Digital Lighthouse Corporation Announces Completion of Financial Restructuring and Fiscal Year 2000 Earnings

Apr 16, 2001, 01:00 ET from Digital Lighthouse Corporation

    ENGLEWOOD, Colo., April 16 /PRNewswire/ --
 Digital Lighthouse Corporation (Nasdaq:   DGLH), a provider of high economic
 value CRM technology and operations solutions, today announced financial
 results for year-end 2000.  In addition, the Company announced the completion
 of its financial restructuring efforts that began in the third quarter of
 2000, which are aimed at allowing the Company to become EBITDA positive.
 
     HIGHLIGHTS
     * Fiscal year 2000 revenues of $39.9 million were 61.4% higher than fiscal
       year 1999 revenues.
     * Restructuring efforts have resulted in substantially lowered revenue
       requirements to achieve breakeven.
     * Anticipate turning EBITDA positive in the near future.
     * Increased focus on high economic value CRM technology solutions --
       currently 70% of revenues; 30% of revenues from ongoing CRM operational
       services.
     * New or expanded relationships with Lehman Brothers, Heller Financial,
       American Century, Orbitz, Solomon Smith Barney, Sony, Merrill Lynch and
       Deutsche Bank, among others, will substantially offset a loss of
       revenues due to a termination of certain low margin accounts.
     * Substantially increased pipeline.
 
     Commenting on recent Company initiatives, Tim O'Crowley, Chairman and CEO
 of Digital Lighthouse Corporation, said:  "Like most firms in our industry, we
 have gone through a period of transition; however, thanks to the hard work of
 our associates, we have made significant changes that have allowed us to get
 back on track in Q2.  We anticipate being very close to EBITDA breakeven
 (excluding non-cash compensation charges) in the near future.   Significant
 new client wins and a substantial pipeline should enable Digital to perform
 well during the remainder of 2001 if we can successfully execute our business
 plan."
 
     In the past six months, the Company has taken the following measures to
 restructure its business:
     * Dramatic expense reduction, including discontinuation of some
       unprofitable operations and associated revenue.
     * Restructuring under-performing acquisitions.
     * Focused efforts on expanding the breadth and depth of relationships with
       key professional services clients
     * Redefining the Company's sales and marketing model away from direct
       sales and toward partnership-based selling.
     * Reorganization of CRM delivery systems for scalability.
     * Increased focus on high demand CRM technology solutions, including
       content management, analytics, and transaction systems.
 
     EXPENSE REDUCTION INITIATIVES
     In September 2000 the Company initiated a major cost-restructuring program
 that was completed at the end of Q1 2001.  Quarterly operating expense has
 been reduced by approximately $5 million.  Digital Lighthouse believes that
 its cost reduction program will bring its operating expense in line with
 projected revenues.
 
     Restructuring initiatives included:
     * Personnel reductions totaling 265 employees.
     * Closing of unprofitable facilities.
     * Write down of certain revenues primarily associated with acquisitions.
 
     With regard to the expense reductions, Mr. O'Crowley noted:  "While the
 restructuring process included eliminating some revenue associated with
 terminated operations, at the end of the day, we have a better, more
 profitable mix of business and a greatly reduced breakeven point.  The
 restructuring, including the write down of approximately $2 million in Q4 2000
 revenues, primarily associated with contracts obtained through the
 acquisitions, and the hiring and training of professional services personnel
 to assist in delivery of programs in Q2 2001 and beyond, was both difficult
 and expensive including the short-term negative impact on gross operating
 margins; however, we believe that now we have a much stronger company going
 forward.
     "We enter the second quarter with a strong backlog, a greatly reduced
 expense structure, growing margins, and total focus on CRM solutions where
 client demand remains strong.  Our client base is primarily made up of blue
 chip clients, including Merrill Lynch, Sony, Solomon Smith Barney, Deutsche
 Bank, among others.  Recent new client wins include Lehman Brothers, Heller
 Financial, American Century, and Orbitz. While the economy remains weak, our
 clients continue to spend money on those projects, which have rapid payback --
 exactly what our CRM solutions are designed to do.
     "Currently, while continuing down the path of achieving profitability, we
 need to take steps to strengthen our balance sheet. In this regard, our
 independent auditor intends to include a going concern qualification in its
 opinion.  We are taking steps to remedy the situation including the potential
 sale of assets associated with the closed facilities, increase in our credit
 facility, and other strategic alternatives."
 
