adding ISEC as a LT winner:
B: I-Sector Posts Record 4th Quarter Results; Revenue Up 101%;
B: I-Sector Posts Record 4th Quarter Results; Revenue Up 101%; Operating Loss
Improves By 75%
HOUSTON, Mar 20, 2002 /PRNewswire-FirstCall via COMTEX/ -- I-Sector Corporation
(Nasdaq: ISEC) today announced financial results for its fourth quarter ended
December 31, 2001 and provided an update on its outlook for the future.
FINANCIAL RESULTS
Operating results were better than the forecasted outlook made by the company in
its statement of November 8, 2001, in which revenue of $7.25 million and a net
loss from continuing operations of $525,000 were forecast. Fourth quarter
results reflect the highest levels of revenue and the lowest levels of operating
losses from continuing operations since the company sold its Computer Products
division in the second quarter of 2000 and began a substantial restructuring of
the company. During the quarter the company discontinued its smallest business
segment, the IT Staffing, Inc. subsidiary, by selling IT Staffing. IT Staffing
had recently accounted for less than five percent of the total company's
revenues and was producing neither revenue growth or profits. The company
decided to exit the IT Staffing business because the prospects for the business
did not look positive for the near future and because of the ongoing losses.
For the company's fourth quarter ended December 31, 2001:
-- Revenue from continuing operations increased 101% to a record
$7.4 million compared to $3.7 million for the corresponding prior
year period, and increased 18% as compared to the sequentially prior
quarter ended September 30, 2001.
-- Gross margin improved to 30.0% from 10.6% for the corresponding
prior year period and as compared to 27.4% for the sequentially
prior quarter ended September 30, 2001. Gross profit increased
469% as compared to the corresponding prior year period and
increased 30% as compared to the sequentially prior quarter ended
September 30, 2001
-- Operating loss provides a comparison of prior period performance
without the influence of significant changes in interest income and
income taxes. Operating loss improved by $1.4 million (75%) to
$480,000 compared to $1.9 million in the corresponding prior year
period. Operating loss improved by $329,000 (41%) as compared to
the sequentially prior quarter ended September 30, 2001.
-- Net loss from continuing operations improved by 65% to
$451,000 compared to $1.3 million for the corresponding prior year
period and improved by $263,000 (37%) as compared to the
sequentially prior quarter ended September 31, 2001.
-- Net loss improved by 66% to $476,000 as compared to $1.4 million for
the corresponding prior year period and improved by 37% as compared
to the sequentially prior quarter ended September 31, 2001.
-- Basic and diluted loss per share on continuing operations decreased
by 64% to a loss of $0.12 compared to a loss of $0.33 for the
corresponding prior year period and decreased by 44% compared to the
loss of $0.18 for the sequentially prior quarter ended
September 30, 2001.
For the year ended December 31, 2001:
-- Revenue from continuing operations increased 38.0% to $23.6 million
from $17.1 million in 2000.
-- Net loss from continuing operations increased to $3.9 million from
$3.6 million in 2000.
-- The impact related to discontinued operations, net of taxes, was
income of $0.2 million compared to income of $3.6 million for 2000.
-- Earnings per share from continuing operations was a loss of $0.99
compared to a loss of $0.90 for 2000.
-- Total earnings per share was $0.95 compared to a loss of $0.01 for
2000.
Commenting on the results for the quarter, James H. Long, President and CEO of
the company stated, "We are very pleased to announce that the fourth quarter
results were better than our previously announced expectations for the quarter.
This marked the fourth quarter in a row of substantially improved financial
results, both top-line and bottom-line. During the fourth quarter, we continued
to realize the benefits of the substantial investments that we made in our
business late last year and earlier this year. We are very pleased with the 18%
sequential revenue growth produced this quarter as well as our substantial
improvement in gross margin, which together created a better than expected
improvement in our operating losses for the quarter. The 200% revenue growth
produced by our Internetwork Experts, Inc. subsidiary and the 86% revenue growth
produced by our Stratasoft, Inc. subsidiary in the face of difficult market
conditions evidences the effectiveness of their business models and execution.
Our Allstar Solutions, Inc. subsidiary held on to the substantial revenue gains
made last quarter while taking substantial costs out of their business model,
which resulted in a significant improvement to their bottom line. We are
currently realizing the positive impact of the investments made by our
subsidiary companies late last year and early this year. As planned, revenue is
now growing rapidly without a corresponding increase in expenses, which is
rapidly improving the bottom line. Becoming cash flow positive now appears to be
achievable in the near future, and we are looking forward to establishing a
track record of consistent, growing profitability."
OUTLOOK
The following statements are made by the company and are based upon current
expectations. These statements are forward-looking, and actual results may
differ materially. The recent weakness in economic conditions and the slowdown
in corporate information technology spending experienced during the past several
quarters of 2001 has made firm forecasting of future financial performance more
difficult than would otherwise be possible and the visibility for many public
companies is somewhat limited at this time as compared to the past.
