CNET Networks Reports Fourth Quarter 2002 Financial Results.Business Editors SAN FRANCISCO--(BUSINESS WIRE)--Jan. 30, 2003 CNET (body) CNET - Centre national d'Etudes des Telecommunications. The French national telecommunications research centre at Lannion. Networks, Inc. (Nasdaq:CNET) today reported that net revenues for the fourth quarter ended December December: see month. 31, 2002 totaled $67.8 million, compared to net revenues of $70.2 million for the same period of 2001. The company's net income for the fourth quarter of 2002 was $3.5 million, or $0.03 per share, versus a net loss of $81.2 million, or $0.59 per share, for the same period last year. The fourth quarter 2002 net income included a gain of $18.5 million from the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of debt, partially offset by a $9.1 million asset 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. charge related to migration to a new technology platform. The fourth quarter 2001 net loss of $81.2 million included $60.1 million of amortization of goodwill and 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 $6.4 million of integration expenses. The company's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. before depreciation, amortization and non-cash asset disposal costs was $4.2 million. This compares to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. before depreciation and amortization of $10.9 million in the fourth quarter of 2001. CNET Networks believes operating income before depreciation, amortization and asset impairment charges is useful to investors in measuring our operating performance. For the year ended December 31, 2002 revenues totaled $237.0 million, compared to net revenues of $285.8 million for the same period of 2001. CNET Networks' 2002 operating loss before depreciation, amortization and asset impairment costs was $30.4 million. This compares to an operating loss before depreciation, amortization and asset impairment costs of $89.1 million in 2001. The 2002 and 2001 operating losses included business realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. costs of $12.4 million and $43.0 million, respectively. The company's net loss for the year of 2002 was $360.6 million, or $2.60 per share, versus a net loss of $2.0 billion, or $14.52 per share, for the same period last year. The 2002 net loss included asset impairment of $290.5 million and amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. of $34.7 million. The 2001 net loss of $2.0 billion included asset impairment of $1.1 billion and $678.6 million of amortization of intangible assets. "CNET Networks accomplished a great deal as we confronted the many challenges faced by the technology marketplace over the past twelve months, and delivered on our goal of operating profitability in the second half of 2002," said Shelby Shelby, city (1990 pop. 14,669), seat of Cleveland co., W N.C., in a fertile piedmont farming (cotton, grain, soybeans, livestock) area; inc. 1843. There is dairy processing, and plastic and metal products, uphostered furniture, textiles and apparel, and chemicals Bonnie bon·ny also bon·nie adj. bon·ni·er, bon·ni·est Scots 1. Physically attractive or appealing; pretty. 2. Excellent. , chairman and chief executive officer of CNET Networks. "In the last quarter of 2002, we gained a greater share of tech advertising budgets, introduced paid services Paid Services are the not-free electronic commerce of digital services and information goods in digital media. Examples of digital media are for instance the world wide web or mobile media (SMS, WAP). , enhanced our commerce capabilities, and advanced the efficiency of our technology infrastructure. This momentum has positioned the company to drive toward revenue growth and margin expansion as we move through 2003. "This year, we will focus on expanding our market share by leveraging our unique position as a media marketplace that offers technology companies both a targeted, high quality audience of buyers, and the reach and frequency of one of the world's largest online networks," Bonnie continued. "The key to achieving sustained profitability and margin growth will be continued innovation of our editorial products, marketing solutions, and shopping services, and delivering operational efficiencies that leverage the scale of CNET Networks' global enterprise." Leading Technology Information and Marketing Resource Today, IT professionals and business decision makers use 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 more than any other resource to find the technology information they need. CNET Networks remains the online choice of this high quality audience for technology news, research, analysis and services. The company continues to increase opportunities for marketers to engage with technology decision makers in the most relevant environments. CNET Networks' leading market position is highlighted by its global reach, increasing customer base, and high customer renewal rate, as follows: -- CNET Networks ranked as the Internet's 14th largest US online property(1) and the 10th largest online property worldwide(2), according to Nielson//NetRatings. -- CNET Networks' advertising customer base totaled 1,950 companies in Q4 2002, up 11 percent sequentially and 30 percent from the same period in 2001. -- In Q4 2002, 85 percent of the company's top 100 advertisers renewed from Q3 2002. "This year, we plan to enhance our enterprise network of Web sites, which include ZDNet, TechRepublic TechRepublic is a technology news site run by CNET Networks, and is led by Stephen Howard-Sarin, vice-president of CNET.