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Thursday February 4, 4:30 pm Eastern Time
Company Press Release
SOURCE: Open Market, Inc.
Open Market Announces Solid Fourth Quarter 1998 Results
BURLINGTON, Mass., Feb. 4 /PRNewswire/ -- Open Market, Inc. (Nasdaq: OMKT - news), a leading provider of Internet commerce and information publishing software, today announced results for its fourth quarter ended December 31, 1998. Net revenues were $16.1 million, compared to net revenues of $18.6 million for the fourth quarter of 1997. Net loss for Q4 1998, which includes the charge of $2.0 million for restructuring costs, was $6.4 million or $0.18 per share. This compared to a net loss of $3.0 million or $0.09 per share for the same period of 1997. Net loss excluding the charge for restructuring was $4.3 million or $0.12 per share.
For the year ended December 31, 1998, revenues were $62.1 million compared to $61.3 million of revenues for the year ended December 31, 1997. Net loss for the year ended December 31, 1998 was $34.9 million or $1.04 per share, compared to a net loss of $58.0 million or $1.87 per share in 1997. Excluding the charges for in-process research and development in connection with acquisitions and the charge for restructuring costs, the net loss for the year ended December 31, 1998 was $22.1 million or $0.66 per share, compared to a net loss of $23.8 million or $0.77 per share in 1997.
According to Gary Eichhorn, president and CEO of Open Market, Inc., ''We had a very solid fourth quarter, beating expectations for revenue and net loss, and making improvements on the bottom line compared to last quarter. We accomplished a lot in 1998, broadening our leadership by expanding our footprint in the market, and setting the stage for long-term growth and profitability. With the continued growth of our blue chip customer base, many of whom are in production today, the advancement of our product line, and the formation of several strategic partnerships, I believe we are well poised for continued success in the future.''
During the fourth quarter, Open Market implemented its restructuring plan to realign its cost base and recorded a restructuring charge of approximately $2.0 million. Of this charge, approximately 62% was employee related severance as a result of a 14% reduction in head count. The remaining costs were related to exit activities and certain asset impairments.
In connection with Open Market's acquisition of ICentral in the second quarter of 1998, Open Market recorded a one-time charge for purchased in- process research and development (''IPRD'') in the operating results for 1998. The one-time charge was recorded in accordance with Generally Accepted Accounted Principles, established industry practice and was supported by an independent third party valuation. Recently, however, the U.S. Securities and Exchange Commission (''SEC'') has provided guidance on valuation methods for purchased IPRD, which guidance differs from prior industry practice. Open Market is working closely with its independent auditors to make a determination as to the application of the SEC's guidance. When the SEC's guidance on appropriate valuation methods is applied by Open Market retroactively, if there is a material impact, then the result will be a reduction in the charge for purchased IPRD in the second quarter of 1998. A reduction in this charge will result in an adjustment to the 1998 net loss reported above, as well as the capitalization of additional amounts to be
amortized in the future. Although Open Market presently is not in a position
to quantify the amount of any possible adjustment, this calculation will be
finalized before the Company files its form 10K with the SEC. At that time,
Open Market will issue a press release announcing its final determination and
any resulting accounting consequences.
Major Q4 Accomplishments
Highlights of Open Market's business activity last quarter included:
-- Many new corporate customers that have licensed Open Market's
technology to support their Internet commerce initiatives. Some of
these new customers included
-- America Online, Inc., the world's leading Internet online services
company;
-- Cablevision, a leading telecommunications and entertainment company;
-- Consumer Reports Online, one of the top content sites on the Web;
-- Encyclopaedia Britannica Online, an award-winning online information
provider;
-- Milacron Inc., a leading manufacturer of tools and systems for
processing plastics and metals; and
-- Pearson Education, part of the international media group, Pearson Inc.,
created from the acquisition of Simon & Schuster education business.
