Modem Media Reports First Quarter Revenue Growth of 17% and Pro Forma EBITDA of $3 million

Apr 26, 2001, 01:00 ET from Modem Media, Inc.

    NORWALK, Conn., April 26 /PRNewswire/ -- Modem Media, Inc. (Nasdaq:   MMPT),
 a leading Internet professional services firm, today announced its operating
 results for the first quarter 2001.
 
     First quarter highlights include:
 
     -- Year-over-year revenue increase - A 17% increase over last year's first
        quarter revenues of $28.5 million.
     -- Stable cash position - Cash including short-term investments was
        $32.9 million as of March 31, 2001.
     -- Increased average annualized revenue from top 10 clients - Average
        annualized revenue from top ten clients was $10.4 million for the
        quarter, up from $10.2 million in the fourth quarter of 2000.
     -- Improved utilization - Billable employee utilization improved to 65% up
        from 56% in the fourth quarter of 2000.
     -- Improved annualized revenue per billable employee - Annualized revenue
        per billable employee increased to $195 thousand up from $179 thousand
        in the fourth quarter of 2000.
 
     "We continue to deliver outstanding value to our clients by providing them
 with the unmatched quality of innovative work that has been synonymous with
 Modem Media since our inception," said Marc Particelli, Modem Media's CEO.
 "This unwavering commitment to providing measurable value to our clients and
 shareholders, combined with our solid financial performance, puts us at the
 top of our industry and positions us to remain a leader moving forward."
     Revenues for the quarter ended March 31, 2001 totaled $33.4 million,
 a 17% increase over last year's first quarter revenues of $28.5 million and a
 5% decline from $35.2 million in the fourth quarter of 2000.
     Pro forma EBITDA, which excludes one-time items, was $3.0 million in the
 first quarter of 2001, compared with $4.0 million in the fourth quarter of
 2000 and $1.4 million for the first quarter of 2000.  Pro forma cash earnings
 for the first quarter of 2001, defined as net income before non-cash
 amortization of intangibles and one-time charges, were breakeven compared with
 $0.8 million or $0.03 per share during the fourth quarter of 2000 and
 breakeven for the first quarter of 2000.
     During the first quarter of 2001, the Company recorded one-time items that
 included pre-tax restructuring charges of $1.9 million to close the Tokyo,
 Japan office and $0.5 million ($0.4 million after-tax) to reduce corporate
 staff and realign capacity across multiple offices.  The Company also recorded
 a one-time charge of $0.4 million ($0.2 million after-tax) for the impairment
 of an investment in marketable equity securities.  The Company recognized a
 U.S. tax benefit of $3.5 million related to the closure of the Japan office.
     The reported actual net income for the quarter, which includes all
 non-cash amortization of intangibles and one-time items, was $0.1 million or
 breakeven on a diluted per share basis, compared with a net loss of
 $(3.0) million or $(0.13) per share for the first quarter of 2000 and
 $(61.7) million or $(2.47) per share for the fourth quarter of 2000.
     "As we move forward, our focus will remain on attaining new clients,
 expanding our business with current clients, and managing our operations to
 higher levels of profitability and positive cash flow," said Frank Connolly,
 Modem Media's CFO.  "During a time of market and industry uncertainty, we are
 well positioned to return to sustainable levels of earnings growth.  Our
 expectations for improved financial performance are a true reflection of our
 market leadership and overall success as an organization."
     In conjunction with the earnings release, G.M. O'Connell, Chairman, Marc
 Particelli, Chief Executive Officer, Bob Allen, President and Chief Operating
 Officer, and Frank Connolly, Chief Financial Officer, will host a conference
 call at 4:00pm (EST) today, which will be simulcast on Modem Media's Web site,
 http://www.modemmedia.com.  By accessing Modem Media's Web site, users can
 listen to the live call, or replay it following the completion of the call.
 
     About Modem Media
     Founded in 1987, Modem Media (http://www.modemmedia.com) is a leading
 Internet professional services firm focused on solving marketing and customer
 management problems facing global companies most impacted by digital change.
 By combining technology-driven solutions with a deep understanding of customer
 needs, Modem Media creates more rewarding solutions for clients and their
 customers.  Headquartered in Norwalk, CT, with offices in New York City, San
 Francisco, Toronto, London, Paris, Munich, Hong Kong and Sao Paulo, Modem
 Media leverages its deep experience in marketing and business strategy,
 creative design, and technology to deliver integrated service offerings on a
 global basis.  With approximately 850 people worldwide, Modem Media has
 created customer-focused Internet solutions for global brands such as
 Citibank, Delta Air Lines, Friends Provident, General Electric, General
 Motors, IBM, JCPenney, Kraft, Michelin and Philips.
 
