MSGI retired debt should show earnings revenues were record - I like the growth and debt payoff for long term look
NEW YORK--(BUSINESS WIRE)--September 28, 1999--Marketing Services
Group, Inc. (Nasdaq: MSGI.O), an integrated marketing and Internet
services industry leader, today announced record results for the
fourth quarter and fiscal year-ended June 30, 1999.
Revenue for the fourth fiscal quarter increased 42% to
$25,885,170, as compared to $18,277,089 for the same period in fiscal
1998, representing the 11th consecutive quarter of double-digit
growth. Net loss for the fourth quarter, excluding preferred dividends
and a one-time severance charge, was $2,741,283 or ($0.14) per share,
based on weighted average shares outstanding of 19,473,263. This
compares to a net income of $350,373 or $0.02 per share reported in
the fourth quarter one year ago, based on weighted average shares
outstanding of 14,113,312. The loss was principally attributed to weak
results from telemarketing operations, which was adversely affected by
a failed bid to unionize the subsidiary's call center as well as the
issuance of options related to the CMG Direct acquisition and
increased amortization of goodwill associated with recent
acquisitions.
MSGI paid its final preferred dividend in the fourth quarter.
This resulted in a charge of $10,915,433 or ($0.56) per share relating
to additional shares issued to GE Capital as part of their 1997 stock
purchase agreement. MSGI converted GE Capital's preferred shares to
common shares on April 22, 1999, thus eliminating any preferred
dividends for the current fiscal year. Including the preferred
dividends and one-time severance charge, net loss for the fourth
quarter was $14,781,715 or ($0.76) per share.
Revenue for the fiscal year-ended June 30, 1999 increased more
than 60% to $82,241,894 as compared to $51,174,063 for the fiscal
year-ended June 30, 1998. Net loss for the year, excluding preferred
dividends and a one-time severance charge, was $6,520,603 or a loss of
($0.45) per share, based on weighted average shares outstanding of
14,552,444.This compares to a loss of $780,478 or ($0.06) per share
for the fiscal year ended June 30, 1998, based on weighted average
shares outstanding of 12,892,323. Preferred dividend charges relating
to additional shares issued to GE Capital as part of their 1997 stock
purchase agreement totaled $12,535,329 or ($0.86) per share and is
eliminated for the current fiscal year. Including the preferred
dividends and one-time severance charge, net loss for the fiscal year
ended June 30, 1999 was $20,180,932 or ($1.39) per share.
On a consolidated basis, direct marketing, excluding
telemarketing, continued to realize healthy growth, contributing
positively to net income from operations. The net loss for the year
was principally attributable to fulfillment operations, telemarketing
operations, the issuance of options related to the CMG Direct
acquisition and increased amortization of goodwill associated with
recent acquisitions. MSGI divested its majority interest in its
fulfillment operations effective March 1, 1999 and appointed a new
president in charge of telemarketing operations on July 1, 1999.
"MSGI has experienced a very full and event-driven year and we
are extremely pleased with the progress the Company has made across
the spectrum of our services," commented Jeremy Barbera, Chairman and
Chief Executive Officer of MSGI. "We are most excited by our Internet
operations, which realized an organic growth rate of 53% for the
fiscal year. Direct marketing operations, excluding telemarketing,
continued to experience internal growth in excess of 10%. Though
telemarketing was adversely affected in the recent quarter by a failed
attempt to unionize the call center, we are optimistic about the
progress of this group going forward as new management has been in
place since the beginning of the new fiscal year. We will, however,
continue to thoroughly assess the viability of this division over the
near term."
Mr. Barbera continued, "MSGI Internet has experienced a very
active year, including the acquisition of CMG Direct, followed by
minority investments in Screenzone Media Networks and GreaterGood.com.
We've formed a new Internet division, WiredEmpire, from CMG Direct's
PermissionPlus technology and recently expanded its Internet offerings
with the agreement to acquire Cambridge Intelligence Agency."
