<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 23, 1999
CMGI, Inc.
------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 000-22846 04-2921333
- --------------------------- ----------- ------------------
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
100 Brickstone Square, Andover, MA 01810
- ---------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 684-3600
N/A
------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
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AdKnowledge Inc.
- ----------------
On September 23, 1999, CMGI, Inc. ("CMGI" or the "Company") entered into an
Agreement and Plan of Merger and Contribution with Engage Technologies, Inc., a
majority owned subsidiary of CMGI ("Engage"), a wholly owned subsidiary of CMGI
and AdKnowledge Inc. ("AdKnowledge"), a provider of Web marketing management
services focused on the needs of online marketers and agencies. Under the terms
of the agreement, CMGI will initially acquire control of AdKnowledge through the
issuance of approximately $170 million of CMGI common stock, followed by a
contribution of AdKnowledge shares held by CMGI and AdKnowledge stockholders to
Engage, in exchange for approximately $193 million of Engage common stock. The
transaction, which has been approved by the Board of Directors of each company,
is subject to regulatory, AdKnowledge stockholder and Engage stockholder
approval and other customary conditions to closing. The Company's press release
announcing this transaction is filed as Exhibit 99.1 hereto.
Pacific Century Cyberworks Limited
- ----------------------------------
On September 23, 1999, CMGI and Pacific Century CyberWorks Limited
("PCCW"), a company listed on The Stock Exchange of Hong Kong, entered into an
agreement whereby CMGI will issue US $350 million worth of its common stock to
PCCW in exchange for US $350 million worth of shares of PCCW (based, in each
case, on the closing price on September 3, 1999), subject to certain customary
terms and conditions to closing. In addition, CMGI and PCCW are in discussions
to form a strategic relationship to jointly develop their Internet-related
business activities in Asia, including the possible establishment of a venture
for the development and application of Internet technologies within the Asian
marketplace, and an agreement for co-investment with respect to Internet
opportunities in the United States and Asia. The Company's press release
announcing this transaction is filed as Exhibit 99.2 hereto.
Fourth Quarter Results
- ----------------------
On September 27, 1999, CMGI reported financial results for the fourth
quarter ended July 31, 1999. Net revenues for the fourth quarter were $53.6
million, a 17% sequential increase in quarterly revenues and a 107% increase
compared with the fourth quarter ended July 31, 1998. Net revenues for the
Company's Internet business segment increased 351% compared with the fourth
quarter of fiscal 1998, and increased 49% compared with the third quarter of
fiscal 1999. Net revenues for the Company's fulfillment services segment
increased 60% compared with the fourth quarter of fiscal 1998, and increased 5%
compared with the third quarter of fiscal 1999. On a full year basis, CMGI's
net revenues increased $93.7 million, or 114% to $175.7 million from $81.9
2
<PAGE>
million in fiscal 1998. CMGI reported net income of $452.7 million or $4.74
basic income per share for the quarter, compared to a net loss of $27.8 million
or ($0.30) basic loss per share for the previous quarter ended April 30, 1999.
Fourth quarter fiscal 1999 results included $744.7 million of other gains, net,
primarily representing a pretax gain of $661.2 million on the conversion of the
Company's GeoCities investment to Yahoo! common stock and a pre-tax gain of
$81.1 million on issuance of stock by Engage in its initial public stock
offering. During the fourth quarter, the Company also recorded a one-time in-
process research and development charge of $1.6 million related to the
acquisitions of Magnitude Network, Inc. and Nascent Technologies, Inc. and a
one-time $53.2 million net of tax gain on the sale of CMG Direct to Marketing
Services Group, Inc. Third quarter fiscal 1999 results included a one-time in-
process research and development charge of $4.5 million related to the
acquisition of Internet Profiles Corporation (IPRO) and $859,000 of other gains,
net, representing a pre-tax gain on issuance of stock by GeoCities. CMGI's
fourth quarter operating expenses for continuing operations of $105 million,
reflect a 32% increase from the third quarter of fiscal 1999 and a 124% increase
from last year's fourth quarter. The Company's press release is filed as
Exhibit 99.3 hereto.
Flycast Communications Corporation
- ----------------------------------
On September 29, 1999, CMGI entered into an Agreement and Plan of Merger
("Merger Agreement") with a wholly owned subsidiary of CMGI ("Sub") and Flycast
Communications Corporation ("Flycast"), a provider of web-based direct response
advertising. In the merger, Sub will merge with and into Flycast, with Flycast
surviving the merger as a wholly owned subsidiary of CMGI. The merger, which has
been approved by the Board of Directors of each company, is subject to
regulatory and Flycast stockholder approval and other customary conditions to
closing. Certain affiliates of Flycast representing a significant percentage of
Flycast common stock have agreed to vote in favor of the merger.
Pursuant to the Merger Agreement, CMGI will acquire Flycast through the
issuance of 0.4738 shares of CMGI common stock for each share of Flycast common
stock outstanding immediately prior to the close of the transaction. In
addition, CMGI will assume all Flycast stock options outstanding at the
effective time of the merger. The transaction is intended to be treated as a
tax-free reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, and to be accounted for as a purchase.
In connection with the merger, CMGI and Flycast also entered into a Stock
Option Agreement, dated as of September 29, 1999, whereby Flycast has granted
CMGI an option to purchase up to 19.9% of the outstanding shares of Flycast
common stock, which option may be exercised in the event that the Merger
Agreement is terminated under certain circumstances.
3
<PAGE>
The Company's press release announcing this transaction is filed as Exhibit
99.4 hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------------------------------------------------------------------
(c) Exhibits.
Exhibit No. Description
- ----------- -----------
99.1 Press release dated September 23, 1999 relating to a definitive
agreement for the acquisition of AdKnowledge Inc. by Engage
Technologies, Inc., a majority-owned subsidiary of CMGI, Inc.
