Company Generates Record Revenues of $15.7 Million, a 71% Increase
Over Prior Year CHICAGO, Aug. 4 /PRNewswire-FirstCall/ --
CoolSavings, Inc. (OTC:CSAV) (BULLETIN BOARD: CSAV) , a leading
interactive marketing services provider, today reported results for
the second quarter ended June 30, 2005. The Company recorded a 71%
increase in revenue in the second quarter compared to the same
quarter of 2004, driven by the continued success of CoolSavings'
Lead Generation Network. Net revenues in the second quarter were
$15.7 million compared to $9.2 million in the second quarter of
2004. The Company reported 12.8 million new registering consumers
across its network for the quarter, compared to 1.3 million new
registrants during the same period of 2004. The increase in
consumer registrations was primarily due to the success of the Lead
Generation Network, which launched late in the second quarter of
2004. CoolSavings also reported a 14% increase in the number of
consumer responses across its network during the second quarter, as
compared to the same period last year. Net income was $1.9 million
in the second quarter of 2005, compared to net income of $0.4
million in the same quarter of 2004, which is 416% growth. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050203/CGTH021LOGO ) The
Company's total operating costs and expenses in the second quarter
of 2005 rose to $13.8 million from $8.7 million in the second
quarter of 2004. The increase was primarily the result of the fees
paid to partners related to the increased revenue from the Lead
Generation Network. Net income applicable to common stockholders
was $1.3 million in the second quarter of 2005, or $0.03 per basic
share and $0.01 per diluted share, as compared to a net loss
applicable to common stockholders in the second quarter of 2004 of
$0.2 million, or $0.00 per basic and diluted share. Cash flows from
operations for the second quarter of 2005 were $0.3 million,
compared to cash used in operations of $0.8 million in the same
period of 2004. Working capital increased from $0.0 million at
December 31, 2004 to $10.3 million at June 30, 2005, due partially
to cash proceeds of $6.6 million received from Landmark
Communications, Inc., the Company's largest stockholder (Landmark),
as a result of their exercise of a previously issued warrant for
13.3 million shares of the Company's common stock. The Company used
the proceeds to repay a currently due note payable due to Landmark
totaling $6.9 million. The working capital increase is also
partially due to the increase in our accounts receivable resulting
from our revenue growth. Six Month Financial Highlights Net
revenues in the six month period ended June 30, 2005 were $30.9
million compared to $17.2 million in the same period of 2004. The
Company reported 24.5 million new registering consumers across its
network for the six months ended June 30, 2005, compared to 3.0
million during the same period of 2004. The increase in consumer
registrations was primarily due to the success of the Lead
Generation Network. CoolSavings also reported a 24% increase in the
number of consumer responses across its network during the six
month period ended June 30, 2005, as compared to the same period
last year. Net income was $2.9 million in the six month period
ended June 30, 2005, compared to a net loss of $0.6 million in the
same period of 2004. The Company's total operating costs and
expenses in the six month period ended June 30, 2005 rose to $27.9
million from $17.6 million in the same period of 2004. The increase
was primarily the result of the fees paid to partners related to
the increased revenue from the Lead Generation Network. Net income
applicable to common stockholders was $1.8 million in the six month
period ended June 30, 2005, or $0.04 per basic share and $0.01 per
diluted share, as compared to a net loss applicable to common
stockholders in the same period of 2004 of $1.7 million, or $0.04
per basic and diluted share. Cash flows from operations for the six
month period ended June 30, 2005 were $0.2 million while working
capital grew by $10.1 million. Financial Condition At June 30,
2005, the Company had cash and cash equivalents of $7.3 million,
compared to $7.2 million at December 31, 2004. Accounts receivable,
net of allowances for doubtful accounts, were $10.6 million at June
30, 2005, compared to $6.7 million at the end of 2004. Current
liabilities totaled $8.3 million and $14.1 million at June 30, 2005
and December 31, 2004, respectively. The CoolSavings Marketing
Network The CoolSavings Marketing Network, the Company's network
for the distribution of targeted offers of which the Lead
Generation Network is a part, experienced significant growth in the
second quarter of 2005. CoolSavings increased its number of network
partner sites by 24% from the first quarter to the second quarter
of 2005, adding top-name partners in a variety of industries. This
strong increase in the number of participating network partner
sites creates significantly broader consumer reach for CoolSavings'
advertisers looking to identify their best customers. comScore
Media Metrix reported an average of 14.5 million unique monthly
visitors for CoolSavings during the second quarter of 2005 vs. 13.9
million during the first quarter of 2005. In addition, comScore
Media Metrix ranked CoolSavings #42 in its AdFocus category for the
month of June. This was CoolSavings' first listing in the AdFocus
category, which ranks the top entities that support online
advertising based on consumer visits, and is one of the most highly
viewed reports by online media buyers. Branded Web Properties In
the second quarter of 2005, CoolSavings' flagship consumer savings
site, http://www.coolsavings.com/ , made important progress in its
goal toward providing registered consumers with valuable savings
opportunities in an easy-to-use, engaging environment. To answer
consumer demand, the Company increased its average number of
printable online coupons from top-name consumer packaged goods
manufacturers by four times at the end at June 30, 2005, as
compared to March 31, 2005. In CoolSavings consumer surveys,
obtaining coupons is consistently ranked as the #1 reason consumers
register and visit the CoolSavings Web site. Leading manufacturers
participating in printable coupon programs on coolsavings.com
include Land O'Lakes, GlaxoSmithKline's Sensodyne(R) and
AquaFresh(R), Energizer(R), and McNeil Consumer & Specialty
Pharmaceuticals' Tylenol(R) to name a few. CoolSavings made strong
improvements to its points-based loyalty program, FreeStyle
Rewards, in the second quarter as well. FreeStyle Rewards allows
registering consumers at http://www.freestylerewards.com/ to earn
points for their online purchases and redeem them for FreeStyle
Rewards branded MasterCard prepaid debit cards, which they can
spend at millions of locations across the United States and online.
