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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-Q


(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934


For the quarterly period ended October 5, 2002


OR


( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934


For the transition period from to


Commission file number 0-20022


POMEROY COMPUTER RESOURCES, INC.
--------------------------------
(Exact name of registrant as specified in its charter)


DELAWARE 31-1227808
- -------- ----------
(State or jurisdiction of incorporation (IRS Employer
or organization) Identification No.)


1020 Petersburg Road, Hebron, KY 41048
--------------------------------------
(Address of principal executive offices)


(859) 586-0600
--------------
(Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
requirements for the past 90 days.

YES X NO
------- ----
The number of shares of common stock outstanding as of November 1, 2002 was
12,846,761


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POMEROY COMPUTER RESOURCES, INC.

TABLE OF CONTENTS


Part I. Financial Information

Item 1. Financial Statements: Page
----

Consolidated Balance Sheets as of 3
January 5, 2002 and October 5, 2002


Consolidated Statements of Income for 5
the Three Months Ended October 5, 2001
and 2002

Consolidated Statements of Income for 6
the Nine Months Ended October 5, 2001
and 2002

Consolidated Statements of Cash Flows 7
for the Nine Months Ended October 5,
2001 and 2002

Notes to Consolidated Financial 8
Statements

Item 2. Management's Discussion and Analysis of 15
Financial Condition and Results of
Operations

Part II. Other Information 18

SIGNATURE 19



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POMEROY COMPUTER RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands) January 5, October 5,
2002 2002
------------ -----------

ASSETS (Unaudited)

Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,875 $ 17,669

Accounts receivable:
Trade, less allowance of $627 and $1,546 at January 5, 2002
and October 5, 2002, respectively . . . . . . . . . . . . 142,356 116,789
Vendor receivables, less allowance of $16,112 at both
January 5, 2002 and October 5, 2002 . . . . . . . . . . . 24,219 12,720
Net investment in leases.. . . . . . . . . . . . . . . . . . 35,809 1,803
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,413 647
------------ -----------
Total receivables. . . . . . . . . . . . . . . . . . . 207,797 131,959
------------ -----------

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 20,876 16,870
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,468 9,504
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . 240,016 176,002
------------ -----------

Equipment and leasehold improvements:
Furniture, fixtures and equipment . . . . . . . . . . . . . . 29,920 31,622
Leasehold improvements. . . . . . . . . . . . . . . . . . . . 5,700 6,353
------------ -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 35,620 37,975

Less accumulated depreciation . . . . . . . . . . . . . . . . 17,070 17,901
------------ -----------
Net equipment and leasehold improvements. . . . . . . . . 18,550 20,074
------------ -----------

Net investment in leases. . . . . . . . . . . . . . . . . . . . 22,438 1,578
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,454 60,528
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . 1,060 840
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . 2,200 3,107
------------ -----------
Total assets . . . . . . . . . . . . . . . . . . . . . $ 341,718 $ 262,129
============ ===========



See notes to consolidated financial statements.


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POMEROY COMPUTER RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS


(in thousands) January 5, October 5,
2002 2002
------------ -----------

LIABILITIES AND EQUITY (Unaudited)

Current Liabilities:
Current portion of notes payable . . . . . . . . . . . . . . . $ 27,190 $ 1,864
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 86,447 39,620
Bank notes payable . . . . . . . . . . . . . . . . . . . . . . 11,882 -
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . 2,751 2,278
Other current liabilities. . . . . . . . . . . . . . . . . . . 11,908 10,349
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . 140,178 54,111
------------ -----------

Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . 10,213 -
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . 565 2,714

Equity:
Preferred stock, $.01 par value; authorized 2,000 shares
(no shares issued or outstanding). . . . . . . . . . . . . . . - -
Common stock, $.01 par value; authorized 20,000 shares
(12,759 and 12,847 shares issued at January 5, 2002 and
October 5, 2002, respectively) . . . . . . . . . . . . . . . . 128 128
Paid in capital. . . . . . . . . . . . . . . . . . . . . . . . 80,487 81,534
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . 110,979 125,363
------------ -----------
191,594 207,025

Less treasury stock, at cost (75 and 143 shares at January 5,
2002 and October 5, 2002, respectively) . . . . . . . . . . . 832 1,721
------------ -----------
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . 190,762 205,304
------------ -----------
Total liabilities and equity . . . . . . . . . . . . . . . . . $ 341,718 $ 262,129
============ ===========



See notes to consolidated financial statements.


