The Cobalt Group Announces:Revenues and Net Loss Increase
SEATTLE--July 24, 2001--The Cobalt Group , a leading provider of e-business products and services to the automotive industry, today announced financial results for its second quarter, ended June 30, 2001. Revenues for the second quarter of 2001 were $12.6 million, compared to $10.2 million in the second quarter of 2000. Net loss for the second quarter of 2001 was $7.2 million or $0.35 per share, compared to net loss of $5.5 million or $0.31 per share in the second quarter of 2000.During the quarter the company announced that it has entered into an Agreement and Plan of Merger, dated as of June 2, 2001, with Cobalt Acquisition Corporation, a Washington corporation that is wholly-owned by Warburg, Pincus Equity Partners, L.P., a private equity firm and the company's largest shareholder. Under the terms of the merger agreement, Cobalt Acquisition Corporation will be merged with and into Cobalt, with Cobalt as the surviving corporation. Following completion of the merger, Cobalt would be privately held by Warburg, Pincus Equity Partners, L.P. and certain other continuing shareholders. Completion of the merger is subject to the satisfaction of customary closing conditions set forth in the Agreement and Plan of Merger, including the approval of shareholders holding a majority of Cobalt's outstanding shares of common stock and receipt of regulatory and other approvals. On June 5, 2001 the company filed a Form 8-K current report with the Securities and Exchange Commission disclosing details of the merger. Cobalt expects to file its definitive proxy statement regarding the merger in August 2001. The company currently expects that the merger will be consummated in September 2001.
ABOUT THE COBALT GROUP
The Cobalt Group(TM) , headquartered in Seattle, is a leading provider of e-business products and services that help automotive dealers and manufacturers effectively manage their businesses online. Cobalt's suite of e-business solutions includes Web services, Web site hosting, e-commerce applications, Internet-based customer relationship management applications, data management, and best practices training and consulting.
Nearly half of the nation's auto dealers use Cobalt's services, including approximately 8,900 Web services clients, and approximately 8,700 PartsVoice(R) (www.partsvoice.com) clients. Cobalt operates MotorPlace.com(TM) (www.MotorPlace.com), an online business management and industry information resource for auto dealers. Cobalt also operates DealerNet(R) (www.dealernet.com), one of the most widely visited consumer automotive information portals on the Web. IntegraLink Corporation, a Cobalt company, is the auto industry's premier provider of automotive data collection and reporting services.
Cobalt has offices in Seattle, Wash.; Portland, Ore.; Detroit, Mich.; Columbus, Ohio; and Austin, Texas. For more information, please visit www.cobaltgroup.com or call (800) 909-8244.
CAUTIONARY STATEMENT
Certain statements contained in this release are forward-looking statements. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this release may relate to the development of Cobalt's products and services and future operating results, including statements regarding future market share, investment, financing and new products and services. The words "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Actual results may vary significantly from the results expressed or implied in such statements. For a discussion of the risks that could affect Cobalt's future performance, please see "Risk Factors" in Cobalt's most recent annual report on Form 10-K and quarterly report on Form 10-Q, each as filed with the Securities and Exchange Commission. Cobalt undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.
The Cobalt Group, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)
Three months ended Six months ended
June 30, June 30,
--------------------- ---------------------
2001 2000 2001 2000
--------- ----------- ---------- ---------
(unaudited) (unaudited)
Revenues
Internet applications
and professional
services $ 8,978 $ 6,580 $ 17,691 $ 12,002
Data extraction and
aggregation services 2,891 3,139 6,007 6,171
Other services 686 476 1,140 938
----------- ---------- ---------- -----------
Total revenues 12,555 10,195 24,838 19,111
Cost of revenues 2,342 2,192 4,837 3,967
----------- ---------- ---------- -----------
Gross profit 10,213 8,003 20,001 15,144
Operating expenses
Sales and marketing,
excluding stock-based 6,985 5,172 13,948 9,448
compensation of
$24, $74, $1,276 and
$142 respectively
Product development,
excluding stock-based 3,051 1,682 6,220 2,936
compensation of $29,
$42, $66 and $88
respectively
General and
administrative,
excluding stock-based 6,148 5,020 12,216 8,803
compensation of $68,
$134, $172 and $310
respectively
Amortization of
intangible assets 1,123 1,584 2,246 3,092
Stock-based expenses 121 250 1,514 540
----------- ---------- ---------- -----------
Total operating
expenses 17,428 13,708 36,144 24,819
----------- ---------- ---------- -----------
Loss from operations (7,215) (5,705) (16,143) (9,675)
Interest expense (56) (151) (130) (219)
Interest income 140 381 439 698
Gain on sale of
YachtWorld - - 1,176 6,446
Other income, net (19) 10 (31) (56)
----------- ---------- ---------- -----------
Net income (loss)
prior to
change in accounting
principle $ (7,150) $ (5,465) $ (14,689) $ (2,806)
=========== ========== ========== ===========
Cumulative effect of
change in accounting
principle $ - $ - $ - $ (2,163)
----------- ---------- ---------- -----------
Net income (loss) $ (7,150) $ (5,465) $ (14,689) $ (4,969)
Basic and diluted net
loss per share $ (0.35) $ (0.31) $ (0.72) $ (0.29)
=========== ========== ========== ===========
Weighted-average shares
outstanding- basic
and diluted 20,362,685 17,430,769 20,324,382 17,254,883
=========== =========== =========== ==========
The Cobalt Group, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
June 30, December 31,
2001 2000
------------- -------------
Assets
Current assets
Cash and cash equivalents $ 7,227 $ 16,577
Accounts receivable, net of
allowance for doubtful accounts
of $1,466 and $944, respectively 8,205 8,892
Other current assets 2,301 1,673
------------- -------------
17,733 27,142
Capital assets, net 15,992 14,256
Intangible assets, net 13,323 15,569
Other assets 560 959
------------- -------------
Total assets $ 47,608 $ 57,926
============= =============
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable $ 2,961 $ 4,696
Accrued liabilities 3,614 2,187
Deferred revenues, current portion 6,091 4,668
Notes payable - 270
Software financing contract,
current portion 569 1,054
Capital lease obligations,
current portion 624 900
------------- -------------
13,859 13,775
Non-current liabilities
Deferred revenues, non-current
portion 1,350 1,348
Software financing contract,
non-current portion - 279
Capital lease obligations,
non-current portion - 269
------------- -------------
1,350 1,896
Shareholders' equity
Preferred stock; $0.01 par value
per share; 100,000,000 shares
authorized; 0 shares issued
and outstanding - -
Common stock; $0.01 par value per
share; 200,000,000 shares
authorized; 20,443,354 and
20,140,376 issued and
outstanding, respectively 204 201
Additional paid-in capital 124,194 124,021
Deferred equity subscriptions (9,938) (12,951)
Deferred equity expenses (523) (2,167)
Notes receivable from shareholders (144) (144)
Accumulated deficit (81,394) (66,705)
------------- -------------
32,399 42,255
------------- -------------
Total liabilities and
shareholders' equity $ 47,608 $ 57,926
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