INTELLIGENT ELECTRONICS ANNOUNCES SECOND QUARTER RESULTS
INTELLIGENT ELECTRONICS ANNOUNCES SECOND QUARTER RESULTS EXTON, Pa., Sept. 15 /PRNewswire/ -- Intelligent Electronics, Inc.
(NASDAQ-NMS: INEL), in addition to announcing it is in discussions for the possible sale of its BizMart operations, today reported consolidated revenues of $581.2 million for its second quarter, increasing revenues 26 percent from $460.5 million during the comparable quarter a year ago.
Intelligent attributed its revenue growth to its acquisition of BizMart in June of 1991, growth in BizMart sales, and increased sales through its network of 1700 franchised and affiliated resellers. On a consolidated basis, the company posted a net loss of $4.3 million for the quarter, or (11) cents a share on 37.6 million shares, compared to earnings of $8.1 million, or 22 cents a share on 36.5 million shares last year. The change reflects BizMart's store immaturity, with 34 of its supercenters less than a year old; the termination of 30 BizMart franchise contracts costing $1.1 million, or 2 cents a share; and $1.9 million in pre-opening costs, or 3 cents aare, for new BizMart locations. The results also reflect computer industry margin pressures plus costs associated with the company's divestiture and operating losses of its Company Center Division (CCD), approximating 5 cents a share. Consumer Retail/BizMart Division BizMart revenues increased to $114.6 million, compared to revenues of $33.8 million for the six weeks included in last year's comparable quarter after the chain's acquisition. The chain reported same store sales increases of 37 percent through its cash registers for the quarter. BizMart reported a loss from operations of $8.1 million, compared to a loss of $400 thousand included in Intelligent's results during the prior year's comparable quarter. The company cited store immaturity, costs associated with terminating 30 BizMart franchise contracts, and increased pre-opening costs associated with BizMart's expansion as the primary reasons for the quarter's operating results. At quarter's close, 34 percent of all BizMart supercenters were less than a year old, and 25 percent were less than six months old. In the 15 months since acquiring BizMart, the company has opened 42 supercenters in 19 new markets. As of today, 99 BizMarts serve customers in 51 markets in 20 states through more than two million square feet of retail selling space. Reseller Network Division Intelligent's Reseller Network Division reported a revenue increase, including inter-divisional sales, of 17 percent to $486.1 million from last year's revenues of $414.8 million, despite industry-wide product shortages and delayed customer and end-user purchasing caused by vendor announcements of pending price and model changes. Gross margin dollars decreased to $20.3 million from $24.4 million a year ago, reflecting competitive pressures which impact vendor pricing and programs and the selling prices the company realizes from its customers. The division continued to manage its selling, general and administrative (SG&A) expenses tightly, achieving 1.5 percent of revenues compared with last year's 1.6 percent. Operating profits at the division were $11.6 million, compared to $16.6 million during the prior year's quarter. Throughout the quarter, the Reseller Network Division continued its strategy of leveraging its lean infrastructure to capture market share in new and existing markets. The company cited the addition of the IBM RISC 6000 line, growing sales of Sun Microsystems' and Hewlett-Packard workstations as examples of positive developments. Company Center Division During the quarter, the company sold the remainder of its company- owned reseller centers. On a pre-tax basis, the sale of CCD generated a profit of $43 thousand but resulted in an after-tax charge to earnings of $1.6 million due to a tax charge related to differences between the tax bases of CCD net assets sold and their amounts for financial reporting purposes. For the two months of operation prior to disposal, CCD reported a loss from operations of $668 thousand. The total impact of CCD's divestiture and operations was approximately 5 cents a share. Intelligent Electronics operates three divisions: Consumer Retail, Reseller Network, and Distribution Services. Its Distribution Services Division forms the core of the company's logistics service to its two other divisions. Recently, DSD was awarded a contract with an IBM company to fulfill its logistics requirements in providing product to its customers in the kindergarten through twelfth grade marketplace. INTELLIGENT ELECTRONICS, INC. AND SUBSIDIARIES Consolidated Statement of Operations (Unaudited; in thousands, except per share data) Periods ended Three months Six months Aug. 1, July 31, Aug. 1, July 31, 1992 1991 1992 1991 Revenues $581,168 $460,492 $1,243,633 $881,913 Cost of goods sold 533,087 421,033 1,134,236 809,478 Gross profit 48,081 39,459 109,397 72,435 Operating expenses: Selling, general and administrative expenses 42,727 23,448 85,606 39,080 Amortization of intangibles, primarily goodwill 2,954 1,979 5,957 3,284 Retail store pre-opening costs 1,851 342 2,825 342 Total operating expenses 47,532 25,769 94,388 42,706 Income from operations 549 13,690 15,009 29,729 Other income (expense): Investment and other income, net (36) 1,701 (52) 3,645 Interest expense (2,955) (1,941) (5,243) (3,679) Gain on sale of CCD 43 --- 43 --- Income (loss) before provision for income taxes (2,399) 13,450 9,757 29,695 Provision for income taxes 1,896 5,301 7,256 11,292 Net income (loss) $(4,295)(A) $8,149 $2,501 $18,403 Earnings (loss) per common share and share equivalents: Primary and fully diluted $(.11) $.22 $.07 $.52 Weighted average number of common shares and share equivalents outstanding (in thousands): Primary and fully diluted 37,553 36,540 38,158 35,529 (A) Includes: -- Net loss on sale of CCD of $1.6 million and two months pre-tax operating losses of $668,000 for a total CCD impact of approximately $.05 per share. -- Costs associated with the termination of 30 franchisees operating BizMart computer departments of $1.1 million before taxes or $.02 per share. INTELLIGENT ELECTRONICS, INC. AND SUBSIDIARIES Consolidated Balance Sheet (Unaudited; in thousands, except share-related data) Assets Aug. 1, 1992 Feb. 1, 1991 Current assets: Cash and cash equivalents $65,133 $64,490 Accounts receivable, net 16,605 44,119 Inventory 321,845 285,485 Prepaid expenses and other current assets 8,614 7,054 Note receivable from affiliate 20,511 --- Deferred income taxes 2,295 3,125 Total current assets 435,003 404,273 Property and equipment 52,264 43,930 Intangible assets, primarily goodwill, net 207,663 221,028 Investments in affiliates 17,146 --- Other assets 1,395 1,184 Total assets $713,471 $670,415 Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt $334 $631 Accounts payable 350,375 305,340 Accrued liabilities 39,193 45,475 Total current liabilities 389,902 351,446 Long-term debt 163 228 Subordinated debt 29,561 29,462 Commitments and contingencies --- --- Shareholders' equity: Common stock $.01 par value per share: Authorized 100,000,000 shares, issued and outstanding: 36,805,994 and 36,592,294 shares 368 366 Additional paid-in capital 195,370 193,307 Retained earnings 98,107 95,606 Total shareholders' equity 293,845 289,279 Total liabilities and shareholders' equity $713,471 $670,415 /delval/ -0- 9/15/92 /CONTACT: Patrice Johnson, vice president, Corporate Communications & Marketing, 215-458-6706, or Bob Yablunsky, director, Investor Relations, 215-458-6668, both of Intelligent Electronics/ (INEL) CO: Intelligent Electronics, Inc. ST: Pennsylvania IN: REA SU: ERN
JS -- PH025 -- 9834 09/15/92 17:19 EDT
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|Date:||Sep 15, 1992|
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