EX-99.1 2 a4945190ex991.txt EXHIBIT 99.1 Exhibit 99.1 Viewpoint Corporation Announces Second Quarter 2005 Financial Results; Total Second Quarter Revenue Increased 18% Sequentially and 134% Year-over-Year NEW YORK--(BUSINESS WIRE)--Aug. 4, 2005--Viewpoint Corporation (NASDAQ: VWPT), a leading interactive media company, today announced financial results for the second quarter ended June 30, 2005. Viewpoint reported total revenue of $6.6 million for the second quarter 2005, an increase of 18 percent as compared to $5.6 million in the first quarter 2005 and 134 percent as compared to $2.8 million in the second quarter 2004. Gross profit was $4.7 million for the second quarter of 2005, an increase of 11 percent as compared to $4.2 million in the first quarter of 2005 and 132 percent as compared to $2.0 million for the second quarter of 2004. Jay Amato, President and Chief Executive Officer, commented, "We are very pleased with our results this quarter, with solid sequential and year-over-year revenue growth. The quarter's strong performance was led by significant growth in our advertising systems revenue as we continued to add a number of clients to our roster. We are also pleased with the progress in our search business with sequential revenue increasing 10 percent to $2.4 million in the second quarter of 2005. During the quarter we began the successful distribution of the Viewpoint Toolbar Version 3.0 with Viewpoint Photo, marking the first time PC users have a browser-based photo management application that's easy to use and provides them with one-click, immediate access to their photos whether they're online or offline." Net loss for the second quarter 2005 was $0.4 million, or $(0.01) per share, compared to net loss of $0.7 million, or $(0.01) per share, in the first quarter 2005 and net income of $0.8 million, or $0.01 per share, in the second quarter of 2004. Operating loss for the second quarter of 2005 was $0.8 million, flat sequentially compared to operating loss of $0.8 million in the first quarter 2005, and an improvement of $1.1 million as compared to a loss of $1.9 million in the second quarter of 2004. The second quarter of 2005 included a non-recurring expense for non-cash stock based compensation of $0.6 million. For the six months ended June 30, 2005, the Company reported revenue of $12.2 million, compared to $6.4 million for the same period in 2004, an increase of $5.8 million. Gross profit increased 83 percent to $8.9 million in 2005 from $4.8 million in 2004. Viewpoint's operating expenses for the six-month period were $10.4 million as of June 30, 2005, compared with $7.9 million as of June 30, 2004, an increase of $2.5 million. The Company's net loss for the six months ended June 30, 2005 of $1.2 million, or $(0.02) per share, was based on a loss from operations of $1.6 million, which included charges of $0.6 million for non-cash stock based compensation and $0.8 million for depreciation and amortization. This compares to a net loss for the six months ended June 30, 2004 of $7.9 million, or $(0.15) per share, based on a loss from operations of $3.1 million, which included charges of $0.3 million for non-cash stock-based compensation and $0.4 million of depreciation and amortization. Viewpoint's cash, cash equivalents, and marketable securities as of June 30, 2005 were $4.6 million. This can be compared to cash, cash equivalents, and marketable securities of $4.9 million as of March 31, 2005. This excludes the $2.0 million raised in a private placement in July 2005. Jay Amato, President and Chief Executive Officer, continued, "We are pleased to report another positive quarter of Operating income excluding non-cash charges for depreciation, amortization and stock based compensation. During the quarter, we established a series of comprehensive marketing initiatives to better support the long-term growth of the business and act as a launch pad for new products. In conjunction with that long term strategy, we will be modifying our upgrade opt-in messaging to users of the Viewpoint Media Player in order to maximize the opportunity from our large distribution base. While we believe that in the short term it will reduce the rate of new installations, it will insure a more positive user experience overall. As we look forward to the second half of 2005, we will continue to focus on further