EX-99.1 2 ex99_1.htm EXHIBIT 99.1 Exhibit 99.1

For Release at 4p.m. EDT Tuesday, August 3, 2004
 
Contacts:
    
Andrew Kaplan
  
Jonathan Korzen
Chief Financial Officer
  
Director of Public Relations
(973) 837-2734
  
(973) 837-2718
akaplan@audible.com
  
jkorzen@audible.com

AUDIBLE® REPORTS SECOND QUARTER RESULTS
HIGHLIGHTED BY 86% YEAR-OVER-YEAR CONTENT
AND SERVICES REVENUE GROWTH
 
Company Achieves Solid Free Cash Flow and Profit Growth

WAYNE, NJ, August 3, 2004— Audible, Inc. (NASDAQ: ADBL), the leading provider of digitally delivered spoken word audio, today announced financial results for the three months ended June 30, 2004.

Second quarter financial and growth highlights include:

·   Net content and services revenue of $7.9 million, up 86% over the second quarter of 2003 and 20% over the first quarter of 2004.
·   Total revenue of $8.1 million, up 82% over the second quarter of 2003 and 19% over the first quarter of 2004.
·   Net income of $237,000 and EPS of $0.01.
·   Free cash flow* of $611,000 as compared to $312,000 in the first quarter of 2004.
·   The addition of 35,250 new customers, of which 24,500, or 70%, were AudibleListener® members.

"Our strong second quarter results demonstrate the key characteristics of our business model: operating efficiencies inherent to digital distribution, the consistent scalability of a steady membership-based recurrent revenue stream, and the additive growth elements of a creative and fast-moving retailer," said Donald Katz, Chairman and CEO, Audible, Inc. "We are particularly pleased by our progress during the quarter as these results come in advance of the expected significant increase in new AudibleReady® digital audio devices during the last half of the year."

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"This was another positive quarter for Audible," added Andrew Kaplan, Chief Financial Officer, Audible, Inc. "Solid gains in AudibleListener membership, combined with strong a la carte sales at audible.com and accelerating sales at the Apple iTunes Music Store resulted in record revenue. While operating expenses remain under tight control, general and administrative expenses in the second quarter were unusually high due to outside legal costs related to business development activities overseas, spending related to Sarbanes-Oxley compliance, and expenses related to the Company’s relisting on Nasdaq."

Other recent highlights:

·   Audible® was relisted on the Nasdaq Small Cap market effective July 1, 2004, and completed a 1-for-3 reverse stock split on June 17.
·   William H. Washecka, a retired Ernst & Young partner who established and managed E&Y’s High Technology and Emerging Business practice before his retirement, joined Audible’s board and has been appointed the Chairman of the Audit Committee.
·   Audible’s distribution partnership with the Apple® iTunes® Music Store was extended to cover the new European versions of the Apple iTunes Music Store.
·   Audible and Samsung Electronics Co. Ltd. announced that hard drive-based MP3 players from Samsung will ship as AudibleReady devices later in the third quarter of 2004.
·   Audible and Soniqcast™ announced that the Soniqcast Element Aireo™ MP3 player is shipping as an AudibleReady® device. The world’s first-ever portable wireless MP3 player is able to receive content wirelessly transferred from listeners’ personal computers.
·   Audible made the first-ever Software Development Kit (SDK) for the digital distribution of the spoken word, available for license in part or whole, to technology and device partners.
·   Retail co-marketing and rebate partnerships were established with Berkshire Hathaway’s Nebraska Furniture Mart and Buy.com.
·   Audible’s Chairman and CEO Donald Katz was named Entrepreneur of the Year in New Jersey by Ernst & Young.

Business Outlook
The Company has raised its expectation of 2004 total revenue to the range of $29.5 million to $31.5 million, up from the previously announced range of $28.0 million to $30.0 million. If the company achieves these results, it would represent a revenue growth rate of 53% to 63% compared to $19.3 million in total revenue in 2003. Management also reaffirmed its estimate of free cash flow for the year of $2.0 million to $2.4 million and its expectations of net income of

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$1.0 million to $1.4 million before dividend and preferred stock conversion charges.

