Press release from Marketwire
Cyberplex Reports Fourth Quarter and 2011 Results
Rebuilding progresses well for core divisions; Tsavo challenges remain.
Friday, March 30, 2012
Cyberplex Reports Fourth Quarter and 2011 Results06:00 EDT Friday, March 30, 2012TORONTO, ONTARIO--(Marketwire - March 30, 2012) -Cyberplex Inc. (TSX:CX) a leader in online publishing and customer acquisition strategies today announced its financial results for the fiscal year and fourth quarter-ended December 31, 2011. Total revenue for the year was $55.5 million a decrease from the $106.9 million recorded in 2010, and the adjusted EBITDA for the year was $1.1 million as compared to $4.7 million for the prior year. "Our financial results reported today and the financial update provided last month reflect continued difficulties associated with the Tsavo Media division. While Tsavo continued to work hard to innovate and adapt to the rapidly changing Yahoo! - Bing marketplace, traffic sources and traffic quality became a concern for Yahoo! in the fourth quarter and resulted in lower revenues and ultimately the previously announced Yahoo! charge," said Geoffrey Rotstein, Chief Executive Officer of Cyberplex. "During this same period, we saw significant progress out of our interactive, performance marketing and media buying divisions, with both operational and financial improvements across these divisions. While these improvements may not be readily apparent in light of the Tsavo situation, they are significant to the overall progress of Cyberplex and our ability to generate meaningful returns in the coming quarters." Results for the Fourth Quarter ended December 31, 2011The Company generated revenue of $9.9 million, a 40% decline from the $16.6 million recorded in the previous quarter; Non-Tsavo divisions produced their second consecutive quarter of sequential growth, increasing revenues in the fourth quarter by 29%. Adjusted EBITDA loss for the quarter was $1.8 million, as compared to $2.0 million of income generated in the previous quarter; Net loss for the quarter was $4.6 million compared to a net income of $1.0 million in the previous quarter; and Cash flow from operations generated $5.0 million in cash for the twelve months ended December 31, 2011, as compared to $7.3 million for the same period in 2010. The Company noted that as a result of the retroactive Yahoo! charge against the Tsavo division previously reported by the Company on February 6, 2012, and the diminished performance by Tsavo in the fourth quarter which continued into 2012, Tsavo will likely not remain in compliance with all of the financial covenants set out in the credit facility with American Capital as at the March 31, 2012 measurement date. The Special Committee of the Board of Directors of Cyberplex that was formed to evaluate strategic alternatives for Tsavo, as announced in the Company's material change report and press release of February 6, 2012, has been in contact with American Capital and is considering, as part of its mandate, possible courses of action to address this issue for the benefit of Cyberplex shareholders. The Special Committee's review of the status of Tsavo and the strategic alternatives available to Cyberplex to create shareholder value out of that division and its recommendation to the Board of Directors in relation to its mandate has not yet been concluded."While difficulties at Tsavo and with American Capital, Tsavo's lender, have overshadowed many of the accomplishments within the organization in the past, we do not intend to allow this to continue to define Cyberplex and our prospects for growth and success." said Geoffrey Rotstein. "Cyberplex is a leader in our industry, and competes favourably against much larger, less agile media organizations. While our fourth quarter set-backs are not yet resolved to our satisfaction, we are committed to generating significant shareholder value in 2012 from both the investments we have made in our traffic acquisition platforms, and a favourable resolution of the ongoing strategic review of Tsavo." Non-IFRS Financial Measures This press release includes a discussion of "Adjusted EBITDA," which is a non-IFRS financial measure. The Company defines Adjusted EBITDA as net loss from operations before; (a) depreciation of property and equipment and amortization of intangible assets; (b) stock-based compensation expense, (c) restructuring and acquisition costs, (d) Impairments of goodwill and intangible assets and other items, net. Management uses Adjusted EBITDA as a measure of the Company's operating performance because it provides information related to the Company's ability to provide operating cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry. The non-IFRS financial measure is used in addition to and in conjunction with results presented in accordance with the Company's consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-IFRS financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the Company's non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. The table below reconciles net loss from operations and Adjusted EBITDA for the periods presented:Three months ended December 31,Twelve months ended December 31,(In thousands of Canadian dollars)2011201020112010Net loss from operations$(8,621)$(62,006)$(13,827)$(64,358)Add:Depreciation of property and equipment2804331,3221,290Amortization of intangible assets1,4303,9497,9949,304Impairment of goodwill and intangible4,85453,7904,85453,790Restructuring and acquisition