EX-99.1 2 exh.htm EXHIBIT 99.1 exh.htm
ePlus Reports December 31, 2006 Quarter Results:
Revenues Increased 36.7% to $223 Million

HERNDON, VA – November 7, 2007– ePlus inc. (OTC: PLUS - news), today announced financial results for its third quarter of fiscal year 2007, which ended December 31, 2006 (“the Quarter”).  Revenues for the Quarter increased 36.7% to $222.9 million as compared to revenues of $163.1 million during the three months ended December 31, 2005 (“the Prior Quarter”).  Net earnings for the Quarter increased 1,053% to $12.4 million from $1.1 million the Prior Quarter, and fully diluted earnings per share increased 1,109% to $1.47 from $0.12.  For the nine months ended December 31, 2006 as compared to the nine months ended December 31, 2005, total revenues increased 25.5% to $611.1 million from $487.1 million; net earnings increased 274.5% to $15.4 million from $4.1 million; and fully diluted earnings per share increased 292.9% to $1.80 from $0.46.

The increase in net earnings for the Quarter and nine months ended December 31, 2006 is primarily attributable to patent settlement income of $17.5 million.  The settlement was reached on December 11, 2006, and the amount was received in January, 2007.

For the Quarter, sales of product and services increased 25.2% to $183.3 million compared to $146.4 million generated the Prior Quarter, and represented 82.2% and 89.8% of total revenue, respectively.  The cost of sales, product and services increased 22.4% to $161.3 million as compared to $131.7 million the Prior Quarter.  The gross margin on sales of product and services was 12.0% in the Quarter as compared to 10.0% the Prior Quarter.

Lease revenues increased 16.3% to $16.0 million in the Quarter, and the net investment in leased assets was $217.0 million as of December 31, 2006, a 5.4% increase from $205.8 million as of December 31, 2005.  Direct lease costs increased 17.5% to $5.6 million in the Quarter.

For the quarter, fee and other income was $3.5 million as compared to $2.9 million the Prior Quarter, and for both nine month periods, $9.5 million.

Salaries and benefits expenses increased 12.9% to $17.9 million in the Quarter.  The Company employed 682 people as of December 31, 2006, as compared to 670 people as of December 31, 2005.  General and administrative expenses decreased 9.4% to $4.1 million in the Quarter.

Interest and financing costs increased 45.2% to $2.8 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 18.4% to $159.2 million as of December 31, 2006 as compared to December 31, 2005.

Basic and fully diluted earnings per common share were $1.51 and $1.47, respectively, for the Quarter, as compared to $0.13 and $0.12, respectively, for the Prior Quarter.  Basic and diluted weighted average common shares outstanding for the Quarter were 8,231,741 and 8,456,627, respectively, as compared to 8,215,221 and 8,865,829, respectively, the Prior Quarter.

For the nine months ended December 31, 2006 as compared to the nine months ended December 31, 2005, basic and fully diluted earnings per common share were $1.88 and $1.80, respectively, as compared to $0.49 and $0.46, respectively, and basic and diluted weighted average common shares outstanding were 8,222,700 and 8,577,999, as compared to 8,411,268 and 8,998,659, respectively.

During the Quarter, the Company did not purchase shares of its outstanding common stock, whereas during the Prior Quarter, the Company repurchased 276,756 shares for $3.7 million.  During the nine months ended December 31, 2006 and 2005 the Company repurchased 209,000 and 447,056 shares of its outstanding common stock for $2.9 million and $5.7 million, respectively.  Since the inception of the Company’s initial repurchase program on September 20, 2001, and as of December 31, 2006, the Company has repurchased 2,978,990 shares of its 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 December 31, 2006 was $20.9 million as compared to $20.7 million as of March 31, 2006.

