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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Fiscal Year Ended July 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM________________ TO ________________
COMMISSION FILE 0-22846
CMG INFORMATION SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-2921333
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S.EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
100 BRICKSTONE SQUARE 01810
ANDOVER, MASSACHUSETTS
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (978) 684-3600
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
(TITLE OF CLASS) (NAME OF EACH EXCHANGE ON WHICH REGISTERED)
Common Stock, $0.01 par value NASDAQ
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
-
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting Common Stock held by non-affiliates of the
Registrant was $774,291,912 as of October 20, 1998. The Registrant does not
have any outstanding non-voting equity.
On October 20, 1998, the Registrant had outstanding 23,057,446 shares of voting
Common Stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1998 Annual Report to Shareholders are incorporated by reference
into Parts I, II and IV of this Report. Portions of the definitive proxy
statement (the "Definitive Proxy Statement") to be filed with the Securities and
Exchange Commission relative to the Company's 1998 Annual Meeting of
Stockholders are incorporated by reference into Part III of this Report.
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT
FISCAL YEAR ENDED JULY 31, 1998
CMG INFORMATION SERVICES, INC.
PART I
ITEM PAGE
-----
1. Business
General....................................................................................................... 2
Interactive Marketing Industry................................................................................ 3
Products and Services......................................................................................... 3
Business Strategy............................................................................................. 9
Sales and Marketing........................................................................................... 10
Competition................................................................................................... 11
Research and Development...................................................................................... 11
Intellectual Property and Proprietary Rights.................................................................. 12
Employees..................................................................................................... 12
Segment Information........................................................................................... 12
Significant Customers......................................................................................... 12
2. Properties........................................................................................................ 12
3. Legal Proceedings................................................................................................. 13
4. Submission of Matters to Vote of Security Holders................................................................. 13
PART II
5. Market for Registrant's Common Equity and Related Stockholders Matters............................................ 13
6. Selected Consolidated Financial Data.............................................................................. 14
7. Management's Discussion and Analysis of Financial Condition and Results of Operations............................. 14
7A. Quantitative and Qualitative Disclosures About Market Risk........................................................ 14
8. Financial Statements and Supplementary Data....................................................................... 14
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.............................. 14
PART III
10. Directors and Executive Officers of the Registrant................................................................ 15
11. Executive Compensation............................................................................................ 15
12. Security Ownership of Certain Beneficial Owners and Management.................................................... 15
13. Certain Relationships and Related Transactions.................................................................... 15
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................................. 15
1
This Report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties, including without limitation, those discussed
in "Factors that May Affect Future Results" section of Item 7 of this Report.
Such forward-looking statements speak only as of the date on which they are
made, and the Company cautions readers not to place undue reliance on such
statements.
PART I
ITEM 1. - BUSINESS
GENERAL
CMG Information Services, Inc. (CMG or the Company), a Delaware
corporation, develops and operates Internet and direct marketing companies as
well as venture funds focused on the Internet.
CMG's Internet strategy includes the internal development and operation of
majority owned subsidiaries within the "CMG Internet Group" as well as the
investment in other Internet companies, either directly by CMG, or through
venture capital fund arrangements. The Company's strategy also envisions and
promotes opportunities for synergistic business relationships among the Internet
companies within its portfolio. At July 31, 1998, the CMG Internet Group
included majority-owned subsidiaries ADSmart Corporation (ADSmart), Engage
Technologies, Inc. (Engage), Accipiter, Inc. (Accipiter), InfoMation Publishing
Corporation (InfoMation), NaviSite Internet Services Corporation (NaviSite),
Planet Direct Corporation (Planet Direct) and Password Internet Publishing
Corporation (The Password). At July 31, 1998, CMG also directly held minority
investments in Magnitude Network, LLC (Magnitude Network) and Open Market, Inc.
ADSmart develops and markets online ad sales and ad serving solutions; Engage
develops and markets precision online marketing solutions; Accipiter specializes
in Internet advertising management solutions; InfoMation develops and markets a
Web-based solution for corporate knowledge management; The Password provides
tools for the creation of a personalized "mini-Web;" and Planet Direct is a
personalized Web service with over 400 Internet Service Provider (ISP) partners
which tailors members' online experience to their interests and local community.
Subsequent to July 31, 1998, the Company announced that InfoMation would become
a division of Planet Direct and that NaviSite would be split into two separate
companies NaviSite will continue to provide high-end server management and
applications solutions, providing high-availability Internet outsourcing, and
NaviNet will provide low cost, high-availability dial-up network connection
through competitive local exchange carriers (CLECs).
The Company's first Internet venture fund, its limited liability company
subsidiary, CMG@Ventures I, LLC (CMG@Ventures I, formerly CMG@Ventures L.P.),
was formed in February, 1996. CMG completed its $35 million commitment to this
fund during fiscal year 1997. The Company owns 100% of the capital and is
entitled to 77.5% of the net capital gains of CMG@Ventures I. At July 31,
1998, CMG@Ventures I held equity investments in five companies, including
Blaxxun Interactive, Inc. (Blaxxun, 81% legal ownership), GeoCities (32%),
Lycos, Inc. (Lycos, 25%), Parable LLC (Parable, 31%), and Vicinity Corporation
(Vicinity, 50%). Lycos and GeoCities shares are publicly traded on the NASDAQ
system under the symbols LCOS and GCTY, respectively. The Company's second
Internet venture fund, its limited liability company subsidiary, CMG@Ventures
II, LLC (CMG@Ventures II), was formed during fiscal year 1997. The Company owns
100% of the capital and is entitled to 80% of the net capital gains of
CMG@Ventures II. At July 31, 1998, CMG@Ventures II held equity investments in
fourteen companies, including Chemdex Corporation (Chemdex 16%), Critical Path
(7%), GeoCities (2%), KOZ, Inc. (KOZ, 14%), Mother Nature's General Store, Inc.
(Mother Nature, 24%), Parable (11%), Reel.com, Inc. (Reel.com, 36%), Sage
Enterprises, Inc. (Sage Enterprises, 29%), Silknet Software, Inc. (Silknet,
24%), Softway Systems, Inc. (Softway Systems, 9%), Speech Machines plc (Speech
Machines, 29%), TicketsLive Corporation (TicketsLive, 14%), Universal Learning
Technology (12%), and Visto Corporation (Visto, 6%). CMG@Ventures II's holdings
in Sage Enterprises and Reel.com were converted into shares of Amazon.com, Inc.
and Hollywood Entertainment Corporation, respectively, pursuant to mergers of
the respective companies subsequent to July 31, 1998.
CMG recently formed its third venture capital fund, CMG@Ventures III, LLC
(CMG@Ventures III), and has begun raising capital from outside investors for a
corresponding outside investment fund, @Ventures III, L.P. The Company owns
100% of the capital and is entitled to 80% of the net capital gains of
CMG@Ventures III, and will be entitled to 2% of the net capital gains of
@Ventures III, L.P. These two funds will co-invest in all investment candidates
based on a predetermined ratio. CMG has committed to funding CMG@Ventures III
up to the greater of $30 million or 19.9% of amounts committed to @Ventures III,
L.P.
The Company provides fulfillment services through three wholly-owned
subsidiaries, SalesLink Corporation (SalesLink, acquired in 1989), InSolutions
Incorporated, (InSolutions, acquired June, 1998), and On-Demand Solutions, Inc.
(acquired July, 1998). SalesLink's services are also provided through its
subsidiary, Pacific Direct Marketing Corporation (Pacific Link), which was
acquired in October, 1996. The Company's fulfillment services offerings include
product and literature fulfillment, turnkey outsourcing, telemarketing, and
sales/lead inquiry management. Traditional mailing list services are provided by
the Company's subsidiary, CMG Direct Corporation (CMG Direct). Recently, CMG
Direct has embarked on a strategy to also provide solutions for integrating
traditional direct marketing with Internet marketing.
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The Company has adopted a strategy of seeking opportunities to realize
significant gains through the selective sale of investments or having separate
subsidiaries or affiliates sell minority interests to outside investors. The
Company believes that this strategy provides the ability to significantly
increase shareholder value as well as provide capital to support the growth in
the Company's subsidiaries and investments. Additionally, in fiscal year 1999,
the Company will continue to develop and refine the products and services of its
businesses, with the goal of significantly increasing revenue as new products
are commercially introduced, and will continue to pursue a strong pace of
investing in new Internet opportunities.
INTERACTIVE MARKETING INDUSTRY
Direct marketing is undergoing rapid, fundamental change, as customers'
needs evolve and technology advances. Marketing channels and media outlets are
expanding in number and diversifying in scope, and powerful database
technologies are able to target both broad markets and individual customers with
ever-greater precision. The emergence of the Internet into homes and offices has
provided direct marketers with a powerful new distribution mechanism -
interactive media. Interactive marketing is a subset of direct marketing. It
differentiates itself from traditional direct marketing channels in that the
consumer has flexibility and control over what is being presented, when they
view the products or services and which types of products or services they are
viewing.
