-----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, V01oMnGrSiOgXU0y0VpvD2ocjePeFtFJWhiRWUTY5SnEhyzoK6wo0jGI7JpG9XQv u1Pm+/Cw3aHu7WPRJtNJKw== 0001157523-04-002390.txt : 20040316 0001157523-04-002390.hdr.sgml : 20040316 20040316160559 ACCESSION NUMBER: 0001157523-04-002390 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040316 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040316 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08141 FILM NUMBER: 04672695 BUSINESS ADDRESS: STREET 1: 5101 SHADY OAK ROAD CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 6123524000 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 8-K 1 a4595475.txt NORSTAN, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 16, 2004 Norstan, Inc. ------------- (Exact name of registrant as specified in its charter) Minnesota 0-8141 41-0835746 --------- ------ ---------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 5101 Shady Oak Road Minnetonka, Minnesota 55343 --------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (972) 352-4000 5 Item 7. Financial Statements, Schedules and Exhibits - ------- -------------------------------------------- (a) and (b) not applicable (c) Exhibits: -------- Exhibit No. Description --- ----------- 99 News release issued by Norstan, Inc. on March 16, 2004 Item 12. Results of Operations and Financial Condition - -------- --------------------------------------------- On March 16, 2004, Norstan, Inc. issued a news release reporting results of operations for the third quarter of its fiscal year 2004. A copy of the news release is furnished as Exhibit 99 and incorporated by reference herein. 2 SIGNATURE 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. By: /s/ Robert J. Vold ------------------- Robert J. Vold Senior Vice President and Chief Financial Officer Dated: March 16, 2004 3 Exhibit Number Description - ------ ----------- 99 Press release dated March 16, 2004 issued by Norstan, Inc. 4 EX-99 3 a4595475ex99.txt NORSTAN INVESTOR RELATIONS EXHIBIT 99 Exhibit 99 Norstan Reports Third Quarter Fiscal 2004 Results; Company Reports Operating Profitability and Positive Earnings MINNEAPOLIS--(BUSINESS WIRE)--March 16, 2004--Norstan, Inc. (Nasdaq:NRRD), a leading provider of communications solutions and services, today reported revenues of $55.0 million for the third quarter ended January 31, 2004, relatively flat from the $56.4 million reported in the second fiscal quarter of the same year. Gross margin of 29.1% also remained flat from the 29.4% reported one quarter ago. The company reported third quarter net income of $520,000, or $0.04 per share, versus a reported second quarter loss of $3.4 million, or $0.26 per share. During the third fiscal quarter of 2004, Norstan recorded a net gain of $208,000 on the sale of real property received as part of an arbitration settlement in fiscal 2003. In the second fiscal quarter, the company recorded restructuring and other charges (pretax) of $4.2 million. Excluding these charges, Norstan's operating profitability has improved each quarter during fiscal 2004. "We are encouraged by Norstan's third quarter operating performance and improved earnings results," said Scott G. Christian, Norstan president and chief executive officer. "We have begun to implement and will continue to look for ways to improve our profitability as we complete fiscal 2004 and plan for fiscal 2005. Our goal is to return Norstan to sustained profitability and deliver a positive return to our shareholders." Year-Over-Year Comparison Third quarter fiscal 2004 revenues declined approximately six percent from the $58.8 million reported in the same period last year. Gross margin was relatively flat from the 29.0% reported in the third quarter of fiscal 2003. Operating income improved dramatically from $612,000 in the third quarter of fiscal 2003 to $1.2 million this fiscal year. Third quarter net income was up from the net income of $416,000 in the same period last fiscal year. 2004 Year-To-Date Results For the nine-month period ending January 31, 2004, Norstan recorded revenues of $168.4 million, flat from the same nine-month period of fiscal 2003. Gross margin of 28.9% declined from the 30.7% in the comparable period of fiscal 2003, primarily as a result of our changing product mix. Including the restructuring and other charges of $4.2 million incurred in the second quarter of fiscal 2004, Norstan reported operating losses of $6.7 million compared to operating income of $2.6 million for the prior year's nine-month period. Net loss from continuing operations totaled $5.1 million, or $0.39 per share, as compared to net income from continuing operations of $556,000, or $0.04 per share, in the comparable period of fiscal 2003. For the nine-month period, net losses totaled $4.8 million, or $0.36 per share, versus net income of $3.2 million, or $0.24 per share, reported in fiscal 2003. During the first nine months of fiscal 2003, Norstan reported a $2.6 million net gain on the disposal of discontinued operations versus $357,000 in the similar period of fiscal 2004. Excluding the second quarter fiscal 2004 restructuring and other charges, net loss from continuing operations for the nine-month period of fiscal 2004 totaled $2.6 million, or $0.20 per share. Fiscal 2004 - 2005 Outlook Norstan will take a charge in the fourth fiscal quarter of 2004 relating to reorganization activities and projects being below the minimum level of EBITDA required under the company's new secured credit agreement. Norstan continues to finalize the details and total costs associated with the