Concepts Direct, Inc. Reports Third-Quarter Results.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)--Oct. 31, 2001 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 for the quarter ended September September: see month. 30, 2001. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter ended September 30, 2001, were $11,248,000, a 1% decrease from sales of $11,391,000 for the same period in 2000. The Company had a net loss of $856,000, or $0.17 per share, for the quarter ended September 30, 2001, as compared to a net loss of $2,838,000, or $0.57 per share, in the same period of 2000. The Company's net loss of $856,000 for the quarter ended September 30, 2001, was from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , as compared to a net loss from continuing operations of $2,162,000, or $0.43 per share, for the quarter ended September 30, 2000. Commenting on third-quarter results, Phillip Phillip is a variant of the name Philip. It may refer to: Given name:
to become active after a period of quiescence or, as in bacterial and viral infections, latency. cross reactivation efforts, increasing new customer acquisition, improving gross margins and improving initial fill rates." Mr. Wiland also noted that "in the coming quarters, we will unfold unfold - inline an aggressive plan to drive revenue growth. We need to be bigger, push fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). and operating costs operating costs npl → gastos mpl operacionales down as a percent of sales and emerge with solid earnings. Selective 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. and aggressive customer reactivation are key elements of this plan. I am cautiously cau·tious adj. 1. Showing or practicing caution; careful. 2. Tentative or restrained; guarded: felt a cautious optimism that the offer would be accepted. optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that our third quarter was an important turning point."
Third-Quarter Financial Results
Three Months Ended Sept. 30,
2001 2000
Net Sales $11,248,000 $11,391,000
Loss from Continuing Operations $(856,000) $(2,162,000)
Loss from Discontinued Operations $(0.00) $(676,000)
Net Loss $(856,000) $(2,838,000)
Basic & Diluted Loss Per Share
from Continuing Operations $(0.17) $(0.43)
Basic & Diluted Loss Per Share
from Discontinued Operations $(0.00) $(0.14)
Net Loss Per Share $(0.17) $(0.57)
Average Shares Outstanding 4,991,748 5,013,448
Brand Update Important Note: Comparisons between the third quarter of 2001 and the third quarter of 2000 have to be evaluated in the light of timing differences between the two quarters. The Company mailed significantly more catalogs in September of this year than it did one year ago. However, the majority of the revenues we expect to derive de·rive v. 1. To obtain or receive from a source. 2. To produce or obtain a chemical compound from another substance by chemical reaction. from that increased September circulation will not be recognized until the fourth quarter. As a result, third-quarter 2001 increases in 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. circulation were not expected to result in comparably increased third-quarter revenues. Colorful Images Catalog circulation for Colorful Images increased 48% during the third quarter of 2001 while revenue increased by 10% when compared to the same period of the prior year. Management expects to continue increasing circulation in the fourth quarter as it steps up efforts to reactivate re·ac·ti·vate v. 1. To make active again. 2. To restore the ability to function or the effectiveness of. re·ac old customers and prospect for new customers. Additional Selective Merchandising tests were conducted during the third quarter. The tests involved the mailing of special versions of the Colorful Images catalog made for certain niche niche: see ecology. niche Smallest unit of a habitat that is occupied by an organism. A habitat niche is the physical space occupied by the organism; an ecological niche is the role the organism plays in the community of organisms found in the buyers. Each group received an additional 16 pages of merchandise targeted to its demonstrated interest. The results of the tests in the third quarter confirmed the results seen in the second quarter. The incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. revenue generated was considerably greater than the incremental cost Incremental Cost The encompassing change that a company experiences within its balance sheet due to one additional unit of production. Notes: Incremental cost is the overall change that a company experiences by producing one additional unit of good. of 16 pages of targeted merchandise. Management is conducting more Selective Merchandising tests for additional niches in the fourth quarter and anticipates additional niches will be tested in the first quarter of 2002. After completing a series of price-increase tests, management implemented an across-the-board price increase for paper products in the May edition of the Colorful Images catalog. Although factors other than the price increase may also have affected results, gross margin for Colorful Images improved in the third quarter compared to the same period one year ago, and management believes the price increase played an important role in that improvement. The Company has made additional progress on the introduction of a new line of personal checks. The Company will design checks, market them, and take orders. A check manufacturing company will be responsible for all manufacturing and fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. . The Company plans to introduce a limited product line through its website in the fourth quarter in order to test production processes. Catalog marketing for the full introductory product line is scheduled to begin in January January: see month. 