-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IBSoVHCL5kFY5U9y2FMKYHGyR6UHYbguCLgXQNT6sQw1zEzhfyWqTs9Is0CxEWeT ycgNulXTeciP9PI5nNoTiA== 0000912057-96-004344.txt : 19960314 0000912057-96-004344.hdr.sgml : 19960314 ACCESSION NUMBER: 0000912057-96-004344 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960127 FILED AS OF DATE: 19960312 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORSTAN INC CENTRAL INDEX KEY: 0000072418 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TELEPHONE INTERCONNECT SYSTEMS [7385] IRS NUMBER: 410835746 STATE OF INCORPORATION: MN FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08141 FILM NUMBER: 96533781 BUSINESS ADDRESS: STREET 1: 6900 WEDGWOOD RD STE 150 STREET 2: P O BOX 9003 CITY: MAPLE GROVE STATE: MN ZIP: 55311 BUSINESS PHONE: 6124201100 MAIL ADDRESS: STREET 1: NORSTAN INC STREET 2: 6900 WEDGEWOOD ROAD CITY: MAPLE GROVE STATE: MN ZIP: 55311 FORMER COMPANY: FORMER CONFORMED NAME: NORSTAN RESEARCH & DEVELOPMENT CO DATE OF NAME CHANGE: 19770926 FORMER COMPANY: FORMER CONFORMED NAME: NORSTAN MANUFACTURING CO INC DATE OF NAME CHANGE: 19750918 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 27, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to __________________ Commission File Number 0-8141 NORSTAN, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Minnesota 41-0835746 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 605 NORTH HIGHWAY 169, TWELFTH FLOOR, PLYMOUTH, MINNESOTA 55441 612/420-1100 --------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- On March 4, 1996, there were 4,330,101 shares outstanding of the registrant's common stock, par value $.10 per share, its only class of equity securities. PART I. FINANCIAL INFORMATION ITEM 1. NORSTAN, INC. AND SUBSIDIARIES ------------------------------ CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- UNAUDITED (In thousands, except per share amounts)
Three Months Ended Nine Months Ended ---------------------------- ---------------------------- January 27, January 28, January 27, January 28, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- REVENUES: Sales of Products and Systems $ 45,092 $ 45,203 $ 129,112 $ 119,941 Telecommunications Services 35,216 28,207 99,464 85,749 Financial Services 1,322 1,202 4,161 3,744 ------------- ------------- ------------- ------------- Total Revenues 81,630 74,612 232,737 209,434 ------------- ------------- ------------- ------------- COST OF SALES: Products and Systems 33,130 33,374 96,001 89,500 Telecommunications Services 24,748 18,228 69,105 53,999 Financial Services 570 589 1,725 1,718 ------------- ------------- ------------- ------------- Total Cost of Sales 58,448 52,191 166,831 145,217 ------------- ------------- ------------- ------------- GROSS MARGIN 23,182 22,421 65,906 64,217 Selling, General & Administrative Expenses 19,032 18,897 55,015 54,912 ------------- ------------- ------------- ------------- OPERATING INCOME 4,150 3,524 10,891 9,305 Interest Expense (317) (406) (1,165) (1,122) Interest and Other Income, Net (11) - 65 54 ------------- ------------- ------------- ------------- INCOME BEFORE PROVISION FOR INCOME TAXES 3,822 3,118 9,791 8,237 Provision for Income Taxes 1,529 1,247 3,916 3,295 ------------- ------------- ------------- ------------- NET INCOME $ 2,293 $ 1,871 $ 5,875 $ 4,942 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ .51 $ .43 $ 1.31 $ 1.14 ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 4,515 4,371 4,495 4,348 ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
The accompanying notes to the consolidated financial statements are an integral part of these statements. NORSTAN, INC. AND SUBSIDIARIES ------------------------------ CONSOLIDATED BALANCE SHEETS --------------------------- (In thousands)
January 27, April 30, 1996 1995 ------------- ------------- (Unaudited) (Audited) ASSETS CURRENT ASSETS: Cash $ 2,566 $ 1,308 Accounts receivable, net of allowances for doubtful accounts of $1,297 and $804 58,536 51,779 Current lease receivables 14,920 14,122 Inventories 11,892 11,137 Costs and estimated earnings in excess of billings of $15,004 and $16,691 8,245 10,926 Prepaid income taxes 3,486 3,634 Prepaid expenses, deposits and other 3,407 2,331 ------------- ------------- TOTAL CURRENT ASSETS 103,052 95,237 ------------- ------------- PROPERTY AND EQUIPMENT: Furniture, fixtures and equipment 73,054 64,652 Less-accumulated depreciation and amortization (40,541) (32,885) ------------- ------------- NET PROPERTY AND EQUIPMENT 32,513 31,767 ------------- ------------- OTHER ASSETS: Lease receivables, net of current maturities 24,467 26,381 Franchise rights and other intangible assets, net of amortization of $3,854 and $3,435 7,434 7,904 Other 578 420 ------------- ------------- TOTAL OTHER ASSETS 32,479 34,705 ------------- ------------- $ 168,044 $ 161,709 ------------- ------------- ------------- -------------
