FORT LAUDERDALE, FL (October 22, 2002) - SportsLine.com, Inc. (NASDAQ: SPLN), a leading Internet sports media company and publisher of CBS SportsLine.com (http://cbs.sportsline.com), today announced its operating results for the third quarter ended September 30, 2002. The Company's net loss for the quarter was $11.4 million, or $0.30 per basic and diluted share, which compares favorably with a net loss for the third quarter of 2001, before two non-recurring items and excluding the results of Sports.com, of $19.4 million. In the third quarter of 2001, the Company had reported net income of $3.9 million, which included a $17 million write-down of goodwill and $41.7 million for the positive effect of deconsolidation of Sports.com. Net loss for the third quarter 2002 was reduced by 30% sequentially from a net loss of $16.3 million, or $0.45 per share in the second quarter of 2002, due to the seasonal nature of the Company's business.
SportsLine.com reported an increase in cash and marketable securities of $7.6 million, primarily resulting from the advance collection of fantasy and certain advertising revenue. That compares to a decrease of $16.7 million in the same quarter a year ago and a decrease of $4.8 million in the second quarter of 2002. At the end of September, the Company's unrestricted cash and marketable securities totaled approximately $44 million, compared to approximately $36 million at the end of June.
The Company's EBITDA loss (loss from operations excluding depreciation, amortization, and amortization of equity issued to Viacom for promotion) for the quarter, excluding a restructuring charge of $1.1 million for severance costs, was $2.0 million, an 80% improvement over the Company's EBITDA loss of $9.9 million for the same period of 2001. The EBITDA loss also represents a 77% improvement over the Company's domestic EBITDA loss of $8.6 million in the third quarter of 2001, which excludes the results of Sports.com. This also represents a 66% sequential improvement over the $5.8 million EBITDA loss in the second quarter of 2002.
Revenue for the third quarter of 2002 was $15.5 million, an increase of 14% compared to $13.6 million in the same quarter of 2001, and a sequential increase of 41% compared to $11.0 million in the second quarter of 2002. The success of the Company's fee-based fantasy football strategy contributed to the rise in subscription and premium products revenue to $3.7 million in the third quarter 2002, a 185% increase compared to $1.3 million in the same period a year ago and a 131% sequential increase compared to $1.6 million in the second quarter of 2002. Domestic advertising and marketing services revenue decreased slightly compared to the same quarter in 2001; however, during the third quarter 2002, barter advertising represented only 4% of total revenue, compared to 14% of domestic revenue in the third quarter of 2001. Excluding barter revenue from both periods, domestic advertising revenue increased by more than 10% in the third quarter 2002 compared to the same quarter in 2001. Advertising and marketing services revenue increased 25% sequentially compared to the second quarter of 2002.
"This quarter is indicative of the strength of SportsLine.com's business as we made significant strides in the right direction in all of our major financial metrics: net loss, EBITDA and revenue," said Michael Levy, founder and CEO of SportsLine.com, Inc. "We have put SportsLine.com in position to achieve our long-stated goal of reaching positive EBITDA in the fourth quarter. We continue to efficiently manage the expense side of our business while on the revenue side, our advertising and marketing services business is more than holding its own in a challenging environment. Furthermore, we have successfully proven the viability of our fantasy sports business as a significant revenue source, as we have already generated in excess of $10 million year-to-date from fantasy sports."
SportsLine.com, Inc.
Financial Highlights
(in thousands, except per-share data)
(unaudited)
Three Months Ended
September 30,
2002 2001
U.S. Sports.com(1) Total
Revenue $15,526 $13,336 $265 $13,601
Net income (loss) $(11,384) $5,327 $(1,443) $3,884
Basic and diluted net income
(loss) per share $(0.30) $0.14
Weighted average shares
outstanding 37,654 28,368
EBITDA(2) $(2,048) $(8,577) $(1,299) $(9,876)
Nine Months Ended
September 30,
2002 2001
U.S. Sports.com(1) Total
Revenue $42,176 $44,547 $4,484 $49,031
Net loss $(39,946) $(29,175) $(18,142) $(47,317)
Basic and diluted net
loss per share $(1.09) $(1.72)
Weighted average shares
outstanding 36,611 27,437
EBITDA(2) $(10,903) $(21,692) $(16,839) $(38,531)
(1) As of July 2001, results of Sports.com are no longer consolidated
with SportsLine.com, Inc.
(2) Excludes restructuring charge.
