Loudeye Reports First Quarter Results

Restructuring Complete; Company Focused on Executing Digital Music Strategy



Apr 26, 2001, 01:00 ET from Loudeye Technologies, Inc.

    SEATTLE, April 26 /PRNewswire/ --
 Loudeye Technologies, Inc. (Nasdaq: LOUD), a leading provider of services and
 infrastructure for the authorized delivery of digital content, today announced
 financial results for the first quarter ended March 31, 2001.  Loudeye will
 hold an investor teleconference at 5:30 p.m. EDT today to discuss the results
 and Company outlook.  Details for the teleconference are provided below.
 
     Financial Results
     Loudeye's first quarter revenues increased 17% to $1.9 million from
 $1.6 million in the year-ago quarter.  The Company reported a net loss of
 $8.5 million, or $0.22 per share, compared with a net loss of $5.7 million, or
 $0.19 per share, in the year-ago quarter, before non-cash charges related to
 the amortization of intangibles and stock-based compensation, and excluding
 the previously announced special charges related to the restructuring of its
 operations.  These results are presented in "pro forma as-adjusted" formats in
 the attached tables and in the text of prior quarterly releases.
     As previously announced, Loudeye recorded a special charge in the
 first quarter of $14.6 million, approximately $800,000 of which is the cash
 component related primarily to severance for positions eliminated during the
 quarter.  The balance of the special charge relates to non-cash asset
 write-downs, primarily goodwill and other intangibles associated with
 Loudeye's 1999 acquisition of Alive.com and certain surplus video production
 equipment.  Including amortization of intangibles, stock-based compensation
 and the special charges, the Company reported a net loss of $26.2 million, or
 $0.68 per share, compared with a net loss of $10.5 million in the year-earlier
 quarter, or $0.35 per share as adjusted for preferred stock conversion.
     The Company ended the quarter with $83 million, or approximately
 $2.00 per share, in cash and short-term investments.  In addition to normal
 operating requirements, first quarter cash uses included a total of
 approximately $5 million for acquisitions of DiscoverMusic and certain
 technology assets from OnAir Streaming Networks, as well as severance related
 payments.
 
     Loudeye Enters New Phase of Growth
     Commenting on the quarter, Loudeye Chief Executive Officer John T. Baker
 said, "While we are pleased to have modestly exceeded revenue and adjusted net
 loss expectations for the quarter, the real story is our recent restructuring
 and renewed focus on execution.  Loudeye has been completely overhauled during
 the last six weeks with reorganized operating divisions, key senior management
 changes, integration of acquisitions and a clear focus on being the premier
 services and infrastructure provider for authorized digital music
 distribution."
     "After many months of uncertainty, the digital music industry is more
 energized than ever before," Baker said.  "Recent new venture announcements by
 the major record labels and others create new opportunities for Loudeye to
 provide technological infrastructure services.  We are making excellent
 progress expanding our relationships with the major music companies."
     "Loudeye envisions that the future of digital music will encompass all
 forms of distribution, including online, broadcast, wireless, cable and
 satellite.  We are building a model that leverages our digital music assets,
 technology prowess, media company relationships and rich customer knowledge,"
 Baker concluded.
 
     Forward Looking Guidance
     -- Second quarter 2001.  The Company currently expects second quarter
        revenues to be approximately equal to or slightly ahead of the
        year-earlier second quarter's $2.6 million. Net loss per share,
        excluding the effect of special charges and other non-cash charges
        related to the amortization of intangibles and stock-based
        compensation, is anticipated to be in the range of  $0.17 to $0.21
        per share.  The Company will record a special charge in the
        second quarter of approximately $3 million related to the
        April operational restructuring of which cash payments, primarily
        related to severance for positions eliminated, will total approximately
        $2 million.
     -- Full year 2001.  The Company reiterates its expectation for 2001
        revenues to increase by 15% to 30% over the $11.5 million reported for
        last year.  Expense levels are expected to remain relatively flat on a
        quarterly basis during the first half of the year and then decline in
        the second half as cost savings associated with the operational
        restructuring are reflected.  Net loss per share before special charges
        and other non-cash charges related to the amortization of intangibles
        and stock-based compensation is anticipated to be in the $0.65 to
        $0.75 range for the full year.
 
