Alloy Announces Third Quarter Results; Total Revenues Up 18% and Net Income Up 368% Versus Prior Year Third Quarter; Strong Operating and Financial Momentum at both dELiA*s and Alloy Media + Marketing.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Spin-Off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of dELiA The delia ['dεlja] was an item of male apparel worn over the żupan by szlachta (nobility) of the Polish-Lithuanian Commonwealth. It was usually of wool or velvet, finished with fur. *s On Schedule to Occur Before Fiscal Year End Alloy alloy (ăl`oi, əloi`) [O. Fr.,=combine], substance with metallic properties that consists of a metal fused with one or more metals or nonmetals. , Inc. (Nasdaq: ALOY), a media, marketing services, direct marketing and retail company primarily targeting the dynamic Generation Y population, today reported revenues for the fiscal quarter ended October October: see month. 31, 2005 of $122.9 million and net earnings attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common stockholders of $7.3 million or $0.15 per 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. share. The net earnings attributable to common stockholders increased 368% versus the $1.6 million in net earnings attributable to common stockholders for the fiscal quarter ended October 31, 2004 and include the impact of the one time spin-off related expenses of $1.5 million, or $0.03 per diluted share. In the third fiscal quarter of 2005, Alloy achieved $12.4 million of earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before interest and other income/expense, income taxes, depreciation and amortization, stock-based compensation expense, spin off costs, restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , and asset write-downs due to impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. ("Adjusted 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 "). Adjusted EBITDA in the third fiscal quarter of 2005 increased 93.7% compared to the third fiscal quarter of 2004. For additional financial detail, including the reconciliation of Adjusted EBITDA to net income (loss) as determined under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , please refer to the financial tables provided at the end of this release. Total revenues for the third fiscal quarter increased 17.7% to $122.9 million, compared with $104.4 million for the third quarter of fiscal 2004. Third fiscal quarter net merchandise revenues of $59.9 million increased 23.6% compared with $48.5 million for last year's third fiscal quarter. The increase resulted from strength in both the direct marketing and retail segments, as revenues were up 27% and 18%, respectively, in those segments. Third fiscal quarter sponsorship and other revenues increased from $55.9 million for last year's third fiscal quarter to $63.0 million for the third quarter of fiscal 2005, a 12.7% increase. Third fiscal quarter gross profit increased to $62.6 million, or 50.9% of revenues, from $50.2 million, or 48.1% of revenues, for the comparable period last year, driven primarily by significant gross margin improvement in both our media and promotional marketing businesses as well as improvements in the both segments of our merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. business. 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. were $54.2 million for the third quarter of fiscal 2005 versus $47.8 million for the third quarter of fiscal 2004. Contributing to the increase were expenses of $1.5 million associated with the anticipated separation of our merchandising business from our media and marketing services business (i.e., the spin-off transaction) in the fourth quarter of this fiscal year. Despite these one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. transaction-driven expenses, operating expenses decreased as a percentage of total revenues to 44.1% for the third quarter of fiscal 2005 from 45.8% for the third quarter of fiscal 2004. The percentage decrease resulted primarily from the cost savings derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from integrating the operations of dELiA*s, which we acquired in September September: see month. 2003, into our merchandise operations, and to a lesser extent reduced overhead costs overhead costs see fixed costs. including technology, finance, legal and other fixed overhead expenses. Net earnings attributable to common stockholders for the third quarter of fiscal 2005 were $7.3 million, or $0.15 per diluted share, compared with net earnings attributable to common stockholders of $1.6 million, or $0.04 per diluted share, for last year's fiscal third quarter. Our weighted average common shares outstanding now include the impact of the conversion of the Series B Redeemable Redeemable Eligible for redemption under the terms of an indenture. Convertible Preferred Stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". into approximately 3.3 million shares of Alloy, Inc. common stock on June June: see month. 