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POMEROY COMPUTER RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data) Three Months Ended
--------------------------
October 5, October 5,
2001 2002
------------ ------------

Net sales and revenues: (Unaudited) (Unaudited)
Sales-equipment, supplies and leasing. $ 167,948 $ 136,976
Service. . . . . . . . . . . . . . . . 35,761 33,945
------------ ------------
Total net sales and revenues. . . . 203,709 170,921
------------ ------------

Cost of sales and service:
Sales-equipment, supplies and leasing. 152,393 125,777
Service. . . . . . . . . . . . . . . . 24,755 23,692
------------ ------------
Total cost of sales and service . . 177,148 149,469
------------ ------------

Gross margin . . . . . . . . . 26,561 21,452
------------ ------------

Operating expenses:
Selling, general and administrative. 14,455 12,551
Rent expense . . . . . . . . . . . . 936 786
Depreciation . . . . . . . . . . . . 1,149 1,158
Amortization . . . . . . . . . . . . 1,398 328
Provision for doubtful accounts. . . 60 400
Litigation settlement. . . . . . . . - 300
Restructuring charge . . . . . . . . - 227
------------ ------------
Total operating expenses . . . 17,998 15,750
------------ ------------

Income from operations. . . . . . . . . 8,563 5,702
------------ ------------

Other expense (income):
Interest expense . . . . . . . . . . 197 112
Miscellaneous. . . . . . . . . . . . (66) (45)
------------ ------------
Net other expense. . . . . . . 131 67
------------ ------------

Income before income tax . . . . . . 8,432 5,635
Net income tax expense . . . . . . . 3,288 541
------------ ------------

Net income . . . . . . . . . . . . . $ 5,144 $ 5,094
============ ============

Weighted average shares outstanding:
Basic. . . . . . . . . . . . . . . . 12,634 12,745
============ ============
Diluted. . . . . . . . . . . . . . . 12,713 12,772
============ ============

Earnings per common share:
Basic. . . . . . . . . . . . . . . . $ 0.41 $ 0.40
============ ============
Diluted. . . . . . . . . . . . . . . $ 0.40 $ 0.40
============ ============



See notes to consolidated financial statements.


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POMEROY COMPUTER RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME


(in thousands, except per share data) Nine Months Ended
--------------------------
October 5, October 5,
2001 2002
------------ ------------

Net sales and revenues: (Unaudited) (Unaudited)
Sales-equipment, supplies and leasing. $ 500,024 $ 453,352
Service. . . . . . . . . . . . . . . . 104,717 100,497
------------ ------------
Total net sales and revenues. . . . 604,741 553,849
------------ ------------

Cost of sales and service:
Sales-equipment, supplies and leasing. 453,038 414,955
Service. . . . . . . . . . . . . . . . 75,251 69,520
------------ ------------
Total cost of sales and service . . 528,289 484,475
------------ ------------

Gross margin . . . . . . . . . 76,452 69,374
------------ ------------

Operating expenses:
Selling, general and administrative. 43,477 39,475
Rent expense . . . . . . . . . . . . 2,744 2,550
Depreciation . . . . . . . . . . . . 3,436 3,485
Amortization.. . . . . . . . . . . . 4,114 824
Provision for doubtful accounts. . . 120 900
Litigation settlement. . . . . . . . 1,000 300
Restructuring charge . . . . . . . . - 714
------------ ------------
Total operating expenses . . . 54,891 48,248
------------ ------------

Income from operations. . . . . . . . . 21,561 21,126
------------ ------------

Other expense (income):
Interest expense . . . . . . . . . . 1,563 437
Miscellaneous. . . . . . . . . . . . (185) (53)
------------ ------------
Net other expense. . . . . . . 1,378 384
------------ ------------

Income before income tax . . . . . . 20,183 20,742
Net income tax expense . . . . . . . 7,871 6,358
------------ ------------

Net income . . . . . . . . . . . . . $ 12,312 $ 14,384
============ ============

Weighted average shares outstanding:
Basic. . . . . . . . . . . . . . . . 12,600 12,729
============ ============
Diluted. . . . . . . . . . . . . . . 12,700 12,799
============ ============

Earnings per common share:
Basic. . . . . . . . . . . . . . . . $ 0.98 $ 1.13
============ ============
Diluted. . . . . . . . . . . . . . . $ 0.97 $ 1.12
============ ============



See notes to consolidated financial statements.


6 of 19



POMEROY COMPUTER RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands) Nine Months Ended
--------------------------
October 5, October 5,
2001 2002
------------ ------------

Cash Flows from Operating Activities: (unaudited) (unaudited)
Net income. . . . . . . . . . . . . . . . . . . $ 12,312 $ 14,384
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation . . . . . . . . . . . . . . . . . 5,255 4,121
Amortization . . . . . . . . . . . . . . . . . 4,114 824
Deferred income taxes. . . . . . . . . . . . . (300) (1,251)
Loss on sale of fixed assets . . . . . . . . . 1,365 652
Stock option extension . . . . . . . . . . . . 265 -
Changes in working capital accounts, net of
effect of acquisitions/divestitures:
Receivables. . . . . . . . . . . . . . . . 13,022 36,224
Inventories. . . . . . . . . . . . . . . . 7,443 3,306
Prepaids . . . . . . . . . . . . . . . . . 2,332 (599)
Net investment in leases . . . . . . . . . 1,222 2,823
Accounts payable . . . . . . . . . . . . . 9,471 (42,902)
Deferred revenue . . . . . . . . . . . . . (4,320) (472)
Income tax payable . . . . . . . . . . . . 2,519 (2,866)
Other, net . . . . . . . . . . . . . . . . 2,028 1,557
------------ ------------
Net operating activities. . . . . . . . . . . . . 56,728 15,801
------------ ------------

