EX-99.1 2 a5094369ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Viewpoint Corporation Announces Fourth Quarter and Full Year 2005 Financial Results NEW YORK--(BUSINESS WIRE)--March 2, 2006--Viewpoint Corporation (NASDAQ: VWPT), a leading internet marketing technology company, today announced financial results for the fourth quarter and full year ended December 31, 2005. Viewpoint reported total revenue of $7.2 million for the fourth quarter 2005, a 21 percent increase as compared to $6.0 million in the third quarter 2005 and a 51 percent increase as compared to $4.8 million in the fourth quarter 2004. Gross profit was $4.6 million for the fourth quarter of 2005, in line with the third quarter of 2005, and an increase of 21 percent as compared to $3.9 million for the fourth quarter of 2004. Patrick Vogt, President and Chief Executive Officer, commented, "We are pleased with our results for the fourth quarter and the great strides we have made as a Company in 2005. As we had guided, in 2005 we were adjusted operating income positive, achieving this performance level for the third consecutive quarter and four out of five trailing quarters. Furthermore, we delivered year-over-year improvements in our business and full year 2005 revenue of over $25 million, an increase of 74 percent as compared to full year 2004." Adjusted operating income is a non-GAAP measure, defined below. Vogt added, "As we enter into 2006, we are very optimistic about our key enterprise solutions - Unicast, TheStudio and KeySearch as well as our key consumer solutions - WebSearch and fotomat. These products are all powered by Viewpoint technology, which allows us to bring the Viewpoint brand back to its roots - great technology that helps companies market their products on the web. These strategic changes in our business model, company culture, product offering, and our laser focus on customers bring a level of synergy unparalled in Viewpoint's history. These changes also position us well to take advantage of the market opportunity ahead." In the fourth quarter the Company recorded a non-cash charge of $3.8 million for impairment of goodwill for its services business. This business experienced a decline in gross margin during the fourth quarter as the Company made it less expensive to license, maintain and distribute content on the Viewpoint platform. The Company expects this strategy will benefit the higher margin Search and Ad systems businesses going forward. Operating loss for the fourth quarter of 2005, including the aforementioned impairment charge of $3.8 million, was $3.9 million, compared to operating loss of $1.4 million in the third quarter of 2005 and operating income of $0.2 million for the fourth quarter of 2004. The $1.4 million loss in the third quarter included a non-recurring $1.1 million non-cash stock-based compensation charge. Net loss for the fourth quarter, including the impairment charge, was $4.0 million or $(0.07) per share compared to a net loss of $1.5 million, or $(0.02) per share in the third quarter 2005 and a net loss of $0.5 million or $(0.01) per share, in the fourth quarter 2004. For the year ended December 31, 2005, the Company reported revenue of $25.3 million, compared to $14.5 million for 2004. Gross margin of $18.1 million for 2005 increased 61 percent from $11.3 million in 2004. Viewpoint's adjusted operating income for 2005 was $0.3 million compared to an adjusted operating loss of $2.8 million in 2004. The Company recorded a net loss for the twelve months ended December 31, 2005 of $6.7 million, or $(0.11) per share. This compares to a net loss for the twelve months ended December 31, 2004 of $9.7 million, or $(0.18) per share. Viewpoint's cash, cash equivalents, and marketable securities as of December 31, 2005 were $9.1 million. This can be compared to cash, cash equivalents, and marketable securities of $8.7 million as of December 31, 2004 and $5.4 million as of September 30, 2005. This included proceeds of the $5.1 million financing completed on December 30, 2005. Bill Mitchell, Chief Financial Officer commented, "Our key initiatives have been gaining ground and we believe we will continue to achieve our goals through the successful execution of our long-term strategy. As our new sales initiatives in Search Engine Marketing and Private Label Toolbars accelerate we will more than make up the annual $4.0 million revenue contribution that the Company received from the AOL license agreement it executed in 2003 that concluded in December." The Company announced that it anticipated revenue in 2006 of between $26 million and $30 million and positive adjusted operating income. 