Wednesday December 2, 7:33 pm Eastern Time
Company Press Release
Computer Literacy Announces Financial
Results for the Quarter Ended October
31, 1998
Record Online Sales Growth With 169 Percent Increase Over Quarter Ended
October 31, 1997
SUNNYVALE, Calif.--(BUSINESS WIRE)--Dec. 2, 1998--Computer Literacy (the ''Company'')
(Nasdaq:CMPL - news), the leading online retailer of books, manuals and training materials for
technology professionals, today announced financial results for the quarter ended October 31, 1998. The
Company, which completed its initial public offering on November 25, 1998, announced record online
sales of $2.9 million for the quarter ended October 31, 1998, an increase of 169 percent over online
sales of $1.1 million for the quarter ended October 31, 1997. Total Company sales (which include sales
generated by physical retail stores and to a lesser extent by trade shows and book fairs, as well as
online activities) for the quarter ended October 31, 1998 were $5.2 million, a 24 percent increase over
total sales of $4.2 million for the quarter ended October 31, 1997. The Company also announced
year-to-date online sales of $7.2 million, an increase of 319 percent over online sales of $1.7 million for
the nine months ended October 31, 1997. Year-to-date total Company sales were $14.4 million, a 103
percent increase over last year.
The Company reported a third quarter net loss of $2.9 million, or $1.84 per share, compared to a net
loss of $646,000, or $0.43 per share, in the prior year. Pro forma net loss per share, assuming
conversion of all outstanding shares of preferred stock immediately upon issuance, was $0.38 per share
for the third quarter of fiscal 1999 compared to $0.13 per share for the third quarter of fiscal 1998. The
Company's year-to-date net loss was $6.5 million, or $4.22 per share, compared to a net loss of $1.6
million, or $1.09 per share for the same period last year. Year-to-date pro forma net loss per share was
$0.90 per share compared to $0.36 per share for the same period last year.
The Company's cumulative customer accounts increased by over 14,000 during the third quarter to
58,576 at October 31, 1998. Customer accounts have increased by more than 350 percent from October
31, 1997. Repeat customer orders represented more than 53 percent of orders placed during the recent
quarter.
''Computer Literacy has earned its leadership position by maintaining an intense focus on technology
professionals,'' said Chris MacAskill, the Company's co-founder, president and chief executive officer.
''We estimate that there are more than 12 million programmers and IT professionals using technology
today. We've combined the industry's leading selection of technology resources with world-class
customer service and made it available to an audience characterized by having disposable income and a
need to answer complex technical questions quickly.''
Recent Highlights
Computer Literacy recently launched FindITNow, an innovative program for corporate customers that
allows businesses to provide customized technical resource stores on their corporate intranets. Through
this program, Computer Literacy builds a custom storefront on a company's intranet, providing
employees with a quick, easy way to find and order technical and business books, manuals and training
materials.
FindITNow gives corporate customers and their employees access to Computer Literacy's
comprehensive range of technology information resources, featuring more than 800 distinct resource
categories. The Company's corporate customer base includes industry leaders such as Cisco Systems,
Hewlett Packard, Intel, Microsoft, SAP and Sun Microsystems.
Also during the quarter the Company launched a new Web site, featuring a powerful new search tool
and numerous additional services designed for technical professionals. New services include ''Keep Me
Posted,'' an e-mail notification system for customers seeking materials on a specific topic and an
''Author's Choice'' section that highlights readings recommended by computer industry experts and
best-selling authors. The new ''Cutting Edge'' section features titles that cover radical developments in
next-generation technologies, and ''Galley Alley'' offers an early look at pre-release versions of books, or
''galleys,'' providing a look at what new technology publications are on the horizon. These features build
on the platform of popular services that have made Computer Literacy the leader in its category,
including staff-written reviews, recommended reading lists and a safe shopping guarantee.
About Computer Literacy
Computer Literacy is the leading online retailer of information resources singularly focused on technical
professionals. With more than 300,000 technology-focused information resource titles from more than
8,000 publishers, the Company offers individual and corporate customers online access to the broadest,
most comprehensive selection of technical books, technology-based training solutions, product
manuals, research reports and other information resources. The Company offers discounts of up to 40
percent on books and resources and strives to ship all in-stock orders placed by 4 PM PST on the
same day the order is placed weekdays. Computer Literacy's web site is www.computerliteracy.com.
