UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 14, 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, Suite 200, Omaha, Nebraska 68154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(402) 758-3900
<PAGE>
Item 5. OTHER EVENTS.
On December 14, 1999, InaCom Corp. issued a press release which included
its earnings outlook for the fourth quarter ending December 25, 1999. A copy of
the press release is attached as an exhibit to this report.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
Exhibit 99.1 Press Release
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.
December 14, 1999 /s/ Thomas Fitzpatrick
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Thomas Fitzpatrick
Executive Vice President and
Chief Finance Officer
INACOM RESTRUCTURES OPERATIONS TO DRIVE GROWTH
IN EBUSINESS INFRASTRUCTURE MANAGEMENT
COMPANY TO REDUCE OPERATING COSTS,
IMPROVE EFFICIENCIES, AND ENHANCE SERVICE TO CLIENTS
(OMAHA, NEB - DEC 14, 1999) - Inacom Corp (NYSE: ICO) today announced a
comprehensive restructuring designed to leverage its leadership position in
eBusiness infrastructure solutions. The restructuring will separate and
streamline product and solutions, exploit the value of the company's product
utility, and optimize its field sales force.
"Since my arrival at Inacom in October, I have examined the opportunities in the
marketplace - particularly as they relate to the design, development and
management of information technology infrastructures," said G.A. Gagliardi,
president and chief executive officer of Inacom. "In addition, a rigorous
evaluation of Inacom's assets, systems, organizational structure and competitive
strategy was conducted. As a result, it was determined that a comprehensive
operational restructuring was necessary to capitalize on the market
opportunities and to maximize the value of the Company."
Gagliardi said the restructuring will allow Inacom to remove costs by reducing
corporate overhead, streamlining sales and service delivery, eliminating
redundancies and improving operational efficiencies. The restructuring will
eliminate layers of management and consolidate Inacom's organizational structure
to improve accountability, provide clients with truly integrated solutions and
enhance their overall experiences with the Company.
"While Inacom was founded on hardware procurement, the focus of this business
has rapidly evolved to building and managing enterprise solutions with an
emphasis on eBusiness infrastructures," Gagliardi said. "The changes made by the
restructuring reflect that evolution. Organizationally, we have made the sale
and delivery of solutions the lead functions of the Company, while the logistics
of product acquisition and delivery becomes a utility to drive integrated
solutions and attract business from both OEMs and independent resellers."
With over 6,000 technical professionals and existing relationships with more
than 35 percent of Fortune 500 corporations, Gagliardi said the changes position
Inacom for growth in an attractive marketplace. According to the Gartner Group,
opportunities in the high margin network services market are expected to grow
from $34 billion in 1998 to $71.5 billion in 2003. The eBusiness service market
is expected to grow from $4 billion in 1998 to $13 billion in 2003 and the
desktop management market is expected to grow by 20 percent annually to $20
billion in 2003.
"When we complete this operational restructuring, we will begin capitalizing on
the opportunities in the digital economy," Gagliardi said. "Inacom is
well-positioned to leverage its expertise in fully-integrated infrastructure
solutions. This includes multi-vendor hardware and software solutions, complete
networking solutions, and customization and delivery of solutions directly to
clients' desktops."
As a result of the restructuring initiatives, the Company currently estimates
that it will eliminate at least 1,000 full-time or full-time equivalent
employees during the first three quarters of fiscal year 2000. Additionally, the
Company has decided to exit the federal government business. These initiatives,
together with other efficiency efforts, are expected to result in annualized
cost savings of more than $100 million.
In recognition of the workforce reduction, the decision to exit the federal
government business, and the realignment of certain other units, the Company
expects to record a special charge of between $100 million and $150 million
pre-tax for the fourth quarter of 1999. The charge will be primarily non-cash.
The Y2K lock-down by large corporate clients, which the Company noted in late
October and has been widely recognized by manufacturers, continues to put
significant downward pressure on earnings and overall fourth-quarter
performance. This stronger than expected deviation from normal client buying
patterns will result in reduced vendor incentives and lower gross margins in the
fourth quarter, which ends on December 25. As a result, the Company expects its
fourth-quarter performance, before the aforementioned special charge, to be a
loss in the range of 50 to 70 cents per share.
Gagliardi has also named a new management committee consisting of the following
executives:
- - Dick Anderson, Senior Vice President, Solutions Sales
- - Chris Howard, Senior Vice President, Solutions Delivery
- - Mike Steffan, Executive Vice President, Product Utility
- - Larry Fazzini, Senior Vice President, Corporate Resources
- - Robert Schultz, Executive Vice President, Operations
- - Tom Fitzpatrick, Executive Vice President and Chief Financial Officer
- - Geri Michelic, Vice President, Marketing
- - Jon Wellman, Vice President, Business Planning/Alliances
"The new management structure eliminates the silos that created redundancies and
inefficiencies," Gagliardi said. "The structure provides for a streamlined
approach to our clients and gives Inacom one focus - providing complete,
end-to-end technology solutions."
ABOUT INACOM
Inacom Corp. (NYSE:ICO) is a Fortune 500 eBusiness Infrastructure Management
Company. The company architects, builds and manages solutions that optimize
corporations' return on IT investments. Inacom's client portfolio includes more
than 35% of Fortune 500 corporations.
FORWARD LOOKING STATEMENT
This press release contains certain forward-looking statements 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 1998 10-K Report that could cause actual results to differ materially
from the results discussed herein.
