Printer Friendly

N2K Inc. Announces Record 1998 Fourth Quarter and Year End Results.

Music Boulevard Fourth Quarter Revenues Increase 331%

- 60% Customer Acquisition Ramp-Up -

NEW YORK, Feb. 3 /PRNewswire/ -- N2K Inc. (Nasdaq: NTKI), a leading online music e-commerce company operating Music Boulevard (, today reported financial results for the fourth quarter and year ended December 31, 1998.

Net revenue for the fourth quarter ended December 31, 1998 was $17,190,000, a 331% increase from revenue of $3,993,000 reported for the fourth quarter of 1997. N2K Inc. reported a loss for the fourth quarter, from continuing operations and excluding transaction fees of $2,378,000 related to the ongoing previously announced merger with CDnow, of $17,698,000, or $1.24 per share, compared to a loss from continuing operations of $7,681,000, or $0.73 per share, for the fourth quarter of 1997. The fourth quarter 1998 net loss was $1.59 per share, compared to a net loss of $1.26 per share for the fourth quarter of 1997.

For the year ended December 31, 1998, N2K reported net revenue of $42,080,000, a 419% increase from revenue of $8,108,000 reported for the year ended December 31, 1997. The loss for the year, from continuing operations and excluding transaction fees of $2,378,000 related to the ongoing previously announced merger with CDnow, was $59,574,000, or $4.37 per share, compared to a loss from continuing operations of $19,988,000, or $4.09 per share, reported for the prior year. The net loss for 1998 was $5.64 per share, compared to a net loss of $5.88 per share for 1997.

At December 31, 1998, N2K's Music Boulevard had approximately 720,000 customers who have ordered and received product, of which 275,000 were first time customers added in the fourth quarter. This represents a customer acquisition ramp-up of over 60%. Approximately 51% of revenue in the fourth quarter came from existing customers. For 1998, N2K has added approximately 603,000 new customers.

"At Music Boulevard, we are committed to providing music consumers with the most compelling and entertaining experience while they shop for music online," said Jon Diamond, Vice Chairman and CEO, N2K Inc. "We are proud of our staff and thankful to our customers and partners for making 1998 the year when Music Boulevard experienced record growth in customer acquisition and revenue."

Mr. Diamond continued, "Through our partnership and marketing efforts with major portals and media companies such as AOL, Netscape, Excite, @Home, Infoseek,, Microsoft, CBS Cable, and, we were pleased to achieve a 60% ramp-up in our customer acquisition rate, well above our expectations. The combination of these partnerships has proven to be a successful brand builder and revenue driver as we saw 1998 revenues increase over 400%. During the year, we also aggressively expanded our international efforts with the opening of distribution centers in Europe and Japan, bringing Music Boulevard's offering to over 475,000 music titles from the US, Europe and Japan. Music Boulevard customers around the world now have access to the largest selection of music titles, community of music fans and music content."

Mr. Diamond continued, "Through our partnership with Time-Life, we were able to offer customers an exclusive Music Boulevard version of the Time-Life Treasury of Christmas. This higher margin product was the best-selling item during the 1998 holiday season. We continued our efforts to deliver a highly personalized experience to our customers with the introduction of My Music Boulevard, a service that allows customers to connect with the music they love on a more individualized basis. Music Boulevard also enhanced its custom CD department this quarter with the addition of holiday titles. We've also continued to embrace and offer new technologies to our customers. We've added over 100 tracks to our e-mod department, the digital downloading area of Music Boulevard. Additionally, Music Boulevard announced the formation of a new editorial team that will continue to generate and oversee music news, reviews and features."

On October 23, 1998, CDnow, Inc. (Nasdaq: CDNW) and N2K Inc.(Nasdaq: NTKI) jointly announced the signing of a definitive merger agreement. The merger is expected to be completed prior to March 31, 1999.

