Exhibit 99.1
OneSource Announces Martin Kahn Appointed Interim CEO; Special
Committee Concludes Review and Company Reports Fourth-Quarter and 2003
Year-End Results
CONCORD, Mass.--(BUSINESS WIRE)--Feb. 5, 2004--OneSource
Information Services, Inc. (NASDAQ: ONES), a leading provider of
business information products and services, today announced that it
has accepted the resignation of Dan Schimmel as president and chief
executive officer and director. Current chairman Martin Kahn has been
named executive chairman and appointed CEO on an interim basis. He
will serve as OneSource's CEO until a permanent successor is
appointed. A national search for a CEO will begin today. The Company
also announced that the special committee has completed its previously
announced review of strategic options and reported financial results
for the fourth quarter and full year ended December 31, 2003.
Special Committee Review and Management Change
On October 3, 2003, OneSource announced that it had received an
unsolicited letter from ValueAct Capital expressing its interest in
acquiring OneSource's business. ValueAct currently holds approximately
a 32% ownership interest in OneSource. OneSource's board of directors
subsequently formed a special committee of outside independent
directors to evaluate OneSource's strategic options to maximize
shareholder value. The special committee engaged Morgan Stanley & Co.
and Portico Capital Securities LLC to assist it in this review. On
January 13, 2004, ValueAct amended its Schedule 13D concerning its
interest in acquiring OneSource's business.
As part of this evaluation, discussions were held with potential
acquirers, and the future operating plans and prospects of OneSource
were reviewed. A number of organizations expressed interest in
OneSource, but none of these discussions led to a final offer to
acquire the Company. The special committee has therefore concluded its
active evaluation of strategic options. OneSource remains open to
strategic business opportunities that may arise from time to time to
enhance shareholder value.
In connection with the review of strategic options, both the board
and Mr. Schimmel determined that new executive leadership would be in
the best interest of the Company and its shareholders. As a result,
OneSource has accepted the resignation of Dan Schimmel as president
and chief executive officer and director, effective immediately.
Current chairman Martin Kahn was appointed CEO on an interim basis
until OneSource identifies a permanent CEO. Mr. Kahn brings to the CEO
position more than 25 years of executive management experience and has
served as the non-executive chairman of OneSource's board since 1993.
Mr. Kahn is Managing Director of Cadence Information Associates L.L.C.
and served as Chairman of Ovid Technologies. In addition, Mr. Kahn
previously held executive positions in both electronic and print
publishing with BRS Information Services, McGraw-Hill and CBS. Mr.
Kahn holds an M.B.A. from the Harvard Business School.
"The board wishes Dan great future success and thanks him for his
many contributions and accomplishments during his tenure. Dan has been
CEO of OneSource for twelve years. During those years, OneSource grew
from a specialized provider of financial information on CD-ROMs to a
supplier of general business information to many of the world's
leading corporations and professional service firms," stated Kahn. "I
look forward to working with OneSource's management team in executing
the Company's strategy. My efforts will be directed at the critical
tasks before us: to accelerate revenue growth, to make OneSource the
most innovative and valuable business information resource for our
customers, and to deliver consistent, predictable and improving
financial results."
Fourth Quarter Financial Performance
Q4 Q3 Q4
(In millions, except per share data and 2003 2003 2002
percentages)
- ----------------------------------------------------------------------
Annualized Contract Value (ACV) $52.7 $53.0 $56.1
- ----------------------------------------------------------------------
Total Revenues $14.5 $13.9 $14.6
- ----------------------------------------------------------------------
Gross Margin 69.4% 68.0% 67.8%
- ----------------------------------------------------------------------
Net Income $0.4(1) $0.7 $1.1
- ----------------------------------------------------------------------
Net Income Per Diluted Share $0.04(1) $0.06 $0.09
- ----------------------------------------------------------------------
(1) Includes $853,000 in charges associated with the work of the
special committee.
Comments on the Fourth Quarter
"OneSource met its year-end ACV, revenue and earnings guidance,
while cash flow was less than we expected due to the timing of certain
payments and changes in operating assets and liabilities," said Roy
Landon, OneSource's Chief Financial Officer. "On the operational
front, we made progress in executing on our solution strategy,
including launching our Catalyst/Account Intelligence Module for
Microsoft Office 2003 edition."
"We attracted 52 new customers during the quarter, representing
$1.2 million in ACV," continued Landon. "This was our highest total
for the year and a modest increase from the third quarter." Global
5000 wins included Duke Energy, Hitachi, Holland and Knight, Munich
Reinsurance and Progress Software. Professional services and financial
services were the strongest sectors for the Company in the quarter,
while the legal and software sectors were weaker.
