Records Quarterly Net Profit of $0.4 Million, Compared to $1.2 Million Loss in
Prior Year Period as Revenue Increases 69%
Names Elizabeth Hambrecht Chief Executive Officer, Joan Walsh Editor in Chief
and Conrad Lowry Chief Financial Officer
SAN FRANCISCO, Feb. 10 /PRNewswire-FirstCall/ -- Salon Media Group, Inc.
(OTC Bulletin Board: SALN), an Internet media company, announced today a net
profit attributable to common stockholders of $0.4 million for its third
quarter ended December 31, 2004, compared to a net loss attributable to common
stockholders of $1.2 million for its third quarter the year before.
Total revenues for the quarter ended December 31, 2004 were $2.2 million,
an increase of 69% from $1.3 million a year ago, with advertising revenues
increasing to $1.3 million from $0.6 million a year ago. Salon has not
recorded quarterly revenues in excess of $2.0 since the quarter that ended
December 31, 2000, four years earlier.
On a non-GAAP pro forma basis, Salon recorded a profit attributable to
common stockholders of $0.4 million compared to a loss of $0.4 million in the
prior year period. For the nine-month period ended December 31, 2004, Salon
recorded a non-GAAP pro forma profit attributable to stockholders of $0.2
million, compared to a comparable non-GAAP pro forma loss attributable to
stockholders of $2.1 million for the nine month period ended December 31,
2003.
A reconciliation of net profit calculated in accordance with generally
accepted accounting principles in the United States of America (GAAP) and pro
forma net income (loss) is provided immediately following the consolidated
statements of operations below. These pro forma measures are not in accordance
with, or an alternative for, GAAP and may be different from pro forma measures
used by other companies. Salon believes that the presentation of pro forma
results provides useful information to management and investors regarding
underlying trends in its consolidated financial condition and results of
operations. Readers of Salon's consolidated financial statements are advised
to review and carefully consider the financial information prepared in
accordance with GAAP contained in this press release and Salon's periodic
filings with the Securities and Exchange Commission.
Management Changes
Salon also announced the promotion of Elizabeth Hambrecht to Chief
Executive Officer and Joan Walsh to Editor in Chief, effective February 10,
2005. Founder David Talbot, formerly CEO and Editor in Chief, has relinquished
those positions but will stay on as Chairman of the Board. Conrad Lowry, who
has been serving the Company as Controller, will assume the duties of Chief
Financial Officer and Secretary.
"I am very excited to announce this profitable quarter," Talbot stated.
"It's an excellent time for me to move into a new role. Betsy and Joan have
been part of the leadership team that brought Salon new fiscal and editorial
life, and I'm proud to be able to leave Salon in their hands." Talbot will
also be working on a book about John and Robert Kennedy for Free Press/Simon &
Schuster.
Joan Walsh joined Salon as its first full-time news editor in October 1998
and presided over the development of its award-winning news and politics
department. Her work has appeared in many national newspapers and magazines,
from the Los Angeles Times and Baltimore Sun to Vogue and the Nation. She
became Senior Vice President of Editorial Operations in 2004. Elizabeth
Hambrecht joined Salon in April 2003 as Chief Financial Officer, and was named
President in October 2003. Mr. Lowry has been Controller at Salon since 2000.
Talbot attributed Salon's improved performance to its continued editorial
excellence and the strength of its innovative business model, which offers
readers a choice between subscribing - Salon had 89,100 subscribers in the
quarter ending Dec. 31, 2004 - or using an advertiser-sponsored "Site Pass,"
which lets readers access Salon's award-winning editorial content for free
after viewing a short advertisement. "Our loyal subscribers have sustained us
through tough times, and our Site Pass model is letting us reach a new
generation of readers and subscribers," Talbot said.
Highlights of quarter ending December 31, 2004:
-- Total revenues for the current period were $2.2 million compared to
$1.3 million last year, a 69% increase. Salon has not recorded quarterly
revenues in excess of $2.0 since its quarter ended December 31, 2000.
-- Advertising revenues increased to $1.3 million this quarter compared to
$0.6 million last year, a 124% increase.
-- Salon Premium subscribers at the end of the quarter were approximately
89,100 compared to approximately 73,700 a year ago.
