ARTISTdirect Reports 2001 Fourth Quarter & Full Year Results; $46.5 Million Cash and Short-Term Investments at December 31, 2001.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--Feb. 28, 2002 Ten Artists Signed to ARTISTdirect Founded in 1994, Artistdirect, Inc. is an online digital media entertainment company. It owns several websites including Artistdirect.com, UBL.com, Loserkids.com and the Artistdirect Network. Records Co-Venture ARTISTdirect, Inc. (Nasdaq:ARTD) today announced financial results for its fourth quarter and full year ended December December: see month. 31, 2001. Net revenue for the fourth quarter and full year were $2.6 million and $10.4 million, respectively, compared with $5.6 million and $18.7 million for the same periods a year ago (reflecting for all periods the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of our Talent Agency business as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. ). EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become loss for the fourth quarter and full year were $5.5 million and $25.6 million, respectively, compared with $13.4 million and $45.8 million for the same periods a year ago. As of December 31, 2001 (using common shares outstanding at that date), cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments totaled $46.5 million, or $13.45 per share, and stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. was $51.4 million, or $14.85 per share. "We are proud of our accomplishments in 2001 to significantly reduce the cost structure of our online operations while investing in the growth opportunity represented by ARTISTdirect Records, our record label co-venture," said Ted Field, Chairman 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 ARTISTdirect, Inc. "We believe that 2002 will fully demonstrate the results of our efforts and I am very excited about the prospects for ARTISTdirect Records. With ten great artists on our roster, an outstanding team in place, and our first album expected to debut in late March, we look forward to a busy and productive year." Financial results Net revenue for the fourth quarter of 2001 decreased 54% to $2.6 million, compared with $5.6 million in the fourth quarter of 2000, reflecting in both periods the reclassification of our Talent Agency business as a discontinued operation. Net loss attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shareholders for the quarter was $22.6 million, compared with a net loss of $17.2 million for the fourth quarter of 2000. Loss per share was $6.45 for the fourth quarter of 2001, compared to loss per share of $4.56 for the fourth quarter of 2000. For the fiscal year ended December 31, 2001, net revenue decreased 44% to $10.4 million, compared with $18.7 million for 2000, reflecting in both periods the reclassification of our Talent Agency business as a discontinued operation. Net loss attributable to common shareholders for 2001 was $70.6 million, compared with a net loss of $85.2 million for 2000. Loss per share was $19.49 for 2001, compared with loss per share of $26.83 for 2000. Revenue from e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. in the fourth quarter decreased 56% to $1.9 million from $4.3 million for the prior year period. For the full year 2001, e-commerce revenue was $7.5 million, a decrease of 38% from revenue of $12.2 million in 2000. Media revenue for the fourth quarter of 2001 was $700,000, a decrease of 49% from $1.3 million for the same period in 2000. For the full year 2001, media revenue was $2.9 million, a decrease of 54% from $6.3 million in 2000. ARTISTdirect Records ARTISTdirect Records ("ADR ADR - Astra Digital Radio ") is a co-venture between the Company and Ted Field. ADR currently has ten artists on its roster: four rock acts (Badly Drawn Boy Damon Gough (nicknamed Badly Drawn Boy), was born 2 October 1969, in Dunstable, Bedfordshire. He grew up in the Breightmet area of Bolton, Lancashire, England. He is a Mercury Prize-winning indie singer/songwriter. , Blood Brothers, Custom and Mad at Gravity) and six urban acts (NAAM Naam (nā`ăm), in the Bible, son of Caleb. Brigade brigade Military unit commanded by a brigadier general or a colonel and composed of two or more subordinate units, such as regiments or battalions. Two or more brigades make up a division. , No Good, Phats Bossi Bossi is a surname native to the Lombardy region of Italy, particularly in Milan. Variations include Bosio and Boselli, the former being among the original derivations of "Bossi" and the latter being a common variation of Italian names. , Pokafase, Poverty and Smilez N' Northstar). ADR expects its first release, the album Fast from Custom, in late March 2002. ADR has a worldwide distribution agreement with BMG BMG Bundesministerium für Gesundheit (Germand: Federal Ministry for Health) BMG Be My Girl BMG Blue Man Group BMG Bertelsmann Music Group BMG Be My Guest BMG Browning Machine Gun BMG Bulk Metallic Glass Entertainment, the global music business of media conglomerate conglomerate, in business conglomerate, corporation whose asset growth, often very rapid, comes largely through the acquisition of, or merger with, other firms whose products are largely unrelated to each other or to that of the parent company. Bertelsmann For the foundation, see . Bertelsmann AG is a transnational media corporation founded in 1835, based in Gütersloh, Germany. The company operates in 63 countries and employs over 100,000 workers (as of June 30, 2007). In 2006 the company reported a € 19. . As of December 31, 2001, the Company had invested $5.3 million in ADR under its original five-year commitment to fund up to $50 million. The Company recognized a loss associated with this investment of $4.9 million for the fourth quarter of 2001 and $8.7 million for the full year 2001. Talent Agency In January January: see month. 