15, 2005. Adjusted EBITDA improved from $6.4 million for the third quarter of fiscal 2004 to $12.4 million for the third quarter of fiscal 2005. Commenting on the third quarter, Matt Diamond, Chairman and Chief Executive Officer stated, "We are pleased to report that both the dELiA*s and Alloy Media + Marketing businesses demonstrated improved sales productivity, margin expansion and increased cost efficiencies which resulted in meaningful profitability expansion. In addition, we began our previously announced dELiA*s retail store roll-out plan as 10 new stores were open during the third quarter. We expect these positive operational and financial trends largely to continue in our fourth quarter. In addition, we remain well on track to complete the dELiA*s, Inc. spin-off by the end of this fiscal year." Total revenues for the nine months ended October 31, 2005 increased 11.0% to $299.8 million compared with $270.1 million for the nine months ended October 31, 2004. Net merchandise revenues for the nine months ended October 31, 2005 of $147.4 million were up 15.3% versus $127.8 million for the nine months ended October 31, 2004. Sponsorship and other revenues of $152.5 million for the nine-month period ended October 31, 2005 increased 7.1% compared with $142.3 million for the same period last year. Gross profit for the nine months ended October 31, 2005 increased to $153.6 million, or 51.2% of revenues, compared with $129.2 million, or 47.8% of revenues, for the first nine months of fiscal 2004. Operating expenses were $151.0 million for the nine months ended October 31, 2005 versus $144.6 million for the nine months ended October 31, 2004. The loss from continuing operations, including 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. dividends and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the , for the nine months ended October 31, 2005 was $1.2 million, or $0.03 per diluted share compared with a loss of $20.5 million for the nine months ended October 31, 2004 or $0.48 per diluted share. The net loss for the nine months ended October 31, 2005 was $11.7 million, compared with a net loss of $18.4 million for the nine months ended October 31, 2004. Net loss attributable to common stockholders for the nine months ended October 31, 2005 was $12.3 million, or $0.27 per diluted share, compared with net loss attributable to common stockholders of $19.6 million, or $0.46 per diluted share for the nine months ended October 31, 2004. Our fiscal 2005 results reflect our sale of the operations of Dan's Competition ("Dan's") in June 2005. Accordingly, our results reflect Dan's 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. and include a loss on disposition of the related net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. of approximately $11.4 million. We received approximately $13 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the sale. Our fiscal 2004 results have been restated to reflect Dan's as a discontinued operation. About Alloy Alloy, Inc. is a media, marketing services, direct marketing and retail company primarily targeting Generation Y, a key demographic segment comprising the more than 60 million boys and girls boys and girls mercurialisannua. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. between the ages of 10 and 24. Alloy's convergent media model uses a wide range of media assets to reach more than 31 million Generation Y consumers each month and is comprised of two distinct businesses: Alloy Media + Marketing and dELiA*s, Inc. Alloy Media + Marketing is one of the largest providers of targeted media and promotional marketing programs incorporating such industry- recognized divisions as Alloy Marketing & Promotions (AMP), 360 Youth, American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Multicultural mul·ti·cul·tur·al adj. 1. Of, relating to, or including several cultures. 2. Of or relating to a social or educational theory that encourages interest in many cultures within a society rather than in only a mainstream culture. Marketing (AMM AMM Autorisation de Mise sur le Marche (French) AMM Autorisation de Mise sur le Marché (French: Commission of Marketing Authorization) AMM ASEAN Ministerial Meeting AMM American Metal Market ), Market Place Media (MPM MPM Multi-Processing Module (Apache) MPM Manufacturing Process Management MPM Milwaukee Public Museum MPM MMW (Millimeter Wave) Power Module MPM Master of Project Management (degree) ), Alloy Education, Alloy Entertainment, and Alloy Out-of-Home. Working with these groups, marketers can connect with their targeted audience through a host of advertising and marketing programs