LAUNCH Reports Fourth Quarter, Full-Year Financial Results.Business & Entertainment Editors SANTA MONICA Santa Monica (săn`tə mŏn`ĭkə), city (1990 pop. 86,905), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1886. Tourism and retailing are important, and the city has motion-picture, biotechnology, and software industries. , Calif.--(BUSINESS WIRE)--Jan. 24, 2001 LAUNCH Media, Inc. (Nasdaq:LAUN) reported today financial results for the fourth quarter and twelve months ended December December: see month. 31, 2000. The Company also announced today it is revising its forecast to accelerate 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 profitability to the third quarter 2000. This is being achieved through cost saving measures, despite lowering its revenue forecast. Net revenues for the fourth quarter 2000 increased 21% to $8.0 million, compared to net revenues of $6.6 million for the fourth quarter 1999. The revenue mix for the quarter was 75% from advertising, 22% from content licensing and 3% from subscription and other. The EBITDA loss for the 2000 fourth quarter was $7.9 million, or $0.55 per share, compared to an EBITDA loss of $7.9 million, or $0.61 per share, for the fourth quarter of 1999 and an EBITDA loss of $8.0 million, or $0.56 per share for the third quarter of 2000, including the Warped Tour Warped Tour is a touring music and extreme sports festival. The tour is held in venues (generally parking lots or fields upon which the stages and other structures are erected). . Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net revenues for the twelve months ending December 31, 2000 totaled $36.9 million, up 48% over pro forma net revenues of $25 million last year. The pro forma revenue mix for the twelve months ending December 31, 2000 was 60% from advertising, 22% from content licensing, 13% from ticket revenue and 5% from subscription and other. The pro forma EBITDA loss for the twelve months ended December 31, 2000 was $34.0 million, or $2.37 per share. This compares to a pro forma EBITDA loss of $26.2 million, or $2.16 per share, for the same twelve-month period last year. LAUNCH also announced today that, as of January January: see month. 31, 2001, it will be discontinuing the "Online Music Group" (OMG (1) See Object Management Group. (2) "Oh my God!" See digispeak. OMG - Object Management Group ) of related music sites due to strong traffic growth on LAUNCH.com as well as reduced demand from advertisers for the banner Same as banner ad. 1. banner - The title page added to printouts by most print spoolers. Typically includes user or account ID information in very large character-graphics capitals. inventory on OMG sites. As a result, along with an overall softer online advertising market, net revenue for the full year 2001 is estimated to increase 22% to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $45 million. Despite slower revenue growth projections, LAUNCH expects to generate positive EBITDA for the first time during the third quarter of 2001, one quarter earlier than the recent guidance of the fourth quarter 2001. Therefore, the Company is reducing its EBITDA loss estimate for the year to $10 million, from the previously estimated loss of $15 million. This is being accomplished through cost savings throughout the company, including reductions in customer acquisition spending and the elimination of OMG. LAUNCH's success in attracting a significant number of new users continued in the fourth quarter as the Company's registered user base grew to 5.6 million as of December 31, 2000, compared to 5.0 million as of September September: see month. 30, 2000. Unique visitors A count of how many different people access a Web site. For example, if a user leaves and comes back to the site five times during the measurement period, that person is counted as one unique visitor, but would count as five "user sessions. to LAUNCH.com totaled 5.1 million for December 2000, compared to 4.2 million in September 2000. Due to the phasing out of OMG, unique visitors to all LAUNCH properties were 9.7 million in December 2000, compared to 9.9 million in September 2000. As OMG was the vast majority of the difference between the LAUNCH 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: and LAUNCH.com unique visitor numbers, only LAUNCH.com will be reported in the future. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Dave Goldberg, 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 LAUNCH, "We are extremely pleased to accelerate our plan for EBITDA profitability to the third quarter of 2001. To reach this goal we have reduced our costs substantially, while still planning to grow revenue, albeit at a slower pace. We will continue to create innovative marketing solutions for our consumer products advertisers through integrated sponsorship and rich media advertising opportunities. In the fourth quarter, we again demonstrated our ability to execute on this strategy by attracting a number of significant new advertisers including Levi's, Volkswagen “VW” redirects here. For the airline using IATA designator VW, see Aeromar. Volkswagen AG (ISIN: DE0007664005), or VW, is an automobile manufacturer based in Wolfsburg, Germany. , Intel Pentium III The successor to the Pentium II from Intel. Introduced in the spring of 1999 at 500 MHz, the Pentium III architecture was similar to the Pentium II with the addition of 70 new instructions optimized for multimedia (see SSE). and Showtime show·time or show time n. 1. The time at which an entertainment, such as the showing of a movie, is scheduled to start. 