America Online Reports FY98 First Quarter Net Income of $19.2 Million, or $0.16 Per Share.DULLES, Va.--(BUSINESS WIRE)--Nov. 6, 1997-- Revenues Up 49% to Record $521.6 Million Membership Grows 821,000 in Quarter to 9.4 Million, Ahead of Schedule to Reach 10 Million Milestone America Online See AOL. , Inc. (NYSE NYSE See: New York Stock Exchange :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. ) Thursday reported net income of $19.2 million, or $0.16 per share, for its fiscal 1998 first quarter ended September 30, 1997. Revenues for the quarter increased 49% to a record $521.6 million. These results compare to a net loss of $353.7 million or $3.80 per share on revenues of $350.0 million in last year's corresponding quarter when the Company took a charge of $385.2 million in connection with a change in accounting estimate. First quarter earnings benefited from strong membership growth, improved member retention, significant efficiencies in marketing spending, and a decrease in the costs of service. The results also include $0.04 per share related to the sale of Excite, Inc. securities and to the Company's continuing business relationship with Excite. AOL added 821,000 members worldwide during the quarter to reach more than 9.4 million on September 30, compared to a 414,000 membership increase during the fiscal 1997 first quarter. The Company's marketing expenses during the fiscal 1998 September quarter were reduced to $97.8 million, or 19% of revenues, from last year's $150.2 million on an equivalent basis, or 43% of revenues. The Company reported it also improved its 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. investment position since June 30, 1997 by $54.3 million to a total of $228.9 million at September 30. Service Revenues totaled $434.2 million, a 40% increase over the fiscal 1997 first quarter total of $311.1 million. Other Revenues amounted to $87.5 million, compared to $38.9 million in last year's corresponding quarter. Of this total, advertising and electronic commerce revenues amounted to $68.2 million, compared to $27.9 million for the same period last year. Since June 30, AOL has announced long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. commerce agreements with leading marketers including 1-800-FLOWERS, Amazon.com, N2K, Preview Travel, American Greetings American Greetings Corporation, Inc. NYSE: AM is the world's largest publicly-traded greeting card company. It is based in Cleveland, Ohio and sells paper greeting cards, electronic greeting cards, party products (such as wrapping papers and decorations), and electronic and, in an agreement announced separately today, JFAX.COM. 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, stated, "We are pleased to have made significant progress over the past quarter in building a foundation for sustained profitable growth. Our strong increase in worldwide membership, combined with continued high member retention and careful management of costs, contributed to these improved results and puts us ahead of schedule to reach the 10 million member milestone." Case added, "With our steady subscriber growth, we are working to ensure that our members' online experience keeps improving through our continued aggressive expansion of network capacity. "Major electronic commerce agreements announced over the past several months will bring significant new value benefits to our members, as well as add to our future revenue streams. We are also making significant progress in bringing the AOL experience to new markets around the globe. "During the past quarter, we reached an agreement to acquire CompuServe's worldwide online services business. This transaction will further strengthen our business in several ways - allowing us to focus on our core interactive services and content businesses, significantly expanding our global reach, helping to control network costs, and adding to our financial flexibility. "We expect the transaction to close in the March quarter and, in the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , we are working to make the transition as smooth as possible," Case concluded. Strong Membership Growth and Key Partnerships Fuel AOL Networks Momentum Bob Pittman, president 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 AOL Networks, said: "The power of AOL's brand makes it not only the top choice of consumers but, increasingly, of major electronic commerce, content and strategic industry partners. Our brand momentum and imaginative promotions with key partners have permitted us to grow our membership while managing marketing expenses - improving both service 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. ." Pittman added: "Our agreements with major electronic commerce partners include significant revenue guarantees and cash payments, and form an excellent foundation for future revenue growth. "In addition, we announced new or expanded relationships with key content providers to enrich our service, helping to boost our usage and member retention. And, over the past several weeks, we also have reached important strategic agreements with Microsoft, Netscape and Lotus." Just two quarters after slowing its marketing and member growth to focus on building out network capacity, AOL deployed limited, 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. marketing over the last several months - including working with its partners to reach consumers - to record one of its largest ever quarterly increases in membership. During the quarter, AOL reached a total of 857,000 international members. In October, the Company and Bertelsmann AG Bertelsmann AG German media company. Beginning as a religious printer and publisher in 1835, the company grew steadily over the next century. Though virtually destroyed by Allied bombing in 1945, it recovered quickly after World War II. , AOL's partner in AOL Europe, announced next year's launch of a new joint venture in Australia. At the same time, the Company has continued its aggressive expansion of AOLnet, the world's largest dial-in network, and from all