-- Revenue of $53.2 million, a 9% increase over the
prior year quarter -- Adjusted EBITDA of $2.2
million, a 39% decrease over the prior year quarter --
Sold the operating assets of FrontLine
Marketing:
- Net cash proceeds of $36.5 million
- Net gain of $19.6 million
Alloy, Inc. (the "Company") (Nasdaq:ALOY), one of the country's
largest providers of media and marketing programs reaching targeted
consumer segments, today reported financial results for its second
fiscal quarter and six months ended July 31, 2010. During the
second quarter of the fiscal year ending January 31, 2011 ("fiscal
2010"), the Company sold the operating assets and certain
liabilities of its FrontLine Marketing business ("FrontLine"). The
operating results discussed below, including Adjusted EBITDA and
free cash flow, exclude the operating results and financial
position of FrontLine for all periods presented.
Consolidated Results for the Three Months Ended July 31,
2010
Revenue in the second quarter of fiscal 2010 increased $4.4
million, or 9%, to $53.2 million, from $48.8 million in the second
quarter of the fiscal year ended January 31, 2010 ("fiscal
2009").
Adjusted EBITDA, defined by the Company as operating income
(loss) plus depreciation and amortization, non-cash stock-based
compensation and special charges, in the second quarter of fiscal
2010 decreased $1.4 million, or 39%, to $2.2 million, from $3.6
million in the second quarter of fiscal 2009. The decrease was
primarily due to decreased Adjusted EBITDA in the Company's Media
segment primarily due to higher production expenses. This decrease
was partially offset by increased Adjusted EBITDA in the Company's
Promotion, Placement, and Corporate segments, due to increased
revenue and lower expenses.
Commenting on Alloy's performance and outlook, Matt Diamond, the
Company's Chairman and Chief Executive Officer, stated, "Our
Adjusted EBITDA results met expectations, as they were in the range
communicated in connection with our first quarter results. We were
pleased with the results of the Promotion segment, particularly the
increase in our on campus marketing business. As well, in the
Placement segment, our newspaper business lines reported
significantly increased revenue over the prior year's quarter."
Free cash flow, defined by the Company as net cash used in or
provided by operating activities and adjusted to exclude changes in
operating assets and liabilities and discontinued operations, minus
capital expenditures, in the second quarter of fiscal 2010 was $0.3
million, or $0.02 per diluted share, as compared to $3.4 million,
or $0.28 per diluted share, in the second quarter of fiscal 2009.
The decrease in free cash flow was primarily due to lower accounts
receivable collections.
Operating loss for the second quarter of fiscal 2010 was $1.8
million, as compared to operating income of $1.0 million for the
second quarter of fiscal 2009, primarily due to lower Adjusted
EBITDA, partially offset by higher stock based compensation. For
the three months ended July 31, 2010, the Company recorded special
charges of $1.1 million related to merger transaction expenses and
an impairment charge related to its auction rate securities.
Interest income, net of interest expense, was not significant
for either of the quarters presented.
Income tax expense for the second quarter of fiscal 2010
increased $0.3 million, to $0.3 million, from $0.0 million in the
second quarter of fiscal 2009. The increase in income tax expense
was primarily related to book and tax differences resulting from
the amortization of goodwill for tax purposes.
Net income increased $15.7 million, to $17.7 million, or $1.35
per diluted share in the second quarter of fiscal 2010, from net
income of $2.0 million, or $0.15 per diluted share for the second
quarter of fiscal 2009. The increase was primarily due to the $19.6
million net gain on the sale of FrontLine.
Sale of FrontLine
On June 7, 2010, Alloy Media, LLC, an indirect wholly-owned
subsidiary of the Company, sold substantially all of its assets
used exclusively in its FrontLine business, together with certain
liabilities, for approximately $39.3 million in cash, resulting in
net cash proceeds to the Company of approximately $36.5 million,
excluding estimated tax. A net gain of $19.6 million related to the
sale was recorded. The current and historical results of FrontLine
are reclassified as discontinued operations in the financial
statements for the three and six months ended July 31, 2010.
Consolidated Results for the Six Months Ended July 31,
2010
Revenue for the first six months of fiscal 2010 increased $8.9
million, or 10%, to $95.9 million, from $87.0 million for the first
six months of fiscal 2009.