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. 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 Annual Report on Form 10-K, which is scheduled to occur on or before March 16, 2006. At the present time, the Company has no reason to believe that there will be changes to the financial information contained herein. FINANCIAL MEASURES In addition to the results presented above in accordance with generally accepted accounting principles, or GAAP, the Company presents financial measures that are non-GAAP measures, specifically adjusted operating income. The Company believes that this non-GAAP measure, viewed in addition to and not in lieu of the Company's reported GAAP results, provides useful information to investors regarding its performance and overall results of operations. These metrics are an integral part of the Company's internal reporting to measure the performance of the Company and the overall effectiveness of senior management. Reconciliations to comparable GAAP measures are available in the accompanying schedules and on the Company's website. The financial measures presented are consistent with the Company's historical financial reporting practices. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies, and are not identical to corresponding measures used in our various agreements or public filings. CONFERENCE CALL The Company will host a conference call on March 2, 2006 at 9:00 A.M. (Eastern Time) to discuss fourth quarter and full year 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: 5211399 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, March 9, 2006. Callers should enter the pass code above to access the recording. ABOUT VIEWPOINT Viewpoint is a leading internet marketing technology company. 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, General Motors, 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 - and the Viewpoint Toolbar - the Vision for the Future of Search - are the latest breakthrough technologies using the full power of the Viewpoint Platform. More information on Viewpoint can be found at www.viewpoint.com. The company has approximately 130 employees principally at its headquarters in New York City and in Los Angeles. 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's new sales initiatives in Search Engine Marketing and Private Label Toolbars will more than make up the annual $4.0 million revenue contribution that the Company received from the AOL license agreement in 2005 or that Viewpoint will achieve revenue of $26 million for the year ending December 31, 2006 or be adjusted operating income positive for the year ending December 31, 2006. Viewpoint, Unicast, and Viewpoint Toolbar are trademarks of Viewpoint Corporation. Copyright (C)2006 Viewpoint Corporation. All rights reserved. VIEWPOINT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) Three Months Ended December 31, September 30, ----------------- --------------- 2005 2004 2005 -------- ------- --------------- Revenue: Search $ 2,353 $ 1,785 $ 2,498 Advertising systems 2,987 222 566 Services 718 1,345 1,744 Related party services 154 371 154 Licenses 102 162 124 Related party licenses 872 883 873 -------- ------- ------------ Total revenue 7,186 4,768 5,959 Cost of revenue: Search 39 35 39 Advertising systems 1,764 83 358 Services 737 795 907 Licenses 1 2 8 -------- ------- ------------ Total cost of revenue 2,541 915 1,312 -------- ------- ------------ Gross profit 4,645 3,853 4,647 Operating expenses: Sales and marketing 1,287 807 1,325 Research and development 1,000 876 1,126 General and administrative 2,050 1,834 2,077 Non-cash stock-based compensation charges 39 28 1,147 Depreciation 204 224 213 Amortization of intangible assets 162 1 159 Restructuring charges - (89) - Impairment of goodwill 3,847 - - -------- ------- ------------ Total operating expenses 8,589 3,681 6,047 Income (loss) from operations (3,944) 172 (1,400) Other income (expense): Interest and other income, net 45 (9) 30 Interest expense (235) (219) (288) Changes in fair values of warrants to purchase common stock and conversion feature of convertible notes 167 (465) 207 -------- ------- ------------ Total other income (expense) (23) (693) (51) -------- ------- ------------ Loss before provision for income taxes (3,967) (521) (1,451) Provision for income taxes 52 22 - -------- ------- ------------ Net income (loss) $ (4,019) $ (543) $ (1,451) ======== ======= ============ Basic and diluted net loss per common share: $ (0.07) $ (0.01) $ (0.02) Weighted average number of shares