Critical Path Announces 2005 Second Quarter Results; Company Continues Consumer Strategy Momentum; Q2 Revenue in Line with Guidance; Gross Margins Up; Expenses Down.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 -- Critical Path, Inc. (Nasdaq:CPTH), a leading provider of messaging software and services, today announced unaudited financial results for the second quarter ended June June: see month. 30, 2005. For the second quarter of 2005, revenues were $17.1 million, compared to $17.4 million in the first quarter of 2005 and $17.0 million in the second quarter of 2004. "For the fourth quarter in a row, our results are consistent with our guidance," said Mark Ferrer Ferrer is a surname known in many countries. The name itself is a mutation of the Latin word Ferrarius, meaning iron-worker or smith; for this reason, the crests of the various branches of Ferrer nobles and knights always include horse shoes. , 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. , Critical Path. "Approaching profitability, reducing expense and stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. revenues have been the result of our focus on the growing consumer messaging market -- a strategy we began executing on last fall. Our Memova(TM) business is growing, while increasing as a percentage of overall revenue. In Q2 we signed several Memova(TM) Messaging and Memova(TM) Anti-Abuse deals, and we expect to see our first revenues from Memova(TM) Mobile -- our new consumer mobile email solution -- in Q3, as mobile operators begin launching new services." GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Results For the second quarter of 2005, net loss attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shareholders, based on 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), was $7.9 million or $0.27 per share, compared to a net loss of $12.6 million or $0.46 per share in the first quarter of 2005 and a net loss of $12.4 million or $0.59 per share in the second quarter of 2004. The net loss which excludes accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of mandatorily Adv. 1. mandatorily - in a manner that cannot be evaded; "the ministry considers that contributions to such a fund should be met from voluntary donations rather than from rates compulsorily levied." compulsorily, obligatorily redeemable Redeemable Eligible for redemption under the terms of an indenture. preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , a non-cash item related to our outstanding preferred stock, for the second quarter of 2005 was $1.4 million or $0.05 per share, compared to a net loss of $7.4 million or $0.27 per share in the first quarter of 2005 and a net loss of $9.1 million or $0.43 per share in the second quarter of 2004. For the second quarter of 2005, total cost of net revenues and 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. , based on GAAP, were $20.0 million, compared to $25.7 million in the first quarter of 2005 and a 34% decline from $30.3 million in the second quarter of 2004. Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become Results For the second quarter of 2005, net loss, on an adjusted EBITDA basis, was $0.7 million, or $0.02 per share, compared to a loss of $3.1 million or $0.11 per share in the first quarter of 2005 and a loss of $7.9 million or $0.37 per share in the second quarter of 2004. For the second quarter of 2005, total cost of net revenues and operating expenses on an adjusted EBITDA basis was $17.8 million, compared to $20.5 million for the first quarter of 2005 and $24.9 million for the second quarter of 2004. Adjusted EBITDA results, a non-GAAP metric we use to measure the performance of our business, is earnings before interest income (expense), provision for income taxes, depreciation and amortization adjusted to exclude other items such as other income (expense), 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 other expenses, stock-based expenses and accretion on mandatorily redeemable preferred stock. "I am happy to report that our commitment to operational excellence is continuing to pay off, improving our economic profile. This quarter marks our fourth quarter of improved gross margins, with significant gross margin gains over the same quarter last year," said Jim Clark Jim Clark - Dr. James H. Clark , CFO See Chief Financial Officer. , Critical Path. "In addition, we've we've Contraction of we have. we've have continued to reduce operating expenses without impacting our revenues and we reduced debt by $5.6 million in Q2." As of June 30, 2005, the Company's cash and cash equivalents totaled $17.0 million, compared to $27.2 million at March 31, 2005 and $23.2 million at December December: see month. 