Press Release: travelbyus.com ltd.
March 7, 2001
WHITE ROCK, British Columbia -- travelbyus.com ltd. (Nasdaq: TRIP; Toronto: TBU; Frankfurt: TVB; Boston: AVG),
a leading travel services firm combining traditional travel distribution networks with a powerful technology platform,
reported results for the first quarter December 31, 2000, in accordance with Canadian generally accepted accounting
principles (GAAP). Amounts in US Dollars have been converted at $1.50 CDN per US Dollar for information purposes
only. These statements reflect the results of operation for travelbyus.com ltd. and do not include the operations
of travelbyus inc. (formerly Aviation Group Inc.). travelbyus.com ltd. and Aviation Group recently completed a
previously announced business combination with an effective date of January 24, 2001.
travelbyus.com reported a loss before interest, taxes, depreciation, amortization and write-downs of $6,654,000
or $0.07 per share (US$4,436,000 or US$0.05 per share) compared to $3,017,000 or $0.06 per share (US$ 2,011,000
or US$0.04 per share) for the same period in 1999. Overall the results reflect the consolidation of previously
announced travel and technology acquisitions. The Company took additional one time charges of $6,554,000 (US$4,369,000)
in anticipation of its January 24, 2001 Nasdaq merger with Aviation Group (symbol: TRIP). With these charges, final
consolidated net loss including write downs, interest, depreciation and amortization was $17,366,000, or $0.17
per share, (US$11,577,000 or US$0.11 per share) compared to a loss of $4,145,000 or $0.08 per share (US$2,763,000
or US$0.05 per share) for the quarter ended December 31, 1999.
Total gross travel bookings for the quarter were $14,259,000 (US$9,506,000) compared to $8,250,000 (US$5,500,000)
the previous year.
Specific Areas of note:
Leisure Product Sales: Reported revenues for travel product sales for the quarter dropped to $465,000 (US$310,000)
compared to $1,140,000 (US$ 760,000) from the prior period. The decrease reflected a decline in the number of barter
airline tickets sold, and the discontinuance of all sales for Sunmakers leisure products. In January, the Company
re-introduced new leisure product lines under the name of Global Leisure and Hawaiian Leisure. As part of this
launch, all product sales were switched from outside reservation systems to the travelbyus wholly owned Epoch Reservation
system. Sales from these products have shown marked increases during January and February 2001.
Airline ticket sales: The Company's air travel commissions (airline ticket sales) increased to $2,082,000 (US$
1,388,000) for the quarter from $757,000 (US$ 505,000) the previous year. The significantly increased travel commissions
primarily reflect the company's acquisition of Cheap Seats in January of 2000. Cheap Seats gross ticket sales during
the quarter increased by 11% from $9,929,551 (US$6,847,966) to $11,480,000 (US$7,653,000) in the quarter.
Technology Division: The Company's technology division saw quarterly sales increase from $206,000 (US$137,000)
in 1999 to $734,000 (US$489,000) in 2000 primarily due to the acquisition of ProSoft Corporation in September of
2000. Prosoft continues to accept outside contracts which aid travelbyus in offsetting the development costs of
travelbyus' website and technology platforms including SiteRabbit. The SiteRabbit program gives each member agency
a well-designed, agent-customized, content-rich web site they can use to communicate with their customers and help
promote their travel agency. The company launched the SiteRabbit platform on February 19, 2001. travelbyus hosts
and maintains the web sites for the travel agents and uses data collected to conduct targeted marketing campaigns
and promotions. These promotions are designed to drive traffic back to the local agency, increasing agent commissions
and revenues.
Cost reductions
In December, January and February the company took steps to severely reduce its losses. Actions included reduction
of expenses and overhead, including personnel costs. The current economic slowdown has been reflected in reduced
domestic package sales, and the Company has taken steps to right size its operation to match the current volume
of business. Staff reductions of approximately 110 personnel were completed in December and January, primarily
from its Reno operations. Costs related to company's acquisitions peaked at year-end and during the Company's first
quarter. The Company's monthly losses showed continuous decreases during January and February and it anticipates
being cash flow positive by the summer.
The company has recently signed an engagement letter with Josephberg & Grosz and Doerge Capital Management
for the raising of US $10 million in the form of a debenture on a best efforts basis.
Delay in filing
Fiscal 2000 was the Company's first year of operation as a travel and technology company and included many, large
strategic acquisitions. The acquisitions were such that the Company was required under GAAP to obtain an independent
review of the allocations made by management for the purchase prices. Values had to be established for several
of the previously unrecorded assets such as trademarks, the travel agency network, airline contracts and assembled
workforce. The review process took longer than anticipated because of the complex nature of the business model,
which includes several travel, technology and multimedia acquisitions. This resulted in a delay in the release
of the annual and quarterly financial statements.
Under GAAP, a review of unamortized goodwill for impairment is required annually. As a result of the full write-off
of the balance of goodwill in fiscal 2000, future operating periods will not have a goodwill amortization charge
against earnings and the Company will not have to again complete the time consuming process of reviewing goodwill
every year.
travelbyus is a vertically integrated travel company serving more than 2,000 member travel agencies and is poised
to help design the future of the travel business. Its mission is to become the world's leading, fully integrated
travel network that creates value by providing more information, greater convenience and superior service to both
the leisure traveler and the travel agent. It will do this by utilizing unique technology and an advanced distribution
system that serves both the travel agent and the consumer to continuously offer the right product to the right
customer at the right time.
Except for the historical information contained herein, this press release contains statements that constitute
forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking
statements inherently involve risks and uncertainties that could cause actual results to differ materially from
the forward-looking statements. Factors that may cause or contribute to such differences include, among other things,
technological developments, uncertainties of the Internet, changes in business conditions and the economy in general,
changes in governmental regulations, unforeseen litigation and other risk factors identified in the Company's public
filings under ``Risk Factors.'' The Company undertakes no obligation to update these forward-looking statements
for revisions or changes after the date of this press release.
SOURCE: travelbyus.com ltd.