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TheStreet Open House

SED International Holdings Reports First Quarter Fiscal Year 2012 Financial Results

Stocks in this article: SED

Management believes net loss and EPS adjusted for the impact of the items described above is useful to investors because it provides a measure of the Company's net profitability on a more comparable basis to historical periods and provides a more meaningful basis for forecasting future performance. Additionally, because of management's focus on generating shareholder value, of which net profitability is a primary driver, management believes net loss and EPS excluding the impact of these items provides an important measure of the Company's net results of operations for the investing public.

However, analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

ABOUT SED INTERNATIONAL HOLDINGS, INC.

Founded in 1980, SED International Holdings, Inc. is a multinational, preferred distributor of leading computer technology, consumer electronics, small appliances, housewares, and personal care products. The company also offers custom-tailored supply chain management services ideally suited to meet the priorities and distribution requirements of the e-commerce, Business-to-Business and Business-to-Consumer markets. Headquartered near Atlanta, Georgia with business operations in California; Florida; Georgia; New Jersey; Texas; Bogota, Colombia and Buenos Aires, Argentina, SED serves a customer base of over 10,000 channel partners and retailers in the US and Latin America. To learn more, please visit www.SEDonline.com; or follow us on Twitter @SEDIntl.

Statements made in this Press Release that are not historical or current facts are "forward-looking statements.” These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond the control of the Company that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. These factors include adverse economic conditions, entry of new and stronger competitors, inadequate capital, unexpected costs, failure to gain product approval in foreign countries and failure to capitalize upon access to new markets. The Company disclaims any obligation to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. These factors and others are discussed in the “Management's Discussion and Analysis" section of the Company's Reports on Forms 10-K and 10-Q available at www.sec.gov .

SED INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
 
  September 30, 2011   June 30, 2011
(Unaudited) (Audited) (1)
ASSETS
 
Current assets:
Cash and cash equivalents $ 4,247 $ 4,751

Trade accounts receivable, less allowance for doubtful accounts of $817 and $783, respectively

64,845 64,335
Inventories 68,029 63,359
Deferred tax assets, net 441 443
Other current assets   9,216     6,617  
Total current assets 146,778 139,505
Property and equipment, net 2,742 1,928
Intangible assets, net   352      
Total assets $ 149,872   $ 141,433  

 

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Current liabilities:
Trade accounts payable $ 71,104 $ 70,681
Accrued and other current liabilities 9,013 9,581
Revolving credit facilities   48,530     38,430  
Total liabilities   128,647     118,692  
 
 
Shareholders’ equity:

Preferred stock, $1.00 par value; 129,500 shares authorized, none issued

Common stock, $.01 par value; 100,000,000 shares authorized; 7,072,473   shares issued and 4,940,999 shares outstanding at September 30, 2011 and   6,979,161 shares issued and 4,867,697 shares outstanding   at June 30, 2011

70 70
Additional paid-in capital 70,763 70,648
Accumulated deficit (30,942 ) (30,112 )
Accumulated other comprehensive loss (3,875 ) (3,171 )
Treasury stock, 2,131,474 shares and 2,111,464 shares, at cost   (14,791 )   (14,694 )
Total shareholders’ equity   21,225     22,741  
Total liabilities and shareholders’ equity $ 149,872   $ 141,433  
 
See notes to condensed consolidated financial statements.
 

((1)) The June 30, 2011 condensed consolidated balance sheet has been derived from the audited consolidated financial statements included in SED’s Annual Report on Form 10-K for the fiscal year ended June 30, 2011.

 
SED INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
 
 

Three Months Ended September 30,

2011   2010
 
Net sales $ 155,839 $ 141,678
Cost of sales   148,320     134,519  
Gross profit   7,519     7,159  
 
Selling, general and administrative 7,915 6,364
Depreciation and amortization 125 96
Foreign currency transaction loss (gain) 651 (447 )
Acquisition-related costs   370     -  
Total operating expense   9,061     6,013  
Operating (loss) income   (1,542 )   1,146  
 
Interest income (8 ) (16 )
Interest expense 304 232
Gain on acquisition   (998 )   -  
(Loss) Income before income taxes (840 ) 930
Income tax (benefit) expense   (10 )   192  
Net (loss) income $ (830 ) $ 738  
 
 
Basic (loss) income per common share $ (0.18 ) $ 0.16  
Diluted (loss) income per common share $ (0.18 ) $ 0.15  
 
Weighted average number of common shares

outstanding:

Basic 4,685,000 4,674,000
Diluted 4,685,000 5,076,000
 

See notes to condensed consolidated financial statements.