The program's membership increased by 42% during the second quarter
of 2005 as compared to the first quarter, while purchase
transactions through this program increased by 65% during the same
period. Although results from this program are not material to the
Company's financials, management believes a strong foundation is
being created to establish a leadership role in this category.
During the second quarter, the Company entered into a relationship
with Commission Junction, a leading affiliate network supplier,
which added nearly 40 new top merchants to the FreeStyle Rewards
program, including Hammacher Schlemmer & Co., ESPRIT, SIRIUS
Satellite Radio, Limited Too, Discovery Channel, Dollar Rent A Car,
1-800-Contacts, Home Shopping Network and Verizon Online DSL. At
the same time, the Company took steps to improve the FreeStyle
Rewards site experience, adding additional shopping categories to
help consumers more easily find the merchant offers they are most
interested in. Business Outlook The following statements are based
on current expectations, and are forward-looking and actual results
may differ materially. See "Cautionary Note Regarding
Forward-Looking Statements" below. CoolSavings remains focused on
its vision of Consumer Requested Marketing and its mission to
provide best-in-class interactive marketing solutions to its
clients and partners that deliver value to consumers, protect their
privacy and earn their trust. To achieve this mission, CoolSavings
intends to continue to develop third-party network marketing
relationships to grow the CoolSavings Marketing Network and
distribute offer content to consumers through high quality online
partners. The Company plans to invest in and launch its own media
properties, including additional investment in its coolsavings.com
web site, to improve the user experience to increase acquisition,
return visitation, transactions and total lifetime value of its
registered consumers. CoolSavings plans to enhance its analytics
infrastructure by continuing to grow and refine targeting,
optimization and predictive modeling capabilities and technologies
for advertisers. The Company also plans to continue to improve its
inventory management methodology and processes to provide greater
yield for its network partners. Additionally, CoolSavings plans to
build out its consumer rewards program, FreeStyle Rewards, through
its new Web property, FreeStyleRewards.com. The Company plans to
take steps to increase its registered consumers and merchant
participation and to continue to improve upon the FreeStyle Rewards
program infrastructure. The Company today also announced improved
2005 guidance, now projecting full-year revenue growth of 50-60% as
compared to 2004 results. This projected revenue of $57.5 million
to $61.4 million is anticipated to result in 2005 operating income
between 8% and 10% of revenues. The Company expects its current
liquidity position to meet its anticipated cash needs for working
capital and capital expenditures, excluding potential acquisitions
that may require large cash outlays, or any accelerated payments
that may result from Landmark's redemption of it preferred stock,
for the foreseeable future. About CoolSavings CoolSavings is a
leading interactive marketing services company for advertisers and
publishers. The Company provides superior lead generation, e- mail,
coupon and loyalty programs across its extensive network of
company-owned Branded Web Properties and top partner sites. The
Company maximizes results using sophisticated targeting,
optimization and predictive modeling capabilities. Together these
services could enable leaders in the consumer packaged goods,
retail and direct marketing industries to reach more than 48
million registering consumers and potentially generate more than 75
million consumer responses in 2005, while delivering valuable
content and revenue for the Company's network partners. Cautionary
Note Regarding Forward-Looking Statements This press release
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including
statements under the caption "Business Outlook" and other
statements regarding the Company's expectations, beliefs, hopes,
intentions, or strategies. Where possible, these forward-looking
statements have been identified by use of words such as "guidance,"
"project," "target," "forecast," "could," "anticipate," "intend,"
"believe," "plan," "will," "expect," and similar expressions but
such words are not the exclusive means of identifying these
statements. Known and unknown risks, uncertainties and other
factors, both general and specific to the matters discussed in this
press release, may cause the Company's actual results and
performance to differ materially from the future results and
performance expressed in, or implied by, such forward-looking
statements. These risks, uncertainties, and other factors include,
without limitation, the Company's ability to secure financing to
meet its long-term capital needs; CoolSavings' ability to secure
long-term contracts with existing advertisers and Lead Generation
Network partners, and attract new advertisers and Lead Generation
Network partners; CoolSavings' ability to add new consumers;
CoolSavings' successful introduction of new services and features,
CoolSavings' ability to compete successfully against current and
future competitors, CoolSavings' ability to protect its patents,
trademarks and proprietary rights, CoolSavings' ability to continue
to attract, assimilate and retain highly skilled personnel, general
industry, economic and market conditions and growth rates, the
potential for higher actual media costs, and other costs and
expenses when compared to estimated costs and projections. For a
discussion of these and other risks, uncertainties and factors
which could cause actual results to differ materially from those
expressed in, or implied by, the forward-looking statements, see
"Risk Factors" in the Company's annual report on Form 10-K for the
year ended December 31, 2004, and our Quarterly Report on Form 10-Q
for the quarter ended March 31, 2005, both as filed with the SEC.
