ARTISTdirect Reports 57% Revenue Growth for Fourth Quarter of 2000 Over Same Period for 1999; Full Year Revenue 111% Above 1999 Results.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--Feb. 22, 2001 ARTISTdirect Inc. (Nasdaq:ARTD) today announced net revenue of $6.0 million for the quarter ended December 31, 2000, a 57% increase over the 1999 period. As of December 31, 2000 (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 $87.8 million, or $2.32 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 $97.8 million, or $2.59 per share. The company previously announced that it is aggressively reducing costs and believes that its current cash and cash equivalents will be sufficient to fund its operations through the point of becoming cash flow positive. "ARTISTdirect maintains a strong cash position, and we have taken aggressive action in reducing our operating costs operating costs npl → gastos mpl operacionales in an effort to achieve profitability," said Marc Geiger, 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 ARTISTdirect has the necessary resources -- both in terms of capital and in core capabilities -- to endure the current market volatility as well as the uncertainty in the online music space." "Consumer demand for digital music is undeniable," said Keith Yokomoto, President and COO (Cell Of Origin) See mobile positioning. for ARTISTdirect Inc. "We expect that consumers will pay for digital music, and ARTISTdirect is uniquely positioned to capitalize To regard the cost of an improvement or other purchase as a capital asset for purposes of determining Income Tax liability. To calculate the net worth upon which an investment is based. To issue company stocks or bonds to finance an investment. in this area through our partnerships with the major labels, our relationship with artists, and our credibility with consumers." Yokomoto added, "We have invested significant resources in developing an on-demand digital music application that we believe will offer tremendous utility and value to the consumer, and will be a significant future source of revenue for ARTISTdirect." Financial results Net revenue for the fourth quarter of 2000 increased 57% to $6.0 million, compared with $3.8 million in the fourth quarter of 1999. Net loss for the quarter was $17.0 million, compared with a net loss of $23.6 million for the fourth quarter of 1999. 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 loss per share was $0.46 for the fourth quarter of 2000, compared to pro forma loss per share of $1.08 for the fourth quarter of 1999. For the fiscal year ended December 31, 2000, net revenue increased 111% to $21.7 million, compared with $10.3 million for 1999. Net loss for 2000 was $59.3 million, compared with a net loss of $57.8 million for 1999. Pro forma loss per share was $1.73 for 2000, excluding non-recurring, non-cash dividends recognized in the first quarter in connection with the automatic conversion of the company's Series C Redeemable Redeemable Eligible for redemption under the terms of an indenture. 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. to Common Stock upon completion of the company's initial public offering and interest accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. in connection with a currently contemplated 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. Pro forma loss per share for 1999, reported on the same basis, was $2.98. The company reported an adjusted gross profit, excluding non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc amortization and stock-based compensation, of $323,000, or 5% of net revenue, for the fourth quarter of 2000, compared with $726,000, or 19% of net revenue, in the prior year period. Adjusted gross profit for 2000 was $3.0 million, or 14% of net revenue, compared with $1.9 million, or 18% of net revenue, for 1999. 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 of 2000 was $13.4 million, compared with $12.5 million in the prior year period. EBITDA loss for 2000 was $45.8 million, compared with $23.4 million for 1999. 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 increased 141% to $4.3 million from the same period in 1999 and increased 31% sequentially from the third quarter of 2000. For the full year 2000, e-commerce revenue was $12.2 million, an increase of 130% over 1999. Our e-commerce business benefited in the fourth quarter from the sale of exclusive CDs from Cher, the Eels and Staind, as well as exclusive merchandise from *NSYNC NSYNC Justin Chris Joey Lasten JC (last letters of first names of members of the group NSYNC) NSYNC Negative Synchronization , Backstreet backstreet Noun a street in a town far from the main roads Adjective denoting secret or illegal activities: a backstreet abortion backstreet n Boys, Stevie Nicks, and Ricky Martin. ARTISTdirect also provided fans the opportunity to buy tickets online for the sold-out *NSYNC tour, and offered pre-sale tickets for the Foo Fighters Foo Fighters are an American rock band formed by musician Dave Grohl in 1995.[1] The group is named after a secret military operation during World War II which researched UFOs ("Foo" being the slang term for a UFO). , Marilyn Manson
