UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| [X] | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2003 |
or
| [ ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to |
Commission File Number 0-25131
INFOSPACE, INC.
(Exact name of registrant as specified in its charter)
| Delaware |
91-1718107 | |
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| 601 108th Avenue NE, Suite 1200 |
98004 | |
| Bellevue, Washington |
(Zip Code) | |
| (Address of principal executive offices) |
Registrant’s telephone number, including area code: (425) 201-6100
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No .
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange act).
Yes X No .
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at April 30, 2003 | |
| Common Stock, Par Value $.0001 |
31,155,205 |
INFOSPACE, INC.
FORM 10-Q
PART I—Financial Information
| Item 1. |
Financial Statements |
|||
| Unaudited Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002 |
3 | |||
| 4 | ||||
| 5 | ||||
| Notes to Unaudited Condensed Consolidated Financial Statements |
6 | |||
| Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|||
| 15 | ||||
| 19 | ||||
| 23 | ||||
| Factors Affecting Our Operating Results, Business Prospects and Market Price of Stock |
26 | |||
| Item 3. |
42 | |||
| Item 4. |
42 | |||
| Part II—Other Information | ||||
| Item 1. |
43 | |||
| Items 2, 3, 4, and 5 are not applicable with respect to the current reporting period | ||||
| Item 6. |
43 | |||
| 44 | ||||
| 45 | ||||
2
Item 1.—Financial Statements
INFOSPACE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2003 |
December 31, 2002 |
|||||||
| (Amounts in thousands, except share data) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents (including cash held for merchants of $4,020 and $2,516) |
$ |
163,389 |
|
$ |
136,672 |
| ||
| Short-term investments, available-for-sale |
|
124,007 |
|
|
138,895 |
| ||
| Accounts receivable, net of allowance of $1,069 and $1,178 |
|
21,671 |
|
|
21,027 |
| ||
| Notes and other receivables, net of allowance of $12,231 and $12,235 |
|
4,824 |
|
|
6,442 |
| ||
| Payroll tax receivable |
|
13,214 |
|
|
13,214 |
| ||
| Prepaid expenses and other current assets |
|
6,105 |
|
|
2,921 |
| ||
| Total current assets |
|
333,210 |
|
|
319,171 |
| ||
| Long-term investments, available-for-sale |
|
525 |
|
|
651 |
| ||
| Property and equipment, net |
|
23,595 |
|
|
26,252 |
| ||
| Other long term assets |
|
715 |
|
|
659 |
| ||
| Other investments |
|
18,682 |
|
|
25,836 |
| ||
| Goodwill |
|
97,844 |
|
|
97,844 |
| ||
| Other intangible assets, net |
|
9,361 |
|
|
10,983 |
| ||
| Total assets |
$ |
483,932 |
|
$ |
481,396 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
4,604 |
|
$ |
4,688 |
| ||
| Funds due to merchants |
|
4,020 |
|
|
2,516 |
| ||
| Accrued expenses and other current liabilities |
|
16,893 |
|
|
15,570 |
| ||
| Short-term deferred revenue |
|
9,260 |
|
|
9,169 |
| ||
| Total current liabilities |
|
34,777 |
|
|
31,943 |
| ||
| Long-term deferred revenue |
|
1,452 |
|
|
1,317 |
| ||
| Total liabilities |
|
36,229 |
|
|
33,260 |
| ||
| Contingencies (Note 7) |
|
— |
|
|
— |
| ||
| Stockholders’ equity: |
||||||||
| Preferred stock, par value $.0001—Authorized, 15,000,000 shares; issued and outstanding, 2 shares |
|
— |
|
|
— |
| ||
| Common stock, par value $.0001—Authorized, 900,000,000 shares; issued and outstanding, 31,148,446 and 30,957,371 shares |
|
3 |
|
|
3 |
| ||
| Additional paid-in capital |
|
1,704,278 |
|
|
1,704,123 |
| ||
| Accumulated deficit |
|
(1,257,282 |
) |
|
(1,255,975 |
) | ||
| Deferred expense—warrants |
|
— |
|
|
(39 |
) | ||
| Unearned compensation |
|
(162 |
) |
|
(543 |
) | ||
| Accumulated other comprehensive income |
|
866 |
|
|
567 |
| ||
| Total stockholders’ equity |
|
447,703 |
|
|
448,136 |
| ||
| Total liabilities and stockholders’ equity |
$ |
483,932 |
|
$ |
481,396 |
| ||
See accompanying notes to unaudited condensed consolidated financial statements.
3
INFOSPACE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| (Amounts in thousands, except per share data) |
||||||||
| Revenues (including related party revenues of $169 and $607, respectively) |
$ |
36,600 |
|
$ |
33,144 |
| ||
| Cost of revenues |
|
8,164 |
|
|
9,663 |
| ||
| Gross profit |
|
28,436 |
|
|
23,481 |
| ||
| Operating expenses: |
||||||||
| Product development |
|
7,282 |
|
|
9,427 |
| ||
| Sales, general and administrative |
|
18,288 |
|
|
27,096 |
| ||
| Amortization of other intangible assets |
|
1,622 |
|
|
5,914 |
| ||
| Other charges |
|
3,956 |
|
|
(50 |
) | ||
| Restructuring charges |
|
167 |
|
|
— |
| ||
| Total operating expenses |
|
31,315 |
|
|
42,387 |
| ||
| Loss from operations |
|
(2,879 |
) |
|
(18,906 |
) | ||
| Gain (loss) on equity investments |
|
413 |
|
|
(16,911 |
) | ||
| Other income, net |
|
1,229 |
|
|
2,078 |
| ||
| Loss before income tax expense and cumulative effect of change in accounting principle |
|
(1,237 |
) |
|
(33,739 |
) | ||
| Income tax expense |
|
(70 |
) |
|
(144 |
) | ||
| Loss before cumulative effect of change in accounting principle |
|
(1,307 |
) |
|
(33,883 |
) | ||
| Cumulative effect of change in accounting principle |
|
— |
|
|
(206,619 |
) | ||
| Net loss. |
$ |
(1,307 |
) |
$ |
(240,502 |
) | ||
| Basic and diluted net loss per share: |
||||||||
| Prior to cumulative effect of change in accounting principle |
$ |
(0.04 |
) |
$ |
(1.11 |
) | ||
| Cumulative effect of change in accounting principle |
|
— |
|
|
(6.77 |
) | ||
| Basic and diluted net loss per share |
$ |
(0.04 |
) |
$ |
(7.88 |
) | ||
| Shares used in basic and diluted net loss per share calculations |
|
30,979 |
|
|
30,517 |
| ||
| Comprehensive loss: |
||||||||
| Net loss |
$ |
(1,307 |
) |
$ |
(240,502 |
) | ||
| Foreign currency translation adjustment |
|
191 |
|
|
1,622 |
| ||
| Unrealized loss on investments |
|
(59 |
) |
|
(299 |
) | ||
| Comprehensive loss |
$ |
(1,175 |
) |
$ |
(239,719 |
) | ||
See accompanying notes to unaudited condensed consolidated financial statements.
4
INFOSPACE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three months ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| (Amounts in thousands) |
||||||||
| Operating activities: |
||||||||
| Net loss |
$ |
(1,307 |
) |
$ |
(240,502 |
) | ||
| Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
||||||||
| Depreciation and amortization |
|
5,221 |
|
|
10,744 |
| ||
| Warrant and stock related revenue |
|
(135 |
) |
|
(752 |
) | ||
| Warrant expense |
|
39 |
|
|
204 |
| ||
| Stock-based compensation expense |
|
(28 |
) |
|
3,543 |
| ||