-- The addition of Commerce Service Provider customers which have licensed
Transact(TM) to provide outsourced commerce services to their business
customers. These included:
-- American Digital Network, a leading strategic Internet services firm;
and
-- KPN Telecom, the largest telecommunications company in the Netherlands.
-- The expansion of Open Market's technology leadership across its product
line. This included:
-- The delivery of LivePublish(TM) and SecurePublish(TM), the web-based
versions of the Folio product suite; and the availability of Folio(TM)
4.2 and the Japanese version of Folio 4.1;
-- The delivery of LiveCommerce(TM) 2.0, the second major release of Open
Market's catalog and marketing system; and
-- The introduction of ShopSite(TM) TX, the integrated version of ShopSite
and Transact.
-- Several significant partnerships. Some of these included:
-- Whittman-Hart, one of the nation's leading information technology
services providers, will work with Open Market to deliver Internet
commerce solutions to middle-market companies;
-- Stibo, a global leader in product information publishing and management
solutions, will resell Open Market's LiveCommerce. Other new
LiveCommerce resellers included Sparkman Advertising, an industrial and
high-technology marketing communications company, and Technomarketing,
a leading Web and multimedia developer and business solutions provider;
and
-- Finsiel's Telecommunications and Industry and Services divisions, a
Telecom Italia Group company and one of Italy's leading information
technology and consulting service groups, will become an Enterprise
Integration Partner for Open Market's Transact.
Other Significant Accomplishments
Yesterday, Open Market and Lycos, Inc., the second most visited hub on the Internet, announced a revenue-sharing agreement to integrate the power of Open Market's software solutions into Lycos' burgeoning e-commerce infrastructure. The agreement calls for installation of Open Market's Transact to power Lycos' electronic marketplace, and distribution of Open Market's ShopSite store- building software to enable the development of a seamlessly integrated community of retailers and suppliers.
1998 saw further endorsement of Open Market's Commerce Service Provider model with more than 50 companies from around the world that have licensed Transact to offer commerce services to small and mid-sized businesses. Some of these added this year include Cable & Wireless, France Telecom, SBC Communications, and NaviSite. Additionally, more than 80 Internet Service Providers use ShopSite(TM) as the basis of their store-building services.
The fourth major release of Transact, Open Market's award-winning Internet commerce solution, became available earlier in 1998. Many of Open Market's blue chip customers are successfully deployed with Transact 4, including AT&T, BusinessWeek, BuyDirect, ICOMS, Lifeway Christian Resources, Milacron, Playboy, RealNetworks, Standard & Poors, and Tribune.
Note to stockholders: The 1999 Annual Meeting of Stockholders of Open Market is scheduled to take place on May 12, 1999.
More About Open Market
Founded in 1994, Open Market, Inc. (Nasdaq: OMKT - news) is the market-share leader in Internet commerce software. Open Market's high-performance application software products and professional services allow its customers to engage in business-to-consumer and business-to-business Internet commerce, information commerce, and commercial publishing. Among Open Market's distinguished roster of global customers are 7 of the 15 top domains on the Web, including AOL.com, Time Warner's Pathfinder.com, major industrials such as Ingram Micro, Milacron, and Acer, more than 700 publishers using Folio Products, including the top 10 commercial publishers, and 11 of 14 of the world's top national telephone companies. The company, headquartered in Burlington, Massachusetts, with offices in Japan, Canada, the UK, France, Germany, The Netherlands, Italy, and Australia can be reached by calling 1.888.OPEN.MKT or by visiting openmarket.com.
This news release contains forward-looking statements that involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the company's limited operating history, delays in product development, development of the Internet market, changes in product pricing policies, competitive pressures, and the risk factors detailed from time to time in the company's periodic reports and registration statements filed with the Securities and Exchange Commission.
Open Market, Folio, LiveCommerce, LivePublish, SecurePublish, ShopSite, Transact and We ARE Internet Commerce are trademarks or registered trademarks of Open Market, Inc. in the United States and other countries.
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