Global Traffic Network, Inc. Reports Fiscal 2011 Annual and Fourth Quarter Operating Results

Quarterly Revenue Increases 44% to $33.5 million

Adjusted Operating Income Up 134%

NEW YORK--()--Global Traffic Network, Inc. (Nasdaq: GNET), a leading provider of custom traffic and news reports to radio and television stations outside the United States, today announced its results for the fiscal fourth quarter and year ended June 30, 2011.

The Company’s revenue for the quarter ended June 30, 2011 was $33.5 million, an increase of 44% from $23.2 million reported in the fourth quarter of fiscal 2010. Revenue from the Company’s Australian, Canadian and United Kingdom operations were up 41%, 50% and 50%, respectively, from the fiscal fourth quarter of 2010. When measured in local currencies, Australian, Canadian and United Kingdom revenues increased 17%, 43% and 38%, respectively compared to the prior year quarter.

Adjusted Operating Income increased from $2.4 million for the fiscal fourth quarter ended June 30, 2010 to $5.7 million for the quarter ended June 30, 2011. The Company defines Adjusted Operating Income (Loss) as net operating income (loss) plus depreciation and amortization expense. Adjusted Operating Income includes the impact of non-cash compensation from the granting of stock options and restricted stock which was $0.4 million for the current quarter compared to $0.3 million for the previous year quarter.

Net income for the fourth quarter of fiscal 2011 was $4.0 million compared to net income of $0.4 million for the same quarter a year ago. Included in the United Kingdom results were $0.7 million of amortization expense related to the intangibles of the Company’s acquisition of Unique Broadcasting in March 2009.

The Company’s revenue for the year ended June 30, 2011 was $117.4 million, an increase of 26% from $93.3 million reported for fiscal 2010. Revenue from the Company’s Australian, Canadian and United Kingdom operations were up 23%, 58% and 19%, respectively, from the year ended June 30, 2010. When measured in local currencies, Australian, Canadian and United Kingdom revenues increased 10%, 51% and 18%, respectively compared to the prior year.

Adjusted Operating Income more than doubled to $18.3 million for the year ended June 30, 2011 compared to $9.0 million for the year ended June 30, 2010. Adjusted Operating Income includes the impact of non-cash compensation from the granting of stock options and restricted stock which was $1.4 million for the current year compared to $1.2 million last year.

Net income for fiscal 2011 was $8.9 million compared to net income of $0.6 million last year. In addition to the continued (and increased) profitability of the Australian operations, the Company’s United Kingdom operations attained profitability while the Company’s Canadian operations significantly reduced their net loss compared to the year ended June 30, 2010. Included in the United Kingdom current results were $2.6 million of amortization expense related to the intangibles of the Company’s acquisition of Unique Broadcasting in March 2009.

Commenting on the results, William L. Yde III, Chairman, Chief Executive Officer and President of Global Traffic Network, said, “We are pleased with the increase in Adjusted Operating Income for both this quarter as well as the whole year. Our Adjusted Operating Income more than doubled for the quarter while our annual Adjusted Operating Income has grown over four fold in the past two years, from $3.8 million for fiscal 2009 to $18.3 million for the latest fiscal year.”

Mr. Yde continued, “Global Alert Network, our personalized alerting product for mobile phones, has added a significant number of subscribers since our launch in February 2011. We now have in excess of 300 thousand users and these subscribers received over 1.5 million traffic and weather alert messages in the month of August alone. In addition, we have brought the I-Phone on line in August and expect to begin to add a significant number of subscribers for this device shortly. We are continuing to actively market the commercial availabilities to advertisers and are optimistic about the revenue potential of the service.”

Mr. Yde concluded, “Our Company continues to generate strong free cash flow and maintain a solid balance sheet which has no debt and significant cash balances. We are well positioned in the advertising market place, with no significant direct competitors, an extremely effective product and a seasoned, experienced sales staff.”

Fiscal First Quarter 2012 Outlook

July 2011 Preliminary Revenue

The Company, based on its internal financial reports and the exchange rates for July 2011, expects revenue for July to be approximately $10.0 million, compared to approximately $7.9 million for July 2010 based on the July 2010 exchange rates below. The Company’s quarterly income statements are translated based on the average exchange rate for the quarter, and therefore a change in the exchange rates from July 2011 to August and September 2011 could change the projected amount of the July 2011 revenue in United States dollars as reported in the Company’s quarterly financial statements.

