EX-99.1 3 f89662exv99w1.txt EXHIBIT 99.1 Exhibit 99.1 For Immediate Release CRITICAL PATH ANNOUNCES FIRST QUARTER 2003 RESULTS SAN FRANCISCO -- (APRIL 29, 2003) Critical Path, Inc. (Nasdaq: CPTH) a global leader in digital communications software and services, today announced financial results for the first quarter ended March 31, 2003. Revenues for the first quarter of 2003 were $18.0 million, compared to $21.8 million in the fourth quarter of 2002. Cash operating expenses which exclude amortization, depreciation and restructuring charges were $26.0 million in the first quarter of 2003, compared with $26.0 million in the fourth quarter of 2002. Based on Generally Accepted Accounting Principles (GAAP) in the United States, net loss attributable to common shares for the first quarter of 2003 improved to $26.9 million, or $0.34 per share, compared to $34.2 million, or $0.43 per share, in the fourth quarter of 2002. Earnings before interest, taxes, depreciation, and amortization, adjusted to exclude special charges (Adjusted EBITDA), amounted to a loss of $7.9 million in the first quarter, compared to an Adjusted EBITDA loss of $4.2 million in the fourth quarter of 2002. "Although revenues level were lower than we expected, we are excited by the amount of customer activity we saw and are energized by recent successes, such as the launch of our world-class hosted messaging platform with HP and our relationship with T-Mobile," said William McGlashan, Jr., Critical Path chairman and chief executive officer. "Through continued execution we believe we will be able to achieve our financial goals for this coming quarter and the year." During the quarter, Critical Path delivered software solutions for driving down helpdesk costs to customers such as UBS AG, DHL and the Danzas Group, and a major US-based conglomerate, among other firms. These solutions enable customers to more efficiently administer passwords, consolidate user identity data across security applications and systems, integrate Microsoft's ActiveDirectory with existing infrastructure, and create whitepages directories for large, highly distributed organizations. Critical Path also delivered additional software solutions that enable telecommunications carriers and service providers to offer new revenue-generating premium services. Key customers included Wind Telecomunicazioni, SEAT Pagine Gialle (formerly Telecom Italia), SANPAOLO Group, and Swisscom, among others. - more - Critical Path Announces First Quarter 2003 Results / 2 REGULATION G The Company uses both GAAP and non-GAAP metrics to measure its financial results. It utilizes two primary non-GAAP metrics: cash operating expenses and Adjusted EBITDA. Management believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash based performance. In addition, management believes these non-GAAP metrics are useful to investors because they remove unusual and nonrecurring charges that occur in the affected period and provide a basis for measuring the Company's financial condition against other quarters. Since the Company has historically reported non-GAAP results to the investment community, management also believes the inclusion of non-GAAP measures provides consistency in its financial reporting. However, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The calculations for cash operating expenses and Adjusted EBITDA are in the Alternative Measurement Reconciliation table below. CONFERENCE CALL Critical Path will host a conference call today to discuss the financial results for the first quarter 2003. Those who would like to participate in the conference call should dial 877/231-3543 or 706/634-1329 (international) prior to 4:50 PM ET on the day of the call. The conference call and its replay will also be Web cast and are accessible from the Company's Web site, www.criticalpath.net. A telephone replay of the conference call will be available for seven days following the call. To access the replay, please dial (800) 642-1687 or (706) 645-9291 (international), passcode 9811034. ABOUT CRITICAL PATH, INC. Critical Path, Inc. (Nasdaq: CPTH) is a global leader in digital communications software and services. The company provides messaging solutions -- from wireless, secure and unified messaging to basic email and personal information management -- as well as identity management solutions that simplify user profile management and strengthen information security. The standards-based Critical Path Communications Platform, built to perform reliably at