"We were successful in upgrading existing customers during the
quarter," Landon added. "Our continued focus on account management and
customer service helped us generate $2.3 million in upgrade business
and improve our dollar-based renewal rate among large customers. Among
the companies that expanded their relationships with OneSource were
American Express, Marsh & McLennan and R.R. Donnelley & Sons. We also
improved our dollar-based renewal rate for the full year 2003 to 78%
from 76% for the full year 2002."
12-Month Financial Performance
Ended Ended
(In millions, except per share data and December 31, December 31,
percentages) 2003 2002
- ----------------------------------------------------------------------
Total Revenues $57.3 $57.8
- ----------------------------------------------------------------------
Gross Margin 68.2% 68.7%
- ----------------------------------------------------------------------
Net Income $2.5(2) $4.4
- ----------------------------------------------------------------------
Net Income Per Diluted Share $0.21(2) $0.35
- ----------------------------------------------------------------------
Cash Flows from Operations $4.9(2) $12.7
- ----------------------------------------------------------------------
(2) Includes $853,000 in charges associated with the work of the
special committee.
In 2003, OneSource generated $4.9 million in cash from operations
and ended the year with $22.8 million in cash and cash equivalents.
OneSource did not purchase any shares during the fourth quarter and
$5.2 million remains in the Company's fourth stock buyback program.
2003 in Review
"In 2003, OneSource continued to execute on its multi-year
strategy designed to enhance our technology, improve our products, and
better serve our customers," said Kahn. "Our long-term goal, stated
simply, is to drive growth by making OneSource the premier provider of
business intelligence for sales and marketing professionals. As a
result of our progress toward this goal in 2003, we are providing
OneSource customers with higher-value information content, enabling
them to access and use our content in new ways, and giving them better
professional services and account management support than ever before.
We set out to accomplish all of this while continuing to profitably
run the business. We were successful in doing this in 2003."
In 2003, OneSource:
-- Introduced Functionally Specific Products - OneSource launched
its Catalyst(SM) product family of plug-in modules,
supplementing the Company's Web-based Business Browser(SM)
product offerings and its highly customizable Synergy(SM)
Solutions. Tailored initially for Siebel eBusiness and
Microsoft Office applications, Catalyst modules are designed
to boost the productivity of corporate professionals working
in customer-centric functions. OneSource also delivered an
enhanced offering for UK financial and professional services
customers.
-- Strengthened Its Customer Relationships - The OneSource
professional services team began providing enterprise-scale
customers with the consulting and systems integration support
they need to envision and deploy OneSource's higher-end
embedded solutions. At the same time, its account management
team launched a relationship-building initiative for Business
Browser product customers to ensure they maximize the value of
their OneSource solutions. Together, these initiatives
produced improvements in dollar-based customer renewal rates
through 2003.
-- Increased Its Solution Selling Activity - OneSource organized
its sales force in 2003 by vertical market and recruited
sales people with significant experience in the professional
services, financial services and technology sectors.
Approaching prospects from a solution-selling perspective, the
sales organization is focusing on closing higher-value
contracts.
-- Expanded the Content in the OneSource(R) Enhanced Information
Warehouse(TM) repository - OneSource continued to add to the
breadth, depth, and quality of its content. OneSource's
expansion of content in 2003 included the addition of
Freedonia Focus US Industry Reports; the addition of
Euromonitor Market Research covering the Asia Pacific Region;
the creation of more than 18,000 IT profiles with data
licensed from Applied Computer Research; and the broadening of
the OneSource Business Browser product line with more than
124,000 executive contacts from Wendover Corporation.
-- Invested in Value-Added Content Enhancements - OneSource added
XML and XBRL functionality to its Enhanced Information
Warehouse repository in 2003, enriching the user experience by
enabling its high-end Synergy Solutions customers to extract
and integrate financial data on nearly 800,000 companies.
OneSource also addressed customers' desire for more current
corporate family and executive data by investing in the
technology and the editorial capabilities required to support
more timely updating of this information.
-- Developed a New Data Repository Technology - OneSource marked
a product development milestone by upgrading the
infrastructure of its Enhanced Information Warehouse
repository. Leveraging an Oracle database as the platform,
this infrastructure now enables customers to perform searches
that are more sophisticated and yield higher-quality business
intelligence.
