Multiple Zones Announces a 27.6% Increase in Net Revenue and a $2.7 million Increase in Operating Income for the First Quarter of 2001

-- Consolidated net income for Q1 2001 increases to $104,000, or $0.01 per

share, from a loss of $673,000, or ($0.05) per share, a year ago

-- Total net revenue increases 27.6% to $161.2 million in Q1 2001

-- ZBS, the Company's outbound direct relationship sales division,

revenues increased 77.6% to $131.0 million in Q1 2001

-- Corporate name to be changed to Zones, Inc.



Apr 26, 2001, 01:00 ET from Multiple Zones, Inc.

    RENTON, Wash., April 26 /PRNewswire/ --
 Multiple Zones, Inc. (the "Company," "Zones"(TM) ) (Nasdaq: MZON), a
 single-source direct reseller of name-brand information technology products
 and services to the fast growing small to medium sized business (SMB) market,
 today announced its first quarter results for the three month period ended
 March 31, 2001. The Company earned $104,000, or $0.01 per share, for the first
 quarter of fiscal year 2001 compared with a net loss of $673,000, or ($.05)
 per share, a year ago which included the after tax gain on the disposition of
 its overseas subsidiary of $827,000, or $0.06 per share.
     Total net revenue increased 27.6% to $161.2 million in the first quarter
 of 2001 from $126.3 million in the first quarter of 2000. The Company's
 revenue increase was buoyed by the continued growth in Zones Business
 Solutions (ZBS), the Company's outbound sales division, accentuated by its
 continued reach into SMB's, enterprise accounts, and the education and
 government market. ZBS revenue increased 77.6% to $131.0 million in the first
 quarter of 2001 from $73.7 million for the comparable period in the prior year
 and up 4.3% sequentially over the quarter ended December 31, 2000.
     "We were able to grow our business and remain profitable this quarter
 notwithstanding the exogenous influences of the economy and the Seattle
 earthquake, as both had a dampening effect on our business," said Firoz Lalji,
 Zones' President and CEO.  "The slowdown in corporate IT spending has created
 a more intense competitive landscape that is disrupting the stability of
 pricing and exerting pressure on margins across all product lines.  In light
 of this operating environment, I am extremely pleased with our results. The
 Company's income before interest, taxes and other expenses, was $ 279,000 for
 the three months ended March 31, 2001, an improvement of $2.7 million over the
 same period last year."
 
     First Quarter Highlights
 
     Operating Highlights
     PC platform revenue comprised 76.1% of total net revenue in the first
 quarter of 2001.  PC platform net revenue increased 88.5% to  $120.5 million
 during the first quarter of 2001 compared to the first quarter of 2000. This
 growth was driven primarily by the increase in ZBS revenue. ZBS revenue is
 more heavily weighted toward the PC platform.  As a percent of total net
 revenue, ZBS revenue increased to 81.3% in the first quarter of 2001 from
 58.4% in the first quarter of 2000.
     CPU revenue as a percent of total revenue was 40.2% in the first quarter
 of 2001.  Revenue of hardware and software in the first quarter of 2001
 represented 48.8% and 11.0% of total net revenue, respectively. The net
 revenue of servers increased 347.4% for the three months ended March 31, 2001
 from net revenue in the prior year. In addition, net revenue of networking
 equipment and laptops increased 97.6% and 5.0%, respectively, for the first
 quarter of 2001. Net revenue of Mac CPU's decreased 35.0% in the first quarter
 of 2001 from the first quarter of 2000.   This decrease is consistent with the
 industry-wide Mac platform sales decline.
     Gross profit margins were 9.6% in the first quarter of 2001, a sequential
 and year over year decrease from 9.9% in the fourth quarter and first quarter
 of 2000.  This decline in gross margin percentage is primarily due to pricing
 pressures from intense competition in spite of the continued shift in revenue
 mix to higher margin products.
     Operating costs decreased to 9.4%, down sequentially from 9.6% of net
 revenue in the fourth quarter of 2000 and down from 11.8% in the first quarter
 of 2000.  The Company rationalized its operating costs during the quarter in
 anticipation of a more difficult economic and operating environment.  However,
 the Company continued to invest in the training and development of its account
 executives to maintain the sales growth in ZBS.  Net interest expense
 decreased $259,000 from the fourth quarter of 2000 primarily as a result of
 decreased borrowing costs associated with the financing of accounts receivable
 and inventory.
 
