NEW YORK--(BUSINESS WIRE)--June 7, 2004--Alloy, Inc.
(Nasdaq:ALOY), a media, marketing services, direct marketing and
retail company targeting the dynamic Generation Y population, today
reported revenues for the fiscal quarter ended April 30, 2004 of $87.8
million and a net loss attributable to common stockholders of $9.6
million or $0.23 per diluted share. For its first fiscal quarter,
Alloy registered a $4.3 million loss before interest and other
income/expense, income taxes, depreciation and amortization,
stock-based compensation expense, and restructuring charges ("Adjusted
EBITDA"). For additional financial detail, including the
reconciliation of Adjusted EBITDA to net income (loss) determined
under GAAP, please refer to the financial tables provided at the end
of this release.
Total revenues for the first fiscal quarter increased 27% to $87.8
million, compared with $69.4 million for the first quarter of fiscal
2003. Fiscal first quarter net merchandise revenues of $44.3 million
were up 48% compared with $30.0 million for last year's fiscal first
quarter. The increase resulted from our acquisition of dELiA*s Corp.,
which offset an overall decline in revenues for Alloy's catalog
titles. Fiscal first quarter sponsorship and other revenues of $43.6
million were up 10% versus $39.5 million for the comparable period in
our last fiscal year. The increase was primarily attributable to the
revenue contribution of the OCM business that we purchased at the
beginning of the second quarter of fiscal 2003.
First fiscal quarter gross profit increased to $41.2 million, or
46.9% of revenues, compared with $31.5 million, or 45.3% of revenues,
for the comparable period last year, largely as a result of the
overall increase in revenues. The increase in gross margin primarily
resulted from the increased percentage of net merchandise revenues as
a percentage of total revenues in the first quarter of fiscal 2004.
Operating expenses were $49.8 million for the first quarter of
fiscal 2004 versus $32.5 million for the first quarter of fiscal 2003.
The increase resulted primarily from the expenses of the acquired
dELiA*s Corp. and OCM operations.
Net loss for the first quarter of fiscal 2004 was $9.2 million,
compared with a net loss of $0.4 million for last fiscal year's first
quarter. Net loss attributable to common stockholders for the first
quarter of fiscal 2004 was $9.6 million, or $0.23 per diluted share,
compared with net loss attributable to common stockholders of $0.8
million, or $0.02 per diluted share, for last fiscal year's first
quarter. Adjusted EBITDA transitioned from earnings of $2.2 million
for the first fiscal quarter of 2003 to a loss of $4.3 million for the
first fiscal quarter of 2004.
Our name database now stands at over 27 million total names, of
which almost 8.5 million have a buying history with us.
Commenting on the quarter, Matt Diamond, Chairman and Chief
Executive Officer stated, "We took significant steps in the first
quarter to position Alloy for improved financial performance in the
second half of the 2004 fiscal year. Our fulfillment and call center
activities have now been fully transitioned from our third party
provider to Company facilities. The merchandising organization has
been strengthened with a number of key hires. The benefits of the
combined Alloy and dELiA*s databases should begin to emerge during the
key back-to-school and holiday selling seasons. The sponsorship side
of the business was generally on plan in the first quarter with a
solid outlook for the remainder of the year. The recent designation of
Alloy's AMP Agency as the 2003 Promotional Agency of the Year by PROMO
Magazine recognizes and validates the outstanding work we are doing
for our advertising clients."
Looking ahead, Mr. Diamond concluded, "Following our first quarter
financial performance, we remain comfortable with our established
fiscal 2004 financial expectations. We affirm our fiscal 2004
merchandise revenue range of $220 million to $230 million, together
with a sponsorship revenue range of $210 million to $220 million, a
diluted net loss attributable to common stockholders per share range
of ($0.25) to ($0.40) and an Adjusted EBITDA range of $11 million to
$16 million."
About Alloy
Alloy, Inc. is a media, marketing services, direct marketing and
retail company targeting Generation Y, a key demographic segment
comprising the more than 60 million boys and girls in the United
States between the ages of 10 and 24. Alloy's convergent media model
uses a wide range of media assets to reach more than 25 million
Generation Y consumers each month. Through Alloy's 360 Youth media and
marketing services unit, marketers can connect with the Generation Y
audience through a host of advertising and marketing programs
incorporating Alloy's media and marketing assets such as direct mail
catalogs, college and high school newspapers, Web sites, school-based
media boards, college guides, and sponsored on- and off-campus events.
Alloy generates revenue from its broad reach in the Generation Y
community by providing marketers advertising and marketing services
through 360 Youth and by selling apparel, accessories, footwear, room
furnishings and action sports equipment directly to the youth market
through catalogs, Web sites and retail stores. For further information
regarding Alloy, please visit our Web site (www.alloyinc.com) and
click on "Investor Relations". Information on 360 Youth's marketing
services can be found at www.360youth.com.