2. Slang The time at which an activity is to begin. Noun 1. ." During the fourth quarter, LAUNCH and RealNetworks (RealNetworks, Inc., Seattle, WA, www.realnetworks.com) The company behind the RealMedia and the RealPlayer technologies. Originally Progressive Networks, product names have a Real prefix (RealPlayer, RealOne, RealArcade, RealAudio, etc.). See RealMedia. extended their strategic alliance to include an updated version of LAUNCH's popular music service, LAUNCHcast “LAUNCH” redirects here. For other uses, see launch. LAUNCHcast is an Internet radio service offered by Yahoo! Music that plays music based on user ratings and preferences. , utilizing RealNetworks'(R) RealPlayer A multimedia player from RealNetworks that plays RealAudio and RealVideo transmissions. Included is the technology (see RealJukebox) for organizing music files and creating MP3 files from audio CDs. (R) streaming media See streaming audio, streaming video and digital media hub. technology. Through this expanded alliance, LAUNCHcast users can now designate des·ig·nate tr.v. des·ig·nat·ed, des·ig·nat·ing, des·ig·nates 1. To indicate or specify; point out. 2. To give a name or title to; characterize. 3. RealPlayer as their preferred format when creating their streaming music station. This allows LAUNCH the opportunity to reach Real's 155 million registered user base as well as music fans using Macintosh A family of desktop and laptop computers from Apple and the first computer to popularize the graphical user interface (GUI). The combination of Mac hardware and software has been consistent over the years, providing an ease of use that Mac users have enjoyed. computers. In addition, LAUNCH will continue to provide music video content, music news and features prominently throughout RealNetworks' Real.com(TM) Guide, a comprehensive source of high quality streaming media programming. Lastly, the LAUNCH RealChannel(TM) has now become a primary selection within the RealPlayer. About LAUNCH Headquartered in Santa Monica, LAUNCH Media, Inc. (Nasdaq:LAUN) is a media company dedicated to creating the premier 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 music site, LAUNCH.com, by providing music fans with the broadest array of music and music-related editorial content. LAUNCH.com provides visitors with a wide selection of streaming audio A one-way audio transmission over a data network. It is widely used on the Web as well as company networks to play audio clips and Internet radio. Computers in home networks stream audio (mostly music) to digital media hubs connected to home theaters. , the Web's largest collection of music videos, exclusive artist features and music news covering all genres of music. Additionally, LAUNCH.com offers music customization with LAUNCHcast, an intelligent music service that enables members to design their own streaming music station with high quality audio or video. LAUNCH Fourth Quarter Webcast LAUNCH management will host a Webcast to discuss fourth quarter financial performance, operating and strategic developments and 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. guidance at 4:30 p.m. ET (1:30 p.m. PT) on Wednesday Wednesday: see week. , January 24, 2001. The Webcast will be available live at www.launch.com. Go to: About LAUNCH, Investor Relations Investor relations The process by which the corporation communicates with its investors. , Scheduled Events (available for 90 days). The conference call will also be available on www.streetevents.com This news release contains forward looking statements about the products and services of LAUNCH, as that term is used in Section 21E of the Securities Exchange Act of 1934. Forward looking statements are denoted by such words as "will allow," "will provide," "we expect," "we believe," "we anticipate," "will result," "we estimate" and similar terms and phrases. Forward looking statements include statements regarding new products and services, our customer base, strategic investments, new partnerships, and our quarterly operating results. Our forward looking statements are based on currently available information which management has assessed but which is dynamic and subject to rapid and even abrupt change. We assume no obligation to update such statements. Actual results could differ materially from those expressed or 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. due to risks and uncertainties that affect our business. These risks include but are not limited to: the unpredictability of our future revenues due to our dependence principally on advertising revenues, our dependence on purchase of advertising by major consumer companies, our failure to increase the size of our audience could affect our ability to attract advertisers or strategic partners, our failure to continue to develop compelling content that attracts our target audience could cause our audience size to decrease or change the demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. of our audience, the need for additional financing to achieve our business objectives where such financing may not be available because of the condition of our business or the uncertain nature of the financial markets, our inability to reach EBITDA profitability could adversely affect our business, the competition in all aspects of our business, especially among the Internet music companies and risks of new business areas, international expansion and strategic alliances and partnerships. The forward looking statements should be considered in the context of these and other risk factors disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the company's filings with the Securities and Exchange Commission, including its 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 fiscal year ended December 31, 1999, available online at http://www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . All forward looking statements are based on information available to the company on the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the company assumes no obligation to update such statements.
