CMGI Reports Fourth Quarter and Full Fiscal Year 2003 Financial Results
Business Editors/High-Tech Writers
CHARLESTOWN, Mass.--(BUSINESS WIRE)--Sept. 30, 2003--
With Major Restructuring Substantially Complete, CMGI Exits
Fiscal Year With Cash, Cash Equivalents and Marketable Securities
in Excess of $275 Million
CMGI, Inc. (Nasdaq: CMGI) today reported financial results for its
fourth quarter and full fiscal year ended July 31, 2003.
Fourth Quarter
CMGI reported net revenue from continuing operations of $97.9
million for the fourth fiscal quarter ended July 31, 2003. This
compares to net revenue of $106.1 million for the quarter ended April
30, 2003, a decrease of $8.2 million from continuing operations. This
decrease was primarily due to lower order volumes from a major
original equipment manufacturer (OEM) customer, as well as the
migration of certain other work to Asia. The addition of new projects
in supply chain management and literature fulfillment was not
sufficient to mitigate the softness in the supply chain management
revenue.
CMGI reported an operating loss from continuing operations of
$34.0 million for the fourth quarter ended July 31, 2003, compared to
an operating loss of $27.5 million for the third quarter ended April
30, 2003. The fourth quarter operating loss from continuing operations
included charges related to the amortization of stock-based
compensation and depreciation totaling $2.9 million and net
restructuring charges of $26.2 million. The Company's restructuring
charges in the fourth quarter included a $15.4 million charge related
to the buyout of the Company's lease for its former headquarters
building in Andover Massachusetts, and a $4.6 million charge related
to facility lease obligations from SalesLink's restructuring of its
North America supply chain capacity. Included in the third quarter
operating loss from continuing operations were charges related to the
amortization of stock-based compensation and depreciation totaling
$2.9 million, and long-lived asset impairment and net restructuring
charges of $20.4 million. The Company's $19.9 million of net
restructuring charges in the third quarter of fiscal 2003 primarily
included $14.9 million of restructuring charges related to facility
and equipment lease obligations and asset write-offs at certain U.S.
based operations of SalesLink.
"The elimination of the Andover lease was a major milestone in
reducing our lease obligations. This transaction reduced future lease
and lease related operating expenses by approximately $50.0 million,
for an annual cash savings of approximately $7.0 million," said Tom
Oberdorf, Chief Financial Officer.
CMGI reported a net loss of $16.4 million or loss per share of
($0.04) for the fourth quarter of fiscal 2003, compared to net income
of $76.9 million or $0.20 earnings per share for the third quarter
ended April 30, 2003. Net loss in the fourth quarter of fiscal 2003
included income from discontinued operations of $13.2 million or $0.03
earnings per share. The income from discontinued operations during the
fourth quarter of fiscal 2003 included a $10.5 million benefit related
to the reversal of net liabilities of a subsidiary that entered into
an assignment for the benefit of creditors in June 2001. The reversal
was triggered by the conclusion of the assignment for the benefit of
creditors proceedings as they related to CMGI. Net income in the third
quarter of fiscal 2003 included income from discontinued operations of
$117.8 million or $0.30 earnings per share. The income from
discontinued operations during the third quarter of fiscal 2003
included a gain by AltaVista of approximately $97.6 million on the
sale of its assets and business operations, a gain of approximately
$1.6 million on the sale of Yesmail, the write-off of approximately
$35.6 million of minority interest in ProvisionSoft, which ceased
operations during the third quarter, and approximately $2.8 million of
loss adjustments related to the Company's January 31, 2003 "held for
sale" loss estimates for Tallan and uBid. The fourth quarter loss from
continuing operations of $29.6 million improved by $11.3 million from
the third quarter amount of $40.9 million.
Excluding the effects of charges related to depreciation,
amortization, long-lived asset impairment and restructuring, CMGI
reported a non-GAAP operating loss(1) from continuing operations of
$4.9 million for the fourth quarter ended July 31, 2003 versus a
non-GAAP operating loss(1) from continuing operations of $4.3 million
in the third quarter ended April 30, 2003. The increase in non-GAAP
operating loss(1) from continuing operations in the fourth quarter was
primarily the result of lower sales levels in the fourth quarter as
compared to the third quarter.
The Company believes that its non-GAAP measure of operating
income/(loss) from continuing operations ("non-GAAP operating
income/(loss)(1)") provides investors with a useful supplemental
measure of the Company's operating performance by excluding the impact
of one-time gains/(losses), non-cash charges, and restructuring
activities. Historically, the Company has recorded significant
one-time gains/(losses), and impairment and restructuring charges and
therefore management uses non-GAAP operating income/(loss)(1) to
assist in evaluating the Company's operating performance. These
non-GAAP results should be evaluated in light of the Company's
financial results prepared in accordance with United States generally
accepted accounting principles ("GAAP"). A table reconciling the
Company's non-GAAP operating loss to its GAAP operating income/(loss)
is included in the consolidated financial statements in this release.
