EX-99.1 2 ex99_1.htm EXHIBIT 99.1 ex99_1.htm
ePlus Reports December 31, 2007 Quarter Results:
Revenues Decreased 11.0% to $198.4 Million;
Net Earnings Decresed 69.8% to $3.8 Million
 
HERNDON, VA – May 5, 2008– ePlus inc. (OTC: PLUS - news), today announced financial results for its third quarter of fiscal year 2008, which ended December 31, 2007 (“the Quarter”).  Revenues for the Quarter decreased 11.0% to $198.4 million as compared to revenues of $222.9 million during the three months ended December 31, 2006 (“the Prior Year’s Quarter”).  Net earnings for the Quarter decreased 69.8% to $3.8 million from $12.4 million the Prior Year’s Quarter.  As disclosed in the Company’s Form 10-Q for the period ended December 31, 2006, the Prior Year’s Quarter included patent settlement income of $17.5 million and related expenses of $5.8 million.  Excluding the patent settlement income, total revenues decreased 3.4% in the Quarter as compared to the Prior Year’s Quarter.

With the filing on May 2, 2008 of the Company’s Form 10-Q for the quarter ended December 31, 2007, the Company believes it is now current in its quarterly and annual report filing requirements of the Securities Exchange Act of 1934 and the related SEC rules.

Both basic and fully diluted earnings per common share were $0.45 for the Quarter, as compared to $1.51 and $1.47, respectively, for the Prior Year’s Quarter.  Basic and diluted weighted average common shares outstanding for the Quarter are 8,231,741 and 8,422,256, respectively, as compared to 8,231,741 and 8,456,627, respectively, for the Prior Year’s Quarter.

For the nine months ended December 31, 2007 as compared to the nine months ended December 31, 2006, total revenues increased 8.3% to $662.1 million from $611.1 million; net earnings decreased 11.9% to $13.6 million from $15.5 million; and fully diluted earnings per share declined 9.4% to $1.63 from $1.80.

For the Quarter, sales of product and services decreased 8.1% to $168.4 million as compared to $183.3 million generated the Prior Year’s Quarter, and represented 84.9% and 82.2% of total revenue, respectively.  The cost of sales, product and services decreased 7.7% to $148.8 million as compared to $161.3 million the Prior Year’s Quarter.  The gross margin on sales of product and services was 11.6% in the Quarter as compared to 12.0% the Prior Year’s Quarter.

Lease revenues decreased 23.8% to $12.2 million in the Quarter, and sale of leased equipment totaled approximately $13.7 million as compared to $2.6 million the Prior Year’s Quarter.  The net investment in leased assets was $161.1 million as of December 31, 2007, a 25.8% decrease from $217.0 million as of December 31, 2006.  This decrease was due to a reduction in our direct financing lease portfolio resulting from the sale of lease schedules and termination of leases in our operating lease portfolio.  Direct lease costs decreased 20.0% to $4.5 million in the Quarter.

For the Quarter, fee and other income was $4.1 million, an increase of 16.0% over the $3.5 million the Prior Year’s Quarter, due to an increase in agent fees from manufacturers and an increase in revenue from sales of ePlus software in the technology sales business unit.

There was no patent settlement income during the Quarter or nine months ended December 31, 2007.  During the three and nine months ended December 31, 2006, patent settlement income was $17.5 million.

Professional and other fees decreased 65.8% to $2.5 million for the Quarter, due to higher expenses incurred in the Prior Year’s Quarter related to a lawsuit against SAP and expenses related to the Audit Committee’s review of the Company’s historical stock option grants, as previously disclosed in the Company’s Form 10-K for the fiscal year ended March 31, 2007.

Salaries and benefits expenses decreased 4.9% to $17.1 million  during the Quarter, driven by a reduction in the number of employees and lower sales commission expense resulting from a decrease in the revenue.  The Company employed 649 people at December 31, 2007  as compared to 682 people at December 31, 2006.   General and administrative expenses decreased 7.2% to $3.8 million during the Quarter, due to increased efficiency in spending controls and efforts to enhance productivity.

Interest and financing costs decreased 36.0% to $1.8 million during the Quarter, which resulted from decreases in recourse and non-recourse notes payable, the total of which decreased 38.1% to $104.7 million as of December 31, 2007 as compared to December 31, 2006.  

