MIVA Announces Second Quarter 2007 Results.Reports 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 loss of $0.2 Million, Excluding Estimated $14.0 Million Non-Cash Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. Charge Sale of MIVA MIVA Maximum In-feasible Value Assignment Small Business Completed August 1, 2007 FORT MYERS Fort Myers, city (1990 pop. 45,206), seat of Lee co., SW Fla., on the Caloosahatchee River, near the Gulf of Mexico; founded 1850, inc. 1905. It has a tourist trade and light industry and is a shipping point for citrus fruits, winter vegetables, flowers (especially , Fla. -- MIVA, 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 : MIVA), today reported financial results for the second quarter ended June 30, 2007. Second Quarter 2007 Results Summary: * Revenue of $39.6 million in Q2 2007, compared to revenue of $43.2 million in Q1 2007. MIVA Direct, our MIVA-owned primary traffic business, contributed 34.0% of total revenue in Q2 2007, compared to 31.3% in Q1 2007; * Gross margins of 52.5% in Q2 2007, compared to 52.9% in Q1 2007; * Estimated non-cash impairment charge related to goodwill for MIVA Media Europe in the amount of $14.0 million, or $(0.44) per basic share in Q2 2007; * EBITDA loss of $14.2 million in Q2 2007, which included the estimated $14.0 million non-cash impairment charge, the net $0.0 million restructuring charge 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. and the $1.2 million non-cash compensation expense, compared to an EBITDA loss of $2.8 million in Q1 2007; * Positive Adjusted EBITDA of $1.0 million in Q2 2007, excluding the estimated $14.0 million non-cash impairment charge, the net $0.0 million restructuring charge and $1.2 million in non-cash compensation expense, compared to Adjusted EBITDA of $1.6 million in Q1 2007; and * GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss of $16.4 million or $(0.52) per basic share in Q2 2007, compared to GAAP net loss of $5.3 million or $(0.17) per basic share in Q1 2007. "On a cash operating basis, our fundamentals have continued to improve due primarily to $16.0 million in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cost reductions, which are now behind us, and our ongoing mix-shift into higher-margin MIVA-owned primary traffic. During the second quarter we achieved positive Adjusted EBITDA of $1.0 million off an anticipated lower revenue base, maintained essentially flat gross margins and increased cash by $2.5 million sequentially," said Peter Corrao, chief executive officer of MIVA. "As we have said previously, 2007 is a transitional year. We expect to build on our overall progress in the coming quarters and realize margin expansion as a result of our plan to concentrate on more profitable toolbar A row or column of on-screen buttons used to activate functions in the application. Many toolbars are customizable, letting you add and delete buttons as required. Toolbars may be fixed in position or may float, which means they can be dragged to a more convenient location in the growth, our ongoing initiative to scale out of unprofitable third-party ad network deals in Media E.U., and our ongoing revenue mix-shift. We expect to bottom out in revenue in Q3 2007 and then grow more profitable revenue in Q4 2007 and into next year." Second Quarter Results Revenue was $39.6 million in Q2 2007, compared to revenue of $43.2 million in Q1 2007. MIVA Direct, our primary traffic business, contributed 34.0% of total revenue in Q2 2007, compared to 31.3% in Q1 2007. MIVA Direct's revenue was flat sequentially from Q1 2007 to Q2 2007. Gross margins were 52.5% in Q2 2007, compared to 52.9% in Q1 2007. Gross margins were essentially flat in Q2 2007, due primarily to the planned expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of our high gross margin private label offering and the impact of unprofitable revenue share deals in Media E.U. The Company recorded an estimated non-cash impairment charge related to goodwill for MIVA Media Europe in the amount of $14.0 million, or $(0.44) per basic share in Q2 2007. The final measurement of the impairment has yet to be completed; therefore as permitted by SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 142, the estimated impairment charge represents management's current best estimate as to the actual impairment, which may be different than the estimated charge. Upon finalization Writing the table of contents (TOC) on a recordable CD or DVD disc. The finalization process ensures that the disc can be played back on most CD and DVD players. See disc-at-once. of the actual impairment charge in Q3 2007, the Company will record any resulting change to the estimated charge. After recording the estimated impairment charge, MIVA Media Europe's goodwill was eliminated. 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 $37.5 million in Q2 2007, compared to $28.2 million in Q1 2007. The approximate $9.3 million increase in operating expenses included the estimated $14.0 million non-cash impairment charge, the net $0.0 million restructuring charge and approximately $1.6 million in incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. advertising spend for MIVA Direct. The net $0.0 million restructuring charge is a function of $0.5 million in charges from the Q2 2007 Perot outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. , due to one-time employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and related costs, offset by $0.5 million in favorability, due to lower settlement costs from the Q1 2007 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). . Adjusting for the estimated $14.0 million non-cash impairment charge, the