DAMARK Announces a Record Year 2000 for the Membership Business.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Feb. 2, 2001 FY Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the : Revenues of $135.9 m, Op Inc of $27.8 m, Net Inc of $17.0 m, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $2.94 DAMARK International, Inc. (Nasdaq:DMRK) today announced its financial results for the fourth quarter and year ended December December: see month. 31, 2000: Provell (membership services) delivered another record year with net revenues of $135.9 million for 2000 compared to $120.7 million in 1999 (adjusted for SAB SAB Spontaneous abortion. See Abortion. 101), a 12.6% increase. 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. for the year 2000 was $27.8 million compared to $26.0 million in 1999 (adjusted for SAB 101). Cash flow generated from operations for the year 2000 also exceeded expectations totaling $28.8 million compared to $27.5 million in 1999. In addition, Provell signed 1,192,000 new members, breaking its previous record-setting quarter. Gross membership acquisitions for the year 2000 increased 52.2% to 3.5 million compared to 2.3 million in 1999. As previously announced, the Company is in the process of selling or winding down its 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 fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. business, ClickShip Direct, Inc. The financial results for ClickShip Direct and the catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. retail business wind-down (which was substantially completed in third quarter 2000) will be accounted for as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in 2000. "The year 2000 was a particularly challenging one for Damark. Our goals were: to focus on, and separate, our membership services business; exit non-member catalog marketing activities; and exploit the promise of e-fulfillment with our catalog infrastructure on behalf of our shareholders", said Mark A. Cohn, Chairman and Chief Executive Officer. "While I am pleased to report another outstanding year of membership performance and an exit from catalog retailing that was on plan, it is with great profound regret Regret See also Remorse. Epimetheus Pandora’s husband; regretted opening box. [Gk. Myth.: Kravitz, 90] Hale, Nathan (1755–1776) American Revolutionary spy, hanged by British; regretted only having one life to give for that we find ourselves having to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. ClickShip Direct. We met virtually every major operating objective for this subsidiary, except for raising additional capital. This failure, while not unique to us as a participant Participant A party of a funding. It usually refers to the lowest rank or smallest level of funding. in the b2c Internet economy The Internet Economy refers to conducting business through markets whose infrastructure is based on the Internet and World-Wide Web. An Internet economy differs from a traditional economy in a number of ways, including: communication, market segmentation, distribution costs, and price. , forced us to abandon abandon v. to intentionally and permanently give up, surrender, leave, desert, or relinquish all interest or ownership in property, a home or other premises, a right of way, and even a spouse, family, or children. our initiative to spin out this promising subsidiary. With the catalog wind-down completed and an expected e-fulfillment wind-down, we will have brought a close to our history as a direct merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. company. We built what was once a top 15-catalog business. Presaging a decline in the discount catalog retailing space, we began 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. our portfolio in 1996 by pursuing aggressive growth in the membership business. Fortunately those investments have paid off. This continuing business, which has consistently exceeded expectations, features high growth potential, healthy cash flows and an extremely talented management team. After we have addressed the cost of the wind-down of ClickShip, we can focus exclusively on expanding this uniquely attractive business." Financial Results from Continuing Operations Net revenue from continuing operations (membership services) for the year ended December 31, 2000 was $135.9 million compared to $120.7 million in 1999 (adjusted for SAB 101), a 12.6% increase. Operating income from continuing operations for the year ended December 31, 2000 was $27.8 million, a 6.8% increase over $26.0 million reported for the comparable period in 1999 (adjusted for SAB 101). Net income from continuing operations for 2000 was $17.0 million or $2.94 per share. This is compared to net income of $17.0 million from continuing operations in 1999 (adjusted for SAB 101) or $2.76 per share. In addition, the Company also recorded in 2000 a non-cash after tax charge of $14.2 million or $2.46 per share for the cumulative effect of a change in accounting and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. related charges of $2.8 million or $0.48 per share. For the fourth quarter 2000, net revenues from continuing operations were $34.0 million compared to $39.6 million for the fourth quarter 1999 (adjusted for SAB 101). Operating income from continuing operations for fourth quarter 2000 was $2.2 million compared to $13.6 million for the comparable period in 1999 (adjusted for SAB 101). The decline in 2000 reflects costs associated with dramatically stepped-up stepped-up adj. Increased in pace or intensity; heightened: a stepped-up political campaign. membership acquisitions