LAUNCH MEDIA, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
For The 3 Months Ended For The 12 Months Ended
December 31, December 31,
---------------------- -----------------------
2000 1999 2000 1999
(in thousands, except per share data)
Net Revenues
Advertising $ 6,002 $ 3,851 $ 20,940 $ 8,958
Content Licensing 1,791 2,064 8,247 5,442
Subscription and Other 230 704 1,642 2,225
Total Revenues 8,023 6,619 30,829 16,625
Operating Expenses
Cost of Revenues 2,288 1,459 7,806 5,239
Sales and Marketing 7,737 8,780 31,241 24,234
Content and Product
Development 3,925 2,910 17,056 9,283
General and
Administrative 2,020 1,327 9,297 4,416
Cost of Warrants -- 4,964 -- 4,964
Depreciation and
amortization 4,811 2,885 17,476 7,970
Loss from Operations (12,758) (15,706) (52,047) (39,481)
Net Interest Income (432) 811 1,678 1,988
Loss Before Provision
for Income Taxes (13,190) (14,895) (50,369) (37,493)
Provision for Income
Taxes 2 0 8 12
Net loss (13,192) (14,895) (50,377) (37,505)
Accretion of Mandatory
Redeemable Convertible
Preferred Stock -- -- -- (766)
Net loss attributable
to common stockholders ($13,192) ($14,895) ($50,377) ($38,271)
Basic and Diluted Loss
Per Share ($ 0.92) ($ 1.17) ($ 3.66) ($ 4.15)
EBITDA Loss (a) ($ 7,947) ($ 7,857) ($34,571) ($26,547)
EBITDA Loss Per Share ($ 0.55) ($ 0.61) ($ 2.51) ($ 2.88)
Weighted Average Common
Shares used in Per Share
Calculations 14,391 12,780 13,782 9,218
(a)EBITDA excludes cost of warrants, net interest income, provision
for income taxes, depreciation and amortization.
LAUNCH MEDIA, INC. AND SUBSIDIARIES
PRO FORMA RESULTS OF OPERATIONS
For The 3 Months Ended For The 12 Months Ended
December 31, December 31,
---------------------- -----------------------
2000 1999 2000 (b) 1999 (a)
(in thousands, except per share data)
Net Revenues
Advertising $ 6,002 $ 3,851 $ 22,097 $ 11,814
Content Licensing 1,791 2,064 8,247 6,905
Ticket Revenue -- -- 4,914 4,044
Subscription and Other 230 704 1,642 2,284
Total Revenues 8,023 6,619 36,900 25,047
Operating Expenses
Cost of Revenues 2,288 1,459 7,806 5,239
Warped Expenses -- -- 5,948 5,583
Sales and Marketing 7,737 8,780 30,744 24,743
Content and Product
Development 3,925 2,910 17,056 10,434
General and
Administrative 2,020 1,327 9,297 5,266
Cost of Warrants -- 4,964 -- 4,964
Depreciation and
amortization 4,811 2,885 18,456 10,807
Loss from Operations (12,758) (15,706) (52,407) (41,989)
Net Interest Income (432) 811 1,679 1,991
Loss Before Provision
for Income Taxes (13,190) (14,895) (50,728) (39,998)
Provision for Income
Taxes 2 0 20 35
Net Loss ($13,192) ($14,895) ($50,748) ($40,033)
Basic and Diluted
Loss Per Share ($ 0.92) ($ 1.17) ($ 3.55) ($ 3.29)
EBITDA Loss (c) ($ 7,947) ($ 7,857) ($33,951) ($26,218)
EBITDA Loss Per
Share ($ 0.55) ($ 0.61) ($ 2.37) ($ 2.16)
Weighted Average
Common Shares used
in Per Share
Calculations 14,391 12,780 14,307 12,155
(a)Statement of operations is on a pro forma basis assuming the
completion of the Company's acquisition of The Warped Tour,
SW Networks and Musicvideos.com as of the beginning of the periods
presented.
(b)Statement of operations is on a pro forma basis assuming the
completion of the Company's acquisition of The Warped Tour as of
the beginning of the period presented.
(c)EBITDA excludes cost of warrants, net interest income, provision
for income taxes, depreciation and amortization.
LAUNCH MEDIA, INC. AND SUBSIDIARIES
BALANCE SHEETS
(in thousands)
December 31,
2000 1999
ASSETS:
Cash and cash equivalents $ 1,438 $ 878
Short term investments 15,169 55,007
Securities available for sale 50 1,684
Accounts receivable, net 5,780 4,027
Notes receivable 2,995 298
Prepaids and other current assets 561 2,269
Total current assets 25,993 64,163
Property and equipment, net 17,316 7,404
Intangibles and other assets 25,756 22,651
Total assets $ 69,065 $ 94,218
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable $ 4,671 $ 2,767
Accrued expenses 8,416 2,357
Deferred revenue 207 1,197
Notes and capital lease obligations,
current portion 1,702 856
Total current liabilities 14,996 7,177
Notes and capital lease obligations,
net of current portion 2,804 999
Total liabilities 17,800 8,176
Common stock, $0.001 par value,
shares authorized 75,000,000; shares
issued and outstanding, 14,412,140 (2000)
and 12,849,686 (1999) 14 13
Additional paid-in capital 167,045 151,221
Other comprehensive income -- 684
Unearned compensation (306) (765)
Accumulated deficit (115,488) (65,111)
Total stockholders' equity 51,265 86,042
Total liabilities & stockholders' equity $ 69,065 $ 94,218
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