WESTLAKE VILLAGE, Calif., July 31, 2003 (PRIMEZONE) -- United Online, Inc. (Nasdaq:UNTD), a leading provider of value-priced Internet services, today reported results for its fourth quarter and fiscal year ended June 30, 2003.
Summary of June 2003 Quarter Results: - Total revenues for the quarter were a record $79.6 million, up 46% versus $54.4 million for the year-ago quarter. - Total pay subscribers increased by a net 142,000 during the quarter, reaching a record 2.55 million at June 30, 2003. Total active users(1), including users of the company's free services, totaled 5.2 million at June 30, 2003. - Approximately 8% of the 2.55 million total pay subscribers at June 30, 2003 were subscribers to the company's recently launched accelerated dial-up services - NetZero HiSpeed and Juno SpeedBand. - Operating income for the quarter was $10.2 million, or 12.8% of revenues, versus an operating loss of ($3.7) million in the year- ago quarter. - Adjusted operating income before depreciation and amortization(2) for the quarter was $16.2 million, or 20.3% of revenues, an increase of 129% versus adjusted operating income before depreciation and amortization of $7.1 million, or 13.0% of revenues, in the year-ago quarter. - Net income for the quarter was $14.6 million, or $0.32 per share, which included a tax benefit of $4.3 million, or $0.10 per share, related to the recognition of a portion of the company's deferred tax assets.(3) Excluding this benefit, net income for the June 2003 quarter was a record $10.3 million, or $0.23 per share, versus a net loss of ($2.7) million, or ($0.07) per share, for the year- ago quarter. - Adjusted net income(4) for the quarter was a record $14.2 million, or $0.31 per share, versus adjusted net income of $4.1 million, or $0.09 per share, for the year-ago quarter. Adjusted net income is calculated in a manner consistent with the analyst consensus estimate as reported by First Call. - Cash flows from operations were $19.6 million for the quarter, versus $12.6 million for the year-ago quarter. - Free cash flow(5) for the quarter was $18.2 million, versus $12.2 million for the year-ago quarter. Summary of Fiscal-Year 2003 Results: - Total revenues for fiscal 2003 were a record $277.3 million, up 66% versus $167.5 million for fiscal 2002. - Pay subscribers increased by 840,000, or 49%, during fiscal year 2003. - Operating income for fiscal 2003 was $21.7 million, or 7.8% of revenues, versus an operating loss of ($53.9) million for fiscal 2002. - Adjusted operating income before depreciation and amortization(2) for fiscal 2003 was $50.2 million, or 18.1% of revenues, versus an adjusted operating loss before depreciation and amortization of ($9.9) million for fiscal 2002. - Net income for fiscal year 2003 was $27.8 million, or $0.62 per share, which included a tax benefit of $4.3 million, or $0.10 per share, related to the company's deferred tax assets.(3) Excluding this benefit, net income for fiscal 2003 was $23.5 million, or $0.52 per share, versus a net loss of ($47.8) million, or ($1.35) per share, for fiscal 2002. - Adjusted net income(4) for fiscal 2003, excluding the aforementioned tax benefit, was $40.6 million, or $0.91 per share, calculated in a manner consistent with the analyst consensus estimate as reported by First Call. This compares to an adjusted net loss of ($23.1) million, or ($0.65) per share, for fiscal 2002. - Cash flows from operations was $65.1 million for fiscal 2003, versus a negative ($4.6) million for fiscal 2002. - Free cash flow(5) for fiscal 2003 was $61.1 million, versus a negative ($2.4) million for fiscal 2002.
"We are very pleased to report another outstanding quarter across the board, highlighted by surpassing a milestone of 200,000 NetZero HiSpeed and Juno SpeedBand subscribers by quarter end," said Mark R. Goldston, chairman, CEO and president of United Online. "We are also proud to have surpassed 2.5 million pay subscribers in our first full year as a profitable company. Our 49% pay subscriber growth in the past year demonstrates that consumers want quality Internet services from recognized brands, but they also demand the best value. We believe that three major areas of focus - quality, brand and value - have been the key drivers of our business and will continue to deliver growth for United Online as the Internet access market evolves."