Cash Flows from Investing Activities:
Capital expenditures. . . . . . . . . . . . . (4,274) (7,113)
Proceeds from sale of fixed assets. . . . . . - 469
Proceeds from sale of leasing segment . . . . - 24,374
Acquisition of subsidiary companies, net of
cash acquired and investment in intangibles . (7,676) (1,625)
------------ ------------
Net investing activities. . . . . . . . . . . . (11,950) 16,105
------------ ------------

Cash Flows from Financing Activities:
Payments under notes payable. . . . . . . . . . (20,495) (10,053)
Proceeds under notes payable. . . . . . . . . . 13,374 4,900
Net payments under bank notes payable . . . . . (35,812) (12,118)
Proceeds from exercise of stock options . . . . 413 810
Proceeds from employee stock purchase plan. . . 274 238
Payment for treasury stock purchase . . . . . . (363) (889)
------------ ------------
Net financing activities. . . . . . . . . . . . (42,609) (17,112)
------------ ------------

Increase (decrease) in cash 2,169 14,794
Cash:
Beginning of period. . . . . . . . . . . . . . 1,097 2,875
------------ ------------
End of period. . . . . . . . . . . . . . . . . $ 3,266 $ 17,669
============ ============



See notes to consolidated financial statements.


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POMEROY COMPUTER RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Except as disclosed herein, there has been no material change in the
information disclosed in the notes to consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended
January 5, 2002. In the opinion of management, all adjustments (consisting
of normal recurring accruals) necessary for a fair presentation of the
interim period have been made. The results of operations for the nine-month
period ended October 5, 2002 are not necessarily indicative of the results
that may be expected for future interim periods or for the year ending
January 5, 2003.

2. Cash and Bank Notes Payable

The Company maintains a sweep account with its bank whereby daily cash
receipts are automatically transferred as payment towards the Company's
credit facility. As of January 5, 2002, bank notes payable includes $3.4
million of overdrafts in accounts with a participant bank to the Company's
credit facility. These amounts were subsequently funded through the normal
course of business.

3. Treasury Stock

On September 19, 2001, the Company's Board of Directors authorized a
program to repurchase up to 100,000 shares of the Company's outstanding
stock at market price. During the third quarter 2001, the Company
repurchased 33,000 shares of stock at a cost of $0.4 million.

On July 25, 2002, the Board of Directors authorized a program to repurchase
up to 150,000 shares of the Company's outstanding common stock at market
price. During the third quarter 2002, the Company repurchased 68,000 shares
of stock at a cost of $0.9 million.


4. Earnings per Common Share

The following is a reconciliation of the number of shares used in the basic
EPS and diluted EPS computations: (in thousands, except per share data)

Three Months Ended October 5,
---------------------------------------------
2001 2002
-------------------- ---------------------
Per Share Per Share
Shares Amount Shares Amount
------- ---------- ------- ----------
Basic EPS 12,634 $ 0.41 12,745 $ 0.40
Effect of dilutive
Stock options 79 (0.01) 27 -
------- ---------- ------- ----------
Diluted EPS 12,713 $ 0.40 12,772 $ 0.40
======= ========== ======= ==========


8 of 19

Nine Months Ended October 5,
---------------------------------------------
2001 2002
-------------------- ---------------------
Per Share Per Share
Shares Amount Shares Amount
------- ---------- ------- ----------
Basic EPS 12,600 $ 0.98 12,729 $ 1.13
Effect of dilutive
Stock options 100 (0.01) 70 (0.01)
------- ---------- ------- ----------
Diluted EPS 12,700 $ 0.97 12,799 $ 1.12
======= ========== ======= ==========


5. Goodwill and Other Intangible Assets-Adoption of Statement 142

On July 20, 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") 141, Business Combinations, and
SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all
business combinations completed after June 30, 2001. SFAS 142 is effective
for fiscal years beginning after December 15, 2001; however, certain
provisions of this Statement apply to goodwill and other intangible assets
acquired between July 1, 2001 and the effective date of SFAS 142. Major
provisions of these Statements and their effective dates for the Company
are as follows:

- All business combinations initiated after June 30, 2001 must
use the purchase method of accounting. The pooling of interest
method of accounting is prohibited except for transactions
initiated before July 1, 2001.
- Intangible assets acquired in a business combination must be
recorded separately from goodwill if they arise from contractual
or other legal rights or are separable from the acquired entity
and can be sold, transferred, licensed, rented or exchanged,
either individually or as part of a related contract, asset or
liability.
- Goodwill, as well as intangible assets with indefinite
lives, acquired after June 30, 2001, will not be amortized.
Effective January 6, 2002, all previously recognized goodwill and
intangible assets with indefinite lives will no longer be subject
to amortization.
- Effective January 6, 2002, goodwill and intangible assets
with indefinite lives will be tested for impairment annually and
whenever there is an impairment indicator.
- All acquired goodwill must be assigned to reporting units
for purposes of impairment testing.