incorporating Alloy's wide ranging media and marketing assets such as direct mail catalogs, college and high school newspapers, Web sites, display media boards, college guides, and promotional events. dELiA*s, Inc., our direct marketing and retail store subsidiary, includes the dELiA*s, Alloy, and CCS (1) (Common Channel Signaling) A communications system in which one channel is used for signaling and different channels are used for voice/data transmission. Signaling System 7 (SS7) is a CCS system, also known as CCS7. See SS7. brand names and sells apparel, accessories, footwear Footwear consists of garments worn on the feet. It is worn for a variety of reasons, including protection against the environment, hygiene and adornment. Usually, socks and other hosiery are worn between the feet and the footwear, except for sandals and flip flops (thongs). , room furnishings furnishings the extra type or quantity of hair on the head, tail, ears or legs, specified for a particular breed. For example, the feathers in setters, the beard in Bearded collies, the eyebrows in Schnauzers. and action sports equipment directly to the youth market through catalogs, websites and retail stores. For further information regarding Alloy, please visit our corporate website at (www.alloyinc.com). This announcement may contain 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 Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our expectations and beliefs regarding our future results or performance. Because these statements apply to future events, they are subject to risks and uncertainties. When used in this announcement, the words "anticipate", "believe", "estimate", "expect", "expectation", "project" and "intend" and similar expressions are intended to identify such forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements. Additionally, you should not consider past results to be an indication of our future performance. Factors that might cause or contribute to such differences include, among others, our ability to: increase revenues; generate high margin sponsorship and multiple revenue streams; increase visitors to our Web sites (www.alloy.com, www.delias Delias is a genus of butterflies. External Links
v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. these efforts; develop commercial relationships with advertisers and the continued resilience resilience (r  ·zilˑ·yens),n in advertising spending to reach the teen market; manage the risks and challenges associated with integrating newly acquired businesses; and identify and take advantage of strategic, synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. acquisitions and other revenue opportunities. Other relevant factors include, without limitation: our competition; seasonal sales fluctuations; the uncertain economic and political climate in the United States and throughout the rest of the world, and the potential that such climate may deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. further; and general economic conditions. For a discussion of certain of the foregoing factors and other risk factors see the "Risk Factors That May Affect Future Results" section included 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 year ended January January: see month. 31, 2005, which is on file with the Securities and Exchange Commission. We do not intend to update any of the forward-looking statements after the date of this announcement to conform these statements to actual results, to changes in management's expectations or otherwise, except as may be required by law.
Alloy, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Three
Months Months Nine Months Nine Months
Ended Ended Ended Ended
10/31/2004 10/31/2005 10/31/2004 10/31/2005
Net merchandise
revenues $48,474 $59,906 $127,776 $147,367
Sponsorship and other
revenues 55,933 63,030 142,342 152,468
----------------------- -----------------------
Total revenues 104,407 122,936 270,118 299,835
Cost of goods sold 54,194 60,354 140,916 146,211
----------------------- -----------------------
Gross profit 50,213 62,582 129,202 153,624
Selling and marketing
expenses 36,435 42,439 107,130 116,787
General and
administrative
expenses 9,472 9,544 31,906 28,475
Amortization of
acquired intangible
assets 1,463 430 4,126 2,272
Stock-based
compensation 371 83 1,074 222
Impairment of long-
lived assets 0 0 0 924
Spin off costs 0 1,538 0 2,153
Restructuring charges 29 144 347 144
----------------------- -----------------------
Total operating
expenses 47,770 54,178 144,583 150,977
Income (Loss) from
continuing operations
before interest and
other income
(expense) and income
taxes 2,443 8,404 (15,381) 2,647
Interest and other
income (expense), net (1,238) (962) (3,753) (3,068)
----------------------- -----------------------
Income (Loss) from
continuing operations
