chinadotcom Reports Record 2004 Revenues 0f US$182.7 Million, Up
135% Year-On-Year Executive Chairman Assumes CEO Position;
Enterprise Software Divisions See Continued Growth; Investments
Planned to Grow Existing Businesses Q4 2004-on-Q3 2004 US GAAP --
Total revenue rose 13% to US$54.2 million from US$48.0 million in
Q3 2004 -- Gross profit increased 22% to US$32.3 million from
US$26.4 million in Q3 2004 -- Gross margin was 60%, increasing from
55% in Q3 2003 -- Operating income was US$0.6 million compared to
operating loss of US$6.9 million in Q3 2004 -- Income before taxes
was US$1.8 million compared to a loss of US$5.7 million in Q3 2004
-- Net loss was US$8.0 million compared to a net loss of US$6.2
million in Q3 2004 due principally to a tax expense of US$9.0
million, US$7.4 million of which is non-cash and primarily related
to acquisition accounting for Pivotal Corporation ('Pivotal') and
Ross Systems, Inc. ('Ross') Q4 2004-on-Q3 2004 Non-GAAP* --
Non-GAAP net income was US$3.6 million compared to Non-GAAP net
income of US$2.8 million in Q3 2004 -- Non-GAAP earnings per share
was 3.3 US cents compared to 2.7 US cents in Q3 2004 -- Non-GAAP
net income excludes certain non-recurring or non-cash expenses
including (i) amortization of purchased intangibles related to the
acquisition of subsidiaries, (ii) restructuring charges and (iii)
adjustments which relate to tax impact of acquisitions Full
Year-on-Year US GAAP -- Total revenue rose 135% to US$182.7 million
from US$77.9 million in 2003 -- Gross profit increased 165% to
US$103.5 million from US$39.0 million in 2003 -- Gross margin was
57%, increasing from 50% in 2003 -- Operating loss was US$6.5
million compared to operating income of US$235,000 in 2003 --
Income before taxes was US$348,000 compared to US$16.6 million in
2003 -- Net loss was US$10.6 million compared to net income of
US$15.5 million in 2003 HONG KONG, March 9
/Xinhua-PRNewswire-FirstCall/ -- chinadotcom corporation (Nasdaq:
CHINA; http://www.corp.china.com/ ) today announced its unaudited
financial results for the fourth quarter and full year of 2004
under US GAAP. Fourth Quarter 2004 The company reported revenues of
US$54.2 million for Q4 2004, an increase of 13% from US$48.0
million in Q3 2004. Fourth quarter 2004 gross profit was US$32.3
million, up 22% from US$26.4 million in Q3 2004. Fourth quarter
gross margin was 60% compared to 55% in Q3 2004. Fourth quarter
2004 operating income was US$0.6 million compared to an operating
loss of US$6.9 million in Q3 2004. Fourth quarter 2004 income
before taxes was US$1.8 million compared to a loss before taxes of
US$5.7 million in Q3 2004. Fourth quarter 2004 net loss was US$8.0
million compared to a net loss of US$6.2 million in Q3 2004. Fourth
quarter 2004 basic loss per share was 7.2 US cents compared to a
basic loss per share of 5.8 US cents for Q3 2004. On a non-GAAP
basis, fourth quarter 2004 net income was US$3.6 million compared
to net income of US$2.8 million in Q3 2004. Fourth quarter 2004
non- GAAP basic earnings per share was 3.3 US cents compared to a
non-GAAP basic earnings per share of 2.7 US cents in Q3 2004. Full
Year 2004 The company reported revenues of US$182.7 million for the
full year 2004, an increase of 135% from US$77.9 million in 2003.
Full year 2004 gross profit was US$103.5 million, up 165% from
US$39.0 million in 2003. Full year gross margin was 57% compared to
50% in 2003. Full year 2004 operating loss was US$6.5 million
compared to a 2003 net income of US$235,000. Full year 2004 income
before taxes was US$348,000 compared to US$16.6 million in 2003.
