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EXHIBIT 99
Contact:
Melissa Viglielmo
Vice President
Corporate Marketing and Strategy
(203) 299-7522
Patty DeLana
Director
Public Relations
(203) 299-7211
Modem Media Announces CentrPort Transactions and
Comments on Fourth Quarter and 2001 Outlook
Investor Conference Call Scheduled to Review Information
NORWALK, CT --December 22, 2000 -- Modem Media (Nasdaq: MMPT), the exclusive
builder and marketer of customer-focused Me-businesssm solutions, today
announced the completion of a series of transactions that provide funds to Modem
Media and its subsidiary CentrPort, resulting in the sale of a portion of its
equity interest in CentrPort. Modem Media will remain a strategic partner and
minority equity owner in CentrPort. The Company also commented on its outlook
for the quarter ending December 31, 2000 and the year 2001.
CentrPort Transactions
Modem Media completed a series of transactions that provide for the financing of
CentrPort and the sale of a portion of its equity interest in CentrPort. A group
of investors, led by Thomas Weisel Capital Partners, has agreed to pay Modem
Media $5 million in cash for a portion of Modem Media's equity interest in
CentrPort and invest up to an additional $22 million in cash directly into
CentrPort to fund its operations. Other investors include, Venture Strategy
Partners, Trident Capital, Draper Richards, and Wheatley Partners. As a result,
Modem Media's ownership interest in CentrPort has been reduced to approximately
15.2%, below the requirement to consolidate CentrPort's financial results with
those of Modem Media. Modem Media's remaining investment in CentrPort is now
reflected at cost in the Company's financial statements. Modem Media has also
been granted warrants to purchase 0.5% of the equity of CentrPort, on a fully
diluted basis, and can earn warrants to purchase up to an additional 3.0% if
certain performance targets are achieved. Modem Media's accounting for its
investment in CentrPort will not change with the grant or exercise of these
warrants, nor will Modem Media be obligated to participate in any funding
obligations that may arise.
Of the total purchase price of $5 million for a portion of Modem Media's
equity
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interest in CentrPort, $2.5 million is not scheduled to be received until
December 21, 2001. This remaining amount may increase by $0.7 million upon
achieving certain resale targets. The underlying agreements provide that
CentrPort will be Modem Media's preferred vendor and obligates Modem Media to
resell a certain amount of CentrPort products and services during 2001.
The sale of Modem Media's equity interest in CentrPort may result in a
pre-tax gain of approximately $2 million. This preliminary gain has been
deferred until Modem Media's obligations under the reseller and other agreements
have been met.
"CentrPort's state-of-the-art technology offerings have been instrumental in
helping Fortune 500 companies identify and recognize customers and their needs
and respond to them with the right content, services or utility at the right
time via the right channel. As a true pioneer in this space, CentrPort is the
only provider to offer such precision in cross-channel customer measurement and
management," said G. M. O'Connell, Modem Media Chairman and CEO. "This
transaction will not only help to ensure that Modem Media and our clients
continue to benefit from CentrPort's outstanding services but will also provide
Modem Media with cash for our core business. Additionally, this arrangement
should ensure that the CentrPort business is adequately funded to add the sales,
marketing and technology infrastructure necessary to actively grow this business
to its full potential."
Fourth Quarter and 2001 Outlook
Modem Media currently anticipates that total revenues in the fourth quarter will
approximate $36 million. Total revenues for the third quarter were $37.8
million. Fourth quarter EBITA (before the amortization of intangibles and any
fourth quarter special items) is currently estimated to be approximately
breakeven. For the third quarter, EBITA was $1.5 million.
In addition to finalizing the CentrPort transaction, steps have also been taken
to reduce the Company's overall expense base. These actions will result in a
fourth quarter pre-tax charge of $3 million to $4 million. The charge includes
severance costs for 36 employees, slightly less than 4% of the Company's total
workforce, and costs to reduce the Company's office space under lease in San
Francisco and Tokyo. The space reduction costs include the write-off of
leasehold improvements and supporting assets.