Adjusted EBITDA in the first six months of fiscal 2010 decreased
$0.7 million, or 30%, to $1.7 million, from $2.4 million in the
first six months of fiscal 2009. The decrease was primarily due to
decreased Adjusted EBITDA in the Company's Media and Promotion
segments, due to increased production and general corporate
expenses. These decreases were partially offset by increased
Adjusted EBITDA in the Company's Placement and Corporate segments,
primarily due to increased revenue and lower expenses.
Free cash flow in the first six months of fiscal 2010 was $(1.1)
million, or $(0.09) per diluted share, as compared to $1.2 million,
or $0.10 per diluted share, in the first six months of fiscal 2009.
The decrease in free cash flow was primarily due to lower accounts
receivable collections.
Operating loss for the first six months of fiscal 2010 increased
$3.0 million, to $5.4 million, from $2.4 million for the first six
months of fiscal 2009, primarily due to higher stock based
compensation and lower Adjusted EBITDA. For the first six months of
fiscal 2010, the Company recorded special charges of $1.2 million
related to merger transaction expenses and an impairment charge
related to our auction rate securities. For the first six months of
fiscal 2009, no special charges were recorded.
Interest income, net of interest expense, was not significant
for either of the quarters presented.
Income tax expense for the first six months of fiscal 2010
increased $0.2 million, to $0.4 million, from $0.2 million in the
first six months of fiscal 2009. The increase in income tax expense
was primarily related to book and tax differences resulting from
the amortization of goodwill for tax purposes.
Net income increased $16.4 million, to $15.6 million, or $1.17
per diluted share in the first six months of fiscal 2010, from a
net loss of $0.8 million, or $(0.08) per basic share for the first
six months of fiscal 2009. The increase was primarily due to the
$19.6 million net gain on the sale of FrontLine.
ZelnickMedia Merger Update
On June 24, 2010, the Company announced that an investor group
led by ZelnickMedia agreed to acquire the Company for $9.80 per
share in cash and that certain members of Alloy's senior management
will invest in the transaction in conjunction with ZelnickMedia.
This transaction is subject to Alloy stockholder approval, the
satisfaction of certain financial conditions and other customary
terms and conditions. The Company received notice that the
Federal Trade Commission and the Department of Justice terminated
the mandatory waiting period under the Hart-Scott-Rodino Act on
July 23, 2010. The Company is awaiting SEC approval to
distribute to its stockholders the definitive proxy statement
soliciting their votes to approve the merger. The Company expects
this transaction to close during its third fiscal quarter. The
Company did not repurchase any stock during the three and six
months ended July 31, 2010 under its existing stock repurchase
program and, given the potential merger, does not expect to make
any such purchases going forward.
Consolidated and Segment Results
The tables below present the Company's revenue, Adjusted EBITDA
and operating income (loss) for the three month periods ended
July 31, 2010 and 2009, respectively:
|
Three Months Ended July 31, |
Change |
(In thousands) |
2010 |
2009 |
$ |
% |
Revenue |
|
|
|
|
Promotion |
$ 27,645 |
$ 27,155 |
$ 490 |
2% |
Media |
14,993 |
14,768 |
225 |
2 |
Placement |
10,595 |
6,900 |
3,695 |
54 |
|
|
|
|
|
Total Revenue |
$ 53,233 |
$ 48,823 |
$ 4,410 |
9% |
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
Promotion |
$ 4,529 |
$ 3,911 |
$ 617 |
16% |
Media |
(465 ) |
2,551 |
(3,016) |
NM |
Placement |
668 |
61 |
607 |
NM |
Corporate |
(2,537) |
(2,935) |
398 |
14 |
|
|
|
|
|
Total Adjusted EBITDA |
$ 2,195 |
$ 3,588 |
$ (1,393) |
(39)% |
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
Promotion |
$ 4,035 |
$ 3,558 |
$ 477 |
13 % |
Media |
(1,892) |
1,121 |
(3,013) |
NM |
Placement |
599 |
14 |
585 |
NM |
Corporate |
(4,564) |
(3,658) |
(906) |
(25) |
|
|
|
|
|
Total Operating Income (Loss) |
$ (1,822) |
$ 1,035 |
$ (2,857) |
NM % |
NM —Not meaningful
Amounts discussed below may differ from Consolidated and Segment
results due to rounding.
