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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 24, 2001
Date of Report (Date of earliest event reported)
YOUTHSTREAM MEDIA NETWORKS, INC
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(Exact Name of Registrant as Specified in Its Charter)
Commission file number: 0-27556
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DELAWARE 13-4082185
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(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation)
28 WEST 23RD STREET, NEW YORK, NY 10010
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(Address of Principal Executive Offices) (Zip code)
212-622-7300
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(Registrant Telephone Number, Including Area Code)
529 FIFTH AVE., NEW YORK, NY 10017
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(Former Name or Former Address, if changed since last report)
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Item 5. Other Events
The following may be distributed to shareholders at large:
January 2001
SM BERGER & COMPANY [LOGO]
3201 Enterprise Parkway
Beachwood, Ohio 44122
(216) 464-6400
YouthStream Media Networks, Inc.
(Nasdaq: NETS)
Stock Data
Recent Price (01/12/01)......................$1.50 Fiscal Year Ends..............................June
52-Week Price Range...................$30.50-$0.59 Fiscal 1999 EBITDA.........................($0.41)
Market Capitalization (01/12/01) ..........$43.8MM Fiscal 2000 EBITDA.........................($0.67)
Shares Outstanding..........................29.2MM Current Ratio.................................6.01
Public Float................................22.2MM
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ABOUT THE COMPANY
YouthStream Media Networks, Inc. (NETS), is an integrated media, marketing
services, promotions, and retail company that targets teenagers 13-17 years old
and young adults aged 18-24, including college and university students. The
company is organized into two principal operating units: media and retail.
YouthStream employs approximately 250 people and has facilities nationwide. In
addition to its New York City headquarters, it has offices in Seattle, Los
Angeles, Tempe, Chicago, and Washington, D.C., and 17 retail stores in college
towns and urban locations in close proximity to college campuses.
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COMPANY OVERVIEW
An integrated media, marketing services, promotions, and retail company
targeting teens and young adults, YouthStream offers solutions for advertisers
and promoters wishing to reach these valuable, growing and highly fragmented
segments of the population, that are developing brand loyalties that can last a
lifetime. YouthStream provides its advertising clients with a one-stop shop of
integrated media and marketing services, helping these companies efficiently
reach:
over 7,000 educational institutions with 6.4 million U.S. high school-aged
students; and
over 2,000 college campuses with more than 13 million students.
In addition, YouthStream operates a growing wall poster retail business,
targeting students via on-campus poster shows and through retail stores in
college and university communities.
After three years of impressive--65 percent--compound annual revenue growth,
today's YouthStream is newly streamlined and focused on profitability. The
company is now well positioned to report positive EBITDA next fiscal year. NETS
appears to offer investors exceptional opportunity because it: serves a sought
after demographic segment; has unmatched ability to reach its target demographic
efficiently; and has valuable relationships with colleges, high schools, and
advertisers.
MARKET OPPORTUNITY. Marketers currently spend $30 billion per year to reach the
youth market, which has $200 billion in annual buying power
STRONG MARKET POSITION. Tightly focused, niche media properties, having
extraordinary reach and potential for multiple revenue streams from integrated
media selling opportunities
EXPERIENCED MANAGEMENT. Highly experienced management team with broad-based,
complementary expertise
DIVERSE CUSTOMER BASE. Current client roster of nearly 600 marketers, with new
customers continuously being added
STRONG IN-HOUSE SALES ORGANIZATION. 100% of sales generated internally
FOCUSED ON THE FUTURE. Well-defined strategy for growth with clear path to
positive EBITDA in the first quarter of next fiscal year
AMPLE RESOURCES. $33 million in cash at end of FY 2001 second quarter, with
estimated $20 million on hand at cash-flow breakeven
THIS RESEARCH REPORT CONTAINS FORWARD-LOOKING INFORMATION ABOUT THE COMPANY'S
PROJECTED OPERATING RESULTS FOR THE FUTURE AND THE COMPANY'S PLANS FOR ACHIEVING
SUCH RESULTS. THE FORWARD-LOOKING STATEMENTS IN THIS REPORT ARE NECESSARILY
BASED UPON A NUMBER OF ESTIMATES AND ASSUMPTIONS THAT, WHILE CONSIDERED
REASONABLE, ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, AND
COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE
CONTROL OF THE COMPANY, AND UPON ASSUMPTIONS WITH RESPECT TO FUTURE BUSINESS
DECISIONS, WHICH ARE SUBJECT TO CHANGE. ACCORDINGLY, THERE CAN BE NO ASSURANCE
THAT THE COMPANY WILL ACHIEVE ITS PROJECTED OPERATING RESULTS, AND ACTUAL
RESULTS MAY VARY MATERIALLY. SM BERGER & COMPANY, INC. IS AN INDEPENDENT
INVESTOR RELATIONS CONSULTING FIRM AND NOT AN INVESTMENT ADVISER OR
BROKER/DEALER. THEREFORE, THIS REPORT IS NOT TO BE CONSTRUED AS AN OFFER TO SELL
OR SOLICITATION OF AN OFFER TO BUY ANY EQUITIES. YOUTHSTREAM MEDIA NETWORKS,
INC., IS A CLIENT OF SM BERGER & COMPANY. CONSIDERATION OF $1,750 WAS PAID FOR
THIS REPORT, WHICH IS WRITTEN FOR INFORMATIONAL PURPOSES ONLY AND SHOULD BE READ
IN CONJUNCTION WITH YOUTHSTREAM'S LATEST ANNUAL AND QUARTERLY REPORTS.
