Easylink Services (NASDAQ:EASY)
Historical Stock Chart
From Jun 2019 to Jun 2024
EasyLink Services Corporation (NASDAQ: EASY), a leading global provider
of outsourced business process automation services that transform manual
and paper-based business processes into efficient electronic processes,
reported financial results for the third quarter ended September 30,
2006.
Revenues for the third quarter of 2006 were $18.7 million as compared to
$18.9 million for the second quarter of 2006 and $19.7 million for the
third quarter of 2005. Revenues for the second and third quarters of
2006 included approximately $0.1 million and $0.7 million, respectively,
related to a previously announced software licensing arrangement. Gross
margin was 63% in the third quarter of 2006 as compared to 58% in the
second quarter of 2006 and 59% in the third quarter of 2005. Gross
margin for the third quarter of 2006 included approximately $0.5 million
of credits from telecommunications carriers and the expected refund of
Federal excise taxes previously paid. Excluding the impact of these
credit adjustments, gross margin improved 3 percentage points to 61% for
the quarter as we begin to realize the benefits of the consolidation of
our facilities to our Piscataway, NJ headquarters. Loss from continuing
operations was $431,000 or approximately $.04 per share for the third
quarter of 2006 as compared to a net loss of $89,000, or $.00 per share
for the second quarter of 2006 and net income of $344,000 or $.04 per
share for the third quarter of 2005. All of the per share amounts have
been adjusted to reflect the Company’s 1 for
5 reverse stock split completed on August 28, 2006.
The loss from continuing operations for the third quarter includes
approximately $0.5 million in interest expense consisting of termination
fees and the expensing of deferred costs associated with our previous
lender upon the refinancing of our debt with CAPCO. Net income for the
third quarter of $0.5 million includes $0.9 million from discontinued
operations for the reversal of the accrual related to litigation
associated with the Company’s former
India.com business. The US District Court for the Southern District of
New York ruled in favor of the Company and denied the defendant’s
appeal on this matter.
The Company further reported that it achieved earnings before interest,
taxes, depreciation and amortization from continuing operations (“EBITDA”)
of $1.3 million in the third quarter of 2006, as compared to EBITDA in
the second quarter of 2006 of $941,000 and EBITDA in the third quarter
of 2005 of $1.9 million. A reconciliation of this non-GAAP financial
measure to the most directly comparable GAAP financial measure,
operating cash flows, together with reconciliation to net income or loss
for all periods presented, is attached. The Company considers EBITDA to
be a financial indicator of its operational strength, its ability to
service debt, and its capacity to make new investments in its services.
The Company’s cash and cash equivalents
balance of $6.2 million at the end of the third quarter remained
relatively unchanged from the $6.3 million balances at June 30, 2006 and
December 31, 2005. Net cash from operating activities amounted to $1.2
million for the current quarter and $1.9 million for the nine months
ended September 30, 2006.
Thomas Murawski, Chairman, President and Chief Executive Officer of
EasyLink, said,
“Third quarter results demonstrated
continuing growth in our Transaction Management Services (TMS) business.
TMS revenue grew sequentially by over 20% to just over $5.9 million for
the quarter, on the strength of the one-time software sale to a Fortune
20 company. Excluding the one time sale, TMS revenue grew just under
$0.4 million or 8%, which was less than we expected. Revenue in the
quarter was unfavorably impacted by implementation delays from already
contracted deals with large corporations. We experience this from time
to time, typically on large projects where customers introduce delays
due to resource contention, greater than anticipated project complexity
or integration issues on their end. We also expect some of these delays
to continue into the fourth quarter. It’s
important to note that we have not lost the customers but rather have
delayed the revenue based on revised implementation schedules. On the
expense side, we are beginning to see the benefits of our cost reduction
programs in improving gross margins and we expect the improving trend to
continue. Operating expenses however, were unfavorably impacted on two
fronts; legal expenses related to the patent infringement lawsuit
initiated by Dynamic Depth which we expect to continue into the fourth
quarter and increased sales and marketing spending, which will not
repeat in the next quarter”.
Murawski added “In this report we have also
begun to separately break out EDI revenues, a Transaction Delivery
Service used by companies to send and receive commercial transactions
such as purchase orders, invoices and shipping information
electronically. As we have mentioned previously, EDI, has delivered
stable revenues and strong contribution margins over the past several
years. We expect EDI to be relatively stable this year, in spite of the
fact that we recently lost one of our largest EDI customers as a result
of a merger with a company who owned a competing EDI provider. Going
forward, we will break out EDI revenues in our quarterly reports to
provide greater visibility into our revenue dynamics which show our
combined TMS growth business and a stable EDI business already larger
than a declining TDS legacy business”.