99.2 Joint press release dated September 23, 1999 by CMGI, Inc. and
Pacific Century CyberWorks Limited relating to a share exchange
agreement.
99.3 Press release dated September 27, 1999 reporting the financial
results of CMGI, Inc. for the fourth quarter ended July 31, 1999.
99.4 Press release dated September 30, 1999 relating to a definitive
agreement for the acquisition of Flycast Communications
Corporation by CMGI, Inc.
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 1, 1999 CMGI, Inc.
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(Registrant)
By:/s/ Andrew J. Hajducky III
-------------------------------------------
Andrew J. Hajducky III
Executive Vice President, Chief Financial
Officer and Treasurer
5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press release dated September 23, 1999 relating to a definitive
agreement for the acquisition of AdKnowledge Inc. by Engage
Technologies, Inc., a majority-owned subsidiary of CMGI, Inc.
99.3 Joint press release dated September 23, 1999 by CMGI, Inc. and
Pacific Century CyberWorks Limited relating to a share exchange
agreement.
99.3 Press release dated September 27, 1999 reporting the financial
results of CMGI, Inc. for the fourth quarter ended July 31, 1999.
99.4 Press release dated September 30, 1999 relating to a definitive
agreement for the acquisition of Flycast Communications
Corporation by CMGI, Inc.
<PAGE>
EXHIBIT 99.1
Engage to Acquire AdKnowledge to Improve Online Marketing Effectiveness
Combined company to provide online marketers and ad agencies with a set of
comprehensive, profile based analysis and targeting tools
Andover, MA, September 23, 1999 - Engage Technologies, Inc. (Nasdaq: ENGA), a
leading provider of profile driven Internet marketing solutions and a majority-
owned operating company of CMGI, Inc. (Nasdaq: CMGI), today announced it has
signed a definitive agreement to acquire AdKnowledge Inc., a leading provider of
complete Web marketing management services focused entirely on the needs of
online marketers and agencies, in an all stock transaction valued at
approximately $193 million.
This transaction combines the vision of both companies to provide online
marketers and agencies with products and services that increase the
effectiveness of their marketing efforts. AdKnowledge's relationships with many
online marketers and agencies, including some of the most sophisticated and
influential in the marketplace, will accelerate the use of Engage's profile
based targeting as an effective alternative to content based targeting.
"Internet trends are being driven by the largest and most sophisticated online
marketers and their advertising agencies, many of which have strong
relationships with AdKnowledge, such as SportsLine (Nasdaq: SPLN), eBay (Nasdaq:
EBAY) and eToys (Nasdaq: ETYS) and agencies like Organic and i-Traffic," said
Paul Schaut, President and CEO of Engage. "We are excited about the opportunity
to add value to these relationships by incorporating profile based ad targeting
into AdKnowledge's extensive services. This powerful combination will enable
profile based ad targeting to be more widely deployed in the industry."
By integrating Engage's profile based targeting, AdKnowledge customers will be
able to target and analyze campaigns based on profiles of their target audience.
AdKnowledge has become a widely used source for marketers targeting online
advertising. To date, nearly all such targeting has been based on content
specific ad buying. With Engage, AdKnowledge will be able to broaden its
offering to include profile based targeting to its customers.
"AdKnowledge and Engage are uniquely complementary and share the same objective
- -- to improve the effectiveness of online marketing," said Scott Kauffman, CEO
of AdKnowledge. "Integrating Engage's consumer profile data and profiling
technologies into the AdKnowledge System will create the industry's most
comprehensive suite of tools for marketers and agencies."
Additionally, the combination of Engage, AdKnowledge and Engage's I/PRO products
and services will uniquely position Engage as a leading provider of
comprehensive data analysis to marketers and agencies. Engage's profiling and
data mining capabilities help marketers profile, segment and better understand
their customers' interests and behaviors.
AdKnowledge eAnalytics lets marketers fine tune those programs for maximum
effectiveness based on the real drivers of brand awareness and purchase
behavior. And I/PRO's site analysis capabilities will help marketers evaluate
the impact of their marketing efforts on site traffic and visitor behavior. By
grouping these products and services, AdKnowledge uniquely positions Engage as a
provider of data analysis capabilities.
Under the terms of the merger and contribution agreement, CMGI will initially
acquire control of AdKnowledge through the issuance of approximately $170
million of CMGI common stock, followed by a contribution of AdKnowledge shares
held by CMGI and AdKnowledge shareholders to Engage in exchange for
approximately $193 million of Engage common stock. The transaction, which will
be
<PAGE>
accounted for as a purchase, is subject to certain conditions, regulatory
approval and the shareholder approval of Engage and AdKnowledge. AdKnowledge,
which recently filed its S-1 with the SEC, is privately held and will become a
wholly-owned subsidiary of Engage. The transaction is expected to be completed
in late 1999 or early 2000.
About Adknowledge:
AdKnowledge is a leading provider of complete Web marketing management services
focused entirely on the needs of advertising buyers. AdKnowledge combines
analytic services and data mining with outbound campaign management to provide
sophisticated marketers and agencies with insights into what drives brand
awareness and purchase behavior across all Web sites and networks. The company's
headquarters are in Palo Alto, California, with offices in New York. For more
information about AdKnowledge, contact via phone at 650-842-6500 or on the
Internet at www.adknowledge.com.
-------------------
About Engage:
Engage Technologies, Inc., (Nasdaq: ENGA) a majority-owned operating company of
CMGI, Inc., (Nasdaq: CMGI), is a leading provider of profile-driven Internet
marketing solutions. Engage offers a range of software products and services
that enable Web publishers, advertisers and merchants to target and deliver
advertisements, commerce and e-commerce offerings to their audiences and to
measure their effectiveness. Engage's core product and services include Engage
Knowledge, a global database that currently contains more than 35 million
anonymous consumer profiles, and Accipiter AdManager, an online advertising
management system that automates the scheduling, targeting and delivery of ads
on Web sites and the reporting of campaign results. Additionally, Engage offers
Web traffic verification, measurement and analysis, and research through its
wholly-owned subsidiary, I/PRO. For more information about Engage, please visit
www.engage.com.