Full year 2004 net loss was US$10.6 million compared to net income
of US$15.5 million in 2003. Full year 2004 basic loss per share was
10.0 US cents compared to a basic earnings per share of 15.4 US
cents for 2003. As of December 31, 2004, the company had
approximately 110.8 million common shares outstanding and held US$
230 million in non-GAAP net cash and cash equivalents on its
balance sheet. Reconciliation from GAAP results to non- GAAP
results: Q3 2004 Q4 2004 (amount in thousands of US dollars, except
per share data) GAAP net income/(loss) (6,152) (8,025) Add back
revenue impact of deferred maintenance revenue down related to the
acquisition of subsidiaries 916 591 Add back amortization of
purchased intangibles related to acquisition of subsidiaries 3,451
2,325 Add back stock compensation expenses related to the
acquisition of subsidiaries 518 462 Add back legal and professional
expenses on stock offering 1,344 -- Add back restructuring expenses
3,083 305 Add back deferred tax impact related to acquisition of
subsidiaries (734) 7,386 Add back impairment of available for sale
securities 416 574 Non-GAAP net income 2,842 3,618 Non-GAAP basic
earnings per share 0.027 0.033 The majority of the non-GAAP
reconciliation items set forth above are non-cash and relate to the
accounting for the acquisitions of Pivotal and Ross. * All
references to Non-GAAP in the results highlights herein should be
read in conjunction with the description of Non-GAAP Measures later
in this press release and the more detailed financial statements
included at the end of this release. Recent Highlights -- Pivotal,
the company's Customer Relationship Management ("CRM") software
unit, acquired in Q1 2004, continued its third successive strong
quarter. The unit's revenue contribution was US$15.9 million for
the quarter. In addition to holding 3 well-attended customer
conferences during this quarter in Chicago, San Francisco and
Paris, the CRM unit won 'Best in Show' at the Healthcare IT Summit
and the CRM Select Excellence Award from Info-Tech Research Group.
-- Ross, the company's Enterprise Resource Planning ("ERP")
software unit, contributed US$13.2 million for the quarter and
added a number of new customers including key wins in the UK, Spain
and Poland. The unit launched iRennaissance 5.9, which included the
integration of the iRennaissance CRM product powered by Pivotal and
introduced iRennaissance Supply Chain Management ('SCM'), its first
product release out of its Shanghai-based development team. The
unit also launched a new line of sales analysis tools. In addition
to cross- selling the Pivotal powered CRM product to 10 current
customers, the unit consummated the first co-sale of an IMI-based
SCM warehousing product. -- IMI, the company's SCM software unit,
achieved operating earnings in the quarter and added a number of
product support and management features to its products. -- CDC
Software Asia, which sells and markets the company's enterprise
software products, including those from Pivotal and Ross, in the
Asia Pacific region, launched a new version of the company's
business analytics tool, Executive Suite. The unit began to build
its sales and marketing infrastructure in Japan, further expanded
its sales capability in China and achieved CMM Level 4
certification for its Shanghai-based software development center.
