CoolSavings Reports Fourth Quarter and 2002 Year-End Financial Results.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 5, 2003 CoolSavings, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :CSAV CSAV Center for the Study of Active Volcanoes (University of Hawaii) CSAV Compañía Sud Americana de Vapores (Chilean Shipping Company) CSAV Chief of Staff Aviation ): Highlights: -- Significant growth in revenue year over year and quarter over quarter; -- Progress toward net income and cash-flow breakeven; -- Record membership and consumer activity; -- Results demonstrate significant growth in client adoption of core business services and new products CoolSavings, Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). :BB CSAV), an online direct marketing and media company that provides smarter solutions to connect marketers to their target consumers, today reported results for the fourth quarter and year-ended December December: see month. 31, 2002. CoolSavings' loss from operations decreased $2.2 million from $2.3 million for the fourth quarter of 2001 to $0.1 million for the fourth quarter of 2002. For the second consecutive quarter, CoolSavings' fourth quarter of 2002 was EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become positive, excluding charges for lease exit, continuing the Company's progress toward achieving its goal of net income and positive cash flow. The Company's robust holiday sales season saw fourth quarter revenue grow 33% over the same period for the prior year. Fourth Quarter Financial Highlights Net revenues in the fourth quarter were $8.3 million compared to $6.3 million in the same period of 2001. Gross profit in the fourth quarter was $7.5 million, or 90% of net revenues, compared to $5.3 million, or 85% of net revenues in the fourth quarter of 2001. The Company's total 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. in the quarter were the same at $7.7 million as compared to the fourth quarter of 2001. For the fourth quarter, the loss applicable to common stockholders was $0.7 million, or a loss of $0.02 per share, compared to the loss of $3.8 million, or $0.10 per share, reported in the same period of 2001. EBITDA was $0.7 million for the fourth quarter compared to an EBITDA loss of $1.1 million in the fourth quarter of 2001.Excluding the charges for lease exit recorded during the fourth quarter of 2002, total operating expenses for the quarter would have been $7.4 million, EBITDA would have been a positive $1.0 million and the loss applicable to common stockholders would have been $0.5 million or $0.01 per share. Year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. Financial Highlights Net revenues for 2002 were $26.4 million, compared to $22.2 million reported in 2001, an increase of 19%. Gross profit for 2002 was $22.8 million, or 86% of total revenues, compared to $16.4 million, or 74% of total revenues, reported in 2001. Total operating expenses for the year were $30.3 million compared to $42.1 million in 2001, a reduction in operating expenses of 28%. The loss applicable to common stockholders for the full year of 2002 was $9.6 million, or a loss of $0.25 per share, compared to a loss of $30.7 million, or $0.78 per share in 2001. EBITDA for the year was a loss of $3.1 million compared to an EBITDA loss of $20.6 million in the comparable period of 2001. Excluding the charges for the lease exit and asset write down recorded during 2002, total operating expenses for the year would have been $27.0 million, EBITDA would have been a positive $0.2 million, and the loss applicable to common stockholders would have been $6.3 million or $0.16 per share. At December 31, 2002, the Company had cash and cash equivalents of $4.9 million and total assets of $13.7 million compared to $5.1 million and $18.0 million, respectively, at December 31, 2001. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying , net of allowances for doubtful accounts, at December 31, 2002 were $4.9 million compared to $3.6 million at the end of 2001. At the end of 2002, CoolSavings' current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. totaled $12.1 million, a reduction of $8.1 million compared to the balance of $20.2 million at the end of 2001. Total liabilities were $13.4 million at December 31, 2002 compared to $20.9 million at December 31, 2001. Stockholders' deficit at December 31, 2002 was $24.6 million compared to $15.0 million at December 31, 2001. Non-GAAP Financial Measures EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization, and extraordinary gains. The Company has presented EBITDA because it is a common alternative measure of performance and is an indicator of the Company's ability to generate cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses . The Company's definition of EBITDA may not be consistent with that of other companies. EBITDA is not a measure of financial performance or liquidity under 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). ) and should not be considered in isolation or as a substitute for measures of performance 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 GAAP. The Company has also provided, for the quarter and year ended December 31, 2002, total operating expenses, EBITDA and loss applicable to common stockholders excluding certain charges. This information is presented because the Company believes it is meaningful, as a complement to, but not as a substitute for, the operating results presented in accordance with GAAP. The attached schedule reconciles the GAAP operating results to the EBITDA and EBITDA excluding certain charges. Record Consumer Registration and Activity In 2002, the Company set its own records for member registrations and activity. Nearly 7.6 million new consumers registered with CoolSavings in 2002--a 26% increase over the previous year--while the Company lowered its average cost per registration by 21% compared to 2001. In addition, the Company's total household membership at the close of the year was 23.5 million, representing approximately 20% of American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of households.(a) Importantly, revenue producing actions by CoolSavings members increased by a record 71% over the previous year. Growth of New Initiatives The Company's new product introductions experienced significant growth in 2002. For example, CoolSavings' unique Select Response service gained considerable momentum throughout the year in terms of client popularity and performance. Providing clients with the ability to deliver highly targeted e-mail or direct mail to pre-qualified consumers who answer customized survey questions, Select Response typical response rates range from 10-25% depending on the communication vehicle. Revenue from Select Response increased 110% from the first quarter to the fourth quarter of 2002. Clients utilizing the product include Wal-Mart  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. , JCPenney, Nestle Purina Petcare Company and
