Audio Book Club, Inc. Announces Fourth Quarter and Year End Financial Results.BOCA RATON Boca Raton (bō`kə rətōn`), city (1990 pop. 61,492), Palm Beach co., SE Fla., on the Atlantic; inc. 1925. Boca Raton is a popular resort and retirement community that experienced significant industrial development in the 1970s and 80s. , FL--(BUSINESS WIRE)--March 26, 1999-- - Gross Sales Gross Sales A measure of overall sales that isn't adjusted for customer discounts or returns, calculated simply by adding all sales invoices, and not including operating expenses, cost of goods sold, payment of taxes, or any other charge. Increased 47 Percent during Fiscal 1998 - - Membership Base Increased 233 Percent to Over 1 Million - Audio Book Club, Inc. (AMEX AMEX See: American Stock Exchange : KLB KLB - Known Lazy Bastard ) today announced financial results for its fourth quarter and year ended December December: see month. 31, 1998. Gross sales for the year ended December 31, 1998 increased 47 percent to $22,242,155 from $15,119,093 a year ago. The net loss for 1998 was $6,985,264, or $(1.13) per share, versus $4,920,851, or $(1.29) per share, for the year ended December 31, 1997. Gross sales for the fourth quarter ended December 31, 1998 increased 25 percent to $6,052,043 from $4,836,722. The net loss for the fourth quarter was $2,991,918, or $(0.48) per share, versus $2,430,745, or $(0.44) per share, during the comparable 1997 period. The net loss for 1998 was primarily the result of the Company's growth strategy. The Company committed approximately $7.5 million during fiscal 1998 towards new member recruitment and name branding via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and direct mail. The Company increased its club membership base to in excess of 1,000,000 names, a significant increase over the approximately 300,000 members at the end of 1997, primarily as a result of the Company's aggressive new member acquisition strategy, including its online marketing campaign, and its acquisition of the Columbia Columbia, cities, United States Columbia (kəlŭm`bēə). 1 City (1990 pop. 75,883), Howard co., central Md., between Washington, D.C., and Baltimore. House Audiobook Club. The Company noted that approximately 32 percent of the customers acquired through its new member recruitment efforts in 1998 were obtained via the Internet and that the cost associated with obtaining new members via the Internet was 960% higher in January 1998 then what it is today. The Company also acquired approximately 625,000 total members through its acquisition of the Columbia House Audiobook Club in December. In addition to the club membership base, the Company added over 400,000 additional customers through the acquisition of three businesses specializing in the sale of classic and nostalgic nos·tal·gi·a n. 1. A bittersweet longing for things, persons, or situations of the past. 2. The condition of being homesick; homesickness. old time radio and video programs. Norton Herrick, 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. , stated, "The past year has proven to be an extremely positive step in the development and growth of our company, as we continue to look for ways to increase our presence as the leading seller of audiobooks and provider of audio content. 1998 was a year marked by numerous milestones, culminating in our December 31 acquisition of Columbia House Company's audiobook division which immediately added over 625,000 names to our membership base and granted us access to Columbia House's other clubs' customer files of approximately 16 million names for member recruitment purposes. As a result of this success, we are continuing to pursue other such strategic alliances in an effort to solidify so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. our position as the audiobook club industry leader. "Another of the more promising aspects of the past year has been our tremendous growth in sales via the Internet. During this period, we committed nearly $4.6 million to developing our online presence through alliances with such leading Internet companies as 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. , Broadcast.com, Microsoft and Yahoo, and as a result we are now registering approximately 1.5 million visitors per month to our website, located at http://www.audiobookclub.com. Additionally, in May we launched our highly successful Associates Network which allows consumers, businesses and organizations to offer visitors to their websites the opportunity to join Audio Book Club online. Since its inception, the network has grown to include over 2,600 associates, bringing qualified traffic to our site and generating new