N2K Inc. is a leading online music e-commerce company operating Music Boulevard and the Internet's complete resource for music content, community and commerce. The Music Boulevard Network combines Music Boulevard, the world's #1 online music store, and the award-winning music channels: Rocktropolis, Jazz Central Station, Classical Insites and the Star Sites including Stones World and the official sites for Leonard Bernstein, Miles Davis and Wynton Marsalis. Music Boulevard ( offers a choice of more than 470,000 music titles and over 350,000 sound samples. The Music Boulevard Network is the preferred or exclusive music partner for America Online (AOL Keyword: MB), AOL Japan, AOL Europe, Netscape, Excite,,, ABC Radio Networks, Infoseek, Microsoft Plaza, iVillage, @Home, AT&T WorldNet, StarMedia, MJI Broadcasting, CBS Cable's TNN, CMT and and MTV International sites in Europe, Japan, Asia and Brazil. Traded on Nasdaq under the symbol "NTKI," N2K Inc. is based in New York at 55 Broad Street, New York, NY 10004. Internet address: Telephone: 212-378-5555.

This release may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to the impact from competition for Internet content and merchandise and recorded music; dependence on strategic alliance partners, suppliers and distributors; market acceptance of the Internet for commerce and as a medium for advertising; technological changes and difficulties; and other risks detailed in the Company's Securities and Exchange Commission filings.

N2K Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)
 Three Months Ended Year Ended
 December 31, December 31,
 1998 1997 1998 1997

 Net Revenues $ 17,190 $3,993 $ 42,080 $8,108
 Cost of Revenues 13,820 2,928 33,709 6,212

 Gross Profit 3,370 1,065 8,371 1,896

 Operating Expenses:
 Operating and
 development 7,803 3,503 23,895 10,585
 Sales and marketing 12,892 4,079 42,711 6,691
 General and
 administrative 3,495 1,522 6,852 4,648

 Operating loss (20,820) (8,039) (65,087) (20,028)

 Interest and
 Other Income 754 528 3,200 693

 Interest Expense (10) (170) (65) (653)

 Loss from continuing
 operations (20,076) (7,681) (61,952) (19,988)

 Loss from Discontinued
 Operations (1,010) (4,876) (13,317) (9,683)

 Gain (Loss) on Disposal
 of Discontinued
 Operations (1,612) -- (1,612) 1,574

 Loss before
 extraordinary item (22,698) (12,557) (76,881) (28,097)

 Extraordinary Item -- (639) -- (639)

 Net Loss $(22,698) $(13,196) $(76,881) $(28,736)

 Basic and Diluted Income
 (Loss) Per Common Share:
 Loss from continuing
 operations $(1.41) $(0.73) $(4.54) $(4.09)
 Loss from discontinued
 operations (0.07) (0.47) (0.98) (1.98)
 Gain (loss) on disposal
 of discontinued
 operations (0.11) -- (0.12) 0.32
 Extraordinary item -- (0.06) -- (0.13)
 Net loss per
 Common Share $(1.59) $(1.26) $(5.64) $(5.88)

 Shares Used in
 Computing Basic
 and Diluted Net Loss
 Per Common Share 14,239 10,496 13,638 4,886

N2K Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except per share data)
 December 31, December 31,
 1998 1997

 Cash and cash equivalents $ 36,154 $ 36,832
 Accounts receivable, net 2,527 713
 Receivable for Common stock
 subject to put rights -- 3,000
 Prepaid expenses 7,400 16,645
 Total current assets 46,081 57,190

 Computer equipment 12,064 4,638
 Office furniture and equipment 1,640 1,080
 Leasehold improvements 1,714 1,213
 Property and equipment under
 capital leases 1,591 1,592
 17,009 8,523
 Less- Accumulated depreciation
 and amortization (5,370) (2,241)
 Net property and equipment 11,639 6,282

 Intangible assets, net 168 244
 Restricted cash 167 167
 Other assets 669 139
 Total other assets 1,004 550

 $ 58,724 $ 64,022

 Current portion of capital
 lease obligations $ 264 $ 394
 Accounts payable 2,210 1,291
 Accrued merchandise costs 1,475 1,170
 Accrued compensation 973 1,259
 Other accrued liabilities 6,594 2,217
 Total current liabilities 11,516 6,331

 OPERATIONS 5,138 706
 Common stock, $.001 par value,
 100,000 shares authorized, 14,256
 and 12,118 shares issued and
 outstanding 14 12
 Additional paid-in capital 171,428 109,198
 Accumulated Deficit (132,943) (56,062)
 Total stockholders'
 equity 38,499 53,148

 $ 58,724 $ 64,022
COPYRIGHT 1999 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Geographic Code:1USA
Date:Feb 3, 1999
Previous Article:Later & Jay Join the MSI Management Team.
Next Article:Omnicare Increases Dividend.

Terms of use | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters