Critical Path Announces First Quarter 2004 Results; Conference Call Scheduled for 5:00 p.m. ET on Thursday, April 29, 2004.Business Editors/High-Tech Writers SAN FRANCISCO--(BUSINESS WIRE)--April 29, 2004 Critical Path, Inc. (Nasdaq:CPTH), a global provider of 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, 2004. Revenues for the first quarter of 2004 were $17.1 million, compared to $20.0 million in the fourth quarter of 2003 and $18.0 million in the first quarter of 2003. 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 2004 was $13.1 million, or $0.63 per share, compared to $18.1 million, or $0.89 per share, in the fourth quarter of 2003 and $26.9 million, or $1.36 per share, in the first quarter of 2003. Based on GAAP in the United States, the total of 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. , were $28.8 million in the first quarter of 2004, compared to $33.6 million in the fourth quarter of 2003 and $33.8 million in the first quarter of 2003. Cash operating expenses, which are comprised of cost of net revenues and operating expenses, excluding 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 $25.0 million in the first quarter of 2004, compared to $23.4 million in the fourth quarter of 2003 and $26.0 million in the first quarter of 2003. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
"We accomplished a lot in the quarter, having brought on a new 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. and a new CFO See Chief Financial Officer. as well as having raised $33.5 million of capital," 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., chairman of Critical Path. "In addition, we saw continued business from customers such as Applied Materials Applied Materials, Inc. NASDAQ: AMAT (HKSE: 4336 ) is the global leader in nanomanufacturing technology solutions with a broad portfolio of innovative equipment, service and software products for the fabrication of semiconductor chips, flat panel solar displays, solar and O2 as well as new business from customers such as CTI (Computer Telephone Integration) Combining data with voice systems in order to enhance telephone services. For example, automatic number identification (ANI) allows a caller's records to be retrieved from the database while the call is routed to the appropriate party. Movil and RM." As of March 31, 2004, the Company's cash and cash equivalents totaled $37.1 million, compared to its December December: see month. 31, 2003 balance of $19.0 million and its March 31, 2003 balance of $31.4 million. During the first quarter of 2004, the Company raised $33.5 million through financings with multiple investors and repaid $2.3 million of its line of credit facility with Silicon Valley Bank. 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. The most directly comparable GAAP measures are of the total of cost of net revenues and operating expenses, and net loss attributable to common shares, respectively. 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 on Thursday Thursday: see week. , April 29, 2004, at 5:00 p.m. Eastern Time to discuss the financial results for the first quarter of 2004. The conference call is scheduled to last up to one hour. Those who would like to participate should dial 877-231-3543 (domestic) or +1 706-634-1329 (international) five to ten minutes prior to the scheduled start time. 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 seven days following the call; to access the telephone replay, please dial 800-642-1687 (domestic) or +1 706-645-9291 (international), passcode 6914430. The Web cast and this earnings release will be available on the Company's Web site for twelve months following the conference call. About Critical Path, Inc. Critical Path, Inc. (Nasdaq:CPTH) is a global provider of digital communications software and services, 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 is available 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 by the Company and its executives regarding the performance, security, scalability How much a system can be expanded. See scalable. scalability - How well a solution to some problem will work when the size of the problem increases. For example, a central server of some kind with ten clients may perform adequately but with a thousand clients it and interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other. of our product and service offerings, the ability of our customers to achieve cost savings 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, 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, 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 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, 2003, and all subsequent filings with the 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: See attached tables. Note to Editors: Critical Path and the Critical Path logo are the trademarks of Critical Path, Inc. All other trademarks are the property of their holders.
