Exhibit 99.1
| Pomeroy IT Solutions, Inc. | | Contact: |
| 1020 Petersburg Road | | Kevin Gregory, Sr. Vice President |
| Hebron, KY 41048 | | and Chief Financial Officer |
| 859-586-0600 | | 859-586-0600 x 1424 |
| www.pomeroy.com | | kgregory@pomeroy.com |
Pomeroy IT Solutions, Inc. Reports First Quarter 2008 Results
Hebron, KY – May 15, 2008 – Pomeroy IT Solutions, Inc. (NASDAQ:PMRY) an information technology ("IT") solutions provider with a comprehensive portfolio of hardware, software, technical staffing services, as well as infrastructure and lifecycle services, today reported first quarter revenue of $143.6 million and a net loss of $(4.2) million, or $(0.35) per fully diluted share.
"Our first quarter loss, while less than the previous two quarters, continued to reflect margin pressures in our Infrastructure Services business resulting from less than optimal utilization of our technical resources. The results also reflect a number of charges that we do not anticipate to be recurring. Our product gross margins improved year over year, but product volumes declined reflecting certain customers' decisions to delay purchases given the current economic environment," said Keith Coogan, CEO and President of Pomeroy IT Solutions.
"During April, we took corrective actions to further reduce our Infrastructure Services staffing levels in recognition of the current revenue levels and our customer service level requirements. Going forward, we will continue to make necessary changes and an adjustment to our business model to appropriately align our operating costs with the gross margins our business generates," added Coogan.
CONSOLIDATED FINANCIAL RESULTS
First Quarter Financial Results
Total Net Revenues: Total net revenues increased $1.6 million or 1.1% in the first quarter of fiscal 2008 as compared to the first quarter of fiscal 2007. For the first quarters of fiscal 2008 and fiscal 2007, the net revenues were $143.6 million and $142.0 million, respectively.
Product revenue was $81.5 million and $92.2 million, respectively, for the first quarters of fiscal 2008 and fiscal 2007. Product revenue decreased $10.7 million in the first quarter of fiscal 2008 as compared to the first quarter of fiscal 2007. This decease was due primarily to timing delays of several large customer purchases.
Service revenue was $62.2 million in the first quarter of fiscal 2008 compared to $49.8 million in the first quarter of fiscal 2007, an increase of $12.4 million from fiscal 2007. The Company groups services revenue into Technical Staffing and Infrastructure Services. Technical Staffing supports clients’ project requirements, ensures regulatory and customer compliance requirements are met, and promotes success of the staffing projects. Infrastructure Services help clients optimize the various elements of distributed computing environments. Encompassing the complete IT lifecycle, services include desktop and mobile computing, server and network environments.
Technical Staffing revenue was $31.0 million and accounted for approximately 49.8% of total service revenues in the first quarter of fiscal 2008, compared to $20.5 million and 41.1% in the first quarter of fiscal 2007. This increase in revenue is primarily the result of recognizing revenue for billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business. Initially this revenue has very low incremental margin but as we convert these subcontractors to Pomeroy resources gross margins improve.
Infrastructure Service revenue was $31.2 million and $29.3 million, respectively, for the first three months of fiscal 2008 and 2007. This increase is primarily the result of new service engagements started at the beginning of 2008. Infrastructure Service revenues were approximately 50.2% of total service revenues in the first quarter of fiscal 2008, compared to 58.9% for the first quarter of fiscal 2007.
Gross Profit: Gross profit was $15.2 million in the first quarter of fiscal 2008, compared to $17.2 million in the first quarter of 2007. Gross profit, as a percentage of revenue, was 10.6% in first quarter of fiscal 2008, compared to 12.2% in the first quarter of fiscal 2007.
The Product gross profit was $8.0 million for the first three months of fiscal 2008, compared to $7.9 million for the same period of fiscal 2007. Product gross profit as a percentage of Product revenue increased to 9.8% in the first quarter of fiscal 2008, compared to 8.6% for the same period of fiscal 2007. The increase in Product gross profit percentage is due primarily to margin improvements as a result of the rebates from OEM partner promotional initiatives.
