Bankrate, Inc. Reports Net Income in Fourth Quarter of 2001.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 25, 2002 Bankrate, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :RATE) -- Fourth Quarter Net Income of $0.02 Per Share vs. Net Loss of $0.07 Per Share in Fourth Quarter 2000 -- Third Consecutive Cash Flow Positive Quarter Achieved--Cash Balance Increases to $9.7 Million -- Subordinated Debt Paid Off Early in 2002 - Bankrate Now Substantially Debt-Free -- Record Fourth Quarter Revenue of $5.1 Million Up 30% Over Same Quarter in 2000; Exceeded Target of $4 Million -- 2001 Online Revenue Up 22% Over 2000 -- Traffic Levels Reach Record Highs in 2001 - Up Almost 300% Over 2000 Bankrate, Inc. (OTCBB:RATE), the Internet's leading source of consumer financial news and information, today reported net income of $317,000, or $0.02 per share, for the quarter ended December December: see month. 31, 2001 compared to a net loss of $919,000, or $0.07 per share, in the comparable quarter in 2000. For the year ended December 31, 2001, the Company reported a net loss of $936,000, or $.07 per share, compared to a net loss of $16,921,000, or $1.22 per share, for the year ended December 31, 2000. Excluding non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $2,208,000 and $2,408,000, respectively, the Company would have reported net income of $1,272,000, or $0.09 per share for the year ended December 31, 2001 compared to a net loss of $14,513,000, or $1.05 per share, in 2000. Non-cash charges in both periods consisted of depreciation and amortization, interest, stock compensation expense, barter barter: see exchange. barter Direct exchange of goods or services without the use of money or any other intervening medium of exchange. Barter is conducted either according to established rates of exchange or by bargaining. mismatch mismatch 1. in blood transfusions and transplantation immunology, an incompatibility between potential donor and recipient. 2. one or more nucleotides in one of the double strands in a nucleic acid molecule without complementary nucleotides in the same position on the other income/expense, and a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. charge of $481,000 in the quarter ended September 30, 2001 related to the Company's stock option exchange program. "I am very pleased that we were able to deliver net income in the fourth quarter of 2001 - ahead of the plan we promised to our investors more than a year ago. We accomplished this goal - in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the economic recession and an absolute depression in 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 ad spending - by delivering a great product and a ready-to-transact audience to our advertisers," said Elisabeth DeMarse, 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. . Cash Flow Positive Quarters Achieved For the third consecutive quarter, the Company generated cash, significantly increasing cash balances from $8,099,000 on March 31, 2001 to $8,356,000 on June 30, 2001, $8,459,000 on September 30, 2001, and $9,755,000 on December 31, 2001. "I am also delighted to deliver three consecutive quarters of positive cash flow. Our focus for 2001 has been to manage Bankrate to profitability. Now that we have met that goal, we have our sights set on achieving consecutive quarters of profitability, as well as continued revenue growth, and adding to our cash balance. I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about further improvements in 2002," added DeMarse. Early Payoff Negotiated on Subordinated Debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". In February 2002, the Company successfully completed the early repayment of its $4,350,000 10% convertible subordinated note payable, including principal and accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. , for $3,400,000. An accounting gain of approximately $2,022,000 will be recorded in the first quarter of 2002 as a result of this transaction. "This is a monumental mon·u·men·tal adj. 1. Of, resembling, or serving as a monument. 2. Impressively large, sturdy, and enduring. 3. achievement for our company. We paid off this debt using our own cash, we negotiated the deal internally without using expensive investment bankers Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. or consultants, and we continue to maintain a healthy cash balance. Looking ahead, we've eliminated significant interest charges and a big cash drain. Most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , we are now a substantially debt-free company," continued DeMarse.
Revenue Significantly Improves; Continues to Show Strong Year Over
Year and Consecutive Quarter Growth
Online revenue for the year ended December 31, 2001 of $14,986,000 was $2,703,000, or 22%, higher than the $12,283,000 reported in 2000. Online revenue for the quarter ended December 31, 2001 of $4,261,000 was $1,051,000, or 33%, higher than the $3,210,000 reported for the same quarter in 2000. Print publishing and licensing revenue for the year ended December 31, 2001 of $3,271,000 was $349,000, or 12%, higher than the $2,922,000 reported in 2000. For the quarter ended December 31, 2001, print publishing and licensing revenue of $861,000 was $142,000, or 20%, higher than the $719,000 reported in the fourth quarter of 2000. Total revenue for the year ended December 31, 2001 of $18,257,000 was $3,052,000, or 20%, higher than the $15,205,000 reported for 2000. Total revenue for the quarter ended December 31, 2001 of $5,121,000 was $1,192,000, or 30%, higher than the $3,929,000 reported in the comparable quarter in 2000. Online revenue for the three months and year ended December 31, 2001 included barter revenue of $643,000 and $2,558,000, representing approximately 13% and 14% of total revenue, respectively. Revenue from hyperlinks increased 52% over 2000 and constitutes 26% of total revenue for the year ended December 31, 2001. "In 2001, we developed several new products that proved to be popular with our advertisers. These included our "Special Event" marketing vehicle, which is designed to wrap an advertiser ad·ver·tise v. ad·ver·tised, ad·ver·tis·ing, ad·ver·tis·es v.tr. 1. To make public announcement of, especially to proclaim the qualities or advantages of (a product or business) so as to increase around traffic spikes spikes see peplomer. ; Island advertising - large format ads within our award-winning content; and email newsletters. These features heighten height·en v. height·ened, height·en·ing, height·ens v.tr. 1. To raise or increase the quantity or degree of; intensify. 2. To make high or higher; raise. v.intr. the selling power of Bankrate and allowed us to meet and exceed our revenue goals. Furthermore, we added over 100 new advertisers this year, which strengthens our sales visibility and diversifies our revenues further. In 2002, we will continue to invest in sales and marketing to extend our category leadership," said Ned Newhouse, Chief Revenue Officer. Gross Margin Continues Improvement Excluding barter revenue of $2,558,000 and $757,000, respectively, Bankrate's gross margin improved from 37% for the year ended December 31, 2000 to 65% for the year ended December 31, 2001. Other 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. Drop by 49% Excluding barter expense and the one-time charge related to the Company's stock option exchange program, other operating expenses for the year ended December 31, 2001 of $10,385,000 were $9,973,000, or 49%, lower than the $20,358,000 reported for the year ended December 31, 2000. Expenses for the year ended December 31, 2000 included restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and goodwill 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. charges of $2,285,000. "In 2001, we removed more than $10 million from our expense base. Business focus and prudent cost management helped us deliver these results, which is significant financial progress," said Bob DeFranco, Chief Financial Officer. "It shows the operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. of our business model and the financial discipline of the entire organization." Traffic Levels Reach Record Highs The Company maintains leading traffic 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. for its destination site, Bankrate.com. Bankrate.com is the #5 most trafficked site in the Business and Financial News/Research category and the #2 Financial Information and Advice site, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Jupiter Media Metrix. Page views increased 74%, from 136.0 million for the year ended December 31, 2000 to 236.6 million for the year ended December 31, 2001. Ad views increased almost 300%; from 404 million for the year ended December 31, 2000 to 1.6 billion for the year ended December 31, 2001. For the 12-month period between September 2000 and September 2001, unique visitors A count of how many different people access a Web site. For example, if a user leaves and comes back to the site five times during the measurement period, that person is counted as one unique visitor, but would count as five "user sessions. grew 152%, vs. the Web's growth of 25%. (Due to a change in audience methodology, it is not possible to accurately compare the Jupiter Media Metrix unique visitors for December 2000 to December 2001.) Cotter cot·ter n. 1. A bolt, wedge, key, or pin inserted through a slot in order to hold parts together. 2. A cotter pin. [Origin unknown. Cunningham, Bankrate's 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 "It is a testament to the Bankrate brand that our growth rate in unique visitors exceeded the growth rate of the Web by over 125%. We grew user metrics in such areas as site visitors, pages viewed, and time spent, despite a challenging economic backdrop Backdrop may refer to:
Year-End Recap "To put 2001 in perspective, we feel we reached a major milestone in demonstrating that the Bankrate business model is viable. Not only did we prove that Bankrate can be profitable, but we grew revenue and achieved profitability under extremely adverse business conditions. Finally, we grew revenue in all of our diverse product lines including auto, mortgage, home equity, and CD's, and won significant gains as a result. Going forward, we plan to further leverage our operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. , continue to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. revenue and focus on our net income targets. In the past year our partners continued to expand their use of Bankrate.com's unique content and our advertisers renewed their buys with us, while the customer benefited from our objective, bias-free rate data and analysis. While we anticipate another tough year with higher targets to reach and tougher goals to meet, our management team and employees have found a formula that works for us as well as our consumers, partners and advertisers," concluded DeMarse. About Bankrate, Inc. Bankrate, Inc. (OTCBB:RATE) owns and operates Bankrate.com, the Internet's leading consumer banking marketplace, with an average of 4 million unique visitors per month connecting with over 4,500 financial institutions in 173 markets in 50 states. Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes and small business finance. It is the leading aggregator of over 100 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CD's, checking and ATM fees, home equity loans and online banking fees. Bankrate.com provides financial applications, information and "financial literacy Financial literacy is the ability of individuals to make appropriate decisions in managing their personal finances. Raising levels of financial literacy is now a focus of government programmes in countries including[1] Australia, Japan, the United States and the UK. " editorial to a network of over 100 partners including MSN (Nasdaq:MSFT MSFT Microsoft (stock symbol) MSFT Movimento Sociale Fiamma Tricolore (Italy) MSFT Multi-Stage Fitness Test MSFT Master of Science in Family Therapy MSFT Macalester Students for Fair Trade ), Yahoo! (Nasdaq:YHOO YHOO Yahoo! Inc. (NASDAQ symbol) ), America Online See AOL. (NYSE NYSE See: New York Stock Exchange :AOL), CNN CNN or Cable News Network Subsidiary company of Turner Broadcasting Systems. It was created by Ted Turner in 1980 to present 24-hour live news broadcasts, using satellites to transmit reports from news bureaus around the world. and Smart Money. Bankrate.com's information is also distributed through more than 100 national and state publications. Certain matters discussed in this press release are or may be considered to be "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 Securities Act of 1933 and the Securities Exchange Act of 1934, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. by 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. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team. Such forward-looking statements include without limitation statements made with respect to future revenue, revenue growth, market acceptance of our products, and profitability. Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include - we have a history of losses and could run out of cash; we use barter transactions that do not generate cash revenue; our success depends on 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. revenue, interest rate volatility, establishing and maintaining distribution arrangements, and increasing brand awareness of our Web site; our markets are highly competitive; our Web site may encounter technical problems and service interruptions; we rely on the protection of our intellectual property; we may face liability for information on our Web site; future government regulation of the Internet is uncertain and subject to change; our success depends on retaining management and key employees; our results of operation may fluctuate significantly; and our stock price may be volatile in the future. These and additional important factors to be considered are set forth under "Item 1. Business - Risk Factors that Could Impact Future Operating Results," "Item 7. 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 of Financial Condition and Results of Operations" and in the other sections of our Annual Report on 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 year ended December 31, 2000, and in our other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or expectations.