The Company adopted SFAS 142 in the first quarter of fiscal 2002. The
Company has determined that all its intangible assets have definite lives
and will continue to amortize these assets over their estimated useful
lives. As a result, the Company has recognized no transitional impairment
loss in the first quarter of fiscal 2002 in connection with the adoption of
SFAS 142 for intangible assets with indefinite lives. For the first nine
months of fiscal 2002, the Company no longer amortized goodwill in
accordance with SFAS 142. The Company has completed a transitional fair
value based impairment test of goodwill as of January 6, 2002 and has
determined no impairment loss in the carrying amount of its goodwill. As a
result, the Company has recognized no transitional impairment loss in the
first nine months of fiscal 2002 in connection with the adoption of SFAS
142 for goodwill with indefinite lives. The Company will review its
intangible assets and goodwill for impairment in accordance with SFAS 144,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of".


9 of 19



Intangible assets consist of the following:

(in thousands) Gross Net Gross Net
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount Amortization Amount Amount Amortization Amount
1/5/2002 1/5/2002 1/5/2002 10/5/2002 10/5/2002 10/5/2002
--------- ------------- --------- ---------- ------------- ----------

Amortized intangible assets:
Covenants not to compete $ 1,171 $ 653 $ 518 $ 1,694 $ 1,118 $ 576
Customer lists 477 236 241 477 289 188
Intangibles 564 263 301 564 488 76
--------- ------------- --------- ---------- ------------- ----------
Total amortized intangibles $ 2,212 $ 1,152 $ 1,060 $ 2,735 $ 1,895 $ 840
========= ============= ========= ========== ============= ==========



Projected future amortization expense related to intangible assets with
definite lives are as follows:

(in thousands)
Fiscal Years:
2002 $ 300 October 6, 2002 - January 5, 2003
2003 389
2004 118
2005 33
2006 -
Total $ 840
==========

For the quarter ended October 5, 2001, amortization expense related to
goodwill was $1,125 thousand. Amortization expense related to intangibles
assets was $174 thousand of which $73 thousand was reported under the
caption "cost of sales" or "selling, general and administrative" expenses.
Amortization expense associated with assets reported under the caption
"other current assets" was $172 thousand.

For the quarter ended October 5, 2002, there was no amortization expense
related to goodwill. Amortization expense related to intangible assets was
$328 thousand.

For the nine months ended October 5, 2001, amortization expense related to
goodwill was $3,269 thousand. Amortization expense related to intangibles
assets was $476 thousand of which $181 thousand was reported under the
caption "cost of sales" or "selling, general and administrative" expenses.
Amortization expense associated with assets reported under the caption
"other current assets" was $550 thousand.

For the nine months ended October 5, 2002, there was no amortization
expense related to goodwill. Amortization expense related to intangibles
assets was $741 thousand of which $71 thousand was reported under the
caption "cost of sales" or "selling, general and administrative" expenses.
Amortization expense associated with assets reported under the caption
"other current assets" was $154 thousand.


10 of 19

The changes in the net carrying amount of goodwill for the nine months
ended October 5, 2002 by segment are as follows:



(in thousands) Products Services Consolidated
--------- --------- -------------

Net carrying amount as of 1/5/02 $ 40,812 $ 16,642 $ 57,454
Goodwill recorded during first nine months 1,469 1,605 3,074
--------- --------- -------------
Net carrying amount as of 10/5/02 $ 42,281 $ 18,247 $ 60,528
========= ========= =============


Pro forma net income and net income per share exclusive of amortization expense
are as follows:



(in thousands, except per share data) Three Months Ended October 5,
---------------------------------
2001 2002
---------------- ---------------

Reported net income $ 5,144 $ 5,094
Add back: Goodwill amortization (net of tax) 686 -
---------------- ---------------
Adjusted net income $ 5,830 $ 5,094
================ ===============

Basic earnings per share:
Reported net income $ 0.41 $ 0.40
Goodwill amortization 0.05 -
---------------- ---------------
Adjusted net income $ 0.46 $ 0.40
================ ===============

Diluted earnings per share:
Reported net income $ 0.40 $ 0.40
Goodwill amortization 0.05 -
---------------- ---------------
Adjusted net income $ 0.45 $ 0.40
================ ===============





(in thousands, except per share data) Nine Months Ended October 5,
--------------------------------
2001 2002
--------------- ---------------

Reported net income $ 12,312 $ 14,384
Add back: Goodwill amortization (net of tax) 1,994 -
--------------- ---------------
Adjusted net income $ 14,306 $ 14,384
=============== ===============

Basic earnings per share:
Reported net income $ 0.98 $ 1.13
Goodwill amortization 0.16 -
--------------- ---------------
Adjusted net income $ 1.14 $ 1.13
=============== ===============

Diluted earnings per share:
Reported net income $ 0.97 $ 1.12
Goodwill amortization 0.15 -
--------------- ---------------
Adjusted net income $ 1.12 $ 1.12
=============== ===============



11 of 19

6. Supplemental Cash Flow Disclosures

Supplemental disclosures with respect to cash flow information and non-cash
investing and financing activities are as follows: (in thousands)




Nine Months Ended October 5,
--------------------------------
2001 2002
--------------- ---------------

Interest paid $ 1,955 $ 424
=============== ===============
Income taxes paid $ 3,537 $ 10,474
=============== ===============
Adjustments to purchase price
of acquisition assets and intangibles $ 869 $ 1,936
=============== ===============

Business combinations accounted for
as purchases:
Assets acquired $ 13,858 $ 2,069
Liabilities assumed 4,854 260
Notes payable 1,328 184
--------------- ---------------
Net cash paid $ 7,676 $ 1,625
=============== ===============


7. Litigation

On April 13, 2001, the Company agreed to a settlement of the litigation
with FTA Enterprises, Inc. and expensed it in the first quarter of fiscal
2001. The settlement of $1.0 million was paid in cash in the second quarter
of fiscal 2001.

