Commerce One Reports Fourth Quarter and Full Year 2002 Results.Business Editors PLEASANTON Pleasanton, city (1990 pop. 50,553), Alameda co., W Calif., a suburb of the San Francisco–Oakland area, in a vineyard and dairy region; inc. 1894. Wine and cheese are produced, and there are publishing and stone-quarrying industries. , Calif.--(BUSINESS WIRE)--Jan. 30, 2003 Commerce One (Nasdaq:CMRC CMRC Canadian Motosport Racing Club CMRC Commerce One Inc. (stock symbol) CMRC Caribbean Marine Research Center CMRC Crime Mapping Research Center CMRC Credit Management Research Centre (UK) ) today announced financial results for the quarter and fiscal year ended December December: see month. 31, 2002. Revenues for the current quarter totaled $19.5 million as compared with $56.0 million for the corresponding quarter in 2001 and $26.4 million for the quarter ended September September: see month. 30, 2002. Revenues for the full year 2002 were $105.5 million as compared with 2001 full year revenues of $408.7 million. The net loss on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis for the current quarter was $279.5 million, or $9.57 per share, as compared with a net loss of $168.3 million, or $5.90 per share, for the corresponding quarter ended December 31, 2001, and $36.3 million, or $1.25 per share, for the quarter ended September 30, 2002. Commerce One also announced today that as part of its effort to continue streamlining the company to keep costs aligned, it plans to reduce overall headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 300 employees by the end of Q1 2003. These employees will be focused primarily around the deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. of the new Commerce One 6.0 Conductor conductor Any of various substances that allow the flow of electric current or thermal energy. A conductor is a poor insulator because it has a low resistance to such flow. platform. "The interest that we've we've Contraction of we have. we've have seen from our prospects and beta customers in Commerce One 6.0 Conductor demonstrates that our new platform solves a critical problem for enterprises today by optimizing and integrating existing resources," said Mark Hoffman, 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 Commerce One. "Our current 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 greater emphasis on partners and channels will provide the right balance of engineering, sales and customer support necessary to successfully bring this next generation of technology to market." Quarterly Highlights The following milestones were completed or announced during the fourth quarter of 2002: -- Commerce One signed 11 Early Adopter beta customer agreements for its new Commerce One 6.0 Conductor platform. The beta customers include both new and existing Commerce One customers. -- Commerce One received commitment from its first license customer for Commerce One 6.0 Conductor. -- Commerce One met two beta releases for Commerce One 6.0 Conductor on schedule on November 6th and December 20th. -- Commerce One added new customers to its roster for its supplier relationship management solutions and continued its momentum in the consumer packaged goods industry (CPG) with leading companies such as Sargento Foods Inc., Daisy Brands, and Bel/Kau Kauna, purchasing its solutions for UCCnet implementation. -- In December, Commerce One announced the sale of Commerce One.net, a business unit of Commerce One, to eScout to continue to streamline and focus the company. Commerce One also announced today that it recently discovered that it had overstated o·ver·state tr.v. o·ver·stat·ed, o·ver·stat·ing, o·ver·states To state in exaggerated terms. See Synonyms at exaggerate. o the company's stock compensation expense for the quarters ended March 31, 2002, June June: see month. 30, 2002 and September 30, 2002, resulting in a net loss for those periods that was slightly better than previously reported. The stock compensation expense for these periods was lower than previously reported by approximately $10.6 million in the third quarter of 2002, $8.8 million in the second quarter of 2002 and $8.9 million in the first quarter of 2002. This overstatement o·ver·state tr.v. o·ver·stat·ed, o·ver·stat·ing, o·ver·states To state in exaggerated terms. See Synonyms at exaggerate. o related to non-cash stock compensation expenses for certain employees from prior acquisitions no longer employed by the company, or whose options had been cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. in the company's stock option exchange program in 2001, but for whom the company continued to amortize amortize To write off gradually and systematically a given amount of money within a specific number of time periods. For example, an accountant amortizes the cost of a long-term asset by deducting a portion of that cost against income in each period. the expense. After adjusting the results in these quarters to correctly reflect the lower expense, the adjusted net loss on a GAAP basis for the third quarter of 2002 was reduced to $36.3 million or $1.25 per share, for the second quarter of 2002 was reduced to $62.3 million or $2.15 per share and for the first quarter of 2002 was reduced to $211.7 million or $7.36 per share. A reconciliation of the Company's results for those periods is provided at the end of this release. The Company also discovered that it had overstated its deferred stock compensation expense for the fiscal years ended 2000 and 2001 by amounts that were immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. to the financial results for those periods. Commerce One will conduct a live Web cast to discuss its fourth quarter 2002 results at 2:00 p.m. PST PST Paroxysmal supraventricular tachycardia, see there on Thursday Thursday: see week. , January January: see month. 30, 2003. The Web cast is accessible on www.commerceone.com/investors. About Commerce One Commerce One (Nasdaq: CMRC) is dedicated to delivering advanced software solutions that help business better collaborate with their partners, customers and suppliers. Commerce One's Conductor platform and complementary set of composite applications In computing, the term composite application expresses a perspective of software engineering that defines an application built by combining multiple services. People often compare composite applications to mashups. represent the next generation of collaborative col·lab·o·rate intr.v. col·lab·o·rat·ed, col·lab·o·rat·ing, col·lab·o·rates 1. To work together, especially in a joint intellectual effort. 2. solutions powered by Web services (1) Loosely, any online service delivered over the Web. Such usage appears in articles from non-technical sources, but not in IT-oriented publications, because definition #2 below describes the correct use of the term. . Conductor enables enterprises to optimize optimize - optimisation their existing technology investments by seamlessly enhancing functionality of existing applications and processes. For more information, go to www.commerceone.com. Forward Looking Statements The foregoing paragraphs include 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. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include statements concerning the timing and extent of the company's expected headcount reductions, the company's expectations regarding the success of its efforts to maintain and balance its cost structure, and the company's expectations regarding the timing of availability and the expected success of its new Conductor technology. These statements also include the company's estimates regarding the impact of the company's overstatement of certain deferred stock compensation expenses on the company's financial results reported for prior quarters. The words "believe," "expect," "will" and similar phrases as they relate to Commerce One are intended to identify such forward-looking statements. Such statements reflect the current views and assumptions of Commerce One, and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. These risks include, but are not limited to, unexpected expenses, the results of the final audit of the Company's financial results for the fiscal year 2002, the risk that the company may not have or may not be able to obtain adequate funding to fulfill 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. its plans, the risk that the planned headcount reductions may not sufficiently reduce our 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. , delays in developing or shipping new versions of our software solutions, the failure of the web services market to materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. as anticipated, the extent of customer adoption and utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of our current and future solutions and risks related to general economic conditions. The information provided in this press release is current as of the date of its publication. Commerce One expressly disclaims any obligation to release publicly any updates or revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to any forward-looking statements to reflect any changes in expectations, or any change in events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or on which those statements are based, unless otherwise required by law. For a discussion of these and other risk factors that could affect Commerce One's business, see "Risk Factors" in Commerce One's filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended September 30, 2002.
