Exhibit 99
Norstan Reports Second Quarter Fiscal 2004 Results; Company Reports Stable
Revenue, Improving Gross Margin Sequentially
MINNEAPOLIS--(BUSINESS WIRE)--Dec. 16, 2003--Norstan, Inc.
(Nasdaq:NRRD), a leading provider of communications technology
solutions and services, today reported revenues of $56.4 million for
the second quarter ended November 1, 2003, relatively flat as compared
to the $56.9 million reported in the first quarter of the same fiscal
year. Gross margins of 29.4% improved from the 28.1% reported one
quarter ago. The company reported a second quarter net loss of $3.4
million, or $0.26 per share, versus a reported first quarter loss of
$1.9 million, or $0.15 per share.
During the second fiscal quarter of 2004, Norstan recorded
restructuring and other charges of $4.2 million consisting of a
restructuring charge of $3.7 million and a write-off of certain fixed
assets in the amount of $500,000.
Excluding the restructuring and other charges, operating results
improved by $2.0 million as compared to results reported last fiscal
quarter. This improvement is the result of the workforce reduction,
which will have a more significant bottom line impact in the third and
fourth quarters of fiscal 2004.
"While other sectors of the economy have shown some signs of
improvement, the telecommunications industry continues to experience a
difficult business environment," said James C. "Jim" Granger, CEO and
President of Norstan. "We're nonetheless heartened by the fact that
our revenues on a sequential basis remained relatively flat and our
gross margins improved, however, we will continue to monitor our costs
going forward and take appropriate actions as required to improve our
profitability."
New Bank Agreement
Subsequent to the quarter end, Norstan entered a new five-year
$27.5 million bank agreement with Wells Fargo Foothill, Inc.
consisting of a $5.0 million revolving line of credit and a $22.5
million term loan (see news release dated December 11, 2003).
Year-Over-Year Comparison
Second quarter fiscal 2004 revenues declined approximately one
percent from $57.1 million reported in the same period last year.
Gross margin was down from the 31.5% reported in the second quarter of
fiscal 2003, the continuing result of changes in product mix.
Including $4.2 million in restructuring and other charges, operating
results declined from the operating income of $1.2 million reported in
the second quarter of fiscal 2003. Second quarter net losses increased
from the net income of $584,000 in the same period last fiscal year.
2004 Year-To-Date Results
For the six-month period ending November 1, 2003, Norstan recorded
revenues of $113.3 million, an increase of 3.8% from the same
six-month period of fiscal 2003. Gross margin of 28.7% declined from
the 31.6% in the comparable period of fiscal 2003. Including the
restructuring and other charges of $4.2 million incurred in the second
quarter of fiscal 2004, Norstan reported operating losses of $7.9
million as compared to operating income of $1.9 million reported for
the prior year's six-month period. Net loss from continuing operations
totaled $5.4 million, or $0.42 per share, as compared to net income
from continuing operations of $473,000, or $0.03 per share, in the
comparable period of fiscal 2003. For the six-month period, net losses
totaled $5.3 million, or $0.41 per share, versus net income of $2.8
million, or $0.21 per share, reported in fiscal 2003. During fiscal
2003, Norstan reported a $2.3 million net gain on the disposal of
discontinued operations.
Excluding the second quarter fiscal 2004 restructuring and other
charges, net loss from continuing operations for the six-month period
of fiscal 2004 totaled $2.9 million, or $0.22 per share.
Conference Call and Webcast
Norstan will discuss its second quarter fiscal 2004 results on a
conference call scheduled today, December 16, at 5 p.m. Eastern time.
The conference call can be accessed toll-free by callers at (888)
443-9986 or on the Internet at www.norstan.com. Starting today at
approximately 7:00 p.m. Eastern time, the replay of the call can be
accessed toll-free until midnight, December 23, by dialing (800)
642-1687 (conference ID number is 3921210) or on the Internet at
www.norstan.com.