During the third quarter 2002, the Company made a litigation settlement
payment of $0.3 million. The litigation settlement is related to a single
bankruptcy preference claim.

There are various other legal actions arising in the normal course of
business that have been brought against the Company. Management believes
these matters will not have a material adverse effect on the Company's
financial position or results of operations.


12 of 19

8. Segment Information

Summarized financial information concerning the Company's reportable
segments is shown in the following table. (in thousands)



Three Months Ended October 5, 2001
---------------------------------------------
Products Services Leasing Consolidated
--------- --------- -------- -------------

Revenues $ 165,436 $ 35,761 $ 2,512 $ 203,709
Income from operations 3,755 4,117 691 8,563
Total assets 213,992 65,580 67,655 347,227
Capital expenditures 1,422 292 - 1,714
Depreciation and amortization 2,257 561 258 3,076


Three Months Ended October 5, 2002
---------------------------------------------
Products Services Leasing Consolidated
--------- --------- -------- -------------
Revenues $ 136,722 $ 33,945 $ 254 $ 170,921
Income from operations 1,921 3,570 211 5,702
Total assets 193,990 61,490 6,649 262,129
Capital expenditures 961 22 - 983
Depreciation and amortization 852 227 14 1,093




Nine Months Ended October 5, 2001
---------------------------------------------
Products Services Leasing Consolidated
--------- --------- -------- -------------

Revenues $ 492,568 $ 104,717 $ 7,456 $ 604,741
Income from operations 12,200 7,818 1,543 21,561
Total assets 213,992 65,580 67,655 347,227
Capital expenditures 3,630 413 231 4,274
Depreciation and amortization 6,843 1,650 876 9,369


Nine Months Ended October 5, 2002
---------------------------------------------
Products Services Leasing Consolidated
--------- --------- -------- -------------
Revenues $ 449,864 $ 100,497 $ 3,488 $ 553,849
Income from operations 7,655 11,945 1,526 21,126
Total assets 193,990 61,490 6,649 262,129
Capital expenditures 4,908 2,121 84 7,113
Depreciation and amortization 4,061 664 220 4,945


9. Assets Held For Sale

On February 28, 2002 the Company entered into a definitive purchase
agreement to sell substantially all of the net assets of its wholly owned
subsidiary - Technology Integration Financial Services, Inc. ("T.I.F.S.")
to Information Leasing Corporation ("ILC"), the leasing division of the
Provident Bank of Cincinnati, Ohio. On April 16, 2002 the Company closed
the sale of a majority of the assets of its wholly owned subsidiary
T.I.F.S. to ILC. Vincent D. Rinaldi, a Director of the Company, is the
President of ILC. ILC will pay the Company book value for the net assets of
T.I.F.S. as of April 16, 2002. The book value of the net assets of T.I.F.S.
as of April 16, 2002 was approximately $4.6 million. Accordingly, no gain
or loss was recognized on this transaction. In addition, ILC assumed and
liquidated at the time of the closing approximately $20.0 million of the
Company's debt related to leased assets owed by T.I.F.S as of April 16,
2002. As part of the transaction, the Company signed an exclusive
seven-year vendor agreement whereby the Company is appointed as an agent
for remarketing and reselling of the leased equipment sold. The Company
will be paid a commission on future lease transactions referred to and
accepted by ILC and will act as the remarketing and reselling agent for
such future leased equipment.


13 of 19

The following table identifies the assets and liabilities sold as of April
16, 2002:

(In thousands)

Cash $ (262)
Net investment in leases 54,364
Other 468
Total assets $ 54,570
============

Current and long term notes payable $ 29,961
Trade payables 15,857
Other 4,176
Total liabilities $ 49,994
============

See the Company's filing on Form 8-K dated May 1, 2002 for more information
on the sale.


10. Restructuring Charge

In the second quarter of fiscal 2002, the Company approved a plan to
consolidate and relocate operations in various geographical locations and
to abandon certain assets associated with modification to strategic
initiatives.

The plan resulted in a pre-tax restructuring charge of $714 thousand ($438
thousand after tax) for the nine months ended October 5, 2002. The
restructuring costs consist of $484 thousand in equipment and leasehold
improvement dispositions, $126 thousand in involuntary employee severance
costs, and $104 thousand in lease terminations. Under the plan, the Company
eliminated approximately 40 employees.

The execution of the plan began in the second quarter of fiscal 2002 and
was completed in the third quarter of fiscal 2002. As of October 5, 2002,
the Company had $110 thousand in accrued and unpaid restructuring costs.
The Company expects to pay substantially all of the remaining accrued and
unpaid costs by the end of fiscal 2003.


