Intershop Communications Reports Fourth Quarter and Full Year 2003
Financial Results JENA, Germany, February 13 /PRNewswire-FirstCall/
-- Positive Net Result for the Fourth Quarter 2003 Intershop
Communications AG (Prime Standard: ISH1, Nasdaq: ISHP) today
announced financial results for the fourth quarter and full year
2003, ended December 31, 2003. Revenue totalled Euro 4.6 million in
the fourth quarter of 2003, as compared to Euro 6.5 million in the
third quarter of 2003 and Euro 12.0 millionin the fourth quarter of
2002. License revenue totalled Euro 1.5 million in the fourth
quarter of 2003, as compared to Euro 2.2 million in the third
quarter of 2003 and Euro 6.5 million in the fourth quarter of 2002.
Revenue for the full year of 2003 totalled Euro 23.2 million, as
compared to Euro 45.1 million for the full year of 2002. Intershop
further reduced its total operational cost (cost of revenue plus
operating expense) in the fourth quarter of 2003, with total
operational cost declining 33% sequentially to Euro 7.2 million.
Compared to the fourth quarter of 2002, Intershop reduced its total
operational cost by Euro 6.3 million or 47%. Due to significant
restructuring and efficiency measures implemented throughout 2003,
Intershop reduced its total annual operational cost in 2003 by 39%,
to Euro 45.0 million. As a result of the continued reduction in
total operational cost and other income in connection with
terminating business operations in France, Intershop recorded Euro
0.1 in net income in the fourth quarter of 2003 million or Euro
0.00 per share, compared to a net loss of Euro 3.8 million or a net
loss of Euro 0.17 per share in the third quarter of 2003. In
comparison, Intershop's net loss in the fourth quarter of 2002 was
Euro 1.0 million or a net loss of Euro 0.05 per share. For the full
year of 2003, Intershop's net loss totalled Euro 18.6 million or a
net loss of Euro 0.90 per share, compared to a net loss of Euro
27.6 million or a net loss of Euro 1.47 per share for the full year
of 2002, a year-over-year reduction of 32%. Total cash including
cash, cash equivalents, marketable securities, and restricted cash
declined from Euro 10.9 million as of September 30, 2003 to Euro
8.8 million as of December 31, 2003. Total cash includes freely
available cash, which decreased from Euro 4.2 million as of
September 30, 2003 to Euro 2.6 million as of December 31, 2003.
Operational highlights for the fourth quarter of 2003 - In the
fourth quarter of 2003 Intershop continued to focus on empowering
enterprises to migrate their disparate e-commerce initiatives onto
Intershop's more powerful Enfinity platform with centralised
management. Intershop's multi-channel e-commerce software Enfinity
allows multiple buying and selling channels to be integrated into a
single platform, providing an efficient and cost-effective
alternative to conventional e-commerce applications. Enfinity thus
fosters more efficient relationships with consumers, business
partners, and suppliers. - Intershop sold 10 new Enfinity product
family configurations, including Enfinity platforms and solutions
during the fourth quarter. In total, 456 Enfinity configurations
have been sold globally as of December 31, 2003. - Intershop
customers in the fourth quarter of 2003 included HP, MAN, Otto,
Deutsche Telekom, DaimlerChrysler Group subsidiary Smart GmbH, and
KarstadtQuelle Group subsidiary Itellium Systems and Services GmbH.
- In the fourth quarter of 2003, Intershop implemented e-commerce
solutions for retailer Jelmoli Versand AG, a subsidiary of the
Swiss Heine Group, and SportScheck GmbH, a leading German sporting
goods retailer, among others. - Intershop's Enfinity-based software
solutions continue to be an important driver of electronic
commerce. According to industry analysis performed by
Nielsen//NetRatings in September 2003, four out of five German
online shops ran on Intershop's Enfinity solutions, including
heavily visited websites such as Otto.de, Tchibo.de, T-Com.de, and
Quelle.de. - Intershop employed 278 full-time equivalent employees
as of December 31, 2003, compared to 326 full-time equivalent
employees as of September 30, 2003. The sequential reduction in
headcount is largely due to the completion of restructuring
measures announced on July 2, 2003. These measures included the
termination of business operations in France, the transfer of
Intershop's sales activities to local distributors in Sweden,
Norway, and Denmark as well as reductions in the number of
full-time employees inGermany. Furthermore, Intershop has
transferred its sales and marketing operations in the United
Kingdom to a local distributor, effective January 1, 2004.