     These forward-looking statements are based upon current expectations as of
 today only and are based upon limited available information which is dynamic
 and subject to risk and uncertainty.  See forward-looking statements below.
 The Company does not intend to update forward-looking statements until the
 next quarterly results announcement, other than publicly available statements.
 
     First Quarter 2001 Results Conference Call and Webcast Information
     Loudeye management will conduct a conference call to discuss these
 financial results and the Company outlook.  The public is invited to listen in
 on this teleconference.  Management will open the call with a discussion of
 financial and operating results in the quarter, discuss the Company outlook
 and end the call with a question and answer session.  Information regarding
 the first quarter 2001 results conference call and webcast is as follows:
 
      Date:            Thursday, April 26, 2001
      Time:            5:30 p.m. EDT / 2:30 p.m. PDT
      Call-in info:    888-423-3271 (live domestic)
                       800-475-6701 (for domestic replay; code 582649)
                       612-288-0329 (live international)
                       320-365-3844 (for int'l. replay; code 582649)
      Audio Webcast:   5:30 p.m. eastern / 2:30 pm pacific; live and archived
                       Webcast from http://ir.loudeye.com and
                       http://biz.yahoo.com/cc/ , among other locations on the
                       Internet.
 
     About Loudeye Technologies, Inc.
     Loudeye is a leading provider of authorized digital media solutions that
 empower today's top media, entertainment and Fortune 1000 companies to
 transform traditional media assets into dynamic digital content.  With offices
 in Seattle, New York and London, Loudeye is building the infrastructure to
 support the next generation of digital media businesses.  To learn more visit
 http://www.loudeye.com or call 206-832-4000.
 
     Forward-Looking Statements
     Statements in this press release that are not strictly historical are
 forward-looking statements within the meaning of the safe harbor provisions
 under the Private Securities Litigation Reform Act of 1995, as amended,
 including but not limited to statements regarding (a) industry outlook, (b)
 digital music strategy, and (c) all statements relating to forward-looking
 guidance.  These statements are based on current trends and expectations.
 Actual events, results or developments may differ materially from those
 expressed or implied in forward-looking statements due to a number of risks
 and uncertainties.  Such factors include:  the possibility of adverse changes
 in the market for distribution of digital music that Loudeye serves, adverse
 or uncertain legal developments with respect to copyrights surrounding the
 creation and distribution of digital music, Loudeye's ability to scale and
 support third-party technologies, pricing pressures and other activities by
 competitors; lack of market acceptance for Loudeye's products and services;
 and the acceptance and growth of streaming media technology in general.  More
 information about the risks and challenges faced by Loudeye is contained in
 Loudeye's Annual Report on Form 10-K for the year ended December 31, 2000, and
 other documents filed by Loudeye from time to time with the Securities and
 Exchange Commission, copies of which are available through the SEC's
 Electronic Data Gathering Analysis and Retrieval system (EDGAR) at
 www.sec.gov.
 
 
                            LOUDEYE TECHNOLOGIES, INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                     UNAUDITED
                (in thousands, except share and per share amounts)
 
                                                       PRO FORMA AS ADJUSTED(B)
                                   For the three months    For the three months
                                          ended                   ended
                                        March 31,               March 31,
                                    2001        2000        2001        2000
 
      REVENUES:
         Digital media
          services                 $1,615      $1,551      $1,615      $1,551
         Applications and
          other                       314          98         314          98
               Total revenues       1,929       1,649       1,929       1,649
 
      COST OF REVENUES:
         Digital media services     3,081       2,134       3,081       2,134
         Applications and other       190          36         190          36
               Total cost of
                revenues            3,271       2,170       3,271       2,170
 
               Gross margin        (1,342)       (521)     (1,342)       (521)
 
      OPERATING EXPENSES:
         Research and development   2,670       1,313       2,670       1,313
         Sales and marketing        2,612       2,776       2,612       2,776
         General and
          administrative            2,750       1,651       2,750       1,651
         Stock-based
          compensation                893       3,139          --          --
         Amortization of
          intangibles and
          other assets              2,228       1,703          --          --
 
