CompuCom Reports 2nd Quarter 2001 Operating Results
DALLAS, Jul 30, 2001 (BUSINESS WIRE) -- CompuCom Systems, Inc. (NASDAQ: CMPC chart, msgs), a digital infrastructure solutions provider, today announced operating results for the second quarter ended June 30, 2001. Second quarter net earnings increased to $2.07 million, or $.04 diluted earnings per share. This compares to second quarter 2000 net earnings of $1.42 million, or $.03 diluted earnings per share, excluding an after-tax gain on the sale of investments of $1.17 million, or $.02 diluted earnings per share.
Second quarter net revenues were $489 million, down approximately 30.3% when compared to second quarter 2000. The revenue decline was attributable to product related revenue. Services revenue of $69.0 million increased 7.5% when compared to a year ago. Total gross margin as a percentage of revenue increased to 13.0% compared to 9.8% in the second quarter 2000, with both product and services gross margin of 9.0% and 37.1%, respectively, improving over prior year and first quarter 2001. Services gross margin dollars were 25.5% higher than in the second quarter 2000 and represented 40.3% of total gross margin dollars compared to 29.5% a year ago.
J. Edward Coleman, CompuCom's president and chief executive officer, commented on today's announcement. "In this difficult environment, we are pleased to have delivered higher second quarter earnings compared to both the first quarter of this year and last year's second quarter. These results are due in large measure to the continued strength in our services business, as demonstrated by the increase in services revenue and the dramatic increase in services gross margin dollars compared to last year. Our services business helped offset a steeper than expected decline in our product business."
"While pleased with these overall results and the strength of our services business, we remain challenged in the near term by the continuing industry-wide slowdown in equipment purchases by large enterprises," Mr. Coleman continued.
"We are pleased with our balance sheet performance, finishing the quarter with a cash balance of $112.3 million compared to $4.7 million at June 30, 2000 and $62.1 million at March 31, 2001, " said M. Lazane Smith, CompuCom's senior vice president and chief financial officer. "Product inventory turns reached an all-time high and accounts receivable performance remained strong. The improved utilization of working capital contributed to a reduction in financing expense of $2.5 million when compared to last year. In addition, we continued to manage our costs down, lowering operating expense $4.1 million when compared to second quarter 2000 and $1.7 million when compared to first quarter 2001."
Mr. Coleman concluded, "While managing our operations tightly, CompuCom continued to invest in its services business to provide leading edge capability in key areas such as Microsoft XP and .Net, e-support-based help desk, mobile and wireless, storage systems, security, network management and asset management solutions. This services focus is further demonstrated by our acquisition of Excell Data earlier this month. The increase in services gross margin dollars to 40.3% of total gross margin dollars provides additional evidence of our ongoing transformation to a services-based business."
Management from CompuCom Systems, Inc. will host a conference call on Tuesday, July 31, 2001 at 10:00 a.m. EDT to discuss the results of the first quarter. To access the call, please dial 800/875-6883 and reference conference ID No. 1333696. The call will also be broadcast on Investor Broadcast Networks' Vcall web site at www.vcall.com. A replay will be available by calling 800/642-1687 and referencing Conference ID No. 1333696 through August 3, 2001.
CompuCom Systems, Inc., (Nasdaq: CMPC chart, msgs - chart, msgs news chart, msgs) headquartered in Dallas, Texas, is a leading digital infrastructure solutions provider. CompuCom's clients include Fortune 1000 enterprises, vertical industry leaders, major technology equipment providers, leading edge systems integrators and wireless technology providers. CompuCom leverages people, process and technology to offer best in class solutions that enable, optimize and operate the digital technology infrastructure. CompuCom is accessible via the Internet at www.compucom.com.