The Company undertakes no obligation to update any of the
forward-looking statements after the date of this press release to
conform these statements to actual results or otherwise reflect new
developments or changed circumstances, unless expressly required by
applicable federal securities laws. You should not place undue
reliance on any such forward-looking statements. COOLSAVINGS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited) (in thousands,
except share and per share data) For the Three Months For the Six
Months Ended Ended June 30, June 30, June 30, June 30, 2005 2004
2005 2004 Net revenues 15,671 9,191 30,949 17,172 Operating costs
and expenses: Cost of revenues 5,570 1,266 10,625 1,928 Sales and
marketing 5,727 4,962 11,525 10,355 Product development 977 867
1,912 1,840 General and administrative 1,444 1,548 3,742 3,327
Lease Exit Costs 35 60 58 114 Total operating costs and expenses
13,753 8,703 27,862 17,564 Income (loss) from operations 1,918 488
3,087 (392) Other income (expense): Interest and other income 33 7
56 15 Interest expense (71) (127) (204) (251) Total other income
(expense) (38) (120) (148) (236) Income (loss) before income taxes
1,880 368 2,939 (628) Income taxes (1) (4) (17) (6) Net income
(loss) 1,879 364 2,922 (634) Cumulative dividend on Series B
Preferred Stock (560) (516) (1,107) (1,022) Income (loss)
applicable to common stockholders $1,319 $(152) $1,815 $(1,656)
Basic and diluted net loss per share $0.03 $0.00 $0.04 $(0.04)
Weighted average shares used in the calculation of basic net income
(loss) per share 46,947,776 39,232,977 43,234,415 39,225,888
Diluted net income (loss) per share $0.01 $0.00 $0.01 $(0.04)
Weighted average shares used in the calculation of diluted net
income (loss) per share 244,991,099 39,232,977 239,598,914
39,225,888 COOLSAVINGS, INC. CONDENSED BALANCE SHEETS (Unaudited)
(in thousands) June 30, 2005 December 31, 2004 ASSETS Current
assets: Cash and cash equivalents $7,308 $7,162 Accounts
receivable, net 10,585 6,681 Prepaid and other assets 674 258 Total
current assets 18,567 14,101 Property and equipment, net 2,343
2,634 Intangible assets, patents and licenses, net 16 18 Goodwill -
TMS 569 569 Total assets $21,495 $17,322 LIABILITIES, CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' DEFICIT Current liabilities:
Accounts payable $- $655 Accrued expenses and other current
liabilities 7,868 6,365 Lease exit cost liability 221 210 Deferred
revenue 215 312 Senior secured note payable due to related party -
6,567 Total current liabilities 8,304 14,109 Long-term liabilities:
Deferred revenue 236 260 Lease exit cost liability 838 980 Deferred
income tax liability 20 13 Other long-term liabilities - 4 Total
long-term liabilities 1,094 1,257 Convertible redeemable cumulative
Series B Preferred Stock 27,934 26,850 Convertible redeemable
Series C Preferred Stock 1,913 1,950 Total stockholders' deficit
(17,750) (26,844) Total liabilities, convertible redeemable
preferred stock stockholders' deficit $21,495 $17,322
http://www.newscom.com/cgi-bin/prnh/20050203/CGTH021LOGO
http://photoarchive.ap.org/ DATASOURCE: CoolSavings, Inc. CONTACT:
Melissa Lederer of CoolSavings, Inc., +1-312-224-5153, or ; or Mary
Scholz Barber of Kupper Parker Communications, +1-314-290-2013, or
Web site: http://www.coolsavings.com/
http://www.freestylerewards.com/
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