SportsLine.com's net loss was reduced to $12.1 million, or $0.28 per basic and diluted share, a slight improvement over the net loss of $12.3 million, or $0.34 per basic and diluted share, in the third quarter of 2002. During the third quarter of 2003, the Company recorded a charge of $2.8 million to reflect the reduction in the estimated value of the e-commerce assets it acquired from MVP.com, Inc. in January 2001. Excluding this charge, the Company's net loss was $9.3 million in the third quarter of 2003, a 16% improvement compared to a net loss of $11.2 million in the same period of 2002, excluding a restructuring charge of $1.1 million related to severance costs.
Beginning with the quarter ended September 30, 2003, the Company adopted Emerging Issues Task Force Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables," ("EITF 00-21") which is applicable to agreements entered into in fiscal periods beginning after June 15, 2003. Prior to the adoption of EITF 00-21, revenue related to most of the Company's advertising and sponsorship arrangements was recognized proportionally as advertising impressions were delivered. Under EITF 00-21, revenues under certain advertising and sponsorship arrangements must be recognized on a straight-line basis over the duration of the arrangement. Although adoption of EITF 00-21 does not affect cash flow or the total amount of revenue the Company receives or recognizes under these advertising and sponsorship arrangements, recognition of a portion of such revenue must be deferred. For the quarter ended September 30, 2003, the impact of the adoption of EITF 00-21 was to defer $1.1 million of advertising and marketing services revenue, of which approximately 60% is expected to be recognized in the quarter ended December 31, 2003 and the remainder in future periods.
If the Company had not been required to adopt EITF 00-21, the Company would have recognized revenue from continuing operations for the third quarter of 2003 of $15.2 million, which is in line with the Company's most recent guidance, and an increase of 13% over the same period last year. In addition, if the Company had not been required to adopt EITF 00-21 in the third quarter, the Company would have reported a net loss of $11.0 million, an improvement of 10% over the net loss for the same period last year.
The Company's EBITDA loss from continuing operations (net loss excluding interest and other expense, depreciation and amortization, amortization of equity issued to third parties, stock compensation expense, and write-down of e-commerce assets) for the quarter was $1.7 million, in line with the Company's previous guidance of an EBITDA loss from continuing operations of $1.5-2.5 million. The EBITDA loss from continuing operations for the quarter is a 51% improvement over the Company's EBITDA loss from continuing operations of $3.6 million in the third quarter of 2002, excluding a restructuring charge of $1.1 million related to severance costs. If the Company had not been required to adopt EITF 00-21 in the third quarter, the Company's EBITDA loss from continuing operations would have been $0.6 million, significantly better than the Company's previous guidance.
The Company's loss from continuing operations for the quarter ended September 30, 2003 was $12.1 million, a 16% improvement from the $14.4 million loss from continuing operations in the same quarter a year ago. Continuing operations excludes the Company's gaming information operations, consisting of VegasInsider.com and Las Vegas Sports Consultants (LVSC). In October, the Company entered into a definitive agreement for the sale of LVSC, subject to a number of closing conditions. Management currently expects to complete the closing contemplated by the definitive agreement by year end, although there can be no assurance that this will occur. As previously announced, VegasInsider.com was sold in June 2003.
"SportsLine.com continued to achieve positive revenue growth this quarter, in spite of the increased competition in the fantasy sports subscription market and a slower than expected recovery of the online advertising market," said Michael Levy, founder and CEO of SportsLine.com, Inc. "We made significant improvement in our EBITDA loss from continuing operations year over year, and management is anticipating positive EBITDA from continuing operations for the fourth quarter."
SportsLine.com, Inc.