     Asset Management
     The Company continued to show improvement in its working capital
 management effort this quarter.  Net inventory increased slightly to
 $29.3 million at March 31, 2001 up from $29.1 million as of December 31, 2000.
 Inventory turns increased to 20 times annually, compared with the December 31,
 2000 annual turn rate of 17 times.  This turn rate is not necessarily
 reflective of the actual inventory turns as ending inventory includes certain
 quarter-end purchases of opportunistic and strategic products.  Open account
 trade receivable increased to $42.6 million at March 31, 2001 from
 $40.5 million as of December 31, 2000 as the Company shifts more sales to open
 account customers.  The accounts receivable days outstanding declined to 33 as
 of March 31, 2001 compared to 38 days outstanding as of December 31, 2000.
 Cash at March 31, 2001 was $8.1 million, up from $4.7 million at December
 31, 2000. There were no interest bearing borrowings outstanding on the
 Company's credit facility at the end of first quarter 2001.
 
     Corporate Name Change
     On May 10, 2001 Multiple Zones, Inc. will change its name and become
 Zones, Incorporated.  The Company will also change its Nasdaq trading symbol
 to "ZONS."  This change reflects the Company's "single point of contact"
 strategy creating unity across its divisions and continued focus on the SMB
 and enterprise marketplace.  The Company will uphold its Mac Zone legacy and
 will distribute catalogs under this name, marketing to its loyal Mac customer.
 
     About Multiple Zones, Inc.
     Multiple Zones, Inc. is a single-source direct reseller of name-brand
 information technology products and services to the fast growing small- to
 medium-sized business market.  Multiple Zones sells these products and
 services through specialty print and e-catalogs, inbound and outbound account
 executives and the Internet.  Multiple Zones offers more than 150,000 products
 from leading manufacturers including Apple, Compaq, Hewlett-Packard, IBM,
 Microsoft and Toshiba.
     Incorporated in 1988, Multiple Zones, Inc., is headquartered in Renton,
 Washington. Company and buying information is available at
 http://www.zones.com , or by calling 800-258-2088.
     This press release contains statements that are forward-looking. These
 statements are made pursuant to the safe harbor provision of the Private
 Securities Litigation Reform Act of 1995. These statements are based on
 current expectations that are subject to risks and uncertainties that could
 cause actual results to differ materially from historical results or those
 anticipated. These risk factors include, without limitation, future growth,
 dependence on revenue of products, vendor support, competition, pressure on
 margin, variability of operating results, changing methods of distributions,
 potential disruption of business, potential increased in postage, shipping,
 and paper costs, reliance on vendor relationships, state revenue or use tax
 uncertainties, dependence on personnel, reliance on outsourced distribution,
 and rapid technological change and inventory obsolescence, and other risks and
 uncertainties detailed in the Company's filings with the SEC.
 
              MULTIPLE ZONES INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
 
                                                 March 31,    December 31,
                                                    2001           2000
                                   ASSETS
 
     Current assets
       Cash and cash equivalents                $7,212,000     $3,816,000
       Restricted Cash                             930,000        930,000
       Receivables, net                         55,263,000     56,608,000
       Inventories, net                         29,282,000     29,050,000
       Prepaids                                    989,000      1,110,000
       Deferred income taxes                     1,970,000      1,970,000
       Notes Receivable                          1,080,000      1,080,000
 
         Total current assets                   96,726,000     94,564,000
 
     Property and equipment, net                11,387,000     11,710,000
     Other assets                                5,047,000      4,996,000
 