In contrast to conventional media, the Internet offers capabilities to
target advertising to specific audiences, to measure the popularity of content,
to reach worldwide audiences cost-effectively and to create innovative and
interactive advertisements. By collecting customer feedback and demographic
information, advertisers can direct highly customized marketing campaigns at
defined targets. In addition, the Internet enables advertisers to transact with
prospective customers much more rapidly than with conventional media. The
Company believes that advertisers will continue to seek to advertise on Web
sites that offer a high volume of traffic and feature flexible advertisement
programs capable of reaching targeted audiences. Likewise, the Company believes
that as advertisers increasingly embrace the Internet as an advertising vehicle,
their participation will subsidize in part the creation and expansion of the
information and resources available on the Web which in turn is expected to
stimulate further traffic flow.
Interactive marketing provides direct marketers with the ability to create
electronic databases of customer information. Using this information will
enable direct marketers to develop more effective advertising, make better
decisions about distribution methods and media selection and target customers
more effectively. The dialogue created between the marketer and the consumer
through interactive marketing creates advertising accountability, enabling
marketers to track advertisement interaction, anticipate consumer needs and make
changes immediately. It is expected that across scores of industries, the
relationship between marketers and consumers will soon be direct, and one-to-
one. When that day arrives, marketers will benefit from this newfound ability
to establish deep, intimate relationships with their customers.
PRODUCTS AND SERVICES
Products and services of the Company's majority-owned subsidiaries as of
July 31, 1998 include the following:
Investment and Development
- - - --------------------------
NaviSite Internet Services Corporation
NaviSite provides the high-performance, Internet outsourcing solutions of
Web hosting and server management, ensuring that a customer's Web presence,
database and applications are continuously operational.
In order to save money and receive better performance, security, and
availability, companies are outsourcing their Internet server management.
NaviSite's carrier-class data centers, private transit Internet connectivity
strategy, advanced monitoring tools, backup power and complete data and network
redundancy ensures that customers or end-users are receiving quality performance
and security. NaviSite monitors and supports the network and its customers'
servers around the clock, and provides detailed reports to its customers
regarding performance, availability, and activity related to their Web sites.
NaviSite's SiteHarbor Web hosting and application solutions provide
customers with the benefits of NaviSite's infrastructure as well as service,
expertise, and customization to fit a customer's unique needs. The SiteHarbor
product line consists of SiteHarbor CL, SiteHarbor MC, SiteHarbor EM and
SiteHarbor Application Solutions. SiteHarbor CL, NaviSite's co-location Web
hosting solution, is a customer-managed option for companies who wish to
maintain full responsibility for the monitoring and maintenance of their servers
while utilizing the benefits of NaviSite's infrastructure. SiteHarbor MC is a
managed co-location Web hosting solution. This option allows customers to
maintain a role in their server maintenance, but also receive management support
from NaviSite. SiteHarbor EM provides enhanced server management capabilities
and offers customers the NaviSite support
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and Web server management tailored to the customer's unique needs. SiteHarbor
Application Solutions provide hosting and management solutions for e-commerce,
content management and ad-serving applications.
In addition to the SiteHarbor product line, NaviSite's NaviNet division
focuses on building high quality, cost-effective wholesale dial-up networking
services based on the NaviNet technology platform. NaviNet's product, GeoDial
SP, enables ISPs to rapidly expand into new markets and offer the latest dial-up
technologies to their customers, at a low per-user monthly cost for unlimited
Internet access.
GeoDial SP aggregates multiple calling areas, deploys advanced switch
bypass technology to eliminate busy signals due to port congestion, and relies
on private transit Internet connectivity to bypass congested public peering
points. In addition to building a unique technology solution, NaviNet is
partnering with CLECs, a strategy that enables the offering of data services
with minimal investment. By offering quality, low cost wholesale dial-up
networking services for ISPs, GeoDial SP allows ISPs to focus on end user
acquisition, technical support, and value-added services. ISPs can more easily
grow and retain their subscriber base in an increasingly competitive Internet
service marketplace.
In September, 1998 the Company announced that NaviSite's NaviNet division
would be spun-off as a separate wholly-owned subsidiary of CMG.
NaviSite has data centers in Andover, MA and Scotts Valley, CA and
currently plans to expand its Andover data center in the near future. NaviSite
currently generates revenues primarily from monthly per-server management fees,
installation fees and bandwidth usage charges. In addition to other customers,
NaviSite manages the Internet servers for many of CMG's Internet and interactive
media affiliates, including Planet Direct, Engage, Mother Nature and Parable.
Engage Technologies, Inc. and Accipiter, Inc.
In fiscal 1998, CMG purchased Accipiter, Inc., a developer of online
management solutions. In August, 1998, Engage Technologies, Inc. and Accipiter,
Inc. (together, Engage/Accipiter) were combined, providing customers with
integrated advertising management and profiling solutions. Also, in fiscal
1998, Engage transferred its ListLab division to CMG Direct and additionally,
sold certain rights to its Engage.Fusion(TM) and Engage.Discover(TM) data
warehouse products to Red Brick Systems, Inc. (Red Brick). These products had
been developed to accelerate the design and creation of very large data
warehouses and perform high-end data query and analysis. Certain rights were
retained by the company to sell these products to interactive media markets as
components of its Engage/Accipiter product line. With the sale of the certain
data warehouse product rights and transfer of the ListLab division,
Engage/Accipiter narrowed its focus to the Internet software solutions market.
Engage/Accipiter develops and markets Web advertising and marketing
solutions, enabling customers to anonymously profile and reach online audiences.
The company's Web visitor Precision Profiling technology helps customers
increase the relevance of their Web site's advertising, editorial and commercial
content for both first-time and repeat visitors. Engage/Accipiter delivers both
Web-wide and enterprise-specific profiling of visitor interests and preferences
without tracking their identity. Engage/Accipiter sets a benchmark for privacy
on the Web, allowing Web sites to deliver messages to the targeted audiences,
while protecting individual identity. Engage/Accipiter products include the
recently developed Accipiter AdManager, Accipiter AdBureau,
DecisionSupportServer, ProfileServer and Engage Knowledge Profiles.
Accipiter AdManager is a software solution which operates the delivery of
online advertising campaigns. Accipiter AdBureau offers the database marketing
and advertising features of AdManager software as a comprehensive turnkey
service, providing an alternative to organizations who wish to outsource ad
management, yet maintain control over advertising sales. Accipiter AdManager and
Accipiter AdBureau manage the advertising processes for over 90 leading Web
sites and online ad networks.
The DecisionSupportServer software helps online marketers better understand
their Web audiences through detailed analysis and reports, enabling sites to
conduct profile-based research on individual visitors and convert the multi-
layered data into relevant marketing information. The ProfileServer software is
a one-to-one Internet marketing solution, allowing online marketers to offer
personalized advertising, custom promotions and relevant content to their
customers and prospects. Engage/Accipiter's Precision Profiling technology
allows the profiling of each Web visitor to best match the customer's marketing
needs. The Engage Knowledge Profiles provide corporations with the ability to
subscribe to in-depth anonymous profiles of over 30 million Web users to target
advertising, custom promotions or personalized content.
Planet Direct Corporation
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Planet Direct is a personal Web service that tailors users' online
experience to their interests and local community. Planet Direct integrates
brand name content, over 27,000 enhanced links to popular content, and other
service sites across 15 major interest areas. Planet Direct provides mainstream
consumers with information such as news, sports, weather, stock quotes and other
financial information, as well as phone directories, driving directions and chat
rooms, in a logical and intuitive manner for quick access to personal interests
in a community atmosphere.
Planet Direct's personal Web service is provided to, and co-branded by,
more than 420 ISPs and affinity partners nationwide. These organizations use
Planet Direct's service to enhance their own Internet offerings, giving the
local ISPs, in particular, the resources to compete with the commercial online
services. Planet Direct's service is available free to the ISPs' and affinity
partners' members, and is also directly accessible to all Web users without
disks or downloads. Planet Direct generates revenues from advertising and
commerce on its service, which it shares with its ISP and affinity partners.
Planet Direct offers advertisers a large demographic database of Internet
customers and usage patterns. Combining technology with member supplied
demographics, Planet Direct is a medium advertisers can use to target consumers
with the information on their topics of interest, at the moment they are
exploring that interest.
In September, 1998, Planet Direct announced the integration of InfoMation's
Echo technology into its operations to serve Planet Direct's customers and
business-to-business partners.
InfoMation Publishing Corporation
InfoMation seeks to solve the problem of information overload for
companies, their employees and their partners by providing knowledge management
applications. Further developing the core technology acquired under license
from BBN Corporation, InfoMation's Echo software is a Web-based knowledge
management application for filtering, organizing, and presenting information
from a variety of sources to client individuals. Echo uses standard Web
browsers to retrieve and integrate highly focused information to create
customized intranet, Internet and extranet solutions.
In addition to product solutions, its services also include customer
support and training as well as business partnerships. InfoMation has announced
business partnerships with Financial Times Information, Hewlett-Packard, Lotus
Development Corporation, News Alert, Quote.com, and Telecommunications Reports
International, Inc. (TRI).
