PlanetOut Reports Fourth-Quarter and Full-Year 2007 Results

SAN FRANCISCO, Feb. 29 /PRNewswire-FirstCall/ -- PlanetOut Inc. (NASDAQ:LGBT), the leading media and entertainment company exclusively focused on the gay and lesbian market, today reported its financial results for the fourth quarter and full year ended December 31, 2007.

Total revenue for the full year ended December 31, 2007 was $70.0 million, before adjusting for discontinued operations, and was within the range of $69.0 to $72.0 million provided during PlanetOut's third quarter 2007 earnings call on November 1, 2007. GAAP net loss for the full year ended December 31, 2007 was $51.2 million. Adjusted EBITDA for the full year ended December 31, 2007 was $(9.7) million, and was also within the range of $(9.0) million to $(11.0) million provided on the earnings call noted above.

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted earnings per share ("Adjusted EPS") -- Basic and Diluted, which are reconciled to net income (loss), net income (loss), and net income (loss) per share -- basic and diluted, respectively, which the company believes are the most comparable GAAP measures. The company uses these non-GAAP financial measures for internal managerial purposes, when providing its business outlook, and as a means to evaluate period-to-period comparisons. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of the company's operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the company's business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities and net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles.

Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and other income (expense), net, less Adjusted EBITDA from Discontinued Operations. Adjusted EBITDA from Discontinued Operations is defined as net income (loss) from discontinued operations before interest, taxes, depreciation and amortization, stock-based compensation, restructuring and non-cash impairment charges. The company considers Adjusted EBITDA to be an important indicator of its operational strength. The company deducts other income (expense), net, consisting primarily of interest income (expense), and Adjusted EBITDA from Discontinued Operations from net income (loss) in calculating Adjusted EBITDA because it regards interest income (expense) and Adjusted EBITDA from Discontinued Operations to be non-operating items. This measure also eliminates the effects of depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and stock-based compensation expense from period to period, which the company believes is useful to management and investors in evaluating its operating performance, as depreciation and amortization, restructuring, non- cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and stock-based compensation costs are not directly attributable to the underlying performance of the company's business operations. A limitation associated with this measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company's businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. A further limitation associated with this measure is that it does not include stock-based compensation expenses related to the company's workforce. Management compensates for this limitation by providing supplemental information about stock-based compensation expense on the face of the consolidated statements of operations.

Adjusted Net Income (Loss) is defined as net income (loss) excluding stock-based compensation expense, restructuring, non-cash impairment charges, executive transition, financial advisory fees and income (loss) from discontinued operations. The company considers Adjusted Net Income (Loss) to be a profitability measure which facilitates the forecasting of its operating results for future periods and allows for the comparison of its results to historical periods and to other companies in its industry. A limitation of Adjusted Net Income (Loss) is that it does not include all items that impact the company's net income (loss) and net income (loss) per share for the period. Adjusted EPS -- Basic and Diluted are defined as Adjusted Net Income (Loss) calculated on a basic and diluted per share basis, respectively.

PlanetOut's management believes the non-GAAP information is useful because it can enhance the understanding of the company's ongoing economic performance and PlanetOut therefore uses non-GAAP information internally to evaluate and manage the company's operations. PlanetOut has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the company analyzes its operating results.

About PlanetOut Inc.

PlanetOut Inc. is the leading global media and entertainment company exclusively serving the lesbian, gay, bisexual and transgender (LGBT) community.

PlanetOut's digital media brands include Gay.com, PlanetOut.com, Advocate.com, Out.com, OutTraveler.com and HIVPlusMag.com. PlanetOut print media brands include The Advocate, Out, The Out Traveler and HIVPlus, as well as SpecPub, Inc. titles. Transaction services brands include e-commerce Web sites Kleptomaniac.com and BuyGay.com, and book publisher Alyson Publications.

PlanetOut, based in San Francisco with additional offices in New York and Los Angeles, offers Global 1000 and local advertisers access to what it believes to be the most extensive multi-channel, multi-platform network of gay and lesbian people in the world. For more information, please visit http://www.planetoutinc.com/.