-- Our strategy is to produce rapid growth of our subsidiary companies,
both through internally generated growth and possibly through
selective acquisitions of complementary companies, as well as
possibly acquiring or starting new businesses that will operate as
separate wholly owned subsidiary companies.
-- We expect revenue for our first quarter ending March 31, 2002 to
grow to approximately $8.5 million, an increase of 85% compared to
the corresponding prior year period and a sequential increase of
15% compared to the fourth quarter of 2001, due primarily to
continued improvement in the sales and marketing efforts by our
subsidiary companies following the earlier significant increase in
the total number of sales account managers employed, offset somewhat
by continued industry-wide softness that we believe to be due to
generally soft spending by corporate accounts related to economic
uncertainty.
-- We expect the net loss from continuing operations for our first
quarter ending March 31, 2002 to decrease to approximately
$390,000, an improvement of 76% compared to the corresponding prior
year period and a sequential improvement of 10% as compared to the
fourth quarter of 2001. This is expected to be primarily the result
of increased revenue and the attendant increased gross profit,
together with slightly improved utilization of billable technical
resources and reduced administrative costs, somewhat offset by (a)
higher costs related to an expanded sales and marketing staff in our
subsidiary companies, and (b) other costs, including promotion and
advertising costs, related to expanding the various subsidiary
businesses and driving revenue growth in the future.
-- We expect the per share loss from continuing operations for our
first quarter ending March 31, 2002 to decrease to approximately
$0.10, an improvement of approximately 77% compared to the
corresponding prior year period and a 10% improvement as compared to
the sequentially prior fourth quarter.
-- Providing an outlook for any period further out than the near-term
quarter is more challenging and subject to a lesser degree of
accuracy than our near-term outlook. Based upon our current view of
market conditions, our expected sales and marketing efforts, and our
expected expense structure, our current expectations for our second
quarter of 2002 ending June 30, 2002 are for revenue of
approximately $9.2 million with a net loss from continuing
operations of approximately $275,000. Looking further out, we
currently expect revenue for our third quarter of 2002, ending
September 30, 2002 to be roughly in the range of approximately
$9.7 million to $10.0 million, with a net loss from continuing
operations in the range of approximately $75,000 to $125,000.
Further out, we expect revenue to continue to grow sequentially each
quarter during 2002, with the fourth quarter of 2002 being our first
marginally profitable quarter, and with growing profitability
thereafter. Our expected revenue improvements are based upon our
previous and ongoing expenditures in the area of sales and marketing
as well as an expected slight improvement in general market
conditions over the next several quarters. Over the next several
quarters we expect our operating profit to improve due to the
above-mentioned higher levels of revenue, as well as an expected
decrease in our general and administrative costs as compared to
revenue, as our relatively fixed corporate general and
administrative costs are spread over a larger revenue base.
-- The forecasts set forth above are for the current organization and
do not include the effect of any future acquisitions. In addition
to internally generated growth, we anticipate possibly making
selective acquisitions during the next twelve months that we expect
will, if consummated, add additional revenue. There is no guarantee
that any suitable acquisitions will be identified or that any
transactions will be consummated.
Regarding the company's outlook for the future, James H. Long, President and CEO
of the company stated, "While we continue to be concerned about the state of the
economy and the IT industry, we continue to increase the number of customers
with which we do business and we are excited about many new significant
opportunities. We continue to make investments in our future and our rapidly
improving financial results in the face of difficult market conditions are a
testament to the viability of our strategy and to the capability and hard work
of our employees. We are excited about the prospect of becoming cash flow
positive at high rates of revenue growth in the very near future, a goal toward
which we have been striving for the past year."
SAFE HARBOR STATEMENT
The statements contained in this document that are not statements of historical
fact, including particularly the statements made in the Outlook section,
including but not limited to, statements identified by the use of terms such as
"anticipate," "appear," "believe," "could," "estimate," "expect," "hope,"
"indicate," "intend," "likely," "may," "might," "plan," "potential," "project,"
"seek," "should," "will," "would," and other variations or negative expressions
of these terms, are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and involve a number of risks
and uncertainties. The actual results of the future events described in the
forward-looking statements in this document could differ materially from those
stated in the forward-looking statements due to numerous factors including:
-- Market and economic conditions
-- Risks associated with entry into new markets
-- The ability to attract and retain key management, sales and technical
staff
-- Unforeseen costs and results related to acquiring and integrating new
businesses
-- Catastrophic events
-- Uncertainties related to rapid changes in the information technology
industry
-- Other risks and uncertainties set forth from time to time in
I-Sector's public statements and its most recent annual report on
Form 10K and other public reports and filings
Recipients of this document are cautioned to consider these risks and
uncertainties and to not place undue reliance on these forward-looking
statements.
The company expressly disclaims any obligation or undertaking to update or
revise any forward-looking statement contained herein to reflect any change in
the company's expectations with regard thereto or any change in events,
conditions or circumstances upon which any statement is based.