This announcement may contain forward-looking statements that involve risks and uncertainties
including, among others, Computer Literacy's limited operating history, anticipated losses, the
unpredictability of its future revenues, competition, risks associated with system development and
operation risks, management of potential growth, and risks of new business areas, international
expansion, business combinations, and strategic alliances. Actual results could differ materially from
those discussed. More information about factors that potentially could affect Computer Literacy's
financial results is included in the Company's filings with the Securities and Exchange Commission,
including its Registration Statement filed on Form SB-2 on November 19, 1998, as amended. All forward
looking statements are based on information available to the Company on the date hereof, and the
Company assumes no obligation to update such statements.
Note to Editors: All company and product names may be trademarks of the respective companies with
which they are associated.
Computer Literacy, Inc. and Subsidiary
Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
Quarter ended October 31,
-------------------------
1998 1997
-------- --------
Revenues:
Online $ 2,934 $ 1,089
Retail and other 2,296 3,124
-------- --------
Total revenues 5,230 4,213
Cost of revenues:
Online 2,347 802
Retail and other 1,501 2,041
-------- --------
Total cost of revenues 3,848 2,843
-------- --------
Gross profit 1,382 1,370
Operating expenses:
Sales and marketing 2,759 1,126
Development and engineering 763 311
General and administrative 799 552
-------- --------
Total operating expenses 4,321 1,989
-------- --------
Loss from operations (2,939) (619)
Interest, net 45 (27)
-------- --------
Net loss $ (2,894) $ (646)
======== ========
Basic and diluted net loss
per share $ (1.84) $ (0.43)
Shares used in calculating
basic and diluted net loss
per share 1,571 1,504
Pro forma net loss per share,
assuming conversion of all
outstanding shares of
preferred stock immediately
upon issuance
Pro forma basic and diluted
net loss per share $ (0.38) $ (0.13)
Shares used in calculating
pro forma basic and diluted
net loss per share 7,650 4,999
Nine Months ended October 31,
-------------------------
1998 1997
-------- --------
Revenues:
Online $ 7,159 $ 1,709
Retail and other 7,280 5,387
-------- --------
Total revenues 14,439 7,096
Cost of revenues:
Online 5,638 1,220
Retail and other 4,727 3,466
-------- --------
Total cost of revenues 10,365 4,686
-------- --------
Gross profit 4,074 2,410
Operating expenses:
Sales and marketing 6,815 2,366
Development and engineering 1,911 524
General and administrative 2,023 1,148
-------- --------
Total operating expenses 10,749 4,038
-------- --------
Loss from operations (6,675) (1,628)
Interest, net 144 (4)
-------- --------
Net loss $ (6,531) $ (1,632)
======== ========
Basic and diluted net loss
per share $ (4.22) $ (1.09)
Shares used in calculating
basic and diluted net loss
per share 1,546 1,504
Pro forma net loss per share,
assuming conversion of all
outstanding shares of
preferred stock immediately
upon issuance
Pro forma basic and diluted
net loss per share $ (0.90) $ (0.36)
Shares used in calculating
pro forma basic and diluted
net loss per share 7,280 4,542
Computer Literacy, Inc. and Subsidiary
Consolidated Balance Sheets
(in thousands, except per share data)
October 31, January 31,
1998 1998
----------- -----------
(unaudited)
Assets
Current assets:
Cash and equivalents $ 2,085 $ 4,974
Accounts receivable, net 770 153
Inventories 4,096 3,683
Prepaid expenses and
other current assets 1,258 440
----------- -----------
Total current assets 8,209 9,250
Property and equipment, net 1,819 1,182
Goodwill, net 2,803 2,962
Other assets 204 204
----------- -----------
Total assets $ 13,035 $ 13,598
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,487 $ 2,518
Accrued expenses 1,473 1,084
Current portion of capital
lease obligations 18 18
----------- -----------
Total current liabilities 3,978 3,620
Capital lease obligations 40 53
----------- -----------
Total liabilities: 4,018 3,673
Stockholders' equity:
Preferred stock, $0.001 par
value, 6,275 and 5,500
shares authorized, 6,079
and 5,222 shares issued
and outstanding at October
31, 1998 and January 31,
1998, respectively 6 5
Common stock, $0.001 par
value, 10,000 and 8,750
shares authorized, 1,582
and 1,527 shares issued
and outstanding at October
31, 1998 and January 31,
1998, respectively 2 2
Additional paid-in capital 19,386 13,764
Warrants 12 12
Accumulated deficit (10,389) (3,858)
----------- -----------
Total stockholders' equity 9,017 9,925
----------- -----------
Total liabilities and
stockholders' equity $ 13,035 $ 13,598
=========== ===========
Contact:
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