EXHIBIT 99.1
DIALOG REPORTS Q3 REVENUES OF $82.8M AND
PROFIT BEFORE TAX OF $10.7M
CARY, N.C. & LONDON--(BUSINESS WIRE)--Nov. 15, 1999--The
Dialog Corporation (NASDAQ:DIAL, LSE:DLG), a leading provider
of Internet- based information, technology and e-commerce
solutions, today announced its third quarter results for the
three-month period ending September 30, 1999 and its interim
results for the nine months ending September 30, 1999. (All
figures are according to U.K. G.A.A.P. and have been converted
from G.B.P.((L)pound)) to U.S. dollars ($) for information
purposes at the prevailing exchange rate on September 30,1999
of (pound)1=$1.6469).
Q3 highlights -
- -- Group Revenues of $82.8 million - up 18% on Q3 1998
- -- Gross Profit $56.2 million - up 42% on Q3 1998
- -- Profit Before Tax of $10.7 million
- -- Traditional business shows like-for-like year-on-year growth
in September for the first time in six years
Post Q3 -
- -- End-user Internet portals launched in conjunction with Netscape
Communications and first credit card payments accepted
- -- Palo Alto data center outsourced to ICL representing
considerable cost and management efficiencies
- -- Fujitsu unveils first Japanese product incorporating Dialog's InfoSort
technology
- -- Agreement reached to acquire remaining equity of Muscat, consolidating
control of powerful natural language search technology on very
favorable terms
Debt refinancing -
- -- In discussions with potential investors concerning capital
restructuring
- -- November debt obligations met in full out of existing resources; next
payments due May 2000
- -- Banking covenants relaxed to allow greater flexibility in refinancing
discussions; new warrants issued allowing Banks to purchase 6 million
ordinary shares
Overview
The third and fourth quarters are seasonally the Company's slower
quarters due to holiday-related declines in information consumption.
Revenues for the quarter, including contributions of $19.1 million from the
Group's alliance partnership with Fujitsu (TSE: 6702), were $82.8 million,
up 18% over Q3 1998, and 13% ahead of Q2 1999.
In September 1999 revenues in the traditional Dialog Information
Services business, for the first time in six years, showed marginal growth
over the previous September.
The Web Solutions Division achieved revenues of $1.9 million that,
excluding the one-time InfoSort license fee from Fujitsu, are up 16% on the
second quarter 1999.
Within the eCommerce Division, revenues for OfficeShopper grew
marginally over Q2 and we completed a follow-on sale to Spicers of our
Sparza eCommerce procurement software.
Pre-tax profit for the quarter of $10.7 million, favorably impacted by
higher margin revenue, was up 556% compared to Q3 1998.
Debt refinancing
The Company has met its debt obligations for November out of existing
resources. This involved $11.1 million of interest on both Senior and
Subordinated Debt plus a $9.8 million repayment of Senior Debt. The next
Senior Debt principal repayments are due in May 2000 by which time the
Board is confident that the debt refinancing will have been successfully
concluded.
The refinancing of the Company's senior debt remains a priority, and
since our statement to the market on 24th August 1999, the Group has
continued to focus on this issue. To date, the discussions on debt
refinancing have resulted in expressions of interest being received from a
number of third parties, such expressions ranging from specific interest in
the Group's eCommerce and Web Solutions activities through to equity stakes
and possible interest in making an offer for the Company.
In conjunction with our advisors, Salomon Smith Barney and Chase
Manhattan Bank, the Company is continuing discussions with potential
investors with a view to enabling the Company to pursue its strategic plans
with an appropriate capital structure and in a manner consistent with the
best interests of shareholders, stakeholders and employees.
The Company's principal lenders support management's view that the
current refinancing discussions will lead to a positive outcome and, at the
Company's request, have relaxed the existing covenant arrangements in order
to allow these discussions to be thoroughly pursued. As part of these
discussions to relax covenants the Company has issued to its senior lenders
warrants to purchase 6 million shares of the Company's Ordinary share
capital exercisable within 10 years. These warrants, along with warrants
previously issued, will be priced at average current market price and may
be re-priced in May 2000 should the share price at that date be lower than
the price at which these warrants have been issued.
Outlook
Allen Thomas, Chairman of The Dialog Corporation, said:
"The efforts of management and staff over the past two years have resulted
in tangible trading progress in the recent quarter. Prospects for the
business are encouraging. However, we remain constrained by our current
debt structure from pursuing the high growth opportunities in Web Solutions
and eCommerce as well as from pursuing more aggressive marketing of our
end-user solutions in our Information Services Division. We continue to
strive for a solution that is beneficial to our shareholders, and, on the
basis of our current discussions, the Board and I remain confident of a
successful outcome."
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, which are subject to the "safe harbor"
created by those sections. The forward-looking statements can be identified
by terminology such as "may," "will," "expect," "intend," "estimate,"
"anticipate," "inevitable," "believe" or "continue" or variations thereon,
and include, among others, the launch dates of the Company's products noted
above. The Company's actual results could differ materially from those
discussed in the forward-looking statements as a result of certain factors,
including, among others, those set forth under the caption "Risk Factors"
in the Company's most recent Report on Form 20-F or generally in the
Company's Reports on Form 6-K. The Company disclaims any obligation to
update these forward-looking statements as a result of subsequent events.