     DELISTING NOTIFICATION
     On April 5, 2001 Digital Lighthouse was notified by the Nasdaq that the
 Company had failed to maintain a minimum market value of public float of
 $5 million and a minimum bid price of $1.00 over 30 consecutive trading days
 as required by The Nasdaq National Market under Marketplace Rules.  Digital
 Lighthouse has 90 days from this date, or until July 5, 2001, to remedy the
 situation or the Company will be delisted from the Nasdaq National Market.
 Digital Lighthouse intends to make the necessary modifications in order to
 comply with the Nasdaq rules.  There is no guarantee that the Company will be
 in compliance with these rules by the specified date, and Digital Lighthouse
 could be delisted from the exchange.
 
                      Consolidated Condensed Balance Sheet
 
                                                       Year Ended December 31,
                                                        1999            2000
                     ASSETS
     CURRENT ASSETS:
       Cash and cash equivalents                       $6,204         $3,020
       Investments - available for sale                    --          4,945
       Restricted cash                                    407          5,813
       Receivables                                      6,326         12,536
       Other current                                    1,596          1,849
         Total current assets                          14,533         28,163
     PROPERTY AND EQUIPMENT, net                        7,982         19,275
     GOODWILL AND OTHER INTANGIBLES, net                2,808          4,651
     OTHER ASSETS                                       1,055            302
         Total assets                                $ 26,378        $52,391
 
     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
     CURRENT LIABILITIES:
       Accounts payable                                $1,668         $6,478
       Other current liabilities                        5,332          9,746
         Total current liabilities                      7,000         16,224
     DEFERRED RENT                                        245            175
     LONG-TERM BORROWINGS, net of current portion       1,722          4,004
     CONVERTIBLE PREFERRED STOCK                       59,408             --
     STOCKHOLDER'S EQUITY (DEFICIT)                  (41,997)         31,988
         Total liabilities and stockholders'
          equity (deficit)                           $ 26,378       $ 52,391
 
                 CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
 
                                                      Year Ended December 31,
                                                       1999            2000
     REVENUE                                          $24,699        $39,871
     DIRECT COST OF SERVICES                         (16,986)       (28,650)
     GROSS PROFIT                                       7,713         11,221
     OPERATING EXPENSES:
       Selling, general and administrative             15,020         37,079
       Depreciation and amortization                    3,533          6,131
       Loss on impairment of intangibles                   --            973
       Restructuring charge                                --          5,009
       Research and development                         1,079             --
         Total operating expenses                      19,632         49,192
     LOSS FROM OPERATIONS                            (11,919)       (37,971)
     OTHER INCOME (EXPENSE):
       Loss from Spider                                (1055)          (738)
       Interest income                                    134          1,302
       (Interest expense)                               (150)          (342)
       Loss on disposal of equipment and other           (20)          (630)
         Total other income (expense), net            (1,091)          (408)
     NET LOSS                                       $(13,010)      $(38,379)
     NET LOSS APPLICABLE TO COMMON SHAREHOLDERS:
       Net loss                                     $(13,010)      $(38,379)
       Accretion of preferred stock                       864            882
       Cumulative dividends to
        preferred stockholders                      (11, 361)        (1,402)
       Beneficial conversion on
        Series F Preferred Stock                           --       (13,366)
     NET LOSS APPLICABLE TO COMMON SHAREHOLDERS     $(25,235)      $(54,029)
     BASIC AND DILUTED NET LOSS PER SHARE            $(13.50)        $(3.72)
     WEIGHTED AVG. COMMON SHARES OUTSTANDING
       BASIC AND DILUTED                            1,869,803     14,523,311
 
