EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT:
Mike Rohrkemper, CFO
(859) 586-0600 x1416
investor@pomeroy.com
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POMEROY IT SOLUTIONS, INC. - FINANCIAL RESULTS, THIRD QUARTER ENDED
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OCTOBER 5, 2004
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Hebron, KY; November 11, 2004: Pomeroy IT Solutions (NASDAQ: PMRY), today
announced results for the third quarter and nine months ended October 5,
2004.
For the third quarter, the Company's total net sales and revenues increased
$42.4 million, or 26.8%, to $200.5 million in the third quarter of fiscal
2004 from $158.1 million in the third quarter of fiscal 2003. Diluted
earnings per share of $0.15 for the quarter ended October 5, 2004,
represent a decline of 28.6% from $0.21 in the third quarter of fiscal
2003. For the same period, diluted earnings per share excluding, the
non-recurring items described below increased 28.6% to $0.27 from $0.21 in
the comparable period.
For the nine months ended October 5, 2004, the Company's total net sales
and revenues increased $98.5 million, or 22.6%, to $533.9 million in the
first nine months of fiscal 2004 from $435.4 million in the first nine
months of fiscal 2003. For the nine months ended October 5, 2004, diluted
earnings per share of $0.58 represent a 18.4% increase from $0.49 in the
comparable period in 2003. For the same period, diluted earnings per share,
excluding the non-recurring items in 2004 described below and excluding a
$92 thousand litigation settlement in 2003, increased 40.0% to $0.70 from
$0.50 in the comparable period.
As previously reported in Form 8-K/A filed October 6, 2004, the Company has
recorded a restructuring charge, in conjunction with certain Pomeroy IT
Solutions exit costs. This charge is related to the acquisition of
Alternative Resources Corporation ("ARC"). In addition, the Company accrued
for a severance package for its founder and former CEO. The net impact of
these non-recurring charges was $1.5 million or $0.12 per diluted share.
"We are pleased that the process of integrating operations and cultures
with our merger partner ARC has not slowed down our momentum as indicated
by our sequential and year over year revenue and earnings growth. Our
balance sheet remains strong with a solid working capital position and a
virtually untapped credit facility," said President Stephen E. Pomeroy.
As a national solutions provider, Pomeroy is uniquely positioned to provide
services that span consulting, infrastructure and life cycle services.
Pomeroy maintains a technical workforce of approximately 4,000 skilled
employees with the capabilities and expertise to plan, design, implement,
support all categories of its solution offerings. Pomeroy has the ability
to leverage its extensive portfolio of services to assist clients in
reducing their total cost of ownership, allowing these savings to be
reinvested back into the customer's core business. Pomeroy has clientele
across a broad spectrum of industries, governments and educational
organizations. For the year ended January 5, 2004, Pomeroy IT Solutions
reported revenues of $598 million.
Certain statements that are not purely historical constitute
"forward-looking statements" for purposes of the Securities Act of 1933 and
the Securities and Exchange Act of 1934, as amended, and as such they
involve known and unknown risks, uncertainties and other factors which may
cause actual results to be materially different from those projected or
anticipated. These statements are based on information available to the
Company as of the date hereof and the Company disclaims any intention or
obligation to update any such forward-looking statements. Factors which
could cause actual results to differ materially from current expectations
include, but are not limited to, the estimated needs of customers as
conveyed to the Company, existing market conditions including the overall
demand for IT products and services, the terms of applicable agreements and
certification programs and the assumptions regarding the Company's
performance thereunder, the Company's ability to attract and retain
technical personnel and to identify and develop expertise in
future-demanded services, the Company's ability to identify suitable
acquisition candidates and successfully integrate acquired companies, the
nature and volume of products and services anticipated to be delivered and
the Company's ability to obtain sufficient volumes of products and provide
services.
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands) October 5, January 5,
2004 2004
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(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $ 9,599 $ 40,200
Accounts receivable:
Trade, less allowance of $1,564 and $2,556 at October 5, 2004
and January 5, 2004, respectively . . . . . . . . . . . . . . 117,477 111,324
Vendor receivables, less allowance of $100 at
October 5, 2004 and January 5, 2004 . . . . . . . . . . . . . 5,052 7,226
Net investment in leases. . . . . . . . . . . . . . . . . . . 4,377 2,056
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,148 2,043
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Total receivables . . . . . . . . . . . . . . . . . . . . . . 129,054 122,649
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,680 12,453
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,444 5,193
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Total current assets. . . . . . . . . . . . . . . . . . . . . 162,777 180,495
Equipment and leasehold improvements:
Furniture, fixtures and equipment . . . . . . . . . . . . . . . 30,746 29,517
Leasehold improvements. . . . . . . . . . . . . . . . . . . . . 6,304 6,438
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Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,050 35,955
Less accumulated depreciation . . . . . . . . . . . . . . . . . 21,158 19,696
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Net equipment and leasehold improvements. . . . . . . . . . . 15,892 16,259
Net investment in leases, net of current portion. . . . . . . . . 2,219 2,935
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . 120,403 67,664
Intangible assets, net. . . . . . . . . . . . . . . . . . . . . . 3,864 436
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,509 1,410
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Total assets. . . . . . . . . . . . . . . . . . . . . . . . . $ 308,664 $ 269,199
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3
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data) October 5, January 5,
2004 2004
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(unaudited)
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of notes payable. . . . . . . . . . . . . . . $ 912 $ 912
