Click2learn Announces Second Quarter 2003 Results; Platform Revenue up 25%; Earnings Per Share Exceeds Guidance.Business Editors BELLEVUE Bellevue (bĕl`vy  ).1 City (1990 pop. 30,982), Sarpy co., E Nebr., a suburb of Omaha, on the Missouri River; inc. 1855. , Wash.--(BUSINESS WIRE)--July 24, 2003 Click2learn (Nasdaq:CLKS) today announced its results for the quarter ended June June: see month. 30, 2003. For the second quarter of 2003, Click2learn reported revenues of $8.1 million, up 7% from $7.6 million in the second quarter of 2002. Revenue growth was primarily the result of the continued positive market reaction to the company's award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" Aspen aspen, in botany aspen: see willow. Aspen, city, United States Aspen (ăs`pən), city (1990 pop. 5,049), alt. 7,850 ft (2,390 m), seat of Pitkin co., S central Colo. Enterprise Productivity Suite(TM), which fueled a 25% increase in platform revenue to $6.9 million over $5.5 million in the second quarter of 2002. Net loss for the second quarter was $826,000 or ($0.03) per share as compared to a net loss of $4.2 million or ($0.17) per share for the same period 2002. The results were better than the company's guidance of ($0.04) to ($0.05) per share. "During the second quarter we booked 15 Aspen platform solutions at an average deal size in excess of $400,000 and ended the quarter with a backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of approximately $12 million," said Kevin KEVIN Keepers of the Eternal Vigilance of the Islamic Nation (fictional, from White Teeth by Zadie Smith) Oakes, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Click2learn. "We continue to expand Aspen within our current customer base, which now numbers over 400 platform customers. We also continue to attract prominent new customers due to the comprehensiveness of our suite and the strength of the individual products. Aspen is clearly a technology leader in the worldwide market for enterprise productivity platforms, and this superiority continues to resonate res·o·nate v. res·o·nat·ed, res·o·nat·ing, res·o·nates v.intr. 1. To exhibit or produce resonance or resonant effects. 2. with corporate and government buyers." In the second quarter of 2003, many new and current customers purchased Aspen including BBC BBC in full British Broadcasting Corp. Publicly financed broadcasting system in Britain. A private company at its founding in 1922, it was replaced by a public corporation under royal charter in 1927. Worldwide, Creo, First Data Corporation, Level 3, Medstar Health MedStar Health is a $2.9 billion non-profit healthcare organization. It operates 25 businesses, including seven hospitals in the Baltimore-Washington region of the United States. , Microsoft, US Army, Vodafone, and Wyeth, among others. Since the beginning of the quarter, Click2learn announced several accomplishments that demonstrated the momentum Aspen has in the marketplace. Those accomplishments included: -- Wins with Nestle, the University of Michigan (body, education) University of Michigan - A large cosmopolitan university in the Midwest USA. Over 50000 students are enrolled at the University of Michigan's three campuses. The students come from 50 states and over 100 foreign countries. , Rollins, Inc., the U.S. Air Force, Baker Hughes INTEQ Baker Hughes INTEQ is among the world's leading oilfield drilling service companies. INTEQ was formed from the legacy companies of Eastman Christensen, Teleco MWD, Milchem and EXLOG, which were acquired by Baker Hughes Incorporated in the late 1980s. and Centrelink, an Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. Government Services Organization. -- Click2learn continued to exhibit standards leadership in the field, recently announcing that Aspen is now SCORM SCORM Shareable Content Object Reference Model (web-based e-learning standard) SCORM Shared Courseware Object Reference Model SCORM Shareable Courseware Object Reference Model certified See certification. -- the only major platform in the industry to earn this important certification from the industry's most widely recognized standards body. -- Click2learn also showed Aspen's strong standards support through the announcement that the Advanced Distributed Learning Initiative (ADL), the original generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. of the SCORM standard, has added the Aspen platform to its Co-Laboratories (Co-Labs) in an effort to better evangelize e·van·gel·ize v. e·van·gel·ized, e·van·gel·iz·ing, e·van·gel·iz·es v.tr. 1. To preach the gospel to. 2. To convert to Christianity. v.intr. To preach the gospel. SCORM and the benefits of establishing a single standard for the learning industry. The Co-Labs will use Aspen to launch, demonstrate, test, and evaluate SCORM content for government, educational, military and other organizations interested in deploying learning technologies and initiatives. -- Aspen was also recognized in the latest edition of the brandon-hall.com LMS (Learning Management System) An information system that administers instructor-led and e-learning courses and keeps track of student progress. Used internally by large enterprises for their employees, an LMS can be used to monitor the effectiveness of the report. Following exhaustive evaluation of the Aspen LMS on a wide range of features and functionalities, the report concludes that "If you are looking for an enterprise-level system with built-in learning content management functionality already integrated, you should definitely add Aspen LMS (along with either the LCMS LCMS Lutheran Church--Missouri Synod LCMS Learning Content Management System (Docent, Inc.) LCMS Living Conditions Monitoring Survey LCMS Louisiana Center for Manufacturing Sciences LCMS Lindero Canyon Middle School , VCS (1) (Verilog Computer Simulator) See Verilog. (2) (Version Control System) See version control. , or both) to your short list." -- The company was also recognized as a Pioneer Of Innovation in enterprise learning, and praised for its industry leadership and commitment to learning product innovation as part of a study presented to the eLearning Forum in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden . "During the quarter, we also demonstrated investor confidence in the company by raising approximately $12 million in a private equity sale, involving several existing and new investors," Oakes added. "This additional capital fortifies our already solid financial structure." Equity Sale On June 20, 2003, Click2learn sold 7,460,644 shares of common stock at $1.67 per share in a private placement transaction. As part of that transaction Click2learn also sold warrants to purchase 2,611,225 shares of common stock at an exercise price of $1.90 per share. The warrants were sold at a price of $0.13 per warrant share. Click2learn also issued warrants for the purchase of an additional 373,032 shares to the placement agent on the same terms as the warrants issued to investors. 