Brian Hugh Warner (born January 5, 1969), better known by his stage name Marilyn Manson, is an American musician and artist known for his outrageous stage persona and image as the lead singer of the , Offspring off·spring n. 1. The progeny or descendants of a person, animal, or plant considered as a group. 2. A child of particular parentage. , and k.d. lang. Advertising revenue for the fourth quarter of 2000 was $1.3 million, an increase of approximately 5% over the same period in 1999 and a small sequential increase from $1.2 million for the third quarter of 2000. For the full year 2000, advertising revenue was $6.3 million, an increase of 117% over 1999. The company experienced continued weakness in the overall advertising market, combined with no significant off-line sponsorship activity during the quarter. Progress on reorganization In November of 2000, the company announced plans to reduce EBITDA loss in 2001 by 30% to 40% compared with 2000 results. In January 2001, the company announced a reorganization around five business units and its expectation that EBITDA loss in 2001 would be reduced by 50% to 60% compared with 2000 results. The company is continuing to explore ways in which to further reduce its burn rate, accelerate profitability, and prudently invest capital in areas that have significant potential. Dutch Auction Dutch Auction An auction where the price on an item is lowered until it gets its first bid, and then the item is sold at that price. Notes: The U.S. Treasury (and other countries) uses a Dutch auction when it sells securities. Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. In February 2001, the company announced that its Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to 2.0 million shares, or approximately 5.3%, of ARTISTdirect's approximately 37.8 million outstanding shares of common stock as of February 20, 2000. The repurchase will be made through a "Dutch Auction" style self-tender offer Self-tender offer A company that tenders for its own shares. , at an expected offering range of between $1.25 and $1.50 per share, subject to market conditions prior to commencement of the tender offer. Commencement of the proposed tender offer and the definitive terms thereof will be subject to the completion of all necessary regulatory filings. The tender offer is currently expected to commence the week of February 26, 2001. If the number of shares tendered is greater than the number sought, the company will select the tendered price within the range that allows the company to repurchase the entire 2.0 million shares at the lowest aggregate price, with purchases to be made on a pro-rata basis for stockholders tendering at or below the purchase price. If the tender offer is accepted in its entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. , the company will have approximately 35.8 million shares of common stock outstanding after its completion. The company plans to fund the tender offer from its existing cash and the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of short-term investments. Rescission Offer The company currently plans to complete a rescission offer with respect to certain options and shares issued pursuant to its stock option plans during the second quarter of 2001. Assuming that the rescission offer is accepted in its entirety as of June 30, 2001, the company's cash exposure would be approximately $11.2 million, including interest. About ARTISTdirect Inc. ARTISTdirect Inc. (Nasdaq:ARTD) is a music and media company that combines an online music network with integrated offline assets to provide a single-stop solution for music fans, artists, labels and advertisers. ARTISTdirect.com (www.artistdirect.com), a comprehensive online destination, blends music programming, community, e-commerce retail and digital music services. Through the ARTISTdirect Talent Agency, the company also manages offline musical tour booking and develops event-marketing programs extending sponsor reach. 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. , California. 