Back to GetFilings.com

FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

 FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2001

 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 0-25790

PC MALL, INC.
(Exact name of registrant as specified in its charter)

2555 West 190th Street
Torrance, CA 90504
(address of principal executive offices)
(310) 354-5600
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  T  No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  

As of March 28, 2002 the aggregate market value of the Common Stock held by non-affiliates of the Registrant was approximately $30,993,692.  The number of shares outstanding of the Registrant's Common Stock as of March 28, 2002 was 10,443,616.

Documents incorporated by reference into Part III:  Portions of the Proxy Statement for the Registrant's 2002 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

PC MALL, INC.

TABLE OF CONTENTS

PART I
ITEM 1 - Business
ITEM 2 - Properties
ITEM 3 - Legal Proceedings
ITEM 4 - Submission of Matters to a Vote of Security Holders
PART II
ITEM 5 - Market for Registrant's Common Stock and Related Stockholder Matters
ITEM 6 - Selected Financial Data
ITEM 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A - Quantitative and Qualitative Disclosures about Market Risk
ITEM 8 - Financial Statements and Supplementary Data
ITEM 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
ITEM 10 - Directors and Executive Officers of the Registrant
ITEM 11 - Executive Compensation
ITEM 12 - Security Ownership of Certain Beneficial Owners and Management
ITEM 13 - Certain Relationships and Related Transactions
PART IV
ITEM 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
SIGNATURES

PART I

ITEM 1. BUSINESS

General

PC Mall, Inc. (the "Company"), formerly IdeaMall, Inc. and Creative Computers, Inc., founded in 1987, is a rapid response supplier of computer hardware, software, peripheral and electronics products. The Company offers products to business, government and educational institutions as well as individual consumers through relationship-based direct marketing techniques, direct response catalogs, dedicated inbound telemarketing sales executives, the Internet, a direct sales force, and a retail showroom.  The Company offers a broad selection of products through its distinctive full-color catalogs under the PC Mall, MacMall, and eCOST.com brands, its five worldwide web sites on the Internet: pcmall.com, macmall.com, ccit-inc.com, ecost.com, and elinux.com, and other promotional materials. The Company's staff of knowledgeable sales executives, customer service and technical support personnel work together to serve customers by assisting in product selection and offering technical assistance.  The Company believes that its high level of customer service results in customer loyalty and repeat customer orders.

 In September 1997, the Company formed a wholly-owned subsidiary, uBid, Inc. ("uBid"), to sell computer-related products and consumer electronics through an auction format on the Internet. On December 9, 1998, uBid completed an initial public offering of 1,817,000 shares of its Common Stock.  Upon completion of this offering, the Company owned 80.1% of the outstanding Common Stock of uBid.  On June 7, 1999, the Company divested its ownership in uBid by means of a tax-free distribution of all of its remaining 7.3 million shares of uBid Common Stock to the Company's stockholders of record as of May 24, 1999.  In April 2000, uBid was acquired by CMGI.

In February 1999, the Company formed eCOST.com as a wholly-owned subsidiary.  eCOST.com is a multi-category Internet retailer of computer products and electronics, and offers a broad selection of name-brand products, most of which are sold at competitive prices plus itemized fees for processing and shipping the order.  In December 1999, the Company formed eLinux as a wholly-owned subsidiary to focus on products and services directed to the Linux community.

During 2000, the Company shifted its strategy to focus primarily on its outbound direct marketing operations.  Accordingly, the Company changed its operating strategy for its start-up businesses, eCOST.com and eLinux, emphasizing profitability over growth.

 The Company currently operates in three reportable business segments: 1) a rapid response supplier of computers, hardware, software, peripheral and electronics products under the PCMall, MacMall, and CCIT brands, collectively referred to as the "Core Business"; 2) a multi-category Internet retailer of computer and consumer electronics products under the eCOST.com brand, and 3) a rapid response supplier of Linux-based products and services provided under the eLinux brand.  For segment information relating to net sales, gross profit and operating income, see Note 9 to the Company's financial statements included herein.

Strategy

The Company's strategy is to be a leading rapid response direct marketer and supplier of a broad range of computers, software and related technology products and solutions to businesses, governmental and educational institutions, and individual customers.  Specific elements of the Company's operating strategy include:

Continued Development of Outbound Direct Marketing.  During 2001, the Company continued to intensify its outbound direct marketing efforts to focus on the under-served small and medium business (SMB) market as well as large businesses (enterprise), government and education markets.  The Company believes that its inherent cost efficiencies and its purchasing power with key vendors provides it with competitive advantages and growth opportunities to acquire market-share from small Value-Added Resellers ("VARS") that traditionally serve the SMB market.   Outbound business sales can also be more profitable than inbound sales due to reduced advertising expense and lower transaction cost from higher average order size.  The Company's strategy is to expand its outbound sales executive workforce and use its expertise in database marketing to mine its customer database and purchased name lists for prospects.  During 2001, the Company continued to hire experienced outbound direct marketing executives to manage this initiative and expand the outbound sales executive workforce.  In September 2001, the Company opened a new outbound call center located in Orange County, California.  The Company also focused on the development of its direct marketing executives through its comprehensive training program.  The Company expects to continue to invest in new tools and training to develop its outbound direct marketing sales operation. 

 Focus on the Windows/Intel (PC platform) Market.  The Company launched its first PC catalog, PC Mall, primarily for PC platform customers, in May 1995.  The Company published seven editions of PC Mall with a total circulation of 11.1 million copies in 1995.  During 2001, there were 13 editions of the PC Mall catalog distributed, with total circulation of 13.7 million.  Total PC platform revenues were $437.8 million, a  decrease of $60.6 million, or 12.2% over 2000 PC platform revenue of $498.4 million.

 The Company is authorized or otherwise has the ability to sell IBM, Compaq, Hewlett-Packard, Sony, Toshiba and other name brand computers.  The Company has become one of the leading catalog resellers of PC platform products since the start of its PC platform initiative in 1995.

