Exhibit 99.1
Press Release
| Company Contact:
Sal Quadrino, CFO
Helios & Matheson North America Inc.
732-499-8228
squadrino@hmna.com | | Investor Contact:
Joseph M. Zappulla
Grannus Financial Advisors, Inc.
212-681-4100
jmzappulla@grannusfinancial.com |
Helios & Matheson North America Reports
Fourth Quarter and Full Year 2007 Financial Results
NEW YORK, New York, February 26, 2008 – Helios & Matheson North America Inc. (“Helios & Matheson”) (Nasdaq Capital Market: HMNA), an IT and Business Process Outsourcing services provider to Fortune 1000 Companies and other large organizations, today reported financial results for its fourth quarter and full year ended December 31, 2007. The Company reported revenue of $5.3 million for the fourth quarter compared to $5.0 million in the third quarter of 2007 and $6.3 million for the fourth quarter of 2006. Revenue for 2007 was $20.8 million, which compares to $24.9 million for 2006. The Company reported a net loss for the fourth quarter of $(222,000) or $(0.09) per basic share compared to a net loss of $(259,000) or $(0.11) per basic share for the third quarter of 2007 and net earnings of $297,000 or $0.12 per diluted share for the fourth quarter of 2006. The Company incurred a net loss of $(838,000) or $(0.35) per basic share in 2007, compared to net earnings of $852,000 or $0.35 per diluted share in 2006, which included $881,000 of net proceeds received by the Company in connection with the release of claims relating to the terminated transaction with Vanguard Info-Solutions Corporation.
| | Three Months Ended | | Twelve Months Ended | |
(In 000s except per share amounts) | | 12-31-07 | | 12-31-06 | | 9-30-07 | | 12/31/07 | | 12-31-06¹ | |
Revenue | | $ | 5,263 | | $ | 6,321 | | $ | 4,957 | | $ | 20,830 | | $ | 24,940 | |
Gross Profit | | $ | 1,624 | | $ | 2,042 | | $ | 1,393 | | $ | 6,147 | | $ | 7,271 | |
Income/(loss) from operations | | $ | (342 | ) | $ | 353 | | $ | (363 | ) | $ | (1,142 | ) | $ | 900 | |
Net Income/(loss) | | $ | (222 | ) | $ | 297 | | $ | (259 | ) | $ | (838 | ) | $ | 852 | |
EPS per basic share | | $ | (0.09 | ) | $ | 0.12 | | $ | (0.11 | ) | $ | (0.35 | ) | $ | 0.36 | |
EPS per diluted share | | $ | (0.09 | ) | $ | 0.12 | | $ | (0.11 | ) | $ | (0.35 | ) | $ | 0.35 | |
¹ | Includes net proceeds received by the Company in connection with the release of claims relating to the terminated transaction with Vanguard Info-Solution Corporation of $881,000 in the second quarter of 2006. |
The Company’s gross margin increased to 30.9 percent in the fourth quarter from 28.1 percent in the third quarter, and compares to 32.3 percent in the fourth quarter of 2006. For the year, gross margin was 29.5 percent, a slight increase over the 2006 level of 29.2 percent. Selling, general and administrative costs (“SG&A”) during the fourth quarter was $1.9 million compared to $1.7 million in the third quarter of 2007 and $1.6 million in the fourth quarter of 2006. The increase in SG&A in the fourth quarter of 2007 over the third quarter represents the costs associated with the Company’s decision to heighten its sales and marketing effort to achieve its revenue quality strategic objectives. SG&A for 2007 was $7.1 million, which is
unchanged from the prior year level, excluding the $881,000 of net proceeds received by the Company during the second quarter of 2006 in connection with the release of claims relating to the terminated transaction with Vanguard Info-Solutions Corporation.
Sal Quadrino, Helios & Matheson’s chief financial officer, commented on the fourth quarter financial results, “The results of our fourth quarter reflect a heightened focus on diversifying our customer base and repositioning the company’s services to higher margined, reoccurring revenues. Virtually all of the increase in SG&A in the fourth quarter, as compared to the third quarter, represented an investment to enhance our sales and marketing effort. Our gross margin showed signs of improving, increasing almost three percent from the previous quarter.” Mr. Quadrino added, “Our company remains financially strong, with a current ratio of 3.5 and cash per share of $1.28 as of 2007 year-end.”
Michael Prude, Helios & Matheson’s chief operating officer, said, “As a premier provider of business solutions that maximize our clients’ return on (IT) investments, we develop partnerships with our clients based on expert guidance and service. We intend to reinforce our business value to our clients by enriching services that support their evolving needs. As a catalyst to top-line growth, and to further the quality of our revenue, we will work towards increasing our multi-year outsourcing engagements, thereby reinforcing our recurring revenue stream.”
Helios & Matheson has scheduled a conference call to present its fourth quarter and full year financial results today, Tuesday, February 26, 2008, at 4:15 pm (ET). Interested parties may access the conference call by dialing 800-895-8003 and providing the following reservation number: 21375478. The live conference call and a replay of the conference call in its entirety will be available via the Internet through MarketWire at http://www.visualwebcaster.com/event.asp?id=46116. A copy of this press release is also available at the Company’s website at http://www.easyir.com/easyir/prss.do?easyirid=F1550FDE4659A723.
About Helios & Matheson North America
Helios & Matheson has built a reputation for cutting-edge IT and BPO solutions that is exemplified by its impressive roster of Fortune 1000 customers and other large organizations. The Company focuses on a business-oriented, value-added approach to its end-to-end, IT services and business process outsourcing solutions. For over 20 years, the Company has provided complete project life-cycle services in the areas of business intelligence, custom application development, support and maintenance, data supply chain, collaboration, quality assurance, project and application portfolio management, and other specific vertical solutions. The Company has offices in New York City, Clark, New Jersey, and Bangalore, India. More information about the Company can be found at its web site at www.hmna.com.
