EX-99.1 3 y91657exv99w1.txt PRESS RELEASE Exhibit 99.1 Viewpoint Corporation Letterhead Contact: Media Relations: or Investor Relations: Yvonne LeCroy Financial Dynamics 212-201-0800 Paul Johnson ylecroy@viewpoint.com 212-850-5600 --------------------- pjohnson@fd-us.com ------------------ VIEWPOINT REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS NEW YORK, NY - NOVEMBER 5, 2003 - Viewpoint Corporation, (NASDAQ: VWPT), a leading provider of visual application development, content creation and delivery technology, today reported results for the third quarter and nine months ended September 30, 2003. Revenues for the third quarter of 2003 were $2.5 million compared to $4.5 million in the second quarter of 2003 and $5.3 million for the third quarter of 2002. Third quarter revenue decreased from the prior quarter principally due to a decline in license and services revenue relating to our contract with our related party American Online ("AOL"). The decrease from the prior year was primarily due to a reduction in license revenue from AOL and other non-related customers, offset by an increase in services revenue from non-related customers. The Company reported a net loss for the third quarter of 2003 of $5.5 million or $(0.12) per share. These results were based upon an operating loss of $6.0 million, which included $0.5 million of non-cash stock-based compensation, $0.4 million of depreciation and amortization, and $0.7 million of restructuring charges. This compares to a net loss of $6.3 million or $(0.14) per share for the prior quarter, which was based upon an operating loss of $4.9 million, and included $0.9 million of non-cash stock-based compensation charges and $0.4 million of depreciation and amortization. The net loss for the third quarter of 2002 of $4.0 million included an operating loss of $4.1 million that included $1.2 million of non-cash stock based compensation charges and $0.5 million of depreciation and amortization. At the end of August the Company initiated a restructuring that lead to a reduction in headcount and the imposition of a hiring freeze that further reduced headcount costs through attrition. The restructuring charges during the third quarter 2003 represent severance costs associated with the headcount reduction, as well as additional costs related to the closing of its Utah facility earlier this year. The headcount reduction and hiring freeze instituted by new management eliminated nearly $3.0 million of future annual compensation costs and nearly $0.8 million of related expenses -MORE- VIEWPOINT REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS PAGE 2 net of those costs for new or replaced employees. The Company largely began to realize annual expense savings of over $3.8 million beginning in September 2003. Viewpoint reported revenues of $11.0 million for the nine months ended September 30, 2003, compared to $15.5 million for the same period in 2002. The decrease in revenue came from a reduction of license revenues of $7.8 million offset by an increase in services revenues of $3.4 million. The Company's net loss for the nine months ended September 2003 of $18.3 million or $(0.41) per share was based upon a loss from operations of $17.1 million which included $2.4 million of non-cash stock-based compensation charges, $1.3 million of depreciation and amortization, and a $1.9 million restructuring charge related to an office closure and headcount reductions. This compares to a net loss for the nine months ended September 30, 2002 of $18.6 million or $(0.46) per share based upon an operating loss of $18.8 million which included $4.2 million of non-cash stock-based compensation charges, $2.1 million of depreciation and amortization, and a $6.3 million charge related to the impairment of goodwill and other intangible assets. Viewpoint's cash, cash equivalents and marketable securities as of September 30, 2003 were $1.8 million, compared with $11.6 million at December 31, 2002. Viewpoint announced a license and services agreement with AOL on October 29, 2003 under which Viewpoint granted to AOL a source code license and permanent rights to certain Viewpoint technologies and AOL agreed to pay $9.0 million to license the Viewpoint Platform and at least $1.0 million for services to be provided by Viewpoint. Payments of $10.0 million are due before December 31, 2003. The companies also plan to cooperate on future technology and product development efforts. "While our results for the third quarter were marked by weak revenue, we initiated steps to contain costs through a strategic headcount reduction. At the same time, we aggressively reviewed our resources and began a process to create exciting opportunities for Viewpoint by leveraging these resources in new ways," commented Jay Amato, newly appointed Chief Executive Officer of Viewpoint Corporation. Mr. Amato continued, "We believe that Viewpoint is a company with strong assets: superior technology, a widely distributed network and strong partners. Long-term licensing deals, such as the recently announced contract with AOL, represent the type of agreement that we believe will increase the growth of our distribution network and drive adoption of the Viewpoint platform." Mr. Amato concluded, "Looking ahead to the end of 2003 and the start of 2004, we expect to maintain a flat management structure that is aligned with the goals of our -MORE- VIEWPOINT REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS PAGE 3 business, focus on creating value through leveraging our existing assets and hold all within Viewpoint accountable for our success. We believe that Viewpoint can be a profitable company through this approach." CONFERENCE CALL The Company will host a