1
EXHIBIT 99.1
[FUTURELINK LOGO]
NEWS RELEASE
FOR IMMEDIATE RELEASE
CONTACTS:
The Financial Relations Board/ BSMG WORLDWIDE FutureLink - Troy Cleland
General Information: Kristen Kopay (310) 442-0599 xtn 222 Investor Relations
Investors: Lisa Mueller (310) 442-0599 xtn 236 (888) 464-2768
Media: Carl Dameron (310) 442-0599 xtn 251 Invrel@futurelink.net
FUTURELINK CORP. REPORTS FOURTH QUARTER
AND FISCAL 2000 RESULTS
Company Re-emphasizes Core Business in 2001
- - Q4 REVENUE OF $34.6 MILLION; 2000 REVENUE OF $125.9 MILLION
- - GOODWILL WRITE-DOWN OF $170 MILLION
- - Q4 NET LOSS $205.1 MILLION, OR $2.92 PER SHARE; 2000 NET LOSS $286.5
MILLION OR $4.48 PER SHARE
- - INDEPENDENT AUDITORS TO MODIFY REPORT FOR GOING CONCERN UNCERTAINTY
- - NEW CEO JOINS COMPANY IN DECEMBER 2000
LAKE FOREST, CALIF., MARCH 30, 2001 -- FUTURELINK CORP. (NASDAQ NM: FTRL), a
leading provider of integrated solutions, hosted application services and one of
the first application infrastructure companies to provide software as a service,
today reported its financial and operating results for the fourth quarter and
full year ended December 31, 2000.
Revenue for the fourth quarter ended December 31, 2000, was $34.6 million,
compared with $8.6 million for the fourth quarter of 1999 and $35.1million for
the third quarter of 2000. Net loss for the quarter was $205.1 million or $2.92
per share, compared with a loss of $13.8 million, or $0.38 per share, in the
same period of 1999, and with a third quarter 2000 net loss of $29.7 million, or
$0.43 per share.
Howard Taylor, who joined FutureLink as President and CEO in December 2000,
commented, "We have redirected our strategic course for 2001 and are now
concentrating on the core strengths of our business, which include information
technology consulting, server-based computing, information security, systems
integration and application delivery. We continue to offer ASP services which,
in 2000, represented 4% of revenue."
"New management has taken several steps to realign our core business in light of
continued growth opportunities in information technology and the slow rate of
growth in the ASP marketplace. These steps include investing in our core
business of IT professional services and reducing ASP and other staff costs to
improve our margins and build a stable foundation for FutureLink. We believe
these actions will positively impact our 2001 results. However, our work in this
area is not done. Further changes to this business are inevitable in order to
drive us to profitability," said Taylor.
-more-
2
FutureLink Reports Q4 and Full Year 2000 Results
Page 2 of 6
FutureLink reported that its present cash position and liquidity will not carry
it through 2001. Accordingly, the company's independent auditors will modify
their report to describe the going concern uncertainty. To address its liquidity
position, the company is evaluating additional measures to reduce the level of
cash used in its operations and to raise additional capital. These may include
eliminating certain unprofitable lines of business and selling one or more
business lines/divisions. FutureLink cannot provide assurances that it will be
successful in reducing its operating losses or in obtaining additional capital.
FOURTH QUARTER RESULTS
For the fourth quarter ended December 31, 2000, the company reported total
revenue of $34.6 million, compared with total revenue of $8.6 million for the
same period last year. Total fourth quarter revenue includes $25.2 million of
revenue related to the resale of hardware and software to FutureLink customers,
compared with $5.2 million of such revenue for the same period of 1999. Total
services revenue for the quarter, including ASP revenue, was $9.4 million,
compared with services revenue of $3.4 million for the fourth quarter of 1999.
Services revenue for the fourth quarter of 2000 includes a total of $1.8 million
of ASP revenue.