reorganization plan announced in February 2004. As such, the total amount of this charge is not yet determined. Norstan has had proactive discussions regarding this projected EBITDA shortfall with their lender, Wells Fargo Foothill, Inc., who has agreed to work with the company relative to specific covenants governing its credit facility. While the company has provided no specific earnings guidance for fiscal 2004, Norstan will continue to receive the benefit in fiscal 2004 of restructuring actions taken during its second fiscal quarter. As the company's strategic focus changes from one of higher revenue through aggressive growth, Norstan is now focusing on profitability through several initiatives such as, improving gross margins, driving additional sales from its existing current base and selectively developing new business in certain technologies. This change in strategic focus may result in lower revenues but deliver higher profitability in fiscal 2005 than in fiscal 2004. Conference Call and Webcast Norstan will discuss its third quarter fiscal 2004 results on a conference call scheduled today, March 16, at 5 p.m. Eastern time. The conference call can be accessed toll-free by callers at (888) 443-9986 or on the Internet at www.norstan.com. Starting today at approximately 7:00 p.m. Eastern time, the replay of the call can be accessed toll-free until midnight, March 23, by dialing (800) 642-1687 (conference ID number is 5490678) or on the Internet at www.norstan.com. About Norstan, Inc. Norstan, Inc. (Nasdaq:NRRD) - A full-service communications solutions and services company delivering voice and data technologies and services, and remanufactured equipment to corporate end-users and the public sector. Norstan also offers a full range of technologies for customer contact solutions, voice and convergence, messaging, infrastructure, conferencing and mobility. Norstan has offices throughout the United States and Canada. To learn more, visit the Norstan website at www.norstan.com. Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 This release contains forward-looking statements within the meaning of the Private Securities Litigation Acts of 1995. A number of factors should be considered in conjunction with the above forward-looking statements, including changes in economic and market conditions, factors related to the development of new technologies, product pricing, labor costs, industry regulation, management of growth, integration of acquisitions, access to adequate financing and other factors set forth in cautionary statements included in Norstan's Form 10-K and other documents as filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as of the date of this release. The company undertakes no obligation to update these forward-looking statements to reflect events and circumstances that may arise after the date of this release. Disclosure of revenue dollars are not intended to reflect materiality, and are subject to confidentiality provisions and customer consent. GAAP to Non-GAAP Reconciliation To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley Act, Norstan has attached to this news release and will post to the company's investor relations web site (www.norstan.com/investorrelations) any reconciliations of differences between non-GAAP and GAAP financial information that may be required in connection with issuing the company's quarterly financial results. Norstan and associated product names are trademarks or registered trademarks of Norstan, Inc. in the United States and/or other countries. All other products and services mentioned in this document may be trademarks of the companies with which they are associated. NORSTAN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) For the Quarter For the Nine Months Ended Ended ------------------- ------------------- Jan. 31, Jan. 25, Jan. 31, Jan. 25, 2004 2003 2004 2003 --------- --------- --------- --------- Revenues Communications Solutions and Services $ 47,555 $ 51,242 $144,776 $143,801 Resale Services 6,978 6,804 22,142 21,632 Financial Services 512 712 1,457 2,485 --------- --------- --------- --------- Total revenues 55,045 58,758 168,375 167,918 --------- --------- --------- --------- Cost of sales 39,033 41,749 119,776 116,405 --------- --------- --------- --------- Gross margin Communications Solutions and Services 12,901 13,913 38,993 41,481 Resale Services 2,449 2,365 7,783 7,677 Financial Services 662 731 1,822 2,355 --------- --------- --------- --------- Total gross margin 16,012 17,009 48,598 51,513 --------- --------- --------- --------- Selling, general, and administrative expenses 14,832 16,397 51,148 48,952 Restructuring and other charges - - 4,180 - --------- --------- --------- --------- Operating income (loss) 1,180 612 (6,730) 2,561 Interest expense (727) (510) (1,728) (1,689) Other income (expense), net 59 32 83 25 --------- --------- --------- --------- Net income (loss) from continuing operations before taxes 512 134 (8,375) 897 Income tax provision (benefit) 200 51 (3,266) 341 --------- --------- --------- --------- Net income (loss) from continuing operations 312 83 (5,109) 556 Discontinued operations (net of tax): Income from operations of discontinued operations - - - 20 Gain from disposal of discontinued operations 208 333 357 2,617 --------- --------- --------- --------- Net income (loss) $ 520 $ 416 $ (4,752) $ 3,193 ========= ========= ========= ========= Net income (loss) per share - Continuing operations $ 0.02 $ 0.01 $ (0.39) $ 0.04 Net income (loss) per share - Discontinued operations 0.02 0.02 0.03 0.20 --------- --------- --------- --------- Net income (loss) per share $ 0.04 $ 0.03 $ (0.36) $ 0.24 ========= ========= ========= ========= Weighted average shares outstanding 13,518 13,131 13,004 13,079 ========= ========= ========= ========= NORSTAN, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share Amounts) January 31, April 30, 2004 2003 ----------- ----------- ASSETS ------ CURRENT ASSETS Cash $ 1,160 $ 1,185 Accounts receivable, net 35,776 33,523 Current lease receivables 5,183 6,846 Inventories 8,543 7,248 Costs and estimated earnings in excess of billings 5,633 5,746 Prepaid expenses, deposits and other 5,664 5,216 ----------- ----------- Total current assets 61,959 59,764 ----------- ----------- PROPERTY AND EQUIPMENT Furniture, fixtures and equipment 92,660 89,988 Less accumulated depreciation and amortization (77,833) (72,304) ----------- ----------- Net property and equipment 14,827 17,684 ----------- ----------- OTHER ASSETS Lease receivables, net 1,514 5,503 Deferred income taxes 15,831 12,564 Net non-current assets of discontinued operations 580 693 Goodwill 4,527 4,379 Intangible and other assets 2,697 2,735 ----------- ----------- Total other assets 25,149 25,874 ----------- ----------- $101,935 $103,322 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES Current maturities of long-term debt $ 4,382 $ 1,641 Current maturities of discounted lease rentals 3,329 4,897 Accounts payable 13,549 14,465 Deferred revenue 21,963 21,521 Accrued liabilities 10,560 11,031 Net current liabilities of discontinued operations 24 150 Billings in excess of costs and estimated earnings 8,045 6,827 ----------- ----------- - - Total current liabilities 61,852 60,532 ----------- ----------- LONG-TERM DEBT, NET 18,900 15,600 DISCOUNTED LEASE RENTALS, NET 1,243 3,600 ----------- ----------- Total liabilities 81,995 79,732 ----------- ----------- SHAREHOLDERS' EQUITY Common stock - $0.10 par value: 40,000,000 authorized shares: 13,204,438 and 12,784,122 shares issued and outstanding 1,320 1,278 Capital in excess of par value 57,815 56,891 Accumulated deficit (37,271) (32,520) Unamortized cost of stock (90) (134) Accumulated other comprehensive loss (1,834) (1,925) ----------- ----------- Total shareholders' equity 19,940 23,590 ----------- ----------- $101,935 $103,322 =========== =========== Norstan, Inc. and Subsidiaries Reconciliation of Non-GAAP Financial Measures (In Thousands) Operating income (loss) - before restructuring and other charges - ---------------------------------------------------------------- First Quarter Second Quarter Third Quarter Fiscal 2004 Fiscal 2004 Fiscal 2004 ------------- -------------- ------------- August 2, November 1, January 31, 2003 2003 2004 ------------- -------------- ------------- Operating income (loss) $ (2,881) $ (5,029) $ 1,180 Restructuring and other charges - 4,180 - ------------- -------------- ------------- Operating income (loss)- before restructuring and other charges $ (2,881) $ (849) $ 1,180 ============= ============== ============= Net income (loss) from continuing operations - before restructuring and other charges - ------------------------------------------------------------------- For the First Quarter Second Quarter Third Quarter Nine Months Fiscal 2004 Fiscal 2004 Fiscal 2004 Ended ------------- -------------- ------------- ----------- August 2, November 1, January 31, January 31, 2003 2003 2004 2004 ------------- -------------- ------------- ----------- Net income (loss) from continuing operations $ (2,026) $ (3,395) $ 312 $ (5,109) Restructuring and other charges - 4,180 - 4,180 Change in income tax (provision) benefit - (1,630) - (1,630) ------------- -------------- ------------- ----------- Net income (loss) from continuing operations - before restructuring and other charges $ (2,026) $ (845) $ 312 $ (2,559) ============= ============== ============= =========== Weighted average shares outstanding 13,004 ----------- Net loss per share from continuing operations - before restructuring and other charges $ (0.20) =========== Earnings before interest, taxes, depreciation and amortization - continuing operations - ---------------------------------------------------------------- For the Quarter Ended For the Nine Months Ended ----------------------------- ------------------------- January 31, January 25, January 31, January 25, 2004 2003 2004 2003 ------------- -------------- ------------- ----------- Net income (loss) - continuing operations 312 83 (5,109) 556 Interest expense 727 510 1,728 1,689 Income tax (provision) benefit 200 51 (3,266) 341 Depreciation and amortization 2,054 2,032 6,445 7,098 ------------- -------------- ------------- ----------- EBITDA - continuing operations 3,293 2,676 (202) 9,684 ============= ============== ============= =========== Earnings per share before restructuring and other charges - --------------------------------------------------------- Second Quarter Third Quarter Nine Months Fiscal 2004 Fiscal 2004 Fiscal 2004 ------------- -------------- ----------- November 1, January 31, January 31, 2003 2004 2004 ------------- -------------- ----------- Earnings per share $ (0.26) $ 0.04 $ (0.36) Impact on EPS from restructuring and other charges 0.19 - 0.19 ------------- -------------- ----------- Earnings per share - before restructuring and other charges $ (0.07) $ 0.04 $ (0.17) ============= ============== =========== CONTACT: Norstan, Inc., Minneapolis Jan W. Drymon, 952-352-4292 jan.drymon@norstan.com or The Carideo Group Tony Carideo, 612-317-2880 tony@carideogroup.com -----END PRIVACY-ENHANCED MESSAGE-----