Exhibit 99.1
[LETTERHEAD OF OUTPOST.COM]
Email Contact:
press@outpost.com
OUTPOST.COM REPORTS FINANCIAL RESULTS FOR FIRST QUARTER ENDED MAY 31, 2001
Kent, CT July 16, 2001 - Outpost.com (Nasdaq: COOL) Cyberian Outpost, Inc. a
leading global Internet retailer of high-end technology products, today
announced unaudited financial results for the first quarter ended May 31, 2001.
Net sales for the first quarter ended May 31, 2001 were $63.7 million, a
decrease of $1.3 million compared to $65.0 million in Q1 2000. The Company
reported a net loss, excluding charges for impairment of goodwill and
restructuring charges, of ($10.2) million for the quarter and basic and diluted
net loss per share of ($0.32), versus a net loss of ($7.4) million and basic and
diluted net loss per share of ($0.26) a year ago. Including charges for
impairment of goodwill and restructuring charges, the quarterly net loss was
($27.4) million or ($0.87) per share. Gross margin for the quarter was 14.0% vs.
13.4% during Q1 2000.
During the quarter, Outpost added approximately 106,000 new customers bringing
its total customer base to over 1.4 million. The Company's repeat buying rate
remained strong with 56% of quarterly product sales coming from existing
satisfied customers.
On April 13, 2001, the Company implemented a restructuring plan and incurred a
restructuring charge of $2.3 million. In connection with the restructuring
plan, the Company has re-focused its business on its core business-to-consumer
sector and has significantly curtailed its business-to-business operations,
OutpostPro.com Inc. As a result, the Company recorded an impairment charge of
$14.9 million for the unamortized goodwill associated with the purchase of that
business which is included in the $27.4 million loss for the quarter ended as of
May 31, 2001. In addition, the Company recorded additional one-time charges
totaling $2.1 million related to the write-off of receivables, liquidation of
inventory and key employee retention during the quarter ended May 31, 2001.
On May 29, 2001, the Company signed a definitive merger agreement with PC
Connection, Inc., a direct marketer of information technology products and
solutions to business, education, government and consumer end users located
primarily in the United States. The completion of this merger is subject to a
number of closing conditions, including approval by the Company's stockholders.
Provided that the merger is approved by the Company's stockholders and all other
conditions to closing are satisfied or waived, the merger is expected to be
completed by the end of October 2001. However, because many of the closing
conditions are beyond the control of the Company, there can be no assurance that
the merger will be completed by the end of October 2001, or at all. If the
Company is unable to close the merger or to obtain additional financing or
complete another sale or merger transaction, it is unlikely that the Company
would be able to continue as a going concern. For additional details regarding
the merger please refer to the Form S-4 filed with the SEC by PC Connection, Inc
on June 19, 2001.
For the month ending June 30, 2001, the Company recorded unaudited net sales of
approximately $13,000,000. Market conditions and the unpredictable economic
environment preclude the Company from making meaningful estimates for fiscal
2002 at this time.
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"Safe Harbor" Statement
This press release contains forward-looking statements, including statements
about our first quarter results, the proposed merger with PC Connection, Inc.
and the results for the month ending June 30, 2001. Some of these forward-
looking statements are based on unaudited financial information. The statements
in this release are not guarantees of future performance and actual results
could differ materially from current expectations as a result of numerous
factors, including, among others:
. the uncertainty of the Company's ability to close the merger with PC
Connection, Inc.;
. the uncertainty of the Company's ability to continue as a going concern;
. the possibility of the delisting of the Company's common stock from The
Nasdaq National Market;
. the effect that the Company's current financial condition will have on the
willingness of customers to purchase products from Outpost.com; and
. the effect that the Company's current financial condition may have on its
relationships with vendors and suppliers and their willingness and ability
to supply the Company with inventory.
All information set forth in this press release is as of July 16, 2001 and the
Company undertakes no duty to update this information unless required by law.