INFORMATION CONTAINED IN THIS REPORT IS BASED ON DATA OBTAINED FROM SOURCES
BELIEVED TO BE RELIABLE AND CORRECT. SM BERGER & COMPANY DOES NOT GUARANTEE THE
REPORT'S ACCURACY OR COMPLETENESS. ANY STATEMENTS NON-FACTUAL IN NATURE
CONSTITUTE ONLY CURRENT OPINIONS, WHICH ARE PRESENTED WITHOUT GUARANTEE AND ARE
SUBJECT TO CHANGE. SM BERGER & COMPANY AND ITS EMPLOYEES MAY MAKE PURCHASES OR
SALES OF SECURITIES FROM TIME TO TIME IN THE OPEN MARKET. AMERICAN PASSAGE,
HOTSTAMP, CAMPUS VOICE, NETWORK EVENT THEATER, AND BEYOND THE WALL ARE
REGISTERED TRADEMARKS OF YOUTHSTREAM MEDIA NETWORKS OR ITS SUBSIDIARIES. ALL
OTHER TRADEMARKS ARE THE PROPERTY OF THEIR RESPECTIVE OWNERS. (C)SM BERGER &
CO., INC., 2001.
YOUTHSTREAM...AT A GLANCE
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% of FY 2000 % of FY 2000
Revenue Principal Properties Media and Marketing Solutions Revenue
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MEDIA AMERICAN PASSAGE(R) ADRAX(R): College newspaper distribution [Pie Chart]
[Pie Chart] racks with advertising display spaces above
college newspaper bins.
GYMBOARDS(R): Gender-specific message and
information centers installed in boys' and
girls' high school and middle school locker
rooms, which are customized with each
school's colors and mascot or nickname.
Advertisements are turned monthly.
NEWSPAPER ADS: A leading wholesale college
newspaper advertising placement service.
POSTERING: A nationwide network that
displays posters and other advertising
messages on college campus bulletin boards.
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HOTSTAMP(R) A nationwide network of postcard racks, in a [Pie Chart]
variety of locations including 175 colleges
and universities. Venues include college
bookstores, student centers, and popular
college hang-outs
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EVENT MARKETING Comprehensive marketing service including [Pie Chart]
the development and execution of customized,
branded, nationwide events such as
promotions and sample give-aways anywhere
college students congregate including
concerts and sporting events.
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CAMPUS VOICE(R) The largest out-of-home media network in the [Pie Chart]
market--over 4,100 boards on more than 500
campuses--generates over 100 million
passers-by impressions per month. Ads are
changed monthly on boards located in a mix
of student centers, dorms, athletic
facilities, and off-campus apartment
buildings.
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NETWORK EVENT A nationwide digital network of campus movie [Pie Chart]
THEATER(R) theaters, featuring advance screenings of
major motion pictures. The network consists
of 47 satellite venues, as well as over 33
venues capable of carrying 35-millimeter
films.
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BEYOND THE WALL(R) Unique "Ads as Art" poster catalog, with an [Pie Chart]
annual circulation of approximately four
million features advertising images for sale
as posters. The catalog, the
largest-circulation print vehicle in the
college market, also promotes the
beyondthewall.com website.
