<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the three months ended SEPTEMBER 30, 1997 Commission File Number 0-14371
- --------------------------------------------- ------------------------------
COMPUCOM SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 38-2363156
---------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7171 FOREST LANE, DALLAS, TX 75230
---------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 856-3600
----------------------
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
----- -----
The number of shares of the Registrant's common stock outstanding as of November
12, 1997 was 45,979,193 shares.
- --------------------------------------------------------------------------------
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
- ------- --------------------- ----
<S> <C> <C>
Item 1. Condensed Consolidated Balance Sheets
September 30, 1997 (unaudited) and December 31, 1996 3
Condensed Consolidated Statements of Operations
Three and nine months ended September 30, 1997 and 1996 (unaudited) 4
Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 1997 and 1996 (unaudited) 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
- -------- -----------------
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
Assets (unaudited)
------
<S> <C> <C>
Current assets:
Cash $ 4,235 $ 4,320
Receivables, less allowance for doubtful accounts
of $2,557 and $2,274 respectively 224,138 377,598
Inventories 169,744 233,464
Other 2,979 3,508
-------- --------
Total current assets 401,096 618,890
Property and equipment, net 66,860 54,308
Cost in excess of fair value of tangible net assets
purchased, less accumulated amortization 14,323 16,513
Other assets 3,289 3,274
-------- --------
$485,568 $692,985
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 78,353 $217,424
Accrued liabilities 68,467 59,342
-------- --------
Total current liabilities 146,820 276,766
Long-term debt 134,198 236,450
Deferred income taxes 6,284 5,671
Convertible subordinated notes 3,000 3,000
Shareholders' equity:
Preferred stock 15,000 15,000
Common stock 460 449
Additional paid-in capital 63,484 60,966
Retained earnings 116,322 94,683
-------- --------
Total shareholders' equity 195,266 171,098
-------- --------
$485,568 $692,985
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue
Product $437,089 $449,950 $1,241,047 $1,295,750
Service 60,513 46,570 173,956 118,267
Other 3,902 1,961 9,610 6,553
-------- -------- ---------- ----------
Total revenue 501,504 498,481 1,424,613 1,420,570
-------- -------- ---------- ----------
Cost of revenue
Product 393,066 403,862 1,116,993 1,164,420
Service 38,541 32,100 110,478 79,930
Other 1,773 1,213 4,578 4,372
-------- -------- ---------- ----------
Total cost of revenue 433,380 437,175 1,232,049 1,248,722
-------- -------- ---------- ----------
Gross margin 68,124 61,306 192,564 171,848
Operating expenses
Selling 18,538 21,547 58,051 58,313
Service 13,430 10,835 35,344 28,810
General and administrative 15,108 14,418 44,788 38,501
Depreciation and amortization 2,946 2,339 8,189 6,193
-------- -------- ---------- ----------
Total operating expenses 50,022 49,139 146,372 131,817
-------- -------- ---------- ----------
Earnings from operations 18,102 12,167 46,192 40,031
Financing expenses 4,039 3,926 10,709 10,368
Nonrecurring gain (1,706) (1,706) (8,738)
-------- -------- ---------- ----------
Earnings before income taxes 15,769 8,241 37,189 38,401
Income taxes 6,307 3,296 14,875 15,360
-------- -------- ---------- ----------
Net earnings $ 9,462 $ 4,945 $ 22,314 $ 23,041
-------- -------- ---------- ----------
Earnings per common share
Primary $ .19 $ .10 $ .46 $ .47
Fully diluted $ .19 $ .10 $ .45 $ .46
Average common shares outstanding
Primary 47,719 47,331 47,292 47,270
Fully diluted 50,360 49,934 50,174 49,874
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited)
Nine months ended September 30, 1997 and 1996
(In thousands)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 22,314 $ 23,041
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 8,189 6,193
Deferred income taxes 613 1,325
Nonrecurring gains (1,706) (8,738)
Changes in assets and liabilities:
Receivables 153,460 (74,124)
Inventories 63,720 (57,413)
Other current assets 529 (2,028)
Accounts payable (139,071) 32,234
Accrued liabilities and other 8,122 1,064
------------ ------------
Net cash provided by (used in) operating activities 116,170 (78,446)
------------ ------------
Cash flows from investing activities:
Capital expenditures, net (18,581) (38,617)
