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FOR IMMEDIATE RELEASE
CONTACT: Elan Yaish
Chief Financial Officer
Telephone: (631) 951-7060
Fax: (631) 951-7639
email: eyaish@mecnet.com
MANCHESTER TECHNOLOGIES, INC. ANNOUNCES FISCAL THIRD QUARTER RESULTS
HAUPPAUGE, NEW YORK - June 9, 2005 - Manchester Technologies Inc. (NASDAQ
NM: MANC), today announced financial results for its third fiscal quarter and
nine months ended April 30, 2005.
On April 17, 2005, the Company entered into a definitive merger agreement
under which entities associated with Caxton-Iseman Capital, Inc. will acquire
all of the Company's outstanding shares in an all cash transaction valued at
approximately $55 million. Under the terms of the agreement, which was
unanimously approved by the Company's Board of Directors, Manchester
shareholders will receive $6.40 per share in cash for each share they own at the
effective time of the merger.
Consummation of the merger, which is expected to occur in the third quarter
of calendar year 2005, is subject to approval by the holders of two-thirds of
the shares of the Company's outstanding common stock, expiration or termination
of the applicable waiting period under the Hart-Scott-Rodino Act, completion of
debt financing by Caxton-Iseman and customary closing conditions.
On May 28, 2004, the Company sold its end-user information technology
fulfillment and professional services business to ePlus, inc., a leading
provider of enterprise cost management, in an all cash transaction. The results
of operations for the three months and nine months ended April 30, 2005 and 2004
for that business have been recorded as discontinued operations in the
accompanying condensed consolidated statements of income.
Revenue from continuing operations for the quarter was $41.9 million as
compared with $42.4 million for the comparable quarter last year. Income from
continuing operations for the quarter was $14,000 or $0.00 per diluted share as
compared with $432,000 or $0.05 per diluted share reported a year ago. Weighted
average common shares outstanding used for the computation of diluted earnings
per share were 8,772,000 and 8,533,000, respectively.
Revenue from continuing operations for the nine months was $128.0 million
as compared with $132.9 million for the first nine months of last year. Income
from continuing operations for the nine months was $2.0 million or $0.24 per
diluted share as compared with $2.0 million or $0.24 per diluted share reported
a year ago.
During the three and nine months ended April 30, 2005, the Company recorded
losses related to lease buy-out expenses of approximately $666,000 for the
buy-out of a capital lease and $325,000 for the buy-out of an operating lease.
The Company ended the quarter with cash and cash equivalents of $20.5
million, working capital of $39.3 million, total assets of $73.5 million and
shareholders' equity of $46.4 million.
MANCHESTER TECHNOLOGIES, INC.
Page 2
About Manchester Technologies, Inc.
Manchester Technologies, Inc. is a distributor of display technology solutions
and plasma display monitors through its subsidiary Electrograph Systems, Inc.
and is a distributor of computer hardware, primarily to dealers and system
integrators. More information about the Company and Electrograph can be obtained
by visiting their websites located at http://www.e-manchester.com and the
website of its subsidiary at http://www.electrograph.com.
Safe Harbor Statement
This press release contains statements that may constitute forward-looking
statements pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
currently available information and represent the beliefs of our management.
These statements are subject to risks and uncertainties that could cause actual
results to differ materially, including, but not limited to, our inability to
attract and retain highly skilled sales representatives or technical personnel
necessary to maintain our current operations and implement our growth
strategies; our inability to maintain good relationships with our vendors and
customers; not being successful in our efforts to focus on higher-margin
products and services and not being able to rapidly respond to new product
offerings; not managing our inventory successfully; being adversely affected by
continued intense competition in the technology industry, including competition
from competitors with greater resources; being subject to potentially adverse
business conditions that our industry is subject to, including, without
limitation, pricing pressures involving distribution channels, market
consolidation, a potential short supply of products, continued deterioration in
average selling prices of personal computers and display technologies, and a
decrease in the growth of the display technology market; the risk that our
success is highly dependent upon a select group of senior management and that
our revenues and operating results are subject to fluctuation from quarter to
quarter; the failure of our information technology systems to function properly;
the failure of our actions to enhance shareholder value; failure to consummate
the merger; failure of the Company's shareholders to adopt the merger agreement
and the merger; the occurrence or existence of any event, fact or set of
circumstances that has had or would reasonably be expected to have, individually
or in the aggregate, a "company material adverse effect" as such term is defined
in the merger agreement; failure of the Company and the acquiror to obtain the
required consents and approvals under the Hart-Scott-Rodino Act; the imposition
of any government conditions to the closing of the proposed transaction; the
failure by the Company or the acquiror to satisfy other conditions to the
completion of the merger as set forth in the merger agreement; the failure of
the acquiror to obtain debt and equity financing; the failure of the Company to
collect from Caxton-Iseman. the termination fee of $2.5 million following an
event that gives rise to an obligation to pay such termination fee; or the
Company's obligation to pay a termination fee of $2.5 million to the acquiror
following an event that gives rise to an obligation to pay such termination fee.
