ATLANTA, Jan. 9, 2006 (PRIMEZONE) -- Interland (Nasdaq:INLD), a leading provider of websites and online services for small and medium-sized businesses (SMBs), today reported results for its fiscal quarter ended November 30, 2005.
The quarter was highlighted by the previously unannounced agreement with R.H. Donnelley to provide website and hosting services. Additional highlights of the quarter include the announcement to purchase Web.com and the appointments of Vikas Rijsinghani as Chief Technology Officer and Judy Hackett as Chief Marketing Officer.
Summary of Fiscal First Quarter 2006 Results:
-- Total revenues for the quarter were $12.1 million, versus $20.6
million in the fourth quarter. Substantially all of the revenue
decline was due to the company's sale of its dedicated server
assets.
-- Net loss was $2.6 million, or negative $0.16 per share, an
improvement of $3.6 million, versus a loss of $6.2 million, or
negative $0.38 per share, in the previous quarter.
-- Earnings before interest, taxes, depreciation, and amortization,
("EBITDA") (1) for the quarter was negative $1.3 million, an
improvement of $0.8 million from negative $2.1 million, in the
previous quarter. This included restructuring charges, net of one
time gains, of roughly $0.8 million and stock-based compensation
of approximately $0.4 million.
-- Cash and investment position, which includes cash and cash
equivalents of $23.3 million and restricted investments of $9.4
million, was $32.7 million compared to $26.5 million, an
improvement of $6.2 million, in the previous quarter.
"Interland executed on its restructuring plan this quarter moving towards a more efficient enterprise poised for growth, highlighted by a $3.6 million improvement in net income," stated Jeff Stibel, President and CEO, Interland. "We made significant inroads in our sales channel and signed deals with R.H. Donnelley, one of the largest Yellow Pages publishers and local online search companies in the U.S., and Ambassador Yellow Pages, the fastest growing directory publisher in New York City. By acquiring Web.com, we now have a strong platform to build a powerful world-class brand. In addition to the tremendous branding opportunity, this acquisition adds revenues, significant direct navigation traffic, and an entrance into the consumer segment of the web hosting market."
"Interland was able to take advantage of significant cost savings during the quarter as a result of the sale of its dedicated server assets and the continued restructuring of the company," stated Gonzalo Troncoso, Executive Vice President and Chief Financial Officer. "I am encouraged with the financial results from the quarter and feel that the company is headed in a favorable direction. By focusing on cost savings and striking deals with leading industry players, Interland is positioning itself for the future and building a strong infrastructure for growth. The company continues to strengthen its team by hiring top talent and its business by focusing on what is core: provide high-quality and reliable websites and online services to the small and medium-sized business market."
For further information on the quarter, please refer to the company's Form 10-Q.
About Interland
Interland, Inc. (Nasdaq:INLD) is a leading provider of websites and online services focused on helping small and medium-sized businesses achieve success by providing the knowledge, services and tools to build, manage and promote businesses online. Interland offers a wide selection of online services, including standardized web hosting, ecommerce, application hosting, website development, online marketing and optimization tools. For more information about Interland, please visit www.interland.com or call at 800-336-9883.
Interland will host a conference call today to discuss its quarterly results at 9:30 AM ET (6:30 AM PT). A live webcast of the call can be accessed on the investors section of the company's website at www.interland.com. A replay of the call will be available on the site for seven days.
(1) EBITDA from continuing operations is a non-GAAP financial measure that is most directly comparable to the GAAP financial measure of Net Loss from continuing operations. Reconciliations of the non-GAAP measure to both Net Loss from continuing operations, as well as to Net Cash Used in Operating Activities follow.
Forward-looking Statements
Except for the historical information contained in this press release, statements in this press release may be considered forward-looking statements. These forward-looking statements include, but are not limited to: the ability to build a more efficient enterprise, grow the business, build a powerful world-class brand, add revenue, enter the consumer segment of the web hosting market and strike deals with leading industry players. Actual results may differ materially from those contained in the forward-looking statements in this press release. Factors which could affect these forward-looking statements, and Interland's business, include but are not limited to: the ability to operate within budgeted expense, the ability of the company to improve customer satisfaction, reduce churn, and expand its customer base as planned, our growing dependence on our reseller and other indirect sales channels, general economic conditions, the impact of competition, quarterly fluctuations in operating results, the loss of customers with failing businesses and customer churn in general, customer acceptance of new products and services, the possible lack of availability of our restricted investments, the retention of key employees, potential liabilities from the sale of our dedicated server assets, possible disruptions due to our data centers being maintained by third parties, higher than expected costs of litigation and the impact of liabilities that could carry over from Micron Electronics' discontinued operations. Certain of these and other risks associated with Interland's business are discussed in more detail in its public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, and its proxy statement. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not undertake to update its forward-looking statements.