Business acquisitions, net of cash acquired (5,759)
Proceeds from sale of securities 2,724 11,368
------------ ------------
Net cash used in investing activities (15,857) (33,008)
------------ ------------
Cash flows from financing activities:
Net bank credit facility and other borrowings (repayments) (102,252) 111,044
Issuance of common stock 2,529 1,126
Preferred stock dividend (675) (675)
------------ ------------
Net cash provided by (used in) financing activities (100,398) 111,495
------------ ------------
Net increase (decrease) in cash (85) 41
Cash at beginning of period 4,320 4,249
------------ ------------
Cash at end of period $ 4,235 $ 4,290
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 1997
(1) General
-------
These condensed interim consolidated financial statements should be read
in conjunction with the consolidated financial statements and the summary
of significant accounting policies and notes thereto included in the 1996
Annual Report on Form 10-K for CompuCom Systems, Inc. and subsidiaries (the
Company). The information furnished is unaudited but reflects all
adjustments consisting only of normal recurring accruals which are, in the
opinion of management, necessary to present a fair statement of the results
for these interim periods. Interim results are not necessarily indicative
of results expected for the full year.
(2) Contingencies
-------------
The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position and results of operations, taken
as a whole.
(3) New Accounting Pronouncement
----------------------------
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share
(Statement 128). Statement 128 supersedes APB Opinion No. 15, Earnings Per
Share (APB 15) and specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS) for entities with publicly held
common stock or potential common stock. Statement 128 replaces the
presentation of primary EPS and fully diluted EPS with a presentation of
basic EPS and diluted EPS. Statement 128 is effective for financial
statements for both interim and annual periods ending after December 15,
1997. Adoption of Statement 128 during the three and nine months ended
September 30, 1997 would have had an impact on EPS as summarized below:
<TABLE>
<CAPTION>
APB Statement 128
--- -------------
EPS EPS
Primary Fully Diluted Basis Diluted
------- ------------- ----- -------
<S> <C> <C> <C> <C> <C>
3Q97 $ 0.19 $ 0.19 3Q97 $ 0.20 $ 0.19
1997 YTD $ 0.46 $ 0.45 1997 YTD $ 0.47 $ 0.44
3Q96 $ 0.10 $ 0.10 3Q96 $ 0.11 $ 0.10
1996 YTD $ 0.47 $ 0.46 1996 YTD $ 0.50 $ 0.46
</TABLE>
Also during 1997, the FASB issued pronouncements relating to the
presentation and disclosure of information related to the Company's capital
structure, comprehensive income and segment data. The Company is required
to adopt the provisions relating to capital structure for the year ending
December 31, 1997, if applicable, and the provisions of the other
pronouncements, if applicable, for the year ending December 31, 1998. The
adoption of these pronouncements will not have an impact on the Company's
financial position and results of operations but may change the
presentation of certain of the Company's financial statements and related
notes and data thereto.
(Continued)
6
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 1997
(4) Sale of Accounts Receivable
---------------------------
Under the terms of a $100 million accounts receivable securitization
facility ("Securitization Facility"), the Company sells, on a revolving
basis, an interest in a portion of its accounts receivable ("receivables").
During the second quarter, the Company's Securitization Facility was
amended such that the sale, on a revolving basis, of a portion of its
receivables is required to be accounted for as a sale of receivables in
accordance with Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities". The Company is retained as servicer of the
receivables; however, the cost of servicing is not material. The $100
million sale of receivables is reflected as a reduction of accounts
receivable on the Condensed Consolidated Balance Sheet as of September 30,
1997 and is included in the net cash provided by operating activities in
the Condensed Consolidated Statements of Cash Flows. The proceeds from the
sale of receivables were used to pay down long term debt. Discounts
associated with the sale of receivables totaling $1.7 million and $3.2
million are included in Financing Expenses in the Condensed Consolidated
Statements of Operations for the three and nine months ended September 30,
1997, respectively.
