Beyond.com Shows Substantial Progress in Transition Quarter; Company Lowers Overall Expenses and Cash Burn Rate, Signs Up Key New Accounts.Business Editors SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--April 26, 2000 E-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. services provider Beyond.com (Nasdaq:BYND) today announced its first quarter 2000 financial results, which show substantial progress towards growing its new e-commerce service offerings and lowering the company's overall expenses and cash burn rate. Net revenues for the first quarter of 2000 were $31.3 million, a 64 percent increase over revenues of $19.1 million reported in the first quarter a year ago. The net loss for the first quarter of 2000, excluding amortization of goodwill, deferred compensation and restructuring charges 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. , was $20.6 million or $(0.55) per share. This compares with a net loss, excluding amortization of goodwill and deferred compensation, of $18.1 million or $(0.64) per share in the first quarter a year ago. "Our primary goals in the first quarter were to sign up key new accounts in our eStore business, maintain our leadership in the government sector and dramatically lower our overall expenses and cash burn rate. I am very pleased to report that we have met or exceeded these goals," said Rick Neely, interim chief executive officer. In Q1, the company incurred a restructuring charge of $13.7 million, which includes approximately $2.7 million in costs associated with employee 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 and facilities consolidation, and approximately $11.0 million in termination fees termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. and intangible and pre-paid asset write-offs associated with marketing agreements. "By paying these one-time termination fees, we were able to eliminate more than $24 million in future marketing payments," Neely explained. "Furthermore, we will be able to reduce future quarterly internal expenses by 30 to 40 percent from second half 1999 levels. We believe our $50.1 million in cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. is sufficient to fund the company's operations for more than a year from March 31, 2000. We expect our quarterly cash burn rate to be approximately $12 million per quarter in fiscal 2000, considerably less than previous quarterly levels." Revenues for Beyond.com's eStore Group, which allows manufacturers and software developers to launch a full-featured Web store in a few weeks, were $9.2 million, up 166 percent from the same quarter a year ago. "Our eStore Group has added the Microsoft Pocket PC store, SalesLogix, TrendMicro and CADopia stores to its growing list of customers. Our ability to offer distinctive service offerings such as digital downloading  The perspective and/or examples in this article do not represent a world-wide view. Please [ edit] this page to improve its geographical balance. , flexible merchandising merchandisingElement of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. , dynamic catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. management and multi-currency and multi-language capabilities gives us a strong competitive advantage in the marketplace." Revenues for Beyond.com's Government Systems Group, which provides e-commerce software solutions to government agencies, were $10.2 million, up 233 percent from the same quarter a year ago. During the first quarter, Beyond.com expanded its government business within the Department of Treasury. The company received a $15 million, nine-month renewal agreement with the Internal Revenue Service (IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. ) to electronically deliver and maintain Microsoft software to approximately 130,000 desktop computers within the IRS. The renewal is for the second agreement year of the 65-month, $120-million contract awarded to Beyond.com and Intellisys Technology Corporation (ITC ITC (Brit) n abbr (= Independent Television Commission) → Fernseh-Aufsichtsgremium ITC n abbr (BRIT) (= Independent Television Commission) → ) in June of 1999. Beyond.com also partnered with ITC to electronically deliver Microsoft software to the Office of Thrift Supervision The Office of Thrift Supervision (OTS) was established as a bureau of the Treasury Department in August 1989 as part of a major Reorganization Plan of the thrift regulatory structure mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C.A. (OTS See Office of Thrift Supervision. ). Under terms of the agreement, Beyond.com will electronically deliver Microsoft software and updates to approximately 1,300 desktop and server computers within the OTS. Revenues for Beyond.com's Website Group, which sells software and computer related products, were $11.9 million. "We will continue to leverage our existing customer base through our direct