CMGI Announces First Quarter Fiscal 2003 Financial Results.Business/Technology Editors ANDOVER Andover (ăn`dōvər), town (1990 pop. 29,151), Essex co., NE Mass.; inc. 1646. Chiefly a textile producer in the 19th cent., Andover now makes toiletries, electronic and computer equipment, chemicals, medical instruments, rubber products, , Mass.--(BUSINESS WIRE)--Dec. 12, 2002 CMGI CMGI Commonly Maintained Grounds Infrastructures CMGI College Marketing Group Information (Services) , Inc. (Nasdaq: CMGI) today reported financial results for the fiscal quarter ended October October: see month. 31, 2002. CMGI's results of operations and cash balances discussed herein exclude the results of operations and cash balances of CMGI's former majority-owned subsidiaries majority-owned subsidiary A firm in which more than 50% of outstanding voting stock is owned by the parent company. , Engage, Inc. ("Engage"), and NaviSite, Inc. ("NaviSite"). On September September: see month. 9, 2002, CMGI divested all of its equity and debt ownership interests in Engage. On September 11, 2002, CMGI sold all of its equity and debt ownership interests in NaviSite to ClearBlue Technologies, Inc. As a result of these transactions, the historical results of operations of Engage and NaviSite have been accounted for as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. 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 generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , and are not included in CMGI's results of continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the or cash balances discussed herein. Additionally, on August 1, 2002, CMGI adopted SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142, "Goodwill and Other 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 ceased amortizing goodwill. Key Performance Highlights:
Q1 2003 Over Q4 2002
-- Total Net Revenue, Up 35 percent
-- Total Operating Loss, Down 65 percent
-- Net Loss, Down 51 percent
-- Pro Forma operating loss(1), Down 21 percent
Cash, Cash Equivalents and Marketable Securities Balances as of
October 31, 2002
-- Cash and Cash Equivalents Balance, $193 million
-- Marketable Securities Balance (excluding equity securities),
$10 million
-- Total Cash, Cash Equivalents and Marketable Securities Balance
(excluding equity securities), $203 million
First Quarter CMGI reported net revenue of $191 million for the first fiscal quarter ended October 31, 2002. This compares to net revenue of $142 million for the quarter ended July July: see month. 31, 2002, an increase of 35%. This increase primarily reflects the full quarter impact of SL Supply Chain Services International Corp., which acquired substantially all of the worldwide assets and operations of iLogistix during the fourth quarter of fiscal year 2002. This increase was partially offset by revenue declines within CMGI's other eBusiness See e-business. and Fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. operations. CMGI reported a total 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. of $49 million for the quarter ended October 31, 2002, compared to a total operating loss of $140 million for the quarter ended July 31, 2002, representing a 65% decrease in operating loss quarter over quarter. Included in the first quarter loss were charges related to amortization of intangible assets and stock-based compensation ("amortization charges") and depreciation totaling $13 million, long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges of $0.2 million, and net 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. of $2 million. Fourth quarter fiscal 2002 total operating loss included charges related to amortization and depreciation totaling $64 million, long lived asset impairment charges of $25 million and net restructuring charges of $7 million. Excluding the effects of charges related to in-process research and development, depreciation, amortization, long-lived asset impairment and restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , CMGI reported a 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 operating loss(1) of $34 million or ($0.09) pro forma operating loss(1) per share for the quarter ended October 31, 2002 versus a pro forma operating loss(1) of $43 million or ($0.11) pro forma operating loss(1) per share in the previous quarter ended July 31, 2002, representing a 21% decrease. CMGI reported a net loss of $94 million or ($0.24) loss per share for the first quarter of fiscal 2003, compared to a net loss of $190 million or ($0.48) loss per share for the fourth quarter ended July 31, 2002. As of October 31, 2002, CMGI had a consolidated cash and cash equivalents balance of $193 million. Total 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 balance (excluding equity securities) was $203 million. Total cash, cash equivalents and marketable securities (excluding equity securities) usage in the first quarter was $36 million, versus $41 million for the previous quarter. George McMillan George Duncan Hastie McMillan, Jr. (born October 11 1943) is an American politician who served as Lieutenant Governor of Alabama from 1979 to 1983. External links
