AMENDMENT
#2
TO
DEED OF
LEASE
THIS
AMENDMENT #2 TO LEASE AGREEMENT (the "Amendment #2") is made as of the 18th day
of June 2009, by and between ePLUS, INC. ("Tenant"), and Norton Building 1 LLC
("Landlord").
WHEREAS,
the Landlord is the owner of certain property, located in Fairfax County,
Virginia, with a street address of 13595 Dulles Technology Drive, Herndon,
Virginia (the "Property"), improved by a two-story office building located
thereon (the "Building"); and,
WHEREAS,
the Tenant and Landlord are parties to that certain LEASE AGREEMENT dated as of
December 23, 2004 (the “Lease”) and AMENDMENT #1 dated as of July 1, 2007
(“Amendment #1”); and,
WHEREAS,
the Tenant and Landlord desire to enter modify the Lease to provide for the
occupancy of the entire Premises for an additional five (5) year term at its
expiration on December 31, 2009, upon the terms and conditions more particularly
set forth herein.
NOW,
THEREFORE, the parties hereto, intending legally to be bound, hereby covenant
and agree as set forth below:
|
1.
|
The
capitalized terms contained in this Amendment #2 and not herein defined
shall have the same meanings as ascribed to them in the
Lease.
|
|
2.
|
Section
1.1(b) is modified to provide that Base Rent from and after January 1,
2010 shall be $21.50 per square foot, subject to adjustment for
actual 2009 operating expenses as provided in Section 6 below and subject
to annual increases as set forth in Section
3.22.
|
|
3.
|
Section
1.1(d) is modified to provide for a new Expiration Date of December 31,
2014.
|
|
4.
|
Section
3.1 is modified to provide that the Base Rent as of January 1, 2010 shall
be $100,118.33 per month subject to adjustment for actual 2009
operating expenses as provided in Section
6.
|
|
5.
|
The
adjustment provided for in Section 3.4 of the Lease as modified by Section
5 of Amendment #1 is eliminated in its entirety, effective for periods on
or after January 1, 2010.
|
|
6.
|
Tenant
shall remain responsible for 100% of increases over Base Year Expenses in
Utilities, operating charges, insurance and real estate taxes for all
periods on or after January 1, 2010. Base Year Expenses shall
be modified for periods on and after January 1, 2010 to actual Utilities,
operating charges, insurance and real estate taxes for calendar year
2009. For purposes of Sections 2 and 4 above modified Base Year
Expenses have been estimated at $9.52 per square foot. Should
actual Utilities, operating charges, insurance and real estate taxes for
calendar year 2009 be more or less than $9.52 per square foot, Base Rent
provided for in Section 2 above and monthly Base Rent provided for in
Section 4 above shall be modified accordingly. Such adjustment
shall be determined on or before April 30,
2010.
|
|
7.
|
Section
3.2 of the Lease shall be modified to provide for annual increases of
2.75% on a Base Rent, net of expenses factor of $11.98 per square foot,
beginning one year from the January 1, 2010 renewal commencement
date.
|
|
8.
|
Section
3.4 of the Lease and Section 5 of Amendment #1 shall be deleted in their
entirety for periods beginning on and after January 1,
2010.
|
|
9.
|
Section
18.18 of the Lease is deleted in its
entirety.
|
|
10.
|
Section
2.4 of the Lease is replaced in its entirety by the following
language:
|
“Early
Termination Right. Tenant may elect to terminate this Lease with
respect to the entire Premises on December 31, 2012 by six (6) months prior
written notice, if Tenant, in good faith, determines that the Premises are no
longer physically suitable for its needs. There shall be no penalty
fee associated with such termination; however, Tenant shall be liable to
Landlord for normal and reasonable restoration costs incurred by Landlord on
account of damage to the Leased Premises, and for costs of any alterations
needed to secure the surrendered space. These costs shall be paid by Tenant as
Additional Rent, to be paid within 60 days after invoice therefore by
Landlord.”
|
11.
|
Except
as modified as provided in this Amendment all terms and conditions of the
Lease as modified by Amendment #1 shall remain in full force and
effect.
|
IN
WITNESS WHEREOF, Landlord and Tenant have executed this Amendment #2 under seal
on the day and year first above written.