Management review Dr. Juergen Schoettler, Chief Executive Officer
commented, "Faced with challenging market conditions, Intershop
ended the fourth quarter of 2003 with total revenues of Euro 4.6
million, resulting in full year 2003 total revenue of Euro 23.2
million. In response to the lower sales levels, Intershop has
realigned the Company's business operations throughout 2003. In the
course of these restructurings, Intershop shifted its European
sales activities outside Germany to local distributors and reduced
its total operational expenses by 39% year over year. As a result,
Intershop reduced its full year 2003 net loss by 32% year over
year." "Stabilising the Company's cash position and generating
positive operating cash flows remain top priorities. Parallel to
these efforts, the Company is exploring external funding
opportunities fromfinancial as well as strategic investors. Through
these activities and by executing on the planned de-listing of
Intershop's American Depositary Receipts (ADRs) from the Nasdaq
National Market on February 17, 2004, we expect to facilitate our
search for potential investors while at the same time further
reducing operational costs." "Looking ahead, Intershop will launch
Enfinity Suite 6, the latest version of its multi-channel
e-commerce software, on March 18, 2004 at CeBIT in Hannover,
Germany. The new Enfinity Suite 6 package will include six function
modules, which could be deployed as a unified commerce solution or
as separate applications, including: Consumer Channel, Business
Channel, Partner Channel, Supplier Channel, Procurement Channel,
and Content Channel. Each individual package will be optimised for
the use of web services and fully supports both Linux and blade
systems. With Enfinity Suite 6, Intershop continues its tradition
as an innovator in e-commerce software." Business outlook Based on
a reduced total operational cost base achieved in 2003 and against
the backdrop of renewed signs of a recovery in corporate IT
spending patterns in 2004, the Company expects to break even on an
annual net income basis in 2004. About Intershop Intershop
Communications AG (Nasdaq: ISHP; Prime Standard: ISH1) is a leading
provider of software solutions that help organisations evolve their
trading relationships with consumers and business partners online.
Founded in 1992, Intershop has a longtradition of driving
innovation in e-commerce by automating and simplifying sales and
buying processes. Intershop Solutions enable organisations to
consolidate and manage unlimited online commerce channels on a
single platform. As a result, Intershop customers benefit from
reduced operating expenses and competitive advantages in their
online sales activities. More than 300 enterprise customers
worldwide, including Hewlett-Packard, BMW and Homebase, run
Intershop Solutions. Four of the five largest e-commerce sites in
Germany rely on Intershop Solutions: Otto, Tchibo, Deutsche
Telekom, and Quelle. Intershop is headquartered in Jena, Germany,
and has branch offices in the United States, Europe and Asia. More
information about Intershop can be found on the Web at
http://www.intershop.com/. This news release contains
forward-looking statements regarding future events or the future
financial and operational performance of Intershop. Actual events
or performance may differ materially from those contained or
implied in such forward-looking statements. Risks and uncertainties
that could lead to such difference could include, among other
things: Intershop's limited operating history, the unpredictability
of future revenues and expenses and potential fluctuations in
revenues and operating results, significant dependence on large
single customer deals, consumer trends, the level of competition,
seasonality, risks related to electronic security, possible
governmental regulation, and general economic conditions.
