- Reports Total Revenue of $35.7 Million -
- Delivers Record $37.6 Million in Net Dollar Volume of Contracts
Written -
- Delivers $5.1 Million of Net Cash Provided by Operating
Activities Increasing Cash and Cash Equivalents to $37.1 Million -
- Increases Trade Receivables, Net of Allowance for Doubtful
Accounts, by $4.3 Million to $29.5 Million -
- Posts GAAP Net Income of $11.7 Million, Inclusive of $5.2
Million Income Tax Benefit -
- Posts GAAP Diluted EPS of $0.90 -
- Posts Record Non-GAAP Diluted EPS of $0.42 -
- Increases Guidance for Fiscal 2007 Net Dollar Volume of
Contracts Written to Grow Approximately 40% over Fiscal 2006 -
OREM, Utah--(BUSINESS WIRE)--Feb. 6, 2007--iMergent, Inc. (AMEX:IIG), a leading provider of eCommerce and software for small businesses and entrepreneurs, today announced its financial results for the three and six months ended December 31, 2006.
Don Danks, chairman and chief executive officer, stated, "We have executed on our plan and delivered another quarter of tremendous growth. The first half of the fiscal year has exceeded our expectations on all fronts. For our second fiscal quarter, revenue reached $35.7 million with strong domestic sales and a reinvigorated international program. During the three months ended December 31, 2006, we held 297 workshops, including 82 internationally, compared to 200 workshops, including 65 internationally, during the comparable period last year."
Danks added, "Response to our marketing campaigns has been strong, and our sales teams are gaining traction. In January 2007, we announced AVAIL, a new telephone/voicemail/email/fax product that complements iMergent's web site development software. This demonstrates iMergent's ongoing commitment to providing our customers with the highest level of products and services. In addition, AVAIL is expected to drive recurring revenue."
"This quarter we posted another record for Net Dollar Volume of Contracts Written, which reached $37.6 million, representing a 50 percent increase over the comparable quarter last year," stated Robert Lewis, chief financial officer. "Also during the quarter, we generated $5.1 million in net cash from operating activities."
As of December 31, 2006, cash and cash equivalents were $37.1 million; net trade receivables were $29.5 million; working capital was $28.9 million; and working capital excluding deferred revenue was $52.4 million.
Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics
In December 2005, the company changed its business model to: (1) limit certain "free" services to a period of one year for all customers who purchased the StoresOnline software prior to December 20, 2005, and (2) begin charging customers for those services as part of customer support. This change in business model resulted in the recognition of previously deferred product and other revenue of $108.0 million in December 2005, which would have been recognized in future periods had the change in business model not occurred.
Because of the change in business model described above, the company believes the Net Dollar Volume of Contracts Written during each period is a consistent and relevant measure to understand the operations of the company. Net Dollar Volume of Contracts Written represents the gross dollar amount of contracts executed during the period less estimates for bad debts, discounts incurred on sales of trade receivables, and estimates for customer returns. The company also believes non-GAAP net income and non-GAAP net income per diluted common share are useful measures. The non-GAAP measures, including non-GAAP net income and non-GAAP net income per diluted common share, assume 1) the Net Dollar Volume of Contracts Written is recognized as revenue at the time of sale; 2) certain corresponding cost of product and other revenue and selling and marketing expenses are also recognized at the time of sale; and 3) the income tax provision is based upon an estimated federal, state, and foreign statutory blended rate of 40 percent. Non-GAAP net income per diluted common share is defined as non-GAAP net income divided by the weighted average of diluted common shares outstanding. Tables reconciling GAAP and non-GAAP measures follow in this press release.
Fiscal Second Quarter 2007 Compared to 2006
-- Revenues for the second quarter of fiscal 2007 were $35.7
million. This compares to $120.5 million for the second
quarter of fiscal 2006, which included the recognition of
previously deferred product and other revenue of $108.0
million due to the change in our business model in December
2005.
-- Net Dollar Volume of Contracts Written was $37.6 million for
the current quarter compared to $25.1 million for the
comparable period last year.
-- Total operating expenses were $30.8 million for the current
quarter, compared to $21.6 million for the comparable quarter
last year. The increase in cost of product and other revenues
and selling and marketing expenses was primarily attributable
to the increase in Net Dollar Volume of Contracts Written.
-- Net cash provided by operating activities for the current
quarter was $5.1 million.