 Continued Macintosh Marketshare Expansion.  Throughout 2001, the Company continued to be a leading rapid response supplier of Macintosh products, offering the full line of Apple and related products.  The Company's sales of Mac-related products in 2001 was $280.4 million, a decrease of $39.8 million, or 12.4% compared to $320.2 million in 2000.  During 2001, the Company published 14 editions of its MacMall catalog with a circulation of 29.7 million copies, a 1% increase from the prior year's 29.5 million circulation and a 6% decrease from the 31.5 million copies circulated in 1999.  

 Penetration of the Linux Market.  In February 2000, the Company launched its newest venture, eLinux, focusing on providing technology solutions to Linux users.  Linux is an open source operating software gaining rapid acceptance within the IT community and is used extensively to run network servers.  eLinux  offers complete multi-vendor Linux solutions, including Linux compatible products, consulting and support services, and community.  The Company's eLinux subsidiary serves the rapidly growing Linux community by providing multi-vendor Linux solutions and custom configurations of Linux-based systems and compatible products through its secure web site and its outbound sales executive work force.

Marketing Database Growth.  The Company has compiled a proprietary mailing list of approximately 7.7 million names of previous and potential customers.  The database is continually analyzed to target customer types and increase response and purchase rates.  The Company's response rate (calculated by dividing the number of orders generated by the number of catalogs distributed) for its proprietary mailing list during 2001 was higher than its response rate for prospects from purchased name lists.

 Increased Relationship-Based Selling.  The Company's sales executives are highly trained in relationship building with their customers and are continuously coached to offer higher levels of service.  The Company is committed to relationship-based selling.  Each sales executive is trained and empowered to handle all customer needs, including ongoing customer service and returns-related issues.  Additionally, sales executives bring other expertise to bear as needed from within the Company, including Novell-trained Certified Network Engineers (CNE), Microsoft Windows NT specialists (MCSE) and Apple and Cisco-certified technicians.

 Leverage of Internet Leadership Position.  The Company considers itself a leader in Internet e-commerce innovation and intends to continue enhancing its leadership position on the Internet. The Company was among the first to enter the Internet auction space with its ubid.com web site.  uBid completed a successful initial public offering ("IPO") in December 1998, and the Company subsequently distributed to its stockholders all of its remaining shares of uBid in June 1999.

 In March 1999, the Company launched the eCOST.com web site, which offers a broad selection of name-brand products, most of which are sold at discount prices. Customers are provided an itemized description of the fees associated with processing their orders, including a handling fee to cover warehousing, order processing, systems and overhead costs, and a shipping fee. With the introduction of eCOST.com, the Company believes that it was among the first full-spectrum Internet resellers in the personal computing marketplace, offering customers many different ways to purchase computer hardware, software, peripherals and consumer electronics.

 Marketing and Sales

The Company designs its various marketing programs to attract new customers and to stimulate additional purchases by previous customers.  The Company continuously attracts new customers by producing leads from existing and purchased databases, employing outbound direct marketing sales techniques to establish relationships with businesses, selectively mailing catalogs to prospective customers and through advertising on the Internet and in major computer user magazines, such as Computer Shopper, MacWorld, Mac Home, Mac Today, Mac Addict and others.  In addition, the Company obtains the names of prospective customers through selected mailing lists acquired from various sources, including manufacturers, suppliers and computer magazine publishers.   The Company sells its products to businesses, government and educational institutions, as well as individual consumers. 

During 2001, the Company acquired a software package designed to manage marketing campaigns using different media channels and to optimize campaigns through advanced data mining techniques.  The software combines these optimization techniques with multiple predictive statistical models to more effectively match offers to individuals and businesses to provide the most profitable results.  The Company expects to begin using the software in 2002.

Outbound Direct Marketing and Inbound Telemarketing.  The Company believes that much of its success has come from the quality and training of its sales executives.  Sales executives are responsible for assisting customers in purchasing decisions, answering product pricing and availability questions and processing product orders.  Sales executives also have the authority to vary prices within specified parameters in order to meet prices of competitors.  In addition, sales executives undergo an initial three-month training program focusing on use of the Company's systems, product offerings and networking solutions, sales techniques, phone etiquette and customer service.  Sales executives also attend frequent training sessions to stay up-to-date on new products.  Sales executives staff the Company's toll-free order lines 24 hours a day, seven days a week.  Customer service and technical support personnel assist inbound and outbound sales executives.

The Company's phone and computer systems are used for order entry, customer tracking and inventory management.  The computer system maintains a database listing previous customer purchases, which allows sales executives to make product suggestions that fit each customer's specific buying preferences and to offer the latest upgrades for products previously purchased from the Company.  During 2001, the Company shipped approximately 640,000 inbound and outbound orders with an average order size of $739.

Catalogs.  The Company published 13 editions of its PC Mall catalog during 2001 and distributed approximately 13.7 million catalogs.  PC Mall customers receive a catalog several times a year depending on purchasing history.  In addition, the Company includes a catalog with most orders shipped, as well as special promotional flyers and manufacturers' product brochures.

The Company published 14 editions of its MacMall catalog in 2001 and distributed approximately 29.7 million catalogs.  Active MacMall customers receive a catalog several times a year depending upon purchasing history, and the Company includes a catalog with most orders shipped, as well as special promotional flyers and manufacturers' product brochures.

The Company creates all of its catalogs in-house with its own design team and production artists using a computer-based desktop publishing system.  The in-house preparation of the catalogs streamlines the production process, provides greater flexibility and creativity in catalog production, and results in significant cost savings over outside production.

The Internet.  The Company operates five worldwide web sites on the Internet, including pcmall.com, macmall.com, ccit-inc.com, ecost.com and elinux.com.  The Company offers many advanced Internet features such as on-line ordering, access to inventory availability and a large product selection with detailed product information.  The Company also maintains and operates an extranet for its Corporate customers, called "Corporate Access Pages" or CAP sites.  The CAP sites provide custom catalogs and online purchasing channels for corporate customers and their employees.  Sales generated through the Internet have grown rapidly for the Company as it offers its customers a convenient means of shopping and ordering its products.  In addition, the Company's web sites also serve as another source of new customers.  In 2001, the Company shipped approximately 355,000 Internet orders, with an average order size of $608.