[1] TechRepublic's news articles are targeted towards professionals in the IT sector.[2] References 1. , Builder.com, and News.com. We will develop the natural synergies between these sites and deliver new content and marketing solutions programs that bring customers and users together in ways that leverage the technology advantages of the Internet," said Bonnie. Commerce, Paid Services, and other Revenue Streams CNET Networks continues to extend its revenue-generating opportunities in the areas of shopping services and advice, data licensing, and other fee-based services. Key updates from Q4 include: -- Through its online commerce sites, including CNET.com, Shopper.com and mySimon mySimon is a comparison shopping website founded by Michael Yang and Yeogirl Yun in April, 1998 and acquired by CNET Networks in 2000. It was the largest online comparison shopping site in 2000. .com, CNET Networks delivered 30 million sales leads A sales lead is the identity of a person or entity potentially interested in purchasing a product or service, and represents the first stage of a sales process. The lead may have a corporation or business associated with the person(s). to merchants, or an average of 325,900 leads per day during the seasonally strong Q4, a 25 percent increase from Q3 2002. -- GameSpot GameSpot video gaming website that provides news, reviews, previews, downloads, and other information. The site was launched in May 1996 by Pete Deemer, Vince Broady, and Jon Epstein. Complete ended Q4 with 47,200 paid users, a 26 percent increase from its September September: see month. 30 membership base. GameSpot Complete is a fee-based service offering gaming news, product demos and reviews, tips and tricks, video game downloads and streaming video A one-way video transmission over a data network. It is widely used on the Web as well as company networks to play video clips and video broadcasts. Computers in home networks stream video to digital media hubs connected to a home theater. files. -- CNET Channel ended Q4 with 258 data licenses, a 51 percent increase from a year ago. CNET Channel enables resellers, distributors and 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. customers to outsource outsource verb To assign specific work to a 3rd party for a specific length of time at an set price and service level Managed care To use outside labor to perform functions–billing and collections, accounting, janitorial services, ER their comparative product information needs. The foundation of this is its electronic database of information on more than 1.2 million technology product units in 18 languages. Investments & Outlook CNET Networks' balance sheet included cash and marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. debt securities of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $145 million on December 31, 2002, including restricted cash of $18 million. The company repurchased $52.4 million face value of its five-percent convertible subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. notes (due in March 2006) during the fourth quarter for $33.1 million in cash, or an average cost of $632 per bond. The remaining balance on the notes was $114 million at December 31, 2002. For the first quarter of 2003, management estimates net revenues will be between $54 million and $56 million, with an operating loss before depreciation and amortization of between $6 million and $9 million. Q1 2003 results will include expenses of $4 million to $5 million associated with severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs related to a five-percent net reduction in positions as well as costs associated with the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of the company's full-time full-time adj. Employed for or involving a standard number of hours of working time: a full-time administrative assistant. full radio programming business in January January: see month. 