Financial Highlights
(in thousands, except per-share data)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2003 2002 2003 2002
(restated) (restated)
Revenue $14,032 $13,369 $34,886 $36,230
Loss from continuing operations $(12,078) $(14,342) $(34,472) $(47,151)
Net loss $(12,144) $(12,289) $(35,264) $(42,172)
Basic and diluted loss per share
before discontinued operations $(0.28) $(0.40) $(0.84) $(1.36)
Basic and diluted loss per share $(0.28) $(0.34) $(0.86) $(1.21)
Weighted average shares
outstanding 43,503 36,029 41,138 34,839
EBITDA from continuing operations $(1,736) $(3,546) $(8,548) $(15,497)
Note: The amounts for prior periods have been restated to reclassify discontinued operations and to record additional stock compensation expense and other revenue and operating expense adjustments (see paragraph entitled "Company to Amend Financial Statements" contained elsewhere in this press release). Additionally, EBITDA from continuing operations amounts for prior periods have been restated to conform with the current period presentation. See "Supplemental Financial Data" for a reconciliation of EBITDA from continuing operations to net loss.
Additional Third Quarter Financial Highlights
Revenue
Operating Expenses
Balance Sheet
Company to Amend Financial Statements
Recent Business Highlights
Expansion of NFL Agreement
Fantasy Football Continues Growth
PGATOUR.COM Agreement Extended
AOL Relationship Modified
SportsLine.com Teams with Amazon.com
Company Adds Board Member
Audience Usage Strong
Gaming Information Operations Update
Business Outlook
The following business outlook section, 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, and changes in consumer acceptance and other variables related to the Company's subscription products, including the introduction of additional competing subscription products in the marketplace, 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 in early 2004, the Company reserves the right to update the outlook for any reason during the quarter, including the occurrence of material events.
Three months ending Year ending
(in millions) December 31, 2003 December 31, 2003
Revenue outlook $21.5 - $22.5 $56.4 - $57.4
EBITDA from continuing operations
outlook
Net loss $(2.3) - $(3.1) $(37.5) - $(38.3)
Amortization of equity issued to
third parties $5.8 $23.7
Write-down of e-commerce assets $0.0 $2.8
Depreciation and amortization $0.8 - $1.0 $4.3 - $4.5
Stock compensation expense $0.5 $2.2
Loss from discontinued operations $0.0 $0.5
Interest and other, net $0.1 $0.4
EBITDA from continuing
operations $4.1 - $5.1 $(3.5) - $(4.5)
The Company expects approximately 55-60% of fourth quarter revenue and 70- 75% of full year 2003 revenue to come from advertising and marketing services, and the remainder from subscriptions and premium products. Capital expenditures for the full year 2003 are estimated to be between $1 and $2 million.
Class Action Lawsuits
During October 2003, the Company and certain of its officers were named as defendants in several securities class action lawsuits filed in the United States District Court for the Southern District of Florida. These actions, which were filed on behalf of purchasers of the Company's common stock during the period May 15, 2001 to September 25, 2003, generally allege that, during the class period, the defendants made misstatements to the investing public about the Company's financial condition and prospects. The complaints seek unspecified damages. The Company believes the plaintiffs' claims lack merit and intends to vigorously defend the lawsuits.
About SportsLine.com, Inc.
SportsLine.com (Nasdaq:SPLN) is at the leading edge of media companies providing Internet sports content, community and e-commerce. As the publisher of CBS SportsLine.com and the official Web sites of the NFL, PGA TOUR and NCAA Sports, the Company serves as one of the most comprehensive sports information sources available, providing an unmatched breadth and depth of multimedia sports news, information, entertainment and merchandise.
Note: This press release contains forward-looking statements, which involve risks and uncertainties. SportsLine.com's actual results could differ materially from those anticipated in these forward-looking statements. Factors that might cause or contribute to such differences include, among others, competitive pressures, dependence on advertising revenues, which are difficult to forecast, the growth rate of the Internet, constantly changing technology and market acceptance of the company's products and services. In addition to these risks, the Company's business and results of operations may be materially adversely affected by the outcome of the class action securities litigation described above. Investors are also directed to consider the other risks and uncertainties discussed in SportsLine.com's Securities and Exchange Commission filings, including those discussed under the caption "Risk Factors That May Affect Future Results" in SportsLine.com's latest Annual Report on Form 10-K. SportsLine.com undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
SportsLine.com, Inc.
