NW....
Computer Literacy, Inc. Announces
Financial Results for the Quarter and
Year ended January 31, 1999
Fourth Quarter Online Sales Increase More Than 2.6
Times
SUNNYVALE, Calif.--(BUSINESS WIRE)--March 15, 1999--Computer
Literacy, Inc. (''the Company'') (Nasdaq:CMPL - news), the leading Internet retailer of books, training
materials and documentation for technology professionals, today announced financial results for its
fourth quarter and fiscal year ended January 31, 1999.
The Company announced record online sales of $3.5 million for the quarter ended January 31, 1999, an
increase of more than 2.6 times online sales of $1.3 million for the quarter ended January 31, 1998.
Total Company sales (which also include sales generated by physical retail stores, trade shows and
book fairs) for the quarter ended January 31, 1999 were $5.3 million, a 39 percent increase over total
sales of $3.9 million for the quarter ended January 31, 1998. Reflecting its strong quarter-to-quarter
growth, Computer Literacy also announced online sales of $10.7 million for the full 1999 fiscal year, an
increase of 253 percent over online sales of $3.0 million for the previous year. Total Company sales were
$19.8 million for the year, an 81 percent increase over the prior year.
Pro forma net loss per share, assuming conversion of all outstanding shares of preferred stock
immediately upon issuance, was $0.32 per share for the fourth quarter of fiscal 1999 compared to $0.29
per share for the fourth quarter of fiscal 1998. The Company reported a fourth quarter net loss of $3.4
million, or $0.37 per share, compared to a net loss of $1.6 million, or $1.02 per share, in the prior year.
Annual pro forma net loss per share was $1.23 per share in fiscal 1999 compared to $0.67 per share for
the same period last year. The Company's annual net loss was $9.9 million, or $2.87 per share,
compared to a net loss of $3.2 million, or $2.11 per share, for the year ended January 31, 1998. Pro
forma weighted average shares outstanding for the quarter and year ended January 31, 1999 were
10,385,000 and 8,060,000, respectively, compared to pro forma weighted average shares outstanding for
the quarter and year ended January 31, 1998 of 5,315,000 and 4,739,000, respectively. The increase in
shares is primarily due to the Company's initial public offering, which was completed on November 20,
1998. Total proceeds to the Company from the IPO, after underwriting commissions, discounts and
expenses, were $30.8 million.
''This has been an exciting year for Computer Literacy as we experienced tremendous growth in our
online business,'' said Chris MacAskill, president and chief executive officer. ''These results have been
driven by the strong support of our customers and partners who have benefited from our focus on the
online business-to-business market. Our success converting browsers to buyers at
ComputerLiteracy.com and the strength of our repeat business is a testament to our deep customer
loyalty and authoritative catalog of professional titles. To augment the quality of our service and fuel our
revenue growth, we announced relationships with key suppliers of purchasing software. We also
enhanced the user experience by making improvements to our site and extending our product offerings.''
During the quarter, the Company added more than 19,000 customers, raising the total number of
customers to 78,000. Computer Literacy customers represent a wide range of purchasers, from
individuals to enterprise-wide purchasing managers. Customer accounts have increased four-fold in the
past year. Repeat customer orders represented more than 52 percent of orders placed during the recent
quarter.
Recent Highlights
Customers Embrace Business-to-Business Initiative
In a separate release today, Computer Literacy announced that since the launch of the FindITnow
program in November, the Company has added more than 60 new corporate accounts, representing a
potential audience in excess of 500,000 individuals. These include Crossworlds Software, KLA-Tencor,
Network Associates, Oracle, SAS Institute, Inc., Seagate, Siemens Information and Communication
Networks, 3Com, Unwired Planet, Verifone, Xerox PARC and many others.
During the quarter, the Company made significant progress with its business-to-business initiative. The
FindITnow intranet bookstore program allows businesses to provide customized technical resource
stores from their corporate networks and was modeled after partnerships with existing customers
including Microsoft (Nasdaq:MSFT - news), Sun Microsystems (Nasdaq:SUNW - news), Cisco
Systems (Nasdaq:CSCO - news), and Hewlett-Packard Company (NYSE:HWP - news). Of special
value to corporate customers is Computer Literacy's ability to integrate FindITnow with existing
business processes to give companies control over procurement.