sources, currently has more than 600,000 modems available for use by AOL members. In addition, AOL has upgraded over 75% of AOLnet access numbers to support the new 56K modem technology speeds. Just last week, AOL's network reached a new milestone of more than 500,000 simultaneous users, tripling peak usage over the past year. Members currently are averaging over 6.5 million hours online daily or 40 minutes per member per day. They are checking up to 75 million stock quotes each day, and the system is processing more than 20 million e-mails daily to more than 80 million recipients. New AOL Channel Lineup A criminal investigation technique in which the police arrange a number of individuals in a row before a witness to a crime and ask the witness to identify which, if any, of the individuals committed the crime. and Key Partnerships To Improve Member Experience Earlier this month, AOL began rolling out The Next AOL with the unveiling of the New AOL Channel Lineup - the first phase of the launch of the innovative AOL 4.0 software. Besides increasing usage and improving member retention, AOL said it anticipates that advertisers and marketers will find the channels even more valuable "real estate" for electronic commerce. In addition, during the past quarter, AOL Networks also announced new or expanded relationships with key content providers including the Rolling Stones' "Bridges to Babylon" tour and album, Viacom International's VH1, The Cartoon Network For Cartoon Network outside of the United States, see . Cartoon Network is a cable television network created by Turner Broadcasting which primarily shows animated programming. , Pfizer, The National Center for Missing & Exploited Children, and CBS/Sportsline. The quarter also saw AOL conclude major strategic agreements with Microsoft, Netscape and Lotus. AOL and Microsoft will be making AOL Networks' AOL Preview Channel available as a pre-configured premier Active Channel on Microsoft Internet Explorer See Internet Explorer. 4.0. Both AOL's International services and AOL Studios will develop additional Active Channels for Internet Explorer Microsoft's Web browser, which comes with Windows starting with Windows 98. Commonly called "IE," versions for Mac and Unix are also available. Internet Explorer is the most widely used Web browser on the market. It has also been the browser engine in AOL's Internet access software. 4.0. AOL and Netscape agreed to distribute AOL's real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. instant messaging Exchanging text messages in real time between two or more people logged into a particular instant messaging (IM) service. Instant messaging is more interactive than e-mail because messages are sent immediately, whereas e-mail messages can be queued up in a mail server for seconds or service - co-branded as Netscape's AOL Instant Messenger See AIM. (TM) - through Netscape's client software and a special co-branded section of Netscape's Netcenter. In addition, AOL Networks will develop a featured channel for Netscape Netcaster A component of the earlier Netscape Communicator that provided a push model delivery system based on Marimba's Castanet Tuner. Users were able to subscribe to content channels on the Internet and receive information updates in the background while working on other applications. . AOL and Lotus this week announced that Lotus will distribute AOL Instant MessengerT with its eSuite Workplace, Smart Suite, and Notes products. AOL also will make the eSuite calendar and mail applets available to its members worldwide and plans with Lotus to cooperate in delivering the eSuite Workplace to AOL members. AOL Studios Generates Momentum with Launches of Entertainment Asylum asylum (əsī`ləm), extension of hospitality and protection to a fugitive and the place where such protection is offered. The use of temples and churches for this purpose in ancient and medieval times was known as sanctuary. , Redesigned Digital City, and Expanded WorldPlay Offerings Ted Leonsis, president and CEO of AOL Studios, said, "We've generated momentum over the course of the last three months for AOL Studios. Specifically, we've added new communities and more users to our local content service, provided a higher level of service in our social entertainment/games area and focused on building our content brands - such as Entertainment Asylum - that are made for the medium and available through our extensive distribution to millions of Internet/online users." Leonsis added, "Our properties continue to be among the most popular on AOL with nearly a dozen - including Love@AOL, Astronet, Hecklers Online, NetNoir, The Motley Fool and Thrive - winning AOL's Members' Choice Awards for the best sites. "We brought on a number of advertisers during the quarter including Godiva, Panasonic, the U.S. Air Force, Simon & Schuster Simon & Schuster U.S. publishing company. It was founded in 1924 by Richard L. Simon (1899–1960) and M. Lincoln Schuster (1897–1970), whose initial project, the original crossword-puzzle book, was a best-seller. , and SegaSoft. As we move toward 1998, AOL Studios has created a solid framework on which to build our activities." AOL Studios last week launched Entertainment Asylum, the one- stop interactive entertainment community and resource about movies, television and celebrities. Available as an anchor tenant on AOL's Entertainment Channel and through AOL.com, Excite, IE 4.0, Netcaster and the World Wide Web, Entertainment Asylum fulfills AOL Studios' multi-platform distribution strategy, which unlocks the value of the company's content and creates brand ubiquity Ubiquity See also Omnipresence. Burma-Shave their signs seen as “verses of the wayside throughout America.” [Am. Commerce and Folklore: Misc. in the marketplace. AOL Studios' Digital City, the nation's top service for local online information, successfully launched a redesign re·de·sign tr.v. re·de·signed, re·de·sign·ing, re·de·signs To make a revision in the appearance or function of. re of the service - improving the visual appeal and making