TENANT:
e
Plus
By: /s/ Steven
Mencarini
Name: Steven
Mencarini
Title: Senior Vice
President
LANDLORD:
NORTON
BUILDING 1, LLC
By: /s/ Michael W.
Scott
Name: Michael W.
Scott
Title: Manager
Contact: Kleyton
Parkhurst, SVP
e
Plus
inc.
investors@eplus.com
703-984-8150
e
Plus Reports Fiscal Year
2009 Financial Results
HERNDON, VA – June 17, 2009
–
e
Plus inc.
(Nasdaq Global Market:
PLUS
), a leading
provider of technology solutions, today announced financial results for its
fiscal fourth quarter and full fiscal year ended March 31, 2009. For
the quarter, revenues totaled $134.2 million, a decrease of $53.0 million or
28.3%, as compared to $187.2 million in the fiscal fourth quarter of
2008. Net earnings totaled $0.8 million, or $0.10 per diluted share,
as compared to $2.7 million, or $0.32 per diluted share, in the fiscal fourth
quarter of 2008.
For the
year, revenues totaled $698.0 million, a decrease of $151.3 million or 17.8%, as
compared to $849.3 million last fiscal year. Net earnings totaled
$12.8 million, or $1.52 per diluted share, as compared to $16.4 million, or
$1.95 per diluted share last fiscal year. Results for the year ended
March 31, 2009 include a pre-tax goodwill impairment charge of $4.6 million
related to the Company’s technology sales business segment. The
impairment is a non-cash charge to earnings, and did not affect the
Company's liquidity, cash flows from operating activities or
covenants. Excluding this impairment charge, non-GAAP net earnings
totaled $15.5 million or $1.84 per diluted share.
“IT
spending has been very volatile in the past few months, and it is difficult to
predict when IT spending will stabilize or increase,” said Phillip G. Norton,
Chairman, President and Chief Executive Officer. “We believe that
e
Plus has
multiple advantages that will allow us to endure current economic challenges and
be well positioned to capture growth when the economy rebounds. These
advantages include our strong balance sheet, a continued focus on advanced
technologies that deliver high value to customers, software and supply chain
processes that differentiate us from the competition, and leasing that
facilitates customer spend to meet their IT needs within capital and budget
constraints.
e
Plus is
helping our customers by providing real value in this marketplace.”
Fourth Quarter
Results
Sales of
product and services totaled $119.3 million, a decrease of $47.7 million or
28.6%, as compared to $167.0 million in the fiscal fourth quarter of
2008. The decline in revenue was primarily attributable to the
economic downturn, which led many customers to defer investments in technology
equipment. The gross margin percentage improved slightly to 13.1%, as
compared to the same quarter last year.
Revenues
generated from the combination of lease revenues, sales of leased equipment, fee
and other income totaled $14.8 million, a decrease of $5.3 million or
26.5%, as compared to $20.2 million in the fiscal fourth quarter of
2008. This decline was largely a result of the Company’s decision to
sell more of its leases in the prior year period, as part of a risk mitigation
process conducted to diversify the portfolio by customer, equipment type and
residual value. As a result of fewer leases in the Company’s
portfolio in the fiscal year, lease revenues decreased 11.7% to $10.3 million
this quarter, representing approximately 8% of the total revenue
mix.
Selling,
general and administrative expenses, which includes professional and other fees,
salaries and benefits, and general and administrative expenses, totaled $23.4
million, a decrease of $2.1 million or 8.1%, as compared to $25.4 million in the
fiscal fourth quarter of 2008. The decrease was primarily related to
lower professional and other fees, as well as the Company’s increased focus on
controlling spending, efforts to improve productivity and a reduction in
depreciation resulting from a smaller portfolio of leases. Salaries
and benefits expenses increased due to the establishment of a telesales unit
earlier this year and the employment of several former consultants as
professional services staff.
Interest
and financing costs totaling $1.5 million were unchanged from the fiscal fourth
quarter of 2008. Non-recourse notes payable totaled $85.0 million at
March 31, 2009, a decrease of 9.4%, as compared to $93.8 million at March 31,
2008.
e
Plus is
not directly liable for its non-recourse debt, except under certain limited
circumstances, as the loans are secured by equipment and assigned lease
payments, which collateralizes the customers’ obligations.