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INTERNET Most notable is TEEN.COM, a leading [Pie Chart]
community for 13-17 year-olds featuring
relevant yet responsible content targeted to
teens. Recently cited by TEEN PEOPLE readers
poll and PC MAGAZINE editors poll as the
premier destination for teenagers.
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RETAIL TRENT GRAPHICS The largest national on-campus seller of
[Pie Chart] wall posters in the college and university
market; campus sales events represent the
single largest marketing event on these
college campuses.
A growing chain of retail stores near
college campuses.
YOUTHSTREAM...AT A GLANCE
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Competitive Advantages
Touchpoints Opportunities for Growth
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2,000 units on more than 290 college campuses Excellence in packaging; consistent record of compliance
Expanding distribution network
Posted in approximately 7,600 middle and high Only company having board in high school locker rooms
schools with a combined total enrollment in excess Refining visual presentation and increasing number of
of 6.4 million students units
Combined circulation of 7 million+; potential to Size and integrated approach; proprietary database of
reach 13 million+ students 1,700+ school newspapers. Focusing on recruiters/other
key industries
Over 2,000 college campuses with enrollment Operates internal network
totaling 10 million+ students Broadening venues; focusing on recruiters and traditional
out-of-home advertisers
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Approximately 250 distribution racks #1 market position on college campuses
Continuing to increase number of college racks
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Over 55 programs for 52 different clients Unparalled familiarity with campus market environment
in fiscal 2000 Cross-selling complementary media services for integrated
campaigns; broadening venues
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4,100+ units on over 500 college campuses, with Broadest reach in college market
a combined enrollment of approximately 4 million Increasing number of boards on existing campuses
students Expanding coverage to additional campuses
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80 college campuses, with combined enrollment Only national network of digital satellite movie theaters
of over 1.2 million students on college and university campuses
Increasing number of events per theater; increasing number
of sponsors per event and expanding the network
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Annually distributes approximately four million Only such catalog on college campuses
catalogs to over 900 campuses Stimulating sponsorship
Broadening product offerings
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57 million ads served monthly to 900,000 unique Tightly targeted, award-winning website
monthly visitors Rapidly growing audience--more than doubled since July 2000
4 million total visits per month Unique ability to sell integrated media to advertisers
Continuing to build share and audience
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Attracts more than five million students per Market leadership with 60-70 percent of on-campus business
year to campus sales events Cross-selling opportunities
Currently operates 17 retail stores located Knowledge of product trends, what's hot and what's not
in college towns and urban areas in close Broadening product offerings
proximity to college campuses Expanding number of retail stores
RECENT HIGHLIGHTS
REPORTS 118-PERCENT REVENUE INCREASE for fiscal 2000 versus the prior year, and
a three-year compound average growth rate in revenues of over 65%
INSTALLS NEW MANAGEMENT TEAM as part of a restructuring initiative in which
James "P.T." Lucchesi is promoted from YouthStream executive vice president to
president and chief executive officer, and former MacAndrews & Forbes executive
Irwin Engelman is named executive vice president and chief financial officer
SHARPENS FOCUS ON PROFITABILITY entering fiscal 2001; cost rationalization and
execution are paramount.
SLASHES BURN RATE, enhancing EBITDA results. Nearly halves the company's
fourth-quarter 2000 loss of $11 million in fiscal 2001's first quarter
RECEIVES COMPREHENSIVE ORDER FROM MOTOROLA for integrated services encompassing
multiple media and marketing solutions
SIGNS FIRST LONG-TERM, MULTIFILM DEAL WITH NEW LINE CINEMA to premiere future
releases
TEEN.COM RECEIVES "BEST ON WEB" AWARDS
THE YOUTH MARKET
The youth market represents a fertile opportunity for youth-oriented marketers
in the entertainment, tele-communications, computer and software, automobile,
health and beauty, fashion, athletic equipment, and financial industries, to
name a few. These marketers are keenly aware that young people are forming the
preferences and attributes on which lifelong buying habits and brand
relationships are built.
YouthStream's core focus is on 13-24 year-olds, which include the principal
demographic groups of teen and young adults segregated by U.S. census data as
follows:
teen 14-17 year-olds
young adult 18-24 year-olds
Currently representing over 15 percent of the nation's total population, or 42.3
million individuals,(1) these groups are projected to grow more than 18 percent
faster than the general population through 2010.(2)
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(1) U.S. Census Bureau estimate (01/01).
