|
|
|
|
|
|
|
|
|
|
|
|
|
|
Previous: SHORT TERM INVESTMENTS CO /TX/, N-30D, 1999-05-07 |
Next: PROTECTIVE INVESTMENT CO, 497, 1999-05-07 |
<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
FILED PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 7, 1999
CMGI, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-22846 04-2921333
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
100 Brickstone Square, Andover, MA 01810
(Address of principal executive offices, including Zip Code)
(978) 684-3600
(Registrant's telephone number, including area code)
================================================================================
<PAGE>
Item 5. Other Events.
- ----------------------
On May 7, 1999, CMGI, Inc. issued a news release relating to the
restatement of its results for its third and fourth quarters of fiscal 1998
ended April 30, 1998 and July 31, 1998, respectively, and its first and second
quarters of fiscal 1999 ended October 31, 1998 and January 31, 1999,
respectively. A copy of the news release containing such announcement is filed
herewith as Exhibit 99.1 and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
- ---------------------------------------------------------------------------
No financial statements or pro forma financial information are filed as a part
of this report. The exhibit filed as part of this report is listed in the
Exhibit index hereto.
Exhibit
No. Description
----- -----------
99.1 News release dated May 7, 1999, issued by CMGI, Inc.
2
<PAGE>
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, thereunto duly authorized.
CMGI, INC.
(Registrant)
/s/ Andrew J. Hajducky III
---------------------------
May 7, 1999 Andrew J. Hajducky III, CPA
Chief Financial Officer and Treasurer
3
<PAGE>
EXHIBIT 99.1
For Immediate Release: Contact: Andrew J. Hajducky III
May 7, 1999 Chief Financial Officer
(978) 684-3660
CMGI, Inc. Announces Revaluation of In-Process Research and Development
Acquisition Charges
Andover, MA--- CMGI, Inc. (NASDAQ: CMGI) today announced that it has completed a
review of its previously reported acquisition-related charges, including the
impact of the recently announced adjustments made to in-process research and
development charges by Lycos, Inc., and the in-process research and development
charge recorded in the third quarter of fiscal year 1998 in conjunction with
CMGI's acquisition of Accipiter, Inc.
On April 16, 1999, Lycos, Inc. announced that in connection with the filing of a
Registration Statement on Form S-4 with the Securities and Exchange Commission,
it had reviewed its accounting treatment for in-process research and development
in four completed 1998 acquisitions. In light of the SEC's recent interpretation
of the accounting for acquired in-process technology resulting from acquisitions
using the purchase method of accounting, Lycos, like many other technology and
Internet companies, reduced its cumulative one-time in-process research and
development charges from those acquisitions and adjusted the related
amortization of intangible assets for the subsequent quarters accordingly.
The adjustments recorded involve only non-cash charges and do not affect Lycos'
previously reported revenues, EBITDA or cash flows for any of the periods.
During such periods, CMGI's ownership in Lycos ranged from approximately 46% to
approximately 22%, and CMGI accounted for its investment in Lycos under the
equity method of accounting, whereby CMGI's portion of the net operating
performance of Lycos was reflected in equity in losses of affiliates.
Additionally, during such periods CMGI recorded gains on sales of portions of
its Lycos stock holdings, and recorded gains on issuances of stock by Lycos.
As a result of the Lycos restatements, CMGI has accordingly restated previously
reported equity in losses of Lycos, gains on sales of Lycos stock and gains on
issuance of stock by Lycos for CMGI's fiscal quarters ended April 30, 1998,
July 31, 1998, October 31, 1998 and January 31, 1999.
Such restatements resulted in net increases in pre-tax income of $18,631,000 and
$283,000 for the quarters ended April 30, 1998 and October 31, 1998,
respectively, and net decreases in pre-tax income of $6,467,000 and $1,125,000
for the quarters ended July 31, 1998 and January 31, 1999, respectively. Lycos'
reduction of previously recorded in-process research and development charges
resulted in higher gains on Lycos stock issuances recorded by CMGI, thereby
increasing CMGI's book basis in its Lycos investment and resulting in lower
gains on sales of Lycos stock and reduced gains on Lycos stock issuances in
subsequent quarters. Related higher amortization charges recorded by Lycos in
subsequent quarters resulted in higher equity in loss of affiliates amounts
recorded by CMGI.
Beginning in January, 1999, CMGI's ownership in Lycos was reduced below 20%, and
accordingly CMGI began accounting for its investment in Lycos as available-for-
sale securities, carried at fair value. Since CMGI's investment in Lycos is now
carried at fair value, CMGI's future operating results will not be affected by
resultant increased amortization charges to be recorded in Lycos' stand-alone
financial statements.