Business & Financial Outlook
"Looking ahead to 2004, we expect to make continued progress on
our multi-year product and service transformation," said Kahn. "We
will launch our next-generation AppLink software development kit as
well as other solutions tailored specifically for corporate sales and
marketing professionals."
OneSource undertakes no obligation to update the guidance below,
which is subject to change. Please note that OneSource provides
earnings guidance in accordance with Generally Accepted Accounting
Principles (GAAP). As a result, the Company's earnings guidance is
based upon net income and net income per diluted share.
OneSource's financial expectations for the first quarter of 2004,
which are subject to change, are as follows:
-- ACV in the range of $50 million to $55 million.
-- Revenues in the range of $13.5 million to $14.5 million.
-- Net income per diluted share in the range of $0.00 to $0.03.
This figure includes anticipated expenses of between $400,000
and $600,000 related to the special committee's review,
severance, and related expenses.
OneSource's financial expectations for the full year 2004, which
are subject to change, are as follows:
-- ACV in the range of $52 million to $58 million.
-- Revenues in the range of $55 million to $59 million.
-- Net income per diluted share in the range of $0.17 to $0.30.
This figure includes anticipated expenses of between $400,000
and $600,000 related to the special committee's review,
severance, and related expenses.
-- Cash flow from operations in the range of $5 million to $9
million.
Fourth-Quarter Conference Call Reminder
In conjunction with this news release, OneSource plans to Webcast
its quarterly conference call at 11:00 a.m. ET today, February 5,
2004. On the call, Martin Kahn and Roy Landon will discuss the
Company's financial results and expectations, and the other matters
discussed in this release. Investors interested in listening to the
Webcast should log onto www.onesource.com at least 15 minutes prior to
the event's broadcast. Select "Investors" to access the Webcast.
About OneSource Information Services, Inc.
OneSource, a recognized leader in business information solutions,
delivers unparalleled company, executive, and industry intelligence
that make business professionals more effective and productive in
completing their critical daily tasks. OneSource products and services
support a company's vital business processes including serving their
customers, finding and leveraging new opportunities, and managing
suppliers and partners.
OneSource combines and organizes content from over 2,500
information sources supplied by more than 30 world-class content
providers, creating an unequalled information resource encompassing
corporate families, industries, executives, financials, news, analyst
reports, and trade and business press articles. Using its Global
Business Taxonomy(TM) system, OneSource links this in-depth
information on over 1.7 million companies worldwide resulting in the
most extensive company-linked repository of business information in
the world.
Users of OneSource products work faster, smarter, and more
productively, whether leveraging OneSource business information
through the Web-based OneSource Business Browser product line or
through enterprise applications or portals integrated seamlessly via
the OneSource AppLink(SM) software development kit (SDK). To help
customers link the OneSource Enhanced Information Warehouse repository
into their preferred enterprise applications, OneSource provides
consulting and integration services.
OneSource is headquartered in Concord, MA, with offices located in
North America, Europe, and the Pacific Rim. Product information is
available at www.onesource.com. Customers include Bank One, Chubb,
Citigroup, Cisco, Deloitte & Touche, HP, i2 Technologies, Orange,
Royal & SunAlliance, SAS Institute, and Sun Microsystems.
OneSource, Business Browser, Catalyst, Global Business Taxonomy,
AppLink, Synergy, Enhanced Information Warehouse and/or other
OneSource product and service names referenced herein are either
trademarks or service marks or registered trademarks or service marks
of OneSource Information Services, Inc. or its subsidiaries in the
United States and/or other countries. All other product and service
names mentioned herein are trademarks or service marks of their
respective owners.
Safe Harbor Statement
This news release contains certain forward-looking statements that
are based on the current beliefs and expectations of OneSource's
management, as well as assumptions made by, and information currently
available to, OneSource's management. Such statements include, but are
not limited to, those regarding management changes; OneSource's
expectations for revenues, net income per diluted share, and ACV for
the first quarter of 2004; OneSource's expectations for revenues, net
income per diluted share, cash flow from operations, and ACV for the
full year of 2004; OneSource's competitive position; OneSource's
expectation to make continued progress in its multi-year product and
service transformation; OneSource's plan to launch its next-generation
AppLink SDK and other solutions tailored specifically for corporate
sales and marketing professionals; the functionality and effectiveness
of OneSource products and services; and OneSource's ability to enhance
its base of Global 5000 customers. Because such statements involve
risks and uncertainties, actual actions and strategies and the timing
and expected results thereof may differ materially from those
expressed or implied by such forward-looking statements, and
OneSource's future results, performance, or achievements could differ
materially from those expressed in, or implied by, any such
forward-looking statements. Risks, uncertainties, assumptions, and
factors that could affect OneSource's financial results are described
in OneSource's recent filings with the United States Securities and
Exchange Commission including its most recent quarterly report on Form
10-Q.