"Generating over $61 million of free cash flow in fiscal 2003 is a tremendous achievement and a testament to the focus and operational excellence delivered by all 461 United Online employees worldwide," said Charles S. Hilliard, executive vice president and CFO of United Online. "Key financial metrics for our June 2003 quarter, which include over $700,000 in annualized revenue per average employee and a billable services margin exceeding 68 percent, demonstrate that we continue to make significant progress in meeting our financial objectives. Given these results and the successful launch of our accelerated dial-up services, we are revising our financial guidance upward for fiscal 2004."Additional Highlights of the June 2003 Quarter:
- Billable services revenues were $72.4 million in the June 2003 quarter, or 91% of total revenues, an increase of 51% versus $47.9 million, or 88% of total revenues, for the June 2002 quarter.
- Billable services margin(6) was 68.2% for the June 2003 quarter, up from 57.0% for the June 2002 quarter.
- Annualized revenue per average employee(7) was $701,000 for the June 2003 quarter, up 37% versus $512,000 for the year-ago quarter.
- Cash balances at June 30, 2003 quarter were $193.0 million, including cash, cash equivalents, short-term investments and restricted cash.
- The company repurchased 187,000 shares of its common stock at an aggregate cost of $3.8 million during the June 2003 quarter. Since inception of the common stock repurchase program in March 2001, the company has repurchased 1.5 million shares of its common stock at an aggregate cost of $11.3 million. On July 29, 2003, the company's Board of Directors extended its stock repurchase program through July 31, 2004, and increased the plan limit to $100 million.
- In April 2003, the company launched its accelerated dial-up Internet access services that deliver Web surfing speeds up to five-times faster than traditional dial-up Internet access from any phone jack. Marketed as NetZero HiSpeed and Juno SpeedBand, these services are offered at $14.95 per month.
Business Outlook:
The following forward-looking information includes certain projections made by management as of the date of this release. United Online does not intend to revise or update this information and may not provide this type of information in the future. Due to a variety of factors, actual results may differ significantly from those projected. Factors include, without limitation, the factors referenced later in this announcement under the caption "Cautionary Information Regarding Forward-Looking Statements." These and other factors are discussed in more detail in the company's filings with the Securities and Exchange Commission.
Following is the company's current guidance for the September 2003 quarter and the fiscal year ending June 30, 2004 (in millions):
Current Current Previous
Sep 2003 Q est. FY 2004 est. FY 2004 est.
------------- ------------- --------------
Operating income before
depreciation and
amortization(2) $16.5 - $17.5 $74.0 - $79.0 $68.0 - $73.0
Depreciation 1.6 6.6 6.6
Amortization 4.0 15.9 15.9
------------- ------------- --------------
Operating income $10.9 - $11.9 $51.5 - $56.5 $45.5 - $50.5
============= ============= ==============
Weighted average
diluted shares 45.8 - 46.3 46.5 - 48.0 46.0 - 48.0
- Total revenues for the September 2003 quarter are estimated to be
between $83 million and $85 million.
- Billable services margin(6) in the September 2003 quarter is
projected to be approximately equal to the 68.2% margin achieved in
the June 2003 quarter.
- The effective tax rate for fiscal 2004 financial reporting purposes
is expected to increase to approximately 40.5%. Given the
company's tax net operating loss carryforwards, actual cash taxes
paid for fiscal 2004 are estimated to be significantly less than
the income tax expense reported on the company's financial
statements.
- The company estimates that pay subscribers will increase to between
2.9 million and 3.1 million by June 30, 2004.
(1) Active users are defined as all free users that logged on to our services at least once during the preceding 31 days, together with all subscribers to a billable service.