CRITICAL PATH, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, March 31,
2003 2004
------------ ----------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $18,984 $37,131
Accounts receivable, net 16,880 16,704
Other current assets 4,664 5,355
------------ ----------
Total current assets 40,528 59,190
Property and equipment, net 14,821 13,304
Goodwill 6,613 6,613
Other assets 5,763 7,751
------------ ----------
Total assets $67,725 $86,858
------------ ----------
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED
STOCK AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable $5,022 $4,102
Accrued liabilities 20,755 22,280
Deferred revenue 8,856 9,966
Line of credit facility 2,298 -
Capital lease and other obligations, current 1,721 1,587
------------ ----------
Total current liabilities 38,652 37,935
Deferred revenue 1,343 1,360
Convertible subordinated notes payable 38,360 38,360
Convertible secured notes payable 10,016 43,561
Capital lease and other obligations, long-term 1,295 1,009
------------ ----------
Total liabilities 89,666 122,225
------------ ----------
Mandatorily redeemable preferred stock 55,301 55,288
------------ ----------
Shareholders' deficit (77,242) (90,655)
------------ ----------
Total liabilities, mandatorily
redeemable preferred stock and
shareholders' deficit $67,725 $86,858
------------ ----------
CRITICAL PATH, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
----------------------------------
March 31, December 31, March 31,
2003 2003 2004
---------- ------------ ---------
Net revenues
Software license $5,047 $7,201 $4,251
Hosted messaging 5,386 4,619 4,343
Professional services 3,220 3,366 2,659
Maintenance and support 4,381 4,776 5,825
---------- ------------ ---------
Total net revenues 18,034 19,962 17,078
---------- ------------ ---------
Cost of net revenues
Software license 1,797 1,008 911
Hosted messaging 6,263 6,631 6,381
Professional services 3,450 3,109 3,094
Maintenance and support 1,929 1,224 1,449
Stock-based expense - Hosted
messaging 8 - 5
Stock-based expense - Professional
services 3 - -
Stock-based expense - Maintenance
and support 6 - -
---------- ------------ ---------
Total cost of net revenues 13,456 11,972 11,840
---------- ------------ ---------
Gross profit 4,578 7,990 5,238
---------- ------------ ---------
Operating expenses
Sales and marketing 9,309 6,834 6,939
Research and development 4,623 5,003 5,779
General and administrative 3,226 2,829 3,122
Stock-based expense - Sales and
marketing 18 - 14
Stock-based expense - Research and
development 15 - 18
Stock-based expense - General and
administrative 9 5,082 9
Restructuring and other expense 3,189 1,852 1,065
---------- ------------ ---------
Total operating expenses 20,389 21,600 16,946
---------- ------------ ---------
Loss from operations (15,811) (13,610) (11,708)
Non-operating expenses
Interest and other income
(expense), net (6,427) (774) 3,667
Interest expense (769) (932) (1,580)
Gain on investments, net - 200 -
---------- ------------ ---------
Total non-operating expenses (7,196) (1,506) 2,087
---------- ------------ ---------
Loss before provision for income
taxes (23,007) (15,116) (9,621)
Provision for income taxes (194) (102) (366)
---------- ------------ ---------
Net loss (23,201) (15,218) (9,987)
Accretion on mandatorily redeemable
preferred stock (3,665) (2,917) (3,147)
---------- ------------ ---------
Net loss attributable to common
shares $(26,866) $(18,135) $(13,134)
---------- ------------ ---------
Net loss per share attributable to
common shares - basic and diluted $(1.36) $(0.89) $(0.63)
---------- ------------ ---------
Weighted average common shares
outstanding 19,666 20,415 21,014
CRITICAL PATH, INC.
Alternative Measurement Reconciliations
(Unaudited)
(In thousands)
Three Months Ended
--------------------------------
March 31, December 31, March 31,
2003 2003 2004
--------- ------------ ---------
Adjusted EBITDA (1)
Net loss attributable to common
shares $(26,866) $(18,135) $(13,134)
Adjustments
Cost of net revenues
Depreciation 2,830 1,695 1,264
Amortization of purchased
technology - 46 -
Stock-based expense - Hosted
messaging 8 - 5
Stock-based expense -
Professional services 3 - -
Stock-based expense - Maintenance
and support 6 - -
Operating expenses
Depreciation 1,794 1,468 1,393
Stock-based expense - Sales and
marketing 18 - 14
Stock-based expense - Research
and development 15 - 18
Stock-based expense - General and
administrative 9 5,082 9
Restructuring and other expense 3,189 1,852 1,065
Non-operating expenses
Interest and other income and
expense, net
Change in fair-value of
preferred stock instrument 6,200 720 (3,160)
Other income and expense, net 227 54 (507)
Interest expense 769 932 1,580
Gain on investments, net - (200) -
Provision for income taxes 194 102 366
Accretion on mandatorily
redeemable preferred stock 3,665 2,917 3,147
--------- ------------ ---------
Total non-cash and non-operating
adjustments (2) 18,927 14,668 5,194
--------- ------------ ---------
Adjusted EBITDA (1) $(7,939) $(3,467) $(7,940)
--------- ------------ ---------
Cash Operating Expenses
Net loss attributable to common
shares $(26,866) $(18,135) $(13,134)
Adjustments
Total net revenues (18,034) (19,962) (17,078)
Total non-cash, restructuring and
non-operating adjustments (2) 18,927 14,668 5,194
--------- ------------ ---------
Cash Operating Expenses $(25,973) $(23,429) $(25,018)
--------- ------------ ---------
(1) Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation and amortization, adjusted to exclude non-cash stock-
based charges, extraordinary restructuring 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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