Conference Call
Senior management will host an investor teleconference at 5:00 p.m. EDT today, to discuss these results as well as related financial and operational developments. A live webcast of the conference call is available at www.audible.com/ir for audio streaming access to the call. To participate in the call the dial-in number is (800) 218-9073. The replay of the call will be available starting at 7:00 p.m. EDT on Tuesday, August 3, at (800) 405-2236, passcode 11002808#.

*Use of Non-GAAP Measures
Management believes that free cash flow is a useful measure of liquidity because it includes cash provided by operating activities as well as the impact of cash used for investment in property and equipment. However, this non-GAAP measure should be considered in addition to, not as a substitute for, or superior to, net cash provided by (used in) operating activities, or other financial measures prepared in accordance with GAAP. A reconciliation to the GAAP equivalents of this non-GAAP measure is contained in tabular form on the attached unaudited financial statements.

To enhance the clarity of Audible’s operating expense presentation, certain operating expenses for historical periods in the attached Statements of Operations have been reclassified to conform with newly reclassified current presentation.
 
About Audible.com:
Audible.com, recently named the best consumer Web service by CNet.com, and one of the "Best of Today’s Web" by PC World, features daily audio editions of The Wall Street Journal and The New York Times — available on a subscription basis in time for the morning drive to work each day—as well as Forbes, Harvard Business Review, Scientific American, and Fast Company. The site offers a powerful collection of audiobook best sellers and classics by authors such as Tom Clancy, Stephen King, John Grisham, Janet Evanovich, James Patterson, the Dalai Lama, David McCullough, Stephen Hawking, William Shakespeare, Emily Dickinson, and Jane Austen. There are also speeches, lectures, and on-demand radio programs including Marketplace, All Things Considered, Car Talk, Fresh Air, and This American Life, and original shows such as RobinWilliams@audible.com. All of the programs at audible.com are available for computer-based playback, burning

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to audio CD, and on-the-go listening using numerous AudibleReady® portable digital audio players offered by leading consumer electronics and computer manufacturers.

About Audible, Inc.:
Audible® (www.audible.com®) is the Internet's leading premium spoken audio source. Content from Audible is downloaded and played back on personal computers, CDs, or AudibleReady® computer-based mobile devices. Audible has more than 50,000 hours of audio programs from more than 185 content partners that include leading audiobook publishers, broadcasters, entertainers, magazine and newspaper publishers, and business information providers. Audible.com is Amazon.com's and the Apple iTunes Music Store’s pre-eminent provider of spoken word products for downloading or streaming via the Web. Additionally, the Company is strategically aligned with Random House, Inc. in the first-ever imprint to produce spoken word content specifically suited for digital distribution, Random House Audible. Among the Company's key business relationships are Apple Corp., Creative Labs, Hewlett-Packard Company, Microsoft Corporation, palmOne, Inc., PhatNoise Inc., RealNetworks, Inc., Rio Audio, Roxio, Inc., Sony Electronics, Texas Instruments Inc., and VoiceAge Corporation.

Audible, www.audible.com, AudibleListener, and AudibleReady are registered trademarks of Audible, Inc. and all are part of the family of Audible, Inc. trademarks.

Other product or service names mentioned herein are the trademarks of their respective owners.

This press release contains information about Audible, Inc. that is not historical fact and may be deemed to contain forward-looking statements about the company. Actual results may differ materially from those anticipated in any forward-looking statements as a result of certain risks and uncertainties, including, without limitation, Audible’s limited operating history, history of losses, uncertain market for its services, and its inability to license or produce compelling audio content and other risks and uncertainties detailed in the company’s Securities and Exchange Commission filings.

