Hoover's, Inc. Reports Fiscal Third-Quarter Results
FOR IMMEDIATE RELEASE
AUSTIN, TEXAS - January 21, 2003 - Hoover's, Inc. (NASDAQ: HOOV) today announced its results for the quarter ended December 31, 2002. Net income totaled $318,000, or $0.02 per share, compared to net income of $122,000, or $0.01 per share, in the same period last year.
Strength in the company's core subscription business contributed to total revenues of $8.6 million this quarter, up 9% compared to the same quarter last year. Subscription revenues grew 31% over the prior year and now comprise 81% of total revenue, up from 67% a year ago. As of December 31, 2002, Hoover's had 8,919 enterprise accounts, an increase of 244 accounts from the end of the previous quarter.
The company's other revenues, including advertising and e-commerce, licensing, and print publishing, totaled $1.6 million for the fiscal third quarter, compared to $2.6 million in the same quarter a year ago. The decline primarily resulted from the absence of the former NewsStand service, which adversely impacted licensing, and lower advertising revenue.
For the quarter ended December 31, 2002, gross margins improved to 76%, compared to 68% in the same quarter of last year. Operating expenses totaled $6.4 million this quarter, compared to $5.6 million in the same quarter one year ago. Operating expenses include approximately $618,000 of expenses associated with the recently announced merger with D&B.
Hoover's ended its third quarter with cash and short-term investments of $38.8 million, with cash flow from operations totaling $2.8 million this quarter.
On December 5, 2002, D&B (NYSE: DNB) and Hoover's announced a definitive agreement whereby D&B will acquire Hoover's for $7.00 per share in cash. The transaction is valued at approximately $117 million. On January 2, 2003, D&B and Hoover's jointly announced that the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Act of 1976 with respect to the transaction with D&B. On January 8, 2003, Hoover's filed its Definitive Proxy Statement with the SEC, which indicated that the Special Meeting of Shareholders will be held on Friday, February 14, 2003.
About Hoover's, Inc. - The Business Information Authority(tm)
Hoover's, Inc. (NASDAQ: HOOV) is a leading provider of business information. Hoover's publishes authoritative information on public and private companies worldwide, and provides industry and market intelligence that helps sales, marketing and business development professionals and senior-level executives get the global intelligence they need to grow their businesses. This information, along with advanced searching tools, is available through Hoover's Online (www.hoovers.com), the company's premier online service. Hoover's business information is also available through corporate intranets and distribution agreements with licensees, as well as via print and CD-ROM products from Hoover's Business Press.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
The statements contained in this release relating to the merger with D&B are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially, including, but not limited to: the satisfaction of all of the conditions to the closing of
the acquisition, including, but not limited to, receiving the approval of a majority of Hoover's outstanding shares.
Condensed Consolidated Statement of Operations — Unaudited (in thousands, except per share data)
| For the Three Months Ended December 31, | Increase/(Decrease) | |||
|---|---|---|---|---|
| 2002 | 2001 | $ | % | |
| REVENUE | ||||
| Subscriptions | $6,946 | $5,309 | 1,637 | 30.8 |
| Advertising and e-commerce | 766 | 1,501 | (735) | (49.0) |
| Licensing | 475 | 717 | (242) | (33.8) |
| Print publishing, net | 393 | 360 | 33 | 9.2 |
| Net revenues | 8,580 | 7,887 | 693 | 8.8 |
| Cost of revenues | (2,035) | (2,511) | (476) | (19.0) |
| Gross profit | 6,545 | 5,376 | 1,169 | 21.7 |
| Gross margin - % of revenue | 76.3% | 68.2% | ||
| OPERATING EXPENSES | ||||
| Product development | 555 | 368 | 187 | 50.8 |
| Sales and marketing | 2,635 | 2,406 | 229 | 9.5 |
| General and administrative | 3,191 | 2,708 | 483 | 17.8 |
| Amortization and impairment of goodwill and intangibles | 12 | 12 | - | - |
| Non-cash compensation | 33 | 66 | (33) | (50.0) |
| Total operating expenses | 6,426 | 5,560 | 866 | 15.6 |
| Operating income/(loss) | 119 | (184) | 303 | — |
| NON-OPERATING INCOME (EXPENSES) | ||||
| Interest income, net | 199 | 225 | (26) | (11.6) |
| Gain on strategic investments | — | 81 | (81) | (100.0) |
| Total non-operating income/(expenses) | 199 | 306 | (107) | (35.0) |
| Net income/(loss) | $318 | $122 | $196 | 160.7 |
| Weighted average shares outstanding | ||||
| Basic | 15,516 | 15,241 | ||
| Diluted | 16,378 | 15,714 | ||
| Net income/(loss) per share | ||||
| Basic | $ 0.02 | $0.01 | $0.01 | — |
| Diluted | $0.02 | $0.01 | $0.01 | — |