-- For the three months ended December 31, 2006, net income was
$11.7 million, or $0.90 per diluted common share, which
included the impact of a $5.2 million income tax benefit
resulting primarily from the reversal of a valuation allowance
against the company's deferred income tax assets. This
compares to net income of $111.2 million, or $8.92 per diluted
common share in the comparable quarter last year, which
included the aforementioned recognition of product and other
revenues of $108.0 million and an income tax benefit of $11.7
million.
-- Non-GAAP net income was $5.5 million, or $0.42 per diluted
common share, for the three months ended December 31, 2006,
compared to non-GAAP net income of $2.5 million, or $0.20 per
diluted common share, for the comparable quarter last year.
Six Months Ended December 31, 2006 Compared to 2005
-- Revenues for the six months ended December 31, 2006 were $64.7
million compared to $131.9 million for the comparable period
last year, which included the aforementioned recognition of
previously deferred product and other revenues of $108.0
million.
-- Net Dollar Volume of Contracts Written was $70.1 million for
the current period, compared to $42.1 million for the same
period last year.
-- Total operating expenses were $57.3 million, compared to $38.8
million for the comparable period last year.
-- Net cash provided by operating activities for the current
period was $8.1 million.
-- For the six months ended December 31, 2006, net income was
$14.0 million, or $1.07 per diluted common share, which
includes a $3.6 million income tax benefit resulting from the
reversal of a valuation allowance against the company's
deferred income tax assets. This compares to net income of
$105.7 million, or $8.46 per diluted common share, in the
comparable period last year, which included the aforementioned
recognition of previously deferred product and other revenues
of $108.0 million and an income tax benefit of $11.5 million.
-- Non-GAAP net income was $9.5 million, or $0.72 per diluted
common share, for the six months ended December 31, 2006,
compared to non-GAAP net income of $2.6 million, or $0.21 per
diluted common share, for the comparable period last year.
Outlook
Danks concluded, "We closed a very strong quarter and are quite positive about 2007. Therefore, we increased our expectations for fiscal 2007 annual growth of Net Dollar Volume of Contracts Written to approximately 40 percent over fiscal 2006. Additionally, we continue to anticipate non-GAAP net income, which assumes Net Dollar Volume of Contracts Written is recognized as revenue and related expenses are recognized at the time of sale, including income taxes at a blended rate of 40 percent, will grow at a faster percentage rate than Net Dollar Volume of Contracts Written."
Conference Call
The company is hosting a conference call today at 1:30 p.m. PT (4:30 p.m. ET). The call will be broadcast live over the Internet at www.imergentinc.com. If you do not have Internet access, the telephone dial-in number is 800-639-0297 for domestic participants and 706-634-7417 for international participants. Please dial in five to ten minutes prior to the beginning of the call. A telephone replay will be available through February 8, 2007; dial 706-645-9291, and enter access code 6071161.
Safe Harbor Statement
The statements made in this press release regarding (i) iMergent continuing its progress of strong domestic and international programs, (ii) iMergent's marketing campaigns continuing to be strong, (iii) iMergent's sales teams continuing to gain traction, (iv) the success of the AVAIL product and its ability to drive recurring revenues, (v) iMergent's commitment to providing its customers with the highest level of products and services, (vi) iMergent's ability to continue to grow its business throughout the remainder of fiscal 2007 and beyond, (vii) iMergent's expectation that Net Dollar Volume of Contracts Written is a consistent and relevant metric to understand the operations of the Company as a result of the change in business model in December 2005, (viii) iMergent's expectation that fiscal 2007 Net Dollar Volume of Contracts Written will grow 40 percent over fiscal 2006, (ix) iMergent's expectation that non-GAAP net income will grow at a faster percentage rate than Net Dollar Volume of Contracts Written in fiscal 2007, (x) iMergent's ability to generate new products and initiatives, and other statements that are not historical in nature constitute forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on the current expectations and beliefs of the management of iMergent and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include, without limitation, the Company's ability to increase the Net Dollar Volume of Contracts Written; the Company properly estimating customer returns and cash collections on financed contracts; the Company's ability to continue to evaluate and find ancillary products; the Company's ability to offer best solutions to its customers; the Company's ability to maintain a very solid customer base; the Company's ability to have lucrative long-term relationships with its customers; that the market for the Company's products will continue to grow; whether regulatory authorities will bring future actions against the Company; the success of StoresOnline(TM) Pro; the continued ability to increase the number of workshops; the ability to expand operating margins; fluctuations in the Company's operating results because of negative publicity, seasonality, weather, competition