PlanetOut Inc.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)

Three months ended Twelve months ended
December 31, December 31,
2006 2007 2006 2007
Revenue:
Advertising services $7,428 $6,194 $26,479 $25,555
Subscription services 6,025 5,167 24,447 21,901
Transaction services 2,167 1,826 7,830 5,557
Total revenue 15,620 13,187 58,756 53,013
Operating costs and expenses:(*)
Cost of revenue 7,339 7,937 26,744 29,886
Sales and marketing 4,160 3,969 15,592 16,266
General and administrative 3,073 3,163 11,690 15,122
Restructuring (101) 49 791 630
Depreciation and amortization 1,638 1,646 5,187 6,723
Impairment of goodwill and
intangible assets - 4,814 - 25,914
Total operating costs and
expenses 16,109 21,578 60,004 94,541
Loss from operations (489) (8,391) (1,248) (41,528)
Other income (expense), net (374) 53 (616) (1,441)
Loss from continuing operations
before income taxes (863) (8,338) (1,864) (42,969)
Provision (benefit) for income taxes 7 - 45 (6)
Loss from continuing operations (870) (8,338) (1,909) (42,963)
Income (loss) from discontinued
operations, net of taxes (860) 298 (1,801) (8,207)

Net loss $(1,730) $(8,040) $(3,710) $(51,170)

Loss per share from continuing
operations - basic and diluted $(0.50) $(2.06) $(1.10) $(14.94)
Income (loss) per share from
discontinued operations - basic and diluted $(0.49) $0.07 $(1.04) $(2.85)
Net loss per share - basic and diluted $(0.99) $(1.99) $(2.14) $(17.79)
Weighted-average shares used to
compute net loss per share - basic and diluted 1,739 4,048 1,733 2,876

(*)Includes stock-based
compensation expense as follows:
Cost of revenue $50 $34 $67 $198
Sales and marketing 22 3 40 40
General and administrative 168 89 180 506
Total stock-based
compensation expense $240 $126 $287 $744

Supplemental Financial Data
Adjusted EBITDA $690 $(1,512) $4,152 $(9,671)
Adjusted Net Loss $(591) $(3,101) $(356) $(14,328)
Adjusted EPS:
Basic $(0.34) $(0.77) $(0.21) $(4.98)
Diluted $(0.34) $(0.77) $(0.21) $(4.98)

PlanetOut Inc.
Note to Unaudited Condensed Consolidated Statements of Operations

This press release includes the non-GAAP financial measures of Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted earnings per share ("Adjusted EPS") -- Basic and Diluted, which are reconciled to net income (loss), net income (loss) and net income (loss) per share -- basic and diluted, respectively, which the Company believes are the most comparable GAAP measures. The Company uses these non-GAAP financial measures for internal managerial purposes, when providing its business outlook, and as a means to evaluate period-to-period comparisons. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company's business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities and net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles.

Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, restructuring, non- cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and other income (expense), net, less Adjusted EBITDA from Discontinued Operations. Adjusted EBITDA from Discontinued Operations is defined as net income (loss) from discontinued operations before interest, taxes, depreciation and amortization, stock-based compensation, restructuring and non-cash impairment charges. The Company considers Adjusted EBITDA to be an important indicator of its operational strength. The Company deducts other income (expense), net, consisting primarily of interest income (expense), and Adjusted EBITDA of Discontinued Operations from net income (loss) in calculating Adjusted EBITDA because it regards interest income (expense) and Adjusted EBITDA from Discontinued Operations to be non-operating items. This measure also eliminates the effects of depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations less Adjusted EBITDA from discontinued operations and stock-based compensation expense from period to period, which the Company believes is useful to management and investors in evaluating its operating performance, as depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations less Adjusted EBITDA from Discontinued Operations and stock-based compensation costs are not directly attributable to the underlying performance of the Company's business operations. A limitation associated with this measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. A further limitation associated with this measure is that it does not include stock-based compensation expenses related to the Company's workforce. Management compensates for this limitation by providing supplemental information about stock-based compensation expense on the face of the consolidated statements of operations.

Adjusted Net Income (Loss) is defined as net income (loss) excluding stock-based compensation expense, restructuring, non-cash impairment charges, executive transition, financial advisory fees and income (loss) from discontinued operations. The Company considers Adjusted Net Income (Loss) to be a profitability measure which facilitates the forecasting of its operating results for future periods and allows for the comparison of its results to historical periods and to other companies in its industry. A limitation of Adjusted Net Income (Loss) is that it does not include all items that impact the Company's net income (loss) and net income (loss) per share for the period. Adjusted EPS - Basic and Diluted are defined as Adjusted Net Income (Loss) calculated on a basic and diluted per share basis, respectively.

The Company undertakes no obligation to provide or update any such estimates or supplemental information in the future.