2003. Management's updated guidance for 2003 includes a full-year revenue estimates in the range of $235 million and $245 million, and operating income before depreciation and amortization of between breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations and $5 million, including the Q1 extraordinary expenses mentioned above. Revenue estimates are based on the assumption that overall technology advertising spending will not worsen wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. worsen Verb to make or become worse worsening adjn from current levels. Operating income before depreciation and amortization estimates are based on the assumption that the company will not experience further material asset impairment or business 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). costs. The company expects this financial outlook will not be updated until the release of CNET Networks' next quarterly financial announcement. The company does, however, reserve the right to update its financial outlook at any time for any reason. Conference Call and Webcast CNET Networks will host a conference call to discuss its fourth quarter financial and operating performance and the company's 2003 business outlook beginning at 5:00 pm ET (2:00 pm PT), today, January 30, 2003. To listen to the discussion, please visit http://ir.cnet.com and click on the link provided for the webcast conference call or dial (706) 679-3076. The webcast will be archived and available through February February: see month. 7, 2003 at the URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. listed above, or you can call (706) 645-9291 and enter the conference ID number 7593054. 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. This press release and its attachments include forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information and statements that are subject to risks and uncertainties that could cause actual results to differ materially. These 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. include the statements regarding the company's expected financial results in the first quarter and full-year 2003, as well as other statements throughout the release that are identified by the words "expect," "estimate," "target," "believe," "anticipate," "intend" and similar expressions. These statements are only effective as of the date of this release and we undertake no duty to publicly update these forward-looking statements, whether as a result of new information, future developments or otherwise. Reported results should not be considered as an indication of future performance. The risks and uncertainties include: a continued or worsening wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in advertising spending on the Internet in general, especially in the technology sector, or on CNET Networks' properties in particular, which could be prompted by continuing weakness in corporate or consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. , the failure of existing advertisers to meet their advertising commitments, or other factors; the need for further cost-reductions, which could increase severance costs and negatively impact operating income and net income or cause such results to differ from company guidance; the risk that cost-reduction initiatives will not be achieved due to implementation difficulties or contractual spending commitments that can't be reduced; the risk that cost-reduction efforts will result in a loss of revenues due to a decrease in resources dedicated to generating revenues; the acquisition of businesses or the launch of new lines of business, which could decrease our cash position, increase operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. and dilute di·lute v. To reduce a solution or mixture in concentration, quality, strength, or purity, as by adding water. adj. Thinned or weakened by diluting. operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ; future impairment of the company's assets or the need to increase the company's reserve attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to abandoned real estate; disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. of our service due to the failure of key infrastructure providers or in connection with the transfer of our systems to new providers; and the failure of the company's users to adopt new paid service offerings. For risks about CNET Networks' business, see its Annual 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, 2001; its Quarterly Report on 10-Q for the period ended September 30, 2002 and subsequent Forms 8-K, including disclosures under the captions "Risk Factors" and "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," which are filed with the Securities and Exchange Commission and are available on the SEC's website at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . About CNET Networks, Inc. CNET Networks, Inc. (www.cnetnetworks.com) is the leading global media company informing and connecting the buyers, users and sellers of technology. The company's product portfolio includes top brands CNET, ZDNet, TechRepublic, Builder.com, News.com, GameSpot, Download.com Download.com is an Internet download directory website, launched in 1996 as a part of CNET. Download.com offers content in four major categories: Software (including PC, Mac, and mobile), Music, Games, and Videos , and mySimon, as well as Computer Shopper Computer Shopper could referr to the following publications:
 r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , CNET
Networks has operations in 16 countries.
