SOURCE: MERISEL, INC.

Merisel, Inc.

March 31, 2010 17:15 ET

Merisel, Inc. Announces Fourth Quarter and Full Year 2009 Results

The Results Were Heavily Impacted by Non-Cash Charges During the Fourth Quarter Relating to Impaired Assets From Previous Acquisitions and a Change in the Valuation Allowance for Deferred Taxes

(In thousands except per share amounts)

NEW YORK, NY--(Marketwire - March 31, 2010) - Merisel, Inc. (PINKSHEETS: MSEL), a leading provider of visual communications and brand imaging solutions to the consumer products, retail, advertising and entertainment industries, today reported financial results for the fourth quarter and full year ended December 31, 2009.

The Company reported a loss available to common stockholders of ($63,804) or ($8.89) per share and ($70,215) or ($9.75) per share for the three and twelve month periods ended December 31, 2009, respectively, as compared to a loss of ($5,540) or ($0.73) per share and ($8,736) or ($1.12) for the same periods in 2008, respectively. Revenues for the three and twelve months ended December 31, 2009, were $17,666 and $62,066, respectively, as compared to $20,877 and $84,178 for the same periods in 2008, respectively.

During the three month period ended December 31, 2009, the Company recorded significant non-cash charges which impacted the reportable loss. The three and twelve month periods ended December 31, 2009, include a non-cash intangible asset impairment charge of ($18,343), ($10,588) after taxes, compared to an intangible asset impairment charge of ($6,750), ($3,866) after taxes, for the three and twelve month periods ended December 31, 2008, respectively. Additionally, during the three month period ended December 31, 2009, the Company increased its valuation allowance on deferred tax assets to 100%, resulting in an additional non-cash income tax provision of ($51,739), for the three and twelve month periods ended December 31, 2009, compared to no increase in the valuation allowance in 2008.

Excluding the non-cash items above, the non-GAAP loss available to common stockholders was ($1,477) and ($7,888) for the three and twelve month periods ended December 31, 2009, respectively, as compared to a non-GAAP loss of ($1,674) and ($4,870) for the three and twelve month periods ended December 31, 2008, respectively.

"During 2009, our principal client base, retail and consumer goods companies, dramatically reduced their marketing and advertising spending in response to soft market conditions. Based on the reduction in revenues and ongoing losses, we recorded a significant asset impairment charge related to previous acquisitions and increased our valuation allowance on our deferred tax assets to 100% of the value as of year-end. These non-cash charges heavily impacted our reportable results," stated Mr. Donald R. Uzzi, Chairman and Chief Executive Officer. Mr. Uzzi continued, "While disappointed in our operating results, it should not be lost that when these non-cash charges are excluded, our operating loss improved for the quarter compared to the same period in the prior year, despite recording lower revenues. Our cost reduction initiatives have reduced our break-even point substantially from where it was a year ago and these initiatives continue. It should also be noted that we generated $3,904 cash from operations in 2009 and $17,118 over the past three years while investing $2,071 in capital expenditures in 2009 and $6,936 over the past three years."

Mr. Uzzi noted that while market uncertainty remains several clients have increased spending as the Company enters 2010. "Throughout this environment of uncertainty Merisel has continued to invest in the future. In the past two years we have significantly reduced operating costs, maintained a strong balance sheet and cash position, leveraged our size and capabilities to win new clients, and invested in technology to meet the needs of our expanding client base. Our management team will continue to manage our operations with great care and strategic focus. Merisel remains an important leader in the visual communications and brand imaging solutions space and is well positioned to take good advantage of opportunities in the marketplace as they present themselves."

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, and Fuel Digital. In March 2010, Crush Creative and Fuel Digital were consolidated under the ColorEdge brand. Merisel has sales offices in New York City, Atlanta, Los Angeles, Chicago and Portland, Oregon, and production facilities in New York, New Jersey, Atlanta and Los Angeles to ensure the highest quality solutions and services to its clients. Learn more at www.merisel.com.

Cautionary Statement

This press release contains forward-looking statements that involve risks and uncertainties concerning Merisel's expectations for future performance (including without limitation the quotations from management in this press release). In this context, forward-looking statements often address Merisel's expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," or "will." 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, these statements are subject to numerous risks and uncertainties that include, among others, the impact of management and organizational changes, the implementation of ongoing strategic and cost initiatives, changes in and a dependence on key personnel, the outcome of pending legal proceedings, the severity and duration of the current economic conditions and changes in economic conditions. These uncertainties may cause Merisel's actual future results to be materially different than those expressed in such forward-looking statements. All information set forth in this press release is as of November 16, 2009. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of the press release. The Company undertakes no obligation to update any such forward-looking statements. More information about the potential factors that could affect Merisel's business and financial results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, which are on file with the SEC and available on the SEC's website at www.sec.gov.

                      MERISEL, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)

                                 Three Months Ended        Year Ended
                                    December 31,          December 31,
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------
Net sales                       $  17,666  $  20,877  $  62,066  $  84,178

Cost of sales                      11,081     12,508     41,240     48,150

                                ---------  ---------  ---------  ---------
Gross profit                        6,585      8,369     20,826     36,028

Selling, general &
 administrative expenses            8,005     10,229     30,097     40,475
Intangible impairment              18,343      6,750     18,343      6,750
                                ---------  ---------  ---------  ---------
Operating loss                    (19,763)    (8,610)   (27,614)   (11,197)

Interest (income) expense, net       (110)        51        304        129

                                ---------  ---------  ---------  ---------
Loss before provision (benefit)
 for income tax                   (19,873)    (8,661)   (27,918)   (11,326)

Income tax provision (benefit)     43,304     (3,700)    39,861     (4,840)

                                ---------  ---------  ---------  ---------
Net loss                          (63,177)    (4,961)   (67,779)    (6,486)

Preferred stock dividends             627        579      2,436      2,250
                                ---------  ---------  ---------  ---------
Net loss available to common
 stockholders                   $ (63,804) $  (5,540) $ (70,215) $  (8,736)
                                =========  =========  =========  =========

Loss per share (basic and
 diluted):
Net loss available to common
 stockholders                   $   (8.89) $   (0.73) $   (9.75) $   (1.12)
                                =========  =========  =========  =========

Weighted average number of
 shares
Basic                               7,178      7,608      7,202      7,797
Diluted                             7,178      7,608      7,202      7,797




                      MERISEL, INC. AND SUBSIDIARIES
         Reconciliation of Non-GAAP Financial Information to GAAP
                              (In Thousands)

Unaudited Supplemental Data:

The following information is not a financial measure under generally accepted accounting principles (GAAP). In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with GAAP, or as an indicator of our operating performance, liquidity or cash flows generated by operating, investing and financing activities as there may be significant factors or trends that it fails to address. We present this financial information because we believe that it is helpful to some investors as one measure of our operations. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare our results with our results from other reporting periods and with the results of other companies.

                                 Three Months Ended   Twelve Months Ended
                                    December 31,         December 31,
                                --------------------  --------------------
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ---------

Net loss available to common
 stockholders in accordance
 with generally accepted
 accounting principals          $ (63,804) $  (5,540) $ (70,215) $  (8,736)

Add (subtract):
Intangible impairment              18,343      6,750     18,343      6,750

Tax benefit on intangible
 impairment                        (7,755)    (2,884)    (7,755)    (2,884)
Valuation allowance                51,739          -     51,739          -
                                ---------  ---------  ---------  ---------

Adjusted net loss available to
 common stockholders (non-GAAP) $  (1,477) $  (1,674) $  (7,888) $  (4,870)
                                =========  =========  =========  =========

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