CMGI Announces Third Quarter Fiscal 2005 Financial Results; Company Continues to Realize Broad Benefits of Modus Media Acquisition.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 2005 third quarter ended April 30, 2005. Q3 2005 vs. Q3 2004 Operating Highlights --Net Revenue, increased 151% to $265.7 million, reflecting greater sales activity and the 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 acquisition --Operating Loss, improved 71% to $1.9 million, primarily due to the Modus Media acquisition --Net Income, declined 72% to $19.6 million, due to lower tax benefits of a non-cash nature --Non-GAAP 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. , improved 332% to $4.4 million "We are making excellent progress toward our goal of building a business model that will create a strong foundation for future business expansion, grow CMGI's market value, and foster a culture of greater growth and winning in the marketplace. Our strategic plan is focused on increasing revenue and profitability, expanding our value add to our clients and driving operational efficiencies," said Joseph C. Lawler Lawler can refer to: People
1. of facilities that will enable us to improve our efficiencies in distributing product to its final destination while taking advantage of cost savings in lower cost regions," added Lawler. "In addition, our 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, following two investments in the clean energy industry earlier in the year, is gaining traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in that emerging field." CMGI reported net revenue of $265.7 million for the quarter ended April 30, 2005. This compares to net revenue of $105.8 million for the same period in fiscal 2004, an increase of $159.9 million, or 151%. This increase was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the Company's acquisition of Modus Media on August 2, 2004. 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. of $1.9 million for the third quarter of fiscal 2005, compared to an operating loss of $6.5 million for the same period in fiscal 2004, an improvement of $4.6 million, or 71%, year over year. The decline in operating loss year over year was the result of the acquisition of Modus Media, a strong sales increase, as well as the realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. of synergies and the related integration cost savings achieved to date. Partially offsetting these gains were the effects of price concessions given earlier in the year, increased costs due to Sarbanes-Oxley 404 compliance readiness actions and SAS (1) (SAS Institute Inc., Cary, NC, www.sas.com) A software company that specializes in data warehousing and decision support software based on the SAS System. Founded in 1976, SAS is one of the world's largest privately held software companies. See SAS System. 70 reviews for clients, charges related to the 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 and depreciation totaling $4.9 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 $1.5 million. Included in the Company's operating loss for the third quarter of fiscal 2004 were charges related to the amortization of stock-based compensation and depreciation totaling $1.8 million, and net restructuring charges of $2.8 million. In addition, reflecting the impact of the acquisition of Modus Media, gross margins for the quarter improved from 5% to 10%, year over year. CMGI reported net income of $19.6 million, or $0.04 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 2005, which includes a non-cash income tax benefit of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $24.7 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. This compares to net income of $69.4 million, or $0.17 diluted earnings per share, for the third fiscal quarter of 2004, when the Company recorded a similar non-cash income tax benefit of approximately $76.4 million. Excluding the effects of charges related to depreciation, amortization of intangible assets and stock-based compensation, and restructuring, CMGI reported non-GAAP operating income of $4.4 million for the third quarter of fiscal 2005. This compares to a non-GAAP operating loss of $1.9 million for the same period of the prior year, and represents an improvement of $6.3 million, or 332%, year over year. The improvement in non-GAAP operating income was the result of the acquisition of Modus Media and the integration cost savings achieved to date. 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. These charges, as well as charges related to depreciation and 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 April 30, 2005, 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 $187.1 million, versus consolidated cash, cash equivalents and marketable securities of $188.6 million at the end of the prior quarter. Conference Call Scheduled for June June: see month. 6th CMGI will hold a conference call to discuss its fiscal 2005 third quarter results at 5:00 PM Eastern Time on June 6, 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, the expected benefits of the Modus Media acquisition, our integration efforts and our investments in ModusLink, and the development and implementation of business strategies in our target markets and through our venture capital affiliate. 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 and sustain profitability, depends on its ability to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution 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 Media acquisition or the financial forecasts of CMGI following the Modus Media acquisition may not be achieved, due to problems or unexpected costs that may arise in successfully integrating the Modus Media 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. 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 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 conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. 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 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,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------
