DAMARK Announces Second Quarter, First Half Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--July 25, 2000 DAMARK International, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :DMRK) today announced its operating and financial results for the second quarter and first half ended July July: see month. 1, 2000: -- Provell (membership services): -- Record second quarter 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. of $9.6 million, up 34.6% on net revenues of $34.0 million; -- Record first half operating income of $21.0 million, up 91.3% on net revenues of $70.2 million; -- Premier client additions in both financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and consumer channels. -- ClickShip Direct, Inc. (outsource outsource verb To assign specific work to a 3rd party for a specific length of time at an set price and service level Managed care To use outside labor to perform functions–billing and collections, accounting, janitorial services, ER 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. and customer care services): -- Net revenues of $9.6 million for the second quarter and $18.0 million for its first five months; -- Nine clients signed to date, including BestBuy.com (NYSE NYSE See: New York Stock Exchange :BBY BBY Best Buy (stock symbol) BBY Before Battle of Yavin (Star Wars) BBY BeBeyond (Chinese online community) ); and -- Fulfillment center capacity expansion on schedule for Labor Day opening. "We are very pleased with our second quarter and first half results," said Mark A. Cohn, DAMARK and ClickShip's chairman and chief executive officer. "Both of our ongoing operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon performed exceptionally well and the wind-down of our non-member cataloging and e-tailing (Electronic-reTAILING) Selling online. See e-commerce. effort is now substantially complete. In addition, we expect to close in coming weeks on short- and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. borrowing facilities from a money center bank. The strategic transformation of our company that was articulated ar·tic·u·la·ted adj. Characterized by or having articulations; jointed. earlier this year is now on the cusp of completion. We have efficiently and effectively exited our under-performing legacy business activities and moved toward our stated goal of providing our shareholders with two pure play independent companies, each uniquely positioned to prosper in its chosen market space." "Our membership business, recently re-named Provell, continues to perform admirably ad·mi·ra·ble adj. Deserving admiration. ad  mi·ra·ble·ness n.ad , with record levels of profitability driven primarily by very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. new member acquisition and servicing costs," said George S George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). . Richards Rich·ards , Dickinson Woodruff 1895-1973. American physician. He shared a 1956 Nobel Prize for developing cardiac catheterization. , the Company's president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "Our revenue growth was slightly less than expected in the second quarter owed principally to delays in the start of marketing campaigns for recently signed clients. With these delays behind us, we believe our long-term revenue growth outlook is very positive given recent major account wins at some of the nation's largest financial institutions and premier consumer marketing companies." "Although CSDI CSDI Computer Systems Development, Inc. CSDI Contract Status Data Input CSDI Compressed Serial Digital Interface has been a participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. in the outsourced Outsourced is a modern day comedy of cross-cultural conflict and romance, directed by John Jeffcoat, released in 2007. Synopsis Todd Anderson (Josh Hamilton) spends his days managing a customer call center for American Novelty Products in Seattle, until his job, fulfillment and customer care market for less than six months, we have made major strategic and operational gains," Mr. Cohn added. "To date, we have signed nine clients including BestBuy.com and have many attractive and highly qualified prospects in our sales pipeline. Our technology platform is tested, flexible, and function-rich; we offer a client integration schedule of 30 days or less. We are on track to open an additional 312,000 square feet of distribution space by Labor Day Labor Day, holiday celebrated in the United States and