               
Currency Exchange Rates for Revenue Information
Month
Ending July 31,
2011
Month
Ending July 31,
2010
Difference
Australia 1.0782 0.8780 +22.8 %
Canada 1.0462 0.9585 +9.1 %
United Kingdom 1.6154 1.5302 +5.6 %

August 2011 Preliminary Revenue

The Company, based on internal pacing reports and the exchange rates for August 2011, expects revenue for August to be in the range of $11.2 million to $11.6 million, compared to approximately $7.6 million for August 2010 based on the August 2010 exchange rates below. The Company’s quarterly income statements are translated based on the average exchange rate for the quarter, and therefore a difference in the exchange rates from August 2011 compared to July and September 2011 could change the projected amount of the August 2011 revenue in United States dollars as reported in the Company’s quarterly financial statements.

               
Currency Exchange Rates for Revenue Information
Month
Ending August 31,
2011
Month
Ending August 31,
2010
Difference
Australia 1.0506 0.9003 +16.7 %
Canada 1.0190 0.9608 +6.1 %
United Kingdom 1.6359 1.5652 +4.5 %

Conference Call

Global Traffic Network, Inc. will host a conference call at 8:30 a.m. ET on Tuesday, September 13, 2011, to discuss its fiscal fourth quarter and fiscal year 2011 results. To listen to the call, dial (877) 303-9131 (domestic), or (408) 337-0141 (international), and enter the pass code 98700383. The call will also be available live on the Internet at www.globaltrafficnetwork.com. A replay of the call will be available from 11:30 a.m. September 13, 2011 through September 20, 2011. To access the replay, please call (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter the following code: 98700383.

About Global Traffic Network

Global Traffic Network, Inc. (Nasdaq: GNET) is a leading provider of custom traffic and news reports to radio and television stations outside the U.S. The Company operates the largest traffic and news network in Australia, operates traffic networks in eight Canadian markets and the largest national radio traffic network across the United Kingdom. In exchange for providing custom traffic and news reports, television and radio stations provide Global Traffic Network with commercial airtime inventory that the Company sells to advertisers. As a result, radio and television stations incur no out-of-pocket costs when contracting to use Global Traffic Network’s services. For more information, visit the Company’s website at www.globaltrafficnetwork.com.

This press release contains statements that constitute forward-looking statements. These statements reflect the Company’s current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading “Risk Factors” and elsewhere in the Company’s annual report 10-K, which may cause the actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated or implied by these forward-looking statements. These statements can be recognized by the use of words such as “anticipate,” “may,” “will,” “intend,” “ should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “ predict,” “potential,” “plan,” “is designed to,” “target” or the negative of these terms, and similar expressions. The Company does not undertake to revise or update any forward-looking statements to reflect future events or circumstances.

 
Currency Exchange Rates for Income Statement Information
        Three Months Ending

June 30, 2011

      Three Months Ending

June 30, 2010

     

Difference

                         
Australia       1.0629       0.8827       +20.4%
Canada       1.0336       0.9719       + 6.3%
United Kingdom       1.6315       1.4917       + 9.4%
                 
 
Estimated Inventory, Rate, Sell-Out information in local currency (Radio only)
Three months ended June 30, 2011
                         
        Australia       Canada       United Kingdom
                         
Average weekly spots       12,300       9,400       20,300
Average rate per spot sold       $129       $50       £19
Percentage of spots sold       88%       65%       97%
                 

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

Global Traffic Network, Inc. defines Adjusted Operating Income (Loss) as net operating income (loss) adjusted to exclude depreciation and amortization expense. The Company uses Adjusted Operating Income (Loss), among other things, to evaluate its operating performance. The Company believes the presentation of this measure is relevant and useful for investors because it helps improve their ability to understand the Company’s operating performance and makes it easier to compare the Company’s results with other companies that have different financing and capital structures or tax rates. In addition, the Company believes this measure is among the measures used by investors, analysts and peers in the media industry for purposes of evaluation and comparing its operating performance to other companies.