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AUDIBLE INC.
COMPARATIVE STATEMENTS OF OPERATIONS

   
Three months ended
  
   
June 30,
  
March 31,
  
   
2004
  
2004
  
   
(unaudited)
  
(unaudited)
  
Revenue:
              
Consumer content
  
$
7,938,082
 
$
6,675,438
 
Point of sale rebates
    
(67,775
)
  
(116,250
)
Services
    
12,901
   
17,102
 
Net content and services
    
7,883,208
   
6,576,290
 
             
Hardware
    
162,749
   
181,717
 
Other
   
16,131
   
16,126
 
Total revenue, net
    
8,062,088
   
6,774,133
 
             
Operating expenses:
             
Cost of content and services revenue:
              
Royalties and other content charges
    
2,600,606
   
2,054,162
 
Discount certificate rebates
    
305,235
   
39,100
 
Total cost of content and services revenue
    
2,905,841
   
2,093,262
 
               
Cost of hardware revenue
    
613,568
   
518,035
 
Operations
    
1,196,685
   
1,143,247
 
Technology and development
    
1,280,970
   
1,255,132
 
Marketing
   
999,711
   
1,152,286
 
General and administrative
    
840,537
   
567,178
 
Total operating expenses
    
7,837,312
   
6,729,140
 
             
Income from operations
    
224,776
   
44,993
 
             
Other income, (expense)
              
Interest income
    
44,688
   
14,967
 
Interest expense
    
(14,090
)
  
(2,188
)
Total other income, net
    
30,598
   
12,779
 
             
Income before income taxes
    
255,374
   
57,772
 
             
Income taxes
    
(18,789
)
  
-
 
             
Net income
    
236,585
   
57,772
 
             
Dividends on convertible preferred stock
    
-
   
(614,116
)
Charges related to conversion of convertible preferred stock
    
-
   
(9,873,394
)
Total preferred stock expense
    
-
   
(10,487,510
)
               
Net income (loss) applicable to common shareholders
  
$
236,585
 
$
(10,429,738
)
 
              
               
Basic net income (loss) per common share
  
$
0.01
 
$
(0.56
)
               
Weighted average basic common shares outstanding
    
21,238,711
   
18,664,387
 
               
Diluted net income (loss) per common share
  
$
0.01
 
$
(0.56
)
               
Weighted average diluted shares outstanding
    
23,620,502
   
18,664,387
 

 
     

6

 
AUDIBLE INC.
STATEMENTS OF OPERATIONS


   
Three months ended 
  
Six Months ended 
  
   
June 30,  
  
June 30,  
  
   
2004
  
2003
  
2004
  
2003
  
   
(unaudited) 
  
(unaudited) 
  
Revenue, net:
                          
Consumer content
  
$
7,938,062
 
$
4,204,999
 
$
14,613,500
 
$
8,092,584
 
Point of sale rebates
    
(67,755
)
  
-
   
(184,005
)
  
-
 
Services
    
12,901
   
30,485
   
30,003
   
58,581
 
Net content and services
    
7,883,208
   
4,235,484
   
14,459,498
   
8,151,165
 
                           
Hardware
    
162,749
   
175,109
   
344,466
   
352,324
 
Other
   
16,131
   
16,126
   
32,257
   
32,252
 
Total revenue, net
    
8,062,088
   
4,426,719
   
14,836,221
   
8,535,741
 
                           
Operating Expenses:
                         
Cost of content and services revenue:
                          
Royalties and other content charges
    
2,600,606
   
1,137,954
   
4,654,768
   
2,103,583
 
Discount certificate rebates
    
305,235
   
-
   
344,335
   
-
 
Total cost of content and services revenue
    
2,905,841
   
1,137,954
   
4,999,103
   
2,103,583
 
                           
Cost of hardware revenue
   
613,568
   
512,508
   
1,131,603
   
1,060,812
 
Operations
    
1,196,685
   
912,476
   
2,339,932
   
1,886,326
 
Technology and Development
    
1,280,970
   
1,188,460
   
2,536,102
   
2,440,433
 
Marketing
   
999,711
   
1,095,215
   
2,151,997
   
2,558,279
 
General and administrative
    
840,537
   
497,213
   
1,407,715
   
1,207,088
 
Total operating expenses
    
7,837,312
   
5,343,826
   
14,566,452
   
11,256,521
 
                           
Income (loss) from operations
    
224,776
   
(917,107
)
  