which increased 101% over prior year's fourth quarter acquisitions. Net income from continuing operations for fourth quarter 2000 was $1.2 million or $0.21 per share compared to net income of $9.0 million or $1.49 per share for the comparable period in 1999 (adjusted for SAB 101). Capital expenditures for continuing operations for the year 2000 and fourth quarter 2000 were $2.6 million and $0, respectively. The Company has a $10 million credit facility in place with borrowings outstanding at December 31, 2000 of $5.2 million. The Company will require additional financing to fund the wind-down of the ClickShip business, but the amount required has not yet been determined. The Company continues to pursue all strategic financing options for its continuing operations as well as to finance a potentially significant cash outlay for a ClickShip wind-down. Financial Results from Discontinued Operations The Company reported a pretax loss pretax loss A loss reported before tax benefits are considered. from the catalog retail and ClickShip businesses (discontinued operations) of $63.3 million through third quarter 2000. The Company anticipates the pretax loss from discontinued operations for the fourth quarter 2000, which includes an estimate of future expenses for operations through the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of date and a potential wind-down of the ClickShip business, to be in the range of $25 to $35 million. The amount of the pretax loss from discontinued operations will depend on whether ClickShip's assets are sold or liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. and upon the amount ultimately realized from the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of any assets of the discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: business. In addition, the Company's ability to realize the deferred tax asset will depend upon the final resolution of the ClickShip business and the Company's ability to finance the resulting cash outflow. The Company expects to complete the wind-down of ClickShip by the end of first quarter, 2001. Guidance for Continuing Operations for 2001 "Over the past two years, membership services has generated over $53 million in pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern operating income for the corporation, while providing over $56 million in cash from operations. We have clearly demonstrated the earnings and cash flow generation power of our membership business model," said George S George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). . Richards Rich·ards , Dickinson Woodruff 1895-1973. American physician. He shared a 1956 Nobel Prize for developing cardiac catheterization. , the Company's president and 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. . "This year's outstanding results were accomplished against the backdrop Backdrop may refer to:
best - (superlative of `good') having the most positive qualities; "the best film of the year"; "the best solution"; "the best time for quarters for new member acquisitions position us well to capture an even larger share of the market in 2001 and beyond." "Looking forward to 2001," Richards continued, "we will be managing very tightly to 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 , and its essential accompaniment, revenue growth. We are targeting cash flow from continuing operations at $24 to $26 million with expected capital expenditures in the $5.0 million range. We expect the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. net revenues to be in the range of $145 to $155 million, with operating income margins dependent on the rate of growth in new member signups and quarterly renewal volumes. In addition, we continue to pursue all strategies, as well as additional financing options, which will permit us to maintain our membership track record of superior value generation for shareholders." Further guidance will be provided once the final disposition of ClickShip is known. DAMARK International, Inc., operating under the Provell name, develops, markets and manages leading edge membership and customer relationship management programs. Provell's proprietary programs provide purchase price discounts and other benefits related to consumer and small business needs in the areas of shopping, travel, hospitality, entertainment, health/fitness, and finance. As of December 31, 2000, consumers enjoyed benefits provided through over 2.6 million memberships. The Company is headquartered in Minneapolis, Minnesota “Minneapolis” redirects here. For other uses, see Minneapolis (disambiguation). Minneapolis (pronounced IPA: /ˌmɪniˈæpəlɪs/) is the largest city in the U.S. and was founded in 1986. Any statements herein regarding the business of DAMARK International, Inc. that are not historical facts 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. " that are intended to qualify for the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions from liability provided 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. For a discussion of risks and uncertainties that could cause actual results to differ from those implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by any forward looking statement, see "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" in the Company's most recent Annual and Quarterly Reports on Forms 10-K and 10-Q and the disclosures under the Sections entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Risk Factors" and "Recent Developments" in the Company's Form S-3 Registration Statement (File No. 333-48776), all as filed with the Securities and Exchange Commission.