As of
March 31, 2009, cash and cash equivalents totaled $107.8 million. At
March 31, 2009, shareholders’ equity was $174.5 million and book value totaled
$21.57 per share, compared to shareholders’ equity of $163.7 million and book
value of $19.89 per share at March 31, 2008.
During
the quarter,
e
Plus
invested $1.4 million to repurchase an additional 133,791 shares of its common
stock at an average cost of $10.64 per share For the full year ended
March 31, 2009,
e
Plus
repurchased 436,664 shares of its outstanding common stock at an average cost of
$9.95 per share for a total purchase price of $4.3 million.
Full Year
Results
Sales of
product and services totaled $636.1 million, a decrease of $95.5 million or
13.1%, as compared to $731.7 million last fiscal year. The decrease
in revenue was primarily attributable to the economic downturn, which has led
many customers to defer investments in technology equipment. Gross
margin percentage improved to 13.9% as compared 11.8% recorded the prior fiscal
year.
Revenues
generated from the combination of lease revenues, sales of leased equipment, fee
and other income totaled $61.9 million, a decrease of $55.8 million or 47.4%, as
compared to $117.7 million last fiscal year. The decrease in sales of
leased equipment, which totaled $45.5 million last fiscal year, represented
nearly three-quarters of the overall decline in revenues. This
decline was largely a result of the Company’s decision to sell more of its
leases in the prior fiscal year, as part of a risk mitigation process conducted
to diversify the portfolio by customer, equipment type and residual
value.
Selling,
general and administrative expenses totaled $98.9 million, a decrease of $2.3
million or 2.3%, as compared to $101.2 million last fiscal year. The
decrease resulted from lower professional and other fees, in addition to
slightly lower general and administrative expenses, which more than offset an
increase in salaries and benefits. Salaries and benefits expense
increased $4.1 million or 5.7% primarily due to staff additions the Company made
earlier this year to support its long-term growth plans. Professional
and other fees decreased $5.7 million or 44.1% from heightened expense levels
incurred last year from delayed SEC filings and other legal fees.
For the
2009 fiscal year, interest and financing costs declined 28.5%, to $5.8 million
from $8.1 million recorded the prior fiscal year, as a result of lower overall
non-recourse debt.
Percentage
changes stated throughout this press release are calculated on rounded numbers
from the Company’s financial statements (which are stated in thousands of
dollars), 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, 2009. Copies are available via the Company’s Web site
at:
http://www.eplus.com
,
via the SEC’s website at:
http://www.sec.gov
,
or by contacting the Company.
Conference Call
Information
The
Company will host a conference call at 11:00 a.m. Eastern on Thursday, June 18.
To participate in the call, please dial 877-856-1960 (international participants
may dial 719-325-4784) and reference access code 8754140. A live
webcast will be available via the Company’s investor relations Web site at:
www.eplus.com
.
A replay
of the teleconference will be accessible through midnight Sunday, June
28th. To access the replay, please call 719-457-0820 and reference
access code 8754140. The webcast will also remain available for
replay via the Company’s investor relations Web site.
Use of Non-GAAP Financial
Information
In this
release,
e
Plus
discloses non-GAAP measures of net earnings and earnings per share showing the
effect of the goodwill impairment charge. A “non-GAAP financial
measure” is a numerical measure of a company’s historical or future financial
performance, financial position or cash flows that excludes amounts, or is
subject to adjustments that have the effect of excluding amounts, that are
included in the most directly comparable measure calculated and presented in
accordance with GAAP in the statement of income, balance sheet or statement of
cash flows of the company; or includes amounts, or is subject to adjustments
that have the effect of including amounts, that are excluded from the most
directly comparable measure so calculated and presented.
e
Plus uses
the financial measures that are included in this news release in its internal
evaluation and management of its business. Management believes that
these measures and the information they provide are useful to investors because
they permit investors to view the Company’s performance using the same tools
that
e
Plus uses
and to better evaluate the Company’s ongoing business
performance. These measures should not be considered an alternative
to measurements required by accounting principles generally accepted in the
United States (GAAP), such as net income and earnings per
share. These non-GAAP measures are unlikely to be comparable to
non-GAAP information provided by other companies. In accordance with SEC
regulations, reconciliation of the
e
Plus GAAP
information to the pro forma information is provided in the table
below. We will also make available on the investor relations page of
our web site at
www.eplus.com
this
press release, and a reconciliation of the difference between the GAAP and
non-GAAP financial measures.