Cautionary Statement Under the Private Securities Litigation
Reform Act of 1995
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Acts of 1995. A number of
factors should be considered in conjunction with the above
forward-looking statements, including changes in economic and market
conditions, factors related to the development of new technologies,
product pricing, industry regulation, management of growth,
integration of acquisitions, access to adequate long-term financing
and other factors set forth in cautionary statements included in
Norstan's Form 10-K and other documents as filed with the Securities
and Exchange Commission. Readers are cautioned not to place undue
reliance on forward-looking statements, which reflect management's
analysis only as of the date of this release. The company undertakes
no obligation to update these forward-looking statements to reflect
events and circumstances that may arise after the date of this
release. Disclosure of revenue dollars are not intended to reflect
materiality, and are subject to confidentiality provisions and
customer consent.
About Norstan, Inc.
Norstan, Inc. (Nasdaq:NRRD) - ...the technology services people
who improve the way their customers communicate. A full-service
telecommunications solutions company that delivers voice and data
technologies and services, and remanufactured equipment to select
corporate end-users and channel partners. Norstan also offers a full
range of technologies for call center design, messaging,
infrastructure, conferencing and mobility. Norstan has offices
throughout North America. To learn more, visit the Norstan website at
www.norstan.com.
Norstan and associated product names are trademarks or registered
trademarks of Norstan, Inc. in the United States and/or other
countries. All other products and services mentioned in this document
may be trademarks of the companies with which they are associated.
NORSTAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
For the Quarter For the Six
Ended Months Ended
----------------- -----------------
Nov. 1, Oct. 26, Nov. 1, Oct. 26,
2003 2002 2003 2002
-------- -------- -------- --------
Revenues
Communications Technology
Solutions and Services $48,167 $48,732 $97,221 $92,559
Resale Services 7,898 7,429 15,164 14,828
Financial Services 381 916 945 1,773
-------- -------- -------- --------
Total revenues 56,446 57,077 113,330 109,160
-------- -------- -------- --------
Cost of sales 39,826 39,081 80,744 74,656
-------- -------- -------- --------
Gross margin
Communications Technology
Solutions and Services 13,179 14,328 26,092 27,568
Resale Services 2,926 2,807 5,334 5,312
Financial Services 515 861 1,160 1,624
-------- -------- -------- --------
Total gross margin 16,620 17,996 32,586 34,504
-------- -------- -------- --------
Selling, general, and
administrative expenses 17,469 16,816 36,316 32,555
Restructuring and other
charges 4,180 - 4,180 -
-------- -------- -------- --------
Operating income (loss) (5,029) 1,180 (7,910) 1,949
Interest expense (553) (487) (1,001) (1,179)
Other income (expense), net 18 (1) 24 (7)
-------- -------- -------- --------
Net income (loss) from continuing
operations before taxes (5,564) 692 (8,887) 763
Income tax provision (benefit) (2,169) 263 (3,466) 290
-------- -------- -------- --------
Net income (loss) from continuing
operations (3,395) 429 (5,421) 473
Discontinued operations (net of tax):
Income from operations of
discontinued operations - - - 20
Gain (loss) from disposal of
discontinued operations (5) 155 150 2,284
-------- -------- -------- --------
Net income (loss) $(3,400) $584 $(5,271) $2,777
======== ======== ======== ========
Net income (loss) per share -
Continuing operations $(0.26) $0.03 $(0.42) $0.03
Net income (loss) per share -
Discontinued operations (0.00) 0.01 0.01 0.18
-------- -------- -------- --------
Net income (loss) per share $(0.26) $0.04 $(0.41) $0.21
======== ======== ======== ========
Weighted average shares