Future Periods Guidance:
Salon does not believe that the quarter ending December 31, 2004 GAAP and
non-GAAP financial results should be considered predictive of future quarter
results.
Salon anticipates a net loss for its quarter ending March 31, 2005 and
cannot accurately predict when it will reach net profit in future quarters.
Due to seasonality, Salon estimates that total revenues for its quarter ending
March 31, 2005 will be $1.3 - $1.4 million, with advertising sales comprising
$0.6 - $0.7 million of the total. Salon cannot predict total revenues after
March 31, 2005 owing to the relatively short time frame in which advertising
orders are secured and when they run on our Website and the lack of
significant long-term advertising orders.
Salon Premium subscriptions grew from approximately 80,900 at September
30, 2004 to approximately 89,100 as of December 31, 2004. Salon does not
believe that this is indicative of future subscription growth rates and cannot
accurately predict the number of active subscribers as of March 31, 2005.
About Salon Media Group, Inc.:
Founded in 1995, Salon is an Internet media company that produces an award
winning, original-content Website of news, opinion and culture, and hosts two
subscription communities, Table Talk and The Well.
"Safe Harbor" Statement under the U.S. Private Securities Litigation
Reform Act of 1995: This press release contains certain "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management's current expectations and
are naturally subject to uncertainty and changes in circumstances. Actual
results may vary materially from the expectations contained herein. The
forward-looking statements contained herein include statements about future
financial and operating results of Salon. Factors that could cause actual
results to differ materially from those described herein include: the economic
environment of the media industry; the difficulty in securing on-line
advertising; growth in subscription revenue programs; uncertain revenue
sources and the general economic environment. More detailed information about
these factors is set forth in the reports filed by Salon with the Securities
and Exchange Commission. Salon is under no obligation to and expressly
disclaims any such obligation to update or alter its forward-looking
statements, whether as a result of new information, future events or
otherwise. We do not believe that our reported results should be considered
predictive of future period or full year results."
NOTE: Salon is a registered trademark of Salon Media Group, Inc. All
other company and product names mentioned are trademarks of their respective
owners.
SALON MEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31 December 31
2004 2003 2004 2003
Net revenues $2,150 $1,273 $5,139 $3,404
Operating expenses:
Production and content 1,131 1,069 3,335 3,214
Sales and marketing 551 649 1,406 1,679
Research and development 158 150 449 448
General and administrative 163 371 524 1,064
Amortization of intangibles -- 86 -- 276
Total operating expenses 2,003 2,325 5,714 6,681
Profit (loss) from operations 147 (1,052) (575) (3,277)
Other income (expense), net 125 (134) 572 (458)
Net profit (loss) 272 (1,186) (3) (3,735)
Preferred deemed dividend 123 (1) 252 30
Net profit (loss) attributable to
common stockholders $395 $(1,187) $249 $(3,705)
Basic diluted net profit (loss) per
share attributable to common
stockholders $0.03 $(0.08) $0.02 $(0.26)
Diluted net profit (loss) per share
attributable to common stockholders $0.00 $(0.08) $0.00 $(0.26)
Weighted average shares used in
computing basic net profit (loss)
per share attributable to common
stockholders 14,507 14,155 14,275 14,081
Weighted average shares used in
computing dilutive net profit (loss)
per share attributable to common
stockholders 203,387 14,155 202,762 14,081
SALON MEDIA GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, 2004 December 31, 2004
As (1) Pro As (1) Pro
Reported Adj. Forma Reported Adj. Forma
Net revenues $2,150 $0 $2,150 $5,139 $ $5,139
Operating expenses:
Production and content 1,131 (65) 1,066 3,335 (134) 3,201
Sales and marketing 551 (174) 377 1,406 (471) 935
Research and
development 158 (12) 146 449 (30) 419
