CMGI Announces First Quarter Fiscal 2006 Financial Results; ModusLink's Continued Execution of Business Strategy Results in 20% Year over Year Increase in Revenue.WALTHAM Waltham (wôl`thăm, –thəm), city (1990 pop. 57,878), Middlesex co., E Mass., a suburb of Boston, on the Charles River; settled c.1634, set off from Watertown 1738, inc. as a city 1884. , Mass. -- CMGI CMGI Commonly Maintained Grounds Infrastructures CMGI College Marketing Group Information (Services) , Inc. (Nasdaq: CMGI) today reported financial results for its fiscal 2006 first quarter ended October October: see month. 31, 2005. Q1 2006 vs. Q1 2005 Operating Highlights --Net Revenue, increased 20% to $307.4 million --Net Income, increased to $2.1 million, from a Net Loss in 2005 "During the first quarter CMGI successfully executed against key initiatives outlined in our strategic plan," said Joseph C. Lawler Lawler can refer to: People
penetration - the act of entering into or through something; "the penetration of upper management by women" . We expect execution on our strategy to enable us to deliver double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" top line growth in fiscal 2006," added Lawler. First Quarter Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Financial Results CMGI reported net revenue of $307.4 million for the quarter ended October 31, 2005. This compares to net revenue of $257.1 million for the same period one year ago, a $50.3 million or 20% increase year over year. This revenue growth was seen in each of the Company's operating segments as the Americas A·mer·i·cas , the See America. , Asia and Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). each realized
double-digit dou·ble-dig·itadj. Being between 10 and 99 percent: double-digit inflation. revenue growth in the first quarter of fiscal 2006, as compared to the prior year. Revenue increased largely due to the contributions from new supply chain management programs awarded during the second half of fiscal 2005 and seasonality-based demand. CMGI reported operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $2.2 million for the quarter ended October 31, 2005, compared to operating income of $2.4 million for the first quarter of fiscal 2005. Operating income for the first quarter of fiscal 2006 was negatively affected by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $7.6 million in price reductions and form factor changes. "Form factor" relates to the simplification or elimination of components from our clients' final products, which in turn reduces the margin potential for ModusLink. The impact of price and form factor reductions primarily related to one client in Asia. Despite the price reduction and form factor changes, the strategic initiatives of entering new verticals and service offerings are expected to enable the Company to achieve its higher gross margin targets of 13 to 14% over the next two years. Operating income for the first quarter of fiscal 2006 also included $1.5 million of 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. stock-based compensation expense related to the implementation of 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 123(R) and $2.2 million of costs related to our Global ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. implementation. CMGI reported a $2.7 million increase in net income to $2.1 million compared to a net loss of $0.6 million for the same period in fiscal 2005. Excluding the effects of charges related to depreciation, 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. , stock-based compensation, 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 non-GAAP operating income of $ 9.1 million for the first quarter of fiscal 2006 versus non-GAAP operating income of $9.0 million for the same period of the prior year. The Company believes that its non-GAAP measure of operating income/(loss) ("non-GAAP operating income/(loss)") provides investors with a useful supplemental measure of the Company's operating performance by excluding the impact of non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. and restructuring activities. Each of the excluded items was excluded because they may be considered to be of a non-operational or non-cash nature. Historically, CMGI has recorded significant 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. 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. . These charges, as well as charges related to depreciation, amortization of intangible assets and stock-based compensation, have been excluded for the purpose of enhancing the understanding by both management and investors of the underlying baseline The horizontal line to which the bottoms of lowercase characters (without descenders) are aligned. See typeface. baseline - released version operating results and trends of the business, which management uses to evaluate our financial performance for purposes of planning and forecasting future periods. Non-GAAP operating income/(loss) does 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, therefore, is unlikely to be comparable to similar measures presented by other reporting companies. Non-GAAP operating income/(loss) should not be evaluated in isolation of, or as a substitute for the Company's financial results prepared 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 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 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 . The Company's usage of non-GAAP operating income/(loss), and the underlying methodology in excluding certain charges, is not necessarily an indication of the results of operations that may be expected in the future, or that the Company will not, in fact, incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. such charges in future periods. A table reconciling CMGI's non-GAAP operating income/(loss) to its GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). operating