Expansion of Business-to-Business Model to New Markets
Based on the success of the FindITnow program, Computer Literacy has announced it will expand its
successful business-to-business e-commerce model into new markets, extending beyond the
information technology market to deliver professional resources to additional industries including
financial services, engineering, science and mathematics. The Company outlined this strategy in a
separate release today.
This expansion - which will include targeted companies within the business, finance, aeronautics,
manufacturing and pharmaceuticals fields, for example - triples the Company's potential market reach
within the business-to-business e-commerce sector, which according to Forrester Research is projected
to exceed $1 trillion by the year 2003.
Integrated Branding and Marketing Campaign
During the quarter, Computer Literacy finalized plans to launch the Company's broadest integrated
marketing campaign to date. Strategically designed to build the Company's brand and increase market
penetration, the plan includes:
-- Launching a new name for the Company, one that properly positions Computer Literacy and its
products within the Internet space;
-- Introducing a new Web site;
-- Forging strategic partnerships to build and expand user communities;
-- Unveiling a branding campaign in targeted media.
The Company expects to announce the new name and details of the marketing campaign by the end of
the month.
Partnerships with E-commerce Leaders
Over the quarter, Computer Literacy continued to develop strategic partnerships with e-commerce
industry players, extending its FindITnow technology and content offerings to all sizes of corporations
that use procurement solutions to purchase services and supplies over the Internet. These include
Fortune 500, Global 2000 and broad market players.
The Company is working with Ariba Technologies to deliver its FindITnow program to Global 2000
organizations using Ariba's buy-side solution to purchase resources, goods and services over the
Internet. Computer Literacy is providing content and sell-side support for Ariba Supplier Link and
Ariba.com, both of which connect buying organizations to suppliers worldwide. Through this partnership,
Computer Literacy gains a distribution channel to millions of corporate buyers worldwide using Ariba's
solutions.
The Company is also working with Trilogy to develop a buy-side e-commerce solution that allows small
and medium-size businesses to purchase supplies over the Internet. The resultant
ComputerLiteracy.com Buying Chain product provides lowest-cost buying processes for companies
using the Internet to buy books and other knowledge products and, in addition, serves as a portal to a
wide range of additional suppliers.
Additional Wins
The Company used its expertise in deploying business-to-business e-commerce solutions to win
additional corporate accounts beyond the FindITnow program. This quarter, Computer Literacy worked
with Compaq Computer Corporation (NYSE:CPQ - news) to provide a specialized online bookstore
serving Compaq's Digital Fortran developer community. Located on Compaq's developer Web site, this
online bookstore provides developers a quick and easy way to access and purchase books,
documentation and developer tools at a discounted rate.
Through an agreement with 3Com's Palm Computing Division (Nasdaq:COMS - news), Computer
Literacy created an online store serving the developer community of the fastest-growing handheld
computing platform today, the Palm Computing® platform. This arrangement leverages the Company's
unique print-on-demand capabilities to provide an active community of more than 15,000 developers a
quick and easy way to order documentation and reference tools. The online store is accessible through
the Palm OS(TM) developer Web site.
Launch of New Affiliates Program
In response to strong demand from its partners, the Company launched an aggressive new affiliates
program which enables individuals and businesses to integrate e-commerce and sell selected Computer
Literacy content from their own Web sites. The program is one of the strongest to be offered in the
online books category, providing referral fees of up to twenty percent and direct access to Computer
Literacy's world-class selection of more than 800 technical subject categories. As part of the program,
affiliates may use Computer Literacy's innovative step-by-step tools to quickly and easily create unique
online book and resource stores from their own Web sites.
About Computer Literacy
Computer Literacy, Inc. is the leading online retailer of information resources singularly focused on
professionals. Best-known for its expertise in the technology industry, Computer Literacy delivers the
broadest, most comprehensive selection of professional resources to organizations in the business and
finance, engineering, science, mathematics and technical fields. The Company offers discounts of up to
40 percent on books and resources, and all in-stock orders placed by 4 PM PT ship the same business
day. Visit Computer Literacy on the Web at www.computerliteracy.com.