outstanding-basic and diluted 59,693 54,714 59,136 VIEWPOINT CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) Year Ended December 31, ------------------------- 2005 2004 ------------ ----------- Revenue: Search $ 9,424 $ 2,698 Advertising systems 5,448 305 Services 5,269 4,822 Related party services 1,057 2,468 Licenses 608 704 Related party licenses 3,490 3,535 ---------- ---------- Total revenue 25,296 14,532 Cost of revenue: Search 173 45 Advertising systems 3,487 132 Services 3,480 3,074 Licenses 12 6 ---------- ---------- Total cost of revenue 7,152 3,257 ---------- ---------- Gross profit 18,144 11,275 Operating expenses: Sales and marketing 5,115 3,712 Research and development 4,465 3,383 General and administrative 8,287 6,977 Non-cash stock-based compensation charges 1,781 312 Depreciation 870 853 Amortization of intangible assets 678 17 Restructuring charges - (106) Impairment of goodwill 3,847 - ---------- ---------- Total operating expenses 25,043 15,148 Loss from operations (6,899) (3,873) Other income (expense): Interest and other income, net 131 60 Interest expense (1,178) (936) Loss on conversion of debt - (810) Changes in fair values of warrants to purchase common stock and conversion feature of convertible notes 1,204 (4,180) ---------- ---------- Total other income (expense) 157 (5,866) ---------- ---------- Loss before provision for income taxes (6,742) (9,739) Provision for income taxes 64 90 ---------- ---------- Net loss from continuing operations (6,806) (9,829) Adjustment to net loss on disposal of discontinued operations 145 129 ---------- ---------- Net loss $ (6,661) $ (9,700) ========== ========== Basic and diluted net loss per common share $ (0.11) $ (0.18) Weighted average number of shares outstanding-basic and diluted 58,631 52,955 VIEWPOINT CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (Unaudited) December 31, December 31, 2005 2004 ------------ ------------ Assets Current assets: Cash and cash equivalents $ 6,531 $ 5,905 Marketable securities 2,580 2,757 Accounts receivable, net 4,336 2,583 Related party accounts receivable, net 6 26 Prepaid expenses and other current assets 510 421 ----------- ---------- Total current assets 13,963 11,692 Restricted cash 182 320 Property and equipment, net 1,218 1,485 Goodwill 29,468 31,276 Intangible assets, net 4,131 230 Other assets 105 270 ----------- ---------- Total assets $ 49,067 $ 45,273 =========== ========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,834 $ 1,218 Accrued expenses 635 244 Deferred revenue 178 431 Related party deferred revenue 29 4,607 Current portion of notes payable 814 - Accrued incentive compensation 545 545 Current liabilities related to discontinued operations 231 231 ----------- ---------- Total current liabilities 5,266 7,276 Accrued expenses - Deferred Rent 334 365 Warrants to purchase common stock 779 1,286 Subordinate notes 2,090 2,388 Unicast notes 1,582 - Stockholders' equity Preferred stock - - Common stock 65 57 Paid-in capital 301,972 290,260 Deferred compensation (3) (5) Treasury stock (1,015) (1,015) Accumulated other comprehensive loss (63) (60) Accumulated deficit (261,940) (255,279) ----------- ---------- Total stockholders' equity 39,016 33,958 ----------- ---------- Total liabilities and stockholders' equity $ 49,067 $ 45,273 =========== ========== VIEWPOINT CORPORATION RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO ADJUSTED OPERATING INCOME (LOSS) (in thousands, except per share amounts) (Unaudited) Three Months Ended December 31, September 30, ------------------- ------------- 2005 2004 2005 ---- ---- ---- Income (Loss) from Operations $ (3,944) $ 172 $ (1,400) Plus (Less): Non-cash stock based Compensation: Sales and marketing - - - Research and development - - - General and administrative 39 28 1,147 Depreciation 204 224 213 Amortization 162 1 159 Restructuring charges - (89) - Impairment of Goodwill 3,847 - - -------- -------- ---------- Adjusted Operating Income $ 308 $ 336 $ 119 ======== ======== ========== Twelve Months Ended December 31, --------------------- 2005 2004 --------- -------- Loss from Operations $ (6,899) $ (3,873) Plus (Less): Non-cash stock based Compensation: Sales and marketing - 20 Research and development 14 49 General and administrative 1,767 243 Depreciation 870 853 Amortization 678 17 Restructuring charges - (106) Impairment of Goodwill 3,847 - -------- -------- Adjusted Operating Income (Loss) $ 277 $ (2,797) ======== ======== CONTACT: Viewpoint William H. Mitchell, 212-201-0800 whmitchell@viewpoint.com or Investor Relations: 212-201-0800 ir@viewpoint.com