email and affiliates program to help promote and grow our eStore Group," Neely said. As part of the company's transition away from consumer etailing, Beyond.com reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. its ownership structure of SoftGallery SARL SARL South African Radio League SARL Société Anonyme à Responsabilité Limitée (French: limited liability company) SARL Salem Animal Rescue League (Salem, NH) SARL Sociedade Anónima de Responsabilidade Limitada , the French company it acquired last year. Under the reorganization plan A scheme authorized by federal law and promulgated by the president whereby he or she alters the structure of federal agencies to promote government efficiency and economy through a transfer, consolidation, coordination, authorization, or abolition of functions. , Beyond.com reduced its ownership stake in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. etailer to less than 20 percent. "We retain the benefit of having a presence in the European market for our eStore business without the ongoing expense of financing SoftGallery," Neely explained. In other company business, Beyond.com selected mySAP.com(TM) for its end-to-end e-commerce platform. Beyond.com chose mySAP.com based on its ability to enable significant growth in the company's eStore Group through a scalable and integrated Internet business solution. Additionally, Beyond.com announced that it is reorganizing its board of directors to assist the company in its new area of focus. The company has appointed Mark W. Bailey, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of WebPartner, and Richard Scudellari, partner at Morrison and Foerster LLP LLP - Lower Layer Protocol , to the board. The company expects to appoint additional directors in the near future. "We are delighted to welcome Mark and Rich to the board as they bring years of senior-level experience in technology, marketing and business development," said Bill McKiernan, chairman of Beyond.com's board of directors. Three members of the board of directors, Doug Carlston Doug Carlston was CEO, chairman, and co-founder (with brother Gary) of Brøderbund Software, a software publishing firm that produced such hit titles as Myst and Where in the World is Carmen Sandiego?. , John Chen and Bert Kolde, resigned their seats, effective April 25, 2000. "Going forward, we are well positioned to offer businesses the services and infrastructure they need to rapidly engage in e-commerce at minimal incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. investment and risk. We are excited about the opportunity to become the first top tier player in e-commerce services and look forward to expanding our business in this growing market," Neely said. About Beyond.com Beyond.com is an e-commerce services provider that builds and manages Web stores for businesses and sells software and computer related products to the government, corporate and consumer markets. The company's eStore Group allows software publishers, hardware manufacturers and systems OEMs to launch a full-featured e-commerce store in a few weeks. Businesses can choose from an array of offerings, including website design and construction, transaction processing Updating the appropriate database records as soon as a transaction (order, payment, etc.) is entered into the computer. It may also imply that confirmations are sent at the same time. Transaction processing systems are the backbone of an organization because they update constantly. , physical and electronic order fulfillment Order fulfillment (in BE also: order fulfilment) is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer. Sometimes Order fulfillment , customer support, marketing, and merchandising support and reporting. Customers include CADopia.com, Compaq Computer, IntelliGolf, Microsoft, McAfee.com, Palm Computing computing - computer , SalesLogix, Symantec, Systran Software, Telex and Trend Micro. Beyond.com's Government Systems Group provides digitally downloadable software and related services to a growing list of government agencies, including the Department of Treasury, Defense Logistics Agency Noun 1. Defense Logistics Agency - a logistics combat support agency in the Department of Defense; provides worldwide support for military missions Defense Department, Department of Defense, DoD, United States Department of Defense, Defense - the federal department (DLA DLA dog leukocyte antigen. ), National Imagery and Mapping Agency (NIMA NIMA National Imagery and Mapping Agency (now National Geospatial-Intelligence Agency; US government) NIMA never in mitosis gene a (molecular biology) NIMA North Idaho Mycological Association ) and Patent and Trademark Office (PTO PTO abbr. 1. Parent Teacher Organization 2. or p.t.o. please turn over 3. power takeoff PTO or pto please turn over Noun 1. ), a division of the Department of Commerce. Beyond.com also operates its own online store (http://www.beyond.com/), where customers can find an expansive selection of software and computer related products. Beyond.com Corporation trades on the Nasdaq National Market under the symbol ("BYND"). More information on the company can be found in the company's filings with the Securities and Exchange Commission ("SEC"). 