Hey all,
Check this out, it was released this morning:
Modem Media Confirms Second Quarter Guidance, Comments on Full Year Outlook, and
Announces Restructuring and Other Actions
NORWALK, Conn., June 27 /PRNewswire-FirstCall/ --
Modem Media, Inc. (Nasdaq: MMPT) today announced it has initiated a series of
global restructuring actions to align capacity with expected revenue levels. These
actions, which were commenced this quarter and are expected to be completed in the
third quarter of 2002, include the closure of offices in Toronto, Munich and Hong
Kong, staff reductions in most of the Company's other offices and a reduction in
office space in Norwalk and London.
"Anticipating a resurgence in growth in the second half of this year, we
retained extra capacity in North America and continued to invest in our
international network," said Marc Particelli, President and CEO of Modem Media.
"Given the slower than expected recovery of our U.S. business, we are resizing
capacity and refocusing our resources on markets with the highest potential and
offices with scale and market strength."
As a result of these actions, Modem Media expects to realize approximately $4
million in pre-tax savings for the balance of this year. The Company expects to
incur second quarter pre-tax charges of approximately $12 million for these
activities and incur approximately $4 million of cash costs to implement these
actions over the next six months. These one-time charges include provisions for
staff reductions, office closures, reduced office space, and other asset
write-offs. The staff reductions and office closures will result in a reduction in
the Company's global workforce of approximately
90 employees. Worldwide headcount will total approximately 310 employees after the
actions are completed. The Company, as of May 31, 2002, had approximately $45
million of cash on hand.
In addition, the Company will recognize a $3 to $4 million goodwill impairment
charge as a result of the adoption of "Statement of Financial Accounting Standards
No. 142, Goodwill and Other Intangible Assets" ("SFAS 142"). In accordance with
the transition provisions of SFAS 142, this charge will be recorded as the
cumulative effect of a change in accounting principle as of January 1, 2002.
Consistent with its prior guidance, Modem Media expects revenue of $18 to $19
million in the second quarter of 2002 with EBITDA, excluding one-time items, of
approximately $0.5 to $1.0 million for the quarter and earnings, excluding
one-time items, at breakeven or slightly below. Due to international office
closures and soft North American results, the Company has revised its outlook for
the full year and now expects revenue in the range of $70 to
$75 million for 2002. EBITDA for 2002, excluding one-time items, is expected to
range from $9 to $10 million and earnings per share, excluding one-time items, are
expected to be from $0.08 to $0.11 per share.
"Our previous expectations for North America have been revised downward as a
result of the uncertain recovery in the U.S. economy," said Frank Connolly, Modem
Media's Chief Financial Officer. "We reduced our costs in line with our revised
revenue outlook and exited certain international locations consistent with our
continuing commitment to build shareholder value and improve profitability."
About Modem Media
Founded in 1987, Modem Media (http://www.modemmedia.com) is an interactive
marketing strategy and services firm recognized for the innovation and
effectiveness of its work in digital channels. Modem Media helps world class
companies realize greater value from their customers by increasing sales and
reducing costs across their communications, selling and service activities. The
Company builds value for global businesses including Delta Air Lines, General
Motors, IBM, Eastman Kodak, Kraft, Michelin and Philips Electronics. Modem Media's
success is rooted in the integration of customer-driven marketing strategies,
award-winning creative solutions, and advanced marketing technologies. Modem Media
is headquartered in Norwalk, Connecticut and has additional offices in San
Francisco, London, and Sao Paulo.
This press release contains statements that are "forward-looking" within the
meaning of applicable federal securities laws, including the Company's financial
strength, the amount of the charge expected to be taken in the second quarter as a
result of restructuring actions, the savings expected as a result of these
actions, cash costs to implement these actions, the timing and cost of the expense
reduction program and office closures, expected revenue, expected EBITDA, expected
EBITDA margin, excepted earnings per share, expected earnings results,
profitability, future results in our North American and International businesses,
future client growth, and future client demand, all of which are subject to a
number of risks and uncertainties that could cause actual results to differ
materially from those anticipated. Factors that could cause actual results to
differ include timing and scope of new projects and client initiatives, demand for
the Company's services, spending levels of the Company's clients and prospects,
the loss of a major client, pricing pressure for the Company's services, the
impact of the continued economic downturn, the amount of severance paid to
employees, the timing and cost of closing the Hong Kong, Toronto and Munich
offices, the timing and ability of the Company to manage the level of personnel
and capacity in the future, the timing and amount of capital expenditures, the
timing of collections from the Company's clients, and other factors more fully
discussed in our filings with the Securities and Exchange Commission, including
our Form 10K and Forms 10Qs.
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Fun, huh?
