Exhibit 99.1
For Immediate Release
CRITICAL PATH ANNOUNCES FIRST QUARTER 2003 RESULTS
SAN FRANCISCO -- (APRIL 29, 2003) Critical Path, Inc. (Nasdaq: CPTH) a global
leader in digital communications software and services, today announced
financial results for the first quarter ended March 31, 2003.
Revenues for the first quarter of 2003 were $18.0 million, compared to
$21.8 million in the fourth quarter of 2002. Cash operating expenses which
exclude amortization, depreciation and restructuring charges were $26.0 million
in the first quarter of 2003, compared with $26.0 million in the fourth quarter
of 2002.
Based on Generally Accepted Accounting Principles (GAAP) in the United
States, net loss attributable to common shares for the first quarter of 2003
improved to $26.9 million, or $0.34 per share, compared to $34.2 million, or
$0.43 per share, in the fourth quarter of 2002.
Earnings before interest, taxes, depreciation, and amortization,
adjusted to exclude special charges (Adjusted EBITDA), amounted to a loss of
$7.9 million in the first quarter, compared to an Adjusted EBITDA loss of $4.2
million in the fourth quarter of 2002.
"Although revenues level were lower than we expected, we are excited by
the amount of customer activity we saw and are energized by recent successes,
such as the launch of our world-class hosted messaging platform with HP and our
relationship with T-Mobile," said William McGlashan, Jr., Critical Path chairman
and chief executive officer. "Through continued execution we believe we will be
able to achieve our financial goals for this coming quarter and the year."
During the quarter, Critical Path delivered software solutions for
driving down helpdesk costs to customers such as UBS AG, DHL and the Danzas
Group, and a major US-based conglomerate, among other firms. These solutions
enable customers to more efficiently administer passwords, consolidate user
identity data across security applications and systems, integrate Microsoft's
ActiveDirectory with existing infrastructure, and create whitepages directories
for large, highly distributed organizations. Critical Path also delivered
additional software solutions that enable telecommunications carriers and
service providers to offer new revenue-generating premium services. Key
customers included Wind Telecomunicazioni, SEAT Pagine Gialle (formerly Telecom
Italia), SANPAOLO Group, and Swisscom, among others.
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Critical Path Announces First Quarter 2003 Results / 2
REGULATION G
The Company uses both GAAP and non-GAAP metrics to measure its
financial results. It utilizes two primary non-GAAP metrics: cash operating
expenses and Adjusted EBITDA. Management believes that, in addition to GAAP
metrics, these non-GAAP metrics assist the Company in measuring its cash based
performance. In addition, management believes these non-GAAP metrics are useful
to investors because they remove unusual and nonrecurring charges that occur in
the affected period and provide a basis for measuring the Company's financial
condition against other quarters. Since the Company has historically reported
non-GAAP results to the investment community, management also believes the
inclusion of non-GAAP measures provides consistency in its financial reporting.
However, non-GAAP financial measures should not be considered in isolation from,
or as a substitute for, financial information prepared in accordance with GAAP.
The calculations for cash operating expenses and Adjusted EBITDA are in the
Alternative Measurement Reconciliation table below.
CONFERENCE CALL
Critical Path will host a conference call today to discuss the
financial results for the first quarter 2003. Those who would like to
participate in the conference call should dial 877/231-3543 or 706/634-1329
(international) prior to 4:50 PM ET on the day of the call. The conference call
and its replay will also be Web cast and are accessible from the Company's Web
site, www.criticalpath.net. A telephone replay of the conference call will be
available for seven days following the call. To access the replay, please dial
(800) 642-1687 or (706) 645-9291 (international), passcode 9811034.
ABOUT CRITICAL PATH, INC.
Critical Path, Inc. (Nasdaq: CPTH) is a global leader in digital communications
software and services. The company provides messaging solutions -- from
wireless, secure and unified messaging to basic email and personal information
management -- as well as identity management solutions that simplify user
profile management and strengthen information security. The standards-based
Critical Path Communications Platform, built to perform reliably at the scale of
public networks, delivers the industry's lowest total cost of ownership for
messaging solutions and lays a solid foundation for next-generation
communications services. Solutions are available on a hosted or licensed basis.