Disney Dis·ney , Walter Elias Known as "Walt." 1901-1966.American animator, showman, and film producer. Noted for his creation of the cartoon characters Mickey Mouse and Donald Duck, he produced the first animated film with sound, . CoolSavings' new direct mail business showed traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in 2002 as well. More than 56 companies, including Earthlink, America Online See AOL. , Scholastic and Citibank utilized the Company's Direct Mail list rental service and co-operative mail program during 2002. CoolSavings' Direct Mail service maintains a postal list of more than 12 million consumers and provides advertisers a wide array of targetable demographic and geographic criteria, and the ability to implement high-impact, cross-channel electronic and postal campaigns. The Company's Coupon Technology licensing service revenues increased significantly in 2002 following a late 2001 introduction. Using CoolSavings' proprietary ASP asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). technology, advertisers deliver secure, printable print·a·ble adj. 1. Capable of being printed or of producing a print: printable negatives. 2. Fit for publication: printable language. coupons to consumers from their own Web sites, e-mail and online banner ads A graphic image used on Web sites to advertise a product or service. Banner ads come in numerous sizes, but are often rectangles 460 pixels wide by 60 pixels high. Also 460 x 55 and 392 x 72 sizes are commonly used. . Wyeth, Sargento, Home Depot The Home Depot (NYSE: HD) is an American retailer of home improvement and construction products and services. Headquartered in Vinings, just outside Atlanta in unincorporated Cobb County, Georgia, Home Depot employs more than 355,000 people and operates 2,164 big-box , L'Oreal, Gorton's and GlaxoSmithKline all have employed Coupon Technology. The CoolSavings Marketing Network (CSMN CSMN Christian Science Monitor News ), an 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 distribution network for coupons and samples from consumer packaged good manufacturers, retailers and restaurants, debuted in the fall of 2002.With more than 30 top Web properties including Knight Ridder
Knight Ridder (IPA: /ˈrɪdɚ/) was an American media company, specializing in newspaper and Internet publishing. newspaper sites, The Weather Channel's weather.com, and popular lifestyle sites such as allrecipes.com, CSMN partnerships provide broad monthly access to more than 22 million consumers across the Internet. CSMN advertisers include Kellogg's, General Mills  This article or section may contain a proseline.Please help [ convert this timeline] into prose or, if necessary, a . , Hormel Foods, JCPenney Portrait, GlaxoSmithKline, Unilever, Dannon and 3M. "Our business really came together this past year," commented Matthew Moog, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of CoolSavings, Inc. "We generated record numbers for both consumer registrations and consumer actions, and we enjoyed our strongest-ever quality and quantity of 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 content. At the same time, we continued to strengthen our core products and services, and enjoyed the early success of new initiatives recently introduced. Add to those milestones a solid 85% retention rate among our Top 50 clients, and we believe we have strong momentum going into 2003." Business Outlook The following statements are based on current expectations, are forward-looking and actual results may differ materially. See "Cautionary Note Regarding 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. " below. Although accurate forecasting of quarterly results is especially difficult in the current period, the Company is targeting EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). 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 in 2003. EBIT is defined as earnings before interest expense, taxes, and extraordinary gains. The Company is changing its measure of profitability for 2003 from EBITDA to EBIT as depreciation and amortization are anticipated to a have a smaller impact on the business going forward. The Company's definition of EBIT may not be consistent with that of other companies. EBIT is not a measure of financial performance or liquidity under generally accepted accounting principles (GAAP), and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. In addition, the Company expects 2003 revenue growth to exceed the 19% increase it experienced in 2002. Although there are many factors that are outside of the Company's control that may negatively impact its ability to achieve these forecasts, the Company believes that the goals it has set are reasonable if the economy remains consistent or improves. About CoolSavings CoolSavings is an online direct marketing and media company that provides smarter solutions to help marketers reach their target consumers. Combining a broad distribution network, sophisticated analytics and proprietary technology with superior customer service, CoolSavings enables a wide variety of advertisers to identify and engage their best customers among our more than 24 million registered households. CoolSavings' popular media property, coolsavings.com, is ranked the #1 coupon site on the Internet for 36 consecutive months.