Pomeroy IT Solutions, Inc. - Financial Results, Fourth Quarter and Yea

    Business Editors/High-Tech Writers

    HEBRON, Ky.--(BUSINESS WIRE)--Feb. 9, 2005--Pomeroy IT Solutions, Inc. (NASDAQ:PMRY), today announced results for the fourth quarter and fiscal year 2004, ended January 5, 2005.
    For the fourth quarter, the Company recorded revenues of $208.4 million, a 27.9% increase from revenues of $163.0 million in Q4, 2003. Diluted earnings per share of $0.30 for the quarter ended January 5, 2005, represent an increase of 25.0 % from $0.24 in Q4, 2003.
    For the fiscal year ended January 5, 2005, revenues increased 24.0% to $742.3 million from $598.4 million in fiscal year 2003. For the twelve months ended January 5, 2005, diluted earnings per share of $1.00, before the adjustment taken in 2004, represents a 35.1% increase from $0.74 for fiscal 2003, before the adjustment taken in 2003. For the same period, diluted earnings per share of $0.88, after the 2004 adjustment, represents a 20.5% increase from $0.73, after the 2003 adjustment. The adjustment for 2004, as previously disclosed, was restructuring and severance charges. The adjustment for fiscal year 2003 was due to a litigation settlement.
    "We continue to focus on customer satisfaction as well as execution of our market development and penetration strategies. We are also beginning to recognize synergies and strategic benefits from the integration of Alternative Resources Corporation, our recent acquisition," said President Steve 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 and 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.
    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 (Unaudited)

(in thousands) January 5, January 5, 2005 2004 ---------- ---------- ASSETS

Current Assets: Cash and cash equivalents $ 17,669 $ 40,200

Accounts receivable: Trade, less allowance of $1,230 and $2,556 at January 5, 2005 and 2004, respectively 143,113 111,324 Vendor receivables, less allowance of $100 at January 5, 2005 and 2004, respectively 5,790 7,226 Net investment in leases 3,814 2,056 Other 2,902 2,043 ---------- ---------- Total receivables 155,619 122,649 ---------- ----------

Inventories 17,188 12,453 Other 10,302 5,193 ---------- ---------- Total current assets 200,778 180,495 ---------- ----------

Equipment and leasehold improvements: Furniture, fixtures and equipment 30,113 29,517 Leasehold Improvements 6,187 6,438 ---------- ---------- Total 36,300 35,955

Less accumulated depreciation 21,061 19,696 ---------- ---------- Net equipment and leasehold improvements 15,239 16,259 ---------- ----------

Net investment in leases, net of current portion 1,650 2,935 Goodwill 109,913 67,664 Intangible assets 3,702 436 Other assets 1,606 1,410 ---------- ---------- Total assets $ 332,888 $ 269,199 ========== ==========

POMEROY IT SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands) January 5, January 5, 2005 2004 ---------- ---------- LIABILITIES AND EQUITY

Current Liabilities: Current portion of notes payable $ 912 $ 912 Short-term borrowings 20,153 - Accounts payable: Floor plan financing 19,393 16,572 Trade 53,263 33,479 ---------- ---------- Total accounts payable 72,656 50,051 Deferred revenue 3,490 3,988 Employee compensation and benefits 8,245 2,425 Accrued restructuring and severance charges 7,585 - Other current liabilities 6,778 6,333 ---------- ---------- Total current liabilities 119,819 63,709 ---------- ----------

Notes payable, net of current portion 250 913 Deferred income taxes 97 4,780

Equity: Preferred stock, $.01 par value; authorized 2,000 shares, (no shares issued or outstanding) - - Common stock, $.01 par value; authorized 20,000 shares, (13,160 and 12,943 shares issued at January 5, 2005 and 2004, respectively) 132 130 Paid in capital 84,931 82,696 Accumulated other comprehensive loss (78) - Retained earnings 136,483 125,250 ---------- ---------- 221,468 208,076 Less treasury stock, at cost (778 and 738 shares at January 5, 2005 and 2004, respectively) 8,746 8,279 ---------- ---------- Total equity 212,722 199,797 ---------- ---------- Total liabilities and equity $ 332,888 $ 269,199 ========== ==========