Business Outlook
Consistent with previous guidance, the Company expects to achieve positive EBITDA in the fourth quarter of 2002, in the range of $200,000 to $1 million. For the full year 2002, the Company has decreased its estimated EBITDA loss to a range of $10 to $11 million, an improvement from the previous estimate of $11 to $13 million.
The Company estimates that total revenue for the fourth quarter of 2002 will be between $18 and $19 million, which will bring total revenue for the full year 2002 to above $60 million. The Company anticipates that approximately 80% of total revenue in 2002 will come from advertising and marketing services. For the fourth quarter, it is anticipated that approximately 35% of total revenue will come from subscriptions and premium products and the balance from advertising and marketing services.
The Company's net loss per share in the fourth quarter is expected to be between $0.22 and $0.25 per share. The net loss per share for the full year is now expected to be $1.30 to $1.40 per share, an improvement from the previous estimate of $1.40 to $1.50 per share.
The Company now expects its cash position at the end of 2002 to exceed $35 million, an increase from the previous guidance of $30 million, considering the projected EBITDA loss and capital expenditures for the remainder of the year.
The preliminary outlook for 2003, which is subject to change, currently calls for revenue growth in the 15% range for the full year. Most of the growth is expected to occur in the second half of the year, consistent with the seasonality in the Company's business. The Company anticipates the total revenue base in 2003 to be split approximately 75% advertising and marketing services and 25% subscription and premium products, with subscription and premium products revenue expected to grow more than 30% over 2002.
The Company currently anticipates that EBITDA in 2003 for the full year will range from approximately break-even to a loss of $5 million, with modest EBITDA losses expected during the first half of the year, and positive EBITDA anticipated during the second half of the year. Final guidance for 2003 will be provided in January when the Company reports fourth quarter results.
These business outlook statements, as well as other forward looking statements in this press release, are based on current expectations as of today only. Due to economic and advertising market variables, among other factors, there can be no assurance that the Company will achieve the stated outlook. SportsLine.com makes these statements as of today and undertakes no obligation to update these statements. While it is currently expected that these business outlook statements will not be updated prior to the release of SportsLine.com's next quarterly earnings announcement, the Company reserves the right to update the outlook for any reason during the quarter, including the occurrence of material events.
Conference Call
SportsLine.com will host a conference call to discuss third quarter 2002 results today at 11:00 a.m. Eastern Time. A live Web cast of the conference call will be available on the SportsLine.com Investor Relations arena (http://sportsline.com/ir/conference.html). The Web cast will be archived for 90 days following the call.
About SportsLine.com, Inc. SportsLine.com, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per-share data)
Three Months Ended
September 30,
2002 2001
U.S. Sports.com(1) Total
Revenue:
Advertising and marketing
services $11,806 $12,029 $154 $12,183
Subscription and premium
products 3,720 1,307 -- 1,307
Content licensing -- -- 111 111
Total revenue 15,526 13,336 265 13,601
Cost of revenue 6,635 6,531 724 7,255
Gross profit (loss) 8,891 6,805 (459) 6,346
Operating expenses:
Product development 500 468 -- 468
Sales and marketing:
Amortization of equity
issued to Viacom
for promotion(2) 5,821 5,072 -- 5,072
Other 5,414 8,854 365 9,219
General and administrative 5,025 6,060 475 6,535
Depreciation and amortization 3,082 6,080 144 6,224
Write-down of goodwill -- 17,000 -- 17,000
Restructuring charge(3) 1,101 -- -- --
Total operating expenses 20,943 43,534 984 44,518
Loss from operations (12,052) (36,729) (1,443) (38,172)
Effect of deconsolidation of
Sports.com -- 41,739 -- 41,739
Tax benefit 720 -- -- --
Net interest and other income
(expense) (52) 317 -- 317
Net income (loss) $(11,384) $5,327 $(1,443) $3,884
Basic and diluted net income
(loss) per share $(0.30) $0.14
Weighted average shares
outstanding 37,654 28,368
Diluted weighted average
shares outstanding 28,383
EBITDA(2)(4) $(2,048) $(8,577) $(1,299) $(9,876)
Gross margin 57% 51% (173)% 47%
(1) As of July 2001, results of Sports.com are no longer consolidated
with SportsLine.com, Inc.
(2) Amortization of equity issued to Viacom for promotion has been
reclassified for all periods presented in the income statements from
depreciation and amortization to sales and marketing expense. For
purposes of calculating EBITDA, such amount will continue to be
treated consistent with the Company's historical reporting method.
