NEW YORK --(BUSINESS WIRE)--Nov. 7, 2002--
Company maintains strong cash position, no debt despite loss
Budding optimism for 2003
Stock buyback program has $1.2 million in outstanding authorization
INNODATA CORPORATION (NASDAQ: INOD), a leading provider of digital content services and systems, today announced a net loss of $2,521,000, or $0.12 per diluted share, for the third quarter of 2002, versus net income of $40,000, or $0.0 per diluted share, for the third quarter of 2001.
Revenues were $7,278,000 for the three months ended September 30, 2002, as compared to revenues of $13,849,000 for the same period last year.
The net loss for the nine months ended September 30, 2002 was $3,177,000, or $0.15 per diluted share, compared to net income of $2,833,000, or $0.11 per diluted share, for the comparable period in 2001. Revenues for the nine months ended September 30, 2002 were $30,223,000 versus $45,689,000 in the same period last year.
Innodata's cash balance continued to be strong at $8.8 million, down from $9.8 million last quarter, and the company had working capital of $10.2 million and no debt other than routine trade payables. Of the approximately $1 million cash used in the third quarter of 2002, less than $100,000 was used in operating activities.
The company attributed the disappointing quarterly results chiefly to the recession-like environment that has severely limited capital spending in the commercial and enterprise publishing sectors during the last several quarters, but indicated it was seeing some signs of a recovery in spending. Of the loss, approximately $500,000 reflects a one-time, non-cash compensation charge.
"While our third quarter results were generally consistent with our expectations and the business realities that have dominated much of 2002, our market - which for the past several quarters was practically lifeless - seems to be showing signs of vitality again," said Jack Abuhoff, Chairman and Chief Executive Officer, "Barring any unforeseen blows to the recovering economy, we believe that we are finally starting to see light at the end of the tunnel."
Within the last two months or so, Innodata announced $17.5 million in large new projects, Abuhoff noted. A small portion of that revenue should be realized in the fourth quarter of 2002, with the bulk of the balance expected in 2003.
"We have successfully trimmed direct operating costs by almost 20% from last quarter - and we are aiming to achieve increased revenues in the fourth quarter and to move toward break-even EBITDA," Abuhoff said. "Innodata has carefully shed excess capacity while maintaining its high performing assets and people to maximize our ability to scale quickly as demand picks up.
While Innodata is cutting costs, the company is also strengthening its business development capabilities, recruiting new sales and marketing talent, and developing more robust marketing programs for launch in 2003, Abuhoff said.
Moreover, according to Abuhoff, Innodata is making substantial progress in growing its outsourcing business, working with major publishers to integrate Innodata's services into their regular operations - creating stable, long-term partnerships, with more predictable recurring revenues accruing to Innodata.
"Innodata is better positioned than anyone in our current competitive set to benefit from increased demand for these comprehensive outsourcing arrangements. "
And Abuhoff pointed out, "It's important to remember that Innodata is a fundamentally strong, well-managed enterprise whose future - despite the inevitable shocks of the business cycle - is fundamentally linked to the continued digitization and digital management of content in the publishing, media and enterprise sectors."
Under the terms of the company's stock buyback program, there remains approximately $1.2 million in outstanding authorization should the company decide to buy back shares.
Timing of Conference Call with Q&A
Innodata will conduct an investor conference call, including a question & answer period, for 11:00 AM EST today. Interested parties can participate in this call by dialing the following call-in numbers:
1-800-915-4836 (Domestic)
1-973-317-5319 (International)
Replays will also be made available throughout the day at:
1-800-428-6051 (Domestic Replay)
1-973-709-2089 (International Replay)
(Passcode on Replay only: 266273)
Investors are also invited to access a live Webcast of the conference call at the Investor Relations section of www.innodata.com. Please note that the Webcast feature will be in a listen-only mode. Call-in or Webcast replay will be available for 30 days following the conference call.