This announcement contains forward-looking statements that involve risks and uncertainties including,
among others, Computer Literacy's limited operating history, anticipated losses, the unpredictability of
its future revenues, competition, risks associated with system development and operation risks,
management of potential growth, and risks of new business areas, international expansion, business
combinations, and strategic alliances. Actual results could differ materially from those discussed. More
information about factors that potentially could affect Computer Literacy's financial results are included
in the Company's filings with the Securities and Exchange Commission, including its Registration
Statement filed on Form SB-2 on November 19, 1998, as amended, each available online at
sec.gov. All forward looking statements are based on information available to the Company
on the date hereof, and the Company assumes no obligation to update such statements.
Note to Editors: All company and product names may be trademarks of the respective companies with
which they are associated.
Computer Literacy, Inc. and Subsidiary
Consolidated Statements of Operations
(in thousands, except per share data)
Quarter ended Year ended
January 31, January 31,
1999 1998 1999 1998
(unaudited)
Revenues:
Online $3,503 $1,312 $10,662 $3,021
Retail and other 1,838 2,540 9,118 7,927
Total revenues 5,341 3,852 19,780 10,948
Cost of revenues:
Online 2,795 969 8,433 2,189
Retail and other 1,240 1,750 5,967 5,216
Total cost of revenues 4,035 2,719 14,400 7,405
Gross profit 1,306 1,133 5,380 3,543
Operating expenses:
Sales and marketing 3,103 1,826 9,918 4,192
Development and engineering 947 336 2,858 860
General and administrative 886 526 2,909 1,674
Total operating expenses 4,936 2,688 15,685 6,726
Loss from operations (3,630) (1,555) (10,305) (3,183)
Interest, net 269 (3) 413 (7)
Net loss $(3,361)$(1,558) $(9,892)$(3,190)
Pro forma basic and diluted
net loss per share (1) $(0.32) $(0.29) $(1.23) $(0.67)
Shares used in calculating
pro forma basic and diluted
net loss per share 10,385 5,315 8,060 4,739
Basic and diluted net loss
per share $(0.37) $(1.02) $(2.87) $(2.11)
Shares used in calculating
basic and diluted net loss
per share 9,064 1,523 3,441 1,509
(1) Pro forma net loss per share assumes conversion of all
outstanding shares of preferred stock immediately upon issuance.
Computer Literacy, Inc. and Subsidiary
Consolidated Balance Sheets
(in thousands, except per share data)
January 31, January 31,
1999 1998
Assets
Current assets:
Cash and equivalents $ 9,341 $ 4,974
Short-term investments 5,344 --
Accounts receivable, net of allowance of
$161 and $67 1,268 153
Inventories 3,204 3,683
Prepaid expenses and other current assets 1,068 440
Total current assets 20,225 9,250
Property and equipment, net 2,097 1,182
Investments 14,181 --
Goodwill, net 2,751 2,962
Other assets 360 204
Total assets $39,614 $13,598
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable $ 1,896 $ 2,518
Accrued expenses 1,169 1,084
Current portion of capital lease obligations 18 18
Total current liabilities 3,083 3,620
Capital lease obligations 35 53
Total liabilities 3,118 3,673
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000
and 5,500 authorized, 0 and 5,222 shares
issued and outstanding at January 31, 1999
and January 31, 1998, respectively;
(aggregate liquidation preference of $0 and
$13,843 at January 31, 1999 and
January 31, 1998, respectively) - 5
Common stock, $0.001 par value, 50,000 and
8,750 shares authorized, 11,172 and 1,564 shares
issued and outstanding at January 31, 1999 and
January 31, 1998, respectively 11 2
Additional paid-in capital 50,270 13,764
Warrants 12 12
Unrealized loss on investments (47) -
Accumulated deficit (13,750) (3,858)
Total stockholders' equity 36,496 9,925
Total liabilities and stockholders' equity $ 39,614 $ 13,598
Contact:
Computer Literacy
Don Alvarez, 408/541-2020, ext. 151
dona@clbooks.com
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