For the third quarter of 2006 in comparison to the second quarter of
2006 and the third quarter of 2005, revenues (in thousands) for the
Company’s services were as follows:
3rd Quarter
2006
2nd Quarter
2006
%
Increase/
(Decrease)
3rd Quarter
2005
% Increase/
(Decrease)
TMS
$
5,927
$
4,912
20.7%
$
4,513
31.3%
TDS - EDI
$
4,480
$
4,712
(4.9%)
$
4,578
(2.1%)
TDS - Other
$
8,282
$
9,228
(10.3%)
$
10,610
(21.9%)
$
18,689
$
18,852
(0.9%)
$
19,701
(5.1%)
This table has been changed from prior quarters to provide greater
investor visibility into the dynamics of EasyLink’s
Transaction Delivery Services (TDS) business, which is comprised of a
stable EDI business and declining Telex, E-Mail, and Text-to-Fax
businesses.
Business Outlook
The following statements are forward looking and actual results may
differ materially due to factors noted at the end of this release, among
others.
For the fourth quarter EasyLink expects:
Revenues in the range of $17.6 to $18.1 million with TMS revenues in
the range of $5.3 to $5.4 million, EDI revenue in the range of $4.3 to
$4.4 million and TDS revenues in the range of $8.0 to $8.3 million.
Earnings in the range of break even to a net loss of $.04 per share.
For the year 2006:
Revenues are expected to be approximately $74 million.
Earnings are expected to be in the range of breakeven to a net loss of
$.04 per share.
Quarterly Conference Call
EasyLink will host its quarterly conference call today at 10:30 a.m.
EST. Listeners should call five minutes prior to the start of the call
to 800/340-8363 and the reservation number is 9165505. The call will
also be broadcast over the Internet. Online listeners should visit the
investor relations’ pages of the EasyLink Web
site, www.EasyLink.com, or www.streetevents.com
prior to the start of the call for login information. If you are unable
to participate, the online archive of the broadcast will be available on
the investor relation’s pages of www.EasyLink.com
within two hours of the live call through 11:00 p.m. EST November 24.
You can also access the replay by calling 800/642-1687 and entering the
reservation number 9165505.
About EasyLink Services Corporation
EasyLink Services Corporation (NASDAQ: EASY), headquartered in
Piscataway, New Jersey, is a leading global provider of outsourced
business process automation services that enable medium and large
enterprises, including 60 of the Fortune 100, to improve productivity
and competitiveness by transforming manual and paper-based business
processes into efficient electronic business processes. EasyLink is
integral to the movement of information, money, materials, products and
people in the global economy, dramatically improving the flow of data
and documents for mission-critical business processes such as client
communications via invoices, statements and confirmations, insurance
claims, purchasing, shipping and payments. Driven by the discipline of
Six Sigma Quality, EasyLink helps companies become more competitive by
providing the most secure, efficient, reliable, and flexible means of
conducting business electronically. For more information, please visit www.EasyLink.com.
This news release may contain statements of a forward-looking nature
relating to future events or financial results of EasyLink Services
Corporation. Investors are cautioned that such statements are only
predictions and actual events or results may differ materially. In
evaluating such statements, investors should specifically consider the
various factors that could cause actual events or results to differ
materially from those indicated from such forward-looking statements.
These include: the ability to service our remaining indebtedness; the
ability to continue as a going concern being dependent upon the ability
to generate sufficient cash flow to meet our obligations on a timely
basis, to obtain additional financing or refinancing as may be required,
and to achieve and maintain profitable operations; the ability to
attract additional customers or to expand services sold to existing
customers; the ability to successfully implement our business strategy;
the ability to commence service for new customers on a timely basis and
to ramp usage by such customers in accordance with our expectations; and
significant competition. These and other risks and uncertainties are
described in more detail in the Company's filings with the Securities
and Exchange Commission.
