Financial: Software Spectrum, Inc. Fiscal 1999 Q1 Earnings

Edge: Work-Group Computing Report, August 24, 1998

 SOFTWARE SPECTRUM, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME

 (In thousands, except per share amounts)

 (Unaudited)

 Three Months Ended

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 July 31, July 31,

 1998 1997

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Net sales $ 224,266 $ 211,958

Cost of sales 199,066 188,246

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 Gross Margin 25,200 23,712

Selling, general and administrative

 expenses 20,055 19,365

Depreciation and amortization 2,572 2,264

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 Operating income 2,573 2,083

Interest expense (income)

 Interest expense 298 957

 Interest income (100) (39)

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 198 918

 Income before income taxes 2,375 1,165

Income tax expense 1,075 624

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 Net income $ 1,300 $ 541

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Earnings per share

 Basic $ 0.30 $ 0.12

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 Diluted $ 0.30 $ 0.12

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Weighted average shares outstanding

 Basic 4,281 4,332

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 Diluted 4,345 4,341

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 SOFTWARE SPECTRUM, INC. AND SUBSIDIARIES

 CONSOLIDATED BALANCE SHEETS

 (In thousands)

 July 31, April 30,

 1998 1998

 (unaudited)

ASSETS

Current assets

 Cash and cash equivalents $ 6,460 $ 7,129

 Trade accounts receivable, net of

 allowance for doubtful accounts 153,321 171,460

 Inventories 4,345 4,564

 Prepaid expenses 4,171 2,279

 Other current assets 831 1,024

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 Total current assets 169,128 186,456

Furniture, equipment and

 leasehold improvements 42,742 37,951

 Less accumulated depreciation

 and amortization 19,286 17,538

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 23,456 20,413

Intangibles and other assets 50,603 51,762

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 $ 243,187 $ 258,631

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LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

 Current maturities of long-term debt $ 644 $ 393

 Trade accounts payable 138,843 160,331

 Other current liabilities 13,444 13,824

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 Total current liabilities 152,931 174,548

Long-term debt, less current maturities 13,657 7,813

Shareholders' equity

 Common stock 44 44

 Additional paid-in capital 40,069 39,496

 Retained earnings 42,065 40,765

 Currency translation adjustments (2,827) (2,627)

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 79,351 77,678

 Less treasury stock 2,752 1,408

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 Total shareholders' equity 76,599 76,270

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 $ 243,187 $ 258,631

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Software Spectrum, Inc. (Nasdaq:SSPE) Wednesday announced net sales of $224 million for the first quarter ended July 31, 1998 as compared to net sales of $212 million for the same quarter a year ago. Net income for the quarter ended July 31, 1998 was $1.3 million compared to $541,000 for the corresponding period last year. Earnings per share for the quarter ended July 31, 1998 were $.30 on a diluted basis, compared to $.12 for the quarter ended July 31, 1997.

"Our highlights for the quarter include the continuing growth of our services business as well as first time profits in Asia/Pacific, which were driven in part by seasonally high sales in that region of the world," stated Judy Sims, Software Spectrum Chairman and Chief Executive Officer. "As we continue through our fiscal year, we remain focused on profitability and international and services sales growth."

Software Spectrum is a leading global supplier of personal computer software and technology services to organizations. Focused on delivering technology to the workplace, Software Spectrum is committed to providing superior customer service while maintaining a cost-efficient operating structure. The Company provides customers with a wide variety of business software products, volume software licensing and technology services. Software Spectrum assists customers in the design, implementation, deployment, and ongoing support of their personal computing strategies. The Company has sales locations, operations centers and technology services offices in North America, Europe and Asia/Pacific.