2002. ColorfulImages.com, in its third full quarter of operation, accounted for 17.9% of total brand sales, up from 15.5% in the second quarter. 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 (TM) Revenues for the Snoopy(TM) brand increased 7% while catalog circulation increased 11% compared to the third quarter of 2000. This is encouraging because the third quarter of 2000 was a period in which the brand experienced high consumer demand due to the PEANUTS pea·nut n. 1. A prostrate southern Brazilian plant (Arachis hypogaea) widely cultivated in tropical and warm temperate regions, having yellow flowers on stalks that bend over so that the seed pods ripen underground. 2. (R) 50th anniversary celebration. Management is pleased with the performance of this brand and believes that it has the potential for growth coupled with strong contribution. SnoopyStore.com was responsible for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 24% of total brand sales, just slightly above its performance in the second quarter. Various tests intended to form the foundation for increased growth are planned for the fourth quarter of 2001 and early 2002. Collectibles The Collectibles brand had a good third quarter. Revenues increased 22% and catalog circulation increased 96%. Direct contribution for the brand is showing continued improvement. Management has tested Selective Merchandising of two niches for the Collectibles brand with excellent success and plans to extend Selective Merchandising to additional niches in the coming months. A prospect version intended to accelerate growth is being developed and will be tested in early 2002. 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 Revenues for Linda Anderson declined 35% and catalog circulation increased 10% when comparing the third quarter of 2001 to the third quarter of 2000. Management is changing the format and breadth of product selection for the Linda Anderson catalog in an effort to revitalize re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. growth and expects to implement the changes in the first quarter of 2002. The Music Stand The Music Stand revenues declined 32% on a 6% increase in circulation. Direct contribution improved, but the brand still did not make a positive contribution in the quarter. Management currently plans to increase circulation in the fourth quarter of 2001 as compared to the fourth quarter of 2000 and, in 2002, expects to focus on improved merchandise mix and customer reactivation. It is anticipated that the Music Stand will require several quarters of more aggressive marketing before it begins producing positive direct contribution consistently. Brand Summary Of the five catalog brands, four have positive trailing 12-month direct contribution, but only two have higher revenue than in the prior 12 months. Management will first focus on generating significant top-line growth for all brands, and then focus on sustained growth with positive direct contribution from all brands. Business Outlook The Company believes the best way to create sustained revenue and earnings growth in the future is to focus on making all five of our brands successful. We will do our best to improve merchandise mix, reactivate former customers, and acquire more new customers for every brand. The Company experienced disappointing sales in the time period immediately after the tragic events of September 11. Sales rebounded within a few weeks, however, and revenues are only moderately below expectations. Although the economic outlook is uncertain, management expects to continue to pursue a growth strategy that is based upon testing new initiatives and then implementing the new strategies it expects will succeed. Gross Margin Gross margin for the Company improved from 39.4% in the third quarter of 2000 to 47.9% in the third quarter of 2001. Management believes this improvement is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a higher percentage of sales being derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from paper products, a price increase for paper products, better pricing for all hard good products, an increased percentage of sales coming from the more cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. Internet channel The Internet Channel is a version of the Opera 9 web browser for use on the Wii by Opera Software and Nintendo.[1] On December 22, 2006, a free beta version (promoted as a "trial version") of the browser was released. , lower fulfillment expenses and the elimination of certain costs incurred last year. Cash The Company had $1,171,000 in cash, including restricted cash, as of September 30, 2001, and no short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. borrowings. This compares to a zero cash balance in addition to $3,000,000 borrowings against its line of credit at the same time last year. Accounts payable as of September 30, 2001, were $4,283,000, compared to $6,964,000 on September 30, 2000. Management believes the cash position will allow it to achieve its operational objectives, including its desired inventory levels for the holiday season, while maintaining accounts payable at acceptable levels. Some borrowing may occur to increase working capital in anticipation of fairly rapid revenue growth. Inventory Inventory for gift, home decorative, collectible