DG FastChannel(R) Second Quarter Revenues Increase 59% to $34.5 Million.Second Quarter 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. Rises 73% to a Record $8.5 Million Adjusted 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 Rises 74.6% to $13.0 Million DALLAS -- DG FastChannel[R], Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : DGIT), a leading provider of digital media advertising services to the advertising, entertainment and broadcast industries, today reported record financial results for the second quarter ended June 30, 2008. Second Quarter Highlights * Second quarter 2008 consolidated revenue of $34.5 million compared to $21.7 million in the same period of 2007. * Second quarter 2008 revenue from the delivery of high definition (HD) advertising content of $6.7 million compared to $1.4 million in the same period of 2007. * Adjusted EBITDA (earnings before interest, taxes, unrealized investment gains and losses, depreciation and amortization, and stock-related compensation) of $13.0 million for the three months ended June 30, 2008 compared to $7.5 million in the same period of 2007. * Second quarter 2008 net income of $4.1 million, or $0.23 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $3.8 million, or $0.23 per diluted share in the same period of 2007. * Second quarter 2008 normalized net income of $8.0 million, or $0.43 per diluted normalized net income per share, compared to normalized net income of $5.1 million, or $0.31 per diluted normalized net income per share in the same period of 2007. * On June 5, 2008, DG FastChannel completed the acquisition of the Vyvx advertising services business, including its distribution, post-production and related operations for $129 million in cash (excluding costs and a working capital adjustment). The consolidated 2008 second quarter operating results presented herein include approximately one month of operations of the Vyvx advertising services business. * On May 8, 2008, the Company signed a definitive agreement to merge with Enliven en·liv·en tr.v. en·liv·ened, en·liv·en·ing, en·liv·ens To make lively or spirited; animate. en·liv  en·er n. Marketing Technologies Corporation (NASDAQ: ENLV).
The merger will combine DG FastChannel's leadership in digital
media advertising services with Enliven's Internet marketing See Internet advertising. ,
online and mobile advertising solutions. DG FastChannel expects to issue
approximately 4.5 million shares of its common stock (excluding shares
already owned by DG FastChannel) valued at approximately $77.6 million,
based on the closing share price of $17.25 on June 30, 2008.
* As of June 30, 2008, DG FastChannel had $27.0 million in cash and $179.9 million of debt, or net debt of approximately $152.9 million compared to net debt of $34.7 million at December 31, 2007. Scott K. Ginsburg, Chairman 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 DG FastChannel, commented on the results, "The second quarter financial results -- a 59% increase in revenues and a 75% improvement in adjusted EBITDA -- confirm DG FastChannel's operating strategy and corporate development plans are succeeding. DG FastChannel has established unique products, workflow toolsets and proprietary digital technologies to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the nationwide transition to HD television. With less than 200 days remaining until the switch over to the HD broadcast standard, the Company is well positioned for growth." Business Outlook Mr. Ginsburg said, "The federal deadline to transition to digital broadcasting is rapidly approaching. DG FastChannel's revenue derived from the delivery of HD content has shown explosive growth. This trend is expected to continue based on the following factors: * Increasing numbers of HD TV sets in U.S. households; * Content providers widely distributing HD programming; and, * Media outlets -- cable, satellite, and over-the-air broadcasters -- transition to digital broadcast standards. "DG FastChannel's HD revenue growth is correlated cor·re·late v. cor·re·lat·ed, cor·re·lat·ing, cor·re·lates v.tr. 1. To put or bring into causal, complementary, parallel, or reciprocal relation. 2. to the capital expenditures incurred at the media outlets to upgrade their HD infrastructure. As these media outlets transition from analog to digital capabilities, our ability to deliver HD advertising content is significantly enhanced. So far, less than ten percent of all U.S. media outlets are enabled to receive HD advertising content, and we anticipate the HD enabled outlets to dramatically increase in the near-term. "During the balance of 2008, revenues also are expected to benefit from significant levels of presidential and overall political advertising." Vyvx Advertising Services Business Mr. Ginsburg commented, "The Vyvx advertising services business significantly expanded DG FastChannel's client base of the nation's most esteemed and best-known brands. Ninety percent of the nation's top 100 advertisers rely on our digital media advertising solutions to ingest in·gest tr.v. in·gest·ed, in·gest·ing, in·gests 1. To take into the body by the mouth for digestion or absorption. See Synonyms at eat. 2. , vault vault, ceiling over a room, formed in any one of a variety of curved shapes. Nature of Vaults A vault is generally composed of separate units of material, such as bricks, tiles, or blocks of stone, so shaped or cut that when assembled they form a , deliver or provide post-production advertising services on behalf of their television, radio and print advertising campaigns. Our revenue sources are more diversified diversified (di·verˑ·s than ever before in our history." The Vyvx advertising services business generated 2007 revenue of approximately $36 million and EBITDA of approximately $11 million. The Company expects to achieve approximately $7 million to $9 million of operational synergies over the next four quarters. The operational synergies include integrating the Vyvx advertising distribution management, operations, products and facilities with DG FastChannel's and the elimination of duplicative offices, telecom lines, equipment and resources. DG FastChannel / Enliven Marketing Technologies Pending Transaction On May 8, 2008, DG FastChannel entered into an agreement to acquire Enliven Marketing Technologies in a stock-for-stock transaction. The merger will combine DG FastChannel's leadership in digital media advertising services with Enliven's Unicast digital marketing technologies for online, mobile and in-game advertising In-game advertising (IGA) refers to the use of computer and video games as a medium in which to deliver advertising. 