EasyLink Services Corporation
Condensed Consolidated Balance Sheets
(in thousands)
Sept. 30, 2006
(unaudited)
Dec. 31, 2005
ASSETS
Cash and cash equivalents
$
6,172
$
6,282
Accounts receivable, net
10,829
11,416
Other current assets
2,798
2,653
Total current assets
19,799
20,351
Property and equipment, net
9,577
10,252
Goodwill and other intangible assets, net
11,911
12,477
Other assets
221
895
Total assets
$
41,508
$
43,975
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable
$
5,320
$
6,464
Accrued expenses
9,756
10,432
Loans and notes payable
5,421
10,550
Other current liabilities
1,315
2,395
Total current liabilities
21,812
29,841
Long term liabilities
1,388
1,753
Total liabilities
23,200
31,594
Total stockholders’ equity
18,308
12,381
Total liabilities and stockholders’
equity
$
41,508
$
43,975
-Statements of operations and cash flow follow-
EasyLink Services Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Sept. 30,
2006
2005
Revenues
$
18,689
$
19,701
Cost of revenues
6,872
8,169
Gross profit
11,817
11,532
Operating expenses:
Sales and marketing
4,698
4,732
General and administrative
4,925
5,206
Product development
1,775
1,696
Amortization of other intangibles
43
517
Loss on sale of fax businesses
---
250
Total operating expenses
11,441
12,401
Income (loss) from operations
376
(869)
Other income (expense), net
(523)
1,148
Income (loss) before income taxes
(147)
279
Provision (credit) for income taxes
284
(65)
Income (loss) from continuing operations
(431)
344
Income from discontinued operations
928
---
Net income
$
497
$
344
Net income per share:
Basic and diluted income (loss) per share
from continuing operations
$
(0.04)
$
0.04
Basic and diluted income per share
from discontinued operations
$
0.08
$
---
Basic and diluted net income per share
$
0.04
$
0.04
Weighted average basic shares outstanding*
10,919
8,975
Weighted average diluted shares outstanding*
10,930
9,007
*Adjusted for 1 for 5 reverse stock split.
EasyLink Services Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Nine Months Ended Sept. 30,
2006
2005
Revenues
$
56,001
$
60,149
Cost of revenues
22,230
22,925
Gross profit
33,771
37,224
Operating expenses:
Sales and marketing
13,757
14,726
General and administrative
14,316
15,390
Product development
5,258
5,094
Separation agreement costs
---
2,312
Amortization of other intangibles
444
1,551
Loss on sale of fax businesses
---
250
Total operating expenses
33,775
39,323
Loss from operations
(4)
(2,099)
Other income (expense), net
(881)
507
Loss before income taxes
(885)
(1,592)
Provision for income taxes
11
40
Loss from continuing operations
(896)
(1,632)
Income from discontinued operations
928
---
Net income (loss)
$
32
$
(1,632)
Net income (loss) per share:
Basic and diluted loss per share from continuing operations
$
(0.09)
$
(0.18)
Basic and diluted income per share from discontinued operations
0.09
---
Basic and diluted net income (loss) per share
$
0.00
$
(0.18)
Weighted average basic shares outstanding*
10,163
8,906
Weighted average diluted shares outstanding*
10,183
8,906
* Adjusted for 1 for 5 reverse stock split.
EasyLink Services Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended Sept. 30,
2006
2005
Cash flows from operating activities:
Net loss
$
32
$
(1,632)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Income from discontinued operation-reversal of litigation reserve
(928)
---
Depreciation
2,127
2,426
Amortization of intangible assets
566
1,762
Loss on sale of marketable securities
---
469
Loss on sale of fax businesses
---
250
Issuance of shares as matching contributions to employee benefit
plans
345
374
Separation agreement costs
---
2,312
Gain on sale of domain names repurchase agreement
---
(1,907)
Debt termination fee
300
Other
337
112
Changes in operating assets and liabilities:
Accounts receivable, net
782
305
Prepaid expenses and other assets
611
201
Accounts payable, accrued expenses and other liabilities
(2,297)
(4,214)
Net cash provided by operating activities-continuing operations
1,875
458
Net cash provided by operating activities-discontinued operations
---
400
Net cash provided by operating activities
1,875
858
Cash flows from investing activities:
Purchases of property and equipment
(1,558)
(3,798)
Proceeds from sale of marketable securities
---
1,021
Proceeds from domain names repurchase agreement
---
830
Cash paid from Quickstream acquisition
---
(342)
Net cash used in investing activities
(1,558)
(2,289)
Cash flows from financing activities:
Proceeds of loan advances
13,700
1,900
Payment of loan advances
(9,229)
(950)
Debt termination fee and deferred debt issuance costs
(645)
---
Principal payments of note payable
(9,600)