Cost of goods sold for the fourth quarter of 2000, which reflects costs of
hardware and software purchased for resale to customers, was $20.1 million, or
79% of the revenue generated from such sales, compared with cost of goods sold
of $5.7 million, or 110% of revenue, for the same period of 1999. Cost of
service delivery for the fourth quarter of 2000 was $9.8 million, or 104% of
service delivery revenue, compared with service delivery costs of $5.1 million,
or 150% of service delivery revenue, for the same period of 1999.
Selling, general and administrative expenses for the fourth quarter of 2000
totaled $20.6 million, or 60% of total revenue, compared with $6.0 million or
70% of revenue for the fourth quarter of 1999.
As a result of changing market conditions and other factors, the company
recently evaluated the recoverability of the goodwill recorded on its books
resulting from its seven acquisitions in 1999 and 2000. Under the requirements
of SFAS No. 121, the company determined that the goodwill was impaired and,
accordingly, recorded a charge to reduce goodwill by $170 million in the fourth
quarter.
For the quarter ended December 31, 2000, FutureLink reported EBITDA of negative
$15.4 million and a net loss of $205.1 million, or a negative $2.92 per share,
compared to EBITDA of negative $8.2 million and a net loss of $13.8 million, or
a negative $0.38 per share, for the same period last year. Included in the net
loss for the fourth quarter ended December 31, 2000 were non-cash charges of
$18.9 million for depreciation and amortization and $170 million related to a
write-down of goodwill. Loss per share for the fourth quarter, excluding
goodwill amortization and the write-down of goodwill, was $0.28.
RESULTS FOR FISCAL 2000
For the year ended December 31, 2000, the company reported total revenue of
$125.9 million compared with total revenue of $13.6 million for last year.
Revenue for 2000 includes $91.2 million of revenue related to the resale of
hardware and software to FutureLink customers, compared with $6.7 million of
such revenue for 1999. Total services revenue for 2000, including ASP revenue,
was $34.7 million, compared with services revenue of $6.9 million for 1999.
Services revenue for 2000 includes a total of $5.4 million of ASP revenue.
-more-
3
FutureLink Reports Q4 and Full Year 2000 Results
Page 3 of 6
Cost of goods sold for 2000 was $75.1 million, or 82% of the revenue generated
from the company's sales of hardware and software, compared with cost of goods
sold of $7.0 million, or 104% of revenue, for 1999. Cost of service delivery for
2000 was $27.3 million, or 79% of service delivery revenue, compared with
service delivery costs of $10.5 million, or 154% of service delivery revenue,
for 1999.
Selling, general and administrative expenses for 2000 totaled $72.0 million, or
57% of total revenue, compared with $12.6 million or 93% of revenue for 1999.
For the year ended December 31, 2000, FutureLink reported EBITDA of negative
$45.8 million and a net loss of $286.5 million, or negative $4.48 per share,
compared to EBITDA of negative $16.6 million and a net loss of $35.7 million, or
negative $2.50 per share, for 1999. Included in the net loss for the year ended
December 31, 2000 were non-cash charges of $66.3 million for depreciation and
amortization and $170 million related to the fourth quarter write-down of
goodwill. Loss per share for the year, excluding goodwill amortization and the
write-down of goodwill, was $0.93.
CASH MANAGEMENT
In November 2000, the company entered into two related receivables-based credit
facilities with a financial institution, for up to $25 million. The company's
level of tangible net worth has been below the amount required under these
facilities. The company has obtained waivers from the lender relating to such
noncompliance until the next monthly measurement date of April 30, 2001. In
order to comply with the covenant as of the next monthly measurement date of
April 30, 2001, FutureLink will need to raise the necessary capital, obtain
additional waivers from the lender or reach an agreement with the lender to
modify the covenant to an achievable level. The company cannot provide
assurances that it can achieve any of these measures.