Vendor Supported Marketing.  The Company currently has a marketing team that sells advertising space in the Company's catalogs, advertising on the Company's Internet sites and vendor supported outbound marketing campaigns.  These advertising sales generate revenues that offset a substantial portion of the expense of publishing and distributing the catalogs.  The same marketing team also develops marketing campaigns to maximize product sales.

National Off-Page Advertising.  The Company continuously attracts new catalog customers and generates orders through large multi-page color advertisements in major publications such as  Computer Shopper, MacWorld, Mac Home, Mac Today, and Mac Addict.  During 2001, the Company purchased 184 pages of magazine advertising.

Corporate Sales.  The specific needs of corporate buyers are fulfilled through a combination of inbound and outbound full-time sales personnel as well as a direct sales force through its CCIT subsidiary.  The Company's sales staff builds long-term relationships with corporate customers through regular phone contact and personalized service.  Corporate customers may choose from several purchase or lease options for financing product purchases, and the Company extends credit terms to certain corporate customers.

Customer Return Policy.  The Company offers a 30-day return policy on a number of its products, subject to vendor terms and conditions.  Returns are monitored to identify trends in product acceptance and defects, to enhance customer satisfaction and to reduce overall returns.

Products and Merchandising

The Company offers hardware, software, peripherals, components and accessories for users of computer products, as well as electronics equipment.  The Company screens new products and selects products for inclusion in its catalogs and web sites based on features, quality, sales trends, price, margins, cooperative/market development funds and warranties.  The Company offers its customers other value-added services, such as the ability to purchase systems that have been specifically configured to meet the customer's requirements.  Through frequent mailings of its catalogs and e-mails to its customers, the Company is able to quickly introduce new products and replace slower selling products with new products.

The following table sets forth the Company's net sales by major product category as a percentage of total net sales for the periods presented.

(1)    Other consists primarily of other electronic products, income from labor charges and sales of extended warranties.

Computer Systems.  The Company offers a large selection of desktop, laptop, and server systems from leading manufacturers including Apple, IBM, Compaq, Hewlett-Packard, Sony, Toshiba and others.

Peripherals, Components and Accessories.  The Company offers a large selection of peripheral and component products from manufacturers such as Apple, Hewlett-Packard, Sony, Epson, 3Com, US Robotics, IBM, Iomega and Compaq.  Peripherals and components include printers, modems, monitors, data storage devices, add-on circuit boards, connectivity products and communications products.  The accessories offered by the Company include a broad range of computer-related items and supplies such as diskettes, cables and connectors.

Software.   The Company sells a wide variety of software packages in the business and personal productivity, utility, language, educational and entertainment categories, including word processing, spreadsheet and database software.  The Company offers a large number of software programs and licenses from established vendors, such as Microsoft, Corel, Adobe, Symantec, Quark, Lotus, Macromedia and Intuit, as well as numerous specialty products from new and emerging vendors.  The Company also markets upgrades from certain vendors, such as Symantec, Corel, Lotus and Microsoft, which the Company believes offer incremental revenue opportunities.

Purchasing and Inventory

The Company believes that effective purchasing is a key element of its business strategy to provide name brand computer products and related software and peripherals at competitive prices.  The Company believes that its high volume of sales results in increased purchasing power with its primary suppliers, resulting in volume discounts, favorable product return policies and vendor promotional allowances.  During 2001, the Company purchased products from over 548 vendors.  During 2001, 2000 and 1999, products manufactured by Apple represented approximately 27.0%, 24.9% and 25.4% of net sales, respectively.  The Company is also linked electronically with twelve distributors, which allows account executives to view distributor product availability on line and drop-ship product directly to their customers.  The benefits of this program, known as virtual warehouse, include reduced inventory carrying costs and improved inventory turns.

Most key vendors have agreements to provide market development funds to the Company, whereby such vendors fund portions of the cost of catalog publication and distribution based upon the amount of coverage given in the catalogs for their products.  Termination or interruption of the Company's relationships with its vendors, or modification of the terms of or discontinuance of the Company's agreements with its vendors, could adversely affect the Company's operating results.  The Company's success is dependent in part upon the ability of its vendors to develop and market products that meet the changing requirements of the marketplace.  As is customary in the industry, the Company has no long-term supply contracts with any of its vendors.  Substantially all of the Company's contracts with its vendors are terminable upon 30 days' notice or less.

The Company attempts to manage its inventory position to generate the highest levels of customer satisfaction possible while limiting inventory risk.  The Company believes that it has increased its ability to provide constrained products, which it believes is an important competitive advantage; and the Company invested in this strategy heavily during 2001.  The Company's average annual inventory turns were 15.7 times in 2001, 18.5 times in 2000, and 15.1 times in 1999.  Inventory levels may vary from period to period, due in part to increases or decreases in sales levels, the Company's practice of making large-volume purchases when it deems the terms of such purchases to be attractive and the addition of new manufacturers and products.  The Company has negotiated agreements with many of its vendors that contain price protection provisions intended to reduce the Company's risk of loss due to manufacturer price reductions.  The Company currently has such rights with respect to products that it purchases from Apple, IBM, Compaq, Hewlett-Packard and certain other vendors; however, such rights vary by product line, have other conditions and limitations and can be terminated or changed at any time.

 The market for computers, computer products, peripherals, software and electronics is characterized by rapid technological change and a growing diversity of products.  The Company believes that its success depends in large part on its ability to identify and obtain the right to market products that will meet the changing requirements of the marketplace and to obtain sufficient quantities of product to meet changing demands.  There can be no assurance that the Company will be able to identify and offer products necessary to remain competitive or avoid losses related to excess or obsolete inventory.

Distribution

The Company operates a full-service 325,000 square foot distribution center in Memphis, Tennessee.  The centralized distribution operations, strategically located near the Federal Express hub in Memphis, allow most orders of in-stock products accepted by 10:00 p.m. Eastern Standard Time to be shipped for delivery by 10:30 a.m. the following day via Federal Express.  Upon request, orders may also be shipped at a lower cost by United Parcel Ground Service.  The Company subleases 105,600 square feet of the Company's 325,000 square foot facility to uBid, and the sublease is coterminus with the building lease.  

