Hi: Calvin
I,m in the same boat with Peter<G>
Here some old stuff to start this new ELNKD off with
Later Dean
Excite Home | Money and Investing Home
"Professional quality research ? and results." ? Howard
Click Here!
Home
Investing
Mortgage
Insurance
Banking
Taxes
Retirement
Business
Investing Home ú Portfolio ú Alerts ú Markets ú Stocks ú Funds ú News ú Quotes ú Boards
Get connected with top companies selling life insurance
Symbol:
Symbol Lookup
Add ELNK to Portfolio
ELNK
48 11/16 , 0
News
EarthLink Reports Fourth Quarter and Year End Financial Results
Monday, February 7, 2000 09:15 AM
Mail this article to a friend
NEW YORK--(BUSINESS WIRE)--Feb. 7, 2000--
Company Completed Merger with MindSpring and Reports 3.1 Million
Members and Combined Fourth Quarter Revenues of $199.1 Million
EarthLink, Inc. (Nasdaq:ELNK, news, msgs), one of the largest independent Internet Service Providers
(ISPs), today announced fourth quarter and year-end financial results for the period ended December
31, 1999.
On a pro-forma basis, the newly combined company (EarthLink and MindSpring) reported fourth quarter
revenues of $199.1 million. Net loss for the quarter was $25.9 million, or a net loss per share of $0.22
prior to acquisition-related costs. On a combined basis, the gross margin for the fourth quarter
increased from 64 to 65 percent, reflecting the company's continued reduction in costs associated with
providing Internet access. For the fourth quarter, EarthLink added 322,000 net members and ended the
year with approximately 3.1 million members on a combined basis.
For the year ended December 31, 1999, combined revenues were $670.4 million. Net loss for the year
was $25.4 million, or a net loss of less than $0.22 per share, prior to acquisition-related costs.
"Our fourth quarter and year-end results cap a very successful year for EarthLink," stated Garry Betty,
CEO of EarthLink. "We reached new record levels for revenue, new members, advertising and
e-commerce revenue (formerly referred to as incremental revenue) and gross margins. Through the
recently closed merger with MindSpring we established ourselves as one of the world's leading ISPs."
Merger Completion and Integration
As announced on February 4, 2000, EarthLink completed its merger with MindSpring following approval
by the shareholders of EarthLink and MindSpring.
The combined company is the nation's leading independent ISP and brings together joint excellence in
customer service and satisfaction. MindSpring and EarthLink were ranked #1 and #2 in customer
satisfaction among the largest ISPs according to the J.D. Powers and Associates 1999 National ISP
Online Residential Customer Satisfaction Study. The merger will result in greater brand awareness
through integrated marketing programs and spending, and operating synergies to accelerate growth.
The merger between EarthLink and MindSpring solidifies the company's position in four key areas of
growth from which the company will continue to diversify its revenue base. These business-focused
areas include: narrowband; broadband; Web hosting; and content, commerce and advertising revenue.
"EarthLink's goal is to continue to focus on attracting a large and loyal member base to whom we can
offer and deliver a broader bundle of products and services," said Betty. "Revenue streams generated
from these products and services will continue to bolster our growth, in addition to the revenue we
receive from our content, commerce and advertising partners."
EarthLink's Key Business Areas
Narrowband
On a combined basis EarthLink's narrowband or dial up revenues were $170.8 million for the fourth
quarter, an 11 percent increase over 1999 third quarter narrowband revenues of $154.4 million. Year
over year, EarthLink's narrowband revenues increased from $260.2 million in 1998 to $582.9 million in
1999, a 124 percent increase.
The company continues to place a high emphasis on the switcher market and user experience to
attract new members and retain existing ones. During the fourth quarter, the company released
EarthLink 5.0, its next generation of software targeted to users who are both new and skilled in using
the Internet. Users can surf the Web with a personalized browser, send and receive email, chat with
friends, and upload files to their personal home page -- all within one easy-to-use program.
Additionally during the quarter, MindSpring announced an agreement with RAVISENT Technologies to
deliver a unique Internet appliance that allows members to access the Internet and surf the Web
without a computer. Finally, to expand its reach and attract new users getting online, EarthLink
announced a deal with Apple Computer shortly after the quarter ended, becoming the exclusive ISP for
all Apple set-up programs in the U.S.