Condensed Consolidated Statement of Operations — Unaudited (in thousands, except per share data)
| For the Nine Months Ended December 31, | Increase/(Decrease) | |||
|---|---|---|---|---|
| 2002 | 2001 | $ | % | |
| REVENUE | ||||
| Subscriptions | $19,348 | $15,693 | 3,655 | 23.3 |
| Advertising and e-commerce | 2,754 | 4,550 | (1,796) | (39.5) |
| Licensing | 1,355 | 2,483 | (1,128) | (45.4) |
| Print publishing, net | 853 | 828 | 25 | 3.0 |
| Net revenues | 24,310 | 23,554 | 756 | 3.2 |
| Cost of revenues | (6,533) | (8,127) | (1,594) | (19.6) |
| Gross profit | 17,777 | 15,427 | 2,350 | 15.2 |
| Gross margin - % of revenue | 73.1% | 65.5% | ||
| OPERATING EXPENSES | ||||
| Product development | 1,506 | 1,842 | (336) | (18.2) |
| Sales and marketing | 7,381 | 6,939 | 442 | 6.4 |
| General and administrative | 8,258 | 10,230 | (1,972) | (19.3) |
| Amortization and impairment of goodwill and intangibles | 37 | 6,238 | (6,201) | (99.4) |
| Non-cash ompensation | 107 | 507 | (400) | (78.9) |
| Total operating expenses | 17,289 | 25,756 | (8,467) | (32.9) |
| Operating income/(loss) | 488 | (10,329) | 10,817 | — |
| NON-OPERATING INCOME (EXPENSES) | ||||
| Interest income, net | 624 | 889 | (265) | (29.8) |
| Loss on strategic investments | — | (2,428) | 2,428 | 100.0 |
| Total non-operating income/(expenses) | 624 | (1,539) | 2,163 | — |
| Net income/(loss) | $1,112 | $(11,868) | $12,980 | — |
| Weighted average shares outstanding | ||||
| Basic | 15,383 | 15,340 | ||
| Diluted | 16,195 | 15,340 | ||
| Net income/(loss) per share | ||||
| Basic | $0.07 | $(0.77) | $ 0.84 | — |
| Diluted | $0.07 | $(0.77) | $0.84 | — |
Condensed Consolidated Balance Sheet (in thousands)
| December 31, 2002(Unaudited) | March 31, 2002(Audited) | ||
|---|---|---|---|
| ASSETS | |||
| Current assets | |||
| Cash and short-term investments | $38,768 | $32,791 | |
| Accounts receivable, net | 1,591 | 2,726 | |
| Inventory, net | 180 | 156 | |
| Other current assets | 555 | 471 | |
| Total current assets | 41,094 | 36,144 | |
| Fixed assets, net | 2,914 | 4,142 | |
| Intangible assets, net | 28 | 65 | |
| Other non-current assets | 17 | 17 | |
| TOTAL ASSETS | $44,053 | $40,368 | |
| LIABILITIES | |||
| Current liabilities | |||
| Accounts payable and commissions | $898 | $1,042 | |
| Accrued expenses | 3,687 | 3,440 | |
| Deferred revenue | 9,402 | 7,853 | |
| Total current liabilities | 13,987 | 12,335 | |
| Total liabilities | 13,987 | 12,335 | |
| Shareholders' equity | |||
| Common stock | 162 | 159 | |
| Paid-in capital | 96,853 | 96,037 | |
| Unearned stock compensation | — | (107) | |
| Accumulated other comprehensive income | (5) | — | |
| Accumulated deficit | (65,604) | (66,716) | |
| Treasury stock, at cost | (1,340) | (1,340) | |
| Total shareholders' equity | 30,066 | 28,033 | |
| TOTAL LIABILITIES & EQUITY | $44,053 | $40,368 | |
Consolidated Statements of Cash Flows — Unaudited
(In Thousands)| For the Nine Months EndedDecember 31, | ||
|---|---|---|
| 2002 | 2001 | |
| Operating activities | ||
| Net income / (loss) | $1,112 | $(11,868) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
| Depreciation | 1,899 | 2,373 |
| Impairment of goodwill and intangibles | — | 5,807 |
| Amortization of intangibles | 37 | 432 |
| Amortization of unearned stock compensation | 107 | 507 |
| Non-cash write-down of software | — | 730 |
| Provision for doubtful accounts | 650 | 561 |
| Impairment of strategic investments | — | 2,508 |
| Gain on sale of investments | — | 81 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | 485 | 911 |
| Inventories | (24) | (80) |
| Prepaid expenses and other current assets | (84) | (277) |
| Accounts payable and commissions | (144) | (1,017) |
| Accrued expenses and employee liabilities | 247 | 585 |
| Deferred revenue | 1,549 | 1,947 |
| Net cash provided by operating activities | 5,834 | 3,200 |
| Investing activities | ||
| Purchases of fixed assets, net | (671) | (923) |
| Purchases of short term investments | (922) | — |
| Sale of short-term investments | — | 50 |
| Net cash used in investing activities | (1,593) | (873) |
| Financing activities | ||
| Purchase of treasury stock | — | (734) |
| Payments on notes payable | — | (1,014) |
| Payments on capital leases | — | (25) |
| Net proceeds from capital stock transactions | 819 | 110 |
| Net cash provided by (used in) financing activities | 819 | (1,663) |
| Change in cumulative translation adjustment | — | (32) |
| Increase in cash and cash equivalents | 5,060 | 632 |
| Cash and cash equivalents -- beginning of period | 17,558 | 30,533 |
| Cash and cash equivalents -- end of period | 22,618 | 31,165 |
| Increase in short-term investments | 917 | — |
| Short-term investments -- beginning of period | 15,233 | — |
| Short-term investments -- end of period | 16,150 | — |
| Cash, cash equivalents and short-term investments at end of period | $38,768 | $31,165 |