the scale of public networks, delivers the industry's lowest total cost of ownership for messaging solutions and lays a solid foundation for next-generation communications services. Solutions are available on a hosted or licensed basis. Critical Path's customers include more than 700 enterprises, 190 carriers and service providers, eight national postal authorities and 35 government agencies. Critical Path is headquartered in San Francisco. More information can be found at www.criticalpath.net - more - Critical Path Announces First Quarter 2003 Results / 3 FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements, including the Company's statements regarding, its finance, business and operations including anticipated or projected revenue, expenses and operational growth, markets, strategic partners and potential customers for Critical Path products and services. The words "anticipate," "expect," "intend," "plan," "believe," "seek," and "estimate" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, difficulties of forecasting future results due to our limited operating history, failure to meet sales and revenue objectives, forecasts and earnings guidance, general economic conditions in markets in which the Company does business, worldwide slow down in technology spending by our customers and potential customers, failure to negotiate favorable or timely deals with strategic partners for the distribution of our products and services, the relative success of strategic partnerships and global sales alliances, our evolving business strategies and the emerging nature of the market for our products and services, turnover within and integration of senior management, board of directors members and other key personnel, difficulties in delivering and marketing our product and service offerings, protection of our intellectual property, failure to successfully expand our sales and marketing activities, potential difficulties associated with restructuring, strategic relationships, investments and uncollected bills, volatility in the market for stock and risks associated with potential delisting actions by the market on which we are listed, risks associated with our international operations, foreign currency fluctuations, unplanned system interruptions and capacity constraints, software defects, and those discussed elsewhere in this announcement and the attached statements. These and other risks and uncertainties are described in more detail in Critical Path's Annual Report on Form 10-K for the fiscal year ended December 31, 2002, as may be amended from time to time, and all subsequent filings with the Securities and Exchange Commission (www.sec.gov) Note to Editors: Critical Path and the Critical Path logo are the trademarks of Critical Path, Inc. CRITICAL PATH CONTACT INFORMATION: Mike Bishop Investor Relations 415-541-2619 mike.bishop@criticalpath.net TABLES TO FOLLOW - more - Critical Path Announces First Quarter 2003 Results / 4 CRITICAL PATH, INC. Condensed Consolidated Balance Sheets (In thousands)
December 31, March 31, 2002 2003 ---- ---- (Unaudited) ASSETS Current assets Cash and cash equivalents $ 33,498 $ 31,409 Short-term marketable securities 5,583 -- Accounts receivable, net 22,818 19,839 Other current assets 4,030 6,839 --------- --------- Total current assets 65,929 58,087 Long-term marketable securities 3,990 -- Equity investments 357 354 Property and equipment, net 18,142 18,092 Goodwill 6,613 6,613 Restricted cash 2,729 -- Other assets 6,246 6,749 --------- --------- Total assets $ 104,006 $ 89,895 ========= ========= LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable $ 28,093 $ 26,797 Accrued liabilities 3,764 3,860 Deferred revenue 10,788 9,496 Line of credit facility -- 4,900 Capital lease and other obligations, current 3,323 3,288 --------- --------- Total current liabilities 45,968 48,341 Convertible subordinated notes payable 38,360 38,360 Capital lease and other obligations, long-term 1,332 1,060 --------- --------- Total liabilities 85,660 87,761 --------- --------- Mandatorily redeemable preferred stock 26,900 36,765 Shareholders' deficit (8,554) (34,631) --------- --------- Total liabilities, mandatorily redeemable preferred stock and shareholders' deficit $ 104,006 $ 89,895 ========= =========
- more - Critical Path Announces First Quarter 2003 Results / 5 CRITICAL PATH, INC. Condensed Consolidated Statements of Operations (In thousands, except per share amounts)
