SAN FRANCISCO, Aug. 8, 2000 (PRIMEZONE) -- Cotelligent, Inc. (NYSE:CGZ), a leading provider of end-to-end information technology (IT) solutions, today announced results for the three months ended June 30, 2000.
During the quarter ended June 30, 2000, Cotelligent was in a period of transition as it completed the divestiture of the majority of its IT staff augmentation business. During this period, Cotelligent continued to provide the infrastructure and support for the divested operations. The financial results for the quarter clearly reflect an imbalance in the Company's cost structure in relation to its current revenue stream. The Company is in the process of streamlining its operations commensurate with its revenue base. The process of identifying and eliminating these inefficiencies will take the remainder of the calendar year.
"It is important that our stockholders know, now that the divestiture is complete, the Company's total focus is on balancing revenue and expenses in order to return to profitability in the near term, while becoming a global force in IT consulting," said Jim Lavelle, Cotelligent's Chairman and Chief Executive Officer. "Our new marketing and outreach activities to client and investor markets will stimulate interest in Cotelligent and reposition our value proposition to a significantly higher standard." Lavelle added, "We are committed to taking all the necessary steps to make Cotelligent a great Company".
The Company reported revenues for the quarter ended June 30, 2000, of $23.8 million, down 11.4% from $26.8 million in the same period of the prior year. The loss from continuing operations in the quarter was $5.1 million compared to $0.9 million in the prior year. Loss per diluted share from continuing operations was $0.34 for the quarter compared to a loss of $0.07 per diluted share for the same period in the prior year. Net income for the quarter was $0.9 million including a gain on the sale of its IT staff augmentation business of $4.4 million, compared to a net loss of $16.3 million for the same period of the prior year.Net income per diluted share was $0.06 for the quarter, compared to a loss of $1.21 per diluted share for the same period of the prior year. For future comparative analysis, historical quarterly results restated to present continuing and discontinued operations for the fiscal year ended March 31, 2000, have been attached.
As previously announced, Cotelligent completed all the necessary due diligence and negotiations to close the divestiture of the majority of its staff augmentation business. On June 30, with the consummation of the transaction, the Company received cash proceeds of $116.5 million, less $5.0 million to be held in escrow for one year to cover potential contingent claims by the buyer. On the same day, the Company paid-off in full its bank debt of $57.9 million and fulfilled its earn-out obligations of $8.5 million to the previous owner of an acquired business. The remaining cash of $45.1 million will be available for divestiture closing costs, strategic investments, and general working capital needs.
In April, Cotelligent announced the signing of an agreement to form a wireless Internet joint venture. Since that time, the two companies have been in the process of completing the due diligence and final negotiations. Cotelligent anticipates completion of this process shortly and will issue a full press release describing the transaction.
The Cotelligent Earnings Release Conference Call will be on Tuesday, August 8, 2000 at 5:15 P.M. EST. The live call can be accessed via the Company Web site or by dialing (800) 865-4460 or (973) 628-6885. Replay of the call will be available on the Company Web site.
About Cotelligent, Inc.
Cotelligent (www.cotelligent.com) is an information technology (IT) consulting firm that is transforming itself to focus on delivering end-to-end eBusiness solutions and emerging wireless data applications ("mBusiness") solutions. Cotelligent assists companies to receive information from multiple locations in an efficient format. Areas of specialization include Web-enabled applications, Web design, eCommerce, Web portals, and ERP eSolutions ("eBusiness"), as well as custom application development, system integration and implementation, strategic consulting and assessments, and business intelligence ("Enterprise Solutions"). As part of its wireless initiative, Cotelligent is also developing its knowledge and expertise in mBusiness. Employing over 600 technical consultants and operating staff, Cotelligent delivers services from major metropolitan locations throughout the United States. Cotelligent's stock is traded on the New York Stock Exchange under the symbol CGZ.
Safe Harbor Statement
Except for historical information contained herein, the information contained in this news release includes forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from such statements. All forward-looking statements included in this release are based upon information available to Cotelligent as of the date thereof, and Cotelligent assumes no obligation to update any such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to: the extent to which customers invest in IT infrastructures; the review of the restructuring charge by the Securities and Exchange Commission or other governmental agency; the availability of qualified IT professionals; the rate of hiring, productivity and retention of revenue-generating personnel; changes in the pricing of Cotelligent's services; the timing and rate of entrance into new regional markets; the structure and timing of acquisitions; the conditions relating to divestiture of the staff augmentation business; the conditions relating to the closing of the joint venture with bSmart.to Technologies; the possibility that the new joint venture requires capital beyond amounts currently contemplated; the possibility that revenues earned by or derived from the new joint venture is less than current expectations; the possibility that technologies will not perform according to expectations; and general economic conditions. Please refer to the discussion of risk factors and other factors included in Cotelligent's Annual Report on Form 10K for the year ended March 31, 2000, the Company's most recent Report on Form 10Q, and other filings made with the Securities and Exchange Commission.
COTELLIGENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share data) (Unaudited) Three Months Ended June 30, 2000 1999 Revenues $ 23,753 $ 26,806 Cost of services 16,500 17,056 Gross profit 7,253 9,750 Selling, general and administrative expenses 12,526 9,880 Depreciation and amortization of goodwill 1,042 723 Operating loss (6,315) (853) Other income(expense): Interest expense (1,556) (652) Interest income 49 118 Other 49 (60) Total other income (expense) (1,458) (594) Loss from continuing operations before income taxes (7,773) (1,447) Income tax benefit 2,643 507 Loss from continuing Operations (5,130) (940) Operating income (loss) from discontinued operations net of income tax (benefit) of $1,551 and $(8,289) 1,615 (15,394) Gain on sale of discontinued operation, net of income taxes of $4,224 4,396 -- Income (loss) from discontinued operations 6,011 (15,394) Net income (loss) $ 881 $ (16,334) Earnings per share: Basic - Income (loss) from continuing operations $ (0.34) $ (0.07) Income (loss) from discontinued operations 0.40 (1.14) Net income (loss) $ 0.06 $ (1.21) Diluted - Income (loss) from continuing operations $ (0.34) $ (0.07) Income (loss) from discontinued operations 0.40 (1.14) Net income (loss) $ 0.06 $ (1.21) Weighted average number of shares outstanding Basic 15,123,639 13,461,007 Diluted 15,124,960 13,461,007 COTELLIGENT, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands, except share data and operating statistics) June 30, March 31, 2000 2000 (Unaudited) ASSETS Cash $ 45,913 $ 4,794 Accounts receivable 20,255 23,435 Net assets of discontinued operations -- 84,721 Other current assets 9,387 3,358 Total current assets 75,555 116,308 Long-term assets 49,503 43,102 Total $ 125,058 $ 159,410 LIABILITIES AND STOCKHOLDERS' EQUITY Short-term debt and current maturities of long-term debt. $ 154 $ 48,958 Other current liabilities 37,193 24,420 Total current Liabilities 37,347 73,378 Long-term debt 52 52 Total liabilities 37,399 73,430 Total stockholders' Equity 87,659 85,980 Total liabilities and stockholders' equity $ 125,058 $ 159,410 COTELLIGENT, INC. OPERATING STATISTICS (Unaudited) Three Months Ended June 30, 2000 1999 Average Bill Rate $100 $85 Hours of Service 234 296 COTELLIGENT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS* (In thousands) (Unaudited) Year Ended March 31, 2000 Q1 Q2 Q3 Q4 Total Revenues $ 26,806 $ 26,162 $ 25,296 $ 27,300 $105,564 Cost of services 17,056 17,217 16,985 18,737 69,995 Gross profit 9,750 8,945 8,311 8,563 35,569 Selling, general and administrative expenses 9,880 9,960 10,534 11,486 41,860 Depreciation and amortization of goodwill 723 816 874 853 3,266 Operating loss (853) (1,831) (3,097) (3,776) (9,557) Total other expense (594) (741) (1,139) (1,282) (3,756) Loss from continuing operations before income taxes (1,447) (2,572) (4,236) (5,058) (13,313) Income tax benefit 507 900 1,483 1,770 4,660 Income (loss) from continuing operations (940) (1,672) (2,753) (3,288) (8,653) Income (loss) from discontinued operations (15,394) 1,751 1,409 2,244 (9,990) Net income (loss) $(16,334) $ 79 $(1,344) $(1,044) $(18,643) Diluted earnings per share: Income (loss) from continuing operations $ (0.07) $ (0.12) $ (0.18) $ (0.22) $ (0.60) Income (loss) from discontinued operations (1.14) 0.13 0.09 0.15 (0.70) Net income (loss) $ (1.21) $ 0.01 $ (0.09) $ (0.07) $ (1.30) Weighted average number of shares outstanding 13,461,007 13,573,264 15,167,742 15,001,429 14,298,693
2000 have been restated to present continuing and discontinued operations.
-0- CONTACT: Cotelligent, San Francisco Jeffrey B. Van Horn, Chief Financial Officer Sonali Sen, VP of Investor Relations Telephone: 415-439-6400