighted average number of shares for the
period, after giving effect to the number of shares that would be
required to be sold at the initial offering price to fund a
distribution to the shareholders of all previously taxed, but
undistributed, S Corporation earnings.
Income and income per share before cumulative effect of a change in
accounting principle, assuming income taxes and excluding offering
cost:
Income (1) $ 502 $ 1,525 $ 4,613 $ 4,939
Income per share:
Basic $ 0.06 $ 0.17 $ 0.52 $ 0.68
Fully diluted $ 0.06 $ 0.17 $ 0.50 $ 0.66
Weighted average shares
outstanding:
Basic 8,828 8,773 8,794 7,295
Fully diluted 9,061 9,125 9,166 7,437
(1) Reflects income and income per share before cumulative effect of a
change in accounting principle, excluding offering costs and assuming
the Company was subject to income taxes for all periods presented.
Datalink Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
December 31, December 31,
2000 1999
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 4,542 $ 6,515
Accounts receivable, net 16,255 19,272
Inventories 8,162 9,528
Inventories shipped but
not installed 6,790 -
Other current assets 244 361
Deferred income taxes 2,401 784
------------ ------------
Total current assets 38,394 36,460
------------ ------------
Property and equipment,net 6,934 2,496
Intangibles, net 10,811 3,412
Other assets 698 47
------------ ------------
$ 56,837 $ 42,415
============ ============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 19,664 $ 13,695
Accrued expenses 4,021 2,809
Income taxes payable 518 257
Note payable to former
stockholder, current portion 705 705
Capital lease obligation,
current portion - 13
Deferred compensation,
current portion - 73
Distribution payable to
S corporation stockholders - 744
Deferred revenue 2,291 931
------------ ------------
27,199 19,227
Note payable to former stockholder,
less current portion 704 1,409
Obligation for construction
in progress 1,968 -
Deferred income taxes
and compensation 464 648
------------ ------------
Total liabilities 30,335 21,284
------------ ------------
Stockholders' equity
Common stock, $.001 par value,
50,000,000 shares authorized,
8,895,850 and 8,772,537 shares
issued and outstanding as
of December 31, 2000 and
December 31, 1999, respectively 9 9
Additional paid in capital 20,088 18,213
Retained earnings 6,405 2,909
------------ ------------
26,502 21,131
------------ ------------
$ 56,837 $ 42,415
============ ============ |
