CMGI Announces Third Quarter Fiscal 2004 Financial Results.Business Editors/High-Tech Writers CHARLESTOWN Charlestown, town, St. Kitts-Nevis Charlestown, town (1991 pop. 1,411) on the island of Nevis, St. Kitts and Nevis, West Indies. Charlestown is the chief town and port of the island. , Mass.--(BUSINESS WIRE)--June 10, 2004 CMGI CMGI Commonly Maintained Grounds Infrastructures CMGI College Marketing Group Information (Services) , Inc. (Nasdaq: CMGI) today reported financial results for its fiscal 2004 third quarter ended April 30, 2004.
Key Financial Metrics:
Q3 2004 Over Q2 2004
-- Total Net Revenue, Increased 5%
-- Total Operating Loss, Increased 35%
-- Net Income, Increased 1,365%
-- Non-GAAP operating loss, Improved 15%
Third Quarter CMGI reported net revenue from 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 of $105.8 million for its fiscal 2004 third quarter ended April 30, 2004. This compares to net revenue of $100.3 million for the second quarter ended January January: see month. 31, 2004, an increase of $5.5 million, or 5%, quarter over quarter. The sequential One after the other in some consecutive order such as by name or number. quarterly increase in revenue is largely attributed to growth within the U.S. supply chain management 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 of the Company's SalesLink subsidiary. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2.2 million of the revenue increase in 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. was due to higher order volumes from major OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers, while the balance of the increase was the result of sales generated in connection with newly awarded programs from both existing and new accounts. 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. from continuing operations of $6.5 million for the third quarter ended April 30, 2004, compared to an operating loss from continuing operations of $4.8 million for the quarter ended January 31, 2004, an increase of $1.7 million, or 35%, quarter over quarter. The increase in the operating loss from continuing operations was largely the result of increased 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). expenses during the third quarter and a decrease in gross margins from 6% to 5% quarter over quarter. The increase in restructuring expenses primarily reflects adjustments of approximately $2.8 million to previously recorded restructuring estimates for facility lease obligations that represent excess capacity within SalesLink's U.S. supply chain management operations. The decrease in gross margins was largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to changes in the composition of products distributed in the United States for certain of our customers. These increased operating costs operating costs npl → gastos mpl operacionales were partially offset by a $1.1 million, or 13%, reduction in general and administrative expenses from the prior quarter. The fiscal 2004 third quarter operating loss from continuing operations also included charges related to the amortization of stock-based compensation and depreciation totaling $1.8 million. Included in the Company's second quarter operating loss from continuing operations were charges related to the amortization of stock-based compensation and depreciation totaling $1.5 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 $1.1 million. In addition, operating loss from continuing operations for the three months ended April 30, 2004 and for the three months ended January 31, 2004, included approximately $0.3 million and $0.8 million, respectively, of charges associated with a potential acquisition that was not consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. . CMGI reported net income of $69.4 million, or $0.17 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , for the third quarter of fiscal 2004. This compares to a net loss of $5.5 million, or ($0.01) diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. loss per share, for the second quarter ended January 31, 2004. Net income in the third quarter of fiscal 2004 included a non-cash income tax benefit of approximately $74.7 million as a result of a reduction in the Company's estimate of certain income tax liabilities that had been included in accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. income taxes on the Company's balance sheet. Excluding the effects of charges related to depreciation, amortization, 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. , and restructuring, CMGI reported a non-GAAP operating loss from continuing operations of $1.9 million for the third quarter ended April 30, 2004, a 15% improvement versus the non-GAAP operating loss from continuing operations of $2.2 million in the second quarter ended January 31, 2004. The decrease in non-GAAP operating loss from continuing operations in the third quarter was primarily the result of lower general and administrative expenses in the third quarter as compared to the second quarter. The non-GAAP operating loss from continuing operations for the three months ended April 30, 2004 and for the three months ended January 31, 2004 included approximately $0.3 million and $0.8 million, respectively, of charges associated with a potential acquisition that was not consummated. The Company believes that its non-GAAP measure of operating income/(loss) from continuing operations ("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 (depreciation, amortization of stock-based compensation, long-lived asset impairment and restructuring) were excluded because they may be considered to be of a non-operational nature. Historically, the Company has recorded significant impairment and restructuring charges and therefore management uses non-GAAP operating income/(loss) to assist in evaluating the Company's actual and expected operating performance. 