expenses200(68)4631,442Stock based compensation58135334549Other items, net-2,732-2,732Adjusted EBITDA$(1,799)$(1,035)$1,140$4,749About CyberplexCyberplex Inc. (www.cyberplex.com) is a North American leader in online publishing and customer acquisition strategies. The Company, through its subsidiaries, connects advertisers to their most relevant online customers and prospects. Cyberplex delivers targeted, high quality results through online, mobile and social initiatives that improve advertiser ROI, monetize the value of online properties, and build loyal online audiences. Forward-Looking StatementsThis news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Cyberplex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.Cyberplex Inc.Unaudited Consolidated Statements of Financial Position(In thousands of Canadian dollars)December 31, 2011December 31, 2010January 1, 2010AssetsCurrent assets:Cash and cash equivalents$4,050$5,192$10,222Short-term investments-1,55111,270Restricted cash-2,310-Accounts receivable8,76913,8799,930Income taxes recoverable31632-Other current assets6,9072,4613,30019,75726,02534,722Non-current assets:Restricted cash2,3571,749-Property and equipment1,9982,921845Intangible assets22,06929,158756Goodwill3654,81314,616Deferred tax assets--58326,78938,64116,800Total assets$46,546$64,666$51,522Liabilities and Shareholders' EquityCurrent liabilities:Accounts payable and accrued liabilities$13,707$10,177$3,694Current portion of provisions-590576Current portion of loans and borrowings4,6979,402-Current portion of deferred lease inducements71115107Deferred revenue498665668Income taxes payable3481,72963119,32122,6785,676Non-current liabilities:Loans and borrowings20,83623,583-Provisions-2,756-Deferred lease inducements114185156Deferred tax liabilities6031,100-Total non-current liabilities21,55327,624156Shareholders' Equity5,67214,36445,690Total liabilities and Shareholders' equity$46,546$64,666$51,522Cyberplex Inc.Unaudited Consolidated Statements of Comprehensive Income (Loss)(In thousands of Canadian dollars, except per share amounts)Three Months Period EndedYears EndedDecember 31, 2011December 31, 2010December 31, 2011December 31, 2010Revenue$9,902$31,633$55,546$106,863Expenses:Publishing and advertising costs6,92220,61533,95173,426Employee compensation and benefits2,4784,21413,16013,652Other operating expenses2,3597,9747,62915,585Depreciation of property and equipment2804331,3221,290Amortization of intangible assets1,4303,9497,9949,304Impairment of goodwill and intangible assets4,85453,7904,85453,790Acquisition and restructuring costs200(68)4631,442Other charges-2,732-2,73218,52393,63969,373171,221Loss from operations(8,621)(62,006)(13,827)(64,358)Finance income (cost), net2,605(719)2,842(1,307)Loss before income taxes(6,016)(62,725)(10,985)(65,665)Income tax recovery (expense)1,4584,0291,8484,496Net Loss(4,558)(58,696)(9,137)(61,169)Other comprehensive income (loss):Net change in fair value of available-for-sale financial assets-(24)761(127)Amount reclassified to income--(753)-Foreign currency translation adjustments to equity(193)(1,022)103(2,620)Other comprehensive income (loss) for the period, net of tax(193)(1,046)111(2,747)Total comprehensive loss$(4,751)$(59,742)$(9,026)$(63,916)Loss per share:Basic$(0.03)(0.44)$(0.07)$(0.62)Diluted$(0.03)(0.44)(0.07)(0.62)Cyberplex Inc.Unaudited Consolidated Statements of Cash Flows(In thousands of Canadian dollars)Years ended December 31, 2011 and 201020112010Cash flows from operating activities:Loss for the year$(9,137)$(61,169)Adjustments to reconcile net loss to net cash flows from operating activities:Depreciation of property and equipment1,3221,290Amortization of intangible assets7,9949,304Amortization of deferred lease inducements(115)(44)Share-based payments334549Foreign exchange (gain) loss(4)493Finance cost (income), net(3,246)749Current income tax (recovery) expense(1,351)1,500Deferred tax liabilities(497)(5,996)Impairment of goodwill and intangible assets4,85453,790Transaction expenses200-Loss on disposal of assets-21Change in non-cash operating working capital4,2298,260Cash generated from operating activities4,5838,747Income taxes received406(1,460)Net cash from operating activities4,9897,287Cash flows from financing activities:Proceeds from term loans800-Repayment of term loans(6,122)(1,935)Repayment of bridge loans-(9,218)Finance lease200-Repayment of finance lease(33)-Proceeds from exercise of stock options-143Proceeds from public offerings, net of issuance costs-30,795Interest paid(3,419)(1,544)Net cash from (used in) financing activities(8,574)18,241Cash flows from investing activities:Sale of short-term investments1,5519,392Interest income received3175Purchase of available-for-sale investments(500)-Net proceeds on sale of available-for-sale investments901-Acquisition of EQ Advertising Group Ltd., net of cash acquired(100)(883)Acquisition of Tsavo, net of cash acquired-(36,562)Decrease (increase) in restricted cash1,703(414)Net proceeds from disposal of property and equipment-126Additions to property and equipment(364)(1,223)Additions to intangible assets(783)(576)Net cash from (used in) investing activities2,439(30,065)Foreign exchange gain (loss) on cash held in foreign currency4(493)Decrease in cash and cash equivalents(1,142)(5,030)Cash and cash equivalents, beginning of year5,19210,222Cash and cash equivalents, end of year$4,050$5,192FOR FURTHER INFORMATION PLEASE CONTACT: David KatzCyberplex Inc.EVP Corporate Development416.597.8889416.597.2345 (FAX)email@example.com