America Online, Inc. FY2000 First Quarter Fully Taxed Income More Than Triples to $184 Million, or $0.15 Per Share.DULLES, Va.--(BUSINESS WIRE)--Oct. 20, 1999-- First Quarter Revenues Climb 47% to $1.5 Billion Subscription Revenues Reach Nearly $1 Billion and Advertising, Commerce, and Other Revenues Double to $350 Million 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. Service Sets First Quarter Record with Nearly 1.1 Million Net New Members America Online See AOL. , Inc. (NYSE NYSE See: New York Stock Exchange : AOL) today announced results for the first quarter of fiscal 2000 ended September 30, 1999 -- setting new records for consolidated revenues, advertising and commerce revenues, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , and membership growth in the first quarter. The Company's fully taxed net income totaled $184 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, up from $50 million, or $0.04 per diluted share, on the same basis in fiscal 1999's first quarter. Operating income for the quarter climbed 244% over the year ago quarter to $265 million. First quarter revenues rose to $1.5 billion, or 47% over last year's first quarter, and advertising, commerce, and other revenues reached $350 million, doubling over the fiscal 1999's September quarter. The AOL service set a record for first quarter membership growth, adding nearly 1.1 million net new members worldwide. In addition, the Company's new CompuServe 2000 emer0 members to close the quarter at a total of 57e Web-based brands posted strong gains in regison of net income in last year's first quarter. line's leadership and growing earnings power. Our core AOL service is becoming more and more central to our members' lives, and we are achieving added growth through our expanding roster of interactive brands, which now reach eight out of ten US Internet users Internet user n → internauta m/f Internet user Internet n → internaute m/f . "Approaching the Internet century, we see new opportunities for AOL to extend its leadership in the emerging world of multiple devices and high-speed access networks." Bob Pittman, President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , said: "Our growth is accelerating across the board. While continuing to improve and extend the AOL brand, we are making full use of our strategic advantages to accelerate the growth and profit contribution of our other brands including CompuServe, Netscape, and ICQ ("I Seek You") A conferencing program for the Internet from Mirabilis, Tel Aviv, Israel (www.icq.com). It provides interactive chat, e-mail and file transfer and can alert you when someone on your predefined list has also come online. . "We are confident that new services, products and initiatives across our brands will continue to build our success in all meaningful markets for interactive services." Key operating metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. from the quarter included: -- Subscription Revenues: Quarterly subscription revenues reached $995 million, up from $723 million during fiscal 1999's corresponding quarter. -- AOL Member Usage: AOL members are averaging 55 minutes daily online, an increase of 8 minutes over last year's first quarter. -- Advertising, Commerce and Other Revenues: Revenues from advertising, commerce and other revenues climbed to $350 million, doubling from $175 million during the year ago quarter. -- Backlog: The Company brought its consolidated backlog of advertising and commerce revenue to over $2.0 billion at the end of the quarter, adding a net of more than $500 million since June 30, 1999. -- Sales and Marketing Expenses: Consolidated sales and marketing expenses declined to 14.2% of revenues, compared with 17.4% in fiscal 1999's first quarter. -- Operating Income: Operating income jumped 244% to $265 million or 18.1% of revenue, up from 7.7% a year ago. -- 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 : EBITDA rose to a record $386 million for the quarter, a 152% increase over a year ago, and EBITDA margins increased to 26.3%. -- Cash Flow from Operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses : Cash flow from operations increased to $472 million, a nearly fourfold fourfold Adjective 1. having four times as many or as much 2. composed of four parts Adverb by four times as many or as much Adj. 1. increase over fiscal 1999's corresponding quarter. Interactive Services Group Highlights Earlier this month, the Company launched worldwide its next generation software, AOL 5.0, a complete package of features and services to make the AOL service even more central and valuable to people's everyday lives. Just two weeks after its official launch, AOL 5.0 has been downloaded by 3.6 million members, and of these, nearly 1.9 million have taken advantage of its new My Calendar feature to create their personal online calendars. In support of the launch of 5.0, AOL is distributing millions of free CD-ROMs through the mail and, for the first time, in up to 5,000 retail outlets retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → nationwide. Plus, AOL's new You've Got Pictures feature is being supported by more than 38,000 Kodak nline was named the most sought-after media comanies. Extending its AOL Anywhere strategymmunications next year between users of Motorola's wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. devices and AOL Instant Messenger See AIM. content and commerce channels have already becomhcare. -- Travel: Significantly enhancin AOL service, AOL.COM, CompuServe, Digital City,ude: The Company's value brand, CompuSerason, and upgrading the service to the cost-effnental Airlines. The worldwide communitye use of Netscape's Internet Keywords tripled oare. And the Netscape Open Directory Project, ws Group Highlights ICQ, which has emerged as one of the leading international Internet services, addeUS. ICQ also experienced increased average dailyuarter, including e-mail, search, and