Restatements

The Form 10-Q for the quarter ended December 31, 2006 contains restatements of the Condensed Consolidated Statements of Operations for the Prior Quarter and the nine months ended December 31, 2005 and the Condensed Consolidated Statement of Cash Flows for the nine months ended December 31, 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 December 31, 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 625 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 November 7, 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
    
December 31, 2006
  
ASSETS
  
(in thousands)
  
             
Cash and cash equivalents
   $
20,697
     $
20,946
  
Accounts receivable—net
    
103,060
      
150,868
  
Notes receivable
    
330
      
265
  
Inventories
    
2,292
      
11,360
  
Investment in leases and leased equipment—net
    
205,774
      
216,975
  
Property and equipment—net
    
5,629
      
5,427
  
Other assets
    
10,038
      
10,531
  
Goodwill
    
26,125
      
26,125
  
TOTAL ASSETS
   $
373,945
     $
442,497
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
LIABILITIES
                
                 
Accounts payable—equipment
   $
7,733
     $
6,226
  
Accounts payable—trade
    
19,235
      
22,692
  
Accounts payable—floor plan
    
46,689
      
53,815
  
Salaries and commissions payable
    
4,124
      
5,188
  
Accrued expenses and other liabilities
    
33,346
      
30,938
  
Income taxes payable
    
104
      
10,211
  
Recourse notes payable
    
6,000
      
10,000
  
Non-recourse notes payable
    
127,973
      
159,200
  
Deferred tax liability
    
165
      
165
  
Total Liabilities
    
245,369
      
298,435
  
                 
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 December 31, 2006
    
110
      
112
  
Additional paid-in capital
    
72,811
      
75,722
  
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
      
100,823
  
Accumulated other comprehensive income—foreign currency translation adjustment
    
287
      
289
  
Total Stockholders' Equity
    
128,576
      
144,062
  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $
373,945
     $
442,497
  

 
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  
(UNAUDITED)
                    
                     
   
Three Months Ended
    
Nine Months Ended
   
December 31,
    
December 31,
   
2005
    
2006
    
2005
  
2006
   
As Restated
          
As Restated
    
   
(dollar amounts in thousands, except per share data)
                       
REVENUES
                      
                       
Sales of product and services
   $
146,385
     $
183,277
     $
440,663
     $
538,923
  
Sales of leased equipment
    
-
      
2,557
      
-
      
4,376
  
     
146,385
      
185,834
      
440,663
      
543,299
  
                             
Lease revenues
    
13,758
      
16,000
      
36,969
      
40,853
  
Fee and other income
    
2,931
      
3,544
      
9,488
      
9,484
  
Patent settlement income
    
-
      
17,500
      
-
      
17,500
  
     
16,689
      
37,044
      
46,457
      
67,837
  
                           
 
TOTAL REVENUES
    
163,074
      
222,878
      
487,120
      
611,136
  
                             
COSTS AND EXPENSES
                            
                             
Cost of sales, product and services
    
131,734
      
161,254
      
397,564
      
477,879
  
Cost of leased equipment
    
-
      
2,509
      
-
      
4,284
  
     
131,734
      
163,763
      
397,564
      
482,163
  
                             
Direct lease costs
    
4,742
      
5,574
      
12,336
      
16,170
  
Professional and other fees
    
2,464
      
7,245
      
5,188
      
13,295
  
Salaries and benefits
    
15,893
      
17,947
      
45,969
      
52,912
  
General and administrative expenses
    
4,469
      
4,050
      
13,906
      
12,921
  
Interest and financing costs
    
1,956
      
2,839
      
5,210
      
7,492
  
     
29,524
      
37,655
      
82,609
      
102,790
  
                           
 
TOTAL COSTS AND EXPENSES
    
161,258
      
201,418
      
480,173
      
584,953
  
                             
EARNINGS BEFORE PROVISION FOR INCOME TAXES
    
1,816
      
21,460
      
6,947
      
26,183
  
                             
PROVISION FOR INCOME TAXES
    
740
      
9,056
      
2,823
      
10,737
  
                             
NET EARNINGS
   $
1,076
     $
12,404
     $
4,124
     $
15,446
  
                             
NET EARNINGS PER COMMON SHARE—BASIC
   $
0.13
     $
1.51
     $
0.49
     $
1.88
  
NET EARNINGS PER COMMON SHARE—DILUTED
   $
0.12
     $
1.47
     $
0.46
     $
1.80
  
                             
WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC
    
8,215,221
      
8,231,741
      
8,411,268
      
8,222,700
  
WEIGHTED AVERAGE SHARES OUTSTANDING—DILUTED
    
8,865,829
      
8,456,627
      
8,998,659
      
8,577,999
  


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