AOL Latin America Reports Reduced Losses for Fourth Quarter 2002; Reports Full-Year 2002 Results.Business EditorsFORT LAUDERDALE Fort Lauderdale (lô`dərdāl), residential, commercial, and resort city (1990 pop. 149,377), seat of Broward co., SE Fla., on the Atlantic coast; settled around a fort built (c.1837) in the Seminole War, inc. 1911. , Fla.--(BUSINESS WIRE)--Feb. 11, 2003 America Online See AOL. Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Inc. (Nasdaq:AOLA AOLA America Online Latin America ): -- Continuing Focus on Operating Efficiency Contributed to Tenth Consecutive Quarter of Narrowed Per-Share Losses -- Losses Reduced by 41% for Full Year 2002 and 45% for Fourth Quarter 2002 Versus Prior Year -- Available Funds Now Expected to Finance Operations Into the First Quarter of 2004 America Online Latin America, Inc. (Nasdaq:AOLA) today reported narrowed per-share losses for the fourth quarter ended December December: see month. 31, 2002, contributing to a narrowed full year loss for 2002. These results mark AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. America's tenth straight quarter of narrowed per-share losses. Operational efficiencies implemented during 2002, marketing strategies focused on higher-value members, as well as regional currency devaluations Currency devaluation A deliberate downward adjustment in the official exchange rates established, or pegged, by a government against a specified standard, such as another currency or gold. contributed to the Company's reduced losses. As a result of these improvements, AOL Latin America now expects its cash on hand to finance operations The execution of the joint finance mission to provide financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support.See also financial management. into the first quarter of 2004. Another key highlight from the quarter was the revised marketing agreement with Banco Itau which is designed to provide a stronger member acquisition channel for the co-branded AOL Brazil/Itau service. The Company's fourth quarter net loss applicable to common stockholders narrowed by more than 45% to $38.6 million, or $0.58 per class A common share, basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , compared with a loss of $70.5 million, or $1.05 per share, for the quarter ended December 31, 2001, and approximately 3% from a loss of $39.9 million, or $0.59 per share, in the third quarter ended September September: see month. 30, 2002. The Company's fourth quarter net loss before dividends on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. was $33.8 million, or $0.09 per share, on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma fully diluted basis, improving from a loss of $65.8 million, or $0.20 per share, on the same basis a year ago, and a loss of $35.2 million, or $0.10 per share last quarter. Pro forma fully diluted calculations were impacted by a significant increase in potentially dilutive securities during the fourth quarter resulting from the issuance of convertible notes to AOL Time Warner Inc. and the payment of interest on such notes through the issuance of preferred stock. AOL Latin America reported total revenues of $17.8 million in the fourth quarter, compared to $18.7 million in the quarter ended December 31, 2001, and $17.6 million in the third quarter of 2002. Total revenues during 2002 were negatively impacted by currency devaluations in Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. , Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. and Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. . Excluding currency devaluations, total revenues rose approximately 18% over the prior year quarter and approximately 9% over the third quarter 2002. Although currency devaluations in the region had a negative effect on revenues, they also contributed to a decline in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. during the quarter and the year which more than offset the negative currency effect on revenue versus the prior periods, helping the Company conserve its cash on hand. Subscription revenue totaled $15.3 million, unchanged from $15.3 million in the December 31, 2001 quarter. Subscription revenue dropped slightly as compared with $15.8 million in the third quarter of 2002 primarily due to currency devaluation. Advertising and other revenue totaled $2.5 million, compared with $3.4 million in the quarter ended December 31, 2001, and $1.8 million in the third quarter of 2002. Softness in the online advertising markets in the region continued to impact the Company's advertising and other revenues. For full-year 2002, total revenue was $72.1 million, up from $66.4 million in 2001. Subscription revenue totaled $63.0 million for 2002, compared with $49.9 million for full-year 2001. Advertising and other revenue fell to $9.1 million for 2002, compared with $16.5 million for full-year 2001. AOL Latin America's net loss before dividends on preferred stock for full-year 2002 narrowed by approximately 44% to $161.9 million, or $0.47 per share, on a pro-forma fully-diluted basis, compared