America Online Announces FY98 Fourth Quarter Operating Results That Significantly Exceed Expectations.DULLES Dul·les , Allen Welsh 1893-1969. American public official. Director of the CIA (1953-1961), he resigned after the failed invasion of the Bay of Pigs. Noun 1. , Va.--(BUSINESS WIRE)--Aug. 4, 1998-- Fully-Taxed Fourth Quarter Income, Before Special Charges, Rises More Than Ten-Fold Adj. 1. ten-fold - containing ten or ten parts denary, tenfold multiple - having or involving or consisting of more than one part or entity or individual; "multiple birth"; "multiple ownership"; "made multiple copies of the speech"; "his multiple to $57.3 Million or $0.23 Per Share, Exceeding Consensus Estimates of $0.19 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. Membership Grows by 665,000 - Best Fourth Quarter in Company History Advertising, Commerce and Other Revenues Climb 38% to $124.8 Million in Quarter Full Year Revenues Increase 54% to $2.6 Billion America Online See AOL. Inc. (NYSE NYSE See: New York Stock Exchange : AOL) Tuesday Tuesday: see week. announced income before special charges that is significantly better than expectations for its fiscal fourth quarter ended June June: see month. 30, 1998. Fourth quarter income, before special charges and on a fully- taxed basis, rose to $57.3 million, which equates to $0.23 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 $5.6 million last year, or $0.03 per share, reported on a comparable basis. Revenues rose to $792.3 million, or 67% over last year's corresponding quarter. For the full year, America Online had revenues of $2.6 billion, up 54% from $1.7 billion a year ago. Income before special charges for fiscal 1998, on a fully-taxed basis, amounted to $134 million, equal to $0.55 per share, versus a net loss in the previous year of $13.4 million, or $0.07 per share, on a comparable basis. The Company said that it is not reporting net income today because previously announced, one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charges are in the process of being finalized See finalization. . The Company expects to report a charge for the settlement of a shareholder suit, as well as write-offs for in-process research and development in connection with its acquisitions of Mirabilis Mi`rab´i`lis prop. n. 1. (Bot.) A genus of plants. See Four-o'clock. Noun 1. Mirabilis - four o'clocks genus Mirabilis LTD LTD 1 Laron-type dwarfism 2 Leukotriene D 3 Long-term depression, see there 4. Long-term disability (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. ) and NetChannel Inc. Prior to finalizing its accounting for the acquisitions, the Company consulted with the Securities and Exchange Commission, and these discussions are continuing. Once the amounts of the charges are finalized, the Company will release full financial results for its fourth quarter and fiscal 1998. The Company said its fourth quarter and fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. 1998 operating results before special charges are final and will not change. Leadership Extended in Interactive Services "AOL's business has never been stronger - with multiple brands and multiple revenue streams, a cost-efficient Adj. 1. cost-efficient - productive relative to the cost cost-effective efficient - being effective without wasting time or effort or expense; "an efficient production manager"; "efficient engines save gas" infrastructure, an unparalleled relationship with our members and a clear vision," said Steve Case Steve Case (born August 21, 1958) is a businessman best known as the co-founder and former chief executive officer and chairman of America Online (AOL). He reached his highest profile when he played an instrumental role in AOL's merger with Time Warner in 2000. , Chairman and Chief Executive Officer of America Online. "In a year when the interactive medium came of age, America Online emerged as the clear choice among consumers and the Internet's first blue-chip company Blue-chip company Used in the context of general equities. Large and creditworthy company. Company renowned for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends. Gilt-edged security. ," Case continued. "In 1998, we delivered strong revenues and operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , while taking the critical steps to position the Company for future profitable growth. With this strong foundation and record of achievements, we have great confidence in the business moving into the coming fiscal year." Operating highlights from this year's fiscal fourth quarter include: -- AOL Membership: The AOL service grew by 665,000 members over the quarter, an 11% increase over fiscal 1997's fourth quarter new member additions - making it the best fourth quarter and fiscal year in the Company's history. Over the full year, membership climbed 3.9 