(2) U.S. Census Bureau Resident Population Projections
(Middle Series).
HISTORY
YouthStream was founded in 1995 as Network Event Theater by Chairman Harlan
Peltz. The company's original business was the establishment of a nationwide
network of college campus theaters previewing first-run movies, with revenue
generation from two primary sources: the movie studios and third-party
advertising sponsorships.
After its IPO in 1996, the company focused on expanding its media-related
properties. YouthStream completed a series of strategic acquisitions, all of
which were in line with its strategy to surrounding the youth market. The
company demonstrated considerable success in the identification, examination,
acquisition, and integration of these properties. To round out its strong and
growing traditional properties and take advantage of the dramatic on-line
advertising growth and strong capital market for online investment, YouthStream
expanded on this core competency in 1999 with the launch of its Internet
strategy.
By fiscal 2000 year-end YouthStream had built a fully integrated media,
marketing services, and retail organization with Internet exposure complementing
and broadening its full-line selling opportunities. In this short period of
intense foundation-building, YouthStream successfully generated rapid top-line
growth a strategy combining both acquisitions and internal growth.
FIVE-YEAR GROWTH TRENDS
CONSOLIDATED REVENUES, $MM
3-YEAR CAGR OVER 65%
1996..........................................$0.1
1997..........................................$6.4
1998.........................................$11.2
1999.........................................$13.3
2000.........................................$29.0
Profitability, however, was another story as the substantial investments in the
acquisition and development of its Internet properties severely restrained the
company's earnings potential. Compounding the resource drain was the
unexpectedly depressed online advertising market. These factors in tandem with
the market's association of YouthStream with pure-play dot-coms, most of which
are cash starved, severely impacted the company's stock price.
Entering the current fiscal year, the company countered these effects with
cost-cutting measures and overhead rationalization. These efforts greatly
improve EBITDA figures, nearly halving the company's fourth-quarter 2000 loss of
$11 million by the end of fiscal 2001's first quarter.
Additionally, the company endeavored to more closely align its strategic
direction with the evolving external business environment. Modest top-line
growth with continued rationalization of its cost structure and execution of its
strategic plan are now the focus for this fiscal year as YouthStream strives to
turn the corner to achieving positive EBITDA in the quarter beginning July 1,
2001. Management anticipates the resumption of aggressive, profitable top-line
growth, both internally and externally, beginning in fiscal 2002.
Management believes that, with marketers continually trying to be more efficient
with their own resources and as its target demographic grows, accurately focused
solution like those offer by YouthStream can drive very attractive growth rates
for the foreseeable future.
RETURN TO CORE COMPETENCIES
With the dramatic shift in the market environment for dot-com companies earlier
this year, NETS management reacted quickly with a firm resolve to reach
near-term, cash-flow-positive status. By the end of this fiscal year, the
company intends to have in its portfolio only those businesses with meaningful
growth potential and solid EBITDA expectations consistent with the company's
core competencies. Assessment of all business units for strategic fit and
profitability potential has already resulted in swift and decisive action.
Focus on Profitability
In building its online presence, YouthStream had invested substantial resources
in the acquisition and integration of its online properties and the development
of an application service provider (ASP) technology platform.
As part of this strategy, the company acquired sixdegrees, inc., publishers of
sixdegrees.com, in January 2000. An online networking community geared toward
young adults and college students, the website provided a proprietary
functionality enable its members to share information and create special
interest communities. However, despite high expectations for technologies
inherent within sixdegrees, the site did not attract a sizeable audience. This,
in tandem with the deteriorating online advertising and investment environment,
led the company's Board to announce its decision to discontinue the operations
of the sixdegrees subsidiary effective December 31, 2000.
The most promising and cost-effective technologies acquired through the
company's online acquisitions, including CommonPlaces LLC, College Web and
Invino, were repositioned as an ASP business and renamed Sodalis. Sodalis is a
branded web platform of integrated applications that support dynamic publishing,
communication, and contact personalization. It leverages the best of
YouthStream's suite of proprietary tools, developed internally and through
acquisition, as well as its technological expertise.
