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Tags: 1 million, amortization, cash charges, conjunction, depreciation, dividend, fiscal year 2005, gaap, immediate release, internet media company, media contact, media group inc, patrick hurley, preferred stockholders, quarter ended june, quarter revenues, salon media, san francisco, vice president, warrants,Pages: 9
Language: english
Created: Thu Aug 5 09:08:12 2004
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Media Contact:
Patrick Hurley
Vice President
(415) 645-9320
phurley@salon.com
FOR IMMEDIATE RELEASE
SALON REPORTS FIRST QUARTER FISCAL YEAR 2005 RESULTS
RECORDS NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
OF $1.2 MILLION COMPARED TO $1.3 MILLION LOSS IN PRIOR YEAR
PERIOD
RECORDS FIRST EVER NON-GAAP PRO FORMA PROFIT ATTRIBUTABLE TO
COMMON STOCKHOLDERS OF $0.2 MILLION COMPARED TO $1.1 MILLION
LOSS IN PRIOR YEAR PERIOD
FIRST QUARTER REVENUES OF $1.7 MILLION, A 66% INCREASE
FROM PRIOR YEAR PERIOD
SAN FRANCISCO, Calif. --- August 5, 2004 --- Salon Media Group, Inc. (SALN.OB), an
Internet media company, announced today a net loss attributable to common stockholders of
$1.2 million or ($0.08) per share for its first quarter ended June 30, 2004, compared to a net
loss attributable to common stockholders of $1.3 million or ($0.09) per share for its first
quarter ended June 30, 2003. On a non-GAAP pro forma basis, Salon recorded a non-GAAP
pro forma profit attributable to common stockholders of $0.2 million compared to a non-
GAAP loss attributable to common stockholders of $1.1 million in the prior year period. The
non-GAAP profit for the current quarter of $0.2 million excludes the following non-cash
charges: $490,000 from re-valuing warrants issued in conjunction with operations, $398,000
from re-valuing warrants issued to preferred stockholders and included as a preferred deemed
dividend charge, $150,000 of utilized prepaid advertising rights, $94,000 of depreciation and
amortization charges and a $195,000 preferred deemed dividend charge resulting from the
issuance of preferred stock at an effective common stock purchase price below the market
price of Salon's common stock on the date of the transaction. The non-GAAP loss in the prior
year period of $1.1 million excludes the following non-cash charges: $214,000 of depreciation
and amortization charges, $120,000 of utilized prepaid advertising rights, a benefit of $21,000
from re-valuing warrants issued in conjunction with operations, and a benefit of $72,000 from
re-valuing warrants issued to preferred stockholders and recorded as a preferred deemed
dividend.
Total revenues for the quarter ended June 30, 2004 were $1.7 million, compared to $1.0
million a year ago, a 66% increase, with advertising revenues increasing to $1.0 million from
$0.4 million a year ago.
"We are very excited to report Salon's first ever pro forma net profit," said David Talbot,
Salon's Chairman and CEO. "This milestone could not have been reached without the
concerted effort and dedication of Salon's employees, investors and readers."
A reconciliation of net loss calculated in accordance with generally accepted accounting
principles generally accepted 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.
Highlights of quarter ending June 30, 2004:
· Total revenues for the current period were $1.7 million compared to $1.0 million last
year, a 66% increase. Advertising revenues for the current period were $1.0 million
compared to $0.4 million last year, a 163% increase.
· Salon Premium subscribers at the end of the quarter were 75,700 compared to 66,200 a
year ago.
· Controlling costs resulted in total GAAP operating expenses for the quarter of $2.0
million, the lowest since becoming a publicly traded company in June 1999.
· GAAP loss from operations of $0.3 million for the quarter was the best performance
of the company since becoming a publicly traded company in June 1999.
· Excluding non-cash related charges of $1.3 million, recorded a non-GAAP pro forma
profit attributable to common stockholders of $0.2 million, compared to a non-GAAP
pro forma loss attributable to common stockholders of $1.1 million last year after
excluding $0.2 million of non-cash charges.
Future Periods Guidance:
Salon does not believe that the quarter ending June 30, 2004 non-GAAP financial results
should be considered predictive of future quarter results. Even though Salon reached non-
GAAP pro forma net income for its quarter ended June 30, 2004, Salon does not anticipate
attaining non-GAAP pro forma net income for its quarter ending September 30, 2004 and
cannot accurately predict when it will reach this milestone in future quarters. Due to
seasonality, Salon estimates that total revenues for its quarter ending September 30, 2004 will
decrease to $1.3 - $1.4 million, with advertising sales comprising $0.6-$0.7 million of the
total. Salon cannot predict total revenues after September 30, 2004 owing to the relative 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.