The accompanying notes to the consolidated financial statements are an integral part of these balance sheets. NORSTAN, INC. AND SUBSIDIARIES ------------------------------ CONSOLIDATED BALANCE SHEETS --------------------------- (In thousands, except share amounts)
January 27, April 30, 1996 1995 ------------- ------------- (Unaudited) (Audited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term $ - $ 93 Current maturities of discounted lease rentals 12,887 11,449 Accounts payable 13,642 16,467 Accrued - Salaries and wages 9,259 10,841 Deferred revenue 17,841 15,045 Warranty costs 1,669 1,756 Other liabilities 6,317 5,118 Income taxes payable 568 158 Billings in excess of costs and estimated earnings of $12,415 and $10,121 4,093 2,127 ------------- ------------- TOTAL CURRENT LIABILITIES 66,276 63,054 ------------- ------------- LONG-TERM DEBT, net of current maturities 12,050 16,465 DISCOUNTED LEASE RENTALS, net of current 16,618 16,313 DEFERRED INCOME TAXES 8,758 8,893 ------------- ------------- SHAREHOLDERS' EQUITY: Common stock - $.10 par value; 20,000,000 authorized shares; 4,327,701 and 4,215,441 shares issued and outstanding 433 422 Capital in excess of par value 27,697 26,031 Retained earnings 37,361 31,486 Unamortized cost of stock (128) (149) Foreign currency translation (1,021) (806) ------------- ------------- TOTAL SHAREHOLDERS' EQUITY 64,342 56,984 ------------- ------------- $ 168,044 $ 161,709 ------------- ------------- ------------- -------------
The accompanying notes to the consolidated financial statements are an integral part of these balance sheets. NORSTAN, INC. AND SUBSIDIARIES ------------------------------ CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- UNAUDITED --------- (In thousands)
Nine Months Ended ---------------------------- January 27, January 28, 1996 1995 ------------- ------------- OPERATING ACTIVITIES: Net Income $ 5,875 $ 4,942 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,443 7,585 Deferred income taxes - (110) Changes in operating items: Accounts receivable (6,863) (6,183) Inventories (781) (3,013) Costs and estimated earnings in excess of billings 2,666 1,041 Prepaid expenses, deposits and other (1,082) (903) Accounts payable (2,805) 163 Accrued liabilities 2,403 2,175 Billings in excess of costs and estimated earnings 1,969 1,599 Income taxes payable 411 715 ------------- ------------- Net cash provided by operating activities 10,236 8,011 ------------- ------------- INVESTING ACTIVITIES: Cash paid for acquisition - (726) Additions to property and equipment, net (8,733) (8,944) Investment in lease contracts (12,822) (12,758) Collections from lease contracts 13,862 12,535 Other, net (123) (99) ------------- ------------- Net cash used for investing activities (7,816) (9,992) ------------- ------------- FINANCING ACTIVITIES: Repayment of short-term debt - (424) Borrowings under revolving credit agreements 87,735 89,660 Repayments under revolving credit agreements (92,150) (88,815) Repayments of long-term debt (93) (95) Borrowings on discounted lease rentals 10,720 9,059 Repayments of discounted lease rentals (8,962) (8,273) Proceeds from sale of common stock 1,595 1,309 ------------- ------------- Net cash (used for) provided by financing (1,155) 2,421 ------------- ------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (7) (3) ------------- ------------- NET INCREASE IN CASH 1,258 437 CASH, BEGINNING OF PERIOD 1,308 755 ------------- ------------- CASH, END OF PERIOD $ 2,566 $ 1,192 ------------- ------------- ------------- -------------