About Dialog
The Dialog Corporation plc (http://www.dialog.com) is a leading
provider of Internet-based information, technology and eCommerce solutions
to the corporate market, created by the merger of M.A.I.D plc and
Knight-Ridder Information Inc.
Dialog provides a range of technologies and services for Internet and
intranet-based knowledge management and eCommerce applications. The
company's InfoSort indexing technology is widely perceived to offer an
industry standard for information categorization, while the DIALOG,
DataStar and Profound range of products and services provide comprehensive,
authoritative sources of information to professionals worldwide. Content
areas include news & media, medicine & pharmaceuticals, business & finance,
chemicals, intellectual property, energy & environment, government &
regulations, food & agriculture, science & technology and social sciences.
The Dialog Corporation has world headquarters in London and US headquarters
in Cary, NC. Its American Depositary Shares (ADS) are traded on NASDAQ
under the symbol "DIAL" with four Ordinary Shares comprising one ADS; its
Ordinary Shares trade on the London Stock Exchange under the symbol "DLG."
For more information on the Dialog / Fujitsu alliance announced in June 1999,
please visit Dialog's Web site at www.dialog.com/info/corporate/pressroom
(financial tables follow)
The Dialog Corporation plc
Consolidated Profit And Loss Account (unaudited) Three and nine months
ended September 30, 1999 (all figures in $'000)
Three months Three months
Ended Ended
September 30, September 30,
1999 1998
Turnover 82,775 69,886
Cost of sales (26,545) (30,375)
Gross profit 56,230 39,511
Distribution costs (9,004) (9,753)
Administrative expenses (23,468) (16,117)
Amortization of development
costs/goodwill (4,282) (2,559)
Exceptional restructuring
items - (2,666)
Operating profit 19,476 8,416
Exceptional item -
- loss on termination of
subsidiary (1,500) -
- gains on sale of fixed
asset investment - 43
Net interest payable (7,311) (6,833)
Profit on ordinary activities
before taxation 10,665 1,626
Taxation on profit on ordinary
activities (756) (224)
Profit on ordinary activities
after taxation 9,909 1,402
Minority equity interest 7 (30)
Retained profit 9,916 1,372
Earnings per ADS (cents) 26.1 3.6
Earnings per ADS excluding
exceptional gain (cents) 26.1 3.5
ADSs used in computing earnings
per ADS (thousands) 37,940 37,652
The financial results set forth above represent the Company's financial
results under UK GAAP translated for convenience into US Dollars at the
rate of US$:((L)pound) 1.6469 being the rate of exchange on September 30,
1999, the last trading day of the period.
The Dialog Corporation plc
Consolidated Profit And Loss Account (unaudited) Three and nine months
ended September 30, 1999 (all figures in $'000)
Nine months Nine months
Ended Ended
September 30, September 30,
1999 1998
Turnover 226,599 216,052
Cost of sales (85,112) (93,389)
Gross profit 141,487 122,663
Distribution costs (26,912) (27,385)
Administrative expenses (65,692) (52,411)
Amortization of development
costs/goodwill (11,655) (9,872)
Exceptional restructuring
items - (2,302)
Operating profit 37,228 30,693
Exceptional item -
- - loss on termination of
subsidiary (1,500) -
- - gains on sale of fixed
asset investment - 3,407
Net interest payable (22,264) (20,965)
Profit on ordinary
activities before taxation 13,464 13,135
Taxation on profit on
ordinary activities (1,894) (1,479)
Profit on ordinary activities
after taxation 11,570 11,656
Minority equity interest 15 (239)
Retained profit 11,585 11,417
Earnings per ADS (cents) 30.6 30.4
Earnings per ADS excluding
exceptional gain (cents) 30.6 22.5
ADSs used in computing
earnings per ADS
(thousands) 37,903 37,605
The financial results set forth above represent the Company's financial
results under UK GAAP translated for convenience into US Dollars at the
rate of US$:((L)pound) 1.6469 being the rate of exchange on September 30,
1999, the last trading day of the period.