Canada on the first Monday in September to honor the laborer. It was inaugurated by the Knights of Labor in 1882 and made a national holiday by the U.S. Congress in 1894. , bringing our total Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces facility size to 720,000 square feet. Finally, we have recruited and hired a highly qualified sales force to help us build industry dominance dominance In genetics, the greater influence by one of a pair of genes (alleles) that affect the same inherited trait. If an individual pea plant that has one allele for tallness and one for shortness is the same height as an individual that has two alleles for tallness, the . In summary, we believe we are well on our way to winning a leadership position in an emerging New Economy industry." Provell produced net revenue of $34.0 million for the second quarter of 2000, a 1.5 percent decrease from the $34.6 million reported in the comparable period in 1999. ClickShip reported $9.6 million of net revenue for the quarter, including $6.8 million associated with the wind-down of the Company's 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. retail operations. Total net revenues for the period were $51.8 million, including $17.2 million from the catalog wind-down, down 53.9 percent from $112.2 million in the prior comparable period. 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 operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the quarter was $14.4 million, including $18.9 million of non-recurring losses incurred in connection with the catalog wind-down compared to an operating loss of $2.3 million for the same period last year. The Company recorded a net loss of $8.8 million or $1.53 per share compared to a net loss of $1.4 million or $0.24 per share in 1999 after an extraordinary gain from condemnation Condemnation bell, book, and candle symbols of Catholic excommunication rite. [Christianity: Brewer Note-Book, 85] Bridge of Sighs passage from Doge’s court to execution chamber in Renaissance Venice. [Ital. Hist. of land of $297,000 net of tax or $0.05 per share. For the first half, Provell generated net revenues of $70.2 million, up 17.7 percent from the $59.6 million recorded in the comparable 1999 period. ClickShip's net revenues for the five months since its incorporation on January January: see month. 27, 2000 were $18.0 million, including $13.6 million associated with the catalog wind-down. Total net revenues for the half were $127.3 million, including $56.1 million from the catalog wind-down, down 42.6 percent from $221.7 million in the prior comparable period. For the half, the Company recorded a consolidated operating loss of $32.8 million, including $44.8 million of non-recurring catalog retail losses, compared to a $3.3 million operating loss last year. The Company's consolidated net loss for the period was $35.0 million or $6.07 per share, including a cumulative after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. effect of adopting SEC Staff Accounting Bulletin No. 101 ("SAB SAB Spontaneous abortion. See Abortion. 101") of $14.2 million or $2.49 per share, compared to a net loss of $2.3 million or $0.39 per share after the extraordinary gain. On a pro-forma basis, after giving effect to the implementation of SAB 101 as if it had been adopted in 1999, membership revenue for the second quarter would have increased by 7.5% from $31.7 million in 1999 to $34.0 million in 2000. Operating income for same period would have increased 23.8% from $7.8 million in 1999 to $9.6 million in 2000. For the half, membership revenues would have increased by 54.0% from $45.6 million in 1999 to $70.2 million in 2000 and operating income would have grown 18 times from $1.1 million in 1999 to $21.0 million in 2000. DAMARK International, Inc., operating under the Provell name, develops, markets and manages leading edge membership and customer relationship management programs. Provell's proprietary programs provide purchase price discounts and other benefits related to consumer and small business needs in the areas of shopping, travel, hospitality, entertainment, health/fitness, and finance. As of July 1, 2000, consumers enjoyed benefits provided through nearly 2.2 million memberships. The Company is headquartered in Minneapolis, Minnesota “Minneapolis” redirects here. For other uses, see Minneapolis (disambiguation). Minneapolis (pronounced IPA: /ˌmɪniˈæpəlɪs/) is the largest city in the U.S. and was founded in 1986. ClickShip