AOL Latin America
CONSOLIDATED CONDENSED OPERATING RESULTS AND EPS
 
 
                            Three Months Ended     Twelve Months Ended
                               December 31,            December 31,
                               ------------            ------------
                             2002       2001         2002       2001
                             ----       ----         ----       ----
                          (In thousands, except per share information)
 
 



 
 
Revenues:
 
 Subscriptions               $15,304   $15,263     $62,998    $49,918
 Advertising and other         2,541     3,417       9,109     16,525
                            --------- --------- ----------- ----------
  Total revenues              17,845    18,680      72,107     66,443
 
Costs and expenses:
 
 Cost of revenues            (18,993)  (32,974)    (98,695)  (128,896)
 Sales and marketing         (21,139)  (39,795)    (97,170)  (191,024)
 General and administrative   (9,109)  (12,048)    (32,871)   (41,591)
                            --------- --------- ----------- ----------
  Total costs and expenses   (49,241)  (84,817)   (228,736)  (361,511)
Loss from operations         (31,396)  (66,137)   (156,629)  (295,068)
 
Other (expense) income,
 
  net                         (2,369)      305      (5,163)     4,753
                            --------- --------- ----------- ----------
Loss before income taxes     (33,765)  (65,832)   (161,792)  (290,315)
Income taxes                     (51)        -         (75)         -
                            --------- --------- ----------- ----------
Net loss                     (33,816)  (65,832)   (161,867)  (290,315)
 
Less: dividends on Series
 
  B and C preferred shares    (4,769)   (4,651)    (18,724)   (17,005)
                            --------- --------- ----------- ----------
 
Net loss applicable to
 
  common stockholders       $(38,585) $(70,483)  $(180,591) $(307,320)
                            ========= ========= =========== ==========
 
 Loss per common share,
 
  basic and diluted           $(0.58)   $(1.05)     $(2.69)    $(4.66)
                            ========= ========= =========== ==========
 
 Weighted average common
 
  shares outstanding          67,070    67,055      67,068     66,018
                            ========= ========= =========== ==========
       PRO FORMA EPS
Pro forma fully diluted
calculation (1):
 
 



 
 
 Net loss applicable to
 
  common stockholders       $(38,585) $(70,483)  $(180,591) $(307,320)
 
 Plus: dividends on Series
 
  B and C preferred shares     4,769     4,651      18,724     17,005
                            --------- --------- ----------- ----------
 
 Net loss before dividends
  on Series B and C
 
  preferred shares          $(33,816) $(65,832)  $(161,867) $(290,315)
 
 Divided by: Pro forma
  fully diluted shares
 
  outstanding (2)            356,485   326,919     341,482    314,025
                            --------- --------- ----------- ----------
 
  Pro forma fully diluted
 
  loss per share              $(0.09)   $(0.20)     $(0.47)    $(0.92)
                            ========= ========= =========== ==========
 
Reconciliation of Common
Shares to Pro Forma Shares (2):
 
 



 
 
Weighted average number of
 
  common shares outstanding   67,070    67,055      67,068     66,018
                            --------- --------- ----------- ----------
 
Plus: effect of potential
  dilutive common shares
  from:
 
 -- Stock options             16,217    15,899      16,102     15,551
 -- AOL warrant               16,541    16,541      16,541     16,541
 -- Convertible debt          23,494         -      12,899          -
 -- Preferred stock
   -- Series B               121,749   116,010     117,458    110,230
   -- Series C               111,414   111,414     111,414    105,685
                            --------- --------- ----------- ----------
                             289,415   259,864     274,414    248,007
                            --------- --------- ----------- ----------
 
 Pro forma fully diluted
 
  shares outstanding         356,485   326,919     341,482    314,025
                            ========= ========= =========== ==========
 
 Notes:
 
 ------

(1) - AOL Latin America considers the pro forma fully diluted earnings per share an important indicator in evaluating its results of operations, as it provides a better picture of the Company's full capitalization structure. However, pro forma fully diluted earnings per share is a non-GAAP measure and should be considered in addition to, not as a substitute for, operating loss, net loss, basic and diluted loss per common share and other measures of financial performance reported in accordance with generally accepted accounting principles in the United States. (2) - On a weighted average basis, includes common stock and assumes conversion of Series B and C preferred shares, the AOLTW senior convertible note, the AOL Warrant, and the Employee Stock Option Plan regardless of whether or not the instrument is dilutive or antidilutive.

                          AOL Latin America
 
                                                      As of
BALANCE SHEETS (In thousands)                December 31, December 31,
                                                2002         2001
                                                ----         ----
 
 ASSETS
 CURRENT ASSETS:
 
 Cash and cash equivalents                      $74,586    $45,636
 
 Short-term money market
 
  investments                                       915      1,040
                                             ----------- ----------
 
 Total cash and cash
 
  equivalents                                    75,501     46,676
 
 Trade accounts receivable,
 
  net of allowances                               3,567      6,144
 Other receivables                                2,090      4,713
 
 Prepaid expenses and other
 
  current assets                                  7,963      5,410
                                             ----------- ----------
 Total current assets                            89,121     62,943
 
 Property and equipment,
 
  net                                             6,983     11,958
 
 Investments, including
  securities available-for-
 
  sale                                              158      1,361
 
 Product development costs
  and other intangible
 
  assets, net                                       285        988
 Other assets                                     3,727      7,134
                                             ----------- ----------
 TOTAL ASSETS                                  $100,274    $84,384
                                             =========== ==========
 
 LIABILITIES AND STOCKHOLDERS' EQUITY
 
  (CAPITAL DEFICIENCY
 
 CURRENT LIABILITIES
 
 Trade accounts payable                          $8,746    $18,114
 Payables to affiliates                           6,893     15,198
 
 Accrued expenses and other
 
  current liabilities                            20,481     28,825
                                             ----------- ----------
 Total current liabilities                       36,120     62,137
 Senior convertible notes                       160,000          -
 
 Deferred revenue and other
 
  non-current liabilities                         1,239      1,124
                                             ----------- ----------
 Total liabilities                              197,359     63,261

STOCKHOLDERS' EQUITY (CAPITAL DEFICIENCY) Preferred stock, common stock and additional paid-in capital , net of

  unearned services                             660,810    614,468
 
 Accumulated deficit and
  accumulated other
 
  comprehensive loss                           (757,895)  (593,345)
                                             ----------- ----------
 
 Total stockholders' equity
 
  (capital deficiency)                          (97,085)    21,123
                                             ----------- ----------
 
 TOTAL LIABILITIES AND STOCKHOLDERS'
 
  EQUITY (CAPITAL DEFICIENCY)                  $100,274    $84,384
                                             =========== ==========