SOURCE: MERISEL, INC.

Merisel, Inc.

May 16, 2011 17:30 ET

Merisel, Inc. Announces First Quarter 2011 Results

Revenues Increase 15.7% to $17.4 Million for the Quarter vs. Prior Year; Operating Income Reported for the Fourth Consecutive Quarter

NEW YORK, NY--(Marketwire - May 16, 2011) - Merisel, Inc. (PINKSHEETS: MSEL)

(In thousands except for per share amounts)

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 first quarter ended March 31, 2011.

Net sales increased 15.7% for the three month period ended March 31, 2011 to $17,355 compared to $15,006 for the three month period ended March 31, 2010. The Company reported a net loss available to common stockholders of ($162) or ($0.02) per share for the first quarter of 2011, compared to ($1,761) or ($0.24) per share for the first quarter of 2010.

Donald R. Uzzi, Chairman and CEO, noted that Merisel reported improvements in all key financial areas for the three months ended March 31, 2011 compared to the same period in 2010; revenues, gross profit percentage, SG&A costs as a percentage of revenues; operating income, net loss available to common stockholders and EBITDA each showed meaningful improvements during the period. "Our organization has been focused on revenue improvement and cost containment. The efforts of our team have resulted in improving operational efficiencies and financial results. Importantly, we have reported four consecutive quarters with operating profits."

Mr. Uzzi further noted that Merisel recorded non-recurring costs of $195 for legal and professional fees related to the March, 2011 sale of the majority interest in Merisel's common stock and 100% of the $14 million of preferred stock outstanding by the then majority shareholder. Without these expenses, the net loss available to common shareholders would have been a net income available to common shareholders.

Highlights for the period included:

--  Revenues increased 15.7% or $2,349 in the 2011 period
    compared to the 2010 period;
--  Gross Profit improved to $7,408 or 42.7% in the 2011
    period compared to $5,695 or 38.0% in the 2010 period;
--  SG&A costs were reduced to 41.4% of revenues in the 2011
    period compared to 45.9% in the 2010 period;
--  The Company reported an operating income of $226 in the
    2011 period compared to an operating loss of ($990) in the
    2010 period.  This is the fourth consecutive quarter with
    operating income;
--  The net loss available to common shareholders improved to
    ($162) in the 2011 period compared to ($1,761) in the 2010
    period;
--  EBITDA, a widely recognized non-GAAP measurement of
    cash flows, improved to $1,214 for the 2011 period from
    $181 in the 2010 period as adjusted for non-recurring
    expenses.

As Importantly:

--  The Company announced in January (and closed in February)
    a redemption agreement with the holders of its outstanding
    preferred stock whereby $34.6 million of preferred stock was
    redeemed in exchange for $14.0 million of a new preferred
    stock and $3.5 million in cash, reducing the preference afforded
    the holders by $20.6 million;
--  On March 21, 2011, the Company announced that Saints
    Capital VI, L.P. ("Saints"), closed its Stock Purchase Agreement
    dated February 18, 2011 with Phoenix Acquisition Company II,
    L.L.C., an affiliate of Stonington Partners Inc. and Stonington
    Capital Appreciation 1994 Fund, L.P. (the "Fund" and together with
    Phoenix, "Stonington"), completing the transfer of Stonington's
    entire preferred stock and common stock interest in the Company.
    At the conclusion of the transaction, Saints held 100% of Merisel's
    Series A Preferred Stock and approximately 69% of the Company's
    outstanding common stock.  Saints is an affiliate of Saints Capital
    LLC, a venture capital and private equity firm focused on providing
    liquidity for investors and founders of private companies. Saints
    Capital LLC has acquired investments in over 300 companies, and
    today is the largest global direct secondary firm in the world.

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 May 16, 2011. 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 and amended on Form 10-K/A for the year ended December 31, 2010, which is 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)
                                (Unaudited)


                                                        Three Months Ended
                                                            March 31,
                                                          2011      2010
                                                        --------  --------
Net sales                                               $ 17,355  $ 15,006

Cost of sales                                              9,947     9,311

                                                        --------  --------
Gross profit                                               7,408     5,695

Selling, general & administrative expenses                 7,182     6,685

                                                        --------  --------
Operating income (loss)                                      226      (990)

Interest expense, net                                        419       131

                                                        --------  --------
Loss before income tax benefit                          ($   193) ($ 1,121)

Income tax benefit                                           (31)        -

                                                        --------  --------
Net loss                                                ($   162) ($ 1,121)

Preferred stock dividends                                      -       640
                                                        --------  --------
Net loss available to common stockholders               ($   162) ($ 1,761)
                                                        ========  ========

Loss per share (basic and diluted):

                                                        --------  --------
Net loss available to common stockholders               ($  0.02) ($  0.24)
                                                        ========  ========
Weighted average number of shares:
  Basic                                                    7,215     7,213
  Diluted                                                  7,215     7,213











                      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
                                                            March 31,
                                                        ------------------
                                                          2011      2010
                                                        --------  --------

Net loss available to common stockholders               ($   162) ($ 1,761)

Add:

Non recurring legal and professional fees                    195         -

                                                        --------  --------
Adjusted net income (loss) available to common
 stockholders (non-GAAP)                                $     33  ($ 1,761)
                                                        ========  ========




                                                        Three Months Ended
                                                            March 31,
                                                        ------------------
                                                          2011      2010
                                                        --------  --------

Net Loss                                                $   (162) $ (1,121)

Add (subtract):

Depreciation and amortization                                743     1,159

Amortization of loan origination fees                         50        12

Non recurring legal and professional fees                    195         -

Interest, net                                                419       131

Taxes                                                        (31)        -

                                                        --------  --------
EBITDA (non-GAAP)                                       $  1,214  $    181
                                                        ========  ========