(2) Adjusted operating income (loss) before depreciation and amortization is defined as operating income before depreciation, amortization, stock-based charges and restructuring and merger-related costs. Management believes that because operating income (loss) before depreciation and amortization and adjusted operating income (loss) before depreciation and amortization exclude certain items that either do not impact the company's cash flows or which management believes are not reflective of the company's core operating results over time, these measures provide investors with additional useful information to measure the company's performance, particularly with respect to changes in performance from period to period, and to assess the company's ability to make capital expenditures, fund working capital requirements, incur and repay indebtedness, and fund strategic initiatives. Management also uses operating income (loss) before depreciation and amortization and adjusted operating income (loss) before depreciation and amortization for these purposes, as well as to allocate resources in managing the company's business. Operating income (loss) before depreciation and amortization and adjusted operating income (loss) before depreciation and amortization are not determined in accordance with generally accepted accounting principles (GAAP) and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Reconciliations to the most directly comparable GAAP financial measure are provided in the tables that follow this text.
(3) The company has potential future tax benefits, or deferred tax assets, associated with historical net operating losses that, because they were fully reserved by a valuation allowance, were not previously reported on its balance sheet. In the June 2003 quarter, the company released a portion of the valuation allowance, which has resulted in (i) the recognition of a portion of its net deferred tax assets on its balance sheet at June 30, 2003, (ii) the recording of a tax benefit on its income statement in the June 2003 quarter, and (iii) an increase in its estimated effective tax rate in fiscal 2004 to approximately 40.5%. It is reasonably possible that the company will release all, or a portion, of the remaining valuation allowance in the near term. Any such release would result in recording a tax benefit that would increase net income in the period the allowance was released. Neither the tax benefit from the current release, or any future release, nor the increase in the estimated effective tax rate in fiscal 2004 have impacted, or will impact, the amount of cash paid for income taxes.
(4) Adjusted net income (loss) is defined as net income (loss) before the after-tax effect of amortization of intangible assets, stock-based charges, restructuring and merger-related costs, other income, and in the June 2003 quarter the tax benefit related to the recognition of a portion of the company's deferred tax assets. Management believes that adjusted net income (loss) provides investors with additional useful information to measure the company's financial performance, particularly from period to period, exclusive of certain non-cash expenses and other items which management believes are not reflective of the company's core operating results over time. Management also uses adjusted net income (loss) for these purposes. Adjusted net income (loss) is not determined in accordance with generally accepted accounting principles (GAAP) and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Reconciliations to the most directly comparable GAAP financial measure are provided in the tables that follow this text.
(5) Free cash flow is defined as net cash provided by (used for) operating activities before cash paid for restructuring and merger-related costs, less capital expenditures. Management believes that free cash flow provides investors with additional useful information to measure operating liquidity because it reflects the company's operating cash flows after investing in capital assets, and excludes the cash impact of items which management believes are not reflective of the company's core operating results over time. This measure is used by management, and may also be useful for investors, to assess the company's ability to generate cash flow for a variety of strategic opportunities, including reinvestment in the business, effecting potential acquisitions, strengthening the balance sheet, and effecting share repurchases. Free cash flow is not determined in accordance with generally accepted accounting principles (GAAP) and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Reconciliations to the most directly comparable GAAP financial measure are provided in the tables that follow this text.
(6) Billable services margin represents billable services revenues less cost of billable services divided by billable services revenues.
(7) Annualized revenue per average employee represents annualized total revenues for the period divided by the average number of employees during that period.
About United Online
United Online, Inc. (Nasdaq:UNTD) is a leading provider of value-priced Internet services through its NetZero, Juno and BlueLight Internet consumer brands. The company's standard services are offered at less than half the standard monthly prices of its major competitors and are available in more than 6,500 cities across the United States and in Canada. At June 30, 2003, United Online had approximately 461 employees worldwide. The company is headquartered in Westlake Village, CA, with offices in New York City, San Francisco and Hyderabad, India. For more information about United Online and its Internet access services, please visit www.untd.com.
United Online will be hosting a conference call today at 8:00AM PDT (11:00AM EDT) to discuss its quarterly results. A live Web cast of the call can be accessed on the Investors section of the company's Web site at www.untd.com. A recording of the call will be available on the site for seven days.