INTERLAND, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
For the Quarter Ended
--------------------------------------
11/30/05 11/30/04 11/30/05 8/31/05
-------- -------- -------- --------
Revenues $12,148 $23,061 $12,148 $20,618
Operating costs and expenses:
Network operating costs,
exclusive of depreciation
shown below 2,131 5,685 2,131 5,642
Sales and marketing, exclusive
of depreciation shown below 2,517 3,966 2,517 4,469
Technical support, exclusive
of depreciation shown below 1,803 3,813 1,803 2,612
General and administrative,
exclusive of depreciation
shown below 5,238 7,131 5,238 7,980
Bad debt expense 276 440 276 321
Depreciation and amortization 1,431 5,877 1,431 4,370
Restructuring costs 1,626 -- 1,626 950
Gain on sale of accounts -- -- -- 705
Other expense (income), net (165) (13) (165) (4)
------- ------- ------- -------
Total operating costs
and expenses 14,857 26,899 14,857 27,045
------- ------- ------- -------
Operating loss (2,709) (3,838) (2,709) (6,427)
Interest income (expense), net 243 41 243 181
------- ------- ------- -------
Loss from continuing
operations before income
taxes (2,466) (3,797) (2,466) (6,246)
Income tax benefit (expense) -- -- -- 850
------- ------- ------- -------
Net loss from continuing
operations (2,466) (3,797) (2,466) (5,396)
Income/(loss) from
discontinued operations,
net of tax (122) 601 (122) (778)
------- ------- ------- -------
Net loss $(2,588) $(3,196) $(2,588) $(6,174)
======= ======= ======= =======
Net income/(loss) per share,
basic and diluted:
Continuing operations $ (0.15) $ (0.24) $ (0.15) $ (0.33)
Discontinued operations (0.01) 0.04 (0.01) (0.05)
------- ------- ------- -------
$ (0.16) $ (0.20) $ (0.16) $ (0.38)
======= ======= ======= =======
Number of shares used in
per share calculation:
Basic and diluted 16,283 16,016 16,283 16,032
INTERLAND, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
As of
-----------------------
November 30, August 31,
2005 2005
--------- ---------
Assets
Current assets
Cash and cash equivalents $ 23,268 $ 16,891
Trade receivables, net of the allowance
of $34 and $381, respectively 1,333 1,365
Other receivables 710 11,502
Prepaids and other current assets 2,056 2,698
Restricted investments 276 258
--------- ---------
Total current assets 27,643 32,714
Restricted investments 9,073 9,299
Securities, held-to-maturity 53 50
Property plant and equipment, net 6,003 5,858
Intangibles, net 2,176 3,038
Other assets 5,600 5,600
--------- ---------
Total assets $ 50,548 $ 56,559
========= =========
Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 2,518 $ 2,355
Accrued expenses 6,287 10,465
Accrued restructuring charges 5,425 4,717
Current portion of long-term debt
and capital lease obligations 872 859
Deferred revenue 4,275 4,542
--------- ---------
Total current liabilities 19,377 22,938
Long-term debt and capital lease obligations 2,269 2,510
Deferred revenue, long-term 208 229
Other liabilities 934 939
--------- ---------
Total liabilities 22,788 26,616
--------- ---------
Shareholders' equity
Common stock, $.01 par value, authorized
21 million shares, issued and outstanding
16.4 and 16.1 million shares, respectively 164 164
Additional capital 324,581 323,498
Warrants 2,128 2,806
Note receivable from shareholder (735) (735)
Accumulated deficit (298,378) (295,790)
--------- ---------
Total shareholders' equity 27,760 29,943
--------- ---------
Total liabilities and shareholders' equity $ 50,548 $ 56,559
========= =========
EBITDA is defined as net income (loss) less (i) provision for incometaxes, (ii) interest income or expense, and (iii) depreciation andamortization. EBITDA is not an indicator of financial performanceunder generally accepted accounting principles and may not becomparable to similarly captioned information reported by othercompanies. In addition, it does not replace net income (loss),operating income (loss), or cash flows from operating activities asindicators of operating performance. The effect of taxes and intereston Interland’s net loss is not significant, but depreciation andamortization, primarily as a result of acquisitions, is significant.The Company believes that measuring the performance of the businesswithout regard to non-cash depreciation and amortization can maketrends in operating results more readily apparent, and when consideredwith other information, assist investors and other users of theCompany’s financial statements who wish to evaluate the Company’sability to generate future cash flows.
The following table reflects the calculation of EBITDA from continuing operations and a reconciliation to net cash provided by (used in) operating activities:
For the Quarter Ended
----------------------------------------
11/30/05 11/30/04 11/30/05 8/31/05
-------- -------- -------- -------
Net loss $(2,588) $(3,196) $(2,588) $(6,174)
Depreciation and
amortization 1,431 5,877 1,431 4,370
Interest expense (income) (243) (41) (243) (181)
Income tax benefit -- -- -- (850)
Discontinued operations 122 (601) 122 778
-------- -------- -------- -------
EBITDA $(1,278) $ 2,039 $(1,278) $(2,057)
======== ======== ======== =======
Interest income/(expense) 243 41 243 181
Provision for bad debts 276 440 276 321
Gain on sale of accounts -- -- -- 705
(Gain)/Loss on the sale
of assets -- (13) -- (4)
Goodwill and asset impairment -- -- -- --
Other non-cash adjustments 385 158 385 --
Restructuring charges 1,626 -- 1,626 950
Income tax (expense) benefit -- -- -- 850
Changes in assets and
liabilities:
Cash received from sale
of dedicated assets 11,267 -- 11,267 --
Receivables, net (719) (490) (719) 548
Other current assets 642 301 642 (534)
Accounts payable, accrued
expenses, and deferred
revenue (4,326) (2,583) (4,326) (5,320)
-------- -------- -------- -------
Net cash provided by
(used in) operating
activities $ 8,116 $ (107) $ 8,116 $(4,360)
======= ======= ======= =======