MSGI Reports Record Revenues in Third Quarter
BUSINESS WIRE - May 17, 1999 16:57
NEW YORK (May 17) BUSINESS WIRE -May 17, 1999--Marketing Services Group, Inc. (Nasdaq:MSGI), an integrated marketing and Internet services industry leader, today reported third fiscal quarter results for the period ended March 31, 1999.
Revenue for the third quarter increased 51% to $22,563,283, versus $14, 968,585 reported for the third quarter one year ago, representing the 10th consecutive quarter of double-digit revenue growth.
Net loss for the third quarter was ($1,756,467) or ($0.14) per share, excluding ($0.08) per share related to GE Capital dividends. This compares to ($149,690) or ($0.01) per share in the third quarter of 1998, excluding the dividends. MSGI converted GE Capital's preferred shares to common shares in the fourth quarter of 1999, thus eliminating preferred dividends for the new fiscal year. Including the preferred dividends, net loss for the third quarter was ($2,799,214) or ($0.22).
Direct and Internet marketing business continue to provide positive income from operations. The net loss was principally attributable to fulfillment operations, which have since been divested, increased amortization costs associated with recent acquisitions and telemarketing activities, which continue to suffer from greater than usual seasonal losses.
"We saw particular strength in our Internet Group, with 45% top line growth, primarily resulting from new business development and excluding recent acquisitions," said Jeremy Barbera, Chairman and CEO of MSGI. "We continue to maintain that our strategy of focusing solely on the areas of direct and Internet marketing is the correct decision. We have taken many exciting and material steps toward executing our new strategic initiatives, which has clearly resulted in an improvement in the value of MSGI for all shareholders." Third Quarter Highlights -- January 1999: MSGI completed the acquisition of Steven- Knox &
Associates (SK&A), widely considered to be the first list
management firm in the country. SK&A propelled MSGI to a run rate
of more than $100 million and also provided MSGI with their first
international operations in the Covent Garden section of London,
as well as expansion into several new markets. -- February 1999: MSGI signed Broadway giant Cameron Mackintosh (Les
Miserables, The Phantom of the Opera, Miss Saigon) to a contract
for extended Web development, hosting and e-mail list management
with possible future plans for online ticketing. This new
contract firmly reinforced MSGI's role as the leading online
provider for the arts and entertainment industry. -- February 1999: MSGI announced their intent to divest the majority
interest in Metro Fulfillment. MSGI entered into negotiations
with a strategic partner, and 85% of the fulfillment business was
sold, effective March 1, 1999. -- March 1999: MSGI signed a definitive agreement with CMGI to
acquire CMG Direct in an exchange of stock and cash. As a result
of the agreement, MSGI also acquired their latest Internet
incubation; Permission Plus(TM), and CMGI became a material
minority stockholder in MSGI. This transaction successfully
closed on May 13, 1999. -- March 1999: Ed Mullen, a CMG executive, was named to the position
of President of MSGI, effective May 14th, 1999. -- March 1999: MSGI applied to Nasdaq for listing on the National
Market. 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 Equity is the owner of a 22 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 will be on PermissionPlus(TM) and will 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 with 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 which could cause actual results to differ are stated in the Company's reports to the Securities and Exchange Commission including it's 10Q for the period ended March 31, 1999 and the annual report on Form 10-KSB for the year ended June 30, 1998.
MSGI Consolidated Statement of Operations
Three months ended March 31, 1999 and 1998
(unaudited)
1999 1998
Revenues $ 22,563,283 $ 14,968,585
Net loss $ ( 1,756,467) $ (149,690)
Net loss attributable
to common stockholders $ (2,799,214) $ (428,834)
Loss per common share $ (0.22) $ (0.03)
Weighted average shares 12,765,852 13,085,627
As a result of the GE Capital transaction; the three months ended March 31, 1999 include the impact of dividends on stock for (a) adjustment of the conversion ratio for $748,571 for exercises of stock options and warrants; (b) $239,082 in cumulative undeclared Preferred Stock dividends; and (c) $55,094 of periodic non-cash accretions on preferred stock.
As a result of the GE Capital transaction; the three months ended March 31, 1998 includes the impact of dividends on stock for (a) adjustment of the conversion ratio for $3,000 for exercises of stock options and warrants; (b) $221,918 in cumulative undeclared Preferred Stock dividends; and (c) $54,226 of periodic non-cash accretions on preferred stock.
-0- sdg/ny*
CONTACT: Marketing Services Group, Inc. Jamie Shaber
212-594-7688 jamie@msginet.com
or Morgen-Walke Associates
Andrea Kaimowitz, Cheryl Olson Press: Eileen King
212-850-5600
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