11. Income Tax

During the third quarter 2002, the Company recorded an income tax benefit
of $1.6 million associated with an increase in the tax basis of leased
assets as a result of an accounting method change for tax purposes. This
amount is reported in the caption "net income tax expense."


12. Recent Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 146, "Accounting for costs Associated with Exit or Disposal
Activities." This Statement requires recording costs associated with exit
or disposal activities at their fair values when a liability has been
incurred. Under previous guidance, certain exit costs were accrued upon
management's commitment to an exit plan, which is generally before an
actual liability has been incurred. Adoption of the Statement is required
with disposal activities initiated after December 31, 2002. The Company
believes that the adoption of this Statement will not have an effect on the
Company's financial position or results of operation as the Company has not
presently identified any activities to be disposed.


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13. Subsequent Events

On October 8, 2002, the Company's Board of Directors authorized a program
to repurchase up to an additional 200,000 shares of the Company's
outstanding common stock, which represents less than 1.6% of its
outstanding common stock, in open market purchases made from time to time
at the discretion of the Company's management. The time and extent of the
repurchases will depend on market conditions. The acquired shares will be
held in treasury or cancelled. The Company anticipates financing the stock
redemption program out of working capital and the redemption program will
be effectuated over the next 12 months.



Special Cautionary Notice Regarding Forward-Looking Statements
--------------------------------------------------------------

Certain of the matters discussed under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contain certain
forward looking statements regarding future financial results of the Company.
The words "expect," "estimate," "anticipate," "predict," and similar expressions
are intended to identify forward-looking statements. Such statements are
forward-looking statements for purposes of the Securities Act of 1933 and the
Securities Exchange Act of 1934, as amended, and as such may involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from future results, performance or achievements expressed or implied by such
forward-looking statements. Important factors that could cause the actual
results, performance or achievements of the Company to differ materially from
the Company's expectations are disclosed in this document including, without
limitation, those statements made in conjunction with the forward-looking
statements under "Management's Discussion and Analysis of Financial Condition
and Results of Operations". All written or oral forward-looking statements
attributable to the Company are expressly qualified in their entirety by such
factors.

POMEROY COMPUTER RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TOTAL NET SALES AND REVENUES. Total net sales and revenues decreased $32.8
million, or 16.1%, to $170.9 million in the third quarter of fiscal 2002 from
$203.7 million in the third quarter of fiscal 2001. This decrease was a result
primarily of an industry-wide slowdown in technology spending, the decrease in
leasing revenue due to the sale of Technology Integration Financial Services,
Inc. (" T.I.F.S."), and the Company's decision to take a fee from manufacturers
related to certain sales transactions as opposed to recording top line revenues
of approximately $3.1 million. Products and leasing sales decreased $30.9
million, or 18.4% to $137.0 million in the third quarter of fiscal 2002 from
$167.9 million in the third quarter of fiscal 2001. Service revenues decreased
$1.9 million, or 5.3%, to $33.9 million in the third quarter of fiscal 2002 from
$35.8 million in the third quarter of fiscal year 2001. This net decrease was
primarily a result of an industry-wide slowdown in technology spending.

Total net sales and revenues decreased $50.9 million, or 8.4%, to $553.8 million
in the first nine months of fiscal 2002 from $604.7 million in the first nine
months of fiscal 2001. This decrease was attributable primarily to an
industry-wide slowdown in technology spending and the Company's decision to take
a fee from manufacturers related to certain sales transaction as opposed to
recording top line revenues of approximately $13.7 million. Excluding
acquisitions completed in fiscal year 2001, total net sales and revenues
decreased 10.1%. Products and leasing sales decreased $46.6 million, or 9.3%, to
$453.4 million in the first nine months of fiscal 2002 from $500.0 million in
the first nine months of fiscal 2001. Excluding acquisitions completed in
fiscal year 2001, products and leasing sales decreased 10.1%. Service revenues
decreased $4.2 million, or 4.0%, to $100.5 million in the first nine months of
fiscal 2002 from $104.7 million in the first nine months of fiscal year 2001 for
the reasons stated in the preceding paragraph. Excluding acquisitions completed
in fiscal year 2001, service revenues decreased 9.8%.


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GROSS MARGINS. Gross margin decreased to 12.6% in the third quarter of fiscal
2002 as compared to 13.0% in the third quarter of fiscal 2001. This decrease in
gross margin resulted primarily from the decrease in hardware margins and
decrease in leasing gross margins due to the sale of T.I.F.S. offset by the
higher proportion of service gross margin to total gross margin associated with
the improved utilization of service personnel. Service gross margin increased to
47.8% of total gross margin in the third quarter of fiscal 2002 from 41.4% in
the third quarter of fiscal 2001. Factors that may have an impact on gross
margin in the future include the continued changes in hardware margins, change
in personnel utilization rates, the mix of products sold and services provided,
a change in unit prices, the percentage of equipment or service sales with
lower-margin customers and the ratio of service revenues to total net sales and
revenues.