               Total operating
                expenses           11,153      10,582       8,032       5,740
 
      Special charges              14,623          --          --          --
 
      OPERATING LOSS              (27,118)    (11,103)     (9,374)     (6,261)
 
      OTHER INCOME (EXPENSE), net
         Interest income            1,262         691       1,262         691
         Interest expense            (342)       (110)       (342)       (110)
               Total other income
                (expense)             920         581         920         581
 
      Net loss                   $(26,198)   $(10,522)    $(8,454)    $(5,680)
 
 
      Basic and diluted net
       loss per share              $(0.68)     $(0.84)     $(0.22)     $(0.46)
 
      Weighted average shares
       outstanding
        used to compute basic
         and diluted net
          loss per share       38,283,453  12,452,312  38,283,453  12,452,312
 
      Basic and diluted pro
       forma net loss per
        share                      $(0.68)     $(0.35)     $(0.22)     $(0.19)
 
      Weighted average shares
       outstanding
        used to compute basic
         and diluted pro
          forma net loss per
           share (C)           38,283,453  29,770,973  38,283,453  29,770,973
 
 
      EBITDA (A)                  $(8,228)    $(5,621)
 
 
 
     (A) EBITDA, consisting of income before interest, taxes, depreciation,
     amortization of goodwill and other intangible assets, non-cash special
     charges and stock-based compensation is a supplemental financial
     measurement used by management as well as industry analysts, to evaluate
     Loudeye's operations.  However, EBITDA should not be construed as an
     alternative to operating income/loss (as an indicator of operating
     performance) or to cash flows from operating activities (as a measure of
     liquidity) as determined in accordance with generally accepted accounting
     principles.
 
     (B) Pro Forma as adjusted amounts are derived from historical financial
     statements excluding non-cash charges associated with stock-based
     compensation, special charges and amortization of goodwill and other
     intangible assets.  Pro forma as adjusted amounts are not intended to
     replace amounts calculated in accordance with generally accepted
     accounting principles, rather they are a supplemental financial
     measurement used by management and industry analysts to evaluate
     Loudeye's operations.
 
     (C) Pro Forma basic and diluted net loss per share is computed based on
     the weighted average number of shares of common stock outstanding giving
     effect to the conversion of convertible preferred stock outstanding that
     automatically converted at the completion of the Company's initial public
     offering (using the if-converted method from the original issue date).
     Pro forma diluted net loss per share excludes the impact of stock options
     and warrants as the effect of their inclusion would be antidilutive.
 
 
                            LOUDEYE TECHNOLOGIES, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (in thousands)
 
                                                  March 31,        December 31,
                                                      2001              2000
                                                  (Unaudited)
     CURRENT ASSETS:
          Cash and cash equivalents                 $46,210           $51,689
          Short-term investments                     36,844            43,300
          Accounts receivable, net                    1,860             3,241
          Prepaids and other current
           assets                                     1,633             1,072
                    Total current assets             86,547            99,302
 
          Property and equipment, net                15,150            15,955
          Goodwill, net                                 337             9,785
          Intangibles and other long-term
           assets, net                               15,061             7,634
 
                    Total assets                   $117,095          $132,676
 
     CURRENT LIABILITIES:
          Accounts payable                           $1,383            $1,137
          Accrued compensation and
           benefits                                   1,384             1,247
          Employee Stock Purchase Plan
           withholding                                  323               307
          Other accrued expenses                      4,248             1,368
          Deposits and deferred revenues                320               800
          Current portion of long-term debt           5,164             4,425
                    Total current liabilities        12,822             9,284
 
          Long-term debt, net of current portion      6,642             7,324
 
                    Total liabilities                19,464            16,608
 
     EQUITY:
          Common stock and warrants                 192,599           185,609
          Deferred stock compensation                (2,616)           (3,387)
          Accumulated deficit                       (92,352)          (66,154)
 
                    Total equity                     97,631           116,068
 
                    Total liabilities and equity   $117,095          $132,676
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X29881542
 
 

SOURCE Loudeye Technologies, Inc.
    SEATTLE, April 26 /PRNewswire/ --
 Loudeye Technologies, Inc. (Nasdaq: LOUD), a leading provider of services and
 infrastructure for the authorized delivery of digital content, today announced
 financial results for the first quarter ended March 31, 2001.  Loudeye will
 hold an investor teleconference at 5:30 p.m. EDT today to discuss the results
 and Company outlook.  Details for the teleconference are provided below.
 