(Balance Sheet follows)
The Dialog Corporation plc
September 30, 1999
Consolidated Balance Sheet (unaudited)
September 30 December 31
1999 1998
$'000 $'000
FIXED ASSETS
Intangible assets 44,568 38,132
Goodwill 12,068 12,642
Tangible assets 25,759 29,430
Investments 21,306 20,346
------ -------
103,701 100,550
CURRENT ASSETS
Stocks 152 364
Debtors 76,029 70,456
Cash at bank and in hand 11,780 7,401
Assets held for resale - 1,634
------ ------
87,961 79,855
CREDITORS (amounts falling
due within one year) (99,026) (96,912)
NET CURRENT LIABILITIES (11,065) (17,057)
TOTAL ASSETS LESS CURRENT
LIABILITIES 92,636 83,493
CREDITORS (amounts falling
due after more than one
year) (234,925) (230,139)
Provisions for liabilities
and charges (4,275) (7,735)
--------- --------
(146,564) (154,381)
CAPITAL AND RESERVES
Called up share capital 2,500 2,493
Share premium account 250,978 250,540
Shares to be issued 1,593 1,593
Profit and loss account (402,598) (410,781)
Ordinary shareholders' funds (147,527) (156,155)
Minority interest 963 1,774
Total shareholders' funds (146,564) (154,381)
The financial results set forth above represent the Company's financial
results under UK GAAP translated for convenience into US Dollars at the
rate of US$:((L)pound) 1.6469 being the rate of exchange on September 30,
1999, the last trading day of the period.
(Cash Flow Statement follows)
The Dialog Corporation plc
Consolidated Cash Flow Statement (unaudited)
for the 9 months ended September 30, 1999
1999 1998
$'000 $'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 36,657 23,483
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE
Interest received 262 507
Interest paid on bank loans and
overdrafts (17,818) (14,941)
Interest paid on finance leases (8) (64)
(17,564) (14,498)
TAXATION PAID (879) (53)
CAPITAL EXPENDITURE
Payments to develop intangible
assets (16,161) (12,810)
Payments to acquire tangible
fixed assets (5,682) (3,961)
Receipts from sales of tangible
fixed assets 143 53
(21,700) (16,718)
ACQUISITIONS AND DISPOSALS
Purchase to acquire minority interest
in subsidiary undertaking (707) -
Purchase of share in joint venture (2,034) (1,789)
Expenses in connection with purchase
of subsidiary undertakings (812) (777)
Proceeds from sale of investments 1,275 11,729
------ ------
(2,278) 9,163
CASH (OUTFLOW)/INFLOW BEFORE THE USE
OF LIQUID RESOURCES AND FINANCING (5,764) 1,377
MANAGEMENT OF LIQUID RESOURCES
Net receipts from sales of investments
with the original maturity date of
less than one year - 1,021
FINANCING
Net proceeds on issue of Ordinary
share capital - 754
Debt due within one year 19,045 -
Debt due after more than one year 24,140 -
Repayment of loans (32,694) (11,375)
Repayment of capital element of
finance leases (534) (530)
------- --------
9,957 (11,151)
INCREASE/(DECREASE) IN CASH 4,193 (8,753)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET DEBT
Increase/(decrease) in cash in the period 4,193 (8,753)
Cash used to decrease lease financing 534 530
Cash acquired from short-term borrowings (43,185) -
Cash used to repay loans 32,694 11,375
Increase in liquid resources and cash
deposits with original maturity date
of less than one year - (1,021)
Change in net debt from cash flows (5,764) 2,131
Other non-cash changes (1,482) (1,169)
New finance leases (3,421) -
Effect of foreign exchange rate
changes (14,323) 8,740
Movement in net debt in period (24,990) 9,702
Net debt at beginning of period (237,478) (240,289)
Net debt at end of period (262,468) (230,587)
The financial results set forth above represent the company's financial
results under UK GAAP translated for convenience into US Dollars at the
rate of US$:((L)pound) 1.6469 being the rate of exchange on September 30,
1999, the last trading day of the period.
(Composition of Turnover follows)
The Dialog Corporation plc
Composition of turnover (unaudited)
Q3 Q2 Q1 Q4
1999 1999 1999 1998
$'000 $'000 $'000 $'000
Information Services 80,536 64,672 68,082 63,262
Web solutions and Internet
software 1,854 8,185 1,709 1,787
eCommerce 385 674 502 127
Other - - - -
------ ------ ------ ------
82,775 73,531 70,293 65,176
Q3 Q2 Q1
1998 1998 1998
$'000 $'000 $'000
Information Services 66,878 69,910 72,201
Web solutions and Internet
software 2,260 1,719 838
eCommerce - - -
Other 748 749 749
----- ------ ------
69,886 72,378 73,788
The financial results set forth above represent the company's financial
results under UK GAAP translated for convenience into US Dollars at the
rate of US$:(pound) 1.6469 being the rate of exchange on September 30,
1999, the last trading day of the period.
General
These results are unaudited and do not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985. The financial
statements for the year ended December 31, 1998 have been reported on by
the Company's auditors, PricewaterhouseCoopers, and delivered to the
Registrar of Companies. The audit report was not qualified and neither did
it contain any statements under Section 237(2) or (3) of the Companies Act
1985. The unaudited results for the nine months ended September 30, 1999
have been prepared in accordance with the accounting policies stated in the
1998 Annual Report and Accounts.
CONTACT: David Mattey, Chief Financial Officer
011 44 171 930 6900
OR
Kristian Talvitie, U.S. Investor Relations
kristian_talvitie@dialog.com 212/381-1824
OR
David C. Collins/Robert L. Rinderman
DIAL@jcir.com
Jaffoni & Collins Incorporated
212/835-8500