The Company’s cash and cash equivalents balance as of December 31, 2007 was $65.6 million, as compared to $39.7 million as of March 31, 2007.

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 2007 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 approximately 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 list our shares of common stock for trading 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; a decrease in the capital spending budgets 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 May 5, 2008.  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, 2007 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
  
(in thousands, except for share amounts)
  
December 31,
    
March 31,
  
    2007    
2007
  
ASSETS
            
             
Cash and cash equivalents
   $ 65,590     $ 39,680  
Accounts receivable– net
     108,457       110,662  
Notes receivable
     186       237  
Inventories
     8,717       6,851  
Investment in leases and leased equipment - net
     161,074       217,170  
Property and equipment - net
     5,007       5,529  
Other assets
     15,011       11,876  
Goodwill
     26,125       26,125  
TOTAL ASSETS
   $ 390,167     $ 418,130  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
LIABILITIES
                
Accounts payable - equipment
   $ 6,482     $ 6,547  
Accounts payable - trade
     26,980       21,779  
Accounts payable - floor plan
     51,618       55,470  
Salaries and commissions payable
     4,491       4,331  
Accrued expenses and other liabilities
     26,674       25,960  
Income taxes payable
     3,531       -  
Recourse notes payable
     -       5,000  
Nonrecourse notes payable
     104,741       148,136  
Deferred tax liability
     4,457       4,708  
Total Liabilities
     228,974       271,931  
                 
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;
                
   11,210,731 issued and 8,231,741 outstanding at March 31, 2007
                
   and 11,210,731 issued and 8,231,741 outstanding at December 31, 2007
   $ 112     $ 112  
Additional paid-in capital
     77,471       75,909  
Treasury stock, at cost, 2,978,990 and 2,978,990 shares, respectively
     (32,884 )     (32,884 )
Retained earnings
     115,878       102,754  
Accumulated other comprehensive income -
     -       -  
    Foreign currency translation adjustment
     616       308  
Total Stockholders' Equity
     161,193       146,199  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 390,167     $ 418,130  

 
ePlus inc. AND SUBSIDIARIES
                        
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    
(UNAUDITED)
                        
(in thousands, except share amounts)
                        
   
Three Months Ended
    
Nine Months Ended
  
   
December 31,
    
December 31,
  
   
2007
    
2006
    
2007
    
2006
  
REVENUES
                        
   
 
                    
Sales of product and services
   $ 168,394     $ 183,277     $ 564,628     $ 538,923  
Sales of leased equipment
     13,740       2,557       40,544       4,376  
      182,134       185,834       605,172       543,299  
                                 
Lease revenues
     12,194       16,000       43,810       40,853  
Fee and other income
     4,111       3,544       13,124       9,484  
Patent Settlement Income
     -       17,500       -       17,500  
                                 
TOTAL REVENUES
     198,439       222,878       662,106       611,136  
                                 
COSTS AND EXPENSES
                                
                                 
Cost of sales, product and services
     148,802       161,254       500,202       477,879  
Cost of sales, leased equipment
     13,308       2,509       38,919       4,284  
      162,110       163,763       539,121       482,163  
                                 
Direct lease costs
     4,460       5,574       16,353       16,170  
Professional and other fees
     2,479       7,245       9,650       13,295  
Salaries and benefits
     17,069       17,947       53,971       52,912  
General and administrative expenses
     3,760       4,050       12,135       12,921  
Interest and financing costs
     1,818       2,839       6,590       7,492  
                                 
TOTAL COSTS AND EXPENSES
     191,696       201,418       637,820       584,953  
                                 
EARNINGS BEFORE PROVISION FOR INCOME TAXES
     6,743       21,460       24,286       26,183  
                                 
PROVISION FOR INCOME TAXES
     2,992       9,056       10,671       10,737  
                                 
NET EARNINGS
   $ 3,751     $ 12,404     $ 13,615     $ 15,446  
                                 
NET EARNINGS PER COMMON SHARE - BASIC
   $ 0.45     $ 1.51     $ 1.65     $ 1.88  
NET EARNINGS PER COMMON SHARE - DILUTED
   $ 0.45     $ 1.47     $ 1.63     $ 1.80  
                                 
                                 
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC
     8,231,741       8,231,741       8,231,741       8,222,700  
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED
     8,422,256       8,456,627       8,375,412       8,577,999  


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