outstanding 12,984 12,817 12,939 12,966
======== ======== ======== ========
NORSTAN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
Nov. 1, April 30,
2003 2003
--------- ---------
ASSETS
------
CURRENT ASSETS
Cash $1,693 $1,185
Accounts receivable, net 32,090 33,523
Current lease receivables 5,867 6,846
Inventories 8,255 7,248
Costs and estimated earnings in excess of billings 5,161 5,746
Prepaid expenses, deposits and other 5,723 5,216
--------- ---------
Total current assets 58,789 59,764
--------- ---------
PROPERTY AND EQUIPMENT
Furniture, fixtures and equipment 92,751 89,988
Less accumulated depreciation and amortization (76,388) (72,304)
--------- ---------
Net property and equipment 16,363 17,684
--------- ---------
OTHER ASSETS
Lease receivables, net 2,782 5,503
Deferred income taxes 16,356 12,564
Net non-current assets of discontinued operations 623 693
Goodwill 4,524 4,379
Intangible and other assets 2,438 2,735
--------- ---------
Total other assets 26,723 25,874
--------- ---------
$101,875 $103,322
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Current maturities of long-term debt $3,403 $1,641
Current maturities of discounted lease rentals 3,835 4,897
Accounts payable 17,147 14,465
Deferred revenue 19,589 21,521
Accrued liabilities 11,001 11,031
Net current liabilities of discontinued operations 63 150
Billings in excess of costs and estimated earnings 7,738 6,827
--------- ---------
Total current liabilities 62,776 60,532
--------- ---------
LONG-TERM DEBT, NET 18,100 15,600
DISCOUNTED LEASE RENTALS, NET 1,822 3,600
--------- ---------
Total liabilities 82,698 79,732
--------- ---------
SHAREHOLDERS' EQUITY
Common stock - $0.10 par value: 40,000,000
authorized shares: 13,092,612 and 12,784,122
shares issued and outstanding 1,309 1,278
Capital in excess of par value 57,613 56,891
Accumulated deficit (37,791) (32,520)
Unamortized cost of stock (97) (134)
Accumulated other comprehensive loss (1,857) (1,925)
--------- ---------
Total shareholders' equity 19,177 23,590
--------- ---------
$101,875 $103,322
========= =========
Norstan, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
(In Thousands)
Operating loss - before restructuring and other charges
- -------------------------------------------------------
For the For the
Quarter Quarter
Ended Ended
-------- --------
Nov. 1, Aug. 2,
2003 2003
-------- --------
Operating loss - before
restructuring and other charges $(849) $(2,881)
Restructuring and other charges (4,180) -
-------- --------
Operating loss $(5,029) $(2,881)
======== ========
Net loss from continuing operations - before restructuring and other
charges
- ----------------------------------------------------------------------
For the
For the Six
Quarter Months
Ended Ended
-------- --------
Nov. 1, Nov. 1,
2003 2003
-------- --------
Net loss from continuing $(845) $(2,871)
operations - before restructuring
and other charges
Restructuring and other charges (4,180) (4,180)
Change in income tax (provision)
benefit 1,630 1,630
-------- --------
Net loss from continuing
operations $(3,395) $(5,421)
======== ========
Earnings before interest, taxes, depreciation and amortization -
continuing operations
- ----------------------------------------------------------------------
For the For the
Quarter Ended Six Months Ended
----------------- -----------------
Nov. 1, Oct. 26, Nov. 1, Oct. 26,
2003 2002 2003 2002
-------- -------- -------- --------
EBITDA - continuing operations $(2,803) $3,676 $(3,495) $7,008
Interest expense (553) (487) (1,001) (1,179)
Income tax (provision) benefit 2,169 (263) 3,466 (290)
Depreciation and amortization (2,208) (2,497) (4,391) (5,066)
-------- -------- -------- --------
Net income (loss) - continuing
operations $(3,395) $429 $(5,421) $473
======== ======== ======== ========
CONTACT: Norstan, Inc., Minneapolis
Jan W. Drymon, 952-352-4292
jan.drymon@norstan.com
or
The Carideo Group
Tony Carideo, 612-317-2880
tony@carideogroup.com