enhanced . Strengthening its lead as the No. 1 local online network, Digital City this week announced plans to expand its reach from 60 cities to more than 200 cities nationwide by Spring of 2000. AOL MovieFone continued its growth as the nation's largest movie listing guide and ticketing service with listing information for over 20,000 US screens. This quarter's user sessions A count of how many times all users access a Web site regardless whether the same person came back several times during the measurement period. If a user leaves and returns within a short time, some systems count those sessions as one. Contrast with unique visitors. See also user session. climbed 20% over the June quarter, and the tickets sold increased more than 50% over the year ago quarter. In addition, the Company partnered with Radiant radiant: see meteor shower. Systems to deploy the MovieFone service on Radiant theater point-of-sale devices, dramatically expanding the number of movie theaters that MovieFone can ticket. The Company successfully integrated its recently acquired online music companies, Spinner and Winamp, and each has continued to maintain its product leadership with rich new client releases in this quarter. Together, Spinner and Winamp have the #1 market share in online music. These music brands have substantially deepened the Company's music capabilities, as evidenced by the launch of Netscape Radio in the new Netscape Communicator An earlier suite of Web browsing and groupware tools from Netscape that were packaged as a bundle starting with Navigator 4.0. Communicator refers to any Netscape Navigator product with a version number less than 6.0. (R) 4.7. AOL International Highlights In addition to the continued international expansion of ICQ, AOL International continued to move forward during the quarter to strengthen and expand the Company's international services. Last month, the Company launched AOL Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. -- the newest member of the AOL global community -- in partnership with China.com (1) (Computer Output Microfilm) Creating microfilm or microfiche from the computer. A COM machine receives print-image output from the computer either online or via tape or disk and creates a film image of each page. Corporation, the leading pan-Asian integrated Internet service company, and its affiliate China Internet Corporation (CIC CIC circulating immune complexes. CIC Circulating immune complexes. See Immune complexes. ). AOL Europe, the Company's joint venture with Bertelsmann, showed significant growth during the quarter, with AOL Germany surpassing one million members last week, the first AOL service outside of the US to achieve that milestone. Launched in 1995, AOL Germany took half the time to reach the one-million-member mark that the AOL service did in the US To continue its growth momentum, AOL Germany also introduced a new pricing plan, offering members a flat monthly rate for unlimited access to AOL and the Internet, lower telephone connection fees, and simplified online billing. A new advertising campaign featuring tennis champion Boris Becker Boris Franz Becker (born November 22 1967) is a former World No. 1 professional tennis player from Germany. He is a six-time Grand Slam singles champion, an Olympic gold medalist, and the youngest-ever winner of the men's singles title at Wimbledon at the age of 17. is promoting the new plan. In the UK during the quarter, AOL Europe launched Netscape Online, a subscription-free service aimed at the value-conscious segment of the consumer market. And, last month, AOL Europe introduced the 'AOL Off-Peak All The Time' pricing plan in the UK that frees members to go online day or night for the same low Internet telephone access cost of just one pence per minute. The Royal Bank of Canada Bank of Canada Canada's central bank, established under the Bank of Canada Act (1934). It was founded during the Great Depression to regulate credit and currency. The Bank acts as the Canadian government's fiscal agent and has the sole right to issue paper money. acquired a 20 percent equity stake in AOL Canada and, with its US subsidiaries Security First Network Bankh speed broadband access See broadband and wireless broadband. over cable this Fall. Around the world, localized versions of AOL 5.0 will be rolling out in Australia, Canada, France, Germany, Japan, and the UK throughout the Fall. These versions will also be accessible by AOL members in Austria, Switzerland and Sweden. Netscape Enterprise Group Highlights During the quarter, the Sun-Netscape Alliance (Sun-Netscape Alliance, Santa Clara, CA) A joint venture of Sun and Netscape to market Netscape's Web-based software products. The Alliance was formed when AOL acquired Netscape in 1999 to take advantage of the fact that the bulk of Netscape software was already running on Sun hardware. , the Netscape Enterprise Group's strategic alliance with Sun Microsystems Sun Microsystems, Inc. (NASDAQ: JAVA[3]) is an American vendor of computers, computer components, computer software, and information-technology services, founded on 24 February 1982. for iPlanet Internet infrastructure and e-commerce solutions, announced new agreements with Chase Manhattan, Cutler Hammer, Adelphia Cable, Argentaria, ExpenseVision, Telecom New Zealand Telecom New Zealand (NZX: TEL ASX: TEL NYSE: NZT) is a Wellington, New Zealand-based telephone company and, through its subdivision Xtra, an internet service provider. It has been run as a publicly-traded private company since 1990. and National Discount. The Alliance also launched a number of new products to help businesses thrive in the fast-growing Net Economy, including Netscape Application Server A Web-based application server from the Sun-Netscape Alliance that supports C, C++ and Java applications, Java servlets, JavaServer Pages (JSPs) and Enterprise JavaBeans. In 2000, it was superseded by iPlanet Application Server, which became Sun ONE Application Server in 2002 when Sun 4.0, iPlanet Web Server See Sun Java System Web Server. 