Braun Consulting Reports Third Quarter Results.Business Editors CHICAGO--(BUSINESS WIRE)--Nov. 6, 2002 Braun Braun , Eva 1912-1945. German lover and later wife of Adolf Hitler. They began living together in 1936, but the liaison was kept secret, and she was never seen in public with him. They were married hours before their double suicide on April 30, 1945. Consulting (Nasdaq:BRNC BRNC Britannia Royal Naval College (Dartmouth, England) ), a professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. firm delivering customer-focused business solutions, today reported financial results for the third quarter ended September September: see month. 30, 2002. Revenue before project expense reimbursements for the third quarter of 2002 was $8.8 million, a decrease of 51 percent from revenue of $17.8 million for the same period a year ago. Total revenue for the third quarter of 2002, including reimbursable re·im·burse tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es 1. To repay (money spent); refund. 2. To pay back or compensate (another party) for money spent or losses incurred. project expenses, was $9.6 million, a decrease of 51 percent from total revenue of $19.8 million for the same period a year ago. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss was $3.2 million for the third quarter of 2002, or $.15 per share, compared with pro forma net loss, excluding certain non-cash items and special charges of $16.7 million, of $953 thousand or $.05 per share for the third quarter of 2001. On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, the net loss for the third quarter of 2002 was $3.2 million, or $.15 per share, compared to a net loss of $15.9 million or $.78 per share for the third quarter of 2001. "Our performance during the quarter was largely impacted by the continued decline in revenue from Pharmacia Pharmacia was founded in 1911 in Stockholm, Sweden. The pharmaceutical company moved to Uppsala, Sweden in 1951. In 1967 Pharmacia Fine Chemicals was established in Uppsala. In 1986 Pharmacia Fine Chemicals acquired LKB-produkter AB and changed name to Pharmacia Biotech. , due to the Pfizer/Pharmacia merger. Obviously, the weak demand environment exacerbated the challenges presented to us by the loss of our largest client, one that represented nearly 30% of our business," said Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Braun, 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. and President, Braun Consulting, Inc. "As previously stated, it will take more than one quarter to recover from a loss of this magnitude. However, with the redeployment re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. of consulting assets across other large accounts and targeted industry prospects and by aggressively investing in the pipeline, we have made positive movement towards filling this void, but there is still a ways to go. An early indication of this positive movement can be seen in the strengthening of our relationships with Pfizer Pfizer Incorporated (NYSE: PFE) is a major research-based pharmaceutical company, which ranks number two in sales The company is based in New York City. It produces the number-one selling drug Lipitor (atorvastatin, used to lower blood cholesterol); the oral antifungal , Eli Lilly Eli Lilly can refer to:
"As we look ahead to the fourth quarter and beyond, we expect that the investments we made during the quarter, and continue to make, will help us rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective from the loss of Pharmacia. Our ability to quickly and effectively stabilize stabilize See peg. the business is critical to achieving our principal objectives of generating positive 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 a near-term near-term adj. Of, for, or involving a short period of time in the near future. return to profitability," continued Braun. Revenue before project expense reimbursements for the nine months ended September 30, 2002, was $37.9 million, down 38 percent from revenue of $61.4 million for the same period a year ago. Total revenue for the nine months ended September 30, 2002, was $41.7 million, a decrease of 38 percent from total revenue of $67.5 million for the same period a year ago. Pro forma net loss, excluding certain non-cash items and special charges of $3.7 million, for the nine months ended September 30, 2002, was $4.2 million or $.21 per share, compared with pro forma net loss, excluding certain non-cash items and special charges of $24.8 million, for the same period a year ago, of $383 thousand or $.02 per share. Special charges and non-cash items for the nine months ended September 30, 2002, consisted of 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 costs, expenses associated with the consolidation of office space and stock compensation. Non-cash items for the same period a year ago included 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. and stock compensation. On a GAAP basis, the net loss for the nine months ended September 30, 2002 was $6.4 million, or $.31 per share, compared to a net loss of $22.0 million or $1.08 per share for the same period a year ago. The Company's fourth quarter outlook reflects the continued uncertainty of the current economic environment and year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. seasonality for IT services. Revenue for the fourth quarter, prior to project expense reimbursements, is expected to between $7.0 million and $7.5 million, resulting in a net loss of $0.16 to $0.18 per share. Braun Consulting will host a conference call for investors today at 5:00 PM EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to further discuss the earnings results for the third quarter and future outlook. Steve Braun, President and Chief Executive Officer, and Tom Schuler Tom Schuler is a retired American professional road