Forward-Looking
Statements
Statements
in this press release that are not historical facts may be deemed to be
“forward-looking statements” Within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of
1934, as amended. Actual and anticipated future results may vary
materially due to certain risks and uncertainties, including, without
limitation, possible adverse effects resulting from the recent financial crisis
in the credit markets and general slowdown of the U.S. economy such as our
current and potential customers delaying or reducing technology purchases,
increasing credit risk associated with our customers and vendors, reduction of
vendor incentive programs, the possibility of additional goodwill impairment
charges, and restrictions on our access to capital necessary to fund our
operations; the demand for and acceptance of, our products and services; our
ability to adapt our services to meet changes in market developments; the impact
of competition in our markets; the possibility of defects in our products or
catalog content data; our ability to hire and retain sufficient personnel; our
ability to protect our intellectual property; a decrease in the capital spending
budgets of our customers; our ability to consummate and integrate acquisitions;
the creditworthiness of our customers; our ability to raise capital and obtain
non-recourse financing for our transactions; our ability to reserve adequately
for credit losses; and other risks or uncertainties detailed in our reports
filed with the Securities and Exchange Commission. All information
set forth in this press release is current as of the date of this release and
e
Plus
undertakes no duty or obligation to update this information.
About
e
Plus
inc.
e
Plus is a
leading provider of technology solutions.
e
Plus
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,
e
Plus has
more than 650 associates in 20+ locations 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
.
e
Plus® and
e
Plus
products referenced herein are either registered trademarks or trademarks of
e
Plus inc.
in the United States and/or other countries
|
e
Plus
inc. AND SUBSIDIARIES
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
As
of
|
|
|
|
March
31, 2009
|
|
March
31, 2008
|
|
ASSETS
|
|
(in
thousands)
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$107,788
|
|
$58,423
|
|
Accounts
receivable—net
|
|
82,734
|
|
109,706
|
|
Notes
receivable
|
|
2,632
|
|
726
|
|
Inventories—net
|
|
9,739
|
|
9,192
|
|
Investment
in leases and leased equipment—net
|
|
119,256
|
|
157,382
|
|
Property
and equipment—net
|
|
3,313
|
|
4,680
|
|
Other
assets
|
|
16,809
|
|
13,514
|
|
Goodwill
|
|
21,601
|
|
26,125
|
|
TOTAL
ASSETS
|
|
$363,872
|
|
$379,748
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable—equipment
|
|
$2,904
|
|
$6,744
|
|
Accounts
payable—trade
|
|
18,833
|
|
22,016
|
|
Accounts
payable—floor plan
|
|
45,127
|
|
55,634
|
|
Salaries
and commissions payable
|
|
4,586
|
|
4,789
|
|
Accrued
expenses and other liabilities
|
|
29,002
|
|
30,372
|
|
Income
taxes payable
|
|
912
|
|
-
|
|
Recourse
notes payable
|
|
102
|
|
-
|
|
Non-recourse
notes payable
|
|
84,977
|
|
93,814
|
|
Deferred
tax liability
|
|
2,957
|
|
2,677
|
|
Total
Liabilities
|
|
189,400
|
|
216,046
|
|
|
|
|
|
|
|
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; 11,504,167 issued and
8,088,513 outstanding at March 31, 2009 and 11,210,731 issued and
8,231,741 outstanding at March 31, 2008
|
|
115
|
|
112
|
|
Additional
paid-in capital
|
|
80,055
|
|
77,287
|
|
Treasury
