AOL 3 cents above.. downgrade by prudential this morning. We'll see what tomorrow brings. America Online, Inc. Reports FY98 Third Quarter Net
Income, Before Special Charges, of $39.0 Million or $0.16
Per Share
Revenues Up 54% to $693.6 Million
DULLES, Va.--(BUSINESS WIRE)--May 6, 1998-- Advertising, Commerce and Other Revenues
Up 72% to a Record $117.9 Million
America Online, Inc. (NYSE: AOL - news) today reported net income, before special charges and
on a fully taxed basis, of $39.0 million, or $0.16 per share on a diluted basis, for its fiscal third
quarter ended March 31, 1998.
These results compare to a net loss of $4.7 million, or $0.02 loss per share, in fiscal 1997's
corresponding quarter. Revenues for the latest quarter increased 54% over the same quarter last year
to a record $693.6 million.
The quarter's pre-tax income, before special charges, rose to $63.4 million, or 9.1% of revenues, as
compared with a loss of $4.7 million in the third quarter of fiscal 1997.
Reported net income for the quarter - including the special charges and with no tax provision -
totaled $18.6 million, or $0.08 per diluted share. The Company's tax provision was offset by the
utilization of its net operating loss carryforwards. As of March 31, 1998, the Company's net
operating loss carryforwards and other deferred tax benefits totaled $827 million.
During this quarter, the Company had two special charges which had been previously announced. In
connection with the restructuring of AOL Studios, the Company recorded a charge of $35.1 million.
In addition, the Company took a $9.7 million charge for acquired research and development related
to the January acquisition of Personal Library Software (PLS), a leading developer of information
indexing and search technologies.
The Company's cash position improved by $405.9 million during the quarter, increasing to $924.1
million at March 31, 1998 from $518.2 million at December 31, 1997. This improvement was
principally due to the generation of $214.3 million in cash from operations and $207.4 million in cash
received pursuant to the January CompuServe/ANS Communications, Inc. transaction.
''We are extremely pleased with AOL's operating results, which show strong continuing momentum
across the board,'' said Steve Case, Chairman and Chief Executive Officer of America Online. ''We
built membership steadily and efficiently throughout the quarter, both in the U.S. and internationally,
and made significant gains in advertising and electronic commerce. We substantially improved our
cash position. And we continued to tightly manage costs.
''During the quarter, we moved quickly to integrate CompuServe and put in place a new organization
to support our AOL, CompuServe and AOL Studios product groups,'' Case added.
''To enhance our members' online experience, we are continuing to build and upgrade our network
infrastructure, expand customer service, and roll out new products like our next-generation AOL 4.0
software. And AOL continues to take an active role in the development of emerging technologies and
markets, as well as in public policy issues affecting the interactive medium.''
AOL's flagship service experienced a strong quarterly increase of 1,148,000 new members for a
total of 11,870,000 worldwide as of March 31, 1998. On April 16, the Company announced that its
membership had topped 12 million worldwide. In addition, CompuServe had a worldwide total of
2,175,000 members in good standing as of March 31, 1998, excluding members of its SpryNet
Internet service.
The Company's marketing expenses during the fiscal 1998 March quarter were reduced to $84.2
million, or 12.1% of revenues, from the prior year period's $92.8 million or 20.6% of revenues.
Advertising & Commerce Momentum Continues
This quarter's advertising, commerce and other revenues amounted to $117.9 million, compared to
$68.6 million in last year's corresponding quarter. AOL's backlog of advertising and commerce
contract revenues increased by $107 million from the December quarter to reach $427 million.
Bob Pittman, President and Chief Operating Officer of America Online, said: ''The AOL experience
increasingly is becoming integral to our member's everyday lives. For advertisers, marketers and
content providers, that means the AOL brand is their best choice for online partnerships. And we are
increasingly leveraging our growing subscriber base to deliver special benefits for our members.''
Pittman added: ''Our new commerce and content partnerships with Bloomberg, Sage, Intuit,
TheStreet.com, and Standard & Poor's Personal Wealth have made AOL's Personal Finance
Channel - already cyberspace's No. 1 financial site - even more valuable to our members.'' |
