For the record:
Tuesday April 22 12:34 PM EDT - Source: Multiple Zones International Inc.
Multiple Zones Reports First Quarter Results
PC/Wintel Sales Reach Record Levels; Increasing by Over 95%
Company Sees Growth Opportunities Through Its Electronic Commerce Web Site
RENTON, Wash., April 22 /PRNewswire/ -- Multiple Zones International, Inc. (Nasdaq:MZON) today announced that the Company reported a 22% increase in net sales to $122,755,000 in the first quarter of 1997 from $100,927,000 in the comparable period of 1996. Net income of $2,066,000 for the current quarter compares with $2,173,000 in the prior year quarter. Earnings per share were $.16 in the first quarter of 1997 compared with $.21 in the first quarter of 1996, reflective of the higher level of shares outstanding in the current quarter.
Commenting on the quarter, John DeFeo, Multiple Zones' Chief Executive Officer stated, ``It continues to be Multiple Zones' strategy to focus on the growth opportunities of the PC/Wintel market while continuing to serve the Apple/Macintosh customer. Domestic PC/Wintel sales were $44,997,000 for the current quarter, which represents a record quarterly sales level and a 95% increase over prior year quarterly sales. Domestic PC/Wintel CPU sales grew over 159% in the quarter and, with declining average selling prices, unit sales rose over 232% from the prior year first quarter.'' DeFeo further commented, ``The PC/Wintel market exceeds $100 billion annually and, with our multiple offerings of catalogs, outbound sales initiatives and internet sites, we see great opportunities to further grow this platform.''
The Company stated that, consistent with its strategic plan, sales of PC/Wintel offerings are increasing and sales of Apple/Macintosh products are decreasing as a percentage of net sales. Macintosh platform sales represented only 58% of domestic net sales for the quarter ended March 31, 1997 compared with 74% in the prior year quarter. Domestic net sales of Macintosh products decreased 2% to $62,394,000 in the current quarter as compared to the first quarter in 1996. DeFeo added, ``The Apple/Macintosh market is becoming increasingly segmented and, as fewer retailers carry these products, the direct marketing channel is becoming the preferred method to serve these dedicated users. A growth area within the Macintosh market is the emergence and acceptance of Macintosh clones from Motorola, Power Computing and UMAX. Clone sales have grown over 50% during the year and in the first quarter of 1997 represented a quarter of Macintosh CPU sales. Apple branded sales, which represented 22% of domestic net sales in the first quarter of 1996, declined to 17% of net sales in the current quarter.''
The Company continued its initiative of expanding outbound sales to business, education and government markets. Outbound telemarketing sales increased 89% to a record quarterly sales level of $32,839,000, compared with $17,408,000 in the prior year quarter.
Gross product margin increased to 13.5% in the quarter from 13.4% in the sequential fourth quarter, but declined from 13.8% in the year ago first quarter. Selling, general and administrative (SG&A) expenses were 10.5% compared with 9.7% in the sequential fourth quarter and 10.0% in the first quarter of 1996. Commenting on margins and SG&A, DeFeo stated, ``As expected, our margins are being affected by our mix shift of increasing PC/Wintel sales. Higher SG&A expenses are attributable to increasing expenditures toward growing PC/Wintel sales and expanding infrastructure costs to accommodate future growth.''
Speaking on new initiatives, DeFeo noted, ``The Company is refocusing its merchandising initiatives and product offerings to enhance its service into two key growth markets: The business market and the knowledgeable consumer market. Customers will see new merchandising treatments evolve from this strategy. An example is the Business Edition of the PC Zone(R), which debuted this quarter. In addition, the Company's new strategies have allowed us to lower inventory levels, with the result that ending inventory was reduced 38% from the December 31st levels and inventory turns have increased.''
During the quarter Multiple Zones launched the PC Zone(R) and Mac Zone(R) Internet SuperStores on the World Wide Web. The online storefronts allow shoppers to search for information and place secure orders on over 10,000 microcomputer hardware and software products. The sites take advantage of Multiple Zones' extensive purchasing, distribution, customer service and direct marketing expertise. Commenting on the electronic storefronts, DeFeo stated, ``We want to participate in multiple channels of distribution to provide differing ways to serve our customers. Our Internet sites complement our inbound and outbound sales treatments and provide customers an additional method to obtain product information and to shop.''
Multiple Zones International, Inc. is a leading international direct marketer of brand name microprocessor-based hardware, software, peripherals and accessories for users of PC/Wintel and Apple Macintosh-compatible computers through two flagship catalogs, The PC Zone(R) and The Mac Zone(R). A dedicated telemarketing sales force serves the needs of the business, education and government markets. Products are also available through the Multiple Zones Internet SuperStore. The Company was founded in 1988, has operations in 26 countries worldwide and is headquartered in Renton, Washington. Orders can be placed or a catalog can be received simply by calling 800-258-2088 or through accessing our World Wide Web location www.zones.com.
Statement under the Private Securities Litigation Reform Act of 1995
With the exception of the historical information contained herein, the matters described herein contain forward-looking statements that involve risk and uncertainties including but not limited to variability of quarterly results, reliance on vendor support and relationships and dependence on sales of Mac products. These and other risk factors are described generally in the Risk Factors section of the Company's 10-K dated March 25, 1997 filed with the Securities and Exchange Commission.
Multiple Zones International, Inc. and Subsidiaries
Consolidated Statements of Operations
For the three months ended March 31, 1997 and 1996
(in thousands, except per share data)
For the three months
ended March 31,
1997 1996
Net sales $ 122,755 $ 100,927
Cost of sales 106,208 86,964
Gross profit 16,547 13,963
SG&A 12,928 10,078
Income from operations 3,619 3,885
Other expenses 389 468
Income before income taxes 3,230 3,417
Provision for income taxes 1,164 1,244
Net income $ 2,066 $ 2,173
Fully diluted earnings per share $ 0.16 $ 0.21
Shares used in computation of
fully diluted earnings per share 13,227 10,137
Multiple Zones International, Inc. and Subsidiaries
Consolidated Balance Sheets
As of March 31, 1997 and December 31, 1996
(in thousands)
March 31, December 31,
1997 1996
ASSETS
Cash & cash equivalents $ 846 $ 976
Receivables, net 39,103 49,975
Inventories, net 47,980 77,501
Other assets 19,995 21,349
Total assets $ 107,924 $ 149,801
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities
Bank lines of credit $ 5,360 $ 2,204
Accounts payable 37,702 83,848
Other liabilities 12,780 13,811
Total liabilities 55,842 99,863
Minority interest 477 469
Total shareholders' equity 51,605 49,469
Total liabilities & shareholders'
equity $ 107,924 $ 149,801 |