When an order is entered into the system, an automated credit check or credit card verification is performed and, if approved, the order is electronically transmitted to the warehouse, where a packing slip is printed for order fulfillment.  Orders fulfilled by certain distributors linked electronically with the Company are transmitted directly to their warehouses via electronic data interchange (EDI).  All inventory items are bar coded and located in computer-designated areas which are easily identified on the packing slip.  All orders are checked with bar code scanners prior to final packing to ensure that each order is packed correctly.

The Company believes that its existing distribution facilities are currently adequate for its needs.

Management Information Systems

The Company has committed significant resources to the development of a sophisticated computer system that is used to manage all aspects of its business.  The Company's computer system supports telemarketing, marketing, purchasing, accounting, customer service, warehousing and distribution, and facilitates the preparation of daily operating control reports which provide concise and timely information regarding key aspects of its business.  The system allows the Company to, among other things, monitor sales trends, make informed purchasing decisions and provide product availability and order status information.  In addition to the main computer system, the Company has a system of networked personal computers, which facilitates data sharing.  The Company also applies its management information systems to the task of managing its inventory.  The Company currently operates its management information system using a Hewlett Packard HP3000 Enterprise System and has a back-up system available in the event of a system failure.  The Company believes that in order to remain competitive it will be necessary to upgrade its management information systems on a continuing basis.

The Company's success is in part dependent on the accuracy and proper utilization of its management information systems and its telephone system.  In addition to the costs associated with system upgrades, the transition to and implementation of new or upgraded hardware or software systems can result in system delays or failures.  Any interruption, corruption, degradation or failure of the Company's management information systems or telephone system could impact its ability to receive and process customer orders on a timely basis. 

Retail Computer Showroom

The Company currently operates one retail computer showroom, located in Santa Monica, California that is targeted at high-end consumers and small businesses located in the Southern California area.

Competition

The retail business for personal computers and related products is highly competitive.  The Company competes with other direct marketers, including CDW, Insight Enterprises, PC Connection and Zones.  In addition, the Company competes with computer retail stores and resellers, including superstores such as CompUSA and Best Buy, certain hardware and software vendors such as Gateway and Dell Computer that sell directly to end users, and other direct marketers of hardware, software and computer-related products.  Barriers to entry are relatively low in the direct marketing industry and the risk of new competitors entering the market is high.  The market in which the Company's retail showroom operates is also highly competitive.

The manner in which personal computers, software and related products are distributed and sold is changing, and new methods of sales and distribution have emerged.  Technology now allows software vendors the ability to sell and download programs directly to consumers, if so desired.  In addition, in recent years the industry has generated a number of new, cost-effective channels of distribution such as computer superstores, consumer electronic and office supply superstores, national direct marketers and mass merchants.  Computer resellers are consolidating operations and acquiring or merging with other resellers to achieve economies of scale and increased efficiency.  In addition, traditional retailers have entered and may increase their penetration into the direct mail channel.  The current industry reconfiguration and the trend toward consolidation could cause the industry to become even more competitive, further increase pricing pressures and make it more difficult for the Company to maintain its operating margins or to increase or maintain the same level of net sales or gross profit.

Although many of the Company's competitors have greater financial resources than the Company, the Company believes that its ability to offer the consumer a wide selection of products, at competitive prices, with prompt delivery and a high level of customer service, and its good relationships with its vendors and suppliers, allow it to compete effectively.  There can be no assurance that the Company can continue to compete effectively against existing or new competitors that may enter the market.  The Company believes that competition may increase in the future, which could require the Company to reduce prices, increase advertising expenditures or take other actions that may have an adverse effect on the Company's operating results.

Employees

As of December 31, 2001, the Company had 907 full-time employees, including 100 people at the Company's distribution center.  The Company emphasizes the recruiting and training of high-quality personnel and, to the extent practical, promotes people to positions of increased responsibility from within the Company.  Each employee initially receives training appropriate for his or her position, followed by varying levels of training in computer technology, communication and leadership.  New account executives participate in an intensive three-month training program, during which time they are introduced to the Company's philosophy, available resources, products and services, as well as basic and advanced sales skills.  Training for specific product lines and continuing education programs for all employees are conducted on an ongoing basis, supplemented by vendor-sponsored training programs for all sales executives and technical support personnel.

The Company's employees are generally compensated on a basis that rewards performance and the achievement of identified goals.  For example, sales executives receive compensation pursuant to a commission schedule that is based primarily upon aggregate sales, gross profit dollars and gross profit percentage generated from their sales efforts.  The Company believes that these incentives positively impact its performance and operating results.

The Company considers its employee relations to be good.  None of the Company's employees is represented by a labor union, and the Company has experienced no work stoppages.

Since its formation, the Company has experienced rapid growth.  As a result of this growth, the Company has added a significant number of employees and has been required to expend considerable effort in training these new employees.

Properties

The Company's facilities at December 31, 2001 were as follows:

 The Company leases all of its facilities, except for the Santa Monica retail showroom and the Lenexa property, both of which are owned by the Company.  The Company's distribution center serves the Company's Core Business, eCOST.com and eLinux operations, and includes shipping, receiving, warehousing and administrative space.  The Company subleases 105,600 square feet of its distribution center to uBid, and is coterminus with the original building lease.  The PC Mall Corporate Headquarters and Wisconsin Sales Office have leases remaining greater than two years.  All of the other leases have remaining terms less than two years.  The Company intends to sell its Lenexa, Kansas building.  The Distribution Center lease expires April 30, 2002, and the Company is negotiating a three-year extension covering 155,000 square feet.

Regulatory and Legal Matters

The direct response business as conducted by the Company is subject to the Merchandise Mail Order Rule and related regulations promulgated by the Federal Trade Commission and laws or regulations directly applicable to access to or commerce on the Internet.  While the Company believes it is currently in compliance with such laws and regulations and has implemented programs and systems to address its on-going compliance with such regulations, no assurances can be given that new laws or regulations will not be enacted or adopted which might adversely affect the Company's operations.  Due to the increasing popularity and use of the Internet, it is possible that a number of laws and regulations may be adopted with respect to the Internet.  The growth and development of the market for Internet commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on those companies conducting business over the Internet.  The adoption of any additional laws or regulations may decrease the growth of the Internet, which, in turn, could decrease the demand for and growth of the Company's Internet-based sales. 