ADSmart Corporation
ADSmart designs, develops, markets and supports complete sales and serving
solutions to manage the Internet advertising buying and selling processes.
ADSmart participates in the growth of Internet advertising by providing
comprehensive and automated expert sales representation, sales forecasting,
campaign management and revenue reporting to advertisers and Web publishers.
For advertisers, the ADSmart Network, a leading Internet advertising
network, provides direct access to key affinity audiences on quality sites. The
ADSmart Network allows advertisers to associate their brands with quality
content and build unique sponsorship and co-branding relationships. As of the
end of fiscal 1998, the ADSmart Network represented 32 premium sites organized
around key affinity areas (College, Generation X, Sports, Travel,
Business/Finance and Technology). Selected premium properties represented by
the ADSmart Network included Golf.com, The Mountain Zone, GORP and IUMA.
For Web publishers, ADSmart provides outsourced solutions for advertising
sales representation and ad management services. ADSmart Management Services
provides a turnkey solution for Web publishers to manage the infrastructure and
logistics of running an online advertising business.
5
Password Internet Publishing Corporation
The Password is a Web service that packages content, commerce, community
chat and bulletin boards around specific areas of interest. Organized into a
library of over 630 subjects, The Password allows users to read, personalize and
to publish back into the library. For readers, the Password library organizes
the Web around personal interests. For personalizers, the technology allows
consumers to organize their favorite Web content into a single space. For
publishers, The Password is a place where consumers can share their view on the
Web.
The Password's service includes the features of The Password Library, My
Own Password and Password Publishing. The Password Library features magazines
organizing the Web content on a given subject. Editors select Web sites and then
define instructions for the filtering engine to ensure that pertinent, up-to-
date information is retrieved. In addition, a special interest bulletin board
allows users to access information on their special interest community. My Own
Password allows consumers to collect information in a personalized magazine.
Users can specifically build and define a single, personal gateway on the most
up-to-date information on their interests, reducing the need for extensive Web
surfing. Password Publishing allows users the tools to post their magazine on a
personal Web site, distribute the URL via e-mail or include the magazine in The
Password Library.
The Password uses the core Echo technology developed by CMG subsidiary,
InfoMation, and is complimentary to a traditional advertising strategy - namely
the desire of advertisers to speak directly to special interest groups which
they already know to be appropriate to their products. The Password offers a
wide range of advertising, sponsorship and co-marketing opportunities for
advertisers to enrich their relationship with consumers and affinity groups.
The company launched its Web site in February 1998. The Password service is
free to its users, with over 150,000 visitors and over 500,000 page views a
month as of October, 1998. The company seeks to generate revenues from
advertising, sponsorships and commerce. The company also syndicates its content
to other highly-visited Web sites.
Vicinity Corporation
Vicinity is a provider of integrated, e-retail solutions that help
corporations tap into the power of the Internet, to bring Web shoppers to real-
world store locations. Vicinity offers a practical, private-labeled solution
that allows customers to find store locations and products quickly and
conveniently using the Web. Vicinity is located in Palo Alto and San Francisco,
California as well as Lebanon, New Hampshire.
For businesses, Vicinity develops and markets its corporate locator
technology, content and services in four major product lines: Business Finder
4.0, Business Directory, Maps, and Driving Directions. Vicinity's content and
services are delivered to Web users from Vicinity's servers, but appear to
originate on the customers' Web sites under their own brand, look and feel. For
consumer Web audiences, Vicinity offers a free consumer Web site called
MapBlast!
Business Finder 4.0 provides businesses, particularly those with retail
stores, dealerships or franchises with an effective Web-based locator solution
to integrate into their sites to provide proximity and multi-attribute proximity
search capabilities. With the exact address of each of the customer's
locations, Business Finder 4.0 enhances the corporate Web site by allowing
consumers to search for the retail outlet, branch or service provider according
to their specifications (i.e., proximity, keyword, attribute or other). Upon
finding the exact location they are looking for, the consumer can then generate
maps and/or driving directions to get them there.
Business Directory provides up to 16 million U.S. business listings.
Business Directory can be implemented by companies in whole or in part as a
national Yellow Pages application or as a subject or geographically-specific
directory of businesses, events or points of interest.
Vicinity Maps are interactive, high-quality, road-level detailed electronic
maps that customers can incorporate into their Web sites to provide users with
vivid, interactive maps of specific business facilities, landmarks and other
locations of interest. Customer locations can also be plotted on maps with a
logo or other symbol. The U.S. street level maps cover more than 130 major
metropolitan areas. Street-level maps are also available for Canada. Driving
Directions provide point-to-point, turn-by-turn directions to destinations in
metropolitan areas throughout the U.S. and Canada.
MapBlast! enables users to generate interactive maps of residence or
business locations, embed them in home pages and fax or e-mail them to friends
and associates.
Blaxxun Interactive, Inc.
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Blaxxun provides software infrastructure for 3-D online communities.
Employing client/server architectures and distributed database technology,
Blaxxun creates a 3-D environment infrastructure that allows individuals to
meet, work, and play on the Web. Blaxxun is located in San Francisco,
California and Munich, Germany.
Blaxxun uses open standards as a key element necessary for the rapid
adoption of cyberspace technology. Virtual Reality Modeling Language, or VRML,
a counterpart to HTML, enables the construction of virtual worlds. Like HTML,
VRML is an open standard architecture that specifies formats and protocols for
all aspects of virtual worlds including 3-D geometry, sound, video, interactive
behavior, and avatars. Blaxxun's products, which include the Blaxxun Community
Server, Community Client software and Developer packages, are VRML-compliant.
The Blaxxun Community Server, a high-performance, multi-user server allows
companies to incorporate interaction into their Web sites, creating user
communities for business, education and entertainment. Key features include
member and place management, avatar and bot support, shared objects and various
types of chat.
In addition, the Blaxxun Community Clients and several Community Developer
software packages, allow integration of community technology with existing
servers and databases. As a Community Client, users are able to access servers
and interact with other users in the virtual 3-D environment. Community
Developer software allows users to create their own customized 3-D virtual
worlds.
Resellers build customer applications using Blaxxun's technology platform
which range from online trade shows to shopping malls, customer support to
entertainment, product promotion to corporate meetings.
Fulfillment Services
- - - --------------------
SalesLink Corporation
SalesLink, along with its subsidiary, Pacific Link, provides product and
literature fulfillment, inventory and data warehouse management, turnkey
outsourcing, sales lead/inquiry management, closed-loop telemarketing,
customized software solutions and value added services for the client's
marketing or manufacturing programs, primarily to high technology,
biotechnology, financial services, and health-care markets. SalesLink's
largest customer is Cisco Systems, Inc. (Cisco), which accounted for 64% and 47%
of SalesLink's fiscal year 1998 and 1997 revenues, respectively.
Product and Literature Fulfillment. On behalf of its fulfillment clients,
SalesLink receives orders for promotional literature and products and "fulfills"
them by assembling and shipping the items requested. Product and literature
fulfillment services begin with the receipt of orders by SalesLink's inbound
telemarketing staff via phone or electronic transmission directly into
SalesLink's computers. Orders are then generated and presented to the
production floor where fulfillment packages are assembled and shipped to either
the end-user or to a broker or distributor.
Inventory and Data Warehouse Management. As adjunct services to
fulfillment, SalesLink provides product and literature inventory control and
warehousing, offering its customer support and management reports detailing
orders, shipments, billings, back orders and returns.
Turnkey Outsourcing. SalesLink's major products include supply-based
management programs. Also known as "turnkey," these programs are a form of
outsourced manufacturing, in which clients retain SalesLink to purchase
components and manufacture customer bills of materials into products that are
either shipped to customers, channels of distribution, or to the customer's
factory for final manufacturing. These outsourced manufacturing services
primarily assist companies in the areas of accessory kits, software, literature
and promotional products.
Sales Lead/Inquiry Management. SalesLink provides prospects with
information about a product or service that one of SalesLink's clients is
marketing. In response, SalesLink receives sales inquiries and maintains
central customer databases of the names and addresses of each person inquiring
about the product. SalesLink's clients use the databases for market research,
sales follow-up and management reports. Depending on the criteria supplied by
the client, SalesLink eliminates non-productive leads, distributes sales
inquiries to the client's sales force and ships fulfillment packages containing
the client's literature or products. After the disposition of the inquiry,
SalesLink is able to produce reports allowing the client to evaluate the
effectiveness of the marketing program which generated the inquiry and evaluate
the performance of the client's sales force in handling the inquiry.
Telemarketing. SalesLink's telemarketing group offers comprehensive
inbound business-to-business telemarketing services to support its sales inquiry
management and order processing activities. Telemarketing services include lead
qualification, order
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processing fulfillment and marketing analysis. SalesLink also offers outbound
business telemarketing services that are tailored to an individual client's
needs. Outbound telemarketing programs can be used to update a client's existing
database, survey possible markets or pre-qualify sales leads.
