Critical Path Announces First Quarter 2003 Results.Business Editors SAN FRANCISCO--(BUSINESS WIRE)--April 29, 2003 Critical Path, Inc. (Nasdaq: CPTH) a global leader in digital communications Transmitting text, voice and video in binary form. See communications. software and services, today announced financial results for the first quarter ended March 31, 2003. Revenues for the first quarter of 2003 were $18.0 million, compared to $21.8 million in the fourth quarter of 2002. Cash 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. which exclude amortization, depreciation and 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. were $26.0 million in the first quarter of 2003, compared with $26.0 million in the fourth quarter of 2002. Based on 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). ) 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. , net loss attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shares for the first quarter of 2003 improved to $26.9 million, or $0.34 per share, compared to $34.2 million, or $0.43 per share, in the fourth quarter of 2002. Earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. , adjusted to exclude special charges (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 ), amounted to a loss of $7.9 million in the first quarter, compared to an Adjusted EBITDA loss of $4.2 million in the fourth quarter of 2002. "Although revenues level were lower than we expected, we are excited by the amount of customer activity we saw and are energized by recent successes, such as the launch of our world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. hosted messaging platform with HP and our relationship with T-Mobile," said William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack McGlashan, Jr., Critical Path chairman and chief executive officer. "Through continued execution we believe we will be able to achieve our financial goals for this coming quarter and the year." During the quarter, Critical Path delivered software solutions for driving down helpdesk costs to customers such as UBS AG UBS AG (NYSE: UBS; SWX: UBSN; TYO: 8657 ) is a diversified global financial services company, with its main headquarters in London and New York. It is the world's largest manager of private wealth assets,, "the world's biggest manager of other people's money"[1] , DHL DHL abbr. 1. Doctor of Hebrew Letters 2. Doctor of Hebrew Literature and the Danzas Danzas was a freight company. It was founded in 1815 and is based in Basel, Switzerland. It was acquired by Deutsche Post World Net in 2000, who have integrated it with DHL, first as "DHL/Danzas Air and Ocean" and now as "DHL Global Forwarding". Group, and a major US-based conglomerate conglomerate, in business conglomerate, corporation whose asset growth, often very rapid, comes largely through the acquisition of, or merger with, other firms whose products are largely unrelated to each other or to that of the parent company. , among other firms. These solutions enable customers to more efficiently administer To give an oath, as to administer the oath of office to the president at the inauguration. To direct the transactions of business or government. Immigration laws are administered largely by the Immigration and Naturalization Service. passwords, consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. user identity data across security applications and systems, integrate Microsoft's ActiveDirectory with existing infrastructure, and create whitepages directories for large, highly distributed organizations. Critical Path also delivered additional software solutions that enable telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. carriers and service providers to offer new revenue-generating premium services. Key customers included Wind Telecomunicazioni, SEAT Pagine Gialle Seat Pagine Gialle is an Italian company with a strong European presence in the directories market place. The UK subsidiary is Thomson Directories Ltd.. External links
Telecom Italia also owns shares in Telecom Argentina and Telecom Personal, fixed and cellular networks in Argentina. ), SANPAOLO Group, and Swisscom Swisscom AG is the leading telephone company in Switzerland. Swisscom is present nationwide, delivering all services and products for mobile, fixed and IP-based voice and data communications. , among others. Regulation G 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. It utilizes two primary non-GAAP metrics: cash operating expenses and Adjusted EBITDA. 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 cash operating expenses and Adjusted EBITDA are in the Alternative Measurement Reconciliation table below. Conference Call Critical Path will host a conference call today to discuss the financial results for the first quarter 2003. Those who would like to participate in the conference call should dial 877/231-3543 or 706/634-1329 (international) prior to 4:50 PM ET on the day of the call. The conference call and its replay will also be Web cast and are accessible from the Company's Web site, www.criticalpath.net. A telephone replay of the conference call will be available for seven days following the call. To access the replay, please dial (800) 642-1687 or (706) 645-9291 (international), passcode 9811034. About Critical Path, Inc. Critical Path, Inc. (Nasdaq: CPTH) is a global leader in digital communications software and services. The company provides messaging solutions -- from wireless, secure and unified messaging Having access to e-mail, voice mail and faxes via a common computer application or by telephone. For example, unified messaging may send faxes and digitized voice mail to a mail server that turns them into e-mail attachments. to basic email and personal information management -- as well as identity management solutions that simplify user profile management and strengthen information security. The standards-based Critical Path Communications Platform, built to perform reliably at the scale of public networks, delivers the industry's lowest total cost of ownership for messaging solutions and lays a solid foundation for next-generation communications services. Solutions are available on a hosted or licensed basis. Critical Path's customers include more than 700 enterprises, 190 carriers and service providers, eight national postal authorities A postal authority organises collection and delivery of domestic mail (US), or post (UK), within its area of control, or in the case of foreign mail, delivery to or receipt of mail from other postal authorities. Payment for the service has been performed in many ways. and 35 government agencies. Critical Path is headquartered 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 . More information can be found at www.criticalpath.net 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, including the Company's statements regarding, its finance, business and operations including anticipated or projected revenue, expenses and operational growth, markets, strategic partners and potential customers for Critical Path products and services. The words "anticipate," "expect," "intend," "plan," "believe," "seek," and "estimate" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, difficulties of forecasting future results due to our limited operating history, failure to meet sales and revenue objectives, forecasts and earnings guidance, general economic conditions in markets in which the Company does business, worldwide slow down in technology spending by our customers and potential customers, failure to negotiate favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. or timely deals with strategic partners for the distribution of our products and services, the relative success of strategic partnerships and global sales alliances, our evolving business strategies and the emerging nature of the market for our products and services, turnover within and integration of senior management, board of directors members and other key personnel, difficulties in delivering and marketing our product and service offerings, protection of our intellectual property, failure to successfully expand our sales and marketing activities, potential difficulties associated with 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). , strategic relationships, investments and uncollected bills, volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in the market for stock and risks associated with potential delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. actions by the market on which we are listed, risks associated with our international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , foreign currency fluctuations, unplanned system interruptions and capacity constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. , software defects, and those discussed elsewhere in this announcement and the attached statements. These and other risks and uncertainties are described in more detail in 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 December: see month. 31, 2002, 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 Securities and Exchange Commission (www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. ) Note to Editors: Critical Path and the Critical Path logo are the trademarks of Critical Path, Inc.
CRITICAL PATH, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, March 31,
2002 2003
--------- ----------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $33,498 $31,409
Short-term marketable securities 5,583 -
Accounts receivable, net 22,818 19,839
Other current assets 4,030 6,839
--------- ----------
Total current assets 65,929 58,087
Long-term marketable securities 3,990 -
Equity investments 357 354
Property and equipment, net 18,142 18,092
Goodwill 6,613 6,613
Restricted cash 2,729 -
Other assets 6,246 6,749
--------- ----------
Total assets $104,006 $89,895
--------- ----------
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND
SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $28,093 $26,797
Accrued liabilities 3,764 3,860
Deferred revenue 10,788 9,496
Line of credit facility - 4,900
Capital lease and other obligations,
current 3,323 3,288
--------- ----------
Total current liabilities 45,968 48,341
Convertible subordinated notes payable 38,360 38,360
Capital lease and other obligations,
long-term 1,332 1,060
--------- ----------
Total liabilities 85,660 87,761
--------- ----------
Mandatorily redeemable preferred stock 26,900 36,765
Shareholders' deficit (8,554) (34,631)
--------- ----------
Total liabilities, mandatorily
redeemable preferred stock
and shareholders' deficit $104,006 $89,895
--------- ----------
CRITICAL PATH, INC.