Note: The operating results of FrontLine are not included in the
above tables and are not discussed below.
Promotion segment revenue for the three months
ended July 31, 2010 was $27.6 million, an increase of $0.5
million, or 2%, from $27.1 million for the three months ended
July 31, 2009. Revenue increased in the Company's on-campus
marketing business, partially offset by a decrease in the Company's
AMP Agency business. Adjusted EBITDA was $4.5 million, an increase
of $0.6 million, or 16%, from $3.9 million, primarily driven by
lower outside labor, production and postage expense. Operating
income was $4.0 million, an increase of $0.5 million, or 13%, from
$3.5 million, primarily due to higher Adjusted EBITDA.
Media segment revenue for the three months
ended July 31, 2010 was $14.9 million, an increase of $0.2
million, or 2%, from $14.7 million for the three months ended
July 31, 2009. Revenue increased in the Company's Digital,
Display Board, Alloy Education and Alloy Entertainment businesses,
partially offset by a decrease in the Company's Channel One
business. Adjusted EBITDA was $(0.5) million, a decrease of $3.0
million, from $2.5 million, primarily due an increase in production
and payroll expenses in the Company's Channel One business.
Operating loss was $1.9 million, a decrease of $3.0 million, from
operating income of $1.1 million, primarily due to lower Adjusted
EBITDA.
Placement segment revenue for the three months
ended July 31, 2010 was $10.6 million, an increase of $3.7
million, or 54%, from $6.9 million for the three months ended
July 31, 2009. Revenue increased primarily due to increases in
military, multicultural, broadcast and general market advertising.
Adjusted EBITDA was $0.7 million, an increase of $0.6 million, from
$0.1 million, primarily driven by higher revenue. Operating income
was $0.6 million, an increase of $0.6 million, from $0.0 million,
primarily due to higher Adjusted EBITDA.
Corporate Adjusted EBITDA increased $0.4
million, or 14%, to $(2.5) million for the three months ended
July 31, 2010, from $(3.0) million for the three months ended
July 31, 2009, primarily due to lower medical and information
technology expenses. Operating loss increased $0.9 million, or 25%,
to $4.6 million, from $3.7 million, primarily due to higher stock
based compensation and special charges.
The tables below present the Company's revenue, Adjusted EBITDA
and operating income (loss) for the six month periods ended
July 31, 2010 and 2009:
|
Six Months Ended July 31, |
Change |
(In thousands) |
2010 |
2009 |
$ |
% |
Revenue |
|
|
|
|
Promotion |
$ 42,182 |
$ 42,221 |
$ (39) |
NM% |
Media |
30,924 |
28,473 |
2,451 |
9 |
Placement |
22,757 |
16,350 |
6,407 |
39 |
|
|
|
|
|
Total Revenue |
$ 95,863 |
$ 87,044 |
$ 8,819 |
10% |
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
Promotion |
$ 3,690 |
$ 4,042 |
$ (352) |
(9)% |
Media |
1,886 |
3,824 |
(1,938) |
(51) |
Placement |
1,126 |
339 |
787 |
NM |
Corporate |
(5,013) |
(5,786) |
773 |
13 |
|
|
|
|
|
Total Adjusted EBITDA |
$ 1,689 |
$ 2,419 |
$ (730) |
(30)% |
|
|
|
|
|
Operating Income (Loss) |
|
|
|
|
Promotion |
$ 2,699 |
$ 3,357 |
$ (658) |
(20)% |
Media |
(878) |
1,109 |
(1,987) |
NM |
Placement |
985 |
247 |
738 |
NM |
Corporate |
(8,178) |
(7,129) |
(1,049) |
(15) |
|
|
|
|
|
Total Operating (Loss) |
$ (5,372) |
$ (2,416) |
$ (2,956) |
NM% |
NM —Not meaningful
Amounts discussed below may differ from Consolidated and Segment
results due to rounding.
Note: The operating results of FrontLine are not included in the
above tables and are not reflected in the discussion below.
Promotion segment revenue for the first six
months of fiscal 2010 was $42.2 million, consistent with $42.2
million for the first six months of fiscal 2009. Adjusted EBITDA
was $3.7 million, a decrease of $0.3 million, or 9%, from $4.0
million, primarily due to higher payroll and facilities expense,
partially offset by lower outside labor and production costs.