Consolidated Statements of Operations
(in thousands, except per-share data)
(unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2003 2002 2003 2002
(restated) (restated)
Revenue:
Advertising and marketing
services $10,011 $10,150 $28,806 $31,361
Subscription and premium
products 4,021 3,219 6,080 4,869
Total revenue 14,032 13,369 34,886 36,230
Cost of revenue 5,587 6,178 14,288 15,395
Gross profit 8,445 7,191 20,598 20,835
Operating expenses:
Sales and marketing:
Amortization of equity
issued to Viacom for
promotion 5,571 5,821 16,714 18,464
Other 5,960 5,843 16,345 20,388
General and administrative 5,152 6,259 15,605 19,666
Depreciation and amortization 1,040 2,509 3,606 6,969
Write-down of e-commerce assets 2,800 -- 2,800 --
Restructuring charge -- 1,101 -- 2,499
Total operating expenses 20,523 21,533 55,070 67,986
Loss from continuing operations (12,078) (14,342) (34,472) (47,151)
Interest and other expense, net (41) (51) (273) (112)
Loss before discontinued
operations and tax benefit (12,119) (14,393) (34,745) (47,263)
Tax benefit -- 720 -- 720
Income (loss) from discontinued
operations (25) 1,384 (234) 4,371
Loss from sale of discontinued
operations -- -- (285) --
Net loss $(12,144) $(12,289) $(35,264) $(42,172)
Basic and diluted loss per share
before discontinued operations
and tax benefit $(0.28) $(0.40) $(0.84) (1.36)
Income (loss) per share from
discontinued operations -- 0.04 (0.01) 0.13
Loss per share from sale of
discontinued operations -- -- (0.01) --
Tax benefit -- 0.02 -- 0.02
Basic and diluted loss per share $(0.28) $(0.34) $(0.86) $(1.21)
Basic and diluted weighted average
shares outstanding 43,503 36,029 41,138 34,839
EBITDA $(1,736) $(3,546) $(8,548) $(15,497)
Note: The amounts for prior periods have been restated to reclassify
discontinued operations and to record additional stock compensation
expense and other revenue and operating expense adjustments (see paragraph
entitled "Company to Amend Financial Statements" contained elsewhere in
this press release). Additionally, EBITDA from continuing operations
amounts for prior periods have been restated to conform with the current
period presentation. See "Supplemental Financial Data" for a
reconciliation of EBITDA from continuing operations to net loss.
Supplemental Financial Data
In order to fully assess the Company's financial operating results, management believes that EBITDA from continuing operations is an appropriate measure of evaluating the operating and liquidity performance of the Company, because it reflects the resources available for operating funds and strategic opportunities, including, among others, to invest in the business, make strategic acquisitions, strengthen the balance sheet and repurchase stock. However, EBITDA from continuing operations should be considered in addition to, 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.
Three Months Nine Months
Ended Ended
(in thousands) September 30, September 30,
2003 2002 2003 2002
(restated) (restated)
EBITDA from continuing operations
reconciliation:
Net loss $(12,144) $(12,289) $(35,264) $(42,172)
Amortization of equity issued to
third parties 5,950 6,172 17,849 19,584
Depreciation and amortization 1,040 2,509 3,606 6,969
Write-down of e-commerce assets 2,800 -- 2,800 --
Restructuring charge -- 1,101 -- 2,499
Stock compensation expense 552 1,014 1,669 2,602
Loss from sale of discontinued
operations -- -- 285 --
(Income) loss from discontinued
operations 25 (1,384) 234 (4,371)
Tax benefit -- (720) - (720)
Interest and other expense, net 41 51 273 112
EBITDA from continuing operations $(1,736) $(3,546) $(8,548) $(15,497)
Note: The amounts for prior periods have been restated to reclassify discontinued operations and to record additional stock compensation expense and other revenue and operating expense adjustments (see paragraph entitled "Company to Amend Financial Statements" contained elsewhere in this press release). Additionally, EBITDA from continuing operations amounts for prior periods have been restated to conform with the current period presentation. See "Supplemental Financial Data" for a reconciliation of EBITDA from continuing operations to net loss.
