EX-99.1 2 exh99-1.htm EXHIBIT 99.1 exh99-1.htm
ePlus Reports September 30, 2006 Quarter:
Revenues Increase 14.1% to $199 Million

HERNDON, VA – October 9, 2007– ePlus inc. (OTC: PLUS - news), today announced financial results for its second quarter of fiscal year 2007, which ended September 30, 2006 (“the Quarter”).  Revenues for the quarter increased 14.1% to $198.7 million as compared to revenues of $174.2 million during the three months ended September 30, 2005 (“the Prior Quarter”).  Net earnings for the Quarter decreased 44.1% to $978 thousand from $1.75 million the Prior Quarter, and fully diluted earnings per share decreased 36.8% to $0.12 from $0.19.  For the six months ended September 30, 2006 as compared to the six months ended September 30, 2005, total revenues increased 19.8% to $388.3 million from $324.0 million; net earnings remained at $3.0 million; and fully diluted earnings per share increased 2.9% to $0.35 from $0.34.

The decline in net earnings for the Quarter is primarily attributable to a higher professional and other fees incurred by the Company.  These expenses increased $3.0 million or 168.2%, to $4.8 million during the Quarter from $1.8 million the Prior Quarter.  The increases were due to the costs of litigation related to the bankruptcy of one of the Company’s customers, and expenses relating a review of accounting guidance regarding stock option grants since the Company’s IPO in 1996.

For the Quarter, sales of product and services increased 13.1% to $180.3 million compared to $159.4 million generated the Prior Quarter, and represented 90.7% and 91.5% of total revenue, respectively.  The cost of sales, product and services increased 11.7% to $160.6 million as compared to $143.7 million the Prior Quarter.  The gross margin on sales of product and services was 10.9% in the Quarter as compared to 9.8% the Prior Quarter.

Lease revenues increased 13.5% to $13.5 million in the Quarter, and the net investment in leased assets was $223.2 million as of September 30, 2006, a 7.0% increase from $208.6 million as of September 30, 2005.  Direct lease costs increased 46.7% to $5.6 million in the Quarter.  Fee and other income was $3.1 million in the Quarter, an increase of 6.0% over the Prior Quarter.

Salaries and benefits expenses increased 15.9% to $17.7 million in the Quarter.  The Company employed 671 people as of September 30, 2006, as compared to 649 people as of September 30, 2005.  General and administrative expenses decreased 11.9% to $4.4 million in the Quarter.

Interest and financing costs increased 55.2% to $2.7 million in the Quarter.  This is primarily due to an increasing lease portfolio, the related non-recourse debt financings, and increasing debt rates on new financings.  Non-recourse notes payable increased 25.4% to $160.5 million as of September 30, 2006 as compared to March 31, 2006.

Basic and fully diluted earnings per common share were both $0.12 for the Quarter, as compared to $0.21 and $0.19, respectively, for the Prior Quarter.  Basic and diluted weighted average common shares outstanding for the Quarter were 8,228,823 and 8,424,903, respectively, as compared to 8,474,301 and 9,071,470, respectively, the Prior Quarter.

For the six months ended September 30, 2006 as compared to the six months ended September 30, 2005, basic and fully diluted earnings per common share were $0.37 and $0.35 as compared to $0.36 and $0.34, respectively, and basic and diluted weighted average common shares outstanding were 8,218,154 and 8,586,866 as compared to 8,509,827 and 9,071,092, respectively.

During the six months ended September 30, 2006, the Company repurchased 209,000 shares of our outstanding common stock for $2.9 million, as compared to a repurchase of 170,300 shares for $2.1 million the prior year’s period.  Since the inception of the initial repurchase program on September 20, 2001, as of September 30, 2006, the Company repurchased a total of 2,978,990 shares of outstanding common stock at an average cost of $11.04 per share for a total of $32.9 million.

The Company’s cash and cash equivalents balance as of September 30, 2006 was $23.7 million as compared to $20.7 million as of March 31, 2006.