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. Statement Certain statements in this press release are forward-looking 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 Exchange Act of 1934, as amended. These include statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc (i) how long the company's cash reserves will be sufficient to fund the company's operations, (ii) Beyond.com's competitive position and intended expansion of its eStore business and, (iii) Beyond.com's strategic transition to an e-commerce services focus with its eStore Group. Such statements are subject to substantial risks and uncertainties. Actual results for the second quarter of 2000 and subsequent quarters could differ materially from any future performance suggested above. Factors that might cause such a difference include, but are not limited to, the risks inherent in transitioning a corporation's business from a consumer focus to an e-commerce services focus successfully and competitive responses to the transition. The service offerings for eStore may differ materially from Beyond.com's current expectations. Beyond.com's Government Group is subject to risks inherent in government sales, including long sales and collections cycles. Beyond.com's business is subject to other risks, including the company's ability to ramp its eStore and government Groups and infrastructure, market acceptance of the company's new initiatives, the company's ability to retain and attract key management and employees. Additional risks include reductions in or cancellations of customer orders, changes in relationships with software suppliers, changes in relationships with strategic partners, changes in the product mix sold by the company, competition from other eStore and online software resellers or publishers, inability to raise sufficient capital on satisfactory terms, or at all, and other factors described in the company's filings with the SEC. Beyond.com news and product/service information is available at the company's World Wide website located at http://www.beyond.com.
Beyond.com
Statement of Operations
(in thousands, except per share amounts)
Three Months Ended,
March 31, March 31,
2000 1999
(unaudited) (unaudited)
Net revenues $ 31,339 $ 19,102
Cost of revenues 27,162 16,204
-------- --------
Gross profit 4,177 2,898
Operating expenses:
Research and development 3,680 1,731
Sales and marketing 16,992 16,563
General and administrative 3,700 2,258
Goodwill and deferred compensation amortization 11,486 732
Restructuring 13,707 -
-------- --------
Total operating expenses 49,565 21,284
Loss from operations (45,388) (18,386)
Interest and other expenses, net (395) (410)
-------- --------
Net Loss $(45,783) $(18,796)
========= =========
Basic and diluted net loss per share $(1.23) $(0.66)
Basic and diluted net loss per share,
excluding amortization of goodwill
and deferred compensation $(0.92) $(0.64)
Basic and diluted net loss per share,
excluding amortization of goodwill,
deferred compensation and restructuring $(0.55) $(0.64)
Weighted average shares outstanding used in
calculating net loss per share 37,114 28,364
Beyond.com
Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2000 1999(1)
(unaudited)
Current assets:
Cash, cash equivalents and
short-term investments $ 50,145 $ 66,313
Accounts receivable, net 6,823 13,843
Prepaid partnership agreements 1,003 5,151
Other prepaid expenses and current assets 1,898 3,002
Cost of deferred revenue 4,641 9,388
--------- ---------
Total current assets 64,510 97,697
========= =========
Non-current assets:
Property and equipment, net 12,724 13,077
Deposits and other long term assets 6,823 7,373
Intangible assets 89,647 102,229
--------- ---------
Total assets $ 173,704 $ 220,376
========= =========
Current liabilities:
Accounts payable $ 8,181 $ 12,579
Accrued employee expenses 3,581 2,046
Other accrued liabilities 11,173 5,468
Current obligations under capital leases 78 118
Deferred revenue 4,049 9,393
--------- ---------
Total current liabilities 27,062 29,604
Non-current obligations under capital leases -- 10
Convertible notes payable 63,250 63,250
Stockholders equity:
Common stock 296,924 295,814
Deferred compensation (622) (1,444)
Accumulated deficit (212,909) (167,127)
Other comprehensive income (1) 269
--------- ---------
Total stockholders equity 83,392 127,512
--------- ---------
Total liabilities and stockholders' equity $ 173,704 $ 220,376
========= =========
(1) Amounts derived from the Company's audited balance sheet at
December 31, 1999.
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