269,769
   
(2,720,780
)
                           
Other income, (expense)
                          
Interest income
    
44,688
   
4,097
   
59,655
   
10,012
 
Interest expense
    
(14,090
)
  
-
   
(16,278
)
  
-
 
Total other income, net
    
30,598
   
4,097
   
43,377
   
10,012
 
                           
Income (loss) before taxes
    
255,374
   
(913,010
)
  
313,146
   
(2,710,768
)
                           
Income taxes
    
(18,789
)
  
-
   
(18,789
)
  
-
 
                           
Net income (loss)
    
236,585
   
(913,010
)
  
294,357
   
(2,710,768
)
                           
Dividends on convertible preferred stock
    
-
   
(376,982
)
  
(614,116
)
  
(740,631
)
Charges related to conversion of convertible preferred stock
    
-
   
-
   
(9,873,394
)
  
-
 
Total preferred stock expense
    
-
   
(376,982
)
  
(10,487,510
)
  
(740,631
)
                           
Net income (loss) applicable to common shareholders
  
$
236,585
 
$
(1,289,992
)
$
(10,193,153
)
$
(3,451,399
)
                           
                           
Basic net income (loss) per common share
  
$
0.01
 
$
(0.12
)
$
(0.51
)
$
(0.34
)
                           
Weighted average basic common shares outstanding
    
21,238,711
   
10,332,648
   
19,936,969
   
10,173,370
 
                           
Diluted net income (loss) per common share
  
$
0.01
 
$
(0.12
)
$
(0.51
)
$
(0.34
)
                           
Weighted average diluted shares outstanding
    
23,620,502
   
10,332,648
   
19,936,969
   
10,173,370
 

 
     

7

AUDIBLE INC.
CONDENSED BALANCE SHEETS

   
June 30,
 
December 31,
 
Assets
  
2004
  
2003
  
   
(unaudited)
      
               
Current Assets
              
Cash and cash equivalents
  
$
10,412,267
 
$
9,074,987
 
Accounts receivable, net of allowance
   
442,984
   
245,641
 
Royalty advances
    
13,800
   
72,338
 
Prepaid expenses and other current assets
    
934,340
   
596,720
 
Inventory
    
202,932
   
99,936
 
Total current assets
    
12,006,323
   
10,089,622
 
               
Property and equipment, net
    
998,538
   
272,851
 
Other assets
    
20,805
   
418,524
 
               
Total Assets
  
$
13,025,666
 
$
10,780,997
 
               
Liabilities and Stockholders' Equity
             
               
Current Liabilities
              
Accounts payable
  
$
489,934
 
$
526,359
 
Accrued expenses and compensation
    
3,449,855
   
2,809,860
 
Royalty obligations
    
280,500
   
408,000
 
Capital lease obligations
    
424,737
   
-
 
Deferred revenue and advances
    
1,071,838
   
873,520
 
Total current liabilities
    
5,716,864
   
4,617,739
 
               
Deferred cash compensation
    
-
   
58,750
 
               
Stockholders' Equity
             
Convertible preferred stock: Series A
    
-
   
13,027,375
 
Convertible preferred stock: Series B
    
-
   
1,137,500
 
Common stock
    
214,935
   
150,156
 
Additional paid-in capital
    
139,253,697
   
110,507,840
 
Deferred compensation and services
    
(183,999
)
  
(239,425
)
Notes due from stockholders for common stock
    
-
   
(58,750
)
Treasury stock at cost
    
(184,740
)
  
(184,740
)
Accumulated deficit
    
(131,791,091
)
  
(118,235,448
)
Total Stockholders' Equity
   
7,308,802
   
6,104,508
 
               
Total Liabilities and Stockholders' Equity
 
$
13,025,666
 
$
10,780,997
 


 
     

8


AUDIBLE INC.
CONDENSED STATEMENTS OF CASH FLOWS

   
Three months ended 
  
Six months ended 
  
   
June 30,  
  
June 30,  
  
   
2004
  
2003
  
2004
  
2003
  
   
(unaudited) 
  