     This press release contains statements that are "forward-looking" within
 the meaning of applicable federal securities laws, including the Company's
 financial strength, revenue growth, earnings growth, higher levels of
 profitability and positive cash flow, 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, the need and
 ability of the Company to manage the level of personnel and capacity in the
 future, the cost and timing of and the ability of the Company to cease its
 operations in Japan and liquidate that office's operations, the timing of
 collections from its clients and other factors more fully discussed in the
 Company's filings with the Securities and Exchange Commission.
 
                       MODEM MEDIA, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                                      Three Months Ended
                                                          March 31,
                                                     2001           2000
                                                         (unaudited)
     Revenues                                     $33,428,000    $28,537,000
     Cost of revenues                              18,735,000     14,316,000
     Gross profit                                  14,693,000     14,221,000
     Operating expenses:
      Sales and marketing                           1,257,000      1,238,000
      General and administrative                   10,851,000     11,594,000
      Restructuring costs                           2,448,000             --
      Depreciation and amortization                 1,735,000      1,224,000
      Amortization of goodwill                        857,000      3,029,000
        Total operating expenses                   17,148,000     17,085,000
     Operating loss                               (2,455,000)    (2,864,000)
     Interest income, net                             455,000        544,000
     Loss before income taxes                     (2,000,000)    (2,320,000)
     (Benefit) provision for income taxes         (2,128,000)        647,000
     Net income (loss)                               $128,000   $(2,967,000)
 
     Net income (loss) per share:
       Basic                                           $ 0.01        $(0.13)
       Diluted                                            $--        $(0.13)
 
     Cash earnings per share
      before one-time items:
       Basic                                              $--            $--
       Diluted                                            $--            $--
 
     Weighted-average number of
      common shares outstanding:
       Basic                                       25,440,000     23,583,000
       Diluted                                     25,760,000     23,583,000
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X17455572
 
 

SOURCE Modem Media, Inc.
    NORWALK, Conn., April 26 /PRNewswire/ -- Modem Media, Inc. (Nasdaq:   MMPT),
 a leading Internet professional services firm, today announced its operating
 results for the first quarter 2001.
 
     First quarter highlights include:
 
     -- Year-over-year revenue increase - A 17% increase over last year's first
        quarter revenues of $28.5 million.
     -- Stable cash position - Cash including short-term investments was
        $32.9 million as of March 31, 2001.
     -- Increased average annualized revenue from top 10 clients - Average
        annualized revenue from top ten clients was $10.4 million for the
        quarter, up from $10.2 million in the fourth quarter of 2000.
     -- Improved utilization - Billable employee utilization improved to 65% up
        from 56% in the fourth quarter of 2000.
     -- Improved annualized revenue per billable employee - Annualized revenue
        per billable employee increased to $195 thousand up from $179 thousand
        in the fourth quarter of 2000.
 