4.0, ECXpert 3.0 and BuyerXpert 3.0. The Alliance now sells to and supports a customer base of more than 7,000 companies that deploy iPlanet software to run their Internet businesses. The Alliance powers 40 percent of the 50 most trafficked Internet sites, and its customers represent more than half of the Fortune 100 companies' software solutions. About America Online, Inc. Founded in 1985, America Online, Inc., based in Dulles, Virginia Dulles, Virginia is an unincorporated census-designated place located in Loudoun County, Virginia, part of the Washington Metropolitan Area. The headquarters of AOL, Orbital Sciences Corporation and ODIN technologies and the former headquarters of MCI Inc. are located in Dulles. , is the world's leader in interactive services, Web brands, Internet technologies, and e-commerce services. America Online, Inc. operates: two worldwide Internet services, America Online, with more than 18 million members, and CompuServe, with more than 2.2 million members; several leading Internet brands including ICQ, AOL Instant Messenger and Digital City, Inc.; the Netscape Netcenter and AOL.COM portals; the Netscape Navigator An earlier Web browser for Windows, Macintosh and X Windows from Netscape that provided secure transmission over the Internet. Soon after its introduction in 1994, Navigator, or just "Netscape," as it was commonly called, quickly became the leading browser on the Web. and Communicator browsers; AOL MovieFone, the nation's No. 1 movie listing guide and ticketing service; and Spinner Networks and NullSoft, Inc., leaders in Internet music. Through its strategic alliance with Sun Microsystems, the Company develops and offers easy-to-deploy, end-to-end e-commerce and enterprise solutions for companies operating in the Net Economy. The Company's earnings conference call can be heard live on the Internet via AOL.COM at 5:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Wednesday, October 20. To listen to the call, visit http://www.corp.aol.com/investors.html or AOL Keyword: AOL Earnings. 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. These statements are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The forward-looking statements in this release address the following subjects: future financial and operating results; subscriber, usage and commerce growth; new markets, products, services, features and content; timing and benefits of acquisitions and other alliances; and availability, benefits, and timing of deployment, of new access and distribution technologies. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: inability to further identify, develop and achieve commercial success for new products and services and access and distribution technologies; increased competition and its effects on pricing, spending, third-party relationships, the subscriber base and revenues; inability to establish and maintain relationships with commerce, advertising, marketing, technology and content providers; risk of accepting warrants in certain agreements; risks of new and changing regulation in the US and internationally. For a detailed discussion of these and other cautionary statements, please refer to the Company's filings with the Securities and Exchange Commission, especially in the "Forward-Looking Statements" section of the Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial section of the Company's 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 fiscal year ended June 30, 1999 and in the Risk Factors section of the Company's registration statement on Form S-3 filed in June 1998.
America Online, Inc.
Consolidated Summary of Results
(Amounts in millions, except per share data)
(Unaudited)
Three months ended
September 30,
----------------------------
1999 1998
---- ----
Revenues:
Subscription services $ 995 $ales and marketing
209 174
Product development 67 82
Provision for income taxes (118) (6)
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Net income 30/99 ended 9/30/98
------------- -------------
Earnings 1) Weighted average shares
outstanding based on
fully taxed diluted share
calculation including
common stock equivalents 1,230 1,137
Other Selected Data
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EBITDA $ 386 $ 153
Net cash provided by operations $ 472 $ 120
Free cash flow $ 320 $ 47
America Online, Inc.
Consolidated Balance Sheets
(Amounts in millions)
September 30, June 30,
1999 1999
------------ --------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $1,330 $ 887
Short-term investments 429 537
Trade accounts receivable, net 346 323
Other receivables 122 79
Prepaid expenses and other
current assets 181 153
------ ------
Total current assets 2,408 1,979
Property and equipment at cost, net 744 657
Other assets:
Investments including
available-for-sale securities 2,760 2,151
Product development costs, net 110 100
Goodwill and other intangible
assets, net 422 454
Other assets and deferred income
taxes 58 7
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Total assets $6,502 $5,348
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 88 $ 74
Other accrued expenses
and liabilities 941 795
Deferred revenue 711 646
Accrued personnel costs 195 134
Deferred network services credit 76 76
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Total current liabilities 2,011 1,725
Long-term liabilities:
Notes payable 341 348
Deferred ilities 12 2,315
Stockholders' equity
C ------ nded September 30,
-
Amortization of deferred networ 3
Deferred income taxes (43)
Other receivables (43) (44)
Prepaid expenses and othe liabilities 147
Product development costs (18) 2)
Proceeds from S/T investments, net 108 89
Other investing activities ivities (123)
st
payments on line of credit and debt (3)43 657
Cash and cash equiva $1,330 $1,334
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