(unaudited) 
  
Cash flows from operating activities:
                          
Net income (loss)
  
$
236,585
 
$
(913,010
)
$
294,357
 
$
(2,710,768
)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                          
Depreciation and amortization
    
144,902
   
95,525
   
255,426
   
308,066
 
Services rendered for common stock and warrants
    
163,246
   
155,985
   
432,328
   
740,690
 
Non-cash compensation charge
    
21,313
   
37,210
   
55,426
   
110,488
 
Non-cash forgiveness of notes due from stockholders for common stock
    
-
   
-
   
-
   
198,995
 
Deferred cash compensation
   
(55,000
)
  
-
   
(58,750
)
  
-
 
Changes in assets and liabilities:
                          
Accounts receivable, net
    
(105,898
)
  
(69,901
)
  
(197,343
)
  
(121,468
)
Royalty advances
   
25,412
   
(2,959
)
  
58,538
   
(130,700
)
Prepaid expenses and other current assets
    
(374,201
)
  
84,872
   
(337,620
)
  
210,358
 
Inventory
    
(14,380
)
  
(82,685
)
  
(102,996
)
  
(222,928
)
Other assets
    
399,748
   
(86,769
)
  
397,719
   
(86,769
)
Accounts payable
    
(198,051
)
  
(208,118
)
  
(36,425
)
  
(79,276
)
Accrued expenses and compensation
    
599,834
   
334,622
   
647,495
   
389,926
 
Royalty obligations
    
(40,000
)
  
(57,500
)
  
(127,500
)
  
(18,500
)
Deferred revenue and advances
    
203,702
   
260,463
   
198,318
   
217,020
 
                           
Net cash provided by (used in) operating activities
    
1,007,212
   
(452,265
)
  
1,478,973
   
(1,194,866
)
                           
                           
Cash flows from investing activities:
                          
Purchases of property and equipment
    
(113,310
)
  
(18,569
)
  
(237,811
)
  
(41,187
)
Net cash used in investing activities
    
(113,310
)
  
(18,569
)
  
(237,811
)
  
(41,187
)
                           
                           
Cash flows from financing activities:
                          
Proceeds from exercise of common stock warrants
    
25,000
   
-
   
27,500
   
-
 
Proceeds from exercise of common stock options
    
104,855
   
-
   
328,433
   
-
 
Payments received on notes due from stockholders for common stock
    
55,000
   
-
   
58,750
   
-
 
Principal payments made on capital lease obligations
    
(283,099
)
  
-
   
(318,565
)
  
-
 
Net cash (used in) provided by financing activities
    
(98,244
)
  
-
   
96,118
   
-
 
                           
                           
Increase (decrease) in cash and cash equivalents
    
795,658
   
(470,834
)
  
1,337,280
   
(1,236,053
)
                           
Cash and cash equivalents at beginning of period
    
9,616,609
   
2,056,861
   
9,074,987
   
2,822,080
 
Cash and cash equivalents at end of period
  
$
10,412,267
 
$
1,586,027
 
$
10,412,267
 
$
1,586,027
 
                           
                           
Non-cash investing and financing activities:
                          
Purchase of property and equipment through capital leases
  
$
305,813
 
$
-
 
$
743,302
 
$
-
 
Reversal of unused accrued expense related to Series C financing
    
7,500
   
-
   
7,500
   
-
 
   
$
313,313
 
$
-
 
$
750,802
 
$
-
 
                           
Non-GAAP Free Cash Flow reconciliation:
                          
Net cash provided by (used in) operating activities
  
$
1,007,212
 
$
(452,265
)
$
1,478,973
 
$
(1,194,866
)
Purchases of property and equipment and capital lease payments
    
(396,409
)
  
(18,569
)
  
(556,376
)
  
(41,187
)
                           
Non-GAAP Free Cash Flow
 
$
610,803
 
$
(470,834
)
$
922,597
 
$
(1,236,053
)