Exhibit 99.1
Wednesday October 15 2:59 PM EDT
Company Press Release
Creative Computers, Inc. Completes Acquisition of $48 Million of Elek-Tek's
Assets for $29 Million
TORRANCE, Calif.--(BUSINESS WIRE)--Oct. 15, 1997--
Acquisition Aimed at Expanding Reach Into PC/Wintel Market;
Increases Credit Facility to $80 Million
Creative Computers, Inc. (Nasdaq:MALL) Wednesday announced that it had completed
the acquisition of substantially all of the assets of Skokie, Ill.-based Elek-
Tek Inc., a full-line marketer of major- brand PC/Wintel microcomputer products
and value-added services, for $29 million in cash.
This acquisition was completed as a result of bankruptcy court approval of the
agreement signed by Creative and Elek-Tek in connection with the Sept. 17, 1997
filing by Elek-Tek for protection under Chapter 11 of the U.S. Bankruptcy Code.
For the six months ended June 30, 1997, Elek-Tek reported revenues of $133
million. As a result of this acquisition, Creative is positioned to further
increase its sales in the PC/Wintel market.
"By closing this transaction, we acquired from Elek-Tek approximately $48
million in assets (subject to post-closing adjustments), $36 million of which
are current assets, for only $29 million, and without assuming any of Elek-Tek's
liabilities or leases,'' stated Frank Khulusi, Creative's chairman and chief
executive officer.
"More important, we acquired Elek-Tek's customer list and ongoing business
operations, which are compatible with our business model and provide Creative
with substantial growth opportunities. As part of our overall growth strategy,
we have focused on increasing our PC/Wintel sales, and have successfully
accomplished this through internal measures.
"With this transaction and the recent acquisition of ComputAbility, we further
enhance our model for increasing PC/Wintel sales going forward.
"The terms of this transaction were particularly appealing," explained
Khulusi. "Prior to this transaction, Creative had virtually no long-term debt
on the balance sheet. To consummate the acquisition, we increased our credit
line with Deutsche Financial Services to $80 million and are using $20 million
of this credit line for this transaction.
"Because this acquisition is largely comprised of liquid assets, we expect to
pay back some of the recently incurred debt by 1997 year end."
Creative's plan is to capitalize on the growth opportunities presented by this
transaction by combining Elek-Tek's considerable name recognition, established
sales force and strong customer base with its substantial direct-marketing
expertise. As previously announced, Creative expects to give up certain of Elek-
Tek's revenues to concentrate on profitable sales.
Creative will continue to operate Elek-Tek's sales division, servicing
corporate, educational and government customers from its four locations in
Chicago, Indianapolis, Kansas City and Denver, and its catalog operations.
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In conjunction with the bankruptcy, Elek-Tek has closed four of its eight retail
stores and Creative is currently in the process of evaluating which of Elek-
Tek's four remaining retail stores to continue in operation.
Creative expects significant cost reductions for Elek-Tek's business from
economies of scale by merging administration, operations and other functions
that will be handled from Creative's headquarters in Torrance, Calif., as well
as Creative's distribution facility in Memphis, Tenn.
Additionally, Creative expects to achieve cost savings by renegotiating leases
at Elek-Tek's remaining retail store operations to decrease lease overhead.
Creative Computers, Inc. is a leading direct marketer of personal computers and
related products. The company offers over 45,000 products to its customers. The
company creates demand for its products through its distinctive, full-color
MacMall, PC Mall, DataCom Mall and ComputAbility catalogs, outbound
telemarketing, Internet marketing and its Web site, four retail showrooms and
other promotional materials.
The company's staff of over 300 knowledgeable telemarketing, customer service
and technical support personnel work together to provide high-level customer
service and gain customer loyalty.
Customers may call PC Mall sales at 800/555-MALL, DataCom Mall sales at 800/898-
DATA, MacMall sales at 800/222-2808 and ComputAbility sales at 800/558-0003, or
shop Creative on the Internet at http://www.pcmall.com,
http://www.datacommall.com, http://www.macmall.com or
http://www.computability.com .
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. There can be no assurance that the company will receive the
expected benefits from the acquisitions of ComputAbility or the assets of Elek-
Tek, or that the company will not experience difficulties integrating these
companies into its operations, or that the company will increase its overall
sales as expected. In addition to the factors set forth above, other important
factors that could cause actual results to differ materially from the company's
expectations include competition from other catalog and retail store resellers
and price pressures related thereto; the company's 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 Securities and Exchange
Commission reports, including but not limited to those set forth in the section
titled "Certain Factors Affecting Future Results'' in its annual report on Form
10-K for 1996.
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Contact:
Creative Computers, Inc., Torrance
Frank Khulusi or Richard M. Finkbeiner, 310/787-4500
or
Seiler Martin Ekman LLC, Los Angeles
Tom J. Ekman, Jody Martin or Steven Seiler, 310/312-7880
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