Concepts Direct, Inc. Reports First Quarter 2000 Sales and Earnings.Business Editors LONGMONT Longmont, city (1990 pop. 51,555), Boulder co., N Colo.; inc. 1885. It is a trade and processing center for a rich farm area irrigated by the Colorado–Big Thompson project. Vitamins, primary metal products, and manufacturing equipment are produced. , Colo.--(BUSINESS WIRE)--April 24, 2000 Concepts Direct, Inc. (Nasdaq:CDIR CDIR Cumulative Damage Index Right Engine CDIR Chemical Demilitarization and Installation Restoration CDIR Channel Distribution Information at the Receiver ), announced today its results and results of its subsidiaries for the quarter ended March 31, 2000. Sales for the quarter ended March 31, 2000 were $12,806,000, a 2% increase from sales of $12,546,000 for the same period in 1999. On a consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: basis, the Company posted a net loss of $1,755,000, or $0.35 per share for the quarter, compared to a net loss of $445,000 or $0.09 per share in the same period in 1999. The first quarter 2000 results reflect an assumed zero percent income tax rate, based on the Company's expectations that anticipated consolidated losses for the balance of the year will not be deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). in the current year for tax purposes. Phillip Phillip is a variant of the name Philip. It may refer to: Given name:
Operating Income (Loss) Operating Loss
Company Quarter Ended Quarter Ended
March 31, 2000 March 31, 1999
Concepts Direct, Inc. $655,000 $(224,000)
iConcepts, Inc. (640,000) (373,000)
BOTWEB, Inc. (1,698,000) (8,000)
"Viewed in this context, it seems clear to me that our catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. business, Concepts Direct, has returned to being on a solid footing. I believe the improvement of nearly $900,000 in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. compared to the same period last year is impressive. As the year progresses I anticipate continued good relative performance from our catalog business. I am firmly convinced con·vince tr.v. con·vinced, con·vinc·ing, con·vinc·es 1. To bring by the use of argument or evidence to firm belief or a course of action. See Synonyms at persuade. 2. that the Concepts Direct management team is very strong and that our catalogs and associated catalog brand Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the sites will grow and prosper. "iConcepts performed as we expected in the first quarter. Its technology services business has robust software but efforts to develop revenues from third parties have not yet begun. Its Internet retailing sites are new and just beginning to develop a revenue stream. I continue to believe that some or all of these businesses have the potential to develop substantial revenues and become profitable. "The large loss in BOTWEB (Best Of The WEB) A now defunct site that listed exemplary Web sites in a variety of categories. The BOTWEB seal signified that a site had been evaluated on presentation, functionality and content and was one of the best of its kind on the Web. occurred primarily as a result of tests conducted during the first quarter to determine consumer reaction to BOTWEB banner Same as banner ad. 1. banner - The title page added to printouts by most print spoolers. Typically includes user or account ID information in very large character-graphics capitals. advertisements and the printed BOTWEB directory. In both cases, I believe that the tests validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. our belief that we can effectively apply direct marketing practices to develop a responsive BOTWEB user community. These traffic building tests, having served their purpose, have now been suspended sus·pend v. sus·pend·ed, sus·pend·ing, sus·pends v.tr. 1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. until we implement certain enhancements to the site and launch a production version to replace the beta version A pre-shipping release of hardware or software that has gone through alpha test. A beta version of software is supposed to be very close to the final product, but, in practice, it is more a way of getting users to test the software in the first place under real conditions. . Currently, we expect this to occur in the third quarter of 2000. The portals market is home to a number of established, substantial players as well as a host of other newcomers. I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that the editorial and direct merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. focus BOTWEB is pursuing can differentiate differentiate /dif·fer·en·ti·ate/ (dif?er-en´she-at) 1. to distinguish, on the basis of differences. 2. to develop specialized form, character, or function differing from that surrounding it or from the original. BOTWEB.com from the competition. The profits from the Concepts Direct catalog business cannot support BOTWEB growth to its full potential; therefore, obtaining third party financing sources is critical if we are to realize my belief that BOTWEB can emerge as a leading portal on the Internet. "Both iConcepts and BOTWEB will soon begin formal efforts to obtain financing independent of Concepts Direct. I am optimistic that these efforts will prove successful. Until financing of iConcepts and BOTWEB occurs, we plan to be restrained in our advertising expenditures." J. Michael Wolfe Michael Wolfe (Born 3 April, 1945, United States) is a poet, author, and the President and Executive Producer of Unity Productions Foundation. He is also a frequent lecturer on Islamic issues at universities across the United States including Harvard, Georgetown, Stanford, SUNY , President and Chief Executive Officer of Concepts Direct, commenting on the first quarter of 2000, said, "Our plan to operate multiple successful catalogs continued to produce positive results in the first quarter of 2000, with Colorful Images showing considerable strength. We are managing Concepts Direct for steady revenue growth and profit and I am optimistic that Concepts Direct, prior to consolidation, can generate favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. comparisons for the balance of 2000, compared to 1999."