Having determined in early December that Sodalis in not aligned with its
long-term vision and strategy and is a very significant contributor to its
current and projected cash-consumption rate, the Board decided to exit the
business and seek to sell the Company's interest to venture capitalists or
others willing to invest in Sodalis' development.
Announces Writeoff
As a result of these two action, YouthStream announced plans to take a one-time
charge in the second quarter of fiscal 2001, ending December 31, 2000, estimated
to be in the range of $150-165 million. The charge is composed of the
unamortized portion of the goodwill of these businesses as well as small amounts
of related fixed assets and accrued expenses. The actual amount of the charge
will be determined when the company establishes a valuation for the Sodalis
business prior to the reporting of its second-quarter financial results.
With these actions, YouthStream's operations now more accurately reflect its
core business focus, greatly enhancing the company's ability to achieve
near-term profitability.
GROWTH OPPORTUNITIES
The company intends to nurture both its offline and online properties to
generate modest top-line growth until YouthStream is financially
self-sustaining, with more aggressive expansion moving forward. Among its
businesses demonstrating exciting and sustainable profitability potential are
the following:
NETWORK EVENT THEATER
Network Event Theater broadcasts both major motion pictures and other events
through a satellite cinema network of 47 college and university venues with an
average seating capacity of 450 students per theater, plus an additional
net-work of 33 college venues capable of showing 35-millimeter films. The
typical theater installation includes a satellite dish and satellite signal
receiving equipment, a multi-channel audio system, and a state-of-the art
DLP(TM) digital projection system with commercial-quality movie theater-sized
screen.
Revenue, generated from movie studio and advertising sponsorship fees, increased
dramatically last year. The company anticipates continued strong top-line growth
in the current fiscal year and attractive sales growth for this unit in fiscal
2002 and beyond.
The business offers a win-win for all constituencies. Movie studios benefit from
substantial campus promotional exposure and word-of mouth advertising among
students, who historically make up over 20 percent of the movie-going audience.
Advertisers benefit from YouthStream's exception reach and the goodwill
associated with sponsorship. Host colleges benefit from free use of the
company's projection equipment for non-commercial purposes, and the students, of
course, benefit from the ability to view the pre-screenings at no charge.
YouthStream's media packaging capabilities were demonstrated recently with its
execution of the young adult portion of the Charlie's Angels(TM) media blitz, in
which the company successfully created what has been termed "a massive young
adult street team" for the film. By coordinating the campus pre-screening with
event marketing and sampling, campus newspaper advertising placement, postering,
and online coverage, the company exposed an estimated six million people to the
film, gratifying movie sponsors and creating multiple revenue opportunities for
YouthStream.
Recently, New Line Cinema signed a deal to screen up to 10 films by the end of
calendar 2001 through Network Event Theater. With increased competition among
movie studios for screenings, more and better-quality movies, and advance studio
commitments enabling longer lead times to match films with suitable sponsors,
YouthStream projects rapid revenue growth for the foreseeable future.
EVENT MARKETING
Event marketing and promotions is a nearly $12 billion opportunity, and
YouthStream is poised to continue its growth in this business. Programs range
from hand-to-hand sample distribution to huge national touring events. Its
expertise in executing youth-focused promotions, particularly in a campus
environment, combined with the unique ability to package and provide advertising
and marketing solutions to clients, provide a competitive edge. The company
executed programs for over 50 clients in FY2000, and anticipates working with
over 90 clients in FY 2001 with comparable growth in sales. The company
anticipates substantial growth to continue in FY 2002 as it expands its reach
into proprietary events.
TRENT GRAPHICS
Trent Graphics is the largest operator of on-campus poster sales in the country,
currently selling posters on close to 700 colleges and universities across the
U.S., with about two-thirds of the market. With these poster shows typically
representing the singly largest on-campus marketing event, significant potential
exists to leverage event marketing services in conjunction with the shows.
In addition, the company operates a growing national chain of retail poster
stores in college towns and major urban areas in close proximity to college
campuses. As of first-quarter 2001, the company had opened 17 retail stores
under the Beyond the Wall name, the newest being in New York City's Greenwich
Village. Other locations include South Street in Philadelphia; Georgetown in
Washington, D.C.; Chicago, Illinois; Ann Arbor, Michigan; and Boulder, Colorado.
The comparable same-store sales growth rate for 2001's opening quarter was an
impressive 20 percent.
The company plans to broaden its product offerings and progressively grow the
number of stores, adding approximately one store per month through fiscal 2002.