About Salon Media Group, Inc.:
Founded in 1995, Salon is an Internet media company that produces various award-winning,
original content sites; 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, including the statements by David Talbot, 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 net loss or non-GAAP pro forma net income for the quarter ending June 30, 2004
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
June 30
2004 2003
Net revenues $ 1,733 $ 1,045
Operating expenses:
Production and content 1,200 1,189
Sales and marketing 468 563
Research and development 135 149
General and administrative 228 371
Amortization of intangibles - 93
Total operating expenses 2,031 2,365
Loss from operations (298) (1,320)
Other income (expense), net (273) (72)
Net loss (571) (1,392)
Preferred deemed dividend (593) 72
Net loss attributable to common stockholders $ (1,164) $ (1,320)
Basic and diluted net loss per share attributable to
common stockholders $ (0.08) $ (0.09)
Weighted average shares used in computing basic
and diluted net loss per share attributable
to common stockholders 14,155 13,997
SALON MEDIA GROUP, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended
June 30, 2004
As Reported (1) Adjustments Pro Forma
Net revenues $ 1,733 $ - $ 1,733
Operating expenses:
Production and content 1,200 (141) 1,059
Sales and marketing 468 (161) 307
Research and development 135 (8) 127
General and administrative 228 (41) 187
Amortization of intangibles - - -
Total operating expenses 2,031 (351) 1,680
Loss from operations (298) 351 53
Other income (expense), net (273) 383 110
Net loss (571) 734 163
Preferred deemed dividend (593) 593 -
Net profit (loss) attributable to
common stockholders $ (1,164) $ 1,327 $ 163
Basic net profit (loss) per share attributable to
common stockholders $ (0.08) $ 0.01
Dilutive net profit (loss) per share attributable $ (0.08) $ 0.00
to common stockholders
Weighted average shares used in computing
basic net profit (loss) per share attributable
to common stockholders 14,155 14,155
Weighted average shares used in computing
dilutive net profit (loss) per share
attibutable to common stockholders 14,155 160,602,578
(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
June 30, 2003
As Reported (1) Adjustments Pro Forma
Net revenues $ 1,045 $ - $ 1,045
Operating expenses:
Production and content 1,189 (40) 1,149
Sales and marketing 563 (133) 430
Research and development 149 (7) 142
General and administrative 371 (10) 361
Amortization of intangibles 93 (93) -
Total operating expenses 2,365 (283) 2,082
Loss from operations (1,320) 283 (1,037)
Other income (expense), net (72) 30 (42)
Net loss (1,392) 313 (1,079)
Preferred deemed dividend 72 (72) -
Net loss attributable to common stockholders $ (1,320) $ 241 $ (1,079)
Basic and diluted net loss per share attributable
to common stockholders $ (0.09) $ (0.08)
Weighted average shares used in computing
basic and diluted net loss per share
attributable to common stockholders 13,997 13,997
(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
June 30,
2004 2003
Net loss attributable to common stockholders $ (1,164) $ (1,320)
Less:
Charges resulting from re-valuing warrants issued in
conjunction with operations 490 (21)
Utilization of prepaid advertising rights 150 120
Depreciation and amortization charges 94 214
Preferred deemed dividend charge from re-valuation
of warrants issued to preferred stockholders 398 (72)
Preferred deemed dividend charge from issuance of
preferred stock 195 -
Pro forma net loss attributable to common stockholders $ 163 $ (1,079)
SALON MEDIA GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts, unaudited)
June 30, March 31,
2004 2004
Assets
Current assets:
Cash and cash equivalents $ 765 $ 696
Accounts receivable, net 821 306
Prepaid expenses, and other current assets 335 432
Total current assets 1,921 1,434
Property and equipment, net 129 89
Prepaid advertising rights 4,280 4,430
Goodwill 200 200
Other assets 102 117
Total assets $ 6,632 $ 6,270
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities 1,107 1,143
Deferred revenue 1,095 1,107
Total current liabilities 2,202 2,250
Warrants payable 3,581 2,621
Total liabilities 5,783 4,871
Stockholders' equity:
Common stock 14 14
Preferred stock - -
Additional paid-in-capital 92,934 92,320
Accumulated deficit (92,099) (90,935)
Total stockholders' equity 849 1,399
Total liabilities and stockholders' equity $ 6,632 $ 6,270