with a loss of $290.3 million for 2001. The reported full-year 2002 net loss per class A common share, basic and diluted, was $2.69 per share on $180.6 million of net loss, compared with $4.66 per share on $307.3 million of net loss for full-year 2001. As a result of the Company's ongoing efforts to reduce the number of members not paying on a timely basis and to target higher value members, AOL Latin America's membership base declined slightly during the quarter. AOL Latin America reported ending the quarter with approximately 1.18 million members, down 2%, or approximately 26,000 members compared to the third quarter of 2002. As with the Company's previous member reports, the 1.18 million members includes those participating in the services' free trial promotional periods, as well as members of the co-branded AOL Brazil service with Banco Itau, whose time online is subsidized sub·si·dize tr.v. sub·si·dized, sub·si·diz·ing, sub·si·diz·es 1. To assist or support with a subsidy. 2. To secure the assistance of by granting a subsidy. by the bank. In line with previous announcements, AOL Latin America's overall efforts to improve the revenue contribution of its membership base, as well as to reduce the number of inactive in·ac·tive adj. 1. Not active or tending to be active. 2. a. Not functioning or operating; out of use: inactive machinery. b. members of the co-branded service under the revised marketing agreement with Banco Itau, are expected to result in further declines in membership in the near term. Underscoring these initiatives, in December 2002, AOL Latin America announced a revised agreement to promote the co-branded AOL Brazil/Itau service to Banco Itau's more than 9 million customers. The Company believes this agreement will provide a stronger member acquisition channel for the co-branded service with point-of-sale point of sale n. pl. points of sale A business or place where a product or service can be purchased. Also called point of purchase. point displays and interactive kiosks An Interactive kiosk is a computer terminal that provides information access via electronic methods. Interactive kiosks sometimes resemble telephone booths, but can also be used while sitting on a bench or chair. , staffed by AOL Brazil promoters PROMOTERS. In the English law, are those who in popular or penal actions prosecute in. their own names and the king's, having part of the fines and penalties. , in hundreds of Banco Itau's banking branches throughout Brazil. As part of the agreement, AOL Latin America will now oversee marketing activities, which will be funded by Banco Itau. The revised agreement also restructures subscriber and revenue targets, which are now based solely on the implementation of Itau's marketing commitments and minimum revenue contribution levels. Over the past year, AOL Latin America has focused on targeting higher value members through more efficient member acquisition channels in an effort to improve the revenue contribution of its member base. These channels have included point of sale displays in key retail partners including Office Depot Office Depot (NYSE: ODP) is one of the world's leading suppliers of office products and services. The Company's selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, , Carrefour and Wal-Mart  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. . The Company
also implemented member acquisition initiatives that included bundled PC
agreements with top manufacturers including Hewlett-Packard See HP. Hewlett-Packard - (HP) Hewlett-Packard designs, manufactures and services electronic products and systems for measurement, computation and communications. The company's products and services are used in industry, business, engineering, science, medicine and in Mexico and Metron Metron can refer to:
AOL Latin America announced that as of January January: see month. 24, 2003, the Company's class A common stock has regained compliance with the required $35 million minimum market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. of listed securities Listed Security Securities that have been accepted for trading purposes by a recognized and regulated exchange. Notes: Listed securities have the advantage of higher liquidity within a regulated environment. . NASDAQ also confirmed that the Company's class A common stock is no longer in a conditional listing period. NASDAQ has also recently granted a 180-day extension to comply with the $1 minimum bid price requirement for continued listing. The Company must now have a closing bid price of $1 or higher for at least ten consecutive trading days In Business, the trading day is the time span that a particular stock exchange is open. For example, the New York Stock Exchange is, as of 2006, open from 09:30AM to 4:00PM. Trading days never take place on weekends. commencing no later than June 30, 2003. Charles Herington, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of AOL Latin America, said: "Our ongoing initiatives to streamline operations and target higher value members contributed to our tenth consecutive quarter