Release Dates: ImmediateContact: Susan Nicholson
MindSpring Announces 1997 And Fourth Quarter Results
ATLANTA, Georgia (January 22, 1998) -- MindSpring Enterprises, Inc. (Nasdaq/NM:MSPG) today announced results for the fourth quarter and year ended December 31, 1997.
"We achieved a major milestone," said Charles M. Brewer, MindSpring's Chairman and Chief Executive Officer. "As planned, we attained bottom line profitability in the fourth quarter. We are certainly happy with this achievement, and are even more pleased with the lessons our company learned in our drive to profitability. We have focused on doing the basics extremely well: providing top-quality software to make our members' Internet experience an enjoyable one; offering excellent support services so our members can get help when they need it, and delivering service via a reliable network so our members' online experience is hassle-free. We have built a company with a reputation for the highest quality service and support, and we have established the systems and procedures to offer that service efficiently and reliably. MindSpring has shown that it is entirely possible to make money in the consumer access business, and to build a loyal and enthusiastic customer base in the process. We view profitability not as a final goal but rather an affirmation that we are doing the right things."
Total revenues for the fourth quarter were $17,209,000 compared with $8,524,000 for the fourth quarter of 1996. The Company posted a net profit for the fourth quarter of 1997 of $498,000, or $0.06 per share on a diluted basis, compared with a net loss of ($2,412,000), or ($0.33) per share, in the fourth quarter last year.
Total revenues for the year ended December 31, 1997, were $52,557,000 compared with $18,132,000 for the previous year. The net loss for 1997 was ($4,083,000), or ($0.54) per share, compared with a net loss of ($7,612,000), or ($1.45) per share, in the prior year.
Total MindSpring members at year-end numbered approximately 278,300, up from 121,800 at the end of 1996. Included in the total are approximately 9,360 Web Hosting customers, up from 3,700 at the end of 1996.
"The fourth quarter was the strongest growth period in MindSpring's history," said Brewer. "We added 54,500 net members to our base. We acquired the dialup customers of three companies, and in doing so further established MindSpring as a consolidator in the consumer Internet access business. We will continue to pursue acquisitions going forward as more consumer Internet service providers choose to focus their resources elsewhere.
"We improved the quality of our network service by building out our own points of presence in two high-growth markets, New York City and California. We will continue to evaluate other markets to determine whether to build out our own network or use the services of a third party provider such as Gridnet. This flexibility will enable MindSpring to continue to make build-versus-buy decisions that result in the highest service levels at the best price for the company.
"In our ongoing effort to provide innovative customer support services, we introduced a 'Call Center Snapshot' to the MindSpring homepage. Our members can visit the page to see what the hold times are in the support queues.
"We established an Emerging Technologies group to evaluate high-speed access opportunities and potential partnerships. We view the developing cable modem and DSL technologies as opportunities for MindSpring and will further explore their potential in 1998.
"MindSpring further developed the Business Services division to offer additional services to our existing customer base. In addition to an enhanced web hosting offering, we now provide co-location services for members who want to house their server at our facility, and web design. Our dialup members have asked us to provide business-oriented services as their needs grow, and we are now well positioned to meet those needs. In November, we announced our plans to acquire the assets of Phoenix-based Internet Direct.
"Also in the fourth quarter, we were recognized in the industry for our commitment to excellence. CNET named MindSpring the Internet Service Provider offering the 'Best Value,' and highlighted our 'first-rate technical support.' In their ranking of ISPs, PC World named MindSpring the ISP with the best Customer Support, noting MindSpring 'gives its users the moon.' We will steadfastly focus on doing the basics extremely well in 1998, as we continually strive to improve our members' MindSpring experience."
MindSpring is a leading Internet service provider. The company focuses on delivering outstanding service and support to its customers. By following its core values and beliefs (www.mindspring.com/aboutms/core.html), MindSpring aims to do an exceptional job of serving its customers, its employees, its owners, and its community.
