DG Systems First Quarter Net Income Rises 21%; EBITDA of $3.3 million; Diluted EPS of $0.02.Business Editors DALLAS--(BUSINESS WIRE)--May 6, 2004 DG Systems, Inc. (Nasdaq: DGIT), the leading provider of digital media distribution services to the advertising and broadcast industries, today reported operating results for the three-month period ended March 31, 2004. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenues for the three months ended March 31, 2004 totaled $13.4 million, compared to $15.7 million in the comparable year-ago period. Net income for the three months ended March 31, 2004 rose 21% to $1.3 million, or $0.02 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 $1.1 million, or $0.02 per diluted share, in the year-ago first quarter. For the 2004 first quarter, DG's earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
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. rose to $2.1 million from $2.0 million in the first quarter of 2003. At March 31, 2004, DG reported cash of $6.9 million and total long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. of $4.8 million, a 15% reduction from the $5.6 million level of long-term debt at December December: see month. 31, 2003. DG's cash surplus of $2.1 million, net of debt, reflects the benefits of cost reductions implemented throughout 2003, as well as the Company's continued focus on utilizing free cash flow to reduce debt. Commenting on the results, Scott K. Ginsburg Gins·burg , Ruth Bader Born 1933. American jurist who was appointed an associate justice of the U.S. Supreme Court in 1993. , Chairman and Chief Executive Officer of DG Systems, stated, "Since assuming the responsibilities of 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. late last year, revenues have stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. and we have embarked on a plan for revenue growth while further strengthening our balance sheet. DG and its senior managers are focused on expanding revenue through internal sales initiatives, realizing the benefits of additional cost savings and managing for bottom line profitability. During the quarter we continued to strengthen our balance sheet, paying down $0.8 million of debt and reducing our short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. liabilities while simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics increasing our net cash surplus to $2.1 million. While year-over-year digital distribution revenue comparisons through the first quarter of 2004 continued to reflect the loss of revenue, primarily from one former customer, we are intent on improving operating results in future periods." DG maintains an industry leading position with its current digital distribution network and its relationships with over 700 leading advertising agencies representing over 5,000 advertisers. The Company's expanded digital network is the largest in the advertising and broadcasting industries, reaching more than 5,000 advertisers and agencies, nearly 2,000 broadcast and cable television destinations and over 10,000 radio stations. In order to accomplish DG Systems' goals for growth, the company announced a strategy last February February: see month. to build on this industry leadership and broad customer relationships through several important technical and service innovations including: -- An industry-first 'triple play' solution for delivering radio commercials via 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 , DG's private telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. network or overnight distribution. The introduction of three separate pathways through which to deliver audio content provides DG customers with the industry's most reliable and easy-to-use spot delivery network available. -- A 'triple play' solution for delivering television commercials electronically via the Internet, satellite or overnight distribution - another industry first. Through the introduction of a new "DG Spot Box" which enables this three-way functionality, DG has established the advertising industry's first and only triple redundant distribution capability for video. -- The recently commenced upgrade of DG Online(TM), our web-based customer application software and interface. Through a just announced alliance with Avanade Avanade, Inc. is a joint venture between Accenture and Microsoft which was founded on April 4 2000. The company is a global IT consulting company that specializes in solutions using Microsoft enterprise technology. , Inc. -- a premier technology integrator (1) In electronics, a device that combines an input with a variable, such as time, and provides an analog output; for example, a watt-hour meter. (2) See systems integrator. for Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. solutions - we plan to introduce an enhanced DG Online solution during the next twelve months. Once implemented, the enhancements will transform DG Online into a more streamlined, easier-to-navigate portal that simplifies the order entry process while providing expanded options for storage, delivery and management of broadcast advertising and content. As with the triple play and DG Spot Box service upgrades, the DG Online enhancements will provide our customers with unrivaled performance, reliability and convenience. Mr. Ginsburg continued, "Our corporate goal is to best serve our customer's needs regardless of technology preference or an individual station's reception capabilities. Although the triple play solutions were only recently introduced, the initial response from ad agencies, brands, radio and television broadcasters, and cable systems has been extremely positive. "Focusing on innovation and enhancing customer service are sound investments in our future. In so doing, we are positioning DG to generate organic growth, both through further cost savings and revenue expansion. We also believe, however, that reductions in debt and current levels of cash have positioned the Company to pursue complementary acquisitions that leverage our sales force, network infrastructure and close relationships with agencies and advertisers. We also will pursue those opportunities with vigor VIGOR Internal medicine A clinical study–Vioxx GI Outcomes Report comparing a proprietary COX-2 inhibitor to standard NSAIDs and discipline." EBITDA/Non-GAAP Reconciliation EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Although 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 , the Company believes that it may be useful to an investor in evaluating its performance. However, investors should not consider this measure 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 generally accepted accounting principles. In addition, because 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 EBITDA figures included herein can be made by deducting 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. , excluding Depreciation and amortization from the Company's Revenues (see attached financial table). About DG Systems, Inc. DG Systems and the Company's StarGuide division provide the standard in Digital Media Exchange services for the advertising and broadcast industries, featuring dependable satellite and Internet transmission technology and a suite of digital media asset management tools. DG's extensive digital network is the largest in the advertising and broadcasting industries, reaching more than 5,000 advertisers and agencies, nearly 2,000 broadcast and cable television destinations and over 10,000 radio stations with innovative delivery and management solutions for short- and long-form audio and video content. More information is available at www.dgsystems.com. The Company's first quarter 2004 conference call will be broadcast live on the Internet at 11:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT today May 6, 2004. The webcast is open to the general public. Interested parties may access the live call on the Internet via the Company's web site at www.dgsystems.com or http://www.vcall.com/CEPage.asp?ID=86009. Please allow 15 minutes to register and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary software. This release contains 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. 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, and the demand among certain clients for digital audio and video delivery services. 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 Systems' business are set forth in the company's 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. filed with the Securities and Exchange Commission on March 12, 2004.
Digital Generation Systems, Inc.
Condensed Consolidated Balance Sheet
(In thousands)
March 31, December 31,
2004 2003
---------- -----------
Cash $ 6,879 $ 7,236
Accounts receivable 9,159 9,288
Inventories 1,895 2,114
Property and equipment 9,378 9,736
Goodwill 48,246 48,759
Other 15,712 15,800
--------- ---------
TOTAL ASSETS $ 91,269 $ 92,933
========= =========
Accounts payable and accrued liabilities 5,185 6,667
Deferred revenue 4,324 5,145
Debt and capital leases 4,814 5,647
--------- ---------
TOTAL LIABILITIES 14,323 17,459
TOTAL STOCKHOLDERS' EQUITY 76,946 75,474
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 91,269 $ 92,933
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Digital Generation Systems, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended
March 31,
2004 2003
--------- ---------
Revenues $ 13,382 $ 15,656
Operating expenses, excluding depreciation
& amortization 10,056 11,850
--------- ---------
EBITDA 3,326 3,806
Depreciation & amortization 1,200 1,837
--------- ---------
Operating income $ 2,126 $ 1,969
Interest expense and other, net 271 212
--------- ---------
Income before income taxes 1,855 1,757
Provision for income taxes 538 667
Net income $ 1,317 $ 1,090
========= =========
Basic net income per common share: $ 0.02 $ 0.02
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Diluted net income per common share: $ 0.02 $ 0.02
========= =========
Weighted average shares outstanding - Basic 72,167 70,743
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Weighted average shares outstanding - Diluted 74,116 72,238
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