Because the company's aggregate cash balances are below $10 million, pursuant to
the terms of the credit facilities, all collections on the company's receivables
are being deposited directly into the lender's lock box. These collections are
then applied to reduce the company's outstanding borrowings on the facilities.
The company's capacity to borrow fluctuates daily based on that day's level of
eligible accounts receivable and the level of outstanding borrowings.
NASDAQ NOTICE
The company has received a notice from Nasdaq that its common stock has not
maintained a minimum bid price of $1.00 over a period of 30 consecutive trading
days. As a result, Nasdaq has provided the company with 90 calendar days, until
June 25, 2001, to regain compliance with this requirement. If the company is
unable to demonstrate compliance with the requirement on or before June 25,
2001, Nasdaq will provide the company with written notification that its
securities will be delisted, a determination which may be appealed by the
company at that time.
OUR BUSINESS
"Despite challenges facing the company, we currently have a strong revenue base
and continue to target EBITDA breakeven by the end of the fourth quarter of
2001," said Taylor.
-more-
4
FutureLink Reports Q4 and Full Year 2000 Results
Page 4 of 6
CONFERENCE CALL INFORMATION
FutureLink Corp. will hold its quarterly conference call on Friday, March 30,
2001 at 11:00 a.m. EST. The call will be accessible live by dialing 800-982-3654
or via webcast at http://www.futurelink.net/investorinfo/. The webcast will be
available on FutureLink's website for 60 days. A replay of the call will be
available for 48 hours by dialing 888-266-2086 or 703-925-2435 and entering
access code 5109999.
ABOUT FUTURELINK
FutureLink Corp. (Nasdaq NM: FTRL) is a leading provider of integrated
solutions, hosted application services and one of the first application
infrastructure companies to provide software as a service. One of the largest
and most experienced application service providers (ASPs) of hosted server-based
solutions worldwide, the company offers a full range of professional services
that meet business-critical application and infrastructure needs. With
FutureLink's offerings, customers can precisely manage IT costs and avoid
expensive and complicated maintenance and support concerns.
FutureLink delivers its products and services in partnership with leading
technology companies worldwide including Microsoft, Citrix Systems, Inc.,
Compaq, EMC Corporation, Cisco Systems, Great Plains, Onyx and others. A
founding member of the ASP Industry Consortium, the company markets its
offerings through a network of channel partners throughout the United States,
Canada, and the United Kingdom. For more information on the company and its
solutions, contact FutureLink toll-free at (877) 216-6001; e-mail:
sales@futurelink.net or visit the FutureLink website at www.futurelink.net.
FORWARD LOOKING STATEMENTS
Except for historical information contained herein, this release contains
information about future expectations, plans and prospects that may constitute
forward-looking statements for purposes of the safe harbor provisions under the
Private Securities Litigation Reform Act of 1995. The statements made by our
CEO, Howard Taylor, are forward-looking statements within the meaning of such
Act. All of these forward-looking statements are based on estimates and
assumptions made by the company's management, which although believed to be
reasonable, are inherently uncertain. No assurance can be given that any of such
estimates or statements will be realized and actual results may differ
materially from those contemplated by such forward-looking statements. Factors
that may cause such differences include: (i) the inability of the company to
obtain new financing of debt or equity in an amount sufficient to fund its
ongoing operations; (ii) the inability of the company to modify, restructure or
replace its senior debt facility in such a manner for it to continue as a going
concern; (iii) a material default in one or more of the company's credit
agreements which is not waived or rectified in a manner which would allow the
company to continue as a going concern; (iv) the inability to successfully
restructure the company's operations to reduce operating losses; and (v) changes
in general economic conditions in the markets in which we may compete. In
addition to the items specifically discussed above, the company's business and
results of operations are subject to the risks and uncertainties described in
registrations statements and periodic reports filed from time to time by the
company with the Securities and Exchange Commission.