(1) Nielsen//NetRatings December 2002 (Home/Work combined panel) (2) Nielsen//NetRatings December 2002 (Global Web Watch home panel)
CNET Networks(R)
Consolidated Statements of Operations
Unaudited
(000s, except per Three Months Ended Year Ended
share data) December 31, December 31,
------------------------- -------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenues
Internet $ 53,474 $ 57,453 $ 183,313 $ 241,199
Publishing 14,327 12,795 53,644 44,606
------------ ------------ ------------ ------------
Total
revenues 67,801 70,248 236,957 285,805
Operating expenses:
Cost of
revenues 36,474 39,925 146,697 178,085
Sales and
marketing 18,040 25,815 76,080 129,542
General and
administrative 9,066 15,457 44,585 67,284
Depreciation 6,036 6,260 25,749 24,417
Amortization of
goodwill and
intangible assets 1,493 60,086 34,655 678,602
Asset
impairment 9,104 -- 290,505 1,075,000
------------ ------------ ------------ ------------
Total
operating
expenses 80,213 147,543 618,271 2,152,930
Operating
income
(loss) (12,412) (77,295) (381,314) (1,867,125)
Non-operating
income (expense):
Realized gains
on sale of
investments 71 437 2,881 9,547
Realized losses
on sale of
investments (24) (81) (123) (8,553)
Realized losses
on impairment
of public
investments -- -- (154) (26,866)
Realized losses
on impairment
of private
investments -- (445) (15,395) (148,389)
Interest income 901 1,825 4,920 11,924
Interest
expense (2,240) (2,346) (10,289) (15,615)
Other 17,190 (2,061) 18,596 (13,418)
------------ ------------ ------------ ------------
Total non-
operating
income
(expense) 15,898 (2,671) 436 (191,370)
------------ ------------ ------------ ------------
Income (loss)
before
income taxes 3,486 (79,966) (380,878) (2,058,495)
Income tax
expense
(benefit) -- 1,191 (20,293) (69,007)
------------ ------------ ------------ ------------
Net income
(loss) $ 3,486 $ (81,157)$ (360,585)$ (1,989,488)
============ ============ ============ ============
Basic net income
(loss) per share $ 0.03 $ (0.59)$ (2.60)$ (14.52)
============ ============ ============ ============
Diluted net income
(loss) per share $ 0.03 $ (0.59)$ (2.60)$ (14.52)
============ ============ ============ ============
Shares used in
calculating basic
net income (loss)
per share 139,070,795 138,072,173 138,850,094 137,062,987
============ ============ ============ ============
Shares used in
calculating
diluted net
income (loss) per
share 139,335,816 138,072,173 138,850,094 137,062,987
============ ============ ============ ============
Note: Effective January 1, 2002, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No.
142 "Goodwill and Other Intangible Assets." Under SFAS 142, goodwill
is no longer amortized, beginning January 1, 2002. If the
non-amortization provisions of SFAS 142 had been effective in 2001,
net loss, for the three months ended December 31, 2001, would have
been $(34,495) and basic and diluted net loss per share would have
been $(0.25), and for the year ended December 30, 2001 net loss would
have been $(1,362,777) and basic and diluted net loss per share would
have been $(9.94).
During 2002, the Company adopted the provisions of SFAS 145,
"Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections." This statement rescinds
SFAS 4, "Reporting Gains and Losses from Extinguishment of Debt"
wherein the FASB determined that gains and losses from debt
extinguishments were to be recorded as extraordinary items.
Accordingly, other income for the year ended December 31, 2002
includes $21.6 million of gain related to the early retirement of
$59.2 million of our 5% Convertible Subordinated Notes, due March
2006. Other expenses for the year ended December 31, 2001 include
$10.6 million of loss related to the early retirement of the TRACES
obligation.
CNET Networks(R)
Consolidated Balance Sheets
Unaudited
(000s, except per share data)
Dec. 31, Dec. 31,
2002 2001
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 47,199 93,439
Investments in marketable debt securities 14,239 46,760
Accounts receivable, net 56,064 56,495
Other current assets 16,789 29,472
----------- -----------
Total current assets 134,291 226,166
Restricted cash 18,067 16,270
Investments in marketable debt securities 65,602 76,777
Property and equipment, net 62,893 79,043
Other assets 21,406 41,036
Intangible assets, net 15,886 96,135
Goodwill, net 59,150 279,353
----------- -----------
Total assets $ 377,295 814,780