Service gross profit was $7.2 million for the first three months of fiscal 2008, compared to $9.3 million in the first three months of fiscal 2007. The decline in service gross profit of $2.1 million was the result of reduced utilization and productivity of Infrastructure Services technical resources. Service gross profit as a percentage of service revenue decreased to 11.7% in the first quarter of fiscal 2008, compared to 18.7% for the same period of fiscal 2007. A decrease of approximately 300 basis points in the service gross profit margin relates to two factors. First, a decline in the service gross profit margin was the result of loss contracts that generated revenue of approximately $1.4 million during the quarter at zero gross profit. Second, the conversion of Technical Staffing subcontractors’ personnel that generated revenue of approximately $11.9 million during the quarter initially had very low incremental gross profit but as these resources are converted to Pomeroy resources, typically after six months, gross profit should improve significantly and gross profit margin should be in the mid-teens. The remainder of the decline in the service gross profit margin relates to reduced utilization and productivity of Infrastructure Service technical resources.
Total operating expenses were $19.4 million in the first quarter of 2008, compared to $14.4 million in the first quarter of 2007, an increase of $5.0 million. This increase is primarily driven by an increase of $0.6 million in sales cost related to an increase in sales force headcount and commissions; an increase of $1.5 million in costs related to investments in personnel to support our product and services businesses and investments to improve customer, vendor and back office support functions; an increase of $0.4 million related to increased professional and outside service provider fees; a charge of approximately $1.0 million to reserve against the collectibility of amounts over- billed by subcontractors for years 2005 and 2006, identified as a result of an audit by our largest staffing customer, the collection of these amounts is uncertain as we no longer do business with many of these subcontractors; an increase related to severance charges of $0.6 million; an increase of $0.3 million related to additional accruals for loss contracts; an increase of $0.3 million for start up expenses related to new engagements; and an increase of $0.2 million related to costs for the retirement of directors.
Operating expenses as a percentage of revenue were 13.4% for the first quarter of fiscal 2008 compared to 10.2% for the first quarter of fiscal 2007.
Income (Loss) from Operations
Loss from operations was ($4.1) million in the first quarter of 2008, as compared to income of $2.8 million for the same period of 2007. This decease is a result of the lower service profit margins for the first three months of fiscal 2008 and increased operating expenses, as detailed above.
Net Interest Income (Expense)
Net interest expense was $70 thousand during the first quarter of 2008 as compared to net interest income of $172 thousand during the first quarter of 2007. During the first quarter of 2008, the Company had amounts outstanding under its credit facility due to a use of cash flow from operations during the first quarter. The use of cash from operating activities in the first quarter was the result of payments to reduce year end accounts payables, payroll and other liabilities.
Income Tax
For the first quarter of 2008, the Company had no income tax expense or income tax benefit. During the first quarter of fiscal 2008, the Company increased its tax valuation allowance by $1.6 million for a total allowance of $16.6 million at April 5, 2008. The tax valuation allowance is due to the future uncertainty of the Company’s ability to utilize its deferred tax assets which are primarily net operating loss carryforwards of $10.5 million. For the first quarter of fiscal 2008, the $1.6 million increase in tax valuation reserve offset what would have been an income tax benefit; the effective income tax rate would have been 37.5% prior to recording the tax valuation reserve. The effective income tax rate for the first quarter of fiscal 2007 was 39.4%.
Net Income (Loss)
Net loss was ($4.2) million in the first quarter of 2008 as compared to net income of $1.8 million in the first quarter of 2007. The change is a result of the factors described above.
Other Financial Information
| o | Short Term Debt | | $ | 6.9 million | |
| o | Capital Expenditures | | $ | 1.2 million | |
| o | Cash Flow Used for Operating Activities | | $ | 16.0 million | |
| o | Purchases of Company stock | | $ | 1.4 million | |
| o | Working Capital | | $ | 76.3 million | |
| | Cash, Cash Equivalents and CD’s | | $ | 1.7 million | |
CONFERENCE CALL
To participate in a conference call and questions and answer session with senior management regarding the first quarter of fiscal 2008 results, call 1-877-842-7108, using pass code 4660524 at 4:30 p.m. (ET) on Thursday, May 15, 2008. For your convenience, a replay will be available shortly after the call by dialing 1-800-642-1687.
ABOUT POMEROY IT SOLUTIONS, INC.
Pomeroy IT Solutions, Inc. is a leading provider of IT infrastructure solutions focused on enterprise, network and end-user technologies. Leveraging its core competencies in IT Outsourcing and Professional Services, Pomeroy delivers consulting, deployment, operational, staffing and product sourcing solutions through the disciplines of Six-Sigma, program and project management, and industry best practices. Pomeroy's consultative approach and adaptive methodology enables Fortune 2000 corporations, government entities, and mid-market clients to realize their business goals and objectives by leveraging information technology to simplify complexities, increase productivity, reduce costs, and improve profitability. For more information, go to www.pomeroy.com.