Additionally, the company is exploring alternative ways to take advantage of
store traffic as another means to leverage its media and marketing service
business. Finally, the company plans to expand its e-commerce beyondthewall.com
poster website via promotions at campus sales events, as well as in its catalog
and stores.
TEEN.COM
Acquired through the purchase of W3T.com, Inc., in July 2000, the Tenn.com
website is a vibrant brand in the teen market, renowned for its family content
and viewed as a very promising asset. It offers an excellent complement to
YouthStream's offline teen-oriented properties and thus is uniquely positioned
to take advantage of YouthStream's focused marketing efforts. Having contributed
immediately, albeit modestly, to the company's revenue stream and more than
doubling its audience since integration, Tenn.com is expected to further
differentiate itself from competitors moving forward. Print media seems to
agree, name the site "Best on the Web" by PC Magazine and "Best Teen Site on the
Web" by Teen People in November 2000. The site is operated by a staff of fewer
than 20 and can be run with minimal overhead.
CHINA
YouthStream is currently evaluating opportunities to establish a present on
university campuses in the People's Republic of China similar to its presence in
the U.S. The measured pace at which the initiative is moving is predicated upon
China's volatile regulatory and operating environment. The company continues to
monitor these developments and adjust its strategic plan to the changing
conditions. YouthStream expects to work with strategic partners who offer a mix
of capital, access to markets, and know-how to leverage its strength and
competencies.
OUTLOOK
Today, YouthStream operates in 11 lines of business and employs approximately
250 people in eight nationwide offices. Newly streamlined and with a clearly
defined path to profitability, the company has substantial cash reserves to
pursue its business plan and goals through EBITDA profitability, which is
anticipated in the first quarter of fiscal 2002. With strong and growing offline
properties, and highly promising online property
Teen.com, the company is positioned to prosper despite the challenges of the
past year.
FINANCIAL REVIEW
In fiscal 2000 2000 (June), YouthStream successfully integrated the operations
and sales forces of its offline media and marketing services businesses,
enhancing the company's appeal to marketers; began to realize positive revenue
contributions from its online properties; and significantly broadened its reach
in the youth market. Consolidated revenues surges 118 percent, reaching record
levels, while operating margins improved. The company reported consolidated
revenues for the full year of $29.0 million versus 1999's $13.3 million. Offline
revenues rose 113 percent to $28.3 million during the period, and online
revenues were $761,000.
FY 2000 EBITDA loss was $14.2 million compared with 1999's $5.2 million. Offline
and online EBITDA losses were $4.4 million and $9.8 million, respectively, with
the latter business being affected primarily by significant investments related
to the development of the company's software platform. In the fiscal 2001 first
quarter, the company eliminated the majority of the expenses related to the
EBITDA loss for fiscal 2000, and expenses are expected to be contained going
forward.
FISCAL 2001
YouthStream began to realize the benefit of cost-reduction initiatives
implemented toward the end of its fiscal 2001 first quarter, as capital
expenditures declined more than 75 percent from the comparable prior-year period
and cash consumption dropped 46 percent from the preceding quarter.
In the fiscal year's opening three months, consolidated revenues reached a
record $10.8 million, up 4.1 percent from $10.4 million in 2000's comparable
quarter. Revenue contributions from offline and online were $10.3 million and
$0.5 million, respectively.
The company's first-quarter 2001 EBITDA loss of $6.9 million (offline, $0.7
million; online, $6.2 million) was a substantial improvement from fourth-quarter
2000's $11.4 million, but down from a positive $1.2 million for first-quarter
2000.
YouthStream expects ongoing benefits from it streamlining efforts, with current
operations consuming cash at an average rate of less than $4 million per quarter
until positive EBITDA is achieved in the first quarter of fiscal 2002, starting
July 2001.
Also in the second quarter, the company announced its intention to discontinue
the operation of sixdegrees and exit its ASP business, resulting in the
previously discussed writeoff. This action is expected to have a mean-with the
fiscal 2001 third quarter, most significantly the elimination of approximately
$18.5 million of goodwill amortization per quarter going forward. Additionally,
certain significant operating expenses associated with these businesses will be
expunged.
SUMMARY
Fiscal 2001 is a transition year for YouthStream. Fiscal 2002 is expected to be
profitable and should illustrate the benefits of more aggressively marketing its
focused portfolio of media and marketing services and renewed investments in
continuing operations.
