CMGI Reports Fourth Quarter and Full Fiscal Year 2004 Financial Results; CMGI Reports Significant Improvements in Operating Results.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 fourth quarter and full fiscal year ended July July: see month. 31, 2004. "The results today show significant progress to date, as we've we've Contraction of we have. we've have restructured and realigned our business. With 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, Inc. acquisition, CMGI has established itself as a global market leader in supply chain management. By combining the supply chain management businesses of Modus Media and SalesLink into our new company, ModusLink, we have greater customer diversity, geographic scope and product offerings. CMGI's supply chain business will continue to focus on customer service excellence in the thriving thrive intr.v. thrived or throve , thrived or thriv·en , thriv·ing, thrives 1. To make steady progress; prosper. 2. outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. marketplace," said Joseph C. Lawler Lawler can refer to: People
Year Over Year Operating Highlights --Total Net Revenue, down 9% --Total Operating Loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. , improved by 74% --Net Income/(Loss), improved by 140% --Non-GAAP operating loss, improved by 57% Fiscal Year CMGI reported net revenue of $397.4 million for the fiscal year ended July 31, 2004. This compares to net revenue of $437.0 million for the fiscal year ended July 31, 2003, a decrease of $39.6 million, or 9%. This decrease was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower order volumes and lower per unit selling prices for certain programs that support a major U.S.-based original equipment manufacturer (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 ) customer. This decrease was partially offset by the addition of new projects in supply chain management and marketing distribution services during the year. CMGI reported an operating loss of $23.7 million for the fiscal year ended July 31, 2004, compared to an operating loss of $92.4 million for the fiscal year ended July 31, 2003, an improvement of $68.7 million, or 74%. The decrease in the operating loss was largely the result of lower 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 general and administrative expenses during fiscal 2004 as compared to the prior year. The decreases in these operating costs operating costs npl → gastos mpl operacionales were partially offset by a decline in gross margin from 8% to 6% primarily due to a change in the composition of products distributed for certain of our customers as well as price reductions provided to a major customer. The fiscal 2004 operating loss also included charges related to the amortization of stock-based compensation and depreciation totaling $7.1 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 $5.6 million. Included in the Company's fiscal 2003 operating loss were charges related to the amortization of stock-based compensation and depreciation totaling $10.8 million, and net restructuring charges of $55.3 million. CMGI reported net income of $87.0 million, or $0.22 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 fiscal 2004, compared to a net loss of $216.3 million, or ($0.55) 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 fiscal 2003. The net income in fiscal 2004 included 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. $76.4 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, and a $40.5 million gain by the Company's 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 subsidiary on the sale of approximately 3.2 million shares of Overture overture, instrumental musical composition written as an introduction to an opera, ballet, oratorio, musical, or play. The earliest Italian opera overtures were simply pieces of orchestral music and were called sinfonie. Services, Inc. common stock. The net loss in fiscal 2003 included a loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $81.6 million, or ($0.21) diluted loss per share. 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 of $11.0 million for the fiscal year ended July 31, 2004 versus a non-GAAP operating loss of $25.8 million in the fiscal year ended July 31, 2003. The decrease in our non-GAAP operating loss in fiscal 2004, as compared to fiscal 2003, is primarily the result of progress against cost reduction initiatives throughout the Company. 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 (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 performance of the Company's core operations. 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 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 ("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. Fourth Quarter CMGI reported net revenue of $96.5 million for the fourth quarter ended July 31, 2004. This compares to net revenue of $105.8 million for the quarter ended April 30, 2004, a decrease of $9.3 million, or 9%, quarter over quarter. This decrease was primarily due to lower order volumes from a major original equipment manufacturer (OEM) customer in 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). .
