Click2learn Announces Third Quarter Results; Aspen 2.0 Launch Sparks Record Platform Bookings.Business Editors, High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers 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)--Oct. 24, 2002 Click2learn, Inc., (Nasdaq:CLKS) today announced its results for the third quarter ended September September: see month. 30, 2002. For the third quarter of 2002, Click2learn reported total net revenues of $6.9 million and new business bookings of $10.3 million, up from $7.9 million in the second quarter of 2002. Click2learn also reported an increase in deferred revenue of $1.4 million. The quarter's results reflect the positive market reaction to the company's new 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. (TM) 2.0 Enterprise Learning Platform, which was released in September. 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 net loss for the fourth quarter was $2.0 million or ($0.08) per share, in line with the company's guidance, compared to a pro forma net loss of $2.4 million, or ($0.12) per share, for the same period of 2001. Pro forma net loss excludes previously announced employee 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 and discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. costs. Throughout the quarter, Click2learn aggressively lowered its 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. and, as outlined in July, recorded a employee severance charge of approximately $500,000. As a result the company expects to achieve positive cash flows from operations at revenue levels of $7.5 - $8.0 million per quarter. The third quarter was marked by the shipment of the latest full version of the company's flagship product A primary product of a company, which is typically why the company was founded and/or what made it well known. For example, MS-DOS, Windows and the Microsoft Office suite have been flagship products of Microsoft. CorelDRAW is a flagship product of Corel Corporation. , Aspen 2.0. Aspen 2.0 has already been recognized as the industry's most comprehensive platform offering, uniquely integrating a Learning Management System (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 ), a Learning Content Management System (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 ) and a Virtual Classroom (VC) in a single, robust architecture. "The unique benefits of Aspen 2.0 certainly resonated with corporate buyers," said Kevin 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. . "During the third quarter we booked 18 Aspen Platform solutions at an average deal size of $400,000, up from $237,000 in the previous quarter. Aspen continues to be adopted by some of the most recognized companies in the world." In the third quarter, Aspen was purchased by new and current customers such as AT&T, Fidelity Investments Fidelity Investments is a group of privately held companies in the financial services industry. It is made up by two independent but closely cooperating companies, Fidelity Management and Research Corporation (FMR Co. , MedStar, Microsoft, Memorial Sloan Kettering Cancer Center, New Horizons, Exempla ex·em·pla n. Plural of exemplum. Healthcare, eRoom (which recently announced it was being purchased by Documentum), Northeast Utilities Northeast Utilities (NU) is a publicly-traded, Fortune 500 energy company headquartered in Berlin, Connecticut, with several regulated subsidiaries offering retail electricity and natural gas service to more than 2 million customers in New England. and Astra Zeneca, among others. "Aspen represents the pinnacle pinnacle (pĭn`ĭkəl), minor architectural motif of vertical tapering shape, usually crowning a pier, buttress, or gable. Although sometimes it appears in Renaissance design, as in the Certosa di Pavia, it is almost exclusively a medieval in evolution of e-learning authoring, management and delivery systems," said Cushing Cush·ing , Harvey Williams 1869-1939. American surgeon known for his innovations in the field of neurosurgery and for his studies of the pituitary gland. Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic , Program Director for IDC. "The successful integration of those critical elements demonstrates Click2learn's thorough understanding of what is needed to solve complex business problems. When companies are ready to select their enterprise learning solutions, Aspen must be on the short list." "As important as the initial uptake uptake /up·take/ (up´tak) absorption and incorporation of a substance by living tissue. up·take n. in Aspen has been, it is equally important to point out our progress on getting to profitability as quickly as possible," said Oakes. "We have sized the company at a level where reaching cash flow positive is very achievable at our fourth quarter projected revenue levels. We are also intently focused on getting to EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. positive as well, and we believe our current cash, credit and working capital are adequate to get us there." "While we have taken significant steps to reduce our current operating costs operating costs npl → gastos mpl operacionales ," Oakes continued, "we have also focused significant effort on making sure that customer satisfaction remains our first priority. As the leading e-Learning technology in the market today, we expect to leverage what is the largest installed base in the industry today as the basis for our future success. The winners in this industry will be those that achieve the highest level of customer success, and we are intently focused on helping our customers achieve