Primix Announces Second Quarter Results, Closes $2.5M in Financing; Restructuring Complete, Results in Line with Expectations.Business/Technology Editors WATERTOWN, Mass.--(BUSINESS WIRE)--July 19, 2001 Primix Solutions 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 :PMIX) today announced financial results for the quarter ended June 30, 2001. Revenue for the second quarter of 2001 was $5,967,000, compared to $5,338,000 for the second quarter of 2000, a 12% year-over-year increase. Pro-forma net loss (earnings before interest, taxes, depreciation, amortization of intangibles, other compensation expense, 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. and stock compensation charges) for the quarter was $1,712,000 ($.10 per share), compared to a pro-forma net loss of $2,500,000 ($.16 per share) in the second quarter of 2000. Net loss for the second quarter of 2001, including the restructuring charge of $ 4,345,000, was $10,943,000 ($.63 per share) versus a net loss of $2,562,000 ($.17 per share) for the comparable prior year period. "As we stated a few weeks ago, we felt the effects of the current macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. environment on our business in the second quarter," said Lennart Mengwall, chairman and 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. of Primix. "We had three of our larger projects in 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. unexpectedly halted or pushed out of Q2 due to client concerns related to the current economic environment. We were unable to back-fill the $2 million of revenue this represented within the quarter, though we did close several new pieces of business by the start of Q3. These include engagements with two highly regarded multinational brands in the healthcare and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. verticals." "Looking ahead to Q3," continued Mr. Mengwall, "We now expect revenue sufficient to reach positive pro-forma income with the changes we made to our cost structure. Beyond that, we are planning for more or less flat revenues until confidence in the economy improves." "Most of our key operating metrics during Q2 declined with revenue," said Michael Troiano, president of Primix. "Our gross margin overall was 37%. 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. revenue per billable head totaled $127,000, down 23% from $165,000 in Q1 2000. Revenue per billable head 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. was $212,000, down from $255,000 in Q1. Our Q2 utilization rate was 57%, down 8 points from 65% in Q1. Our average hourly bill rate was $107, down 12% overall from $122 in Q1. Average hourly bill rates in the U.S. reached $182, up from $180 per hour in Q1. Headcount totaled 237 at the end of Q2 versus 264 at the end of Q1 as a result of our restructuring. Despite the addition of 9 sales and marketing people, we improved our billable to non-billable ratio to 74% at the end of Q2." Mr. Troiano also provided details of the Company's restructuring in Q2. "The decisions we made during the quarter were difficult, but necessary. In total, this restructuring resulted in the termination of 61 people worldwide, 20% of our total headcount. We eliminated 23 full-time salaried non-billable positions and trimmed total delivery capacity by approximately 18%. These changes, along with other cost cutting measures taken in Q2, will reduce our run rate of expenses by more than $1.4 million per quarter versus Q1, with more than $800,000 of that amount coming from G&A." "Severance costs related to these changes totaled $803,000," said David Chapman, chief financial officer. "In addition, we have consolidated as much of our office space as possible, resulting in approximately $3,246,000 of office-related liabilities and write-offs. The Company also incurred vendor fees related to the termination of contracts in the amount of $296,000. Additional non-recurring charges taken during Q2 include the acceleration of amortization of 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. associated with our Swedish and Danish subsidiaries in the amounts of $2,133,000 and $731,090, respectively, and the write down of certain notes receivable to their estimated net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. , reflected as $707,000 of other compensation expense." The Company also announced that it has closed $2,500,000 of bridge financing Bridge Financing A method of financing, used by companies before their IPO, to obtain necessary cash for the maintenance of operations. Notes: These funds are usually supplied by the investment bank underwriting the new issue. with its chairman and CEO, Lennart Mengwall, as anticipated in its June 22 release. Primix also announced two executive changes. Co-CEO Kevin Azzouz has stepped down from his operating role for health-related reasons until such time as his condition improves. Mr. Azzouz remains a significant Primix shareholder along with Lennart Mengwall, who assumes the title of CEO. Additionally, Martin Glover Martin "Youth" Glover (born December 27 1960) is an influential record producer and a founding member and bassist of the UK band Killing Joke. Glover was born in Africa. has been added to the Primix executive team as Vice President of Operations, North America, and also remains the General Manager of Primix's Northeast region, including the New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. and New York Metro For the region, see . Metro New York is a free daily newspaper in New York City started in 2004. Its main competition is AM New York, with which it practices many of the same distribution and marketing strategies. areas. Mr. Glover joined the Company in July 2000. Prior to joining Primix, Mr. Glover, was a partner in the Boston