Science & Technology
Science and Technology
Science and Technology
Mon, May 18, 2009
Fri, May 15, 2009
Merisel, Inc.: Merisel, Inc. Announces First Quarter 2009 Results
NEW YORK, NY--(Marketwire - May 15, 2009) - Merisel, Inc. (
Merisel reported net income of $100 for the First Quarter 2009 compared to a loss of ($639) for the First Quarter of 2008. This increase in net income was primarily attributable to a $2,000 gain related to the settlement of litigation with American Capital Strategies, Ltd. First Quarter 2009 net sales of $17,102 were down $4,250 or 20% when compared to First Quarter 2008. The decrease in net sales was partially offset by decreases in the Company's Selling, General and Administrative expenses of $2,331 or 22%.
"Merisel's results continued to be negatively impacted by the worldwide economic recession," stated Donald R Uzzi, Chairman and CEO. "The consumers' deleveraging has forced our retail clients to adjust to softening market demand. Most importantly we continue to maintain our leadership position in the retail and fashion/apparel graphics market and continue to excel in meeting the needs of our valued clients."
RESULTS OF OPERATIONS
The Company reported a net loss available to common shareholders of ($492) or ($0.07) per share for the three months ended March 31, 2009, respectively, as compared to a loss of ($1,186) or ($0.15) per share for the three months ended March 31, 2008, respectively.
Three Months Ended March 31, 2009 as Compared to the Three Months Ended March 31, 2008
Net Sales - Net sales were $17,102 for the three months ended March 31, 2009 compared to $21,352 for the three months ended March 31, 2008. The decrease of $4,250 or 19.9% was due to weakening demand for our client services, which was caused by softer economic conditions throughout the United States.
Gross Profit - Total gross profit was $6,366 for the three months ended March 31, 2009 compared to $9,387 for the three months ended March 31, 2008. The decrease in total gross profit of $3,021 or 32.2% was primarily due to the 19.9% decline in net sales. Gross margin percentage decreased to 37.2% for the three months ended March 31, 2009 from 44.0% for the three months ended March 31, 2008. This decrease resulted from higher (percentage of sales) costs for raw materials, outside purchases, delivery and shipping expenses, depreciation on production equipment, and production rent and utilities expense. Actual production labor costs for the quarter ended March 31, 2009 also increased as a percentage of sales compared to the quarter ended March 31, 2008, but were down $617 or 15.6% in absolute dollars.
Selling, General and Administrative - Total Selling, General and Administrative expenses decreased to $6,150 for the three months ended March 31, 2009 from $10,481 for the three months ended March 31, 2008. The decrease of $4,330 or 41.3% was due primarily to the $2,000 legal settlement described above, which was recorded as income during the first quarter of 2009. Additionally, decreases in legal costs and investment banking fees of $760 associated with the Company's decision to enter into a merger agreement, sales salaries and commission expense of $451, other compensation costs of $380, and professional fees of $322 contributed to the reduction in total Selling, General and Administrative costs. Excluding the gain from the legal settlement, total Selling, General and Administrative expenses as a percentage of sales decreased to 47.7% for the three months ended March 31, 2009 compared to 49.1% for the three months ended March 31, 2008.
Interest Expense, Net - Interest expense increased to $41 in the three months ended March 31, 2009 from $1 in the three months ended March 31, 2008. The increase was due to a decrease in interest income of $130 due to lower balances in short-term interest-bearing investments classified as cash offset by a $90 reduction in interest expense resulting from lower installment note balances.
Income Taxes - The Company recorded income tax expense of $75 for the three months ended March 31, 2009 compared to a benefit of $460 for the three months ended March 31, 2008. Income tax expense in the current quarter is recorded at an effective tax rate of 42.9%, which compares to a 42.0% tax rate in the first quarter of 2008.
Net Income - As a result of the above items, the Company had net income of $100 for the three months ended March 31, 2009 compared to a loss of $639 for the three months ended March 31, 2008.
About Merisel
Merisel, headquartered in New York, N.Y., is a leading visual communications and brand imaging solutions provider to its clients. Merisel provides a broad portfolio of digital and graphic services to clients in the retail, manufacturing, beverage, cosmetic, advertising, entertainment and consumer packaged goods industries. These solutions are delivered to clients through its portfolio companies; ColorEdge, Crush Creative, Comp 24, It's in the Works, Dennis Curtin Studios, AdProps, and Fuel Digital. Merisel has sales offices in New York City, Atlanta, Los Angeles, Orlando, and Portland, Oregon, and production facilities in New York, New Jersey, Atlanta and Los Angeles to ensure the highest quality solutions and services to our clients. Learn more at [ www.merisel.com ].
Cautionary Statement
This release contains statements concerning Merisel's expectations for future performance, and are forward-looking statements as that term is used in the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are inherently speculative and are based on currently available information, operating plans and projections about future events and trends. As such, they are subject to numerous risks and uncertainties. Actual results and performance may be significantly different from expectations. The Company undertakes no obligation to update any such forward-looking statements. Please see the Company's filing with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K, for a discussion of specific risks that may affect performance.
MERISEL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended March 31, 2009 2008 ---------- ---------- Net sales $ 17,102 $ 21,352 Cost of sales 10,736 11,965 ---------- ---------- Gross profit 6,366 9,387 Selling, general & administrative expenses 6,150 10,481 ---------- ---------- Operating income (loss) 216 (1,094) Interest expense, net 41 1 ---------- ---------- Income (loss) from continuing operations before provision (benefit) for income tax 175 (1,095) Income tax provision (benefit) 75 (460) ---------- ---------- Income (loss) from continuing operations 100 (635) Loss from discontinued operations, net of taxes - (4) ---------- ---------- Net income (loss) 100 (639) Preferred stock dividends 592 547 ---------- ---------- Net loss available to common stockholders $ (492) $ (1,186) ========== ========== Loss per share (basic and diluted): Loss from continuing operations available to common stockholders $ (0.07) $ (0.15) Loss from discontinued operations, net of taxes 0.00 0.00 ---------- ---------- Net loss available to common stockholders $ (0.07) $ (0.15) ========== ========== Weighted average number of shares Basic 7,241 7,881 Diluted 7,241 7,881