The accompanying notes to the consolidated financial statements are an integral part of these statements. NORSTAN, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 27, 1996 UNAUDITED The information furnished in this report is unaudited and reflects all adjustments, which are normal recurring adjustments and, which in the opinion of management, are necessary to present fairly the operating results for the interim periods. The operating results for the interim periods presented are not necessarily indicative of the operating results to be expected for the full fiscal year. This report should be read in conjunction with the Company's most recent "Annual Report on Form 10-K." PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. FOREIGN CURRENCY - For the Company's foreign operations, assets and liabilities are translated at exchange rates as of the balance sheet date, and revenues and expenses are translated at average exchange rates prevailing during the period. Translation adjustments are recorded as a separate component of shareholders' equity. NORSTAN FINANCIAL SERVICES, INC. (NFS) - NFS provides financing for customers of the Company. Leases are accounted for as sales-type leases for consolidated financial reporting purposes. Condensed unaudited statements of operations of NFS are as follows (in thousands):
Nine Months Ended ---------------------------- January 27, January 28, 1996 1995 ------------- ------------- Revenues $ 3,751 $ 3,514 Interest Expense (1,407) (1,526) Other Expenses (1,004) (920) ------------- ------------- Income before provision for income taxes 1,340 1,068 Provision for income taxes (536) (427) ------------- ------------- Net Income $ 804 $ 641 ------------- ------------- ------------- -------------
SUPPLEMENTAL CASH FLOWS INFORMATION - Supplemental disclosure of cash flows information is as follows (in thousands):
Nine Months Ended ---------------------------- January 27, January 28, 1996 1995 ------------- ------------- Cash paid for: Interest $ 2,785 $ 2,733 Income taxes $ 3,471 $ 2,553
RECENTLY ISSUED ACCOUNTING STANDARD - Financial Accounting Standards Board (FASB) Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (Statement 121), issued in March 1995 and effective for fiscal years beginning after December 15, 1995, establishes accounting standards for the recognition and measurement of impairment of long-lived assets, certain identifiable intangibles, and goodwill either to be held or disposed of. Management believes the adoption of Statement 121 will not have a material impact on the Company's financial position or results of operations. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SUMMARY - During the quarter ended January 27, 1996, the Company's net income improved compared to the quarter ended January 28, 1995, increasing 22.6% to $2,293,000, or $.51 per common share, compared to $1,871,000, or $.43 per common share. For the nine month period ended January 27, 1996, the Company's net income was $5,875,000, or $1.31 per common share, compared to $4,942,000, or $1.14 per common share, for the same period last year. RESULTS OF OPERATIONS - The Company's revenues consist of revenues from the sale of products and systems, telecommunications services and financial services. Revenues from the sale of products and systems result from the sale of new products and upgrades, as well as refurbished equipment. Revenues from telecommunications services result primarily from communications maintenance services, moves, adds and changes and long distance service. Financial services revenues result primarily from leasing activities. The following table sets forth, for the periods indicated, certain items from the Company's consolidated statements of operations. SELECTED CONSOLIDATED FINANCIAL DATA
DOLLAR AMOUNTS AS A DOLLAR AMOUNTS AS A PERCENTAGE OF REVENUES PERCENTAGE PERCENTAGE OF REVENUES PERCENTAGE Three Months Ended INCREASE Nine Months Ended INCREASE ---------------------------- -------------- ---------------------------- ------------- January 27, January 28, Fiscal January 27, January 28, Fiscal 1996 1995 1996 vs. 1995 1996 1995 1996 vs 1995 ------------- ------------- -------------- ------------- ------------- ------------- REVENUES Sales of Products and Systems 55.2% 60.6% (0.2%) 55.5% 57.3% 7.6% Telecommunications Services 43.1% 37.8% 24.8% 42.7% 40.9% 16.0% Financial Services 1.7% 1.6% 10.0% 1.8% 1.8% 11.1% ------------- ------------- -------------- ------------- ------------- ------------- Total Revenues 100.0% 100.0% 9.4% 100.0% 100.0% 11.1% COST OF SALES 71.6% 69.9% 12.0% 71.7% 69.3% 14.9% ------------- ------------- -------------- ------------- ------------- ------------- GROSS MARGIN 28.4% 30.1% 3.4% 28.3% 30.7% 2.6% SELLING, GENERAL & ADMINISTRATIVE EXPENSES 23.3% 25.4% 0.7% 23.6% 26.2% 0.2% ------------- ------------- -------------- ------------- ------------- ------------- OPERATING INCOME 5.1% 4.7% 17.8% 4.7% 4.5% 17.0% Interest Expense and Other, Net (0.4%) (0.5%) (19.2%) (0.5%) (0.5%) 3.0% ------------- ------------- -------------- ------------- ------------- ------------- INCOME BEFORE PROVISION FOR INCOME TAXES 4.7% 4.2% 22.6% 4.2% 4.0% 18.9% Provision for Income Taxes 1.9% 1.7% 22.6% 1.7% 1.6% 18.9% ------------- ------------- -------------- ------------- ------------- ------------- NET INCOME 2.8% 2.5% 22.6% 2.5% 2.4% 18.9% ------------- ------------- -------------- ------------- ------------- ------------- ------------- ------------- -------------- ------------- ------------- -------------