31, 2004. In the quarter, the Company paid down debt by $5.6 million. In addition, we were negatively affected by currency exchange fluctuations. The Company expects to significantly reduce cash burn in Q3 and Q4. Second Quarter 2005 Highlights --Approaching Profitability: Second quarter 2005 results continue to improve toward profitability. As referred to above, losses have narrowed significantly. --In with Memova(TM) -- Critical Path was able to meet revenue expectations again this quarter due to revenue from core consumer messaging solutions for service providers. Significant deals in the quarter included Swisscom's purchase of Memova(TM) Messaging (see today's separate announcement) and T-System's purchase of Memova Anti-Abuse. --Memova(TM) Mobile in Asia -- China, India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. and Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. are expected to provide a significant opportunity for Critical Path. Indosat PT Indosat Tbk (NYSE: IIT) is an Indonesian telecommunications company. It was established in 1967 as a foreign investment company. It is the second largest provider of wireless services in Indonesia through its three brands, Matrix, Mentari, and IM-3. -- a leading telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. provider in Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago. with more than 10 million mobile subscribers -- is expected to go live with Memova Mobile services for the mass market next month. Multiple operators are currently engaged in market trials, deployments and evaluations of Memova Mobile in Asia. The Company has expanded resources in Asia, bringing in a new Director of China & Northern Asia, and adding new field sales & marketing skills. Guidance Second quarter 2005 revenue of $17.1 million was in line with the Company's guidance range of $17.0 to $19.0 million. Gross margins, on an adjusted EBITDA basis, were 54%, slightly better than the guidance range of 49% to 53%. Operating expenses, on an adjusted EBITDA basis, were better than the previously provided guidance of $10.5 million to $11.5 million. The Company currently expects revenue for the third quarter of 2005 to be in the range of $17.0 million to $19.0 million, and in the range of $18.0 million to $20.0 million in the fourth quarter of 2005. This guidance is on an adjusted EBITDA (non-GAAP) basis as described above. If the Company is successful in delivering the middle to high end of its revenue range, it expects total gross margins in the third and fourth quarters to be in the range of 53% to 58%. Additionally, the Company expects its operating expenses to be in the range of $9.5 million to $10.5 million in the third and fourth quarters of 2005. Regulation G Due to the forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. nature of the projections of gross margins and operating expenses on an adjusted EBITDA basis given directly above, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP measures is not available without unreasonable effort. The Company believes that the information necessary to reconcile the non-GAAP financial measures to GAAP, such as future restructuring costs, if any, other income (expense), interest income and expense, stock-based expenses and accretion on mandatorily redeemable preferred stock, are not reasonably estimable es·ti·ma·ble adj. 1. Possible to estimate: estimable assets; an estimable distance. 2. Deserving of esteem; admirable: an estimable young professor. or predictable. The Company uses both GAAP and non-GAAP metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. to measure its financial results. The non-GAAP metrics used are: income (loss) on an adjusted EBITDA basis, both cost of revenues and operating expenses on an adjusted EBITDA basis and Memova Anti-Abuse sales bookings. The most directly comparable GAAP measures are the net loss attributable to common shareholders, cost of net revenues and operating expenses and net revenues, respectively. The adjusted EBITDA results exclude interest income (expense), provision for income taxes, depreciation and amortization as well as other items such as other income (expense), net, restructuring expenses, stock-based expenses and accretion on mandatorily redeemable preferred stock. Memova Anti-Abuse sales bookings are the billable value of contracts for such products closed in the period. There is no difference between adjusted EBITDA and GAAP revenues. Management believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash-based performance. In addition, management believes these non-GAAP metrics are useful to investors because they remove unusual and nonrecurring charges Nonrecurring Charge An expense occurring only once on a company's financial statement. Notes: An extraordinary item is an example of a nonrecurring charge. Also known as "nonrecurring item". that occur in the affected period and provide a basis for measuring the Company's financial condition against other quarters. Since the Company has historically reported non-GAAP results to the investment community, management also believes the inclusion of non-GAAP measures provides consistency Consistency can refer to:
As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. The calculations for these non-GAAP metrics are in the alternative measurement reconciliation table below. Conference Call Critical Path will host a conference call on Thursday Thursday: see week. , July July: see month. 28, 2005, at 4:15 p.m. Eastern Time to discuss the financial results for the second quarter ended June 30, 2005. The conference call is scheduled to last up to one hour. Those who would like to participate should dial +1 877-231-3543 (within the U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ) or +1 706-634-1329 (from outside the U.S. and Canada) five to ten minutes prior to the scheduled start time (no passcode is needed). In addition, the conference call and a subsequent replay will be available via Web cast from the Company's Web site, www.criticalpath.net. A replay of the conference call will also be available by telephone for fourteen days following the call. To access the telephone replay, please dial +1 800-642-1687 (within the U.S. and Canada) or +1 706-645-9291 (from outside the U.S. and Canada) and use conference ID 8266895. The Web cast and earnings release will be