"We are pleased with CMGI's financial performance in the first quarter as it shows that we are making progress on all fronts - with higher revenue, significantly lower pro forma operating loss(1) and higher cash and cash equivalents balances than originally projected. We are confident that our performance leads to break even on a consolidated pro forma operating basis(1) in Q3. Our emphasis continues to be on reaching profitability, and generating higher margin revenue." Outlook Consolidated net revenue for the second quarter of fiscal 2003 is expected to be approximately $150 million to $155 million. The major reason for the decline in revenue projection for the second quarter is the company's continued focus on reducing under performing categories and products from uBid's offerings. This strategy has significantly improved uBid profit margins. Pro forma operating loss(1) for the second quarter of fiscal 2003 is expected to be approximately $10 million to $15 million. The company continues to expect to reach break even on a consolidated pro forma operating basis(1) in the third quarter of fiscal 2003. Both of CMGI's pro forma operating results(1) guidance estimates depend on the timing of actual divestitures of certain non-core assets and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. the costs related to shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down of certain subsidiaries for which a buyer cannot be found. Consolidated cash, cash equivalents and marketable securities balance (excluding equity securities) exiting the second quarter of fiscal 2003 is expected to be approximately $169 million. The usage of cash, cash equivalents and marketable securities in the second quarter of fiscal year 2003 is expected to be $34 million, of which it is estimated that approximately $10 million would relate to cash in companies being considered for divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). in the second quarter. About CMGI CMGI, Inc. (Nasdaq: CMGI) provides technology and 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. solutions that help businesses market, sell and distribute their products and services. CMGI offers targeted solutions including industry-leading global supply chain management; web-based distribution and fulfillment; web-driven direct marketing; and enterprise-oriented professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. . CMGI's corporate headquarters are located at 100 Brickstone Square, Andover, Mass. 01810. For additional information, see www.cmgi.com. (1)The pro forma operating results are not a recognized measure for financial statement presentation under the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. generally accepted accounting principles (U.S. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). Non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. GAAP earnings measures do not have any standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. definition and are therefore unlikely to be comparable to similar measures presented by other reporting companies. This pro forma measure is provided to assist readers in evaluating CMGI's operating performance and each of the items listed (in-process research and development, depreciation, amortization of assets and stock-based compensation, long-lived asset impairment and restructuring) were excluded because they were considered to be of a non-operational nature. Readers are encouraged to consider this pro forma measure in conjunction with CMGI's U.S. GAAP results. This release contains 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. which address a variety of subjects including, for example, the expected financial results of CMGI and its operating companies operating company A business that engages in transactions with outsiders. for the second quarter of fiscal 2003 and beyond, and the expected ability of CMGI to reduce its cash usage, preserve its capital resources, grow its businesses and reach profitability. All statements other than statements of historical fact, including without limitation, those with respect to CMGI's goals, plans and strategies set forth herein are forward-looking statements. The following important factors and uncertainties, among others, could cause actual results to differ materially from those described in these forward-looking statements: CMGI's ability to reach profitability in the time frame set forth herein is dependent on additional divestitures; CMGI's success is dependent upon its ability to integrate its operating companies in accordance with its business strategy; CMGI's success, including its ability to decrease its cash burn rate, improve its cash position, grow its businesses and revenues and reach profitability, depends on its ability to execute on its business strategy and the continued and increased demand for and market acceptance of CMGI's and its operating companies' products, services, and web sites and 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 in general; CMGI may experience difficulties integrating technologies, operations and personnel in accordance with its business strategy; CMGI derives a significant portion of its revenue from a small number of customers and the loss of any of those customers would significantly damage CMGI's business; and increased competition and technological changes in the markets in which CMGI competes. For a detailed discussion of cautionary statements that may affect CMGI's future results of operations and financial results, please refer to CMGI's filings with the Securities and Exchange Commission, including CMGI's most recent 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. . Forward-looking statements represent management's current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements made by us.
