RAZF-.42 Major Mover - NEWS -Net Income of 2.5mill..
Razorfish Announces Net Income of $2.5 Million for First Quarter 2002
Company Reports Revenues of $10.8 Million and EPS of $.02 in Line with Management Guidance
NEW YORK--(BUSINESS WIRE)--April 17, 2002--Razorfish, Inc. (NASDAQ: RAZF - news), the digital solutions provider, today announced results for the first quarter ended March 31, 2002.
The results announced today include GAAP earnings as well as a description of pro forma results, as defined in note (a) on the attached statements of operations.
For the quarter ended March 31, 2002, revenues before reimbursements for direct costs (see note b) were $10.8 million, compared to $11.1 million pro forma revenues before reimbursements for direct costs for the fourth quarter 2001. Net income was $2.5 million or $0.02 per share, including the reversal of approximately $1.7 million of previously recorded restructuring reserves. Pro forma net income for the first quarter 2002 was $0.9 million or $0.01 per share, in line with previous management guidance, compared to pro forma net income of $0.6 million or $0.01 per share in the fourth quarter 2001.
``We are pleased that we achieved net income on a GAAP basis in the first quarter, and that our quarterly financial results are in line with our communicated guidance once again,'' said Jean-Philippe Maheu, chief executive officer. ``During the first quarter, we saw repeat business with many of our clients as well as a continued improvement in a number of our operating metrics.''
Recent Highlights
Operational Performance:
Operating cost structure of approximately $9.6 million in Q1
Gross margins (before reimbursements for direct costs) of approximately 45% for Q1, the fifth consecutive quarterly increase in gross margins
Ordinary operating margins (before reimbursements for direct costs) of approximately 11% for Q1, the fifth consecutive quarterly increase in ordinary operating margins
Balance Sheet Management:
Days sales outstanding (DSO) of 47 days, within management's target range of 45 to 55 days
Total liabilities were reduced by more than $5 million due to payments and a reversal of approximately $1.7 million for previously recorded restructuring reserves related to settled real estate obligations.
Client Satisfaction:
Razorfish was retained by several new clients during the first quarter, including John Wiley, Microsoft, Fortis Inc., a Sabre company, a leading family entertainment company, and a specialty chemicals manufacturer.
The Company continued to win additional business or service ongoing projects from existing clients, including Genentech, Cisco Systems, Western Union, Avaya, Comcast, Legg Mason, Verizon Communications, Veritas, Ford Motor Company, VeriSign, GlaxoSmithKline, Manulife Financial, a major consulting firm, and an international cosmetics company.
Guidance:
Razorfish anticipates revenues before reimbursements for direct costs of $10.3 million - $11.3 million and pro forma net earnings of $0.5 million to $1.0 million for the second quarter 2002.
Conference Call:
Razorfish management will host an investor conference call on April 17, 2002 at 10:00 AM EDT to further discuss its financial results. To access the conference call over the Internet, please log on to www.vcall.com and type in ``RAZF'' as the ticker symbol, or at www.razorfish.com under ``Investor Relations.'' It is advised that you log on at least fifteen minutes prior to the call to register, download, and install any necessary audio software. A replay of the Webcast will be archived for 90 days at www.vcall.com or at www.razorfish.com under ``Investor Relations.''
About Razorfish:
Razorfish's services employ digital technologies to address a wide range of its clients' needs, from business and brand strategy to systems integration. From its founding in 1995 to the present, Razorfish has provided its clients with services designed to enhance communications and commerce with their customers, suppliers, employees and other partners through the use of digital technologies. Razorfish is headquartered in New York and has offices in Boston, Los Angeles, San Francisco, Silicon Valley, and Tokyo. Recent Razorfish clients include Cisco Systems, Sony Corporation, Microsoft, Comcast, Manulife Financial, Ford Motor Company, and Bechtel. For more information visit: www.razorfish.com.
Forward-Looking Statement Disclaimer
Safe Harbor Statements under the Private Securities Litigation Reform Act of 1995
This release contains, in addition to historical information, forward-looking statements, including, but not limited to, Razorfish's strategies and goals with respect to its structure and service offerings (which can be found without limitation in the section titled ``Guidance''). We use words like ``anticipates'', ``believes'', ``plans'', ``intends'', ``expects'', ``future'' and similar expressions to identify forward-looking statements. Forward-looking statements are subject by their nature to risks and uncertainties, and actual results could differ materially from those set forth in the forward-looking statements. Typical risks and uncertainties include, but are not limited to, those related to the number and size of projects completed in a given period, integration of acquisitions, international and domestic economic conditions including, without limitation, interest rate and currency exchange rate fluctuations, changes in competition, our ability to manage growth and international operations effectively, retention of our professionals and other factors described from time to time in Razorfish's reports filed with the Securities Exchange Commission. In addition, we draw your attention to risk factors identified by Razorfish's 2001 Form 10-K filed with the Securities Exchange Commission on April 15, 2002 and its quarterly report on Form 10-Q, filed November 14, 2001. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Razorfish is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by the securities laws.
