UNITED STATES
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
February 2, 1999
Date of Report (Date of earliest event reported)
InaCom Corp.
(Exact name of registrant as specified in its charter)
Delaware 0-16114 47-0681813
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
10810 Farnam Drive, Omaha Nebraska 68154
(Address of principal executive offices) (Zip Code)
(402) 758-3900
Registrant's telephone number, including area code
------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. OTHER EVENTS.
On February 2, 1999, InaCom Corp. ("InaCom"), announced its
earnings for its fiscal year and fourth quarter ended December 26, 1998. A copy
of the InaCom press release dated February 2, 1999 is attached hereto as Exhibit
99.1 and incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
99.1 InaCom Press Release dated February 2, 1999.
<PAGE>
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 hereunto duly authorized.
INACOM CORP.
February 2, 1999 /s/ David C. Guenthner
By:______________________
David C. Guenthner
Executive Vice President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
99.1 InaCom Press Release dated February 2, 1999.
FOR IMMEDIATE RELEASE
For more information contact:
John P. Lambrechts
Director, Investor Relations
(402) 758-3281
INACOM SETS REVENUE AND EARNINGS RECORDS FOR 1998
Services Revenue Increases 35 Percent in Fourth Quarter to $107 Million
(OMAHA, NEB.--February 2, 1999) - Inacom Corp.(NYSE:ICO), a Fortune 500
technology services company, reported full year 1998 record revenues of $4.3
billion, a nine percent increase over 1997 revenues of $3.9 billion. Record net
earnings of $42.6 million or $2.26 a share, increased 45 percent and four
percent respectively, over prior-year net earnings of $29.5 million or $2.17 per
share. Excluding a third-quarter 1998 charge related to an accounts receivable
securitization, net earnings for 1998 were $43.3 million or $2.30 per share, an
increase of 47 percent and six percent, respectively.
Inacom reported fourth quarter 1998 net earnings of $10.7 million compared
to net earnings of $10.3 million in the fourth quarter of 1997. Diluted earnings
per share for the fourth quarter of 1998 were 55 cents compared 64 cents
reported in the fourth quarter of 1997. Revenues were $1.1 billion for the
fourth quarter of 1998, reaching prior year levels.
"Inacom's record performance in 1998 was led by strong revenue growth in
distributed technology infrastructure solutions," said Bill L. Fairfield,
President and Chief Executive Officer of Inacom. "Our strategic focus on growing
the higher-margin services business resulted in a 41 percent increase in 1998
services revenues."
"As we enter 1999, Inacom remains committed to high standards of
performance for our clients which is expected to result in more business from
existing clients and new client relationships," Fairfield said. "The pending
merger with Vanstar, which is scheduled for stockholder vote on February 17,
exemplifies a major investment in our vision to be the world's largest and most
reputable technology services company providing effective distributed technology
infrastructure solutions to clients worldwide."
The services business showed strong revenue growth of 35 percent over the
fourth quarter of 1997, while product revenues decreased four percent in the
fourth quarter of 1998 compared to the prior year. In the products business,
strong end-user demand and a 18 percent increase in the direct (company-owned)
side of the business was offset by a weakness in the reseller (indirect) market,
which declined 28 percent in the fourth quarter compared to the prior year.
Gross margins in the fourth quarter of 1998 rose to 10.3 percent compared
to 9.2 percent in the third quarter of 1998. The increase resulted from an
improvement in revenue mix in the product segment to a higher proportion of
direct business, coupled with strong revenue growth in the higher-margin
services business. <PAGE>
David C. Guenthner, Inacom's executive vice president and chief financial
officer said, "Our 1998 financial performance was very good given the transition
occurring in the industry throughout the year. The industry transition issues,
which were customer driven, have benefited Inacom. Lower inventory levels
coupled with sound asset management enabled us to reach another milestone
generating $54 million of cash flow from operations during the fourth quarter.
As a result, we were cash flow positive for all of 1998."
"Inacom's strategy fulfills what IT professionals worldwide are demanding:
an independent advocate with an extensive client portfolio to draw upon for
proven expertise in distributed technology infrastructure solutions," said Rick
Inatome, Inacom chairman of the board. "The pending merger with Vanstar will
enhance this position."
This press release contains certain forward-looking statements regarding
revenues, margins, earnings, growth rates, certain business trends and pending
business combinations based on certain assumptions and information currently
available to management. Such statements are subject to various risks and
uncertainties, including those described in the Company's 1997 10-K Report and
the Company's 1998 Form 10-Q Report for the period ended September 26, 1998,
that could cause actual results to differ materially from the results discussed
herein.
