A.D.A.M., Inc. Announces Financial Results for Fourth Quarter and Year-End 2008.Total license revenues increase 8% for the year; Content license revenues increase 19%; Full-year Non-GAAP operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $5,711,000 hits 20% of revenues ATLANTA -- A.D.A.M., Inc. (Nasdaq: ADAM Adam, the first man, in the Bible Adam (ăd`əm), [Heb.,=man], in the Bible, the first man. In the Book of Genesis, God creates humankind in his image as a species of male and female, giving them dominion over other life. ), a leading provider of health information and benefit technology solutions, today announced financial results for its fourth quarter and year ended December 31, 2008. "We delivered profitable operating results even in a challenging economic environment while investing and repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. the company for long-term growth," said Kevin Noland, President and Chief Executive Officer of A.D.A.M. "We are very pleased with 19% growth in our health content licensing business which is a result of people and product investments we made previously. During 2008, we continued to invest in sales, marketing and customer service functions for Benergy as we look to grow our important broker channel and capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the opportunities we see with larger employers. In addition, we replaced several internal product offerings with a broader suite of products that allows us to provide a more comprehensive product set for our broker and employer clients through new outsourced relationships. While this was underway, A.D.A.M. continued to generate positive operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and ended the year in a solid financial position. Based on the strength of our business model, we secured new long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. financing in the fourth quarter and with a lower cash interest rate." Fourth Quarter Highlights License revenues for the fourth quarter ended December 31, 2008, which include both health content and Benergy products, were $6,367,000 as compared to $6,182,000 for the same period of 2007, an increase of 3%, primarily as a result of growth in health content licensing. Total revenues for the fourth quarter ended December 31, 2008 were $7,406,000 as compared to $7,633,000 for the same period of 2007, a decrease of 3%. Fourth quarter revenues were primarily impacted as a result of a professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. contract relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's education business in excess of $350,000 that occurred in the prior year period. Net loss for the fourth quarter ended December 31, 2008 was $2,007,000 or $0.19 per share on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis as compared to a profit of $1,824,000 or $0.17 per share on a fully diluted basis for the same period of 2007. The fourth quarter of 2008 included charges of $3,006,000 relating to facility consolidation and loan refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. expenses, while 2007 included an income tax benefit of $1,510,000, related to the Company's utilization of its net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryforward. Adjusted non-GAAP operating income for the fourth quarter ended December 31, 2008 was $1,642,000, or 22% of revenues, compared to $1,624,000, or 21%, for the same period in 2007. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become was $2,023,000, or 27% of revenues, for the fourth quarter ended December 31, 2008 as compared to $2,215,000, or 29% for the same period of 2007. During the fourth quarter, the Company expanded its credit facility to include a term loan of $10,000,000 and a revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility of $3,000,000. In conjunction with the new facility, the Company terminated its agreement with its previous lender and recorded a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $813,000 related to the write-off of unamortized financing fees and the issuance of warrants related to the termination of the prior agreement. Also completed in the fourth quarter was the Company's facility consolidation program. This program included an outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. arrangement with a third party to resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. their financial service offerings, such as Flexible Spending Account flexible spending account, n an employee reimbursement account primarily funded with employee-designated salary reductions. Funds are reimbursed to the employee for health care (medical and/or dental), dependent care, and/or legal expenses and are administration, which will provide a broader and more comprehensive service offering to our customers. This allowed the Company to close two office facilities and reduce personnel related to several product offerings and consolidate support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services into the Atlanta location. As a result, the Company recorded $2,193,000 in costs related to the facility consolidation program. Full Year 2008 Financial Results For the year ended December 31, 2008, revenues were $28,857,000, up 4% from $27,878,000 from the same period last year. License revenues for the year were $25,395,000 an increase of 8% in total and 19% related to health content licensing. This increase in license revenues was driven by expansion of the Company's licensing customer base under multiple year contracts that generate recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenues for the Company. Product revenues for the year ended December 31, 2008, which are comprised of the Company's products for the education market, were $1,182,000 as compared to $1,642,000 for the same period last year, a decline of 28%. The decrease in product revenues is a result of the market shift away from CD-ROM-based educational products and towards Web-based e-learning platforms. To meet the growing need for online education products, the Company expects to release a