The following information includes both actual and pro forma financial results. The pro forma results do not purport to be prepared in accordance with Generally Accepted Accounting Principles.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Pro Forma
Results(a)
Three Actual Results
Months Ended Three Months Ended
March 31, March 31,
---------- ------------------------
2001 2001 2002
---------- ------------------------
Revenues
Revenues before
reimbursements for direct costs $ 25,479 $ 42,410 $ 10,783
Reimbursements for direct costs 937 1,358 470
-------- -------- ---------
Total revenues 26,416 43,768 11,253
Project personnel costs
Project personnel costs before
reimbursements for direct costs 16,475 28,607 5,949
Reimbursements for direct costs 937 1,358 470
-------- -------- ---------
Total project personnel costs 17,412 29,965 6,419
Gross profit 9,004 13,803 4,834
Ordinary operating expenses
Sales and marketing 3,445 4,652 348
General and administrative 13,667 20,508 3,283
-------- -------- ---------
Total ordinary operating expenses 17,112 25,160 3,631
-------- -------- ---------
Income from ordinary operations (8,108) (11,357) 1,203
Non-cash compensation - - 611
Restructuring charges 9,346 12,917 (1,652)
Amortization of intangibles 374 937 -
-------- -------- ---------
Income from operations (17,828) (25,211) 2,244
Other income, net 545 313 304
-------- -------- ---------
Income before income taxes (17,283) (24,898) 2,548
Provision for income taxes - - -
--------- -------- ---------
Net income (loss) $ (17,283) $ (24,898) $ 2,548
========= ======== =========
Net income per share
Basic $ (0.18) $ (0.25) $ 0.02
Diluted $ (0.18) $ (0.25) $ 0.02
Weighted average
shares outstanding
Basic 97,706 97,706 119,881
Diluted 97,706 97,706 125,236
Pro forma data: (a)
Income before income taxes $ (17,283) $ (24,898) $ 2,548
Non-cash compensation - - 611
Restructuring Charges 9,346 12,917 (1,652)
Amortization of intangibles 374 937 -
--------- --------- ---------
Pro forma income
before income taxes (7,563) (11,044) 1,507
Pro forma provision
for income taxes (3,025) (4,418) 603
--------- --------- ---------
Pro forma net income (loss) $ (4,538) $ (6,626) $ 904
========= ========= =========
Pro forma net income per share $ (0.05) $ (0.07) $ 0.01
Weighted average
shares outstanding 97,706 97,706 125,236
(a) The pro forma results are presented to reflect the Company's
divestitures of its European operations at various times
during 2001, as if such activities had occurred at the
beginning of the respective period. Pro forma data excludes
non-cash compensation, restructuring charges and amortization
of intangibles. The pro forma provision for income taxes is
calculated using a 40% tax rate. This data does not purport to
be prepared in accordance with Generally Accepted Accounting
Principles.
(b) In 2001, the Emerging Issues Task Force of the Financial
Accounting Standards Board (FASB) concluded that
reimbursements for "out of pocket" expenses should be
classified as revenue and, correspondingly, cost of services,
in the income statement. The new accounting treatment is
applicable to Razorfish in the first quarter 2002 and requires
that comparative financial statements for prior periods be
reclassified in order to ensure consistency for all periods
presented. Accordingly, in the attached statements of
operations, Razorfish presents captions for "revenues before
reimbursements for direct costs" and "total revenues" as well
as corresponding captions for project personnel costs.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) December 31, March 31,
----------- ---------
2001 2002
----------- ---------
ASSETS
Current assets
Cash, cash equivalents,
and short-term investments $ 8,011 $ 7,111
Accounts and unbilled receivables 5,617 5,986
Other current assets 458 572
-------- --------
Total current assets 14,086 13,669
Net fixed assets 1,599 1,544
Other assets 262 262
-------- --------
Total assets $ 15,947 $ 15,475
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 20,652 $ 16,899
Deferred revenues 178 307
-------- --------
Total current liabilities 20,830 17,206
Long-term obligations 3,111 1,570
-------- --------
Total liabilities 23,941 18,776
Stockholders' equity (7,994) (3,301)
-------- --------
Total liabilities and stockholders' equity $ 15,947 $ 15,475
======== ========
--------------------------------------------------------------------------------
Contact:
Razorfish, Inc.
David LaBar, 212/798-7941
david.labar@razorfish.com
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