Unlike many other companies that pursued costly Internet strategies and
exhausted their resources, resulting in their ultimate demise, YouthStream has
all of the critical elements in place to compete and win in the future.
Operating in an industry with exceptional dynamics, YouthStream has ample
capital to reach financial self-sufficiency and an experienced management team
dedicated to executing its strategic business plan With its substantial presence
in the critical college and university markets and the faster-than-average
growth rate expectations for the company's target demographic, YouthStream Media
Networks provides investors with an excellent means to gain exposure to this
exciting sector.
An overview of YouthStream's executive management team is present on the
following page.
MANAGEMENT TEAM
YouthStream has assembled a dynamic team of highly experienced executives with
broad-based, complementary expertise to execute its strategic plan.
HARLAN D. PELTZ, FOUNDER AND CHAIRMAN
Peltz has over 10 years' experience in the media business. From 1993 to 1995, he
was president of Universal Access Network, the predecessor of Network Event
Theaters (NET). He was instrumental in the startup and development of NET (now
YouthStream Media Networks), serving as chairman and, until June 2000, chief
executive officer, at which time he stepped down to devote more time to
directing corporate strategy. Previously, he served as an associate at Veronis,
Suhler & Associates, Inc., an investment banking firm specializing in the media
industry; and with Home Box Office in the area of international business
development. Peltz holds an MBA from the Sterns School of Business at New York
University, and holds a BA from Haverford College.
JAMES "P.T." LUCCHESI, PRESIDENT AND CEO
Lucchesi joined YouthStream as executive vice president in January 2000 and was
promoted to his current position in June of the same year. Prior to that, he
spent three years as Chief Financial Officer of sixdegrees where he was
instrumental in guiding the service from inception until its sale to
YouthStream. Lucchesi has more than 20 years of executive management experience,
including service as CEO of two early-stage consumer packaged goods firms, and
as COO and CFO of Fuel Tech, Inc., a pollution-control technology firm. He holds
a BA from Georgetown University, and an MBA from Harvard University.
IRWIN ENGELMAN, CHIEF FINANCIAL OFFICER
Engelman's comprehensive financial and general management experience spans over
34 years and includes considerable expertise in the areas of mergers and
acquisitions as well as the management of technology advances and all aspects of
financial organizations from control, treasury, tax and audit to information
systems and investor relations for global companies. He joined YouthStream in
November 2000 from MacAndrews & Forbes Holdings, Inc., where he was most
recently vice chairman and CAO of Revlon, Inc., after acting as executive vice
president and CFO of MacAndrews & Forbes for more than six years. Previously, he
held senior executive-level positions with GAF Corporation, Citytrust
Bancorporation, The Blackstone Group, General Foods Corporation, The Singer
Company, and Xerox Corporation. Engelman earn his Juris Doctor from Brooklyn Law
School and his Bachelor of Business Administration from Baruch College. In 2000,
Baruch College awarded him a Doctor of Letters & Laws (Hon.).
DENNIS G. ROCHE, CHIEF OPERATING OFFICER
Roche has over seven years of experience in media businesses targeting the youth
market. In his current assignment, Roche has responsibilities for YouthStream's
sales, operations, and marketing functions. Since joining the company in 1997
upon its acquisition of Beyond the Wall, a company Roche co-founded in 1993, he
has been intimately involved in the intergration and development of
YouthStream's acquired media properties. Prior to starting Beyond the Wall, he
worked in brand management, Beauty Care, for Procter & Gamble for two years.
Previously, he was with Morgan Stanley & Company in its investment banking
division. Roche received his undergraduate degree from Georgetown University and
received an MBA from the J.L. Kellogg Graduate School of Management at
Northwestern.
The media expertise of YouthStream's senior-level executives is enhanced by the
financial management depth of the company's new CFO, rounding out the management
team and providing a disciplined structure and focus as the company strives to
become financially self-sustaining in fiscal 2002.
SM BERGER & COMPANY
3201 Enterprise Parkway
Beachwood, Ohio 44122
(216) 464-6400
Item 7. Financial Statements and Exhibits
None
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
January 24, 2001 Youthstream Media Networks, Inc.
By: /S/ JAMES G. LUCCHESI
-----------------------------
James G. Lucchesi
Chief Executive Officer