Interliant Announces Second Quarter Financial Results; Leading ASP Reports Revenue Increase of 44% Over First Quarter and 71 New ASP Customer Wins.Business Editors PURCHASE, N.Y.--(BUSINESS WIRE)--Aug. 9, 2000 Interliant, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :INIT), a leading global application service provider (ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). ), today reported revenue of $38.6 million for the second quarter of 2000. This compares to $10.6 million for the same period a year earlier and represents a 44% sequential One after the other in some consecutive order such as by name or number. gain over the $26.9 million reported in the first quarter of 2000. Second quarter 2000 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 (earnings before interest, taxes, depreciation, amortization and non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for compensation) was negative $19.1 million, compared with negative $5.8 million a year earlier and negative $11.0 in the first quarter of 2000. EBITA EBITA Earnings Before Interest Taxes Amortization (earnings before interest, taxes, amortization and non-cash charges for compensation) was negative $23.0 million, compared with negative $7.2 million in the second quarter of 1999 and negative $13.5 million in the first quarter of 2000. Gross margins were 27%, down from the 31% reported for the first quarter of 2000. The decline, which was expected, was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk primarily to the inclusion of the lower-margin reSource Partner and Soft Link businesses that were acquired late in the first quarter. Interliant's net loss was $38.9 million, or $0.82 per share, in the second quarter of 2000. This loss compares with net losses of $14.1 million, or $0.44 per share for the same period a year earlier and $28.6 million, or $0.62 per share, in the first quarter of 2000. Commenting on the results for the quarter, Herb Hribar, president and chief executive officer, said "We are very pleased with our progress this quarter. Our strategic initiatives are well underway and we believe that we are on track to achieve our financial goals for the year. Overall revenue growth of 44% and organic growth of 11% this quarter was consistent with our expectations as was the change in gross margin. We currently have integration activities underway that are intended to eliminate duplicative du·pli·cate adj. 1. Identically copied from an original. 2. Existing or growing in two corresponding parts; double. 3. or unnecessary costs and will have a positive impact on gross margin and EBITDA. During the quarter we added 71 new ASP customers and commenced operations on the Dell OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and platform and Interliant Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , which generated modest and promising initial
results."He commented further: "Consistent with our focus on driving organic growth, we have substantially slowed our domestic acquisition activity. We closed one transaction during the quarter, Knowledge Systems, Inc., an ASP with proprietary solutions focusing on the association vertical market. As part of this acquisition, we launched our INIT Association hosted application offering." Mr. Hribar continued: "During the quarter, we launched our INIT ASP Host program to encourage developers and independent software vendors to leverage Interliant's 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. hosting facilities to quickly and cost-effectively deploy their Web-based applications See Web application. . We also launched our INIT HR hosted application offering. In July July: see month. , we augmented our hosted ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. practice by joining the Oracle Authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: Application Provider program to deliver hosted Oracle solutions. Simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics , we acquired two related Oracle consulting firms Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a , Interactive Software, Inc. and Milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. Services, Inc. which will enable us to rapidly implement hosted Oracle solutions for our customers. Mr. Hribar continued: "Our Interliant branding initiative was successful, increasing awareness by more than 20 points during the quarter. We grew our sales force to 102 direct sales associates at the end of the period. We now have a twelve month committed backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of $63 million, with what we believe is a strong pipeline of potential new business to be booked in future quarters." Hribar concluded: "I've I've Contraction of I have. I've I have I've have now been with Interliant for six months. Since I joined, we've we've Contraction of we have. we've have undertaken a substantial number of significant initiatives, and I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in pleased to report that they are having a visible positive effect on our business. We ended