-- The china.com portal, named the exclusive online partner of The
10th National Games of the People's Republic of China, launched a
one year count-down clock and the commercial website for The Games
( http://titan.china.com/ ). -- The operating environment for
mobile value added services ("MVAS") in China was harsh during the
second half of 2004 as a result of sanctions and new restrictions
imposed by the regulator and mobile operators. As a consequence,
the company's fourth quarter MVAS revenues declined. The MVAS units
allocated more resources toward 2.5G services, such as Wireless
Application Protocol ('WAP') and MMS. Dr. Raymond Ch'ien, the
company's Executive Chairman and newly appointed CEO, says, '2004
marked a year of positive change and transformation for
chinadotcom. We acquired two enterprise software companies and
added a mobile value added service provider. These investments have
significantly extended our global reach and broadened the products
and services we offer. Entering 2005, the company has a
strengthened management team; a broad set of first class
mid-enterprise software products for the international market; in
China, a portal that is being repositioned with superior special
interest content; and large market potential in mobile value added
services driven by 2.5G network-based products." 2005 -- Investing
for Sustained Growth The company's key 2005 investment plans
include: -- Acceleration of research & development programs for
enterprise software products -- Addition of selected vertical
market offerings for the company's enterprise software products --
Expansion of the sales and marketing network for enterprise
software in the Asia Pacific region -- Development of innovative
products and services for the existing 2.5G mobile networks and the
proposed 3G mobile networks in China -- Development of specialized
content, cultivating strategic partnerships and sponsoring key
events for the china.com portal Dr. Ch'ien continues, 'Our goal is
to enhance competitiveness during 2005. The investments we make
this year will help us achieve an improved and sustainable
financial performance in 2006 and beyond." Other Developments The
board of directors has accepted the resignation of CEO Peter Yip
who has been on an extended leave of absence. Mr. Yip will remain
on the board as Vice Chairman. Executive Chairman Raymond Ch'ien
has been appointed CEO by the board of directors. Dr. Ch'ien
comments, 'On behalf of my board colleagues, I would like to
express our appreciation for Peter's indelible contributions as
founding CEO. Under his visionary and untiring leadership, the
company developed from a concept to a burgeoning enterprise with
over 1,800 employees spread over four continents with the potential
of gaining preeminence in the fields of new media in China and
specialist enterprise software internationally.' Non-GAAP Measures
To supplement the financial measures prepared in accordance with
generally accepted accounting principles ("GAAP"), the company uses
non-GAAP financial measures for net income and other line items,
which are adjusted from results based on GAAP. These non-GAAP
measures are provided to enhance the user's overall understanding
of the company's current financial performance and its prospects
for the future. The company believes the non-GAAP results provide
useful information to both management and investors. In particular,
the adjusted presentation may be useful for investors to assess the
impact of recent acquisitions. Although the company continues to
report US GAAP results to investors, the company believes the
inclusion of non-GAAP financial measures provides further clarity
in its financial reporting. These non-GAAP financial measures may
be different from non-GAAP financial measures used by other
companies, and should be considered in addition to results prepared
in accordance with GAAP, but should not be considered a substitute
for or superior to GAAP measures. The non-GAAP financial measures
included in this press release have been reconciled to the nearest
GAAP measures. Unaudited and Preliminary Financial Information The
financial information included in this press release is unaudited
and preliminary. At this time, the company's independent auditor,
Ernst & Young, has not completed its audit of the company's
consolidated financial statements and related notes. The financial
information included herein is subject to adjustment pending the
completion of such audit. Adjustments to such financial statements
and information may be identified when the audit work is completed,
which could result in significant differences between the company's
audited consolidated financial statements and the preliminary
unaudited financial information set forth in this press release and
prior press releases as related to the company's 2004 financial
information. The audited consolidated financial statements and
related notes will be included in the company's Annual Report on
Form 20-F for the year ended December 31, 2004. Conference Call
chinadotcom will hold a conference call to review its fourth
quarter 2004 results at 8:00 am EDT on Wednesday, March 9, 2005
(9:00 pm on March 9, Hong Kong time). Investors can call: USA and
CANADA Toll Free Number: +1-877-692-2592 US Toll Number:
+1-973-582-2700 UK Toll Free Number: 0800-0689199 AUSTRALIA Toll
Free Number: 1800-003163 CHINA Toll Free Number: 10800-1300432 HONG
KONG Toll Number: 800-903265 The passcode is Q4 China and the call
leader is Raymond Ch'ien. Alternatively the conference call can be
heard via the Internet at
http://www.talkpoint.com/viewer/starthere.asp?Pres=109232 . Instant
Replay For those unable to call in or listen to the live broadcast
via the web, a replay will be available after the call at
http://www.corp.china.com/ under INVESTOR RELATIONS or via Instant
Replay by calling US Toll Number: 973-341-3080, US and CANADA Toll
Free Number: 877-519-4471, or UK Toll Free Number: 08001693875. The
passcode for the Instant Replay is 5283649. About chinadotcom
corporation chinadotcom corporation (Nasdaq: CHINA; Website:
http://www.corp.china.com/) is a leading integrated enterprise
software and mobile applications company focused on China and
internationally. The company has over 1,800 employees with
operations in 14 countries. For more information about chinadotcom
corporation, please visit the website http://www.corp.china.com/ .