- --------------
About Cmgi:
With nearly 50 companies, CMGI, Inc. (Nasdaq: CMGI) represents the largest, most
diverse network of Internet companies in the world. This network includes both
CMGI operating companies and a growing number of synergistic investments through
its venture capital affiliate, @Ventures. CMGI leverages the technologies,
content, and market reach of its extended family of companies to foster rapid
growth and industry leadership across its network, and the larger Internet
Economy. Microsoft, Intel, Sumitomo and Compaq hold minority positions in CMGI.
CMGI's majority-owned subsidiaries include Engage Technologies (Nasdaq: ENGA),
Activerse, Adsmart, AltaVista, Cha! Technologies, iCAST, Magnitude Network,
NaviSite, NaviNet, Planet Direct and ZineZone. The company's @Ventures
affiliates have ownership interests in Lycos, Inc. (Nasdaq: LCOS), Critical Path
(Nasdaq: CPTH), Silknet (Nasdaq: SILK), Chemdex (Nasdaq: CMDX), Ancestry.com,
Asimba, AuctionWatch, Aureate Media, blaxxun, BizBuyer.com, buyingedge.com,
CarParts.com, CraftShop.com, eCircles.com, EXP.com, FindLaw, Furniture.com,
HotLinks, Intelligent/Digital, KOZ.com, Mondera.com, MotherNature.com,
NextMonet.com, NextPlanetOver.com, OneCore.com, ONElist, PlanetOutdoors.com,
Productopia, Promedix.com, Raging Bull, Speech Machines, ThingWorld.com,
Vicinity, Virtual Ink, Visto and WebCT.
CMGI is also the majority-owner of SalesLink, InSolutions and On-Demand
Solutions, leaders in the direct marketing, fulfillment and turnkey arenas. CMGI
Corporate headquarters is located at 100 Brickstone Square, Andover, MA 01810.
Telephone: 978-684-3600. Fax: 978-684-3814. Additional information is available
on the company's Web site at www.cmgi.com.
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Statement Under the Private Securities Litigation Reform Act
Except for the historical information contained in this release, the matters
described herein contain forward-looking statements that involve risks and
uncertainties which might cause the results of such forward-looking statements
to differ materially from those anticipated. Such risks and uncertainties
include failure of the combination of Engage and AdKnowledge to realize
anticipated product offering benefits, failure of Engage or AdKnowledge products
and services to achieve customer acceptance, privacy concerns, slower than
expected growth in Internet advertising, increased competition, the timely
development of new profile-based products and services, and other risks detailed
in Engage's Registration Statement on Form S-1 declared effective on July 19,
1999 under the Securities Act of 1933.
<PAGE>
EXHIBIT 99.2
CMGI and Pacific Century CyberWorks
Announce Share Exchange
Andover, Mass. and Hong Kong, September 23, 1999 -- CMGI, Inc. (NASDAQ: CMGI)
and Pacific Century CyberWorks Limited ("PCCW;" Reuters: 1186.HK; Bloomberg:
1186), a company listed on The Stock Exchange of Hong Kong, announced today that
the two companies have entered into an agreement whereby CMGI will issue US$350
million worth of its common stock to PCCW in exchange for $350 million worth of
shares of PCCW, subject to certain customary terms and conditions.
In addition, the companies are in discussion to form a strategic relationship to
jointly develop their Internet-related business activities in Asia, including
the possible establishment of a venture for the development and application of
Internet technologies within the Asian marketplace, and an agreement for co-
investment with respect to Internet opportunities in the United States and Asia.
About the Pacific Century Group
The Pacific Century Group (www.pcg-group.com) was established in October 1993
-----------------
with proceeds from the sale of STAR TV, the first pan-Asian satellite television
network, operating in more than 50 countries, to News Corp. At the sale, which
was completed in 1995, the valuation of the enterprise was US$950.5 million. The
total original investment in STAR TV, which Mr. Richard Li founded in 1990, was
US$125 million. The Group's publicly-listed companies and non-listed operations
are active worldwide in digital technology, financial services and
infrastructure development.
Pacific Century CyberWorks, the Group's technology flagship, announced in August
1999 its acquisition of Pacific Convergence Corporation (PCC), a joint venture
between Pacific Century Group (60%) and Intel Corporation (40%), the world's
leading maker of microprocessors. Intel's investment of US$50 million in PCCW,
combined with its initial 40% stake in PCC, gives it a 13.05% stake in PCCW.
PCC's objective is to be the preeminent provider of broadband Internet services
in Asia via its satellite network serving 110 million connected cable
households.
Listed companies within the Group, in addition to PCCW, include Singapore-listed
Pacific Century Regional Developments Limited (Reuters: PCEN.SI; Bloomberg: PAC
SP); and Hong Kong-listed Pacific Century Insurance Limited (Reuters: 0065.HK;
Bloomberg: 65).
The Pacific Century Group is the sole partner with the Government of Hong Kong
in the approximately US$1.6 billion Cyber-Port project (www.cyber-port.com)
------------------
announced by the Financial Secretary Donald Tsang in his 1999 Budget. The Cyber-
Port is a comprehensive facility designed to foster the development of Hong
Kong's information services sector through the formation of a strategic cluster
of both established and start-up companies at the one location.
The Group's aim is to build on its expertise and knowledge of digital technology
and new media to become a preeminent leader in Internet content and services
such as eCommerce. The Group believes there are tremendous synergies between its
existing activities in this field and future business opportunities. PCCW's
parallel involvements in the Cyber-Port and the fast-growing information
technology and Internet sectors, and its acquisition of Pacific Convergence
Corporation, will help secure Hong Kong's position as a hub of Asia-focused
eCommerce and Internet content development, and create new opportunities for the
best talent in the region.