Cautionary Information Regarding Forward-Looking Statements
This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements containing words such as "guidance," "may," "believe," "will," "expect," "project" and "estimate" or similar expressions constitute forward-looking statements. These statements include, without limitation, guidance for future financial performance; growth in billable subscribers; weighted average diluted shares; depreciation and amortization; and future tax rates and benefits. Actual results may differ materially from those predicted and reported results should not be considered an indication of future performance. Potential risks and uncertainties include, among others: the effect of competition, including adoption of broadband services and changes in pricing by our competitors; the company's inability to retain its existing subscribers; and the rate at which new subscribers sign up for the company's services; changes in the projected number of weighted average diluted shares due to stock issuances, stock repurchases, fluctuations in the company's stock price or other factors; changes in the projected amortization and depreciation figures due to capital spending or other factors; unanticipated usage by subscribers, additional telecommunications costs or other factors negatively impacting our billable services margin; changes in our free user base; the company's inability to realize the benefits of its deferred tax assets; the company's inability to maintain its agreements with telecommunications providers on attractive terms; problems associated with the company's billing systems; the company's inability to retain key customers and key personnel; unanticipated technological problems or developments; risks associated with litigation; and unanticipated governmental regulation. More information about potential factors that could affect the company's business and financial results is included in the company's annual and quarterly reports filed with the Securities and Exchange Commission (http://www.sec.gov), including without limitation information under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors."
UNITED ONLINE, INC.
Condensed Consolidated Balance Sheets
June 30, 2003 June 30, 2002
------------- -------------
ASSETS
Cash, cash equivalents and
short-term investments $192,228 $139,355
Restricted cash 811 6,185
Accounts receivable, net 12,420 7,977
Deferred tax assets, net 8,056 --
Property and equipment, net 11,535 16,500
Goodwill and intangible assets, net 49,595 58,119
Other assets 6,031 5,457
-------- --------
Total assets $280,676 $233,593
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 23,041 $ 21,575
Accrued liabilities 17,073 11,212
Deferred revenue 23,616 18,815
Capital leases 34 3,205
-------- --------
Total liabilities 63,764 54,807
-------- --------
Stockholders' equity 216,912 178,786
-------- --------
Total liabilities and
stockholders' equity $280,676 $233,593
======== ========
UNITED ONLINE, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
Three Months Ended Fiscal Year Ended
June 30, June 30,
----------------- -------------------
2003 2002 2003 2002
(unaudited)
------- ------- -------- --------
Revenues:
Billable services $72,412 $47,888 $247,790 $141,005
Advertising and commerce 7,196 6,561 29,505 26,510
------- ------- -------- --------
Total revenues 79,608 54,449 277,295 167,515
Operating expenses:
Cost of billable
services 23,011 20,612 89,293 74,227
Cost of free services 2,572 4,365 12,603 33,129
Sales and marketing 26,470 14,644 86,623 40,220
Product development 5,429 6,320 23,054 24,779