Based upon current law, the Company, or various subsidiaries, currently collects and remits sales tax only on sales of its products to residents of the states in which the Company or its respective subsidiaries has a physical presence.  Various state taxing authorities have sought to impose on direct marketers with no physical presence in the taxing state the burden of collecting state sales and use taxes on the sale of products shipped to those states' residents, and it is possible that such a requirement could be imposed in the future.  In addition, a number of bills are pending before federal and state legislatures that would potentially expand the tax collection responsibility of Internet-related companies.  Until these legislative efforts have run their course and the courts have considered and resolved some cases involving these tax collection issues, there can be no assurance that future laws imposing taxes or other regulations on commerce over the Internet would not substantially impair the growth of e-commerce and as a result have a material adverse effect on the Company's business, results of operations and financial condition.

Executive Officers

The executive officers of the Company as of March 29, 2002 and their respective ages and positions are as follows:

 The following is a biographical summary of the experience of the executive officers:

Frank F. Khulusi is a co-founder of the Company and has served as Chairman of the Board and Chief Executive Officer of the Company since the Company's inception in 1987, served as President until July 1999, and resumed the office of President in March 2001.  Mr. Khulusi attended the University of Southern California.

 Theodore R. Sanders has served as Chief Financial Officer since September 1998 and was Vice President - Controller of the Company from May 1997 to September 1998.  Prior to joining the Company, Mr. Sanders spent ten years with the Pittston Company in various senior finance roles including Controller of its Burlington Air Express Global division and Director of Internal Audit.  Mr. Sanders started his career with Deloitte & Touche and rose to the position of Manager.  Mr. Sanders is a C.P.A. and received a B.S.B.A. degree from Nichols College.

Daniel J. DeVries has served as Executive Vice President - Marketing since February 1996 and was Senior Vice President from October 1994 to that time.  Mr. DeVries is responsible for all marketing, consumer sales, purchasing and the retail showroom.  Mr. DeVries' marketing responsibilities include vendor co-op marketing, merchandising, database marketing and Internet marketing.  From April 1993 to October 1994, he held various sales and marketing positions with the Company.  From July 1988 to April 1993, Mr. DeVries was a Regional Manager for Sun Computers, a computer retailer.

Kristin M. Rogers joined the Company in February 2000 and was appointed as Executive Vice President  - Enterprise Sales in June 2001.  Ms. Rogers is responsible for all enterprise sales, which includes all sales divisions selling to businesses, as well as the sales support functions including training, sales operations and recruiting.  Prior to joining PC Mall, Ms. Rogers held a variety of positions with Merisel, a computer wholesale distributor from 1980 through 1999, the most recent position being Senior Vice President and General Manager of the US region.  In addition, Ms. Rogers spent one year (1997) as Executive Vice President and General Manager of the US region for Micro Warehouse, a direct marketer based in Norwalk, Connecticut.  Ms. Rogers received a B.A. degree in Political Science at Bates College (Lewiston, Maine).

CERTAIN FACTORS AFFECTING FUTURE RESULTS

This Annual Report on Form 10-K, including the sections entitled "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other sections of this Report, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934.  Words such as "expect," "anticipate," "intend," "plan," "believe," "estimate," "may," "will," "should," "seeks" and variations of such words and similar expressions are intended to identify such forward-looking statements.  The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and the Company is including this statement for purposes of complying with these safe harbor provisions.  The Company has based these forward-looking statements on its current expectations and projections about future events.  These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions, and actual results could differ materially as a result of several factors, including those set forth under this section entitled "Certain Factors Affecting Future Results" and elsewhere herein.  The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

          It is not reasonably possible to itemize all of the many factors and specific events that could affect the Company and/or the computer products and electronics industry as a whole.  However, the discussion below discusses in more detail some of the foregoing factors, as well as additional factors which may affect the Company's actual results and cause such results to differ materially from those projected, forecasted, estimated, budgeted or otherwise expressed in any "forward-looking statements."

The addition of a new business focus could subject the Company to risks commonly associated with a new company.

The Company has historically operated as a direct marketer of computer products, and has only subsequently expanded its business model to include a focus on the business-to-business and Internet markets by developing its portfolio of web site properties.  The Company has only been active in this new line of business since 1995 when the pcmall.com web site was launched.  The Company established uBid.com, an on-line auction web site in 1997, the ecost.com web site in March 1999 and the eLinux.com web site in February 2000, and plans to continue its focus on the business-to-business and Internet market in the future.   The Company does not have a significant operating history to evaluate the new business focus, and past performance should be not relied upon to predict future performance.  In adding a new business focus, the Company expects that it will have to make changes to its business operations, sales and implementation practices, customer service and support operations and management focus.  The Company also faces new risks and challenges, including a lack of meaningful historical financial data upon which to plan future budgets, reliance on the growth and use of the Internet to generate commercial opportunities, competition from a wider range of sources, the need to develop strategic relationships and other risks.  The Company cannot guarantee that it will be able to successfully transition to this new business focus.

Dependence on Apple

 The Company is dependent on sales of Apple computers and software and peripheral products used with Apple computers.  Products manufactured by Apple represented 27.0%, 24.9% and 25.4% of the Company's net sales in 2001, 2000 and 1999, respectively.  A decline in sales of Apple computers or a decrease in supply of or demand for software and peripheral products for such computers could have a material adverse impact on the Company's business.  During parts of 2001, 2000 and 1999, certain Apple computers were in short supply.  A continuation of such shortages or future shortages could adversely affect the Company's operating results.  The Company is an authorized dealer for the full retail line of Apple products; however, the Company's dealer agreement with Apple is terminable upon 30 days' notice.  The Company's business would be adversely affected if all or a portion of the line of Apple products was no longer available to the Company.  The Company's success is, in part, dependent upon the ability of Apple to develop and market products that meet the changing requirements of the marketplace.  To the extent that these products are not available to the Company, the Company could encounter increased price and other competition, which would adversely affect the Company's business, financial condition and results of operations.