About CMGI
With nearly 50 companies, CMGI, Inc. (Nasdaq: CMGI) represents the largest, most
diverse network of Internet companies in the world. This network includes both
CMGI operating companies and a growing number of synergistic investments through
its venture capital affiliate, @Ventures. CMGI leverages the technologies,
content, and market reach of its extended family of companies to foster rapid
growth and industry leadership across its network, and the larger Internet
Economy. Microsoft, Intel, Sumitomo and Compaq hold minority positions in CMGI.
<PAGE>
CMGI's majority-owned subsidiaries include Engage Technologies (Nasdaq: ENGA),
Activerse, Adsmart, AltaVista, Cha! Technologies, iCAST, Magnitude Network,
NaviSite, NaviNet, Planet Direct and ZineZone. The company's @Ventures
affiliates have ownership interests in Lycos, Inc. (Nasdaq: LCOS), Critical Path
(Nasdaq: CPTH), Silknet (Nasdaq: SILK), Chemdex (Nasdaq: CMDX), Ancestry.com,
Asimba, AuctionWatch, Aureate Media, blaxxun, BizBuyer.com, buyingedge.com,
CarParts.com, CraftShop.com, eCircles.com, EXP.com, FindLaw, Furniture.com,
HotLinks, Intelligent/Digital, KOZ.com, Mondera.com, MotherNature.com,
NextMonet.com, NextPlanetOver.com, OneCore.com, ONElist, PlanetOutdoors.com,
Productopia, Promedix.com, Raging Bull, Softway Systems, Speech Machines,
ThingWorld.com, Vicinity, Virtual Ink, Visto and WebCT.
CMGI is also the majority-owner of SalesLink, InSolutions and On-Demand
Solutions, leaders in the direct marketing, fulfillment and turnkey arenas. CMGI
Corporate headquarters is located at 100 Brickstone Square, Andover, MA 01810.
Telephone: 978-684-3600. Fax: 978-684-3814. Additional information is available
on the company's Web site at http://www.cmgi.com.
-------------------
# # #
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements in this press release regarding CMGI, Inc.'s business which are
not historical facts are "forward-looking statements" that involve risks and
uncertainties. For a discussion of such risks and uncertainties, which could
cause actual results to differ from those contained in the forward-looking
statements, see "Risk Factors" in the CMGI Annual Report or Form 10-K for the
most recently ended fiscal year.
<PAGE>
EXHIBIT 99.3
P R E S S R E L E A S E
Contact: Andrew J. Hajducky III
Chief Financial Officer
(978) 684 3660
CMGI ANNOUNCES RECORD FOURTH QUARTER EARNINGS OF $4.74 PER SHARE
REVENUES INCREASE 107% COMPARED WITH PRIOR YEAR FOURTH QUARTER
INTERNET SEGMENT REVENUES GROW 49% OVER THIRD QUARTER
ANDOVER, Mass., September 27, 1999, --- CMGI, Inc. (NASDAQ: CMGI) today reported
net revenues of $53.6 million for the fourth quarter ended July 31, 1999, a 17%
sequential increase in quarterly revenues and a 107% increase compared with last
year's fourth quarter. Net revenues for the Company's Internet business segment
increased 351% compared with the fourth quarter of fiscal 1998, and increased
49% compared with the third quarter of fiscal 1999. Net revenues for the
Company's fulfillment services segment increased 60% compared with the fourth
quarter of fiscal 1998, and increased 5% compared with the third quarter of
fiscal 1999. On a full year basis, CMGI's net revenues increased $93.7 million,
or 114% to $175.7 million from $81.9 million in fiscal 1998.
CMGI reported net income of $452.7 million or $4.74 basic income per share for
the quarter, compared to a net loss of $27.8 million or ($0.30) basic loss per
share for the previous quarter ended April 30, 1999. Fourth quarter fiscal 1999
results included $744.7 million of other gains, net, primarily representing a
pretax gain of $661.2 million on the conversion of the Company's GeoCities
investment to Yahoo! common stock and a pre-tax gain of $81.1 million on
issuance of stock by Engage Technologies in its initial public stock offering.
During the fourth quarter the Company also recorded a one-time in-process
research and development charge of $1.6 million related to the acquisitions of
Magnitude Network, Inc. and Nascent Technologies, Inc. and a one-time $53.2
million net of tax gain on the sale of CMG Direct to Marketing Services Group,
Inc. (MSGI). Third quarter fiscal 1999 results included a one-time in-process
research and development charge of $4.5 million related to the acquisition of
Internet Profiles Corporation (IPRO) and $859,000 of other gains, net,
representing a pre-tax gain on issuance of stock by GeoCities. CMGI's fourth
quarter operating expenses for continuing operations of $105 million, reflect a
32% increase from the third quarter of fiscal 1999 and a 124% increase from last
year's fourth quarter.
During the Company's fourth fiscal quarter, Engage Technologies, Inc. (Engage,
Nasdaq: ENGA), CMGI's majority - owned subsidiary, completed its initial public
offering at $15 per share, raising $94.8 million, net of issuance and other
related costs. CMGI currently holds 38.6 million shares of Engage common stock.
Also during the fourth quarter CMGI completed the acquisitions of Nascent
Technologies Inc., Netwright LLC, and Digiband, Inc. and secured $375 million
through the private placement of CMGI Series C Convertible Preferred Stock.
Subsequent to quarter end, NaviSite, Inc., a majority - owned subsidiary of the
Company filed its initial registration statement for its public offering with
the Securities and Exchange Commission.