of narrowed losses. We also expect these ongoing initiatives will help us finance operations into the first quarter of 2004. These efforts will be augmented by our revised marketing agreement with Banco Itau, which continues to be an important partner. With these initiatives in place, and having recently remedied our position on the NASDAQ SmallCap Market, AOL Latin America is going in the right direction by building our business for the future." Other Highlights Over the past several months, AOL Latin America continued to make progress on several fronts, including: -- New Content: AOL Latin America continued to enhance its robust content offerings with several new partners, including a special promotion with McDonald's in Brazil called "Dancing with Ronald McDonald," an online music promotion with Sony in Mexico, and content from Poder and Loft magazines from Zoom Media. Other offerings have included AOL First Listens, exclusive worldwide premieres of today's hottest music artists, and great online content and promotions for Harry Potter A potter is someone who makes pottery. Potter may also refer to: People
The Two Towers. -- AOL 8.0: AOL Latin America also plans to begin launching localized Translated into the spoken language of the country. See localization. versions of the AOL 8.0 software in the first half of 2003. AOL 8.0 has been a great success in the U.S. with record adoption levels since its launch in October, 2002. AOL 8.0 is currently available to members in Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. . -- Financing: AOL Latin America noted that, as of December 31, 2002, funds from the $160 million March 2002 financing agreement with AOL Time Warner Inc. were completely drawn as per the agreement. The Company now expects its cash on hand to be sufficient to finance operations into the first quarter of 2004. About AOL Latin America America Online Latin America, Inc. (Nasdaq:AOLA) is the exclusive provider of AOL-branded services in Latin America and has become one of the leading Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and interactive services providers in the region. AOL Latin America launched its first service, America Online Brazil, in November 1999, and began as a joint venture of America Online, Inc., a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of AOL Time Warner Inc. (NYSE NYSE See: New York Stock Exchange :AOL), and the Cisneros Group The Cisneros Group of Companies is one of the largest, privately held media, entertainment, telecommunications and consumer products organizations in the world. The Group owns or holds interests in companies ranging from broadcast television, networks and pay television businesses of Companies. Banco Itau, a leading Brazilian bank, is also a minority stockholder of AOL Latin America. The Company combines the technology, brand name, infrastructure and relationships of America Online, the world's leader in branded interactive services, with the relationships, regional experience and extensive media assets of the Cisneros Group of Companies, one of the leading media groups in the Americas. The Company currently operates services in Brazil, Mexico and Argentina and serves members of the AOL-branded service in Puerto Rico. It also operates a regional portal accessible at http://www.aola.com. America Online's 35 million members worldwide can access content and offerings from AOL Latin America through the International Channels on their local AOL services. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements regarding (i) the expected results of initiatives to improve the revenue contribution of our membership base and further operating efficiencies, (ii) future membership levels, (iii) the expected results of the revised agreement with Banco Itau, (iv) our expectation that cash on hand will allow us to continue to finance operations into the first quarter of 2004 and (v) the future launch of AOL 8.0. These forward-looking statements are subject to a number of risks and uncertainties, which are described in our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the period ended December 31, 2001, and from time to time in other reports we file with the SEC, as well as the following risks and uncertainties: our limited cash position, the impact our continued losses will have on our ability to finance our operations, the success of the co-branded Banco Itau service (including new marketing initiatives under the revised agreement with Banco Itau), currency exchange rates, the actions of our competitors, uncertainty relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc our ability to convert our subscribers into paying subscribers, our limited operating history, uncertainty regarding the success of our targeting marketing initiatives, macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. developments in Brazil and Mexico, our ability to penetrate our markets and the timing of development efforts related to the AOL 8.0 client software. Actual results could differ materially from those described in the forward-looking statements.
