Vsource(R) Announces Results for Fiscal 2004 LA JOLLA, Calif.,
April 27 /PRNewswire-FirstCall/ -- Vsource, Inc. (BULLETIN BOARD:
VSCE) , an innovative leader in providing customized global
business process outsourcing (BPO) services to clients worldwide,
today announced its financial results for its fiscal year ending
January 31, 2004 (fiscal 2004). (Logo:
http://www.newscom.com/cgi-bin/prnh/20030910/VSCELOGO) Revenue for
the quarter ending January 31, 2004 totaled $4 million, compared to
$5.5 million for the same prior year period. The company reported a
net loss available to common shareholders of $6.7 million or $3.39
per basic share for the fourth quarter. Net loss available to
common shareholders during the period included a non-cash charge of
$3.2 million from deemed non- cash dividends to preferred
shareholders. Excluding the deemed non-cash dividend, Vsource's net
loss was $3.5 million in the fourth quarter of fiscal 2004. The
company recorded a deemed dividend credit arising from the
conversion of preferred stock to another class of preferred stock
in the fourth quarter ending January 31, 2003, when it reported a
net loss available to common shareholders of $1.7 million or $0.94
per basic share. Revenue for fiscal 2004 totaled $18.3 million,
compared to $26.5 million for the same prior year period. The
company reported a net loss available to common shareholders of
$23.2 million or $12.16 per basic share for fiscal 2004. Net loss
available to common shareholders during the year included non- cash
charges of $11.9 million from deemed non-cash dividends to
preferred shareholders and $0.1 million from amortization of
stock-based compensation expenses. Excluding the deemed non-cash
dividend and one-time Team America- related charges, Vsource's net
loss was $9.9 million for fiscal 2004. The company recorded a
deemed dividend credit arising from the conversion of preferred
stock to another class of preferred stock in fiscal 2003 when it
reported a net loss available to common shareholders of $5.3
million or $3.06 per basic share. The Company's earnings before
interest, taxes, depreciation and amortization, adjusted to exclude
non-cash expenses ("Adjusted EBITDA"), was a loss of $2.8 million
for the quarter ending January 31, 2004, compared with Adjusted
EBITDA loss of $0.2 million, adjusted to exclude non-cash
stock-based compensation charges of $0.06 million and non-cash loss
on extinguishment of debt of $0.1 million, for the same prior year
period. For fiscal 2004, the Adjusted EBITDA loss was $9 million,
adjusted to exclude non-cash stock compensation charges of $0.1
million, compared with Adjusted EBITDA of $1.1 million, adjusted to
exclude non-cash stock compensation charges of $1 million and loss
on extinguishment of debt of $6.8 million, for the same prior year
period. Adjusted EBITDA represents a non-GAAP (Generally Accepted
Accounting Principles) financial measure. A table reconciling this
measure to the appropriate GAAP measure is included in the notes to
the consolidated financial statements included in this release. Net
cash as of January 31, 2004 totaled $1.5 million, compared to $11.2
million as of January 31, 2003. Commenting on the fiscal 2004
results, Vsource Chairman and Chief Executive Officer, Phil Kelly
stated: "The results for fiscal 2004 were impacted by several key
factors. First, the termination of the Team America merger was
costly from a financial perspective and disruptive to our
operations. A good portion of the last quarter was spent
re-aligning our activities to contend with the set-backs associated
with this event. Second, in the first half of the year, SARS had a
material influence on our business, just as it affected many