<PAGE>
On August 18, 1999, the Company completed the acquisition of Alta Vista from
Compaq (NYSE: CPQ). Upon closing, Compaq transferred an 81.5 percent equity
ownership in the Alta Vista business to CMGI, and retained its remaining 18.5
percent interest. In return, Compaq received approximately 19.0 million CMGI
common shares and CMGI Series D convertible redeemable preferred shares
equivalent to approximately 1.8 million CMGI common shares. CMGI also issued a
$220 million three year note to Compaq, bringing total consideration for CMGI's
81.5% ownership in the Alta Vista business to approximately $2.3 billion.
On September 15, 1999, CMGI announced the completed acquisition of 80% of Cha!
Technologies , an Internet payment services company, for $12.5 million in CMGI
stock and the commitment of $12.5 million in operating capital to that business.
On September 27, 1999, CMGI announced the completed acquisition of Signatures
Network, formerly Sony Signatures, an industry-leading music and celebrity
licensing and event merchandising company. Under the terms of the acquisition,
Signatures Network will become a majority-owned subsidiary of iCAST, CMGI's
Internet entertainment company
On September 20, 1999, CMGI announced that it had signed a definitive agreement
to acquire AdForce, Inc. (Nasdaq: ADFC), a leading provider of centralized
online advertising services, in a stock-for-stock tax-free merger valued at
approximately $500 million. Under the terms of the agreement, CMGI will issue
0.262 CMGI shares for every share of AdForce held on the closing date of the
transaction. Closing of the merger is subject to customary conditions, including
approval by AdForce shareholders, expected later this year.
On September 20, 1999, CMGI announced it has signed a definitive agreement to
acquire AdKnowledge Inc., a leading provider of complete Web marketing
management services focused entirely on the needs of online marketers and
agencies, in an all stock transaction valued at approximately $193 million.
Under the terms of the merger and contribution agreement, CMGI will initially
acquire control of AdKnowledge through the issuance of approximately $170
million of CMGI common stock, followed by a contribution of AdKnowledge shares
held by CMGI and AdKnowledge shareholders to Engage in exchange for
approximately $193 million of Engage common stock. The transaction, is subject
to customary conditions, including shareholder approval of Engage and
AdKnowledge. AdKnowledge, which recently filed its S-1 with the SEC, is
privately held and will become a wholly-owned subsidiary of Engage. The
transaction is expected to be completed in late 1999 or early 2000.
On September 23, 1999, CMGI and Pacific Century CyberWorks Limited ("PCCW"), a
company listed on The Stock Exchange of Hong Kong, announced that the two
companies have entered into an agreement whereby CMGI will issue US$350 million
worth of its common stock to PCCW in exchange for US $350 million worth of
shares of PCCW, subject to certain customary terms and conditions. In addition,
the companies are in discussion to form a strategic relationship to jointly
develop their Internet-related business activities in Asia, including the
possible establishment of a venture for the development and application of
Internet technologies within the Asian marketplace, and an agreement for co-
investment with respect to Internet opportunities in the United States and Asia.
During the fourth quarter, CMGI, through it's limited liability company
affiliates, CMG@Ventures II, LLC and CMG@Ventures III, LLC made initial or
follow-on investments in twenty Internet companies, including:
<PAGE>
Initial Investments
- -------------------
. AuctionWatch.com
. AureateMedia
. BizBuyer.com
. Intelligent/Digital
. NextPlanetOver.com
. PlanetOutdoors.com
. Productopia
. Plus three others to be announced
Follow-on Investments
- ---------------------
. Asimba.com
. eCircles.com
. Furniture.com
. KOZ.com
. MotherNature.com
. NextMonet.com
. Raging Bull
. Web CT (formerly Universal Learning Technology)
. Virtual Ink
. Visto
Since July 31, 1999, the following investments have also been made:
Initial Investments
- -------------------
. Boatscape.com
. buyingedge.com
. CraftShop.com
. FindLaw
. Plus one other to be announced
Follow-on Investments
- ---------------------
. exp.com, formerly Advoco.com
. Mondera.com
. OneCore.com
On May 5, 1999, Silknet successfully completed its initial public offering at a
price of $15 per share, and on July 27, 1999, Chemdex successfully completed its
initial public offering at a price of $15 per share. CMG@Ventures II, LLC
currently holds 2.8 million shares of Silknet common stock (of which
approximately 2.2 million shares are attributable to CMGI), which it acquired at
an average cost of $2.42 per share. CMG@Ventures II, LLC currently holds 2.7
million shares of Chemdex common stock (of which approximately 2.2 million
shares are attributable to CMGI), which it acquired at an average cost of $1.80
per share. On September 22, 1999, Chemdex announced that it has signed a
definitive agreement to acquire Promedix.com, in an all-stock transaction of
approximately 12 million shares valued at approximately $340 million.
CMG@Ventures III, LLC currently holds approximately 6% of Promedix.com's
outstanding shares on a fully diluted basis.
<PAGE>
Commenting on the Company's performance, CEO David Wetherell said, "We are very
proud of the significant progress made across our portfolio of businesses during
this quarter and past year. That momentum was further accelerated by the recent
acquisitions of AltaVista, Cha! Technologies, and Signatures Network, the
definitive agreements to acquire AdForce and AdKnowledge , and the additions of
Compaq and Pacific Century CyberWorks Limited as strategic investors. We
continue to build dramatically upon our traffic and the targeting of that
traffic, while establishing the infrastructure with NaviNet and Engage to take
advantage of low cost or free net access. The single most important trend
affecting ISPs over the coming years will be free Internet access, and no
company is better positioned to benefit from that than CMGI."
Operating Segments
For continuing operations, the Company reports two operating segments: Internet
and Fulfillment Services. The Company's Lists and Database Services segment is
reported as discontinued operations.