the quarter with $154.5 million in the bank and I am proud to say that we are encouraged by our second quarter results." About Interliant, Inc. Interliant, Inc. (NASDAQ: INIT) is a leading global application service provider (ASP) and pioneer in the ASP market. Interliant's INIT Solutions Suite includes messaging and knowledge management, security, e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. , customer relationship management, enterprise resource planning See ERP. (application, business) Enterprise Resource Planning - (ERP) Any software system designed to support and automate the business processes of medium and large businesses. , distributed learning Distributed Learning means a method of instruction that relies primarily on indirect communication between students and teachers, including internet or other electronic-based delivery, teleconferencing or correspondence; (British Columbia, School Act, 2006). , Web-site hosting, and Web-based rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. applications. Interliant, headquartered in Purchase, N.Y., maintains strategic alliances with the world's leading software, networking and hardware manufacturers including Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. (NASDAQ: MSFT MSFT Microsoft (stock symbol) MSFT Movimento Sociale Fiamma Tricolore (Italy) MSFT Multi-Stage Fitness Test MSFT Master of Science in Family Therapy MSFT Macalester Students for Fair Trade ), Dell Computer Corporation (company) Dell Computer Corporation - One of the biggest US manufacturers of IBM PC compatibles. "From notebooks to networks", their slogan says. http://us.dell.com. (NASDAQ: DELL), BMC Software BMC Software, Inc. NYSE: BMC, is an American enterprise management software provider, focusing on IT infrastructure applications. BMC was founded in 1980 and is headquartered in Houston, Texas. (NASDAQ: BMCS BMCS Bristol Muslim Cultural Society (UK) BMCS Senior Chief Boatswain's Mate (Naval Rating) BMCS Blue Mountains Conservation Society (Wentworth Falls, NSW, Australia) ), Network Solutions (NASDAQ: NSOL), IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) (NYSE NYSE See: New York Stock Exchange : IBM) and Lotus lotus: see water lily. lotus Any of several different plants whose flowers have been given symbolic meaning by many cultures. The lotus of the Greeks is Ziziphus lotus (family Rhamnaceae), a shrub native to southern Europe; wine made from its fruit Development Corp. For more information, please visit the Interliant Web site, http://www.interliant.com/. Interliant is a registered trademark of Interliant, Inc. All other trademarks are the properties of their respective companies. This press release contains 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 the "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. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Actual results and the timing of certain events may differ significantly from the results anticipated or discussed in the forward-looking statements. These forward-looking statements are based largely on the Company's current expectations and are subject to a number of risks and uncertainties. In addition to this press release, other important factors to consider in evaluating the forward-looking statements include, without limitation, the Company's 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. filed with the Securities and Exchange Commission ("SEC") on March 29, 2000, and the Company's registration statement on Form S-1, 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. , that was filed with the SEC on May 16, 2000, and in other reports of the Company filed from time to time with the SEC. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained herein will in fact be realized and the Company assumes no obligation to update this information.
INTERLIANT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
June 30,
----------------------------
2000 1999
------------ ------------
Revenues:
Total revenues $38,609,000 $10,648,000
Costs and expenses:
Cost of revenue 28,241,000 6,088,000
Sales and marketing 11,954,000 4,073,000
General and administrative (exclusive
of non-cash compensation shown below) 17,534,000 6,242,000
Non-cash compensation 3,090,000 567,000
Depreciation 3,909,000 1,401,000
Amortization of intangibles 11,997,000 6,191,000
------------ ------------
76,725,000 24,562,000
------------ ------------
Operating loss (38,116,000) (13,914,000)
Interest income (expense), net (1,130,000) (168,000)
------------ ------------
Loss before minority interest and
cumulative effect
of accounting change (39,246,000) (14,082,000)
Minority interest 320,000
------------ ------------
Loss before cumulative effect of
accounting change (38,926,000) (14,082,000)
Cumulative effect of accounting change
Net loss $(38,926,000) $(14,082,000)
============ ============
Basic and diluted loss per share:
Loss before cumulative effect of
accounting change $ (0.82) $ (0.44)
Cumulative effect of accounting change
- -
------------ ------------
Net loss $ (0.82) $ (0.44)
============ ============