(3,225)
Proceeds from issuance of stock
5,405
96
Other
(42)
(324)
Net cash used in financing activities
(411)
(2,503)
Effect of foreign exchange rate changes on cash and cash
equivalents
(16)
101
Net decrease in cash and cash equivalents
(110)
(3,833)
Cash and cash equivalents at beginning of the period
6,282
12,216
Cash and cash equivalents at end of the period
$
6,172
$
8,383
EasyLink Services Corporation
Reconciliation of Non GAAP Financial Information to GAAP
(in thousands)
Three Months Ended Sept. 30,
2006
2005
Income (loss) from continuing operations
$
(431)
$
344
Add:
Depreciation
706
712
Amortization of intangible assets
81
580
Interest expense, net
638
306
Income taxes (credits)
284
(65)
EBITDA
1,278
1,877
Less:
Interest expense, net
638
306
Income taxes (credits)
284
(65)
Add (subtract):
Other non-cash items
674
(883)
Changes in operating assets and liabilities
202
453
Net cash provided by continuing operations
$
1,232
$
1,206
Nine Months Ended Sept. 30,
2006
2005
Loss from continuing operations
$
(896)
$
(1,632)
Add:
Depreciation
2,127
2,426
Amortization of intangible assets
566
1,762
Interest expense, net
1,172
911
Income taxes (credits)
11
40
EBITDA
2,980
3,507
Less:
Interest expense, net
1,172
911
Income taxes (credits)
11
40
Add (subtract):
Other non-cash items
982
1,610
Changes in operating assets and liabilities
(904)
(3,708)
Net cash provided by continuing operations
$
1,875
$
458
EasyLink Services Corporation (NASDAQ: EASY), a leading global
provider of outsourced business process automation services that
transform manual and paper-based business processes into efficient
electronic processes, reported financial results for the third quarter
ended September 30, 2006.
Revenues for the third quarter of 2006 were $18.7 million as
compared to $18.9 million for the second quarter of 2006 and $19.7
million for the third quarter of 2005. Revenues for the second and
third quarters of 2006 included approximately $0.1 million and $0.7
million, respectively, related to a previously announced software
licensing arrangement. Gross margin was 63% in the third quarter of
2006 as compared to 58% in the second quarter of 2006 and 59% in the
third quarter of 2005. Gross margin for the third quarter of 2006
included approximately $0.5 million of credits from telecommunications
carriers and the expected refund of Federal excise taxes previously
paid. Excluding the impact of these credit adjustments, gross margin
improved 3 percentage points to 61% for the quarter as we begin to
realize the benefits of the consolidation of our facilities to our
Piscataway, NJ headquarters. Loss from continuing operations was
$431,000 or approximately $.04 per share for the third quarter of 2006
as compared to a net loss of $89,000, or $.00 per share for the second
quarter of 2006 and net income of $344,000 or $.04 per share for the
third quarter of 2005. All of the per share amounts have been adjusted
to reflect the Company's 1 for 5 reverse stock split completed on
August 28, 2006.
The loss from continuing operations for the third quarter includes
approximately $0.5 million in interest expense consisting of
termination fees and the expensing of deferred costs associated with
our previous lender upon the refinancing of our debt with CAPCO. Net
income for the third quarter of $0.5 million includes $0.9 million
from discontinued operations for the reversal of the accrual related
to litigation associated with the Company's former India.com business.
The US District Court for the Southern District of New York ruled in
favor of the Company and denied the defendant's appeal on this matter.
The Company further reported that it achieved earnings before
interest, taxes, depreciation and amortization from continuing
operations ("EBITDA") of $1.3 million in the third quarter of 2006, as
compared to EBITDA in the second quarter of 2006 of $941,000 and
EBITDA in the third quarter of 2005 of $1.9 million. A reconciliation
of this non-GAAP financial measure to the most directly comparable
GAAP financial measure, operating cash flows, together with
reconciliation to net income or loss for all periods presented, is
attached. The Company considers EBITDA to be a financial indicator of
its operational strength, its ability to service debt, and its
capacity to make new investments in its services.
The Company's cash and cash equivalents balance of $6.2 million at
the end of the third quarter remained relatively unchanged from the
$6.3 million balances at June 30, 2006 and December 31, 2005. Net cash
from operating activities amounted to $1.2 million for the current
quarter and $1.9 million for the nine months ended September 30, 2006.