companies across Asia-Pacific. SARS had a residual effect,
impacting our fiscal 2004 performance by extending the already long
sales cycles associated with closing new contracts. Basically, this
delayed our client acquisition cycles by 4 to 6 months." "Heading
into fiscal year 2005, we are encouraged by our progress and
efforts in the fourth quarter. We have added new client contracts
with several of the world's leading companies and we continue to
strengthen relationships with our existing clients by maintaining
our focus on client satisfaction through exceptional service
delivery. We are also making great headway with our operations in
Taiwan, which was launched in November 2003. Furthermore, with our
newly expanded Human Capital Management solutions offering, we are
well positioned to help our growing list of new clients (small and
medium-sized businesses) achieve success through outsourced HR
services. We continue to distinguish ourselves in the BPO
marketplace by forging an important relationship with Symphony
House Berhad in Malaysia, a solid partner in the region. Vsource,
Inc. Consolidated Statements of Income (in thousands, except per
share data) Three months ended Fiscal year ended January 31,
January 31, 2004 2003 2004 2003 Revenue $4,034 $5,506 $18,298
$26,546 Operating Expenses Cost of revenue 2,909 2,699 11,479
13,236 Selling, general and administrative 4,591 3,669 16,638
15,561 Amortization of stock-based compensation expense 0 56 94 963
Write-off of merger-related expenses 0 0 1,467 0 Insurance proceeds
in respect of loss on inventory 0 0 0 (464) Loss on extinguishment
of debt 0 135 0 6,838 Total expenses 7,500 6,559 29,678 36,134
Operating loss (3,466) (1,053) (11,380) (9,588) Non-cash beneficial
conversion feature expense (1) 0 (10) 0 (1,727) Other interest
income (expense) 2 16 33 (512) Provision for income tax (22) 0 22 0
Net loss $(3,486) $(1,047) $(11,369) $(11,827) Non-cash deemed
dividend to preferred shareholders (2) $(3,213) (610) (11,877)
6,526 Net loss available to common shareholders $(6,699) $(1,657)
$(23,246) $(5,301) Basic and diluted net loss per share available
to common shareholders $(3.39) $(0.94) $(12.16) $(3.06) Weighted
average number of common shares outstanding 1,973,175 1,760,999
1,912,304 1,734,060 Basic and diluted (3) Earnings before interest,
taxes, depreciation & amortization excluding non-cash stock
compensation expense (4) $(2,858) $(231) $(8,998) $1,122 Adjusted
EBITDA margin (5) (71%) (4%) (49%) (4%) (1) Non-cash beneficial
conversion feature charges associated with the issuance of
convertible debt (2) Non-cash deemed dividend for preferred
shareholders associated with the amortization of beneficial
conversion feature and accretion of redemption value of Series 4-A
convertible preferred stock and; associated with reversal of
beneficial conversion feature originally recognized on Series 2-A
convertible preferred stock and warrants upon exchange for Series
4-A convertible preferred stock (3) Excludes common shares
outstanding on an "as converted basis" totaling 20.4 million in
aggregate associated with preferred stock, warrants and vested
employee options outstanding (4) Reconciliation of Net loss to
Adjusted EBITDA Three months ended Twelve months ended January 31,
January 31, 2004 2003 2004 2003 Net loss $(3,481) $(1,047)
$(11,369) $(11,827) Add: Non-cash beneficial conversion feature
expense 0 10 0 1,727 Other interest (income) expense (2) (16) (33)
512 Depreciation and amortization 608 631 2,288 2,909 Amortization
of stock-based compensation expense 0 56 94 963 Provision for
income tax 22 0 22 0 Loss on extinguishment of debt 0 135 0 6,838
Adjusted EBITDA $(2,853) $(231) $(8,998) $1,122 (5)Adjusted EBITDA
margin is Adjusted EBITDA divided by Revenue Vsource, Inc.
Consolidated Balance Sheets (in thousands) January 31, 2004 January
31, 2003 Assets Current assets: Cash $1,452 $11,152 Restricted cash
473 150 Accounts receivable, net 1,062 1,522 Inventories 207 490
Prepaid expenses 475 337 Other current assets 2,148 1,262 Total
current assets 5,817 14,913 Property and equipment, net 4,418 4,974
Restricted cash, non-current 599 250 Total assets $10,834 $20,137
Liabilities, Preferred stock and Shareholders' (deficit) equity
Current liabilities: Accounts payable $2,296 $1,134 Accrued
expenses 5,348 3,333 Advance from customers 906 1,229 Total current
liabilities 8,550 5,696 Advance from customer, non-current 0 900
Preferred stock 19,064 8,096 Shareholders' (deficit) equity
(16,780) 5,445 Total Liabilities, Preferred stock and Shareholders'
(deficit) equity $10,834 $20,137 Non-GAAP Financial Measures This
release contains non-GAAP financial measures. Pursuant to the
requirements of Regulation G, Vsource has provided reconciliation
within this release of the non-GAAP financial measures to the most
directly comparable GAAP financial measures. Adjusted EBITDA has
been presented in this release in order to assist in the analysis
of the operating profitability of the company because the company
believes this form of measurement eliminates the effects of
non-cash charges such as beneficial conversion feature expense,
stock-based compensation and depreciation and amortization.
Management reviews this form of measurement monthly. Vsource has
consistently provided this measurement in previous releases and
therefore has provided a consistent basis for comparison between
quarters, which the company believes is useful to investors and
other interested persons. About Vsource Vsource, Inc.,
headquartered in La Jolla, Calif., provides customized global
business process outsourcing (BPO) services to clients worldwide.
Under Vsource Client Outsourcing Solutions (COS), Vsource provides
superior BPO solutions for Fortune 500 and Global 500
organizations. Vsource COS include: Human Resource Solutions,
Warranty Solutions, Sales Solutions, and Vsource Foundation
Solutions(TM), which include Customer Relationship Management
(CRM), Financial Services, Travel and Expense Claims, and Supply
Chain Management (SCM). Under Vsource Human Capital Management
(HCM) solutions, Vsource delivers Fortune 500 reliability to small
and medium-sized businesses in the U.S. HCM solutions include:
Human Resource Management, Health & Welfare, Administrative
Services, and Risk Management. Vsource solutions are currently
utilized by some of the world's most admired companies, including:
ABN-AMRO, Agilent Technologies, EMC2, FedEx, Network Appliance,
Haworth, and Gateway. For more information, log on to:
http://www.vsource.com/. Forward Looking Statements: Some of the
statements in this release and other oral and written statements
made by us from time to time to the public constitute
forward-looking statements. These forward-looking statements are
based on management's current expectations or beliefs and are
subject to a number of factors and uncertainties that could cause
actual results to differ materially from those described in the
forward-looking statements. These forward-looking statements
include, without limitation, statements with respect to anticipated
future operating and financial performance, introduction of
services and growth opportunities expected or anticipated to be
realized by management. Vsource disclaims any obligation to update
or revise any forward-looking statements based on the occurrence of
future events, the receipt of new information, or otherwise.
Factors that could cause or contribute to such differences include,
but are not limited to, heavy reliance on a small number of major
clients, a potential requirement to redeem our Series 4-A
convertible preferred stock if we fail to meet certain conditions
by March 31, 2006, our limited experience in providing human
capital management solutions, the new and unproven market for
business process outsourcing services internationally, long cycles
for sales of our solutions, complexities involved in implementing
and integrating our services, fluctuations in revenues and
operating results, economic and infrastructure disruptions,
dependence on a small number of vendors and service providers,
management of acquisitions, litigation and competition. Other
factors that may affect these statements are identified in our
previous filings with the Securities and Exchange Commission.
Vsource is a registered trademark of Vsource, Inc. Vsource
Foundation Solutions is a trademark of Vsource, Inc. Fortune,
Fortune 500 and Global 500 are registered trademarks of Time Inc.
Vsource disclaims any proprietary interest in the marks and names
of others. For further information please contact Cindy Kim,
Vsource Media Relations, +1-858-456-4871, or fax, +1-858-456-4878,
. http://www.newscom.com/cgi-bin/prnh/20030910/VSCELOGO
http://photoarchive.ap.org/ DATASOURCE: Vsource, Inc. CONTACT:
Cindy Kim, Vsource Media Relations, +1-858-456-4871, or fax,
+1-858-456-4878, Web site: http://www.vsource.com/
Copyright