General and
administrative 7,939 6,433 27,805 30,722
Restructuring charges -- 1,113 (215) 4,228
Amortization of
intangible assets 3,964 4,685 16,411 14,156
------- ------- -------- --------
Total operating
expenses 69,385 58,172 255,574 221,461
------- ------- -------- --------
Operating income (loss) 10,223 (3,723) 21,721 (53,946)
Interest income, net 1,124 1,044 4,290 5,070
Other income, net -- -- -- 1,066
------- ------- -------- --------
Income (loss) before
income taxes 11,347 (2,679) 26,011 (47,810)
Provision (benefit) for
income taxes (3,247) -- (1,781) --
------- ------- -------- --------
Net income (loss) $14,594 $(2,679) $ 27,792 $(47,810)
======= ======= ======== ========
Basic net income (loss)
per share $ 0.35 $ (0.07) $ 0.68 $ (1.35)
======= ======= ======== ========
Diluted net income (loss)
per share $ 0.32 $ (0.07) $ 0.62 $ (1.35)
======= ======= ======== ========
Shares used to calculate
basic income (loss)
per share 41,944 39,738 41,125 35,539
======= ======= ======== ========
Shares used to calculate
diluted income (loss)
per share 45,551 39,738 44,716 35,539
======= ======= ======== ========
Shares outstanding at
end of period 42,473 40,567 42,473 40,567
======= ======= ======== ========
UNITED ONLINE, INC
Condensed Consolidated Cash Flow Statements
(in thousands)
Three Months Ended Fiscal Year Ended
June 30, June 30,
------------------ -------------------
2003 2002 2003 2002
(unaudited)
------- -------- -------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $14,594 $ (2,679) $ 27,792 $(47,810)
Adjustments to reconcile
net income (loss) to net
cash provided by (used
for) operating activities:
Depreciation, amortization
and stock-based charges 5,932 9,392 27,667 38,832
Deferred taxes and other (3,020) 802 (2,006) 373
Change in operating
assets and liabilities
(excluding the effects
of acquisitions):
Restricted cash -- 223 5,374 9,592
Accounts receivable (490) 582 (2,832) 3,730
Other assets 1,514 3,885 (1,324) 6,948
Accounts payable and
accrued liabilities 1,323 (2,943) 6,678 (20,103)
Deferred revenue (286) 3,351 3,757 3,885
------- -------- -------- --------
Net cash provided by
(used for) operating
activities 19,567 12,613 65,106 (4,553)
------- -------- -------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of short-term
investments (5,079) (50,439) (45,522) (97,026)
Proceeds from maturities
of short-term investments 8,400 9,735 38,600 58,491
Purchases of property
and equipment (1,326) (594) (5,983) (1,465)
Proceeds from sale of
cost-basis investment 750 -- 750 --
Cash paid for acquisitions,
net of cash acquired -- -- (8,388) 32,496
Purchases of patent rights -- -- -- (18)
Proceeds from sales
of assets -- (351) -- 1,011
------- -------- -------- --------
Net cash provided by
(used for) investing
activities 2,745 (41,649) (20,543) (6,511)
------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on notes payable
and capital leases (64) (1,247) (2,968) (7,340)
Repayments of notes
receivable 1,587 6 1,653 6
Proceeds from employee
stock purchase plan 1,019 405 1,862 516
Common stock repurchases (3,797) (50) (7,777) (3,592)
Proceeds from exercises
of stock options 3,018 1,699 6,962 2,930
------- -------- -------- --------
Net cash provided by
(used for) financing
activities 1,763 813 (268) (7,480)
------- -------- -------- --------
Change in cash and cash
equivalents 24,075 (28,223) 44,295 (18,544)
Cash and cash equivalents,
beginning of period 61,763 69,766 41,543 60,087
------- -------- -------- --------
Cash and cash equivalents,
end of period $85,838 $ 41,543 $ 85,838 $ 41,543
======= ======== ======== ========
UNITED ONLINE, INC.