         Total assets                         $113,160,000   $111,270,000
 
                      LIABILITIES & SHAREHOLDERS' EQUITY
 
     Current liabilities:
       Bank lines of credit                            $--            $--
       Accounts payable                         69,499,000     66,267,000
       Accrued liabilities and other             7,893,000      9,212,000
       Current portion of capital
        lease obligations                        1,904,000      1,905,000
 
         Total current liabilities              79,296,000     77,384,000
 
     Capital lease obligations,
      net of current portion                     1,126,000      1,197,000
     Other                                         863,000        955,000
 
         Total liabilities                      81,285,000     79,536,000
 
     Minority interest                             130,000        131,000
 
     Commitments and contingencies
 
     Shareholders' equity:
       Common stock                             39,398,000     39,360,000
       Retained earnings deficit               (7,653,000)    (7,757,000)
       Foreign currency translation adjustment          --             --
 
         Total shareholders' equity             31,745,000     31,603,000
 
         Total liabilities & shareholders'
          equity                              $113,160,000   $111,270,000
 
 
              MULTIPLE ZONES INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)
 
                                         For the three       For the three
                                          months ended        months ended
                                             March 31,          March 31,
                                               2001                2000
 
     Net sales                           $161,169,000       $126,306,000
     Cost of sales                        145,691,000        113,865,000
 
       Gross profit                        15,478,000         12,441,000
     Selling, general and
      administrative expenses              15,199,000         14,846,000
 
       Income (loss) from operations          279,000        (2,405,000)
 
     Other (income) expense:                  110,000        (1,440,000)
 
     Income (loss) before income taxes        169,000          (965,000)
     Provision for (benefit from)
      income taxes                             65,000          (351,000)
 
       Net income (loss) before
        cumulative change                    $104,000         $(614,000)
 
     Cumulative effect of change
      in accounting principle                       0           (59,000)
 
       Net income (loss)                      104,000          (673,000)
 
 
     Basic earnings (loss) per share            $0.01            $(0.05)
     Basic earnings (loss) per share
      after cumulative effect                   $0.01            $(0.05)
 
     Shares used in computation of
      basic earnings (loss) per share      13,438,000         13,354,000
 
     Diluted earnings (loss) per share          $0.01            $(0.05)
     Diluted earnings (loss) per share
      after cumulative effect                   $0.01            $(0.05)
 
     Shares used in computation of
      diluted earnings (loss) per share    13,438,000         13,354,000
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X56402076
 
 

SOURCE Multiple Zones, Inc.
    RENTON, Wash., April 26 /PRNewswire/ --
 Multiple Zones, Inc. (the "Company," "Zones"(TM) ) (Nasdaq: MZON), a
 single-source direct reseller of name-brand information technology products
 and services to the fast growing small to medium sized business (SMB) market,
 today announced its first quarter results for the three month period ended
 March 31, 2001. The Company earned $104,000, or $0.01 per share, for the first
 quarter of fiscal year 2001 compared with a net loss of $673,000, or ($.05)
 per share, a year ago which included the after tax gain on the disposition of
 its overseas subsidiary of $827,000, or $0.06 per share.
     Total net revenue increased 27.6% to $161.2 million in the first quarter
 of 2001 from $126.3 million in the first quarter of 2000. The Company's
 revenue increase was buoyed by the continued growth in Zones Business
 Solutions (ZBS), the Company's outbound sales division, accentuated by its
 continued reach into SMB's, enterprise accounts, and the education and
 government market. ZBS revenue increased 77.6% to $131.0 million in the first
 quarter of 2001 from $73.7 million for the comparable period in the prior year
 and up 4.3% sequentially over the quarter ended December 31, 2000.
     "We were able to grow our business and remain profitable this quarter
 notwithstanding the exogenous influences of the economy and the Seattle
 earthquake, as both had a dampening effect on our business," said Firoz Lalji,
 Zones' President and CEO.  "The slowdown in corporate IT spending has created
 a more intense competitive landscape that is disrupting the stability of
 pricing and exerting pressure on margins across all product lines.  In light
 of this operating environment, I am extremely pleased with our results. The
 Company's income before interest, taxes and other expenses, was $ 279,000 for
 the three months ended March 31, 2001, an improvement of $2.7 million over the
 same period last year."
 