The Internet segment results reflect the consolidated performance of majority-
owned Internet companies, which during the fourth quarter of fiscal year 1999
include Activerse, Adsmart, Blaxxun, Engage Technologies, iCAST, Magnitude
Network, Nascent Technologies, NaviNet, NaviSite, Netwright, Planet Direct, and
ZineZone. The Internet segment reported revenues of $18,824,000 in the current
quarter, compared with $12,657,000 in the previous quarter ended April 30, 1999,
an increase of 49%. Current quarter revenue increases primarily reflect
increased revenues for Engage, ADSmart and NaviNet, partially offset by
decreased revenue for Planet Direct which had recorded approximately $2.3
million revenues from one significant customer in the previous quarter. Revenue
increases by Engage reflected both the impact of the I/PRO acquisition during
the third quarter and increased business volumes. Revenue increases by Adsmart
reflected both the impact of the 2CAN Media acquisition during the third quarter
and increased ad - serving volumes. Including acquisition related one-time in-
process research and development charges of $1.6 million in the current quarter
and $4.5 million in the preceding quarter, the operating loss for the Internet
segment was $53,821,000 in the quarter just ended versus a loss of $35,632,000
for the quarter ended April 30, 1999.
CMGI's portion of the net operating performances of investments in which its
ownership is between 20% and 50% are reflected in equity in losses of
affiliates. During the fourth quarter of fiscal 1999, these included
ThingWorld.com, Web CT (formerly Universal Learning Technology), Engage Japan
and GeoCities through the date of conversion of the Company's GeoCities
investment into Yahoo! Common stock in May, 1999. Equity in losses of
affiliates was $2,636,000 for the current quarter, compared with $3,553,000 for
the quarter ended April 30, 1999. CMGI's investments in exp.com (formerly
Advoco.com), Ancestry.com, Asimba.com, AuctionWatch.com, AureateMedia,
BizBuyer.com, CarParts.com, eCircles.com, Furniture.com, HotLinks,
Intelligent/Digital, KOZ.com, Mondera.com, MotherNature.com, NextMonet.com,
NextPlanetOver.com, OneCore.com, ONElist, PlanetOutdoors.com, Productopia,
Promedix.com (formerly Medical Village), Raging Bull, Tickets.com, Virtual Ink,
and Visto are carried at cost at July 31, 1999. As of July 31, 1999, CMGI's
holdings in Amazon.com, Chemdex, Critical Path, Hollywood Entertainment,
Informix, Lycos, Marketing Services Group, Inc., Open Market, Silknet, USWeb,
and Yahoo! are accounted for as available-for-sale securities, at market value.
In the Fulfillment Services segment, revenues increased 60% to $34,763,000 in
the fourth quarter of fiscal 1999 from $21,776,000 in last year's fourth fiscal
quarter, primarily reflecting increased volumes from Cisco Systems and the
acquisitions of InSolutions and On-Demand Solutions in the fourth quarter of
fiscal 1998. Compared with the third quarter of fiscal 1999, fulfillment
services segment revenues increased 5%,
<PAGE>
reflecting growth in turnkey and e-commerce business. The fulfillment segment
reported operating income of $2,426,000 in the quarter, compared with operating
income of $1,565,000 in the quarter ended April 30, 1999. The increase in
operating income primarily reflected the impacts of revenue increases and
operating efficiencies related to turnkey operations. Fulfillment services
segment results for the current quarter ended July 31, 1999 and the previous
quarter ended April 30, 1999 include approximately $700,000 of goodwill
amortization charges related to acquisitions.
Internet Highlights
Engage, CMGI's majority-owned provider of profile driven Internet marketing
solutions successfully completed its initial public offering on July 19, 1999,
raising net proceeds of $94.8 million. Also in July, Engage went live with its
Engage Knowledge data service with customers. Engage Knowledge provides real-
time access to Engage's database of more than 35 million anonymous profiles of
Web users for more effective targeting of online advertising, promotions and
content. On September 22, 1999, Engage announced its 1999 fiscal year results,
with revenues of $16.0 million, up 627% from fiscal 1998 revenues of $2.2
million. Engage's 1999 fiscal year net loss was $32.0 million, compared to 1998
net loss of $13.8 million. Engage's 1999 fourth quarter revenues were $7.0
million, a 338% increase from fourth quarter fiscal 1998 revenues of $1.6
million. Net loss for the 1999 fourth quarter was $10.8 million, up from $4.6
million in fiscal 1998. As of July 31, 1999, Engage had 335 customers worldwide
using its profiling, ad management and strategic market intelligence and
measurement products and services.
Alta Vista offered a nationwide dial-up free Internet connection service in
August and has registered more than 400,000 users within seven weeks--an
unprecedented Internet sign-up rate. The FreeAccess service is combined with the
AltaVista microportal, a desktop application that provides up-to-the-minute
news, weather, sports and financial information, as well as links to premier
AltaVista Search technologies and other media and commerce services. The
FreeAccess service is supported through advertising that is displayed within the
microportal window, which takes up less than five percent of a user's screen.
AltaVista markets the service but uses several ISPs, which underwrite the entire
service and technical support costs.
Adsmart made significant progress during the quarter with significant structural
changes to its network and rapid growth in its organization. In June, Adsmart
announced it signed thirty new sites to its Channels Division and thirteen new
sites to Adsmart NetFuerza, its Hispanic advertising network. In late July,
Adsmart measured its growth over the past six months and announced 4,000% growth
in impressions served, 250 sites added to the network, and 100 new employees
recruited for its offices in the six major advertising markets. Adsmart also
continued its pattern of adding brand sites to its network, most notably the
World Wrestling Federation sites, the number one sports sites among male teens
according to Media Metrix. In mid-August, Adsmart also added a new service to
its offering with ad-buy.com, the first program of its kind from a major ad
network directed at small businesses. With ad-buy.com, small businesses that
cannot afford to advertise on a traditional network will now be able to purchase
impressions directly online on Adsmart's network of brand sites. Most recently,
Adsmart announced major changes to the structure of its network with new
divisions and categories that directly match the way advertisers buy media.