The following table sets forth, for the periods indicated, the gross margin percentages for sales of products and systems, telecommunications services and financial services.
Three Months Ended Nine Months Ended ---------------------------- ---------------------------- January 27, January 28, January 27, January 28, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- GROSS MARGIN PERCENTAGES: Sales of Products and Systems 26.5% 26.2% 25.6% 25.4% Telecommunications Services 29.7% 35.4% 30.5% 37.0% Financial Services 56.9% 51.0% 58.5% 54.1%
RESULTS OF OPERATIONS REVENUES. Revenues increased 9.4%, to $81,630,000 for the quarter ended January 27, 1996 as compared to $74,612,000 for the similar period last year. For the nine months ended January 27, 1996, revenues increased 11.1%, to $232,737,000 as compared to $209,434,000 for the same period last year. Sales of products and systems decreased $111,000, or less than 1% and increased $9,171,000, or 7.6% during the comparable three and nine month periods ended January 27, 1996, respectively. Revenues from telecommunications services increased $7,009,000, or 24.8% and $13,715,000, or 16.0% in the comparable three and nine month periods ended January 27, 1996, respectively. Revenues from telecommunications services generally have increased following the growth in the sales of telecommunications products and systems in fiscal 1995 and 1994. Revenues from financial services increased $120,000, or 10.0% and $417,000, or 11.1% during the comparable three and nine month periods ended January 27, 1996, respectively. GROSS MARGIN. The Company's gross margin increased $761,000, or 3.4%, to $23,182,000 for the three months ended January 27, 1996 as compared to $22,421,000 for the three months ended January 28, 1995. For the nine month period ended January 27, 1996, gross margin increased $1,689,000, or 2.6%, to $65,906,000 as compared to $64,217,000 for the nine months ended January 28, 1995. As a percent of total revenues, gross margin declined to 28.4% and 28.3% for the three and nine month periods ended January 27, 1996 as compared to 30.1% and 30.7% for the three and nine month periods ended January 28, 1995, respectively. Gross margin as a percent of revenues for the sale of products and systems was 26.5% and 25.6% for the three and nine month periods ended January 27, 1996 as compared to 26.2% and 25.4% for the comparable periods ended January 28, 1995, respectively. Gross margin as a percent of revenues for telecommunications services was 29.7% and 30.5% for the three and nine month periods ended January 27, 1996 as compared to 35.4% and 37.0% for the comparable periods ended January 28, 1995, respectively. These decreases result from changes in the mix of services, increased service support costs, additional training and development costs required to support the Company's expanded line of product offerings, as well as decreased margins attributable to moves, adds and changes. Gross margin as a percent of revenues for financial services was 56.9% and 58.5% for the three and nine month periods ended January 27, 1996 as compared to 51.0% and 54.1% for the three and nine month periods ended January 28, 1995, respectively. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased $135,000, or less than 1.0% for the quarter ended January 27, 1996 as compared to the quarter ended January 28, 1995. For the nine months ended January 27, 1996, selling, general and administrative expenses increased $103,000, or less than 1.0% as compared to the similar period last year. As a percent of revenues, selling, general and administrative expenses declined to 23.3% and 23.6% for the three and nine month periods ended January 27, 1996 as compared to 25.4% and 26.2% for the similar periods ended January 28, 1995, respectively. These decreases in selling, general and administrative expenses as a percent of revenues resulted from volume related efficiencies, as sales volume increased without a proportionate increase in expenses. OPERATING INCOME. Operating income increased $626,000, or 17.8%, to $4,150,000 for the quarter ended January 27, 1996 as compared to $3,524,000 