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Filed by: Towne Services, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: Towne Services, Inc.
Commission File No. 000-24695
FOR IMMEDIATE RELEASE
CONTACT: G. LYNN BOGGS
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
(678) 475-5200
TOWNE SERVICES, INC. ANNOUNCES FIRST QUARTER 2001 RESULTS
COMPANY ACHIEVES STRONG YEAR-OVER-YEAR IMPROVEMENT
SUWANEE, Ga. (May 15, 2001) -- Towne Services, Inc. (Nasdaq/NM: TWNE) today
reported financial and operating results for the first quarter ended March 31,
2001.
Reflecting an almost 90% improvement, the Company reported an operating
loss (earnings from operations before income taxes, depreciation and
amortization) of $252,000, or $(0.05) per share, for the first quarter ended
March 31, 2001, compared with a loss of $2.2 million, or $(0.41) per share, for
the fourth quarter ended December 31, 2000, and compared with a loss of $2.3
million, or $(0.43) per share, for the first quarter ended March 31, 2000.
Net revenues for the first quarter ended March 31, 2001 totaled $5.7
million, a 4% increase over fourth quarter 2000 revenues of $5.5 million, and
compared with $6.7 million for the first quarter ended March 31, 2000. The
Company also reported a balance of over $10.5 million of cash and short-term
investments as of March 31, 2001.
Showing a 57% year-over-year improvement, the Company reported a net
loss of $1.5 million, or $(0.29) per share, for the first quarter ended March
31, 2001, versus a net loss of $3.4 million, or $(0.62) per share, for the same
period last year.
All per share figures have been adjusted to reflect the one-for-five
reverse split of the Company's common stock, which was effected December 20,
2000.
"We are very pleased with the 90% year-over-year improvement in
earnings from operations," commented Lynn Boggs, chairman of the board and chief
executive officer of Towne Services, Inc. "Management's continued focus on
improving operating efficiencies, and our careful attention to our expenses,
yielded over a 50% improvement to our bottom line. With our previously announced
focus on revenue growth beginning in the fourth quarter of 2000, we are very
excited
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TWNE Announces First Quarter Results
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May 15, 2001
about the improved revenue numbers we achieved quarter-to-quarter, particularly
the fact that Accounts Receivable revenue grew 5.3% over the last quarter of
2000.
"We are delighted to see our year-long effort to bring Towne to
profitability near completion. As we approach our anticipated merger with
Private Business, the value of our improvement in cash flow is clearly
significant."
As previously announced on April 16, 2001, the Company signed a
definitive agreement to merge Towne Services with Private Business, Inc.
(Nasdaq: PBIZ). The merger is subject to customary closing conditions, including
approval of the shareholders of both companies at their annual meetings now
scheduled for June 18. The agreement is structured as a tax-free exchange in
which Towne's shareholders will receive shares of common stock of Private
Business for their shares of Towne's common stock. The merger is expected to
close in the first half of 2001.
"We are very pleased to be entering into this partnership with Private
Business," added Boggs. "The potential for greater operating efficiencies and
economies of scale will result in a much stronger organization with enhanced
capabilities for our customers. In addition, we believe the combination of our
proven technology with the strength of the Private Business's sales force will
allow us to leverage our unique core strengths and expand our market presence.
We look forward to the many opportunities this proposed merger offers, and
clearly believe this strategic combination will have a positive impact on
shareholder value."
Towne Services, Inc., based in the metropolitan Atlanta area, is a
leading provider of services and products that process sales and payment
information and related financing transactions for small and mid-sized retail
and commercial businesses and banks in the United States. The Company delivers
these services and products on-line by linking its business and bank customers
to its processing systems using the Internet and telecommunications lines.
Towne's systems also act as a hub, or electronic gateway, through which
customers can access a variety of e-commerce business and management tools
provided by Towne and its strategic alliances.
THIS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING THOSE RELATING TO TOWNE'S OPERATIONS, REVENUE, ECONOMIC
PERFORMANCE, BUSINESS PROSPECTS, MANAGEMENT AND FINANCIAL CONDITION. ACTUAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE FOLLOWING FACTORS, AMONG OTHERS:
WHETHER TOWNE CAN GROW ITS CUSTOMER BASE AS PLANNED; COMPETITIVE MARKET
PRESSURES IN THE FINANCIAL TECHNOLOGY SECTOR; THE POSSIBLE NEGATIVE EFFECTS OF
LAWSUITS FILED AGAINST TOWNE; WHETHER TOWNE WILL CONTINUE TO SATISFY STOCK
MARKET LISTING STANDARDS; MARKET ACCEPTANCE OF NEW PRODUCTS AND SERVICES; AND
OTHER FACTORS DISCUSSED UNDER "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS" IN TOWNE'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. IN
ADDITION, THERE ARE POTENTIAL RISKS AND UNCERTAINTIES RELATING TO TOWNE'S
PROPOSED MERGER WITH PRIVATE BUSINESS, INCLUDING, BUT NOT LIMITED TO, THE
ABILITY OF THE PARTIES TO OBTAIN THE REQUIRED SHAREHOLDER APPROVAL AND CLOSE THE
MERGER AS ANTICIPATED.
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TWNE Announces First Quarter Results
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May 15, 2001
WE URGE INVESTORS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE, BECAUSE THEY
CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. INVESTORS WILL BE ABLE TO OBTAIN
THESE DOCUMENTS FREE OF CHARGE AT THE SEC'S WEBSITE, WWW.SEC.GOV. PLEASE READ
THE PROXY STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION CONCERNING THE
MERGER.
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TWNE Announces First Quarter Results
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May 15, 2001
TOWNE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
MARCH 31,
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2001 2000
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(unaudited)
REVENUES $ 5,671,000 $ 6,700,000
COSTS AND EXPENSES:
Costs of processing, servicing and support 1,923,000 2,063,000
Sales and marketing 3,134,000 4,990,000
General and administrative 988,000 2,378,000
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Total costs and expenses 6,045,000 9,431,000
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EBITDA (374,000) (2,731,000)
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Interest Income (122,000) (389,000)
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Earnings before Taxes, Depreciation & Amortization (252,000) (2,342,000)
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Provision for Income tax expense 24,000 --
Depreciation & Amortization 1,193,000 1,057,000
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Net Profit (Loss) Attributable to Common Shareholders $(1,469,000) $(3,399,000)
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Net Profit (Loss) Attributable to Common Shareholders
per Common Share:
Basic $ (0.29) $ (0.62)
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Diluted $ (0.29) $ (0.62)
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Weighted Average Common Shares Outstanding 5,053,228 5,444,475
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END