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). to the company after taking into account all estimated fees and expenses, but excluding the value assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to warrants, are approximately $11.9 million and will be used for working capital purposes. On July 23, 2003 Click2learn filed a registration statement on Form S-3 with the Securities and Exchange Commission to register the resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. of the common stock issued in the private placement (including those shares underlying the warrants) for resale by the investors. Financial Guidance Click2learn's guidance for the third quarter of 2003 is a range of $7.8 - $8.4 million for revenue, and a loss of between $0.03 - $0.04 per share, with positive cash flows from operating activities. Investor Conference Call The live audio of the conference call will be accessible at 2 PM PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT to the public via Webcast at www.click2learn.com/investor, or via phone at (888) 368-4278 or at (706) 679-3154. A replay of the conference call will be available via archived Webcast at the same URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. and via phone through Aug. 31, 2003 at (800) 642-1687 or (706) 645-9291, ID number 1614481. About Click2learn, Inc. Click2learn (Nasdaq:CLKS) is the recognized leader in enterprise productivity solutions for Global 2000 organizations and government agencies seeking to improve business performance and workforce productivity. Using Click2learn's Aspen Enterprise Productivity Suite(TM), many of the world's best-known corporations improve sales force readiness, achieve and demonstrate regulatory compliance, improve speed and quality of customer service, and educate customers and partners, while at the same time realizing significant cost savings. Click2learn's clients include such industry leaders as Accenture, American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the , Anheuser Busch, AT&T, Blue Cross/Blue Shield, Cendant, Fujitsu, Microsoft, New Horizons, Pfizer, the National Guard, The Thomson Corporation, Symantec and Vodafone. Based in Bellevue, Wash., with offices throughout the U.S., Click2learn (www.click2learn.com, 800.448.6543) also is represented in Europe, Australia, Japan and India. This announcement 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. that involve risks and uncertainties, including statements that are preceded by, followed by or include the words "believes," "plans," "intends," "expects," "anticipates" or similar expressions as well as statements of expected revenue, earnings or other financial guidance for any future period. For such statements, the Company claims the protection of the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for forward-looking statements contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. Factors that could cause actual results to differ from those contained in the forward-looking statements include economic conditions generally and overall spending levels for technology and enterprise software, market acceptance of and continued demand for the Aspen platform and competing offerings, the ability to successfully implement Aspen for our customers and increase revenues from existing customers, the ability to successfully address technological developments and standards and the risk factors set forth in filings the Company has made with the SEC. Click2learn, Aspen and ToolBook are trademarks of Click2learn. All other company and product names are the trademarks of their respective owners.
CLICK2LEARN, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, December 31,
2003 2002
--------- ------------
Assets
Current assets:
Cash and cash equivalents $15,750 $3,586
Accounts receivable, net of allowance for
returns and doubtful accounts of $861 in
2003 and $927 in 2002 9,458 10,785
Other 1,428 1,776
--------- ------------
Total current assets 26,636 16,147
Property and equipment, net 1,015 1,214
Goodwill 2,877 2,877
Intangible assets, net 4,109 4,636
Other 589 599
--------- ------------
Total assets $35,226 $25,473
========= ============
Liabilities and Stockholders' Equity
Current liabilities $12,205 $13,247
--------- ------------
Total current liabilities 12,205 13,247
Noncurrent liabilities 222 -
--------- ------------
Total liabilities 12,427 13,247
--------- ------------
Stockholders' equity 22,799 12,226
--------- ------------
Total liabilities and stockholders'
equity $35,226 $25,473
========= ============
CLICK2LEARN, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ------------------
2003 2002 2003 2002
----------- -------- -------- ---------
Revenue:
Platforms $6,871 $5,518 $13,423 $10,936
Tools 784 1,236 1,558 2,495
Content services 474 848 1,148 1,481
----------- -------- -------- ---------
Total revenue 8,129 7,602 16,129 14,912
Cost of revenue:
Platforms 1,476 1,480 3,050 3,054
Tools 133 287 258 682
Content services 445 652 1,017 1,307
----------- -------- -------- ---------
Total cost of revenue 2,054 2,419 4,325 5,043
Gross margin 6,075 5,183 11,804 9,869
Operating expenses:
Research and development 1,913 2,404 3,397 4,685
Sales and marketing 3,499 4,831 7,177 9,263
General and administrative 1,411 1,435 2,751 3,038
----------- -------- -------- ---------
Total operating
expenses 6,823 8,670 13,325 16,986
Operating loss from
continuing operations (748) (3,487) (1,521) (7,117)
Other income (expense) (46) (3) (93) 13
Equity in losses in affiliate (25) (75) (50) (150)
----------- -------- -------- ---------
Loss from continuing
operations before income
taxes (819) (3,565) (1,664) (7,254)
Income taxes (7) - (17) -
---------------------------------------
Loss from continuing
operations (826) (3,565) (1,681) (7,254)
Loss from discontinued
operations - (656) - (2,651)
---------------------------------------
Net loss $(826) $(4,221) $(1,681) $( 9,905)
=======================================
Amounts per share, basic and
diluted:
Loss from continuing
operations $(0.03) $(0.14) $(0.07) $( 0.29)
Loss from discontinued
operations - (0.03) - (0.11)
---------------------------------------
Net loss $(0.03) $(0.17) $(0.07) $( 0.40)
=======================================
Weighted average common
shares outstanding,
basic and diluted 25,757 24,271 25,288 24,235
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