Web-based version of its core educational product later this year. Revenues from professional services for the year ended December 31, 2008 were $2,280,000 as compared to $2,673,000 for the same period last year, a decrease of 15%. The decrease in professional services revenue was a result of a large contract completed in 2007. Adjusted non-GAAP operating income for the year ended December 31, 2008, was $5,711,000 or 20% of revenues compared to $6,046,000 or 22% of revenues in the prior year. During the year, the Company's expenditures in sales and marketing increased by 49% as the Company completed expansion of its sales and marketing functions to better serve its customers and address new business opportunities. Net income for the year ended December 31, 2008 was $38,000, and included $3,006,000 of facility consolidation and refinance charges. Non-GAAP net income for the year was $4,700,000 or 16% of revenues. During 2008, the Company generated $5,962,000 in cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and the Company's cash on hand was $1,377,000 at December 31, 2008. During the year, the Company reduced its debt under long-term loan obligations by $10,000,000 and increased its unused line of credit by $1,000,000. "The operational steps we took in 2008 better positions us to support our brokers, increase our sales and build a stronger brand presence with larger employers while reducing our overall operating expenditures going forward. While there are certain unknowns relating to the economy in the next several quarters, we believe we have excellent prospects long-term with healthy profit margins and strong cash flow. A.D.A.M. is uniquely positioned to address the needs of employers and healthcare organizations as well as consumers who continue to bear more of the cost and management of their benefits and healthcare," Mr. Noland concluded. Use of Non-GAAP Measures To supplement our consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , we present investors with certain non-GAAP operational measures, including adjusted operating income, adjusted net income, adjusted earnings per share and adjusted EBITDA, all of which primarily exclude the effects of amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , stock-based compensation, acquisition related expenses, facility consolidation charges, debt refinancing Refinancing An extension and/or increase in amount of existing debt. costs, and the income tax benefits from valuation of future tax loss carryforwards tax loss carryforward See carryforward. . Our management considers the total return of an investment we have made in an acquisition (i.e. operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. generated as compared to the purchase price paid) without taking into consideration any allocations made for accounting purposes. Thus, because the purchase price for an acquisition does not necessarily reflect the accounting value assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to intangible assets, including customer lists and goodwill, when analyzing the return provided by the acquisition in subsequent periods, our management, for planning and evaluation purposes, excludes the GAAP impact of acquired intangible assets and other acquisition related expenses to our financial results. We believe that such an approach is useful in understanding the long-term return provided by an acquisition and that our investors benefit from a supplemental non-GAAP financial measure that adjusts for the accounting expense associated with acquired intangible assets. Similarly, we believe that excluding stock-based compensation expense provides supplemental information and an alternative presentation useful to investors' understanding of our operating results and trends, especially when comparing those results on a consistent basis to results for previous periods and anticipated results for future periods. We also believe that, in excluding stock-based compensation, amortization of intangible assets, facility consolidation and the other listed items in the GAAP to Non-GAAP reconciliation schedules, our non-GAAP financial measures provide investors with transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. into the information and basis used by management and our board of directors to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods, to compare our results of operations on a more consistent basis against that of other companies in making financial and operating decisions, and to establish targets for management incentive compensation. We believe that the presentation of non-GAAP operational measures of adjusted operating income, adjusted net income, adjusted earnings per share and adjusted EBITDA provide important supplemental information to management and investors regarding financial and business trends relating to the company's financial condition and results of operations. These non-GAAP operational measures have historically been used as key performance metrics Performance metrics are measures of an organizations activities and performance. Performance metrics should support a range of stakeholder needs from customers, shareholders to employees [1]. by our senior management as they evaluate the performance of the consolidated financial results. These non-GAAP operational measures are reviewed individually as well as in total in measuring our performance against internal and external expectations for the period. The expectations for such key non-GAAP operational measures are the basis for any financial guidance provided by management for future periods. Management believes that the use of each of these non-GAAP financial measures provides enhanced consistency and comparability with our past financial reports. We provide this information to investors to enable them to perform additional analyses of past, present and future operating performance. We believe that each of these operational measures is useful to investors in their assessment of our operating performance and the valuation of our company. Adjusted operating income, adjusted net income, adjusted