Gross margin decreased to 12.5% in the first nine months of fiscal 2002 as
compared to 12.7% in the first nine months of fiscal 2001. This decrease in
gross margin resulted primarily from the decrease in hardware margins and
decrease in leasing gross margins due to the sale of T.I.F.S. and offset by the
increase in service gross margin associated with the improved utilization of
service personnel. Service gross margin increased to 44.7% of total gross margin
in the first nine months of fiscal 2002 from 38.5% in the first nine months of
fiscal 2001. Factors that may have an impact on gross margin in the future
include the continued changes in hardware margins, change in personnel
utilization rates, the mix of products sold and services provided, a change in
unit prices, the percentage of equipment or service sales with lower-margin
customers and the ratio of service revenues to total net sales and revenues.

OPERATING EXPENSES. Selling, general and administrative expenses (including
rent expense and provision for doubtful accounts) expressed as a percentage of
total net sales and revenues increased to 8.0% in the third quarter of fiscal
2002 from 7.6% in the third quarter of fiscal 2001. This increase is primarily a
result of lower than expected total net sales and revenues and increase in
reserve for doubtful accounts offset by the reduction in selling and
administrative payroll and related costs. Total operating expenses expressed as
a percentage of total net sales and revenues increased to 9.2% in the third
quarter of fiscal 2002 from 8.8% in the third quarter of fiscal 2001. This
increase is primarily the result of lower than expected total net sales and
revenues, the increase in the provision for doubtful accounts, litigation
settlement and the restructuring charge as discussed below and offset by the
elimination of amortization expense associated with the Company's goodwill and
reduction in payroll costs.

Selling, general and administrative expenses (including rent expense and
provision for doubtful accounts) expressed as a percentage of total net sales
and revenues increased to 7.8% in the first nine months of fiscal 2002 from 7.7%
in the first nine months of fiscal 2001. The increase is primarily a result of
lower than expected total net sales and revenues and the increase in its reserve
for doubtful accounts offset by the reduction in the selling and administrative
payroll costs. Total operating expenses expressed as a percentage of total
net sales and revenues decreased to 8.7% in the first nine months of fiscal 2002
from 9.1% in the first nine months of fiscal 2001 due to the elimination of
amortization expense associated with the Company's goodwill and the reduction of
the litigation settlement fees offset by the increase in selling, general and
administrative expenses as a percentage of total net sales and revenues as
discussed above and the restructuring charge as discussed below.

LITIGATION SETTLEMENT. On April 13, 2001, the Company agreed to a settlement of
the litigation with FTA Enterprises, Inc. and expensed it in the first quarter
of fiscal 2001. The settlement of $1.0 million was paid in cash in the second
quarter of fiscal 2001.

During the third quarter 2002, the Company recorded a litigation settlement of
$0.3 million. The litigation settlement is related to a single bankruptcy
preference claim.

RESTRUCTURING CHARGE. In the second quarter of fiscal 2002, the Company approved
a plan to consolidate and relocate operations in various geographical locations
and to abandon certain assets associated with modification to strategic
initiatives.


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The plan resulted in a pre-tax restructuring charge of $714 thousand ($438
thousand after tax) for the nine months ended October 5, 2002. The
restructuring costs consist of $484 thousand in equipment and leasehold
improvement dispositions, $126 thousand in involuntary employee severance costs,
and $104 thousand in lease terminations. Under the plan, the Company eliminated
approximately 40 employees.

The execution of the plan began in the second quarter of fiscal 2002 and was
completed in the third quarter of fiscal 2002. As of October 5, 2002, the
Company had $110 thousand in accrued and unpaid restructuring costs. The Company
expects to pay substantially all of the remaining accrued and unpaid costs by
the end of fiscal 2003.

INCOME FROM OPERATIONS. Income from operations decreased $2.9 million, or
33.7%, to $5.7 million in the third quarter of fiscal 2002 from $8.6 million in
the third quarter of fiscal 2001. The Company's operating margin decreased to
3.3% in the third quarter of fiscal 2002 as compared to 4.2% in the third
quarter of fiscal 2001. This decrease is primarily due to the increase in
operating expenses as a percentage of total net sales and revenues and the
decrease in the Company's gross margin.

Income from operations decreased $0.5 million, or 2.3%, to $21.1 million in the
first nine months of fiscal 2002 from $21.6 million in the first nine months of
fiscal 2001. The Company's operating margin increased to 3.8% in the first nine
months of fiscal 2002 as compared to 3.6% in the first nine months of fiscal
2001. This increase is primarily due to the decrease in operating expenses and
offset by the lower than expected total net sales and revenues.

INTEREST EXPENSE. Interest expense decreased $0.1 million, or 50.0%, to $0.1
million in the third quarter of fiscal 2002 from $0.2 million in the third
quarter of fiscal 2001. This decrease was due to reduced borrowings as a result
of improved cash flow management, the sale of T.I.F.S. and a reduced interest
rate charged by the Company's lender.

Interest expense decreased $1.2 million, or 75.0%, to $0.4 million in the first
nine months of fiscal 2002 from $1.6 million in the first nine months of fiscal
2001. This decrease was due to reduced borrowings as a result of improved cash
flow management, the sale of T.I.F.S. and a reduced interest rate charged by the
Company's lender.