Restatements

The Form 10-Q for the quarter ended September 30, 2006 contains restatements of the Consolidated Statements of Operations and Cash Flows for the Prior Quarter and the six months ended September 30, 2005 for the effects of errors in accounting for stock options and other items.  More information about the Company’s accounting restatement is contained in its Form 10-K for the fiscal year ended March 31, 2006 and its Form 10-Q for the quarter ended September 30, 2006.

The financial results presented herein are unaudited. Investors are encouraged to review the Company's Form 10-Q and to review other SEC filings including the Company's audited financial statements contained in the fiscal year 2006 Form 10-K.

About ePlus inc.

ePlus is a leading provider of technology solutions.  ePlus enables organizations to optimize their IT infrastructure and supply chain processes by delivering world-class IT products from top manufacturers, professional services, flexible lease financing, proprietary software, and patented business methods.  Founded in 1990, ePlus has more than 650 associates in 30+ offices serving more than 2,500 customers.  The Company is headquartered in Herndon, VA.   For more information, visit http://www.eplus.com/, call 888-482-1122, or email info@eplus.com.

ePlus® and/or other ePlus products referenced herein are either registered trademarks or trademarks of ePlus inc.
 
Note:  Statements in this press release, which are not historical facts, may be deemed to be "forward-looking statements.”  Actual and anticipated future results may vary due to certain risks and uncertainties, including, without limitation, the effects of the delisting of the Company’s common stock from The Nasdaq Global Market and the quotation of the Company’s common stock in the “Pink Sheets,” including any adverse effects relating to the trading of the stock due to, among other things, the absence of market makers; the timing of our ability to re-apply to list our shares of common stock on The Nasdaq Global Market; the effects of any lawsuits or governmental investigations alleging, among other things, violations of federal securities laws, by the Company or any of its directors or executive officers; the existence of demand for, and acceptance of, our services; our ability to hire and retain sufficient personnel; our ability to protect our intellectual property; the creditworthiness of our customers; our ability to raise capital and obtain non-recourse financing for our transactions; our ability to realize our investment in leased equipment; our ability to reserve adequately for credit losses; fluctuations in our operating results; and other risks or uncertainties detailed in our SEC filings.

All information set forth in this release and its attachments is as of October 9, 2007.  ePlus inc. undertakes no duty to update this information.  More information about potential factors that could affect ePlus inc.’s business and financial results is included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006 under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is on file with the SEC and available at the SEC’s website at http://www.sec.gov/.

ePlus inc. AND SUBSIDIARIES
            
CONDENSED CONSOLIDATED BALANCE SHEETS
            
(UNAUDITED)
  
As of
    
As of
  
   
March 31, 2006
    
September 30, 2006
  
ASSETS
  
(in thousands)
  
             
Cash and cash equivalents
   $
20,697
     $
23,681
  
Accounts receivable—net
    
103,060
      
138,974
  
Notes receivable
    
330
      
293
  
Inventories
    
2,292
      
10,303
  
Investment in leases and leased equipment—net
    
205,774
      
223,178
  
Property and equipment—net
    
5,629
      
4,957
  
Other assets
    
10,038
      
16,577
  
Goodwill
    
26,125
      
26,125
  
TOTAL ASSETS
   $
373,945
     $
444,088
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
LIABILITIES
                
Accounts payable—equipment
   $
7,733
     $
9,197
  
Accounts payable—trade
    
19,235
      
25,227
  
Accounts payable—floor plan
    
46,689
      
57,155
  
Salaries and commissions payable
    
4,124
      
4,511
  
Accrued expenses and other liabilities
    
33,346
      
37,792
  
Income taxes payable
    
104
      
1,321
  
Recourse notes payable
    
6,000
      
16,700
  
Nonrecourse notes payable
    
127,973
      
160,495
  
Deferred tax liability
    
165
      
165
  
Total Liabilities
    
245,369
      
312,563
  
                 
COMMITMENTS AND CONTINGENCIES
                
                 
STOCKHOLDERS' EQUITY
                
                 
Preferred stock, $.01 par value; 2,000,000 shares authorized;
                
none issued or outstanding
    
-
      
-
  
Common stock, $.01 par value; 25,000,000 shares authorized;
                
