Pomeroy IT Solutions, Inc. - Financial Results, First Quarter Ended Ap

    Business Editors/High-Tech Writers

    HEBRON, Ky.--(BUSINESS WIRE)--May 12, 2005--Pomeroy IT Solutions (NASDAQ:PMRY), today announced results for the quarter ended April 5, 2005. For the first quarter, Pomeroy IT Solutions (the "Company") recorded revenues of $165.6 million, a 6.7% increase over revenues of $155.2 million in Q1, 2004. Diluted earnings per share of $0.23 for the quarter ended April 5, 2005 represent an increase of 27.8% from $0.18 in Q1, 2004.
    "As a reiteration and expansion of comments made in our May 5, 2005 pre announcement, our revenues for the quarter were impacted by delays in multiple projects which became evident late in the quarter. We are pleased with our cost management results and improvement in service and blended margins and our year-over-year profitability growth. Our liquidity remains strong with a working capital position of $84.8 million and a virtually untapped credit facility at quarter end," said Stephen E. Pomeroy, President and Chief Executive Officer.
    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 customers 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

(in thousands) April 5, January 5, 2005 2005 ----------- ---------- (unaudited) ASSETS

Current Assets: Cash and cash equivalents $30 $13,108 Certificates of deposit 4,576 4,561

Accounts receivable: Trade, less allowance of $2,031 at April 5, 2005 and $1,462 at January 5, 2005 121,773 143,113 Vendor receivables, less allowance of $100 at April 5, 2005 and January 5, 2005 5,804 5,790 Net investment in leases 3,118 3,814 Other 1,905 2,902 ----------- ---------- Total receivables 132,600 155,619 ----------- ----------

Inventories 16,650 17,188 Other 7,858 10,302 ----------- ---------- Total current assets 161,714 200,778 ----------- ----------

Equipment and leasehold improvements: Furniture, fixtures and equipment 30,036 30,113 Leasehold Improvements 6,323 6,187 ----------- ---------- Total 36,359 36,300

Less accumulated depreciation 21,626 21,061 ----------- ---------- Net equipment and leasehold improvements 14,733 15,239 ----------- ----------

Net investment in leases, net of current portion 2,425 1,650 Goodwill 109,902 109,913 Intangible assets, net 3,434 3,702 Other assets 2,753 1,606 ----------- ---------- Total assets $294,961 $332,888 =========== ==========

POMEROY IT SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS

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

Current Liabilities: Current portion of notes payable $- $912 Short-term borrowings 1,584 20,153 Accounts payable 56,938 72,656 Deferred revenue 2,898 3,490 Employee compensation and benefits 5,141 8,245 Accrued restructuring and severance charges 4,914 7,585 Other current liabilities 5,393 6,778 ----------- ---------- Total current liabilities 76,868 119,819 ----------- ----------

Notes payable, less current portion - 250 Deferred income taxes 375 97 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 (13,341 and 13,188 shares issued at April 5, 2005 and January 5, 2005, respectively) 133 132 Paid-in capital 87,229 85,231 Accumulated other comprehensive income (loss) 24 (78) Retained earnings 139,078 136,183 ----------- ---------- 226,464 221,468 Less treasury stock, at cost (778 shares at April 5, 2005 and January 5, 2005) 8,746 8,746 ----------- ---------- Total equity 217,718 212,722 ----------- ---------- Total liabilities and equity $294,961 $332,888 =========== ==========

POMEROY IT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except earnings per share data) Three Months Ended ----------------------- April 5, April 5, 2005 2004 ----------- ----------- (unaudited) (unaudited) Net sales and revenues: Sales-equipment, supplies and leasing $111,313 $124,599 Service 54,277 30,615 ----------- ----------- Total net sales and revenues 165,590 155,214 ----------- -----------

Cost of sales and service: Sales-equipment, supplies and leasing 102,424 114,573 Service 37,309 22,272 ----------- ----------- Total cost of sales and service 139,733 136,845 ----------- -----------

Gross profit 25,857 18,369 ----------- -----------

Operating expenses: Selling, general and administrative 18,575 12,967 Rent expense 854 768 Depreciation 1,073 889 Amortization 268 40 ----------- ----------- Total operating expenses 20,770 14,664 ----------- -----------

Income from operations 5,087 3,705 ----------- -----------

Other expense (income): Interest, net 221 (12) Other - 2 ----------- ----------- Total other expense (income) 221 (10) ----------- -----------

Income before income tax 4,866 3,715 Income tax expense 1,971 1,439 ----------- -----------

Net income $2,895 $2,276 =========== ===========

Weighted average shares outstanding: Basic 12,469 12,231 =========== =========== Diluted 12,717 12,401 =========== ===========

Earnings per common share: Basic $0.23 $0.19 =========== =========== Diluted $0.23 $0.18 =========== ===========

POMEROY IT SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Net income $2,895 $2,276 Other comprehensive income: Foreign currency translation adjustment, net of tax 102 - ----------- -----------

Comprehensive income $2,997 $2,276 =========== ===========

--30--JAM/cl*

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

KEYWORD: KENTUCKY OHIO INDUSTRY KEYWORD: HARDWARE EARNINGS SOURCE: Pomeroy IT Solutions, Inc.

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