building on the achievements we have made in our business to drive our long-term success." Bill Mitchell, Chief Financial Officer added, "Our recent re-financing has provided us the funds and flexibility to make these changes that will benefit us in 2006 and beyond. However, despite solid pipelines in our Services and Ad Systems segments, these tactical changes will impact current year revenue. Accordingly we are reducing our revenue guidance to $27-$30 million for 2005. Additionally, because of the reduced revenue as well as other distribution and marketing initiatives we have in place for both our search and ad systems segments, we believe it is appropriate to restate our previous guidance of adjusted net income positive for the year as we now expect to report positive Operating income, excluding non-cash charges for depreciation, amortization and stock based compensation, for the year ending December 31, 2005." FINANCIAL INFORMATION Management prepares and is responsible for the Company's consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States and audited by independent external auditors. The financial information contained in this press release, which is unaudited, is subject to revision and should not be considered final until the Company files its Quarterly Report on Form 10-Q, which is scheduled to occur on or before August 9, 2005. At the present time, the Company has no reason to believe that there will be changes to the financial information contained herein. CONFERENCE CALL The Company will host a conference call on August 4, 2005 at 9:00 A.M. (Eastern Time) to discuss second quarter 2005 financial results. The conference call will be available via the Internet in the Investor Relations section of Viewpoint's Web site at http://www.viewpoint.com, as well as through Thomson/CCBN at www.companyboardroom.com. If you are not able to access the live Web cast, dial in information is as follows: Toll-Free Telephone Number: (800) 603-7883 International Telephone Number: (706) 643-1946 Pass code: 7989297 Participants should call at least 10 minutes prior to the start of the call. A complete replay of the conference call will be available approximately one hour after the completion of the call by dialing (800) 642-1687 through Thursday, August 11, 2005. Callers should enter the pass code above to access the recording. ABOUT VIEWPOINT The Viewpoint Platform is the technology behind some of the most innovative, visual experiences on the Web and on the desktop with leading clients such as America Online, General Electric, Hewlett Packard, IBM, Lexus, Microsoft, Samsung, Scion, Sony and Toyota. The Unicast Online Advertising Suite: the Company's next-generation ad deployment and management system, the Viewpoint Toolbar: the Vision for the Future of Search, and Viewpoint Photos are the latest breakthrough technologies using the full power of the Viewpoint Platform. More information on Viewpoint can be found at www.viewpoint.com. FORWARD LOOKING STATEMENTS This press release contains "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: Viewpoint will continue to build on achievements in its business; that initiatives put in place will lead to long-term growth or that Viewpoint will achieve revenue of $27-$30 million for the year ending December 31, 2005 or be operating income positive for the year ending December 31, 2005, excluding non-cash charges for depreciation, amortization and stock based compensation. Viewpoint, Unicast, and Viewpoint Toolbar are trademarks of Viewpoint Corporation. Copyright (C)2005 Viewpoint Corporation. All rights reserved. VIEWPOINT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) Three Months Ended June 30, March 31, ------- -------- 2005 2004 2005 ---- ---- ---- Revenue: Search $ 2,393 $ - $ 2,180 Advertising systems 1,163 37 732 Services 1,564 1,066 1,243 Related party services 354 686 395 Licenses 227 144 155 Related party licenses 872 872 873 ------- ------- ------- Total revenue 6,573 2,805 5,578 Cost of revenue: Search 49 - 46 Advertising systems 847 6 518 Services 1,026 792 810 Licenses 1 3 2 ------- ------- ------- Total cost of revenue 1,923 801 1,376 ------- ------- ------- Gross profit 4,650 2,004 4,202 Operating expenses: Sales and marketing 1,228 944 1,275 Research and development 1,147 860 1,192 General and administrative 2,073 1,790 2,087 Non-cash