OneSource Information Services, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data, and unaudited)
Three months ended Year ended
December 31, December 31,
2003 2002 2003 2002
Revenues $14,499 $14,596 $57,284 $57,750
Cost of revenues 4,437 4,696 18,228 18,064
Gross profit 10,062 9,900 39,056 39,686
Operating expenses:
Selling and marketing 4,208 4,170 17,135 16,467
Platform and product
development 2,570 2,367 10,574 10,040
General and administrative(1) 2,574 1,613 7,308 6,156
Amortization of acquired
intangible assets 82 82 327 427
Total operating expenses 9,434 8,232 35,344 33,090
Income from operations 628 1,668 3,712 6,596
Interest income, net 62 138 363 437
Income before provision
for income taxes 690 1,806 4,075 7,033
Provision for income taxes 259 668 1,528 2,602
Net income $431 $1,138 $2,547 $4,431
Net income per share:
Basic $0.04 $0.10 $0.22 $0.37
Diluted $0.04 $0.09 $0.21 $0.35
Weighted average common shares
outstanding:
Basic 11,413 11,658 11,489 11,859
Diluted 11,835 12,180 11,884 12,512
(1) Results for the fourth quarter and full year 2003 include $853,000
in charges associated with the work of the special committee.
OneSource Information Services, Inc.
Condensed Consolidated Balance Sheets
(In thousands and unaudited)
December 31,
2003 2002
ASSETS
Cash and cash equivalents $ 22,794 $ 23,096
Accounts receivable, net 16,705 16,499
Deferred subscription costs and other current
assets 3,891 5,339
Total current assets 43,390 44,934
Property and equipment, net 4,612 3,629
Goodwill and acquired intangible assets, net 5,335 5,662
Deferred income taxes 1,480 -
Other assets, net 5,548 4,573
Total assets $ 60,365 $ 58,798
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 948 $ -
Accounts payable and accrued expenses 9,092 11,032
Deferred revenues 29,520 30,012
Deferred income taxes 692 245
Total current liabilities 40,252 41,289
Long-term debt 1,402 -
Total liabilities 41,654 41,289
Stockholders' equity:
Common stock 133 133
Additional paid-in capital 36,720 35,128
Accumulated deficit (6,801) (5,856)
Accumulated other comprehensive income 941 437
Treasury stock, at cost (12,282) (12,333)
Total stockholders' equity 18,711 17,509
Total liabilities and stockholders' equity $ 60,365 $ 58,798
OneSource Information Services, Inc.
Condensed Consolidated Statements Of Cash Flows
(In thousands and unaudited)
Year ended
December 31,
2003 2002
Cash flows relating to operating activities:
Net income $ 2,547 $ 4,431
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,061 3,152
Amortization of acquired intangible assets 327 427
Deferred income taxes (245) ----
Stock-based employee compensation expense 51 77
Tax benefits of stock options 739 1,328
Loss on disposal of fixed assets 14 7
Changes in operating assets and liabilities (1,634) 3,257
Net cash provided by operating activities 4,860 12,679
Cash flows relating to investing activities:
Proceeds from restricted time deposits 603 ----
Purchases of property and equipment (3,246) (1,872)
Capitalization of software development costs (2,480) (1,872)
Net cash used by investing activities (5,123) (3,744)
Cash flows relating to financing activities:
Issuance of stock pursuant to stock options and
employee stock purchase plan 3,220 1,075
Repurchase of common stock (6,647) (5,572)
Proceeds from equipment line advance 2,843 ----
Repayment of equipment line (493) ----
Net cash used by financing activities (1,077) (4,497)
Effect of exchange rate changes on cash and cash
equivalents 1,038 496
Increase (decrease) in cash and cash equivalents (302) 4,934
Cash and cash equivalents, beginning of year 23,096 18,162
Cash and cash equivalents, end of period $22,794 $23,096
CONTACT: OneSource Information Services, Inc.
Investor Contact: Roy Landon, 978-318-4377
Roy_Landon@onesource.com
or
Sharon Merrill Associates, Inc.
Media Contact: Jason Fredette, 617-542-5300
jfredette@InvestorRelations.com