Digital City even easier to use. Digital City has also launched a series of new and exciting products over the last few months, expanding the Digital City WebGuide to 24 cities, the Digital City MovieGuide to 14 cities and its recently launched DiningGuides in six cities. In addition, its newly launched Real Estate product offers nearly a million MLS See multilevel security. listings from Realtor.com and more than two million apartment listings from AllApartments.com. With AOL's Games Channel as one of its platforms, AOL Studios' WorldPlay Entertainment continued to expand its selection of online social entertainment and multiplayer games See multiplayer gaming. in the highly competitive online entertainment industry. In September, WorldPlay launched the Windows 95 version of Warcraft IIT IIT - Integrated Information Technology : Tides of Darkness, a highly anticipated strategy game. The WorldCom/CompuServe Transaction In September, AOL reached an agreement with WorldCom, Inc. to acquire - in exchange for its ANS (ANS Communications, Inc, Purchase, NY) An ISP, Internet backbone and provider of private data network services, founded in 1990 as Advanced Network & Services, Inc., by IBM, MCI and Merit (consortium of Michigan universities). Communications, Inc. subsidiary - CompuServe's worldwide online services business from WorldCom and receive approximately $175 million in cash. AOL and WorldCom also entered into a long-term strategic relationship that will provide AOL with significantly expanded network capacity at favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. prices. The two companies also will collaborate on the deployment of a next-generation broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). network. Upon completion of the transaction, expected early next year, Bertelsmann will pay an additional $75 million to AOL, and each company will invest $25 million in an expanded joint venture to operate CompuServe's European online service. During the past quarter, ANS introduced its ANS InterManage(SM) service to provide secure Internet connections; the industry's most extensive Service Level Agreement -- a commitment to 99.5% availability -- for its Internet connection service, and 56K dial access through its ANS SureRemote(TM) service. America Online, Inc. (NYSE:AOL), 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 leading Internet online service, with more than 9.4 million members worldwide. AOL, founded in 1985, offers its subscribers a wide variety of services including electronic mail, conferencing See teleconferencing. , software, computing computing - computer support, interactive magazines and newspapers and online classes, as well as easy access to services of the Internet. Personal computer owners can obtain America Online software at major retailers and bookstores, by calling 800-827-6364, or by downloading downloading - download from http://www.aol.com. 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. 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. In particular, careful consideration should be given to cautionary statements made in the management discussion and analysis section of the Company's Form 10K for the fiscal year ended June 30, 1997, and in the risk factor section of the Company's registration statement on Form S-3 dated Feb. 14, 1997, filed with the Securities and Exchange Commission. -0-
America Online, Inc.
Consolidated Summary of Results
(amounts in thousands, except per share data)
Three months ended
Sept. 30,
1997 1996
---------- ----------
(Unaudited) (Unaudited)
Revenues:
Online service revenues $ 434,167 $ 311,132
Other revenues 87,471 38,850
---------- ----------
Total revenues 521,638 349,982
Costs and expenses:
Cost of revenues 327,001 201,154
Marketing
Marketing 97,802 79,143
Write-off of deferred
subscriber acquisition
costs -- 385,221
Product development 15,815 18,584
General and administrative 54,311 20,104
Amortization of goodwill 1,676 1,920
Restructuring charge (1,306) --
---------- ----------
Total costs and expenses 495,299 706,126
Income (loss) from
operations 26,339 (356,144)
Other income 5,327 2,455
---------- ----------
Income (loss) before
provision for income taxes 31,666 (353,689)
Provision for income taxes (12,502) --
---------- ----------
Net income (loss) $ 19,164 $(353,689)
========== ==========
Earnings (loss) per share $ 0.16 $ (3.80)
Weighted average shares
outstanding 118,880 93,169
America Online, Inc.
Consolidated Condensed Balance Sheets
(Amounts in thousands)
Sept. 30, June 30,
1997 1997
------------ -----------
(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $ 178,901 $ 124,608
Accounts receivable 96,307 91,399
Prepaid expenses and other
current assets 98,363 107,466
------------ ---------
Total current assets 373,571 323,473
Property and equipment
at cost, net 265,306 233,129
Other assets:
Restricted cash 50,000 50,000
Product development
costs, net 77,553 72,498
Other assets 152,526 101,395
Deferred income taxes 44,011 24,410
Goodwill, net 40,629 41,783
------------ ---------
$1,003,596 $ 846,688
============ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 77,226 $ 69,703
Other accrued expenses
and liabilities 319,405 317,306
Deferred revenue 159,192 166,007
Current portion of
long-term debt and
capital lease obligations 750 1,454
------------ ---------
Total current
liabilities 556,573 554,470
Long-term liabilities:
Notes payable 78,498 50,000
Deferred income taxes 44,011 24,410
Deferred revenue 86,632 86,040
Minority interests 732 2,674
Other liabilities 959 1,060
------------ ---------
Total liabilities 767,405 718,654
Total stockholders' equity 236,191 128,034
------------ ---------
$1,003,596 $ 846,688
============ =========
CONTACT: America Online, Inc. Tricia Primrose primrose, common name for the genus Primula of the Primulaceae, a family of low perennial herbs with species found on all continents, most frequently in north temperate regions. , 703/265-1459 Michael Gross Michael Gross is the name of several people:
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