Direct, Inc. provides outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. of order fulfillment Order fulfillment (in BE also: order fulfilment) is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer. Sometimes Order fulfillment and customer care services to retailers, e-tailers, direct marketers, and manufacturers. These services include online and offline (1) Not connected to the Internet, online service or internal network. See offline file. (2) Not connected to or not installed in the computer. If a terminal, printer or other device is physically connected to the computer, but is not turned on or in ready mode, it is order-capture, payment processing, inventory receipt, warehousing, merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain shipment, after-the-sale customer service and support, and returns management. CSDI operates two 375-seat customer care centers in Junction City, Kansas Junction City is a city in Geary County, Kansas, United States. The population was 18,886 at the 2000 census. It is the county seat of Geary CountyGR6. Fort Riley, a major U.S. Army post, is nearby. and Fayetteville, North Carolina Fayetteville is a city located in Cumberland County, North Carolina. As of the 2000 census, the city had a total population of 121,015. It is the county seat of Cumberland County GR6, and is best known as the home of Fort Bragg, a U.S. and a 408,000 square foot distribution center in Brooklyn Park, Minnesota Brooklyn Park is a city in Hennepin County, Minnesota, United States. As of 2005, it had a population of 66,408. It is a northwestern suburb of Minneapolis, Minnesota. Geography According to the United States Census Bureau, the city has a total area of 68.8 km² (26. . Headquartered in Minneapolis, Minnesota, ClickShip is a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of DAMARK International, Inc. and was incorporated in January 2000. Additional information about CSDI can be found at www.clickshipdirect.com. Any statements herein regarding the business of DAMARK International, Inc. that are not historical facts are "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. " that are intended to qualify for the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions from liability provided by 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. For a discussion of risks and uncertainties that could cause actual results to differ from those implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by any forward looking statement, see "Forward-Looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. Information" in the Company's most recent Annual and Quarterly Reports on Forms 10-K and 10-Q as filed with the Securities and Exchange Commission. (Financial Tables to Follow, 4 Pages)
2nd QUARTER 2000
CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, in thousands except per share data)
CONSOLIDATED STATEMENTS
OF OPERATIONS Quarter Ended First Half Ended
------------------- --------------------
Jul 1, Jul 3, Jul 1, Jul 3,
2000 1999 2000 1999
-------- -------- -------- --------
Product and
other revenues.......... $17,729 $77,692 $57,112 $162,042
Membership and
related revenues........ 34,044 34,554 70,183 59,632
-------- ------- ------- --------
Total net revenues..... 51,773 112,246 127,295 221,674
Cost of products sold.... 16,680 55,558 48,496 117,129
Operating and marketing
expenses................ 35,526 43,721 79,380 79,295
Restructuring charges.... 2,259 - 8,998 -
General and
administrative expenses. 11,673 15,219 23,261 28,574
-------- ------- ------- --------
Total costs and expenses. 66,138 114,498 160,135 224,998
-------- ------- ------- --------
Operating loss......... (14,365) (2,252) (32,840) (3,324)
Interest expense, net.... 280 255 478 544
Other expense, net....... 31 119 160 131
-------- ------- ------- --------
Loss before income
taxes and other items. (14,676) (2,626) (33,478) (3,999)
Income tax benefit....... (5,858) (893) (12,700) (1,360)
-------- ------- ------- --------
Loss before other items. (8,818) (1,733) (20,778) (2,639)
Cumulative effect of
change in accounting
net of tax benefit...... - - (14,201) -
Extraordinary gain on
condemnation of land
net of tax provision.... - 297 - 297
-------- ------- ------- --------
Net loss............... ($8,818) ($1,436) ($34,979) ($2,342)
======== ======= ======= ========
Per basic and diluted
share:
Loss before other items.. ($1.53) ($0.29) ($3.64) ($0.44)
Cumulative effect of
change in accounting
net of tax benefit...... - - 2.49) -