Adjusted Operating Income (Loss) is not a measure of performance calculated in accordance with United States generally accepted accounting principles (“GAAP”) and it should not be considered in isolation of, or as a substitute for, net operating income (loss) as an indicator of operating performance. Because Adjusted Operating Income (Loss) excludes certain financial information compared with net operating income (loss), which is the most directly comparable GAAP financial measure, users of this financial information should consider the types of events and transactions which are excluded. In addition, Adjusted Operating Income (Loss) may not be comparable to measures of adjusted operating income, earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA, operating cash flow or similarly titled measures employed by other companies. Adjusted Operating Income (Loss) is not necessarily a measure of the Company’s ability to fund its cash needs.

The following presents the reconciliation of net operating income to Adjusted Operating Income for the three and twelve month periods ended June 30, 2011 and 2010.

             

Three Months

Ended

Twelve Months

Ended

June 30,

2011

   

June 30,

2010

June 30,

2011

   

June 30,

2010

(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(In thousands) (In thousands) (In thousands) (In thousands)
 
Net operating income $ 4,137 $ 1,019 $ 12,319 $ 3,705
Add back:
Depreciation and amortization expense   1,553   1,416   5,975   5,326
Adjusted Operating Income $ 5,690 $ 2,435 $ 18,294 $ 9,031
 
 

Global Traffic Network, Inc.

Income Statement Detail

(Unaudited)

(In thousands)

Three Months Ended June 30,

                                         
          2011       2011       2011       2011       2011       2011  
          Australia     Canada     UK     Alert*     Corporate     Total
Revenues         $ 20,015       $ 4,523       $ 8,960       $ 1       $ -       $ 33,499  
Operating expenses                                        
Traffic           6,500         2,923         6,339         417         -         16,179  
News           3,509         -         496         -         -         4,005  
TV           313         -         -         -         -         313  
Selling, G&A           3,492         1,181         1,207         34         -         5,914  
Corporate overhead           470         -         90         -         469         1,029  
Non-cash compensation           -         -         -         -         369         369  
Depreciation/amortization           271         490         792         -         -         1,553  
                                         
Net operating income (loss)           5,460         (71 )       36         (450 )       (838 )       4,137  
                                         
Interest expense           -         -         -         -         -         -  
Other (income)           (406 )       -         (4 )       -         (1 )       (411 )
Other expense           -         12         -         -         87         99  
                                         
Net income (loss) before taxes           5,866         (83 )       40         (450 )       (924 )       4,449  
Income tax expense (benefit)           1,764         -         (209 )       -         (1,153 )       402  
Net income (loss)         $ 4,102       $ (83 )     $ 249       $ (450 )     $ 229       $ 4,047  
                           
            2010         2010         2010         2010         2010         2010  
          Australia     Canada     UK     Alert*     Corporate     Total
Revenues         $ 14,224       $ 2,977       $ 6,040       $ -       $ -       $ 23,241  
Operating expenses                                        
Traffic           5,208         2,561         4,763         140         -         12,672  
News           2,247         -         431         -         -         2,678  
TV           231         -         -         -         -         231  
Selling, G&A           2,581         819         668         33         -         4,101  
Corporate overhead           392         -         -         -         436         828  
Non-cash compensation           -         -         -         -         296         296  
Depreciation/amortization           232         483         675         26         -         1,416  
                                         
Net operating income (loss)           3,333         (886 )       (497 )       (199 )       (732 )       1,019  
                                         
Interest expense           -         -         -         -         -         -  
Other (income)           (216 )       -         2         -         1         (213 )
Other expense           -         -         -         -         -         -  
                                         
Net income (loss) before taxes           3,549         (886 )       (499 )       (199 )       (733 )       1,232  
Income tax expense (benefit)           1,069         -         (204 )       -         11         876  
Net income (loss)         $ 2,480       $ (886 )     $ (295 )     $ (199 )     $ (744 )     $ 356  
 

*Global Alert Network, Inc. (formerly Mobile Traffic Network, Inc.)

 
 

Global Traffic Network, Inc.