Similarly, using revised guidelines and assumptions generally suggested by the
SEC and as clarified through existing practice, CMGI has voluntarily adjusted
the amount originally allocated to in-process
<PAGE>
research and development for its acquisition of Accipiter, Inc. during the third
fiscal quarter of 1998. As a result, the third quarter pre-tax charge for
acquired in-process research and development was decreased from the $18 million
amount previously recorded to the amount of $9.2 million. Correspondingly, the
value of goodwill recorded on the balance sheet related to the acquisition of
Accipiter was increased from $11.5 million to $18.4 million, completed
technologies were valued at $1.6 million, and other intangibles were valued at
$300,000. These adjustments to the purchase price allocation of Accipiter have
no effect upon the cash flows, financial condition or liquidity of the Company.
The Company plans to amortize the value of goodwill over five years and the
values of completed technologies and other intangible assets over their
estimated useful lives of five and two years, respectively, commencing as of
April 1998. As a result of these changes, amortization of Accipiter acquisition-
related intangible assets in the fourth quarter of fiscal 1998 increased to
$1 million from $0.6 million previously reported. Amortization of acquisition-
related intangible assets during fiscal 1999 is expected to be $1 million per
quarter and will continue at this level through the second quarter of fiscal
2003, with a final charge of $0.7 million in the third quarter of fiscal year
2003.
The combined impact of the Lycos and Accipiter related restatements on the third
quarter of fiscal 1998 is to reduce the previously recorded net loss of
$11.7 million, or ($0.27) per diluted share, to a net income of $7.9 million, or
$0.17 per diluted share. Similarly, the impact of recorded adjustments to fourth
quarter fiscal 1998 is to reduce the previously recorded net income of
$31.4 million, or $0.64 per diluted share, to a net income of $27.1 million, or
$0.55 per diluted share. First quarter fiscal 1999 net income of $38.6 million,
or $0.77 per diluted share was reduced to $38.3 million, remaining at $0.77 per
diluted share, and second quarter fiscal 1999 net income of $14.1 million, or
$0.28 per diluted share was reduced to $13 million, or $0.25 per diluted share.
The combined changes to the Company's previously reported consolidated
statements of operations as a result of these adjustments are shown in the
attached financial tables. Due to the Company's decision to sell its CMG Direct
subsidiary, which comprised the Company's list and database business segment,
amounts presented in both "As Restated" and "As Reported" in the financial
tables include the results of CMG Direct's operations and the Company's
previously reported gain on sale of data warehouse product rights as
discontinued operations for all periods presented. In connection with SEC
guidelines, the Company's annual report on Form 10K for the year ended July 31,
1998, and the quarterly reports on Form 10-Q for the third quarter of fiscal
year 1998 and first and second quarters of fiscal year 1999 will be amended and
restated to reflect these changes.
CMGI, Inc. is a leading provider of direct marketing services, investing in and
integrating advanced Internet, interactive media and database technologies.
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>
CMGI, Inc. And Subsidiaries
Consolidated Statements of Operations
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30, 1998
--------------------------
As
Reported Restated
-------- --------
<S> <C> <C>
Net revenues $ 18,145 $ 18,145
Operating expenses:
Cost of revenues 17,203 17,230
Research and development 3,849 3,849
In-process research and development 18,060 9,250
Selling 6,203 6,203
General and administrative 4,987 5,114
-------- ---------
Total operating expenses 50,302 41,646
Operating loss (32,157) (23,501)
Other income (deductions):
Gain on sale of Lycos, Inc. stock 26,092 24,850
Gain on stock issuance by Lycos, Inc. 4,082 24,294
Equity in losses of affiliates (3,908) (4,247)
Interest income 573 573
Interest expense (775) (775)
-------- ---------
Total 26,064 44,695
Income (loss) from continuing operations before
income taxes (6,093) 21,194
Income tax expense 5,454 13,125
-------- ---------
Income (loss) from continuing operations (11,547) 8,069
Loss from discontinued operations of lists and
database services segment, net of income taxes (147) (147)