As of July 31, 2003, CMGI had consolidated cash, cash equivalents
and marketable securities of $276.1 million, versus consolidated cash,
cash equivalents and marketable securities of $250.9 million for the
prior quarter. Cash, cash equivalents and marketable securities
increased primarily due to a $45.5 million increase in value during
the fourth quarter of shares of Overture Services, Inc. ("Overture")
common stock held by AltaVista. Subsequent to the fiscal year end, all
shares of Overture common stock were sold.
George McMillan, President and Chief Executive Officer of CMGI,
Inc., said: "One factor contributing to the revenue softness in the
supply chain business is the migration of programs to Asia, more
specifically, China, where CMGI is actively pursuing expansion. The
liquidity position of CMGI is exceptionally strong, and provides both
a considerable source for reinvestment in our global supply chain and
literature fulfillment business, and a long-term liquidity cushion."
Fiscal Year
CMGI reported net revenue from continuing operations of $437.0
million for the fiscal year ended July 31, 2003. This compares to net
revenue from continuing operations of $168.5 million for the fiscal
year ended July 31, 2002, an increase of $268.5 million. This increase
was the result of the revenue contributions from SalesLink's SL Supply
Chain subsidiary, which was acquired in July 2002, partially offset by
a decline in SalesLink's supply chain management business.
CMGI reported an operating loss from continuing operations of
$92.4 million for the fiscal year ended July 31, 2003, compared to an
operating loss from continuing operations of $75.7 million for the
fiscal year ended July 31, 2002. Included in the fiscal 2003 operating
loss from continuing operations were charges related to the
amortization of stock-based compensation and depreciation totaling
$10.8 million, and long-lived asset impairment and net restructuring
charges of $55.8 million. Included in the fiscal 2002 operating loss
from continuing operations were charges related to the amortization of
intangible assets and stock-based compensation and depreciation
totaling $19.2 million, and long-lived asset impairment and net
restructuring charges of ($0.6) million. The Company's $55.3 million
of restructuring charges in fiscal 2003 primarily included a $15.4
million charge related to the early termination of the Company's lease
for its former headquarters facility in Andover, Massachusetts, $19.5
million of restructuring charges related to facility and equipment
lease obligations and asset write-offs at certain U.S. based
operations of the Company's SalesLink subsidiary, and $6.6 million of
charges related to certain corporate equipment lease obligations.
CMGI reported a net loss of $216.3 million for fiscal 2003,
compared to a net loss of $524.9 million for fiscal 2002. CMGI's net
loss available to common stockholders for fiscal 2003 was $216.3
million, or ($0.55) loss per share, compared to a net loss available
to common stockholders of $463.7 million, or ($1.22) loss per share,
for fiscal 2002. The net loss in fiscal 2003 included a loss from
discontinued operations of $81.6 million, or ($0.21) loss per share.
The loss from discontinued operations during fiscal 2003 primarily
included operating losses from discontinued operations of $206.2
million, partially offset by a gain by AltaVista of approximately
$99.4 million on the sale of its assets and business operations, and
the write-off of approximately $35.6 million of minority interest in
ProvisionSoft. The net loss in fiscal 2002 included a loss from
discontinued operations of $540.7 million, or ($1.43) loss per share.
Excluding the effects of charges related to depreciation,
amortization, long-lived asset impairment and restructuring, CMGI
reported a non-GAAP operating loss(1) from continuing operations of
$25.8 million for the fiscal year ended July 31, 2003 versus a
non-GAAP operating loss(1) from continuing operations of $57.1 million
in the fiscal year ended July 31, 2002. The decrease in non-GAAP
operating loss(1) from continuing operations in fiscal 2003, as
compared to fiscal 2002, is primarily due to the Company's
restructuring efforts in fiscal 2003.
Basis of Presentation
The Company's results of continuing operations discussed herein
exclude the results of operations of the Company's former operating
companies AltaVista and uBid, each of which sold substantially all of
their assets, Engage, NaviSite, Yesmail, and Tallan, each of which
were divested, and ProvisionSoft, which ceased operations, during the
fiscal year ended July 31, 2003. The results of operations of each of
these former operating companies have been reported as discontinued
operations in accordance with generally accepted accounting
principles.
As of July 31, 2003, the Company's operating businesses included
its wholly-owned subsidiary, SalesLink Corporation ("SalesLink") and
SL Supply Chain Services International Corp., a wholly-owned
subsidiary of SalesLink, each of which operate within the Company's
eBusiness and Fulfillment segment. The Company also continues to hold
investments in various companies through its @Ventures venture capital
affiliates.