Income Statement Detail

(Unaudited)

(In thousands)

Twelve Months Ended June 30,

                                         
          2011       2011       2011       2011       2011       2011  
          Australia     Canada     UK     Alert*     Corporate     Total
Revenues         $ 69,732       $ 15,017       $ 32,651       $ 1       $ -       $ 117,401  
Operating expenses                                        
Traffic           23,944         10,643         23,421         1,048         -         59,056  
News           11,532         -         2,015         -         -         13,547  
TV           1,090         -         -         -         -         1,090  
Selling, G&A           12,312         4,184         3,803         114         -         20,413  
Corporate overhead           1,783         -         180         -         1,636         3,599  
Non-cash compensation           -         -         -         -         1,402         1,402  
Depreciation/amortization           1,070         1,964         2,940         1         -         5,975  
                                         
Net operating income (loss)           18,001         (1,774 )       292         (1,162 )       (3,038 )       12,319  
                                         
Interest expense           -         -         -         -         -         -  
Other (income)           (1,308 )       (4 )       (14 )       -         (1 )       (1,327 )
Other expense           -         39         -         -         99         138  
                                         
Net income (loss) before taxes           19,309         (1,809 )       306         (1,162 )       (3,136 )       13,508  
Income tax expense           5,812         -         (119 )       -         (1,128 )       4,565  
Net income (loss)         $ 13,497       $ (1,809 )     $ 425       $ (1,162 )     $ (2,008 )     $ 8,943  
                           
          2010       2010       2010       2010       2010       2010  
          Australia     Canada     UK     Alert*     Corporate     Total
Revenues         $ 56,451       $ 9,464       $ 27,389       $ 31       $ -       $ 93,335  
Operating expenses                                        
Traffic           20,066         9,675         21,229         541         -         51,511  
News           9,024         -         1,800         -         -         10,824  
TV           931         -         -         -         -         931  
Selling, G&A           10,097         2,837         3,281         175         -         16,390  
Corporate overhead           1,588         -         -         -         1,815         3,403  
Non-cash compensation           -         -         -         -         1,245         1,245  
Depreciation/amortization           982         1,386         2,854         104         -         5,326  
                                         
Net operating income (loss)           13,763         (4,434 )       (1,775 )       (789 )       (3,060 )       3,705  
                                         
Interest expense           15         -         -         -         -         15  
Other (income)           (729 )       (9 )       (129 )       -         (100 )       (967 )
Other expense           -         6         -         26         -         32  
                                         
Net income (loss) before taxes           14,477         (4,431 )       (1,646 )       (815 )       (2,960 )       4,625  
Income tax expense (benefit)           4,360         -         (388 )       -         26         3,998  
Net income (loss)         $ 10,117       $ (4,431 )     $ (1,258 )     $ (815 )     $ (2,986 )     $ 627  
 

*Global Alert Network, Inc. (formerly Mobile Traffic Network, Inc.)

 
 

GLOBAL TRAFFIC NETWORK, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except share and per share amounts)

 
  Three Months Ended   Twelve Months Ended
June 30 June 30
2011   2010 2011   2010
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Revenues $ 33,499 $ 23,241 $ 117,401 $ 93,335
 
 

Operating expenses (exclusive of depreciation and

  amortization shown separately below)

20,497 15,581 73,693 63,266
Selling, general and administrative expenses 7,312 5,225 25,414 21,038
Depreciation and amortization expense   1,553   1,416   5,975   5,326
 
Net operating income 4,137 1,019 12,319 3,705
Interest expense 15

Other (income) (including interest income of $411 and

$214 for the three months ended June 30, 2011 and

2010 and interest income of $1,318 and $727 for

the twelve months ended June 30, 2011 and 2010)

(411 ) (213 ) (1,327 ) (967 )
Other expense   99     138   32
 
Net income before income taxes 4,449 1,232 13,508 4,625
Income tax expense 402 876   4,565   3,998
 
Net income $ 4,047 $ 356 $ 8,943 $ 627
 
 
Income per common share:
Basic $ 0.22 $ 0.02 $ 0.49 $ 0.03
Diluted $ 0.21 $ 0.02 $ 0.48 $ 0.03
Weighted average common shares outstanding:
Basic 18,734,887 18,091,502 18,344,388 18,115,530
Diluted 19,282,131 18,121,113 18,825,649 18,132,721
 