Thomas Murawski, Chairman, President and Chief Executive Officer
of EasyLink, said,
"Third quarter results demonstrated continuing growth in our
Transaction Management Services (TMS) business. TMS revenue grew
sequentially by over 20% to just over $5.9 million for the quarter, on
the strength of the one-time software sale to a Fortune 20 company.
Excluding the one time sale, TMS revenue grew just under $0.4 million
or 8%, which was less than we expected. Revenue in the quarter was
unfavorably impacted by implementation delays from already contracted
deals with large corporations. We experience this from time to time,
typically on large projects where customers introduce delays due to
resource contention, greater than anticipated project complexity or
integration issues on their end. We also expect some of these delays
to continue into the fourth quarter. It's important to note that we
have not lost the customers but rather have delayed the revenue based
on revised implementation schedules. On the expense side, we are
beginning to see the benefits of our cost reduction programs in
improving gross margins and we expect the improving trend to continue.
Operating expenses however, were unfavorably impacted on two fronts;
legal expenses related to the patent infringement lawsuit initiated by
Dynamic Depth which we expect to continue into the fourth quarter and
increased sales and marketing spending, which will not repeat in the
next quarter".
Murawski added "In this report we have also begun to separately
break out EDI revenues, a Transaction Delivery Service used by
companies to send and receive commercial transactions such as purchase
orders, invoices and shipping information electronically. As we have
mentioned previously, EDI, has delivered stable revenues and strong
contribution margins over the past several years. We expect EDI to be
relatively stable this year, in spite of the fact that we recently
lost one of our largest EDI customers as a result of a merger with a
company who owned a competing EDI provider. Going forward, we will
break out EDI revenues in our quarterly reports to provide greater
visibility into our revenue dynamics which show our combined TMS
growth business and a stable EDI business already larger than a
declining TDS legacy business".
For the third quarter of 2006 in comparison to the second quarter
of 2006 and the third quarter of 2005, revenues (in thousands) for the
Company's services were as follows:
-0-
*T
% %
3rd Quarter 2nd Quarter Increase/ 3rd Quarter Increase/
2006 2006 (Decrease) 2005 (Decrease)
----------- ----------- ---------- ----------- ----------
TMS $ 5,927 $ 4,912 20.7% $ 4,513 31.3%
TDS - EDI $ 4,480 $ 4,712 (4.9%) $ 4,578 (2.1%)
TDS - Other $ 8,282 $ 9,228 (10.3%) $ 10,610 (21.9%)
----------- ----------- ---------- ----------- ----------
$ 18,689 $ 18,852 (0.9%) $ 19,701 (5.1%)
*T
This table has been changed from prior quarters to provide greater
investor visibility into the dynamics of EasyLink's Transaction
Delivery Services (TDS) business, which is comprised of a stable EDI
business and declining Telex, E-Mail, and Text-to-Fax businesses.
Business Outlook
The following statements are forward looking and actual results
may differ materially due to factors noted at the end of this release,
among others.
For the fourth quarter EasyLink expects:
-- Revenues in the range of $17.6 to $18.1 million with TMS
revenues in the range of $5.3 to $5.4 million, EDI revenue in
the range of $4.3 to $4.4 million and TDS revenues in the
range of $8.0 to $8.3 million.
-- Earnings in the range of break even to a net loss of $.04 per
share.
For the year 2006:
-- Revenues are expected to be approximately $74 million.
-- Earnings are expected to be in the range of breakeven to a net
loss of $.04 per share.
Quarterly Conference Call
EasyLink will host its quarterly conference call today at 10:30
a.m. EST. Listeners should call five minutes prior to the start of the
call to 800/340-8363 and the reservation number is 9165505. The call
will also be broadcast over the Internet. Online listeners should
visit the investor relations' pages of the EasyLink Web site,
www.EasyLink.com, or www.streetevents.com prior to the start of the
call for login information. If you are unable to participate, the
online archive of the broadcast will be available on the investor
relation's pages of www.EasyLink.com within two hours of the live call
through 11:00 p.m. EST November 24. You can also access the replay by
calling 800/642-1687 and entering the reservation number 9165505.