FORWARD-LOOKING STATEMENTS
Certain of the statements in the preceding paragraphs regarding financial results constitute forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our markets' actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements, expressed or implied by such forward-looking statements. These risks, and other factors you should specifically consider, include but are not limited to: changes in customer demands or industry standards; existing market and competitive conditions, including the overall demand for IT products and services; the nature and volume of products and services anticipated to be delivered; the mix of the products and services businesses; the type of services delivered; the ability to successfully attract and retain customers, sell additional products and services to existing customers; the ability to timely bill and collect receivables; the ability to maintain a broad customer base to avoid dependence on any single customer; the need to successfully attract and retain outside consulting services; new acquisitions by the Company; terms of vendor agreements and certification programs and the assumptions regarding the ability to perform there under; the ability to implement the Company's best practices strategies; the ability to manage risks associated with customer projects; adverse or uncertain economic conditions; loss of key personnel; litigation; and the ability to attract and retain technical and other highly skilled personnel. In some cases, you can identify forward-looking statements by such terminology as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "continue", "projects", "intends", "prospects", "priorities", or negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
The non-GAAP financial measures contained in this earnings press release exclude certain non recurring expenses for severance, loss contracts, contractual start-up penalties, additional subcontractor costs for technical staffing, and retiring directors’ non-cash compensation. Management uses non-GAAP financial measures to assess the nature of its business, including (i) whether to continue current lines of business or enter new lines of business; (ii) anticipating changes in demands for products and services; (iii) pressures on gross margins; (iv) planning and forecasting its future business; and (v) analyzing prior forecasts against past performance. In addition, excluding these charges enhances the Company’s understanding of trends developing in its operations, its performance in its market and against its competitors. The Company believes that providing non-GAAP net income measures that exclude such items, best allows investors to understand the Company’s ongoing business activities during the quarter. The Company believes that inclusion of certain non-GAAP financial measures provides comparability to other publicly traded companies. The non-GAAP financial measures should not be considered as a substitute for, or preferable to, measures of financial performance prepared in accordance with GAAP and may be different from non-GAAP financial measures used by others. Management recognizes that the use of such non-GAAP financial measures do not take into account the fact that some of the excluded extraordinary expenses could recur or that other extraordinary expenses could be incurred.
The Company believes that these non-GAAP financial measures provide an additional tool for investors to evaluate its ongoing operating results and trends. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures as detailed below:
Non-GAAP Financial Measures
(in thousands, except per share data)
| | | First Quarter of Fiscal 2008 | |
| | | Net Loss | | | Basic Earnings Per Share | | | Diluted Earnings Per Share | |
| | | | | | | | | | |
| As reported GAAP financial measures | | $ | (4,202 | ) | | $ | (0.35 | ) | | $ | (0.35 | ) |
| | | | | | | | | | | | | |
| Adjustments: | | | | | | | | | | | | |
| Severance | | | 581 | | | | 0.05 | | | | 0.05 | |
| Loss contract additional accrual | | | 271 | | | | 0.02 | | | | 0.02 | |
| Accrual for contractual start-up penalties | | | 250 | | | | 0.02 | | | | 0.02 | |
| Additional subcontractors costs for technical staffing | | | 1,126 | | | | 0.09 | | | | 0.09 | |