 Rapid Growth

 Since its formation, the Company has experienced rapid growth.  Net sales have grown from $8.7 million in 1990 to $718.1 million in 2001.  The Company's direct marketing sales grew from $117.9 million in 1994 to $472.9 million in 2001.  Internet sales on its pcmall.com, macmall.com, ccit-inc.com, ecost.com and elinux.com web sites grew from $15.6 million in 1997 to $215.8 million in 2001.  As a result of the Company's shift from the retail showroom to the Internet sales and catalog distribution channels, retail showroom sales have decreased from 28.0% of net sales in 1994 to 4.1% in 2001.  In response to the growth in catalog and business-to-business sales, the Company has added a significant number of employees and has been required to expend considerable efforts in training these new employees.  This growth has placed strains on the Company's management, resources and facilities.  As part of its growth strategy, the Company may in the future acquire companies in the same or complementary lines of business.  These acquisitions and any such acquisition and the ensuing integration of the operations of the acquired company with those of the Company place additional demands on the Company's management, operating and financial resources.  The Company's success will, in part, be dependent upon the ability of the Company to manage growth effectively.  In addition, the Company's business and growth could be affected by the spending patterns of existing or prospective customers, the cyclical nature of capital expenditures of businesses, continued competition and pricing pressures, changes in the rate of development of new technologies and new products by manufacturers, acceptance by end users and other trends in the general economy.  There can be no assurance that the Company's historical growth will continue in the future.

 Competition

 The retail business for personal computers, electronics and related products is highly competitive, based primarily on price, product availability, speed and accuracy of delivery, effectiveness of sales and marketing programs, credit availability, ability to tailor specific solutions to customer needs, quality and breadth of product lines and services, and availability of technical or product information.  The Company competes with other direct marketers, including CDW, Insight Enterprises, PC Connection and Zones.  In addition, the Company competes with computer retail stores and resellers including superstores such as CompUSA and Best Buy, certain hardware and software vendors such as Gateway and Dell Computer that sell directly to end users, and other direct marketers of hardware, software and computer-related products.  In the direct marketing and Internet retail industries, barriers to entry are relatively low and the risk of new competitors entering the market is high.  Certain existing competitors of the Company have substantially greater financial resources than the Company.  There can be no assurance that the Company can continue to compete effectively against existing competitors, consolidations of competitors or new competitors that may enter the market.  In addition, price is an important competitive factor in the personal computer hardware, software and peripherals market and the market for electronics products, and there can be no assurance that the Company will not be subject to increased price competition, which may have an adverse effect on the Company's business, financial condition and results of operations.  There can be no assurance that the Company will not lose market share or that it will not be forced in the future to reduce its prices in response to the actions of its competitors and thereby experience a further reduction in its gross margins. 

Narrow Gross Operating Margins

 As a result of intense price competition in the computer products and electronics industry, the Company's margins have historically been narrow and are expected to continue to be narrow.  These narrow gross margins magnify the impact on operating results of variations in operating costs and of adverse or unforeseen events.

Potential Quarterly Fluctuations 

The Company experiences variability in its net sales and net income on a quarterly basis as a result of many factors.  These factors include the frequency of catalog mailings, introduction or discontinuation of new catalogs, the introduction of new products or services by the Company and its competitors, changes in prices from suppliers, the loss or consolidation of a significant supplier or customer, general competitive conditions including pricing, the Company's ability to control costs, the timing of capital expenditures, the condition of the personal computer industry and electronics in general, seasonal shifts in demand for computer and electronics products, industry announcements and market acceptance of new products or upgrades, deferral of customer orders in anticipation of new product applications, product enhancements or operating systems, the relative mix of products sold during the period, inability of the Company to obtain adequate quantities of products carried in its catalogs, delays in the release by suppliers of new products and inventory adjustments and expenditures by the Company on new business ventures.  The Company's planned operating expenditures each quarter are based on sales forecasts for the quarter. If sales do not meet expectations in any given quarter, operating results for the quarter may be materially adversely affected. The Company's narrow margins may magnify the impact of these factors on the Company's operating results. The Company believes that period-to-period comparisons of its operating results should not be relied upon as an indication of future performance. In addition, the results of any quarterly period are not necessarily indicative of results to be expected for a full fiscal year.  In certain future quarters, the Company's operating results may be below the expectations of public market analysts or investors.  In such event, the market price of the Company's Common Stock could be materially adversely affected.

 Dependence on Vendors

 The Company purchases all of its products from vendors.  Certain key vendors, including IBM, Hewlett-Packard, Compaq and Apple, provide the Company with trade credit as well as substantial incentives in the form of discounts, credits and cooperative advertising.  Most key vendors have agreements to provide, or otherwise have consistently provided, market development funds to the Company, whereby such vendors finance portions of the cost of catalog publication and distribution based upon the amount of coverage given in the catalogs to their respective products.  Termination or interruption of the Company's relationships with one or more of these vendors, including Apple, or modification of the terms or discontinuance of the agreements and market-development fund programs with these vendors, could adversely affect the Company's operating income and cash flow.  The Company's success is dependent in part upon the ability of its vendors to develop and market products that meet the changing requirements of the marketplace.  Substantially all of the Company's contracts with its vendors are terminable upon 30 days' notice or less.  In most cases, the Company has no guaranteed price or delivery arrangements with its suppliers.  As a result, the Company has experienced and may in the future experience short-term inventory shortages on certain products.  In addition, manufacturers who currently sell their products through the Company may decide to sell their products directly or through resellers or channels other than the Company.  Further, the personal computer industry experiences significant product supply shortages and customer order backlogs from time to time due to the inability of certain manufacturers to supply certain products as needed.  There can be no assurance that suppliers will be able to maintain an adequate supply of products to fulfill the Company's customers' orders on a timely basis or that the Company will be able to obtain particular products or that a product line currently offered by suppliers will continue to be available.  Similarly, there can be no assurance that the Company will be able to obtain authorizations from new vendors which may introduce new products that create market demand.