     First Quarter Highlights
 
     Operating Highlights
     PC platform revenue comprised 76.1% of total net revenue in the first
 quarter of 2001.  PC platform net revenue increased 88.5% to  $120.5 million
 during the first quarter of 2001 compared to the first quarter of 2000. This
 growth was driven primarily by the increase in ZBS revenue. ZBS revenue is
 more heavily weighted toward the PC platform.  As a percent of total net
 revenue, ZBS revenue increased to 81.3% in the first quarter of 2001 from
 58.4% in the first quarter of 2000.
     CPU revenue as a percent of total revenue was 40.2% in the first quarter
 of 2001.  Revenue of hardware and software in the first quarter of 2001
 represented 48.8% and 11.0% of total net revenue, respectively. The net
 revenue of servers increased 347.4% for the three months ended March 31, 2001
 from net revenue in the prior year. In addition, net revenue of networking
 equipment and laptops increased 97.6% and 5.0%, respectively, for the first
 quarter of 2001. Net revenue of Mac CPU's decreased 35.0% in the first quarter
 of 2001 from the first quarter of 2000.   This decrease is consistent with the
 industry-wide Mac platform sales decline.
     Gross profit margins were 9.6% in the first quarter of 2001, a sequential
 and year over year decrease from 9.9% in the fourth quarter and first quarter
 of 2000.  This decline in gross margin percentage is primarily due to pricing
 pressures from intense competition in spite of the continued shift in revenue
 mix to higher margin products.
     Operating costs decreased to 9.4%, down sequentially from 9.6% of net
 revenue in the fourth quarter of 2000 and down from 11.8% in the first quarter
 of 2000.  The Company rationalized its operating costs during the quarter in
 anticipation of a more difficult economic and operating environment.  However,
 the Company continued to invest in the training and development of its account
 executives to maintain the sales growth in ZBS.  Net interest expense
 decreased $259,000 from the fourth quarter of 2000 primarily as a result of
 decreased borrowing costs associated with the financing of accounts receivable
 and inventory.
 
     Asset Management
     The Company continued to show improvement in its working capital
 management effort this quarter.  Net inventory increased slightly to
 $29.3 million at March 31, 2001 up from $29.1 million as of December 31, 2000.
 Inventory turns increased to 20 times annually, compared with the December 31,
 2000 annual turn rate of 17 times.  This turn rate is not necessarily
 reflective of the actual inventory turns as ending inventory includes certain
 quarter-end purchases of opportunistic and strategic products.  Open account
 trade receivable increased to $42.6 million at March 31, 2001 from
 $40.5 million as of December 31, 2000 as the Company shifts more sales to open
 account customers.  The accounts receivable days outstanding declined to 33 as
 of March 31, 2001 compared to 38 days outstanding as of December 31, 2000.
 Cash at March 31, 2001 was $8.1 million, up from $4.7 million at December
 31, 2000. There were no interest bearing borrowings outstanding on the
 Company's credit facility at the end of first quarter 2001.
 
     Corporate Name Change
     On May 10, 2001 Multiple Zones, Inc. will change its name and become
 Zones, Incorporated.  The Company will also change its Nasdaq trading symbol
 to "ZONS."  This change reflects the Company's "single point of contact"
 strategy creating unity across its divisions and continued focus on the SMB
 and enterprise marketplace.  The Company will uphold its Mac Zone legacy and
 will distribute catalogs under this name, marketing to its loyal Mac customer.
 