 
SED INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
Reconciliation of Selected GAAP Measures to Non-GAAP Measures (1) (Unaudited)
First Quarter Fiscal 2012
(In thousands, except share data)
 
  Three Months Ended September 30,

2011 GAAP

 

2011 Non-GAAP

 

2010 GAAP

 

2010 Non-GAAP

Reconciliation of GAAP operating income, net income and EPS to Non-GAAP measures:
 
GAAP operating (loss) gain $ (1,542 ) $ (1,542 ) $ 1,146 $ 1,146
Foreign currency exchange loss (gain) (2) 651 (447 )
Acquisition-related costs (3) 370
Severance, restructuring, and other costs (4)   350      
Non-GAAP adjusted operating (loss) income $ (1,542 ) $ (171 ) $ 1,146 $ 699  
 
 
GAAP net (loss) gain $ (830 ) $ (830 ) $ 738 $ 738
Foreign currency exchange loss (gain) (2) 651 (447 )
Acquisition-related costs (3) 370
Severance, restructuring, and other costs (4) 350
Gain on acquisition (5)   (998 )    
Non-GAAP adjusted net (loss) income $ (830 ) $ (457 ) $ 738 $ 291  
 
Diluted earnings per share $ (0.18 ) $ (0.10 ) $ 0.15 $ 0.06
Diluted common shares outstanding 4,685,000 4,685,000 5,076,000 5,076,000
 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered as a substitute for comparable GAAP measures and should be read only in conjunction with our financial statements prepared in accordance with GAAP and our press release, which explains our use of non-GAAP measures.

(2) Foreign currency exchange from Colombia and Argentina subsidiaries.
(3) Acquisition-related costs associated with the acquisition of Lehrhoff assets.
(4) Severance costs in Argentina, relocation of Atlanta headquarters and distribution facility, and other restructuring costs.
(5) Gain on the acquisition of the Lehrhoff assets recorded as a bargain purchase under ASC 805.
 
SED INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES
 
Reconciliation of Selected GAAP Measures to Non-GAAP Measures
Excluding SED Lehrhoff (1) (Unaudited)
First Quarter Fiscal 2012
(In thousands, except share data)
 
 

Three Months Ended September 30,

2011 GAAP

 

2011 Non-GAAP

Reconciliation of GAAP net sales, operating income, net income and EPS to Non-GAAP measures:
 
GAAP net sales $ 155,839 $ 155,839
Lehrhoff net sales (1)   729  
Non-GAAP net sales $ 155,839 $ 155,110  
 
 
GAAP operating loss $ (1,542 ) $ (1,542 )
Lehrhoff gross profit (2) (73 )
Lehrhoff SG&A (3) 608
Lehrhoff acquisition-related costs (4)   370  
Non-GAAP adjusted operating income without Lehrhoff (637 )
Foreign currency transaction loss (5) 651
Severance, restructuring, and other costs (6)   350  
Non-GAAP adjusted operating (loss) income $ (1,542 ) $ 364  
 
 
GAAP net loss $ (830 ) $ (830 )
Lehrhoff gross profit (2) (73 )
Lehrhoff SG&A (3) 608
Lehrhoff acquisition-related costs (4) 370
Gain on acquisition (7)   (998 )
Non-GAAP adjusted net loss without Lehrhoff (923 )
Foreign currency transaction loss (5) 651
Severance, restructuring, and other costs (6)   350  
Non-GAAP adjusted net (loss) income $ (830 ) $ 78  
 
Diluted earnings per share $ (0.18 ) $ 0.02
Diluted common shares outstanding 4,685,000 4,918,000
 

(1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered as a substitute for comparable GAAP measures and should be read only in conjunction with our financial statements prepared in accordance with GAAP and our press release, which explains our use of non-GAAP measures.

(2) Lehrhoff gross profit for the three months ending September 30, 2011.
(3) Lehrhoff SG&A for the three months ending September 30, 2011.
(4) Acquisition-related costs associated with the acquisition of Lehrhoff assets.
(5) Foreign currency exchange from Colombia and Argentina subsidiaries.
(6) Severance costs in Argentina, relocation of Atlanta headquarters and distribution facility, and other restructuring costs.
(7) Gain on the acquisition of the Lehrhoff assets recorded as a bargain purchase under ASC 805.
 




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