 Business Interruption; Facilities

The Company believes that its success to date has been, and future results of operations will be, dependent in large part upon its ability to provide prompt and efficient service to its customers.  The Company has taken several precautionary steps to help minimize the impact of disasters that might cause business interruptions.  There can be no assurance that a disruption will not occur; however, any disruption of the Company's day-to-day operations including those caused by natural disasters, acts or threats of war, terrorism or other conflict could have a material adverse effect upon the Company, and any interruption, corruption, degradation or failure of the Company's management information systems, distribution center, web site or telephone system could impair its ability to receive and process customer orders and ship products on a timely basis.  The Company does not have a redundant telephone system and does not have a backup or redundant call center.

 Changing Methods of Distribution

 The manner in which computer and electronics products are distributed and sold is changing, and new methods of sale and distribution, such as the Internet, have emerged.  Computer hardware and software vendors have sold, and may intensify their efforts to sell, their products directly to end users.  From time to time, certain vendors have instituted programs for the direct sale of large quantities of hardware and software to certain major corporate accounts.   These types of programs may continue to be developed and used by various vendors.  Vendors also may attempt to increase the volume of software products distributed electronically to end users' personal computers.  Any of these competitive programs, if successful, could have a material adverse effect on the Company's business, financial condition and results of operations.

 Dependence on Independent Shipping Companies

The Company relies almost entirely on arrangements with independent shipping companies, especially Federal Express and UPS, for the delivery of its products.  The disruption or termination of the Company's arrangements with Federal Express, UPS or other shipping companies, or the failure or inability of one or more shipping companies to deliver products from the Company to its customers, or from suppliers to the Company, could have a material adverse effect on the Company's business, financial condition and results of operations.

 Postage, Shipping and Paper Costs

 Postage and shipping are significant expenses in the operation of the Company's business.  The Company ships its products to customers by overnight delivery and ground delivery services and generally mails its catalogs through the U.S. Postal Service.  Any increases in postal or shipping rates in the future could have a material adverse effect on the business, financial condition and results of operations.  The cost of paper is also a significant expense of the Company in printing its catalogs.  The cost of paper has fluctuated significantly over the last several years.  While the Company believes that it may be able to recoup a portion of any increased postage and paper costs through increases in vendor advertising rates, no assurance can be given that such advertising rate increases can be sustained or that they will offset all of the increased costs.

 Risk of Technological Changes and Inventory Obsolescence

 The market for personal computers, peripherals, software and electronics products is characterized by rapid technological change and a growing diversity of products.  The Company's success depends in large part on its ability to identify and obtain the right to market products that will meet the changing requirements of the marketplace.  There can be no assurance that the Company will be able to identify and offer products necessary to remain competitive or avoid losses related to excess and obsolete inventory.  The Company currently has limited return rights with respect to products which it purchases from Apple, IBM, Compaq, Hewlett-Packard and certain other vendors; however, such rights vary by product line, have other conditions and limitations and can be terminated or changed at any time.

 State Sales Tax Collection

 Based upon current law, the Company, or various subsidiaries, currently collects and remits sales tax only on sales of its products to residents of the states in which the Company or its respective subsidiaries has a physical presence.  The U.S. Supreme Court has ruled that the various states, absent Congressional legislation, may not impose tax collection obligations on an out-of-state mail order company whose only contacts with the taxing state are distribution of catalogs and other advertisement materials through the mail, and whose subsequent delivery of purchased goods is by mail or interstate common carriers.   Certain court cases have upheld tax collection obligations on  companies, including mail order companies, whose contacts with  the taxing state was quite limited (e.g., visiting the state several times a year to aid customers or  to inspect showrooms stocking their goods).  The Company believes its operations are different from the operations of the companies in  these cases and thus do not give rise to tax collection obligations.

However, the Company cannot predict the level of contact with any state which would give rise to future or past tax collection obligations.   The tax treatment of the Internet and e-commerce is currently  in a state of flux.   Various state taxing authorities have sought to impose on direct marketers with no physical presence in the taxing state the burden of collecting state sales and use taxes on the sale of products shipped to those states' residents, and it is possible that such a requirement could be imposed in the future.  In addition, a number of bills are pending before federal and state legislatures that would potentially expand the tax collection responsibility of Internet-related companies.  It is possible that federal legislation could be enacted that would permit states to impose sales tax collection obligations on out-of-state mail order companies and if enacted, the imposition of a tax collection obligation on the Company may result in additional administrative expenses to the Company and price increases to its customers that could adversely affect the Company's business, financial condition and results of operations.  States also potentially may expand tax collection responsibilities of out-of-state companies through legislation.  Until these legislative efforts have run their course and the courts have considered and resolved some cases involving tax  collection issues, there can be no assurance that future laws imposing taxes or other regulations on commerce over the Internet would not substantially impair the growth of e-commerce and as a result have a material adverse effect on the Company's business, results of operations and financial condition.

Industry Evolution and Price Reductions

 The personal computer industry is undergoing significant change.  In addition, in recent years a number of new, cost-effective channels of distribution have developed in the industry, such as the Internet, computer superstores, consumer electronic and office supply superstores, national direct marketers and mass merchants.  Computer resellers are consolidating operations and acquiring or merging with other resellers and/or direct marketers to achieve economies of scale and increased efficiency.  The current industry reconfiguration and the trend towards consolidation could cause the industry to become even more competitive, further increase pricing pressures and make it more difficult for the Company to maintain its operating margins or to increase or maintain the same level of net sales or gross profit.  Declining prices, resulting in part from technological changes, may require the Company to sell a greater number of products to achieve the same level of net sales and gross profit.  Such a trend could make it more difficult for the Company to continue to increase its net sales and earnings growth.  In addition, the personal computer market has experienced rapid growth.  If the growth rate of the personal computer market were to decrease, the Company's business, financial condition and operating results could be adversely affected.

 Management Information Systems

The Company's success is in part dependent on the accuracy and proper utilization of its management information systems, including its telephone system.  The Company's ability to analyze data derived from its management information systems to increase product promotions, manage inventory and accounts receivable collections, to purchase, sell and ship products efficiently and on a timely basis and to maintain cost-efficient operations, are each dependent upon the quality and utilization of the information generated by its management information systems.  During 1995, the Company significantly upgraded its management information system hardware and software.  The Company believes that to remain competitive it will be necessary to upgrade its management information systems on a continuing basis.  In addition to the costs associated with such upgrades, the transition to and implementation of new or upgraded hardware or software systems can result in system delays or failures which could impair the Company's ability to receive and process orders and ship products in a timely manner.  The Company does not currently have a redundant or back-up telephone system, and any interruption in telephone service including those caused by natural disasters could have a material adverse effect on the Company's business, financial condition and results of operations.