available on the Company's Web site for twelve months following the conference call. About Critical Path, Inc. Critical Path's Memova(TM)solutions provide a new and improved email experience for millions of consumers worldwide, helping mobile operators, broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). and fixed-line Refers to wired devices. For example, a fixed-line phone is a standard phone with the handset wired to the base unit in contrast to a portable phone or cellphone. service providers unlock the potential of email in the mass market. Memova(TM) Mobile gives consumers instant, on-the-go access to the messages that matter most. Featuring industry-leading anti-spam Spam elimination. See spam filter, spambot and e-mail obfuscator. and anti-virus See antivirus program. technology, Memova(TM) Anti-Abuse protects consumers against viruses and spam E-mail that is not requested. Also known as "unsolicited commercial e-mail" (UCE), "unsolicited bulk e-mail" (UBE), "gray mail" and just plain "junk mail," the term is both a noun (the e-mail message) and a verb (to send it). . Memova(TM) Messaging provides consumers with a rich email experience, enabling service providers to develop customized offerings for high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. subscribers. Headquartered in San Francisco with offices around the globe, Critical Path's messaging solutions are deployed by more than 200 service providers throughout the world. More information is available at www.criticalpath.net. Cautionary Note Regarding 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. : This press release contains forward-looking statements by the Company and its executives regarding the performance of our product and service offerings, our expected revenue results, gross margins and operating expenses for the second fiscal quarter of 2005, the ability of our customers to achieve cost savings and improve revenues in the provision of services, industry trends, market and customer requirements, the ability of our products and services to meet the business needs of our customers and compete favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. in the marketplace, management of spending levels, the market for products and services like ours and the performance of our senior management in achieving strategic goals. The words and expressions "look forward to," "will," "expect," "plan," "believe," "seek," "strive for," "anticipate," "hope," "estimate" and similar expressions are intended to identify the Company's forward-looking statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks include, but are not limited to, our evolving business strategy and the emerging and changing nature of the market for our products and services, our ability to deliver on our sales objectives, the ability of our technology and our competitors' technologies to address customer demands, changes in economic and market conditions, and software and service design defects. These and other risks and uncertainties are described in more detail in the Company's filings with the U.S. Securities and Exchange Commission (www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. ) made from time to time including Critical Path's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2004, its Quarterly Report on Form 10Q for the three months ended March 31, 2005, its Current Reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. , as may be 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. from time to time, and all subsequent filings with the United States Securities and Exchange Commission (www.sec.gov). The Company makes no commitment to revise or update any forward-looking statements in order to reflect 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 after the date any such statement is made. Note to Editors: Critical Path, the Critical Path logo, Memova and the Memova logo are the trademarks of Critical Path, Inc. All other trademarks are the property of their respective holders.
Critical Path, Inc.
Condensed Consolidated Balance Sheets
December 31, March 31, June 30,
2004 2005 2005
============ ========= =========
ASSETS (in thousands; unaudited)
Current assets
Cash and cash equivalents $23,239 $27,196 $16,993
Accounts receivable, net 19,667 18,817 19,661
Other current assets 4,567 3,696 3,767
------------ --------- ---------
Total current assets 47,473 49,709 40,421
Property and equipment, net 11,379 8,829 7,244
Goodwill 6,613 6,613 6,613
Other assets 3,734 3,776 2,007
------------ --------- ---------
Total assets $69,199 $68,927 $56,285
============ ========= =========
LIABILITIES, MANDATORILY
REDEEMABLE PREFERRED STOCK AND
SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable $4,973 $3,986 $4,988
Accrued expenses 23,207 24,524 19,536
Deferred revenue 9,978 11,451 11,576
Capital lease and other
obligations, current 1,067 695 355
Notes payable, current 5,565 5,565 -
------------ --------- ---------
Total current liabilities 44,790 46,221 36,455
Deferred revenue long-term 173 136 71
Notes payable, long-term 8,875 15,847 16,698
Embedded derivative liability 5,173 3,660 2,402
------------ --------- ---------
Total liabilities 59,011 65,864 55,626
------------ --------- ---------
Mandatorily redeemable preferred
stock 122,377 117,569 116,248
------------ --------- ---------
Total shareholders' deficit (112,189) (114,506) (115,589)
------------ --------- ---------
Total liabilities and
shareholders' deficit $69,199 $68,927 $56,285
============ ========= =========
Critical Path, Inc.
