Manchester Technologies, Inc. Announces Fiscal Third Quarter Results

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, [phone], or Fax:

[phone],  



Web site:  http://www.e-manchester.com/

http://www.electrograph.com/ 

Copyright