-------- ---------
Net income (loss) $(11,694) $ 7,922
======== =========
</TABLE>
<PAGE>
CMGI, Inc. And Subsidiaries
Consolidated Statements of Operations -- Continued
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
April 30, 1998
--------------------------
As
Reported Restated
-------- --------
<S> <C> <C>
Basic Earnings (Loss) Per Share:
Income (loss) from continuing operations $ (0.27) $ 0.19
Loss from discontinued operations of lists and
database services segment - -
-------- ---------
Net income (loss) $ (0.27) $ 0.19
======== =========
Diluted Earnings (Loss) Per Share:
Income (loss) from continuing operations $ (0.27) $ 0.17
Loss from discontinued operations of lists and
database services segment - -
-------- ---------
Net income (loss) $ (0.27) $ 0.17
======== =========
Shares used in computing earnings (loss) per share:
Basic 42,836 42,836
======== =========
Diluted 42,836 46,344
======== =========
</TABLE>
<PAGE>
CMGI, Inc. And Subsidiaries
Consolidated Statements of Operations
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ending
July 31, 1998 July 31, 1998
-------------------- ---------------------
As As
Reported Restated Reported Restated
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $ 25,946 $ 25,946 $ 81,916 $ 81,916
Operating expenses:
Cost of revenues 27,690 27,770 72,843 72,950
Research and development 4,814 4,814 19,223 19,223
In-process research and development 200 200 19,135 10,325
Selling 6,931 6,931 28,882 28,882
General and administrative 6,773 7,154 20,287 20,795
--------- --------- --------- ---------
Total operating expenses 46,408 46,869 160,370 152,175
Operating loss (20,462) (20,923) (78,454) (70,259)
Other income (deductions):
Gain on sale of Lycos, Inc. stock 53,978 50,450 97,158 92,388
Gain on sale of Premiere Technologies, Inc. stock - - 4,174 4,174
Gain on stock issuance by Lycos, Inc. 24,305 22,077 28,301 46,285
Minority interest - - (28) (28)
Equity in losses of affiliates (3,397) (4,108) (11,821) (12,871)
Interest income 714 714 2,426 2,426
Interest expense (1,035) (1,035) (3,296) (3,296)
--------- --------- --------- ---------
Total 74,565 68,098 116,914 129,078
Income from continuing operations before
income taxes 54,103 47,175 38,460 58,819
Income tax expense 22,448 19,785 26,547 31,555
--------- --------- --------- ---------
Income from continuing operations 31,655 27,390 11,913 27,264
Discontinued operations, net of income taxes:
Loss from operations of lists and
database services segment (259) (259) (338) (338)
Gain on sale of data warehouse product rights - - 4,978 4,978
--------- --------- --------- ---------
Net income $ 31,396 $ 27,131 $ 16,553 $ 31,904
========= ========= ========= =========
</TABLE>
<PAGE>
CMGI, Inc. And Subsidiaries
Consolidated Statements of Operations -- Continued
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ending
July 31, 1998 July 31, 1998
-------------------- ---------------------
As As
Reported Restated Reported Restated
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic Earnings (Loss) Per Share:
Income from continuing operations $ 0.69 $ 0.60 $ 0.29 $ 0.65
Loss from discontinued operations of lists and
database services segment - - (0.01) (0.01)
Gain on sale of data warehouse product rights - - 0.12 0.12
--------- --------- --------- ---------
Net income $ 0.69 $ 0.60 $ 0.40 $ 0.76
========= ========= ========= =========
Diluted Earnings (Loss) Per Share:
Income from continuing operations $ 0.64 $ 0.55 $ 0.27 $ 0.61
Loss from discontinued operations of lists and
database services segment - - (0.01) (0.01)
Gain on sale of data warehouse product rights - - 0.11 0.11
--------- --------- --------- ---------
Net income $ 0.64 $ 0.55 $ 0.37 $ 0.71
========= ========= ========= =========
Shares used in computing earnings (loss) per share:
Basic 45,588 45,588 41,666 41,666
========= ========= ========= =========
Diluted 49,320 49,320 45,030 45,030
========= ========= ========= =========
</TABLE>
<PAGE>
CMGI, Inc. And Subsidiaries
Consolidated Statements of Operations
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 31, 1998
--------------------
As
Reported Restated
-------- --------
<S> <C> <C>
Net revenues $ 37,405 $ 37,405
Operating expenses:
Cost of revenues 35,545 35,625
Research and development 5,353 5,353
Selling 8,238 8,238
General and administrative 7,936 8,317
--------- ---------
Total operating expenses 57,072 57,533
Operating loss (19,667) (20,128)
Other income (deductions):
Gain on sale of Lycos, Inc. stock 2,018 1,879