Operating income was $2.7 million, a decrease of $0.6 million, or
20%, from $3.3 million, primarily due to lower Adjusted EBITDA and
higher depreciation and stock based compensation.
Media segment revenue for the first six months
of fiscal 2010 was $30.9 million, an increase of $2.4 million, or
9%, from $28.5 million for the first six months of fiscal 2009. The
increase was primarily due to increased revenue in the Company's
Digital, Display Board and Alloy Education businesses, partially
offset by a decrease in the Company's Channel One business.
Adjusted EBITDA was $1.9 million, a decrease of $1.9 million, or
51%, from $3.8 million, primarily due to increased production and
payroll expenses. Operating loss was $0.9 million, a decrease of
$2.0 million, from operating income of $1.1 million, primarily due
to lower Adjusted EBITDA.
Placement segment revenue for the first six
months of fiscal 2010 was $22.7 million, an increase of $6.4
million, or 39%, from $16.4 million for the first six months of
fiscal 2009. Revenue increased primarily due to increases in
college, military, multicultural, broadcast and general market
advertising. Adjusted EBITDA was $1.1 million, an increase of $0.8
million from $0.3 million, primarily driven by
higher revenue. Operating income was $0.9 million, an increase of
$0.7 million, from $0.2 million, due to higher Adjusted EBITDA.
Corporate Adjusted EBITDA increased $0.8
million or 13%, to $(5.0) million for the first six months of
fiscal 2010, from $(5.8) million for the first six months of fiscal
2009, primarily driven by lower medical and information technology
expenses. Operating loss increased $1.0 million or 15% to $8.2
million, from $7.1 million, primarily due to higher stock based
compensation and special charges.
About Alloy
Alloy, Inc. (Nasdaq:ALOY) is one of the country's
largest providers of media and marketing programs reaching targeted
consumer segments. Alloy manages a diverse array of assets and
services in digital, display, direct mail, content production and
educational programming. Alloy works with over 1,500 companies,
including half of the Fortune 200. For further information
regarding Alloy, please visit our corporate website at
www.alloymarketing.com.
The Alloy, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5852
Forward-Looking Statements
This announcement contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, including
statements regarding the Company's expectations and beliefs
regarding the Company's future results or performance. Because
these statements apply to future events, they are subject to risks
and uncertainties. When used in this announcement, the words
"anticipate", "believe", "estimate", "expect", "expectation",
"project" and "intend" and similar expressions are intended to
identify such forward-looking statements. The Company's future as
an investment should be evaluated in light of the proposed going
private transaction for which stockholder approval is required and
is subject to the satisfaction of various financial and other
customary terms and conditions. The Company's actual results could
differ materially from those projected in the forward-looking
statements. Additionally, past results should not be considered to
be an indication of the Company's future performance. Factors that
might cause or contribute to such differences include, among
others, the Company's ability to: increase revenues; generate high
margin sponsorship and multiple revenue streams; increase visitors
to its Web sites and build customer loyalty; develop its sales and
marketing teams and capitalize on these efforts; develop commercial
relationships with advertisers and the continued resilience in
advertising spending to reach the teen market; manage the risks and
challenges associated with integrating newly acquired businesses;
and identify and take advantage of strategic, synergistic
acquisitions and other revenue opportunities. Other relevant
factors include, without limitation: its competition; seasonal
sales fluctuations; the uncertain economic and political climate in
the United States and throughout the rest of the world and the
potential that such climate may deteriorate further; and general
economic conditions. For a discussion of certain of the foregoing
factors and other risk factors see the "Risk Factors That May
Affect Future Results" section included in the Company's annual
report on Form 10-K for the year ended January 31, 2010
and in subsequent filings that the Company makes with the
Securities and Exchange Commission. The Company does not intend to
update any of the forward-looking statements after the date of this
announcement to conform these statements to actual results, to
changes in management's expectations or otherwise, except as may be
required by law.
ALLOY, INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL
INFORMATION
(Unaudited; in millions)
A. Adjusted EBITDA
The following tables set forth the Company's Adjusted EBITDA for
the three-month periods ended July 31, 2010 and 2009
respectively. The Company defines Adjusted EBITDA as net loss
adjusted to exclude the following line items and amounts presented
in its Statements of Operations: interest income, interest expense,
income taxes, depreciation and amortization and stock-based
compensation and special charges.