Customized Software Solutions. SalesLink's proprietary information
management system, SL FlagShip, allows customers to better understand their
sales and product ordering information. Stored at SalesLink and/or available
on customers' file servers and PCs, the information is used by customers to
evaluate inventory, market campaigns, and distribution channel success. SL
FlagShip can solve geomarketing, budget, sales, and media problems through
campaign analysis, market demographics, sales lead and territory management,
source code analysis, market research and surveys.
InSolutions, Inc.
InSolutions was acquired by CMG in fiscal 1998 as an addition to its
fulfillment services product line. InSolutions is an integrated software
manufacturer providing comprehensive turnkey solutions for clients in the high
technology industry. InSolutions' services include:
. CD-ROM, DVD and diskette replication
. Product packaging and assembly
. Fulfillment
. Print management
. Electronic order processing and software distribution
. Inventory management
. Online operations including remote access to inventory, work-in-progress,
order status and package tracking.
On-Demand Solutions, Inc.
On-Demand Solutions was also acquired by CMG in fiscal 1998 as an addition
to its fulfillment services product line. On-Demand Solutions provides online
operations logistics solutions, offering outsourced program management that
support all aspects of the "Web to Warehouse to Customer" process, and markets
support programs for the high-tech, scholastic and sports industries. On-
Demand Solutions online operations provide service and support in the following
e-business value chain areas:
. Remote access to bills of material, "see through" inventory, work-in-
progress, order status and online package tracking.
. Online inventory supply and e-mail order confirmation
. Complete turnkey product and software manufacturing and/or assembly services
. Real-time order processing and product fulfillment
. Secure online shopping and payment functionality
. Web site design, hosting and maintenance
. Marketing capabilities including campaign support, online survey/registration
data capture for customer profiling, marketing collateral manufacturing &
fulfillment to prospective clients and customer contact strategies
List and Database Services
- - - --------------------------
CMG Direct Corporation (CMG Direct)
CMG Direct offers solutions for integrating traditional direct marketing
and Internet marketing. With extensive experience in direct marketing,
sophisticated database management, analysis and targeted mailing lists, CMG
Direct now provides clients with a range of direct and Internet marketing
services.
CMG Direct's principle products are mailing lists derived from its
databases and sold primarily to publishers. CMG Direct has three primary
mailing list databases, the College List database, the InfoBuyers List database
and the K-12 List database. The databases are highly segmented, permitting CMG
Direct to use its application software to extract specifically defined lists of
potential customers who are most likely to purchase products advertised by CMG
Direct's clients. CMG Direct is continually working to expand the size and
comprehensiveness of its database offerings based on the needs of its clients
and the availability of new lists.
The College List Database. The College List database includes
approximately 812,000 names and addresses of professors and college
administrators, university deans, faculty and librarians at every college,
university and junior college in North America.
8
CMG Direct classifies each course taught, and the faculty teaching it, into over
4,000 subject codes, which permits CMG Direct to identify all faculty teaching
any particular course or subject and create lists identifying the faculty so
they can be targeted. The College List is compiled by CMG Direct from course
schedules and other source documents published by colleges and universities and
is updated continually for new semester information.
The InfoBuyers List Database. The InfoBuyers List includes over 14 million
names and addresses of direct mail purchasers of books, journals and magazines,
as well as other pertinent information. The InfoBuyers List is assembled from
over 120 proprietary lists of over 100 publishers and other organizations.
Combining these separate customer lists into a single database permits CMG
Direct to offer its clients a larger group of potential customers across a
broader range of target categories than could be obtained from any single list.
The database is also valuable because it is limited primarily to those consumers
who have actually purchased through mail order and are therefore thought to be
more likely to do so in the future. The InfoBuyers List is segmented under the
same 4,000 subject codes as the College List, plus additional consumer oriented
segmentation.
The Kindergarten through Grade Twelve List Database (K-12 List). The K-12
List database consists of 5.8 million names including teachers, administrators
and book buying families with K-12 children in the U.S. This list also includes
the names of approximately 112,780 public and private schools and approximately
15,300 public school district offices. The K-12 List is segmented into over 30
public school district demographic categories and is used by publishers of
textbooks, supplemental educational materials and magazines and school supply
distributors, among others. The K-12 List is compiled from federal, state and
local government files and the names of school administrators and staff are
developed through state directories, mailings, telephone surveys and the
Internet.
List Management and Brokerage. CMG Direct provides list management and
list brokerage services to businesses that use direct marketing to promote their
products. As a list manager, CMG Direct acts as the exclusive marketing agent
for the postal mailing lists or e-mail lists of its list management clients. In
conjunction with performing list management services, CMG Direct also provides
list brokerage. This service allows CMG Direct to be a single source for
virtually any brokered list requested by a customer and provides opportunity to
generate additional sales of CMG Direct's other products.
Database Management and List Processing Services. CMG Direct's database
management and list processing services provide database analysis, design,
software development, testing, debugging, and maintenance for clients that want
to build a customer database. These services include processing customer data,
segmenting the processed information to provide the level of detail and
selectivity desired, storing the information, and updating it to make it readily
accessible for the client's promotional, analytical and list rental activities.
Lists may be combined and enhanced with additional demographic information and
other lists to form databases which can be used as the basis of additional
client promotions or marketed to other list users. In combining lists, CMG
Direct will offer merge/purge services to eliminate duplicate names. CMG Direct
also offers private database management as a service for large volume mailers
who mail to the same target lists regularly. A private database is a targeted
collection of mailing lists that is used repeatedly by a restricted group of
mailers.
CMGExpress.net(TM). CMGExpress.net(TM) is the Internet expansion
initiative of CMG Direct Corporation. CMGExpress.net leverages CMG Direct's
core competencies through its ExpressList(TM) and PermissionPlus(TM) services.
ExpressList is an opt-in e-mail list service which allows marketers to purchase
e-mail lists online by segments. CMG Direct's list sources are leading Web
sites including InfoBeat, Yoyodyne and Roxy.com. CMG Direct's newest service,
PermissionPlus(TM), is a Web site solution that enables companies to survey
their customers online. It then gives the company the permission and also
ability to e-mail market to their customers. This service is intended to allow
clients to convert passive Web site visitors into buying customers.
BUSINESS STRATEGY
Each CMG business unit's mission is to become the predominant services
provider within its respective market niche. The critical success factors are:
understanding, developing and applying information technology to the Internet,
interactive media markets, and data access and software tools; narrowing market
focus while consummating strategic alliances to complement product and service
offerings; investing in strategic Internet or interactive media investments or
acquisitions and, most importantly, a continued understanding of customers'
needs.
With respect to the businesses of CMG, the Company will seek to expand its
participation in the direct marketing products and services, Internet,
interactive media industries, and increase market share. Key elements of this
strategy include:
Continue to enhance and expand the Company's products and services. The
Company has invested significant resources in new subsidiaries or investments
which seek to capitalize on opportunities surrounding the growth of the Internet
and the interactive marketing industry. The Company intends to continue to
pursue the growth and development of its technologies and services and continue
to introduce its products commercially. Additionally, the Company intends to
continue to evaluate new opportunities to
9
further its investment in its direct marketing strategy and also to seek out
opportunities to realize significant shareholder value through the sale of
selected investments or technologies or having separate subsidiaries sell a
minority interest to outsiders.
Pursue innovative advertising solutions. The Company is actively seeking to
develop innovative ways for advertisers to reach their target audiences through
the Internet effectively. The Company designs and offers customized packages
which include the ability to change advertisements quickly and frequently, to
conduct advertising test campaigns with rapid result delivery and to track daily
usage statistics. The Company has developed and will continue developing
software that provides the ability to target ads based on demographics and usage
patterns.
Actively seek growth in the Company's fulfillment services segment. CMG
intends to continue to pursue the strategy of growing its fulfillment services
segment through gaining market share in its existing markets, through
acquisition, and through developing new IT based products and services for its
client base. During fiscal 1998, CMG built on its national fulfillment and
turnkey businesses with the acquisitions of InSolutions, a turnkey provider with
diskette and CD ROM manufacturing capabilities; and On-Demand Solutions, a
provider of fulfillment, turnkey and Web-based catalogue and sports e-commerce
services. These two new companies are being integrated with SalesLink's
national turnkey and fulfillment operations, while creating an e-commerce
fulfillment component that will seek to broaden the Company's market potential
in the fast-growing Internet fulfillment industry.
Augment database offerings. The Company has expended significant resources
to develop the most comprehensive and accurate databases of their kind available
to publishers. The Company believes that its College List database is the
dominant list of its kind and that the InfoBuyers List database is the only list
of its kind, complemented by the K-12 List database, which is positioned to be
cross sold to gain market share. The Company intends to maintain or improve its
market position by expanding the number, size, nature, comprehensiveness and
segmentation of its database offerings. The Company also intends to leverage its
traditional direct marketing competencies through its CMGExpress.net(TM)
Internet expansion initiative.
Cross-sell products and services. The Company is involved in many aspects
of the direct marketing sales cycle. The Company has experienced success in
fostering the cross-selling of products and services among the businesses and
its portfolio, and will increasingly continue to pursue such cross-selling.