This press release contains certain forward-looking statements regarding revenues, gross margin, operating and financing expense, earnings, growth rates and certain business trends that involve risks and uncertainties that could cause actual results to differ materially from the results discussed herein. Specifically, the following trends may not continue: the ability to grow services revenue and gross margins; the decline in product revenue and product gross margin dollars may continue and may be greater than anticipated; the ability to grow product gross margin as a percentage of revenue; the ability to continue to decrease costs including, among others, financing costs; the ability to improve operational efficiency; the ability to improve services gross margin dollars and services gross margin as a percentage of total gross margin; the ability to continue to improve the balance sheet; the ability to win new clients; the expansion of the services the Company provides may not be as broad as the Company currently expects or widely accepted by clients; the Company's wireless services offerings may not be widely accepted by clients; the manufacturers who use the Company's direct services may elect not to use those services. Other factors that could cause actual results to differ materially are: acquisition integration issues; competitive pricing and supply; lower demand than anticipated for the products and services the Company sells; the impact of the manufacturer's shift to direct marketing programs may be more significant than anticipated; changes to manufacturers' pricing, price protection, rebate and incentive programs; short-term interest rate fluctuations; general economic conditions; the impact of general economic conditions on investments the Company has in other businesses; employee turnover; possible future litigation; and the ability to collect trade and vendor accounts receivable, as well as the risks and uncertainties set forth from time to time in CompuCom's Annual Report on Form 10-K and other public filings and disclosures. Readers should refer to those documents and should not place undue reliance on these forward-looking statements.
COMPUCOM SYSTEMS, INC.
CONDENSED COMPARATIVE FINANCIAL DATA
(All amounts in thousands except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Revenue ---- ---- ---- ----
Product $ 419,718 $637,460 $902,079 $1,149,105
Service 68,991 64,151 140,918 128,217
--------- -------- -------- ----------
Total revenue 488,709 701,611 1,042,997 1,277,322
--------- -------- -------- ----------
Gross Margin
Product 37,894 48,622 79,984 84,140
Service 25,581 20,378 49,174 39,334
--------- -------- -------- ----------
Total gross margin 63,475 69,000 129,158 123,474
--------- -------- -------- ----------
Gross Margin Percentage
Product 9.0% 7.6% 8.9% 7.3%
Service 37.1% 31.8% 34.9% 30.7%
--------- -------- -------- ----------
Total gross margin
percentage 13.0% 9.8% 12.4% 9.7%
Operating expenses
Selling 17,553 20,384 37,102 43,682
Service 13,745 12,995 27,315 24,392
General and administrative 22,267 24,638 44,478 46,419
Depreciation and
amortization 5,720 5,413 11,389 11,079
Restructuring charges - - - 5,169
--------- -------- -------- ----------
Total operating expenses 59,285 63,430 120,284 130,741
--------- -------- -------- ----------
Earnings (loss) from operations 4,190 5,570 8,874 (7,267)
Other income - 1,958 - 1,958
Financing expense 748 3,206 2,477 7,471
--------- -------- -------- ----------
Earnings (loss) before income
taxes 3,442 4,322 6,397 (12,780)
Income taxes (benefit) 1,377 1,728 2,559 (5,112)
--------- -------- -------- ----------
Net earnings (loss) $ 2,065 $ 2,594 $ 3,838 ($ 7,668)
========= ======== ======== ==========
Earnings (loss) per common share (excluding
restructuring charges and other income)
Basic $ .04 $ .03 $ .07 ($ .13)
Diluted $ .04 $ .03 $ .07 ($ .13)
Earnings (loss) per common share
Basic $ .04 $ .05 $ .07 ($ .17)
Diluted $ .04 $ .05 $ .07 ($ .17)
Average common shares outstanding
Basic 47,777 48,657 47,908 48,466
Diluted 48,205 48,664 48,120 48,466
COMPUCOM SYSTEMS, INC.
SUMMARY BALANCE SHEET
(All amounts in thousands)
(unaudited)
June 30, December 31,
2001 2000
-------- ---------
Cash and cash equivalents $ 112,256 $ 14,857
Receivables 157,468 224,639
Inventories 39,702 77,207
Other current assets 3,350 7,626
---------- ----------
Total current assets 312,776 324,329
Property and equipment, net 27,625 24,304
Other assets 82,491 87,727
----------- ------------
Total assets $ 422,892 $ 436,360
=========== ============
Accounts payable $ 118,083 $ 112,485
Accrued liabilities 72,399 94,323
----------- ------------
Total current liabilities 190,482 206,808
Stockholders' equity 232,410 229,552
----------- ------------
Total liabilities and stockholders'
equity $ 422,892 $ 436,360
=========== ============
Contact:
CompuCom Systems, Inc., Dallas
J. Edward Coleman
M. Lazane Smith
972/856-3600 |