Reconciliation of Net Income (Loss) to Adjusted Net Income(4)
(in thousands, except per-share data)
Three Months Ended Three Months Ended
June 30, 2003 June 30, 2002
---------------------------- ---------------------------
Adjust- Adjust-
Reported ments Adjusted Reported ments Adjusted
------- ------- ------- ------- ------- -------
Revenues:
Billable
services $72,412 $ -- $72,412 $47,888 $ -- $47,888
Advertising
and
commerce 7,196 -- 7,196 6,561 -- 6,561
------- ------- ------- ------- ------- -------
Total
revenues 79,608 -- 79,608 54,449 -- 54,449
Operating
expenses:
Cost of bill-
able
services 23,011 (1)(a) 23,010 20,612 (41)(a) 20,571
Cost of free
services 2,572 -- 2,572 4,365 -- 4,365
Sales and
marketing 26,470 (3)(a) 26,467 14,644 (39)(a) 14,605
Product
development 5,429 (1)(a) 5,428 6,320 (814)(a) 5,506
General and
admini-
strative 7,939 (9)(a) 7,930 6,433 (47)(a) 6,386
Restructuring
charges -- -- -- 1,113 (1,113)(b) --
Amortization
of
intangible
assets 3,964 (3,964)(c) -- 4,685 (4,685)(c) --
------- ------- ------- ------- ------- -------
Total
operating
expenses 69,385 (3,978) 65,407 58,172 (6,739) 51,433
------- ------- ------- ------- ------- -------
Operating
income
(loss) 10,223 3,978 14,201 (3,723) 6,739 3,016
Interest
income,
net 1,124 -- 1,124 1,044 -- 1,044
------- ------- ------- ------- ------- -------
Income (loss)
before
income
taxes 11,347 3,978 15,325 (2,679) 6,739 4,060
Provision
(benefit)
for income
taxes (3,247) 4,384(d) 1,137 -- -- --
------- ------- ------- ------- ------- -------
Net income
(loss) $14,594 $ (406) $14,188 $(2,679) $ 6,739 $ 4,060
======= ======= ======= ======= ======= =======
Basic net
income (loss)
per share $ 0.35 $ 0.34 $ (0.07) $ 0.10
======= ======= ======= =======
Diluted net
income (loss)
per share $ 0.32 $ 0.31 $ (0.07) $ 0.09
======= ======= ======= =======
Shares used to
calculate basic
income (loss)
per share 41,944 41,944 39,738 39,738
======= ======= ======= =======
Shares used to
calculate
diluted
income (loss)
per share 45,551 45,551 39,738 45,030
======= ======= ======= =======
Shares
outstanding
at end of
period 42,473 42,473 40,567 40,567
======= ======= ======= =======
-------------------------------------------------------
(a) Elimination of stock-based charges of $14 in 2003 and stock-based
charges and merger-related charges of $656 and $285 in 2002.
(b) Elimination of restructuring charges.
(c) Elimination of amortization of intangible assets.
(d) Elimination of benefit recognized for deferred tax assets and
income tax effect of adjusting entries.
UNITED ONLINE, INC.
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)(4)
(in thousands, except per-share data)
Fiscal Year Ended Fiscal Year Ended
June 30, 2003 June 30, 2002
---------------------------- ---------------------------
Adjust- Adjust-
Reported ments Adjusted Reported ments Adjusted
-------- ------- -------- -------- -------- ---------
Revenues:
Billable
services $247,790 $ -- $247,790 $141,005 $ -- $141,005
Advertising
and
commerce 29,505 -- 29,505 26,510 -- 26,510
-------- ------- -------- -------- -------- ---------
Total
revenues 277,295 -- 277,295 167,515 -- 167,515
Operating
expenses:
Cost of
billable
services 89,293 (118)(a) 89,175 74,227 (193)(a) 74,034
Cost of free
services 12,603 -- 12,603 33,129 (72)(a) 33,057
Sales and
marketing 86,623 (113)(a) 86,510 40,220 (659)(a) 39,561
Product
development 23,054 (623)(a) 22,431 24,779 (2,360)(a) 22,419
General and
adminis-
trative 27,805 (280)(a) 27,525 30,722 (4,149)(a) 26,573
Restructuring
charges (215) 215(b) -- 4,228 (4,228)(b) --
Amortization
of
intangible
assets 16,411 (16,411)(c) -- 14,156 (14,156)(c) --
-------- ------- ------- -------- ------ -------
Total
operating
expenses 255,574 (17,330) 238,244 221,461 (25,817) 195,644
-------- ------- ------- -------- ------ -------
Operating
income
(loss) 21,721 17,330 39,051 (53,946) 25,817 (28,129)
Interest
income,
net 4,290 -- 4,290 5,070 -- 5,070
Other income,
net -- -- -- 1,066 (1,066)(e) --
-------- ------- ------- -------- ------ -------
Income (loss)
before
income
taxes 26,011 17,330 43,341 (47,810) 24,751 (23,059)
Provision
(benefit)
for income
taxes (1,781) 4,524(d) 2,743 -- -- --
-------- ------- ------- -------- ------ -------
Net income
(loss) $ 27,792 $12,806 $ 40,598 $(47,810) $24,751 $(23,059)
======== ======== ======== ======== ======== =========
Basic net
income
(loss) per
share $ 0.68 $ 0.99 $ (1.35) $ (0.65)
======== ======== ======== =========
Diluted net
income
(loss) per
share $ 0.62 $ 0.91 $ (1.35) $ (0.65)
======== ======== ======== =========
Shares used
to calculate
basic income
(loss) per
share 41,125 41,125 35,539 35,539
======== ======== ======== =========
Shares used
to calculate
diluted
income
(loss) per
share 44,716 44,716 35,539 35,539
======== ======== ======== =========
Shares
outstanding
at end of
period 42,473 42,473 40,567 40,567
======== ======== ======== =========
--------------------------
(a) Elimination of stock-based charges of $107 and $6,417 and
merger-related charges of $1,027 and $1,016, in 2003 and 2002,
respectively.