Condensed Consolidated Statement of Operations on a
United States GAAP Basis
Three months ended Six months ended
------------------------------ -------------------
June 30, March 31, June 30, June 30, June 30,
2004 2005 2005 2004 2005
========= ========== ========= ========= =========
(in thousands, except per share amounts;
unaudited)
NET REVENUE
SW licensing $5,407 $4,445 $4,771 $9,658 $9,216
Hosted messaging 3,711 5,211 3,528 8,054 8,739
Professional
services 2,936 3,084 3,727 5,595 6,811
Maintenance and
support 4,962 4,700 5,083 10,787 9,783
--------- ---------- --------- --------- ---------
Total net
revenue 17,016 17,440 17,109 34,094 34,549
COST OF NET
REVENUE
SW licensing 1,708 1,208 1,035 2,619 2,243
Hosted messaging 6,570 5,124 3,766 12,951 8,890
Professional
services 3,034 2,404 2,318 6,128 4,722
Maintenance and
support 1,322 1,550 1,550 2,771 3,100
Stock-based
expense - 64 43 5 107
Restructuring
and other
expenses 175 - - 175 -
--------- ---------- --------- --------- ---------
Total cost of
net revenue 12,809 10,350 8,712 24,649 19,062
--------- ---------- --------- --------- ---------
GROSS PROFIT 4,207 7,090 8,397 9,445 15,487
OPERATING EXPENSES
Selling and
marketing 6,035 4,647 3,926 12,974 8,573
Research and
development 5,344 4,893 3,644 11,123 8,537
General and
administrative 3,771 3,914 3,356 6,890 7,270
Stock-based
expense 1,212 244 212 1,253 456
Restructuring
expense 1,144 1,639 168 2,209 1,807
--------- ---------- --------- --------- ---------
Total
operating
expenses 17,506 15,337 11,306 34,449 26,643
--------- ---------- --------- --------- ---------
OPERATING LOSS (13,299) (8,247) (2,909) (25,004) (11,156)
Other income
(expense), net 6,733 1,846 2,531 10,400 4,377
Interest income
(expense) (2,065) (660) (907) (3,645) (1,567)
--------- ---------- --------- --------- ---------
Loss before
provision for
income taxes (8,631) (7,061) (1,285) (18,249) (8,346)
Provision for
income taxes (445) (308) (116) (811) (424)
--------- ---------- --------- --------- ---------
NET LOSS (9,076) (7,369) (1,401) (19,060) (8,770)
Accretion on
mandatorily
redeemable
preferred stock (3,348) (5,277) (6,515) (6,495) (11,792)
--------- ---------- --------- --------- ---------
NET LOSS
ATTRIBUTABLE TO
COMMON
SHAREHOLDERS $(12,424) $(12,646) $(7,916) $(25,555) $(20,562)
========= ========== ========= ========= =========
Net loss per share $(0.43) $(0.27) $(0.05) $(0.90) $(0.31)
========= ========== ========= ========= =========
Net loss per share
attributable to
common $(0.59) $(0.46) $(0.27) $(1.21) $(0.73)
========= ========== ========= ========= =========
Shares used in the
per share
calculations 21,157 27,256 29,358 21,074 28,356
========= ========== ========= ========= =========
Critical Path, Inc.