| Retiring directors non-cash compensation | | | 209 | | | | 0.02 | | | | 0.02 | |
| The income tax effect on non-GAAP adjustments offset by an adjustment for the tax asset valuation reserve. | | | 662 | | | | 0.06 | | | | 0.06 | |
| Total adjustments | | | 3,099 | | | | 0.26 | | | | 0.26 | |
| | | | | | | | | | | | | |
| Non-GAAP financial measures | | $ | (1,103 | ) | | $ | (0.09 | ) | | $ | (0.09 | ) |
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
| | | April 5, 2008 | | | January 5, 2008 | |
| ASSETS | | | | | | |
| | | | | | | |
| Current Assets: | | | | | | |
| Cash and cash equivalents | | $ | 1,658 | | | $ | 13,282 | |
| Certificates of deposit | | | 1,121 | | | | 1,113 | |
| | | | | | | | | |
| Accounts receivable: | | | | | | | | |
| Trade, less allowance of $3,067 and $3,522, respectively | | | 120,297 | | | | 140,167 | |
| Vendor, less allowance of $538 and $562, respectively | | | 12,790 | | | | 11,352 | |
| Net investment in leases | | | 422 | | | | 756 | |
| Other | | | 646 | | | | 1,288 | |
| Total receivables | | | 134,155 | | | | 153,563 | |
| | | | | | | | | |
| Inventories | | | 15,552 | | | | 15,811 | |
| Other | | | 10,483 | | | | 10,196 | |
| Total current assets | | | 162,969 | | | | 193,965 | |
| | | | | | | | | |
| Equipment and leasehold improvements: | | | | | | | | |
| Furniture, fixtures and equipment | | | 16,424 | | | | 15,180 | |
| Leasehold Improvements | | | 7,262 | | | | 7,262 | |
| Total | | | 23,686 | | | | 22,442 | |
| | | | | | | | | |
| Less accumulated depreciation | | | 13,743 | | | | 12,645 | |
| Net equipment and leasehold improvements | | | 9,943 | | | | 9,797 | |
| | | | | | | | | |
| Intangible assets, net | | | 1,874 | | | | 2,017 | |
| Other assets | | | 909 | | | | 805 | |
| Total assets | | $ | 175,695 | | | $ | 206,584 | |
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
| | | April 5, 2008 | | | January 5, 2008 | |
| LIABILITIES AND EQUITY | | | | | | |
| | | | | | | |
| Current Liabilities: | | | | | | |
| Accounts payable: | | | | | | |
| Floor plan financing | | $ | 14,190 | | | $ | 26,328 | |
| Trade | | | 42,231 | | | | 57,016 | |
| Total accounts payable | | | 56,421 | | | | 83,344 | |
| | | | | | | | | |
| Credit facility payable | | | 6,919 | | | | - | |
| Deferred revenue | | | 2,093 | | | | 1,949 | |
| Employee compensation and benefits | | | 6,437 | | | | 10,248 | |
| Accrued facility closing cost and severance | | | 1,249 | | | | 1,678 | |
| Other current liabilities | | | 13,513 | | | | 15,542 | |
| Total current liabilities | | | 86,632 | | | | 112,761 | |
| | | | | | | | | |
| Accrued facility closing cost and severance | | | 1,037 | | | | 1,056 | |
| | | | | | | | | |
| Equity: | | | | | | | | |
| | | | | | | | | |
| Preferred stock, $.01 par value; authorized 2,000 shares, (no shares issued or outstanding) | | | - | | | | - | |
| | | | | | | | | |
| Common stock, $.01 par value; authorized 20,000 shares, (13,539 and 13,513 shares issued, respectively) | | | 141 | | | | 140 | |
| Paid in capital | | | 92,326 | | | | 91,399 | |
| Accumulated other comprehensive income | | | 12 | | | | 20 | |
| Retained earnings | | | 9,999 | | | | 14,200 | |
| | | | 102,478 | | | | 105,759 | |
| Less treasury stock, at cost (1,544 and 1,323 shares, respectively) | | | 14,452 | | | | 12,992 | |
| Total equity | | | 88,026 | | | | 92,767 | |
| Total liabilities and equity | | $ | 175,695 | | | $ | 206,584 | |
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| (in thousands, except per share data) | | Three Months Ended | | | | |
| | | April 5, 2008 | | | April 5, 2007 | |
| | | | | | Non-GAAP | | | | |
| Net revenues: | | | | | | | | | |
| Product | | $ | 81,477 | | | $ | 81,477 | | | $ | 92,210 | |
| Service | | | 62,152 | | | | 62,228 | | | | 49,783 | |
| Total revenues | | | 143,629 | | | | 143,705 | | | | 141,993 | |
| | | | | | | | | | | | | |
| Cost of revenues: | | | | | | | | | | | | |
| Product | | | 73,499 | | | | 73,499 | | | | 84,280 | |
| Service | | | 54,908 | | | | 54,816 | | | | 40,472 | |
| Total cost of revenues | | | 128,407 | | | | 128,315 | | | | 124,752 | |
| | | | | | | | | | | | | |
| Gross profit | | | 15,222 | | | | 15,390 | | | | 17,241 | |
| | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | |
| Selling, general and administrative | | | 15,869 | | | | 15,869 | | | | 13,280 | |
| Depreciation and amortization | | | 1,216 | | | | 1,216 | | | | 1,120 | |
| Severance | | | 581 | | | | - | | | | - | |
| Additional loss contract accrual | | | 271 | | | | - | | | | - | |
| Accrual for start-up penalties | | | 250 | | | | - | | | | - | |
| Cost for subcontractor wage adjustments | | | 958 | | | | - | | | | - | |
| Retiring directors expenses | | | 209 | | | | - | | | | - | |
| Total operating expenses | | | 19,354 | | | | 17,085 | | | | 14,400 | |
| | | | | | | | | | | | | |
| Income (loss) from operations | | | (4,132 | ) | | | (1,695 | ) | | | 2,841 | |
| | | | | | | | | | | | | |
| Interest income | | | 85 | | | | 85 | | | | 310 | |
| Interest expense | | | (155 | ) | | | (155 | ) | | | (138 | ) |
| Interest, net | | | (70 | ) | | | (70 | ) | | | 172 | |
| | | | | | | | | | | | | |
| Income before income tax | | | (4,202 | ) | | | (1,765 | ) | | | 3,013 | |
| Income tax (benefit) expense | | | - | | | | (662 | ) | | | 1,188 | |
| Net income (loss) | | $ | (4,202 | ) | | $ | (1,103 | ) | | $ | 1,825 | |
| | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | |
| Basic | | | 12,061 | | | | 12,061 | | | | 12,349 | |
| Diluted | | | 12,061 | | | | 12,061 | | | | 12,604 | |
| | | | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | | | |
| Basic | | $ | (0.35 | ) | | $ | (0.09 | ) | | $ | 0.15 | |
| Diluted* | | $ | (0.35 | ) | | $ | (0.09 | ) | | $ | 0.14 | |
* Dilutive loss per common share for the quarter ended January 5, 2008 would have been anti-dilutive if the number of weighted average shares outstanding were adjusted to reflect the dilutive effect of outstanding stock options.
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
| | | Three Months Ended | |
| Cash Flows from Operating Activities: | | April 5, 2008 | | | April 5, 2007 | |
| Net income (loss) | | $ | (4,202 | ) | | $ | 1,825 | |
| Adjustments to reconcile net income (loss) to net cash flows from (used in) operating activities: | | | | | | | | |
| Depreciation and amortization | | | 1,250 | | | | 1,336 | |
| Stock option, restricted stock compensation and employee purchase plan expense | | | 755 | | | | 242 | |
| Facility closing cost and severance | | | 581 | | | | - | |
| Provision for doubtful accounts | | | 300 | | | | 150 | |
| Amortization of unearned income | | | (2 | ) | | | (20 | ) |
| Deferred income taxes | | | - | | | | 727 | |
| Loss on disposal of fixed assets | | | (2 | ) | | | - | |
| Changes in working capital accounts: | | | | | | | | |
| Accounts receivable | | | 18,775 | | | | (1,938 | ) |
| Inventories | | | 259 | | | | 147 | |
| Other current assets | | | (390 | ) | | | 1,585 | |
| Net investment in leases | | | 336 | | | | 330 | |
| Accounts payable - floor plan financing | | | (12,138 | ) | | | (6,590 | ) |
| Accounts payable trade | | | (14,785 | ) | | | 1,073 | |
| Deferred revenue | | | 144 | | | | 160 | |
| Income tax payable | | | - | | | | 5 | |
| Employee compensation and benefits | | | (3,811 | ) | | | 2,154 | |
| Other, net | | | (3,112 | ) | | | (946 | ) |
| Net operating activities | | | (16,042 | ) | | | 240 | |
| Cash Flows used in Investing Activities: | | | | | | | | |
| Capital expenditures | | | (1,244 | ) | | | (1,155 | ) |
| Purchases of certificate of deposits | | | (8 | ) | | | (9 | ) |
| Net investing activities | | | (1,252 | ) | | | (1,164 | ) |
| Cash Flows used for Financing Activities: | | | | | | | | |
| Increase in short-term debt, net | | | 6,919 | | | | - | |
| Proceeds from exercise of stock options | | | - | | | | 7 | |
| Purchase of treasury stock | | | (1,413 | ) | | | (357 | ) |
| Proceeds from issuance of common shares for employee stock purchase plan | | | 172 | | | | 146 | |
| Net financing activities | | | 5,678 | | | | (204 | ) |
| Effect of exchange rate changes on cash and cash equivalents | | | (8 | ) | | | (81 | ) |
| Decrease in cash and cash equivalents | | | (11,624 | ) | | | (1,209 | ) |
| Cash and cash equivalents: | | | | | | | | |
| Beginning of period | | | 13,282 | | | | 13,562 | |
| End of period | | $ | 1,658 | | | $ | 12,353 | |
POMEROY IT SOLUTIONS, INC.