     "We continue to deliver outstanding value to our clients by providing them
 with the unmatched quality of innovative work that has been synonymous with
 Modem Media since our inception," said Marc Particelli, Modem Media's CEO.
 "This unwavering commitment to providing measurable value to our clients and
 shareholders, combined with our solid financial performance, puts us at the
 top of our industry and positions us to remain a leader moving forward."
     Revenues for the quarter ended March 31, 2001 totaled $33.4 million,
 a 17% increase over last year's first quarter revenues of $28.5 million and a
 5% decline from $35.2 million in the fourth quarter of 2000.
     Pro forma EBITDA, which excludes one-time items, was $3.0 million in the
 first quarter of 2001, compared with $4.0 million in the fourth quarter of
 2000 and $1.4 million for the first quarter of 2000.  Pro forma cash earnings
 for the first quarter of 2001, defined as net income before non-cash
 amortization of intangibles and one-time charges, were breakeven compared with
 $0.8 million or $0.03 per share during the fourth quarter of 2000 and
 breakeven for the first quarter of 2000.
     During the first quarter of 2001, the Company recorded one-time items that
 included pre-tax restructuring charges of $1.9 million to close the Tokyo,
 Japan office and $0.5 million ($0.4 million after-tax) to reduce corporate
 staff and realign capacity across multiple offices.  The Company also recorded
 a one-time charge of $0.4 million ($0.2 million after-tax) for the impairment
 of an investment in marketable equity securities.  The Company recognized a
 U.S. tax benefit of $3.5 million related to the closure of the Japan office.
     The reported actual net income for the quarter, which includes all
 non-cash amortization of intangibles and one-time items, was $0.1 million or
 breakeven on a diluted per share basis, compared with a net loss of
 $(3.0) million or $(0.13) per share for the first quarter of 2000 and
 $(61.7) million or $(2.47) per share for the fourth quarter of 2000.
     "As we move forward, our focus will remain on attaining new clients,
 expanding our business with current clients, and managing our operations to
 higher levels of profitability and positive cash flow," said Frank Connolly,
 Modem Media's CFO.  "During a time of market and industry uncertainty, we are
 well positioned to return to sustainable levels of earnings growth.  Our
 expectations for improved financial performance are a true reflection of our
 market leadership and overall success as an organization."
     In conjunction with the earnings release, G.M. O'Connell, Chairman, Marc
 Particelli, Chief Executive Officer, Bob Allen, President and Chief Operating
 Officer, and Frank Connolly, Chief Financial Officer, will host a conference
 call at 4:00pm (EST) today, which will be simulcast on Modem Media's Web site,
 http://www.modemmedia.com.  By accessing Modem Media's Web site, users can
 listen to the live call, or replay it following the completion of the call.
 
     About Modem Media
     Founded in 1987, Modem Media (http://www.modemmedia.com) is a leading
 Internet professional services firm focused on solving marketing and customer
 management problems facing global companies most impacted by digital change.
 By combining technology-driven solutions with a deep understanding of customer
 needs, Modem Media creates more rewarding solutions for clients and their
 customers.  Headquartered in Norwalk, CT, with offices in New York City, San
 Francisco, Toronto, London, Paris, Munich, Hong Kong and Sao Paulo, Modem
 Media leverages its deep experience in marketing and business strategy,
 creative design, and technology to deliver integrated service offerings on a
 global basis.  With approximately 850 people worldwide, Modem Media has
 created customer-focused Internet solutions for global brands such as
 Citibank, Delta Air Lines, Friends Provident, General Electric, General
 Motors, IBM, JCPenney, Kraft, Michelin and Philips.
 
     This press release contains statements that are "forward-looking" within
 the meaning of applicable federal securities laws, including the Company's
 financial strength, revenue growth, earnings growth, higher levels of
 profitability and positive cash flow, 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, the need and
 ability of the Company to manage the level of personnel and capacity in the
 future, the cost and timing of and the ability of the Company to cease its
 operations in Japan and liquidate that office's operations, the timing of
 collections from its clients and other factors more fully discussed in the
 Company's filings with the Securities and Exchange Commission.
 
                       MODEM MEDIA, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
                                                      Three Months Ended
                                                          March 31,
                                                     2001           2000
                                                         (unaudited)
     Revenues                                     $33,428,000    $28,537,000
     Cost of revenues                              18,735,000     14,316,000
     Gross profit                                  14,693,000     14,221,000
     Operating expenses:
      Sales and marketing                           1,257,000      1,238,000
      General and administrative                   10,851,000     11,594,000
      Restructuring costs                           2,448,000             --
      Depreciation and amortization                 1,735,000      1,224,000
      Amortization of goodwill                        857,000      3,029,000
        Total operating expenses                   17,148,000     17,085,000
     Operating loss                               (2,455,000)    (2,864,000)
     Interest income, net                             455,000        544,000
     Loss before income taxes                     (2,000,000)    (2,320,000)
     (Benefit) provision for income taxes         (2,128,000)        647,000
     Net income (loss)                               $128,000   $(2,967,000)
 
     Net income (loss) per share:
       Basic                                           $ 0.01        $(0.13)
       Diluted                                            $--        $(0.13)
 
     Cash earnings per share
      before one-time items:
       Basic                                              $--            $--
       Diluted                                            $--            $--
 
     Weighted-average number of
      common shares outstanding:
       Basic                                       25,440,000     23,583,000
       Diluted                                     25,760,000     23,583,000
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X17455572
 
 SOURCE  Modem Media, Inc.