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,572 7,324
Accrued liabilities 62,833 80,224
Current portion of long-term debt 220 77
----------- -----------
Total current liabilities 69,625 87,625
Non-current liabilities
Long-term debt 117,738 176,457
Other long term liabilities 3,875 7,199
----------- -----------
Total liabilities 191,238 271,281
Stockholders' equity:
Common stock; $0.0001 par value;
400,000,000 shares authorized;
139,251,879 outstanding at
December 31, 2002 and 138,300,625
outstanding at December 31, 2001 14 14
Notes receivable from stockholders (397) (563)
Additional paid-in-capital 2,698,980 2,695,443
Other comprehensive income (13,811) (12,789)
Deferred stock compensation -- (481)
Retained deficit (2,468,301) (2,107,716)
Treasury stock, at cost (30,428) (30,409)
----------- -----------
Total stockholders' equity 186,057 543,499
----------- -----------
Total liabilities and stockholders'
equity $ 377,295 814,780
=========== ===========
CNET Networks(R)
Statement of Cash Flows
Unaudited
($'000)
Year ended December 31,
2002 2001
---------- ------------
Cash flows from operating activities:
Net Loss $(360,585) $(1,989,488)
Adjustments to reconcile loss to net
cash used in operating activities:
Depreciation and amortization 60,404 704,883
Noncash interest 1,237 3,210
Deferred taxes 9,193 (48,130)
(Gain) loss on debt retirement (21,551) 10,609
Asset impairment 290,505 1,075,000
Allowance for doubtful accounts 3,004 901
Services exchanged for cost method
investments -- (4,697)
(Gain) loss on sale and impairment of
marketable equity and debt securities
and privately held investments 12,771 174,261
Foreign currency translation gain (loss) (1,412) (11,852)
Loss on fixed assets due to lease
abandonment -- 8,108
Changes in operating assets and
liabilities:
Accounts receivable (1,576) 41,574
Other assets (4,930) 28,240
Accounts payable (1,816) (12,462)
Accrued liabilities (21,990) (17,695)
Other long-term liabilities (733) 3,487
Benefit from exercise of stock
options -- 6,281
---------- ------------
Net cash used in operating
activities (37,479) (27,770)
---------- ------------
Cash flows from investing activities:
Purchase of marketable debt securities (151,362) (106,066)
Proceeds from sale of marketable debt
securities 199,307 109,161
Proceeds from sale of equity investments 451 29,066
Proceeds from sale of (investments in)
privately held companies 3,000 (10,015)
Net cash acquired (paid for) acquisitions (8,781) (10,834)
Capital expenditures (18,966) (48,298)
---------- ------------
Net cash used in investing
activities 23,649 (36,986)
---------- ------------
Cash flows from financing activities:
Payments received on stockholders' notes 149 475
Net proceeds from employee stock purchase
plan 864 2,030
Net proceeds from exercise of options &
warrants 3,148 13,095
Principal payments on borrowings and
retirement of debt (37,170) (6,081)
---------- ------------
Net cash provided by
financing activities (33,009) 9,519
---------- ------------
Net increase in cash and cash equivalents (46,839) (55,237)
Effect of exchange rate changes on cash and
cash equivalents 599 (121)
Cash and cash equivalents at the beginning of
the period 93,439 148,797
---------- ------------
Cash and cash equivalents at the end of the
period $47,199 $93,439
========== ============
CNET Networks(R)
Business Segment Summary
Unaudited
($'000)
CNET's primary areas of measurement and decision-making include
three principal business segments -- U.S. Media, International Media
and Channel Services. U.S. Media consists of an online network
including sites providing sources of technology information, as well
as shopping services, a technology print publication, and a radio
broadcast providing technology news and information. International
Media includes the delivery of online technology information and
several technology print publications. Channel Services includes a
licensed product database and an online technology marketplace for
resellers, distributors and manufacturers. Management believes that
segment operating income (loss) before depreciation and amortization
is an appropriate measure of evaluating the operating performance of
the company's segments. However, segment operating income (loss)
before depreciation and amortization should not be considered a
substitute for operating income, cash flows or other measures of
financial performance prepared in accordance with generally accepted
accounting principles.