SALES AND MARKETING
The Company markets its products and services through a marketing staff
using both telemarketing and direct sales. The Company maintains separate
marketing staffs for each product and service area, enabling the marketing
personnel to develop strong customer relationships and expertise in their
respective areas. The Company has established direct sales forces experienced in
the advertising business to address the new and evolving requirements of the
Internet advertising market. The Company believes that an experienced sales
staff is critical to initiating and maintaining relationships with advertisers
and advertising agencies and therefore has hired a significant portion of its
Internet advertising sales force from the advertising industry. The Company
advertises its products and services through direct mail, space advertising,
Internet banners, directory listings, trade shows and Company sponsored user
groups. In addition, in certain instances, the Company, has complemented the
activities of its direct sales force by retaining advertising sales agencies, to
serve as a sales representatives on a commission basis.
The Company attends numerous trade shows in the Internet, high technology,
direct marketing, mutual fund, book, and library markets, while further
supplementing its sales efforts with space advertising and product and services
listings in appropriate directories. In addition, the Company sponsors user
group meetings for its mutual fund clients and major list participants in the
InfoBuyers List database, where new products and services are highlighted.
The Company also conducts numerous mailings of list catalogs, flyers,
newsletters and other product information throughout the year to primarily book,
magazine, journal, newsletter and software publishers and resellers, seminar
companies, professional associations, business supply catalogers, consumer
electronic, high technology and financial service organizations.
10
COMPETITION
CMG's Internet investments compete in the electronic technology and
Internet service arenas which are comprised of numerous small and large
companies providing different new technologies, all with varying applications.
The market for Internet products and services is highly competitive. In
addition, the Company expects the market for Internet advertising, to the extent
it further develops, to be intensely competitive. Although the Company believes
that the diverse segments of the Internet market will provide opportunities for
more than one supplier of products and services similar to those of the Company,
it is possible that a single supplier may dominate one or more market segments.
The Company believes the principal competitive factors in this market are name
recognition, performance, ease of use, variety of value-added services,
functionality and features and quality of support. CMG's products and services
are being developed predominantly for direct marketing applications, on the
Internet or through interactive media. Competitors would include a wide variety
of companies and organizations, including Internet software, content, service
and technology companies, telecommunication companies, cable companies and
equipment/technology suppliers. In the future, the Company may encounter
competition from providers of Web browser software and other Internet products
and services that incorporate competing features into their offerings. Many of
the Company's existing competitors, as well as a number of potential new
competitors, have significantly greater financial, technical and marketing
resources than the Company.
The Company may also be affected by competition from licensees of its
products and technology. There can be no assurance that the Company's
competitors will not develop Internet products and services that are superior to
those of the Company or that achieve greater market acceptance than the
Company's offerings. Moreover, a number of the Company's current advertising
customers, licensees and partners have also established relationships with
certain of the Company's competitors and future advertising customers, licensees
and partners may establish similar relationships. The Company may also compete
with online services and other Web site operators as well as traditional off-
line media such as print and television for a share of advertisers' total
advertising budgets. There can be no assurance that the Company will be able to
compete successfully against its current or future competitors or that
competition will not have a material adverse effect on the Company's business,
results of operations and financial condition.
CMG's fulfillment services segment companies have several prominent
competitors for the mutual fund literature fulfillment and turnkey manufacturing
components of its businesses, and also compete with the internal fulfillment and
manufacturing operations of manufacturing and mutual fund companies themselves.
The companies in this segment also compete on the basis of pricing, geographic
proximity to their clients and the speed and accuracy with which orders are
processed. There are also many businesses that compete with SalesLink's,
InSolutions' and On-Demand Solutions' other services.
CMG Direct competes on the basis of the accuracy, size, and
comprehensiveness of its principal databases: the College List and the
InfoBuyers List. The Company believes that the College List is the dominant
database of its kind and has only one competitor, while the K-12 List is a
relatively new product offering that will compete with the same competitor as
the College List. The Company believes that the InfoBuyers List is also the
dominant list of its kind. CMG Direct's database management and list processing
services compete with numerous other service bureaus and compete on the basis of
their effectiveness in processing customer and prospect list databases for
publishers.
RESEARCH AND DEVELOPMENT
The Company develops and markets a variety of Internet related products and
services, as well as a number of database software technologies. These
industries are characterized by rapid technological development. The Company
believes that its future success will depend in large part on its ability to
continue to enhance its existing products and services and to develop other
products and services which complement existing ones. In order to respond to
rapidly changing competitive and technological conditions, the Company expects
to continue to incur significant research and development expenses during the
initial development phase of new products and services as well as on an on-going
basis.
During fiscal years 1998, 1997 and 1996, the Company expended $19,709,000,
$25,058,000 and $6,971,000, respectively, or 21.5%, 35.5% and 24.5%,
respectively, of net revenues, on research and development. In addition, during
fiscal years 1998, 1997 and 1996, the Company recognized $19,135,000, $1,312,000
and $2,691,000, respectively, of in-process research and development expenses in
connection with acquisitions of subsidiaries and investments in affiliates.
11
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company regards its software technologies, databases and database
management software as proprietary. CMG's lists are sold under terms and
conditions which permit the Company's clients to use the list for a single
mailing only and prohibit the further use or resale of the lists or the names
included therein. The Company depends on trade secrets for protection of its
software. It has entered into confidentiality agreements with its management
and key employees with respect to this software, and limits access to, and
distribution of this, and other proprietary information.
EMPLOYEES
As of July 31, 1998, the Company employed a total of 1,024 persons on a
full-time basis. In addition, depending on client demand, the Company utilizes
manpower agencies to contract between 75 and 200 persons on a temporary, part-
time basis. None of the Company's employees are represented by a labor union.
The Company believes that its relations with its employees are good.
SEGMENT INFORMATION
Segment information is set forth in Note 3 of the Notes to Consolidated
Financial Statements referred to in Item 8(a) below and incorporated herein by
reference.
SIGNIFICANT CUSTOMERS
Significant customers information is set forth in Note 2(r) of the Notes to
Consolidated Financial Statements referred to in Item 8(a) below and
incorporated herein by reference.
ITEM 2. - PROPERTIES
FACILITIES
The location and general character of the Company's principal properties by
industry segment as of July 31, 1998 are as follows:
Lists and Database Services and Corporate Headquarters
- - - ------------------------------------------------------
The Company leases approximately 34,000 square feet of administrative,
engineering, sales and operations space in Wilmington, Massachusetts, under a
lease which expires in 2000. The Company subleases 14,000 square feet of this
facility to an outside party.
The Company also leases approximately 84,000 square feet of space in
Andover, Massachusetts, under a lease which expires in 2002. This facility
consists of executive office space for the Company's corporate headquarters, as
well as administrative, engineering, sales and operations space for certain
investment and development segment subsidiaries.
Fulfillment Services
- - - --------------------
The Company's east coast operations are conducted from an approximately
245,000 square foot leased facility in Boston, Massachusetts. The lease for
this facility expires in 1998. The Company has recently leased a 155,000
square foot facility in Charlestown, Massachusetts, under an arrangement
expiring in 2013. The Company plans to occupy the Charlestown space upon
expiration of the Boston lease. Additionally, the Company leases 49,000 square
feet in Wilmington, Massachusetts, under lease arrangements that expire through
2003.
The Company's west coast operations are conducted from leased facilities
totaling approximately 325,000 and 100,000 square feet in Newark and Santa
Clara, California, respectively. The leases for these facilities expire through
2012. Of the Newark, California facility, 39,000 square feet is subleased to an
outside party.
Additionally, the Company leases an approximately 51,000 square foot
operating facility in Bedford Park, Illinois under a lease which expires in
1999.
12
Investment and Development
- - - --------------------------
The Company leases the following significant facilities in the investment
and development segment:
- - - - 22,000 square feet in Andover, Massachusetts, under a lease that expires in
2007.
- - - - 14,000 square feet in Scotts Valley, California, under a lease that expires
in 2002.
- - - - 12,000 square feet in Raleigh, North Carolina, under agreements that expire
through 2001.
- - - - 9,500 square feet in Burlington, Massachusetts, under a lease that expires in
2000.
- - - - 7,600 square feet in Palo Alto, California, under a lease that expires in
2000.
The facilities in this segment primarily consist of engineering, sales,
operations and administrative offices.
This industry segment also shares a portion of the Company's Andover,
Massachusetts facility described in the Corporate Headquarters section above.
ITEM 3. - LEGAL PROCEEDINGS
The Company is not a party to any material litigation.
ITEM 4. - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.
PART II
ITEM 5. - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market information is set forth in Note 18 of the Notes to
Consolidated Financial Statements referred to in Item 8(a) below and
incorporated herein by reference.
(b) On October 20, 1998, there were 374 holders of record of common stock.
(c) The Company has never paid cash dividends on its common stock, and the
Company has no intention to pay cash dividends in the forseeable future.
(d) On June 16, 1998, the Company issued 185,331 shares of its common
stock to shareholders of InSolutions in consideration for the acquisition of all
of the issued and outstanding shares of capital stock of InSolutions. The shares
issued by the Company are not registered under the Securities Act of 1933, as
amended, and carry restrictions on transfer or sale for a period of one year.