Cautionary Note Regarding Forward-Looking Statements This press
release includes "forward-looking statements" within the meaning of
the United States Private Securities Litigation Reform Act of 1995,
and includes statement relating to the Company's plan for its
enterprise software business to accelerate research and
development, add selected vertical market offerings and expand the
sales and marketing network in the Asia Pacific region, for its
mobile services and applications business to develop innovative
products and services for 2.5G and 3G mobile networks in China, and
for its portal business to develop specialized content, cultivate
strategic partnerships and sponsor key events. These statements are
based on management's current expectations and are subject to risks
and uncertainties and changes in circumstances. There are important
factors that could cause actual results to differ materially from
those anticipated in the forward looking statements, including the
following: (a) the ability to realize strategic objectives by
taking advantage of market opportunities in targeted geographic
markets; (b) the ability to make changes in business strategy,
development plans and product offerings to respond to the needs of
current, new and potential customers, suppliers and strategic
partners; (c) the ability to integrate operations or new
acquisitions in accordance with the company's business strategy;
(d) the effects of restructurings and rationalization of
operations; (e) the ability to recruit and retain qualified,
experienced employees; (f) the demand for the company's software
products; (g) the relationship between the company's software
business units and their partner network and the ability of these
partners to effectively sell the company's software products; (h)
the risks associated with the development and licensing of software
generally, including potential delays in software development and
technical difficulties that may be encountered in the development
or use of software, existence of error and defects in software
products and size and timing of license transactions; (i) the
ability to manage regulatory and litigation risks; (j) the ability
to address technological changes and developments including the
development and enhancement of products; (k) the entry of new
competitors and their technological advances; and (l) the company's
reliance on mobile operators in China to provide MVAS and the
migration by China Mobile of MVAS products onto the MISC platform
and the effect of such migration on the company's MVAS revenues.
Further information on risks or other factors that could cause
results to differ is detailed in filings or submissions with the
United States Securities and Exchange Commission made by
chinadotcom corporation in its Annual Report for the year ended
December 31, 2003 on Form 20-F/A filed on July 8, 2004. All
forward- looking statements included in this press release are
based upon information available to management as of the date of
the press release, and you are cautioned not to place undue
reliance on any forward looking statements which speak only as of
the date of this press release. The company assumes no obligation
to update or alter the forward-looking statements whether as a
result of new information, future events or otherwise. chinadotcom
corporation Consolidated Statement of Operations (Amounts in
thousands of U.S. dollars, except per share data) Quarter Ended
Quarter Ended September 30, December 31, 2004 2004 (unaudited)*
(unaudited)* Revenues Software 28,438 38,491 Business services
9,727 9,352 Mobile services and applications 6,822 2,826
Advertising and marketing activities 3,019 3,554 Other income -- --
48,006 54,223 Cost of revenues Software (11,759) (14,255) Business
services (6,939) (6,185) Mobile services and applications (1,775)
(119) Advertising and marketing activities (1,169) (1,373) Other
income -- -- (21,642) (21,932) Gross profit 26,364 32,291 Gross
margin % 55% 60% Selling, general and administrative expenses
(22,591) (23,313) Research and development expenses (3,934) (4,668)
Depreciation and amortization expenses (3,700) (3,447)
Restructuring expenses (3,083) (305) (33,308) (31,733) Operating
income/(loss) (6,944) 558 Interest income 2,579 1,871 Interest
expense (650) (360) Loss on disposal of available- for-sale
securities -- (179) Impairment of available-for-sale securities
(416) (574) Gain/(loss) on disposal of subsidiaries and investments
(270) 796 Share of losses in equity investees -- (313)
Income/(loss) before income taxes (5,701) 1,799 Income taxes
benefits/(expenses) 685 (8,962) Losses before minority interests
(5,016) (7,163) Minority interests in income of consolidated
subsidiaries (791) (149) Losses from continuing operations (5,807)
(7,312) Discontinued operations Loss from operations (7) (48) Loss
from disposals (338) (665) Net losses (6,152) (8,025) Basic losses
per share (0.058) (0.072) Diluted losses per share (0.058) (0.072)
Weighted average no. of shares 105,890,819 110,781,552 Diluted no.