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. These non-GAAP results 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 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 ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). A table reconciling the Company's non-GAAP operating loss to its GAAP operating loss is included in the statements of operations information in this release. As of April 30, 2004, CMGI had 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: 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 $260.2 million, versus consolidated cash, cash equivalents and marketable securities of $265.5 million at the end of the prior quarter. Cash, cash equivalents and marketable securities decreased in the third quarter of fiscal year 2004 primarily due to cash usage from operating activities of continuing operations of approximately $13.9 million, as compared to cash usage from operating activities of continuing operations of approximately $3.4 million in the quarter ended January 31, 2004. This increase in cash usage for operations was primarily attributable to inventory purchases during the quarter to support anticipated customer demand for certain products over the second half of our fiscal 2004. This cash usage was partially offset by cash provided by financing activities of $10.8 million, which represents borrowings under SalesLink's revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. to finance the inventory purchases noted above. 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
"The revenue has continued to grow in the third quarter as a result of strength in the United States plus contribution of new business wins. Non-GAAP operating loss has also improved due to leaner operations. Customer demands to build inventories in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of increased sales required net use of cash, but we have also made progress in inventory management and we continue to work to improve our vendor terms. Finally, we are very excited by our pending acquisition of 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, Inc. This acquisition, which is on track for a calendar third quarter closing, gives CMGI a global leader in supply chain management, in addition to our other operating and venture assets." Basis of Presentation The Company's results of continuing operations discussed herein exclude the results of operations of the Company's former operating companies operating company A business that engages in transactions with outsiders. AltaVista (AltaVista Company, Palo Alto, CA, www.altavista.com) The first search engine to index every word on a page and provide a retrieval system to extract relevant information. Developed by Digital's Research Labs in Palo Alto in 1995, the AltaVista search engine is available in more than 25 and uBid, each of which sold substantially all of their assets, Engage, NaviSite, Yesmail and Tallan, each of which were divested; and ProvisionSoft, which ceased operations, during the fiscal year ended July July: see month. 31, 2003. The results of operations of each of these former operating companies have been reported 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 with generally accepted accounting principles. As of April 30, 2004, the Company's operating businesses included SalesLink and SL Supply Chain Services International Corp., a wholly-owned subsidiary of SalesLink, each of which operate within the Company's eBusiness See e-business. and Fulfillment segment. The Company also continues to hold investments in various companies through its @Ventures venture capital affiliates. Conference Call Scheduled for June June: see month. 10th CMGI will hold a conference call to discuss its fiscal 2004 third quarter results at 5:00 p.m. Eastern Time on June 10, 2004. 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) provides technology and commerce solutions that help businesses market, sell and distribute their products and services. In addition, 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, focuses on identifying, investing in and developing emerging companies. CMGI offers industry-leading global supply chain management and distribution and fulfillment services. 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, the expected benefits of the Modus acquisition, anticipated customer demands for certain products, and the expected ability of CMGI to preserve and utilize its capital resources, and increase productivity, to grow its businesses. 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 decrease its cash burn rate, improve its cash position, expand its operations 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 its products and services; the possibility that expected benefits of the Modus acquisition or the financial forecasts of CMGI following the Modus acquisition may not be achieved, due to problems or unexpected costs that may arise in successfully integrating the Modus business or an inability to realize expected synergies or make expected future investments in the combined businesses; 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; 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. . 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 Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