The Company uses Adjusted EBITDA, among other things, to
evaluate the Company's operating performance and to value
prospective acquisitions. The measure is also one of several
components of incentive compensation targets for certain management
personnel and is among the primary measures used by management for
planning and forecasting future periods. The Company believes that
this measure is an important indicator of the Company's operational
strength and performance of its business, because it provides a
link between profitability and operating cash flow. The Company
believes the presentation of this measure is relevant and useful
for investors because it allows investors to view performance in a
manner similar to the method used by the Company's management,
helps improve investors' ability to understand the Company's
operating performance and makes it easier to compare the Company's
results with other companies that have different financing and
capital structures or tax rates. In addition, this measure is also
among the primary measures used externally by the Company's
investors, analysts and peers in its industry for purposes of
valuation and comparing the operating performance of the Company to
other companies in the industry.
Since Adjusted EBITDA is not a measure of performance calculated
in accordance with Generally Accepted Accounting Principles
("GAAP"), it should not be considered in isolation from, nor as a
substitute for, net income as an indicator of operating
performance. Adjusted EBITDA, as the Company calculates it, may not
be comparable to similarly titled measures employed by other
companies. In addition, this measure does not necessarily represent
funds available for discretionary use and is not necessarily a
measure of the Company's ability to fund its cash needs. As
Adjusted EBITDA excludes certain financial information compared to
net income, the most directly comparable GAAP financial measure,
users of this financial information should consider the types of
events and transactions that are excluded. As required by the
Securities and Exchange Commission, the Company provides below a
reconciliation of net loss to Adjusted EBITDA and operating income
(loss) to Adjusted EBITDA by segment.
|
Three Months Ended
July 31, |
Six Months Ended
July 31, |
|
2010 |
2009 |
2010 |
2009 |
Net income (loss) |
$ 17.7 |
$ 2.0 |
$ 15.6 |
$ (0.8) |
Plus (minus) |
|
|
|
|
Income from discontinued operations, net
of tax |
(20.2) |
(1.0) |
(21.8) |
(1.8) |
Income taxes |
0.3 |
— |
0.4 |
0.2 |
Interest income & other |
0.4 |
— |
0.4 |
— |
Operating income (loss) |
$ (1.8) |
$ 1.0 |
$ (5.4) |
$ (2.4) |
Plus |
|
|
|
|
Depreciation and amortization |
1.6 |
1.6 |
3.3 |
3.0 |
Stock based compensation |
1.3 |
1.0 |
2.6 |
1.8 |
Special charges |
1.1 |
— |
1.2 |
— |
|
|
|
|
|
Adjusted EBITDA |
$ 2.2 |
$ 3.6 |
$ 1.7 |
$ 2.4 |
|
|
|
Three Months
Ended July 31, 2010(1) |
|
Operating
Income (loss) |
Depreciation and
Amortization |
Stock-based
Compensation |
Special
Charges |
Adjusted
EBITDA |
Promotion |
$ 4.0 |
$ 0.3 |
$ 0.2 |
$ — |
$ 4.5 |
Media |
(1.9) |
1.1 |
0.3 |
— |
(0.5) |
Placement |
0.6 |
— |
0.1 |
— |
0.7 |
Corporate |
(4.5) |
0.2 |
0.7 |
1.1 |
(2.5) |
|
|
|
|
|
|
Total |
$ (1.8) |
$ 1.6 |
$ 1.3 |
$ 1.1 |
$ 2.2 |
|
|
|
Three Months
Ended July 31, 2009(1) |
|
Operating
Income (loss) |
Depreciation and
Amortization |
Stock-based
Compensation |
Special
Charges |
Adjusted
EBITDA |
Promotion |
$ 3.5 |
$ 0.2 |
$ 0.1 |
$ — |
$ 3.8 |
Media |
1.1 |
1.2 |
0.3 |
— |
2.6 |
Placement |
— |
— |
0.1 |
— |
0.1 |
Corporate |
(3.6) |
0.2 |
0.5 |
— |
(2.9) |
|
|
|
|
|
|
Total |
$ 1.0 |
$ 1.6 |
$ 1.0 |
$ — |
$ 3.6 |
|
|
|
Six Months Ended
July 31, 2010(1) |
|
Operating
Income (loss) |
Depreciation and
Amortization |
Stock-based
Compensation |
Special
Charges |
Adjusted
EBITDA |
Promotion |
$ 2.7 |
$ 0.6 |
$ 0.4 |
$ — |
$ 3.7 |
Media |
(0.9) |
2.2 |
0.6 |
— |
1.9 |
Placement |
1.0 |
— |
0.1 |
— |
1.1 |
Corporate |
(8.2) |
0.5 |
1.5 |
1.2 |
(5.0) |