4th QUARTER 2000
----------------
FINANCIAL STATEMENTS, CONTINUING OPERATIONS
(unaudited, in thousands except per share data)
----------------------------------------------------------------------
CONDENSED STATEMENTS OF OPERATIONS,
CONTINUING OPERATIONS Quarters Ended Years Ended
---------------- -------------------
Dec 31, Dec 31, Dec 31, Dec 31,
2000 1999 2000 1999
-------- ------- -------- ---------
Net revenues....................$33,983 $42,560 $135,940 $138,188
------- ------- -------- --------
Operating and marketing
expenses (1,2)................. 27,472 25,585 88,911 93,414
General and administrative
expenses....................... 4,324 3,940 19,206 15,409
------- ------- -------- --------
Total costs and expenses........ 31,796 29,525 108,117 108,823
------- ------- -------- --------
Operating income................ 2,187 13,035 27,823 29,365
Other expense, net.............. 172 33 436 118
------- ------- -------- --------
Income before taxes and
cumulative effect of change
in acctg....................... 2,015 13,002 27,387 29,247
Income tax provision............ (766) (4,420) (10,406) (9,944)
------- ------- -------- --------
Income before cumulative effect
of change in accounting........ 1,249 8,582 16,981 19,303
Cumulative effect of change in
accounting, net of tax......... - - 14,201 -
------- ------- -------- --------
Net income...................... 1,249 8,582 2,780 19,303
Beneficial conversion feature
attributable to preferred
stock.......................... - - (1,989) -
Preferred stock dividends and
amortization................... (799) - (799) -
------- ------- -------- --------
Net income (loss) available to
common shareholders............$ 450 $ 8,582 $ (8) $ 19,303
======= ======= ======== ========
Earnings per common share -
basic
Income from continuing
operations.....................$ 0.21 $ 1.55 $ 2.94 $ 3.28
Cumulative effect of change in
accounting, net of tax......... - - (2.46) -
Preferred stock charges......... (0.13) - (0.48) -
------- ------- -------- --------
Net income (loss) available to
common shareholders............$ 0.08 $ 1.55 $ (0.00) $ 3.28
======= ======= ======== ========
Weighted average basic shares
outstanding.................... 5,856 5,545 5,766 5,877
======= ======= ======== ========
Earnings per common share -
diluted
Income from continuing
operations.....................$ 0.21 $ 1.42 $ 2.94 $ 3.12
Cumulative effect of change in
accounting, net of tax......... - - (2.46) -
Preferred stock charges......... (0.13) - (0.48) -
------- ------- -------- --------
Net income (loss) available to
common shareholders............$ 0.08 $ 1.42 $ (0.00) $ 3.12
======= ======= ======== ========
Weighted average diluted shares
outstanding.................... 5,856 6,027 5,766 6,177
======= ======= ======== ========
Years Ended
-------------------
CONDENSED BALANCE SHEETS, Dec 31, Dec 31,
CONTINUING OPERATIONS 2000 1999
-------- ---------
Cash and cash equivalents..........................$ 13,107 $ 3,927
Trade accounts receivable, net..................... 39,586 32,842
Due from affiliate (3)............................. 29,370 -
Deferred costs..................................... 57,136 4,911
Deferred income taxes.............................. - 1,360
Other current assets............................... 1,731 452
-------- ---------
Total current assets............................... 140,930 43,492
Property and equipment, net........................ 3,959 2,446
Other assets, net.................................. 50 327
Deferred income taxes (4).......................... 26,666 2,059
-------- ---------
Total assets.......................................$171,605 $ 48,324
======== =========
Accounts payable...................................$ 20,387 $ 10,762
Accrued liabilities................................ 56,601 28,777
Deferred revenues.................................. 55,683 24,749
Borrowings under revolving
credit facility................................... 5,150 -
-------- ---------
Total current liabilities.......................... 137,821 64,288
-------- ---------
Series D preferred stock........................... 16,417 -
Equity (deficit) in continuing
operations (5).................................... 17,367 (15,964)
-------- ---------
Total liabilities and equity in
continuing operations.............................$171,605 $ 48,324
======== =========
CONDENSED STATEMENTS OF CASH FLOWS, Years Ended
CONTINUING OPERATIONS -------------------
Dec 31, Dec 31,
2000 1999
-------------------
Net income from continuing
operations........................................$ 2,780 $ 19,303
Cumulative effect of change in
accounting, net of tax............................ 14,201 -
Depreciation and amortization...................... 1,513 2,357
Changes in deferred income
taxes............................................. 3,984 8,119
Loss on disposal of property....................... 19 22
Net change in non-interest
bearing current assets and
liabilities....................................... 3,404 1,594
--------- ---------
Cash provided by continuing
operations........................................ 25,901 31,395
--------- ---------
Additions to property and
equipment, net.................................... (2,561) (911)
Other, net......................................... (8) 19
--------- ---------
Cash used for investments.......................... (2,569) (892)
--------- ---------
Net change in investment in
segment........................................... (1,808) (15,326)
Increase in intercompany
receivable, corporate............................. (38,810) -
Net borrowings (repayments)
under revolving credit facility................... 5,150 (5,140)
Repurchases and retirements of
Common Stock...................................... - (7,091)
Issuance of preferred stock, net 18,853 -
Net proceeds from exercise of
stock options..................................... 2,463 932
---------- --------
Cash used for financing............................ (14,152) (26,625)
---------- --------
Net increase in cash and
equivalents....................................... $ 9,180 $ 3,878
========== ========
---------------------------------------------------
(1) Discounts provided to Preferred Buyers Club(R) and Insiders(R)
members are allocated entirely to discontinued operations (Retail
segment) and totaled $2.1 million in the quarter ended December
31, 1999.