(5) Financing Expenses
------------------
Financing expenses consist of interest incurred on borrowings under the
Company's financing arrangements and discounts on the sale of receivables.
(6) Reclassification
----------------
Certain amounts in the 1996 condensed consolidated financial statements
have been reclassified to conform with the 1997 presentation, the most
significant of which is the separation of selling and service expenses into
separate line items in the operating expenses section of the Condensed
Consolidated Statement of Operations.
7
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and
Results of Operations
September 30, 1997
Results of Operations
- ---------------------
The following table shows the Company's total revenue, gross margin and gross
margin percentage by revenue source. Operating expenses, financing expenses,
nonrecurring gains, income taxes and net earnings are shown as a percentage of
total revenue, for the three and nine months ended September 30, 1997 and
1996.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue:
Product $437,089 $449,950 $1,241,047 $1,295,750
Service 60,513 46,570 173,956 118,267
Other 3,902 1,961 9,610 6,553
-------- -------- ---------- ----------
Total revenue 501,504 498,481 1,424,613 1,420,570
-------- -------- ---------- ----------
Gross margin:
Product 44,023 46,088 124,054 131,330
Service 21,972 14,470 63,478 38,337
Other 2,129 748 5,032 2,181
-------- -------- ---------- ----------
Total gross margin 68,124 61,306 192,564 171,848
-------- -------- ---------- ----------
Gross margin percentage:
Product 10.1% 10.2% 10.0% 10.1%
Service 36.3% 31.1% 36.5% 32.4%
Other 54.6% 38.1% 52.4% 33.3%
-------- -------- ---------- ----------
Total gross margin percentage 13.6% 12.3% 13.5% 12.1%
Operating expenses:
Selling 3.7% 4.3% 4.1% 4.1%
Service 2.7% 2.2% 2.5% 2.1%
General and administrative 3.0% 2.9% 3.1% 2.7%
Depreciation and amortization 0.6% 0.5% 0.6% 0.4%
-------- -------- ---------- ----------
Total operating expenses 10.0% 9.9% 10.3% 9.3%
-------- -------- ---------- ----------
Earnings from operations 3.6% 2.4% 3.2% 2.8%
Financing expenses 0.8% 0.8% 0.7% 0.7%
Nonrecurring gain (0.3%) (0.1%) (0.6%)
-------- -------- ---------- ----------
Earnings before income taxes 3.1% 1.6% 2.6% 2.7%
Income taxes 1.2% 0.7% 1.0% 1.1%
-------- -------- ---------- ----------
Net earnings 1.9% 0.9% 1.6% 1.6%
======== ======== ========== ==========
</TABLE>
(Continued)
8
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Product revenue, which is primarily derived from the sale of distributed
desktop computer products to corporate customers, was $437.1 million for the
third quarter of 1997, and $1.24 billion for the nine months ended September 30,
1997. This represents a decline of 2.9% and 4.2% respectively from the same
periods in 1996. During the three and nine month periods ended September 30,
1997, the Company shipped more desktop, laptop, and server units relative to
comparable 1996 periods. However, due to manufacturer price reductions, these
units carried a lower average sales price in 1997 versus 1996, contributing to
the slight product revenue decline. Also, the Company believes the product
revenue decline can be partially attributed to an increase in direct marketers'
market share.