April January April April April
30, 31, 30, 30, 30,
2004 2004 2003 2004 2003
-------- -------- -------- -------- ---------
Net revenue $105,789 $100,279 $106,109 $300,956 $ 339,105
Operating expenses:
Cost of revenue 100,352 94,139 98,582 281,901 313,494
Selling 1,365 1,010 1,066 3,572 5,346
General and
administrative 7,641 8,785 13,557 28,063 48,927
Amortization of
stock-based
compensation 72 88 55 262 164
Impairment of long-
lived assets - - 432 - 456
Restructuring, net 2,811 1,069 19,938 5,566 29,144
-------- -------- -------- -------- ---------
Total operating
expenses 112,241 105,091 133,630 319,364 397,531
-------- -------- -------- -------- ---------
Operating loss (6,452) (4,812) (27,521) (18,408) (58,426)
Other income
(deductions):
Other gains
(losses), net 431 908 (11,608) 43,483 (45,680)
Minority interest 76 87 99 (2,118) 250
Equity in income
(losses) of
affiliates, net 199 (214) (1,049) 29 (1,937)
Interest income 799 1,048 710 2,821 2,662
Interest (expense)
recovery, net (451) (380) (432) (1,227) 730
-------- -------- -------- -------- ---------
Total 1,054 1,449 (12,280) 42,988 (43,975)
-------- -------- -------- -------- ---------
Income (loss) from
continuing operations
before income taxes (5,398) (3,363) (39,801) 24,580 (102,401)
Income tax expense
(benefit) (74,739) 1,569 1,073 (70,181) 2,667
-------- -------- -------- -------- ---------
Income (loss) from
continuing operations 69,341 (4,932) (40,874) 94,761 (105,068)
Discontinued
operations, net of
income taxes:
Income (loss) from
discontinued
operations 61 (554) 117,806 (984) (94,850)
-------- -------- -------- -------- ---------
Net income (loss) $ 69,402 $ (5,486)$ 76,932 $ 93,777 $(199,918)
======== ======== ======== ======== =========
Basic earnings (loss)
per share:
Earnings (loss) from
continuing operations $ 0.17 $ (0.01)$ (0.10)$ 0.24 $ (0.27)
Earnings (loss) from
discontinued
operations $ - $ - $ 0.30 $ - $ (0.24)
-------- -------- -------- -------- ---------
Earnings (loss) $ 0.17 $ (0.01)$ 0.20 $ 0.24 $ (0.51)
======== ======== ======== ======== =========
Diluted earnings (loss)
per share:
Earnings (loss) from
continuing operations $ 0.17 $ (0.01)$ (0.10)$ 0.23 $ (0.27)
Earnings (loss) from
discontinued
operations $ - $ - $ 0.30 $ - $ (0.24)
-------- -------- -------- -------- ---------
Earnings (loss) $ 0.17 $ (0.01)$ 0.20 $ 0.23 $ (0.51)
======== ======== ======== ======== =========
Shares used in
computing basic
earnings (loss) per
share 400,721 399,849 393,542 398,581 393,106
======== ======== ======== ======== =========
Shares used in
computing diluted
earnings (loss) per
share 405,650 399,849 393,542 404,291 393,106
======== ======== ======== ======== =========
CMGI, Inc. and Subsidiaries
Consolidated Statements of Operations Information
(In thousands)
(Unaudited)
Three months ended Nine months ended
April January April April April
30, 31, 30, 30, 30,
2004 2004 2003 2004 2003
-------- -------- -------- -------- --------
Net revenue:
------------
eBusiness and
Fulfillment $105,663 $100,067 $105,974 $300,453 $338,334
Enterprise Software
and Services - - - - 227
Managed Application
Services 126 212 135 503 544
-------- -------- -------- -------- --------
$105,789 $100,279 $106,109 $300,956 $339,105
======== ======== ======== ======== ========
Operating income (loss):
------------------------
eBusiness and
Fulfillment $ (3,824)$ 813 $(15,028)$ (2,199)$(12,985)
Enterprise Software
and Services - - - - (966)
Managed Application
Services 137 211 (149) 509 251
Portals (221) (1,586) (450) (1,807) 419
Other (2,544) (4,250) (11,894) (14,911) (45,145)
-------- -------- -------- -------- --------
$ (6,452)$ (4,812)$(27,521)$(18,408)$(58,426)
======== ======== ======== ======== ========
Non-GAAP operating
income (loss):
------------------------
eBusiness and
Fulfillment $ 537 $ 2,302 $ 1,767 $ 5,029 $ 6,657
Enterprise Software
and Services - - - - (911)
Managed Application
Services 125 212 136 498 560
Portals (8) (19) (7) (27) 956
Other (2,511) (4,690) (6,157) (12,707) (28,154)
-------- -------- -------- -------- --------
$ (1,857)$ (2,195)$ (4,261)$ (7,207)$(20,892)
======== ======== ======== ======== ========
Note: Non-GAAP operating income (loss) represents total operating
income (loss), excluding net charges related to depreciation,
amortization of stock-based compensation, long-lived asset impairment
and restructuring.
TABLE RECONCILING GAAP OPERATING INCOME (LOSS) TO NON-GAAP
OPERATING INCOME (LOSS)
GAAP Operating Loss $ (6,452)$ (4,812)$(27,521)$(18,408)$(58,426)
Adjustments:
Depreciation 1,712 1,460 2,835 5,373 7,770
Amortization of stock-
based compensation 72 88 55 262 164
Long-lived asset
impairment - - 432 - 456
Restructuring, net 2,811 1,069 19,938 5,566 29,144
-------- -------- -------- -------- --------
Non-GAAP Operating Loss $ (1,857)$ (2,195)$ (4,261)$ (7,207)$(20,892)
======== ======== ======== ======== ========
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