PlanetOut Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands)

December 31,
2006 2007
Assets
Current assets:
Cash and cash equivalents $9,674 $8,534
Short-term investments 2,050 - Restricted cash 2,854 167
Accounts receivable, net 8,963 6,868
Inventory 1,690 1,113
Prepaid expenses and other current assets 4,137 2,188
Current assets of discontinued operations 7,573 - Current assets held for sale - 1,795
Total current assets 36,941 20,665
Property and equipment, net 10,737 8,441
Goodwill 28,590 7,123
Intangible assets, net 9,763 1,870
Other assets 1,021 580
Long-term assets of discontinued
operations 6,537 - Long-term assets held for sale - 2,673
Total assets $93,589 $41,352

Liabilities and stockholders' equity
Current liabilities:
Accounts payable $1,691 $1,338
Accrued expenses and other liabilities 3,310 2,491
Deferred revenue, current portion 8,989 5,760
Capital lease obligations, current portion 694 838
Notes payable, current portion net
of discount 8,817 - Deferred rent, current portion 228 264
Current liabilities of discontinued
operations 6,068 - Current liabilities related to
assets held for sale - 1,676
Total current liabilities 29,797 12,367
Deferred revenue, less current
portion 1,474 1,089
Capital lease obligations, less
current portion 1,504 984
Notes payable, less current portion
and discount 8,100 - Deferred rent, less current portion 1,569 1,401
Long-term liabilities related to
assets held for sale - 602
Total liabilities 42,444 16,443
Stockholders' equity:
Common stock 17 40
Additional paid-in capital 89,532 114,406
Accumulated other comprehensive loss (122) (85)
Accumulated deficit (38,282) (89,452)
Total stockholders' equity 51,145 24,909
Total liabilities and stockholders' equity $93,589 $41,352

PlanetOut Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)

Twelve months ended
December 31,
2006 2007
Cash flows from operating activities:
Net loss $(3,710) $(51,170)
Net loss from discontinued operations,
net of tax 1,801 8,207
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 5,186 6,723
Impairment of goodwill and
intangible assets - 25,914
Non-cash services expense - 185
Provision for doubtful accounts 219 211
Restructuring 19 203
Stock-based compensation 293 744
Amortization of debt discount 55 392
Amortization of deferred rent (43) (132)
Loss on disposal or write-off of
property and equipment 46 940
Changes in operating assets and
liabilities, net of acquisition effects
and classification of assets and
liabilities related to assets
held for sale:
Accounts receivable (3,152) 1,987
Inventory (341) 263
Prepaid expenses and other
assets (1,628) 1,489
Accounts payable 357 (281)
Accrued expenses and other
liabilities 560 (858)
Deferred revenue (24) (1,602)
Net cash used in continuing
operating activities (362) (6,785)
Net cash used in discontinued
operations (4,364) (1,131)
Net cash used in operations (4,726) (7,916)

Cash flows from investing
activities:
Purchases of property and equipment (4,454) (3,844)
Changes in short-term investments (2,050) 2,050
Changes in restricted cash (2,854) 2,687
Acquisitions, net of cash acquired 76 - Acquisition of discontinued
operations, net of cash (5,479) - Net cash provided by (used in)
investing activities (14,761) 893

Cash flows from financing
activities:
Proceeds from exercise of common
stock options and warrants 461 71
Proceeds from equity financing,
net of transaction costs - 24,017
Proceeds from issuance of notes payable 10,500 - Proceeds from repayment of note
receivable from stockholder 843 - Principal payments under capital
lease obligations and notes
payable (1,105) (18,097)
Tax withholding payments
reimbursed by restricted stock - (137)
Net cash provided by financing
activities 10,699 5,854

Effect of exchange rate on cash and
cash equivalents 1 29

Net decrease in cash and cash equivalents (8,787) (1,140)
Cash and cash equivalents, beginning
of period 18,461 9,674

Cash and cash equivalents, end of period $9,674 $8,534

Supplemental disclosure of noncash
investing and financing activities:
Property and equipment and related
maintenance acquired under capital leases $2,525 $461
Issuance of common stock warrants
in connection with debt issuance
and financial advisory fees $445 $-

PlanetOut Inc.
Reconciliations to Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)

Three months ended Twelve months ended
December 31, December 31,
2006 2007 2006 2007