Commerce One, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
Dec. 31, Dec. 31,
2002 2001
--------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 77,263 $ 192,547
Restricted cash and short term investments 35,630 14,260
Short term investments -- 81,346
Accounts receivable, net 7,373 45,877
Prepaid expenses and other current assets 4,923 9,762
--------- ---------
Total current assets 125,189 343,792
Property and equipment, net 9,761 64,908
Goodwill and other intangible assets, net 18,449 409,534
Investments and other assets 6,023 10,707
--------- ---------
Total assets $ 159,422 $ 828,941
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,104 $ 23,773
Accrued compensation and related expenses 8,338 17,960
Deferred revenue 23,546 57,367
Other current liabilities 29,793 50,021
--------- ---------
Total current liabilities 64,781 149,121
Notes payable and capital lease obligations 25,204 19,000
Non-current accrued restructuring charges 21,947 37,005
Total stockholders' equity 47,490 623,815
--------- ---------
Total liabilities and stockholders' equity $ 159,422 $ 828,941
========= =========
Commerce One, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
December 31,
2002 2001
---------- ----------
Revenues:
License fees $ 4,518 $ 15,039
Services 14,996 40,920
---------- ----------
Total revenues 19,514 55,959
---------- ----------
Costs and expenses:
Cost of license fees(1) $ 35,534 11,974
Cost of services 11,670 36,540
Sales and marketing 10,691 31,560
Product development 14,573 28,767
General and administrative 2,942 19,448
Restructuring costs and other 7,082 50,458
Amortization of deferred stock compensation 1,517 23,717
Amortization of goodwill and other
intangible assets 2,878 21,888
Impairment of long-lived assets 214,082 --
---------- ----------
Total cost and expenses 300,969 224,352
---------- ----------
Loss from operations (281,455) (168,393)
Interest income and other, net 596 2,107
Provision for income taxes (1,377) 2,001
---------- ----------
Net loss $(279,482) $(168,287)
========== ==========
Basic and diluted net loss per share $ (9.57) $ (5.90)
========== ==========
Shares used in calculation of net
loss per share 29,200 28,502
========== ==========
(1) Results reflect the amortization and impairment charges relating
to the company's technology agreement with Covisint. This expense
approximated $35.7 million and $5.7 million for the quarters
ending December 31, 2002 and 2001, respectively.
Commerce One, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Twelve Months Ended
December 31,
2002 2001
---------- ------------
Revenues:
License fees $ 28,597 $ 130,917
Services 76,932 277,652
---------- ------------
Total revenues 105,529 408,569
---------- ------------
Costs and expenses:
Cost of license fees(2) 192,406 662,315
Cost of services 68,233 228,023
Sales and marketing 78,945 183,412
Product development 76,922 118,159
General and administrative 25,615 116,621
Purchased in-process research and
development -- 4,548
Restructuring costs and other 22,947 126,605
Amortization of deferred stock compensation 8,728 98,302
Amortization of goodwill and other
intangible assets 11,867 332,789
Impairment of long-lived assets 214,082 1,120,464
---------- ------------
Total cost and expenses 699,745 2,991,238
---------- ------------
Loss from operations (594,216) (2,582,669)
Interest income and other, net 4,681 7,571
Provision for income taxes 301 9,001
---------- ------------
Net loss $(589,836) $(2,584,099)
========== ============
Basic and diluted net loss per share $ (20.33) $ (103.02)
========== ============
Shares used in calculation of net
loss per share 29,011 25,084
========== ============
(2) Results reflect the amortization and impairment charges relating
to the company's technology agreement with Covisint. This expense
approximated $190.4 million and $647.5 million for the years
ending December 31, 2002 and 2001, respectively.
Net Loss and Earnings per Share Revision to Quarterly Financial
Results for Deferred Stock Compensation Adjustment
Q1 2002 Q2 2002 Q3 2002
======= ======= =======
Net loss as reported 220,596 71,130 46,938
Net loss as adjusted 211,681 62,333 36,340
Earnings per Share as reported (7.67) (2.46) (1.61)
Earnings per Share as adjusted (7.36) (2.15) (1.25)
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