Extraordinary gain on
condemnation of land
net of tax provision.... - 0.05 - 0.05
-------- ------- ------- --------
Net loss................. ($1.53) ($0.24) ($6.13) ($0.39)
======== ======= ======= ========
Weighted average basic
and diluted shares
outstanding............. 5,761 5,993 5,702 5,990
======== ======= ======= ========
CONDENSED CONSOLIDATED
BALANCE SHEETS Jul 1, 2000 Dec 31, 1999 Jul 3, 1999
----------- ------------- -----------
Cash and cash equivalents...... $449 $3,927 $286
Trade accounts receivable, net. 28,860 43,847 42,754
Merchandise inventories, net... 1,352 30,739 24,785
Deferred costs................. 30,870 15,186 15,641
Deferred income taxes.......... 1,360 1,360 -
Other current assets........... 2,987 1,366 5,192
--------- ----------- ----------
Total current assets......... 65,878 96,425 88,658
Net property and equipment..... 19,513 25,464 27,633
Net other assets............... 167 2,098 2,107
Deferred income taxes.......... 23,462 2,059 3,649
--------- ----------- ----------
Total assets................. $109,020 $126,046 $122,047
========= =========== ==========
Accounts payable............... $10,635 $30,568 $24,912
Accrued liabilities............ 44,103 41,312 40,714
Deferred revenues.............. 46,548 24,749 24,883
Deferred income taxes.......... - - 493
Borrowings under revolving
credit facility............... 11,543 - 285
--------- ----------- ----------
Total current liabilities.... 112,829 96,629 91,287
Common Stock................... 58 55 60
Paid-in capital................ 56,360 54,610 59,525
Accumulated deficit............ (60,227) (25,248) (28,825)
--------- ----------- ----------
Total shareholders' equity..... (3,809) 29,417 30,760
--------- ----------- ----------
Total liabilities and
shareholders' equity........ $109,020 $126,046 $122,047
========= =========== ==========
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS First Half Ended
----------------------
Jul 1, 2000 Jul 3, 1999
----------- -----------
Net loss.............................. ($34,979) ($2,342)
Cumulative effect of change in
accounting net of tax benefit........ 14,201 -
Extraordinary gain on condemnation
of land net of tax provision......... - (297)
Depreciation and amortization......... 8,611 4,151
Changes in deferred income taxes...... (12,700) (1,360)
Loss (gain) on disposal of property... 67 80
Net change in non-cash current assets. 52,347 19,681
Net change in non-interest bearing
current liabilities.................. (43,371) (10,143)
----------- -----------
Cash provided by(used for)operations.. (15,824) 9,770
Additions to property and equipment... (1,594) (2,194)
Proceeds from sale of assets.......... 741 -
Additions to other assets, net
of disposals......................... (97) (1,523)
----------- -----------
Cash used for investments............. (950) (3,717)
Net repayments under revolving
credit facility...................... 11,543 (4,855)
Repurchases and retirements of
Common Stock......................... - (1,741)
Net proceeds from exercise of options
and issuance of stock................ 1,753 780
----------- -----------
Cash used for financing............... 13,296 (5,816)
----------- -----------
Net increase (decrease) in cash
and equivalents...................... ($3,478) $237
========== ===========
The condensed financial statements included herein have been prepared
by the Company without audit in accordance with generally accepted
accounting principles and pursuant to the rules and regulations of the
Securities and Exchange Commission and should be read in conjunction
with the financial statements and notes thereto included in the
Company's most recent Annual and Quarterly Reports on Forms 10K and
10Q as filed with the SEC.
SEGMENT FINANCIAL DATA (unaudited, in thousands)
------------------------------------------------
STATEMENTS OF OPERATIONS
AND STATEMENTS OF CASH
FLOWS DATA Catalog Membership
Retail Services Corporate Consolidated
------- ---------- --------- ------------
Quarter Ended July 1, 2000
--------------------------
Net revenues...............$17,729 $34,044 $0 $51,773
Cost of products sold...... 16,680 - - 16,680
Operating and marketing
expenses (1).............. 16,721 18,805 - 35,526
Restructuring charges...... 2,259 - - 2,259
General and administrative
expenses.................. 6,064 5,609 - 11,673
------- ---------- --------- ----------
Operating income (loss)..(23,995) 9,630 - (14,365)
Interest expense, net...... - - 280 280