of shares 105,890,819 110,781,552 Reconciliation from GAAP results
to non-GAAP results: GAAP net loss (6,152) (8,025) Add back revenue
impact of deferred maintenance revenue write down related to the
acquisition of subsidiaries 916 591 Add back amortization of
purchased intangibles related to the acquisition of subsidiaries
3,451 2,325 Add back stock compensation expenses related to the
acquisition of subsidiaries 518 462 Add back legal and professional
expenses on stock offering 1,344 -- Add back restructuring expenses
3,083 305 Add back deferred tax impact related to acquisition of
subsidiaries (734) 7,386 Add back impairment of available for sale
securities 416 574 Non-GAAP net income 2,842 3,618 Non-GAAP Basic
earnings per share 0.027 0.033 Weighted average no. of shares -
Non-GAAP 105,890,819 110,781,552 * Adjusted for discontinued
operations chinadotcom corporation Consolidated Statement of
Operations (Amounts in thousands of U.S. dollars, except per share
data) Year Ended Year Ended December 31, December 31, 2003 2004
(unaudited)* (unaudited)* Revenues Software 12,891 107,879 Business
services 37,242 39,391 Mobile services and applications 16,876
23,694 Advertising and marketing activities 8,841 11,709 Other
income 2,001 10 77,851 182,683 Cost of revenues Software (6,960)
(43,240) Business services (24,469) (26,750) Mobile services and
applications (2,247) (4,597) Advertising and marketing activities
(4,312) (4,645) Other income (889) -- (38,877) (79,232) Gross
profit 38,974 103,451 Gross margin % 50% 57% Selling, general and
administrative expenses (31,785) (80,419) Research and development
expenses -- (13,825) Depreciation and amortization expenses (6,954)
(12,276) Restructuring expenses -- (3,387) (38,739) (109,907)
Operating income/(loss) 235 (6,456) Interest income 13,412 9,653
Interest expense (1,070) (1,895) Gain on disposal of available-for-
sale securities 4,599 167 Impairment of available-for-sale
securities -- (1,362) Gain/(loss) on disposal of subsidiaries and
investments (1,263) 549 Other non-operating gains 934 -- Other
non-operating losses (148) -- Share of losses in equity investees
(124) (308) Income before income taxes 16,575 348 Income taxes
benefits/(expenses) 598 (7,541) Income/(loss) before minority
interests 17,173 (7,193) Minority interests in income of
consolidated subsidiaries (2,257) (2,227) Income/(loss) from
continuing operations 14,916 (9,420) Discontinued operations Loss
from operations (1,519) (190) Income/(loss) from disposals 2,127
(950) Net income/(loss) 15,524 (10,560) Basic earnings/(losses) per
share 0.154 (0.100) Diluted earnings/(losses) per share 0.150
(0.100) Weighted average no. of shares 100,532,594 105,898,392
Diluted no. of shares 103,199,421 105,898,392 * Adjusted for
discontinued operations For further information, please contact:
Media Relations Jane Cheng, Associate Director, Public Relations
Tel: +852-2961-2750 Fax: +852-2571-0410 Email: Investor Relations
Craig Celek, VP Investor Relations Tel: +1-212-661-2160 Fax:
+1-646-827-2421 Email: Web Sites: http://www.corp.china.com
http://www.talkpoint.com/viewer/starthere.asp?Pres=109232
DATASOURCE: chinadotcom corporation CONTACT: Media Relations - Jane
Cheng, Associate Director, Public Relations, +852-2961-2750, or
fax, +852-2571-0410, or , or Investor Relations - Craig Celek, VP
Investor Relations, +1-212-661-2160, or fax, +1-646-827-2421, or ,
both of CHINA
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