Critical Path Announces Substantial Completion of Restructuring Plan.Business Editors SAN FRANCISCO--(BUSINESS WIRE)--Oct. 10, 2001 Critical Path, Inc. (Nasdaq:CPTH), a global leader in communication technologies and integrated messaging solutions, announced today that it has substantially completed its restructuring plan, including the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of many of its non-core products and services, a restructuring of its balance sheet, a significant reduction in 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 a successful reduction in headcount. "The rapid implementation and execution of the restructuring plan demonstrates our commitment to our customers and shareholders, to whom we owe a debt of gratitude," said David Hayden, Critical Path Executive Chairman. "The progress we have made allows us to focus on reaching break-even in the near term and to continue our technological leadership in the messaging market." In April 2001, Critical Path announced a strategic restructuring plan designed to place the Company back on the path to profitability. Chief among the mandates, to allow for a $30 million to $50 million reduction in annual expenses, were a strategic refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus on core communications solutions and services, a 450 employee head count reduction and the consolidation of two-thirds of its facilities. Refocusing on Core Communications Solutions and Services Critical Path has successfully sold or discontinued nearly all of its thirteen non-core products and services. The Company has closed the transactions of six of seven non-core products being sold, inclusive of inclusive of prep. Taking into consideration or account; including. the sales of the InJoin Trans, Batch and PATH/3270 products to Sun Microsystems Sun Microsystems, Inc. (NASDAQ: JAVA[3]) is an American vendor of computers, computer components, computer software, and information-technology services, founded on 24 February 1982. , the InJoin Broker product family to 2AB, Inc., and the InLine Project Collaboration product to ENACTEX, Inc. Additionally, the Company has strategically discontinued four of six non-core products and services that it has decided to exit and the remaining two are expected to be discontinued no later than the first quarter of 2002. Expense Reduction During the second quarter, Critical Path's total costs and expenses, excluding special charges, decreased by $7.4 million, and the company expects its expenses, excluding special charges, to continue to decrease through the third and fourth quarters. These significant savings were accomplished by the divestiture of non-core products and services, the reduction in headcount from 1,011 at March 31, 2001 to 564 at September 30, 2001, and the continued consolidation of facilities from 77 at March 31, 2001 to the current level of 38, with approximately 15 additional facilities expected to close no later than the first quarter of 2002. "We have continued to execute on our strategic restructuring plan, as evidenced by our progress on headcount reduction, facilities consolidation and our effort to refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. on core communications solutions and services. As a result, we are updating our estimated expense reduction from an initial range of $30 to $50 million on an annual basis to $40 to $60 million," said Laureen DeBuono, Interim Chief Financial Officer. Financial Restructuring The Company completed a balance sheet restructuring by repurchasing over $197 million of face value of its outstanding convertible subordinated notes. The action resulted in a net gain, and increased equity, of approximately $143 million. The Nasdaq National Market has found that the restructuring results satisfactorily meet the minimum equity requirement for continued listing on the Nasdaq National Market and the Company will be filing, by October 15, 2001, a 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. to evidence compliance with the minimum equity requirement. Additionally, the Board of Directors of the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. announced that it has implemented an across the board moratorium on minimum bid and public float requirements for continued listing until January 2, 2002, at which time the Company will have 90 days to comply with these requirements. About Critical Path, Inc. Critical Path, Inc. (Nasdaq:CPTH) is a global leader in communication technology and complete messaging solutions for wireless and wireline carriers, service providers and corporations through its integrated platform of messaging applications and directory infrastructure. 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 , with offices throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe, Asia and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . More information on Critical Path can be found at http://www.cp.net/. 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. This press release contains forward-looking statements, including the Company's statements regarding the restructuring of the debt and equity position of Critical Path, anticipated charges and cost savings as a result of headcount and facilities reduction, operational and financial restructuring, the strategic sale of certain product lines, and our belief as to our ability to successfully emerge from the debt and operational restructuring. The words "anticipate," "expect," "intended to," "designed to," "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 the, response of financial markets and investors to our restructuring plans, difficulties of forecasting future results due to our limited operating history, evolving business strategy and the emerging nature of the market for our products and services, pending litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and SEC investigation, turnover of senior management, board of directors members and other key personnel, difficulties in implementing our strategic plan to exit certain products and services offerings, difficulties of integrating acquired businesses, failure to expand our sales and marketing activities, potential difficulties associated with strategic relationships, investments and uncollected bills, risks associated with continued compliance with various NASDAQ National Market listing requirements Listing requirements Requirements, including minimum shares outstanding, market value, and income, that are laid down by an exchange for any stock to be listed for trading. , 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, software defects, and those discussed elsewhere in this announcement. These and other risks and uncertainties are described in more detail in the 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, 2000, as amended, and the quarterly reports on Form 10-Q Form 10-Q See 10-Q. for the quarters ended June 30, 2001 and March 30, 2001,respectively, both as may be amended from time to time, and all subsequent filings with the Securities and Exchange Commission (www.sec.gov). 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. |
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