About EasyLink Services Corporation
EasyLink Services Corporation (NASDAQ: EASY), headquartered in
Piscataway, New Jersey, is a leading global provider of outsourced
business process automation services that enable medium and large
enterprises, including 60 of the Fortune 100, to improve productivity
and competitiveness by transforming manual and paper-based business
processes into efficient electronic business processes. EasyLink is
integral to the movement of information, money, materials, products
and people in the global economy, dramatically improving the flow of
data and documents for mission-critical business processes such as
client communications via invoices, statements and confirmations,
insurance claims, purchasing, shipping and payments. Driven by the
discipline of Six Sigma Quality, EasyLink helps companies become more
competitive by providing the most secure, efficient, reliable, and
flexible means of conducting business electronically. For more
information, please visit www.EasyLink.com.
This news release may contain statements of a forward-looking
nature relating to future events or financial results of EasyLink
Services Corporation. Investors are cautioned that such statements are
only predictions and actual events or results may differ materially.
In evaluating such statements, investors should specifically consider
the various factors that could cause actual events or results to
differ materially from those indicated from such forward-looking
statements. These include: the ability to service our remaining
indebtedness; the ability to continue as a going concern being
dependent upon the ability to generate sufficient cash flow to meet
our obligations on a timely basis, to obtain additional financing or
refinancing as may be required, and to achieve and maintain profitable
operations; the ability to attract additional customers or to expand
services sold to existing customers; the ability to successfully
implement our business strategy; the ability to commence service for
new customers on a timely basis and to ramp usage by such customers in
accordance with our expectations; and significant competition. These
and other risks and uncertainties are described in more detail in the
Company's filings with the Securities and Exchange Commission.
-0-
*T
EasyLink Services Corporation
Condensed Consolidated Balance Sheets
(in thousands)
Sept. 30, 2006 Dec. 31, 2005
(unaudited)
ASSETS
Cash and cash equivalents $ 6,172 $ 6,282
Accounts receivable, net 10,829 11,416
Other current assets 2,798 2,653
---------- ---------
Total current assets 19,799 20,351
Property and equipment, net 9,577 10,252
Goodwill and other intangible assets, net 11,911 12,477
Other assets 221 895
---------- ---------
Total assets $ 41,508 $ 43,975
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 5,320 $ 6,464
Accrued expenses 9,756 10,432
Loans and notes payable 5,421 10,550
Other current liabilities 1,315 2,395
---------- ---------
Total current liabilities 21,812 29,841
Long term liabilities 1,388 1,753
---------- ---------
Total liabilities 23,200 31,594
Total stockholders' equity 18,308 12,381
---------- ---------
Total liabilities and stockholders'
equity $ 41,508 $ 43,975
========== =========
-Statements of operations and cash flow follow-
*T
-0-
*T
EasyLink Services Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended Sept. 30,
-----------------------------
2006 2005
-------- --------
Revenues $ 18,689 $ 19,701
Cost of revenues 6,872 8,169
-------- --------
Gross profit 11,817 11,532
Operating expenses:
Sales and marketing 4,698 4,732
General and administrative 4,925 5,206
Product development 1,775 1,696
Amortization of other intangibles 43 517
Loss on sale of fax businesses --- 250
-------- --------
Total operating expenses 11,441 12,401
-------- --------
Income (loss) from operations 376 (869)
Other income (expense), net (523) 1,148
-------- --------
Income (loss) before income taxes (147) 279
Provision (credit) for income taxes 284 (65)
-------- --------
Income (loss) from continuing operations (431) 344
Income from discontinued operations 928 ---
-------- --------
Net income $ 497 $ 344
======== ========
Net income per share:
Basic and diluted income (loss) per share
from continuing operations $ (0.04) $ 0.04
Basic and diluted income per share
from discontinued operations $ 0.08 $ ---
-------- --------
Basic and diluted net income per share $ 0.04 $ 0.04
======== ========
Weighted average basic shares
outstanding* 10,919 8,975
======== ========
Weighted average diluted shares outstanding* 10,930 9,007
======== ========
*Adjusted for 1 for 5 reverse stock split.