CMGI, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands)
(Unaudited)
Three months ended
October 31, July 31, October 31,
2002 2002 2001
Net revenue:
Enterprise Software and
Services $ 27,963 $ 26,069 $ 35,615
eBusiness and Fulfillment 162,415 115,440 132,698
Managed Application Services 136 205 5,453
Portals -- -- 2,813
Other -- -- --
--------- --------- ---------
$ 190,514 $ 141,714 $ 176,579
Operating loss:
Enterprise Software and
Services $ (16,721) $ (78,810) $ (73,153)
eBusiness and Fulfillment (16,751) (44,243) (40,743)
Managed Application Services 136 27 809
Portals -- 4,644 (7,796)
Other (15,506) (21,873) (13,842)
--------- --------- ---------
$ (48,842) $ (140,255) $ (134,725)
Pro forma operating loss:
Enterprise Software and
Services $ (9,141) $ (17,941) $ (18,128)
eBusiness and Fulfillment (11,301) (11,940) (8,123)
Managed Application Services 136 1,024 (13,612)
Portals -- 5,568 (1,206)
Other (13,854) (20,138) (9,867)
--------- --------- ---------
$ (34,160) $ (43,427) $ (50,936)
Note: Pro forma operating loss represents total operating loss,
excluding net charges related to in-process research and development,
depreciation, amortization of intangible assets and stock-based
compensation, long-lived asset impairment and restructuring.
TABLE RECONCILING GAAP OPERATING LOSS TO PRO FORMA OPERATING LOSS
GAAP operating loss $ (48,842) $ (140,255) $ (134,725)
Adjustments:
Depreciation 8,235 8,514 12,609
Amortization of intangibles and
stock-based compensation 4,325 55,882 56,784
Long-lived asset impairment 192 25,184 9,263
Restructuring 1,930 7,248 5,133
-------- -------- --------
Proforma operating loss $ (34,160) $ (43,427) $ (50,936)
CMGI, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three months ended
October 31, July 31, October 31,
2002 2002 2001
Net revenue $ 190,514 $ 141,714 $ 176,579
Operating expenses:
Cost of revenue 164,414 120,188 158,721
Research and development 8,682 10,164 12,845
Selling 24,035 43,295 34,066
General and administrative 35,778 20,008 34,492
Amortization of intangible
assets and stock-based
compensation 4,325 55,882 56,784
Impairment of long-lived assets 192 25,184 9,263
Restructuring 1,930 7,248 5,133
Total operating expenses 239,356 281,969 311,304
Operating loss (48,842) (140,255) (134,725)
Other income (deductions):
Other losses, net (55,045) (34,525) (8,550)
Minority interest (2,284) 1,528 9,644
Equity in losses of affiliates (515) (12) (12,249)
Interest income 1,443 5,058 6,211
Interest benefit (expense), net 26,855 15,019 (6,720)
Total (29,546) (12,932) (11,664)
Loss from continuing
operations before income taxes (78,388) (153,187) (146,389)
Income tax expense (benefit) 856 (3,216) 12,579
Loss from continuing operations (79,244) (149,971) (158,968)
Discontinued operations, net of
income taxes:
Loss from discontinued
operations (14,340) (40,134) (65,836)
Net loss (93,584) (190,105) (224,804)
Preferred stock accretion -- -- (1,890)
Net loss available to
common stockholders $ (93,584) $(190,105) $ (226,694)
Basic and diluted loss
per share available to
common stockholders:
Loss from continuing
operations $ (0.20) $ (0.38) $ (0.46)
Loss from discontinued
operations (0.04) (0.10) (0.19)
Net loss available to
common stockholders $ (0.24) $ (0.48) $ (0.65)
Shares used in computing
basic and diluted
loss per share 392,682 392,380 351,052
Supplemental Disclosure:
Net loss available to
common stockholders
as reported $ (93,584) $(190,105) $(226,694)
Add back: goodwill
and workforce-in-place
amortization expense,
net of tax -- 51,924 51,343
Adjusted net loss available
to common stockholders $ (93,584) $(138,181) $(175,351)
Basic and diluted loss
per share as reported $ (0.24) $ (0.48) $ (0.65)
Add back: goodwill and
workforce-in-place
amortization expense,
net of tax -- 0.13 0.15
Adjusted basic and
diluted loss per share $ (0.24) $ (0.35) $ (0.50)
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