INCOME TAXES. The Company's effective tax rate was 9.6% in the third quarter of
fiscal 2002 compared to 39.0% in the third quarter of fiscal 2001. This decrease
was related to a tax benefit of $1.6 million associated with an increase in the
tax basis of leased assets as a result of an accounting method change for tax
purposes, lower overall state income tax liability and the change in goodwill
amortization.


The Company's effective tax rate was 30.7% in the first nine months of fiscal
2002 compared to 39.1% in the first nine months of fiscal 2001. This decrease
was related to a tax benefit of $1.6 million associated with an increase in the
tax basis of leased assets as a result of an accounting method change for tax
purposes, lower overall state income tax liability and the change in goodwill
amortization.


NET INCOME. Net income remained constant at $5.1 million in the third quarter
of fiscal 2002 and 2001.

Net income increased $2.1 million, or 17.1%, to $14.4 million in the first nine
months of fiscal 2002 from $12.3 million in the first nine months of fiscal 2001
due to the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities was $15.8 million in the first nine months
of fiscal 2002. Cash provided by investing activities was $16.1 million, which
included $24.3 million for proceeds related to the sale of the leasing segment
and $0.5 million for proceeds on sale of fixed assets offset by $7.1 million for
capital expenditures and $1.6 million for prior year acquisitions. Cash used in
financing activities was $17.1 million which included $5.1 million of net
payments on notes payable, $12.1 million of net payments on bank notes payable,
$0.9 million for purchase of treasury stock and offset by $1.0 million from the
exercise of stock options and purchases of stock under the employee stock
purchase plan.


17 of 19

A significant part of the Company's inventories is financed by floor plan
arrangements with third parties. At October 5, 2002, these lines of credit
totaled $84.0 million, including $72.0 million with Deutsche Financial Services
("DFS") and $12.0 million with IBM Credit Corporation ("ICC"). Borrowings under
the DFS floor plan arrangements are made on thirty-day notes. Borrowings under
the ICC floor plan arrangements are made on either thirty-day or sixty-day
notes. All such borrowings are secured by the related inventory. Financing on
substantially all of the arrangements is interest free due to subsidies by
manufacturers. Overall, the average rate on these arrangements is less than
1.0%. The Company classifies amounts outstanding under the floor plan
arrangements as accounts payable.

The Company's financing of receivables is provided through a portion of its
credit facility with DFS. The $240.0 million credit facility has a three year
term and includes $72.0 million for inventory financing, $144.0 million for
working capital which is based upon accounts receivable financing, and a
cash-flow component in the form of a $24.0 million term loan, which is not
restricted to a borrowing base. The accounts receivable and term loan portion of
the credit facility carry a variable interest rate based on the London InterBank
Offering Rate ("LIBOR") and a pricing grid, which was 4.6% as of October 5,
2002. At October 5, 2002, the Company did not have a balance outstanding under
this facility. The credit facility is collateralized by substantially all of the
assets of the Company, except those assets that collateralize certain other
financing arrangements. Under the terms of the credit facility, the Company is
subject to various financial covenants and is restricted from paying dividends.

On April 16, 2002, the Company closed the sale of a majority of the assets of
its wholly owned leasing subsidiary- Technology Integration Financial Services,
Inc. ("T.I.F.S."). ILC paid the Company book value for the net assets of
T.I.F.S. as of April 16, 2002, which was approximately $4.6 million. In
addition, ILC assumed and liquidated at the time of the closing approximately
$20.0 million of the Company's debt related to leased assets owed by T.I.F.S as
of April 16, 2002.

The Company believes that the anticipated cash flow from operations and current
financing arrangements will be sufficient to satisfy the Company's capital
requirements for the next twelve months. Historically, the Company has financed
acquisitions using a combination of cash, earn outs, shares of its Common Stock
and seller financing. The Company anticipates that future acquisitions will be
financed in a similar manner.


POMEROY COMPUTER RESOURCES, INC.

PART II - OTHER INFORMATION

Items 1 to 4 None

Item 5

On August 30, 2002, the Company acquired Verity Solutions, LLC ("Verity"), a
Cleveland, Ohio-based IT solutions and professional services provider. For the
twelve months ended July 31, 2002, Verity had recorded revenues of $1.0 million.
Their primary services include IT solutions consulting, enterprise network
infrastructure solutions, network systems and application solutions and project
management.

Item 6 Exhibits and Reports on Form 8-K

(a) Reports on Form 8-K None

(b) Exhibits

10(I) Material Agreements

10(I) (mm)(10) Asset Purchase Agreement by, between and among
Pomeroy Select Integration Solutions, Inc. and
Verity Solutions, LLC and John R. Blackburn, dated
August 30, 2002


18 of 19

(mm)(11) Covenant Not to Compete Agreement between John R.
Blackburn and Pomeroy Select Integration
Solutions, Inc.

11 Computation of Earnings per Share

99.12 David B. Pomeroy, Chief Executive Officer,
Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

99.13 Michael E. Rohrkemper, Chief Financial Officer,
Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

POMEROY COMPUTER RESOURCES, INC.
--------------------------------
(Registrant)

Date: November 13, 2002 By: /s/ Michael E. Rohrkemper

Michael E. Rohrkemper
-------------------------------
Chief Financial Officer and
Chief Accounting Officer

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