million, compared to 2.4 million in 1997. AOL ended fiscal 1998 with a total of 12.5 million members worldwide. -- Service Revenues: AOL service revenues climbed to $667.5 million, a 73% increase over last year's fourth quarter, reflecting higher membership and higher revenue per member. -- Other Revenues: Advertising, commerce and other revenues rose to $124.8 million, with the advertising and commerce fees climbing to $83.1 million, an 87% increase over 1997's corresponding quarter. -- Advertising and Commerce Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. : AOL increased its backlog of advertising and commerce contract revenues from $180 million at the end of fiscal 1997 to $510.5 million at June 30. -- Operating Margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: : Operating margins, before special charges, improved to 11.3% for the quarter from 1.6% in 1997's fourth quarter. -- Marketing Spending: Marketing expenses were held to just 12% of revenues, compared to 21% during last year's fourth quarter. -- Operating Cash Flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. : The Company generated approximately $55.3 million in operating cash flow during the quarter and today has cash and cash equivalents in excess of $1 billion, up from $124.3 million at June 30, 1997. Bob Pittman Pittman may refer to: People
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , stated, "These results clearly reflect the strength of our core business, which generates profitable growth while allowing us to make investments in new products and services - our growth vehicles for the future. "Our flagship AOL service extended its worldwide lead in the mass market and achieved breakthrough agreements with a wide range of advertising and commerce partners. "Leading consumer brands like Kodak (company) Kodak - The photographic company responsible for Photo CD. http://kodak.com/. and Unilever Unilever Either of two linked companies, Unilever PLC (based in London) and Unilever NV (based in Rotterdam). They are the holding companies for more than 500 firms worldwide that manufacture and sell soaps, foods, and other products. are increasingly recognizing the attractiveness of AOL's customer base and we are forging innovative relationships." Pittman continued, "Our targeted brands - CompuServe An online information service that provides access to the Internet, e-mail, instant messaging and an integrated contact list. Founded in 1969 as a timesharing service, CompuServe is one of the oldest online services, being the first to offer e-mail in 1979 and online chat a year later. , AOL.COM America Online's Internet domain address. When sending e-mail to an AOL subscriber via the Internet, the aol.com is the last part of the address; for example: jjones@aol.com. , ICQ and Digital City - have added an important new dimension to our business model, dramatically increasing our global audience and revenue potential. "AOL's shared, cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. infrastructure, scale and expertise position us uniquely to profitably grow these other brands. We look forward to the launch of a number of exciting new products this Fall and the continuing development of extensions of AOL to emerging platforms." AOL Service Highlights Over the year, AOL undertook a number of initiatives to improve the member experience and enhance the service's value proposition. Last month, C/NET awarded AOL its Editors' Choice recommendation as the No. 1 national Internet service provider Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. for being "the best deal in town." Last week, the final version of AOL's next-generation software, AOL 4.0, became available to members for downloading downloading - download - the first step of the broad-scale consumer launch of AOL 4.0 that will culminate culminate, in astronomy, the maximum height in the sky reached by a celestial body on a given day. At the culminate the body is crossing the observer's celestial meridian and is said to be in upper transit. with the mailing of easy-to-install CD-ROM's to millions of members and potential customers. With its unparalleled array of new products and features that further enhance the service's convenience, ease-of-use and seamless integration An addition of a new application, routine or device that works smoothly with the existing system. It implies that the new feature or program can be installed and used without problems. Contrast with "transparent," which implies that there is no discernible change after installation. with the Web. During its preview period and now in its launch, AOL 4.0 has generated more than 3 million downloads. AOL members averaged 44.2 minutes a day online in the latest quarter, a 16% increase over a year ago, during what is the seasonally slow period for usage. The current quarter's member usage is continuing to grow. In another measure of AOL's "ratings," simultaneous usage of the service during peak periods grew during the quarter to more than 692,000. As part of its commitment to provide the most advanced technology available for the best possible member experience, AOL last month deployed the standard V.90 modem protocol for high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. 