CMGI Announces Fourth Quarter Fiscal 2001 Financial Results and Financial Guidance for Fiscal 2002.Business/Technology Editors ANDOVER, Mass.--(BUSINESS WIRE)--Sept. 25, 2001 CMGI CMGI Commonly Maintained Grounds Infrastructures CMGI College Marketing Group Information (Services) , Inc. (Nasdaq: CMGI), a leading global Internet operating and development company, today reported net revenue of $255.5 million for the fourth quarter ended July 31, 2001, a 12% decrease compared with the previous quarter. For the fiscal year ended July 31, 2001, CMGI's net revenues increased $347.3 million, or 39%, to $1.238 billion from $890.4 million in fiscal 2000. Fiscal 2002 net revenue is expected to decline approximately 10% versus fiscal 2001 net revenue, primarily as a result of 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). and divestitures that commenced during fiscal 2001. 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. and stock-based compensation ("amortization charges"), long-lived 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. and restructuring, CMGI's fourth quarter fiscal 2001 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. were $360.0 million, reflecting a decrease of $60.8 million, or 14%, from the previous quarter. Excluding the effects of these charges, CMGI reported an 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. ("recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. operating loss") of $104.5 million or ($0.30) per share for the quarter ended July 31, 2001 versus a recurring operating loss of $131.7 million or ($0.38) per share in the previous quarter ended April 30, 2001. The Company expects that its recurring operating loss for all of fiscal 2002 will be less than the $104.5 million recurring operating loss in the fourth quarter of fiscal 2001. The Company expects to achieve break-even on a recurring operating basis during the fourth quarter of fiscal 2002. CMGI reported a total operating loss of $1.050 billion for the quarter ended July 31, 2001, compared to a total operating loss of $996.0 million for the quarter ended April 30, 2001. Included in the fourth quarter total operating loss were charges related to impairment of long-lived assets of $692.3 million, depreciation and amortization charges of $163.6 million 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. of $89.8 million. Third quarter fiscal 2001 total operating loss included long-lived asset impairment charges of $609.5 million, depreciation and amortization charges of $236.2 million and restructuring charges of $18.5 million. CMGI continually evaluates the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of its long-lived assets. If it is determined that the carrying value may require adjustment and the estimated fair value of the asset is less than its recorded amount, an impairment charge is recorded. During the fourth quarter, the Company determined that the carrying values of certain of its long-lived assets required adjustment. The long-lived asset impairment charges recorded in the fourth quarter were primarily related to goodwill associated with the Company's fiscal 2000 acquisitions of AltaVista, Flycast and Tallan, the fiscal 2001 acquisition of MediaBridge and certain assets of NaviSite. CMGI's net loss was $1.276 billion or ($3.69) loss per share for the fourth quarter, compared to a net loss of $963.3 million or ($2.80) loss per share for the previous quarter ended April 30, 2001. Fourth quarter fiscal 2001 results included the impact of pre-tax losses, classified as "Other gains (losses), net," of $187.5 million related to a write-down of the Company's investment in Pacific Century CyberWorks Limited, $119.3 million related to write-downs of certain @Ventures investments and $106.1 million related to write-downs of certain 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 investments. Third quarter fiscal 2001 results included pre-tax losses of $26.1 million related to write-downs of certain @Ventures investments and $18.5 million on the sale of CMGI's majority interest in Signatures Network, Inc. As of July 31, 2001, CMGI had a consolidated cash and cash equivalents balance of $710.7 million. Total cash and cash equivalents usage was $135.1 million during the fourth quarter versus $119.0 million in the previous quarter. These amounts included net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from maturities or sales of marketable securities of $2.5 million and $73.8 million in the fourth and third quarters, respectively. CMGI expects to exit fiscal 2002 with a cash and cash equivalents balance in excess of $325 million and total cash and cash equivalents usage is expected to decline to approximately $10 -$15 million in the fourth quarter of fiscal 2002. "We continue to make measurable improvements in our performance, and our most recent quarter saw a number of significant actions," said David Wetherell, CMGI's Chairman and Chief Executive Officer. "We continue to aggressively restructure the operations of our core holdings and have taken several key steps to improve the prospects of these businesses. Our increased focus on realizing efficiencies through consolidation and improvement of operating processes should continue to bear fruit in the coming quarters as we move closer to our goal of profitability." Highlights - Corporate Significant corporate announcements made during the quarter or at the quarterly report include: Restructuring/Divestiture Update Subsequent to the quarter end, the following strategic actions were taken to continue CMGI's restructuring and focus resources on core operating assets Operating Assets Another term for working capital. : --CMGI has ceased funding the operations of NaviPath, its provider of Internet access See how to access the Internet. solutions. While NaviPath continues to explore strategic alternatives for its business, it is transitioning key customers to alternative service providers; --Loudeye Technologies, Inc. (Nasdaq: LOUD) has acquired Activate, CMGI's majority-owned provider of webcasting services; --Engage has sold certain online advertising assets to BlueStreak, Inc., a marketing technology company. The company also announced it will cease the remainder of its media operations as it completes its effort to focus on software products for multichannel marketing Refers to using several methods to sell products and services. The term has become popular since the advent of the Web, because it adds a prominent new channel to storefronts and catalog sales. One consideration of multichannel marketing is that each channel reinforce the other. . Executive Management Appointments --George McMillan appointed Chief Financial Officer --David Andonian promoted to President and 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. Board of Director Elections --Barry K. Allen, President, Allen Enterprises, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and former President, Ameritech (SBC (1) (SBC Communications Inc., San Antonio, TX, www.sbc.com) A large, national telecommunications company that grew from a multitude of local and regional companies, including Southwestern Bell, Pacific Bell and Nevada Bell, into a single, unified brand by 2002. Communications) --Jonathan A. Kraft, President and Chief Operating Officer, The Kraft Group The Kraft Group, LLC is a group of privately held companies in the professional sports, manufacturing, and real-estate development industries doing business in 82 countries[1]. and Vice Chairman, New England Patriots  Editing of this page by unregistered or newly registered users is currently disabled until (UTC) due to vandalism. Highlights - Operating Businesses and Venture Capital Significant accomplishments of CMGI's principal operating businesses, by segment, during the quarter include: eBusiness 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. uBid --Nielsen NetRatings and Harris Interactive Harris Interactive (NASDAQ: HPOL) is an American market research company that specializes in public opinion research using both telephone and surveys on online panels. The company is the product of a 1996 merger between the Gordon S. Black Company and Louis Harris & Associates. ranked uBid No. 2 in total revenue share in the online auction market --Announced agreement with Yahoo! Auctions to offer select uBid inventory to Yahoo! Auctions consumers --Launched redesigned site, including new features and functionalities, and merged product listings from its three auction channels: uBid Direct, uBid Preferred Partners and Consumer Exchange --Subsequent to the quarter close, uBid launched its first-ever national advertising campaign through an agreement with Sportsline.com, Inc., publisher of CBS (Cell Broadcast Service) See cell broadcast. SportsLine.com; television spots will air throughout the fall during telecasts of college football and the National Football League on the CBS Television Network CBS Television Network Major U.S. broadcasting company and network. It began in 1928 as the Columbia Broadcasting System, a small radio network directed by William S. Paley. . Search and Portals AltaVista --Named James Barnett For the Australian colonial architect of similar name, see . James Barnett, (1986, Hutchinson, Kansas) is an entrepreneur and community activist from Dallas, Texas. At 17, he created a social networking site for gay teens and young adults called My-Boi. as Chief Executive Officer --Expanded AltaVista Enterprise Search Software Architecture with new product developments for corporations to find and organize data in 30 languages and over 225 file formats within an organization --Entered into alliances with EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. , Hewlett Packard and Oracle to offer AltaVista Search Engine 3.0 to their customers --Achieved certification for AltaVista Search Engine 3.0 from Sun Microsystems' SunTone Certification and Branding Program for Applications --Added news headlines and abstracts from The New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Times' Internet division into search results pages on AltaVista.com --Launched AltaVista Express Inclusion service for small- and medium-sized businesses to submit and track website addresses for AltaVista's worldwide index. Interactive Marketing Engage --Launched new package application - PromoManager - designed to enable eCommerce businesses to quickly, easily and cost-effectively deliver highly-targeted promotional content on their Web sites --Unveiled AdManager 5.5, an enhanced version of its industry leading advertising management software for Web publishers --Following the close of the quarter, Engage unveiled its new