First Quarter 2000 and 1999 Consolidated Financial Results
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
Sales $12,806,000 $12,546,000
Gross Profit 4,587,000 4,545,000
Operating Loss (1,683,000) (605,000)
Net Loss (1,755,000) (445,000)
Diluted Loss per Share $(0.35) $(0.09)
Average Shares Outstanding 4,986,000 4,971,000
Recap of First Quarter Financial Results by Company The following is a recap of sales and expense activity for the first quarter of 2000 for the three companies included in the consolidated Concepts Direct, Inc. financial results. Sales and expenses are shown with the appropriate company. The related party line items refer to charges between related companies for services provided to other related companies.
Concepts Direct, Inc. iConcepts, Inc. BOTWEB, Inc.
Sales to Third
Parties $12,700,000 $43,000 $63,000
Sales to Related
Parties 15,000 502,000 28,000
Total Sales 12,715,000 545,000 91,000
Expenses from Third
Parties 11,766,000 1,163,000 1,560,000
Expenses from Related
Parties 294,000 22,000 229,000
Total Expenses 12,060,000 1,185,000 1,789,000
Operating Income
(Loss) 655,000 (640,000) (1,698,000)
Sales On a consolidated basis sales increased by 2% for the quarter ended March 31, 2000, compared to the same period in 1999 primarily because of strong performance by the Colorful Images catalog. For Concepts Direct, Inc., sales increased by about one percent despite the reduction in catalog circulation of the Linda A set of parallel processing functions added to languages, such as C and C++, that allows data to be created and transferred between processes. It was developed by Yale professor David Gelernter, when he was a 23-year old graduate student. Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic , Collectibles, and Snoopy Snoopy world’s most famous beagle. [Comics: “Peanuts” in Horn, 542] See : Dogs Snoopy imaginative dog. [Comics: “Peanuts” in Horn, 542–543] See : Illusion , Etc.(TM) concepts. This reduction versus the prior year circulation should be expected until later in this year, at which point we will be making comparisons with the period in which we began shifting our circulation strategy to produce positive contribution. Overall catalog circulation in the first quarter of 2000 was down about 1% compared to the first quarter of 1999. Gross Profit Margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. On a consolidated basis, gross profit as a percentage of sales was 36% for both the quarter ended March 31, 2000 and the same period of 1999. Gross profit as a percentage of sales for Concepts Direct, Inc., the catalog business, increased to 42% during the first quarter of 2000, compared to 37% in the first quarter of 2000. The primary reason for this increase was the increase in higher margin paper product sales in 2000, compared to the same period in 1999. Selling, General and Administrative Costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. as a Percentage of Sales On a consolidated basis, selling, general and administrative costs increased as a percentage of sales in the first quarter of 2000 to 49% as compared to 41% in 1999. This increase occurred primarily because of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1,000,000 in advertising expenditures incurred to test various aspects of BOTWEB, Inc.'s Internet Portal site Noun 1. portal site - a site that the owner positions as an entrance to other sites on the internet; "a portal typically has search engines and free email and chat rooms etc. , BOTWEB.com. Selling, general and administrative costs for Concepts Direct, Inc., the catalog business, was 37% in both the first quarter of 2000 and the same period of 1999. Balance Sheet Review During 2000, cash decreased by $1,231,000. The primary factor causing this decrease was the funding of the Company's Internet initiatives. Cautionary Statement This press release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. as such term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Company statements that are not historical facts, including statements about management's expectations, beliefs, plans and objectives are forward-looking statements and involve various risks and uncertainties, including the risks associated with starting new businesses. Additional discussion of factors that could cause actual results to differ materially from management's expectations, beliefs, plans and objectives is contained in the Company's SEC filings.