11,037,213 issued and 8,267,223 outstanding at March 31, 2006
                
and 11,210,731 issued and 8,231,741 outstanding at September 30,2006
    
110
      
112
  
Additional paid-in capital
    
72,811
      
75,505
  
Treasury stock, at cost, 2,769,990 and 2,978,990 shares, respectively
     (29,984 )     (32,884 )
Deferred compensation expense
     (25 )    
-
  
Retained earnings
    
85,377
      
88,420
  
Accumulated other comprehensive income—
                
foreign currency translation adjustment
    
287
      
372
  
Total Stockholders' Equity
    
128,576
      
131,525
  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $
373,945
     $
444,088
  
                 
See Notes to Unaudited Condensed Consolidated Financial Statements.
  

 
ePlus inc. AND SUBSIDIARIES
  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  
(UNAUDITED)
  
   
Three Months Ended
    
Six Months Ended
  
   
September 30,
    
September 30,
  
   
2005
    
2006
    
2005
    
2006
  
REVENUES
  
As Restated
          
As Restated
    
 
  
   
(dollar amounts in thousands, except per share data)
  
               
 
    
 
  
Sales of product and services
   $
159,409
     $
180,313
     $
294,278
     $
355,646
  
Sales of leased equipment
    
-
      
1,819
      
-
      
1,819
  
 
    
159,409
      
182,132
      
294,278
      
357,465
  
                                 
Lease revenues
    
11,916
      
13,522
      
23,211
      
24,853
  
Fee and other income
    
2,918
      
3,094
      
6,558
      
5,940
  
 
    
14,834
      
16,616
      
29,769
      
30,793
  
                                 
TOTAL REVENUES
    
174,243
      
198,748
      
324,047
      
388,258
  
                                 
COSTS AND EXPENSES
                                
                                 
Cost of sales, product and services
    
143,742
      
160,596
      
265,830
      
316,625
  
Cost of sales, leased equipment
    
-
      
1,775
      
-
      
1,775
  
 
    
143,742
      
162,371
      
265,830
      
318,400
  
                                 
Direct lease costs
    
3,798
      
5,572
      
7,594
      
10,596
  
Professional and other fees
    
1,776
      
4,764
      
2,724
      
6,050
  
Salaries and benefits
    
15,288
      
17,723
      
30,077
      
34,965
  
General and administrative expenses
    
4,975
      
4,385
      
9,437
      
8,871
  
Interest and financing costs
    
1,717
      
2,665
      
3,254
      
4,653
  
     
27,554
      
35,109
      
53,086
      
65,135
  
                                 
TOTAL COSTS AND EXPENSES
    
171,296
      
197,480
      
318,916
      
383,535
  
                                 
EARNINGS BEFORE PROVISION FOR INCOME TAXES
    
2,947
      
1,268
      
5,131
      
4,723
  
                                 
PROVISION FOR INCOME TAXES
    
1,198
      
290
      
2,082
      
1,681
  
                                 
NET EARNINGS
   $
1,749
     $
978
     $
3,049
     $
3,042
  
                                 
NET EARNINGS PER COMMON SHARE—BASIC
   $
0.21
     $
0.12
     $
0.36
     $
0.37
  
NET EARNINGS PER COMMON SHARE—DILUTED
   $
0.19
     $
0.12
     $
0.34
     $
0.35
  
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC
    
8,474,301
      
8,228,823
      
8,509,827
      
8,218,154
  
WEIGHTED AVERAGE SHARES OUTSTANDING—DILUTED
    
9,071,470
      
8,424,903
      
9,071,092
      
8,586,866
  


 
Contact:   
Kley Parkhurst, SVP 
 
 
ePlus inc. 
 
 
kparkhurst@eplus.com 
 
 
703-984-8150