Content Management Solution for Multichannel Marketing, a single integrated software package Software that combines several applications in one program, typically providing at least word processing, spreadsheet and database management. Presentation graphics, page layout, paint, calendar, address book, e-mail and other applications may also be included. that allows marketers, publishers, and their suppliers, such as advertising agencies and printing companies, to streamline the planning and delivery of their multichannel marketing programs. yesmail.com --Client wins for YesMail Customer Retention Solutions include Aon, uBid, and Hoover's Online, resulting in 10% growth in CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. revenue during the quarter --Growth of permission email addresses See Internet address. under YesMail management increased by 28%, to more than 25 million unique email addresses. Internet Professional Services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. Tallan --New client engagements include assignments with The Hartford 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. Group, NFPA NFPA National Fire Protection Association NFPA National Food Processors Association NFPA National Fluid Power Association NFPA National Federation of Paralegal Associations (Edmonds, WA) (National Fire Protection Association), Stage Stores, NewRoads and Manugistics Infrastructure and Enabling Technologies Equilibrium --Clear Channel Interactive, the country's largest network of local entertainment Web sites, selected MediaRich to automate the creation and delivery of messages to its network of more than 1,000 sites --Subsequent to the quarter close, Equilibrium launched Debabelizer Pro 5, the professional software for automatically preparing digital images, animations, and digital video for delivery in virtually any medium. NaviSite --Trish Gilligan named acting Chief Executive Officer --New managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality customer engagements included SLI (Scalable Link Interface) A multi-GPU interface from NVIDIA for connecting two or four NVIDIA display adapters together for faster graphics rendering on one monitor or two monitors. , Inc. and CRKInteractive --New streaming media See streaming audio, streaming video and digital media hub. customer engagements included the award of exclusive streaming rights for the British Open golf championship and the 2001 Wimbledon Tournament Venture Capital --CMGI's portion of @Ventures investments made during the quarter totaled $1.2 million, consisting of follow-on investments in Ensera and Alibris --Following the quarter close, @Ventures made additional follow-on investments in 2Roam and Virtual Ink About CMGI and @Ventures CMGI, Inc. (Nasdaq: CMGI), a leading global Internet operating and development company, is comprised of established and emerging companies, including both CMGI operating businesses and investments made through its venture capital affiliate, @Ventures. CMGI companies span a range of vertical market segments including search and portals; infrastructure and enabling technologies; e-business and fulfillment; interactive marketing; and Internet professional services. Compaq, Pacific Century CyberWorks and Sumitomo hold minority positions in CMGI. CMGI's majority-owned operating companies operating company A business that engages in transactions with outsiders. include Engage (Nasdaq: ENGA), NaviSite (Nasdaq: NAVI NAVI Nuclear Arms Verification Instrument NAVI New Analog Video Interface ), AltaVista, CMGion, Equilibrium, MyWay.com, SalesLink, Tallan, uBid and yesmail.com. @Ventures has ownership interests in more than 40 companies, with a focus on identifying, investing in and developing emerging technology companies and eBusinesses. CMGI's corporate headquarters is located at 100 Brickstone Square, Andover, MA 01810. @Ventures has offices there, as well as at 3000 Alpine ALPINE Antihypertensive Treatment and Lipid Profile in a North of Sweden Efficacy Evaluation (drug trial) ALPINE Advanced Logistics Program Integration and Engineering Road, Menlo Park Menlo Park. 1 Residential city (1990 pop. 28,040), San Mateo co., W Calif.; inc. 1874. Electronic equipment and aerospace products are manufactured in the city. Menlo College and a Stanford Univ. research institute are there. 2 Uninc. , CA 94028. For additional information, see http://www.cmgi.com and http://www.ventures.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, the expected fiscal 2002 financial results of CMGI and its segments and operating companies, the expected benefits of continued restructuring efforts, and the expected ability of CMGI to reduce its cash usage, preserve its capital resources 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 success is dependent upon its ability to integrate its operating companies in accordance with its segment strategy; CMGI's success, including its ability to decrease its cash burn rate, improve its cash position and revenue run rate 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' web sites and the Internet in general; CMGI may experience difficulties integrating technologies, operations and personnel in accordance with its business strategy; 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 Quarterly Report on Form 10-Q Form 10-Q See 10-Q. .