before income taxes 1,205 7,442 (19,134) (421)
Income tax expense 10 137 130 203
----------------------- -----------------------
Income (Loss) from
continuing operations 1,195 7,305 (19,264) (624)
Discontinued
operations
Income (loss) from
operations of
discontinued Dan's
Competition
(including loss on
disposal of 11,405),
net of tax 770 0 831 (11,029)
----------------------- -----------------------
Net income (loss) 1,965 7,305 (18,433) (11,653)
Preferred stock
dividend and
accretion 405 0 1,200 620
----------------------- -----------------------
Net income (loss)
attributable to
common stockholders $1,560 $7,305 ($19,633) ($12,273)
======================= =======================
Basic income (loss)
per common share:
Income (loss) from
continuing
operations including
preferred stock
dividends and
accretion $0.02 $0.16 ($0.48) ($0.03)
Income (loss) from
discontinued
operations $0.02 $0.00 $0.02 ($0.24)
----------------------- -----------------------
Total basic income
(loss) attributable
to common
stockholders $0.04 $0.16 ($0.46) ($0.27)
======================= =======================
Diluted income (loss)
per common share:
Income (loss) from
continuing
operations including
preferred stock
dividends and
accretion $0.02 $0.15 ($0.48) ($0.03)
Income (loss) from
discontinued
operations $0.02 $0.00 $0.02 ($0.24)
----------------------- -----------------------
Total diluted income
(loss) attributable
to common
stockholders $0.04 $0.15 ($0.46) ($0.27)
======================= =======================
Weighted average basic
common shares
outstanding: 42,951,223 46,357,107 42,672,454 44,659,263
======================= =======================
Weighted average
diluted common shares
outstanding: 43,044,459 55,142,653 42,672,454 44,659,263
======================= =======================
Reconciliation of EBTA
and Adjusted EBITDA
to GAAP Results (1):
----------------------
Net income( loss) from
continuing operations $1,195 $7,305 ($19,264) ($624)
Income tax expense 10 137 130 203
Amortization of
acquired intangible
assets 1,463 430 4,126 2,272
Stock-based
compensation 371 83 1,074 222
Impairment of long-
lived assets 0 0 0 924
Spin off costs 0 1,538 0 2,153
Restructuring charges 29 144 347 144
---------------------------------------------- -----------------------
EBTA excluding stock-
based compensation,
restructuring, asset
write-downs and spin
off costs $3,068 $9,637 ($13,587) $5,294
Interest and other
income (expense), net (1,238) (962) (3,753) (3,068)
Depreciation and
amortization 2,075 1,761 6,406 5,504
---------------------------------------------- -----------------------
Adjusted EBITDA $6,381 $12,360 ($3,428) $13,866
======================= =======================
(1) This press release contains the non-GAAP financial measures
EBTA and Adjusted EBITDA. Alloy uses EBTA and Adjusted EBITDA to
evaluate its performance period to period without taking into account
certain expenses which, in the opinion of Alloy management, do not
reflect Alloy's results from its core business activities. These
non-GAAP financial measures should be considered in addition to, and
not as a substitute for, or superior to, other measures of financial
performance prepared in accordance with GAAP. These non-GAAP measures
included in this press release have been reconciled to the nearest
GAAP measure as is required under SEC rules regarding the use of
non-GAAP financial measures. As used herein, "GAAP" refers to
accounting principles generally accepted in the United States of
America.
Alloy, Inc.
SELECTED CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
January 31, October 31,
2005 2005
----------- -----------
Assets
Current Assets
Cash and cash equivalents $25,137 $36,695
Marketable securities 6,341 1,000
Accounts receivable, net 39,657 53,613
Inventories 26,623 37,591
Prepaid catalog costs 2,588 5,993
Other current assets 6,651 6,021
Current assets of discontinued operations 2,763 0
----------- -----------
Total current assets 109,760 140,913
Property and equipment, net 24,505 28,476
Goodwill, net 185,763 185,763
Intangible and other assets, net 17,159 14,837
Noncurrent assets of discontinued operations 21,946 0
----------- -----------
Total assets $359,133 $369,989
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $29,287 $33,792
Deferred revenues 18,144 19,122
Mortgage Note payable 160 112
Bank Loan Payable 0 7,254
Accrued expenses and other current liabilities 26,433 36,038
Current liabilities of discontinued operations 822 43
----------- -----------
Total current liabilities 74,846 96,361
Long term liabilities 6,209 6,467
Convertible debt 69,300 69,300
Series B Preferred Stock 16,042 0
Stockholders' Equity 192,736 197,861
----------- -----------
Total liabilities and stockholders' equity $359,133 $369,989
=========== ===========
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