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . 63,325 50,051
Bank notes payable. . . . . . . . . . . . . . . . . . . . . . 2,853 -
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . 3,487 3,988
Accrued restructuring and severance charges . . . . . . . . . 8,875 -
Other current liabilities . . . . . . . . . . . . . . . . . . 16,387 8,758
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Total current liabilities . . . . . . . . . . . . . . . . 95,839 63,709
Notes payable, less current portion . . . . . . . . . . . . . 250 913
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 5,446 4,780
Commitments and contingencies
Equity:
Preferred stock, $.01 par value; authorized 2,000 shares,
(no shares issued or outstanding) . . . . . . . . . . . . - -
Common stock, $.01 par value; authorized 20,000 shares,
(13,021 and 12,943 shares issued at October 5, 2004
and January 5, 2004, respectively). . . . . . . . . . . . 130 130
Paid-in-capital . . . . . . . . . . . . . . . . . . . . . . 83,297 82,696
Accumulated other comprehensive loss. . . . . . . . . . . . (36) -
Retained earnings . . . . . . . . . . . . . . . . . . . . . 132,484 125,250
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215,875 208,076
Less treasury stock, at cost ( 778 and 738 shares at
October 5, 2004 and January 5, 2004, respectively). . . . . 8,746 8,279
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Total equity. . . . . . . . . . . . . . . . . . . . . . . 207,129 199,797
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Total liabilities and equity. . . . . . . . . . . . . . . $ 308,664 $ 269,199
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4
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data) Three Months Ended
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October 5, October 5,
2004 2003
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(unaudited) (unaudited)
Net sales and revenues:
Sales-equipment, supplies and leasing . . . . . . . $ 139,403 $ 125,698
Service . . . . . . . . . . . . . . . . . . . . . . 61,101 32,374
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Total net sales and revenues . . . . . . . . . . 200,504 158,072
Cost of sales and service:
Sales-equipment, supplies and leasing . . . . . . . 129,621 116,825
Service . . . . . . . . . . . . . . . . . . . . . . 44,433 23,612
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Total cost of sales and service. . . . . . . . . 174,054 140,437
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Gross profit . . . . . . . . . . . . . . . . 26,450 17,635
Operating expenses:
Selling, general and administrative. . . . . . . . 18,818 11,331
Rent expense . . . . . . . . . . . . . . . . . . . 906 802
Depreciation . . . . . . . . . . . . . . . . . . . 1,052 1,228
Amortization . . . . . . . . . . . . . . . . . . . 122 63
Restructuring and severance charges. . . . . . . . 2,423 -
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Total operating expenses . . . . . . . . . . 23,321 13,424
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Income before other expense (income) and income tax. 3,129 4,211
Other expense (income):
Interest, net. . . . . . . . . . . . . . . . . . . 32 (7)
Other. . . . . . . . . . . . . . . . . . . . . . . 4 16
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Total other expense, net . . . . . . . . . . 36 9
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Income before income tax. . . . . . . . . . . . . . 3,093 4,202
Income tax expense . . . . . . . . . . . . . . . . . 1,221 1,639
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Net income . . . . . . . . . . . . . . . . . . . . $ 1,872 $ 2,563
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Weighted average shares outstanding:
Basic. . . . . . . . . . . . . . . . . . . . . . . 12,240 12,226
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Diluted. . . . . . . . . . . . . . . . . . . . . . 12,366 12,369
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Earnings per common share:
Basic. . . . . . . . . . . . . . . . . . . . . . . $ 0.15 $ 0.21
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Diluted. . . . . . . . . . . . . . . . . . . . . . $ 0.15 $ 0.21
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POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data) Nine Months Ended
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October 5, October 5,
2004 2003
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(unaudited) (unaudited)
Net sales and revenues:
Sales-equipment, supplies and leasing.. . . . . . . $ 407,724 $ 341,879
Service . . . . . . . . . . . . . . . . . . . . . . 126,149 93,523
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Total net sales and revenues . . . . . . . . . . 533,873 435,402
Cost of sales and service:
Sales-equipment, supplies and leasing.. . . . . . . 377,638 316,186
Service . . . . . . . . . . . . . . . . . . . . . . 91,685 67,887
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Total cost of sales and service. . . . . . . . . 469,323 384,073
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Gross profit. . . . . . . . . . . . . . . . 64,550 51,329
Operating expenses:
Selling, general and administrative. . . . . . . . 44,570 34,777
Rent expense . . . . . . . . . . . . . . . . . . . 2,451 2,397
Depreciation . . . . . . . . . . . . . . . . . . . 2,968 3,643
Amortization . . . . . . . . . . . . . . . . . . . 201 360
Provision for doubtful accounts. . . . . . . . . . - 200
Restructuring and severance charges. . . . . . . . 2,423 -
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Total operating expenses . . . . . . . . . . 52,613 41,377
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Income before other expense (income) and income tax. 11,937 9,952
Other expense (income):
Interest, net. . . . . . . . . . . . . . . . . . . 1 (21)
Other. . . . . . . . . . . . . . . . . . . . . . . 27 1
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Total other expense, net . . . . . . . . . . 28 (20)
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Income before income tax. . . . . . . . . . . . . . 11,909 9,972
Income tax expense . . . . . . . . . . . . . . . . . 4,675 3,889
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Net income . . . . . . . . . . . . . . . . . . . . $ 7,234 $ 6,083
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Weighted average shares outstanding:
Basic. . . . . . . . . . . . . . . . . . . . . . . 12,243 12,340
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Diluted. . . . . . . . . . . . . . . . . . . . . . 12,419 12,390
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Earnings per common share:
Basic. . . . . . . . . . . . . . . . . . . . . . . $ 0.59 $ 0.49
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Diluted. . . . . . . . . . . . . . . . . . . . . . $ 0.58 $ 0.49
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