Selected Key Statistics - Concepts Direct, Inc.
(in thousands except percentages and
average order amounts)
Q1-00 1999 Q4-99 Q3-99 Q2-99
------------------------------------
Concepts Direct
Catalog Business
Statistics:
Approximate Catalogs
Circulated (1)(8)
--------------------
Colorful Images 8,284 26,550 5,329 8,152 6,361
Linda Anderson 1,887 9,701 3,001 2,073 1,520
Snoopy etc. 180 1,579 150 204 361
Linda Anderson's
Collectibles 469 2,085 430 444 551
the Music Stand 425 1,202 580 622 0
Total 11,245 41,416 9,490 11,495 9,092
Customer Database
Size (2)(9)
-----------------
Colorful Images 9,037 8,899 8,640 8,507
Linda Anderson 750 713 644 595
Snoopy etc. 193 176 164 150
Linda Anderson's
Collectibles 188 176 161 146
the Music Stand 2,135 2,127 2,110 0
Total 11,523 11,338 11,121 8,979
Active
Customers (3)(9)
-----------------
Colorful Images 1,054 1,024 1,170 1,331
Linda Anderson 167 185 255 287
Snoopy etc. 39 41 56 60
Linda Anderson's
Collectibles 48 49 81 89
the Music Stand 43 37 142
Total 1,295 1,282 1,611 1,660
Average Order Amount
--------------------
Colorful Images $27 $28 $27 $28 $29
Linda Anderson $57 $58 $57 $58 $59
Snoopy etc. $73 $64 $66 $62 $62
Linda Anderson's
Collectibles $57 $61 $58 $62 $62
the Music Stand $58 $55 $58 $49
Catalog Merchandise
Mix (4)
-------------------
Personalized Paper
Products 45% 41% 40% 45% 40%
Other Merchandise 55% 59% 60% 55% 60%
Catalog Customer
Marketing (6)
----------------
Sales 9,563 37,521 14,372 7,531 7,472
Related Advertising
Expense 2,273 9,228 3,276 1,934 1,958
Advertising as
% of Sales 23.8% 24.6% 22.8% 25.7% 26.2%
Catalog Prospect
Marketing (7)
----------------
Sales 2,821 16,760 5,622 3,274 3,446
Related Advertising
Expense 1,158 7,163 2,138 1,294 1,677
Advertising as
% of Sales 41.0% 42.7% 38.0% 39.5% 48.7%
E-Commerce Sales
----------------
LindaAnderson.com 103.8 286.5 250.7 34.9 0.9
theMusicStand.com 27.8 77.9 77.9
Gross Profit
Margin (5) 41.7% 35.7% 34.4% 38.9% 33.3%
SG&A Costs As
A Percent of Sales 36.6% 37.4% 35.6% 40.3% 38.1%
Q1-99 1998 Q4-98 Q3-98 Q2-98 Q1-98
-------------------------------------------
Concepts Direct
Catalog Business
Statistics:
Approximate Catalogs
Circulated (1)(8)
--------------------
Colorful Images 6,708 51,603 8,283 20,895 10,130 12,295
Linda Anderson 3,107 17,299 5,417 5,636 2,531 3,715
Snoopy etc. 864 2,942 1,033 1,244 128 537
Linda Anderson's
Collectibles 660 6,429 2,941 2,366 1,122 0
the Music Stand 0 0 0 0 0 0
Total 11,339 78,273 17,674 30,141 13,911 16,547
Customer Database
Size (2)(9)
-----------------
Colorful Images 8,293 8,188 7,891 7,670 7,512
Linda Anderson 513 470 314 247 198
Snoopy etc. 122 110 45 34 23
Linda Anderson's
Collectibles 122 112 45 27 15
the Music Stand 0 0 0 0 0
Total 8,956 8,774 8,286 7,959 7,727
Active
Customers (3)(9)
-----------------
Colorful Images 1,429 1,561 1,827 1,865 1,999
Linda Anderson 306 301 215 168 132
Snoopy etc. 57 53 37 26 23
Linda Anderson's
Collectibles 92 83 45 27 15
the Music Stand
Total 1,758 1,859 2,009 2,000 2,097
Average Order Amount
--------------------
Colorful Images $29 $28 $29 $29 $28 $26
Linda Anderson $59 $58 $59 $59 $58 $58
Snoopy etc. $62 $65 $64 $66 $68 $62