Conference Call Scheduled for September 30th
CMGI will hold a conference call to discuss its fourth quarter and
full fiscal year 2003 results at 5:00 p.m. EDT on September 30, 2003.
Investors can listen to the conference call on the Internet at
www.cmgi.com/investor. To listen to the live call, go to the Web site
at least 15 minutes prior to the start time to download and install
the necessary audio software.
About CMGI
CMGI, Inc. (Nasdaq: CMGI) provides technology and commerce
solutions that help businesses market, sell and distribute their
products and services. CMGI offers industry-leading global supply
chain management and distribution and fulfillment services. For
additional information, see www.cmgi.com.
(1) The non-GAAP operating results are not a recognized measure
for financial statement presentation under the United States generally
accepted accounting principles (U.S. GAAP). Non-U.S. GAAP earnings
measures do not have any standardized definition and are therefore
unlikely to be comparable to similar measures presented by other
reporting companies. This non-GAAP measure is provided to assist
readers in evaluating CMGI's operating performance and each of the
items listed (depreciation, amortization of assets and stock-based
compensation, long-lived asset impairment and restructuring) were
excluded because they were considered to be of a non-operational
nature. Readers are encouraged to consider this non-GAAP measure in
conjunction with CMGI's U.S. GAAP results. Previously, CMGI referred
to this measure as "pro forma operating income/(loss)."
This release contains forward-looking statements, which address a
variety of subjects including, for example, the expected future
benefits of CMGI's restructuring activities, CMGI's planned
international expansion efforts, and the expected ability of CMGI to
preserve and utilize its capital resources to grow its businesses. All
statements other than statements of historical fact, including without
limitation, those with respect to CMGI's goals, plans and strategies
set forth herein are forward-looking statements. The following
important factors and uncertainties, among others, could cause actual
results to differ materially from those described in these
forward-looking statements: CMGI's success, including its ability to
decrease its cash burn rate, improve its cash position, expand its
operations and revenues and reach profitability, depends on its
ability to execute on its business strategy and the continued and
increased demand for and market acceptance of its products and
services; CMGI may not be able to expand its operations in accordance
with its business strategy, CMGI may experience difficulties
integrating technologies, operations and personnel in accordance with
its business strategy; CMGI derives a significant portion of its
revenue from a small number of customers and the loss of any of those
customers would significantly damage CMGI's financial condition and
results of operations; and increased competition and technological
changes in the markets in which CMGI competes. For a detailed
discussion of cautionary statements that may affect CMGI's future
results of operations and financial results, please refer to CMGI's
filings with the Securities and Exchange Commission, including CMGI's
most recent Quarterly Report on Form 10-Q. Forward-looking statements
represent management's current expectations and are inherently
uncertain. We do not undertake any obligation to update
forward-looking statements made by us.
-0-
*T
CMGI, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three months ended Fiscal Year ended
July 31, April 30, July 31, July 31, July 31,
2003 2003 2002 2003 2002
-------- -------- --------- --------- ---------
Net revenue $ 97,882 $106,109 $ 48,724 $ 436,987 $ 168,476
Operating expenses:
Cost of revenue 90,389 98,582 41,164 403,883 152,140
Research and
development - - 463 332 4,732
Selling 1,446 1,066 19,748 6,792 28,357
General and
administrative 13,741 13,557 3,885 62,336 54,598
Amortization of
intangible assets
and stock-based
compensation 54 55 (311) 218 4,941
Impairment of long-
lived assets - 432 154 456 2,482
Restructuring, net 26,204 19,938 3,652 55,348 (3,118)
-------- -------- --------- --------- ---------
Total operating
expenses 131,834 133,630 68,755 529,365 244,132
-------- -------- --------- --------- ---------
Operating loss (33,952) (27,521) (20,031) (92,378) (75,656)
Other income
(deductions):
Other gains
(losses), net 4,363 (11,608) (34,071) (41,317) (67,983)
Minority interest 69 99 - 319 -
Equity in losses of
