IDG reports Q1 financials

Industrial Distribution Group, Atlanta, GA, reported first quarter 2002 revenues of $120.0 million compared to $136.2 million for the first quarter of 2001. The company reported net income for the quarter ended Mar. 31 of $155,000 before the effect of a change in accounting principle discussed below, compared to a net loss of $596,000 for the prior year first quarter. Operating income increased 60.8% from $653,000 to $1,050,000 for the quarter compared to the comparable period in 2001. After the cumulative effect of the mandatory change in accounting principle required by the new Statement of Financial Accounting Standards No. 142, 'Goodwill and Other Intangible Assets,' the net loss for the quarter was $50.2 million.

Revenues from Flexible Procurement Solutions, IDG's services-based supply offerings, continued to expand and capture market share with the addition of 11 new integrated supply sites since year-end 2001. FPS revenues were 47.1% of IDG's total sales for the first quarter of 2002, compared to the 41.1% for the comparable period in 2001. The company said it was continuing to manage its expense and cost structure in response to the continuing slow economic environment for its manufacturing and industrial customers. Selling, general and administrative expenses decreased by 14.9% or $4.4 million during the first quarter of 2002 as compared to the same period in 2001. The decrease is attributable to workforce reductions and other consolidation efforts started during 2001.

Cash flow from operations increased 71.4% from $1.4 million to $2.4 million for the first quarter compared to the same quarter of 2001. IDG reduced its debt balance from $51.9 million at Mar. 31, 2001 to $41.4 million at March 31, 2002.

'The first quarter was important from an operational and financial perspective,' said Andrew B. Shearer, IDG's president and CEO. 'We continued to focus on our integration and productivity efforts that we expect will drive further value for our customers and profitability for our shareholders when the economy fully recovers.

Excluding the impact of the mandatory adoption of SFAS 142, which is a non-cash charge, we were able to demonstrate that IDG's fundamental business is sound, cash flow is good, and we produced an improving profit compared to the most recent quarter.

'We're executing on our vision to gain market share through FPS, and we expect this will enable higher sales volume and inventory turns when the economy becomes more robust. During the quarter we saw signs of improvement in certain customer segments. However, our customers in the commercial aerospace and aluminum industries have experienced continued weakness in their businesses. Accordingly, while we believe economic conditions have stabilized, these sector dynamics prevented a broad-based economic recovery in our industry. We are pleased, however, with our capability to efficiently manage and adjust operations to reflect the state of the economy and our level of business activity,' Shearer said.

During the quarter the company adopted the required accounting principle SFAS 142, Goodwill and Other Intangible Assets, to reflect a non-recurring, non-cash charge of $50.3 million in the first quarter of 2002 that is reflected in the company's consolidated statement of operations.