ePlus Reports Fiscal Year 2007 Financial Results

ePlus inc. (OTC: PLUS), announced record revenues for its fiscal year ended March 31, 2007 ("FY07”). Revenues during FY07 increased 22.3% to $791.6 million from $647.3 million for the prior fiscal year ("FY06”). The Company recorded net earnings of $17.4 million, as compared to a net loss of $521 thousand in FY06. Basic and diluted earnings per share in FY07 were $2.11 and $2.04, respectively, as compared to loss per share of $0.06 in FY06. Financial Results for the Fiscal Year and Quarter Ended March 31, 2007 The increase in total revenues for FY07 is primarily the result of a 20.3% increase in sales of product and services to $701.2 million, as compared to $583.1 million in the prior fiscal year. Sales of product and services represented 88.6% of total revenue for FY07 as compared to 90.1% the prior year, and gross margin on sales of product increased to 11.2% for FY07 from 10.0% in FY06. A substantial portion of sales of product and services are from sales of Hewlett Packard and Cisco products, which represented approximately 24% and 32% of sales, respectively, in FY07, as compared to 28.0% and 22.0%, respectively, in FY06. In FY07, lease revenues increased 11.3% to $54.7 million from $49.2 million for the prior fiscal year. The net investment in leased assets was $217.2 million as of March 31, 2007, a 5.5% increase from $205.8 million as of March 31, 2006. The increase in lease revenue is predominately due to an increase in the operating lease portfolio. Fee and other income was $13.7 million, an increase of 2.7% over the prior fiscal year. In FY07, the Company recorded patent settlement income of $17.5 million. There was no patent settlement income in FY 06. Cost of sales, product and services increased 18.6% to $622.5 million in FY07 as compared to $525.0 million in the prior fiscal year. This increase corresponds to a similar increase in sales of product and services. Direct lease costs increased 21.5% to $20.3 million for FY07, as compared to $16.7 million for the prior fiscal year. The largest component of direct lease costs is depreciation expense for equipment subject to operating leases. Investment in operating leases increased 17.9% as of March 31, 2006 as compared to the prior fiscal year. Professional and other fees for FY07 increased 141.6% to $16.2 million from $6.7 million, primarily due to increased expenses related to patent litigation in the amount of $5.6 million, legal expenses related to the Cyberco matter of $670 thousand, and our review of accounting guidance regarding stock option grants since our IPO in 1996 and the resulting tax and accounting impact in connection with the audit committee investigation as previously disclosed of $5.0 million. Salaries and benefit expenses increased 13.8% to $70.9 million for the year, due in part to an increase in benefit costs and an increase in the average salary per employee. We employed 649 people as of March 31, 2007 compared to 680 people as of March 31, 2006. General and administrative expenses decreased 7.7% to $17.2 million for FY07 as compared to the prior fiscal year. The decrease is due to a slight reduction in depreciation and amortization expense relating to property and equipment and increased efficiency in spending controls to enhance productivity and profits. Interest and financing costs increased 39.7% to $10.1 million for the year, due to an increasing non-recourse debt portfolio and increasing debt rates on new financings. Non-recourse notes payable increased 15.8% to $148.1 million for FY07 as compared to the prior fiscal year. The FY07 earnings per share was calculated using weighted average common shares outstanding of 8,224,929 (basic) and 8,534,608 (diluted), as compared to 8,347,727 for both basic and diluted for FY06. For the quarter ended March 31, 2007, the Company recorded net earnings of $1.9 million, as compared to a net loss of $4.6 million in the prior year’s quarter. The prior year’s loss included expenses of $10.2 million for the resolution of two lawsuits relating to a customer’s bankruptcy and non-payment. Basic and fully diluted earnings per share for the FY07 fourth quarter were $0.24 and $0.23, respectively, as compared to a loss of $0.55 for both basic and diluted for the same quarter in FY06. Revenues for the quarter increased 12.7% to $180.5 million, from $160.2 million recorded in the prior year’s quarter. At March 31, 2007, the Company had cash and cash equivalents of $39.7 million and total stockholders’ equity of $146.2 million, as compared to $20.7 million and $128.6 million, respectively, at March 31, 2006. Total assets increased 11.8% to $418.1 million at March 31, 2007 as compared to $373.9 million at March 31, 2006. The Company did not purchase any common stock during FY07. Percentage changes stated above are calculated on actual numbers from the financial statements, not on the rounded numbers used herein. Investors are encouraged to read the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2007. Copies are available at http://www.eplus.com or http://www.sec.gov, or by contacting the Company at info@eplus.com or (888) 482-1122. About ePlus inc. ePlus is a leading provider of technology solutions. ePlus enables organizations to optimize their IT infrastructure and