EXHIBIT 99.1
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information of Cybernet
Internet Services International, Inc. (the "Company") gives effect to the sale
of all its assets, equipment, furniture and fixtures located in its data centers
in Hamburg, Frankfurt and Munich (the "Data Centers") to Disko Leasing GmbH,
cancellation of certain lease agreements for the Data Centers, termination of
operating agreements for the Data Centers, amendment of service agreements for
the Data Centers in Frankfurt and Munich and payment of an arrangement fee (the
"Transaction") as if the Transaction had occurred on January 1, 2001 with
respect to the unaudited pro forma consolidated statement of operations for the
year ended December 31, 2001, on January 1, 2002 with respect to the unaudited
pro forma consolidated statement of operations for the three months ended March
31, 2002 and on March 31, 2002 for the Transaction with respect to the
unaudited pro forma consolidated balance sheet as at March 31, 2002.
The unaudited pro forma adjustments described in the notes to the pro forma
consolidated balance sheet and statements of operations have been prepared by
management in accordance with Regulation S-X of the Securities Exchange Act of
1934.
The unaudited pro forma consolidated statements of operations disclose losses
from continuing operations before nonrecurring charges or credits.
The unaudited pro forma consolidated financial information presents management's
best estimate of the effects of the Transaction and is presented for
illustrative purposes only. This information is not indicative of the operating
results and financial position of the Company that would have actually been
obtained had the Transaction been consummated as of the dates and for the
periods presented, or that may be obtained in the future.
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As at March 31, 2002
(in thousands of Euros)
Pro forma
Historical Adjustments Pro forma
ASSETS
Current Assets
Cash and cash equivalents 2,740 2,740
Restricted cash 2,183 2,183
Short-term investments 77 77
Trade accounts receivable, net 6,636 6,636
Related party receivables 356 356
Other receivables 2,067 38,967 41,034
Restricted investments 5,328 5,328
Prepaid expenses 765 765
Other current assets 1,077 1,077
---------- ---------- ----------
Total current assets 21,229 38,967 60,196
Property and equipment, net 29,760 (16,138) 13,622
Product development costs, net 624 624
Investments 2,635 2,635
Other assets 5,792 (1,049) 4,743
---------- ---------- ----------
TOTAL ASSETS 60,040 21,780 81,820
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
Current Liabilities
Overdrafts and short-term borrowings 866 866
Trade accounts payable 12,850 12,850
Other accrued liabilities 9,764 7,062 16,826
Accrued personnel costs 2,851 2,851
---------- ---------- ----------
Total current liabilities 26,331 7,062 33,393
Long-term debt 169,958 169,958
---------- ---------- ----------
196,289 7,062 203,351
SHAREHOLDERS' DEFICIT
Common stock 25 25
Additional paid-in capital 127,718 127,718
Accumulated deficit (264,045) 14,718 (249,327)
Accumulated other comprehensive income 53 53
---------- ---------- ----------
Total shareholders' deficit (136,249) 14,718 (121,531)
---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT 60,040 21,780 81,820
========== ========== ==========
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet and
Statement of Operations.
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2001
(in thousands of Euros, except share data)
Pro forma
Historical Adjustments Pro forma
Revenues 39,077 (7,251) 31,826
Costs and expenses:
Direct cost of services 25,105 (1,944) 23,161
Network operations 7,861 7,861
General and administrative expenses 18,477 18,477
Sales and marketing expenses 10,186 10,186
Research and development 365 365
Impairment of assets and other
asset write-offs 37,110 37,110
Depreciation and amortization 20,156 (2,116) 18,040
---------- ---------- ----------
119,260 (4,060) 115,200
---------- ---------- ----------
Operating loss (80,183) (3,191) (83,374)
Other income and expenses:
Interest income 1,477 1,477
Interest expenses (25,728) (25,728)
Other income 123 123
Equity in losses of equity-method
investees (538) (538)
Foreign currency losses (6,721) (6,721)
---------- ---------- ----------
Loss before income tax (111,570) (3,191) (114,761)
Income tax expense (27,678) (27,678)
---------- ---------- ----------
Net loss (139,248) (3,191) (142,439)
========== ========== ==========
Basic and diluted loss per share (5.36) (5.48)
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet and
Statement of Operations.