     Financial Results
     Loudeye's first quarter revenues increased 17% to $1.9 million from
 $1.6 million in the year-ago quarter.  The Company reported a net loss of
 $8.5 million, or $0.22 per share, compared with a net loss of $5.7 million, or
 $0.19 per share, in the year-ago quarter, before non-cash charges related to
 the amortization of intangibles and stock-based compensation, and excluding
 the previously announced special charges related to the restructuring of its
 operations.  These results are presented in "pro forma as-adjusted" formats in
 the attached tables and in the text of prior quarterly releases.
     As previously announced, Loudeye recorded a special charge in the
 first quarter of $14.6 million, approximately $800,000 of which is the cash
 component related primarily to severance for positions eliminated during the
 quarter.  The balance of the special charge relates to non-cash asset
 write-downs, primarily goodwill and other intangibles associated with
 Loudeye's 1999 acquisition of Alive.com and certain surplus video production
 equipment.  Including amortization of intangibles, stock-based compensation
 and the special charges, the Company reported a net loss of $26.2 million, or
 $0.68 per share, compared with a net loss of $10.5 million in the year-earlier
 quarter, or $0.35 per share as adjusted for preferred stock conversion.
     The Company ended the quarter with $83 million, or approximately
 $2.00 per share, in cash and short-term investments.  In addition to normal
 operating requirements, first quarter cash uses included a total of
 approximately $5 million for acquisitions of DiscoverMusic and certain
 technology assets from OnAir Streaming Networks, as well as severance related
 payments.
 
     Loudeye Enters New Phase of Growth
     Commenting on the quarter, Loudeye Chief Executive Officer John T. Baker
 said, "While we are pleased to have modestly exceeded revenue and adjusted net
 loss expectations for the quarter, the real story is our recent restructuring
 and renewed focus on execution.  Loudeye has been completely overhauled during
 the last six weeks with reorganized operating divisions, key senior management
 changes, integration of acquisitions and a clear focus on being the premier
 services and infrastructure provider for authorized digital music
 distribution."
     "After many months of uncertainty, the digital music industry is more
 energized than ever before," Baker said.  "Recent new venture announcements by
 the major record labels and others create new opportunities for Loudeye to
 provide technological infrastructure services.  We are making excellent
 progress expanding our relationships with the major music companies."
     "Loudeye envisions that the future of digital music will encompass all
 forms of distribution, including online, broadcast, wireless, cable and
 satellite.  We are building a model that leverages our digital music assets,
 technology prowess, media company relationships and rich customer knowledge,"
 Baker concluded.
 
     Forward Looking Guidance
     -- Second quarter 2001.  The Company currently expects second quarter
        revenues to be approximately equal to or slightly ahead of the
        year-earlier second quarter's $2.6 million. Net loss per share,
        excluding the effect of special charges and other non-cash charges
        related to the amortization of intangibles and stock-based
        compensation, is anticipated to be in the range of  $0.17 to $0.21
        per share.  The Company will record a special charge in the
        second quarter of approximately $3 million related to the
        April operational restructuring of which cash payments, primarily
        related to severance for positions eliminated, will total approximately
        $2 million.
     -- Full year 2001.  The Company reiterates its expectation for 2001
        revenues to increase by 15% to 30% over the $11.5 million reported for
        last year.  Expense levels are expected to remain relatively flat on a
        quarterly basis during the first half of the year and then decline in
        the second half as cost savings associated with the operational
        restructuring are reflected.  Net loss per share before special charges
        and other non-cash charges related to the amortization of intangibles
        and stock-based compensation is anticipated to be in the $0.65 to
        $0.75 range for the full year.
 