net $0.0 million restructuring charge and $1.6 million in incremental advertising spend, operating expenses were $21.9 million in Q2 2007, below adjusted Q1 2007 operating expenses of $25.1 million, which excluded $3.1 million in restructuring charges. Q2 2007 operating expenses included $1.2 million in non-cash compensation expense. Q1 2007 operating expenses included a total of $2.1 million in non-cash compensation expense, of which $0.7 million was related to termination of employees and was included in the restructuring charge of $3.1 million. Accordingly, the portion of the non-cash compensation expense for Q1 2007 that was not accounted for in the restructuring charge was $1.4 million. EBITDA was a loss of $14.2 million in Q2 2007, compared to an EBITDA loss of $2.8 million in Q1 2007. Q2 2007 EBITDA included the estimated $14.0 million non-cash impairment charge, the net $0.0 million restructuring charge, the $1.2 million non-cash compensation expense and approximately $1.6 million in incremental advertising spend for MIVA Direct. Q1 2007 EBITDA included the $3.1 million restructuring charge and $1.4 million non-cash compensation expense. Adjusted EBITDA was $1.0 million in Q2 2007, compared to Adjusted EBITDA of $1.6 million in Q1 2007. Q2 Adjusted EBITDA excluded the estimated $14.0 million non-cash impairment charge, the net $0.0 million restructuring charge and $1.2 million in non-cash compensation expense. Q1 2007 Adjusted EBITDA excluded the $3.1 million restructuring charge and $1.4 million non-cash compensation expense. GAAP net loss was $16.4 million or $(0.52) per basic share in Q2 2007. This compares to GAAP net loss of $5.3 million, or $(0.17) per basic share in Q1 2007. Adjusted net income was $0.0 million or $0.00 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in Q2 2007, compared to Adjusted net income of $0.3 million or $0.01 per diluted share in Q1 2007. Q2 2007 Adjusted net income excluded the estimated $14.0 million non-cash impairment charge, $1.2 million in amortization, the net $0.0 million restructuring charge and $1.2 million non-cash compensation expense. Q1 2007 Adjusted net loss excluded $1.2 million in amortization, $3.1 million in restructuring charges and $1.4 million in non-cash compensation expense. Cash and cash equivalents were $23.9 million at June 30, 2007, an increase of $2.5 million from March 31, 2007 cash of $21.4 million. As of June 30, 2007, the Company had an active base of 265 full time employees, down from 346 at March 31, 2007, and 401 at December 31, 2006. The decrease from December 2006 is due primarily to the Company's Q1 2007 restructuring and Q2 2007 Perot outsourcing plan. Second Quarter 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. by Business [TABLE OMITTED] (*) MIVA Direct's gross margin excludes advertising spend of $9.1 million in Q2 2007 and $7.5 million in Q1 2007, which is included in consolidated operating expenses within the marketing, sales, and service category. The approximate $1.6 million increase in advertising spend did not yield the immediate anticipated results in toolbar growth and revenue. The Company expects to reduce ad spend in Q3 2007 as it focuses on more profitable toolbar growth. The total paid clicks metric does not reflect clicks generated through our MIVA-owned primary traffic business, MIVA Direct, including our toolbars. Recent Developments On August 1, 2007, the Company completed the asset sale of MIVA Small Business for $0.2 million in cash, net of liabilities assumed. The sale was structured to preserve certain net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carry forwards (NOLs) for the Company. The sale reflects the Company's strategy to focus on building consumer media and to transition away from non-core business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . Business Outlook The Company is forecasting Q3 2007 revenue of approximately $38.0 to $39.0 million and Q4 2007 revenue of approximately $40.0 to $41.0 million. The Company expects to achieve positive EBITDA in Q3 2007 of approximately $1.0 to $1.5 million and Q4 2007 EBITDA of approximately $2.5 to $3.0 million. The Company expects cash and cash equivalents to be approximately $24.0 million as of September 30, 2007. Management Conference Call Management will participate in a conference call to discuss the full results for the Company on August 6, 2007, at approximately 5:00 p.m. ET. The conference call will be simulcast on the Internet at http://ir.miva.com/medialist.cfm. A replay of the conference call will be available on the investor relations Investor relations The process by which the corporation communicates with its investors. area of MIVA's website at http://ir.miva.com/medialist.cfm. Interested parties may email questions in advance to Peter Weinberg Peter Weinberg is an Anglo-American businessman. He is a non-executive director at BAE Systems and was formerly CEO at Goldman Sachs International, the bank's European arm, until January 2005. of MIVA, Inc. at peter.weinberg@miva.com. MIVA believes that "Adjusted EBITDA", "Adjusted net income/loss" and "Adjusted net income/loss per share" provide meaningful measures for comparison of the Company's current and projected operating performance with its historical results due to the significant increase in non-cash amortization that began in 2004 primarily due to certain intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. resulting from mergers and acquisitions. MIVA defines Adjusted EBITDA as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. MIVA uses Adjusted EBITDA as an internal measure of its business and believes it is utilized as an important measure of performance by the investment community. MIVA sets goals and awards bonuses in part based on performance relative to Adjusted EBITDA. MIVA defines Adjusted net income/loss as net income/loss plus amortization and non-cash compensation expense, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business, in each case including the tax effects (if any) of the adjustment. MIVA believes the use of these measures does not lessen less·en v. less·ened, less·en·ing, less·ens v.tr. 1. To make less; reduce. 