2002, the Company announced its plan to exit its Talent Agency business and the formation of a relationship with Creative Artists Agency Creative Artists Agency (CAA) is a talent and literary agency which represents a vast array of actors, musicians, writers, directors, and athletes, as well as a variety of companies and their products. ("CAA Caa See CCC. ") for the provision by CAA to the Company of agency and other related services. As a result, the Company's talent agency business is classified as a discontinued operation in the financial statements for the fourth quarter and full year 2001. Rescission The abrogation of a contract, effective from its inception, thereby restoring the parties to the positions they would have occupied if no contract had ever been formed. By Agreement Offer During the fourth quarter of 2001, the Company completed a rescission offer with respect to certain options and shares issued prior to its initial public offering pursuant to its stock option plans. The rescission offer resulted in cash payments of approximately $10.2 million. The Company recognized rescission related expenses of $6.9 million in the fourth quarter of 2001 and will recognize an additional $1.9 million in 2002. ABOUT ARTISTdirect, Inc. ARTISTdirect Inc. (Nasdaq:ARTD) is a music entertainment company that combines an online music network with offline (1) Not connected to the Internet, online service or internal network. See offline file. (2) Not connected to or not installed in the computer. If a terminal, printer or other device is physically connected to the computer, but is not turned on or in ready mode, it is assets to provide an integrated solution for music fans, artists and marketing partners. The ARTISTdirect Network (www.artistdirect.com), is a network of Web sites offering multi-media content, music news and information, community around shared music interests, music related commerce and digital music services. Through its co-venture, ARTISTdirect Records, the Company operates a record label. The Company is headquartered in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. . 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. Statement under 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: This news release may contain projections or other 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. regarding future events or the future financial performance of ARTISTdirect. These projections and statements involve risks and uncertainties. Readers are cautioned that these statements are based on information currently available to management and are only predictions. These predictions may differ materially from the Company's actual future events or results. Potential risks and uncertainties that may affect future events and the Company's business, financial status and operating results include, among others, the Company's ability to reduce costs and increase revenue, the ability of ARTISTdirect and Mr. Field to successfully implement and operate the Company's record label co-venture, the ability of ARTISTdirect or Mr. Field to accurately budget and forecast the record label operations, uncertainties related to the effects of piracy piracy, robbery committed or attempted on the high seas. It is distinguished from privateering in that the pirate holds no commission from and receives the protection of no nation but usually attacks vessels of all nations. on sales of recorded music recorded music n → música grabada , general uncertainties related to amounts spent on online advertising and e-commerce, competition in its industry, ability to enter into new strategic relationships and leverage existing strategic relationships, ability to increase revenue from online product sales, advertising and other revenue streams, and to generate revenue from digital distribution, ability to increase visits to ARTISTdirect's network of sites, ability to offer compelling content, and ability to protect and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. obtain intellectual property rights. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, ARTISTdirect cannot assure the public that future results will meet these expectations. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. ARTISTdirect is under no duty to update any of the forward-looking statements after the date of this release to conform those statements to actual results or to changes in the Company's expectations. More information about potential factors that could affect the Company's business and financial results is included in the documents filed by ARTISTdirect with the SEC, including its most recent 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. , Quarterly Report on Form 10-Q Form 10-Q See 10-Q. , current report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. and its Registration Statements on Form S-1 and all amendments thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. .