MindSpring subscribers can browse the World Wide Web, send electronic mail, and access over 22,000 newsgroups. MindSpring offers local Internet service in more than 320 locations throughout the United States. To learn more about MindSpring and its services, visit the web site at www.mindspring.com, or call the company at 800-719-4332.
MINDSPRING ENTERPRISES, INC. Unaudited Financial Highlights Three Months Ended Year Ended December 31, December 31, Statements of Operations Data: 1997 1996 1997 1996 Revenues: Access $13,658,000 $6,719,000 $40,925,000 $13,420,000 Subscriber start-up fees 1,089,000 845,000 3,921,000 2,426,000 Business services 2,462,000 960,000 7,711,000 2,286,000 Total revenues 17,209,000 8,524,000 52,557,000 18,132,000 Costs and expenses: Cost of revenues 5,081,000 3,448,000 16,823,000 8,208,000 Gross margin 12,128,000 5,076,000 35,734,000 9,924,000 General and administrative 6,398,000 4,381,000 22,265,000 10,072,000 Selling 2,550,000 1,396,000 8,519,000 4,089,000 EBITDA(a) 3,180,000 (701,000) 4,950,000 (4,237,000) Depreciation and amortization 2,534,000 1,678,000 8,695,000 3,285,000 Operating income (loss) 646,000 (2,379,000) (3,745,000) (7,522,000) Interest expense, net (148,000) (33,000) (338,000) (90,000) Net income (loss) $ 498,000 $(2,412,000) $(4,083,000) $(7,612,000) Net income (loss) per share $ 0.06 $ (0.33) $ (0.54) $ (1.45) Weighted average common shares outstanding 8,005,534 7,231,396 7,514,155 5,252,611 Dec. 31, Dec. 31, 1997 1996 Balance Sheet Data: (Unaudited) Cash $9,386,000 $9,653,000 Current assets other than cash 3,045,000 2,967,000 Property and equipment, net 23,638,000 11,583,000 Intangible and other assets 8,217,000 11,029,000 Total assets 44,286,000 35,232,000 Current liabilities 17,781,000 7,100,000 Long-term liabilities 5,091,000 2,725,000 Stockholders' equity 21,414,000 25,407,000 Other Operating Data: Approximate number of subscribers at end of period 278,300 121,800 Number of employees at end of period 502 321 (a) EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered an alternative to net income as a measure of performance. MINDSPRING ENTERPRISES, INC. Unaudited Selected Financial Statement Information Three Months Ended Dec. 31, Sept. 30, Statements of Operations Data: 1997 1997 Revenues: Access $13,658,000 $10,858,000 Subscriber start-up fees 1,089,000 1,025,000 Business services 2,462,000 2,084,000 Total revenues 17,209,000 13,967,000 Costs and expenses: Cost of revenues 5,081,000 4,389,000 Gross margin 12,128,000 9,578,000 General and administrative 6,398,000 5,621,000 Selling 2,550,000 2,150,000 EBITDA(a) 3,180,000 1,807,000 Depreciation and amortization 2,534,000 2,273,000 Operating income (loss) 646,000 (466,000) Interest expense, net (148,000) (161,000) Net income (loss) $498,000 $(627,000) Net income (loss) per share $ 0.06 $ (0.08) Weighted average common shares outstanding 8,005,534 7,528,102 (a) EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered an alternative to net income as a measure of performance.
When used in this press release, the words ``continue,'' ``feel,'' and similar conditional or future-oriented expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from the possible results referred to in such forward-looking statements. Such risks and uncertainties may include, but are not limited to: financial, legal and regulatory, and other conditions and developments in the Internet and technology markets and in the general economy; the timely and successful development, and market acceptance of new products and services; the operation and accessibility of the Corporation's network and of the Internet in general; the Corporation's successful management of growth, including acquisition of new subscribers, minimizing 'churn`` of existing subscribers, control of expenses, and growth of revenue and earnings; competitive conditions in the Corporation's industry; and other risks and uncertainties described from time to time in the Corporation's press releases and Securities and Exchange Commission reports and filings.
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