ARTISTdirect Reports Results for First Quarter 2002; $30.8 Million Cash and Short-Term Investments at March 31, 2002.Business Editors LOS LOS Length of stay, see there ANGELES--(BUSINESS WIRE)--April 25, 2002 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. , Inc. (Nasdaq:ARTD) today announced financial results for its first quarter ended March 31, 2002. Net revenue for the period was $1.3 million, compared with $3.1 million in the first quarter of 2001, reflecting in both periods the Company's former 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 quarter was $2.6 million compared with $8.7 million in the year ago period, and improved from the $5.5 million EBITDA loss in the fourth quarter of 2001. As of March 31, 2002, unrestricted 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 $30.8 million, or $8.91 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 $38.2 million, or $11.05 per share (using common shares outstanding at that date). Ted Field, ARTISTdirect 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. , commented, "The efforts of more than a year to realign re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. our cost structure are evident in our results for the first quarter, with our EBITDA loss of $2.6 million reflecting an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. run rate of $10 million to $11 million. With this work now largely accomplished, we are focused on developing the revenue side of business. "At ARTISTdirect Records, the first quarter brought our first release, `Fast' by the artist Custom, which has been well-received both critically and commercially. At March 31, 2002, the label had ten artists currently slated to produce nine releases this year, and I am very excited by the potential among these talented performers." Financial Results Net revenue for the first quarter of 2002 decreased 57% to $1.3 million, compared with $3.1 million in the first quarter of 2001, reflecting in both periods the Company's former talent agency business as a discontinued operation. Net loss for the quarter was $13.2 million, compared with a net loss of $17.2 million for the first quarter of 2001. 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. loss per share for the quarter was $3.80, compared to $4.56 for the prior year period, in each case based upon weighted average shares outstanding for the period adjusted for the one-for-ten reverse split in July July: see month. 2001. EBITDA loss for the first quarter of 2002 was $2.6 million, compared with $8.7 million in the prior year period and $5.5 million in the fourth quarter of 2001. 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 first quarter of 2002 decreased 48% to $1.25 million from $2.4 million during the same period in 2001. Media revenue for the first quarter was $81,000, a decrease of 89% from the same period in 2001. The Company experienced continued weakness in the overall advertising market and expects this condition to persist. ARTISTdirect Records ARTISTdirect Records ("ADR ADR - Astra Digital Radio ") is a co-venture between the Company and Ted Field. As of March 31, 2002, ADR had 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' Southstar SouthStar (born ca. 1980 in Hawaii as Robert Campman) is an Asian American hip-hop artist who is best known for his music in the hip-hop duo Smilez and Southstar based in Orlando, Florida. Southstar is Chinese/Filipino-American. ). 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 March 31, 2002, the Company had advanced $13.8 million to ADR under its original five-year commitment to fund up to $50 million, including $8.5 million advanced during the first quarter of 2002. The Company recognized a loss associated with its investment in ADR of $8.4 million for the first quarter of 2002 and has recognized losses Recognized Loss The amount of loss reported for income tax purposes. Notes: You can defer recognizing some losses and then deduct the losses for the following year(s). of $17.1 million from the inception of ADR in 2001. About ARTISTdirect, Inc. ARTISTdirect Inc. (Nasdaq:ARTD) is a music entertainment company that combines an online music network, a traditional record label and entertainment marketing services to provide an integrated solution for music fans, artists and marketing partners. The ARTISTdirect Network (www.artistdirect.com) offers multi-media content, music news and information, online fan communities, music-related commerce and digital music services. Through its co-venture, ARTISTdirect Records, the Company operates an independent record label specializing in rock and urban music. The Company also provides entertainment marketing solutions using artists, live events and online media to deliver targeted audiences to brand advertisers. The Company has headquarters 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 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, including the number of, and revenue from, record releases, the availability of sufficient capital to fund the Company's operations and its record label co-venture, 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 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)
March 31, December 31,
2002 2001
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 10,504 $ 25,766
Restricted cash 2,258 2,258
Short-term investments 20,335 18,518
Accounts receivable, net 258 346
Prepaid stock-based compensation 3,107 4,645
Other prepaid expenses and current assets 2,153 1,390
------------- -------------
Total current assets 38,615 52,923
Property and equipment, net 5,275 6,077
Investments in affiliated companies 80 80
Goodwill and intangibles, net 788 788
Other assets, net 5 5
------------- -------------
$ 44,763 $ 59,873
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 206 251
Accrued expenses 2,755 4,018
Loans and notes payable -- 254
Deferred revenue 26 36
------------- -------------
Total current liabilities 2,987 4,559
Investment in record label joint venture 2,622 3,027
Long-term liabilities 907 903
------------- -------------
Total liabilities 6,516 8,489
------------- -------------
Stockholders' equity:
Common stock 379 379
Treasury stock (3,442) (3,442)
Additional paid-in-capital 207,894 207,832
Unearned compensation (685) (745)
Accumulated deficit (165,951) (152,786)
Unrealized gain on available
for sale investments 52 146
------------- -------------
Total stockholders' equity 38,247 51,384
------------- -------------
$ 44,763 $ 59,873
============= =============
ARTISTdirect, Inc. and Subsidiaries
Consolidated Statements of Operations
(amounts in thousands, except for share data)
Three Months Ended
March 31,
----------------------------
2002 2001
------------- -------------
Net revenue:
E-Commerce $ 1,250 $ 2,394
Media 81 734
------------- -------------
Total net revenue 1,331 3,128
Cost of revenue:
Direct cost of product sales 1,020 2,113
Other cost of revenue 851 1,618
Stock-based compensation 950 1,549
------------- -------------
Total cost of revenue 2,821 5,280
Gross loss (1,490) (2,152)
Operating expenses:
Website development 9 1,647
Sales and marketing 641 2,426
General and administrative 1,579 4,142
Stock-based compensation 714 1,683
Depreciation and amortization 787 1,986
Loss from impairment of goodwill -- 4,458
------------- -------------
Loss from operations (5,220) (18,494)
Income (loss) from equity investments (8,398) 55
Interest income, net 295 1,343
------------- -------------
Loss from continuing operations
before taxes (13,323) (17,096)
Income taxes -- --
------------- -------------
Loss from continuing operations $(13,323) $(17,096)
Income from discontinued operations 158 14
------------- -------------
Net loss $(13,165) $(17,082)
Interest on rescission offer -- 164
------------- -------------
Net loss attributable to
common shareholders $(13,165) $(17,246)
============= =============
Basic and diluted loss per share
from cont. operations $ (3.85) $ (4.56)
Basic and diluted income per share
from discont. operations 0.05 0.00
------------- -------------
Basic and diluted loss per share $ (3.80) $ (4.56)
============= =============
Weighted average common shares outstanding 3,460,608 3,779,608(a)
============= =============
EBITDA loss $ (2,611) $(8,665)(b)
============= =============
Adjusted gross loss $ (540) $(464)(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 amortization of
vendor prepaid, included in other cost of revenue. We have
included EBITDA data because management believes that this
measure is useful to an investor to evaluate our operations.
However, you should not consider this data in isolation or as a
substitute for net income, cash flows from operating activities
or other statement of operations or cash flow data prepared in
accordance with generally accepted accounting principles.
(c) Adjusted gross profit/(loss) excludes stock-based compensation
and amortization of vendor prepaid.
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