Creative Computers, Inc. Announces Third-Quarter Financial Results; Return to Profitability -- EPS $0.06; PC Sales Up 50%; 67% Sequentially; Proprietary Database Grows 135% to 2.3 Million Names.TORRANCE Torrance, industrial and residential city (1990 pop. 133,107), Los Angeles co., SW Calif.; inc. 1921. It has large aircraft and electronics industries. Among its many manufactures are aircraft, electronics, communications equipment, aluminum products, steel, and , Calif.--(BUSINESS WIRE)--October 15, 1996--Creative Computers, Inc. ("Creative") (Nasdaq: MALL) today announced financial results for the third quarter and nine-month period ended September September: see month. 30, 1996. The Company returned to profitability, reporting a net profit of $557,000 for the third quarter versus a loss of ($5,377,000) for the second quarter and ($2,500,000) for the first quarter. "We believe our positive results this quarter begin to show the fruits of the changes we made over the past several quarters. We strengthened our management team and successfully re-engineered our operational infrastructure. Our Memphis warehouse is fully online and we and our customers are able to reap the rewards of being located in FedEx's hub city Hub (Urdu: حب ) city is located in Hub Tehsil of Lasbela District in Balochistan, Pakistan. See also
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, 1996 were $111.3 million, up 18% from the prior quarter, but as a result of the planned decrease 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, less than last year's third quarter sales of $119.5 million. Catalog circulation for the quarter was reduced over last year. However, due to very strong promotions, sales exceeded expectations and were down only 7%, with catalog sales down only 4%. Gross margin declined from 13.4% to 12.6% primarily due to PC sales comprising a larger percentage of the business and stronger promotions. SG&A expenses increased by only $0.1 million, but as a percent to sales they increased 0.9 percentage points. As a percent to sales, net advertising declined while personnel costs increased as the Company continues to lay the foundation for future growth. The Company reported a net profit of $0.6 million, or $0.06 per share, compared with net income of $1.8 million, or $0.19 per share last year. Net sales for the nine months ended September 30, 1996 increased 8% to $315.0 million, up from $290.4 million for the comparable period in 1995. Catalog sales increased 13% for the same period. Net loss for the nine months was ($7.3 million), or ($0.75) per share, compared with net income of $5.2 million, or $0.60 per share for the first nine months of 1995. PC Sales Experiencing Rapid Growth PC sales increased 50% from $19 million last year in the third quarter to $28.4 million this year. "We made great strides in this quarter on one of our key strategic objectives: increasing our PC/Wintel-based sales as a percentage of overall sales. This growth is remarkable given that last year's third quarter included Microsoft's Windows 95 introduction. Excluding Windows 95 sales in the third quarter of last year, PC sales were up 83%," Khulusi explained. Sequentially, Creative's PC sales increased by 67% and comprised 26% of total revenue in the third quarter versus 18% during the second quarter of 1996. Creative announced in August 1996 that it received authorization The right or permission to use a system resource; the process of granting access. See access control. to carry CPUs from Hewlett Hewlett may refer to: People with the surname Hewlett:
Home USA, Japan. notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. to its array of products. "Our ability to add these major CPU CPU in full central processing unit Principal component of a digital computer, composed of a control unit, an instruction-decoding unit, and an arithmetic-logic unit. vendors to our already broad product selection demonstrates our strong position in the PC market and should help us in the fourth quarter and beyond to reach our goal of expanding our PC/Wintel-platform sales," explained Khulusi. Macintosh Business Up Sequentially Mac sales for the third quarter of 1996 were $82.9 million, up sequentially by 7%. This was down 18% from the same quarter last year, primarily as a result of the planned decrease in catalog circulation and shortages on certain products. "We remain strongly committed to the Mac market. We plan to aggressively acquire new Mac customers. We are also very excited about the growth in the Macintosh OS-compatible market. We now carry all major Mac clones See Macintosh clone. -- Motorola (Motorola, Inc., Schaumburg, IL, www.motorola.com) A leading manufacturer of semiconductor devices, electronics, telecommunications and satellite systems. Founded in Chicago in 1928 by Paul V. , Power Computing Not to be confused with the extant computer hardware company also called Power Computing. Power Computing was a short-lived manufacturer of Apple Macintosh-compatible computers. and UMAX. We also plan on aggressively increasing the circulation of our MacMall catalogs in the fourth quarter over the third quarter of 1996," stated Khulusi. Proprietary Database Grows 135% Following its strategy of aggressively growing its