Product gross margin as a percentage of product net revenues for the third
quarter of 1997 and for the nine months ended September 30, 1997 was 10.1% and
10.0% respectively. This compares to product gross margins of 10.2% and 10.1%
for the corresponding periods in 1996. The slight decreases noted from 1996 to
1997 are mainly due to intense competition from other resellers and direct
marketers. Future product margins will be influenced by manufacturers' pricing
strategies together with competitive pressures from other resellers in the
industry and direct marketers as well as the level of sales to some of the
Company's larger customers, which typically have lower margins. The Company
participates in certain manufacturer-sponsored programs designed to increase
sales of specific products. These programs, excluding volume incentive programs
and specific product rebates offered by certain manufacturers, are not material
when compared to the Company's overall financial results. Due to the short
order fulfillment cycle, the Company's backlog is not considered to be a
meaningful indicator of future business prospects.
Service revenue for the three and nine months ended September 30, 1997
increased 30% and 47%, respectively from the same periods in 1996 to $60.5
million and $174.0 million. Service revenue is primarily derived from systems
integration services, including field engineering, product configuration, and
LAN/WAN projects. LAN/WAN projects include consulting, network management, and
help desk services. Service revenue reflects revenue generated by the actual
performance of specific services and does not include product sales associated
with service projects. The increases in service revenue can be attributed to the
Company's continued focus on growing this portion of the business through the
hiring of additional service personnel and to growth in the Company's higher-end
service offerings. Also contributing to the revenue growth in service has been
the increase in unit volume of products sold such as desktops and laptops, many
of which create demand for services such as configuration and installation.
Service gross margin as a percentage of service net revenue for the three and
nine months ended September 30, 1997 was 36.3% and 36.5%, respectively, as
compared to 31.1% and 32.4% for the same periods in 1996. The improvement in
service margins can be primarily attributed to improved utilization of the
Company's service personnel.
Total operating expenses were $50.0 million for the three months ended
September 30, 1997 as compared to $49.1 million reported in the same period of
the prior year. For the nine months ended September 30, 1997, total operating
expenses increased to $146.4 million as compared to $131.8 million in the same
period of the prior year. These changes are attributed to increases in service
operating expenses, general and administrative expenses, and depreciation
expenses, and are partially offset by a decrease in selling expenses when
compared to the same periods of the prior year. Service operating expenses
increased 24.0% and 22.7%, general and administrative expenses increased 4.8%
and 16.3%, and depreciation expenses increased 26.0% and 32.2%, respectively,
for the three month and nine month periods ended September 30, 1997 when
compared to the same periods of the prior
(Continued)
9
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
year. Selling operating expenses decreased 14.0% and 0.4% for the three
month and nine month periods ended September 30, 1997 when compared to the same
periods of the prior year.
The decreases in selling operating expense for both the three and nine
month periods ended September 30, 1997 are attributable to the decrease in
product revenue from the comparable periods of the prior year, as well as a
revision, effective second quarter 1997, to the Company's commission plan. The
increases in service operating expense can be primarily attributed to recruiting
and training of service personnel, necessary to support the growth in the
Company's service business. However, the Company has focused on controlling
expenses and has shown a decrease in service expense as a percentage of service
revenue for the three and nine months ended September 30, 1997 as compared to
the same periods of the prior year. Service operating expenses were 22.2% and
20.3% of service revenue for the three and nine months ended September 30, 1997
as compared to 23.3% and 24.4% in the same periods of the prior year.
General and administrative expense, as a percentage of net revenue,
increased for the three and nine months ended September 30, 1997 to 3.0% and
3.1% as compared to 2.9% and 2.7% for the comparable periods of the prior year.
The increases are primarily due to the Company's continued investment in
information system resources required to broaden the Company's electronic
commerce capabilities. The Company's operating expenses are reported net of
reimbursements by certain manufacturers for specific training, promotional and
marketing programs. These reimbursements offset some of the expenses incurred
by the Company.
Depreciation and amortization expense increased for the three and nine
months ended September 30, 1997 in absolute dollars and as a percentage of net
revenue when compared to the same periods in 1996. The increases primarily
reflect depreciation expense associated with the Company's new corporate
headquarters and operations campus and depreciation of enhancements to the
Company's information systems. During the third quarter, the Company
substantially completed the relocation to its new headquarters and classified
its old headquarters as an asset held for sale. Consequently, the Company is
no longer recording depreciation on the old headquarters building.