Gain on stock issuance by Lycos, Inc. 19,182 20,374
Gain on stock issuance by GeoCities 24,132 24,132
Gain on sale of investment in Sage Enterprises, Inc. 19,057 19,057
Gain on sale of investment in Reel.com, Inc. 23,158 23,158
Minority interest 101 101
Equity in losses of affiliates (2,589) (3,359)
Interest income 559 559
Interest expense (1,068) (1,068)
--------- ---------
Total 84,550 84,833
Income from continuing operations before
income taxes 64,883 64,705
Income tax expense 26,199 26,316
--------- ---------
Income from continuing operations 38,684 38,389
Loss from discontinued operations of lists and
database services segment, net of income taxes (131) (131)
--------- ---------
Net income $ 38,553 $ 38,258
========= =========
</TABLE>
<PAGE>
CMGI, Inc. And Subsidiaries
Consolidated Statements of Operations -- Continued
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
October 31, 1998
--------------------
As
Reported Restated
-------- --------
<S> <C> <C>
Basic Earnings (Loss) Per Share:
Income from continuing operations $ 0.84 $ 0.83
Loss from discontinued operations of lists and
database services segment - -
--------- ---------
Net income $ 0.84 $ 0.83
========= =========
Diluted Earnings (Loss) Per Share:
Income from continuing operations $ 0.77 $ 0.77
Loss from discontinued operations of lists and
database services segment - -
--------- ---------
Net income $ 0.77 $ 0.77
========= =========
Shares used in computing earnings (loss) per share:
Basic 46,082 46,082
========= =========
Diluted 49,932 49,932
========= =========
</TABLE>
<PAGE>
CMGI, Inc. And Subsidiaries
Consolidated Statements of Operations
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, 1999 January 31, 1999
-------------------- --------------------
As As
Reported Restated Reported Restated
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues $ 38,972 $ 38,972 $ 76,377 $ 76,377
Operating expenses:
Cost of revenues 37,043 37,123 72,588 72,748
Research and development 5,239 5,239 10,592 10,592
Selling 6,932 6,932 15,170 15,170
General and administrative 10,366 10,747 18,302 19,064
--------- --------- --------- ---------
Total operating expenses 59,580 60,041 116,652 117,574
Operating loss (20,608) (21,069) (40,275) (41,197)
Other income (deductions):
Gain on sale of Lycos, Inc. stock 44,503 43,596 46,521 45,475
Gain on sale of Amazon.com, Inc. stock 7,002 7,002 7,002 7,002
Gain (loss) on stock issuance by Lycos, Inc. (21) (121) 19,161 20,253
Gain on stock issuance by GeoCities 4,382 4,382 28,514 28,514
Gain on sale of investment in Sage Enterprises, Inc. - - 19,057 19,057
Gain on sale of investment in Reel.com, Inc. - - 23,158 23,158
Minority interest 103 103 204 204
Equity in losses of affiliates (6,071) (6,189) (8,660) (9,548)
Interest income 748 748 1,307 1,307
Interest expense (1,165) (1,165) (2,233) (2,233)
--------- --------- --------- ---------
Total 49,481 48,356 134,031 133,189
Income from continuing operations before
income taxes 28,873 27,287 93,756 91,992
Income tax expense 14,601 14,138 40,800 40,454
--------- --------- --------- ---------
Income from continuing operations 14,272 13,149 52,956 51,538
Loss from discontinued operations of lists and
database services segment, net of income taxes (148) (148) (279) (279)
--------- --------- --------- ---------
Net income $ 14,124 $ 13,001 $ 52,677 $ 51,259
========= ========= ========= =========
</TABLE>
<PAGE>
CMGI, Inc. And Subsidiaries
Consolidated Statements of Operations -- Continued
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, 1999 January 31, 1999
-------------------- --------------------
As As
Reported Restated Reported Restated
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic Earnings (Loss) Per Share:
Income from continuing operations $ 0.30 $ 0.28 $ 1.14 $ 1.11
Loss from discontinued operations of lists and
database services segment - - (0.01) (0.01)
--------- --------- --------- ---------
Net income $ 0.30 $ 0.28 $ 1.13 $ 1.10
========= ========= ========= =========
Diluted Earnings (Loss) Per Share:
Income from continuing operations $ 0.28 $ 0.25 $ 1.05 $ 1.02
Loss from discontinued operations of lists and
database services segment - - (0.01) (0.01)
--------- --------- --------- ---------
Net income $ 0.28 $ 0.25 $ 1.04 $ 1.01
========= ========= ========= =========
Shares used in computing earnings (loss) per share:
Basic 46,260 46,260 46,160 46,160
========= ========= ========= =========
Diluted 51,257 51,257 50,650 50,650
========= ========= ========= =========
</TABLE>
|
|