(3) Restructuring charge consists primarily of severance costs.
(4) Excludes restructuring charge.
SportsLine.com, Inc.
Condensed Consolidated Statements
of Operations
(in thousands, except per-share data)
Nine Months Ended
September 30,
2002 2001
U.S. Sports.com(1) Total
Revenue:
Advertising and marketing
services $35,842 $37,784 $2,254 $40,038
Subscription and premium
products 6,334 3,463 -- 3,463
Content licensing -- 3,300 2,230 5,530
Total revenue 42,176 44,547 4,484 49,031
Cost of revenue 16,726 17,688 8,902 26,590
Gross profit (loss) 25,450 26,859 (4,418) 22,441
Operating expenses:
Product development 1,672 1,451 -- 1,451
Sales and marketing:
Amortization of equity
issued to Viacom
for promotion(2) 18,464 15,216 -- 15,216
Other 18,943 27,999 6,199 34,198
General and administrative 15,738 19,101 6,222 25,323
Depreciation and amortization 8,689 17,968 1,664 19,632
Write-down of goodwill -- 17,000 -- 17,000
Restructuring charge(3) 2,499 985 -- 985
Total operating expenses 66,005 99,720 14,085 113,805
Loss from operations (40,555) (72,861) (18,503) (91,364)
Loss on equity investments -- (28) -- (28)
Effect of deconsolidation of
Sports.com -- 41,739 -- 41,739
Tax benefit 720 -- -- --
Net interest and other income
(expense) (111) 1,975 361 2,336
Net loss $(39,946) $(29,175) $(18,142) $(47,317)
Basic and diluted net loss
per share $(1.09) $(1.72)
Basic and diluted weighted
average shares outstanding 36,611 27,437
EBITDA(2)(4) $(10,903) $(21,692) $(16,839) $(38,531)
Gross margin 60% 60% (99)% 46%
(1) As of July 2001, results of Sports.com are no longer consolidated
with SportsLine.com, Inc.
(2) Amortization of equity issued to Viacom for promotion has been
reclassified for all periods presented in the income statements from
depreciation and amortization to sales and marketing expense. For
purposes of calculating EBITDA, such amount will continue to be
treated consistent with the Company's historical reporting method.
(3) Restructuring charge consists primarily of severance costs.
(4) Excludes restructuring charge.
Net change in cash and marketable securities
The analysis below should be considered in addition to, and not as a substitute for, or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with generally accepted accounting principles. Management believes this supplemental financial data, which is not a presentation in accordance with generally accepted accounting principles, should be considered in addition to other financial statements, in order to fully assess the Company's financial operating results.
(in thousands) Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Net income (loss) $(11,384) $3,884 $(39,946) $(47,317)
Depreciation and amortization 3,082 6,224 8,689 19,632
Amortization of equity issued to
Viacom for promotion 5,821 5,072 18,464 15,216
Write-down of goodwill -- 17,000 -- 17,000
Effect of deconsolidation of
Sports.com -- (45,482) -- (45,482)
Investment in Sports.com -- (5,000) -- (5,000)
Acquisition of property and
equipment (843) (2,088) (1,177) (5,473)
Net repurchase of equity (75) (1,011) (179) (13,315)
Sale (purchase) of intangible
assets 155 -- 155 (6,158)
Increase in working capital 10,365 4,717 10,754 2,586
Other 488 (30) 1,218 (52)
Net change in cash and
marketable securities $7,609 $(16,714) $(2,022) $(68,363)
SportsLine.com, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31, 2001,
2002 2001
Assets:
Cash and short-term marketable securities $33,542 $46,035
Deferred advertising and content -- CBS 7,286 2,286
Receivables, prepaids and other
current assets 11,121 14,570
Total current assets 51,949 62,891
Non-current marketable securities 10,470 --
Property and equipment, net 8,621 12,069
Long-term deferred advertising and content --
CBS 7,428 9,143
Other assets 7,385 8,000
Goodwill 20,861 20,861
$106,714 $112,964
Liabilities and Shareholders' Equity:
Current liabilities $28,108 $16,711
Long-term convertible notes 16,678 16,678
Other long-term liabilities -- 407
Shareholders' equity 61,928 79,168
$106,714 $112,964
| For further information, contact: SportsLine.com Inc. — Corporate Communications — (954) 489-4000
|