Adjusted EBITDA:
Net loss $(1,730) $(8,040) $(3,710) $(51,170)
(Income) loss from
discontinued operations 860 (298) 1,801 8,207
Provision (benefit) for income
taxes 7 - 45 (6)
Other (income) expense, net 374 (53) 616 1,441
Loss from operations (489) (8,391) (1,248) (41,528)
Stock-based compensation expense 240 126 287 744
Restructuring (101) 49 791 630
Non-cash impairment charges * - 5,012 - 26,579
Executive transition 140 - 475 497
Financial advisory fees - 50 - 185
Depreciation and amortization 1,638 1,646 5,187 6,723
Adjusted EBITDA from continuing
operations 1,428 (1,508) 5,492 (6,170)
Adjusted EBITDA from discontinued
operations (738) (4) (1,340) (3,501)
$690 $(1,512) $4,152 $(9,671)

Adjusted Net Loss:
Net loss $(1,730) $(8,040) $(3,710) $(51,170)
(Income) loss from
discontinued operations 860 (298) 1,801 8,207
Stock-based compensation expense 240 126 287 744
Restructuring (101) 49 791 630
Non-cash impairment charges * - 5,012 - 26,579
Executive transition 140 - 475 497
Financial advisory fees - 50 - 185
$(591) $(3,101) $(356) $(14,328)

Adjusted EPS:
Basic $(0.34) $(0.77) $(0.21) $(4.98)
Diluted $(0.34) $(0.77) $(0.21) $(4.98)

Weighted-average shares used to
compute Adjusted EPS:
Basic 1,739 4,048 1,733 2,876
Diluted 1,739 4,048 1,733 2,876

* Non-cash impairment charges for the twelve months ended December 31,
2007 include $93,000 of charges for the three months ended March 31,
2007 not previously defined as a reconciling item in our calculation
of Adjusted EBITDA or Adjusted Net Income (Loss).

PlanetOut Inc.
Unaudited Summary of Consolidated Segment Information
(In thousands)

Three months ended Three months ended
December 31, 2006 December 31, 2007

Online Publishing Total Online Publishing Total
Revenue:
Advertising
services $3,874 $3,554 $7,428 $2,474 $3,720 $6,194
Subscription
services 4,393 1,632 6,025 3,957 1,210 5,167
Transaction services 512 1,655 2,167 232 1,594 1,826
Total revenue 8,779 6,841 15,620 6,663 6,524 13,187
Direct operating costs
and expenses:
Cost of revenue 2,846 4,493 7,339 2,907 5,030 7,937
Sales and marketing 2,462 1,698 4,160 2,277 1,692 3,969
Total direct
operating costs
and expenses 5,308 6,191 11,499 5,184 6,722 11,906

Contribution margin
(loss) $3,471 $650 4,121 $1,479 $(198) 1,281
Other operating costs
and expenses:
General and
administrative 3,073 3,163
Restructuring (101) 49
Depreciation and
amortization 1,638 1,646
Impairment of goodwill
and intangible assets - 4,814
Total other operating
costs and expenses 4,610 9,672
Loss from operations (489) (8,391)
Other income (expense),
net (374) 53
Provision (benefit) for
income taxes 7 - Income (loss) from
discontinued operations (860) 298
Net loss $(1,730) $(8,040)

Twelve months ended Twelve months ended
December 31, 2006 December 31, 2007

Online Publishing Total Online Publishing Total
Revenue:
Advertising
services $11,116 $15,363 $26,479 $9,365 $16,190 $25,555
Subscription
services 18,378 6,069 24,447 16,476 5,425 21,901
Transaction
services 2,129 5,701 7,830 1,191 4,366 5,557
Total revenue 31,623 27,133 58,756 27,032 25,981 53,013
Direct operating
costs and expenses:
Cost of revenue 10,240 16,504 26,744 12,673 17,213 29,886
Sales and marketing 10,236 5,356 15,592 9,296 6,970 16,266
Total direct
operating costs
and expenses 20,476 21,860 42,336 21,969 24,183 46,152
Contribution margin $11,147 $5,273 16,420 $5,063 $1,798 6,861
Other operating
costs and expenses:
General and
administrative 11,690 15,122
Restructuring 791 630
Depreciation and
amortization 5,187 6,723
Impairment of
goodwill and
intangible assets - 25,914
Total other
operating costs
and expenses 17,668 48,389
Loss from operations (1,248) (41,528)
Other expense, net (616) (1,441)
Provision (benefit)
for income taxes 45 (6)
Loss from
discontinued
operations (1,801) (8,207)
Net loss $(3,710) $(51,170)

First Call Analyst:
FCMN Contact:

Source: PlanetOut Inc.

CONTACT: Dan Steimle of PlanetOut Inc., +1-415-834-6449

Web site: http://www.planetoutinc.com/

2008-02-29 18:30:55 0302109 PRNEWSWIRE