Inacom Corp. is a leading single-source provider of information technology
products and technology management services designed to enhance the productivity
of information systems primarily for Fortune 1000 clients. Inacom offers a
comprehensive range of integrated life cycle services to manage the entire
technology life cycle. Inacom sells its products and services through a
marketing network of company-owned business centers throughout the United States
that focus on serving large corporations. Inacom also has a network of
value-added resellers that typically have a regional, industry or specific
product focus. Inacom has international affiliations in Europe, Asia, Central
and South America, the Caribbean, the Middle East, Africa, Canada and Mexico to
satisfy the management needs of its multinational clients. Inacom employs 5,600
people, including 3,100 technical professionals, and is headquartered in Omaha,
NE.
# # #
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<TABLE>
INACOM CORP. AND SUBSIDIARIES
Condensed and Consolidated Balance Sheets
(Unaudited)
(Amounts in Thousands, Except Share Data)
December 26, December 27,
1998 1997
--------------- ------------------
--------------- ------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 54,416 $ 52,592
Accounts receivable, net 408,052 252,067
Inventories 267,775 429,362
Other current assets 23,741 13,758
--------------- ------------------
--------------- ------------------
Total current assets 753,984 747,779
--------------- ------------------
--------------- ------------------
Other assets, net 39,105 34,502
Cost in excess of net assets of businesses acquired,
net of accumulated amortization 211,353 88,411
Property and equipment, net 98,202 89,847
--------------- ------------------
=============== ==================
$1,102,644 $ 960,539
=============== ==================
=============== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 369,492 $ 409,513
Notes payable 60,000 -
Other current liabilities 102,711 80,280
--------------- ------------------
--------------- ------------------
Total current liabilities 532,203 489,793
--------------- ------------------
--------------- ------------------
Convertible subordinated debentures 141,500 141,500
Other long-term liabilities 3,804 4,030
Stockholders' equity:
Capital stock:
Class A preferred stock of $1 par value.
Authorized 1,000,000 shares; none issued - -
Common stock of $.10 par value. Authorized 30,000,000 shares;
issued 16,768,473 shares in 1998 and 14,825,049 in 1997 1,677 1,482
Additional paid-in capital 275,050 216,671
Retained earnings 149,647 107,063
--------------- ------------------
--------------- ------------------
426,374 325,216
Less unearned restricted stock (1,237) -
--------------- ------------------
--------------- ------------------
Total stockholders' equity 425,137 325,216
--------------- ------------------
$ 1,102,644 $ 960,539
=============== ==================
</TABLE>
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<TABLE>
INACOM CORP. AND SUBSIDIARIES
Condensed and Consolidated Statements of Operations
(Unaudited)
(Amounts in Thousands, Except Per Share Data)
Thirteen Weeks Ended Fifty-Two Weeks Ended
------------------------------ ------------------------------
December 26, December 27, December 26, December 27,
1998 1997 1998 1997
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Products $ 949,715 $ 989,723 $3,879,334 $3,626,532
Services 107,300 79,341 379,091 269,770
--------------- -------------- --------------- --------------
1,057,015 1,069,064 4,258,425 3,896,302
--------------- -------------- --------------- --------------
Direct costs:
Product 882,213 935,447 3,647,653 3,419,366
Services 65,597 40,622 228,737 147,944
--------------- -------------- --------------- --------------
947,810 976,069 3,876,390 3,567,310
--------------- -------------- --------------- --------------
Gross margin 109,205 92,995 382,035 328,992
Selling, general and administrative expenses 83,042 68,275 275,953 250,097
--------------- -------------- --------------- --------------
Operating income 26,163 24,720 106,082 78,895
Financing expense, net (1) 8,100 7,351 33,785 29,024
--------------- -------------- --------------- --------------
Earnings before income taxes 18,063 17,369 72,297 49,871
Income tax expense 7,405 7,096 29,713 20,415
--------------- -------------- --------------- --------------
Net earnings (1) $ 10,658 $ 10,273 $ 42,584 $ 29,456
=============== ============== =============== ==============
Earnings per share (1):
Basic $ 0.63 $ 0.76 $ 2.66 $ 2.48
Diluted $ 0.55 $ 0.64 $ 2.26 $ 2.17
=============== ============== =============== ==============
Common shares and equivalents outstanding:
Basic 16,800 13,500 16,000 11,900
Diluted 21,300 17,400 20,700 14,600
=============== ============== =============== ==============
</TABLE>
(1) Includes the impact of a charge under Statement of Financial Accounting
Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," related to an accounts receivable
securitization in the third quarter of 1998. The pre-tax impact is $1.3 million
and the after-tax impact is $0.7 million, or $0.04 per diluted share in 1998.
(2) Certain prior period amounts have been reclassified to conform to current
year presentation.
