MANC Manchester Technologies (MM)

Manchester Technologies, Inc. Announces Fiscal Third Quarter Results HAUPPAUGE, N.Y., June 9 /PRNewswire-FirstCall/ -- Manchester Technologies Inc. (NASDAQ:MANC), today announced financial results for its third fiscal quarter and nine months ended April 30, 2005. On April 17, 2005, the Company entered into a definitive merger agreement under which entities associated with Caxton-Iseman Capital, Inc. will acquire all of the Company's outstanding shares in an all cash transaction valued at approximately $55 million. Under the terms of the agreement, which was unanimously approved by the Company's Board of Directors, Manchester shareholders will receive $6.40 per share in cash for each share they own at the effective time of the merger. Consummation of the merger, which is expected to occur in the third quarter of calendar year 2005, is subject to approval by the holders of two-thirds of the shares of the Company's outstanding common stock, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act, completion of debt financing by Caxton-Iseman and customary closing conditions. On May 28, 2004, the Company sold its end-user information technology fulfillment and professional services business to ePlus, inc., a leading provider of enterprise cost management, in an all cash transaction. The results of operations for the three months and nine months ended April 30, 2005 and 2004 for that business have been recorded as discontinued operations in the accompanying condensed consolidated statements of income. Revenue from continuing operations for the quarter was $41.9 million as compared with $42.4 million for the comparable quarter last year. Income from continuing operations for the quarter was $14,000 or $0.00 per diluted share as compared with $432,000 or $0.05 per diluted share reported a year ago. Weighted average common shares outstanding used for the computation of diluted earnings per share were 8,772,000 and 8,533,000, respectively. Revenue from continuing operations for the nine months was $128.0 million as compared with $132.9 million for the first nine months of last year. Income from continuing operations for the nine months was $2.0 million or $0.24 per diluted share as compared with $2.0 million or $0.24 per diluted share reported a year ago. During the three and nine months ended April 30, 2005, the Company recorded losses related to lease buy-out expenses of approximately $666,000 for the buy-out of a capital lease and $325,000 for the buy-out of an operating lease. The Company ended the quarter with cash and cash equivalents of $20.5 million, working capital of $39.3 million, total assets of $73.5 million and shareholders' equity of $46.4 million. About Manchester Technologies, Inc. Manchester Technologies, Inc. is a distributor of display technology solutions and plasma display monitors through its subsidiary Electrograph Systems, Inc. and is a distributor of computer hardware, primarily to dealers and system integrators. More information about the Company and Electrograph can be obtained by visiting their websites located at http://www.e-manchester.com/ and the website of its subsidiary at http://www.electrograph.com/. Safe Harbor Statement This press release contains statements that may constitute forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on currently available information and represent the beliefs of our management. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including, but not limited to, our inability to attract and retain highly skilled sales representatives or technical personnel necessary to maintain our current operations and implement our growth strategies; our inability to maintain good relationships with our vendors and customers; not being successful in our efforts to focus on higher- margin products and services and not being able to rapidly respond to new product offerings; not managing our inventory successfully; being adversely affected by continued intense competition in the technology industry, including competition from competitors with greater resources; being subject to potentially adverse business conditions that our industry is subject to, including, without limitation, pricing pressures involving distribution channels, market consolidation, a potential short supply of products, continued deterioration in average selling prices of personal computers and display technologies, and a decrease in the growth of the display technology market; the risk that our success is highly dependent upon a select group of senior management and that our revenues and operating results are subject to fluctuation from quarter to quarter; the failure of our information technology systems to function properly; the failure of our actions to enhance shareholder value; failure to consummate the merger; failure of the Company's shareholders to adopt the merger agreement and the merger; the occurrence or existence of any event, fact or set of circumstances that has had or would reasonably be expected to have, individually or in the aggregate, a "company material adverse effect" as such term is defined in the merger agreement; failure of the Company and the acquiror to obtain the required consents and approvals under the Hart-Scott-Rodino Act; the imposition of any government conditions to the closing of the proposed transaction; the failure by the Company or the acquiror to satisfy other conditions to the completion of the merger as set forth in the merger agreement; the failure of the acquiror to obtain debt and equity financing; the failure of the Company to collect from Caxton-Iseman. the termination fee of $2.5 million following an event that gives rise to an obligation to pay such termination fee; or the Company's obligation to pay a termination fee of $2.5 million to the acquiror following an event that gives rise to an obligation to pay such termination fee. For further information on these risks and others affecting us, please see our Annual Report on Form 10-K for the year ended July 31, 2004, and those set forth from time to time in our other filings with the Securities and Exchange Commission (the "SEC"). Each of these documents is on file with the SEC and is available free of charge. Readers of this press release are referred to such filings. The forward-looking statements herein speak only as of the date of this press release. We do not undertake to update any forward-looking statement that may be made from time to time by us or on our behalf. Manchester Technologies, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share amounts) (Unaudited) Three months ended Nine months ended April 30, April 30, 2005 2004 2005 2004 Revenue $41,902 $42,448 $128,072 $132,943 Cost of Revenue 36,649 38,509 111,906 119,712 Gross profit 5,253 3,939 16,166 13,231 Selling, general and administrative expenses 4,608 3,149 12,317 9,735 Loss on buy-out of capital lease 666 - 666 - Income (loss) from operations (21) 790 3,183 3,496 Interest and other income (expense), net 46 (70) 179 (166) Income from continuing operations before income taxes 25 720 3,362 3,330 Income tax provision 11 288 1,345 1,312 Income from continuing operations 14 432 2,017 2,018 Discontinued operations Income (loss) from operations of discontinued component - (714) 995 (2,314) Income tax (provision) benefit - 285 (398) 905 Income (loss) from discontinued operations - (429) 597 (1,409) Net income $ 14 $3 $2,614 $609 Income per share from continuing operations Basic $ 0.00 $0.05 $0.24 $0.25 Diluted $0.00 $0.05 $0.24 $0.24 Income (loss) per share from discontinued operations Basic $ 0.00 $(0.05) $0.07 $(0.18) Diluted $0.00 $(0.05) $0.07 $(0.17) Net income per share Basic $0.00 $0.00 $0.32 $0.08 Diluted $0.00 $0.00 $0.31 $0.07 Weighted average shares outstanding Basic 8,486 8,070 8,289 8,017 Diluted 8,772 8,533 8,519 8,364 Manchester Technologies, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands except per share amounts) April 30, 2005 July 31, 2004 (Unaudited) Assets Current assets: Cash and cash equivalents $20,476 $16,881 Accounts receivable, net of allowance for doubtful accounts of $1,525 and $2,848, respectively 15,799 15,530 Inventory 21,166 20,301 Deferred income taxes 1,212 1,212 Prepaid taxes 655 916 Prepaid expenses and other current assets 1,111 1,266 Total current assets 60,419 56,106 Property and equipment, net 7,487 9,890 Goodwill, net 3,735 3,735 Deferred income taxes 1,728 1,728 Other assets 113 183 Total assets $73,482 $71,642 Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued expenses $20,899 $21,492 Current portion of capital lease obligations 213 246 Total current liabilities 21,112 21,738 Deferred compensation payable 98 98 Capital lease obligations, net of current portion 5,836 7,683 Total liabilities 27,046 29,519 Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value; 5,000 shares authorized, none issued - - Common stock, $.01 par value; 25,000 shares authorized, 8,542 and 8,163 shares issued and outstanding 85 82 Additional paid-in capital 21,293 19,597 Retained earnings 25,058 22,444 Total shareholders' equity 46,436 42,123 Total liabilities and shareholders' equity $73,482 $71,642 DATASOURCE: Manchester Technologies Inc. CONTACT: Elan Yaish, Chief Financial Officer, +1-631-951-7060, or Fax: +1-631-951-7639, Web site: http://www.e-manchester.com/ http://www.electrograph.com/

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