56 Kilobits-per-second (Kbps) access throughout AOLnet, the world's largest dial-up Refers to using the regular "dial-up" telephone network to send data from a computer to a remote network or to a remote device. The computer's digital data are converted to analog signals in the same frequency range as human voice by a modem. data network. The Company added 350,000 modems available to AOL members over the past year, for a total of 800,000, and expects its network to surpass one million modems during fiscal 1999. During the quarter, AOL launched the first nationwide field trials of Digital Subscriber Line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and - xDSL - broadband service See broadband and broadband service provider. . The Company said that it intends to offer its members this higher-speed option when it becomes easy-to-use and commercially viable for the mass market. Advertising & Commerce Agreements Highlights Over the quarter, the Company increased to approximately 50 its number of partners with multi-year advertising and commerce agreements valued in excess of $1 million. In the single largest commitment to the interactive medium made by any packaged goods Noun 1. packaged goods - groceries that are packaged for sale foodstuff, grocery - (usually plural) consumer goods sold by a grocer plural, plural form - the form of a word that is used to denote more than one marketer to date, Unilever, the global leader in consumer packaged goods, joined AOL in a three-year global interactive marketing agreement earlier this month. Under the agreement, as many as 100 Unilever brands will benefit from a prominent presence throughout the AOL service. Unilever brand advertising may also appear on CompuServe. And Unilever will have a global advertising presence on several of AOL's international services for specific packaged goods categories. Over the past several weeks, the Company announced two-year pacts with four leading online brokerages for a combined total of $100 million.
Ameritrade will become the premier brokerages in AOL's new Brokerage
and Mutual Fund Centers in the AOL Personal Finance Channel -- the
most frequently visited channel on AOL and cyberspace's most popular
personal finance destination.
AOL also concluded an alliance with photo giant Eastman Kodak
Company to offer members an exclusive new online service -- "You've
Got Pictures!"(SM) -- that will revolutionize how people share and
store their favorite pictures and add a compelling new dimension to
both online communications and photography. The service is scheduled
for launch this Fall.
In addition, AOL entered into key marketing alliances with a
series of major personal computer manufacturers. The new multi-year
agreements make AOL the featured Internet service on a range of
computers made by the Compaq Computer Corp., Packard Bell NEC Inc.,
and IBM.
Consumers will be able to access the pre-installed AOL software
by simply clicking on the prominently displayed AOL icon during the
computer's initial setup process.
The Company said these pacts underscore the power of the AOL
brand and the increasing importance that consumers put on the
Internet experience in buying personal computers.
AOL International Highlights
AOL International enjoyed strong growth during the quarter,
surpassing 2.5 million combined AOL and CompuServe members. In
France, America Online, Bertelsmann, Canal+ and Cegetel signed
agreements to establish a new strategic alliance to serve a combined
285,000 French members.
AOL International built its advertising and commerce revenues
with the international component of the Unilever agreement, the
first-ever global interactive marketing pact.
In addition, AOL Europe, the joint venture between America Online
and Bertelsmann, reached an agreement with N2K Inc., the leading
online music entertainment company, to make N2K's Music Boulevard the
exclusive music partner for AOL's European services.
And AOL and Excite Inc. announced an agreement to launch
localized versions of the AOL NetFind product, powered by Excite's
search and navigation technology, on the AOL Japan and AOL Canada
services.
Highlights from CompuServe, AOL.COM, Digital City, and ICQ
In June, CompuServe launched its new client, CompuServe 4.0, and
CompuServe Instant Messenger in the United States. Together these
new products deliver a faster, more convenient and more productive
Internet experience for today's busy adults.
