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In September,
Revenue for the third quarter decreased 19% compared to the same period last year. Subscription Services revenue was
Operating expenses in the third quarter were
Adjusted EBITDA was
"By generating
Selected Operating Results of Third Quarter 2012
The Company's net loss was
The Company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of
Additionally, the Company continued the suspension of its dividend for the fourth quarter 2012.
Conference Call Information
To participate in the call, please dial 800-649-5127 (domestic) or 914-495-8549 (international). The passcode for the call is 44045610. This call is being webcast and can be accessed in the Investor Relations section of
A replay of the webcast will be available approximately two hours after the conclusion of the call and remain available for approximately ninety calendar days.
About
The
(1) To supplement the Company's financial statements presented in accordance with generally accepted accounting principles ("GAAP"), the Company uses non-GAAP measures of certain components of financial performance, including "EBITDA," "Adjusted EBITDA" and "free cash flow." EBITDA is adjusted from results based on GAAP to exclude interest, income taxes, depreciation and amortization. This non-GAAP measure is provided to enhance investors' overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company believes that the non-GAAP EBITDA results are an important indicator of the operational strength of the Company's business and provide an indication of the Company's ability to service debt and fund capital expenditures. EBITDA eliminates the uneven effect of considerable amounts of noncash depreciation of tangible assets and amortization of certain intangible assets that were recognized in business combinations. Adjusted EBITDA further eliminates the impact of noncash stock compensation, restructuring and other charges affecting comparability. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's businesses. Management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budgets and investment spending levels. "Free cash flow" means net loss plus non-cash expenses net of gains/losses on dispositions of assets, less changes in operating assets and liabilities and capital expenditures. The Company believes that this non-GAAP financial measure is an important indicator of the Company's financial results because it gives investors a view of the Company's ability to generate cash.
(2) Calculation excludes the impact of The Deal.
(3) Average monthly churn rate is defined as subscriber terminations/expirations in the quarter divided by the sum of the beginning subscribers and gross subscriber additions for the quarter, then divided by three. Subscriptions that are on a free-trial basis are not regarded as added or terminated unless the subscription is active at the end of the free-trial period.
All statements contained in this press release other than statements of historical facts are deemed forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, including those described in the Company's filings with the
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| CONSOLIDATED BALANCE SHEETS | ||
| ASSETS |
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| Current Assets: | ||
| Cash and cash equivalents | $ 19,669,082 | $ 44,865,191 |
| Marketable securities | 17,127,107 | 20,895,238 |
|
Accounts receivable, net of allowance for doubtful accounts of |
4,831,404 | 6,225,424 |
| Other receivables | 1,174,407 | 356,219 |
| Prepaid expenses and other current assets | 1,553,959 | 1,421,955 |
| Restricted cash | 660,370 | 660,370 |
| Total current assets | 45,016,329 | 74,424,397 |
|