Financing expenses remained relatively flat both in dollars and as a
percentage of net revenue for both the three and nine months ended September 30,
1997 as compared to the same periods in 1996. The Company's effective interest
rate during the three and nine months ended September 30, 1997 was 7.2% and 6.8%
respectively, as compared to 7.1% and 7.2%, respectively, in the same periods of
1996.
During the third quarter of 1997, the Company recognized a previously
deferred nonrecurring after-tax gain of $1.0 million. Recognition of the gain
was due to the early payment of a note that was part of the terms of the 1994
sale of the Company's former subsidiary PC Parts Express, Inc. (now known as PC
Service Source, Inc.).
During the second quarter of 1996, the Company participated in the
secondary stock offering of PC Service Source, Inc. resulting in an after-tax,
nonrecurring gain on the sale of securities of $5.2 million.
As a result of the factors noted above, net earnings, excluding the
nonrecurring gains in 1997 and 1996, for the three months ended September 30,
1997 increased to $8.4 million from $4.9 million in the same period of the prior
year, and for the nine months ended September 30, 1997 increased to $21.3
million as compared to $17.8 million in the same period of the prior year. The
earnings per share impact of the 1997 nonrecurring gain was $.02 on a fully
diluted basis for the three and nine months ended September 30, 1997,
respectively. The earnings per share impact of the 1996 nonrecurring gain was
$.10 on a fully diluted basis
(Continued)
10
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition and Results of
Operations
for the nine months ended September 30, 1996. Future improved profitability
will depend on the Company's ability to retain and hire quality service
personnel while effectively managing the utilization of such personnel. It will
also depend on increased focus in providing technical service and support to
customers, product demand, competition, manufacturer product availability and
pricing changes, effective utilization of vendor programs, the Company's ability
to successfully manage the final assembly programs of its major vendors as well
as the Company's control of operating expenses.
Liquidity and Capital Resources
- -------------------------------
Working capital at September 30, 1997 was $254 million compared to $342
million at December 31, 1996. The decrease is primarily due to two factors: 1)
the off-balance-sheet financing entered into by the Company in which effectively
$100 million of accounts receivable were sold and the proceeds used to pay down
long-term debt and 2) a $64 million reduction in inventory. Although the
Company's working capital decreased in dollar terms from December 31, 1996, the
Company's working capital ratio increased to 2.7 from 2.2. This increase was
primarily due to a significant reduction in accounts payable.
The Company's capital asset requirements are generally funded through
financing arrangements, internally generated funds or leasing sources. As of
September 30, 1997, the Company's financing arrangements consist of a $200
million working capital facility, a $100 million Securitization Facility, and a
$25 million real estate loan ("Real Estate Loan") (collectively, the "Credit
Agreements"). On November 3, 1997, the Company amended the Credit Agreements.
The results of the amended Credit Agreements were: 1) the Securitization
Facility was increased to $175 million; 2) the working capital facility was
reduced to $125 million, all of which is available, subject to certain
conditions; 3) the term of the Credit Agreements was increased from three to
five years, 4) an overall reduction in borrowing costs and 5) an amortization
schedule was set for the Real Estate Loan, with the first quarterly payment of
$500,000 due on April 1, 1999. Under the amended Real Estate Loan, the
quarterly payments increase to $1,000,000 on January 1, 2000 and to $2,000,000
on January 1, 2001 and a final payment of $3,500,000 due on October 30, 2002.
The Company is currently evaluating other permanent financing options for the
Real Estate Loan.