stock-based compensation charges 581 56 14 Depreciation 220 205 233 Amortization of intangible assets 179 1 178 ------- ------- ------- Total operating expenses 5,428 3,856 4,979 Loss from operations (778) (1,852) (777) Other income (expense): Interest and other income, net 32 27 24 Interest expense (339) (236) (316) Loss on conversion of debt - (212) - Changes in fair values of warrants to purchase common stock and conversion feature of convertible notes 648 3,050 182 ------- ------- ------- Total other income (expense) 341 2,629 (110) ------- ------- ------- Income (loss) before provision for income taxes (437) 777 (887) Provision for income taxes 9 25 3 ------- ------- ------- Net income (loss) from continuing operations (446) 752 (890) Adjustment to net loss on disposal of discontinued operations - 20 145 ------- ------- ------- Net income (loss) $ (446) $ 772 $ (745) ======= ======= ======= Basic and diluted net income (loss) per common share: $ (0.01) $ 0.01 $ (0.01) Weighted average number of shares outstanding-basic and diluted 58,014 52,651 57,655 VIEWPOINT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) Six Months Ended June 30, -------- 2005 2004 ---- ---- Revenue: Search $ 4,573 $ 8 Advertising systems 1,895 37 Services 2,807 2,589 Related party services 749 1,600 Licenses 382 384 Related party licenses 1,745 1,779 ------- ------- Total revenue 12,151 6,397 Cost of revenue: Search 95 - Advertising systems 1,365 6 Services 1,836 1,543 Licenses 3 4 ------- ------- Total cost of revenue 3,299 1,553 ------- ------- Gross profit 8,852 4,844 Operating expenses: Sales and marketing 2,503 1,976 Research and development 2,339 1,724 General and administrative 4,160 3,514 Non-cash stock-based compensation charges 595 282 Depreciation 453 424 Amortization of intangible assets 357 4 Restructuring charges related to office closure - (17) ------- ------- Total operating expenses 10,407 7,907 Income (loss) from operations (1,555) (3,063) Other income (expense): Interest and other income, net 56 46 Interest expense (655) (486) Loss on conversion of debt - (810) Changes in fair values of warrants to purchase common stock and conversion feature of convertible notes 830 (3,553) ------- ------- Total other income (expense) 231 (4,803) ------- ------- Loss before provision for income taxes (1,324) (7,866) Provision for income taxes 12 35 ------- ------- Net income (loss) from continuing operations (1,336) (7,901) Adjustment to net loss on disposal of discontinued operations 145 39 ------- ------- Net income (loss) $(1,191)$(7,862) ======= ------- Basic and diluted net loss per common share: $ (0.02)$ (0.15) Weighted average number of shares outstanding-basic and diluted 57,835 51,433 VIEWPOINT CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (Unaudited) June 30, December 31, 2005 2004 -------- ----------- Assets Current assets: Cash and cash equivalents $ 3,529 $ 5,905 Marketable securities 1,086 2,757 Accounts receivable, net 4,048 2,583 Related party accounts receivable, net 26 26 Prepaid expenses and other current assets 541 421 --------- --------- Total current assets 9,230 11,692 Restricted cash 220 320 Property and equipment, net 1,445 1,485 Goodwill 33,409 31,276 Intangible assets, net 4,393 230 Other assets 180 270 --------- --------- Total assets $ 48,877 $ 45,273 ========= ========= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,104 $ 1,218 Accrued expenses 1,311 244 Deferred revenue 393 431 Related party deferred revenue 2,144 4,607 Current portion of notes payable 518 - Accrued incentive compensation 545 545 Current liabilities related to discontinued operations 231 231 --------- --------- Total current liabilities 7,246 7,276 Accrued expenses - Deferred Rent 373 365 Warrants to purchase common stock 456 1,286 Subordinate notes 2,417 2,388 Unicast notes 1,676 - Stockholders' equity Preferred stock - - Common stock 58 57 Paid-in capital 294,206 290,260 Deferred compensation (4) (5) Treasury stock (1,015) (1,015) Accumulated other comprehensive loss (66) (60) Accumulated deficit (256,470) (255,279) --------- --------- Total stockholders' equity 36,709 33,958 --------- --------- Total liabilities and stockholders' equity $ 48,877 $ 45,273 ========= ========= CONTACT: Viewpoint William H. Mitchell, 212-201-0800 whmitchell@viewpoint.com or Investor Relations: 212-201-0800 ir@viewpoint.com