|
|
|
|
|
|
Total |
$ (5.4) |
$ 3.3 |
$ 2.6 |
$ 1.2 |
$ 1.7 |
|
|
|
Six Months Ended
July 31, 2009(1) |
|
Operating
Income (loss) |
Depreciation and
Amortization |
Stock-based
Compensation |
Special
Charges |
Adjusted
EBITDA |
Promotion |
$ 3.4 |
$ 0.5 |
$ 0.2 |
$ — |
$ 4.1 |
Media |
1.1 |
2.1 |
0.6 |
— |
3.8 |
Placement |
0.2 |
— |
0.1 |
— |
0.3 |
Corporate |
(7.1) |
0.4 |
0.9 |
— |
(5.8) |
|
|
|
|
|
|
Total |
$ (2.4) |
$ 3.0 |
$ 1.8 |
$ — |
$ 2.4 |
(1) Numbers may differ from Consolidated and Segment results due
to rounding.
Note: The operating results of FrontLine are not included in the
above tables and are not discussed below.
B. Free Cash Flow
Free cash flow is defined by the Company as net cash used or
provided by operating activities and adjusted to exclude changes in
operating assets and liabilities and discontinued operations, minus
capital expenditures. The Company uses free cash flow, among other
measures, to evaluate its operating performance. Management
believes free cash flow provides investors with an important
perspective regarding the Company's cash available to make
strategic acquisitions and investments, maintain its capital
assets, repurchase its common stock and fund ongoing operations. As
a result, free cash flow is viewed as a significant measure of the
Company's ability to generate long-term value. The Company believes
the presentation of free cash flow is relevant and useful for
investors because it allows investors to view performance in a
manner similar to the method used by management. In addition, free
cash flow is also a primary measure used externally by the
Company's investors, analysts and peers in its industry for
purposes of valuation and comparing the operating performance of
the Company to other companies in its industry. Free cash flow per
weighted average shares outstanding is defined by the Company as
free cash flow divided by the weighted average shares outstanding
used in the computation of net income (loss) per share for
continuing operations.
As free cash flow is not a measure of performance calculated in
accordance with GAAP, free cash flow should not be considered in
isolation from, nor as a substitute for, net income as an indicator
of operating performance or net cash flow provided by operating
activities as a measure of liquidity. Free cash flow, as the
Company calculates it, may not be comparable to similarly titled
measures employed by other companies. In addition, free cash flow
does not necessarily represent funds available for discretionary
use and is not necessarily a measure of operating cash flow.
Specifically, the Company adjusts operating cash flow (the most
directly comparable GAAP financial measure) for capital
expenditures, non-recurring expenditures and certain other non-cash
items in addition to removing the impact of sources and or uses of
cash resulting from changes in operating assets and liabilities.
Accordingly, users of this financial information should consider
the types of events and transactions which are not reflected in
this financial measure. The Company provides below a reconciliation
of net cash flow provided by operating activities, a GAAP measure,
to free cash flow.
|
|
|
|
|
|
Three Months
Ended July 31, |
Six Months
Ended July 31, |
(In millions, except per share
amounts) |
2010 |
2009 |
2010 |
2009 |
Net cash provided by operating
activities |
$ 7.6 |
$ 9.1 |
$ 7.2 |
$ 6.4 |
Plus (minus) |
|
|
|
|
Net cash provided by (used in) operating
activities attributable to discontinued operations |
0.3 |
(2.9) |
1.8 |
(2.3) |
Changes in operating assets and
liabilities |
(7.1) |
(2.2) |
(9.0) |
(1.3) |
Capital expenditures |
(0.5) |
(0.6) |
(1.1) |
(1.5) |
|
|
|
|
|
Free Cash Flow |
$ 0.3 |
$ 3.4 |
$ (1.1) |
$ 1.2 |
|
|
|
|
|
Weighted average shares
outstanding—Diluted |
11.7 |
12.3 |
11.6 |
11.9 |
|
|
|
|
|
Free Cash Flow per Share |
$ 0.02 |
$ 0.28 |
$ (0.09) |
$ 0.10 |
Note: The operating results of FrontLine are not included in the
above tables.