Condensed Consolidated Statements of
Operations
(In thousands, except per share amounts)
Three Months Ended
-------------------------------
March 31, Dec. 31, March 31,
2002 2002 2003
----------- --------- ---------
(Unaudited)
Net revenues
Software license $10,911 $7,436 $5,047
Hosted messaging 6,964 5,886 5,386
Professional services 1,937 3,958 3,220
Maintenance and support 3,877 4,554 4,381
----------- --------- ---------
Total net revenues 23,689 21,834 18,034
----------- --------- ---------
Cost of net revenues
Software license 287 1,246 1,797
Hosted messaging 7,817 6,468 6,263
Professional services 2,443 3,018 3,450
Maintenance and support 2,103 2,121 1,929
Amortization of purchased
technology 4,630 4,630 -
Stock-based expense - Hosted
messaging 185 60 8
Stock-based expense - Professional
services 81 26 3
Stock-based expense - Maintenance
and support 151 49 6
----------- --------- ---------
Total cost of net revenues 17,697 17,618 13,456
----------- --------- ---------
Gross profit 5,992 4,216 4,578
----------- --------- ---------
Operating expenses
Sales and marketing 10,943 10,342 9,309
Research and development 5,002 4,320 4,623
General and administrative 6,678 3,792 3,226
Amortization of intangible assets 6,141 6,206 -
Stock-based expense - Sales and
marketing 2,536 240 18
Stock-based expense - Research and
development 422 152 15
Stock-based expense - General and
administrative 297 61 9
Restructuring and other expense - 1,629 3,189
----------- --------- ---------
Total operating expenses 32,019 26,742 20,389
----------- --------- ---------
Loss from operations (26,027) (22,526) (15,811)
Non-operating expenses
Interest and other income
(expense), net 629 (5,049) (6,427)
Interest expense (783) (492) (769)
Equity in net loss of joint venture (403) - -
Loss on investments - (1,530) -
----------- --------- ---------
Total non-operating
expenses (557) (7,071) (7,196)
----------- --------- ---------
Net loss before income taxes (26,584) (29,597) (23,007)
Benefit from (provision for) income
taxes 573 (724) (194)
----------- --------- ---------
Net loss (26,011) (30,321) (23,201)
Accretion on mandatorily redeemable
preferred stock (3,206) (3,837) (3,665)
----------- --------- ---------
Net loss attributable to common shares $(29,217) $(34,158) $(26,866)
----------- --------- ---------
Net loss per share - basic and diluted
Net loss attributable to common
shares $(0.38) $(0.43) $(0.34)
----------- --------- ---------
Weighted average common shares
outstanding 76,514 78,557 78,664
CRITICAL PATH, INC.
Alternative Measurement
Reconciliations
(In thousands)
Three Months Ended
-------------------------------
March 31, Dec. 31, March 31,
2002 2002 2003
----------- --------- ---------
(Unaudited)
Adjusted EBITDA (1)
Net loss attributable to common
shares $(29,217) $(34,158) $(26,866)
Adjustments
Cost of net revenues
Depreciation 4,979 3,407 2,849
Amortization of purchased
technology 4,630 4,630 -
Stock-based expense - Hosted
messaging 185 60 8
Stock-based expense -
Professional services 81 26 3
Stock-based expense -
Maintenance and support 151 49 6
Operating expenses
Depreciation 2,821 1,914 1,775
Amortization of intangible
assets 6,141 6,206 -
Stock-based expense - Sales and
marketing 2,536 240 18
Stock-based expense - Research
and development 422 152 15
Stock-based expense - General
and administrative 297 61 9
Restructuring and other expense - 1,629 3,189
Non-operating expenses
Interest and other income and
expense, net
Change in fair-value of
preferred stock instrument - 5,280 6,200
Other income and expense, net (629) (231) 227
Interest expense 783 492 769
Equity in net loss of joint venture 403 - -
Loss on investments - 1,530 -
Benefit from or provision for
income taxes (573) 724 194
Accretion on redeemable
convertible preferred stock 3,206 3,837 3,665
----------- --------- ---------
Total non-cash and non-operating
adjustments (2) 25,433 30,006 18,927
----------- --------- ---------
Adjusted EBITDA (1) $(3,784) $(4,152) $(7,939)
----------- --------- ---------
Cash Operating Costs
Net loss attributable to common
shares $(29,217) $(34,158) $(26,866)
Adjustments
Total net revenues (23,689) (21,834) (18,034)
Total non-cash, restructuring and
non-operating adjustments (2) 25,433 30,006 18,927
----------- --------- ---------
Cash Operating Costs $(27,473) $(25,986) $(25,973)
----------- --------- ---------
(1) Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation and amortization, adjusted to exclude non-cash stock-
based charges, extraordinary restucturing expenses, accretion on
redeemable convertible preferred stock and other non-operating
expenses.
(2) Total non-cash, restructuring and non-operating adjustments is
defined in the Adjusted EBITDA table presented above.
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