“Safe Harbor” Statements under the Private Securities Litigation Reform Act of 1995: Statements made in this press release which are not historical facts, including those that refer to Helios & Matheson North America’s plans, beliefs and intentions, are “forward-looking statements” that involve risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from the forward-looking statements, and include, but are not limited to, Helios & Matheson North America’s ability to scale its existing and any new businesses. For a more complete description of the risks that apply to the Company’s business, please refer to the Company’s filings with the Securities and Exchange Commission. The Company’s actual results may differ materially from the results anticipated in these forward-looking statements as a result of certain factors set forth under Risk Factors and elsewhere in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2007.
* * * * * Financial Statements Follow * * * * *
HELIOS & MATHESON NORTH AMERICA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | Twelve Months Ended
December 31, | | Three Months Ended
December 31, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | (unaudited) | | | | (unaudited) | | (unaudited) | |
| | | | | | | | | | | | | |
Revenues | | $ | 20,830,184 | | $ | 24,940,153 | | $ | 5,263,353 | | $ | 6,320,980 | |
Cost of revenues | | | 14,683,313 | | | 17,669,075 | | | 3,639,235 | | | 4,279,232 | |
Gross profit | | | 6,146,871 | | | 7,271,078 | | | 1,624,118 | | | 2,041,748 | |
Operating expenses: | | | | | | | | | | | | | |
Selling, general & administrative | | | 7,100,950 | | | 6,219,836 | (1) | | 1,920,938 | | | 1,649,222 | |
Depreciation & amortization | | | 187,711 | | | 151,220 | | | 44,808 | | | 39,044 | |
| | | 7,288,661 | | | 6,371,056 | | | 1,965,746 | | | 1,688,266 | |
(Loss)/Income from operations | | | (1,141,790 | ) | | 900,022 | (1) | | (341,628 | ) | | 353,482 | |
Other income(expense): | | | | | | | | | | | | | |
Interest income-net | | | 157,200 | | | 69,021 | | | 30,214 | | | 34,338 | |
| | | 157,200 | | | 69,021 | | | 30,214 | | | 34,338 | |
(Loss)/Income before income taxes | | | (984,590 | ) | | 969,043 | | | (311,414 | ) | | 387,820 | |
Provision for income taxes | | | (146,795 | ) | | 117,189 | | | (89,026 | ) | | 90,938 | |
Net (loss)/income | | | (837,795 | ) | | 851,854 | | | (222,388 | ) | | 296,882 | |
Other comprehensive (loss)/income - foreign currency adjustment | | | (2,294 | ) | | 6,876 | | | (7,214 | ) | | 7,271 | |
Comprehensive (loss)/income | | $ | (840,089 | ) | $ | 858,730 | | $ | (229,602 | ) | $ | 304,153 | |
Net (loss)/income per share | | | | | | | | | | | | | |
Basic | | $ | (0.35 | ) | $ | 0.36 | | $ | (0.09 | ) | $ | 0.12 | |
Diluted | | $ | (0.35 | ) | $ | 0.35 | | $ | (0.09 | ) | $ | 0.12 | |
(1) | Includes net proceeds received by the Company in connection with the release of claims relating to the terminated transaction with Vanguard Info-Solutions Corporation of $881,000 in the second quarter of 2006. |
HELIOS & MATHESON NORTH AMERICA INC.
CONSOLIDATED BALANCE SHEETS
| | December 31,
2007 | | December 31,
2006 | |
| | (unaudited) | | | |
ASSETS | | | | | | | |
Current Assets: | | | | | | | |
Cash and cash equivalents | | $ | 3,077,655 | | $ | 3,849,056 | |
Accounts receivable- less allowance for doubtful accounts of $221,970 at December 31, 2007 and $225,741 at December 31, 2006 | | | 3,569,719 | | | 3,676,869 | |
Unbilled receivables | | | 32,754 | | | 316,156 | |
Prepaid expenses and other current assets | | | 189,467 | | | 159,398 | |
Total current assets | | | 6,869,595 | | | 8,001,479 | |
Property and equipment, net | | | 342,937 | | | 457,223 | |
Goodwill | | | 1,140,964 | | | 1,140,964 | |
Deposits and other assets | | | 151,350 | | | 189,620 | |
Total assets | | $ | 8,504,846 | | $ | 9,789,286 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |
Current Liabilities: | | | | | | | |
Accounts payable and accrued expenses | | $ | 1,807,033 | | $ | 2,294,929 | |
Deferred revenue | | | 178,018 | | | 285,227 | |
Total current liabilities | | | 1,985,051 | | | 2,580,156 | |
Shareholders’ equity: | | | | | | | |
Preferred stock, $.01 par value; 2,000,000 shares authorized; no shares issued and outstanding as of December 31, 2007, and December 31, 2006. | | | — | | | — | |
Common stock, $.01 par value; 30,000,000 shares authorized; 2,396,707 issued and outstanding as of December 31, 2007; 2,382,801 issued and outstanding as of December 31, 2006. | | | 23,967 | | | 23,828 | |
Paid-in capital | | | 34,758,266 | | | 34,607,651 | |
Accumulated other comprehensive income - foreign currency translation | | | 1,655 | | | 3,949 | |
Accumulated deficit | | | (28,264,093 | ) | | (27,426,298 | ) |
Total shareholders’ equity | | | 6,519,795 | | | 7,209,130 | |
Total liabilities and shareholders’ equity | | $ | 8,504,846 | | $ | 9,789,286 | |