The Company's business is not capital asset intensive, and capital
expenditures in any year normally would not be significant in relation to the
overall financial position of the Company. Capital expenditures were
approximately $6.5 million during the third quarter of 1997 and $18.5 million
for the nine months ended September 30, 1997. These expenditures were primarily
related to preparing the Company's new headquarters and operations campus for
full occupancy and additions to IS equipment. The Company has completed the
majority of the consolidation to its new headquarters and operations campus and
is continuing to refurbish and update this facility. The Company has entered
into an agreement to sell its former headquarters building. Although the sale is
contingent upon certain conditions, the Company expects the sale to be completed
within the next six months. Upon completion of the sale, the Company expects to
recognize a pre-tax gain in the range of $4 million to $5 million. The Company
expects capital expenditures to return to more normal levels after the ongoing
refurbishment of its new headquarters and operations campus has been completed.
This document contains "forward-looking statements" regarding revenues,
margins, operating expenses, earnings, growth rates and certain business trends
that are subject to risks and uncertainties that could cause actual results to
differ materially from the results described herein. Recipients of this
document are cautioned to consider these risks and uncertainties and to not
place undue reliance on these forward-looking statements.
11
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
--------
Exhibit
No. Description
------- --------------------------------------------
11 Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed by the Registrant during the
three months ended September 30, 1997.
12
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
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.
COMPUCOM SYSTEMS, INC.
-------------------------------------
(Registrant)
DATE: November 13, 1997 /s/ Edward Anderson
-------------------------------------
Edward Anderson,
President and Chief Executive Officer
DATE: November 13, 1997 /s/ M. Lazane Smith
-------------------------------------
M. Lazane Smith,
Senior Vice President, Finance and
Chief Financial Officer
13
<PAGE>
COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES
Exhibit 11 - Computation of Per Share Earnings
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE
- ---------------------------------
Net earnings $ 9,462 $ 4,945 $ 22,314 $ 23,041
Preferred dividend (225) (225) (675) (675)
----------- ----------- ----------- -----------
$ 9,237 $ 4,720 $ 21,639 $ 22,366
=========== =========== =========== ===========
Average common shares outstanding 45,868 44,765 45,585 44,548
Average common share equivalents 1,851 2,566 1,707 2,722
----------- ----------- ----------- -----------
Average number of common shares and
common share equivalents outstanding 47,719 47,331 47,292 47,270
=========== =========== =========== ===========
Primary earnings per common share $ .19 $ .10 $ .46 $ .47
=========== =========== =========== ===========
FULLY DILUTED EARNINGS PER COMMON SHARE
- ---------------------------------------
Primary net earnings $ 9,462 $ 4,945 $ 22,314 $ 23,041
Interest expense, net of income tax expense 23 23 69 69
----------- ----------- ----------- -----------
$ 9,485 $ 4,968 $ 22,383 $ 23,110
=========== =========== =========== ===========
Average common shares outstanding 45,868 44,765 45,585 44,548
Average common share equivalents 1,890 2,566 1,987 2,723
Additional shares issuable 2,603 2,603 2,603 2,603
----------- ----------- ----------- -----------
Average number of common shares
assuming full dilution 50,360 49,934 50,174 49,874
=========== =========== =========== ===========
Fully diluted earnings per common share $ .19 $ .10 $ .45 $ .46
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,235
<SECURITIES> 0
<RECEIVABLES> 226,695
<ALLOWANCES> 2,557
<INVENTORY> 169,744
<CURRENT-ASSETS> 401,096
<PP&E> 89,635
<DEPRECIATION> 22,775
<TOTAL-ASSETS> 485,568
<CURRENT-LIABILITIES> 146,820
<BONDS> 137,198
0
15,000
<COMMON> 460
<OTHER-SE> 179,806
<TOTAL-LIABILITY-AND-EQUITY> 485,568
<SALES> 1,241,047
<TOTAL-REVENUES> 1,424,613
<CGS> 1,116,993
<TOTAL-COSTS> 1,232,049
<OTHER-EXPENSES> 146,372
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,709
<INCOME-PRETAX> 37,189
<INCOME-TAX> 14,875
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,314
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.45
</TABLE>