     These forward-looking statements are based upon current expectations as of
 today only and are based upon limited available information which is dynamic
 and subject to risk and uncertainty.  See forward-looking statements below.
 The Company does not intend to update forward-looking statements until the
 next quarterly results announcement, other than publicly available statements.
 
     First Quarter 2001 Results Conference Call and Webcast Information
     Loudeye management will conduct a conference call to discuss these
 financial results and the Company outlook.  The public is invited to listen in
 on this teleconference.  Management will open the call with a discussion of
 financial and operating results in the quarter, discuss the Company outlook
 and end the call with a question and answer session.  Information regarding
 the first quarter 2001 results conference call and webcast is as follows:
 
      Date:            Thursday, April 26, 2001
      Time:            5:30 p.m. EDT / 2:30 p.m. PDT
      Call-in info:    888-423-3271 (live domestic)
                       800-475-6701 (for domestic replay; code 582649)
                       612-288-0329 (live international)
                       320-365-3844 (for int'l. replay; code 582649)
      Audio Webcast:   5:30 p.m. eastern / 2:30 pm pacific; live and archived
                       Webcast from http://ir.loudeye.com and
                       http://biz.yahoo.com/cc/ , among other locations on the
                       Internet.
 
     About Loudeye Technologies, Inc.
     Loudeye is a leading provider of authorized digital media solutions that
 empower today's top media, entertainment and Fortune 1000 companies to
 transform traditional media assets into dynamic digital content.  With offices
 in Seattle, New York and London, Loudeye is building the infrastructure to
 support the next generation of digital media businesses.  To learn more visit
 http://www.loudeye.com or call 206-832-4000.
 
     Forward-Looking Statements
     Statements in this press release that are not strictly historical are
 forward-looking statements within the meaning of the safe harbor provisions
 under the Private Securities Litigation Reform Act of 1995, as amended,
 including but not limited to statements regarding (a) industry outlook, (b)
 digital music strategy, and (c) all statements relating to forward-looking
 guidance.  These statements are based on current trends and expectations.
 Actual events, results or developments may differ materially from those
 expressed or implied in forward-looking statements due to a number of risks
 and uncertainties.  Such factors include:  the possibility of adverse changes
 in the market for distribution of digital music that Loudeye serves, adverse
 or uncertain legal developments with respect to copyrights surrounding the
 creation and distribution of digital music, Loudeye's ability to scale and
 support third-party technologies, pricing pressures and other activities by
 competitors; lack of market acceptance for Loudeye's products and services;
 and the acceptance and growth of streaming media technology in general.  More
 information about the risks and challenges faced by Loudeye is contained in
 Loudeye's Annual Report on Form 10-K for the year ended December 31, 2000, and
 other documents filed by Loudeye from time to time with the Securities and
 Exchange Commission, copies of which are available through the SEC's
 Electronic Data Gathering Analysis and Retrieval system (EDGAR) at
 www.sec.gov.
 
 
                            LOUDEYE TECHNOLOGIES, INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                     UNAUDITED
                (in thousands, except share and per share amounts)
 
                                                       PRO FORMA AS ADJUSTED(B)
                                   For the three months    For the three months
                                          ended                   ended
                                        March 31,               March 31,
                                    2001        2000        2001        2000
 
      REVENUES:
         Digital media
          services                 $1,615      $1,551      $1,615      $1,551
         Applications and
          other                       314          98         314          98
               Total revenues       1,929       1,649       1,929       1,649
 
      COST OF REVENUES:
         Digital media services     3,081       2,134       3,081       2,134
         Applications and other       190          36         190          36
               Total cost of
                revenues            3,271       2,170       3,271       2,170
 
               Gross margin        (1,342)       (521)     (1,342)       (521)
 
      OPERATING EXPENSES:
         Research and development   2,670       1,313       2,670       1,313
         Sales and marketing        2,612       2,776       2,612       2,776
         General and
          administrative            2,750       1,651       2,750       1,651
         Stock-based
          compensation                893       3,139          --          --
         Amortization of
          intangibles and
          other assets              2,228       1,703          --          --
 