Property and equipment, net of accumulated depreciation and amortization of |
6,610,318 | 8,494,648 |
| Marketable securities | 22,715,811 | 7,894,365 |
| Other assets | 110,780 | 172,055 |
| Goodwill | 25,726,239 | 24,057,616 |
|
Other intangibles, net of accumulated amortization of |
11,562,593 | 5,370,135 |
| Restricted cash | 1,301,000 | 1,000,000 |
| Total assets | $ 113,043,070 | $ 121,413,216 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities: | ||
| Accounts payable | $ 2,223,595 | $ 2,305,589 |
| Accrued expenses | 6,750,030 | 7,970,802 |
| Deferred revenue | 20,862,328 | 17,625,666 |
| Other current liabilities | 986,431 | 509,214 |
| Total current liabilities | 30,822,384 | 28,411,271 |
| Deferred tax liability | 288,000 | 288,000 |
| Other liabilities | 4,735,702 | 4,569,497 |
| Total liabilities | 35,846,086 | 33,268,768 |
| Stockholders' Equity: | ||
|
Preferred stock; |
55 | 55 |
|
Common stock; |
396,251 | 384,616 |
| Additional paid-in capital | 270,374,962 | 270,230,246 |
| Accumulated other comprehensive income | (129,153) | (394,600) |
|
Treasury stock at cost; 6,747,719 shares at |
(11,840,818) | (11,010,149) |
| Accumulated deficit | (181,604,313) | (171,065,720) |
| Total stockholders' equity | 77,196,984 | 88,144,448 |
| Total liabilities and stockholders' equity | $ 113,043,070 | $ 121,413,216 |
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| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
|
For the Three Months Ended |
For the Nine Months Ended |
|||
| 2012 | 2011 | 2012 | 2011 | |
| Net revenue: | ||||
| Subscription services | $ 9,101,050 | $ 9,994,184 | $ 27,140,853 | $ 29,678,616 |
| Media | 2,496,705 | 4,346,907 | 9,753,885 | 13,812,144 |
| Total net revenue | 11,597,755 | 14,341,091 | 36,894,738 | 43,490,760 |
| Operating expense: | ||||
| Cost of services | 5,699,275 | 6,274,741 | 17,834,336 | 20,036,270 |
| Sales and marketing | 2,717,794 | 4,640,908 | 10,076,902 | 13,122,182 |
| General and administrative | 3,143,160 | 3,750,475 | 10,242,852 | 12,159,579 |
| Depreciation and amortization | 1,295,197 | 1,326,484 | 3,740,649 | 4,492,525 |
| Restructuring and other charges | 3,046,104 | -- | 6,039,797 | -- |
| Loss (gain) on disposition of assets | 14,011 | -- | (205,989) | -- |
| Total operating expense | 15,915,541 | 15,992,608 | 47,728,547 | 49,810,556 |
| Operating loss | (4,317,786) | (1,651,517) | (10,833,809) | (6,319,796) |
| Net interest income | 91,271 | 155,123 | 295,216 | 529,898 |
| Loss from continuing operations before income taxes | (4,226,515) | (1,496,394) | (10,538,593) | (5,789,898) |
| Provision for income taxes | -- | -- | -- | -- |
| Loss from continuing operations | (4,226,515) | (1,496,394) | (10,538,593) | (5,789,898) |
| Discontinued operations: | ||||
| Loss from discontinued operations | -- | (46) | -- | (1,798) |
| Net loss | (4,226,515) | (1,496,440) | (10,538,593) | (5,791,696) |
| Preferred stock cash dividends | -- | 96,424 | 192,848 | 289,272 |
| Net loss attributable to common stockholders | $ (4,226,515) | $ (1,592,864) | $ (10,731,441) | $ (6,080,968) |
| Basic and diluted net loss per share: | ||||
| Loss from continuing operations | $ (0.13) | $ (0.05) | $ (0.32) | $ (0.18) |
| Loss from discontinued operations | -- | (0.00) | -- | (0.00) |
| Net loss | (0.13) | (0.05) | (0.32) | (0.18) |
| Preferred stock dividends | -- | (0.00) | (0.01) | (0.01) |
| Net loss attributable to common stockholders | $ (0.13) | $ (0.05) | $ (0.33) | $ (0.19) |
| Weighted average basic and diluted shares outstanding | 32,848,076 | 31,994,227 | 32,648,487 | 31,933,296 |
| Net loss | $ (4,226,515) | $ (1,496,440) | $ (10,538,593) | $ (5,791,696) |
| Net interest income | (91,271) | (155,123) | (295,216) | (529,898) |