Linda Anderson's
Collectibles $63 $61 $63 $62 $61 $56
the Music Stand
Catalog Merchandise
Mix (4)
-------------------
Personalized Paper
Products 38% 34% 29% 33% 35% 44%
Other Merchandise 62% 66% 71% 67% 65% 56%
Catalog Customer
Marketing (6)
----------------
Sales 8,146 46,977 17,048 10,932 9,489 9,508
Related Advertising
Expense 2,060 15,436 5,252 4,131 3,256 2,797
Advertising as
% of Sales 25.3% 32.9% 30.8% 37.8% 34.3% 29.4%
Catalog Prospect
Marketing (7)
----------------
Sales 4,418 39,066 17,361 8,610 6,420 6,675
Related Advertising
Expenses 2,054 19,110 7,936 4,670 2,708 3,796
Advertising as
% of Sales 46.5% 48.9% 45.7% 54.2% 42.2% 56.9%
E-Commerce Sales
----------------
LindaAnderson.com
theMusicStand.com
Gross Profit
Margin (5) 37.1% 45.6% 50.0% 45.3% 45.8% 45.8%
SG&A Costs As
A Percent of Sales 37.3% 45.9% 38.5% 50.3% 44.9% 49.8%
Q1-00 1999 Q4-99 Q3-99 Q2-99 Q1-99
-------------------------------------------
Consolidated Company
Statistics
Balance Sheet Information
-------------------------
Cash 0 1,231 0 481 3,402
Deferred Advertising 2,804 2,115 4,256 2,726 3,088
Inventories 5,664 5,221 9,115 8,933 9,256
Property and
Equipment 12,232 12,484 12,328 11,807 12,691
Long Term Liabilities 4,627 4,818 5,681 5,881 5,967
Total Liabilities 13,481 12,305 15,545 12,296 12,687
Stockholders' Equity 12,133 13,888 15,572 16,307 17,036
Effective Income
tax rate 0% -20% 4% -34% -34% -34%
----------------
1998 Q4-98 Q3-98 Q2-98 Q1-98
-----------------------------------
Cash 4,070 4,007 5,003 8,674
Deferred Advertising 4,455 11,187 8,333 6,493
Inventories 10,053 10,777 6,789 5,078
Property and
Equipment 12,272 11,659 11,606 11,781
Long Term Liabilities 6,079 6,467 6,178 6,337
Total Liabilities 14,633 22,270 15,020 15,154
Stockholders' Equity 17,440 17,016 17,995 18,189
Effective Income
tax rate -32% 43% -35% -35% -35%
----------------
(1) Includes approximate number of catalogs mailed and catalogs
distributed in product shipments. Microniche mailings are
attributed to the related catalog title.
(2) Approximate size of proprietary customer database, including
customers, catalog requesters, gift recipients and catalog
referrals, at period end.
(3) Approximate number of prior 12 month buyers at period end.
(4) Estimated percentage of Company catalog sales attributable to
major merchandise categories.
(5) Net Sales less product cost, order fulfillment cost and order
shipping cost.
(6) Gross catalog sales and the related advertising expense to
customers of the same catalog title, prior to refunds.
(7) Gross catalog sales and the related advertising expense to
individuals not previously classified as customers of the catalog
title, prior to refunds.
(8) Catalogs distributed in the last 2 days of June 1998 are included
in 3rd Qtr. counts: 4,085,000 Colorful Images, 1,419,000 Linda
Anderson, 463,000 Snoopy, etc. and 597,000 Linda Anderson's
Collectibles.
(9) Counts for a period may vary from one report to another due to
factors such as elimination of duplicate customer records,
elimination of undeliverable address records, changes in
classification, etc.
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