Other expense, net......... 18 13 - 31
------- ---------- --------- ----------
Income (loss) before
income taxes............(24,013) 9,617 (280) (14,676)
Income tax (benefit)
provision................ - - (5,858) (5,858)
------- ---------- --------- ----------
Net income (loss).......($24,013) $9,617 $5,578 ($8,818)
======= ========== ========= ==========
Net income (loss).........($24,013) $9,617 $5,578 ($8,818)
Depreciation and
amortization.............. 3,391 119 - 3,510
Net changes in working
capital and other......... 20,126 281 (12,952) 7,455
------- ---------- --------- ----------
Cash provided by (used
for) operations......... (496) 10,017 (7,374) 2,147
Additions to property
and equipment............. (159) (107) - (266)
Proceeds from sale of
assets.................... - - - -
Additions to other assets,
net of disposals.......... (25) - (59) (84)
------- ---------- --------- ----------
Cash provided by (used
for) investments........ (184) (107) (59) (350)
Net change in investment
in segment................ 680 (9,910) 9,230 -
Net borrowing (repayment)
of debt................... - - (2,188) (2,188)
Net issuance (retirement)
of equity................. - - 151 151
------- ---------- --------- ----------
Cash provided by (used for)
financing................. 680 (9,910) 7,193 (2,037)
------- ---------- --------- ----------
Net increase (decrease) in
cash and equivalents...... $0 $0 ($240) ($240)
======= ========== ========= ==========
Quarter Ended July 3, 1999
--------------------------
Net revenues...............$77,692 $34,554 $0 $112,246
Cost of products sold...... 55,558 - - 55,558
Operating and marketing
expenses (1, 2)........... 20,047 23,674 - 43,721
General and administrative
expenses.................. 10,182 3,727 1,310 15,219
------- ---------- --------- ----------
Operating income (loss).. (8,095) 7,153 (1,310) (2,252)
Interest expense, net...... - - 255 255
Other expense, net......... - - 119 119
------- ---------- --------- ----------
Income (loss) before income
taxes and other items..... (8,095) 7,153 (1,684) (2,626)
Income tax (benefit)
provision................. - - (893) (893)
------- ---------- --------- ----------
Income (loss) before other
items..................... (8,095) 7,153 (791) (1,733)
Extraordinary gain on
condemnation of land net
of tax provision.......... 450 - (153) 297
------- ---------- --------- ----------
Net income (loss)..........($7,645) $7,153 ($944) ($1,436)
======= ========== ========= ==========
Net income (loss)..........($7,645) $7,153 ($944) ($1,436)
Depreciation and
amortization.............. 1,482 530 48 2,060
Net changes in working
capital and other......... 8,233 5,261 (548) 12,946
------- ---------- --------- ----------
Cash provided by (used for)
operations................ .2,070 12,944 (1,444) 13,570
Additions to property and
equipment................. (2,134) 1,269 - (865)
Proceeds from sale of
assets.................... - - - -
Additions to other assets,
net of disposals.......... (29) 18 - (11)
------- ---------- --------- ----------
Cash provided by (used for)
investments............... (2,163) 1,287 - (876)
Net change in investment
in segment................ 93 (14,231) 14,138 -
Net borrowing (repayment)
of debt.................... - - (13,448) (13,448)
Net issuance (retirement)
of equity................. - - 640 640
------- ---------- --------- ----------
Cash provided by (used for)
financing................. 93 (14,231) 1,330 (12,808)
------- ---------- --------- ----------
Net increase (decrease) in
cash and equivalents...... $0 $0 ($114) ($114)
======= ========== ========= ==========
---------------------------
(1) Discounts provided to Preferred Buyers Club(R) and Insiders(R)
members are allocated entirely to Retail and totaled $285,000 and $3.1
million in the quarters ended July 1, 2000 and July 3, 1999,
respectively.
(2) Includes inter-segment transfers to Retail from Membership of
$5,657 in the quarter ended July 3, 1999.
SEGMENT FINANCIAL DATA (unaudited, in thousands)
------------------------------------------------
STATEMENTS OF OPERATIONS
AND STATEMENTS OF CASH
FLOWS DATA Catalog Membership
Retail Services Corporate Consolidated
------- ---------- --------- ------------
First Half Ended
July 1, 2000
----------------
Net revenues...............$57,112 $70,183 $0 $127,295
Cost of products sold...... 48,496 - - 48,496
Operating and marketing
expenses (1).............. 40,343 39,037 - 79,380
Restructuring charges...... 8,998 - - 8,998
General and administrative