Critical Path's customers include more than 700 enterprises, 190 carriers and
service providers, eight national postal authorities and 35 government agencies.
Critical Path is headquartered in San Francisco. More information can be found
at www.criticalpath.net
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Critical Path Announces First Quarter 2003 Results / 3
FORWARD-LOOKING STATEMENTS:
This press release contains forward-looking statements, including the Company's
statements regarding, its finance, business and operations including anticipated
or projected revenue, expenses and operational growth, markets, strategic
partners and potential customers for Critical Path products and services. The
words "anticipate," "expect," "intend," "plan," "believe," "seek," and
"estimate" and similar expressions are intended to identify forward-looking
statements. These forward-looking statements involve a number of risks and
uncertainties that could cause actual results to differ materially. Factors that
might cause future results to differ materially from those projected in the
forward-looking statements include, but are not limited to, difficulties of
forecasting future results due to our limited operating history, failure to meet
sales and revenue objectives, forecasts and earnings guidance, general economic
conditions in markets in which the Company does business, worldwide slow down in
technology spending by our customers and potential customers, failure to
negotiate favorable or timely deals with strategic partners for the distribution
of our products and services, the relative success of strategic partnerships and
global sales alliances, our evolving business strategies and the emerging nature
of the market for our products and services, turnover within and integration of
senior management, board of directors members and other key personnel,
difficulties in delivering and marketing our product and service offerings,
protection of our intellectual property, failure to successfully expand our
sales and marketing activities, potential difficulties associated with
restructuring, strategic relationships, investments and uncollected bills,
volatility in the market for stock and risks associated with potential delisting
actions by the market on which we are listed, risks associated with our
international operations, foreign currency fluctuations, unplanned system
interruptions and capacity constraints, software defects, and those discussed
elsewhere in this announcement and the attached statements. These and other
risks and uncertainties are described in more detail in Critical Path's Annual
Report on Form 10-K for the fiscal year ended December 31, 2002, as may be
amended from time to time, and all subsequent filings with the Securities and
Exchange Commission (www.sec.gov)
Note to Editors: Critical Path and the Critical Path logo are the trademarks of
Critical Path, Inc.
CRITICAL PATH CONTACT INFORMATION:
Mike Bishop
Investor Relations
415-541-2619
mike.bishop@criticalpath.net
TABLES TO FOLLOW
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Critical Path Announces First Quarter 2003 Results / 4
CRITICAL PATH, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, March 31,
2002 2003
---- ----
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 33,498 $ 31,409
Short-term marketable securities 5,583 --
Accounts receivable, net 22,818 19,839
Other current assets 4,030 6,839
--------- ---------
Total current assets 65,929 58,087
Long-term marketable securities 3,990 --
Equity investments 357 354
Property and equipment, net 18,142 18,092
Goodwill 6,613 6,613
Restricted cash 2,729 --
Other assets 6,246 6,749
--------- ---------
Total assets $ 104,006 $ 89,895
========= =========
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 28,093 $ 26,797
Accrued liabilities 3,764 3,860
Deferred revenue 10,788 9,496
Line of credit facility -- 4,900
Capital lease and other obligations, current 3,323 3,288
--------- ---------
Total current liabilities 45,968 48,341
Convertible subordinated notes payable 38,360 38,360
Capital lease and other obligations, long-term 1,332 1,060
--------- ---------
Total liabilities 85,660 87,761
--------- ---------
Mandatorily redeemable preferred stock 26,900 36,765
Shareholders' deficit (8,554) (34,631)
--------- ---------
Total liabilities, mandatorily redeemable preferred stock
and shareholders' deficit $ 104,006 $ 89,895
========= =========
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Critical Path Announces First Quarter 2003 Results / 5
CRITICAL PATH, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Ended
------------------