Through extensive research, Adsmart created eight key divisions and over twenty
targeted audience groups to ease the process of media buying and bring greater
profits to its network of over 300 Web sites. Adsmart is the only major ad
network to offer such specific categories based on advertisers most sought after
demographics.
NaviSite, CMGI's majority-owned applications hosting and management supplier and
Application Service Provider (ASP), filed with the Securities and Exchange
Commission a registration statement for the initial public offering of its
common stock. BancBoston Robertson Stephens, Inc., Hambrecht and Quist, and
<PAGE>
FAC/Equities, a division of First Albany Corporation will act as the lead
underwriters of the offering. Also in this quarter NaviSite announced strategic
marketing relationships with Dell and Microsoft. Dell has become a preferred
server, storage, and PC provider for NaviSite. Microsoft has partnered with
NaviSite to offer streaming solutions based on Windows Media Technology. Dell
and Microsoft have also become strategic investors in NaviSite. In this quarter,
NaviSite also announced that it will offer Oracle's 8I database on a service
bureau basis to its e-business applications customers. Additionally, NaviSite
announced industry relationships with numerous application developers, service
providers and integrators, including Lutris Technologies and Cisco Systems. The
agreement with Lutris, a leading Internet development and strategy firm, will
provide end to end solutions for designing, developing, hosting and managing web
applications. Under the Cisco Powered Network Program, NaviSite and Cisco have
teamed to offer reliable, secure and high performance Internet services.
NaviSite also announced that it has begun construction of two new data centers,
in Andover, MA and San Jose, CA.
NaviNet, CMGI's wholly-owned supplier of high performance, low cost remote
Internet access services, installed new network facilities in Seattle and
Washington, D.C., and extended its New England coverage to include Rhode Island
as it moved closer to its goal of reaching over 80% of U.S. major market
Internet users by calendar year-end. In addition, the company has now executed
supply and financing agreements with Ascend (now part of Lucent) and NorTel
Networks for significant volumes of network equipment to be deployed in NaviNet
Points of Presence (POP's) in North America. The company executed an agreement
with NetZero, currently the fastest growing U.S. ISP, to supply it with Internet
access services in major markets across the U.S. The company has continued to
expand rapidly, adding a CFO and VP Product Marketing to its executive team,
tripling its employee and contractor staff to a total of 62, and moving to
larger facilities in the Andover area. On September 21, 1999, NaviNet announced
that it has signed an agreement to provide Internet access services to Prodigy
Communications Corporation (Nasdaq:PRGY). The agreement, to take effect in the
fourth quarter of 1999, allows NaviNet to provide outsourced dial-up access to
Prodigy users on a nationwide basis.
iCAST, CMGI's wholly-owned on-line personal entertainment company, acquired
Digiband, an online, dynamic database of audio and video streams. In addition,
ICAST hired Matt Farber as its COO. Mr. Farber was previously SVP of
Programming Enterprises, MTV and General Manager, MTV2. Zinezone.com continued
to see tremendous growth in visitors and memberships, achieving a 1.7 reach in
July Media Metrix, a growth of 140% over the preceeding quarter. On September
27, 1999, CMGI announced the completed acquisition of Signatures Network,
formerly Sony Signatures, an industry-leading music and celebrity licensing and
event merchandising company. Under the terms of the acquisition, Signatures
Network will become a majority-owned subsidiary of iCAST, CMGI's Internet
entertainment company
About CMGI
With nearly 50 companies, CMGI, Inc. (Nasdaq: CMGI) represents the largest, most
diverse network of Internet companies in the world. This network includes both
CMGI operating companies and a growing number of synergistic investments through
its venture capital affiliate, @Ventures. CMGI leverages the technologies,
content, and market reach of its extended family of companies to foster rapid
growth and industry leadership across its network, and the larger Internet
Economy. Microsoft, Intel, Sumitomo and Compaq hold minority positions in CMGI.
CMGI Corporate headquarters is located at 100 Brickstone Square, Andover, MA
01810. Telephone: 978-684-3600. Fax: 978-684-3814. Additional information,
including a complete listing of companies in the CMGI network, is available at
www.cmgi.com.
<PAGE>
Forward looking statements in this release are made pursuant to the safe harbor
provisions of the Private Securities Litigation Act. Investors are cautioned
that actual results could differ materially from those anticipated by such
statements and are advised to consult CMGI's current SEC filings for additional
information concerning risk factors that affect the Company's business.
<PAGE>
EXHIBIT 99.4
P R E S S R E L E A S E
Contacts: Deidre Moore Lyn Chitow Oakes
CMGI Flycast
(978) 684-3655 (415) 913-1592
[email protected] [email protected]
CMGI TO ACQUIRE FLYCAST COMMUNICATIONS CORPORATION
Online Response Leader to Fill Important Role in CMGI's
Growing Stable of Advertising Services
ANDOVER, MA AND SAN FRANCISCO, CA, September 30, 1999-CMGI, Inc. (Nasdaq: CMGI)
announced today that it has signed a definitive agreement to acquire Flycast
Communications Corporation (Nasdaq: FCST), the leading provider of web-based
direct response advertising solutions, in a stock-for-stock merger. Under the
terms of the agreement, CMGI will issue .4738 CMGI shares for every share of
Flycast held on the closing date of the transaction. Closing of the merger,
expected in January 2000, is subject to customary conditions, including formal
approval by Flycast shareholders.
A significant percentage of Flycast shareholders have agreed to vote in favor of
the merger. In connection with the merger, CMGI and Flycast also entered into a
Stock Option Agreement, whereby Flycast has granted CMGI an option to purchase
up to 19.9% of the outstanding shares of Flycast common stock, which option may
be exercised in the event that the Merger Agreement is terminated under certain
circumstances.