and other factors; adverse international or domestic regulatory developments affecting the internet or the Company's business; the effect of competitive and economic factors and the Company's reaction to them; possible disruption in commercial activities caused by terrorist activity and armed conflicts; changes in logistics and security arrangements; reduced purchases relative to security expectations; possible disruption in commercial activity as a result of natural disasters or major health concerns including epidemics; continued competitive pressures in the marketplace; the ability of the Company to successfully evolve its products; costs of and developments in the Company's pending litigation and SEC investigation; the Company's ability to generate revenue and profits from current strategic partnerships; the Company continuing to experience traction from marketing partnerships; the Company's ability to generate positive cash flows from operating activities; the Company's ability to sell receivables; the continued ability of the Company to repurchase its common shares and what effect those transactions may have on cash and liquidity; the Company's ability to expand current markets and develop new markets and establish profitable strategic partnerships; the Company's ability to continue to finance extended payment term arrangement customer contracts; whether there is continual demand for the Company's products and services in its target market of small businesses and entrepreneurs for assistance in establishing websites; that the Company can successfully adjust its product financing policy and that such adjustments to the policy will not negatively impact business or revenues; that the Company is able to leverage its business; that the Company does improve margins and can continue to improve margins; that new products and initiatives in the pipeline will be implemented; that new products and initiatives, if implemented, will improve the customer base and margins of the Company; that the Company's customer service will be adequate to meet the needs of its customers; that the Company's customer service will continue to improve; that the Company can broaden its training and education programs as well as offer new products and solutions; that if the Company is able to broaden its training and education programs as well as offer new products and solutions that such actions will have a positive impact on the Company, its customers, its customer relationships, and its margins or revenues; and that the growth strategy undertaken by the Company will be successful. For a more detailed discussion of risk factors that may affect iMergent's operations, please refer to the Company's Form 10-K for the year ended June 30, 2006 and the Form 10-Q for the period ended September 30, 2006. These forward-looking statements speak only as of the date on which such statements are made and the Company undertakes no obligation and expressly disclaims any obligation to update such forward-looking statements, except as required by law.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business products or ideas via the Internet. Headquartered in Orem, Utah, the Company sells its proprietary StoresOnline software and training services which help users build a successful Internet strategy to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers site development, web hosting and marketing products. iMergent typically reaches its target audience through a concentrated direct marketing effort to fill Preview Sessions, in which a StoresOnline expert reviews the product opportunities and costs. These sessions lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and encourage them to make purchases. iMergent, Inc. and StoresOnline are trademarks of iMergent, Inc.
iMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(unaudited)
December 31, 2006 June 30, 2006
----------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 37,141 $ 30,023
Certificate of deposit - 500
Trade receivables, net of allowance
for doubtful accounts of $11,165 as
of December 31, 2006 and $6,894 as
of June 30, 2006 18,905 13,419
Inventories 185 151
Prepaid expenses and other 2,727 2,739
----------------- -------------
Total current assets 58,958 46,832
Certificate of deposit 500 -
Long-term trade receivables, net of
allowance for doubtful accounts of
$6,220 as of December 31, 2006 and
$4,117 as of June 30, 2006 10,558 7,508
Property and equipment, net 949 696
Deferred income tax assets 13,886 9,976
Merchant account deposits and other 856 1,000
----------------- -------------
Total Assets $ 85,707 $ 66,012
================= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,251 $ 2,752
Accrued expenses and other 2,537 4,085
Income taxes payable 692 348
Deferred revenue, current portion 23,567 20,064
Capital lease obligations, current
portion 49 91
----------------- -------------
Total current liabilities 30,096 27,340
Deferred revenue, net of current
portion 10,558 8,693
----------------- -------------
Total liabilities 40,654 36,033
----------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.001
per share - authorized 5,000,000
shares; none issued - -
Common stock, par value $0.001 per
share - authorized 100,000,000
shares; 12,431,879 shares
outstanding as of December 31, 2006
and 12,375,313 shares outstanding
as of June 30, 2006 12 12
Additional paid-in capital 78,805 77,762
Accumulated deficit (33,764) (47,795)
----------------- -------------
Total stockholders' equity 45,053 29,979
----------------- -------------