office of Whittman-Hart. About Primix Primix is a professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. firm dedicated to helping clients improve their business results through the application of Internet, wireless and broadband technology broadband technology Telecommunications devices, lines, or technologies that allow communication over a wide band of frequencies, and especially over a range of frequencies divided into multiple independent channels for the simultaneous transmission of different signals. . The Company brings together strategic, technical, design and branding professionals to build practical, customized, results-driven solutions for clients including A.T. Cross, Bose Corporation The Bose Corporation is a privately-held American company based in Framingham, Massachusetts that specializes in audio equipment[2][3] and holds the philosophy of supporting its technological development through research (thus the company motto). , Citibank, Computerworld, Ericsson, Genzyme, Joslin Diabetes Center Joslin Diabetes Center is the world’s largest and most respected diabetes research center, diabetes clinic, and provider of diabetes education. It is located in the Longwood Medical and Academic Area in Boston, Massachusetts. , Kemper Insurance, Lucent Technologies, Pergo, Rockwell Collins Rockwell Collins, Inc. (NYSE: COL) is a large United States-based international company headquartered in Cedar Rapids, Iowa, primarily providing aviation and information technology systems, solutions, and services to governmental agencies and aircraft manufacturers. , and Waters Corporation  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . . Primix is headquartered just outside Boston, Massachusetts “Boston” redirects here. For other uses, see Boston (disambiguation). Boston is the capital and most populous city of Massachusetts.[3] The largest city in New England, Boston is considered the unofficial economic and cultural center of the entire New , and operates regional offices in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Sweden and Denmark. Additional information about the Company, its approach, clients and service offerings may be found at http://www.primix.com. You may also e-mail info@primix.com or call 617-923-6500. Statements made in this press release, other than those concerning historical information, should be considered forward-looking and subject to various risks and uncertainties. Such 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. are made based on management's belief as well as assumptions made by, and information currently available to, management pursuant to the 'safe harbor' 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. Primix Solutions' actual results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors, including the Company's ability to maintain its current credit facility, the Company's ability to raise additional funds on a timely basis to satisfy its liquidity needs, the Company's ability to meet its revenue targets and meet client expectations related to committed revenues, the Company's ability to manage expenses in line with revenue and all factors that contribute to meeting such goals, the Company's ability to attain profitability and positive cash flow in 2001, and those factors identified in Primix Solutions' 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, and its Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. and subsequent reports filed with the Securities and Exchange Commission.
Primix Solutions Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Unaudited Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
2000 2001 2000 2001
Revenue:
Professional services $ 5,338 $ 5,967 $ 10,351 $ 13,708
Operating expenses:
Professional services 3,758 3,752 7,034 7,765
Sales and marketing 1,645 980 3,259 2,249
General and
administrative 2,390 2,947 4,454 6,044
Restructuring charge -- 4,345 -- 4,345
Amortization of
intangible assets 202 3,586 294 4,240
Depreciation 122 364 176 812
Other compensation
expense -- 707 -- 707
Stock compensation 25 187 25 271
Total operating expenses 8,142 16,868 15,242 26,433
Operating loss (2,804) (10,901) (4,891) (12,725)
Interest income
(expense), net 242 (42) 472 17
Net loss $ (2,562) $(10,943) $ (4,419) $(12,708)
Basic and diluted
net loss per common share $ (0.17) $ (0.63) $ (0.29) $ (0.74)
Basic and diluted
weighted average
shares outstanding 15,246 17,410 15,063 17,089
Primix Solutions Inc.
Condensed Consolidated Balance Sheets
(In thousands)
Unaudited
December 31, June 30,
2000 2001
Assets
Current assets:
Cash and cash equivalents $ 4,813 $ 518
Accounts receivable, net 4,143 7,559
Prepaid expenses and other
current assets 663 864
Note receivable from related party
- current portion 870 --
Total current assets 10,489 8,941
Property and equipment, net 4,462 4,507
Restricted cash -- 1,080
Goodwill, net 5,371 3,699
Notes receivable from
related parties 500 500
Other assets 393 78
Total assets $ 21,215 $ 18,805
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of
capital lease obligations $ -- $ 684
Lines of credit payable -- 3,522
Notes payable - related party -- 2,393
Accounts payable 1,229 2,348
Accrued expenses and
other liabilities 4,392 2,528
Restructuring obligation -- 1,958
Total current liabilities 5,621 13,433
Obligations under capital leases -- 950
Other liabilities -- 92
Total liabilities 5,621 14,475
Stockholders' equity:
Common stock 18 19
Additional paid-in capital 66,947 68,385
Notes receivable from related party -- (163)
Deferred compensation (1,507) (1,345)
Accumulated deficit (49,777) (62,485)
Cumulative translation adjustment (87) (81)
Total stockholders' equity 15,594 4,330
Total liabilities and
stockholders' equity $ 21,215 $ 18,805
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