Additional information regarding factors that potentially could
affect Intershop's business, financial condition and operating
results is included in Intershop's filings with the Securities and
Exchange Commission, including the Company's Form 20-F dated June
6, 2003. Intershop Communications AG Consolidated Balance Sheets
(U.S.GAAP) (in thousands EUR, except share and per-share amounts)
December 31, December 31, 2003 2002 (unaudited) ASSETS EUR EUR
Current assets Cash and cash equivalents 2,611 11,303 Marketable
securities - 4,172 Restricted cash 6,190 7,073 Trade receivables,
net of allowances for doubtful accounts of EUR5,254 at December 31,
2003 and EUR7,511 at December 31, 2002, respectively 3,418 11,131
Prepaid expenses and other current assets 1,297 7,427 Total current
assets 13,516 41,106 Property and equipment, net 1,106 4,301 Other
assets 557 2,268 Goodwill 4,473 4,473 Total assets 19,652 52,148
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current
debt and current maturities of long-term debt - 98 Accounts payable
249 840 Accrued restructuring costs 2,657 4,881 Other accrued
liabilities 3,827 13,472 Deferred revenue 5,058 6,295 Total current
liabilities 11,791 25,586 Long-term liabilities, netof current
portion - 152 Deferred revenue 23 38 Total liabilities 11,814
25,776 Shareholders' equity Common share, stated value EUR1-
authorized: 78,567,219 shares; outstanding: 22,035,299 shares at
December 31, 2003 and 19,306,400 shares at December 31, 2002,
respectively 22,035 19,306 Accumulated deficit (17,245) 4,124
Accumulated other comprehensive income 3,048 2,942 Total
shareholders' equity 7,83826,372 Total liabilities and
shareholders' equity 19,652 52,148 Intershop Communications AG
Consolidated Statements of Operations (US-GAAP) (In thousands EUR,
except per-share amounts, unaudited) Three Months Twelve Months
Ended Ended December 31, December 31, 2003 2002 2003 2002 EUR EUR
EUR EUR Revenues Licenses 1,484 6,493 6,505 22,462 Services,
maintenance, and other 3,134 5,462 16,654 22,635 Total revenues
4,618 11,955 23,159 45,097 Cost of revenues Licenses 127 115 523
1,288 Services, maintenance, and other 2,139 3,751 11,522 17,814
Total costs of revenues 2,266 3,866 12,045 19,102 Gross profit
2,352 8,089 11,114 25,995 Operating expenses Research and
development 1,275 1,421 6,260 7,225 Sales and marketing 1,308 6,975
14,181 29,363 General and administrative 1,986 1,313 8,964 12,760
Restructuring costs and asset impairment 335 (115) 3,554 5,326
Total operating expenses 4,904 9,594 32,959 54,674 Operating loss
(2,552) (1,505) (21,845) (28,679) Other income (expense) Interest
income 406 218 609 651 Interest expense -349 (7) -374 (31) Other
income (expense), net 2,579 257 2,970 504 Total other income
(expense) 2,636 468 3,205 1,124 Net loss 84 (1,037) (18,640)
(27,555) Basic and diluted result per share 0.00 (0.05) (0.9)
(1.47) Shares used in computing: For basic and diluted result per
share 22,035 19,306 20,749 18,731 Intershop Communications AG
Consolidated Statements of Cashflows (U.S.GAAP) (in thousands EUR,
unaudited) Year Ended December 31, 2003 2002 EUR EUR CASH FLOWS
FROM OPERATING ACTIVITIES: Net loss (18,640) (27,555) Adjustments
to reconcile net loss to cash used in operating activities
Depreciation and amortization 3,181 9,115 Non-cash effects from
deconsolidation (2,521) Provision for doubtful accounts (1,595)
(4,686) (Gain) loss on disposal of marketable securities (40) 152
(Gain) Loss on disposal of property and equipment (114) 689 Changes
in operating assets and liabilities Accounts receivable 8,660 4,809
Prepaid expenses and other current assets 5,844 2,497 Other assets
1,599 1,104 Accounts payable (483) (2,643) Deferred revenue (504)
818 Accrued restructuring costs (1,455) (5,773) Accrued expenses
and other liabilities (7,283) (1,270) Net cash used in operating