Early next year, CompuServe plans to introduce its 5.0 software,
based on AOL's state-of-the-art technology platform while preserving
the distinctive CompuServe look and feel.
As part of its agreement with AOL, Packard Bell NEC also will be
promoting CompuServe within the initial setup process on its personal
computers.
AOL continues to expand its portal strategy, through the
continued development of AOL.COM as well as the expansion and
repositioning of ICQ. Last month, the Company introduced the preview
version of the redesigned AOL.COM, the No. 1 Web site among home
users.
With a fresh look and new Web content and product offerings, it
is becoming a premier destination site for both AOL members and the
Internet audience at large. AOL.COM will continue to evolve over the
coming months before the launch of the final version sometime later
this year.
Since its acquisition, ICQ -- the fastest-growing instant
communications service on the Internet -- has continued its
phenomenal growth, totaling 13.9 million registered users including
6.8 million active users recording 263 million hours of usage per
month by the end of the quarter.
Last month, ICQ was named the overall winner of PC Magazine's
Shareware Awards, as well as of the e-mail, news readers, and chat
awards.
While operating ICQ as a separate brand, the Company said it will
continue to develop the ICQ instant communications and chat
technology to improve the service and establish its
revenue-generating capabilities as a major Web portal built around an
active and rapidly growing community.
During the quarter, AOL Studios' Digital City, the No. 1 branded
local content and community guide on the Internet and the AOL
service, expanded into 12 new cities -- bringing to 50 the number of
markets it now serves.
Digital City was also launched on CompuServe and on AOL.COM. In
addition, AOL launched its next-generation Digital City Los Angeles,
an interactive online city guide with enhanced features and
functionality and availability on the World Wide Web.
Digital City and Netscape Communications Corp. announced a
two-year strategic agreement yesterday to make Digital City the
exclusive local content provider to the co- branded Local Channel of
Netscape's Netcenter 2.0.
America Online Inc., based in Dulles, is the world's leader in
branded interactive services and content. America Online Inc.
operates two worldwide Internet online services: America Online, with
more than 12.5 million members; and CompuServe, with approximately
2 million members.
America Online Inc. also operates AOL Studios, the world's
leading creator of original interactive content.
Other branded Internet services operated by America Online Inc.
include AOL.COM, the world's most accessed Web site from home;
Digital City Inc., the No. 1 branded local content network and
community guide on AOL and the Internet; AOL NetFind, AOL's
comprehensive guide to the Internet; AOL Instant Messenger, an
instant messaging tool available on both AOL and the Internet; and
ICQ, an instant communications and chat technology on the Internet.
This release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995.
Such 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: accounting charges and treatment in connection
with the Mirabilis LTD and NetChannel Inc. acquisitions, the
Company's expectations regarding fiscal 1998 financial results and
future financial results, timing for launch of new products, services
and platforms, and the growth of the Company's network.
The following factors, among others, could cause actual results
to differ materially from those described in the forward-looking
statements: final accounting treatment for recent acquisitions;
increased competition and its effects on pricing, third-party
relationships, the subscriber base and revenues; inability to provide
adequate network capacity; reliance on three network service
providers; slowing or reversing subscriber and/or revenue growth,
requiring the Company to increase marketing spending and causing
decreased margins; inability to establish and maintain relationships
with electronic commerce, advertising, marketing, technology and
content providers; inability to identify, develop and achieve
commercial success for new access and distribution technologies;
risks of regulation in the U.S. and internationally in certain
relevant areas.
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 section of the
Company's Form 10-K for the fiscal year ended June 30, 1997 and in
the subsequently filed Forms 10-Q, and in the Risk Factors section of
the Company's most recently filed registration statement on Form S-3
filed in June 1998.
CONTACT: America Online Inc.
Press Contact:
Tricia Primrose or Michael Gross, 703/265-1746
or
Investor Contact:
Richard Hanlon, 703/265-1271
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