Three months ended December 31, 2002
-----------------------------------------------------
US Media Int'l Channel Other (1) Total
-------------------------------------- ------------
Revenues $53,747 $9,991 $4,063 $ -- $67,801
Operating
expenses 46,775 10,169 4,885 18,384 80,213
-------------------------------------- ------------
Operating
income
(loss) $6,972 $(178) $(822) $(18,384) $(12,412)
====================================== ============
Three months ended December 31, 2001
-----------------------------------------------------
US Media Int'l Channel Other (1) Total
-------------------------------------- ------------
Revenues $59,040 $7,600 $3,608 $ -- $70,248
Operating
expenses 56,991 11,785 6,057 72,710 147,543
-------------------------------------- ------------
Operating
income
(loss) $2,049 $(4,185)$(2,449) $(72,710) $(77,295)
====================================== ============
Year ended December 31, 2002
-----------------------------------------------------
US Media Int'l Channel Other (2) Total
-------------------------------------- ------------
Revenues $194,105 $27,786 $15,066 $ -- $236,957
Operating
expenses 200,847 34,256 19,837 363,331 618,271
-------------------------------------- ------------
Operating
(loss) $(6,742) $(6,470)$(4,771) $(363,331) $(381,314)
====================================== ============
Year ended December 31, 2001
-----------------------------------------------------
US Media Int'l Channel Other (2) Total
-------------------------------------- ------------
Revenues $242,122 $28,805 $14,878 $ -- $285,805
Operating
expenses 264,786 44,254 22,879 1,821,011 2,152,930
-------------------------------------- ------------
Operating
loss $(22,664)$(15,449)$(8,001)$(1,821,011) $(1,867,125)
====================================== ============
(1) For the three months ended December 31, 2002, other represents
operating expenses related to asset impairment charges of $9,104,
integration and realignment of $1,751, depreciation of $6,036 and
amortization of $1,493. For the three months ended December 31,
2001, other represents operating expenses related to integration
and realignment of $6,364, depreciation of $6,260 and amortization
of $60,086.
(2) For the year ended December 31, 2002, other represents operating
expenses related to asset impairment of $290,505, integration and
realignment of $12,422, depreciation of $25,749 and amortization
of $34,655. For the year ended December 31, 2001, other represents
operating expenses related to asset impairment of $1,075,000,
integration and realignment of $42,992, depreciation of $24,417
and amortization of $678,602.
CNET Networks(R)
Guidance to the Investment Community
----------------------------------------------------------------------
$ in millions, except Q4 2002 Q1 2003 est. FY 2003 est.
per share Actual Low - High Low - High
----------------------------------------------------------------------
Net revenues $67.8 $54 - $56 $235 - $245
Operating expense before
depreciation &
amortization (1) (2) $63.6 $61 - $63 $235 - $240
Operating income (loss)
before depreciation &
amortization (2) $4.2 ($9) - ($6) $0 - $5
Depreciation expense ($6.0) ($6.0) ($21.0)
Amortization expense ($1.5) ($1.5) ($6.0)
Interest expense, net ($1.3) ($1.5) ($6.0)
Other income (expense) (3) $17.2 ($1.0) ($4.0)
Earnings (loss) per
share (4) (5) $0.03 ($0.14) - ($0.11) ($0.27) - ($0.23)
----------------------------------------------------------------------
1) Q1 2003 est. and FY2003 est. includes expenses of $4-5 million
related to staff reductions completed in Q1 2003 as well as radio
operation termination costs.
2) Q4 2002 actual excludes a $9.1 million asset impairment charge.
3) Q4 2002 includes a net gain of $18.5 million from the repurchase
of debt.
4) Q4 2002 includes a net gain of $0.07 per share related to the gain
on the repurchase of debt offset by the asset disposal charge.
5) Assumes an effective tax rate of zero percent in Q4 2002, Q1 2003
and full-year 2003.