(2) Includes inter-segment transfers to discontinued operations
(Retail segment) from Membership of $5.1 million in the quarter
ended December 31, 1999.
(3) Amount will be directly offset in consolidation against an
intercompany payable recorded in discontinued operations (Retail
segment).
(4) Does not include deferred taxes associated with fourth quarter
2000 losses from discontinued operations currently estimated to
range from $25.0 million to $35.0 million before taxes. In
addition, the recorded amount does not include any adjustment for
the realizability of this asset which the Company is continuing to
evaluate.
(5) Does not reflect the negative impact on equity from discontinued
operations.
The condensed financial statements included herein have been prepared
by the Company without audit in accordance with generally accepted
accounting principles and pursuant to the rules and regulations of the
Securities and Exchange Commission and should be read in conjunction
with the financial statements and notes thereto included in the
Company's most recent Annual and Quarterly Reports on Forms 10-K and
10-Q as filed with the SEC.
4th QUARTER 2000
----------------
SEGMENT FINANCIAL DATA, CONTINUING OPERATIONS
(unaudited, in thousands)
----------------------------------------------------------------------
CONDENSED STATEMENTS OF OPERATIONS AND Member- Total
STATEMENTS OF CASH FLOWS, ship Continuing
CONTINUING OPERATIONS Services Corporate Operations
-------- --------- ----------
Quarter ended December 31, 2000
-------------------------------
Net revenues.............................$ 33,983 $ - $ 33,983
Operating and marketing expenses (1)..... 27,472 - 27,472
General and administrative expenses...... 4,324 - 4,324
-------- -------- --------
Operating income......................... 2,187 - 2,187
Other (income) expense, net.............. (2) 174 172
-------- -------- --------
Income (loss) before income taxes........ 2,189 (174) 2,015
Income tax provision..................... - (766) (766)
-------- -------- --------
Net income (loss) from continuing
operations.............................. $ 2,189 $ (940) $ 1,249
======== ======== ========
Net income (loss) from continuing
operations.............................. $ 2,189 $ (940) $ 1,249
Depreciation and amortization............ 342 107 449
Net changes in working capital and
other................................... 13,270 3,829 17,099
-------- -------- --------
Cash provided by continuing operations... 15,801 2,996 18,797
-------- -------- --------
Additions to property and equipment,
net..................................... 20 - 20
Other, net............................... (10) (40) (50)
-------- -------- --------
Cash provided by (used for) investments.. 10 (40) (30)
-------- -------- --------
Net change in investment in segment...... 10,740 (174) 10,566
Increase in intercompany receivable,
corporate............................... - (10,151) (10,151)
Net repayments under revolving credit
facility................................ - (6,613) (6,613)
Issuance of preferred stock and
warrants................................ - (97) (97)
Net proceeds from exercise of stock
options................................. - 30 30
-------- -------- --------
Cash provided by (used for) financing.... 10,740 (17,005) (6,265)
-------- -------- --------
Net increase (decrease) in cash and
equivalents.............................$ 26,551 $(14,049) $ 12,502
======== ======== ========
Quarter ended December 31, 1999
(Restated)
-------------------------------
Net revenues.............................$ 42,560 $ - $ 42,560
Operating and marketing expenses (1,2)... 25,585 - 25,585
General and administrative expenses...... 3,940 - 3,940
-------- -------- --------
Operating income......................... 13,035 - 13,035
Other expense, net....................... - 33 33
-------- -------- --------
Income (loss) before income taxes........ 13,035 (33) 13,002
Income tax provision..................... - (4,420) (4,420)
-------- -------- --------
Net income (loss) from continuing
operations..............................$ 13,035 $ (4,453) $ 8,582
======== ======== ========
Net income (loss) from continuing
operations..............................$ 13,035 $ (4,453) $ 8,582
Depreciation and amortization............ 566 48 614
Net changes in working capital and
other................................... (4,256) 6,260 2,004
-------- -------- --------
Cash provided by continuing operations... 9,345 1,855 11,200
Additions to property and equipment,
net..................................... (296) - (296)
Other, net............................... 2 - 2
-------- -------- --------
Cash used for investments................ (294) - (294)
-------- -------- --------
Net change in investment in segment...... 3,984 (8,222) (4,238)
Repurchases and retirements of Common
Stock................................... - (2,284) (2,284)
Net proceeds from exercise of stock
options................................. - 74 74
-------- -------- --------
Cash provided by (used for) financing.... 3,984 (10,432) (6,448)
-------- -------- --------
Net increase (decrease) in cash and
equivalents.............................$ 13,035 $ (8,577) $ 4,458
======== ======== ========
-----------------------------------------
(1) Discounts provided to Preferred Buyers Club(R) and Insiders(R)
members are allocated entirely to discontinued operations (Retail
segment) and totaled $2.1 million in the quarter ended December
31, 1999.