expenses.................. 13,115 10,146 - 23,261
------- ---------- --------- ----------
Operating income (loss)....(53,840) 21,000 - (32,840)
Interest expense, net...... - - 478 478
Other expense, net......... 91 36 33 160
------- ---------- --------- ----------
Income (loss) before income
taxes and other items.....(53,931) 20,964 (511) (33,478)
Income tax (benefit)
provision................. - - (12,700) (12,700)
------- ---------- --------- ----------
Income (loss) before other
items.....................(53,931) 20,964 12,189 (20,778)
Cumulative effect of change
in accounting net of tax
benefit................... - (22,904) 8,703 (14,201)
------- ---------- --------- ----------
Net income (loss).........($53,931) ($1,940) $20,892 ($34,979)
======= ========== ========= ==========
Net income (loss).........($53,931) ($1,940) $20,892 ($34,979)
Depreciation and
amortization.............. 8,198 397 16 8,611
Net changes in working
capital and other......... 35,281 15,300 (40,037) 10,544
------- ---------- --------- ----------
Cash provided by (used for)
operations................(10,452) 13,757 (19,129) (15,824)
Additions to property and
equipment................. (1,021) (573) - (1,594)
Proceeds from sale of
assets.................... 741 - - 741
Additions to other assets,
net of disposals.......... (4) 2 (95) (97)
------- ---------- --------- ----------
Cash provided by (used for)
investments............... (284) (571) (95) (950)
Net change in investment in
segment................... 10,736 (13,186) 2,450 -
Net borrowing (repayment)
of debt................... - - 11,543 11,543
Net issuance (retirement)
of equity................. - - 1,753 1,753
------- ---------- --------- ----------
Cash provided by (used for)
financing................. 10,736 (13,186) 15,746 13,296
------- ---------- --------- ----------
Net increase (decrease) in
cash and equivalents...... $0 $0 ($3,478) ($3,478)
======= ========== ========= ==========
First Half Ended
July 3, 1999
----------------
Net revenues..............$162,042 $59,632 $0 $221,674
Cost of products sold......117,129 - - 117,129
Operating and marketing
expenses (1, 2)........... 37,620 41,675 - 79,295
General and administrative
expenses.................. 20,284 6,980 1,310 28,574
------- ---------- --------- ----------
Operating income (loss)....(12,991) 10,977 (1,310) (3,324)
Interest expense, net...... - - 544 544
Other expense, net......... - - 131 131
------- ---------- --------- ----------
Income (loss) before income
taxes and other items.....(12,991) 10,977 (1,985) (3,999)
Income tax (benefit)
provision................. - - (1,360) (1,360)
------- ---------- --------- ----------
Income (loss) before other
items.....................(12,991) 10,977 (625) (2,639)
Extraordinary gain on
condemnation of land net
of tax provision.......... 450 - (153) 297
------- ---------- --------- ----------
Net income (loss).........($12,541) $10,977 ($778) ($2,342)
======= ========== ========= ==========
Net income (loss).........($12,541) $10,977 ($778) ($2,342)
Depreciation and
amortization.............. 3,025 1,029 97 4,151
Net changes in working
capital and other......... 10,610 (1,714) (935) 7,961
------- ---------- --------- ----------
Cash provided by (used for)
operations................ 1,094 10,292 (1,616) 9,770
Additions to property and
equipment................. (3,057) 863 - (2,194)
Proceeds from sale of
assets.................... - - - -
Additions to other assets,
net of disposals.......... (38) 16 (1,501) (1,523)
------- ---------- --------- ----------
Cash provided by (used for)
investments............... (3,095) 879 (1,501) (3,717)
Net change in investment
in segment................ 2,001 (11,171) 9,170 -
Net borrowing (repayment)
of debt................... - - (4,855) (4,855)
Net issuance (retirement)
of equity................. - - (961) (961)
------- ---------- --------- ----------
Cash provided by (used for)
financing................. 2,001 (11,171) 3,354 (5,816)
------- ---------- --------- ----------
Net increase (decrease) in
cash and equivalents...... $0 $0 $237 $237
======= ========== ========= ==========
---------------------------
(1) Discounts provided to Preferred Buyers Club(R) and Insiders(R)
members are allocated entirely to Retail and totaled $1.1 million and
$6.3 million in the in the first halves ended July 1, 2000 and July 3,
1999, respectively.
(2) Includes inter-segment transfers to Retail from Membership of
$10,806 in the first half ended July 3, 1999.