Weighted average shares
outstanding - basic and diluted 47,625,000 31,969,000
============ ============
Six Months Ended
June 30,
----------------------------
2000 1999
------------ ------------
Revenues:
Total revenues $65,467,000 $16,082,000
Costs and expenses:
Cost of revenue 46,775,000 9,339,000
Sales and marketing 19,953,000 5,969,000
General and administrative (exclusive
of non-cash compensation shown below) 28,873,000 10,480,000
Non-cash compensation 7,543,000 1,135,000
Depreciation 6,375,000 2,100,000
Amortization of intangibles 21,313,000 8,785,000
------------ ------------
130,832,000 37,808,000
------------ ------------
Operating loss (65,365,000) (21,726,000)
Interest income (expense), net (1,242,000) (114,000)
------------ ------------
Loss before minority interest and
cumulative effect of accounting change (66,607,000) (21,840,000)
Minority interest 320,000
------------ ------------
Loss before cumulative effect of
accounting change (66,287,000) (21,840,000)
Cumulative effect of accounting change (1,220,000)
------------ ------------
Net loss $(67,507,000) $ (21,840,000)
============ ============
Basic and diluted loss per share:
Loss before cumulative effect of
accounting change $ (1.41) $ (0.77)
Cumulative effect of accounting change
(0.03) -
------------ ------------
Net loss $ (1.44) $ (0.77)
============ ============
Weighted average shares
outstanding - basic and diluted 46,807,000 28,369,000
============ ============
INTERLIANT, INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2000 1999
------------ ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 47,356,000 $ 27,608,000
Restricted cash 907,000 1,012,000
Short-term investments 107,177,000 3,612,000
Accounts receivable, net of allowance
of $1,666,000 and $1,378,000 at June
30, 2000 and December 31, 1999,
respectively 27,685,000 13,981,000
Prepaid and other current assets 8,061,000 3,470,000
Payroll and benefit funds held for
customers 3,094,000
------------ ------------
Total current assets 194,280,000 49,683,000
------------ ------------
Fixed assets, net 47,594,000 18,199,000
Intangibles, net 136,849,000 93,636,000
Other assets 7,095,000 1,357,000
------------ ------------
Total assets $385,818,000 $162,875,000
============ ============
Liabilities and stockholders' equity
Current liabilities:
Notes payable and current portion of
long-term debt $ 4,156,000 $ 1,212,000
Accounts payable and accrued expenses 29,233,000 15,701,000
Deferred revenue 9,138,000 5,884,000
Payroll and benefit funds held for
customers 3,094,000 -
------------ ------------
Total current liabilities 45,621,000 22,797,000
------------ ------------
Long-term debt, less current portion 12,773,000 2,503,000
7% Subordinated Convertible Notes 164,825,000 -
Minority interest in subsidiary 6,891,000 -
Stockholders' equity:
Preferred stock, $.01 par value;
1,000,000 shares authorized; 0
shares issued and outstanding - -
Common stock, $.01 par value;
200,000,000 shares authorized;
47,803,914, and 44,601,141 shares
issued and outstanding at June 30,
2000 and December 31, 1999,
respectively 478,000 446,000
Additional paid-in capital 287,810,000 201,922,000
Accumulated deficit (132,329,000) (64,822,000)
Accumulated other comprehensive
income (251,000) 29,000
------------ ------------
Total stockholders' equity 155,708,000 137,575,000
------------ ------------
Total liabilities and
stockholders' equity $385,818,000 $162,875,000
============ ============
INTERLIANT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30,
-------------------------------
2000 1999
------------- ------------
Operating activities
Net cash used in operating
activities $ (32,600,000) $(7,001,000)
------------- ------------
Investing activities
Purchases of fixed assets (27,628,000) (3,239,000)
Payments issued in connection with
non-compete agreements - (1,000,000)
Investments in restricted securities - (953,000)
Purchases of short-term investments (103,565,000) -
Acquisitions of businesses, net of
cash acquired (22,002,000 (20,701,000)
------------- ------------
Net cash used in investing
activities (153,195,000) (25,893,000)
------------- ------------
Financing activities
Proceeds from sale of common stock 27,500,000 11,000,000
Proceeds from issuance of Series A
redeemable convertible preferred
stock - 13,000,000
Proceeds from issuance of 7%
Subordinated Convertible Notes 164,825,000 -
Proceeds from exercise of options
and warrants 1,554,000 5,099,000
Proceeds from issuance of debt and
capital lease financing 12,912,000 1,278,000
Repayment of debt and capital leases (1,476,000) (244,000)
Minority investment in subsidiary 7,211,000 -
Offering costs (6,983,000) (782,000)
------------- ------------
Net cash provided by financing
activities 205,543,000 29,351,000
------------- ------------
Net increase in cash and cash
equivalents 19,748,000 (3,543,000)
Cash and cash equivalents at beginning
of period 27,608,000 6,813,000
------------- ------------
Cash and cash equivalents at end of
period $ 47,356,000 $ 3,269,000
============= ============
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