     A reader of this press release should be cautioned that certain important
 factors may affect the Company's actual results and could cause such results
 to differ materially from any forward-looking statement which may have been
 made or deemed to have been made in this press release or which are otherwise
 made by the Company or on its behalf.  For this purpose any statements
 contained in this press release that are not statements of historical fact may
 be deemed to be forward-looking statements.  Without limiting the generality
 of the foregoing, words such as  "may," "will," "expect," "believe,"
 "anticipate," "intend," "could," "would,"  "estimate," "continue" or "pursue,"
 or the negative other variations thereof or comparable terminology are
 intended to identify forward-looking statements.
 
     Forward-looking statements involve risks and uncertainties that cannot be
 predicted or quantified and, consequently, actual results may differ
 materially from those expressed or implied by such forward-looking statements.
 The Company has based these statements on our current expectations about
 future events.  Although the Company believes that the expectations reflected
 in its forward-looking statements are reasonable, it cannot guarantee that
 these expectations actually will be achieved.
     The Company undertakes no obligation to publicly update any
 forward-looking statements, whether as a result of new information, future
 events or otherwise.  The Company also may make additional disclosures in its
 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
 on Form 8-K that it may file from time to time with the Securities and
 Exchange Commission.  This discussion is provided as permitted by the Private
 Securities Litigation Reform Act of 1995.
 
     About Digital Lighthouse
     Digital Lighthouse is the premier provider of customer relationship
 solutions. The Company's Customer Relationship Management Professional
 Services team provides CRM-focused strategic consulting; content, knowledge,
 and document management; interface design and web development; customer
 knowledge programs and data analytics; and customer interaction and
 transaction processing systems.
     Digital Lighthouse's ASP Operational Services team operates and manages
 the systems required to support customer relationship management campaigns.
 The Operations services include management of transaction processing systems;
 online and offline customer communication and interaction systems (co-browse,
 email, live chat and voice); and transaction processing and web site hosting.
 
     You can find out more information about the Company at
 http://www.digitallighthouse.com.
 
 

SOURCE Digital Lighthouse Corporation
    ENGLEWOOD, Colo., April 16 /PRNewswire/ --
 Digital Lighthouse Corporation (Nasdaq:   DGLH), a provider of high economic
 value CRM technology and operations solutions, today announced financial
 results for year-end 2000.  In addition, the Company announced the completion
 of its financial restructuring efforts that began in the third quarter of
 2000, which are aimed at allowing the Company to become EBITDA positive.
 
     HIGHLIGHTS
     * Fiscal year 2000 revenues of $39.9 million were 61.4% higher than fiscal
       year 1999 revenues.
     * Restructuring efforts have resulted in substantially lowered revenue
       requirements to achieve breakeven.
     * Anticipate turning EBITDA positive in the near future.
     * Increased focus on high economic value CRM technology solutions --
       currently 70% of revenues; 30% of revenues from ongoing CRM operational
       services.
     * New or expanded relationships with Lehman Brothers, Heller Financial,
       American Century, Orbitz, Solomon Smith Barney, Sony, Merrill Lynch and
       Deutsche Bank, among others, will substantially offset a loss of
       revenues due to a termination of certain low margin accounts.
     * Substantially increased pipeline.
 
     Commenting on recent Company initiatives, Tim O'Crowley, Chairman and CEO
 of Digital Lighthouse Corporation, said:  "Like most firms in our industry, we
 have gone through a period of transition; however, thanks to the hard work of
 our associates, we have made significant changes that have allowed us to get
 back on track in Q2.  We anticipate being very close to EBITDA breakeven
 (excluding non-cash compensation charges) in the near future.   Significant
 new client wins and a substantial pipeline should enable Digital to perform
 well during the remainder of 2001 if we can successfully execute our business
 plan."
 