their productivity goals with Aspen and our related products and services." Discontinued Operations In August the Company completed the discontinuation dis·con·tin·u·a·tion n. A cessation; a discontinuance. Noun 1. discontinuation - the act of discontinuing or breaking off; an interruption (temporary or permanent) discontinuance of its content development business, and has recorded charges related to early termination of its contract to develop content for the National Guard of $4.9 million, in line with prior guidance. As a result, financial statements have been reclassified to reflect the net results of current and historical content development revenues and expenses below operating expenses as a gain or loss from discontinued operations as required by GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Net loss for the quarter including employee severance and discontinued operations was $7.4 million or ($0.30) per share, in line with the company's guidance, as compared to a net loss of $2.8 million or ($0.12) per share in the quarter ended September 30, 2001. Recent Significant Events -- Aspen 2.0 productivity suite ships. Suite is the first of its kind to integrate LMS, LCMS and Virtual Classroom code bases into a single robust platform. -- Thomson University adopts Aspen for 44,000 employees. -- Thomson/NetG and Click2learn team to develop and deliver the model solution for tightly integrated, content and technology for Compucom. -- Microsoft Business Solutions announces they have selected Aspen to create, deliver and manage training that will help enhance certification programs for its reselling partners who distribute the division's financial, human resources, point-of-sale, customer relationship management, supply chain, payroll and other business applications. -- Click2learn Japan, a Click2learn joint venture, ships Kanji version of Aspen 2.0, 30 days after English language release. -- Aspen 2.0 distribution network expands with the addition of Bernard Julhiet Interactive in France and Crealogix in Switzerland. -- Playback Media joins Aspen Alliance Program. -- New Horizons, Fidelity Investments, AT&T, MedStar, Microsoft, Memorial Sloan Kettering Cancer Center, Exempla Healthcare, eRoom (which recently announced it was being purchased by Documentum), Northeast Utilities and Astra Zeneca purchase Aspen in the quarter, and existing companies such as Arrow Electronics, Charter Communications, Comalco, De Beers, and Medical Learning, among others, are announced as successfully deploying Aspen. -- Customer Productivity Center (CPC) is launched, offering education, information and support programs to customers of Aspen via special password-protected Web site built on Aspen. Financial Guidance As a result of its increased 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. the Company expects total revenue to be between $7.5 - 7.8 million for the fourth quarter of 2002. On a segment basis the Company expects Platforms revenue to be $6.0 - 6.3 million, Tools and Content Services to be approximately $1.0 million and $500,000 respectively. The Company expects to report a fourth quarter 2002 loss per share of between ($0.04 - $0.05), roughly equivalent to non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) for the quarter. Investor Conference Call The live audio of the conference call will be accessible 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 November 8 at 800/642-1687or 706/645-9291, ID number 6052483. About Click2learn, Inc. Click2learn (Nasdaq:CLKS) is a provider of enterprise software for Global 2000 organizations seeking to capture, manage and disseminate dis·sem·i·nate v. dis·sem·i·nat·ed, dis·sem·i·nat·ing, dis·sem·i·nates v.tr. 1. To scatter widely, as in sowing seed. 2. knowledge throughout their extended enterprise. Using Click2learn's Aspen Enterprise Learning Platform, organizations can deploy highly interactive, personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. learning initiatives to achieve strategic business objectives. Many of the world's best-known corporations use Click2learn's technology to improve workforce performance, educate customers, and publish large volumes of learning content. Click2learn's clients include 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 , AstraZeneca, Century 21, Fidelity Investments, Fujitsu, Microsoft, Pfizer, Symantec, and Towers Perrin Towers Perrin is a global professional services firm. It was established 1 March 1934 as Towers, Perrin, Forster & Crosby. The umbrella name of Towers Perrin was adopted in 1987. . Based in Bellevue, Wash., Click2learn (www.click2learn.com, 800.448.6543) operates offices 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. , Europe, Japan and Australia. For more information, visit www.click2learn.com. 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 information contained in this document where statements are preceded by, followed by or include the words "believes," "plans," "intends," "expects," "anticipates" or similar expressions. Such statements include financial guidance for any future period. For such statements, we claim 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 general economic conditions, market acceptance of our enterprise learning solutions and competing enterprise learning offerings, revenue mix and the timing of closing sales, the ability to successfully implement our solutions and increase revenues, the ability to successfully address technological developments and standards and the risk factors set forth in our filings with the Securities and Exchange Commission.