earnings per share and adjusted EBITDA are significant measures used by management for: * Reporting our financial results and forecasts to our board of directors; * Evaluating the operating performance of our company; * Managing and comparing performance internally and externally against our peers; and * Establishing internal operating targets. These non-GAAP operational measures, including adjusted operating income, adjusted net income, adjusted earnings per share and adjusted EBITDA are used by us as broad measures of financial performance that encompass our operating performance, cash, capital structure, investment management, and income tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. effectiveness. These operational measures are not calculated in accordance with GAAP and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. These operational measures have limitations in that they do not reflect all of the costs or reductions to revenues associated with the operations of our business as determined in accordance with GAAP. In addition, these operational measures may not be comparable to non-GAAP financial measures reported by other companies. As a result, one should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis, prominently disclosing GAAP results and providing reconciliations from GAAP results to operational measures. The limitations in relying on our non-GAAP financial measures include the fact that the adjusted operating income, adjusted net income, adjusted earnings per share and adjusted EBITDA operational measures do not include the impact of stock-based compensation expense or the effects of amortization of intangible assets, acquisition related expenses and other charges. We expect to continue to incur expenses similar to the non-GAAP adjustments described above, and the exclusion or inclusion of these items from our non-GAAP financial measures should not be construed as an inference (logic) inference - The logical process by which new facts are derived from known facts by the application of inference rules. See also symbolic inference, type inference. that these costs are unusual or infrequent in·fre·quent adj. 1. Not occurring regularly; occasional or rare: an infrequent guest. 2. . Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Act of 1934, as amended. The forward-looking statements are based on A.D.A.M.'s current intent, belief and expectations. These statements, especially revenue, net income, cash flow, are not guarantees of future performance and involve a number of risks and uncertainties that can be difficult to predict and that could cause actual results, performance or developments to differ materially. Factors that could affect the company's actual results, performance or developments include general economic conditions, development of the Internet as a source of health information, pricing actions taken by competitors, demand for the company's health information, regulatory changes in laws and regulations that impact how the company conducts its business and the other factors described in A.D.A.M.'s filings with the SEC. A.D.A.M. undertakes no obligation or duty to update or revise any of its forward-looking statements whether as a result of new information, future events, circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or otherwise. Conference Call and Earnings Release Information A.D.A.M. will conduct its fourth quarter and year-end 2008 earnings conference call on March 17, 2009 at 10:00AM Eastern Time (ET). To participate in the call, please dial 866-624-3372 approximately five minutes prior to the start time. International callers may dial 706-758-3874. A digital replay will be available at 12:00 PM ET the same day by dialing 800-633-8284 or 402-977-9140 with reservation code 21. The telephone replay will be available until March 31, 2009. To listen to a replay of the call online, visit www.adam.com. About A.D.A.M., Inc. A.D.A.M. (Nasdaq: ADAM) is a leading provider of health information and benefits management solutions to healthcare organizations, employers, consumers, and educational institutions. With an industry-leading employee and benefits management platform and one of the largest consumer health information libraries in the world, A.D.A.M. empowers consumers to get smart about their health and wellness, while reducing the costs of healthcare and benefits administration. For more information, visit www.adam.com or call 1-800-755-ADAM. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered as a substitute for comparable GAAP measures and should be read only in conjunction with our financial statements prepared in accordance with GAAP and our press release, which explains our use of non-GAAP measures. (2) Severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when for former employees of OnlineBenefits. (3) Consolidation of facilities and support services into Atlanta. (4) Costs to refinance long-term debt. (5) Stock-based compensation related to non-cash charges for stock options. (6) Amortization of customer list and purchased software acquired with Online Benefits. (7) Income tax benefit adjustment for expected future use of NOL NOL - Never Offline carryforwards. [TABLE OMITTED] (1) This presentation includes non-GAAP measures. Our non-GAAP measures are not meant to be considered as a substitute for comparable GAAP measures and should be read only in conjunction with our financial statements prepared in accordance with GAAP and our press release, which explains our use of non-GAAP measures. (2) Severance for former employees of OnlineBenefits. (3) Consolidation of facilities and support services into Atlanta. (4) Costs to refinance long-term debt. (5) Stock-based compensation related to non-cash charges for stock options. (6) Amortization of customer list and purchased software acquired with Online Benefits. (7) Income tax benefit adjustment for expected future use of NOL carryforwards. (8) Recognition of loss from sale of interest bearing short term investments. [TABLE OMITTED] [TABLE OMITTED] |
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