"As consumers continue to depend heavily on their Internet service and expand what they do online,
such as trading stocks and downloading photos onto their personal home pages to creating their own
e-commerce site, their desire for additional products and services will increase," said Betty. "As a
leading service provider for millions of users on the Internet, the revenue opportunities for delivering
these additional products and services are diverse and significant."
Broadband
On a combined basis, EarthLink's fourth quarter broadband revenues were $7.3 million, a 12 percent
increase over third quarter broadband revenues of $6.5 million. With 25,000 broadband customers, a 77
percent increase over its third quarter customers, EarthLink is aggressively upgrading its narrowband
members to high-speed access solutions. The rollout of high-speed access to twelve new major cities
in the fourth quarter allowed EarthLink to rapidly expand its geographical offering of broadband access
in 15 markets.
In addition to its commitment for delivering broadband access, EarthLink also secured broadband
partnerships with ABCNEWS.com, ESPN.com, FOXNews.com, FOXSports.com and ZDNet to deliver
quality broadband content to its members.
"With 25,000 broadband customers, EarthLink is a leading provider in the broadband market and is the
only ISP with eight major broadband partners: Bell South, Charter Communications, Covad, GTEi,
Knology, PacBell, Sprint and UUNet," said Betty.
Web Hosting
As of December 31, 1999, the combined company hosted 109,000 Web sites compared to 95,000
Web sites in the third quarter of 1999. Year over year, EarthLink's Web sites increased from 36,000 in
1998 to 109,000 in 1999, a 203 percent increase. The combined company reported Web hosting
revenues of $13.8 million versus $13 million in the third quarter, representing a 6 percent sequential
increase.
In a continued effort to service small- and medium-sized businesses, MindSpring launched its online
business resources portal, mindspringbiz.com, during the fourth quarter. The Web site is a portal
dedicated to providing businesses with the tools they need for success on the Web such as small
business solutions, industry information, guides, news and discussion forums.
"EarthLink's Web hosting business grew 203 percent, year over year and we expect this growth to
continue," said Betty. "EarthLink will continue its focus on servicing its small- to medium-sized
business customers by providing enhanced Internet solutions and will allocate more resources to this
area."
Content, Commerce and Advertising Revenue
The combined company reported fourth quarter content, commerce and advertising revenue of $7.3
million, a 92 percent increase over the $3.8 million in revenues for the combined third quarter of 1999.
On a year over year basis, EarthLink's advertising and e-commerce revenue increased 228 percent
from $5.1 million in 1998 to $16.6 million in 1999. Advertising and e-commerce revenue backlog for the
company is $28.2 million. On a per member per month basis, fourth quarter advertising and
e-commerce revenue is $0.82, an increase of 71 percent over $0.48 last quarter.
Driving this increase in EarthLink's revenue stream are the company's Premiere Partnerships such as
the following, which were announced during the quarter:
-- Narrowband partnerships with APC, Blue Mountain Arts, CarsDirect,
CountryWatch, Health Channel, Health Network, HealthAtoZ.com,
iEntertainment Network, INO.com, iOwn, KeyTrade Online,
MaMaMedia, Morgan Stanley, My Events.com, Network Solutions,
OneCore.com, PayMyBills, PC Flowers, Snap.com, Sparks,
Talkway/Alaris, and ZDNet
-- Broadband Partners with ABC-ESPN, FOX News/Sports, Yak.com,
ZDNet
Betty commented, "We continue to view content, commerce and advertising revenue as a major
contributing factor to our overall business. We believe we will realize significant growth in this
high-margin revenue stream in 2000."
Betty concluded, "Today, EarthLink's service plays a much more important role for the millions of
Internet users who depend on our service. As new technologies and Internet applications are
introduced and used by our members, the role of EarthLink as the service provider will become
increasingly important. Whether it's a DSL or cable connection, an e-commerce site or a new wireless
feature on their Personal Start Page, EarthLink is uniquely positioned to be the first to offer it to the
millions of customers who use EarthLink. The various revenue streams generated by these product and
service offerings will be a key factor in the company's continued growth."