General and
administrative 163 27 190 524 47 571
Total operating
expenses 2,003 (224) 1,779 5,714 (588) 5,126
Profit (loss) from
operations 147 224 371 (575) 588 13
Other income (expense),
net 125 (104) 21 572 (415) 157
Net profit (loss) 272 120 392 (3) 173 170
Preferred deemed
dividend 123 (123) 0 252 (252) 0
Net profit (loss)
attributable to
common stockholders $395 $(3) $392 $249 $(79) $170
Basic net profit (loss)
per share attributable
to common stockholders $0.03 $0.03 $0.02 $0.01
Dilutive net profit
(loss) per share
attributable
to common stockholders $0.00 $0.00 $0.00 $0.00
Weighted average shares
used in computing
basic net profit
(loss) per share
attributable
to common stockholders 14,507 14,507 14,275 14,275
Weighted average shares
used in computing
dilutive net profit
(loss) per share
attributable to common
stockholders 203,387 203,387 202,762 202,762
(1) In accordance with accounting principles generally accepted in the
United States
SALON MEDIA GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, 2003 December 31, 2003
As(1) Pro As(1) Pro
Reported Adj. Forma Reported Adj. Forma
Net revenues $1,273 $0 $1,273 3,404 $ $3,404
Operating expenses:
Production and content 1,069 (124) 945 3,214 (262) 2,952
Sales and marketing 649 (386) 263 1,679 (673) 1,006
Research and
development 150 (28) 122 448 (52) 396
General and
administrative 371 (61) 310 1,064 (94) 970
Amortization of
intangibles 86 (86) -- 276 (276) --
Total operating
expenses 2,325 (685) 1,640 6,681 (1,357) 5,324
Loss from operations (1,052) 685 (367) (3,277) 1,357 (1,920)
Other income (expense),
net (134) 77 (57) (458) 301 (157)
Net loss (1,186) 762 (424) (3,735) 1,658 (2,077)
Preferred deemed
dividend (1) 1 -- 30 (30) --
Net loss attributable to
common stockholders $(1,187) $763 $(424) (3,705) $1,628 $(2,077)
Basic and diluted net
loss per share
attributable
to common stockholders $(0.08) $(0.03) (0.26) $(0.15)
Weighted average shares
used in computing
basic and diluted net
loss per share
attributable to common
stockholders 14,155 14,155 14,081 14,081
(1) In accordance with accounting principles generally accepted in the
United States
SALON MEDIA GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Nine Months
Ended Ended
December 31, December 31,
2004 2003 2004 2003
Net profit (loss) attributable to
common stockholders $395 $(1,187) $249 $(3,705)
Less:
Charges (benefits) resulting from
re-valuing warrants
issued in conjunction with
operations (135) (57) (541) (9)
Utilization of prepaid advertising
rights 159 360 440 600
Gain on issuance of stock for
trade payable (25) -- (25) --
Loss on retirement of assets -- 43 -- 43
Depreciation and amortization
charges 121 416 299 1,024
Preferred deemed dividend charges
(benefits) from
re-valuing warrants issued to
preferred stockholders (123) 1 (470) (30)
Preferred deemed dividend charge
from issuance of
preferred stock -- -- 218 --
Pro forma net profit (loss)
attributable to common stockholders $392 $(424) $170 $(2,077)
SALON MEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share and per share amounts)
December 31, March 31,
2004 2004
Assets
Current assets:
Cash and cash equivalents $460 $696
Accounts receivable, net 1,128 306
Prepaid expenses and other
current assets 262 432
Total current assets 1,850 1,434
Property and equipment, net 139 89
Other intangible assets, net 0 0
Goodwill, net 200 200
Prepaid advertising rights 3,990 4,430
Other assets 68 117
Total assets $6,247 $6,270
Liabilities and stockholders' equity
Liabilities:
Current liabilities:
Accounts payable and accrued
liabilities $865 $1,143
Deferred revenue 1,119 1,107
Total current liabilities 1,984 2,250
Warrants payable -- 2,621
Total liabilities 1,984 4,871
Stockholders' equity:
Common stock 14 14
Preferred stock -- --
Additional paid in capital 94,935 92,320
Accumulated deficit (90,686) (90,935)
Total stockholders' equity 4,263 1,399
Total liabilities and
stockholders' equity $6,247 $6,270
SOURCE Salon Media Group, Inc.
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Related links:
http://www.salon.com
CONTACT:
Investor & Media, Priscilla Eshelman of Salon
Media Group, Inc., +1-415-645-9333, or pr@salon.com
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