conference call today, November 5, 2003 at 9:00 a.m. Eastern Time to discuss third quarter results. To participate in the call, please dial 888-882-0109 and enter reservation number 21164167. It is recommended that participants call at least 10 minutes before the call is scheduled to begin. In addition, the Company's conference call will be available live via Internet broadcast. You can access the live call through the Home Page of the Company's Web site at www.viewpoint.com, or through CCBN at www.companyboardroom.com. A replay of the conference call in its entirety will be available approximately one hour after its completion for 48 hours thereafter by calling 800-633-8284 and entering the above reservation number. Serving clients like America Online, Adobe, Toyota, General Motors, Samsung, IBM and Hewlett-Packard, Viewpoint technology has an installed user base of 100,000,000, ranking it above Apple Computer's QuickTime in market penetration, according to a study published by Macromedia Inc. and available at: http://www.macromedia.com/software/player_census/flashplayer/ ------------------------------------------------------------- OUR WORLD VIEW Information comes in numerous forms: visual, auditory, sensory, contextual, perceptual. The Viewpoint Platform integrates and orchestrates this information in an elegant symphony - providing fresh, vivid and lasting experiences that transform the ordinary into the extraordinary. By empowering companies to be their best, Viewpoint transforms the way you view your world. Visit Viewpoint at: http://www.viewpoint.com. ------------------------ This press release may contain "forward-looking" statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and similar expressions that reflect Viewpoint's current expectations about its future performance. These statements and expressions are subject to risks, uncertainties and other factors that could cause Viewpoint's actual performance to differ materially from those expressed in, or implied by, these statements and expressions. Such risks, uncertainties and factors include those described in the Company's filings and reports on file with the Securities and Exchange Commission as well as the lack of assurances that the value of Viewpoint's distribution network will increase, that the Viewpoint platform will be more widely adopted, that Viewpoint will maintain a flat management structure, that all within Viewpoint will be held accountable for Viewpoint's success, or that Viewpoint can be a profitable company through its planned approach. Viewpoint and Viewpoint Experience Technology are either registered trademarks or trademarks of Viewpoint Corporation. Other product and company names herein may be trademarks of their respective owners. Copyright 2003 Viewpoint Corporation. All rights reserved. -Tables Follow- VIEWPOINT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) THREE MONTHS ENDED SEPTEMBER 30, JUNE 30, ------------- -------- 2003 2002 2003 ---- ---- ---- Revenues: Licenses ............................................ $ 317 $ 1,633 $ 217 Related party licenses .............................. -- 2,024 1,010 Services ............................................ 1,508 605 842 Related party services .............................. 693 1,064 2,405 -------- -------- -------- TOTAL REVENUES ........................................ 2,518 5,326 4,474 -------- -------- -------- Cost of revenues: Licenses ............................................ 21 6 28 Services ............................................ 1,419 1,125 2,372 -------- -------- -------- TOTAL COST OF REVENUES ................................ 1,440 1,131 2,400 -------- -------- -------- GROSS PROFIT .......................................... 1,078 4,195 2,074 -------- -------- -------- Operating expenses: Sales and marketing ................................. 1,549 3,516 2,227 Research and development ............................ 1,063 1,073 945 General and administrative .......................... 2,839 1,965 2,497 Non-cash stock-based compensation charges ........... 520 1,200 858 Depreciation ........................................ 383 493 444 Amortization of intangible assets ................... 1 1 7 Restructuring charges ............................... 674 -- -- -------- -------- -------- TOTAL OPERATING EXPENSES .............................. 7,029 8,248 6,978 -------- -------- -------- LOSS FROM OPERATIONS .................................. (5,951) (4,053) (4,904) -------- -------- -------- Other income (expense): Interest and other income, net ...................... 8 44 11 Interest expense .................................... (257) -- (323) Changes in fair values of warrants to purchase common stock and conversion options of convertible notes . 667 -- (1,081) -------- -------- -------- TOTAL OTHER INCOME (EXPENSE) .......................... 418 44 (1,393) -------- -------- -------- LOSS BEFORE PROVISION FOR INCOME TAXES ................ (5,533) (4,009) (6,297) Provision for income taxes ............................ 26 -- 13 -------- -------- -------- NET LOSS FROM CONTINUING OPERATIONS ................... (5,559) (4,009) (6,310) Adjustment to net loss on disposal of discontinued Operations ....................................... 41 9 26 -------- -------- -------- NET LOSS .............................................. $ (5,518) $ (4,000) $ (6,284) ======== ======== ======== BASIC AND DILUTED NET LOSS PER COMMON SHARE: Net loss per common share from continuing operations $ (0.12) $ (0.10) $ (0.14) Net income per common share from discontinued Operations ....................................... -- -- -- -------- -------- -------- NET LOSS PER COMMON SHARE ............................. $ (0.12) $ (0.10) $ (0.14) ======== ======== ======== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING -- BASIC AND DILUTED ...................................... 45,987 40,987 45,986 ======== ======== ========