for the quarter ended January 28, 1995. For the nine months ended January 27, 1996, operating income increased $1,586,000, or 17.0%, to $10,891,000, as compared to $9,305,000 for the similar period last year. As a percent of revenues, operating income increased to 5.1% and 4.7% for the three and nine month periods ended January 27, 1996 as compared to 4.7% and 4.5% for the similar periods ended January 28, 1995, respectively. OTHER COSTS AND EXPENSES. Interest expense decreased to $317,000 for the three month period ended January 27, 1996 as compared to $406,000 for the similar period ended January 28, 1995. For the similar nine month periods ended January 27, 1996, and January 28, 1995, respectively, interest expense increased to $1,165,000 as compared to $1,122,000. Average month end revolving credit balances (excluding amounts borrowed to finance leasing activities) were approximately $22,500,000 for the nine months ended January 27, 1996 as compared to approximately $21,000,000 for the nine months ended January 28, 1995. The Company's effective tax rate was 40% for the three and nine month periods ended January 27, 1996, and January 28, 1995. The Company's effective tax rate differs from the federal statutory rate primarily due to state income taxes. The provisions for income tax have been recorded based upon management's estimate of the annualized effective tax rate. NET INCOME. Net income was $2,293,000, or $.51 per common share, and $1,871,000, or $.43 per common share, for the quarters ended January 27, 1996 and January 28, 1995, respectively. Net income was $5,875,000, or $1.31 per common share, and $4,942,000, or $1.14 per common share, for the nine month periods ended January 27, 1996 and January 28, 1995, respectively. LIQUIDITY AND CAPITAL RESOURCES WORKING CAPITAL. Working capital increased to $36,776,000 at January 27, 1996 from $32,183,000 at April 30, 1995. The current ratio was 1.55 to 1.0 at January 27, 1996 as compared to 1.51 to 1.0 at April 30, 1995. Net cash provided by operating activities was $10,236,000 for the nine months ended January 27, 1996 as compared to $8,011,000 for the nine months ended January 28, 1995. CAPITAL RESOURCES. In October 1994, the Company entered into a $35,000,000 unsecured revolving long-term credit agreement with certain banks. Under this agreement, the total credit facility of $35,000,000 is reduced by $750,000 per fiscal quarter effective January 31, 1995. As of January 27, 1996, the total capacity of the credit facility was $31,250,000. Borrowings under this agreement are due May 2, 1998 and bear interest at the banks' reference rate (8.50% and 9.00% at January 27, 1996 and April 30, 1995, respectively), except for LIBOR, CD and commercial paper based options which generally bear interest at a rate lower than the bank's reference rate. The Company is able to borrow up to $15,000,000 of this credit facility in the form of commercial paper. In addition, Norstan Financial Services, Inc. (NFS) is able to borrow up to $8,000,000 of this facility from Norstan, Inc. Total consolidated borrowings under this agreement were $12,050,000 and $16,465,000 at January 27, 1996 and April 30, 1995, respectively. There was nothing borrowed for the account of NFS at January 27, 1996, and $322,000 borrowed for the account of NFS at April 30, 1995. Borrowings by the Company in fiscal 1996 and 1995 have been for working capital and general corporate purposes, to invest in property and equipment, as well as to borrow funds for NFS. Net capital expenditures for the nine months ended January 27, 1996 were $8,733,000 and $8,944,000 for the similar period last year. These expenditures were primarily for the purchase of telecommunications equipment used as spare parts, computer equipment and other facility expansion. At January 27, 1996, there were no outstanding material commitments for future capital expenditures. The Company has also made a significant investment in lease contracts with its customers. The investment made in lease contracts totaled $12,822,000 for the nine months ended January 27, 1996 and $12,758,000 for the similar period last year. Net lease receivables decreased to $39,387,000 at January 27, 1996 as compared to $40,503,000 at April 30, 1995. Norstan Financial Services, Inc. (NFS) and Norstan Canada Inc. utilize their lease receivables and corresponding underlying equipment to borrow funds from financial institutions at fixed rates on a nonrecourse or recourse basis by discounting the stream of future lease payments. Proceeds from discounting are presented on the consolidated balance sheets as discounted lease rentals. Interest rates on these credit agreements range from 6% to 10%, and payments are generally due in varying monthly installments through July 2001. Payments due financial institutions on a monthly basis are made from monthly collections of lease receivables from customers. Discounted lease rentals consisted of the following (in thousands):