supply chain processes by delivering world-class IT products from top manufacturers, professional services, flexible lease financing, proprietary software, and patented business methods. Founded in 1990, ePlus has more than 625 associates in 30+ offices serving more than 2,500 customers. The Company is headquartered in Herndon, VA. For more information, visit http://www.eplus.com, call 888-482-1122, or email info@eplus.com. ePlus® and/or other ePlus products referenced herein are either registered trademarks or trademarks of ePlus inc. in the United States and/or other countries. Note: Statements in this press release, which are not historical facts, may be deemed to be "forward-looking statements.” Actual and anticipated future results may vary due to certain risks and uncertainties, including, without limitation, the effects of the delisting of the Company’s common stock from The Nasdaq Global Market and the quotation of the Company’s common stock in the "Pink Sheets,” including any adverse effects relating to the trading of the stock due to, among other things, the absence of market makers; the timing of our ability to re-apply to list our shares of common stock on The Nasdaq Global Market; the effects of any lawsuits or governmental investigations alleging, among other things, violations of federal securities laws, by the Company or any of its directors or executive officers; the existence of demand for, and acceptance of, our services; our ability to hire and retain sufficient personnel; our ability to protect our intellectual property; the creditworthiness of our customers; our ability to raise capital and obtain non-recourse financing for our transactions; our ability to realize our investment in leased equipment; our ability to reserve adequately for credit losses; fluctuations in our operating results; and other risks or uncertainties detailed in our SEC filings. All information set forth in this release and its attachments is as of February 8, 2008. ePlus inc. undertakes no duty to update this information. More information about potential factors that could affect ePlus inc.’s business and financial results is included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2007 under the captions "Risk Factors” and "Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is on file with the SEC and available at the SEC’s website at http://www.sec.gov. ePlus inc. AND SUBSIDIARIES   CONSOLIDATED BALANCE SHEETS As of March 31, 2006   As of March 31, 2007 (in thousands) ASSETS Cash and cash equivalents $ 20,697 $ 39,680 Accounts receivable—net 103,060 110,662 Notes receivable 330 237 Inventories 2,292 6,851 Investment in leases and leased equipment—net 205,774 217,170 Property and equipment—net 5,629 5,529 Other assets 10,038 11,876 Goodwill   26,125     26,125 TOTAL ASSETS $ 373,945   $ 418,130 LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES Accounts payable—equipment $ 7,733 $ 6,547 Accounts payable—trade 19,235 21,779 Accounts payable—floor plan 46,689 55,470 Salaries and commissions payable 4,124 4,331 Accrued expenses and other liabilities 33,346 25,960 Income taxes payable 104 - Recourse notes payable 6,000 5,000 Non-recourse notes payable 127,973 148,136 Deferred tax liability   165     4,708 Total Liabilities 245,369 271,931 COMMITMENTS AND CONTINGENCIES - STOCKHOLDERS’ EQUITY Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued or outstanding - - Common stock, $.01 par value; 25,000,000 shares authorized; 11,037,213 issued and 8,267,223 outstanding at March 31, 2006; and 11,210,731 issued and 8,231,741 outstanding at March 31, 2007 110 112 Additional paid-in capital 72,811 75,909 Treasury stock, at cost, 2,769,990 and 2,978,990 shares, respectively (29,984 ) (32,884) Deferred compensation expense (25 ) - Retained earnings 85,377 102,754 Accumulated other comprehensive income—foreign currency translation adjustment   287     308 Total Stockholders’ Equity   128,576     146,199 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 373,945   $ 418,130 ePlus inc. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS   Year Ended March 31, 2006   2007 (in thousands) REVENUES Sales of product and services $ 583,068 $ 701,237 Sales of leased equipment   1,727     4,455 584,795 705,692 Lease revenues 49,160 54,699 Fee and other income 13,363 13,720 Patent settlement income   -     17,500   62,523     85,919 TOTAL REVENUES   647,318     791,611 COSTS AND EXPENSES Cost of sales, product and services 524,967 622,501 Cost of sales, leased equipment   1,690     4,360   526,657     626,861 Direct lease costs 16,695 20,291 Professional and other fees 6,695 16,175 Salaries and benefits 62,308 70,888 General and administrative expenses 18,603 17,165 Litigation settlement and judgment 10,176 - Interest and financing costs   7,250     10,125   121,727     134,644 TOTAL COSTS AND EXPENSES   648,384     761,505 Earnings (loss) before provision for income taxes   (1,066 )   30,106 Provision for (benefit from) income taxes   (545 )   12,729 NET EARNINGS (LOSS) $ (521 ) $ 17,377 NET EARNINGS (LOSS) PER COMMON SHARE—BASIC $ (0.06 ) $ 2.11 NET EARNINGS (LOSS) PER COMMON SHARE—DILUTED $ (0.06 ) $ 2.04 WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC 8,347,727 8,224,929 WEIGHTED AVERAGE SHARES OUTSTANDING—DILUTED 8,347,727 8,534,608