Net revenue $265,667 $295,724 $105,789 $818,517 $300,956
Operating expenses:
Cost of revenue 237,921 257,704 100,352 721,100 281,901
Selling 4,795 5,425 1,365 15,770 3,572
General and
administrative 21,018 19,726 7,641 60,223 28,063
Amortization of
intangible
assets and
stock-based
compensation 2,405 3,063 72 8,320 262
Restructuring,
net 1,472 977 2,811 3,785 5,566
-------- -------- -------- -------- --------
Total
operating
expenses 267,611 286,895 112,241 809,198 319,364
-------- -------- -------- -------- --------
Operating income
(loss) (1,944) 8,829 (6,452) 9,319 (18,408)
Other income
(expenses):
Other gains
(losses), net (10) (1,158) 1,323 (2,613) 45,083
Minority interest (4) - 76 (1) (2,118)
Equity in income
(losses) of
affiliates, net (338) 303 (693) (261) (1,571)
Interest income 1,206 877 799 2,713 2,821
Interest expense (394) (595) (451) (1,412) (1,227)
-------- -------- -------- -------- --------
Total 460 (573) 1,054 (1,574) 42,988
-------- -------- -------- -------- --------
Income (loss) from
continuing
operations before
income taxes (1,484) 8,256 (5,398) 7,745 24,580
Income tax expense
(benefit) (23,099) 1,020 (74,739) (20,553) (70,181)
-------- -------- -------- -------- --------
Income from
continuing
operations 21,615 7,236 69,341 28,298 94,761
Discontinued
operations, net of
income taxes:
Income (loss) from
discontinued
operations (2,047) - 61 (2,047) (984)
-------- -------- -------- -------- --------
Net income $ 19,568 $ 7,236 $ 69,402 $ 26,251 $ 93,777
======== ======== ======== ======== ========
Basic earnings
(loss) per share:
Earnings from
continuing
operations $ 0.04 $ 0.02 $ 0.17 $ 0.06 $ 0.24
Income (loss) from
discontinued
operations $ (0.00) $ - $ 0.00 $ (0.00) $ (0.00)
-------- -------- -------- -------- --------
Earnings $ 0.04 $ 0.02 $ 0.17 $ 0.06 $ 0.24
======== ======== ======== ======== ========
Diluted earnings
(loss) per share:
Earnings from
continuing
operations $ 0.04 $ 0.01 $ 0.17 $ 0.05 $ 0.23
Income (loss) from
discontinued
operations $ (0.00) $ - $ 0.00 $ (0.00) $ (0.00)
-------- -------- -------- -------- --------
Earnings $ 0.04 $ 0.01 $ 0.17 $ 0.05 $ 0.23
======== ======== ======== ======== ========
Shares used in
computing basic
earnings (loss) per
share 477,515 475,072 400,721 474,222 398,581
======== ======== ======== ======== ========
Shares used in
computing diluted
earnings (loss) per
share 486,210 485,719 405,650 482,585 404,291
======== ======== ======== ======== ========
CMGI, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Information
(In thousands)
(Unaudited)
Three months ended Nine months ended
April January April April April
30, 31, 30, 30, 30,
2005 2005 2004 2005 2004
-------- -------- -------- -------- --------
Net revenue:
------------
eBusiness and
Fulfillment
Americas $106,379 $130,212 $ 54,463 $343,857 $155,469
Asia 52,561 58,745 8,422 162,635 25,703
Europe 106,727 106,761 42,778 311,941 119,281
-------- -------- -------- -------- ---------
Total eBusiness
and Fulfillment 265,667 295,718 105,663 818,433 300,453
Managed Application
Services - 6 126 84 503
-------- -------- -------- -------- --------
$265,667 $295,724 $105,789 $818,517 $300,956
======== ======== ======== ======== ========
Operating income
(loss):
----------------
eBusiness and
Fulfillment
Americas $ (1,312) $ 3,319 $ (3,968) $ 2,323 $ (4,274)
Asia 3,969 8,797 (645) 19,673 (1,168)
Europe 132 1,375 789 302 3,243
-------- -------- -------- -------- --------
Total eBusiness
and Fulfillment 2,789 13,491 (3,824) 22,298 (2,199)
Managed Application
Services (432) 6 137 (348) 509
Portals - - (221) - (1,807)
Other (4,301) (4,668) (2,544) (12,631) (14,911)
-------- -------- -------- -------- --------
$ (1,944) $ 8,829 $ (6,452) $ 9,319 $(18,408)
======== ======== ======== ======== ========
Non-GAAP operating
income (loss):
------------------
eBusiness and
Fulfillment
Americas $ 1,642 $ 7,112 $ 312 $ 11,350 $ 2,716
Asia 5,319 10,310 (620) 24,808 (1,087)
Europe 1,518 2,322 845 4,287 3,400
-------- -------- -------- -------- --------
Total eBusiness
and Fulfillment 8,479 19,744 537 40,445 5,029
Managed Application
Services - 6 125 84 498
Portals - - (8) - (27)
Other (4,073) (4,296) (2,511) (11,669) (12,707)
-------- -------- -------- -------- --------
$ 4,406 $ 15,454 $ (1,857) $ 28,860 $ (7,207)
======== ======== ======== ======== ========
Note: Non-GAAP operating income (loss) represents total operating
income (loss), excluding net charges related to depreciation,
amortization of intangible assets and stock-based compensation and
restructuring.
TABLE RECONCILING NON-GAAP OPERATING INCOME (LOSS) TO GAAP OPERATING
INCOME (LOSS) AND NET INCOME
Non-GAAP Operating
income (loss) $ 4,406 $ 15,454 $ (1,857) $ 28,860 $ (7,207)
Adjustments:
Depreciation (2,473) (2,585) (1,712) (7,436) (5,373)
Amortization of
intangible assets
and stock-based
compensation (2,405) (3,063) (72) (8,320) (262)
Restructuring, net (1,472) (977) (2,811) (3,785) (5,566)
-------- -------- -------- -------- --------
GAAP Operating
income (loss) $ (1,944) $ 8,829 $ (6,452) $ 9,319 $(18,408)
-------- -------- -------- -------- --------
Other income
(expense) 460 (573) 1,054 (1,574) 42,988
Income tax expense
(benefit) (23,099) 1,020 (74,739) (20,553) (70,181)
Income (loss) from
discontinued
operations (2,047) - 61 (2,047) (984)
-------- -------- -------- -------- --------
Net income $ 19,568 $ 7,236 $ 69,402 $ 26,251 $ 93,777
======== ======== ======== ======== ========
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