CMGI reported an operating loss of $5.3 million for the fourth quarter ended July 31, 2004, compared to an operating loss of $6.5 million for the third quarter ended April 30, 2004, a decrease of $1.2 million, or 18%, quarter over quarter. The decrease in the operating loss was largely the result of lower restructuring expenses during the fourth quarter and an increase in gross margins from 5% to 6%, quarter over quarter. Partially offsetting these improvements from operations were integration expenses related to the Modus Media acquisition and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when related costs. The fiscal 2004 fourth quarter operating loss also included charges related to the amortization of stock-based compensation and depreciation totaling $1.5 million. Included in the Company's third quarter operating loss 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, the operating loss for the three months ended April 30, 2004 included approximately $0.3 million 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 a net loss of $6.8 million, or ($0.02) diluted loss per share for the fourth quarter of fiscal 2004. This compares to net income of $69.4 million, or $0.17 diluted earnings per share, for the third quarter ended April 30, 2004. Net income in the third quarter of fiscal 2004 included a non-cash income tax benefit of approximately $76.4 million as a result of a reduction in the Company's estimate of certain income tax liabilities that had been included in accrued income taxes on the Company's balance sheet. Excluding the effects of charges related to depreciation, amortization, long-lived asset impairment, and restructuring, CMGI reported a non-GAAP operating loss of $3.7 million for the fourth quarter ended July 31, 2004 compared to a non-GAAP operating loss of $1.9 million for the third quarter ended April 30, 2004. The increase in non-GAAP operating loss in the fourth quarter was primarily the result of integration costs associated with the Modus Media acquisition and severance related costs. The non-GAAP operating loss for the three months ended April 30, 2004 included approximately $0.3 million of charges associated with a potential acquisition that was not consummated. As of July 31, 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 $272.2 million, versus consolidated cash, cash equivalents and marketable securities of $260.2 million at the end of the prior quarter. Cash, cash equivalents and marketable securities increased in the fourth quarter of fiscal year 2004 primarily due to cash provided from operating and investing activities of approximately $3.2 million and $9.4 million, respectively. The cash generated from investing activities included approximately $11.2 million from the release of the escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. proceeds associated with the AltaVista transaction, partially offset by other investing activities, including the investment of approximately $2.1 million in certain @Ventures investments. On August 2, 2004, CMGI completed the acquisition of Modus Media. As part of the consideration, CMGI made a net cash payment of approximately $66.2 million to retire Modus' debt and pay certain deal related costs. Basis of Presentation The Company's results of continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the 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 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 31, 2003. The results of operations of each of these former operating companies have been reported as discontinued operations in accordance with U. S. generally accepted accounting principles. Conference Call Scheduled for September September: see month. 30th CMGI will hold a conference call to discuss its fourth quarter and full fiscal year 2004 results at 5:00 p.m. Eastern Time on September 30, 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), through its subsidiaries, ModusLink and SalesLink, provides technology and product solutions that help businesses market, sell and distribute their products and services, and through its 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, invests venture capital 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 acquisition and our integration efforts, anticipated customer demands for certain products, expected continued growth in the markets for our products and services, 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 Fiscal Year ended