2005 spending on in-game advertising was USD$56 million, and this figure is estimated to grow to $1. solutions. The deal is subject to a vote by the DG FastChannel and Enliven shareholders, regulatory approvals and other customary closing conditions. DG FastChannel and Enliven Marketing Technologies expect to mail proxy A proxy server that specializes in e-mail transactions. See proxy server. materials to shareholders this month and, if the shareholders agree to the terms of the transaction, the deal is expected to close at the end of the third quarter of 2008. Mr. Ginsburg commented, "The Unicast and SpringBox platforms provide robust online advertising solutions. By undertaking this transaction, DG FastChannel's products participate in the fastest growing verticals within the advertising industry. DG FastChannel customers will benefit from our diversified digital platform as brands increasingly migrate valuable content to computers, cell phones, smart phones, game players and other portable, mobile devices." "We plan to bundle Enliven's digital marketing solutions with DG FastChannel's digital media advertising marketing products in the sales process A sales process is a systematic approach for performing product or service sales. The reasons for having a sales process include seller and buyer risk management, achieving standardized customer interaction in sales and scalable revenue generation. ," added Mr. Ginsburg. "This transaction and our corporate strategies will allow us to capitalize on the Company's pre-existing nationwide operating platform and cross-sell to our marquee customer base. In view of the advertising industry's diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of expenditures between traditional and online media, we believe it is in our Company's and our shareholders' best interest to enter the online advertising space. The Enliven transaction will 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. DG FastChannel's revenue sources." DG FastChannel expects to achieve operating and financial synergies based on the combination of the respective operating strategies of the Company and Enliven. The new combined company expects to realize approximately $3 million of cost savings in its first full year of operation as a combined entity through the elimination of duplicative corporate overhead. Concurrently, DG FastChannel expects to make substantial investments in upgrading the Unicast sales organization and enhancing its ad delivery software platform. Second Quarter 2008 Financial Results Webcast The Company's second quarter conference call will be broadcast live on the Internet at 11:00 a.m. ET on Thursday, August 7, 2008. The webcast is open to the general public and all interested parties may access the live webcast on the Internet at the Company's Web site at www.dgfastchannel.com. Please allow 15 minutes to register and download or install any necessary software. Non-GAAP Reconciliation, Adjusted EBITDA, Normalized Net Income and Diluted Shares Used in Normalized Net Income Per Share Calculation Definitions Adjusted EBITDA is defined as earnings before interest, taxes, unrealized investment gains and losses, depreciation and amortization, and stock-related compensation. Although adjusted EBITDA is not a measure of performance or liquidity calculated in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), the Company believes this Non-GAAP financial measure provides meaningful supplemental information regarding our performance and liquidity. However, investors should not consider these measures in isolation or as substitutes for operating income, cash flows from operating activities or any other measure for determining the Company's operating performance or liquidity that is calculated in accordance with GAAP. In addition, because adjusted EBITDA is not calculated in accordance with generally accepted accounting principles, it may not necessarily be comparable to similarly titled measures employed by other companies. A reconciliation of the adjusted EBITDA figures to GAAP net income is included herein. DG FastChannel defines "normalized net income" as net income before amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , stock-related compensation expense, 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. and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. and losses on investments, utilization of tax NOLs/credits, release of the deferred tax asset valuation allowance and income and losses from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . DG FastChannel considers normalized net income to be another important indicator of the overall performance of the Company because it eliminates the effects of events that are either not part of the Company's core operations or are non-cash. DG FastChannel defines "diluted shares used in normalized net income per share calculations" as diluted common shares outstanding used in GAAP net income per share calculations, excluding the effect of FAS 123R under the treasury stock method. DG FastChannel considers normalized net income and diluted normalized net income per share to be additional important indicators of the overall performance of the Company because they eliminate the effect of non-cash items. Adjusted EBITDA and normalized net income should be considered in addition to, not as a substitute for, the Company's operating income and net income, as well as other measures of financial performance reported in accordance with GAAP. Reconciliation of Non-GAAP Financial Measures In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, the Company is presenting the most directly comparable GAAP financial measures and reconciling the non-GAAP financial metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. to the comparable GAAP measures. About DG FastChannel, Inc. DG FastChannel provides innovative, technology-based solutions to help advertisers and agencies work faster, smarter and more competitively. DG FastChannel delivers the standard in digital media services to the advertising, broadcast and publishing industries. The Company utilizes satellite and Internet transmission technologies and has deployed a suite of digital media intelligence and asset management tools designed specifically for the advertising industry, including creative and production resources, broadcast verification, and digital asset management. The Company's vast electronic media distribution network is relied upon by more than 5,000 advertisers and agencies, and over 21,000 online radio, television, cable, network and print publishing destinations. For more information visit www.dgfastchannel.com. 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. This release contains forward-looking statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company, including the expansion of its digital distribution network, the demand among certain clients for digital audio and video delivery services and its expectations of operations of the recently acquired Point.360 advertising distribution operations, GTN GTN gestational trophoblastic neoplasia. , the Vyvx advertising distribution assets and its strategic alliance and proposed merger with Enliven Marketing Technologies. These forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to DG FastChannel's business are set forth in the Company's filings with the Securities and Exchange Commission. DG FastChannel assumes no obligation to publicly update or revise any forward-looking statements. 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