ATG Announces Third-quarter 2001 Financial Results, Meeting Revenue and Beating EPS Guidance; Company Takes Further Actions to Accelerate Return to Profitability.Business/Technology Editors CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 25, 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 ), a leading provider of e-business software for e-commerce and customer management, today announced financial results for the third quarter ended September 30, 2001. In a separate news release today, ATG announced Paul Shorthose as the company's new Chief Executive Officer, Bernard Bailey as 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. and Jeet Singh as Chief Strategy Officer and Co-chairman of ATG's Board of Directors.
THIRD-QUARTER PERFORMANCE
(In millions, except per Q3, 2001 Q3, 2000 Q2, 2001
share data and percentages)
Total revenues $30.0 $46.3 $35.1
Product license $13.4 $34.2 $19.1
% of Total revenues 45% 74% 54%
Services $16.6 $12.1 $16.0
% of Total revenues 55% 26% 46%
Net (loss) income $(9.0) $5.0 $(11.8)(a)
Diluted net (loss)
income per share $(0.13) $0.07 $(0.17)(a)
(a) excludes restructuring charge of $44.2 million.
"ATG posted solid results in the third quarter, meeting its revenue guidance, beating its EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. guidance and reducing its cash burn despite a weak economic environment and the tragic events of September 11," said Paul Shorthose, President and Chief Executive Officer. "We were successful in significantly reducing our operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in the quarter. The company improved service gross margins significantly, which this quarter jumped to 39% compared with 25% in the second quarter and 11% in the first quarter. We also successfully maintained the strength of our balance sheet, ending the quarter with $85 million of 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 ." During the third quarter, ATG gained 30 new customers and maintained its high customer retention rate. As of September 30, 2001, ATG's customer list increased to 800 companies worldwide. Significant third-quarter customer wins included BHP BHP blood hydrostatic pressure; the pressure exerted by the blood cells and plasma in the capillaries. , Billiton, Consignia, Deutsche Post Deutsche Post AG (ISIN: DE0005552004, LSE: DPO) is a German post, logistics and courier headquartered in Bonn, previously the German state-owned mail monopoly. It has 520,000 employees in more than 220 countries and territories worldwide and generated revenue of € 60. , Fira International de Barcelona, GE Capital Real Estate, Minnesota Public Radio Minnesota Public Radio (MPR) is a regional public radio network based in the U.S. state of Minnesota that has been broadcasting since 1967. The network includes more than 50 FM transmitters ranging from low-power translators in small and hard-to-reach areas up to full-power , Roche, TDC TDC Top Dead Center TDC Time-to-Digital Converter TDC Tabular Data Control TDC Total Development Cost TDC Texas Department of Corrections TDC The Discovery Channel TDC Torpedo Data Computer TDC Theater Deployable Communications Switzerland, Vielife and William M. Mercer. ATG generated strong repeat business in the third quarter with companies such as AGF AGF Assurances Générales de France AGF Army Ground Forces AGF American Growth Fund (mutual fund) AGF American General Finance AGF Arbeitsgemeinschaft der Grossforschungseinrichtungen AGF Anatomic Gift Foundation AGF Assume Good Faith , Alcatel, America Online See AOL. , Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. of Massachusetts, Brocade Communications Systems Brocade, Inc. NASDAQ: BRCD, based in Silicon Valley, designs, manufactures, and sells storage networking solutions and management applications for storage area networks (SANs) and file area networks (FANs). , Bunge, Cummins Inc., DZ Bank AG, Handspring, 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, Martha Stewart Living Martha Stewart Living is a magazine and a television show featuring entertaining and home decorating guru Martha Stewart. Both the magazine and the television program focus on the domestic arts. , Massachusetts Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , MTVi Group, Sharper Image, Target Corporation, and Telstra. Shorthose continued, "The rollout of version 5.5 of the 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 e-Business Platform and the new Portal and Enterprise Commerce applications, which were released in September, have been extremely well received. In fact, new Portal Suite sales generated a significant amount of revenue in the third quarter. The Portal Suite and Enterprise Commerce Suite reflect the strength of our skilled and seasoned R&D team and ATG's ability to develop leading-edge products that meet customers' needs. These products greatly enhance our future market opportunities and demonstrate that ATG is maintaining its competitive edge." Restructuring ATG today announced further restructuring actions to proactively address the effects of the economic environment. The initiative includes a reduction of approximately 20% of ATG's workforce. Additional cost-saving measures include further reductions in discretionary spending. The initiative is expected to result in a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $29 to $33 million in the fourth quarter of this year. The company anticipates that the cash component of this restructuring charge and restructuring charges taken earlier this year will be approximately $5 - $6 million in the fourth quarter of 2001 and $4 - $5 million per quarter in 2002. "Management remains fully committed (Law) committed to prison for trial, in distinction from being detained for examination. See also: Fully to taking the steps necessary to quickly return the company to profitability," stated Ed Terino, ATG's Chief Financial Officer. "To that end, we are reducing discretionary spending and implementing further workforce reductions to lower our overall cost structure until we see signs of a market recovery. These initiatives better position ATG for the current economic environment and we anticipate these reductions will result in 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. savings of $28 to $32 million." BUSINESS OUTLOOK ATG's fourth-quarter and 2002 guidance is based