income/(loss) and its GAAP net income/(loss) is included in the statement of operations See Income statement. information in this release. As of October 31, 2005, CMGI had consolidated 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 $154.3 million, versus consolidated cash, cash equivalents and marketable securities of $192.7 million at the end of the prior quarter. The cash usage during the quarter ended October 31, 2005 was primarily for working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. in support of new customer programs and seasonality-based demand and is primarily reflected in the $61 million increase in Accounts Receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying . Business Highlights ModusLink, CMGI's subsidiary, successfully executed against its strategic business plan to expand vertical markets and service offerings resulting in increased revenue growth. ModusLink's sales resources focused on three new key vertical markets, including consumer electronics, communications and storage, resulting in 4 new clients being added to ModusLink's client portfolio. Additionally, revenue increased with the expansion of 22 existing business relationships by either extending the existing supply chain solutions ModusLink was delivering to a client with new capabilities and services or handling additional new products for a client. Each of the regional operations contributed to this success. In the Americas, revenue grew 24% to $133 million; in Asia, revenue increased 18% to $61 million; and in Europe, revenue increased 15% to $113 million. CMGI's venture capital affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. , @Ventures continued to target investments in the emerging and growing market for clean energy technologies, including alternative energy, energy efficiency, and water purification  It has been suggested that , , and be merged into this article or section. and management. As previously announced, @Ventures has made
an additional $4.9 million investment in Advent Solar, Inc. as part of
Advent Solar's $30 million Series C financing round, one of the
most significant investment rounds to date in a privately-held solar
cell solar cell, semiconductor devised to convert light to electric current. It is a specially constructed diode, usually made of silicon crystal. When light strikes the exposed active surface, it knocks electrons loose from their sites in the crystal. company. Also, many of @Ventures current investments are
well-positioned to benefit from the strength in the mergers and
acquisitions and IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. markets. For example, in November November: see month. , WebCT, a company
in which @Ventures had invested, announced an agreement to be acquired
by Blackboard (1) See Blackboard Learning System.(2) The traditional classroom presentation board that is written on with chalk and erased with a felt pad. Although originally black, "white" boards and colored chalks are also used. , Inc. The closing of the transaction is subject to regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approval and other customary closing conditions. Conference Call Scheduled for December December: see month. 5th CMGI will hold a conference call to discuss its fiscal 2006 first quarter results at 5:00 PM Eastern Time on December 5, 2005. Investors can listen to the conference call 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 at www.cmgi.com/investor. To listen to the live call, go to the Web site at least 15 minutes prior to the start time to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install the necessary audio software. About CMGI CMGI, Inc. (Nasdaq: CMGI), through its subsidiary, ModusLink, provides technology and products solutions that help businesses market, sell and distribute their products and services. In addition, CMGI's venture capital affiliate, @Ventures, invests in a variety of technology ventures. For additional information, see www.cmgi.com. 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, our expected revenue growth rate, our expected improvement in gross margins, the further execution of ModusLink's strategic business plan, the development and implementation of business strategies in our target markets and through our venture capital affiliate and our assessment of the companies within our venture capital portfolio. 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 success, including its ability to improve its cash position, expand its operations and revenues, improve its gross margins and sustain profitability, depends on its ability to execute on its business strategy and the continued and increased demand for and market acceptance of its products and services; CMGI's management may face strain on managerial and operational resources as they try to oversee the expanded operations; CMGI may not be able to expand its operations in accordance with its business strategy; CMGI's cash balances may not be sufficient to allow CMGI to meet all of its business and investment goals; 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 financial condition and results of operations; the mergers and acquisitions and IPO markets are inherently unpredictable and liquidity events for companies in the venture capital portfolio may not occur; and increased competition and technological changes in the markets in which CMGI competes. In addition, from time to time management may present unaudited 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 combined financial results of CMGI and Modus MODUS, civil law. Manlier; means; way. MODUS, eccl. law. Where there is by custom a particular manner of tithing allowed, different from the general law of taking tithes in kind, as a pecuniary compensation, or the performance of labor, or when any means are adopted by which the Media for historical perspective. Such pro forma information is not necessarily indicative indicative: see mood. of financial results that could have occurred, nor necessarily indicative of financial results that may be expected in the future. Such pro forma financial information should be read in conjunction with the Company's financial results prepared in accordance with US GAAP. 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