*T
-0-
*T
EasyLink Services Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Nine Months Ended Sept. 30,
-----------------------------
2006 2005
-------- --------
Revenues $ 56,001 $ 60,149
Cost of revenues 22,230 22,925
-------- --------
Gross profit 33,771 37,224
Operating expenses:
Sales and marketing 13,757 14,726
General and administrative 14,316 15,390
Product development 5,258 5,094
Separation agreement costs --- 2,312
Amortization of other intangibles 444 1,551
Loss on sale of fax businesses --- 250
-------- --------
Total operating expenses 33,775 39,323
-------- --------
Loss from operations (4) (2,099)
Other income (expense), net (881) 507
-------- --------
Loss before income taxes (885) (1,592)
Provision for income taxes 11 40
-------- --------
Loss from continuing operations (896) (1,632)
Income from discontinued operations 928 ---
-------- --------
Net income (loss) $ 32 $ (1,632)
======== ========
Net income (loss) per share:
Basic and diluted loss per share from
continuing operations $ (0.09) $ (0.18)
Basic and diluted income per share from
discontinued operations 0.09 ---
-------- --------
Basic and diluted net income (loss) per
share $ 0.00 $ (0.18)
======== ========
Weighted average basic shares
outstanding* 10,163 8,906
======== ========
Weighted average diluted shares outstanding* 10,183 8,906
======== ========
* Adjusted for 1 for 5 reverse stock split.
*T
-0-
*T
EasyLink Services Corporation
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended Sept. 30,
---------------------------
2006 2005
------- -------
Cash flows from operating activities:
Net loss $ 32 $(1,632)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Income from discontinued operation-
reversal of litigation reserve (928) ---
Depreciation 2,127 2,426
Amortization of intangible assets 566 1,762
Loss on sale of marketable securities --- 469
Loss on sale of fax businesses --- 250
Issuance of shares as matching
contributions to employee benefit plans 345 374
Separation agreement costs --- 2,312
Gain on sale of domain names repurchase
agreement --- (1,907)
Debt termination fee 300
Other 337 112
Changes in operating assets and
liabilities:
Accounts receivable, net 782 305
Prepaid expenses and other assets 611 201
Accounts payable, accrued expenses and
other liabilities (2,297) (4,214)
------- -------
Net cash provided by operating activities-
continuing operations 1,875 458
Net cash provided by operating activities-
discontinued operations --- 400
------- -------
Net cash provided by operating activities 1,875 858
------- -------
Cash flows from investing activities:
Purchases of property and equipment (1,558) (3,798)
Proceeds from sale of marketable securities --- 1,021
Proceeds from domain names repurchase
agreement --- 830
Cash paid from Quickstream acquisition --- (342)
------- -------
Net cash used in investing activities (1,558) (2,289)
------- -------
Cash flows from financing activities:
Proceeds of loan advances 13,700 1,900
Payment of loan advances (9,229) (950)
Debt termination fee and deferred debt
issuance costs (645) ---
Principal payments of note payable (9,600) (3,225)
Proceeds from issuance of stock 5,405 96
Other (42) (324)
------- -------
Net cash used in financing activities (411) (2,503)
------- -------
Effect of foreign exchange rate changes on
cash and cash equivalents (16) 101
------- -------
Net decrease in cash and cash equivalents (110) (3,833)
Cash and cash equivalents at beginning of
the period 6,282 12,216
------- -------
Cash and cash equivalents at end of the
period $ 6,172 $ 8,383
=========== ===========
*T
-0-
*T
EasyLink Services Corporation
Reconciliation of Non GAAP Financial Information to GAAP
(in thousands)
Three Months Ended Sept. 30,
----------------------------
2006 2005
------- --------
Income (loss) from continuing operations $ (431) $ 344
Add:
Depreciation 706 712
Amortization of intangible assets 81 580
Interest expense, net 638 306
Income taxes (credits) 284 (65)
------- --------
EBITDA 1,278 1,877
Less:
Interest expense, net 638 306
Income taxes (credits) 284 (65)
Add (subtract):
Other non-cash items 674 (883)
Changes in operating assets and
liabilities 202 453
------- --------
Net cash provided by continuing operations $ 1,232 $ 1,206
======= ========
*T
-0-
*T
Nine Months Ended Sept. 30,
----------------------------
2006 2005
------- -------
Loss from continuing operations $ (896) $(1,632)
Add:
Depreciation 2,127 2,426
Amortization of intangible assets 566 1,762
Interest expense, net 1,172 911
Income taxes (credits) 11 40
------- -------
EBITDA 2,980 3,507
Less:
Interest expense, net 1,172 911
Income taxes (credits) 11 40
Add (subtract):
Other non-cash items 982 1,610
Changes in operating assets and
liabilities (904) (3,708)
------- -------
Net cash provided by continuing operations $ 1,875 $ 458
======= =======
*T