(b) Elimination of restructuring charges.
(c) Elimination of amortization of intangible assets.
(d) Elimination of benefit recognized for deferred tax assets and
income tax effect of adjusting entries.
(e) Elimination of other income, net.
UNITED ONLINE, INC.
Reconciliation of Non-GAAP Financial Data
(in thousands)
Three Months Ended Fiscal Year Ended
June 30, June 30,
------------------ ------------------
2003 2002 2003 2002
-------- -------- -------- --------
Adjusted Operating Income
(Loss) Before Depreciation
and Amortization(2)
Operating income (loss) $ 10,223 $ (3,723) $ 21,721 $(53,946)
Depreciation 1,954 4,051 11,149 18,259
Amortization 3,964 4,685 16,411 14,156
-------- -------- -------- --------
Operating income (loss)
before depreciation
and amortization 16,141 5,013 49,281 (21,531)
-------- -------- -------- --------
Stock-based charges 14 656 107 6,417
Restructuring and merger-
related charges(a) -- 1,398 812 5,244
-------- -------- -------- --------
Adjusted operating income
(loss) before depreciation
and amortization $ 16,155 $ 7,067 $ 50,200 $ (9,870)
======== ======== ======== ========
Three Months Ended Fiscal Year Ended
June 30, June 30,
------------------ ------------------
2003 2002 2003 2002
-------- -------- -------- --------
Free Cash Flow(5):
Net cash provided by (used
for) operating activities $ 19,567 $ 12,613 $ 65,106 $ (4,553)
Add (deduct):
Cash paid for restructuring
and merger-related
charges(a) -- 224 1,959 3,651
Capital expenditures (1,326) (594) (5,983) (1,465)
-------- -------- -------- --------
Free cash flow $ 18,241 $ 12,243 $ 61,082 $ (2,367)
======== ======== ======== ========
-----------------------------
(a) Represents restructuring and merger-related costs incurred in
connection with the merger of Juno and NetZero and the
acquisition of certain assets of BlueLight.com. These costs are
primarily attributable to stay bonuses, contract termination
fees, write-off of leasehold improvements and employee severance
payments.
UNITED ONLINE, INC.
Selected Historical Financial Data and Key Metrics (a)
(in thousands, except per share amounts,
number of employees and where noted)
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
2003 2003 2002 2002 2002
------- ------- ------- ------- -------
Total revenues $79,608 $73,819 $65,800 $58,068 $54,449
Net income (loss) $14,594 $ 6,962 $ 4,711 $ 1,525 $(2,679)
Net income (loss)
per diluted share $ 0.32 $ 0.15 $ 0.11 $ 0.03 $ (0.07)
Billable subscribers 2,547 2,405 2,176 1,848 1,707
Active users
(in millions)(1) 5.2 5.2 5.0 4.8 4.8
Number of employees
at end of period 461 447 444 420 420
Annualized revenue
per average
employee(7) $ 701 $ 663 $ 609 $ 553 $ 512
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(a) More information on the financial results for these quarters can
be found in the company's filings with the Securities and
Exchange Commission.