proprietary database of customers and prospective customers, Creative grew this database to 2.3 million names versus 975,000 names in the same period last year, a 135% increase. Major portions of this database continue to be included in every mailing and exhibit solid performance. Creative Computers, Inc. is a leading direct marketer of personal computer hardware, software and peripheral products for users of PC/Wintel and Apple Macintosh Apple Macintosh - Macintosh and compatible personal computers. The Company offers over 14,500 products to its customers through its distinctive, full-color PC Mall, MacMall and DataCom Mall catalogs, and other promotional materials. The Company's staff of knowledgeable sales, customer service and technical support personnel work together to provide high-level customer service and gain customer loyalty. Customers may call PC Mall sales representatives at (800) 555-MALL and MacMall sales representatives at (800) 222-2808, or shop on the 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 at http://www.pcmall.com or http://www.macmall.com. Except for historical information, all of the statements, expectations and assumptions contained in this press release are forward looking statements. The realization of any or all of these expectations and assumptions is subject to a number of risks and uncertainties, and it is possible that the assumptions made by management may not materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. . In addition to the factors set forth above, other important factors that could cause actual results to differ materially from our expectations include competition from other catalog and retail store resellers and price pressures related thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. ; uncertainties surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the supply of and demand for products manufactured by and compatible with Apple Computer and clones thereof; our reliance on Apple Computer, IBM, Hewlett Packard and other vendors; and risks due to shifts in market demand and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. price erosion of owned inventory. This list of risk factors is not intended to be exhaustive. Reference should also be made to the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for 1995. For more information on Creative Computers via facsimile at no cost, call 1-800-PRO-INFO and dial client code 066. -0-
CREATIVE COMPUTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except per share data)
For the three For the nine
months ended months ended
September 30, September 30,
1996 1995 1996 1995
Net sales $111,291 $119,546 $314,989 $290,354
Cost of goods sold 97,321 103,562 281,355 250,186
Gross Profit 13,970 15,984 33,634 40,168
Selling, general and
administrative expenses 13,201 13,119 46,217 31,806
Cost associated with the
relocation of the Company's
distribution center -- 150 -- 150
Income (loss) from
operations before
interest and income
taxes 769 2,715 (12,583) 8,212
Interest income 215 224 450 303
Income (loss) before
income taxes 984 2,939 (12,133) 8,515
Provision (benefit) for income
taxes 427 1,155 (4,813) 3,318
Net income (loss) $557 $1,784 ($7,320) $5,197
Earnings (loss) per share $0.06 $0.19 ($0.75) $0.60
Weighted average number of
shares outstanding 9,882 9,633 9,764 8,639
CREATIVE COMPUTERS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands)
September 30, December 31,
1996 1995
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $19,626 $13,082
Securities available for sale 4,097 12,575
Accounts receivable, net of
allowance for doubtful accounts 16,574 18,305
Inventories 46,547 52,026
Prepaid expenses and other
current assets 4,058 4,231
Deferred income taxes 4,421 1,109
Total current assets 95,323 101,328
Property, plant and equipment, net 11,012 10,814
Deferred income taxes 2,119 --
Other assets 190 427
$108,644 $112,569
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $44,180 $46,098
Accrued expenses and other
current liabilities 12,336 8,642
Capital leases - current portion 245 250
Notes payable - current portion 37 31
Total current liabilities 56,798 55,021
Capital leases 354 535
Notes payable 45 54
Deferred income taxes -- 399
Total liabilities 57,197 56,009
Stockholders' Equity:
Common stock, $.001 par value;
15,000,000 shares authorized;
9,759,945 and 9,750,000 shares
issued and outstanding 10 10
Preferred stock, $.001 par value;
5,000,000 shares authorized; none
issued and outstanding -- --
Additional paid in capital 53,845 51,547
Treasury stock, at cost;
15,000 shares (91) --
Retained earnings (deficit) (2,317) 5,003
Total stockholders' equity 51,447 56,560
$108,644 $112,569
CONTACT: AT THE COMPANY Frank Khulusi Chairman & CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. 310/787-4500 Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a M. Finkbeiner Chief Financial Officer 310/787-4500 or AT THE FINANCIAL RELATIONS BOARD Fiona Ross Ross , Sir Ronald 1857-1932. British physician. He won a 1902 Nobel Prize for proving that malaria is transmitted to humans by the bite of the mosquito. General Info 310/442-0599 Tom Ekman Investor Contact 310/442-0599 Steve Seiler Media Contact 310/442-0599 |
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