Total Liabilities and
Stockholders' Equity $ 85,707 $ 66,012
================= =============
iMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Income Statements
(Dollars in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Revenues:
Product and
other $ 29,821 $ 117,493 $ 55,134 $ 126,462
Commission and
other 5,854 3,002 9,550 5,426
------------ ------------ ------------ ------------
Total revenues 35,675 120,495 64,684 131,888
------------ ------------ ------------ ------------
Operating
expenses:
Cost of product
and other
revenues 11,375 8,442 20,684 14,281
Selling and
marketing 15,331 9,837 28,249 17,544
General and
administrative 3,833 3,090 7,874 6,458
Research and
development 253 196 488 469
------------ ------------ ------------ ------------
Total
operating
expenses 30,792 21,565 57,295 38,752
------------ ------------ ------------ ------------
Income from
operations 4,883 98,930 7,389 93,136
------------ ------------ ------------ ------------
Other income
(expense):
Interest income 1,628 605 2,995 1,280
Interest expense (1) (4) (3) (14)
Other income
(expense), net 5 (44) 21 (275)
------------ ------------ ------------ ------------
Total other
income, net 1,632 557 3,013 991
------------ ------------ ------------ ------------
Income before
income tax
benefit 6,515 99,487 10,402 94,127
Income tax benefit 5,188 11,703 3,629 11,545
------------ ------------ ------------ ------------
Net income $ 11,703 $ 111,190 $ 14,031 $ 105,672
============ ============ ============ ============
Net income per
common share:
Basic $ 0.95 $ 9.16 $ 1.13 $ 8.71
Diluted $ 0.90 $ 8.92 $ 1.07 $ 8.46
Weighted average
common shares
outstanding:
Basic 12,365,203 12,133,930 12,365,841 12,133,032
Diluted 13,061,113 12,459,597 13,060,096 12,489,110
iMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
Six Months Ended
December 31,
---------------------
Increase (decrease) in cash and cash equivalents 2006 2005
------------------------------------------------ ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,031 $ 105,672
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 260 130
Expense for stock options issued to employees 1,387 588
Expense for stock options issued to
consultants 34 33
Changes in assets and liabilities:
Trade receivables and trade receivables held
for sale (8,536) 11,713
Inventories (34) (74)
Prepaid expenses and other 12 190
Restricted cash - (57)
Merchant account deposits and other 144 (455)
Deferred income tax asset (3,910) (11,877)
Accounts payable, accrued expenses and other
liabilities (1,049) (798)
Deferred revenue 5,368 (89,794)
Income taxes payable 344 -
---------- ----------
Net cash provided by operating activities 8,051 15,271
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (513) (213)
---------- ----------
Net cash used in investing activities (513) (213)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock (1,566) -
Proceeds from exercise of stock options and
related tax benefit 1,188 10
Principal payments on capital lease
obligations (42) (38)
---------- ----------
Net cash used in financing activities (420) (28)
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,118 15,030
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF
THE PERIOD 30,023 10,691
---------- ----------
CASH AND CASH EQUIVALENTS AT THE END OF THE
PERIOD $ 37,141 $ 25,721
========== ==========
NON-GAAP MEASURES
The following non-GAAP measures assume:
-- The Net Dollar Volume of Contracts Written is recognized as
revenue at the time of sale;
-- Certain corresponding cost of revenue and selling and
marketing expenses are also recognized at the time of sale;
and
-- The income tax provision is based upon an estimated federal,
state, and foreign statutory blended rate of 40%.
Net Dollar Volume of Contracts Written
Until the change in our business model in late December 2005, the Company recognized product and other revenue ratably over a period of five years and not at the time contracts were written. Effective December 2005, the Company began recognizing product and other revenue after the expiration of the three-day cancellation period for contracts written for which cash payments were received. For products purchased by customers under extended payment term arrangements, the Company continues to defer and recognize revenue as cash payments are received from customers, typically over two years.
Because of the changes in the Company's revenue recognition policies resulting from the change in business model noted above and due to the Company's growth, management believes that the Net Dollar Volume of Contracts Written is a consistent and relevant measure to understand the operations of the Company. Net Dollar Volume of Contracts Written represents the gross dollar amount of contracts executed during the period less estimates for bad debts, discounts incurred on sales of trade receivables (financial discounts), and estimates for customer returns. Net Dollar Volume of Contracts Written is not equivalent to revenue recognized in accordance with US GAAP. In contrast, revenue recognized in accordance with US GAAP consists of cash contracts written net of estimated customer returns plus actual cash collections on financed contracts. Actual collections on financed contracts and customer returns may differ materially from original estimates. However, the Company has several years of experience with the financing arrangements and products and services offered to its customers. Consequently, management believes it has a reasonable basis for its estimates.