bicycle racer and founder of Team Sports Inc., a sports management company that focuses on cycling, mountain biking, triathlon, and roller blading. , Senior Vice President of Corporate Development and Investor Relations Investor relations The process by which the corporation communicates with its investors. , will lead the call. To participate, please dial (800) 266-2145 and enter the following pass code: 20990839. The conference call will also be broadcast live on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . To hear the Webcast, please go to www.braunconsult.com, then click on Investor Relations. "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 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 Statements in this press release that are not strictly historical are "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements that involve risks or uncertainties, many of which are not under the control of the Company. The risks and uncertainties could cause actual results to differ materially from those described in the forward-looking statement 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. . Such risks and uncertainties include, but are not limited to, the nature of the market and demand for our service offerings, competition, overall general business and economic conditions, the nature of our clients and project engagements, attracting and retaining highly skilled employees, the ability of our clients to pay for our services, timely payment by clients for services rendered, and our ability to effectively manage growth and client relationships, as well as other risks identified in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2001, and other filings with the Securities and Exchange Commission. The Company is under no duty to update any of the forward-looking statements after the date of this report or to conform these statements to actual results or changes in its expectations. About Braun Consulting Braun Consulting, Inc. (Nasdaq:BRNC) is a professional services firm delivering customer-focused business solutions to Fortune 1000 and middle market companies. Braun Consulting combines cutting-edge business intelligence and CRM/eCRM technologies with business strategy to help clients build customer loyalty. By creating the necessary connection between technology and strategy, Braun builds effective business solutions that help clients drive business performance and cultivate cul·ti·vate tr.v. cul·ti·vat·ed, cul·ti·vat·ing, cul·ti·vates 1. a. To improve and prepare (land), as by plowing or fertilizing, for raising crops; till. b. long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. relationships with their most valuable customers. Founded in 1993, Chicago-based Braun Consulting has 7 offices throughout the U.S. Braun Consulting maintains strategic alliances with top developers of enterprise applications, including BEA Systems BEA Systems, Inc. (NASDAQ: BEAS) is one of the major companies developing enterprise infrastructure software. BEA makes middleware, products that help software run on top of databases. , Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. , Oracle, SAP sap, fluid in plants consisting of water and dissolved substances. Cell sap refers to this fluid present in the large vacuole, or cell cavity, that occupies most of the central portion of mature plant cells. , Siebel For the tech company, see . Siebel, originally Flugzeugbau Halle, was a German aircraft manufacturer in Halle an der Saale. Siebel aircraft included:
BRAUN CONSULTING, INC.
STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------------
2002 2001 2002 2001
------- ------- ------- -------
Revenue:
Revenue before
reimbursements $8,766 $17,756 $37,936 $61,433
Reimbursements 873 2,018 3,813 6,085
------- ------- ------- -------
Total revenue 9,639 19,774 41,749 67,518
Costs and expenses:
Project personnel
and expenses 7,987 11,846 27,712 38,889
Reimbursable expenses 873 2,018 3,813 6,085
Selling and marketing
expenses 1,268 1,551 3,248 5,132
General and
administrative expenses 4,834 5,906 14,289 19,213
Amortization of
intangible assets - 2,231 - 6,693
Stock compensation 2 201 28 426
Special charges - 14,308 3,624 17,639
------- ------- ------- -------
Total costs
and expenses 14,964 38,061 52,714 94,077
------- ------- ------- -------
Operating loss (5,325) (18,287) (10,965) (26,559)
Interest income 192 378 606 1,584
Interest expense - 4 - 52
------- ------- ------- -------
Loss before benefit
for income taxes (5,133) (17,913) (10,359) (25,027)
Benefit for income taxes (1,971) (1,996) (3,922) (2,994)
------- ------- ------- -------
Net loss ($3,162) ($15,917) ($6,437) ($22,033)
======= ======= ======= =======
Loss per share:
Basic ($0.15) ($0.78) ($0.31) ($1.08)
Diluted ($0.15) ($0.78) ($0.31) ($1.08)
Reconciliation of net loss
to pro forma net loss,
excluding certain non-cash
items and special charges:
Net loss ($3,162) ($15,917) ($6,437) ($22,033)
Amortization of
intangible assets - 2,231 - 6,693
Stock compensation 2 201 28 426
Special charges - 14,308 3,624 17,639
------- ------- ------- -------
Pro forma net income (loss)
before tax effect of
special charges (3,160) 823 (2,785) 2,725
Tax effect of
special charges - (1,776) (1,450) (3,108)
------- ------- ------- -------
Pro forma net loss,
excluding certain
non-cash items and
special charges ($3,160) ($953) ($4,235) ($383)
======= ======= ======= =======
Pro forma loss per share,
excluding certain
non-cash items and
special charges:
Basic ($0.15) ($0.05) ($0.21) ($0.02)
Diluted ($0.15) ($0.05) ($0.21) ($0.02)
Weighted average shares:
Basic 20,451,802 20,569,300 20,623,095 20,444,294
Diluted 20,465,247 21,331,382 20,908,663 21,405,039
----------------------------------------------------------------------
Notes: Excluded non-cash items consist of amortization of intangible
assets and stock compensation.