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 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, specifically expectations as to revenues, profitability, reduction in cash burn rate, cash flow and cost savings from cost-cutting measures. These projections and statements involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future events or results. Potential risks and uncertainties that may affect future events and results include, among others, general uncertainties related to amounts spent on online advertising and e-commerce, ARTISTdirect's ability to attract new artists and retain existing artists, competition in its industry, including from Web sites offering free music, 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 obtain intellectual property rights. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot assure you that our future results, levels of activity, performance or achievements will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are 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 our 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 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
(in thousands)
December 31, December 31,
2000 1999
Assets
Current assets:
Cash and cash equivalents $51,457 $69,119
Cash held for clients 743 770
Short term investments 36,368 --
Accounts receivable, net 948 1,001
Prepaid expenses and other
current assets 3,218 6,795
Total current assets 92,734 77,685
Property and equipment, net 9,057 3,343
Goodwill and intangibles,
net 15,018 13,415
Other assets, net 1,696 4,157
$118,505 $98,600
Liabilities, Redeemable Preferred Stock
and Stockholders' Equity (Deficit)
Current liabilities:
Cash held for clients $743 $770
Accounts payable 2,257 3,709
Accrued expenses 5,186 4,698
Notes payable 178 741
Deferred revenue 34 37
Total current
liabilities 8,398 9,955
Long term liabilities 1,530 683
Total liabilities 9,928 10,638
Redeemable securities 10,778 111,707
Stockholders' equity (deficit):
Common stock 379 141
Additional paid-in-capital 200,690 36,688
Unearned compensation (20,364) (36,976)
Accumulated deficit (82,906) (23,598)
Total stockholders'
equity (deficit) 97,799 (23,745)
$118,505 $98,600
ARTISTdirect Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except for share data)
Three Months Ended Years Ended
December 31, December 31,
2000 1999 2000 1999
Net revenue:
Online product
sales $4,286 $1,781 $12,160 $5,282
Advertising and
other 1,310 1,244 6,326 2,910
Agency
commissions 423 642 2,946 1,304
Record label -- 173 244 778
Total net
revenue 6,019 3,840 21,676 10,274
Cost of revenue:
Direct cost of
product sales 3,330 1,977 10,381 5,091
Other cost of
revenue 2,449 1,219 8,616 3,380
Stock-based
compensation 1,395 1,388 7,545 1,769
Total cost of
revenue 7,174 4,584 26,542 10,240
Gross Profit
(loss) (1,155) (744) (4,866) 34
Operating expenses:
Product
development 2,607 787 5,364 1,815
Sales and
marketing 6,081 7,784 25,623 13,222
General and
administrative 5,042 4,697 17,874 10,319
Amortization of
stock-based
compensation 1,951 8,762 5,067 30,304
Depreciation and
amortization 1,933 955 6,248 2,509
Loss from
operations (18,769) (23,729) (65,042) (58,135)
(Loss)/income
from equity
investment (250) 17 (235) 50
Interest income,
net 1,976 114 5,969 281
Net loss $(17,043) $(23,598) $(59,308) $(57,804)
Interest on
rescission offer 193 199 532 237
Dividend on
redeemable stock -- 500 963 1,414
Beneficial
conversion
feature on
redeemable
preferred stock -- -- 24,375 --
Net loss
attributable to
common
shareholders $(17,236) $(24,297) $(85,178) $(59,455)
Basic and diluted
loss per share $(.46) $(1.71) $(2.68) N/A (a)
Weighted average
common shares
outstanding 37,773,310 14,177,463 31,751,258 N/A (a)
Pro forma loss per
share $(0.46) $(1.08) $(2.40) $(2.98) (b)
Pro forma
weighted
average common
shares
outstanding 37,773,310 22,019,492 35,138,987 19,502,437
EBITDA loss $(13,407) $(12,542) $(45,849) $(23,442) (c)
Adjusted gross profit $323 $726 $3,012 $1,914 (d)
(a) From January 1, 1999, to October 6, 1999, the Company was
organized as a limited liability company. Accordingly, no
common shares were outstanding and no loss per share is
applicable for the year ended December 31, 1999.
(b) Pro forma net loss per share and pro forma weighted average
shares outstanding are calculated assuming that the Company's
members' interests, which were converted to common shares in
October 1999 and its Redeemable Preferred Securities, which
were converted to common shares at the IPO, were outstanding
as common shares during the periods presented. The
calculation of the pro forma net loss per share includes the
effect of the beneficial conversion feature assuming the
Series C preferred stock converted at the initial public
offering date pursuant to the original terms of the Series C
preferred stock.
(c) EBITDA excludes income from equity investment, net interest
income, depreciation and amortization, stock-based
compensation and amortization of vendor prepaid, included in
other cost of revenue.
(d) Adjusted gross profit excludes stock based compensation and
amortization of vendor prepaid.
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