ABOUT I-SECTOR CORPORATION
I-Sector Corporation, headquartered in Houston, Texas, owns, operates or invests
in companies that are primarily engaged in the area of information technology.
Additional information about I-Sector is available on the Internet at
www.I-Sector.com .
For additional information contact:
James H. Long
President and Chief Executive Officer
(713) 795-2301
I-SECTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2000 AND 2001
(In thousands, except share and par value amounts)
ASSETS 2001 2000
Current Assets:
Cash and cash equivalents $3,434 $8,346
Accounts receivable, net 4,302 4,473
Accounts receivable - affiliates 250 303
Accounts receivable - other 21 141
Notes receivable 169 ---
Inventory 587 774
Cost and estimated earnings
in excess of billings 1,695 ---
Income taxes receivable 151 863
Other current assets 302 233
Total current assets 10,911 15,133
Property and equipment, net 1,226 1,579
Intangible assets 1,356 326
Other assets 55 104
$13,548 $17,142
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $213 $---
Accounts payable 1,772 1,892
Billings in excess of cost
and estimated earnings 72 503
Accrued expenses 2,091 1,635
Net liabilities related
to discontinued operations 654 869
Deferred service revenue 126 136
Total current liabilities 4,928 5,035
Long term debt 410 ---
Deferred credit - stock warrants 195 195
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized,
no shares issued --- ---
Common stock, $.01 par value,
15,000,000 shares authorized,
4,441,325 issued at December 31,
2000 and 2001, respectively 44 44
Additional paid in capital 10,184 10,182
Unearned equity compensation --- (1)
Treasury stock, at cost, 399,800 and
591,800 shares at December 31,
2000 and 2001, respectively (1,187) (992)
Retained earnings (1,026) 2,679
Total stockholders' equity 8,015 11,912
$13,548 $17,142
I-SECTOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
(In thousands, except share and per share amounts)
Years ended December 31,
2001 2000 1999
Total revenue $23,620 $17,087 $17,984
Cost of goods and services 17,325 12,968 11,806
Gross profit 6,295 4,119 6,178
Selling, general and
administrative expenses 10,573 9,479 6,207
Operating loss 4,278 5,360 29
Interest and other income, net 316 239 23
Loss from continuing operations
before (benefit) provision
for income taxes 3,962 5,121 6
(Benefit) provision
for income taxes (87) (1,493) 20
Net loss from
continuing operations 3,875 3,628 26
Discontinued operations:
Net (loss) income from
discontinued operations,
net of taxes (167) 195 319
Gain (loss) on disposal,
net of taxes 337 3,390 (1,138)
Net loss $3,705 $43 $845
Net income (loss) per share:
Basic and diluted:
Net loss from continuing
operations $(0.99) $(0.90) $(0.01)
Net (income) loss from
discontinued operations (0.04) 0.05 0.08
Gain (loss) on disposal 0.08 0.84 (0.27)
Net loss per share $(0.95) $(0.01) $(0.20)
Weighted average number of
shares outstanding:
Basic and diluted 3,911,019 4,059,618 4,168,140
I-SECTOR CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(In thousands, except share and per share amounts)
Quarter Ended Year Ended
December 31, December 31,
2001 2000 2001 2000
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue:
Allstar $1,592 $1,266 $5,668 $6,946
INX 3,535 1,174 10,775 1,874
Stratasoft 2,298 1,236 7,257 6,660
Corporate 1 18 (6) 1,640
Eliminations (47) (22) (74) (33)
Total 7,379 3,672 23,620 17,087
Gross Profit
Allstar 432 127 1,265 1,356
INX 428 (8) 1,112 (43)
Stratasoft 1,357 503 3,939 3,087
Corporate 9 (221) 7 (269)
Eliminations (13) (12) (28) (12)
Total 2,213 389 6,295 4,119
Selling, general and
administrative expenses
Allstar 624 850 3,077 3,186
INX 983 608 3,103 935
Stratasoft 907 700 3,021 3,647
Corporate 192 103 1,400 1,723
Eliminations (13) (12) (28) (12)
Total 2,693 2,249 10,573 9,479
Operating income (loss):
ALS (192) (723) (1,812) (1,830)
INX (555) (616) (1,991) (978)
Stratasoft 450 (197) 918 (560)
Corporate (183) (324) (1,393) (1,992)
Total (480) (1,860) (4,278) (5,360)
Interest and other
income, net (43) (104) (316) (239)
Loss from continuing
operations before
(benefit) provision
for income taxes (437) (1,756) (3,962) (5,121)
(Benefit) provision
for income tax 14 (439) (87) (1,493)
Net loss from continuing
operations $(451) $(1,317) $(3,875) $(3,628)
MAKE YOUR OPINION COUNT - Click Here
tbutton.prnewswire.com
SOURCE I-Sector Corporation
CONTACT: James H. Long, President and Chief Executive Officer of
I-Sector Corporation, +1-713-795-2301
URL: i-sector.com |