stock, at cost, 3,415,654 and 2,978,990 shares,
respectively
|
|
(37,229)
|
|
(32,884)
|
|
Retained
earnings
|
|
131,452
|
|
118,623
|
|
Accumulated
other comprehensive income—foreign currency translation
adjustment
|
|
79
|
|
564
|
|
Total
Stockholders' Equity
|
|
174,472
|
|
163,702
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$363,872
|
|
$379,748
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Year
Ended
|
|
|
March
31,
|
|
March
31,
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
(in
thousands, except for per share amounts)
|
|
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
of product and services
|
$119,335
|
|
$167,026
|
|
$636,142
|
|
$731,654
|
|
Sales
of leased equipment
|
1,186
|
|
4,949
|
|
4,633
|
|
45,493
|
|
|
120,521
|
|
171,975
|
|
640,775
|
|
777,147
|
|
|
|
|
|
|
|
|
|
|
Lease
revenues
|
10,286
|
|
11,649
|
|
44,483
|
|
55,459
|
|
Fee
and other income
|
3,352
|
|
3,575
|
|
12,769
|
|
16,699
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES
|
134,159
|
|
187,199
|
|
698,027
|
|
849,305
|
|
|
|
|
|
|
|
|
|
|
COSTS
AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of sales, product and services
|
103,680
|
|
145,191
|
|
548,035
|
|
645,393
|
|
Cost
of leased equipment
|
1,113
|
|
4,783
|
|
4,373
|
|
43,702
|
|
|
104,793
|
|
149,974
|
|
552,408
|
|
689,095
|
|
|
|
|
|
|
|
|
|
|
Direct
lease costs
|
2,957
|
|
4,602
|
|
14,220
|
|
20,955
|
|
Professional
and other fees
|
1,269
|
|
3,239
|
|
7,199
|
|
12,889
|
|
Salaries
and benefits
|
18,671
|
|
18,314
|
|
76,380
|
|
72,285
|
|
General
and administrative expenses
|
3,424
|
|
3,881
|
|
15,320
|
|
16,016
|
|
Impairment
of goodwill
|
-
|
|
-
|
|
4,644
|
|
-
|
|
Interest
and financing costs
|
1,501
|
|
1,533
|
|
5,808
|
|
8,123
|
|
|
|
|
|
|
|
|
|
|
TOTAL
COSTS AND EXPENSES
|
132,615
|
|
181,543
|
|
675,979
|
|
819,363
|
|
|
|
|
|
|
|
|
|
|
EARNINGS
BEFORE PROVISION FOR INCOME TAXES
|
1,544
|
|
5,656
|
|
22,048
|
|
29,942
|
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAXES
|
790
|
|
2,911
|
|
9,219
|
|
13,582
|
|
|
|
|
|
|
|
|
|
|
NET
EARNINGS
|
$754
|
|
$2,745
|
|
$12,829
|
|
$16,360
|
|
|
|
|
|
|
|
|
|
|
NET
EARNINGS PER COMMON SHARE - BASIC
|
$0.10
|
|
$0.34
|
|
$1.56
|
|
$1.99
|
|
NET
EARNINGS PER COMMON SHARE - DILUTED
|
$0.10
|
|
$0.32
|
|
$1.52
|
|
$1.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC
|
8,059,518
|
|
8,231,741
|
|
8,219,318
|
|
8,231,741
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING - DILUTED
|
8,256,718
|
|
8,396,712
|
|
8,453,333
|
|
8,378,683
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION
OF NON-GAAP INFORMATION
|
|
|
|
Year
Ended
|
|
|
|
March
31,
|
|
|
|
2009
|
|
2008
[2]
|
|
|
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
GAAP
earnings before provision for income taxes as reported
|
|
$22,048
|
|
$29,942
|
|
Plus:
Impairment of goodwill
|
|
4,644
|
|
-
|
|
Non-GAAP
Earnings before provision for income taxes
|
|
26,692
|
|
29,942
|
|
Non-GAAP
Provision for income taxes [1]
|
|
11,161
|
|
13,582
|
|
Non-GAAP
proforma net earnings
|
|
$15,531
|
|
$16,360
|
|
|
|
|
|
|
|
GAAP
net earnings per common share-diluted
|
|
$1.52
|
|
$1.95
|
|
Non-GAAP
proforma net earnings per common share-diluted
|
|
$1.84
|
|
$1.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC
|
|
8,219,318
|
|
8,231,741
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING - DILUTED
|
|
8,453,333
|
|
8,378,683
|
|
|
|
|
|
|
|
[1]
Non-GAAP tax rate is calculated at the same tax rate as GAAP
earnings
|
|
[2]
Figures in the 2008 column are GAAP and provided for comparative
purposes.
|