| Depreciation and amortization | 1,295,197 | 1,326,484 | 3,740,649 | 4,492,525 |
| EBITDA | (3,022,589) | (325,079) | (7,093,160) | (1,829,069) |
| Restructuring and other charges | 3,046,104 | -- | 6,039,797 | -- |
| Stock based compensation | 565,601 | 736,198 | 1,632,405 | 2,166,161 |
| Loss (gain) on disposition of assets | 14,011 | -- | (205,989) | -- |
| Transaction related costs | 443,318 | 84,173 | 518,647 | 419,568 |
| Adjusted EBITDA | $ 1,046,445 | $ 495,292 | $ 891,700 | $ 756,660 |
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| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
|
For the Nine Months Ended |
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| 2012 | 2011 | |
| Cash Flows from Operating Activities: | ||
| Net loss | $ (10,538,593) | $ (5,791,696) |
| Loss from discontinued operations | -- | 1,798 |
| Loss from continuing operations | (10,538,593) | (5,789,898) |
| Adjustments to reconcile loss from continuing operations to net cash (used in) provided by operating activities: | ||
| Stock-based compensation expense | 1,632,405 | 2,166,161 |
| Provision for doubtful accounts | 100,887 | 133,089 |
| Depreciation and amortization | 3,740,649 | 4,492,525 |
| Restructuring and other charges | 1,396,695 | -- |
| Deferred rent | (239,968) | 742,447 |
| Noncash barter activity | 126,940 | -- |
| Gain on disposition of assets | (205,989) | -- |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 2,058,490 | 1,538,860 |
| Other receivables | (502,866) | (272,110) |
| Prepaid expenses and other current assets | (334,508) | (160,091) |
| Other assets | 40,601 | 5,119 |
| Accounts payable | (473,986) | (420,271) |
| Accrued expenses | (1,531,416) | (1,074,228) |
| Deferred revenue | (1,139,243) | 1,948,915 |
| Other current liabilities | 113,626 | 10,609 |
| Net cash (used in) provided by continuing operations | (5,756,276) | 3,321,127 |
| Net cash used in discontinued operations | -- | (3,669) |
| Net cash (used in) provided by operating activities | (5,756,276) | 3,317,458 |
| Cash Flows from Investing Activities: | ||
| Purchase of marketable securities | (41,151,130) | (24,854,469) |
| Sale and maturity of marketable securities | 30,363,261 | 39,603,926 |
| Capital expenditures | (915,263) | (1,475,768) |
| Proceeds from the disposition of assets | 222,300 | -- |
|
Purchase of |
(5,430,063) | -- |
|
Sale of |
-- | 265,000 |
| Net cash (used in) provided by investing activities | (16,910,895) | 13,538,689 |
| Cash Flows from Financing Activities: | ||
| Cash dividends paid on common stock | (1,640,421) | (2,595,645) |
| Cash dividends paid on preferred stock | (192,848) | (289,272) |
| Proceeds from the sale of common stock | 135,000 | -- |
| Purchase of treasury stock | (830,669) | (351,316) |
| Net cash used in financing activities | (2,528,938) | (3,236,233) |
| Net (decrease) increase in cash and cash equivalents | (25,196,109) | 13,619,914 |
| Cash and cash equivalents, beginning of period | 44,865,191 | 20,089,660 |
| Cash and cash equivalents, end of period | $ 19,669,082 | $ 33,709,574 |
| Supplemental disclosures of cash flow information: | ||
| Cash payments made for interest | $ -- | $ -- |
| Cash payments made for income taxes | $ -- | $ -- |
| Net loss | $ (10,538,593) | $ (5,791,696) |
| Noncash expenditures | 6,551,619 | 7,534,222 |
| Changes in operating assets and liabilities | (1,769,302) | 1,574,932 |
| Capital expenditures | (915,263) | (1,475,768) |
| Free cash flow | $ (6,671,539) | $ 1,841,690 |
CONTACT:Thomas Etergino Executive Vice President, Chief Financial OfficerTheStreet, Inc. 212-321-5234 ir@thestreet.comErica Mannion Investor Relations Sapphire Investor Relations, LLC 415-471-2700 ir@thestreet.com
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