Hartco - Computer Division Positions Hartco for Another Year of Growth First Quarter Results Released at Annual General Meeting

Business Wire, June 16, 1998

MONTREAL--(BUSINESS WIRE)--June 16, 1998--(ME:HTC.) (TSE:HTC.) Strong growth in its Computer Division continued to spell success for Hartco, Canada's largest franchisor of computer resellers, integrators and retailers. President Harry Hart told attendees of the company's Annual General Meeting today that this formula continues to attract the brightest in the computer business as well as an increasing number of blue chip national accounts. Mr. Hart also announced a new concept for Hartco's Communication Division.

Hartco's revenues for fiscal 1998 reached $717 million, up over 22 percent, while net earnings increased 32 percent to $12.4 million. First quarter results were also announced at the meeting. For the period ended May 2, 1998 revenues rose 12 percent to $187.1 million from $167.3 million a year ago, while net earnings were up 15 percent to $2.1 million or $0.17 per share, compared to $1.9 million or $0.15 per share for the first quarter last year.

During the first quarter the MicroAge network added Chevron to its growing list of national accounts. The oil company signed a $3 million contract to custom configure over 1,000 computers.

"I have been able to transfer my vision of entrepreneurship to the individuals who run our owner-operated branches. These are leading operators who bring a particular culture with them which spells success. Our goal is to continue to make our shareholders investment in Hartco work for them. Despite competitive pressures, we feel confident we can continue to do this," commented Mr. Hart.

Hartco's MicroAge network continues to secure large national accounts, including General Motors and Midland Walwyn. This is in addition to the likes of Deloitte & Touche, Manulife and three of Canada's national banks, all of which increased their purchases with the network over the past year. The MicroAge business-to-business Internet site has allowed the network to win new business as no other competitor can match this service.

Hartco Executive Vice-President, Jeffrey Hart, said : "Customers increasingly look to the MicroAge network to supply and manage their entire PC and network infrastructure. They are becoming the provider of choice because with 75 locations, they have the largest number of branches in Canada. Their closest competitors have less than 20 locations. Last year we opened up in the Yukon, so we're now situated in every province and territory across Canada. We expect to open 3 to 5 more locations this year."

Jeffrey Hart said the company expects to add 2 to 3 more independent retailers to the CompuSmart large format store network this year. "We believe that CompuSmart offers the only strong alternative for independent, retail-focused resellers looking for support, just as MicroAge has become for business-oriented resellers."

CompuSmart is currently making a major move on Western Canada as it prepares to replace Doppler Computers in the region. Doppler went out of business this spring and CompuSmart quickly moved in to fill the gap left in the market. Revenues of $60 million are anticipated over time between the two new locations opening in Calgary and Vancouver.

The Compucentre retail network grew by 20 percent last year, to a large degree helped by a new support team driving the business. Three to six new locations are anticipated for this year. Potential franchisees are attracted to Compucentre, in large part because of Multimicro's buying power and the strong support Multimicro provides in training, service and marketing. Multimicro is Hartco's wholly-owned distribution and franchise support company from which it operates its Computer Division.

"Overall, the Computer Division grew at a rate of 26 percent in 1997 exceeding the computer industry average of 14 percent. We have consistently outpaced industry growth and think this pace will continue as CompuSmart becomes a compelling alternative for independent retailers and the national strength of the MicroAge network becomes a determining factor in how corporations buy as they increase their investment in PC networks. We remain confident that we will continue to grow our Computer Division as fast as, or even more rapidly, than the industry in the year ahead", stated Jeffrey Hart.

Contrary to perceptions in the marketplace that Hartco is primarily a retailer, 70 percent of its Computer Division revenue is derived from the business and government markets.

Mr. Hart outlined a new concept for the company's Communication Division. "Just as the Computer Division first targeted retail and later formed a network to serve the corporate marketplace, we are looking at a similar strategy for the Communication Division. We are currently launching the TeleSolutions network to serve small and medium sized business clients."

Jeff Hart stated that by this time next year 4 major metropolitan locations are planned with several other markets under consideration. "We are building this network to be a franchise opportunity to help increase the profitability of leading independent communication resellers across the country. We are projecting to break even in TeleSolutions inaugural year and predict very rapid growth after that. Long term, we hope to achieve similar success to that which we have achieved in the corporate segment of our Computer Division."