January 27, April 30, 1996 1995 ------------------ ------------------ Nonrecourse borrowings $ 27,790 $ 24,712 Recourse borrowings 1,715 3,050 ------------------ ------------------ Total discounted lease rentals 29,505 27,762 Less-current maturities (12,887) (11,449) ------------------ ------------------ $ 16,618 $ 16,313 ------------------ ------------------ ------------------ ------------------
In addition to the recourse as described previously, recourse to Norstan, Inc. relative to discounted lease rentals was limited to $902,000 as of January 27, 1996 and $986,000 as of April 30, 1995. Management of the Company believes that a combination of cash to be generated from operations, existing bank facilities and available borrowing capacity, in aggregate, are adequate to meet the anticipated liquidity and capital resource requirements of its business. Sources of additional financing, if needed, may include further debt financing or the sale of equity or other securities. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is involved in legal actions in the ordinary course of its business. Although the outcomes of any such legal actions cannot be predicted, in the opinion of management there is no legal proceeding pending against or involving the Company for which the outcome is likely to have a material adverse effect upon the consolidated financial position or results of operations of the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. Exhibit 11. Statement Regarding Computation of Earnings Per Share. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NORSTAN, INC. ------------------------------ Registrant Date: March 11, 1996 By /s/ Paul Baszucki ---------------------------- Paul Baszucki Co-Chairman of the Board and Chief Executive Officer Date: March 11, 1996 By /s/ Richard Cohen ---------------------------- Richard Cohen Vice Chairman of the Board and Chief Financial Officer (Principal Financial and Accounting Officer) EX-11 2 EXHIBIT 11
EXHIBIT 11 NORSTAN, INC. AND SUBSIDIARIES ------------------------------ STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE ----------------------------------------------------- (In thousands, except per share amounts) Three Months Ended Nine Months Ended --------------------------- --------------------------- January 27, January 28, January 27, January 28, 1996 1995 1996 1995 ------------ ------------ ------------ ------------ Primary earnings per share - Weighted average number of issued shares outstanding 4,261 4,127 4,234 4,089 Effect of: 1986 Long-Term Incentive Plan 200 191 208 211 Restated Non-Employee Directors' Stock Option Plan 48 41 48 40 Employee Stock Purchase Plan 6 12 5 8 ------------ ------------ ------------ ------------ Shares outstanding used to compute primary earnings per share 4,515 4,371 4,495 4,348 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net income $ 2,293 $ 1,871 $ 5,875 $ 4,942 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Primary earnings per share $ .51 $ .43 $ 1.31 $ 1.14 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Fully diluted earnings per share - Weighted average number of shares used for primary earnings per share 4,515 4,371 4,495 4,348 Effect of: 1986 Long-Term Incentive Plan - - 3 2 Restated Non-Employee Directors' Stock Option Plan - - 1 1 Employee Stock Purchase Plan - - 1 1 ------------ ------------ ------------ ------------ Shares outstanding used to compute fully diluted earnings per share 4,515 4,371 4,500 4,352 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Net income $ 2,293 $ 1,871 $ 5,875 $ 4,942 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Fully diluted earnings per share $ .51 $ .43 $ 1.31 $ 1.14 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
EX-27 3 EXHIBIT 27 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS APR-30-1996 MAY-1-1995 JAN-27-1996 2,566 0 59,833 1,297 11,892 103,052 73,054 40,541 168,044 66,276 28,668 433 0 0 63,909 168,044 129,112 232,737 96,001 166,831 54,950 0 1,165 9,791 3,916 5,875 0 0 0 5,875 1.31 1.31
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