ALLOY,
INC. |
CONSOLIDATED BALANCE
SHEETS |
(In thousands, except
per share amounts) |
|
|
July 31,
2010 |
January 31,
2010 |
|
(Unaudited) |
|
ASSETS |
Current assets: |
|
|
Cash and cash equivalents |
$ 60,501 |
$ 26,178 |
Accounts receivable, net of allowance for
doubtful accounts of $837 and $851, respectively |
29,263 |
26,764 |
Unbilled accounts receivable |
7,670 |
5,989 |
Inventory |
5,389 |
3,478 |
Other current assets |
4,802 |
5,607 |
Current assets of discontinued
operations |
— |
4,098 |
|
|
|
Total current assets |
107,625 |
72,114 |
Fixed assets, net |
18,786 |
19,352 |
Goodwill |
46,092 |
45,085 |
Intangible assets, net |
5,923 |
6,776 |
Other assets |
975 |
1,656 |
Noncurrent assets of discontinued
operations |
— |
13,155 |
Total assets |
$ 179,401 |
$ 158,138 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
Current liabilities: |
|
|
Accounts payable |
$ 19,806 |
$ 10,886 |
Deferred revenue |
11,424 |
10,305 |
Accrued expenses and other current
liabilities |
20,912 |
17,655 |
Current liabilities of discontinued
operations |
— |
10,098 |
Total current liabilities |
52,142 |
48,944 |
Deferred tax liability |
2,717 |
2,668 |
Other long-term liabilities |
3,568 |
3,112 |
Total liabilities |
58,427 |
54,724 |
|
|
|
Stockholders' equity: |
|
|
Common stock; $.01 par value: authorized
200,000 shares; issued and outstanding: 16,925 and 16,600
respectively |
172 |
165 |
Additional paid-in capital |
457,634 |
454,896 |
Accumulated deficit |
(305,959) |
(321,546) |
|
151,847 |
133,515 |
Less treasury stock, at cost: 4,061 and
3,963 shares, respectively |
(30,873) |
(30,101) |
|
|
|
Total stockholders' equity |
120,974 |
103,414 |
|
|
|
Total liabilities and stockholders'
equity |
$ 179,401 |
$ 158,138 |
|
ALLOY,
INC. |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(In thousands, except
per share amounts) |
|
|
Three Months
Ended July 31, |
Six Months
Ended July 31, |
|
2010 |
2009 |
2010 |
2009 |
|
(Unaudited) |
(Unaudited) |
Revenues: |
|
|
|
|
Services revenue |
$ 35,024 |
$ 32,767 |
$ 72,087 |
$ 65,263 |
Product revenue |
18,209 |
16,056 |
23,776 |
21,781 |
Total revenue |
$ 53,233 |
$ 48,823 |
$ 95,863 |
$ 87,044 |
|
|
|
|
|
Cost of Goods Sold: |
|
|
|
|
Costs of goods sold- services |
15,772 |
12,840 |
33,158 |
27,300 |
Costs of goods sold- product |
6,318 |
5,285 |
7,581 |
6,553 |
Total costs of goods sold |
$ 22,090 |
$ 18,125 |
$ 40,739 |
$ 33,853 |
|
|
|
|
|
Expenses: |
|
|
|
|
Operating |
25,490 |
22,855 |
46,286 |
42,134 |
General and administrative |
4,801 |
5,261 |
9,774 |
10,445 |
Depreciation and amortization** |
1,618 |
1,547 |
3,271 |
3,028 |
Special charges |
1,056 |
— |
1,165 |
— |
Total expenses |
32,965 |
29,663 |
60,496 |
55,607 |
|
|
|
|
|
Operating income (loss) from continuing
operations |
(1,822) |
1,035 |
(5,372) |
(2,416) |
|
|
|
|
|
Interest expense |
(4) |
(17) |
(9) |
(18) |
Interest income and other |
(387) |
6 |
(394) |
17 |
Income (loss) before income taxes |
(2,213) |
1,024 |
(5,775) |
(2,417) |
Income tax expense |
(249) |
(33) |
(477) |
(156) |
Income (loss) from continuing operations |
(2,462) |
991 |
(6,252) |
(2,573) |
Income from discontinued operations, net of
