EXHIBIT 99.1
IdeaMall Reports Increased Consolidated First Quarter Net Income of $1.2 Million
or $0.12 Per Share, Up $8.7 Million From Q1 2000
Reports $3.6 Million EBITDA
Highlights:
. Record Core business first quarter net income of $1.7 million or $0.16 per
share, a sevenfold increase from last year's Q1 Core business earnings of
$0.02 million or $0.02 per share.
. Consolidated first quarter net income of $1.2 million, or $0.12 per share, an
$8.7 million, or $0.84 per share improvement from Q1 2000's loss of $7.5
million.
. Cash flow from operations $13.8 million; Credit facility balance of $0 at
quarter end.
. Consolidated EBITDA $3.6 million.
Torrance, California -- April 17, 2001 -- IdeaMall, Inc. (Nasdaq:MALL),
which is changing its name to PC Mall, Inc. ("PC Mall/IdeaMall"), today reported
consolidated net income for the quarter ended March 31, 2001 of $1.2 million or
$0.12 per share, an $8.7 million or $0.84 per share improvement from the net
loss of $7.5 million for the comparable quarter a year earlier. PC
Mall/IdeaMall's Core business earnings for the quarter rose 741 percent to a
first quarter record of $1.7 million, or $0.16 per share from 2000's first
quarter earnings of $0.2 million, or $0.02 per share.
Frank Khulusi, Chairman, President and CEO of PC Mall/IdeaMall, said, "Our
Core business has delivered increased year-over-year earnings and strong cash
flow from operations for the past three quarters. We are very proud of these
accomplishments especially given the challenging economic environment." Khulusi
continued, "Our sales were sequentially the same as Q4 2000 while our outbound
sales increased sequentially. This suggests that our outbound strategy is
working by capturing market share."
Consolidated sales for the quarter were $198 million, sequentially the same
as Q4 2000. Outbound business-to-business and eCOST.com sales increased from Q4
2000 but were offset by a seasonal drop in consumer sales. Compared with the
same quarter last year, consolidated sales declined 16 percent from $237 million
primarily due to a 46 percent decline in eCOST.com sales and an 18 percent
decline in consumer sales due to the Company's shift in focus to outbound
business sales and profitability. However, the impact on results from the
decline in sales was more than offset by a 14 percent increase in gross margin
and a 34 percent decline in SG&A spending.
Core business sales for the quarter were $174 million, nearly the same as
Q4 2000, a historically strong consumer buying season. This compares with Q1
2000 Core business sales of $194 million.
The Company's improved earnings for its Core business reflects the
successful execution of its strategy to increase business sales and control
overhead spending. During the quarter, the Company continued to hire and train
outbound account executives and enhance its sales support capabilities to expand
business sales. These new capabilities include technical licensing and network
specialists supporting account executives, as well as significant enhancement of
its Client Access Pages ("CAP"), web pages providing customized features for
business customers. These enhancements contributed to a 167 percent increase in
licensing sales and 58 percent increase in networking sales for Q1 2001 compared
with Q1 2000. Licensing and network product sales for the quarter increased
sequentially as well, up 12 percent and 42 percent, respectively from Q4 2000.
SG&A for the Core business declined 21 percent from Q1 2000. Core business gross
profit margin for the quarter was 11.4 percent of sales, unchanged from last
year.
PC Mall/IdeaMall's eCOST.com subsidiary continued to produce significant
improvement in profitability. eCOST.com was cash flow positive for the quarter
and reduced its quarterly loss to $0.2 million, a $0.2 million or 50 percent
improvement over Q4 2000's loss of $0.4 million. Sales for the quarter rose nine
percent to $23 million from $21 million in Q4. Compared with last year's first
quarter, eCOST.com reduced its loss by $6.1 million on a 46 percent or $20
million sales decline from $42 million reported for Q1 2000. Most of the
earnings improvement from the same quarter a year ago resulted from a fourfold
increase in margin percentage and a 72 percent reduction of SG&A spending.
Compared with Q4
2000, eCOST results for Q1 2001 improved from an 11 percent increase in gross
profit and a four percent decline in SG&A.
eLinux, PC Mall/IdeaMall's outbound sales unit focused on Linux-based
solutions, produced sales and results for the quarter similar to those of Q4
2000 but substantially better than Q1 of 2000. Sales for Q1 2001 were $1.9
million and results for the quarter were a loss of $0.3 million. This compares
with sales of $0.5 million and a loss of $0.8 million in Q1 of 2000.
PC Mall/IdeaMall's cash position continued to strengthen during the
quarter. EBITDA for the quarter was $3.6 million, a $9 million improvement over
last year's Q1. Cash flow from operations for the quarter was $13.8 million, the
third consecutive quarter of positive cash flow from operations. The Company has
generated $21.4 million of cash from operations over the last three quarters.
Cash flow from operations for Q1 2001 was favorably impacted by a reduction in
accounts receivable and inventory. Cash generated from operations was used to
pay off $17.3 million of borrowings on the Company's credit facility. Cash at
the end of the quarter was $10.4 million and no borrowings were outstanding on
the Company's credit facility.
During the quarter, the Company secured a new $75 million three year asset
based revolving credit facility with Congress Financial Corporation, a unit of
First Union Corporation (NYSE: FTU - news). The new facility is a significant
enhancement over the Company's previous financing arrangement which was for $40
million on a non-committed basis. Other enhancements include superior advance
rates on accounts receivable and inventory, as well as a reduction of financial
covenants to one that is more flexible than the four previously in place.