     In the past six months, the Company has taken the following measures to
 restructure its business:
     * Dramatic expense reduction, including discontinuation of some
       unprofitable operations and associated revenue.
     * Restructuring under-performing acquisitions.
     * Focused efforts on expanding the breadth and depth of relationships with
       key professional services clients
     * Redefining the Company's sales and marketing model away from direct
       sales and toward partnership-based selling.
     * Reorganization of CRM delivery systems for scalability.
     * Increased focus on high demand CRM technology solutions, including
       content management, analytics, and transaction systems.
 
     EXPENSE REDUCTION INITIATIVES
     In September 2000 the Company initiated a major cost-restructuring program
 that was completed at the end of Q1 2001.  Quarterly operating expense has
 been reduced by approximately $5 million.  Digital Lighthouse believes that
 its cost reduction program will bring its operating expense in line with
 projected revenues.
 
     Restructuring initiatives included:
     * Personnel reductions totaling 265 employees.
     * Closing of unprofitable facilities.
     * Write down of certain revenues primarily associated with acquisitions.
 
     With regard to the expense reductions, Mr. O'Crowley noted:  "While the
 restructuring process included eliminating some revenue associated with
 terminated operations, at the end of the day, we have a better, more
 profitable mix of business and a greatly reduced breakeven point.  The
 restructuring, including the write down of approximately $2 million in Q4 2000
 revenues, primarily associated with contracts obtained through the
 acquisitions, and the hiring and training of professional services personnel
 to assist in delivery of programs in Q2 2001 and beyond, was both difficult
 and expensive including the short-term negative impact on gross operating
 margins; however, we believe that now we have a much stronger company going
 forward.
     "We enter the second quarter with a strong backlog, a greatly reduced
 expense structure, growing margins, and total focus on CRM solutions where
 client demand remains strong.  Our client base is primarily made up of blue
 chip clients, including Merrill Lynch, Sony, Solomon Smith Barney, Deutsche
 Bank, among others.  Recent new client wins include Lehman Brothers, Heller
 Financial, American Century, and Orbitz. While the economy remains weak, our
 clients continue to spend money on those projects, which have rapid payback --
 exactly what our CRM solutions are designed to do.
     "Currently, while continuing down the path of achieving profitability, we
 need to take steps to strengthen our balance sheet. In this regard, our
 independent auditor intends to include a going concern qualification in its
 opinion.  We are taking steps to remedy the situation including the potential
 sale of assets associated with the closed facilities, increase in our credit
 facility, and other strategic alternatives."
 
     DELISTING NOTIFICATION
     On April 5, 2001 Digital Lighthouse was notified by the Nasdaq that the
 Company had failed to maintain a minimum market value of public float of
 $5 million and a minimum bid price of $1.00 over 30 consecutive trading days
 as required by The Nasdaq National Market under Marketplace Rules.  Digital
 Lighthouse has 90 days from this date, or until July 5, 2001, to remedy the
 situation or the Company will be delisted from the Nasdaq National Market.
 Digital Lighthouse intends to make the necessary modifications in order to
 comply with the Nasdaq rules.  There is no guarantee that the Company will be
 in compliance with these rules by the specified date, and Digital Lighthouse
 could be delisted from the exchange.
 
                      Consolidated Condensed Balance Sheet
 
                                                       Year Ended December 31,
                                                        1999            2000
                     ASSETS
     CURRENT ASSETS:
       Cash and cash equivalents                       $6,204         $3,020
       Investments - available for sale                    --          4,945
       Restricted cash                                    407          5,813
       Receivables                                      6,326         12,536
       Other current                                    1,596          1,849
         Total current assets                          14,533         28,163
     PROPERTY AND EQUIPMENT, net                        7,982         19,275
     GOODWILL AND OTHER INTANGIBLES, net                2,808          4,651
     OTHER ASSETS                                       1,055            302
         Total assets                                $ 26,378        $52,391
 
     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
     CURRENT LIABILITIES:
       Accounts payable                                $1,668         $6,478
       Other current liabilities                        5,332          9,746
         Total current liabilities                      7,000         16,224
     DEFERRED RENT                                        245            175
     LONG-TERM BORROWINGS, net of current portion       1,722          4,004
     CONVERTIBLE PREFERRED STOCK                       59,408             --
     STOCKHOLDER'S EQUITY (DEFICIT)                  (41,997)         31,988
         Total liabilities and stockholders'
          equity (deficit)                           $ 26,378       $ 52,391
 
