COMTEX News Network Inc.
Release: IMMEDIATE
For: Comtex News Network
(Symbol: CMTX)
Contact: Amber Gordon
agordon@comtex.com
703-797-8011
COMTEX REPORTS 2ND QUARTER FISCAL 2006 FINANCIAL RESULTS
ALEXANDRIA, VA, February 14, 2006- Comtex News Network, Inc. (OTC BB: CMTX), a
leading provider of economically useful electronic real-time news, content and
market alerts, today announced financial results for the quarter and six months
ended December 31, 2005.
Comtex reported approximately $1.9 million in revenue for the second
quarter of fiscal 2006 compared to $2.1 million in revenue for second quarter
fiscal 2005. For the six months ended December 31, 2005, Comtex reported revenue
of $3.9 million compared to $4.1 million for the comparative period of the
previous year. The decreases in revenue are primarily the result of business
consolidations among clients.
For the three and six month periods ended December 31, 2005, Comtex
reported operating losses of ($162,000) and ($58,000), respectively, versus
operating income of $159,000 and $291,000 for the three and six months ended
December 31, 2004. Comtex reported a net loss of ($184,000), or ($0.01) per
share, for second quarter fiscal 2006, versus net income of $119,000, or $0.01
per share, for second quarter fiscal 2005. For the six months ended December 31,
2005 and 2004, respectively, Comtex reported a net loss of ($121,000), or
($0.01) per share, and net income of $216,000, or $0.02 per share.
The operating and net losses reported by Comtex for the three and six
month periods ended December 31, 2005 primarily result from the effects of
reporting stock-based compensation in accordance with Statement of Financial
Accounting Standard No. 123R of a charge of approximately $321,000 and $438,000
respectively, which requires the issuance of stock options be accounted for
using specific new regulations. Comtex adopted this standard on its effective
date, July 1, 2005. In addition to the impact of SFAS No. 123R, Comtex has also
experienced decreases in gross profit margins.
For the six month periods ended December 31, 2005 and 2004, EBITDA (as
defined and explained in the accompanying note to the table below) decreased to
$561,000 from $648,000. This change is reflective of increased stock-based
compensation charges, decreased gross profit margins, and decreased depreciation
and amortization, as described above.
"Comtex continues to work to optimize our financial results while
providing superior, targeted news and financial data products to our clients,"
said Chip Brian, Comtex's President and COO. "Besides our focus on new product
development, we're quite pleased that our 2005 statistical analysis of Comtex's
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Comtex Announces 2nd Quarter Financial Results Page 2
February 14, 2006
technical performance showed a near-perfect score of 99.8% reliability and a
per-story throughput speed of less than one second. These high performance
metrics substantiate our dedication to exceeding our customers' requirements and
expectations."
About Comtex
Comtex (www.comtex.com) provides real-time news, SmarTrendSM Alerts and
economically useful information to businesses whose customers need more than
just facts. Comtex customers receive select content from key sources which is
further enhanced with stock tickers and an extended lexicon of relevant terms.
With a specialization in the financial news and content marketplace, Comtex
receives, enhances, combines and filters news and content received from national
and international news bureaus, agencies and publications, and distributes more
than one million total stories per day. Comtex's state-of-the-art technology
delivers this relevant content and reliable service in real-time. Comtex (OTC
BB: CMTX) has offices in New York City and Alexandria, Virginia.
SmarTrendSM and CSTASM are service marks of Comtex News Network, Inc.
Please Note: Except for the historical information contained herein, this press
release contains forward-looking statements within the meaning of Section 21E of
the Securities and Exchange Act of 1934, as amended, that involve a number of
risks and uncertainties. These forward-looking statements may be identified by
reference to a future period by use of forward-looking terminology such as
"anticipate," "expect," "could," "intend," "may" and other words of a similar
nature. These statements involve risks and uncertainties that could cause actual
results to differ materially from those contemplated herein, including the
occurrence of unanticipated events or circumstances relating to the fact that
Comtex is in a highly competitive industry subject to rapid technological,
product and price changes. Other factors include the possibility that demand for
the Company's products may not occur or continue at sufficient levels, changing
global economic and competitive conditions, technological risks and other risks
and uncertainties, including those detailed in the Company's filings with the
Securities and Exchange Commission. Comtex undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
FINANCIAL TABLE FOLLOWS
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Comtex Announces 2nd Quarter Financial Results Page 3
February 14, 2006
Comtex News Network, Inc.
Selected Financial Data
(unaudited)
(amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
December 31 December 31
----------------------------------- ------------------------------------
2005 2004 2005 2004
---- ---- ---- ----
Revenues $ 1,933 $ 2,086 $ 3,929 $ 4,072
Operating (Loss) / Income (162) 159 (58) 291
Net Income (Loss) $ (184) $ 119 $ (121) $ 216
----------------------------------- ------------------------------------
Net Earnings (Loss) Per Share
Basic $ (0.01) $ 0.01 $ (0.01) $ 0.02
----------------------------------- ------------------------------------
Diluted $ (0.01) $ 0.01 $ (0.01) $ 0.01
----------------------------------- ------------------------------------
Weighted Avg. # Shares:
Basic 13,700 13,600 13,650 13,600
----------------------------------- ------------------------------------
Diluted 13,700 14,645 13,650 14,645
----------------------------------- ------------------------------------
Reconciliation to EBITDA:
Net Income (Loss) $ (184) $ 119 $ (121) $ 216
Stock-based compensation 321 - 438 -
Depreciation & Amortization 75 178 181 357
Interest/Other Expense 22 40 47 75
Income Taxes - - 16 -
---------------------------------- ------------------------------------
EBITDA $ 234 $ 337 $ 561 $ 648
Please Note: EBITDA consists of earnings before interest and other expense,
interest and other income, income taxes, stock-based compensation, depreciation
and amortization and impairment charges. EBITDA is not a term defined by
generally accepted accounting principles, and as a result, our measure of EBITDA
might not be comparable to similarly titled measures used by other companies.
However, we believe that EBITDA is relevant and useful information, which is
often reported and widely used by analysts, investors and other interested
parties in our industry. Accordingly, we are disclosing this information to
permit a more comprehensive analysis of our operating performance.
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