Financial Statements Follow
Bankrate, Inc. and Subsidiary
Consolidated Balance Sheets
December 31, December 31,
2001 2000
---- ----
Assets
Cash and cash equivalents $ 9,755,032 $ 8,890,649
Accounts receivable, net 1,259,256 1,218,867
Other current assets 231,134 572,185
------------ ------------
Total current assets 11,245,422 10,681,701
Furniture, fixtures and equipment, net 1,076,508 1,730,455
Intangible assets, net 69,622 88,425
Other assets 134,460 133,809
------------ ------------
Total assets $ 12,526,012 $ 12,634,390
============ ============
Liabilities and
Stockholders' Equity
Liabilities:
Accounts payable $ 699,054 $ 772,181
Other accrued expenses 1,871,492 2,016,236
Accrued interest 217,500 -
Deferred revenue 347,869 463,224
Current portion of obligations
under capital leases 36,406 214,651
Other current liabilities 207,952 158,672
------------ ------------
Total current liabilities 3,380,273 3,624,964
10% convertible subordinated note payable 4,350,000 4,350,000
Accrued stock compensation expense - 2,452,424
Accrued interest 810,363 592,863
Other liabilities 3,264 40,815
------------ ------------
Total liabilities 8,543,900 11,061,066
------------ ------------
Stockholders' equity:
Common stock, par value $.01 per
share-- 100,000,000 shares
authorized; 13,996,950 shares
issued and outstanding 139,969 139,969
Additional paid in capital 63,931,555 60,586,991
Accumulated deficit (60,089,412) (59,153,636)
------------ ------------
Total stockholders' equity 3,982,112 1,573,324
------------ ------------
Total liabilities and
stockholders' equity $ 12,526,012 $ 12,634,390
============= ============
Bankrate, Inc. and Subsidiary
Consolidated Statements of Operations
Year Ended December 31,
Revenue: 2001 2000 1999
---- ---- ----
Online publishing $ 14,985,903 $ 12,282,795 $ 8,496,905
Print publishing and
licensing 3,271,223 2,921,970 3,472,780
---------- ---------- ----------
Total revenue 18,257,126 15,204,765 11,969,685
---------- ----------- ----------
Cost of revenue:
Online publishing 3,268,528 7,114,258 5,627,713
Print publishing and
licensing 2,173,529 1,982,885 2,387,229
---------- ----------- ----------
Total cost of
revenue 5,442,057 9,097,143 8,014,942
---------- ----------- ----------
Gross margin 12,815,069 6,107,622 3,954,743
---------- ----------- ----------
Operating expenses:
Sales 3,096,401 3,234,148 3,017,231
Marketing 2,922,867 3,873,796 16,459,113
Product development 1,385,672 1,949,933 2,024,847
General and administrative
expenses 5,511,572 8,467,279 9,415,520
Restructuring and
impairment charges - 2,285,422 -
Depreciation and
amortization 700,497 873,484 421,792
Goodwill amortization - 231,214 186,229
---------- ----------- ----------
13,617,010 20,915,276 31,524,732
---------- ----------- ----------
Loss from
operations (801,940) (14,807,654) (27,569,989)
---------- ----------- ----------
Other income (expense):
Interest income 328,505 727,327 1,087,148
Interest expense (462,341) (496,868) (232,504)
Noncash financing charge - - (2,656,000)
Other - - 18,712
---------- ----------- ----------
Other income
(expense), net (133,836) 230,459 (1,782,644)
---------- ----------- ----------
Loss before income taxes and
discontinued operations (935,776) (14,577,195) (29,352,633)
Income taxes from continuing
operations - - -
---------- ----------- ----------
Loss before discontinued
operations (935,776) (14,577,195) (29,352,633)
---------- ----------- ----------
Discontinued operations:
Loss from discontinued
operations - (3,214,577) (2,135,697)
Gain on disposal of
discontinued operations - 871,212 -
---------- ----------- ----------
- (2,343,365) (2,135,697)
---------- ----------- ----------
Net loss (935,776) (16,920,560) (31,488,330)
Accretion of Convertible
Series A and Series B
preferred stock to
redemption value - - (2,281,000)
---------- ------------ ------------
Net loss applicable to
common stock $ (935,776) $(16,920,560)$(33,769,330)
========== ============ ============
Basic and diluted net loss
per share:
Loss before discontinued
operations $ (0.07) $ (1.05)$ (2.90)
Discontinued operations - (0.17) (0.21)
---------- ------------ -----------
Net loss (0.07) (1.22) (3.11)
Accretion of Convertible
Series A and
Series B preferred stock to
redemption value - - (0.23)
---------- ------------ -----------
Net loss applicable to
common stock $ (0.07) $ (1.22)$ (3.34)
========== ============ ===========
Weighted average shares
outstanding used in basic
and diluted per-share
calculation 13,996,950 13,872,788 10,113,928
========== ============ ===========
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