Avenue A, Inc. Announces Q2 Financial Performance; Results in Line with Previously Announced Guidance; Gross Margins Strong; Atlas DMT on Target for Launch of Technology Platform.Business Editors, Technology Writers SEATTLE--(BUSINESS WIRE)--July 27, 2001 Conference Call and Webcast at 11 a.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 Today Avenue A, Inc. (Nasdaq: AVEA AVEA American Veterinary Exhibitors Association ), a digital marketing and technology company, today announced financial results for the second quarter and six months of 2001 that were in line with previously announced financial guidance. For the second quarter ended June June: see month. 30, 2001, Avenue A, Inc. reported revenues of $20.6 million, compared to revenues of $52.4 million for the second quarter of 2000. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the second quarter of 2001, which excludes the amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and deferred stock compensation, was $7.4 million or $.13 per share. This also excludes non-recurring charges of $4.7 million related to staff reductions and write-downs of assets and investments. This compared to a pro forma net loss of $1.7 million, or $0.03 per share for the comparable 2000 quarter. Revenues for the first six months of 2001 were $44.7 million, versus revenues of $99.2 million for the comparable six months of 2000. Pro forma net loss for the first six months of 2001, which excludes the amortization of intangible assets and deferred stock compensation, was $15.1 million or $.26 per share. This is before the non-recurring 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. of $6.2 million related to staff reductions and write-downs of assets and investments. This compared to a pro forma net loss of $4.3 million, or $0.09 per share for the comparable 2000 first half. The Company announced that gross margins increased strongly to 28%, versus 19.8% in Q2 of 2000 and 23.5% in Q1 of this year. Brian McAndrews, President and Chief Executive Officer of Avenue A, Inc., stated, "We are pleased to be experiencing greater stability in our client base and more visibility into our revenue streams. Nonetheless, the current economic climate has had an adverse impact on the advertising industry, and the digital marketing sector remains soft. Consequently, we announced a significant staff reduction at the end of May to continue driving our 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. down." Mr. McAndrews further stated, "During this period of cost reductions, however, we continued to make progress on key company initiatives. In our agency business, we continued to strengthen our client base, reducing dotcom-generated revenue to 24% of total revenues. In our Atlas Atlas, in Greek mythology Atlas (ăt`ləs), in Greek mythology, a Titan; son of Iapetus and Clymene and the brother of Prometheus. DMT See DSL. technology division, we made further investments in our proprietary technology, including the ongoing development of our Atlas Digital Marketing Suite. That remains on schedule for completion and rollout at the end of Q3. This represents the culmination of a strategic plan which provides us with the customer offerings to lead the digital marketing industry by capitalizing on its two main segments -- service and technology." The Company noted that it ended the second quarter with $119.5 million in 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. investments. Avenue A Scores New Business The Company continued to focus its business on larger, more stable clients. During the second quarter, Avenue A signed the following companies, among others, as new clients: -- Novartis -- Club Med -- Kimberly Clark Second Quarter 2001 Conference Call/Webcast Today Avenue A, Inc. will host a conference call to discuss these financial results at 11:00 a.m. Eastern/8:00 a.m. Pacific. The webcast and replay will be available from the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's website at www.avenuea.com, under "Calendar of Events." Interested parties should visit the website approximately 15 minutes prior to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary software. About Avenue A, Inc. Avenue A, Inc., a digital marketing services and technology company, was founded in 1997 to help marketers acquire, retain and grow customers across all digital media. Through its two operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon -- Avenue A, provider of digital marketing services, and the new Atlas DMT unit, provider of digital marketing management solutions -- Avenue A, Inc. is able to touch and bring value to any interaction in the digital marketplace. The corporation is based in Seattle and operates offices in 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 and Chicago. Avenue A, Inc. also offers digital marketing services through Avenue A/NYC LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. based in New York. Avenue A, Inc. and Avenue A/NYC adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. the NAI See Network Associates. privacy principles that have been applauded by the FTC FTC See Federal Trade Commission (FTC). . These principles are designed to ensure Internet user Internet user n → internauta m/f Internet user Internet n → internaute m/f privacy. Please visit www.avenueainc.com to learn more. About Atlas DMT Atlas DMT is DMT I Diabetes Mellitus Type 1 a provider of digital marketing management systems and an operating unit of Avenue A, Inc. Atlas DMT offers a system of services and technologies that help advertising agencies and other marketing professionals deliver efficient, profitable digital marketing programs. The Atlas Digital Marketing Suite is an integrated, end-to-end solution (jargon) end-to-end solution - (E2ES) A term that suggests that the supplier of an application program or system will provide all the hardware and/or software components and resouces to meet the customer's requirement and no other supplier need be involved. Compare: turn-key solution. for planning, executing, and analyzing digital marketing campaigns. Atlas Power Tools are additional tools