SAN FRANCISCO (January 16, 2003) — Critical Path, Inc. (Nasdaq: CPTH), a global leader in digital communications software and services, today announced that it expects to report fourth quarter 2002 revenue between $21 million and $22 million, exceeding its previously announced guidance range of $19 million to $21 million. Cash operating expense results, excluding special charges and depreciation, is anticipated to be within the previously announced guidance range of $26 million to $27 million.
The Company also announced it has implemented a cost-reduction plan that targets reduced operating expenses, excluding special charges, amortization and depreciation, of approximately $22 million annually. The plan targets quarterly operating expenses, excluding special charges, amortization and depreciation, of approximately $21 million to $22 million by mid-year 2003 and includes the consolidation of some office locations and a global workforce reduction of approximately 175 positions, or approximately 30% of its workforce. The headcount reduction is partially offset by outsourcing approximately 80 positions to lower cost service providers. The Company anticipates an aggregate charge of approximately $7.5 million resulting from the cost reduction plan, inclusive of cash and non-cash expenses. The Company expects to incur the charge through the first half of 2003.
"We are very pleased with our fourth quarter results and we expect to continue to successfully execute in the market," commented William McGlashan, Jr., chairman and chief executive officer. "We are committed to achieving EBITDA breakeven by the end of the second quarter of 2003 and EBITDA profitability in the second half of 2003, and for that reason we are taking the Company to a lower cost structure that we believe will support our growth targets."
Management will provide more details on the quarterly and 2002 year-end results and the cost reduction plan on the financial results conference call scheduled for February 5, 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 7659668.
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
Forward-Looking Statements:
This press release may contain forward-looking statements, including the Company's statements regarding its finance, business, operations, results and projections including anticipated or projected revenue, expenses and operational and market growth. 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 revenue objectives, sales forecasts and earnings guidance, failure to negotiate favorable deals with strategic partners for technology and the distribution of our products and services, failure to reach profitability and further reduce cash operating expenses, our evolving business strategies and the emerging nature of the market for our products and services ,failure to achieve anticipated cost savings and efficiencies through outsourced service providers, litigation and other distractions associated with the execution of reductions in force, the effects of reductions in force on our remaining workforce and our ability to service customer and meet strategic goals, lingering doubts related to the SEC investigation of former executive officers and directors, 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, general economic conditions in markets in which the Company does business, volatility in the market for stock and risks associated with potential de-listing actions by the Nasdaq National Market on which we are listed, risks and doubts associated with the operation and viability of the Company should its stock be de-listed, risks associated with litigation of various forms, our international operations, foreign currency fluctuations, unplanned system interruptions and capacity constraints, software defects. 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, 2001 and the Quarterly Reports on Form 10-Q the for quarters ended March 31, June 30 and September 30, 2002, all 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. All other trademarks are the property of their holders.
# # #
Contact Information:
For Reporters:
Horn Group
Katey Stewart
415.905.4019
kstewart@horngroup.com For Financial Analysts:
Critical Path, Inc.
Mike Bishop
415.541.2619
mike.bishop@criticalpath.net