Notes on Financial Presentation
Historical results of operations are preliminary and unaudited. Financial
results are prepared in accordance with accounting principles generally accepted
in the United States of America. Certain prior period balances have been
reclassified to conform to the current period's presentation.
In February 2001 the Company changed its accounting policy for classifying
shipping revenue in accordance with Emerging Issues Task Force Issue 00-10
("EITF 00-10") "Accounting for Shipping and Handling Fees and Costs". The
Company was required by the EITF to adopt this accounting change in the fourth
quarter. Shipping revenue had historically been netted against shipping costs
in the "Sales and marketing" classification on the income statement. Due to
classification of shipping revenue as net sales, prior period gross profit as
well as sales and marketing expense amounts have changed. Application of this
accounting change is a reclassification on the statement of operations and does
not affect the net losses previously reported.
About Outpost.com
Outpost.com, established in 1995, is a leading Internet retailer of consumer
technology products. Outpost.com has been named the top-rated consumer shopping
experience on the Web by the on-line shoppers' rating service Bizrate.com,
receiving the "Circle of Excellence Award" for Holiday 2000 and the 1999, 2000
and 2001 #1 PowerRanking for Computing by Forrester Research. Outpost.com's 24/7
Customer Service Center and free overnight delivery service for in stock
products over $100 is unmatched in the industry. Today, Outpost.com has an
existing customer base of over 1.4 million. The Company has partnered with
leading consumer electronics retailer Tweeter Home Entertainment Group expanding
its clicks and mortar presence. As a full service provider (FSP), Outpost.com
provides its partners with e-commerce solutions encompassing site design, site
maintenance, order management and fulfillment.
OUTPOST.COM
Consolidated Balance Sheets
(In thousands)
May 31, February 28,
2001 2001
---- ----
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents....................................................... $ 4,556 $ 21,970
Accounts receivable, net........................................................ 7,014 15,762
Inventories..................................................................... 4,517 15,234
Prepaid expenses and other current assets....................................... 498 692
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Total current assets......................................................... 16,585 53,658
Property and equipment, net....................................................... 21,086 20,580
Goodwill.......................................................................... -- 15,224
Other assets...................................................................... 278 243
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Total assets................................................................. $ 37,949 $ 89,705
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Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of capital lease obligations.................................... $ 604 $ 696
Accounts payable................................................................ 15,075 37,372
Accrued expenses and other current liabilities.................................. 4,059 6,080
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Total current liabilities.................................................... 19,738 44,148
Capital lease obligations, excluding current portion and other long-term debt..... 297 389
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Total liabilities............................................................ 20,035 44,537
Minority interest................................................................. 3,775 3,603
Stockholders' equity:
Common stock.................................................................... 317 317
Additional paid-in capital...................................................... 141,188 141,172
Accumulated deficit............................................................. (127,366) (99,924)
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Total stockholders' equity................................................... 14,139 41,565
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Total liabilities and stockholders' equity................................... $ 37,949 $ 89,705
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OUTPOST.COM
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended
May 31, May 31,
2001 2000
---- ----
Net sales........................................................................ $ 63,714 $ 64,994
Cost of sales.................................................................... 54,787 56,295
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Gross profit................................................................... 8,927 8,699
Operating expenses:
Sales and marketing............................................................ 11,284 10,917
General and administrative..................................................... 3,887 2,768
Technology and development..................................................... 3,631 2,916
Amortization of goodwill....................................................... 285 -
Impairment of goodwill......................................................... 14,939 -
Restructuring charges.......................................................... 2,290 -
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Total operating expenses.................................................... 36,316 16,601
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Operating loss................................................................. (27,389) (7,902)
Other income, net................................................................ 119 637
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Net loss before minority interest.............................................. (27,270) (7,265)
Minority interest................................................................ (172) (100)
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Net loss....................................................................... ($27,442) ($7,365)
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Basic and diluted net loss per share............................................. ($0.87) ($0.26)
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Weighted average shares outstanding.............................................. 31,667 28,014
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