"I am satisfied with what we anticipate will be very solid performance in a
fourth quarter of considerable industry uncertainty. We continue to deliver on
those items that are critical to remaining a strong leader in the business, a
healthy strategic partner to our clients and a vibrant organization for our
employees. Our challenge will continue to be prudent expense management on a
domestic and international basis. We have set in motion actions to limit our
exposure in the major expense areas; the losses from our CentrPort subsidiary,
our Japanese overhead costs and
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lower than acceptable utilization levels." Bob Allen, President and Chief
Operating Officer, stated. "Our client base remains dominated by Fortune 500 and
large international companies, where we continue to see some moderation in
spending, but a solid pipeline of business for 2001. Accordingly, we expect 2001
revenue growth for Modem Media to be in the range of 20% to 25%. The Company's
operating earnings and cash flow in 2001 will reflect the benefit of the
CentrPort transactions and the expense reductions implemented in the fourth
quarter. We expect these actions will provide significant cost savings and
contribute to an EBITA margin of at least 8% for 2001."
Conference Call
Modem Media will host a conference call to discuss this
information on Friday, December 22, 2000 at 12:30 p.m. EST/ 9:30 a.m. PST. To
participate in the conference call, please dial 1-800-521-5439 or for
international callers 303-267-1001, approximately ten minutes prior to the call.
A replay of the call will be available through January 5, 2001. To access the
replay, please dial 800-625-5288 or for international callers 303-804-1855. The
access code is 893800. The call will also be available through webcast at
www.modemmedia.com under Investor Information and Conference Calls. The call
will remain website accessible through January 5, 2001.
About Modem Media
Founded in 1987, Modem Media (http://www.modemmedia.com) provides Internet
strategy and end-to-end Me-businesssm solutions to Fortune 500 companies and
select Internet start-ups. As an Internet pioneer, Modem Media has been a
driving force in the digital economy and is the exclusive developer of
Me-businesssm solutions, a unique customer-focused approach to Internet
business. The Company's award-winning Internet-related services include
strategic planning and consulting, engineering, visual and information design,
media distribution and project management. With approximately 1,000
professionals worldwide, Modem Media's global presence includes its headquarters
in Norwalk, CT, and offices in New York City, San Francisco, Toronto, London,
Paris, Munich, Hong Kong, Tokyo and Sao Paulo. Modem Media has created
customer-focused Internet solutions for global brands such as Citibank, General
Electric, Weight Watchers, General Motors, Delta Air Lines, Philips, IBM and
JCPenney.
About CentrPort
CentrPort (http://www.centrport.com/) is the outsourced solution that enables
Continuous Customer Development (CCD) tm across all channels. CentrPort
optimizes customer acquisition, development and retention through: single
customer view across all marketing channels, decision-directed segmentation and
analytics, and real-time synchronization of message delivery. The ADVANCE tm
Reporting Suite of software is easy to use, yet flexible enough to be specific
to marketers needs.
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The CentrPort Analytic Team provides leading-edge consulting and strategic
direction. Headquartered in Westport, CT, CentrPort is currently deploying CCD
tm solutions for leading Fortune 500 clients, agencies and professional services
firms.
# # #
Me-business is a service mark of Modem Media
CentrPort is a service mark of CentrPort, Inc.
This press release contains statements that are "forward-looking" within the
meaning of applicable federal securities laws, including the Company's revenue
results and growth rates, EBITA results and targets, gross margins, expense
reductions, cost savings, clients' demand for services and their spending,
receipt of additional cash as a result of the CentrPort transaction, and the
achievement of its CentrPort resale targets, which are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from those anticipated. Factors that could cause actual results to differ
include timing and scope of new projects and client initiatives, demand for the
Company's services and CentrPort's products, spending levels of the Company's
clients, the timing of the reduction of office space in San Francisco and Japan
and other cost saving efficiency programs, pricing pressures in the market
place, the ability to attract and retain qualified professionals and other
factors more fully discussed in our filings with the Securities and Exchange
Commission.
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