March 31, December 31, March 31,
2002 2002 2003
---- ---- ----
(Unaudited)
Net revenues
Software license $ 10,911 $ 7,436 $ 5,047
Hosted messaging 6,964 5,886 5,386
Professional services 1,937 3,958 3,220
Maintenance and support 3,877 4,554 4,381
-------- -------- --------
Total net revenues 23,689 21,834 18,034
-------- -------- --------
Cost of net revenues
Software license 287 1,246 1,797
Hosted messaging 7,817 6,468 6,263
Professional services 2,443 3,018 3,450
Maintenance and support 2,103 2,121 1,929
Amortization of purchased technology 4,630 4,630 --
Stock-based expense - Hosted messaging 185 60 8
Stock-based expense - Professional services 81 26 3
Stock-based expense - Maintenance and support 151 49 6
-------- -------- --------
Total cost of net revenues 17,697 17,618 13,456
-------- -------- --------
Gross profit 5,992 4,216 4,578
-------- -------- --------
Operating expenses
Sales and marketing 10,943 10,342 9,309
Research and development 5,002 4,320 4,623
General and administrative 6,678 3,792 3,226
Amortization of intangible assets 6,141 6,206 --
Stock-based expense - Sales and marketing 2,536 240 18
Stock-based expense - Research and development 422 152 15
Stock-based expense - General and administrative 297 61 9
Restructuring and other expense -- 1,629 3,189
-------- -------- --------
Total operating expenses 32,019 26,742 20,389
-------- -------- --------
Loss from operations (26,027) (22,526) (15,811)
Non-operating expenses
Interest and other income (expense), net 629 (5,049) (6,427)
Interest expense (783) (492) (769)
Equity in net loss of joint venture (403) -- --
Loss on investments -- (1,530) --
-------- -------- --------
Total non-operating expenses (557) (7,071) (7,196)
-------- -------- --------
Net loss before income taxes (26,584) (29,597) (23,007)
Benefit from (provision for) income taxes 573 (724) (194)
-------- -------- --------
Net loss (26,011) (30,321) (23,201)
Accretion on mandatorily redeemable preferred stock (3,206) (3,837) (3,665)
-------- -------- --------
Net loss attributable to common shares $(29,217) $(34,158) $(26,866)
======== ======== ========
Net loss per share - basic and diluted
Net loss attributable to common shares $ (0.38) $ (0.43) $ (0.34)
======== ======== ========
Weighted average common shares outstanding 76,514 78,557 78,664
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Critical Path Announces First Quarter 2003 Results / 6
CRITICAL PATH, INC.
Alternative Measurement Reconciliations
(In thousands)
Three Months Ended
------------------
March 31, December 31, March 31,
2002 2002 2003
---- ---- ----
(Unaudited)
ADJUSTED EBITDA (1)
Net loss attributable to common shares $(29,217) $(34,158) $(26,866)
Adjustments
Cost of net revenues
Depreciation 4,979 3,407 2,849
Amortization of purchased technology 4,630 4,630 --
Stock-based expense - Hosted messaging 185 60 8
Stock-based expense - Professional services 81 26 3
Stock-based expense - Maintenance and support 151 49 6
Operating expenses
Depreciation 2,821 1,914 1,775
Amortization of intangible assets 6,141 6,206 --
Stock-based expense - Sales and marketing 2,536 240 18
Stock-based expense - Research and development 422 152 15
Stock-based expense - General and administrative 297 61 9
Restructuring and other expense -- 1,629 3,189
Non-operating expenses
Interest and other income and expense, net
Change in fair-value of preferred stock instrument -- 5,280 6,200
Other income and expense, net (629) (231) 227
Interest expense 783 492 769
Equity in net loss of joint venture 403 -- --
Loss on investments -- 1,530 --
Benefit from or provision for income taxes (573) 724 194
Accretion on redeemable convertible preferred stock 3,206 3,837 3,665
-------- -------- --------
Total non-cash and non-operating adjustments (2) 25,433 30,006 18,927
-------- -------- --------
Adjusted EBITDA (1) $ (3,784) $ (4,152) $ (7,939)
======== ======== ========
CASH OPERATING COSTS
Net loss attributable to common shares $(29,217) $(34,158) $(26,866)
Adjustments
Total net revenues (23,689) (21,834) (18,034)
Total non-cash, restructuring and non-operating adjustments (2) 25,433 30,006 18,927
-------- -------- --------
Cash Operating Costs $(27,473) $(25,986) $(25,973)
======== ======== ========
(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation
and amortization, adjusted to exclude non-cash stock-based charges,
extraordinary restructuring expenses, accretion on redeemable convertible
preferred stock and other non-operating expenses.
(2) Total non-cash, restructuring and non-operating adjustments is defined in
the Adjusted EBITDA table presented above.
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