For further information on these risks and others affecting us, please see our
Annual Report on Form 10-K for the year ended July 31, 2004, and those set forth
from time to time in our other filings with the Securities and Exchange
Commission (the "SEC"). Each of these documents is on file with the SEC and is
available free of charge. Readers of this press release are referred to such
filings. The forward-looking statements herein speak only as of the date of this
press release. We do not undertake to update any forward-looking statement that
may be made from time to time by us or on our behalf.
- Tables Follow-
Manchester Technologies, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
Three months ended April 30, Nine months ended April 30,
2005 2004 2005 2004
---- ---- ---- ----
Revenue $41,902 $42,448 $128,072 $132,943
Cost of Revenue 36,649 38,509 111,906 119,712
------ ------ ------- -------
Gross profit 5,253 3,939 16,166 13,231
Selling, general and
administrative expenses 4,608 3,149 12,317 9,735
Loss on buy-out of capital lease 666 - 666 -
--- ------- --- ------
Income (loss) from operations (21) 790 3,183 3,496
Interest and other income (expense), net 46 (70) 179 (166)
-- ---- --- ----
Income from continuing operations
before income taxes 25 720 3,362 3,330
Income tax provision 11 288 1,345 1,312
-- ---- ----- -----
Income from continuing operations 14 432 2,017 2,018
-- ---- ----- -----
Discontinued operations
Income (loss) from operations of
discontinued component - (714) 995 (2,314)
Income tax (provision) benefit - 285 (398) 905
---- --- ---- ------
Income (loss) from discontinued operations - (429) 597 (1,409)
---- ----- --- -------
Net income $ 14 $ 3 $2,614 $ 609
=== ======= ===== =======
Income per share from continuing operations
Basic $ 0.00 $0.05 $0.24 $0.25
===== ==== ==== ====
Diluted $0.00 $0.05 $0.24 $0.24
==== ==== ==== ====
Income (loss) per share from discontinued operations
Basic $ 0.00 $(0.05) $0.07 $(0.18)
===== ===== ==== =====
Diluted $0.00 $(0.05) $0.07 $(0.17)
==== ===== ==== =====
Net income per share
Basic $0.00 $0.00 $0.32 $0.08
==== ==== ==== ====
Diluted $0.00 $0.00 $0.31 $0.07
==== ==== ==== ====
Weighted average shares outstanding
Basic 8,486 8,070 8,289 8,017
===== ===== ===== =====
Diluted 8,772 8,533 8,519 8,364
===== ===== ===== =====
- More Tables To Follow -
Manchester Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands except per share amounts)
April 30, 2005 July 31, 2004
(Unaudited) -------------
---------
Assets
------
Current assets:
Cash and cash equivalents $20,476 $16,881
Accounts receivable, net of allowance for doubtful accounts
of $1,525 and $2,848, respectively 15,799 15,530
Inventory 21,166 20,301
Deferred income taxes 1,212 1,212
Prepaid taxes 655 916
Prepaid expenses and other current assets 1,111 1,266
----- -----
Total current assets 60,419 56,106
Property and equipment, net 7,487 9,890
Goodwill, net 3,735 3,735
Deferred income taxes 1,728 1,728
Other assets 113 183
----- -------
Total assets $73,482 $71,642
====== ======
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $20,899 $21,492
Current portion of capital lease obligations 213 246
------ --------
Total current liabilities 21,112 21,738
Deferred compensation payable 98 98
Capital lease obligations, net of current portion 5,836 7,683
----- -----
Total liabilities 27,046 29,519
------ ------
Commitments and contingencies
Shareholders' equity:
Preferred stock, $.01 par value; 5,000 shares
authorized, none issued - -
Common stock, $.01 par value; 25,000 shares
authorized, 8,542 and 8,163 shares issued
and outstanding 85 82
Additional paid-in capital 21,293 19,597
Retained earnings 25,058 22,444
------ ------
Total shareholders' equity 46,436 42,123
------ ------
Total liabilities and shareholders' equity $73,482 $71,642
====== ======
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