activities (13,351) (22,743) CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash 882 800 Proceeds on disposal of equipment 286 536
Purchases of property and equipment, net of capital leases (368)
(670) Proceeds from sale of marketable securities 8,294 47,541
Purchases of marketable securities (4,162) (32,498) Net cash (used
in) provided by investing activities 4,932 15,709 CASH FLOWS FROM
FINANCING ACTIVITIES Cash received for unregistered stock- 10,005
Net cash provided by financing activities - 10,005 Effect of change
in exchange rates on cash (273) (775) Net change in cash and cash
equivalents (8,692) 2,196 Cash and cash equivalents, beginning of
period 11,303 9,107 Cash and cash equivalents, end of period 2,611
11,303 Intershop Communications AG Consolidated Statement of
Shareholders' Equity (in thousands EUR, except share data) Common
Common Shares Stated Shares Value APIC Balance, January 1, 2001
88,003,016 88,003 168,585 Other comprehensive loss: Net loss
Foreign currency translation adjustments Unrealised gain (loss) on
available for sale security, net Comprehensive loss Exercise of
stock options 188,306 188 330 Appropriation of paid in capital
(155,495) Balance, December 31, 2001 88,191,322 88,191 13,420 Other
comprehensive loss: Net loss Foreign currency translation
adjustments Unrealised gain (loss) on available for sale security,
net Comprehensive loss Exercise of stock options 6,678 7 (3)
Private placement of common stock, net 8,334,000 8,334 1,667
Allocation of par value resulting from reverse stock split
(77,225,600) (77,226) 77,226 Appropriation of additional paid-in
capital (92,310) Balance, December 31, 2002 19,306,400 19,306 -
Other comprehensive loss: Net loss (unaudited) Foreign currency
translation adjustments (unaudited) Unrealised gain (loss) on
available for sale security, net (unaudited) Comprehensive loss
Conversion of common stock of subsidiary to common stock of parent
(unaudited) 2,499,999 2,500 Conversion of preferred stock of
subsidiary to common stock of parent (unaudited) 228,900 229
Balance, December 31, 2003 22,035,299 22,035 Intershop
Communications AG Consolidated Statement of Shareholders' Equity
(in thousands EUR, except share data) Accumulated Other Total Total
Compre- Share- Accumulated hensive holders' Deficit Income Equity
Balance, January 1, 2001 (84,329) 1,709 173,969 Other comprehensive
loss: Net loss (131,798) (131,798) Foreign currency translation
adjustments 837 837 Unrealised gain (loss) on available for sale
security, net 348 348 Comprehensive loss (130,613) Exercise of
stock options 518 Appropriation of paid in capital 155,495 Balance,
December 31, 2001 (60,632) 2,894 43,874 Other comprehensive loss:
Net loss (27,555) (27,555) Foreign currency translation adjustments
157 157 Unrealised gain (loss) on available for sale security, net
(109) (109) Comprehensive loss (27,507) Exercise of stock options 4
Private placement of common stock, net 10,001 Allocation of par
value resulting from reverse stock split Appropriation of
additional paid-in capital 92,310 Balance, December 31, 2002 4,124
2,942 26,372 Other comprehensive loss: Net loss (unaudited)
(18,640) (18,640) Foreign currency translation adjustments
(unaudited) (83) (83) Unrealised gain (loss) on available for sale
security, net (unaudited) 189 189 Comprehensive loss (18,534)
Conversion of common stock of subsidiary to common stock of parent
(unaudited) (2,500) Conversion of preferred stockof subsidiary to
common stock of parent (unaudited) (229) Balance, December 31, 2003
(17,245) 3,048 7,838 DATASOURCE: Intershop Communications AG
CONTACT: Investor Relations: Klaus F. Gruendel, T:
+49-3641-50-1307, F: +49-3641-50-1002, , Press: Dana Schmidt, T:
+49-3641-50-1000, F: +49-3641-50-1002,
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