VIEWPOINT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) NINE MONTHS ENDED SEPTEMBER 30, 2003 2002 ---- ----- Revenues: Licenses ............................................ $ 2,166 $ 4,129 Related party licenses .............................. 1,060 6,929 Services ............................................ 3,705 2,673 Related party services .............................. 4,086 1,757 -------- -------- TOTAL REVENUES ........................................ 11,017 15,488 -------- -------- Cost of revenues: Licenses ............................................ 96 251 Services ............................................ 4,967 2,947 -------- -------- TOTAL COST OF REVENUES ................................ 5,063 3,198 -------- -------- GROSS PROFIT .......................................... 5,954 12,290 -------- -------- Operating expenses: Sales and marketing ................................. 7,158 9,242 Research and development ............................ 3,322 3,548 General and administrative .......................... 6,940 5,736 Non-cash stock-based compensation charges ........... 2,388 4,173 Depreciation ........................................ 1,305 1,463 Amortization of intangible assets ................... 9 664 Restructuring charges ............................... 1,885 -- Impairment of goodwill and other intangible assets .. 6,275 ------------------------------------------------------- -------- -------- -------- TOTAL OPERATING EXPENSES .............................. 23,007 31,101 -------- -------- LOSS FROM OPERATIONS .................................. (17,053) (18,811) -------- -------- Other income (expense): Interest and other income, net ...................... 42 133 Interest expense .................................... (743) -- Loss on early extinguishment of debt ................ (1,682) -- Changes in fair values of warrants to purchase common stock and conversion options of convertible notes . 1,010 -------- -------- -------- TOTAL OTHER INCOME (EXPENSE) .......................... (1,373) 133 ------------------------------------------------------- -------- -------- LOSS BEFORE PROVISION FOR INCOME TAXES ................ (18,426) (18,678) Provision for income taxes -------- 39 -- -------- -------- NET LOSS FROM CONTINUING OPERATIONS ................... (18,465) (18,678) Adjustment to net loss on disposal of discontinued Operations ....................................... 157 -------- 102 NET LOSS .............................................. $(18,308) $(18,576) ======== ======== BASIC AND DILUTED NET LOSS PER COMMON SHARE: Net loss per common share from continuing operations $ (0.41) $ (0.46) Net income per common share from discontinued Operations -------- -------- -------- -------- NET LOSS PER COMMON SHARE ............................. $ (0.41) $ (0.46) ======== ======== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING -- BASIC AND DILUTED ...................................... 44,463 40,677 ======== ======== VIEWPOINT CORPORATION CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) SEPTEMBER 30, DECEMBER 31, 2003 2002 ---- ---- ASSETS Current assets: Cash and cash equivalents ............................ $ 746 $ 10,678 Marketable securities ................................ 1,017 890 Accounts receivable, net ............................. 1,218 2,925 Related party accounts receivable, net ............... 286 838 Notes receivable, net ................................ -- 750 Prepaid expenses and other current assets ............ 633 599 --------- --------- Total current assets ......................... 3,900 16,680 Restricted cash ........................................ 455 987 Property and equipment, net ............................ 2,111 3,591 Goodwill, net .......................................... 31,276 31,276 Intangible assets, net ................................. 187 165 Other assets ........................................... 294 653 --------- --------- TOTAL ASSETS ................................. $ 38,223 $ 53,352 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ..................................... $ 1,994 $ 2,962 Accrued expenses ..................................... 1,520 759 Due to related parties, net .......................... 2,928 2,920 Deferred revenues .................................... 379 334 Related party deferred revenues ...................... 687 249 Accrued incentive compensation ....................... 545 545 Current liabilities related to discontinued operations 231 231 --------- --------- Total current liabilities .................... 8,284 8,000 Convertible notes ...................................... 3,001 6,712 Warrants to purchase common stock ...................... 130 288 Subordinated notes ..................................... 1,685 -- Stockholders' equity: Preferred stock ........................................ -- -- Common stock ........................................... 46 41 Paid-in capital ........................................ 269,119 267,569 Deferred compensation .................................. (586) (4,130) Treasury stock ......................................... (1,015) (1,015) Accumulated other comprehensive loss ................... (56) (36) Accumulated deficit .................................... (242,385) (224,077) --------- --------- Total stockholders' equity ................... 25,123 38,352 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ... $ 38,223 $ 53,352 ========= =========
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