Excluded special charges include the costs associated with
employee severances, consolidation of office space and the
impairment of goodwill and other assets.
BRAUN CONSULTING, INC.
BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 30, December 31,
ASSETS 2002 2001
------ --------------- --------------
Current assets:
Cash and cash equivalents $1,115 $2,673
Marketable securities 34,300 38,150
Accounts receivable (net of
allowance: $280 in 2002; $500 in 2001 9,840 15,090
Accounts receivable - employees 3 5
Income taxes receivable 125 140
Deferred tax asset 191 252
Prepaid expenses and other current assets 901 625
--------------- --------------
Total current assets 46,475 56,935
Equipment, furniture and software - net 9,173 11,527
Deferred tax asset (net of allowance:
$115 in 2002; $97 in 2001) 11,888 7,829
--------------- --------------
Total assets $67,536 $76,291
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $1,149 $1,753
Accrued compensation 532 841
Other accrued liabilities 529 730
Accrued restructuring 1,109 2,223
Unearned revenue 942 1,638
--------------- --------------
Total current liabilities 4,261 7,185
Deferred rent 1,099 810
Accrued restructuring 1,659 1,342
--------------- --------------
Total liabilities 7,019 9,337
Stockholders' equity:
Preferred stock, $0.001 par value at
September 30, 2002 and December 31, 2001;
authorized 10,000,000 shares at
September 30, 2002 and December 31, 2001;
no shares have been issued at
September 30, 2002 and December 31, 2001 - -
Common stock, $0.001 par value at
September 30, 2002 and December 31, 2001;
authorized 50,000,000 shares at
September 30, 2002 and December 31, 2001;
issued and outstanding 20,268,213 shares
at September 30, 2002 and 20,516,727 shares
at December 31, 2001 20 21
Additional paid-in capital 105,984 106,040
Unearned deferred compensation (4) (61)
Accumulated deficit (45,483) (39,046)
--------------- --------------
Total stockholders' equity 60,517 66,954
--------------- --------------
Total liabilities and
stockholders' equity $67,536 $76,291
=============== ==============
BRAUN CONSULTING, INC.
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
----------------------
2002 2001
-------- --------
Cash flows from operating activities:
Net loss $ (6,437) $ (22,033)
Adjustments to reconcile net loss to net
cash flows from operating activities:
Compensation expense related to
stock options 28 426
Income tax benefit from disqualifying
stock dispositions 12 276
Loss on disposal of assets 561 688
Loss on impairments - 11,603
Deferred income taxes (3,998) (3,287)
Provision for losses on accounts
receivable 175 2,559
Depreciation and amortization 2,181 9,430
Changes in assets and liabilities:
Accounts receivable 5,077 (5,623)
Income taxes receivable 15 327
Prepaid expenses and other
current assets (276) 526
Accounts payable (604) (1,631)
Accrued liabilities (221) (1,177)
Accrued restructuring (797) 2,866
Unearned revenue (696) (629)
--------------- --------------
Net cash flows from operating
activities (4,980) (5,679)
Cash flows from investing activities:
Purchases of marketable securities (11,500) (3,800)
Sales of marketable securities 15,350 14,350
Purchases of equipment, furniture
and software (388) (6,552)
--------------- --------------
Net cash flows from
investing activities 3,462 3,998
Cash flows from financing activities:
Borrowings - 6,000
Repayments of debt - (6,000)
Exercise of stock options 719 651
Common share purchase - 592
Proceeds from secondary public offering - 129
Employee stock purchase plan 225 -
Treasury stock purchase and retirement (984) (379)
--------------- --------------
Net cash flows from
financing activities (40) 993
--------------- --------------
Net decrease in cash and cash equivalents (1,558) (688)
--------------- --------------
Cash and cash equivalents
at beginning of period 2,673 2,723
--------------- --------------
Cash and cash equivalents at end of period $ 1,115 $ 2,035
=============== ==============
Supplemental disclosure of cash flow information:
Interest paid $ - $ 52
=============== ==============
Income taxes paid $ 61 $ 66
=============== ==============
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