collectible An asset of limited supply that is sought for a variety of reasons including, it is hoped, an increase in value. Stamps, antiques, coins, and works of art are among the many things usually classified as collectibles. , and casual apparel items was approximately $3,968,000 as of September 30, 2001, compared to approximately $5,594,000 as of September 30, 2000. The Company liquidates excess inventory through NewBargains.com, its two retail stores, and vendor returns. Key Statistics The Company releases selected Key Statistics regarding its brands. These statistics are intended to provide an indication of trends related to the brand. The Key Statistics summary page can be found at the end of this press release. Management Conference Call In conjunction with the third-quarter earnings release for Concepts Direct, Inc., management will conduct a conference call on Thursday Thursday: see week. , November November: see month. 1, 2001, at 9:00 a.m. Mountain Time. Mr. Wiland will host the call. To participate in the conference call, dial 866/535-8525 just prior to 9:00 a.m. Mountain Time, Thursday, and reference Concepts Direct, Inc. Q3 Financial Results. If you are unable to participate during the call, the call will be available via digitized replay between 12:30 p.m. November 1, 2001, and 11:59 p.m. November 8, 2001, by calling 800/475-6701, access code: 609490. About Concepts Direct, Inc. Concepts Direct is a direct retailing company focused on building its multiple catalog brands and associated websites. The Company sells personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. paper products and a diverse line of merchandise, including gift items, home decorative items, collectibles and apparel. Concepts Direct sells its merchandise via the Colorful Images, Linda Anderson, Snoopy(TM) etc., Linda Anderson's Collectibles and the Music Stand catalogs. In addition, the Company owns and operates associated websites, including www.ColorfulImages.com, www.LindaAnderson.com, www.SnoopyStore.com, and www.theMusicStand.com. The Company considers a brand's "direct contribution" to be revenue from the brand minus advertising expenses, certain product, delivery, and brand-related general and administrative expenses which management believes would be eliminated if the brand was discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: . 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 the Company'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 percentage and average order amounts)
Q3-01 Q2-01 Q1-01 2000 Q4-00 Q3-00
----- ----- ----- ---- ----- -----
Approx. Catalogs
Circulated (1)
----------------
Colorful Images 14,237 7,024 8,968 30,751 5,227 9,636
Linda Anderson 1,532 572 676 5,291 1,472 1,398
Snoopy etc. 609 169 431 1,497 235 548
Collectibles 345 157 389 1,633 589 176
the Music Stand 493 130 106 2,028 692 463
Totals 17,216 8,052 10,570 41,200 8,215 12,221
Customer Database
Size (2) (8)
-----------------
Colorful Images 9,904 9,746 9,612 9,445 9,287
Linda Anderson 880 860 850 834 795
Snoopy etc. 298 280 270 252 225
Collectibles 229 224 221 213 202
the Music Stand 2,134 2,174 2,170 2,163 2,147
Totals 12,519 12,384 12,240 12,050 11,844
Active Customers (3) (10)
-------------------------
Colorful Images 1,094 1,105 1,122 1,101 1,087
Linda Anderson 84 89 95 107 134
Snoopy etc. 48 46 50 48 44
Collectibles 34 33 35 38 42
the Music Stand 34 36 39 43 52
Totals 1,258 1,280 1,309 1,302 1,293
Average Order Amount
--------------------
Colorful Images $29 $28 $28 $27 $28 $27
Linda Anderson $60 $59 $59 $58 $58 $58
Snoopy etc. $71 $72 $72 $76 $81 $76
Collectibles $64 $63 $61 $57 $57 $55
the Music Stand $60 $59 $59 $58 $58 $58
Catalog Merchandise Mix (4)
---------------------------
Paper Products 59% 54% 54% 47% 46% 54%
Other Merchandise 41% 46% 46% 53% 54% 46%
Catalog Customer
Marketing (6)
----------------
Sales $8,014 $7,051 $8,232 $40,173 14,259 $8,296
Advertising Expense $2,625 $2,386 $10,670 $2,593 $3,477 $2,651
% of Sales 32.76% 33.84% 31.50% 26.60% 24.40% 32.00%
Catalog Prospect
Marketing (7)
----------------
Sales $2,416 $2,001 $3,042 $12,086 $4,591 $2,365
Advertising Expense $1,285 $1,250 $5,478 $1,560 $1,927 $1,279
% of Sales 53.21% 62.47% 51.28% 45.30% 42.00% 54.10%
E-Commerce Sales as a %
of Total Brand Sales (9)
-------------------------
ColorfulImages.com 17.88% 15.54% 12.02%
LindaAnderson.com 10.09% 8.24% 8.68%
SnoopyStore.com 23.90% 23.65% 14.31%
theMusicStand.com 15.15% 15.48% 10.07%
All websites combined 17.55% 15.58% 12.64%
Gross Profit
Margin (5) (10) 47.87% 44.09% 42.20% 41.13% 45.87% 39.36%
----------------
S,G&A costs as % of
sales (10) 53.40% 55.56% 50.16% 43.10% 37.62% 52.17%
-------------------
Balance Sheet Information
-------------------------
Cash, including
restricted cash $1,171 $962 $2,391 $2,789 $0
Deferred Advertising $5,423 $2,779 $3,108 $3,747 $4,811
Inventories, less
allowances $4,418 $4,580 $4,688 $4,841 $5,545
Property and Equipment,
net $8,842 $9,137 $9,417 $9,607 $10,706
Long-Term Liabilities $11,005 $10,973 $10,941 $10,910 $4,333
Total Liabilities $17,818 $14,285 $16,307 $16,476 $18,282
Stockholders' Equity $7,598 $8,454 $9,895 $11,156 $7,446
Effective Income tax
rate 0% 0% 0% 0% 0% 0%
--------------------
(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) 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.
(9) Includes only sales not directly attributable to specific
catalog advertising programs.
(10) Certain historical amounts have been restated to conform to
the current financial presentation.
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