Safe Harbor Statement: This document includes forward-looking
information and statements that are subject to risks and uncertainties
that could cause actual results to differ materially. These
forward-looking statements include the statements regarding the
company's expected financial results in the first quarter and
full-year 2003, as well as other statements throughout the release
that are identified by the words "expect," "estimate," "target,"
"believe," "anticipate," "intend" and similar expressions. These
statements are only effective as of the date of this release and we
undertake no duty to publicly update these forward-looking statements,
whether as a result of new information, future developments or
otherwise. Reported results should not be considered as an indication
of future performance. The risks and uncertainties include: a
continued or worsening slowdown in advertising spending on the
Internet in general, especially in the technology sector, or on CNET
Networks' properties in particular, which could be prompted by
continuing weakness in corporate or consumer spending, the failure of
existing advertisers to meet their advertising commitments, or other
factors; the need for further cost-reductions, which could increase
severance costs and negatively impact operating income and net income
or cause such results to differ from company guidance; the risk that
cost-reduction initiatives will not be achieved due to implementation
difficulties or contractual spending commitments that can't be
reduced; the risk that cost-reduction efforts will result in a loss of
revenues due to a decrease in resources dedicated to generating
revenues; the acquisition of businesses or the launch of new lines of
business, which could decrease our cash position, increase operating
expense and dilute operating margins; future impairment of the
company's assets or the need to increase the company's reserve
attributable to abandoned real estate; disruption of our service due
to the failure of key infrastructure providers or in connection with
the transfer of our systems to new providers; and the failure of the
company's users to adopt new paid service offerings. For risks about
CNET Networks' business, see its Annual Form 10-K for the year ended
December 31, 2001; its Quarterly Report on 10-Q for the period ended
September 30, 2002 and subsequent Forms 8-K, including disclosures
under the captions "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," which are
filed with the Securities and Exchange Commission and are available on
the SEC's website at www.sec.gov.
CNET Networks(R)
Quarterly Statistical Highlights
Unaudited Q4-02
comparison
Q4-02 Q3-02 Q2-02 Q1-01 Q4-01 Q-Q Y-Y
%chg %chg
------- ------- ------- ------- ------- ------ ----
Total Quarterly
Revenue ($mm) $67.8 $56.3 $57.2 $55.7 $70.2 21% -3%
Revenue
Distribution (%)
US Online Media 42% 43% 43% 45% 49%
Commerce 20% 17% 19% 20% 18%
Print & Broadcast 17% 22% 19% 20% 17%
International 15% 11% 12% 9% 11%
Channel Services 6% 7% 7% 6% 5%
Barter as % of
Total Revenue 4% 5% 5% 5% 5%
Advertiser Metrics
Network Unique
Customers 1,950 1,750 1,591 1,585 1,503 11% 30%
Top 100
Advertisers'
Renewal Rate 85% 88% 91% 78% 92%
Top 100
Advertisers' %
of Network
Revenue 63% 63% 59% 61% 64%
Commerce Metrics
(000s, except $)
Average Leads per
Day 326 261 280 280 322 25% 1%
Total Leads 30,000 24,000 25,500 25,200 29,600 25% 1%
Revenue per Lead $0.45 $0.44 $0.43 $0.43 $0.41
Channel Services
Data Source
Licenses 258 218 201 188 171 18% 51%
User Metrics
GameSpot Complete
Paid Subscribers
(000s) 47.2 37.5 22.5 -- -- 26% na
Downloads per day
(mm) 2.4 2.2 2.6 3.1 2.7 9% -11%
Balance Sheet
Highlights ($mm)
Cash $47.2 $64.8 $94.1 $57.6 $93.4
Marketable Debt
Securities 79.8 105.4 112.9 135.4 123.5
Restricted Cash 18.1 18.1 15.8 15.8 16.3
------- ------- ------- ------- -------
Total Cash &
Equivalents $145.1 $188.3 $222.8 $208.8 $233.2
Total Long-term
Debt $118.0 $170.1 $177.0 $176.5 $176.5
Days Sales
Outstanding
(DSO) 74 69 73 87 72 7% 3%
Operating Loss Reconciliation
Income (loss) before depreciation,
amortization and asset impairment:
Three months ended Twelve months ended
December 31, December 31,
2002 2001 2002 2001
---------------------- ----------------------
Operating income
(loss) $ (12,412) $ (77,295) $ (381,314) $ (1,867,125)
Depreciation 6,036 6,260 25,749 24,417
Amortization of
goodwill and
intangible assets 1,493 60,086 34,655 678,602
Asset impairment 9,104 -- 290,505 1,075,000
---------------------- ----------------------
Operating income (loss)
before depreciation,
amortization and asset
impairment $ 4,221 $ (10,949) $ (30,405) $ (89,106)
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