MSGI's Internet group also experienced a number of material
client wins for the year. Pegasus Internet is developing the online
trading system for National Securities Corporation and signed the
Cameron Mackintosh account, know for Phantom of the Opera, Les
Miserables and Miss. Saigon. WiredEmpire gained contracts with Levi
Strauss & Co., Datek Online, Magnitude Network and Federal Express
Corporation's advertising agency, RTC Direct.
"As we move into a new fiscal year, we do so on the strongest
financial footing in our history, and with a very deliberate focus:
the improvement of operating leverage and profitability; the rapid
expansion of Internet operations; continued minority investments as
our incubation business develops; and opportunistic transactions for
our direct marketing operations," added Mr. Barbera. "Furthermore, in
an effort to improve the integration, leverage and profitability
across all of our subsidiaries, MSGI expects to fill a newly
established position of Chief Operating Officer this fall."
Recent Highlights:
September 1999
-- MSGI completed their $31 million private placement to retire all
short and certain long-term debt, to complete the Company's
announced Internet investments and to provide general working
capital.
August 1999
-- WiredEmpire was formed, a new company in MSGI's Internet Group to
be derived from CMG Direct's PermissionPlus(TM) technology.
-- MSGI's WiredEmpire agreed to acquire Cambridge Intelligence
Agency, a leading provider of Web-based e-mail response
management solutions.
-- MSGI amended its warrant agreement with GE Capital. The December
1997 warrant agreement required MSGI to file for a secondary
offering by December 1999, allowing GE Capital to sell
approximately 1.7 million of their 4.8 million common shares. The
agreement required MSGI to offer GE a warrant convertible to an
amount up to 10,670,000 shares to be invoked if a secondary had
not been filed in the time allotted. The August 1999 amendment
allowed for two changes to the original warrant agreement,
including an extension for a secondary filing through April 30,
2000 and the addition of a private placement as a vehicle to
satisfy the original condition.
July 1999
-- MSGI invested in Screenzone Media Networks, LLC and
GreaterGood.com. MSGI acquired a 10% stake in Screenzone Media
Networks, LLC, a new interactive broadcast gateway that was
developed to advertise and promote movies, music, live events and
other entertainment at shopping malls and over the Internet. MSGI
also acquired an 18% stake in GreaterGood.com, a leading
cause-related e-commerce company which allows shoppers to
purchase branded products from well-known retailers with 5% or
more of each purchase benefiting the charity of their choice at
no extra cost.
-- MSGI signed a definitive agreement to acquire Grizzard
Communications, a vertically integrated network of marketing
communications companies. This acquisition complements MSGI's
core database marketing services and leverages the online
marketing capabilities of the Company's Internet Marketing Group.
The $100 million transaction was structured as half equity-half
cash. Grizzard Communications generated $65 million in revenues
in 1998.
-- MSGI joined the ranks of the Russell 2000 and also began trading
on the Nasdaq National market.
May 1999
-- MSGI acquired CMG Direct. With this acquisition, MSGI expanded
its Internet marketing services by leveraging CMG Direct's
traditional database marketing unit, as well as its Internet
incubation, PermissionPlus(Tm), an automated Internet Marketing
solution enabling companies to automate their Web site customer
acquisition function. This acquisition also resulted in CMGI
obtaining a material shareholder position in MSGI.
April 1999
-- MSGI converted GE Capital from preferred shareholders to common
shareholders, resulting in an end to the payment of quarterly
dividends as of MSGI's June 1999 quarter.
-- The Company divested 85% of its fulfillment operations, Metro
Fulfillment, Inc.
January 1999
-- MSGI acquired SK&A, widely considered to be the first list
management firm in the country, propelling MSGI to a run rate of
$100 million.
About MSGI
Marketing Services Group, Inc. is a leader in the Internet and
marketing services industries. MSGI's revenues have grown from $16
million in fiscal 1996 to in excess of $100 million on an annualized
basis. GE Capital is the owner of an 18 percent stockholder position
in MSGI and CMGI is the owner of a 10 percent stockholder position in
MSGI.