This acquisition represents the latest in a series of recent deals designed to
help CMGI strengthen its stable of interactive marketing and advertising
properties. Flycast represents another critical segment of CMGI's advertising
strategy, and the larger Internet advertising marketplace-- a direct response,
ROI-focused advertising solution built on a network model of aggregated
inventory from large numbers of sites. CMGI anticipates leveraging a number of
<PAGE>
inter-company synergies with Flycast and other members of the CMGI network, most
notably Adsmart, AdForce*, and Engage (Nasdaq: ENGA). A more definitive
integration of Flycast with other CMGI advertising and marketing properties is
now under consideration and will be fully explored in the next several months.
Flycast creates value for both advertisers and web sites through its network of
aggregated inventory, proprietary click-optimization technology and superior
customer service. By aggregating the inventory from large and small to medium-
sized web sites, Flycast can deliver high-quality, cost-effective advertising
space to response-oriented advertisers. At the same time, by selling available
inventory through its network, Flycast creates an incremental revenue
opportunity for web sites that does not conflict with their other sales efforts
because it offers their available advertising space on an unbranded basis.
-more-
<PAGE>
"With the acquisition of Flycast, CMGI again strengthens its position to offer a
full service, end-to-end solution for both advertisers and Web publishers," said
David Wetherell, Chairman and CEO, CMGI. "The Flycast business model is highly
complimentary to the current advertising businesses within the CMGI network,
particularly Adsmart. Adsmart is focused on site-specific representation and
maximizing CPMs for branded sites, while Flycast emphasizes the ROI model. As
part of the leading advertising properties in the CMGI network, Flycast joins
Adsmart, Engage, I/PRO, and now AdForce* and AdKnowledge* to bring together
advertisers and publishers, branded and non-branded sites, to deliver a total
advertising network solution."
"We are thrilled to be joining the world-class CMGI family and becoming part of
a group of true leaders in Internet marketing and advertising," said George
Garrick, Chairman and CEO of Flycast. "This combination of companies at CMGI
represents the most powerful assembly of advertising and marketing services
companies and resources in the industry today and together we will be able to
deliver a wide range of enhanced services for both advertisers and publishers.
I have no doubt that together we will push the envelope and define the shape of
the Internet advertising industry for the future."
Flycast's flagship offering, the Flycast Network, serves 1.4 billion ad
impressions per month on 1,200 sites, reaching more than 25 million people a
month. Flycast's advertisers include some of the industry's leading e-commerce
companies, direct response marketers, interactive agencies and traditional
advertisers such as Bozell, Digital River, Saatchi & Saatchi, Agency.com, iXL,
BMG, Paradigm Interactive, GoTo.com, eBay, and E-Trade.
About Flycast Communications
Based in San Francisco, Flycast Communications is the leading provider of
Internet direct response advertising solutions. The company is focused on
maximizing the return on investment for response-oriented advertisers, direct
marketers and e-commerce companies by delivering the most ROI-effective audience
reach, response and results in the industry. The company's flagship offering,
the Flycast Network, reaches over 25 million people a month, or 41 percent of
the web. Flycast's advertisers include e-commerce companies, direct response
marketers and interactive agencies who are interested in generating
<PAGE>
site traffic and increasing web-based sales through ROI-focused advertising.
Flycast can be reached on the web at http://www.flycast.com.
About CMGI
With nearly 50 companies, CMGI, Inc. (Nasdaq: CMGI) represents the largest, most
diverse network of Internet companies in the world. This network includes both
CMGI operating companies and a growing number of synergistic investments through
its venture capital affiliate, @Ventures. CMGI leverages the technologies,
content, and market reach of its extended family of companies to foster rapid
growth and industry leadership across its network, and the larger Internet
Economy. Microsoft, Intel, Sumitomo and Compaq hold minority positions in CMGI.
-more-
<PAGE>
CMGI's majority-owned operating companies include Engage Technologies (Nasdaq:
ENGA), 1ClickBrands, Activerse, Adsmart, AltaVista, iCAST, Magnitude Network,
NaviSite, NaviNet, Planet Direct, Saleslink and ZineZone. The company's
@Ventures affiliates have ownership interests in Lycos, Inc. (Nasdaq: LCOS),
Critical Path (Nasdaq: CPTH), Silknet (Nasdaq: SILK), Chemdex (Nasdaq: CMDX),
Ancestry.com, Asimba, AuctionWatch, Aureate Media, blaxxun, BizBuyer.com,
Boatscape, buyingedge.com, CarParts.com, CraftShop.com, eCircles.com, EXP.com,
FindLaw, Furniture.com, HotLinks, Intelligent/Digital, KOZ.com, Mondera.com,
MotherNature.com, NextMonet.com, NextPlanetOver.com, OneCore.com, ONElist,
PlanetOutdoors.com, Productopia, Promedix.com, Raging Bull, Softway Systems,
Speech Machines, ThingWorld.com, Vicinity, Virtual Ink, Visto and WebCT.
CMGI Corporate headquarters is located at 100 Brickstone Square, Andover, MA
01810. Telephone: 978-684-3600. Fax: 978-684-3814. Additional information is
available on the company's Web site at http://www.cmgi.com.
# # #
EDITOR'S NOTE: Executives from Flycast and CMGI will be available to discuss
the merger agreement on a conference call today at 8:30 AM EST. Interested
media may participate on the call by dialing (415) 537-1829.
*On September 20, 1999, CMGI announced a definite agreement to acquire AdForce,
Inc. Additionally, Engage Technologies Inc. has announced a definitive
agreement to acquire AdKnowledge, Inc. Both transactions are subject to
customary terms and conditions, including approval by the target company
shareholders.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements in this press release regarding CMGI, Inc.'s business which are
not historical facts are "forward-looking statements" that involve risks and
uncertainties. For a discussion of such risks and uncertainties, which could
cause actual results to differ from those contained in the forward-looking
statements, see "Risk Factors" in the CMGI Annual Report or Form 10-K for the
most recently ended fiscal year.