2. Archaic To make little of; belittle. v.intr. To become less; decrease. the importance of GAAP measures. In Q4 2006 and Q1 2007, MIVA calculated Adjusted EBITDA and Adjusted net income/loss without adding non-cash compensation expense to the calculation. Beginning in Q2 2007, MIVA calculates Adjusted EBITDA and Adjusted net income/loss by adding non-cash compensation to the calculation. Adjusted EBITDA and Adjusted net income/loss amounts for Q1 2007 referred to in this press release are calculated by adding non-cash compensation expense. About MIVA([R]), Inc. MIVA, Inc. is an online advertising and media company that operates across the US and Europe. MIVA's mission is to deliver valuable digital audiences to advertisers, which is achieved through two distinct divisions: MIVA Media, which offers Pay-Per-Click Ads across both vertical and contextual networks and MIVA Direct, which offers display and toolbar advertising solutions and focuses on the development and monetization Monetization The securitization of the gross revenues of a contract. of consumer sites. 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 certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. 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. Words or expressions such as "plan," "intend," "believe," "expect" or "forecast'' or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation, the potential that the information and estimates used to predict anticipated revenues and expenses were not accurate; the risks associated with the fact that we have material weaknesses in our internal control over financial reporting that may prevent us from being able to accurately report our financial results or prevent fraud; the risk that we have in the past and may in the future incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. goodwill and other intangible asset impairment charges that materially adversely affect our earnings and our operating results; the potential that demand for our services will decrease; the risk that we will not be able to continue to enter into new online marketing relationships to drive qualified traffic to our advertisers; the risk that our distribution partners will use unacceptable means to obtain users or that we will need to remove traffic generated by distribution partners; risks associated with our ability to compete with competitors and increased competition for distribution partners; political and global economic risks attendant to our business; risks associated with legal and cultural pressures on certain of our advertiser's service and/or product offerings; other economic, business and competitive factors generally affecting our business; the risk that operation of our business model infringes upon intellectual property rights held by others; our reliance on distribution partners for revenue generating traffic; risks associated with maintaining an international presence; difficulties executing integration strategies or achieving planned synergies with acquired businesses and private label initiatives; the risk that we will not be able to effectively achieve ongoing growth or return to profitability; the risk that new technologies could emerge which could limit the effectiveness of our products and services; risks associated with the operation of our technical systems, including system interruptions, security breaches and damage; risks associated with Internet security ''This article or section is being rewritten at Internet security is the process of protecting data and privacy of devices connected to internet from information robbery, hacking, malware infection and unwanted software. , including security breaches which, if they were to occur, could damage our reputation and expose us to loss or 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. ; risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc regulatory and legal uncertainties, both domestically and internationally. Additional key risks are described in MIVA's reports filed with the U.S. Securities and Exchange Commission, including the 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 fiscal 2006 and its most recent Form 10-Q Form 10-Q See 10-Q. . MIVA undertakes no obligation to update the information contained herein. Non-GAAP Financial Measures This press release includes discussion of additional financial measures "Adjusted EBITDA," "Adjusted Net Loss," "Adjusted Net Income," "Adjusted Net Loss Per Share" and "Adjusted Net Income Per Share," which are not considered generally accepted accounting principle (GAAP) measures by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. MIVA provides reconciliations of these two financial measures to GAAP measures in its press releases regarding actual financial results. A reconciliation of these financial measures to net income/loss and net income/loss per share for the three and six month periods ended June 30, 2007 included in this press release is set forth below. [R]Registered trademark of MIVA, Inc. All other marks properties of their respective companies. [TABLE OMITTED] [TABLE OMITTED] |
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