About EarthLink
EarthLink is one of the world's leading Internet service providers, bringing the magic of the Internet to
more than 3.1 million individuals and businesses every day. Headquartered in Atlanta, EarthLink
provides a full range of innovative access, hosting and e-commerce solutions to thousands of
communities internationally from more than 5,000 points of presence. EarthLink is committed to doing
an exceptional job of pleasing its customers, shareholders and the community by following the
company's Core Values and Beliefs. Information about EarthLink and EarthLink Sprint services is
available by calling 800-395-8425 and through EarthLink's Web site at www.earthlink.net.
Certain of the statements contained in this release are forward-looking statements (rather than
historical facts) that are subject to risks and uncertainties that could cause actual results to differ
materially from those described. With respect to such forward-looking statements, the Company seeks
the protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include,
without limitation, (1) that the Company will not retain or grow its member base, (2) that the Company
will fail to be competitive with existing and new competitors, (3) that the Company will not be able to
sustain its current growth, (4) that the Company will not adequately respond to technological
developments impacting the Internet, and (5) that needed financing will not be available to the
Company if and as needed. This list is intended to identify certain of the principal factors that could
cause actual results to differ materially from those described in the forward-looking statements
included elsewhere herein. These factors are not intended to represent a complete list of all risks and
uncertainties inherent in the Company's business, and should be read in conjunction with the more
detailed cautionary statements included elsewhere in the Company's most recent filings with the SEC.
EARTHLINK, INC.
Unaudited Pro Forma Combined Financial Highlights
(in thousands, except per share data)
Three Months Ended December 31,
Percent Percent
of Total of Total
1998 Revenues 1999 Revenues
Statement of
Operations Data:
Revenues:
Access $ 88,103 90% $ 170,765 86%
Web Hosting 6,391 7% 13,806 7%
Broadband 1,219 1% 7,297 4%
Advertising and
e-Commerce 2,122 2% 7,277 3%
Total revenues 97,835 100% 199,145 100%
Operating costs
and expenses:
Cost of revenues 37,882 39% 70,118 35%
Sales and marketing 24,512 25% 85,032 43%
Member support 17,485 18% 40,914 21%
General and
administrative 10,224 10% 19,284 10%
Operations 9,343 9% 16,530 8%
Acquisition-related
costs (1) 21,174 22% 34,903 17%
Total operating
costs and expenses 120,620 123% 266,781 134%
Loss from operations (22,785) -23% (67,636) -34%
Interest income
(expense), net 2,174 2% 6,882 4%
Income tax provision (2) (972) -1% -- 0%
Net loss (21,583) -22% (60,754) -30%
Deductions for accretion
dividends (3) (3,271) -3% (3,429) -2%
Net loss attributable to
common stockholders $ (24,854) -25% $ (64,183) -32%
Basic and diluted net
loss per share $ (0.25) $ (0.55)
Weighted average common
shares outstanding (4) 99,148 116,494
EBITDA (5) 4,527 5% $ (20,326) -10%
Depreciation/Amortization
Depreciation -
cost of revenues 3,000 7,054
Depreciation/
Amortization
- other 3,138 5,353
Acquisition-related
amortization 21,174 34,903
Before Acquisition-related
costs and income taxes
Net Income (loss) $ 563 1% $ (25,851) -13%
Net loss, per share $ 0.01 $ (0.22)
EBITDA (5) 4,527 5% $ (20,326) -10%
EARTHLINK, INC.
