VANSTAR ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS
Company Benefits from Burgeoning Services Segment and Strong Product Growth
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ATLANTA, GA -- June 3, 1998 -- Vanstar Corporation (NYSE: VST) today announced that net income for the fourth quarter ended April 30, 1998 increased to $9.6 million, or $0.22 per share, from $1.6 million, or $0.04 per share, for the comparable quarter a year ago. Total revenue for the most recent quarter increased 30.1% to $713.0 million from $548.2 million reported for the same period a year ago. The most recent fourth quarter gross margin increased to 15.4% from 14.2% for the same period last year.
Net income for the fiscal year ended April 30, 1998 increased 19.8% to $35.9 million, or $0.81 per share, from $30.0 million, or $0.69 per share, for the previous fiscal year. Total revenue for the year increased 30.3% to $2.8 billion from $2.2 billion a year ago. The gross margin for the most recent fiscal year increased to 14.6% from 14.4% for the previous fiscal year.
"With a strong focus on our services business, we were able to capitalize on the explosive growth of the services industry during the year. In a relatively short time, we have been able to attract and retain an impressive team of talented IT professionals, expand our industry-leading partnerships, and develop new customer relationships through our expanded services model," said William Y. Tauscher, chairman and CEO of Vanstar. "Furthermore, we are immensely proud of our solid product revenue growth in an environment of declining sales prices and increasing competition."
Product
For the fourth quarter ended April 30, 1998, product revenue rose 27.9% to $585.3 million from $457.7 million for the same period last year. The Product gross margin for the most recent quarter increased to 10.1% from 10.0% for the comparable year-ago quarter. For the most recent fiscal year, Product revenue increased 28.0% to $2.4 billion from $1.8 billion for the previous year. The Product gross margin for the most recent fiscal year decreased to 9.7% from 10.0% a year ago.
Life Cycle Services
Life Cycle Services revenue increased 59.6% to $80.9 million for the most recent quarter from $50.7 million for the same period a year ago. The Life Cycle Services gross margin for the most recent quarter increased to 37.2% from 34.4% in the fourth quarter a year ago. For the most recent fiscal year, Life Cycle Services revenue increased 53.1% to $275.7 million from $180.1 million for the year prior. The Life Cycle Services gross margin decreased to 33.0% from 35.1% in the previous fiscal year.
Professional Services
For the most recent quarter, Professional Services revenue increased 38.1% to $43.1 million from $31.2 million last year. The Professional Services gross margin for the most recent quarter increased to 44.0% from 29.2% for the quarter a year earlier. In the fiscal year ended April 30, 1998, Professional Services revenue increased 47.5% to $163.8 million from $111.1 million for the same period a year ago. The Professional Services gross margin for the most recent year increased to 44.4% from 35.8% in the previous fiscal year.
Other Services
Revenue from Other Services decreased 55.9% to $3.8 million from $8.6 million in the year ago quarter. The gross margin for the most recent quarter was 48.9% compared to 64.5% for the same period last year. For the most recent fiscal year, Other Services revenue decreased 15.1% to $32.3 million from $38.0 million in the previous year. Gross margin from Other Services for the most recent fiscal year was 63.2% compared to 70.4% in the previous year. Results for the year include the effect of the completion of the distribution services agreement with a subsidiary of Synnex Information Technologies in December and the sale in January of the classroom instruction portion of the Education Services business.
SG&A
Most recent fourth quarter SG&A expenses were $82.3 million, or 11.5% of revenue, compared to $69.0 million, or 12.6% of total revenue, for the comparable year-ago quarter. For the most recent fiscal year, SG&A expenses were $313.3 million, or 11.0% of revenue, compared to $245.7 million, or 11.3% of total revenue, for the previous fiscal year.
About Vanstar
Vanstar is a leading provider of services and products to design, build, and manage computer network infrastructures of Fortune 1000 companies and other large enterprises. Vanstar provides customized, integrated solutions through comprehensive Life Cycle Services. Through its Professional Services Organization, Vanstar offers extensive consulting expertise through national practices focused on emerging technologies. Vanstar's common stock is publicly traded on the New York Stock Exchange under the symbol VST.
For additional information, please visit our web site at www.vanstar.com or call Vanstar Investor Relations at (770) 522-4680.
This press release may contain certain forward-looking statements regarding business trends and objectives. Those statements involve risks and uncertainties that could cause actual results to differ materially from the results discussed herein. Factors that might cause such a difference include, but are not limited to, changes in demand for Vanstar's products and services, competitive conditions, product supply, vendor incentive programs, and the introduction of new technologies. Recipients of this press release are cautioned not to place undue reliance on the forward-looking statements made herein. |