(2) Includes inter-segment transfers to discontinued operations
(Retail segment) from Membership of $5.1 million in the quarter
ended December 31, 1999.
4th QUARTER 2000
----------------
SEGMENT FINANCIAL DATA, CONTINUING OPERATIONS
(unaudited, in thousands)
----------------------------------------------------------------------
CONDENSED STATEMENTS OF OPERATIONS AND Member- Total
STATEMENTS OF CASH FLOWS, ship Continuing
CONTINUING OPERATIONS Services Corporate Operations
-------- --------- ----------
Year Ended December 31, 2000
----------------------------
Net revenues.............................$135,940 $ - $135,940
Operating and marketing expenses (1)..... 88,911 - 88,911
General and administrative expenses...... 19,206 - 19,206
-------- -------- --------
Operating income......................... 27,823 - 27,823
Other expense, net....................... 3 433 436
-------- -------- --------
Income (loss) before taxes and cumulative
effect of change in acctg............... 27,820 (433) 27,387
Income tax provision..................... - (10,406) (10,406)
-------- -------- --------
Income (loss) before cumulative effect of
change in accounting.................... 27,820 (10,839) 16,981
Cumulative effect of change in
accounting, net of tax.................. 22,904 (8,703) 14,201
-------- -------- --------
Net income (loss) from continuing
operations..............................$ 4,916 $ (2,136) $ 2,780
======== ======== ========
Net income (loss) from continuing
operations..............................$ 4,916 $ (2,136) $ 2,780
Cumulative effect of change in
accounting, net of tax.................. 22,904 (8,703) 14,201
Depreciation and amortization............ 1,048 465 1,513
Net changes in working capital and
other................................... (91) 7,498 7,407
-------- -------- --------
Cash provided by (used for) continuing
operations.............................. 28,777 (2,876) 25,901
-------- -------- --------
Additions to property and equipment,
net..................................... (2,561) - (2,561)
Other, net............................... (8) - (8)
-------- -------- --------
Cash used for investments................ (2,569) - (2,569)
-------- -------- --------
Net change in investment in segment...... 24,140 (25,948) (1,808)
Increase in intercompany receivable,
corporate............................... - (38,810) (38,810)
Net borrowing of debt.................... - 5,150 5,150
Issuance of preferred stock and
warrants................................ - 18,853 18,853
Net proceeds from exercise of stock
options................................. - 2,463 2,463
-------- -------- --------
Cash provided by (used in) financing..... 24,140 (38,292) (14,152)
-------- -------- --------
Net increase (decrease) in cash and
equivalents.............................$ 50,348 $(41,168) $ 9,180
======== ======== ========
Year Ended December 31, 1999 (Restated)
---------------------------------------
Net revenues.............................$138,188 $ - $138,188
Operating and marketing expenses (1,2)... 93,414 - 93,414
General and administrative expenses...... 15,278 131 15,409
-------- -------- --------
Operating income (loss).................. 29,496 (131) 29,365
Other expense, net....................... 22 96 118
-------- -------- --------
Income (loss) before income taxes and
other items............................. 29,474 (227) 29,247
Income tax provision..................... - (9,944) (9,944)
-------- -------- --------
Net income (loss) from continuing
operations..............................$ 29,474 $(10,171) $ 19,303
======== ======== ========
Net income (loss) from continuing
operations..............................$ 29,474 $(10,171) $ 19,303
Depreciation and amortization............ 2,162 195 2,357
Net changes in working capital and
other................................... (4,111) 13,846 9,735
-------- -------- --------
Cash provided by continuing operations... 27,525 3,870 31,395
-------- -------- --------
Additions to property and equipment,
net..................................... (911) - (911)
Other, net............................... 19 - 19
-------- -------- --------
Cash used for investments................ (892) - (892)
-------- -------- --------
Net change in investment in segment...... 1,532 (16,858) (15,326)
Net repayment of debt.................... - (5,140) (5,140)
Repurchases and retirements of Common
Stock................................... - (7,091) (7,091)
Net proceeds from exercise of stock
options................................. - 932 932
-------- -------- --------
Cash provided by (used for) financing.... 1,532 (28,157) (26,625)
-------- -------- --------
Net increase (decrease) in cash and
equivalents.............................$ 28,165 $(24,287) $ 3,878
======== ======== ========
-----------------------------------------
(1) Discounts provided to Preferred Buyers Club(R) and Insiders(R)
members are allocated entirely to discontinued operations (Retail
segment) and totaled $1.2 million and $10.9 million in the years
ended December 31, 2000 and December 31, 1999, respectively.