CMGI, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three months ended Twelve months ended
July 31, April 30, July 31, July 31, July 31,
2001 2001 2000 2001 2000
Net revenue $ 255,547 $ 289,143 $ 369,619 $ 1,237,702 $ 890,421
Operating expenses:
Cost of
revenue 236,119 260,054 301,566 1,131,778 735,164
Research and
development 25,577 35,621 52,647 158,960 153,930
In-process
research and
development -- -- 19,746 1,462 65,683
Selling 60,324 82,691 146,287 393,658 455,537
General and
administrative 56,614 64,999 83,333 281,105 218,264
Amortization of
intangible
assets and
stock-based
compensation 144,983 213,714 513,518 1,490,714 1,402,675
Impairment
of long-lived
assets 692,298 609,491 17,505 3,394,220 34,205
Restructuring 89,821 18,526 14,770 217,219 14,770
Total
operating
expenses 1,305,736 1,285,096 1,149,372 7,069,116 3,080,228
Operating
loss (1,050,189) (995,953) (779,753) (5,831,414) (2,189,807)
Other income (deductions):
Gains (losses)
on issuance of
stock by
subsidiaries
and affiliates,
net (644) (432) 8,460 121,794 80,387
Other gains
(losses),
net (429,818) (48,155) 97,230 (357,547) 525,265
Minority
interest 124,691 43,202 54,427 507,652 165,271
Equity in
losses of
affiliates (6,285) (9,948) (36,167) (45,661) (51,886)
Interest
income 9,601 12,517 10,571 54,033 41,521
Interest
expense (8,421) (6,637) (30,100) (48,055) (56,617)
Total (310,876) (9,453) 104,421 232,216 703,941
Loss before
income
taxes (1,361,065)(1,005,406) (675,332) (5,599,198) (1,485,866)
Income tax
benefit (84,771) (42,130) (41,665) (161,531) (121,173)
Net loss (1,276,294) (963,276) (633,667) (5,437,667) (1,364,693)
Preferred stock
accretion and
amortization of
discount (1,890) (1,829) (1,890) (7,499) (11,223)
Net loss
available
to common
stockholders $(1,278,184)$(965,105)$(635,557)$(5,445,166)$(1,375,916)
Basic and
diluted loss
per share
available to
common
stockholders $ (3.70) $ (2.80) $ (2.17) $ (16.52) $ (5.26)
Shares used
in computing
basic and
diluted loss
per share 345,834 344,186 293,532 329,623 261,555
CMGI, Inc. and Subsidiaries
Summarized Consolidated Segment Financial Information
(In thousands)
(Unaudited)
Three months ended Twelve months ended
July 31, April 30, July 31, July 31, July 31,
2001 2001 2000 2001 2000
Net revenue:
eBusiness and
Fulfillment $ 162,890 $ 166,197 $ 163,698 $ 691,414 $ 345,177
Search
and Portals 29,607 37,060 67,792 182,280 236,778
Interactive
Marketing 19,931 30,269 72,546 133,449 187,348
Internet
Professional
Services 12,642 21,014 30,487 94,464 42,498
Infrastructure
and Enabling
Technologies 30,477 34,603 35,096 136,095 78,620
$ 255,547 $ 289,143 $ 369,619 $ 1,237,702 $ 890,421
Operating loss:
eBusiness and
Fulfillment $ (44,746)$ (55,032)$ (44,609)$ (179,375)$ (53,769)
Search and
Portals (279,181) (72,778) (304,792) (1,928,685) (1,123,963)
Interactive
Marketing (420,023) (102,717) (190,833) (1,882,764) (489,490)
Internet
Professional
Services (90,294) (542,168) (52,842) (735,607) (83,520)
Infrastructure
and Enabling
Technologies (183,383) (198,913) (160,949) (1,002,213) (383,913)
Other (32,562) (24,345) (25,728) (102,770) (55,152)
$(1,050,189)$ (995,953)$ (779,753)$(5,831,414)$(2,189,807)
Recurring Operating Income (loss):
eBusiness and
Fulfillment $ (6,453)$ (3,609)$ (4,523)$ (16,461)$ (4,076)
Search and
Portals (13,765) (17,208) (56,777) (117,668) (244,256)
Interactive
Marketing (18,340) (25,297) (31,309) (142,767) (110,947)
Internet
Professional
Services (1,500) (712) (493) 2,842 (11,854)
Infrastructure
and Enabling
Technologies (44,007) (62,306) (71,757) (279,121) (184,084)
Other (20,385) (22,558) (23,843) (85,858) (52,554)
$ (104,450)$ (131,690)$ (188,702)$ (639,033)$ (607,771)
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