Management uses the following non-GAAP measures to evaluate the results of the Company's operations because Net Dollar Volume of Contracts Written is the primary factor that influences cost of revenue and selling and marketing expenses, which are typically recognized at the time the contract is written but no later than the expiration of the customer's three-day cancellation period. Consequently, management measures the Company's operating performance and sets its future operating budgets based upon the Net Dollar Volume of Contracts Written during the period.
The following non-GAAP measures assume that the Net Dollar Volume of Contracts Written is recognized as revenue at the time of sale, regardless of the three-day cancellation period.
Certain Costs of Revenue and Selling and Marketing Expenses
The Company recognizes sales commissions and software royalties as costs of revenue at the time the related sales are deemed final, i.e. upon expiration of the customers' three-day cancellation period in accordance with US GAAP. Additionally, the Company recognizes direct-response advertising costs as selling and marketing expenses in accordance with SOP 93-7 as the related cash sales are recognized as revenues.
Because the following non-GAAP measures assume that Net Dollar Volume of Contracts Written is recognized as revenue at the time of sale, the non-GAAP measures also assume that the related costs described above are recognized as expenses at the time of sale, regardless of the three-day cancellation period.
The Company conducted multiple workshops during the last three business days of September 2006. Consequently, $1,540,000 of cash sales were deferred and recognized in October 2006. Additionally, the related costs of revenue totaling $237,000 and the related selling and marketing expenses totaling $450,000 were recognized in October 2006. No workshops were conducted during the last three business days of September 2005, December 2005, or December 2006.
Income Tax Provision
Due to the change in business model in December 2005, the Company determined that it was more likely than not that $11,877,000 of its net deferred income tax assets, which had a valuation allowance against them, would be realized. The benefit recorded upon the removal of the corresponding valuation allowance was partially offset by an income tax provision of $174,000, resulting in a net income tax benefit of $11,703,000 during the quarter ended December 31, 2005.
Due to management's increased taxable earnings projections and discrete event developments in the resolution of certain contingencies during the current quarter, the Company determined that it was more likely than not that its remaining deferred income tax assets of $7,746,000 would be realized. The benefit resulting from the removal of the corresponding valuation allowance was partially offset by an income tax provision of $2,558,000, resulting in a net income tax benefit of $5,188,000 during the quarter ended December 31, 2006.
The Company expects to recognize income tax expense commensurate with federal, state, and foreign statutory rates in periods subsequent to December 2006. Consequently, the following non-GAAP measures assume an income tax provision based upon an estimated federal, state, and foreign statutory blended rate of 40%. Because of the change in business model in December 2005 and the resulting impacts on income tax provision/benefit mentioned above, management believes that this non-GAAP measure provides a consistent and relevant metric to understand the operations of the Company.
Reconciliation of Net Dollar Volume of Contracts Written
The following tables summarize the activity within deferred revenue and the Net Dollar Volume of Contracts Written during the three and six months ended December 31, 2006 and 2005, and reconciles the Net Dollar Volume of Contracts Written (NDVCW) with US GAAP revenue as reported in the Company's financial statements.
Three Months Ended Six Months Ended
December 31, December 31,
------------------ ------------------
2006 2005 2006 2005
-------- --------- -------- ---------
(in thousands)
Deferred revenue, beginning of
period $32,189 $119,644 $28,757 $114,050
Less: Cash product sales during
the last three business days of
September 2006 (1,540) - - -
Remaining net change in deferred
revenue 3,476 (95,388) 5,368 (89,794)
-------- --------- -------- ---------
Deferred revenue, end of period $34,125 $ 24,256 $34,125 $ 24,256
======== ========= ======== =========
2006 2005 2006 2005
-------- --------- -------- ---------
(in thousands)
Total revenue recognized in
financial statements in
accordance with US GAAP $35,675 $120,495 $64,684 $131,888
Less: Cash product sales during
the last three business days of
September 2006 (1,540) - - -
Remaining net change in deferred
revenue 3,476 (95,388) 5,368 (89,794)
-------- --------- -------- ---------
Net Dollar Volume of Contracts
Written, non-GAAP $37,611 $ 25,107 $70,052 $ 42,094
======== ========= ======== =========
iMERGENT, INC. AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliation Tables
(Dollars in thousands, except per share data)
(unaudited)
Three Months Ended December 31, 2006
----------------------------------------------
Expense assuming
NDVCW is recognized
as revenue and
related expenses
are recognized at
time of sale
GAAP Adj. (Non-GAAP).