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
(Unaudited)
October 31, July 31,
2005 2005
----------- ----------
Assets:
Cash and cash equivalents $ 154,091 $ 192,450
Available-for -sale securities 246 278
Accounts receivable 226,988 165,492
Inventories 98,333 78,689
Prepaid expenses and other current assets 12,753 12,083
Current assets of discontinued operations 83 83
----------- ----------
Total current assets 492,494 449,075
----------- ----------
Property and equipment, net 42,797 42,863
Investments in affiliates 26,775 22,528
Goodwill and other intangible assets 204,524 201,314
Other assets 3,650 5,890
Non-current assets of discontinued operations 14 14
----------- ----------
$ 770,254 $ 721,684
=========== ==========
Liabilities:
Current installments of long-term debt $ 87 $ 1,670
Current portion of capital lease obligations 291 304
Revolving line of credit - 24,785
Accounts payable 177,761 135,677
Current portion of accrued restructuring 11,427 11,251
Accrued income taxes 2,936 2,778
Accrued expenses 48,260 44,175
Other current liabilities 3,653 3,797
----------- ----------
Total current liabilities 244,415 224,437
----------- ----------
Revolving line of credit 24,785 -
Long-term debt, net of current portion 98 98
Long-term portion of accrued restructuring 7,584 7,912
Long-term portion of capital lease
obligations 744 823
Other long-term liabilities 17,615 17,101
Non-current liabilities of discontinued
operations 98 98
----------- ----------
50,924 26,032
Stockholders' equity 474,915 471,215
----------- ----------
$ 770,254 $ 721,684
=========== ==========
CMGI, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three months ended
October 31, July 31, October 31,
2005 2005 2004
----------- -------- ------------
Net revenue $ 307,375 $251,243 $ 257,126
Operating expenses:
Cost of revenue 275,739 226,714 225,746
Selling 5,503 6,072 5,912
General and administrative 21,705 19,332 20,391
Amortization of intangible
assets 1,206 1,306 1,307
Restructuring, net 977 1,473 1,336
----------- -------- ------------
Total operating
expenses 305,130 254,897 254,692
----------- -------- ------------
Operating income (loss) 2,245 (3,654) 2,434
Other income (expenses):
Other gains (losses), net 3,236 5,227 (1,442)
Equity in losses of
affiliates, net (403) (1,135) (226)
Interest income 1,173 1,053 630
Interest expense (552) (597) (423)
----------- -------- ------------
Total 3,454 4,548 (1,461)
----------- -------- ------------
Income from continuing
operations before income taxes 5,699 894 973
Income tax expense 943 620 1,526
----------- -------- ------------
Income (loss) from continuing
operations 4,756 274 (553)
Discontinued operations, net of
income taxes:
Loss from discontinued
operations (2,624) - -
----------- -------- ------------
Net income (loss) $ 2,132 $ 274 $ (553)
=========== ======== ============
Basic and diluted earnings
(loss) per share:
Earnings (loss) from continuing
operations $ 0.01 $ 0.00 $ (0.00)
Loss from discontinued
operations $ (0.01) $ - $ -
----------- -------- ------------
Earnings (loss) $ 0.00 $ 0.00 $ (0.00)
=========== ======== ============
Shares used in computing basic
earnings (loss) per share 482,063 479,283 469,720
=========== ======== ============
Shares used in computing diluted
earnings (loss) per share 487,435 486,605 469,720
=========== ======== ============
CMGI, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Information
(In thousands)
(Unaudited)
Three months ended
October 31, July 31, October 31,
2005 2005 2004
----------- --------- ------------
Net revenue:
--------------------------------
eBusiness and Fulfillment
Americas $ 133,330 $ 105,543 $ 107,266
Asia 60,717 49,960 51,329
Europe 113,328 95,740 98,453
----------- --------- ------------
Total eBusiness and
Fulfillment 307,375 251,243 257,048
Other - - 78
----------- --------- ------------
$ 307,375 $ 251,243 $ 257,126
=========== ========= ============
Operating income (loss):
--------------------------------
eBusiness and Fulfillment
Americas $ 2,709 $ (4,138) $ 231
Asia 5,491 3,457 6,907
Europe (1,923) 1,207 (1,205)
----------- --------- ------------
Total eBusiness and
Fulfillment 6,277 526 5,933
Other (4,032) (4,180) (3,499)
----------- --------- ------------
$ 2,245 $ (3,654) $ 2,434
=========== ========= ============
Non-GAAP operating income (loss):
--------------------------------
eBusiness and Fulfillment
Americas $ 4,980 $ (1,500) $ 2,596
Asia 7,014 5,610 9,179
Europe 33 3,236 447
----------- --------- ------------
Total eBusiness and
Fulfillment 12,027 7,346 12,222
Other (2,972) (4,206) (3,222)
----------- --------- ------------
$ 9,055 $ 3,140 $ 9,000
=========== ========= ============
Note: Non-GAAP operating income represents total operating income
(loss), excluding net charges related to depreciation, amortization of
intangible assets, stock-based compensation and restructuring.
TABLE RECONCILING NON-GAAP OPERATING INCOME TO GAAP OPERATING INCOME
(LOSS) AND NET INCOME (LOSS)
Non-GAAP Operating income $ 9,055 $ 3,140 $ 9,000
Adjustments:
Depreciation (2,617) (2,715) (2,378)
Amortization of intangible assets (1,206) (1,306) (1,307)
Stock-based compensation (2,010) (1,300) (1,545)
Restructuring, net (977) (1,473) (1,336)
------- ------- -------
GAAP Operating income (loss) $ 2,245 $(3,654) $ 2,434
------- ------- -------
Other income (expense) 3,454 4,548 (1,461)
Income tax expense 943 620 1,526
Loss from discontinued operations (2,624) - -
------- ------- -------
Net income (loss) $ 2,132 $ 274 $ (553)
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