About Innodata
Innodata (www.innodata.com / www.isogen.com) is the world's largest dedicated provider of digital content services and solutions. Innodata delivers content manufacturing, content conversion, XML transformation, systems engineering, and education in XML and related standards to leading companies in fields as diverse as publishing, telecommunications, healthcare, and defense. Innodata's seven content manufacturing centers based in Asia provide peerless outsourced support to companies worldwide, and its Isogen division offers advanced systems engineering and education at four U.S.-based solutions centers. In 2001, Fortune and Business Week each rated Innodata as one of the 100 top-performing public companies in the United States.
This release contains certain forward-looking statements, including without limitation, statements concerning the Company's operations, economic performance, and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," and other similar expressions generally identify forward-looking statements, which speak only as of their dates. These forward-looking statements are based largely on the Company's current expectations, and are subject to a number of risks and uncertainties, including without limitation, changes in external market factors, the ability and willingness of the Company's clients and prospective clients to execute business plans which give rise to requirements for digital content and professional services in knowledge processing, difficulty in integrating and deriving synergies from acquisitions, potential undiscovered liabilities of companies that Innodata acquires, changes in the Company's business or growth strategy, the emergence of new or growing competitors, various other competitive and technological factors, and other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission. Actual results could differ materially from the results referred to in the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the results referred to in the forward-looking statements contained in this release will in fact occur.
INNODATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
----------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
---- ---- ---- ----
REVENUES $ 7,278 $13,849 $30,223 $45,689
-------- -------- ------- --------
OPERATING COSTS
AND EXPENSES:
Direct operating
expenses 7,124 11,315 25,668 34,836
Selling and
administrative
expenses 2,740 2,021 7,810 6,306
Provision for
doubtful accounts - 500 - 500
Interest
income - net (13) (27) (34) (178)
-------- ------ ------ ------
Total 9,851 13,809 33,444 41,464
------- ------ ------ ------
(LOSS) INCOME BEFORE
(BENEFIT FROM) PROVISION
FOR INCOME TAXES (2,573) 40 (3,221) 4,225
(BENEFIT FROM) PROVISION
FOR INCOME TAXES (52) - (44) 1,392
-------- -------- ------ ------
NET (LOSS) INCOME $(2,521) $ 40 $ ( 3,177) $2,833
======= ======== ========= =======
BASIC (LOSS) INCOME
PER SHARE $(.12) $ - $(.15) $.13
======== ====== ========== ======
WEIGHTED AVERAGE SHARES
OUTSTANDING 21,733 21,404 21,589 21,303
======== ====== ====== ======
DILUTED (LOSS) INCOME
PER SHARE $(.12) $ - $(.15) $.11
======= ====== ======= =======
ADJUSTED DILUTIVE SHARES
OUTSTANDING 21,733 23,977 21,589 24,817
======= ====== ====== ======
INNODATA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
--------------------------------------------------------------------
September 30, December 31,
2002 2001
---- ----
Unaudited Derived from
audited
financial
statements
ASSETS
CURRENT ASSETS:
Cash and
equivalents $ 8,787 $ 6,267
Accounts
receivable-net 3,534 7,846
Prepaid expenses
and other current
assets 1,867 978
Deferred income
taxes 1,525 1,793
-------- --------
Total current assets 15,713 16,884
PROPERTY AND EQUIPMENT - NET 7,444 10,236
OTHER ASSETS 1,072 2,351
GOODWILL 675 623
-------- --------
TOTAL $24,904 $30,094
======== =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Acquisition notes
payable $ - $ 650
Accounts payable and
accrued expenses 2,218 2,875
Accrued salaries and
wages 3,064 3,770
Income and other
taxes 271 735
-------- --------
Total current liabilities 5,553 8,030
DEFERRED INCOME TAXES PAYABLE 1,723 1,702
STOCKHOLDERS' EQUITY 17,628 20,362
-------- --------
TOTAL $24,904 $30,094
======== =======
CONTACT:
Innodata Corporation
Al Girardi, 201/488-1200, ext. 5392
al_girardi@inod,.com
Leading publications around the world frequently look to Innodata Isogen for its recognized expertise on all aspects of content supply chains.
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