POMEROY IT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data) Fiscal Years Ended --------------------- January 5, January 5, 2005 2004 ---------- ---------- Net sales and revenues: Sales - equipment, supplies and leasing $ 545,115 $ 470,518 Service 197,175 127,905 ---------- ---------- Total net sales and revenues 742,290 598,423 ---------- ----------

Cost of sales and service: Equipment, supplies and leasing 504,018 435,048 Service 143,136 92,982 ---------- ---------- Total cost of sales and service 647,154 528,030 ---------- ----------

Gross profit 95,136 70,393 ---------- ----------

Operating expenses: Selling, general and administrative 66,449 46,769 Rent 3,448 3,149 Depreciation 4,029 4,915 Amortization 364 404 Provision for doubtful accounts - 200 Litigation settlement - 150 Restructuring and severance charges 2,423 - ---------- ---------- Total operating expenses 76,713 55,587 ---------- ----------

Income from operations 18,423 14,806 ---------- ----------

Other expense (income): Interest, net 251 (75) Miscellaneous 26 11 ---------- ---------- Total other expense (income) 277 (64) ---------- ----------

Income before income tax 18,146 14,870

Income tax expense 7,213 5,799 ---------- ----------

Net income $ 10,933 $ 9,071 ========== ==========

Weighted average shares outstanding: Basic 12,253 12,305 ========== ========== Diluted 12,442 12,375 ========== ==========

Earnings per common share: Basic $ 0.89 $ 0.74 ========== ========== Diluted $ 0.88 $ 0.73 ========== ==========

POMEROY IT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands) Year Ended --------------------- January 5, January 5, 2005 2004 ---------- ----------

Net income $ 10,933 $ 9,071 Other comprehensive loss: Foreign currency translation adjustment, net of tax (78) - ---------- ----------

Comprehensive income $ 10,855 $ 9,071 ========== ==========

POMEROY IT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data) Three Months Ended --------------------- January 5, January 5, 2005 2004 ---------- ---------- Net sales and revenues: Sales - equipment, supplies and leasing $ 137,391 $ 128,639 Service 71,026 34,382 ---------- ---------- Total net sales and revenues 208,417 163,021 ---------- ----------

Cost of sales and service: Equipment, supplies and leasing 126,380 118,862 Service 51,451 25,095 ---------- ---------- Total cost of sales and service 177,831 143,957 ---------- ----------

Gross profit 30,586 19,064 ---------- ----------

Operating expenses: Selling, general and administrative 21,879 12,142 Rent 997 752 Depreciation 1,061 1,272 Amortization 163 44 ---------- ---------- Total operating expenses 24,100 14,210 ---------- ----------

Income from operations 6,486 4,854 ---------- ----------

Other expense (income): Interest expense 250 (54) Miscellaneous (1) 10 ---------- ---------- Total other expense (income) 249 (44) ---------- ----------

Income before income tax 6,237 4,898

Income tax expense 2,538 1,910 ---------- ----------

Net income $ 3,699 $ 2,988 ========== ==========

Weighted average shares outstanding: Basic 12,284 12,200 ========== ========== Diluted 12,512 12,367 ========== =========

Earnings per common share: Basic $ 0.30 $ 0.25 ========== ========== Diluted $ 0.30 $ 0.24 ========== ==========

POMEROY IT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in thousands) Three Months Ended --------------------- January 5, January 5, 2005 2004 ---------- ----------

Net income $ 3,699 $ 2,988 Other comprehensive loss: Foreign currency translation adjustment, net of tax (42) - ---------- ----------

Comprehensive income $ 3,657 $ 2,988 ========== ==========

--30--MD/cl*

CONTACT: Pomeroy IT Solutions, Inc. Mike Rohrkemper, 859-586-0600 x1416 investor@pomeroy.com

KEYWORD: KENTUCKY INDUSTRY KEYWORD: HARDWARE COMPUTERS/ELECTRONICS SOFTWARE NETWORKING EARNINGS SOURCE: Pomeroy IT Solutions, Inc.

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