On June 16, 1998, the Company issued 125,071 shares of its common
stock to shareholders of On-Demand Solutions in consideration for the
acquisition of all of the issued and outstanding shares of capital stock of On-
Demand Solutions. The shares issued by the Company are not registered under the
Securities Act of 1933, as amended, and carry restrictions on transfer or sale
for a period of two years.
The shares issued in the above mentioned transactions were issued in
private placements in reliance upon the exemption provided by section 4 (2) of
the Securities Act of 1933.
13
ITEM 6. - SELECTED CONSOLIDATED FINANCIAL DATA
The information set forth in the 1998 Annual Report to Shareholders is
incorporated herein by reference and is filed herewith as Exhibit 13.1.
ITEM 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information set forth in the 1998 Annual Report to Shareholders,
referred to in Item 8(a) below, is incorporated herein by reference and is filed
herewith as Exhibit 13.2.
ITEM 7A. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The carrying values of financial instruments including cash and cash
equivalents, accounts receivable, accounts payable and notes payable,
approximate fair value because of the short maturity of these instruments. The
carrying value of long-term debt approximates its fair value, as estimated by
using discounted future cash flows based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements.
The Company uses derivative financial instruments primarily to reduce
exposure to adverse fluctuations in interest rates on its borrowing
arrangements. The Company does not enter into derivative financial instruments
for trading purposes. As a matter of policy all derivative positions are used
to reduce risk by hedging underlying economic exposure. The derivatives the
Company uses are straightforward instruments with liquid markets. At July 31,
the Company was primarily exposed to the London Interbank Offered Rate (LIBOR)
interest rate on the outstanding borrowings under its line of credit and other
bank borrowing arrangements. Information about the Company's borrowing
arrangements including principal amounts and related interest rates appears in
Note 12 to the Consolidated Financial Statements included herein.
The Company has historically had very low exposure to changes in foreign
currency exchange rates, and as such, has not used derivative financial
instruments to manage foreign currency fluctuation risk. As the Company expands
globally, the risk of foreign currency exchange rate fluctuation may
dramatically increase. Therefore, in the future, the Company may consider
utilizing derivative instruments to mitigate such risks.
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) The following consolidated financial statements of the Company and
independent auditors' report set forth in the 1998 Annual Report to Shareholders
are incorporated herein by reference and are filed herewith as Exhibit 13.3:
- Consolidated Balance Sheets as of July 31, 1998 and 1997
- Consolidated Statements of Operations for the three years ended July
31, 1998
- Consolidated Statements of Stockholders' Equity for the three years
ended July 31, 1998
- Consolidated Statements of Cash Flows for the three years ended July
31, 1998
- Notes to Consolidated Financial Statements
- Independent Auditors' Report
(b) Selected Quarterly Financial Data (unaudited) is set forth in Note 18
of the Notes to Consolidated Financial Statements referred to in Item 8 (a)
above and incorporated herein by reference.
ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
14
PART III
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the portions of the Definitive Proxy
Statement entitled "Proposal 1--Election of Directors," "Additional
Information," and "Section 16(a) Beneficial Ownership Reporting Compliance."
ITEM 11. - EXECUTIVE COMPENSATION
Incorporated by reference from the portions of the Definitive Proxy
Statement entitled "Executive Compensation,"
and "Additional Information Compensation of Directors."
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the portion of the Definitive Proxy
Statement entitled "Security Ownership by Management and Principal
Stockholders."
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the portion of the Definitive Proxy
Statement entitled "Certain Relationships and Related Transactions."
PART IV
ITEM 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) Financial Statements, Financial Statement Schedule, and Exhibits
1. Financial Statements. The financial statements as set forth under
Item 8 of this report on Form 10-K are incorporated herein by
reference. The following financial statements of Lycos, Inc. as
required by Regulation S-X, Rule 3-09 are filed herewith as
Exhibit 99.1:
--Consolidated Balance Sheets as of July 31, 1998 and 1997
--Consolidated Statements of Operations for the three years
ended July 31, 1998
--Consolidated Statements of Stockholders' Equity for the
three years ended July 31, 1998
--Consolidated Statements of Cash Flows for the three years
ended July 31, 1998
--Notes to Consolidated Financial Statements
--Independent Auditors' Report
2. Financial Statement Schedule. Financial Statement Schedule II of
the Company and the corresponding Report of Independent Auditors
on Financial Statement Schedule are included in this report.
All other financial statement schedules have been omitted since
they are either not required, not applicable, or the information
is otherwise included.
3. Exhibits. The following Exhibits are required to be filed with
this Report by Item 14 and are incorporated by reference to the
source cited in the Exhibit Index below or are filed herewith.
15
EXHIBIT INDEX
EXHIBIT NO. TITLE METHOD OF FILING
- - - ----------- ----- ----------------
3 (i)(1) Amendment to the Restated Certificate of Incorporated by reference to Exhibit 3 (i) (1) to the
Incorporation. Registrant's quarterly report on Form 10-Q for the quarter
ended April 30, 1996
3 (i) (2) Restated Certificate of Incorporation. Incorporated by reference from Registration Statement on Form
S-1, as amended, filed on November 10, 1993 (Registration No.
33-71518)
3 (ii) Restated By-Laws. Incorporated by reference from Registration Statement on Form
S-1, as amended, filed on November 10, 1993 (Registration No.
33-71518)
4 Specimen Stock Certificate representing the Incorporated by reference from Registration Statement on Form
Common Stock. S-1, as amended, filed on November 10, 1993 (Registration No.
33-71518).
10.01 Form of Indemnification Agreement executed Filed herewith.
between the Company and each of the members of
its Board of Directors (David S. Wetherell,
William H. Berkman, Craig D. Goldman, John A.
McMullen and Robert J. Ranalli) in June 1998.
10.02 Lease, dated November 21, 1991, Between the Incorporated by reference from Registration Statement on Form
Registrant and Ballardvale Park Associates II S-1, as amended, filed on November 10, 1993 (Registration No.
Limited Partnership. 33-71518).
10.03 Lease Agreement, dated September 2, 1992, between Incorporated by reference from Registration Statement on Form
SalesLink Corporation, the subsidiary of the S-1, as amended, filed on November 10, 1993 (Registration No.
Registrant, and American National Bank & Trust 33-71518).
Company of Chicago as Trustee under Trust No.
1001971-01.
10.04 Amendment to Lease, dated May 10, 1992, between Incorporated by reference from Registration Statement on Form
SalesLink Corporation, the subsidiary of the S-1, as amended, filed on November 10, 1993 (Registration No.
Registrant, and Drydock Associates Limited 33-71518).
Partnership.
10.05* Employment Agreement, dated August 1, 1993, Incorporated by reference from Registration Statement on Form
between the Registrant and David S. Wetherell. S-1, as amended, filed on November 10, 1993 (Registration No.
33-71518).
10.06 Fulfillment and Inventory Management Agreement Incorporated by reference from Registration Statement on Form
between SalesLink Corporation, the subsidiary of S-1, as amended, filed on November 10, 1993 (Registration No.
the Registrant, and MFS Financial Services, Inc. 33-71518).
10.07 Fulfillment and Mailing Agreement, dated January Incorporated by reference from Registration Statement on Form
1, 1993, between SalesLink Corporation, the S-1, as amended, filed on November 10, 1993 (Registration No.
subsidiary of the Registrant and Kemper Financial 33-71518).
Services, Inc.
16
EXHIBIT NO. TITLE METHOD OF FILING
- - - ----------- ----- ----------------
10.08 Agreement, dated January 15, 1991, between Incorporated by reference from Registration Statement on Form
ListLab, a division of the Registrant, and S-1, as amended, filed on November 10, 1993 (Registration No.
Prentice-Hall, Business and Professional 33-71518).
Publishing Division.
10.09 Account Indebtedness Letter Agreement, dated as Incorporated by reference from Registration Statement on Form
of November 9, 1993, between the Registrant and S-1, as amended, filed on November 10, 1993 (Registration No.
David S. Wetherell. 33-71518).
10.10 Amendment to Account Indebtedness Letter Incorporated by reference from Registration Statement on Form
Agreement, dated as of January 10, 1994, between S-1, as amended, filed on November 10, 1993 (Registration No.
the Registrant and David S. Wetherell. 33-71518).
10.11* Amendment No. 1 to the Employment Agreement, Incorporated by reference from Registration Statement on Form
dated January 20, 1994, between the Registrant S-1, as amended, filed on November 10, 1993 (Registration No.
and David S. Wetherell. 33-71518).
10.12 Amendment No. 2 to Account Indebtedness Letter Incorporated by reference from Registration Statement on Form
Agreement, dated January 25, 1994 between the S-1, as amended, filed on November 10, 1993 (Registration No.
Registrant and David S. Wetherell. 33-71518).
10.13 Extension Agreement dated August 4, 1995 to Incorporated by reference to Exhibit 10.24 to the Registrant's
Fulfillment and Mailing Agreement dated January annual report on Form 10-K for the year ended July 31, 1995 .
