Second quarter and six month financial results:
biz.yahoo.com
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Thursday August 6, 8:06 am Eastern Time
Company Press Release
Audio Book Club, Inc. Announces Second Quarter and Six Month Financial Results
- Second Quarter Gross Sales Increase 61%, Gross Profit Up 25% -
BOCA RATON, Fla.--(BUSINESS WIRE)--August 6, 1998-- - New Members Via The Internet in Second Quarter
Rises 227% From Prior Quarter -
- Total Members Exceed 350,000 As Of August 3, 1998 -
Audio Book Club, Inc. (AMEX: KLB - news) today announced financial results for its second quarter and six months ended June 30, 1998.
Gross sales for the quarter ended June 30, 1998 increased 61% to $5,646,926 from $3,502,928 in the comparable 1997 period. The net loss for the second quarter ended June 30, 1998 decreased to $1,016,398, or $(0.17) per share, compared to a net loss of $1,399,653, or $(0.43) per share for the quarter ended June 30, 1997.
Gross sales for the six months ended June 30, 1998 increased 60% to $10,412,165 from $6,499,331 in the comparable 1997 period. The net loss for the first half of 1998 was $2,142,366, or $(0.35) per share, compared to a net loss of $1,167,878, or $(0.36) per share for the six months ended June 30, 1997.
The Company continued to make a significant investment in the Internet to acquire new members and, consequently, advertising and promotion costs to acquire and retain members for the second quarter and six months ended June 30, 1998 were approximately $2,176,000 and $3,685,000, respectively. Internet advertising for the second quarter and first half of 1998 amounted to approximately $783,000, or 36%, and $1,326,000, or 36%, of total advertising and promotion costs, respectively. Audio Book Club also invested approximately $465,000 in developing and improving its web sites, including the introduction of www.BooksAloud.com. The Company noted that this strategy and its investment in the Internet continues to prove successful as the number of new members acquired via the Internet increased from 2,860 during the quarter ended March 31, 1998, to 9,343 new members during second quarter ended June 30, 1998.
Additionally, the Company noted that for the month of July alone it acquired approximately 5,300 new members via the Internet.
Norton Herrick, Chairman and CEO, stated, ''We are pleased by the Company's strong revenue and membership growth which firmly indicates our business plan is not only on track, but reaffirms our belief it is a key to our long term success. During the second quarter the Company signed numerous Internet advertising agreements with such strategic providers as Yahoo!, Juno Online Services and Netscape Communications Corporation [Nasdaq:NSCP - news], web sites such as net@ddress.com, hitthebeach.com, freeride.com and WhoWhere?Inc., among others. Additionally, the Company initiated its Associates Program, which now numbers over 100 Associates. All of the Internet agreements, as well as the Associates Program, had a positive impact on second quarter results.''
Mr. Herrick further stated, ''It is important to note that the Company continues to utilize conservative accounting policies. The Company does not capitalize member acquisition costs as many similar companies often do. Consequently, advertising costs for both the Internet and direct mail incurred to generate new members are expensed in current periods. However, revenue received from new members is earned in future periods.''
''Audio Book Club remains committed to its Internet strategy and pleased with its progress to date. We anticipate continued revenue and membership growth in the second half of 1998 as we work toward our ultimate goal of profitability,'' concluded Mr. Herrick.
Audio Book Club, Inc. is a direct marketer of audiobooks through membership clubs which market and sell audiobooks via the Internet at www.audiobookclub.com and www.BooksAloud.com, and by mail order. Since commencing operations in January 1994, the Company has engaged in an aggressive membership recruitment program to establish a core Audio Book Club member base of over 350,000 members and to continually expand its member base.
This release is covered under the ''Safe Harbor '' Statement under the Private Securities Litigation Reform Act of 1995: Certain information included in this release that are not historical facts are forward looking statements that involve a number of known and unknown risks and uncertainties, including but not limited to, the Company's ability to successfully implement a strategy of continued growth and other risks detailed in the Company's registration Statement on Form SB-2 and other Securities and Exchange Commission filings. The Company's actual results, performance or achievements may differ materially from any future results performance or achievements expressed or implied in any forward looking statement. Readers are cautioned not to place undue reliance on these forward looking statements, which only speak as of the date the statement was made.
Audio Book Club, Inc.
Consolidated Statement of Operations
Three Months Ending Six Months Ending
6/30/98 6/30/97 6/30/98 6/30/97
Sales $5,646,926 $3,502,928 $10,412,165 $6,499,331
Returns, discounts
and allowances 1,516,534 723,420 2,752,007 1,409,289
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Sales, net 4,130,392 2,779,508 7,660,158 5,090,042
Cost of sales 2,511,881 1,479,765 5,110,221 2,810,548
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Gross profit 1,618,511 1,299,743 2,549,937 2,279,494
Expenses:
Advertising and promotion
(for acquisition
and retention
of members) 2,175,956 2,050,378 3,685,288 2,249,737
General and
administrative 474,609 372,321 1,000,987 725,777
Professional fees 60,916 72,602 185,891 152,535
Depreciation
and amortization 5,680 3,295 10,927 4,678
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Operating loss (1,098,650) (1,198,853) (2,333,156) (853,233)
Interest (expense)income,
net of interest
Income of $576 in 1997 82,252 (200,800) 190,790 (314,645)
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Net loss $(1,016,398)$(1,399,653)$(2,142,366)$(1,167,878)
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Net loss per share
of common stock $(0.17) $ (0.43) $ (.35) $ (.36)
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Weighted average per common shares outstanding
Balance Sheet
6/30/98 12/31/97
Assets
Cash, cash equivalents and
short term investments $ 5,036,829 $ 8,798,752
Total current assets 10,842,415 12,661,996
Total assets 11,469,359 12,770,020
Liabilities and
Stockholders' Equity
Total current liabilities 3,704,373 3,016,668
Long-term debt --
Total stockholders' equity 7,764,986 9,753,352
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Contact:
Audio Book Club
John Levy, Chief Financial Officer
(973) 539-9528
or
Rubenstein Investor Relations
Jeffrey Volk
(212) 843-8086
jvolk@rir1.com |