------------ ---------- -------------------
Cost of product and
other revenue $ 11,375 $ (237)(1) $ 11,138
Selling and marketing 15,331 (450)(1) 14,881
Three Months Ended December 31, 2006
----------------------------------------------
Assumes NDVCW is
recognized as
revenue and
related expenses
are recognized
at time of sale,
including income
taxes at 40
percent
GAAP Adj. (Non-GAAP).
------------ ---------- -------------------
Income before income
tax benefit
(provision) $ 6,515 $ 2,623 (2) $ 9,138
Income tax benefit
(provision) 5,188 (8,843)(3) (3,655)
------------ ---------- -------------------
Net income $ 11,703 $ (6,220) $ 5,483
============ ========== ===================
Net income per common
share:
Basic $ 0.95 $ 0.44
============ ===================
Diluted $ 0.90 $ 0.42
============ ===================
Weighted average common
shares outstanding:
Basic 12,365,203 12,365,203
Diluted 13,061,113 13,061,113
Three Months Ended December 31, 2005
----------------------------------------------
Assumes NDVCW is
recognized as
revenue and
related expenses
are recognized
at time of sale,
including income
taxes at 40
percent
GAAP Adj. (Non-GAAP).
------------ ---------- -------------------
Income before income
tax benefit
(provision) $ 99,487 $ (95,388)(4) $ 4,099
Income tax benefit
(provision) 11,703 (13,343)(3) (1,640)
------------ ---------- -------------------
Net income $ 111,190 $(108,731) $ 2,459
============ ========== ===================
Net income per common
share:
Basic $ 9.16 $ 0.20
============ ===================
Diluted $ 8.92 $ 0.20
============ ===================
Weighted average common
shares outstanding:
Basic 12,133,930 12,133,930
Diluted 12,459,597 12,459,597
iMERGENT, INC. AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliation Tables
(Dollars in thousands, except per share data)
(unaudited)
Six Months Ended December 31, 2006
----------------------------------------------
Assumes NDVCW is
recognized as
revenue and
related expenses
are recognized
at time of sale,
including income
taxes at 40
percent
GAAP Adj. (Non-GAAP).
------------ ---------- -------------------
Income before income
tax benefit
(provision) $ 10,402 $ 5,368 (4) $ 15,770
Income tax benefit
(provision) 3,629 (9,937)(3) (6,308)
------------ ---------- -------------------
Net income $ 14,031 $ (4,569) $ 9,462
============ ========== ===================
Net income per common
share:
Basic $ 1.13 $ 0.77
============ ===================
Diluted $ 1.07 $ 0.72
============ ===================
Weighted average common
shares outstanding:
Basic 12,365,841 12,365,841
Diluted 13,060,096 13,060,096
Six Months Ended December 31, 2005
----------------------------------------------
Assumes NDVCW is
recognized as
revenue and
related expenses
are recognized
at time of sale,
including income
taxes at 40
percent
GAAP Adj. (Non-GAAP).
------------ ---------- -------------------
Income before income
tax benefit
(provision) $ 94,127 $ (89,794)(4) $ 4,333
Income tax benefit
(provision) 11,545 (13,278)(3) (1,733)
------------ ---------- -------------------
Net income $ 105,672 $(103,072) $ 2,600
============ ========== ===================
Net income per common
share:
Basic $ 8.71 $ 0.21
============ ===================
Diluted $ 8.46 $ 0.21
============ ===================
Weighted average common
shares outstanding:
Basic 12,133,032 12,133,032
Diluted 12,489,110 12,489,110
(1) Represents certain expenses, described above, related to revenues that were deferred to October 2006 as a result of workshops conducted during the last three business days of September 2006.
(2) Represents the net adjustment to revenues of $1,936,000 to derive the Net Dollar Volume of Contracts Written during the period (including $1,540,000 of cash sales that were deferred to October 2006 as a result of workshops conducted during the last three business days of September 2006), and the adjustments to expenses noted above in cost of product and other revenues of $237,000 and selling and marketing expenses of $450,000.
(3) Represents the adjustment necessary to recognize the income tax provision based upon an estimated federal, state, and foreign statutory blended rate of 40%.
(4) Represents the adjustment to revenues to derive the Net Dollar Volume of Contracts Written during the period.
CONTACT: iMergent, Inc.
Robert Lewis, CFO, 801-431-4695
investor_relations@imergentinc.com
or
Lippert/Heilshorn & Associates
Kirsten Chapman, 415-433-3777 (Investor Relations)
kchapman@lhai.com
Mary Magnani, 415-433-3777 (Investor Relations)
SOURCE: iMergent, Inc.