GLOBAL TRAFFIC NETWORK, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 
  June 30,     June 30,
2011 2010
(Unaudited)   (Unaudited)
ASSETS:
Current Assets:
Cash and cash equivalents $ 41,655 $ 19,564
Accounts receivable net of allowance for doubtful accounts of $191 and $69 at June 30, 2011 and 2010 27,508 18,790
Prepaids and other current assets 1,658 1,989
Deferred tax assets 387 239
 
Total current assets   71,208   40,582
 
Property and equipment, net 5,841 6,693
Intangibles 11,245 13,013
Goodwill 4,572 4,257
Deferred tax assets 196 129
Other assets 213 414
 
Total assets $ 93,275 $ 65,088
 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Accounts payable and accrued expenses $ 18,835 $ 11,709
Deferred revenue 560 810
Income taxes payable 2,521 1,306
 
Total current liabilities 21,916 13,825
Deferred tax liabilities 2,938 2,747
Other liabilities 939 349
 
Total liabilities 25,793 16,921
 

Preferred stock, $.001 par value; 10,000,000 authorized; 0 issued and outstanding as of June 30, 2011 and

June 30, 2010

Common stock, $.001 par value; 100,000,000 shares authorized; 19,050,172 shares issued and outstanding

as of June 30, 2011 and 18,409,834 shares issued and outstanding as of June 30, 2010

19 18
Additional paid in capital 54,821 51,391
Accumulated other comprehensive income 7,330 389
Retained earnings (accumulated deficit)   5,312   (3,631 )
 
Total shareholders’ equity 67,482 48,167
 
 
Total liabilities and shareholders’ equity $ 93,275 $ 65,088
 

GLOBAL TRAFFIC NETWORK, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 
  Twelve Months Ended
June 30,
2011   2010
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 8,943 $ 627
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,975 5,326
Allowance for doubtful accounts 122 (81 )
Non-cash compensation expense 1,402 1,245
Change in deferred taxes 157 (403 )
Foreign currency translation income (101 )
Loss on disposal or write down of assets 94 92
Changes in assets and liabilities (net of effects from purchase of controlled entity):
Accounts receivable (4,913 ) (2,700 )
Prepaid and other current assets and other assets 878 (481 )
Accounts payable and accrued expenses and other liabilities 5,176 680
Deferred revenue (405 ) (391 )
Income taxes payable   790     (714 )
Net cash provided by operating activities 18,219   3,099  
 
Cash flows from investing activities:
Purchase of property and equipment (1,611 ) (1,244 )
Acquisition of business       (3,488 )
Net cash used in investing activities (1,611 ) (4,732 )
 
Cash flows from financing activities:
Proceeds from exercise of warrants 1,791
Proceeds from exercise of employee stock options 31
Repayment of long term debt       (414 )
Net cash provided by (used) in financing activities 1,822   (414 )
 
Effect of exchange rate changes on cash and cash equivalents 3,661   192  
 
Net increase (decrease) in cash and cash equivalents 22,091 (1,855 )
Cash and cash equivalents at beginning of fiscal period   19,564   21,419
 
Cash and cash equivalents at end of fiscal period $ 41,655 $ 19,564
 
Supplemental disclosures of cash flow information:
Cash paid during the fiscal period for:
Interest $ $ 15
Income taxes $ 5,141 $ 5,133

Contacts

At KCSA Strategic Communications
Phil Carlson/Adam Pollack, 212-896-1233/1232
pcarlson@kcsa.com/apollack@kcsa.com
or
At Global Traffic Network, Inc.
Scott Cody, 212-896-1255
Chief Financial Officer,
Chief Operating Officer & Treasurer
scott.cody@globaltrafficnet.com

Contacts

At KCSA Strategic Communications
Phil Carlson/Adam Pollack, 212-896-1233/1232
pcarlson@kcsa.com/apollack@kcsa.com
or
At Global Traffic Network, Inc.
Scott Cody, 212-896-1255
Chief Financial Officer,
Chief Operating Officer & Treasurer
scott.cody@globaltrafficnet.com