income taxes |
20,159 |
963 |
21,839 |
1,804 |
|
|
|
|
|
Net income (loss) |
$ 17,697 |
$ 1,954 |
$ 15,587 |
$ (769) |
|
|
|
|
|
Net income (loss) per basic share: |
|
|
|
|
Income (loss) from continuing
operations |
$ (0.21) |
$ 0.08 |
$ (0.54) |
$ (0.22) |
Income from discontinued operations |
1.72 |
0.08 |
1.88 |
0.15 |
Net income (loss) – Basic |
1.51 |
0.16 |
1.34 |
(0.07) |
|
|
|
|
|
Net income (loss) per diluted share: |
|
|
|
|
Income (loss) from continuing
operations |
$ (0.21) |
$ 0.08 |
$ (0.54) |
$ (0.22) |
Income from discontinued operations |
1.56 |
0.07 |
1.71 |
0.14 |
Net income (loss) – Diluted |
1.35 |
0.15 |
1.17 |
(0.08) |
** Includes amortization of intangibles of $777 and $689
for the three month periods ended July 31, 2010 and 2009,
respectively, and includes amortization of intangibles of $1,555
and $1,298 for the six-month periods ended July 31, 2010 and
2009, respectively.
Alloy,
Inc. |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(In Thousands) |
|
|
Six Months
Ended |
|
July
31, |
|
2010 |
2009 |
|
(Unaudited) |
Cash Flows from Operating
Activities |
|
|
Net income (loss) |
$ 15,587 |
$ (769) |
Less net income from discontinued
operations |
$ 21,839 |
$ 1,804 |
Net loss from continuing operations |
$ (6,252) |
$ (2,573) |
Adjustments to reconcile net loss from
continuing operations to net cash provided by operating
activities: |
|
|
Loss on sale of operating assets |
— |
311 |
Depreciation and amortization of fixed
assets |
1,714 |
1,729 |
Deferred tax expense |
221 |
— |
Impairment charge on investments |
109 |
|
Amortization of intangible assets |
1,557 |
1,298 |
Provision for losses on accounts
receivable |
68 |
135 |
Stock compensation |
2,646 |
1,833 |
Changes in operating assets and
liabilities: |
|
|
Accounts receivable |
(4,248) |
9,469 |
Inventory and other assets |
(533) |
(3,387) |
Accounts payable, accrued expenses, and
other |
13,685 |
(4,733) |
Net cash provided by (used in) operating
activities attributable to discontinued operations |
(1,780) |
2,272 |
Net cash provided by operating
activities |
7,187 |
6,354 |
|
|
|
Cash Flows from Investing
Activities |
|
|
Capital expenditures |
(1,146) |
(1,488) |
Acquisitions, net of cash acquired |
— |
275 |
Contingent consideration payments related
to prior acquisitions |
(940) |
— |
Purchase of domain name / mailing list /
marketing rights |
(704) |
(609) |
Net proceeds on the sale of operating
assets |
— |
122 |
Net cash provided by (used in) investing
activities attributable to discontinued operations |
30,600 |
(693) |
Net cash provided by (used in) investing
activities |
27,810 |
(2,393) |
|
|
|
Cash Flows from Financing
Activities |
|
|
Issuance of common stock |
99 |
— |
Repurchase of common stock |
(773) |
(4,169) |
Net cash used in financing
activities |
(674) |
(4,169) |
|
|
|
Net change in cash and cash
equivalents |
34,323 |
(208) |
|
|
|
Cash and cash equivalents: |
|
|
|
|
|
Beginning of period |
$ 26,178 |
$ 32,116 |
|
|
|
End of period |
$ 60,501 |
$ 31,908 |
CONTACT: Alloy, Inc.
Joseph D. Frehe, Chief Financial Officer
(212) 329 - 8347
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