affiliates 163 (1,049) (12) (1,774) (15,408)
Interest income 734 710 4,286 3,396 14,387
Interest (expense)
recovery, net (409) (432) 16,605 321 22,029
-------- -------- --------- --------- ---------
Total 4,920 (12,280) (13,192) (39,055) (46,975)
-------- -------- --------- --------- ---------
Loss from continuing
operations before
income taxes and
extraordinary item (29,032) (39,801) (33,223) (131,433) (122,631)
Income tax expense
(benefit) 582 1,073 (2,881) 3,249 (7,096)
-------- -------- --------- --------- ---------
Loss from continuing
operations before
extraordinary item (29,614) (40,874) (30,342) (134,682) (115,535)
Discontinued
operations, net of
income taxes:
Income (loss) from
discontinued
operations 13,224 117,806 (159,763) (81,626) (540,664)
Extraordinary gain on
retirement of debt,
net of income tax - - - - 131,281
-------- -------- --------- --------- ---------
Net income (loss) (16,390) 76,932 (190,105) (216,308) (524,918)
Preferred stock
accretion - - - - (2,301)
Gain on repurchase of
Series C Convertible
Preferred Stock - - - - 63,505
-------- -------- --------- --------- ---------
Net income (loss)
available to common
stockholders $(16,390)$ 76,932 $(190,105)$(216,308)$(463,714)
======== ======== ========= ========= =========
Basic and diluted
earnings (loss) per
share available to
common stockholders:
Loss from
continuing
operations before
extraordinary
item $ (0.07)$ (0.10)$ (0.08)$ (0.34)$ (0.14)
Earnings (loss)
from discontinued
operations $ 0.03 $ 0.30 $ (0.40)$ (0.21)$ (1.43)
Extraordinary gain
on retirement of
debt, net of
income tax $ - $ - $ - $ - $ 0.35
-------- -------- --------- --------- ---------
Earnings (loss)
available to
common
stockholders $ (0.04)$ 0.20 $ (0.48)$ (0.55)$ (1.22)
======== ======== ========= ========= =========
Shares used in
computing basic and
diluted earnings
(loss) per share 394,514 393,542 392,380 393,455 379,800
======== ======== ========= ========= =========
CMGI, Inc. and Subsidiaries
Consolidated Statements of Operations Information
(In thousands)
(Unaudited)
Three months ended Fiscal Year ended
July 31, April 30, July 31, July 31, July 31,
2003 2003 2002 2003 2002
-------- -------- -------- -------- --------
Net revenue:
-------------------------
eBusiness and
Fulfillment $ 97,545 $105,974 $ 48,401 $435,879 $154,493
Enterprise Software and
Services - - 118 227 1,289
Managed Application
Services 337 135 205 881 6,158
Portals - - - - 6,536
-------- -------- -------- -------- --------
$ 97,882 $106,109 $ 48,724 $436,987 $168,476
======== ======== ======== ======== ========
Operating income (loss):
-------------------------
eBusiness and
eBusiness and
Fulfillment $ (7,036)$(15,028)$ 525 $(20,021)$ (1,090)
Enterprise Software and
Services 120 - (3,354) (846) (13,957)
Managed Application
Services (904) (149) 27 (653) 2,368
Portals (436) (450) 4,644 (17) (1,747)
Other (25,696) (11,894) (21,873) (70,841) (61,230)
-------- -------- -------- -------- --------
$(33,952)$(27,521)$(20,031)$(92,378)$(75,656)
======== ======== ======== ======== ========
Non-GAAP operating income
(loss):
-------------------------
eBusiness and
Fulfillment $ 695 $ 1,767 $ 2,429 $ 7,352 $ 5,923
Enterprise Software and
Services 50 - (2,673) (861) (9,653)
Managed Application
Services 652 136 1,024 1,212 (12,056)
Portals 55 (7) 5,568 1,011 5,628
Other (6,333) (6,157) (20,138) (34,487) (46,916)
-------- -------- -------- -------- --------
$ (4,881)$ (4,261)$(13,790)$(25,773)$(57,074)
======== ======== ======== ======== ========
Note: Non-GAAP operating income (loss) represents total operating
income (loss), excluding net charges related to depreciation,
amortization of intangible assets and stock-based compensation,
long-lived asset impairment and restructuring.
TABLE RECONCILING GAAP OPERATING INCOME (LOSS) TO
NON-GAAP OPERATING INCOME (LOSS)
GAAP Operating Loss $(33,952)$(27,521)$(20,031)$(92,378)$(75,656)
Adjustments:
Depreciation 2,813 2,835 2,746 10,583 14,277
Amortization of
intangible assets
and stock-based
compensation 54 55 (311) 218 4,941
Long-lived asset
impairment - 432 154 456 2,482
Restructuring 26,204 19,938 3,652 55,348 (3,118)
-------- -------- -------- -------- --------
Non-GAAP Operating Loss $ (4,881)$ (4,261)$(13,790)$(25,773)$(57,074)
======== ======== ======== ======== ========
*T
--30--SK/bo*
CONTACT: CMGI, Inc.
Investors-Financial
Tom Oberdorf, 617-886-4523
ir@cmgi.com
KEYWORD: MASSACHUSETTS
INDUSTRY KEYWORD: SOFTWARE E-COMMERCE INTERNET
COMPUTERS/ELECTRONICS CONFERENCE CALLS EARNINGS
SOURCE: CMGI, Inc.
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