SAN FRANCISCO (February 5, 2003) — Critical Path, Inc. (Nasdaq: CPTH), a global leader in digital communications software and services, today announced
financial results for the fourth quarter and fiscal year ended December 31,
2002.
Total net revenues for the quarter increased 14% to $21.8 million from the $19.2 million reported in the third quarter. Cash operating expenses, excluding
special charges, depreciation and amortization, decreased 5% to $26.0 million
from the $27.4 million reported in the third quarter.
Earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding special charges, amounted to a loss of $4.2 million for the quarter, an improvement
of $4.0 million compared to the EBITDA loss, excluding special charges, of
$8.2 million for the third quarter of 2002.
Based on Generally Accepted Accounting Principals (GAAP), net loss attributable to common shares for the fourth quarter was $34.2 million, or $0.43 per share,
inclusive of a $5.3 million charge for revaluation of a derivative instrument
embedded in the preferred stock, compared to a net loss of $29.6 million,
or $0.38 per share for the third quarter of 2002.
"We're very pleased with our positive Q4 results and the progress we've made," commented William McGlashan, Jr., chairman and chief executive officer. "We
believe we're starting 2003 on a solid foundation to build a profitable business
this year."
Total net revenues for fiscal year 2002 were $87.1 million, compared with overall net revenues of $104.2 million and core revenues of $82.2 million in 2001,
which represents a 6% increase in the ongoing business of Critical Path.
Cash operating expenses, excluding special charges, amortization and depreciation,
were $108.8 million, compared with $164.4 million in 2001.
EBITDA, excluding special charges, for the year significantly improved to a loss of $21.7 million, compared with a loss of $60.2 million for the prior
year.
GAAP net loss attributable to common shares for the year was $131.8 million, or $1.69 per share, compared with a net loss attributable to common shares of
$79.8 million, or $1.08 per share, for 2001, which includes a extraordinary
gain on the retirement of the Company's convertible subordinated notes of
$179.3 million.
CFO Transition
The Company also announced today the appointment of Paul Bartlett as executive vice president and chief financial officer, effective February 13, 2003.
He succeeds Laureen DeBuono, who has chosen to step down as CFO, but will
aid in the transition through March.
"I would like to thank Laureen for her extraordinary work during the Company's turnaround. She played an integral role in restoring Critical Path to financial health,
restructuring the business, and building a solid finance team. With the restructuring
of the Company complete, Laureen has chosen to move on to assist other companies
in need of financial restructuring," McGlashan said. "I am pleased to announce
Paul's appointment as CFO. He is a seasoned business executive with public
company experience and a track record of managing companies during periods
of tremendous growth."
Bartlett, 42, came to Critical Path with a background in operations and financial management. He was formerly a director and president of Hall Kinion and Associates,
a staffing, services and recruiting company, where, under his leadership,
revenue grew from $30 million annually as a private company to $200 million
annually as a public company. As a director, then COO, of Quintus Corporation,
he led the company's restructuring and later sale. Earlier, he was a general
partner at Sprout Venture Capital Group, where he invested in late stage
technology companies. Prior to that, Bartlett spent five years in several
investment banks in their corporate finance departments. He has an economics
undergraduate degree from Princeton University and an MBA from Stanford University.
Guidance
The Company expects that overall market conditions will remain challenging, limiting its ability to forecast financial results. For the first quarter of 2003,
Critical Path expects to report substantially flat revenues in the range
of $20 million to $22 million. Resulting from the cost-reduction action taken
early in the first quarter, quarterly cash operating expenses are expected
to decrease to approximately $25 million to $26 million. The Company expects
to reach the EBITDA break-even point by the end of the second quarter of
2003 through continued decline in expenses, in the range of 8% to 12%.
Conference Call
Critical Path will hold a conference call today to discuss the fourth quarter and year-end results. 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 for the distribution and resale of our products and services,
failure to reach profitability in the short term and further reduce cash
operating expenses, challenges associated with 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 reductions in
force and outsourcing of operations and service providers, litigation and
other distractions associated with the execution of world wide reductions
in force, the effects of reductions in force on our remaining workforce and
our ability to service customers and meet strategic goals in timely manner,
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, difficulties in general economic conditions
and in markets in which the Company does business, volatility in the market
for stock and risks associated with delisting actions by the Nasdaq National
Market on which we are listed, risks and doubts associated with both the
operation and viability of the Company and the liquidity of and market for
its stock should its common stock be delisted, risks associated with litigation
of various forms, challenges related to our international operations, foreign
currency fluctuations, unplanned system interruptions, 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.
Look at the Numbers — (.pdf 18k)
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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