on the assumption that the current economic and geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. environment will not worsen. For the fourth quarter of 2001, the company is anticipating revenues of between $27 million and $31 million and a net loss per share, excluding restructuring charges, in the range of ($0.08) to ($0.12) per share. The company anticipates a fourth-quarter restructuring charge of $29 to $33 million. Further, given ATG's ongoing operating losses and the continued economic uncertainty surrounding the broader economy, the company will evaluate the value of its deferred tax asset for impairment at year end. ATG anticipates that its balance of cash, cash equivalents and marketable securities will be in the range of $70 million to $75 million on December 31, 2001. ATG expects to return to profitability in the second half of 2002. Total revenues in 2002 are expected to be flat to slightly lower than 2001 levels. As a result of this anticipated performance and the company's expectation for improved management of working capital, ATG believes that it has sufficient cash for the foreseeable future. The company expects to end 2002 with a balance of cash, cash equivalents and marketable securities in excess of $50 million. "ATG's technology offerings and competitive position are as strong as ever and will be greatly enhanced in the coming months as we roll out our products on the industry's leading application servers," stated Shorthose. "We plan to introduce ATG Dynamo on BEA's WebLogic application server in the fourth quarter of this year and on HP, IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) and iPlanet applications servers in the first half of 2002. With these four companies owning approximately 90% of the application server market, this initiative opens vast new market and revenue opportunities for ATG. With the rollout of these new products and a dynamic new management team in place, I am confident that ATG will maintain its strong competitive position." Conference Call Reminder ATG management will discuss the company's third-quarter 2001 financial results on its quarterly conference call for investors at 5:00 p.m. ET today, October 25. 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 an e-business software platform and applications 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. 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 800 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 Sun Microsystems, Inc. (NASDAQ: JAVA[3]) is an American vendor of computers, computer components, computer software, and information-technology services, founded on 24 February 1982. , Walgreen Company, and WellsFargo. The company is headquartered in Cambridge, Massachusetts This article is about the city of Cambridge in Massachusetts. For the English university town, see Cambridge, England. For other places, see Cambridge (disambiguation). Cambridge, Massachusetts is a city in the Greater Boston area of Massachusetts, United States. , with additional locations throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe, and Asia. For more information about ATG, please visit our Web site at www.atg.com 2001 Art Technology Group, Inc. ATG, Art Technology Group, the Techmark, the ATG Logo, and Dynamo are registered trademarks, and Personalization Server and Scenario Server are trademarks, of Art Technology Group, Inc. All other trademarks are the property of their respective holders. NASDAQ:ARTG 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 paragraphs 5, 6, 7, 8, 9, and 10 of this press release include forward-looking statements. These statements involve known and unknown risks and uncertainties 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. Important risk factors affecting ATG's business generally may be found in ATG's prospectus and in periodic reports and registration statements filed with the Securities and Exchange Commission. Risk factors related to the subject matter of this press release include 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 Nine Months Ended
September 30, September 30, September 30, September 30,
2001 2000 2001 2000
REVENUES:
Product
license $ 13,411 $ 34,233 $ 57,975 $ 74,291
Services 16,628 12,077 49,978 26,220
Total revenues 30,039 46,310 107,953 100,511
COST OF REVENUES:
Product license 1,075 908 3,222 2,481
Services 10,132 10,084 37,652 21,973
Total cost
of revenues 11,207 10,992 40,874 24,454
Gross profit 18,832 35,318 67,079 76,057
OPERATING EXPENSES:
Research and
development 7,218 4,762 24,397 12,452
Sales and
marketing 20,506 20,531 77,341 45,922
General and
administrative 5,299 5,836 20,359 14,525
Stock-based
compensation 298 278 1,002 886
Restructuring - - 44,235 -
Total operating
expenses 33,321 31,407 167,334 73,785
INCOME (LOSS) FROM
OPERATIONS (14,489) 3,911 (100,255) 2,272
INTEREST AND
OTHER INCOME,
NET 809 2,298 4,161 6,699
Net income (loss)
before provision
for (benefit from)
income taxes (13,680) 6,209 (96,094) 8,971
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES (4,651) 1,200 (32,273) 1,700
Net income
(loss) $ (9,029) $ 5,009 $ (63,821) $ 7,271
Net income (loss) per share:
Basic $ (0.13) $ 0.07 $ (0.93) $ 0.11
Diluted $ (0.13) $ 0.07 $ (0.93) $ 0.10
Weighted average common shares outstanding:
Basic 68,762 67,254 68,512 67,055
Diluted 68,762 73,850 68,512 73,361
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)
September 30, December 31,
2001 2000
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 58,458 $ 53,255
Marketable securities 26,535 73,218
Accounts receivable, net 30,950 52,440
Prepaid expenses and other
current assets 11,464 9,051
Total current assets 127,407 187,964
Property and equipment, net 24,358 23,492
Long-term marketable securities - 17,734
Intangible and other assets, net 10,894 13,246
Deferred tax asset 50,766 17,079
--------- ---------
$ 213,425 $ 259,515
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term obligations $ 2,000 $ 2,000
Accounts payable 5,159 11,375
Accrued expenses 22,083 29,402
Accrued restructuring current 15,335 -
Deferred revenue 17,929 22,765
Total current liabilities 62,506 65,542
Accrued restructuring long term 16,785 -
Long-term obligations, less
current maturities 500 2,000
Stockholders' equity 133,634 191,973
---------- ---------
$ 213,425 $ 259,515
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