July 31, April 30, July 31, July 31, July 31,
2004 2004 2003 2004 2003
-------- --------- -------- -------- ---------
Net revenue $ 96,466 $ 105,789 $ 97,882 $397,422 $ 436,987
Operating expenses:
Cost of revenue 90,392 100,352 90,389 372,293 403,883
Selling 1,751 1,365 1,446 5,323 6,792
General and
administrative 9,469 7,641 13,741 37,532 62,668
Amortization of
stock-based
compensation 71 72 54 333 218
Impairment of long-
lived assets - - - - 456
Restructuring, net 38 2,811 26,204 5,604 55,348
-------- --------- -------- -------- ---------
Total operating
expenses 101,721 112,241 131,834 421,085 529,365
-------- --------- -------- -------- ---------
Operating loss (5,255) (6,452) (33,952) (23,663) (92,378)
Other income (deductions):
Other gains (losses),
net (85) 431 4,363 43,398 (41,317)
Minority interest 43 76 69 (2,075) 319
Equity in income
(losses) of
affiliates, net (785) 199 163 (756) (1,774)
Interest income 748 799 734 3,569 3,396
Interest (expense)
recovery, net (505) (451) (409) (1,732) 321
-------- --------- -------- -------- ---------
Total (584) 1,054 4,920 42,404 (39,055)
-------- --------- -------- -------- ---------
Income (loss) from
continuing operations
before income taxes (5,839) (5,398) (29,032) 18,741 (131,433)
Income tax expense
(benefit) 649 (74,739) 582 (69,532) 3,249
-------- --------- -------- -------- ---------
Income (loss) from
continuing operations (6,488) 69,341 (29,614) 88,273 (134,682)
Discontinued operations,
net of income taxes:
Income (loss) from
discontinued
operations (314) 61 13,224 (1,298) (81,626)
-------- --------- -------- -------- ---------
Net income (loss) $ (6,802)$ 69,402 $(16,390)$ 86,975 $(216,308)
======== ========= ======== ======== =========
Basic and diluted
earnings (loss) per share:
Earnings (loss) from
continuing operations $ (0.02)$ 0.17 $ (0.07)$ 0.22 $ (0.34)
Earnings (loss) from
discontinued
operations $ - $ - $ 0.03 $ - $ (0.21)
-------- --------- -------- -------- ---------
Earnings (loss) $ (0.02)$ 0.17 $ (0.04)$ 0.22 $ (0.55)
======== ========= ======== ======== =========
Shares used in computing
basic earnings (loss)
per share 400,845 400,721 394,514 399,153 393,455
======== ========= ======== ======== =========
Shares used in computing
diluted earnings (loss)
per share 400,845 405,650 394,514 404,246 393,455
======== ========= ======== ======== =========
CMGI, Inc. and Subsidiaries
Consolidated Statements of Operations Information
(In thousands)
(Unaudited)
Three months ended Fiscal Year ended
July 31, April 30, July 31, July 31, July 31,
2004 2004 2003 2004 2003
-------- --------- -------- -------- --------
Net revenue:
------------
eBusiness and
Fulfillment $ 96,355 $ 105,663 $ 97,545 $396,808 $435,879
Enterprise Software
and Services - - - - 227
Managed Application
Services 111 126 337 614 881
-------- --------- -------- -------- --------
$ 96,466 $ 105,789 $ 97,882 $397,422 $436,987
======== ========= ======== ======== ========
Operating income (loss):
------------------------
eBusiness and
Fulfillment $ (408)$ (3,824)$ (7,036)$ (2,607)$(20,021)
Enterprise Software
and Services 23 - 120 23 (846)
Managed Application
Services 85 137 (904) 594 (653)
Portals - (221) (436) (1,807) (17)
Other (4,955) (2,544) (25,696) (19,866) (70,841)
-------- --------- -------- -------- --------
$ (5,255)$ (6,452)$(33,952)$(23,663)$(92,378)
======== ========= ======== ======== ========
Non-GAAP operating income (loss):
---------------------------------
eBusiness and
Fulfillment $ 1,036 $ 537 $ 695 $ 6,065 $ 7,352
Enterprise Software
and Services - - 50 - (861)
Managed Application
Services 111 125 652 609 1,212
Portals - (8) 55 (27) 1,011
Other (4,895) (2,511) (6,333) (17,602) (34,487)
-------- --------- -------- -------- --------
$ (3,748)$ (1,857)$ (4,881)$(10,955)$(25,773)
======== ========= ======== ======== ========
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 $ (5,255)$ (6,452)$(33,952)$(23,663)$(92,378)
Adjustments:
Depreciation 1,398 1,712 2,813 6,771 10,583
Amortization of stock-
based compensation 71 72 54 333 218
Long-lived asset
impairment - - - - 456
Restructuring, net 38 2,811 26,204 5,604 55,348
-------- --------- -------- -------- --------
Non-GAAP Operating Loss $ (3,748)$ (1,857)$ (4,881)$(10,955)$(25,773)
======== ========= ======== ======== ========
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