and services that enhance the marketing power of the Atlas Suite. And the Atlas Institute provides research and education on the most effective digital marketing practices. The Atlas DMT team is made up of technologists, database marketing experts, and other digital marketing professionals who have years of front-line experience making digital marketing work. About Avenue A Avenue A is a digital marketing agency and operating unit of Avenue A, Inc. It offers a one-stop solution that seeks to drive breakthrough results for its clients' web and e-mail marketing Email marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every email sent to a potential or current customer could be considered email marketing. initiatives by using innovative technology and rigorous analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. methods that turn campaign data into actionable Giving sufficient legal grounds for a lawsuit; giving rise to a Cause of Action. An act, event, or occurrence is said to be actionable when there are legal grounds for basing a lawsuit on it. insights. Avenue A's integrated suite of services includes web advertising, affiliate programs, search engine optimization Designing a Web site so that search engines easily find the pages and index them. The goal is to have your page be in the top 10 results of a search. Optimization includes the choice of words used in the text paragraphs and the placement of those words on the page, both visible and hidden , strategic portal relationships, e-mail prospecting, e-mail list management, customer targeting, profiling and advanced analytical services. Avenue A focuses on achieving the best possible results and the highest possible return on investment for its clients' digital marketing efforts. Clients include Microsoft, Household Finance and Best Buy. Certain statements in this press release are "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 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. Forward-looking statements include all passages containing verbs such as 'aims, anticipates, believes, estimates, expects, intends, plans, predicts, projects, continues or targets' or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. The forward-looking statements in this release include, among others, statements about the stability of our client base and expected release date of the Atlas Digital Marketing Suite. Forward-looking statements are based on the opinions and estimates of the management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect Avenue A's actual results include, among others, fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. or declining demand for our advertising services among our existing client base, the potential erosion in service pricing, failure to attract sufficient new business to Atlas DMT to materially and positively impact financial results, delays in releasing the Atlas Digital Marketing Suite due to unforeseen problems with software development, the potential failure to attract new clients, to maintain current, desired client relationships or to achieve effective advertising campaigns for existing clients, potential deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. or slower-than-expected development of the Internet advertising Delivering ads to Internet users via Web sites, e-mail, ad-supported software and Internet-enabled cellphones. Also called an "ad network," Internet advertising organizations act as a middleman between the advertiser and the Web sites and software publishers that display the ads. market, the potential need for additional funds to finance operations The execution of the joint finance mission to provide financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support.See also financial management. , the need to generate significant additional revenue to achieve profitability, quarterly and seasonal fluctuations in operating results, timing variations on the part of advertisers to implement advertising campaigns, costs related to any possible future acquisitions of technologies or businesses, the short term nature of Avenue A's contracts with clients which are cancelable on 90 days' or less notice, and the uncertainties, potential costs, and possible business impacts of unfavorable rulings in the previously-announced class action lawsuits class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax . More information about factors that potentially could affect Avenue A's financial results is included in Avenue A's Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2001 filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, Avenue A undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.
Avenue A, Inc.
Consolidated Balance Sheets
(in thousands)
June 30, 2001 December 31, 2000
---------------------------------
Assets (unaudited)
Current assets:
Cash, cash equivalents,
and short-term investments $119,495 $134,145
Accounts receivable, net of
allowance 13,781 39,343
Other receivable 1,612 1,824
Prepaid expenses and other
current assets 952 716
---------------------------------
Total current assets 135,840 176,028
---------------------------------
Property and equipment, net 10,380 13,087
Intangible assets, net 2,330 3,519
Other assets 2,672 5,671
---------------------------------
Total assets $151,222 $198,305
=================================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and
accrued expenses $23,735 $48,664
Notes payable, current portion 2,000 2,000
Deferred revenue 1,258 1,084
---------------------------------
Total current liabilities 26,993 51,748
---------------------------------
Long-term notes payable 2,559 3,556
---------------------------------
Total liabilities 29,552 55,304
Shareholders' equity:
Common stock 581 581
Paid-in capital 218,210 222,901
Deferred stock compensation (9,758) (21,566)
Subscription receivable (710) (941)
Accumulated deficit (86,653) (57,974)
---------------------------------
Total shareholders' equity 121,670 143,001
---------------------------------
Total liabilities and
shareholders' equity $151,222 $198,305
=================================
Avenue A, Inc.