(2) Includes inter-segment transfers to discontinued operations
(Retail segment) from Membership of $19.1 million in the year
ended December 31, 1999.
4th QUARTER 2000
----------------
SEGMENT FINANCIAL DATA, CONTINUING OPERATIONS
(unaudited, in thousands)
----------------------------------------------------------------------
Member- Total
ship Continuing
CONDENSED BALANCE SHEETS, CONTINUING Services Corporate Operations
OPERATIONS -------- --------- ----------
At December 31, 2000
--------------------
Cash and cash equivalents................$ - $13,107 $ 13,107
Trade accounts receivable, net........... 35,168 4,418 39,586
Due (to) from affiliate (1).............. (9,440) 38,810 29,370
Deferred costs........................... 57,136 - 57,136
Other current assets..................... 931 800 1,731
------- ------- --------
Total current assets..................... 83,795 57,135 140,930
Property and equipment, net.............. 3,959 - 3,959
Other assets, net........................ 10 40 50
Deferred income taxes (2)................ - 26,666 26,666
------- ------- --------
Total assets.............................$87,764 $83,841 $171,605
======= ======= ========
Accounts payable.........................$20,385 $ 2 $ 20,387
Accrued liabilities...................... 56,448 153 56,601
Deferred revenues........................ 55,683 - 55,683
Borrowings under revolving credit
facility................................ - 5,150 5,150
------- ------- --------
Total current liabilities................132,516 5,305 137,821
Series D preferred stock................. - 16,417 16,417
Equity (deficit) in continuing
operations(3)...........................(44,752) 62,119 17,367
------- ------- --------
Total liabilities and equity in
continuing operations...................$87,764 $83,841 $171,605
======= ======= ========
At December 31, 1999 (Restated)
-------------------------------
Cash and cash equivalents................$ - $ 3,927 $ 3,927
Trade accounts receivable, net........... 31,043 1,799 32,842
Deferred costs........................... 4,911 - 4,911
Deferred income taxes.................... - 1,360 1,360
Other current assets..................... 452 - 452
------- ------- --------
Total current assets..................... 36,406 7,086 43,492
Property and equipment, net.............. 2,446 - 2,446
Other assets, net........................ 2 325 327
Deferred income taxes.................... - 2,059 2,059
------- ------- --------
Total assets.............................$38,854 $ 9,470 $ 48,324
======= ======= ========
Accounts payable.........................$10,762 $ - $ 10,762
Accrued liabilities...................... 26,819 1,958 28,777
Deferred revenues........................ 24,749 - 24,749
------- ------- --------
Total current liabilities................ 62,330 1,958 64,288
Equity (deficit) in continuing
operations(3)...........................(23,476) 7,512 (15,964)
------- ------- --------
Total liabilities and equity in
continuing operations...................$38,854 $ 9,470 $ 48,324
======= ======= ========
-----------------------------------------
(1) Amount will be directly offset in consolidation against an
intercompany payable recorded in discontinued operations (Retail
segment).
(2) Does not include deferred taxes associated with fourth quarter
2000 losses from discontinued operations currently estimated to
range from $25.0 million to $35.0 million before taxes. In
addition, the recorded amount does not include any adjustment for
the realizability of this asset which the Company is continuing to
evaluate.
(3) Does not reflect the negative impact on equity from discontinued
operations.
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