ATG Announces Second-Quarter 2001 Financial Results In Line With Revised Guidance.Business/Technology Editors CAMBRIDGE, Mass.--(BUSINESS WIRE)--July 26, 2001 ATG ATG antithymocyte globulin. lymphocyte immune globulin (antithymocyte globulin equine, ATG, ATG equine, LIG) Atgam Pharmacologic class: Immunoglobulin Therapeutic class: Immunosuppressant (Art Technology Group, Inc.; Nasdaq: ARTG ARTG Australian Register of Therapeutic Goods ) today announced financial results for the second quarter ended June 30, 2001 in line with the company's revised guidance.
SECOND-QUARTER PERFORMANCE
(In millions,
except per
share data
and Q2, Q2, % Q1, %
percentages) 2001 2000 Growth 2001 Growth
Total Revenues $ 35.1 $ 32.6 8% $ 42.8 (18)%
Product license $ 19.1 $ 23.8 (20)% $ 25.4 (25)%
% of Total Revenue 54% 73% 59%
Services $ 16.0 $ 8.8 82% $ 17.4 (8)%
% of Total Revenue 46% 27% 41%
Net income (loss)
excluding
restructurings $ (11.8)* $ 2.9 $ (12.9)
Net income (loss)
per share
excluding
restructurings $ (0.17)* $ 0.04 $ (0.19)
Net loss including
restructurings $ (41.9) N/A N/A
Net loss per
share including
restructurings $ (0.61) N/A N/A
* excludes one-time restructuring charge of $44.2 million
"ATG's financial results for the second quarter are indicative of the prolonged slowdown in IT spending," said Jeet Singh, co-founder and chief executive officer, ATG. "While some corporate IT budgets reopened during the second quarter, many were at significantly reduced levels. Consequently, we took aggressive action to streamline ATG from an organizational perspective for the current market while also maintaining a focus on future business opportunities. As previously announced, these actions included the realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of the company's worldwide sales and services structure, workforce reductions, and substantial cost-cutting initiatives." As previously announced, ATG is recording a second-quarter charge of $44.2 million associated with both the restructuring of the company announced in April and reorganization of the company announced in June. ATG anticipates that these initiatives will result in an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cost savings of approximately $80 million. As of June 30, 2001, ATG had cash, cash equivalents, and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has of approximately $95 million. "Recently, ATG announced several significant technological and strategic initiatives that are intended to propel the company further into the software application space and greatly enhance its market opportunities," continued Singh. "Among them is our commitment to support BEA BEA - Basic programming Environment for interactive-graphical Applications, from Siemens-Nixdorf. , HP and iPlanet application servers in addition to our ATG Dynamo A family of e-commerce and CRM applications from Art Technology Group, Inc., Cambridge, MA (www.atg.com). Part of ATG's core marketing Adaptive Scenario Engine, Dynamo comprises a comprehensive set of Java-based products that enable an organization to deploy a fully-integrated customer Application Server. While this decision was ultimately made to extend the reach of our applications globally, our dedication to meeting the needs of our customers was a driving factor in supporting other application servers. "In addition, we announced last week that we greatly enhanced our product offerings with the introduction of the ATG Dynamo(R) e-Business Platform version 5.5, as well as the ATG Enterprise Portal See corporate portal. Suite and the ATG Dynamo Gear Network. These new product introductions are further evidence of our ability to meet the needs of our blue-chip customers while also enhancing our competitive position," Singh stated. "In particular, our new portal product offers enterprise-class functionality, extensibility, multi-channel interaction, and personalization features that we believe lead the market today." OTHER RECENT HIGHLIGHTS New Customer Wins ATG gained 37 new customers during the second quarter. As of June 30, 2001, the company's customer list increased to 770 companies worldwide. Significant customer wins during the second quarter included Accenture France, DraftWorldwide, FTD FTD Financial Times Deutschland (German sister newspaper of the Financial Times) FTD Frontotemporal Dementia FTD Fitted FTD Federal Tax Deposit FTD Flight Training Device FTD Fastest Time of the Day Association, HDPNET Spa, Hyatt Corporation, Louis Vuitton The Louis Vuitton Company (more commonly known simply as Louis Vuitton) is a luxury French fashion and leather goods brand and company, headquartered in Paris, France. It is a division of the French holding company, LVMH Louis Vuitton Moët Hennessy S.A. , and Nexgen Technology. Repeat Business Customer retention remained high in the second quarter and ATG expanded relationships with existing customers such as 3M, A&E Television Networks, Alcatel, American Greetings American Greetings Corporation, Inc. NYSE: AM is the world's largest publicly-traded greeting card company. It is based in Cleveland, Ohio and sells paper greeting cards, electronic greeting cards, party products (such as wrapping papers and decorations), and electronic , Blue Cross and Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. , Cabelas.com, CGNU CGNU Crazy Go Nuts University (Homestar Runner) CGNU Commercial Union, General Accident and Norwich Union (insurance group, renamed Aviva) , Den Norske Bank Den norske Bank or DnB was a Norwegian bank that existed between 1990 and 2003 when it merged with Gjensidige NOR to form the present DnB NOR. The bank's headquarters were in Bergen, Norway. , Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/[1]) (ISIN: DE0005140008, NYSE: DB) (English: German Bank , Direkt Analge Bank, Dresdner Bank Dresdner Bank AG is one of Germany's largest banking corporations and is based in Frankfurt. History 19th century Dresdner Bank was established on 12 November 1872 through the conversion of financial institution Michael Kaskel. , EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. , Harvard Business School Harvard Business School, officially named the Harvard Business School: George F. Baker Foundation, and also known as HBS, is one of the graduate schools of Harvard University. , Hewlett Packard, Hilton Hotels