SEGMENT FINANCIAL DATA (unaudited, in thousands)
------------------------------------------------
Catalog Membership
CONDENSED CONSOLIDATING Retail Services Corporate Consolidated
BALANCE SHEETS ------- ---------- --------- ------------
At July 1, 2000
---------------
Cash and cash equivalents.. $9 $0 $440 $449
Trade accounts receivable,
net....................... 5,260 22,850 750 28,860
Due (to) from corporate....(13,842) (4,143) 17,985 -
Merchandise inventories,
net....................... 1,352 - - 1,352
Deferred costs............. 605 30,265 - 30,870
Deferred income taxes...... 272 - 1,088 1,360
Other current assets....... 487 697 1,803 2,987
------- ---------- --------- ----------
Total current assets....... (5,857) 49,669 22,066 65,878
Net property and equipment. 17,753 1,760 - 19,513
Net other assets........... 142 - 25 167
Deferred income taxes...... 382 - 23,080 23,462
------- ---------- --------- ----------
Total assets...............$12,420 $51,429 $45,171 $109,020
======= ========== ========= ==========
Accounts payable........... $2,854 $7,781 $0 $10,635
Accrued liabilities........ 7,558 36,545 - 44,103
Deferred revenues.......... - 46,548 - 46,548
Borrowings under revolving
credit facility........... - - 11,543 11,543
------- ---------- --------- ----------
Total current liabilities.. 10,412 90,874 11,543 112,829
Investment in segment/
shareholders' equity...... 2,008 (39,445) 33,628 (3,809)
------- ---------- --------- ----------
Total liabilities and
equity....................$12,420 $51,429 $45,171 $109,020
======= ========== ========= ==========
At December 31, 1999
--------------------
Cash and cash equivalents.. $0 $0 $3,927 $3,927
Trade accounts receivable,
net....................... 11,005 31,043 1,799 43,847
Merchandise inventories,
net....................... 30,739 - - 30,739
Deferred costs............. 10,275 4,911 - 15,186
Deferred income taxes...... - - 1,360 1,360
Other current assets....... 914 452 - 1,366
------- ---------- --------- ----------
Total current assets....... 52,933 36,406 7,086 96,425
Net property and equipment. 20,135 5,329 - 25,464
Net other assets........... 138 2 1,958 2,098
Deferred income taxes...... - - 2,059 2,059
------- ---------- --------- ----------
Total assets...............$73,206 $41,737 $11,103 $126,046
======= ========== ========= ==========
Accounts payable...........$19,806 $10,762 $0 $30,568
Accrued liabilities........ 12,240 26,819 2,253 41,312
Deferred revenues.......... - 24,749 - 24,749
Deferred income taxes...... - - - -
Borrowings under revolving
credit facility........... - - - -
------- ---------- --------- ----------
Total current liabilities.. 32,046 62,330 2,253 96,629
Investment in segment/
shareholders' equity...... 41,160 (20,593) 8,850 29,417
------- ---------- --------- ----------
Total liabilities and
equity....................$73,206 $41,737 $11,103 $126,046
======= ========== ========= ==========
At July 3, 1999
---------------
Cash and cash equivalents.. $0 $0 $286 $286
Trade accounts receivable,
net....................... 15,048 23,302 4,404 42,754
Merchandise inventories,
net....................... 24,785 - - 24,785
Deferred costs............. 8,087 7,554 - 15,641
Other current assets....... 1,380 262 3,550 5,192
------- ---------- --------- ----------
Total current assets....... 49,300 31,118 8,240 88,658
Net property and equipment. 21,874 5,944 5,571 33,389
Net other assets........... - - - -
Deferred income taxes...... - - - -
------- ---------- --------- ----------
Total assets...............$71,174 $37,062 $13,811 $122,047
======= ========== ========= ==========
Accounts payable...........$19,620 $5,292 $0 $24,912
Accrued liabilities........ 10,384 29,286 1,044 40,714
Deferred revenues.......... - 24,883 - 24,883
Deferred income taxes...... - - 493 493
Borrowings under revolving
credit facility........... - - 285 285
------- ---------- --------- ----------
Total current liabilities.. 30,004 59,461 1,822 91,287
Investment in segment/
shareholders' equity...... 41,170 (22,399) 11,989 30,760
------- ---------- --------- ----------
Total liabilities and
equity....................$71,174 $37,062 $13,811 $122,047
======= ========== ========= ==========
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