CLICK2LEARN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2002 2001
(unaudited)
------------- ------------
Assets
Current assets:
Cash and cash equivalents $4,009 $9,553
Accounts receivable, net of allowance
for returns and doubtful accounts
of $648 in 2002 and $1,430 in 2001 9,752 19,449
Inventories 42 62
Other 1,641 1,190
------------- ------------
Total current assets 15,444 30,254
Property and equipment, net 1,365 2,250
Goodwill and other intangible
assets, net 7,767 6,061
Other 596 789
------------- ------------
Total assets $25,172 $39,354
============= ============
Liabilities and Stockholders' Equity
Current liabilities $12,305 $9,377
------------- ------------
Total current liabilities 12,305 9,377
Noncurrent liabilities 42 417
------------- ------------
Total liabilities 12,347 9,794
------------- ------------
Stockholders' equity 12,825 29,560
------------- ------------
Total liabilities and
stockholders' equity $25,172 $39,354
============= ============
CLICK2LEARN, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2002 2001 2002 2001
------------------ -------------------
Unaudited Unaudited
------------------ -------------------
Revenue:
Tools $907 $1,711 $3,402 $5,538
Content Services 737 739 2,218 2,642
Platforms 5,295 6,059 16,231 13,688
--------- -------- --------- ---------
Total revenue 6,939 8,509 21,851 21,868
Cost of Revenue:
Tools 268 438 950 1,374
Content Services 577 627 1,884 2,410
Platforms 1,189 952 4,243 2,391
--------- -------- --------- ---------
Total cost of revenue 2,034 2,017 7,077 6,175
Gross Margin 4,905 6,492 14,774 15,693
Operating Expenses:
Research and development 2,041 2,180 6,726 6,663
Sales and marketing 3,690 4,546 12,952 14,205
General and administrative 1,182 1,580 4,221 4,815
Employee severance 485 - 485 -
Amortization of goodwill - 473 - 1,023
--------- -------- --------- ---------
Total operating
expenses 7,398 8,779 24,384 26,706
Loss from operations (2,493) (2,287) (9,610) (11,013)
Other income 15 33 28 288
Loss from affiliate (25) (100) (175) (300)
--------- -------- --------- ---------
Net loss from continuing
operations (2,503) (2,354) (9,757) (11,025)
Gain(loss) from discontinued
operations (4,934) (466) (7,584) 522
--------- -------- --------- ---------
Net loss $(7,437) $(2,820) $(17,341) $(10,503)
========= ======== ========= =========
Net loss per share, basic and
diluted $(0.30) $(0.14) $(0.71) $(0.55)
Shares used in computation of
basic and diluted
net loss per share 24,498 20,281 24,323 19,037
Proforma information which excludes discontinued
operations and restructuring charges:
Total revenue $6,939 $8,509 $21,851 $21,868
Total cost of revenue 2,034 2,017 7,077 6,175
Gross Margin 4,905 6,492 14,774 15,693
Operating Expenses 6,913 8,779 23,899 26,706
Loss from Operations (2,008) (2,287) (9,125) (11,013)
Proforma Net Loss $(2,018) $(2,354) $(9,272) $(11,025)
Proforma Loss per share, basic
and diluted $(0.08) $(0.12) $(0.38) $(0.58)
Shares used in computation of
basic and diluted
proforma net loss per share 24,498 20,281 24,323 19,037
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