(b) (a) Numbers based on U.S. Census Bureau's American Housing Survey The American Housing Survey The American Housing Survey (AHS)[1], [2] a statistical survey funded by the United States Department of Housing and Urban Development (HUD) and conducted by the U.S. Census Bureau. for the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. : 2001. (b) comScore Media Metrix Jan.2000-Dec.2002 CoolSavings is a registered trademark of CoolSavings, Inc. Other product and company names herein may be trademarks of their respective owners. Cautionary Note Regarding Forward-Looking Statements Statements in this press release regarding CoolSavings' business that are not historical facts are forward-looking statements 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, including the statements under "Business Outlook" and other statements regarding the Company's expectations, beliefs, hopes, intentions or strategies. Where possible, such forward-looking statements have been identified by use of words such as "target," "forecast," "budget," "believe," "expects" and similar expressions. Known and unknown risks, uncertainties and other factors, both general and specific to the matters discussed in this press release, may cause CoolSavings' actual results and performance to differ materially from the future results and performance expressed in, or implied by, such forward-looking statements. Among these risks are the Company's ability to obtain additional debt and/or equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. , the uncertainties related to CoolSavings' unproven unproven Dubious, nonscientific, not proven, quack, questionable, unscientific adjective Relating to that which has not been validated by reproducible experiments or other scientific methods for determining effect or efficacy business model in a rapidly evolving marketplace, and CoolSavings' ability to protect its patents, trademarks and propriety pro·pri·e·ty n. pl. pro·pri·e·ties 1. The quality of being proper; appropriateness. 2. Conformity to prevailing customs and usages. 3. proprieties The usages and customs of polite society. rights. These and other important factors, including those mentioned in various Securities and Exchange Commission filings made periodically by CoolSavings, For further discussion of some of the risks, uncertainties and other factors which could cause actual results to differ from those expressed in, or implied by, the forward-looking statements, see "Risk Factors" in CoolSavings' 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, as filed with the SEC. CoolSavings undertakes no obligation to update or revise any forward-looking statements as a result of new information, future events or developments or changed circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or .
COOLSAVINGS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per share data)
For the For the
Three Months Ended Twelve Months Ended
----------------------------------------------------
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
-------------------------- -------------------------
Revenue:
e-marketing
services $ 8,282 $ 6,215 $ 26,088 $ 21,874
License royalties 66 66 272 299
------------- ------------ ------------ ------------
Net revenues 8,348 6,281 26,360 22,173
Cost of revenues 827 948 3,607 5,739
------------- ------------ ------------ ------------
Gross profit 7,521 5,333 22,753 16,434
------------- ------------ ------------ ------------
Operating expenses:
Sales and marketing 4,303 3,729 14,281 17,814
Product development 1,060 1,143 4,002 6,092
General and
administrative 2,040 2,812 8,708 18,184
Lease exit costs 261 - 2,110 -
Loss on asset
impairment - - 1,233 -
------------- ------------ ------------ ------------
Total operating
expenses 7,664 7,684 30,334 42,090
------------- ------------ ------------ ------------
Loss from
operations (143) (2,351) (7,581) (25,656)
Other income
(expense):
Interest and
other income 8 3 50 258
Interest expense (294) (307) (1,183) (841)
Amortization of
debt discount - (13) - (3,096)
Other settlement
expense - - - (219)
------------- ------------ ------------ ------------
Total other income
(expense) (286) (317) (1,133) (3,898)
------------- ------------ ------------ ------------
Loss before income
taxes and
extraordinary gain (429) (2,668) (8,714) (29,554)
Income taxes - - - -
------------- ------------ ------------ ------------
Loss before
extraordinary gain (429) (2,668) (8,714) (29,554)
Extraordinary gain - 327 - 327
------------- ------------ ------------ ------------
Net loss (429) (2,341) (8,714) (29,227)
Accretion of
convertible
redeemable Series B
Preferred Stock to
redemption value - (1,318) - (1,318)
Cumulative dividend
on Series B
Preferred Stock (283) (113) (909) (113)
------------- ------------ ------------ ------------
Loss applicable to
common stockholders $ (712) $ (3,772) $ (9,623) $ (30,658)
============= ============ ============ ============
Basic and diluted net
loss per share before
extraordinary gain $ (0.02) $ (0.11) $ (0.25) $ (0.79)
Extraordinary gain - 0.01 - 0.01
------------- ------------ ------------ ------------
Basic and diluted net
loss per share $ (0.02) $ (0.10) $ (0.25) $ (0.78)
============= ============ ============ ============
Weighted average
shares used in the
calculation
of basic and
diluted net loss
per share 39,093,660 39,093,660 39,093,660 39,093,660
============= ============ ============ ============
COOLSAVINGS, INC.
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(in thousands)
Loss from operations $ (143) $ (2,351) $ (7,581) $ (25,656)
Plus: Depreciation
and amortization 884 1,283 4,392 5,064
Plus: Interest income 8 3 50 258
Plus: Other settlement
expense - - - (219)
------------- ------------ ------------ ------------
EBITDA $ 749 $ (1,065) $ (3,139) $ (20,553)
============= ============ ============ ============
Plus: Lease exit costs 261 - 2,110 -
Plus: Loss on asset
impairmment - - 1,233 -
------------- ------------ ------------ ------------
EBITDA excluding lease
exit costs and loss
on asset impairment $ 1,010 $ (1,065) $ 204 $ (20,553)
============= ============ ============ ============
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