               Total operating
                expenses           11,153      10,582       8,032       5,740
 
      Special charges              14,623          --          --          --
 
      OPERATING LOSS              (27,118)    (11,103)     (9,374)     (6,261)
 
      OTHER INCOME (EXPENSE), net
         Interest income            1,262         691       1,262         691
         Interest expense            (342)       (110)       (342)       (110)
               Total other income
                (expense)             920         581         920         581
 
      Net loss                   $(26,198)   $(10,522)    $(8,454)    $(5,680)
 
 
      Basic and diluted net
       loss per share              $(0.68)     $(0.84)     $(0.22)     $(0.46)
 
      Weighted average shares
       outstanding
        used to compute basic
         and diluted net
          loss per share       38,283,453  12,452,312  38,283,453  12,452,312
 
      Basic and diluted pro
       forma net loss per
        share                      $(0.68)     $(0.35)     $(0.22)     $(0.19)
 
      Weighted average shares
       outstanding
        used to compute basic
         and diluted pro
          forma net loss per
           share (C)           38,283,453  29,770,973  38,283,453  29,770,973
 
 
      EBITDA (A)                  $(8,228)    $(5,621)
 
 
 
     (A) EBITDA, consisting of income before interest, taxes, depreciation,
     amortization of goodwill and other intangible assets, non-cash special
     charges and stock-based compensation is a supplemental financial
     measurement used by management as well as industry analysts, to evaluate
     Loudeye's operations.  However, EBITDA should not be construed as an
     alternative to operating income/loss (as an indicator of operating
     performance) or to cash flows from operating activities (as a measure of
     liquidity) as determined in accordance with generally accepted accounting
     principles.
 
     (B) Pro Forma as adjusted amounts are derived from historical financial
     statements excluding non-cash charges associated with stock-based
     compensation, special charges and amortization of goodwill and other
     intangible assets.  Pro forma as adjusted amounts are not intended to
     replace amounts calculated in accordance with generally accepted
     accounting principles, rather they are a supplemental financial
     measurement used by management and industry analysts to evaluate
     Loudeye's operations.
 
     (C) Pro Forma basic and diluted net loss per share is computed based on
     the weighted average number of shares of common stock outstanding giving
     effect to the conversion of convertible preferred stock outstanding that
     automatically converted at the completion of the Company's initial public
     offering (using the if-converted method from the original issue date).
     Pro forma diluted net loss per share excludes the impact of stock options
     and warrants as the effect of their inclusion would be antidilutive.
 
 
                            LOUDEYE TECHNOLOGIES, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (in thousands)
 
                                                  March 31,        December 31,
                                                      2001              2000
                                                  (Unaudited)
     CURRENT ASSETS:
          Cash and cash equivalents                 $46,210           $51,689
          Short-term investments                     36,844            43,300
          Accounts receivable, net                    1,860             3,241
          Prepaids and other current
           assets                                     1,633             1,072
                    Total current assets             86,547            99,302
 
          Property and equipment, net                15,150            15,955
          Goodwill, net                                 337             9,785
          Intangibles and other long-term
           assets, net                               15,061             7,634
 
                    Total assets                   $117,095          $132,676
 
     CURRENT LIABILITIES:
          Accounts payable                           $1,383            $1,137
          Accrued compensation and
           benefits                                   1,384             1,247
          Employee Stock Purchase Plan
           withholding                                  323               307
          Other accrued expenses                      4,248             1,368
          Deposits and deferred revenues                320               800
          Current portion of long-term debt           5,164             4,425
                    Total current liabilities        12,822             9,284
 
          Long-term debt, net of current portion      6,642             7,324
 
                    Total liabilities                19,464            16,608
 
     EQUITY:
          Common stock and warrants                 192,599           185,609
          Deferred stock compensation                (2,616)           (3,387)
          Accumulated deficit                       (92,352)          (66,154)
 
                    Total equity                     97,631           116,068
 
                    Total liabilities and equity   $117,095          $132,676
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X29881542
 
 SOURCE  Loudeye Technologies, Inc.