Financial: IntelliQuest Announces Financial Results for the Third Quarter and a Return to Profitability - Company Financial Information

Edge: Work-Group Computing Report, Oct 26, 1998

IntelliQuest Information Group Inc. (NASDAQ:IQST) announced Tuesday a return to profitability as it reported financial results for the quarter ended Sept. 30, 1998.

Third quarter revenues were $13.8 million, an increase of 11% over revenues of $12.5 million for the same period in 1997. Revenues for the nine months ended Sept. 30, 1998, were $33.8 million, an increase of 23% over $27.5 million for the same period in 1997. Net income for the quarter was $701,000, or $.08 per basic and diluted share, compared with $1.4 million, or $.16 per basic and diluted share, for the year-ago period. Net loss for the nine months ended Sept. 30, 1998 was $1.9 million, or $.23 per basic and diluted share, compared with earnings of $2.8 million, or $.33 per basic and diluted share, for the comparable year-ago period.

Brian Sharples, president and chief executive officer, noted, "On a comparable basis, third quarter revenues increased 25% for the quarter and 43% year-to-date, excluding the effect of businesses we exited last year and the timing of a major conference."

Sharples continued, "After a year of restructuring, we're beginning to see the payoff on the bottom line. We have executed on our commitment to stockholders to return to profitability in the third quarter, while continuing to make significant investments in strategic areas of our business, specifically database marketing and Internet services. Demand for our services remains strong, and we are excited about the prospects of new business resulting from our recently announced partnerships with CoolSavings Inc. and 24/7 Media Inc. We have also recently launched a new Internet consumer panel, which complements our highly successful Technology Panel, and will launch a new e-commerce branding study in the fourth quarter to round out our growing list of Internet offerings. Our strategy is to leverage our core competencies in branding expertise and customer identification to harness opportunities available with the evolution of one-to-one marketing on the Web."

The Company also announced that its Board of Directors has declared a dividend distribution of one Preferred Share Purchase Right on each outstanding share of IntelliQuest common stock. Subject to limited exceptions, the Rights will be exercisable if a person or group acquires 20% or more of the Company's common stock or announces a tender offer for 20% or more of the common stock. Under certain circumstances, each Right will entitle stockholders to buy one one-hundredth of a share of newly created Series A Junior Participating Preferred Stock of the Company at an exercise price of $40.00. The IntelliQuest Board will be entitled to redeem the Rights at $.001 per Right at any time before a person has acquired 20% or more of the outstanding common stock.

The Rights are intended to enable all IntelliQuest stockholders to realize the long-term value of their investment in the Company. They do not prevent a takeover, but should encourage anyone seeking to acquire the Company to negotiate with the Board of Directors prior to attempting a takeover. The Rights are not being distributed in response to any specific effort to acquire control of the Company. The Rights are designed to assure that all IntelliQuest stockholders receive fair and equal treatment in the event of any proposed takeover of the Company and to guard against partial tender offers, open market accumulations and other abusive tactics to gain control of IntelliQuest without paying all stockholders a control premium.

If a person becomes an Acquiring Person, each Right will entitle its holder to purchase, at the Right's then-current exercise price, a number of common shares of IntelliQuest having a market value at that time of twice the Right's exercise price. Rights held by the Acquiring Person will become void and will not be exercisable to purchase shares at the bargain purchase price. An Acquiring Person is defined as a person who acquires 20% or more of the outstanding common stock of IntelliQuest. If IntelliQuest is acquired in a merger or other business combination transaction which has not been approved by the Board of Directors, each Right will entitle its holder to purchase, at the Right's then-current exercise price, a number of the acquiring company's common shares having a market value at that time of twice the Right's exercise price. The dividend distribution to establish the new Rights Plan will be payable to stockholders of record on Nov. 2, 1998. The Rights will expire in 10 years. The Rights distribution is not taxable to stockholders.

The Company also announced that its Board of Directors has authorized the repricing of all of the Company's outstanding stock options as of Oct. 16, 1998, including options granted to members of the Board, at a new grant price of $5.00, the closing price of the Company's stock on the date of the repricing. Under the terms of the repricing, unvested shares, excluding certain Board and senior executive grants with event-driven vesting, will vest 1/48 monthly over four years, beginning Oct. 16, 1998.