1stQ results out at noon.
Rick
Tech Squared Reports First Quarter Results
MINNEAPOLIS, May 12 /PRNewswire/ -- Tech Squared Inc. (OTC Bulletin Board: TSQD -news) today reported lower sales but an increase in operating profit for the first quarter ended March 31, 1998. Net sales for the period were $8,593,000, compared with $9,964,000 in the first
quarter last year. Operating profit rose to $64,000 from $62,000 a year earlier.
The company reported a consolidated net loss of $505,000, or 5 cents per share, vs. a consolidated net loss of $251,000, or 2 cents per share, in the first quarter last year. These results include a
portion of the losses of Digital River, Inc., an Internet commerce company in which Tech Squared's current effective ownership is approximately 23 percent. Excluding Tech Squared's portion of Digital
River's losses, the first quarter was Tech Squared's seventh consecutive quarter of profitability, with net income of $45,000, up from $35,000 in the first quarter of 1997.
The company said lower first-quarter volume was a result of declining sales to Tech Squared's distribution customers, as well as a decrease in sales of systems and storage devices to its DTP catalog customers. Because quarter-to-quarter fluctuations in net sales may reflect the timing of
new-product introductions by major vendors and competitors and changes in pricing and product mix, they are not necessarily indicative of results in future periods, the company noted.
Despite continuing competitive pressure on gross margins, the company's gross margin percentage improved to 12.6 percent in the first quarter from 10.9 percent last year, primarily as a result of a
reduction in variable overhead expenses and improved sales margins on both DTP Direct catalog sales and distribution sales.
Selling and marketing expenses rose 9 percent in the first quarter from a year earlier, primarily as a result of production and distribution of DPT Direct catalogs and costs leading up to the May launch
of a new catalog, Net Direct, which is directed at developers of intranet and Internet web sites.
''While the development costs of Digital River have had a negative impact on Tech Squared's results, we are excited about the Digital River concept,'' said Joel Ronning, Tech Squared's chairman
and chief executive. Digital River, a provider of e-commerce and data center management for companies selling software on the Internet, reported net sales of $2,270,000 in the first quarter of 1998, compared with $179,000 a year earlier. Its sales for all of 1997 were $2,472,000.
Tech Squared, based in Minneapolis, is a national marketer and distributor of mid- to high-end microcomputer hardware, software and peripherals primarily to businesses in the desktop publishing,
graphic arts and pre-press industries, as well as an emerging customer base of intranet and Intranet web site developers.
Except for historical financial information, the information contained in this release is forward-looking and subject to certain risks as described in the company's filings with the Securities and Exchange
Commission, including the company's annual report on Form 10-K for the year ended Dec. 31, 1997. Actual results may differ significantly based on such risks.
TECH SQUARED INC.
Consolidated Statements of Operations
(Unaudited)
Three months ended
March 31,
1998 1997
Net sales $8,592,728 $9,963,858
Cost of sales 7,506,225 8,873,097
Gross profit 1,086,503 1,090,761
Selling & marketing 520,349 476,492
General & administrative 502,515 552,444
Total operating expenses 1,022,864 1,028,936
Operating profit 63,639 61,825
Interest expense, net (23,132) (26,575)
Investment income 4,611 --
Equity in losses of Digital River (549,625) (285,795)
Net loss $(504,507) $(250,545)
Net loss per common share $(0.05) $(0.02)
Weighted average shares outstanding 10,549,413 10,374,870 |