 Dependence on Senior Management

The Company's future performance will depend to a significant extent upon the efforts and abilities of certain key management personnel, including Frank Khulusi, Chairman of the Board, President and Chief Executive Officer.  The Company has a $3 million key man life insurance policy on Mr. Khulusi.  The loss of service of one or more of the Company's key management personnel could have an adverse effect on the Company's business.  The Company's success and plans for future growth will also depend in part on management's continuing ability to hire, train and retain skilled personnel in all areas of its business.

 Management of Growth

The rapid growth of the Company's business has required the Company to make significant additions in personnel and has significantly increased the Company's working capital requirements.  Although the Company has experienced significant sales growth, such growth should not be considered indicative of future sales growth.  Such growth has resulted in new and increased responsibilities for management personnel and has placed and continues to place significant strain upon the Company's management, operating and financial systems, and other resources.  There can be no assurance that this strain will not have a material adverse effect on the Company's business, financial condition, and results of operations, nor can there be any assurance that the Company will be able to attract or retain sufficient personnel to continue the expansion of its operations.  Also crucial to the Company's success in managing its growth will be its ability to achieve additional economies of scale.  There can be no assurance that the Company will be able to achieve such economies of scale, and the failure to do so could have a material adverse effect upon the Company's business, financial condition and results of operations.

Acquisitions

As part of its growth strategy, the Company acquired two marketers of computers and computer-related products in 1997 and may continue to pursue acquisitions of companies that would either complement or expand its existing business.  No assurance can be given that the benefits expected from the integration of acquired companies will be realized.  In addition, acquisitions involve a number of risks and difficulties, including expansion into new geographic markets and business areas, the diversion of management's attention to the assimilation of the operations and personnel of the acquired company, the integration of the acquired Company's management information systems with those of the Company, potential short-term adverse effects on the Company's operating results and the amortization of acquired intangible assets.  Any delays or unexpected costs incurred in connection with the integration of acquired operations could have a material adverse effect on the Company's business, financial condition and results of operations.  There can be no assurance that the Company will be able to implement or sustain its acquisition strategy or that its strategy will ultimately prove profitable for the Company.

Possible Volatility of Stock Price

The Company believes certain factors, such as sales of the Company's Common Stock into the market by existing stockholders, fluctuations in quarterly operating results and market conditions generally, including market conditions affecting stocks of computer hardware and software manufacturers and resellers and companies in the Internet and electronic commerce industries in particular, and other technology or related stocks, could cause the market price of the Company's Common Stock to fluctuate substantially.  The stock market in general, and the stocks of computer and software resellers, and companies in the Internet and electronic commerce industries in particular, and other technology or related stocks, have in the past experienced extreme price and volume fluctuations which have been unrelated to corporate operating performance.  Such market volatility may adversely affect the market price of the Company's Common Stock. 

 The Company's Common Stock is presently authorized for quotation on the Nasdaq National Market. Accordingly, the Company is subject to all requirements of its listing agreement with Nasdaq.  Among the events that could cause the Company's Common Stock to have its status as a National Market security terminated include the failure to maintain a minimum closing bid price for the Common Stock of $1.00 per share, failure to timely hold annual meetings of stockholders and failure to comply with other corporate governance requirements.  Any delisting of the Company's Common Stock from the Nasdaq National Market could have a material adverse effect on the liquidity and market price of the Company's Common Stock.

Privacy Concerns

 The Company mails catalogs and sends electronic messages to names in its proprietary customer database and to potential customers whose names the Company obtains from rented or exchanged mailing lists.  Worldwide public concern regarding personal privacy has subjected the rental and use of customer mailing lists and other customer information to increased scrutiny.  Any domestic or foreign legislation enacted limiting or prohibiting these practices could negatively affect the Company's business, financial condition and results of operations.

Dependence on Continued Use of Internet

The Company's level of sales generated from its worldwide web sites has increased in part because of the growing use and acceptance of the Internet by end-users.  The growth in Internet usage is a relatively recent development, and no assurance can be made that the Internet will continue to develop or that a sufficiently broad base of consumers will adopt and continue to use the Internet and other online services as a medium of commerce.  Sales of computer products over the Internet have increased as a percentage of the Company's net sales in recent years.  Continued growth of the Company's Internet sales is dependent on potential customers using the Internet in addition to traditional means of commerce to purchase products.  The Company cannot accurately predict the rate at which they will do so.  If the use by consumers of the Internet to purchase products does not continue, the Company's business, financial condition and results of operations could be adversely affected.

The Company's success in maintaining and growing its Internet business will depend in large part upon the development of an infrastructure for providing Internet access and services.  If the number of Internet users or their use of Internet resources continues to grow rapidly, such growth may overwhelm the existing Internet infrastructure.  The Company's ability to increase the speed with which it provides services to customers and to increase the scope of such services ultimately is limited by and reliant upon the speed and reliability of the networks operated by third parties.  The Company cannot assure that networks and infrastructure providing sufficient capacity and reliability will continue to be developed.

ITEM 2.  PROPERTIES

See "Properties" in Item 1 above.

 ITEM 3. LEGAL PROCEEDINGS

The Company is subject to various legal proceedings or claims which arise in the ordinary course of business.  In the opinion of management, the amount of ultimate liability with respect to those actions will not materially affect the Company's business, financial condition or results of operations.

 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 No matter was submitted to a vote of security holders during the fourth quarter of 2001.

PART I

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

 The Common Stock of the Company has been traded on the Nasdaq National Market since the Company's initial public offering on April 4, 1995 (the "IPO").  Prior to the IPO, there was no public market for the Company's Common Stock.  The following table sets forth the range of high and low closing sales prices for the Company's Common Stock for the periods indicated, as reported by the Nasdaq National Market.

		Price Range of Common Stock