This announcement may contain 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 our expectations and beliefs regarding our 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. Our actual
results could differ materially from those projected in the
forward-looking statements. Additionally, you should not consider past
results to be an indication of our future performance. Factors that
might cause or contribute to such differences include, among others,
our ability to: increase revenues, generate high margin sponsorship
and multiple revenue streams, increase visitors to our Web sites
(www.alloy.com, www.ccs.com, and www.danscomp.com) and build customer
loyalty; develop our 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: our 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 our annual report on Form 10-K for
the year ended January 31, 2004, as amended, which is on file with the
Securities and Exchange Commission. We do not intend to update any of
the forward-looking statements after the date of this announcement to
conform these statements to actual results or to changes in
management's expectations, except as may be required by law.
(tables to follow)
Alloy, Inc.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Three
Months Months
Ended Ended
4/30/2003 4/30/2004
Net merchandise revenues $29,971 $44,281
Sponsorship and other revenues 39,473 43,566
----------------------
Total revenues 69,444 87,847
Cost of goods sold 37,975 46,627
----------------------
Gross profit 31,469 41,220
Selling and marketing expenses 25,379 36,003
General and administrative expenses 4,958 11,765
Acquired intangible asset amortization 1,785 1,522
Stock-based compensation 0 351
Restructuring charge 380 126
----------------------
Total operating expenses 32,502 49,767
Income (loss) income from operations (1,033) (8,547)
Interest and other income (expense), net 287 (686)
----------------------
Income (loss) before income taxes (746) (9,233)
Income tax (benefit) expense (358) 10
----------------------
Net income (loss) (388) (9,243)
Preferred stock dividend and accretion 453 394
----------------------
Net income (loss) attributable to common
stockholders ($841) ($9,637)
Net income (loss) attributable to common
stockholders per basic share ($0.02) ($0.23)
Net income (loss) attributable to common
stockholders per diluted share ($0.02) ($0.23)
Weighted average basic common shares
outstanding: 40,149,100 42,457,030
Diluted shares outstanding per GAAP: 40,149,100 42,457,030
Reconciliation of EBTA and Adjusted EBITDA to GAAP Results (1):
--------------------------------------------------------------
Net income (loss) ($388) ($9,243)
Income tax expense (358) 10
Acquired intangible asset amortization 1,785 1,522
Stock-based compensation 0 351
Restructuring charge 380 126
----------------------------------------------------------------------
EBTA excluding stock-based compensation and
restructuring charges $1,419 ($7,234)
Interest and other income (expense), net 287 (686)
Depreciation and amortization 1,043 2,268
----------------------------------------------------------------------
Adjusted EBITDA $2,175 ($4,280)
(1) This press release contains the non-GAAP financial measures
EBTA and Adjusted EBITDA. Alloy uses EBTA and Adjusted EBITDA to
evaluate its performance period to period without taking into account
certain expenses which, in the opinion of Alloy management, do not
reflect Alloy's results from its core business activities. These
non-GAAP financial measures should be considered in addition to, and
not as a substitute for, or superior to, other measures of financial
performance prepared in accordance with GAAP. These non-GAAP measures
included in this press release have been reconciled to the nearest
GAAP measure as is now required under new SEC rules regarding the use
of non-GAAP financial measures. As used herein, "GAAP" refers to
accounting principles generally accepted in the United States of
America.
Alloy, Inc.
SELECTED CONDENSED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
January 31, April 30,
2004 2004
(audited) (unaudited)
Assets
Current Assets
Cash and cash equivalents $30,543 $22,867
Marketable securities 19,014 15,684
Accounts receivable, net 31,492 34,907
Inventories, net 29,021 25,980
Prepaid catalog costs 2,028 1,420
Other current assets 3,813 6,158
----------------------
Total current assets 115,911 107,016
Marketable securities 5,585 4,160
Property and equipment, net 27,234 27,176
Goodwill, net 274,796 280,721
Intangible and other assets, net 25,865 25,985
----------------------
Total assets $449,391 $445,058
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $28,740 $27,216
Deferred revenues 15,124 17,630
Accrued expenses and other current
liabilities 39,755 38,837
----------------------
Total current liabilties 83,619 83,683
Long-term liabilities 743 1,852
Convertible debt 69,300 69,300
Series B Preferred Stock 14,434 14,828
Stockholders' Equity 281,295 275,395
----------------------
Total liabilities and stockholders'
equity $449,391 $445,058
CONTACT: Alloy, Inc.
Sam Gradess, 212/244-4307
SOURCE: Alloy, Inc.
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