2007 QUARTERS AND FULL YEAR FINANCIAL STATEMENT
(UNAUDITED)
(in thousands)
| | | First Quarter of Fiscal 2007 | |
| | | As Previously Reported | | | As Restated | |
| Net revenues | | $ | 141,993 | | | $ | 141,993 | |
| Cost of revenues | | | 118,291 | | | | 124,752 | |
| Gross profit | | | 23,702 | | | | 17,241 | |
| | | | | | | | | |
| Operating expenses | | | 20,861 | | | | 14,400 | |
| | | | | | | | | |
| Loss from operations | | | 2,841 | | | | 2,841 | |
| | | | | | | | | |
| Net Interest - income | | | 172 | | | | 172 | |
| | | | | | | | | |
| Income taxes | | | 1,188 | | | | 1,188 | |
| | | | | | | | | |
| Net income | | $ | 1,825 | | | $ | 1,825 | |
| | | Second Quarter of Fiscal 2007 | |
| | | As Previously Reported | | | As Restated | |
| Net revenues | | $ | 138,261 | | | $ | 138,261 | |
| Cost of revenues | | | 116,238 | | | | 122,653 | |
| Gross profit | | | 22,023 | | | | 15,608 | |
| | | | | | | | | |
| Operating expenses | | | 23,434 | | | | 17,019 | |
| | | | | | | | | |
| Loss from operations | | | (1,411 | ) | | | (1,411 | ) |
| | | | | | | | | |
| Net Interest - income | | | 90 | | | | 90 | |
| | | | | | | | | |
| Income taxes benefit | | | (468 | ) | | | (468 | ) |
| | | | | | | | | |
| Net loss | | $ | (853 | ) | | $ | (853 | ) |
| | | Third Quarter of Fiscal 2007 | |
| | | As Previously Reported | | | As Restated | |
| Net revenues | | $ | 144,392 | | | $ | 144,392 | |
| Cost of revenues | | | 123,662 | | | | 129,637 | |
| Gross profit | | | 20,730 | | | | 14,755 | |
| | | | | | | | | |
| Operating expenses | | | 124,265 | | | | 118,290 | |
| | | | | | | | | |
| Loss from operations | | | (103,535 | ) | | | (103,535 | ) |
| | | | | | | | | |
| Net Interest - income | | | 70 | | | | 70 | |
| | | | | | | | | |
| Income taxes benefit | | | (11,671 | ) | | | (11,671 | ) |
| | | | | | | | | |
| Net loss | | $ | (91,794 | ) | | $ | (91,794 | ) |
| | | Fourth Quarter of Fiscal 2007 | |
| | | As Previously Reported | | | As Restated | |
| Net revenues | | $ | 162,261 | | | $ | 162,261 | |
| Cost of revenues | | | 144,731 | | | | 152,155 | |
| Gross profit | | | 17,530 | | | | 10,106 | |
| | | | | | | | | |
| Operating expenses | | | 26,691 | | | | 19,267 | |
| | | | | | | | | |
| Loss from operations | | | (9,161 | ) | | | (9,161 | ) |
| | | | | | | | | |
| Net Interest - income | | | 119 | | | | 119 | |
| | | | | | | | | |
| Income taxes | | | 12,369 | | | | 12,369 | |
| | | | | | | | | |
| Net loss | | $ | (21,411 | ) | | $ | (21,411 | ) |
| | | 2007 Fiscal Year | |
| | | As Previously Reported | | | As Restated | |
| Net revenues | | $ | 586,907 | | | $ | 586,907 | |
| Cost of revenues | | | 502,922 | | | | 529,197 | |
| Gross profit | | | 83,985 | | | | 57,710 | |
| | | | | | | | | |
| Operating expenses | | | 195,251 | | | | 168,976 | |
| | | | | | | | | |
| Loss from operations | | | (111,266 | ) | | | (111,266 | ) |
| | | | | | | | | |
| Net Interest - income | | | 451 | | �� | | 451 | |
| | | | | | | | | |
| Income taxes | | | 1,418 | | | | 1,418 | |
| | | | | | | | | |
| Net loss | | $ | (112,233 | ) | | $ | (112,233 | ) |
For fiscal 2008, the Company has reclassified amounts previously included in operating expenses. Above is the fiscal 2007 financial statement as previously reported in the Company’s 2007 10K Report and the fiscal 2007 financial statement after the reclassifications.