members on a daily basis. Looking forward, we will continue to look for new ways to maximize the efficiency of our 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. business and to provide new and unique offerings to our customers, including our recently acquired classic and nostalgic radio and video properties." Added John Levy John Levy (b. April 11, 1912, in New Orleans, Louisiana) is an African-American jazz double-bassist and businessman. In 1944, Levy left his hometown of Chicago, Illinois, and moved to New York City, New York, where he played bass for such renowned jazz musicians as Ben , CFO See Chief Financial Officer. , "While 1998 was an extremely positive year for the Company in terms of internal membership growth, we believe that the most exciting aspect of our development during this period has been our tremendous growth through various strategic acquisitions. As a result, we now have a member and customer database of over 1.5 million names, a library of over 60,000 classic old-time radio programs Listed below are vintage radio programs associated with Radio's Golden Age. United States Golden Age programs #
Audio Book Club, Inc. is the world's largest marketer of audiobooks through its membership club which markets and sells audiobooks via the Internet at www.audiobookclub.com and by mail order. Audio Book Club, Inc. is also a publisher of audio and video content including classic radio and video programs and markets and sells that content on audio cassettes A 1/8" inch, analog audio tape format that has been widely used for music distribution and home recording. Although the same size housing is used, the tape thickness and length determine the recording time. Cassettes holding from 15 minutes to 60 minutes per side have been manufactured. , CDs and video cassettes video cassette Noun a cassette containing video tape video cassette n → videocassette f video cassette n → via numerous distribution channels including the Internet, catalogues, radio shows, retail and other outlets. Since commencing operations in January 1994, Audio Book Club, Inc. has engaged in an aggressive membership recruitment program to establish a core Audio Book Club member base. Following its acquisition of the Columbia House Audiobook Club, Audio Book Club, Inc. has a combined membership and customer database of over 1,500,000 names. This release is covered under 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. " 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: Certain information included in this release that are not historical facts are forward looking statements that involve a number of known and unknown risks and uncertainties, including but not limited to, the Company's ability to successfully implement a strategy of continued growth and other risks detailed in the Company's registration Statement on Form SB-2 and other Securities and Exchange Commission filings. The Company's actual results, performance or achievements may differ materially from any future results performance or achievements expressed or implied in any forward looking statement. Readers are cautioned not to place undue reliance on these forward looking statements, which only speak as of the date the statement was made. -0-
Audio Book Club, Inc.
Consolidated Statement of Operations
Three Months Ended Year Ended
(unaudited) (unaudited)
12/31/98 12/31/97 12/31/98 12/31/97
Sales $ 6,052,043 $ 4,836,722 $ 22,242,155 $ 15,119,093
Returns,
discounts and
allowances 2,693,940 1,953,683 7,348,584 5,040,939
------------ ------------ ------------ ------------
Sales, net 3,358,103 2,883,039 14,893,571 10,078,154
Cost of sales 1,893,480 1,738,738 9,451,601 5,495,358
------------ ------------ ------------ ------------
Gross profit 1,464,623 1,144,301 5,441,970 4,582,796
------------ ------------ ------------ ------------
Expenses:
Internet
expense for
acquisition
and Retention
of members 1,017,900 0 4,624,701 0
Advertising
and promotion 1,778,378 2,931,217 4,285,459 6,843,250
General,
administrative
and other 1,591,487 686,938 3,697,444 2,224,889
------------ ------------ ------------ ------------
Operating loss (2,923,142) (2,473,854) (7,165,634) (4,485,343)
Interest
income
(expense),
net (68,776) 43,109 180,370 (435,508)
------------ ------------ ------------ ------------
Net loss $ (2,991,918) $ (2,430,745) $ (6,985,264) $ (4,920,851)
============ ============ ============ ============
Net loss per
share of
common stock $ (0.48) $ (0.44) $ (1.13) $ (1.29)
============ ============ ============ ============
Weighted
average per
common
shares
outstanding 6,287,887 5,492,530 6,187,687 3,820,027
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