1, 1993, between SalesLink Corporation and Kemper
Financial Services, Inc.
10.14 Fulfillment Master Purchase Agreement dated March Incorporated by reference to Exhibit 10.25 to the Registrant's
28, 1994, between SalesLink Corporation and annual report on Form 10-K for the year ended July 31, 1995.
Fidelity Investments Institutional Service
Company, Inc.
10.15 Literature Fulfillment Agreement dated August 1, Incorporated by reference to Exhibit 10.26 to the Registrant's
1995, between SalesLink Corporation and Vista annual report on Form 10-K for the year ended July 31, 1995.
Capital Management.
10.16 License Agreement dated June 16, 1995, as Incorporated by reference to Exhibit 10.27 to the Registrant's
amended, between the Registrant, CMG@Ventures, annual report on Form 10-K for the year ended July 31, 1995.
L.P., Carnegie Mellon University, and Lycos, Inc.
10.17 Agreement and Plan of Reorganization dated as of Incorporated by reference from report on Form 8-K as filed
November 8, 1994, as amended, among the with the Commission 01/01/95 (File No. 0-22846).
Registrant, BookLink Technologies, Inc., America
Online, Inc. and BLT Acquisition Corporation.
10.18* 1995 Employee Stock Purchase Plan, as amended. Incorporated by reference to Exhibit 10.1 to the Registrant's
quarterly report on Form 10-Q for the quarter ended October
31, 1997.
10.19* 1986 Stock Option Plan, as amended. Incorporated by reference to Exhibit 10.2 to the Registrant's
quarterly report on Form 10-Q for the quarter ended October
31, 1997.
17
EXHIBIT NO. TITLE METHOD OF FILING
- - - ----------- ----- ----------------
10.20 Master Agreement dated as of February 13, 1996 Incorporated by reference to Exhibit 10.33 to the Registrant's
between BBN Corporation and the Registrant. quarterly report on Form 10-Q for the quarter ended January
31, 1996.
10.21* 1995 Stock Option Plan for Non-Employee Incorporated by reference to Exhibit 10.3 to the Registrant's
Directors, as amended. quarterly report on Form 10-Q for the quarter ended October
31, 1997.
10.22 Amendments dated February 9, 1996 and March 4, Incorporated by reference to Exhibit 10.35 to the Registrant's
1996 to License Agreement dated June 16, 1995, quarterly report on Form 10-Q for the quarter ended January
between the Registrant, CMG@Ventures L.P., 31, 1996.
Carnegie Mellon University and Lycos, Inc.
10.23 Sublease, dated September 26, 1996 between the Incorporated by reference to Exhibit 10.1 to the Registrant's
Registrant and FTP Software, Inc. quarterly report on Form 10-Q for the quarter ended October
31, 1996.
10.24* Amendment No. 2 to Employment Agreement, dated Incorporated by reference to Exhibit 10.2 to the Registrant's
October 25, 1996, between the Registrant and quarterly report on Form 10-Q for the quarter ended October
David S. Wetherell. 31, 1996.
10.25 Supplement #1 to Sublease, dated September 26, Incorporated by reference to Exhibit 10.1 to the Registrant's
1996 between the Registrant and FTP Software, Inc. quarterly report or Form 10-Q for the quarter ended January
31, 1997.
10.26 CMG Stock Purchase Agreement, dated as of Incorporated by reference to Exhibit 99.1 to the Registrant's
December 10, 1996 by and between the Registrant current report on Form 8-K dated January 31, 1997, filed on
and Microsoft Corporation. February 14, 1997.
10.27* CMG @Ventures, Inc. Deferred Compensation Plan. Incorporated by reference to Exhibit 10.1 to the Registrant's
quarterly report on Form 10-Q for the quarter ended April 30,
1997.
10.28 Stock Purchase Agreement dated as of October 24, Incorporated by reference to Exhibit 2 to the Registrant's
1996, among SalesLink Corporation, CMG report on Form 8-K as filed with the commission 10/24/96 (File
Information Services, Inc., Pacific Direct No. 0-022846).
Marketing Corp., d/b/a Pacific Link and all the
stockholders of Pacific Link.
10.29 Warrant Purchase Agreement by and among SalesLink Incorporated by reference to Exhibit 10.37 to the Registrant's
Corporation and BankBoston, N.A., dated as of annual report on Form 10-K for the year ended July 31, 1997.
October 24, 1996.
10.30 Common Stock Purchase Warrant issued by SalesLink Incorporated by reference to Exhibit 10.38 to the Registrant's
Corporation to BankBoston, N.A., dated as of annual report on Form 10-K for the year ended July 31, 1997.
October 24, 1996.
10.31 Revolving Credit Agreement, dated May 14, 1997, Incorporated by reference to Exhibit 10.49 to the Registrant's
between the Registrant and BankBoston, N.A. annual report on Form 10-K for the year ended July 31, 1997.
10.32 Revolving Credit Note, dated May 14, 1997, Incorporated by reference to Exhibit 10.50 to the Registrant's
between the Registrant and BankBoston, NA. annual report on Form 10-K for the year ended July 31, 1997.
18
EXHIBIT NO. TITLE METHOD OF FILING
- - - ----------- ----- ----------------
10.33 First Amendment, dated as of May 26, 1998, to Filed herewith.
Revolving Credit Agreement, dated May 14, 1997 by
and among CMG Information Services, Inc. and
BankBoston, N.A. and the other lending
institutions listed on Schedule 1 to the Credit
Agreement.
10.34 Second Amendment, dated as of April 9, 1998, to Filed herewith.
Revolving Credit Agreement, dated May 14, 1997,
by and among CMG Information Services, Inc. and
BankBoston, N.A. and the other lending
institutions listed on Schedule 1 to the Credit
Agreement.
10.35 Third Amendment, dated as of May 31, 1998, to Filed herewith.
Revolving Credit Agreement, dated May 14, 1997,
by and among CMG Information Services, Inc. and
BankBoston, N.A. and the other lending
institutions listed on Schedule 1 to the Credit
Agreement.
10.36 Fourth Amendment, dated as of August 14, 1998, to Filed herewith.
Revolving Credit Agreement, dated May 14, 1997,
by and among CMG Information Services, Inc. and
BankBoston, N.A. and the other lending
institutions listed on Schedule 1 to the Credit
Agreement.
10.37 Fifth Amendment, dated as of September 30, 1998, Filed herewith.
to Revolving Credit Agreement, dated May 14,
1997, by and among CMG Information Services, Inc.
and BankBoston, N.A. and the other lending
institutions listed on Schedule 1 to the Credit
Agreement.
10.38 Common Stock Purchase Agreement dated as of Incorporated by reference to Exhibit 99.1 to the Registrant's
December 19, 1997 by and between CMG Information current report on Form 8-K dated December 19, 1997, filed
Services, Inc. and Intel Corporation. December 29, 1997.
10.39 ISDA Master Swap Agreement (the "Swap Incorporated by reference to Exhibit 10.1 to the Registrant's
Agreement"), dated January 13, 1998, between quarterly report on Form 10-Q for the quarter ended January
BankBoston, N.A. and the Registrant. 31, 1998.
10.40 Schedule to the Swap Agreement, dated January 13, Incorporated by reference to Exhibit 10.2 to the Registrant's
1998. quarterly report on Form 10-Q for the quarter ended January
31, 1998.
10.41 Confirmation to the Swap Agreement, dated January Incorporated by reference to Exhibit 10.3 to the Registrant's
13, 1998. quarterly report on Form 10-Q for the quarter ended January
31, 1998.
10.42 ISDA Credit Support Annex, dated January 13, Incorporated by reference to Exhibit 10.4 to the Registrant's
1998, between BankBoston, N.A. and the Registrant. quarterly report on Form 10-Q for the quarter ended January
31, 1998.
19
EXHIBIT NO. TITLE METHOD OF FILING
- - - ----------- ----- ----------------
10.43 Agreement for the Assignment of Voting Rights, Incorporated by reference to Exhibit 10.5 to the Registrant's
dated January 13, 1998, between the Registrant quarterly report on Form 10-Q for the quarter ended January
and Long Lane Master Trust. 31, 1998.
10.44 Repurchase Agreement, dated January 13, 1998, Incorporated by reference to Exhibit 10.6 to the Registrant's
between the Registrant and Long Lane Master Trust. quarterly report on Form 10-Q for the quarter ended January
31, 1998.
10.45 Common Stock Purchase Agreement dated as of Incorporated by reference to Exhibit 99.1 to the Registrant's
February 15, 1998 by and between CMG Information current report on Form 8-K dated February 27, 1998, filed
Services, Inc. and Sumitomo Corporation. March 19, 1998.
10.46 CMG @Ventures I, LLC Limited Liability Company Incorporated by reference to Exhibit 10.1 to the Registrant's
Agreement, dated December 18, 1997. quarterly report on Form 10-Q for the quarter ended April 30,
1998.
10.47 Agreement and Plan of Merger dated as of April 8, Incorporated by reference to Exhibit 2.1 to the Registrant's
1998 among CMG Information Services, Inc., CMGI current report on Form 8-K dated April 8, 1998, filed on April
Acquisition Corporation, Accipiter, Inc., and 23, 1998.
