WALTHAM, Mass. - July 26, 2002 - Lionbridge Technologies, Inc. (Nasdaq: LIOX) today announced preliminary financial results for the quarter ended June 30, 2002. Based on preliminary data, the Company expects to exceed expectations with revenue of between $29.1 million and $29.8 million for the quarter, compared to revenue of $22.7 million for the second quarter of 2001 and revenue of $24.9 million for Q1 2002. The Company is expecting earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of $400,000 to $1.3 million, or a net loss of between $600,000 and $1.5 million on a GAAP basis for the quarter ended June 30, 2002. These revenue and earnings estimates include potential EBITDA and net loss adjustments of between $1.8 million and $900,000 related to the Company's ChinaConnect subsidiary.
The Company also reported that it is postponing its final earnings announcement in order to complete its financial review associated with the Company's decision during the quarter to transform its Beijing, China, ChinaConnect subsidiary into a VeriTest offshore testing and development center. ChinaConnect, which accounted for about 3% of the Company's revenue in 2001, was acquired as part of Lionbridge's merger with INT'L.com. ChinaConnect had increasingly focused on developing middleware for the China wireless telecom sector. During Q2 the Company decided to exit this non-core business activity and utilize its existing infrastructure in Beijing for expansion of its growing VeriTest testing business.
"With the strongest financial and operational performance of our globalization, testing and development businesses in the Company's history, we are estimating record organic quarter on quarter revenue and earnings growth for the core business. Our global 2000 customers continue to rely on Lionbridge as their outsourcing partner for critical business processes," said Rory Cowan, CEO, Lionbridge. "As part of our decision to exit the ChinaConnect business, we are looking at the realizability of certain receivables and work-in-process associated with select ChinaConnect customers. We felt the most prudent course of action would be to postpone our final earnings announcement until we complete that review."
The Company estimates potential adjustments to EBITDA and net loss related to ChinaConnect ranging from $900,000 to $1.8 million, and has included those potential adjustments in the estimates above for the quarter. At this time, the Company has not made a final determination as to the specific amount, timing and classification of these potential ChinaConnect adjustments.
Based on preliminary results for the quarter ended June 30, 2002, the Company also reported a net loss (after potential adjustments related to ChinaConnect) of between $600,000 and $1.5 million, or between $.02 and $.05 per share for the quarter, based on 31.6 million weighted average common shares outstanding. This compares to a net loss of $0.27 per share for the second quarter of 2001 and $0.06 per share for the first quarter of 2002.
Additional details of the preliminary results for the second quarter ended June 30, 2002, excluding ChinaConnect, include:
- Unrestricted Cash of approximately $12.1 million, Net Accounts Receivable of approximately $16.5 million, and ending Work in Process estimated at $6.1 million. Collectively these assets increased by approximately $7.0 million from the previous quarter. The Company's net borrowings increased approximately $4.1 million to help fund much of this asset growth. Accounts payable and accrued expenses increased by approximately $1.4 million.
- The Company's simple days sales outstanding (DSO) was approximately 49 days for Q2, reflective of the Company's delivery quality and its strong customer relationships.
- Revenue from the Company's top 25 customers grew by over 20% during the quarter versus the prior quarter, a demonstration of the core business strength and strong recurring nature of the business.
The Company also noted that during the quarter, as previously announced, it extended its financing arrangements with Capital Resource Partners, and renewed through May 2003 its credit facility with its primary bank, Silicon Valley Bank.
The Company expects to host a conference call to discuss final earnings on or before August 14, 2002, in lieu of its previously scheduled call for July 29. Details of the final second quarter earnings call will be announced prior to the call.
About Lionbridge
Lionbridge Technologies, Inc. provides solutions for worldwide deployment of technology and content to global 2000 companies in the technology, life sciences and financial services industries. Lionbridge testing and compatibility services, globalization solutions, and multilingual content management technologies help clients reduce cost, speed time to market, and ensure the integrity of global brands. Based in Waltham, Mass., Lionbridge maintains facilities in England, Ireland, The Netherlands, France, Germany, China, South Korea, Japan, Taiwan, Brazil, and the United States. To learn more, visit www.lionbridge.com.
Forward-Looking Statements
This press release contains express or implied forward-looking statements, including statements relating to expected operating results for the second quarter, the expected impact of any adjustments to operating results from the transformation of the ChinaConnect business, and the strength of the Company's core business, customer base, and customer relationships. These statements are neither promises nor guarantees, but are subject to risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including the termination of customer contracts prior to the end of their term; Lionbridge's dependence on clients' product releases to generate revenues; the loss of a major client; the size, timing and recognition of revenue from clients; Lionbridge's ability to complete projects started at ChinaConnect as well as to collect accounts receivables from the ChinaConnect business; customer delays or postponements of services; the impact of foreign currency fluctuations on its operating results and revenue growth; risks associated with management of growth; market acceptance of new service offerings; the failure to keep pace with the rapidly changing requirements of its clients; Lionbridge's ability to attract and retain key personnel; Lionbridge being held liable for defects or errors in its solutions; political, economic and business fluctuations in domestic and international markets; as well as risks of downturns in conditions generally, and in the information technology and software industries specifically, and risks associated with competition and competitive pricing pressures; and the preliminary nature of the revenue and operating results information contained in this release. For a more detailed description of the risk factors associated with Lionbridge, please refer to Lionbridge's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2002 and Lionbridge's Quarterly Report on Form 10Q filed with the Securities and Exchange Commission on May 15, 2002.