AOL Latin America
Press Release Financial Information
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2002 2001 2002 2001
---- ---- ---- ----
(In thousands, except per share information)
CONSOLIDATED CONDENSED OPERATING RESULTS AND EPS
------------------------------------------------
Revenues:
Subscriptions $15,304 $15,263 $62,998 $49,918
Advertising and other 2,541 3,417 9,109 16,525
--------- --------- ----------- ----------
Total revenues 17,845 18,680 72,107 66,443
Costs and expenses:
Cost of revenues (18,993) (32,974) (98,695) (128,896)
Sales and marketing (21,139) (39,795) (97,170) (191,024)
General and administrative (9,109) (12,048) (32,871) (41,591)
--------- --------- ----------- ----------
Total costs and expenses (49,241) (84,817) (228,736) (361,511)
Loss from operations (31,396) (66,137) (156,629) (295,068)
Other (expense) income,
net (2,369) 305 (5,163) 4,753
--------- --------- ----------- ----------
Loss before income taxes (33,765) (65,832) (161,792) (290,315)
Income taxes (51) - (75) -
--------- --------- ----------- ----------
Net loss (33,816) (65,832) (161,867) (290,315)
Less: dividends on Series
B and C preferred shares (4,769) (4,651) (18,724) (17,005)
--------- --------- ----------- ----------
Net loss applicable to
common stockholders $(38,585) $(70,483) $(180,591) $(307,320)
========= ========= =========== ==========
Loss per common share,
basic and diluted $(0.58) $(1.05) $(2.69) $(4.66)
========= ========= =========== ==========
Weighted average common
shares outstanding 67,070 67,055 67,068 66,018
========= ========= =========== ==========
PRO FORMA EPS
-------------
Pro forma fully diluted
calculation (1):
-----------------------
Net loss applicable to
common stockholders $(38,585) $(70,483) $(180,591) $(307,320)
Plus: dividends on Series
B and C preferred shares 4,769 4,651 18,724 17,005
--------- --------- ----------- ----------
Net loss before dividends
on Series B and C
preferred shares $(33,816) $(65,832) $(161,867) $(290,315)
Divided by: Pro forma
fully diluted shares
outstanding (2) 356,485 326,919 341,482 314,025
--------- --------- ----------- ----------
Pro forma fully diluted
loss per share $(0.09) $(0.20) $(0.47) $(0.92)
========= ========= =========== ==========
Reconciliation of Common
Shares to Pro Forma Shares (2):
-------------------------------
Weighted average number of
common shares outstanding 67,070 67,055 67,068 66,018
--------- --------- ----------- ----------
Plus: effect of potential
dilutive common shares
from:
-- Stock options 16,217 15,899 16,102 15,551
-- AOL warrant 16,541 16,541 16,541 16,541
-- Convertible debt 23,494 - 12,899 -
-- Preferred stock
-- Series B 121,749 116,010 117,458 110,230
-- Series C 111,414 111,414 111,414 105,685
--------- --------- ----------- ----------
289,415 259,864 274,414 248,007
--------- --------- ----------- ----------
Pro forma fully diluted
shares outstanding 356,485 326,919 341,482 314,025
========= ========= =========== ==========
Notes:
------
(1) - AOL Latin America considers the pro forma fully diluted
earnings per share an important indicator in evaluating its results
of operations, as it provides a better picture of the Company's full
capitalization structure. However, pro forma fully diluted earnings
per share is a non-GAAP measure and should be considered in addition
to, not as a substitute for, operating loss, net loss, basic and
diluted loss per common share and other measures of financial
performance reported in accordance with generally accepted
accounting principles in the United States.
(2) - On a weighted average basis, includes common stock and assumes
conversion of Series B and C preferred shares, the AOLTW senior
convertible note, the AOL Warrant, and the Employee Stock Option
Plan regardless of whether or not the instrument is dilutive or
antidilutive.
AOL Latin America
Press Release Financial Information
As of
-----
BALANCE SHEETS (In thousands) December 31, December 31,
2002 2001
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $74,586 $45,636
Short-term money market
investments 915 1,040
----------- ----------
Total cash and cash
equivalents 75,501 46,676
Trade accounts receivable,
net of allowances 3,567 6,144
Other receivables 2,090 4,713
Prepaid expenses and other
current assets 7,963 5,410
----------- ----------
Total current assets 89,121 62,943
Property and equipment,
net 6,983 11,958
Investments, including
securities available-for-
sale 158 1,361
Product development costs
and other intangible
assets, net 285 988
Other assets 3,727 7,134
----------- ----------
TOTAL ASSETS $100,274 $84,384
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
(CAPITAL DEFICIENCY)
CURRENT LIABILITIES
Trade accounts payable $8,746 $18,114
Payables to affiliates 6,893 15,198
Accrued expenses and other
current liabilities 20,481 28,825
----------- ----------
Total current liabilities 36,120 62,137
Senior convertible notes 160,000 -
Deferred revenue and other
non-current liabilities 1,239 1,124
----------- ----------
Total liabilities 197,359 63,261
STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY)
Preferred stock, common stock and
additional paid-in capital , net of
unearned services 660,810 614,468
Accumulated deficit and
accumulated other
comprehensive loss (757,895) (593,345)
----------- ----------
Total stockholders' equity
(capital deficiency) (97,085) 21,123
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (CAPITAL DEFICIENCY) $100,274 $84,384
=========== ==========
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