abbr. 1. National Basketball Association 2. National Boxing Association NBA (US) n abbr (= National Basketball Association) → Basketball-Dachverband (= Media Ventures, Pfizer, Sharper Image, Siemens, and Verisign (formerly Network Solutions). Partner and Channel Sales Partner-enabled and channel sales accounted for 82% of the company's revenues during the second quarter, with significant business coming from major solution providers such as Accenture, EDS (Electronic Data Systems, Plano, TX, www.eds.com) Founded in 1962 by H. Ross Perot (independent candidate for the President of the U.S. in 1992), EDS is the largest outsourcing and data processing services organization in the country. , IBM Global Services IBM Global Services is the world's largest business and technology services provider. It is the fastest growing part of IBM, with over 190,000 professionals serving customers in more than 160 countries. , and PricewaterhouseCoopers. The company signed 22 new partners during the second quarter to bring its total partner count to more than 270 companies worldwide.
Six-month Financial Performance
(In millions, except
per share data and Six months Six months % Growth
percentages) ended ended
June 30, 2001 June 30, 2000
Total Revenues $ 77.9 $ 54.2 44%
Product license $ 44.6 $ 40.1 11%
% of Total Revenue 57% 74%
Services $ 33.3 $ 14.1 136%
% of Total Revenue 43% 26%
Net income (loss)
excluding
restructurings $ (24.7)* $ 2.3
Net income (loss)
per share
excluding
restructurings $ (0.36)* $ 0.03
Net income (loss)
including
restructurings $ (54.8) N/A
Net income (loss)
per share including
restructurings $ (0.80) N/A
* excludes one-time restructuring charge of $44.2 million
BUSINESS OUTLOOK "We remain committed to returning ATG to profitability as quickly as possible," Singh said. "We will continue to maintain tight controls on our cost structure and remain in close contact with our more than 770 customers to best match our resources with market demand. We believe that our ability to maximize our relationships with this large and diverse customer network provides ATG with a solid foundation for growth in the quarters ahead. "At the same time, we will continue to work with our top partners to generate interest among prospective customers for ATG's recently expanded Dynamo Product Suite. We also plan to maintain our level of investment in research and development as we move forward with our efforts to port our applications to third-party application servers. We believe that these initiatives will enable ATG to weather the current downturn and successfully emerge from it when our target markets rebound and IT budgets are reestablished." "ATG remains cautiously optimistic for a financial turnaround by year's end, but we do not anticipate a notable upswing in revenues until IT budgets return to some level of normalcy nor·mal·cy n. Normality. Noun 1. normalcy - being within certain limits that define the range of normal functioning normality ," stated Paul Shorthose, president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "While we have taken a number of measures to significantly reduce our cost structure, our visibility remains limited due to continued economic uncertainty. Therefore, based on the information that we have today, we are anticipating third-quarter 2001 revenues of between $28 million and $32 million and a net loss per share in the range of $0.15 to $0.19 per share. We continue to target a return to profitability as soon as possible, but we no longer anticipate this happening in the fourth quarter unless we see a significant rebound in spending activity." Conference Call Reminder ATG management will discuss the company's second-quarter 2001 financial results on its quarterly conference call for investors at 5:00 p.m. ET today, July 26. The call will be broadcast live over the Internet. Investors interested in listening to the Webcast should log onto the "Investors" section of the ATG Web site, located at www.atg.com, at least 15 minutes before the event's broadcast. About ATG ATG(R) (Art Technology Group, Inc.) provides applications and an e-business software platform for e-commerce, relationship management, and portals. Customers around the globe rely on ATG for the frontline applications that help build and manage mutually beneficial Adj. 1. mutually beneficial - mutually dependent interdependent, mutualist dependent - relying on or requiring a person or thing for support, supply, or what is needed; "dependent children"; "dependent on moisture" relationships with customers, partners, and employees. Deployed on the industry's most popular application servers, including the ATG Dynamo Application Server, ATG's integrated suite of Java(TM) applications is ideal for large-scale, rapidly-evolving, and customized Web interactions. ATG and its network of more than 270 committed technology and solution partners deliver dedicated services for client