TABLES TO FOLLOW
-more-
5
FutureLink Reports Q4 and Full Year 2000 Results
Page 5 of 6
FUTURELINK CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
UNAUDITED
FOR THE THREE MONTHS ENDED FOR THE 12 MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
REVENUE $ 34,574 $ 8,563 $ 125,938 $ 13,600
------------ ------------ ------------ ------------
EXPENSES:
Cost of hardware and software 20,061 5,680 75,070 7,013
Cost of service delivery 9,783 5,067 27,329 10,527
Selling, general and administration 20,568 5,984 71,996 12,611
Depreciation and other amortization 3,156 1,187 8,549 1,709
Goodwill amortization 15,753 3,560 57,824 4,981
Write-off of Goodwill 170,000 -- 170,000 --
------------ ------------ ------------ ------------
239,321 21,478 410,768 36,841
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (204,747) (12,915) (284,830) (23,241)
Interest expense, net 306 503 1,662 11,658
------------ ------------ ------------ ------------
LOSS BEFORE INCOME TAXES AND EXTRAORDINARY
ITEM (205,053) (13,418) (286,492) (34,899)
Income tax expense (1) 357 26 --
------------ ------------ ------------ ------------
LOSS BEFORE EXTRAORDINARY ITEM (205,052) (13,775) (286,518) (34,899)
Extraordinary item -- -- -- (845)
------------ ------------ ------------ ------------
NET LOSS (205,052) (13,775) (286,518) (35,744)
============ ============ ============ ============
Net loss before Preferred Stock dividends (205,052) (13,775) (286,518) (35,744)
Dividends for Series A Preferred Stock (283) -- (720) --
------------ ------------ ------------ ------------
Net loss applicable to common stock (205,335) (13,775) (287,238) (35,744)
============ ============ ============ ============
NET LOSS PER SHARE-BASIC AND DILUTED $ (2.92) $ (0.38) $ (4.48) $ (2.50)
============ ============ ============ ============
NET LOSS PER SHARE-BASIC AND DILUTED, EXCLUDING
GOODWILL AMORTIZATION, EXTRAORDINARY ITEM
AND WRITE-OFF OF GOODWILL $ (0.28) $ (0.28) $ (0.93) $ (0.28)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES-BASIC AND DILUTED(1) 70,304,754 36,529,967 64,128,022 14,279,647
============ ============ ============ ============
EBITDA LOSS(2) $ (15,389) $ (8,168) $ (45,774) $ (16,551)
============ ============ ============ ============
(1) Reflects the Company's June 1, 1999 5 for 1 reverse stock split of its
common stock.
(2) Defined as loss before extraordinary item, interest, taxes, depreciation,
amortization, non cash compensation and write-off of goodwill.
-more-
6
FutureLink Reports Q4 and Full Year 2000 Results
Page 6 of 6
FUTURELINK CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
UNAUDITED
DECEMBER 31, DECEMBER 31,
2000 1999
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 14,158 $ 19,185
Restricted cash 660 3,099
Accounts receivable, net 25,076 14,284
Inventory 3,101 4,964
Prepaid expenses and other current assets 1,545 536
-------- --------
Total current assets 44,540 42,068
Property and equipment, net 34,100 10,972
Goodwill and other intangibles, net 68,382 186,866
Deferred offering and acquisition costs -- 543
Other assets 1,682 229
-------- --------
Total assets $148,704 $240,678
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit $ 10,507 $ 1,657
Accounts payable and accrued liabilities 33,049 15,811
Settlement payable -- 5,000
Current portion of long-term debt 8,116 8,554
Deferred revenue 1,504 1,330
-------- --------
Total current liabilities 53,176 32,352
Long term debt, net of current portion 14,237 4,116
Convertible debentures, net -- 874
Deferred taxes 588 588
-------- --------
Total liabilities 68,001 37,930
Stockholders' equity: 80,703 202,748
-------- --------
Total liabilities and stockholders' equity $148,704 $240,678
======== ========
# # #