EX-99 4 mv828_ex99-1.txt Exhibit 99.1 HOLLYWOOD MEDIA CORP. HOLLYWOOD MEDIA ANNOUNCES EXCHANGE AGREEMENT (Boca Raton, FL - August 28, 2002) - Hollywood Media Corp. (Nasdaq: HOLL) announced today that it is exchanging approximately $49.0 million in non-cash advertising that it has available for use over the next four years for Viacom's transfer to Hollywood Media of its entire equity interest in Hollywood Media plus Viacom's payment of $2.0 million in cash to Hollywood Media. Viacom currently holds 8,614,687 shares of Hollywood Media common stock, plus warrants to purchase an additional 262,973 shares of common stock, which together represent approximately 30.8% of Hollywood Media's shares outstanding. Hollywood Media will retain $5.0 million in non-cash advertising and promotion across CBS properties for use through calendar year 2003. As a result of the exchange, Hollywood Media's shares outstanding will decrease to approximately 20.4 million shares from approximately 29.0 million shares, significantly increasing the remaining shareholders' percentage interest in Hollywood Media. Importantly, this transaction is expected to accelerate the company's timetable for profitability due to the elimination of approximately $17.0 million in annual amortization expense. Today's transaction does not affect either Hollywood Media's or Viacom's relationship with MovieTickets.com, of which both companies are shareholders. Mitchell Rubenstein, CEO of Hollywood Media, commented, "This transaction benefits Hollywood Media in that it greatly accelerates our expected timetable for profitability, with positive GAAP earnings now expected to be reached during 2003. It also reduces our shares outstanding by approximately 30%, which significantly increases our remaining shareholders' percentage interest in Hollywood Media. As we have evolved into a diversified media company with established brand names and an increasing number of business customers, our overall need for a high level of consumer advertising has diminished substantially. Consequently, CBS' advertising platform, which in the early stages of our development was quite beneficial, is no longer a strategic asset for us. We are retaining $5 million in non-cash advertising, which we believe should be more than ample to promote our consumer properties through calendar year 2003. Given the evolution of our business, we believe the benefits of this transaction to our shareholders far outweigh the present value of the non-cash advertising that was available to us over the next four years." Attached are unaudited pro forma financial statements as of and for the quarter ended June 30, 2002 assuming that the exchange between Hollywood Media and Viacom had occurred on January 1, 2002. Continued . . . HOLLYWOOD MEDIA ANNOUNCES EXCHANGE AGREEMENT Page 2 ABOUT HOLLYWOOD MEDIA --------------------- Hollywood Media Corp. is a leading provider of news, information and ticketing covering the entertainment and media industries. On the strength of its history in developing comprehensive entertainment industry databases, as well as its unique content, the Company has launched a network of commercial and consumer businesses. The Company's commercial units include CinemaSource, EventSource, AdSource, Baseline/FilmTracker, and Theatre Direct International. These services supply thousands of media outlets with specific information on entertainment events such as movies, live theater and concerts. The Company's ticketing units sell live theater tickets to shows in New York and London to consumers through its Broadway.com and 1-800-Broadway units, and to businesses through Theatre Direct International. The Company also owns Hollywood.com and a minority interest in MovieTickets.com. In addition, the Company also owns and operates two recently launched digital cable television networks, Totally Broadway TV and Totally Hollywood TV. The Company's shares are traded on the Nasdaq Stock Market under the symbol HOLL. The matters discussed herein that are forward-looking statements are based on current management expectations that involve risks and uncertainties that may result in such expectations not being realized. Potential risks and uncertainties include, but are not limited to, the risks described in Hollywood Media Corp.'s filings with the Securities and Exchange Commission. CONTACT For Hollywood Media: John Buckley/Kim Holt Brainerd Communicators, Inc. 212-986-6667 buckley@braincomm.com Holt@braincomm.com HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
Pro forma * June 30, 2002 --------------------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,163,451 Receivables, net 1,616,324 Inventories, net 6,643,550 Prepaid expenses 1,448,495 Other receivables 656,770 Other current assets 184,993 Deferred advertising - CBS 950,119 --------------------- Total current assets 16,663,702 PROPERTY AND EQUIPMENT, net 4,470,986 INVESTMENTS IN AND ADVANCES TO EQUITY METHOD INVESTEES 938,685 NONCURRENT DEFERRED ADVERTISING - CBS - IDENTIFIABLE INTANGIBLE ASSETS, net 3,077,405 GOODWILL, net 40,775,736 OTHER ASSETS 1,263,303 --------------------- TOTAL ASSETS $ 67,189,817 ===================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 1,885,309 Accrued expenses and other 2,491,591 Notes payable 250,000 Loan from shareholder/officer - Accrued exit and retail closure costs 130,257 Deferred revenue 8,313,481 Current portion of capital lease obligations 414,180 --------------------- Total current liabilities 13,484,818 --------------------- CAPITAL LEASE OBLIGATIONS, less current portion 292,899 --------------------- DEFERRED REVENUE 604,433 --------------------- MINORITY INTEREST 28,278 --------------------- OTHER DEFERRED LIABILITY 3,145,211 --------------------- CONVERTIBLE DEBENTURES, NET 2,900,691 --------------------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Preferred Stock, $.01 par value, 539,127 shares authorized; none outstanding - Common stock, $.01 par value, 100,000,000 shares authorized; 19,970,364 and 27,971,409 shares issued and outstanding at June 30,2002 and December 31, 2001, respectively 199,704 Deferred compensation (1,034,074) Additional paid-in capital 276,624,062 Accumulated deficit (229,056,205) --------------------- Total shareholders' equity 46,733,487 --------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 67,189,817 =====================
-------------------------- * Pro forma. Assumes the Viacom Exchange Transaction occurred on January 1, 2002. The pro forma above takes into account the one-time non-cash accounting charge resulting from the Viacom Exchange Transaction. HOLLYWOOD MEDIA CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended June 30, ------------------------------------------------ 2002 2002 ---------------------- ----------------------- Pro forma* Actual NET REVENUES $ 16,522,685 $ 16,522,685 COST OF REVENUES 11,468,041 11,468,041 ---------------------- ----------------------- Gross margin 5,054,644 5,054,644 ---------------------- ----------------------- OPERATING EXPENSES: General and administrative 1,245,679 1,245,679 Selling and marketing 861,779 861,779 Salaries and benefits 3,489,967 3,489,967 Amortization of CBS advertising ** 238,125 5,025,145 Depreciation and amortization 942,681 942,681 ---------------------- ----------------------- Total operating expenses 6,778,231 11,565,251 ---------------------- ----------------------- Operating loss (1,723,587) (6,510,607) EQUITY IN EARNINGS - INVESTMENTS 14,575 14,575 OTHER: Interest expense (237,705) (237,705) Interest income 7,209 7,209 Other, net (18,446) (18,446) ---------------------- ----------------------- Loss before minority interest (1,957,954) (6,744,974) MINORITY INTEREST IN EARNINGS OF SUBSIDIARIES (189,411) (189,411) ---------------------- ----------------------- Net loss $ (2,147,365) $ (6,934,385) ====================== ======================= Basic and diluted loss per common share $ (0.11) $ (0.25) ====================== ======================= Weighted average common and common equivalent shares outstanding - basic and diluted 19,662,197 28,276,884 ====================== =======================
--------------------- * Pro forma. Assumes the Viacom Exchange Transaction occurred on January 1, 2002. ** The pro forma above assumes a straight line amortization of $1.27 million over a period of 16 months. The $1.27 million reflects the approximate book value of the $5 million in advertising retained in the Viacom Exchange Transaction.