Unaudited Pro Forma Combined Financial Highlights
(in thousands, except per share data)
Year Ended December 31,
Percent Percent
of Total of Total
1998 Revenues 1999 Revenues
Statement of
Operations Data:
Revenues:
Access $260,229 90% $ 582,883 87%
Web Hosting 22,007 7% 47,435 7%
Broadband 3,321 1% 23,540 4%
Advertising and
e-Commerce 5,057 2% 16,575 2%
Total revenues 290,614 100% 670,433 100%
Operating costs
and expenses:
Cost of revenues 115,529 40% 248,487 37%
Sales and marketing 65,037 22% 219,349 33%
Member support 51,293 18% 128,891 19%
General and
administrative 34,575 12% 67,876 10%
Operations 28,951 10% 53,243 8%
Acquisition-related
costs (1) 49,684 17% 148,267 22%
Total operating
costs and expenses 345,069 119% 866,113 129%
Loss from operations (54,455) -19% (195,680) -29%
Interest income
(expense), net 3,671 2% 21,986 3%
Income tax provision (2) (2,394) -1% -- 0%
Net loss (53,178) -18% (173,694) -26%
Deductions for accretion
dividends (3) (7,601) -3% (14,106) -2%
Net loss attributable to
common stockholders $(60,779) -21% $(187,800) -28%
Basic and diluted net
loss per share $ (0.66) $ (1.65)
Weighted average common
shares outstanding (4) 91,466 113,637
EBITDA (5) $ 15,498 5% $ (6,157) -1%
Depreciation/Amortization
Depreciation -
cost of revenues 10,830 23,441
Depreciation/
Amortization
- other 10,836 17,815
Acquisition-related
amortization 48,287 148,267
Before Acquisition-related
costs and income taxes
Net Income (loss) $ (1,100) 0% $ (25,427) -4%
Net loss, per share $ (0.01) $ (0.22)
EBITDA (5) $ 16,895 6% $ (6,157) -1%
December 31, December 31,
1998 1999
Balance Sheet Data:
Cash and cash equivalents $ 308,607 $ 685,753
Current assets other than cash 13,737 60,215
Total assets 510,002 1,109,147
Long-term debt 10,125 188,367
Total liabilities 109,515 350,694
Accumulated (deficit) (140,578) (328,378)
Stockholders' equity 400,487 758,453
Other Operating Data:
Member count at end of period 1,693,000 3,122,000
Number of employees at
end of period (6) 2,320 4,828
(1) Represents acquisition and amortization related expenses for the
periods ended December 31, 1999 and 1998 resulting from the
following:
(a) the acquisition of the Sprint Internet Passport business in
June 1998 and a one time transaction cost of $1,397,000 related
to the June 1998 Sprint transaction.
(b) the acquisition of various assets used in connection with the
consumer dial-up Internet access business of Spry, Inc., in
October 1998.
(c) the acquisition of the United States Internet services
business of NETCOM On-Line Communication Services, Inc., in
February 1999.
(2) During reorganization discussions, management reviewed the
combined deferred tax assets and concluded that sufficient
uncertainty now exists regarding realizability of the net
deferred tax assets. Accordingly, a full valuation allowance on
net deferred tax assets has been reestablished for all periods
presented.
(3) Reflects the accretion of Liquidation Dividends on Series A
and B convertible preferred stock at 3% compounded quarterly and
the accretion of a dividend related to the beneficial conversion
feature in accordance with EITF D-60.
(4) Weighted average shares is calculated assuming each share of
EarthLink common stock will be exchanged for 1.615 shares of the
stock of the combined company and each share of MindSpring common
stock will be exchanged for one share of the new company.
(5) Represents net loss before depreciation and amortization,
interest income and expense and income tax expense. EBITDA is
not determined in accordance with generally accepted accounting
principles, is not indicative of cash used by operating
activities and should not be considered in isolation or as an
alternative to, or more meaningful than measures of performance
determined in accordance with generally accepted accounting
principles.
(6) Represents full-time equivalents.
CONTACT: EarthLink
Kirsten Hamling, 626/296-2467
kirstenk@corp.earthlink.net
Quote for referenced ticker symbols: ELNK
¸ 2000, Business Wire
Money & Investing Search
Find:
Site Index Site Map Help Glossary
On Excite: Help Add URL Advertise on Excite Excite Affiliates Press Releases Jobs@Excite
Contact Us: Feedback Help Center Free Newsletter Quicken Support
Copyright ¸ 1995-2000 Excite Inc. All rights reserved. Disclaimer
¸ 1997-2000 Intuit Inc. All rights reserved. Trademark Notices
By accessing and using this page you agree to the Terms of Service.
Learn how important your privacy is to us.
Information for Advertisers |