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 2002
(in thousands of Euros, except share data)
Pro forma
Historical Adjustments Pro forma
Revenues 9,308 (1,947) 7,361
Costs and expenses:
Direct cost of services 4,533 (486) 4,047
Network operations 1,019 1,019
General and administrative expenses 5,479 5,479
Sales and marketing expenses 1,927 1,927
Research and development - -
Impairment of assets and other
asset write-offs - -
Depreciation and amortization 2,475 (529) 1,946
---------- ---------- ----------
15,433 (1,015) 14,418
---------- ---------- ----------
Operating loss (6,125) (932) (7,057)
Other income and expenses:
Interest income 103 103
Interest expenses (6,834) (6,834)
Other income - -
Equity in losses of equity-method
investees (135) (135)
Foreign currency losses (1,580) (1,580)
---------- ---------- ----------
Loss before income tax (14,571) (932) (15,503)
Income tax benefit (1) (1)
---------- ---------- ----------
Net loss (14,572) (932) (15,504)
========== ========== ==========
Basic and diluted loss per share (0.55) (0.59)
See accompanying Notes to Unaudited Pro Forma Consolidated Balance Sheet and
Statement of Operations.
CYBERNET INTERNET SERVICES INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AND STATEMENT OF
OPERATIONS
(1) Pro Forma Transaction.
On June 25, 2002, Cybernet Internet Dienstleistungen AG ("Cybernet AG"),
a wholly-owned subsidiary of the Company, entered into an asset
purchase and transfer agreement with Disko Leasing GmbH, pursuant to
which Cybernet AG sold all its assets, equipment, furniture and fixtures
located in its data centers in Hamburg, Frankfurt and Munich (the "Data
Centers") to Disko Leasing GmbH. Cybernet AG also cancelled certain
lease agreements for the Data Centers, terminated operating agreements
for the Data Centers, amended certain service agreements for the Data
Centers in Frankfurt and Munich and paid an arrangement fee to Telehouse
Deutschland GmbH under an agreement dated June 25, 2002.
(2) Pro Forma Adjustments.
The pro forma adjustments include the elimination of the revenues and
direct costs of revenues from the Data Centers, as well as the
amortization charges thereof. For the pro forma consolidated balance
sheet, the sale proceeds are accrued, and arrangement fee and related
expenses are provided for.
(3) Unusual Events.
The Company has incurred significant operating losses since inception,
and has not achieved and does not expect to achieve sufficient
revenues to support future operations without additional financing.
These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Since inception, the Company has
financed its operations primarily through public and private sales of
common stock and public debt, and short-term borrowings from banks.
These financings have funded the Company's operating losses, which total
approximately Euro 249,473,000 for the years from inception through
December 31, 2001. The Company's operations continue to generate
negative operating cash flows; in the year ended December 31, 2001 cash
used in operations totalled approximately Euro 24,259,000. Management
believes that planned cost savings and anticipated improvements in
operating results in 2002 will reduce the amount of cash used in
operations which, when combined with available unrestricted cash as of
December 31, 2001, and anticipated new financing sources, will permit
the Company to continue to operate. The Company is currently in the
process of identifying alternative financing sources, negotiating
changes to its debt structure and evaluating its strategic options.
However, there are no assurances that these plans can be accomplished
or that they will provide sufficient cash to fund the Company's
operations.
During the fourth quarter of fiscal 2001, the Company performed an
impairment assessment of goodwill and identifiable intangible assets
recorded in connection with its various previous acquisitions. The
assessment was performed primarily due to the continued
depressed value of the Company's stock price during fiscal 2001,
the losses that the Company has incurred since inception, the
Company's significant underperformance relative to projections and
the overall decline in industry growth rates, which indicated that
this trend might continue for an indefinite period. The Company
determined that the estimated future undiscounted cash flows were below
the carrying value of the goodwill and identifiable intangible assets
associated with certain previous acquisitions. As a result, the Company
recorded Euro 22,022,000 and Euro 6,395,000 for impairment charges
related to goodwill and other intangible assets, respectively, in the
year ended December 31, 2001 to reduce goodwill and identifiable
intangible assets to zero. The assumptions supporting the estimated
future undiscounted cash flows reflect management's best estimates.