                 CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
 
                                                      Year Ended December 31,
                                                       1999            2000
     REVENUE                                          $24,699        $39,871
     DIRECT COST OF SERVICES                         (16,986)       (28,650)
     GROSS PROFIT                                       7,713         11,221
     OPERATING EXPENSES:
       Selling, general and administrative             15,020         37,079
       Depreciation and amortization                    3,533          6,131
       Loss on impairment of intangibles                   --            973
       Restructuring charge                                --          5,009
       Research and development                         1,079             --
         Total operating expenses                      19,632         49,192
     LOSS FROM OPERATIONS                            (11,919)       (37,971)
     OTHER INCOME (EXPENSE):
       Loss from Spider                                (1055)          (738)
       Interest income                                    134          1,302
       (Interest expense)                               (150)          (342)
       Loss on disposal of equipment and other           (20)          (630)
         Total other income (expense), net            (1,091)          (408)
     NET LOSS                                       $(13,010)      $(38,379)
     NET LOSS APPLICABLE TO COMMON SHAREHOLDERS:
       Net loss                                     $(13,010)      $(38,379)
       Accretion of preferred stock                       864            882
       Cumulative dividends to
        preferred stockholders                      (11, 361)        (1,402)
       Beneficial conversion on
        Series F Preferred Stock                           --       (13,366)
     NET LOSS APPLICABLE TO COMMON SHAREHOLDERS     $(25,235)      $(54,029)
     BASIC AND DILUTED NET LOSS PER SHARE            $(13.50)        $(3.72)
     WEIGHTED AVG. COMMON SHARES OUTSTANDING
       BASIC AND DILUTED                            1,869,803     14,523,311
 
     A reader of this press release should be cautioned that certain important
 factors may affect the Company's actual results and could cause such results
 to differ materially from any forward-looking statement which may have been
 made or deemed to have been made in this press release or which are otherwise
 made by the Company or on its behalf.  For this purpose any statements
 contained in this press release that are not statements of historical fact may
 be deemed to be forward-looking statements.  Without limiting the generality
 of the foregoing, words such as  "may," "will," "expect," "believe,"
 "anticipate," "intend," "could," "would,"  "estimate," "continue" or "pursue,"
 or the negative other variations thereof or comparable terminology are
 intended to identify forward-looking statements.
 
     Forward-looking statements involve risks and uncertainties that cannot be
 predicted or quantified and, consequently, actual results may differ
 materially from those expressed or implied by such forward-looking statements.
 The Company has based these statements on our current expectations about
 future events.  Although the Company believes that the expectations reflected
 in its forward-looking statements are reasonable, it cannot guarantee that
 these expectations actually will be achieved.
     The Company undertakes no obligation to publicly update any
 forward-looking statements, whether as a result of new information, future
 events or otherwise.  The Company also may make additional disclosures in its
 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
 on Form 8-K that it may file from time to time with the Securities and
 Exchange Commission.  This discussion is provided as permitted by the Private
 Securities Litigation Reform Act of 1995.
 
     About Digital Lighthouse
     Digital Lighthouse is the premier provider of customer relationship
 solutions. The Company's Customer Relationship Management Professional
 Services team provides CRM-focused strategic consulting; content, knowledge,
 and document management; interface design and web development; customer
 knowledge programs and data analytics; and customer interaction and
 transaction processing systems.
     Digital Lighthouse's ASP Operational Services team operates and manages
 the systems required to support customer relationship management campaigns.
 The Operations services include management of transaction processing systems;
 online and offline customer communication and interaction systems (co-browse,
 email, live chat and voice); and transaction processing and web site hosting.
 
     You can find out more information about the Company at
 http://www.digitallighthouse.com.
 
 SOURCE  Digital Lighthouse Corporation