Three Months Ended ------------------ March 31, December 31, March 31, 2002 2002 2003 ---- ---- ---- (Unaudited) Net revenues Software license $ 10,911 $ 7,436 $ 5,047 Hosted messaging 6,964 5,886 5,386 Professional services 1,937 3,958 3,220 Maintenance and support 3,877 4,554 4,381 -------- -------- -------- Total net revenues 23,689 21,834 18,034 -------- -------- -------- Cost of net revenues Software license 287 1,246 1,797 Hosted messaging 7,817 6,468 6,263 Professional services 2,443 3,018 3,450 Maintenance and support 2,103 2,121 1,929 Amortization of purchased technology 4,630 4,630 -- Stock-based expense - Hosted messaging 185 60 8 Stock-based expense - Professional services 81 26 3 Stock-based expense - Maintenance and support 151 49 6 -------- -------- -------- Total cost of net revenues 17,697 17,618 13,456 -------- -------- -------- Gross profit 5,992 4,216 4,578 -------- -------- -------- Operating expenses Sales and marketing 10,943 10,342 9,309 Research and development 5,002 4,320 4,623 General and administrative 6,678 3,792 3,226 Amortization of intangible assets 6,141 6,206 -- Stock-based expense - Sales and marketing 2,536 240 18 Stock-based expense - Research and development 422 152 15 Stock-based expense - General and administrative 297 61 9 Restructuring and other expense -- 1,629 3,189 -------- -------- -------- Total operating expenses 32,019 26,742 20,389 -------- -------- -------- Loss from operations (26,027) (22,526) (15,811) Non-operating expenses Interest and other income (expense), net 629 (5,049) (6,427) Interest expense (783) (492) (769) Equity in net loss of joint venture (403) -- -- Loss on investments -- (1,530) -- -------- -------- -------- Total non-operating expenses (557) (7,071) (7,196) -------- -------- -------- Net loss before income taxes (26,584) (29,597) (23,007) Benefit from (provision for) income taxes 573 (724) (194) -------- -------- -------- Net loss (26,011) (30,321) (23,201) Accretion on mandatorily redeemable preferred stock (3,206) (3,837) (3,665) -------- -------- -------- Net loss attributable to common shares $(29,217) $(34,158) $(26,866) ======== ======== ======== Net loss per share - basic and diluted Net loss attributable to common shares $ (0.38) $ (0.43) $ (0.34) ======== ======== ======== Weighted average common shares outstanding 76,514 78,557 78,664
- more - Critical Path Announces First Quarter 2003 Results / 6 CRITICAL PATH, INC. Alternative Measurement Reconciliations (In thousands)
Three Months Ended ------------------ March 31, December 31, March 31, 2002 2002 2003 ---- ---- ---- (Unaudited) ADJUSTED EBITDA (1) Net loss attributable to common shares $(29,217) $(34,158) $(26,866) Adjustments Cost of net revenues Depreciation 4,979 3,407 2,849 Amortization of purchased technology 4,630 4,630 -- Stock-based expense - Hosted messaging 185 60 8 Stock-based expense - Professional services 81 26 3 Stock-based expense - Maintenance and support 151 49 6 Operating expenses Depreciation 2,821 1,914 1,775 Amortization of intangible assets 6,141 6,206 -- Stock-based expense - Sales and marketing 2,536 240 18 Stock-based expense - Research and development 422 152 15 Stock-based expense - General and administrative 297 61 9 Restructuring and other expense -- 1,629 3,189 Non-operating expenses Interest and other income and expense, net Change in fair-value of preferred stock instrument -- 5,280 6,200 Other income and expense, net (629) (231) 227 Interest expense 783 492 769 Equity in net loss of joint venture 403 -- -- Loss on investments -- 1,530 -- Benefit from or provision for income taxes (573) 724 194 Accretion on redeemable convertible preferred stock 3,206 3,837 3,665 -------- -------- -------- Total non-cash and non-operating adjustments (2) 25,433 30,006 18,927 -------- -------- -------- Adjusted EBITDA (1) $ (3,784) $ (4,152) $ (7,939) ======== ======== ======== CASH OPERATING COSTS Net loss attributable to common shares $(29,217) $(34,158) $(26,866) Adjustments Total net revenues (23,689) (21,834) (18,034) Total non-cash, restructuring and non-operating adjustments (2) 25,433 30,006 18,927 -------- -------- -------- Cash Operating Costs $(27,473) $(25,986) $(25,973) ======== ======== ========
(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted to exclude non-cash stock-based charges, extraordinary restructuring expenses, accretion on redeemable convertible preferred stock and other non-operating expenses. (2) Total non-cash, restructuring and non-operating adjustments is defined in the Adjusted EBITDA table presented above. # # #