Supplemental financial data related to gaming information operations, which are now reflected as discontinued operations in the Company's consolidated statements of operations:
Three Months Nine Months
Ended Ended
(in thousands) September 30, September 30,
2003 2002 2003 2002
Advertising and marketing services
revenue $-- $1,655 $188 $5,051
Subscription and premium products
revenue 277 501 1,205 1,466
Cost of revenue (236) (491) (1,294) (1,460)
Sales and marketing expense (8) (198) (135) (405)
General and administrative expense (58) (77) (192) (263)
Depreciation and amortization -- (7) (7) (20)
Interest income, net -- 1 1 2
Income (loss) from discontinued
operations $(25) $1,384 $(234) $4,371
SportsLine.com, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2003 2002
(restated)
Cash flows from operating activities:
Net loss $(35,264) $(42,172)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization 3,612 6,990
Amortization of equity issued to
third parties 17,849 19,584
Write-down of e-commerce assets 2,800 --
Loss from sale of discontinued
operations 285 --
Stock compensation expense 1,669 2,602
Other (577) 342
Changes in assets and
liabilities:
Accounts receivable (1,516) (2,219)
Prepaid expenses and other
assets (705) 2,670
Accounts payable 269 (349)
Accrued expenses 390 5,552
Deferred revenue 11,634 6,124
Net cash provided by
(used in) operating
activities 446 (876)
Cash flows from investing activities:
Purchases of available-for-sale
securities (13,810) --
Sales of available-for-sale
securities 10,113 --
Purchases of held-to-maturity
securities (3,292) (33,306)
Maturities of held-to-maturity
securities 7,094 32,051
Purchase of property and equipment (1,159) (1,177)
Sales of intangible assets -- 155
Purchase of licenses (250) --
Proceeds from divestiture of
business 1,460 --
Net change in restricted cash 197 54
Net cash provided by
(used in) investing
activities 353 (2,223)
Cash flows from financing activities:
Proceeds from exercise of employee
options 151 56
Repurchase of common stock (658) (235)
Net cash used in
financing activities (507) (179)
Net increase (decrease) in cash and
cash equivalents 292 (3,278)
Cash and cash equivalents, beginning
of period 17,383 30,017
Cash and cash equivalents, end of
period $17,675 $26,739
SportsLine.com, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, 2003 December 31, 2002
(unaudited) (restated)
Assets:
Cash and cash equivalents $17,675 $17,383
Short-term marketable securities 3,593 3,866
Receivables, prepaids and other
current assets 14,347 11,393
Assets held for sale 242 2,204
Total current assets 35,857 34,846
Non-current marketable securities 16,432 16,376
Property and equipment, net 6,088 7,537
Deferred advertising and content-CBS 7,428 9,143
Other assets 2,301 8,027
Goodwill 16,194 16,194
$84,300 $92,123
Liabilities and Shareholders' Equity:
Current liabilities $31,551 $14,255
Liabilities held for sale 123 137
Long-term convertible notes 16,678 16,678
Other long-term liabilities 10,256 6,883
Shareholders' equity 25,692 54,170
$84,300 $92,123
Supplemental schedule of cash and marketable securities
September 30, 2003 December 31, 2002
(unaudited)
Cash and cash equivalents $17,675 $17,383
Short-term marketable securities 3,593 3,866
Non-current marketable securities 16,432 16,376
$37,700 $37,625
| For further information, contact: SportsLine.com Inc. — Corporate Communications — (954) 489-4000
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