Certain Stockholders of Accipiter, Inc. Named
Herein.
10.48 Employee Stockholder Escrow Agreement dated April Incorporated by reference to Exhibit 2.2 to the Registrant's
8, 1998. current report on Form 8-K dated April 8, 1998, filed on April
23, 1998.
10.49 Non-Employee Stockholder Escrow Agreement dated Incorporated by reference to Exhibit 2.3 to the Registrant's
April 8, 1998. current report on Form 8-K dated April 8, 1998, filed on April
23, 1998.
10.50 Employee Investment Representation and Lockup Incorporated by reference to Exhibit 2.4 to the Registrant's
Letters dated April 8, 1998. current report on Form 8-K dated April 8, 1998, filed on April
23, 1998.
10.51 Non-Employee Investment Representation and Lockup Incorporated by reference to Exhibit 2.5 to the Registrant's
Letters dated April 8, 1998. current report on Form 8-K dated April 8, 1998, filed on April
23, 1998.
10.52 Registration Rights Agreement dated April 8, 1998. Incorporated by reference to Exhibit 2.6 to the Registrant's
current report on Form 8-K dated April 8, 1998, filed on April
23, 1998.
10.53 Lease, dated January 6, 1998, between the 425 Incorporated by reference to Exhibit 10.2 to the Registrant's
Medford Nominee Trust and SalesLink Corporation quarterly report on Form 10-Q for the quarter ended April 30,
for premises at 425 Medford Street, Boston, 1998.
Massachusetts.
10.54 CMG Information Services, Inc. Guaranty of Incorporated by reference to Exhibit 10.3 to the Registrant's
SalesLink Corporation Lease for 425 Medford quarterly report on Form 10-Q for the quarter ended April 30,
Street, Boston, Massachusetts. 1998.
10.55 Supplement No. 2 to the Registrant's Lease for Incorporated by reference to Exhibit 10.4 to the Registrant's
100 Brickstone Square, Andover, Massachusetts. quarterly report on Form 10-Q for the quarter ended April 30,
1998.
20
EXHIBIT NO. TITLE METHOD OF FILING
- - - ----------- ----- ----------------
10.56 Supplement No. 3 to the Registrant's Lease for Incorporated by reference to Exhibit 10.5 to the Registrant's
100 Brickstone Square, Andover, Massachusetts. quarterly report on Form 10-Q for the quarter ended April 30,
1998.
10.57 Amended and Restated Revolving Credit and Term Filed herewith.
Loan Agreement, dated as of June 11, 1998, among
SalesLink Corporation, InSolutions Incorporated,
Pacific Direct Marketing Corp., BankBoston, N.A.
and the other lending institutions set forth in
Schedule 1.
10.58 Amended and Restated Term Note, dated June 11, Filed herewith.
1998, between SalesLink Corporation and
InSolutions Incorporated and Imperial Bank.
10.59 Amended and Restated Term Note, dated June 11, Filed herewith.
1998, between SalesLink Corporation and
InSolutions Incorporated and BankBoston, N.A.
10.60 Fourth Amended and Restated Revolving Credit Filed herewith.
Note, dated June 11, 1998, between SalesLink
Corporation and InSolutions Incorporated and
Imperial Bank.
10.61 Fourth Amended and Restated Revolving Credit Filed herewith.
Note, dated June 11, 1998, between SalesLink
Corporation and InSolutions Incorporated and
BankBoston, N.A.
10.62 Amended and Restated Stock Pledge Agreement, Filed herewith.
dated June 11, 1998, between SalesLink
Corporation and BankBoston, N.A.
10.63 Amended and Restated Guaranty, dated as of June Filed herewith.
11, 1998, by Pacific Direct Marketing Corp. in
favor of BankBoston, N.A.
10.64 Amended and Restated Security Agreement, dated as Filed herewith.
of June 11, 1998, among SalesLink Corporation,
InSolutions Incorporated and BankBoston, N.A.
10.65 Amended and Restated Security Agreement, dated as Filed herewith.
of June 11, 1998, between Pacific Direct
Marketing Corp. and BankBoston, N.A.
10.66 Amended and Restated Trademark Collateral Filed herewith.
Security and Pledge Agreement, dated as of June
16, 1998, between SalesLink Corporation and
BankBoston, N.A.
10.67 Trademark Collateral Security and Pledge Filed herewith.
Agreement, dated as of June 11, 1998, between
InSolutions Incorporated and BankBoston, N.A.
21
EXHIBIT NO. TITLE METHOD OF FILING
- - - ----------- ----- ----------------
10.68 Registration Rights Agreement, dated June 16, Filed herewith.
1998, between the listed shareholders and CMG
Information Services, Inc.
10.69 CMG@Ventures II, LLC Operating Agreement, dated Filed herewith.
as of February 26, 1998
13.1 Selected Consolidated Financial Data. Filed herewith.
13.2 Management's Discussion and Analysis of Financial Filed herewith.
Condition and Results of Operations.
13.3 Consolidated Financial Statements, Supplementary Filed herewith.
Data, and Independent Auditors' Report.
21 Subsidiaries of the Registrant. Filed herewith.
23.1 Consent of Independent Auditors. Filed herewith.
23.2 Consent of Independent Auditors for Lycos, Inc. Filed herewith.
27.1 Restated Financial Data Schedule for the year Filed herewith.
ended July 31, 1997.
27.2 Financial Data Schedule for the year ended July Filed herewith.
31, 1998.
99.1 Consolidated Financial Statements and Independent Filed herewith.
Auditors' Report Thereon of Lycos, Inc.
* Management contracts and compensatory plans or arrangements.
(B) Reports on Form 8-K
On June 12, 1998, the Company filed a report on Form 8-K/A amending the
Form 8-K dated April 8, 1998 in conjunction with the acquisition of all the
issued and outstanding shares of capital stock of Accipiter, Inc. in
exchange for approximately 1,264,000 shares of the Company's common stock.
On July 1, 1998, the Company filed a report on Form 8-K dated June 16, 1998
in conjunction with the acquisition of all the issued and outstanding
shares of capital stock of InSolutions, Incorporated in exchange for
approximately 185,000 shares of the Company's common stock, $5 million in
cash and a note payable to a former employee shareholder.
22
REPORT OF INDEPENDENT AUDITORS
ON FINANCIAL STATEMENT SCHEDULE
The Board of Directors
CMG Information Services, Inc.:
Under date of September 22, 1998, except for Note 19 which is as of October 27,
1998, we reported on the Consolidated Balance Sheets of CMG Information
Services, Inc. as of July 31, 1998 and 1997, and the related Consolidated
Statements of Operations, Stockholders' Equity, and Cash Flows for each of the
years in the three-year period ended July 31, 1998, which are included in the
Form 10-K for the year ended July 31, 1998. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
consolidated financial statement schedule of Valuation and Qualifying Accounts
in the Form 10-K. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Boston, Massachusetts
September 22, 1998
23
CMG INFORMATION SERVICES, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JULY 31, 1996, 1997, 1998
Additions Deductions
---------------------------- ----------------------------------
Additions Deductions
Accounts Receivable, Charged to (Charged
Allowance for Balance at Costs and against (a) Balance at
Doubtful beginning of Expenses (Bad Accounts Deconsolidation/ end
Accounts period Acquisitions Debt Expense) Receivable) Dispositions of period
-------- ------ ------------ ------------ ---------- ------------ ---------
1996 $ 148,000 $ -- $ 294,000 $ -- $ $ 442,000
1997 $ 442,000 $ 395,000 $ 442,000 $ 186,000 $ 10,000 $ 1,083,000
1998 $ 1,083,000 $ 264,000 $ 466,000 $ 99,000 $ 659,000 $ 1,055,000
(a) Amount of $659,000 in fiscal 1998 relates to the effect of deconsolidation
of Lycos, Inc. on November 1, 1997. Amount of $10,000 in fiscal 1997
relates to the disposition of the Company's subsidiary, NetCarta
Corporation in January 1997.
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CMG INFORMATION SERVICES, INC.
(Registrant)
Date: October 29, 1998 By /s/ David S. Wetherell
--------------------------
David S. Wetherell, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been duly signed below by the following persons on behalf of the Registrant
and in the capacities and on the date set forth above.
Signature Title
- - - --------- -----
/s/ David S. Wetherell Chairman of the Board, President, Chief
- - - --------------------------------
David S. Wetherell Executive Officer and Director (Principal
Executive Officer)
/s/ Andrew J. Hajducky, III Chief Financial Officer and Treasurer
- - - --------------------------------
Andrew J. Hajducky III, CPA (Principal Financial and Accounting
Officer)
/s/ John A. McMullen Director
- - - --------------------------------
John A. McMullen
/s/ Craig D. Goldman Director
- - - --------------------------------
Craig D. Goldman
/s/ William H. Berkman Director
- - - --------------------------------
William H. Berkman
/s/ Robert J. Ranalli Director
- - - --------------------------------
Robert J. Ranalli
25