About PC Mall/IdeaMall
PC Mall/IdeaMall's Core business, consisting primarily of the PC Mall and
MacMall brands, is a rapid response supplier of technology solutions for
business, government and educational institutions as well as consumers. More
than 100,000 different products from companies such as Compaq, Microsoft, Apple,
IBM and Hewlett-Packard are marketed to business customers using relationship
based outbound telemarketing, catalogs and the Internet (http://www.pcmall.com,
http://www.macmall.com). Customer orders are rapidly filled by the Company's
distribution center strategically located near FedEx's main hub or by PC
Mall/IdeaMall's extensive network of distributors, one of the largest networks
in the IT industry.
PC Mall/IdeaMall also operates two startup wholly-owned subsidiaries:
eLinux (http://www.eLinux.com) and eCOST.com (http://www.ecost.com). eLinux is
similar to PC Mall/IdeaMall's Core business, but with a focus on Linux-based
solutions. eCOST.com is primarily a web-based multi-category supplier of high
technology products.
Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing are forward-looking statements. The
realization of any or all of these expectations is subject to a number of risks
and uncertainties and it is possible that the assumptions made by management may
not materialize causing actual results to differ materially from the forward
looking statements. In that regard, there can be no assurance that the
transition in the Company's business strategy to an increasingly Outbound sales
model will be successful, that productivity can be increased, that profitability
can be optimized or that PC Mall/IdeaMall will be profitable in the second
quarter of 2001 or for the 2001 fiscal year. There can be no assurance that the
focus on eCOST.com's and eLinux's profitability will succeed or result in bottom
line improvements, or that eLinux's sales and business models prove successful,
or that eCOST.com and eLinux will continue to make progress towards achieving
profitability. There also can be no assurance that the growth in Outbound sales
will continue or that cost reductions, EBITDA or profitability for the Company's
Core business will continue or improve. 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 companies either
currently in the market or entering the market; competition from other catalog
and retail store resellers and price pressures related thereto; uncertainties
surrounding the supply of and demand for products manufactured by and compatible
with Linux or Apple Computer; our reliance on Apple Computer, IBM, Hewlett-
Packard, Compaq and other vendors; and risks due to shifts in market demand
and/or 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 those
set forth in the section entitled "Certain Factors Affecting Future Results"
in its Annual Report on Form 10-K for 2000.
Note to Editors: Linux is a registered trademark of Linus Torvalds.
###
-Financial Tables to Follow-
IDEAMALL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited, in thousands except per share data)
For the three months
ended March 31,
----------------------
2001 2000
-------- --------
Net sales $198,351 $237,137
Cost of goods sold 176,428 214,240
-------- --------
Gross profit 21,923 22,897
Selling, general and administrative expenses 19,763 29,868
-------- --------
Income (loss) from operations 2,160 (6,971)
Interest income (expense), net (204) 35
-------- --------
Income (loss) before income taxes 1,956 (6,936)
Income tax provision 724 -
-------- --------
Income (loss) before effect of cumulative change in
accounting principle 1,232 (6,936)
Effect of cumulative change in accounting principle - (536)
-------- --------
Net income (loss) $ 1,232 $ (7,472)
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Earnings (loss) per share
Continuing operations $ 0.12 $ (0.67)
Cumulative change in accounting principle - (0.05)
-------- --------
$ 0.12 $ (0.72)
======== ========
Diluted earnings (loss) per share
Continuing operations $ 0.12 $ (0.67)
Cumulative change in accounting principle - (0.05)
-------- --------
$ 0.12 $ (0.72)
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Basic weighted average number of
shares outstanding 10,434 10,407
======== ========
Diluted weighted average number of
shares outstanding 10,436 10,407
======== ========
IDEAMALL, INC.
CONSOLIDATED BALANCE SHEET
--------------------------
(in thousands, except share data)
March 31, 2001
(unaudited) December 31, 2000
--------------- ------------------
Assets
Current assets:
Cash and cash equivalents $ 10,405 $ 12,195
Accounts receivable, net of allowance for doubtful accounts 47,583 54,970
Inventories 34,611 35,838
Prepaid expenses and other current assets 2,454 2,489
Deferred income taxes 1,324 2,047
-------- --------
Total current assets 96,377 107,539
Property, plant and equipment, net 13,623 14,928
Goodwill, net 11,186 11,316
Deferred income taxes 3,738 3,738
Other assets 45 45
-------- --------
$124,969 $137,566
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 62,469 $ 59,294
Accrued expenses and other current liabilities 12,275 12,963
Deferred revenue 6,493 7,204
Line of credit - 17,315
Capital leases - current portion 539 573
Notes payable - current portion 1,000 6
-------- --------
Total current liabilities 82,776 97,355
Capital leases 453 562
Notes payable 1,000 141
-------- --------
Total liabilities 84,229 98,058
-------- --------
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized; none issued and outstanding - -
Common stock, $.001 par value; 15,000,000 shares
authorized; 10,433,866 and 10,433,866 shares issued 11 11
Additional paid-in capital 74,403 74,403
Treasury stock, at cost: 15,000 shares (91) (91)
Retained earnings (accumulated deficit) (33,583) (34,815)
-------- --------
Total stockholders' equity 40,740 39,508
-------- --------
$124,969 $137,566
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