strategy, implementation and support. Together, ATG and its global alliance network provide the e-commerce and relationship management capabilities that generate loyalty, drive sales, and empower the world's most recognized companies to realize the full potential of their online initiatives. Today, ATG has delivered e-business solutions to more than 770 companies worldwide including 3M, Abbott Laboratories Abbott Laboratories (NYSE: ABT) is a diversified pharmaceuticals and health care company. It has over 65,000 employees and operates in 130 countries. The corporate headquarters are in Abbott Park, Illinois, a neighborhood of North Chicago, Illinois. , Aetna Services, Inc., Alcatel, American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the , AT&T, Barclays Global Investors Barclays Global Investors is a subsidiary of British-based Barclays Bank which is in the investment management industry. It is the largest corporate money manager in the world, with over £936 billion (US$1.77 trillion) under management as of March 2006[1]. , BMG BMG Bundesministerium für Gesundheit (Germand: Federal Ministry for Health) BMG Be My Girl BMG Blue Man Group BMG Bertelsmann Music Group BMG Be My Guest BMG Browning Machine Gun BMG Bulk Metallic Glass Direct, Eastman Kodak, Ford Motor Credit, HSBC HSBC Hongkong and Shanghai Banking Corporation HSBC Humane Society of Broward County (Florida) HSBC Humane Society of Bay County (Bay County, Michigan) , J. Crew, Sun Microsystems, Target, and Walgreen Company. The company is headquartered in Cambridge, Massachusetts, with additional locations throughout North America, Europe, Asia, and Australia. For more information about ATG, please visit our Web site at www.atg.com. ATG, Art Technology Group, and Dynamo are registered trademarks of Art Technology Group, Inc. This press release contains forward-looking statements for purposes of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions under The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements involve factors that may cause ATG's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The statements in paragraph 3, 4, 9, 10, and 11 of this press release include forward-looking statements, the achievement is subject to a number of factors including: the effect of weakened or weakening economic conditions or perceived conditions on the level of spending by customers and prospective customers for ATG's software and services; financial and other effects of cost control measures; quarterly fluctuations in ATG's revenues or other operating results; customization and deployment delays or errors associated with ATG's products; the result of longer sales cycles for ATG's products; satisfaction levels of customers regarding the implementation and performance of ATG's products; ATG's need to maintain and enhance business relationships with systems integrators and other parties who may be affected by changes in the economic climate; ATG's abilities to attract and maintain qualified executives and other personnel and to motivate employees; activities by ATG and others related to protection of intellectual property; and release of competitive products and other activities by competitors. Further details on these risks are set forth in ATG's filings with the Securities and Exchange Commission, which are available on a website maintained by the Securities and Exchange Commission at http://www.sec.gov.
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
REVENUES:
Product license $ 19,083 $ 23,811 $ 44,564 $ 40,058
Services 15,985 8,818 33,350 14,143
Total revenues 35,068 32,629 77,914 54,201
COST OF REVENUES:
Product license 1,100 865 2,147 1,573
Services 12,012 6,897 27,520 11,889
Total cost of
revenues 13,112 7,762 29,667 13,462
Gross profit 21,956 24,867 48,247 40,739
OPERATING EXPENSES:
Research and
development 8,146 4,095 17,179 7,690
Sales and marketing 26,725 14,339 56,835 25,391
General and
administrative 5,783 5,014 15,060 8,689
Stock-based
compensation 323 304 704 608
Restructuring charge 44, 235 -- 44,235 --
Total operating
expenses 85,212 23,752 134,013 42,378
INCOME (LOSS) FROM
OPERATIONS (63,256) 1,115 (85,766) (1,639)
INTEREST INCOME,
NET 1,668 2,254 3,352 4,401
Net income (loss)
before provision
for (benefit from)
income taxes (61,588) 3,369 (82,414) 2,762
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES (19,708) 500 (27,622) 500
Net income (loss) $(41,880) $ 2,869 $ (54,792) $ 2,262
Net income (loss)
per share:
Basic $ (0.61) $ 0.04 $ (0.80) $ 0.03
Diluted $ (0.61) $ 0.04 $ (0.80) $ 0.03
Weighted average
common shares
outstanding:
Basic 68,595 66,655 68,387 66,339
Diluted 68,595 72,855 68,387 72,872
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)
June 30, December 31,
2001 2000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 43,179 $ 53,255
Marketable securities 51,672 73,218
Accounts receivable,
net 40,042 52,440
Prepaid expenses and
other current assets 10,856 9,051
Total current assets 145,749 187,964
Property and
equipment, net 27,147 23,492
Long-term marketable
securities - 17,734
Intangible and
other assets, net 12,061 13,246
Deferred tax asset 45,388 17,079
$ 230,345 $ 259,515
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term obligations $ 2,000 $ 2,000
Accounts payable 5,714 11,375
Accrued expenses 26,760 29,402
Accrued
restructuring-current 16,088 --
Deferred revenue 19,655 22,765
Total current
liabilities 70,217 65,542
Accrued restructuring-long
term 18,960 --
Long-term obligations,
less current maturities 1,000 2,000
Stockholders' equity 140,168 191,973
$230,345 $259,515
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