Condensed Consolidated Statement of Operations on a Non-GAAP
(Adjusted EBITDA(1)) Basis
Three months ended Six months ended
--------------------------- ------------------
June 30, March 31, June 30, June 30, June 30,
2004 2005 2005 2004 2005
======== ========= ======== ========= ========
(in thousands, except per share amounts;
unaudited)
NET REVENUE
SW licensing $5,407 $4,445 $4,771 $9,658 $9,216
Hosted messaging 3,711 5,211 3,528 8,054 8,739
Professional
services 2,936 3,084 3,727 5,595 6,811
Maintenance and
support 4,962 4,700 5,083 10,787 9,783
-------- --------- -------- --------- --------
Total net revenue 17,016 17,440 17,109 34,094 34,549
COST OF NET REVENUE
SW licensing 1,708 1,208 1,035 2,619 2,243
Hosted messaging 5,494 3,886 3,007 10,692 6,893
Professional
services 2,994 2,376 2,295 6,031 4,671
Maintenance and
support 1,302 1,532 1,541 2,727 3,073
-------- --------- -------- --------- --------
Total cost of net
revenue 11,498 9,002 7,878 22,069 16,880
-------- --------- -------- --------- --------
GROSS PROFIT 5,518 8,438 9,231 12,025 17,669
OPERATING EXPENSES
Selling and
marketing 5,854 4,477 3,806 12,523 8,283
Research and
development 4,513 3,240 3,111 9,363 6,351
General and
administrative 3,061 3,786 3,036 5,989 6,822
-------- --------- -------- --------- --------
Total operating
expenses 13,428 11,503 9,953 27,875 21,456
-------- --------- -------- --------- --------
ADJUSTED EBITDA LOSS $(7,910) $(3,065) $(722) $(15,850) $(3,787)
======== ========= ======== ========= ========
Adjusted EBITDA loss
per share $(0.37) $(0.11) $(0.02) $(0.75) $(0.13)
======== ========= ======== ========= ========
Shares used in the per
share calculations 21,157 27,256 29,358 21,086 28,356
======== ========= ======== ========= ========
(1) Excludes interest income (expense), provision for income taxes,
depreciation and amortization adjusted to exclude other items such
as other income (expense), net, restructuring and other expenses,
stock-based expenses and accretion on mandatorily redeemable
preferred stock.
Critical Path, Inc.
Alternative Measurements Reconciliation
The following table provides a reconcilation between the Company's
Non-GAAP results and Adjusted EBITDA Loss to the Company's Condensed
Consolidated Statement of Operations on a United States GAAP basis.
Three months ended Six months ended
---------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2004 2005 2005 2004 2005
========= ========= ======== ========= =========
(in thousands, except per share amounts;
unaudited)
Adjusted EBITDA loss $(7,910) $(3,065) $(722) $(15,850) $(3,787)
Interest income
(expense) (2,065) (660) (907) (3,645) (1,567)
Provision for
income taxes (445) (308) (116) (811) (424)
Depreciation and
amortization (2,683) (3,235) (1,764) (5,512) (4,999)
Other income
(expense), net 6,733 1,846 2,531 10,400 4,377
Restructuring and
other expenses (1,319) (1,639) (168) (2,384) (1,807)
Stock-based
expenses (1,387) (308) (255) (1,258) (563)
--------- --------- -------- --------- ---------
Net loss (9,076) (7,369) (1,401) (19,060) (8,770)
Accretion on
mandatorily
redeemable
preferred stock 3,348 5,277 6,515 6,495 11,792
--------- --------- -------- --------- ---------
Net loss
attributable to
common
shareholders $(12,424) $(12,646) $(7,916) $(25,555) $(20,562)
========= ========= ======== ========= =========
Net loss per share $(0.43) $(0.27) $(0.05) $(0.90) $(0.31)
========= ========= ======== ========= =========
Net loss per share
attributable to
common $(0.59) $(0.46) $(0.27) $(1.21) $(0.73)
========= ========= ======== ========= =========
Shares used in the
per share
calculations 21,157 27,256 29,358 21,074 28,356
========= ========= ======== ========= =========
The following table provides a reconcilation between the total cost of
net revenues and operating expenses on an Adjusted EBITDA basis to
the Company's cost of revenues and operating expenses on a
United States GAAP basis.
Three months ended Six months ended
---------------------------- -----------------
June 30, March 31, June 30, June 30, June 30,
2004 2005 2005 2004 2005
========= ========= ======== ======== ========
(in thousands, except per share amounts;
unaudited)
Total cost of net
revenues and operating
expenses
on an Adjusted
EBITDA basis $24,926 $20,505 $17,831 $49,944 $38,336
Depreciation and
amortization (2,683) (3,235) (1,764) (5,512) (4,999)
Restructuring
expenses (1,319) (1,639) (168) (2,384) (1,807)
Stock-based expenses (1,387) (308) (255) (1,258) (563)
--------- --------- -------- -------- --------
Total cost of net
revenues and operating
expenses on a United
States GAAP basis $30,315 $25,687 $20,018 $59,098 $45,705
========= ========= ======== ======== ========
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