ARTISTdirect, Inc. and Subsidiaries
Consolidated Balance Sheets
(amounts in thousands)
December 31, December 31,
2001 2000
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 28,024 $51,457
Cash held for clients 36 743
Short term investments 18,518 36,368
Accounts receivable, net 346 948
Prepaid stock based compensation 4,645 -
Other prepaid expenses and current assets 1,390 3,218
------------ ----------
Total current assets 52,959 92,734
Property and equipment, net 6,077 9,057
Investments in affiliated companies 80 85
Goodwill and intangibles, net 788 15,018
Other assets, net 5 1,611
------------ ----------
$ 59,909 $ 118,505
============ ==========
Liabilities, Redeemable Securities and
Stockholders' Equity
Current liabilities:
Cash held for clients $ 36 $ 743
Accounts payable 251 2,257
Accrued expenses 4,018 5,186
Loans and notes payable 254 178
Deferred revenue 36 34
------------ ----------
Total current liabilities 4,595 8,398
Investment in record label joint venture 3,027 -
Long term liabilities 903 1,530
------------ ----------
Total liabilities 8,525 9,928
------------ ----------
Redeemable securities - 10,778
------------ ----------
Stockholders' equity:
Common stock 379 379
Treasury stock (3,442) -
Additional paid-in-capital 207,832 200,690
Unearned compensation (745) (20,364)
Accumulated deficit (152,786) (82,906)
Unrealized gain on available for sale
investments 146 -
------------ ----------
Total stockholders' equity 51,384 97,799
------------ ----------
$ 59,909 $ 118,505
============ ==========
ARTISTdirect, Inc. and Subsidiaries
Consolidated Statements of Operations
(amounts in thousands, except for share data)
Three Months Ended Years Ended
December 31, December 31,
-------------------------------------------
2001 2000 2001 2000
-------------------------------------------
Net revenue:
E-Commerce $ 1,891 $ 4,286 $ 7,542 $ 12,160
Media 674 1,310 2,879 6,326
Other - - - 244
-------------------------------------------
Total net revenue 2,565 5,596 10,421 18,730
Cost of revenue:
Direct cost of
product sales 1,439 3,330 6,137 10,381
Other cost of
revenue 1,589 2,368 5,728 8,103
Stock-based
compensation 3,757 1,395 8,405 7,545
-------------------------------------------
Total cost of
revenue 6,785 7,093 20,270 26,029
Gross loss (4,220) (1,497) (9,849) (7,299)
Operating expenses:
Website development 457 2,607 3,726 5,364
Sales and marketing 673 6,081 5,726 25,623
General and
administrative 3,986 4,916 14,842 17,632
Stock-based
compensation 7,556 1,951 12,415 5,067
Depreciation and
amortization 1,083 1,933 6,512 6,248
Loss from
impairment of
goodwill - - 11,444 -
-------------------------------------------
Loss from
operations (17,975) (18,985) (64,514) (67,233)
Loss from equity
investments (4,944) (250) (8,998) (235)
Interest income,
net 528 1,976 3,585 5,969
-------------------------------------------
Loss from
continuing
operations
before taxes (22,391) (17,259) (69,927) (61,499)
Income taxes - - - -
-------------------------------------------
Loss from
continuing
operations $(22,391) $(17,259) $(69,927)$(61,499)
Income (loss)
from
discontinued
operations (96) 216 47 2,191
-------------------------------------------
Net loss $ (22,487) $(17,043) $ (69,880)$(59,308)
Interest on rescission
offer 158 193 691 532
Dividends on
redeemable preferred
securities - - - 963
Beneficial conversion
feature on redeemable
preferred stock - - - 24,375
-------------------------------------------
Net loss attributable
to common
shareholders $(22,645) $(17,236) $(70,571)$(85,178)
===========================================
Basic and diluted loss
per share from cont.
operations $(6.42) $(4.62) $(19.50) $(27.52)
Basic and diluted
income per share from
discont. operations (0.03) 0.06 0.01 0.69
-------------------------------------------
Basic and diluted
loss per share $(6.45) $(4.56) $(19.49) $(26.83)
===========================================
Weighted average
common shares
outstanding 3,512,799 3,777,331 3,620,161 3,175,126(a)
===========================================
EBITDA loss $(5,675) $(13,407) $(25,552)$(45,849)(b)
===========================================
Adjusted gross profit
(loss)
$(463) $ (19) $(1,305) $ 329(c)
===========================================
(a) On July 5, 2001, the Company declared a 1 for 10 reverse stock
split. The outstanding common shares have been retroactively adjusted
to reflect the reverse stock split.
(b) EBITDA excludes income/(loss) from equity investment, net interest
income, depreciation and amortization, stock-based compensation, loss
on impairment of goodwill and, in 2000, amortization of vendor
prepaid, included in other cost of revenue.
(c) Adjusted gross profit/(loss) excludes stock based compensation and
amortization of vendor prepaid.
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