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
----------------------------------------------
2001 2000 2001 2000
----------------------------------------------
Revenue $20,602 $52,425 $44,737 $99,200
Cost of revenue 14,826 42,039 33,280 80,555
----------------------------------------------
Gross profit 5,776 10,386 11,457 18,645
----------------------------------------------
Expenses:
Client support 2,692 3,857 6,040 7,183
Product development 3,496 3,349 7,003 4,926
Selling, general, and
administrative 7,106 7,121 14,055 13,137
Depreciation and
amortization of
property and equipment 1,499 1,092 2,961 1,700
Amortization of
intangible assets 498 497 999 1,007
Amortization of deferred
stock compensation 2,880 7,344 6,716 13,535
Corporate restructuring
charges 2,166 -- 3,666 --
----------------------------------------------
Total expenses 20,337 23,260 41,440 41,488
----------------------------------------------
Loss from operations (14,561) (12,874) (29,983) (22,843)
Interest income, net 1,586 3,297 3,529 4,005
Impairment of cost-basis
investment 2,500 -- 2,500 --
----------------------------------------------
Net loss $(15,475) $(9,577) $(28,954) $(18,838)
==============================================
Basic and diluted net
loss per share $(0.27) $(0.16) $(0.51) $(0.40)
==============================================
Shares used in computing
basic and diluted net
loss per share 57,051 58,112 56,890 47,388
==============================================
Reconciliation of Loss From Operations to Pro Forma Loss
From Operations, Pro Forma Net Loss, and Pro Forma
Net Loss Excluding Non-recurring items
(in thousands)
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
----------------------------------------------
2001 2000 2001 2000
----------------------------------------------
Loss from operations $(14,561) $(12,874) $(29,983) $(22,843)
Amortization of
intangible assets 498 497 999 1,007
Amortization of
deferred stock
compensation 2,880 7,344 6,716 13,535
----------------------------------------------
Pro forma loss from
operations (a) (11,183) (5,033) (22,268) (8,301)
Interest income, net 1,586 3,297 3,529 4,005
Impairment of cost-basis
investment 2,500 -- 2,500 --
----------------------------------------------
Pro forma net loss (a) $(12,097) $(1,736) $(21,239) $(4,296)
==============================================
Pro forma basic and
diluted net loss per
share $(0.21) $(0.03) $(0.37) $(0.09)
==============================================
Shares used in computing
pro forma basic and
diluted net loss per
share 57,051 58,112 56,890 47,388
==============================================
Pro forma net loss (a) $(12,097) $(1,736) $(21,239) $(4,296)
Corporate restructuring
charges 2,166 -- 3,666 --
Impairment of
cost-basis investment 2,500 -- 2,500 --
----------------------------------------------
Pro forma net loss
excluding non-recurring
items (b) (7,431) (1,736) (15,073) (4,296)
Pro forma basic and
diluted net loss per
share excluding
non-recurring items $(0.13) $(0.03) $(0.26) $(0.09)
==============================================
Shares used in computing
pro forma basic and
diluted net loss per
share 57,051 58,112 56,890 47,388
==============================================
(a) The pro forma loss from operations and net loss exclude amortization of intangible assets and stock-based compensation charges, which are summarized in the above table. These disclosures do not purport To convey, imply, or profess; to have an appearance or effect. The purport of an instrument generally refers to its facial appearance or import, as distinguished from the tenor of an instrument, which means an exact copy or duplicate. PURPORT, pleading. to be prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). (b) The pro forma net loss excluding non-recurring items excludes corporate restructuring charges and 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. of cost-basis investment, which are summarized in the above table. These disclosures do not purport to be prepared in accordance with Generally Accepted Accounting Principles (GAAP). |
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