Financial reports: PC Connection, Kennametal, Hanover

Annual net income tumbles 57% at PC Connection

Computer reseller PC Connection (Nasdaq: PCCC) posted a 57% drop in net income for the year on flat sales. For 2002, the Merrimack, NH-based company netted $3.2 million on sales of $1.19 billion. In 2001, net income was $7.4 million, again on sales of $1.19 billion.

But the company did end the year on an up note. Net sales for the three months ended Dec. 31 were $322.2 million, up 18% from $273.6 million for the fourth quarter of 2001. Net income increased 107%, to $2.9 million from $1.4 million.

“Our fourth quarter results were stronger than we expected given the current economic environment. Excluding the operations of MoreDirect, net sales for the month of December grew by 5% over a year ago,” CEO Patricia Gallup said in a statement. “Our positive finish in 2002 has encouraged us to be cautiously optimistic that, increasingly, there will be renewed demand in 2003 for the products and services PC Connection provides.”

J&L posts quarterly operating profit for Kennametal For the three months ended Dec. 31, sales at maintenance, repair, and operations (MRO) cataloger J&L Industrial Supply were $48.1 million, down 14% from $56.0 million for the comparable quarter of 2001. But J&L reported operating income of $1.7 million, compared with a $3.7 million net loss it suffered last year.

Quarterly sales at J&L’s parent company, Latrobe, PA-based Kennametal, increased 14%, to $431.7 million from $380.3 million the previous year. Operating income increased 118%, to $12.0 million from $5.5 million.

Annual sales fall 14% at Hanover Direct Fiscal 2002 sales for catalog holding company Hanover Direct (Amex: HNV) were $457.3 million, down 14% from the previous year. But Edgewater, NJ-based Hanover attributes the decline to reduced circulation to unprofitable segments and to the discontinuance or sale of several books. For instance, the June 2001 sale of its Improvements business accounted for $34.1 million of the reduction. The discontinuance of the Domestications Kitchen & Garden, Kitchen & Home, Encore, and Turiya catalogs accounted for another $6.4 million.

Overall circulation of Hanover’s remaining catalogs– Domestications, The Company Store, Company Kids, Silhouettes, International Male, Scandia Down, and Gump’s by Mail—was cut nearly 10% last year. Revenue for the continuing businesses fell 7%.

Hanover will release its full operating results for 2002 on March 21.

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