     About Multiple Zones, Inc.
     Multiple Zones, Inc. is a single-source direct reseller of name-brand
 information technology products and services to the fast growing small- to
 medium-sized business market.  Multiple Zones sells these products and
 services through specialty print and e-catalogs, inbound and outbound account
 executives and the Internet.  Multiple Zones offers more than 150,000 products
 from leading manufacturers including Apple, Compaq, Hewlett-Packard, IBM,
 Microsoft and Toshiba.
     Incorporated in 1988, Multiple Zones, Inc., is headquartered in Renton,
 Washington. Company and buying information is available at
 http://www.zones.com , or by calling 800-258-2088.
     This press release contains statements that are forward-looking. These
 statements are made pursuant to the safe harbor provision of the Private
 Securities Litigation Reform Act of 1995. These statements are based on
 current expectations that are subject to risks and uncertainties that could
 cause actual results to differ materially from historical results or those
 anticipated. These risk factors include, without limitation, future growth,
 dependence on revenue of products, vendor support, competition, pressure on
 margin, variability of operating results, changing methods of distributions,
 potential disruption of business, potential increased in postage, shipping,
 and paper costs, reliance on vendor relationships, state revenue or use tax
 uncertainties, dependence on personnel, reliance on outsourced distribution,
 and rapid technological change and inventory obsolescence, and other risks and
 uncertainties detailed in the Company's filings with the SEC.
 
              MULTIPLE ZONES INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
 
                                                 March 31,    December 31,
                                                    2001           2000
                                   ASSETS
 
     Current assets
       Cash and cash equivalents                $7,212,000     $3,816,000
       Restricted Cash                             930,000        930,000
       Receivables, net                         55,263,000     56,608,000
       Inventories, net                         29,282,000     29,050,000
       Prepaids                                    989,000      1,110,000
       Deferred income taxes                     1,970,000      1,970,000
       Notes Receivable                          1,080,000      1,080,000
 
         Total current assets                   96,726,000     94,564,000
 
     Property and equipment, net                11,387,000     11,710,000
     Other assets                                5,047,000      4,996,000
 
         Total assets                         $113,160,000   $111,270,000
 
                      LIABILITIES & SHAREHOLDERS' EQUITY
 
     Current liabilities:
       Bank lines of credit                            $--            $--
       Accounts payable                         69,499,000     66,267,000
       Accrued liabilities and other             7,893,000      9,212,000
       Current portion of capital
        lease obligations                        1,904,000      1,905,000
 
         Total current liabilities              79,296,000     77,384,000
 
     Capital lease obligations,
      net of current portion                     1,126,000      1,197,000
     Other                                         863,000        955,000
 
         Total liabilities                      81,285,000     79,536,000
 
     Minority interest                             130,000        131,000
 
     Commitments and contingencies
 
     Shareholders' equity:
       Common stock                             39,398,000     39,360,000
       Retained earnings deficit               (7,653,000)    (7,757,000)
       Foreign currency translation adjustment          --             --
 
         Total shareholders' equity             31,745,000     31,603,000
 
         Total liabilities & shareholders'
          equity                              $113,160,000   $111,270,000
 
 
              MULTIPLE ZONES INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)
 
                                         For the three       For the three
                                          months ended        months ended
                                             March 31,          March 31,
                                               2001                2000
 
     Net sales                           $161,169,000       $126,306,000
     Cost of sales                        145,691,000        113,865,000
 
       Gross profit                        15,478,000         12,441,000
     Selling, general and
      administrative expenses              15,199,000         14,846,000
 
       Income (loss) from operations          279,000        (2,405,000)
 
     Other (income) expense:                  110,000        (1,440,000)
 
     Income (loss) before income taxes        169,000          (965,000)
     Provision for (benefit from)
      income taxes                             65,000          (351,000)
 
       Net income (loss) before
        cumulative change                    $104,000         $(614,000)
 
     Cumulative effect of change
      in accounting principle                       0           (59,000)
 
       Net income (loss)                      104,000          (673,000)
 
 
     Basic earnings (loss) per share            $0.01            $(0.05)
     Basic earnings (loss) per share
      after cumulative effect                   $0.01            $(0.05)
 
     Shares used in computation of
      basic earnings (loss) per share      13,438,000         13,354,000
 
     Diluted earnings (loss) per share          $0.01            $(0.05)
     Diluted earnings (loss) per share
      after cumulative effect                   $0.01            $(0.05)
 
     Shares used in computation of
      diluted earnings (loss) per share    13,438,000         13,354,000
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X56402076
 
 SOURCE  Multiple Zones, Inc.