CMGI Reports Fourth Quarter and Full Fiscal Year 2005 Financial Results
Monday October 3, 4:00 pm ET
CMGI Reports Strong Operating Results for First Full Year After Modus Media Acquisition
WALTHAM, Mass.--(BUSINESS WIRE)--Oct. 3, 2005--CMGI, Inc. (Nasdaq: CMGI - News) today reported financial results for its full fiscal year and fourth quarter ended July 31, 2005.
Year Over Year Operating Highlights
* Net Revenue, Increased $672.3 million, or 169%
* Operating Income, Improved by $29.3 million, or 124%
* Gross Margins, Increased from 6% to 11%
* Annualized Integration Savings, Achieved $28.0 million
exceeding the $20.0 million target
"Approximately one year ago, we said that fiscal 2005 would be a profitable year for CMGI and I'm pleased to report that it was," said Joseph C. Lawler, President and Chief Executive Officer. "The year saw the Company's first quarterly and annual operating profit in nine years and significant improvements across key operation and financial measures. Moving forward, we've built and are executing our strategic plan which we expect will result in improved gross margins and lower operating expenses in the coming years," added Lawler.
Fiscal Year
CMGI reported net revenue of $1.1 billion for the fiscal year ended July 31, 2005. This compares to net revenue of $397.4 million for the fiscal year ended July 31, 2004, an increase of $672.3 million, or 169% year over year. This increase was primarily attributable to the Company's acquisition of Modus Media on August 2, 2004.
CMGI reported operating income of $5.7 million for the fiscal year ended July 31, 2005, compared to an operating loss of $23.7 million for the fiscal year ended July 31, 2004, an improvement of $29.3 million, or 124%. This improved performance was largely due to the acquisition of Modus Media, which provided significant financial benefits including expansion into higher margin business verticals, service offerings and geographies as well as synergies that allowed the Company to reduce costs by eliminating redundancies. The Company achieved savings related to integration of approximately $28.0 million, on an annualized basis. Partially offsetting these improved financial results were significant costs associated with Sarbanes-Oxley 404 compliance readiness actions and SAS 70 reviews for clients which totaled approximately $5.8 million. The fiscal 2005 operating income also included charges related to the amortization of intangible assets and stock-based compensation and depreciation totaling $21.1 million and net restructuring charges of $5.3 million. Included in the Company's fiscal 2004 operating loss were charges related to the amortization of stock-based compensation and depreciation totaling $7.1 million, and net restructuring charges of $5.6 million.
CMGI reported net income of $26.5 million, or $0.06 diluted earnings per share for fiscal 2005, compared to net income of $87.0 million, or $0.22 diluted earnings per share for fiscal 2004. The net income in fiscal 2005 included a non-cash income tax benefit of approximately $23.9 million as a result of a reduction in the Company's estimate of certain income tax liabilities that had been included in accrued income taxes on the Company's balance sheet. The net income in fiscal 2004 included a $40.5 million gain by the Company's AltaVista subsidiary on the sale of approximately 3.2 million shares of Overture Services, Inc. common stock, and a non-cash income tax benefit of approximately $76.4 million.
Excluding the effects of charges related to depreciation, amortization of intangible assets and stock-based compensation, and restructuring, CMGI reported non-GAAP operating income of $32.0 million for the fiscal year ended July 31, 2005 versus non-GAAP operating loss of $11.0 million in the fiscal year ended July 31, 2004. Similar to the year over year improvements noted in the discussion above of our GAAP results, the $43.0 million, or 392% year over year improvement in our non-GAAP operating income was also primarily attributable to the synergies and resulting benefits realized from the acquisition of Modus Media at the beginning of fiscal 2005.
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Fourth Quarter
CMGI reported net revenue of $251.2 million for the fourth quarter ended July 31, 2005. This compares to net revenue of $96.5 million for the same period of the prior year, an increase of $154.8 million, or 160%, year over year. This increase was primarily attributable to the Company's acquisition of Modus Media.
CMGI reported an operating loss of $3.7 million for the fourth quarter ended July 31, 2005, compared to an operating loss of $5.3 million for the same period last year, an improvement of $1.6 million, or 30%, year over year. Operating results for the fourth quarter were negatively impacted by significant costs associated with the Company's Sarbanes Oxley 404 compliance readiness actions, which totaled approximately $3.6 million during the quarter. The fiscal 2005 fourth quarter operating loss also included charges related to the amortization of intangible assets and stock-based compensation and depreciation totaling $5.3 million and net restructuring charges of $1.5 million. Included in the Company's fiscal 2004 fourth quarter operating loss were charges related to the amortization of stock-based compensation and depreciation totaling $1.5 million.
CMGI reported net income of $0.3 million, or nil diluted earnings per share for the fourth quarter of fiscal 2005. This compares to a net loss of $6.8 million, or ($0.02) diluted loss per share, for the same period last year. Net income in the fourth quarter of fiscal 2005 included a $4.5 million gain as a result of the sale of one of @Ventures portfolio companies, Molecular.
Excluding the effects of charges related to depreciation, amortization of intangible assets and stock-based compensation, and restructuring, CMGI reported non-GAAP operating income of $3.1 million for the fourth quarter ended July 31, 2005 compared to non-GAAP operating loss of $3.7 million for the same period last year. Similar to the improvements noted in the discussion above of our fourth quarter GAAP results, the $6.9 million, or 184% year over year improvement in our non-GAAP operating income in the fourth quarter was also primarily attributable to the synergies and resulting benefits realized from the acquisition of Modus Media at the beginning of fiscal 2005.
As of July 31, 2005, CMGI had consolidated cash, cash equivalents and marketable securities of $192.7 million, versus $272.2 million at July 31, 2004. The primary use of cash versus last year-end represents the Modus Media net cash acquisition costs and related expenses of approximately $66.2 million.
Conference Call Scheduled for October 3rd
CMGI will hold a conference call to discuss its fourth quarter and full fiscal year 2005 results at 5:00 p.m. Eastern Time on October 3, 2005. 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 - News), through its subsidiary, ModusLink, provides technology and products solutions that help businesses market, sell and distribute their products and services. In addition, CMGI's venture capital affiliate, @Ventures, invests in a variety of technology ventures. For additional information, see www.cmgi.com. |