MSGI is organized into two business divisions: the Internet Group
and the Marketing Services Group. The Internet Group's mission is to
acquire, invest in and incubate Internet companies. Its preliminary
focus is on WiredEmpire, and its Marketing Agent technology. MSGI
plans to expand into other strategic areas. The MSGI Internet Group
provides Internet marketing, e-commerce applications, Web development
and hosting, online ad sales and consulting. Its Marketing Services
Group provides strategic planning, direct marketing and database
marketing, telemarketing and telefundraising, media planning and
buying and fulfillment. Through this business segment, MSGI will
continue to grow by leveraging the synergies it has across all its
companies in marketing, technology, and capabilities.
Thousands of clients worldwide are provided services by MSGI,
which has offices throughout the United States and in London.
Corporate headquarters are located at 333 Seventh Ave., New York, NY
10001. Telephone: 212-594-7688. Additional information is available on
the company's Website: msginet.com.
Matters discussed in this release include forward-looking
statements that involve risks and uncertainties, and actual results
may be materially different. Factors that could cause actual results
to differ are stated in the company's reports to the Securities and
Exchange Commission including its 10-Q for the period ended March 31,
1999 and the annual report on Form 10-KSB for the year ended June 30,
1998 and the year ended June 30, 1999.
*T
MSGI YEAR END RESULTS
MSGI Consolidated Statement of Operations
Three Months Ended June 30, 1999 and 1998
1999 1998
Income (loss) Income (loss)
per share, per share,
basic and basic and
fully diluted fully diluted
Revenues $25,885,170 $18,277,089
Net income (loss) excluding
preferred dividends
and one time charge $(2,741,283) $(0.14) $350,373 $0.02
One time severance
charge $(1,125,000) $(0.06) N/A
Final GE Preferred
d432) $(0.56) $(279,677) $(0.02)
Net income (loss)
attributable to common
shareholders $(14,781,715) $(0.76) $70,696 $0.01
Weighted average
shares outstanding 19,473,263 14,113,312
MSGI Consolidated Statement of Operations
Twelve Months Ended June 30, 1999 and 1998
1999 1998
Income (loss) Income (loss)
per share, per share,
basic and basic and
fully diluted fully diluted
Revenues $82,241,894 $51,174,063
Net loss excluding
preferred dividends
and one time charge $(6,520,603) $(0.45) $(780,478) $(0.06)
One time severance
charge $(1,125,000) $(0.08) N/A
Final GE Preferred
dividends $(12,535,329) $(0.86) $(3,944,002) $(0.31)
Net income (loss)
attributable to common
shareholders $(20,180,932) $(1.39) $(4,724,480) $(0.37)
Weighted average
shares outstanding 14,552,444 12,892,323
*T
As a result of the GE Capital transaction, the three and twelve
months ended June 30, 1999 include the impact of dividends on stock
for (a) adjustment of the conversion ratio for $10,617,451 and
$11,366,022 for exercises of stock options and warrants; (b) $242,668
and $949,365 in cumulative undeclared Preferred Stock dividends; and
(c) $55,314 and $219,943 of periodic non-cash accretions of preferred
stock, respectively.
As a result of the GE Capital transaction, the twelve months
ended June 30, 1998 included the impact of dividends on stock for
non-cash, non-recurring beneficial conversion feature of $3,214,400.
The three and twelve months ended June 30, 1998 also include the
impact of dividends on stock for (a) $66 and $152,512, respectively,
from adjustment of the conversion ratio for certain issuance's of
common stock and exercises of stock options; (b) $225,638 and
$464,816, respectively, in cumulative undeclared dividends; and (c)
$53,973 and $112,274, respectively, of periodic non-cash accretions on
preferred stock.
--30--emb/ny*
CONTACT: Jamie Shaber
Marketing Service Group, Inc.
212-594-7688
jamie@msginet.com
or
Morgen-Walke Associates
Andrea Kaimowitz, Cheryl Olson
Press: Eileen King, Stacey Reed
212-850-5600
KEYWORD: NEW YORK
INDUSTRY KEYWORD: COMED COMPUTERS/ELECTRONICS
INTERACTIVE/MULTIMEDIA/INTERNET TELECOMMUNICATIONS
EARNINGS
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