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Table of Contents
 

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 September 30, 2002
 
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
Bellevue, Washington
 
98004
(Address of principal executive offices)
 
(Zip Code)
 
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 the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
Class

 
Outstanding at
October 31, 2002

Common Stock, Par Value $.0001
 
30,941,023
 


Table of Contents
 
INFOSPACE, INC.
FORM 10-Q
 
TABLE OF CONTENTS
 
PART I – Financial Information
 
Item 1.
  
Financial Statements
    
       
3
       
4
       
5
       
6
Item 2.
  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    
       
19
       
25
       
31
       
33
Item 3.
     
50
Item 4.
     
50
    
Part II – Other Information
    
Item 1.
     
51
Item 2.
     
54
Items 3 and 5 are not applicable with respect to the current reporting period.
    
Item 4.
     
54
Item 6.
     
54
  
56
  
57

2


Table of Contents
Item 1. – Financial Statements
 
INFOSPACE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
 
    
September 30, 2002

    
December 31, 2001
(audited)

 
    
(Amounts in thousands,
except share data)
 
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
  
$
134,160
 
  
$
118,561
 
Short-term investments, available-for-sale
  
 
141,042
 
  
 
80,319
 
Accounts receivable, net
  
 
17,322
 
  
 
16,305
 
Notes receivable, net
  
 
1,842
 
  
 
2,888
 
Other receivables, net
  
 
9,311
 
  
 
11,095
 
Payroll tax receivable
  
 
13,214
 
  
 
13,214
 
Prepaid expenses and other current assets
  
 
5,169
 
  
 
8,239
 
    


  


Total current assets
  
 
322,060
 
  
 
250,621
 
Long-term investments, available-for-sale
  
 
—  
 
  
 
94,891
 
Property and equipment, net
  
 
29,830
 
  
 
39,443
 
Other long term assets
  
 
781
 
  
 
1,403
 
Other investments
  
 
23,981
 
  
 
47,087
 
Goodwill, net
  
 
153,948
 
  
 
356,476
 
Other intangible assets, net
  
 
17,881
 
  
 
47,084
 
    


  


Total assets
  
$
548,481
 
  
$
837,005
 
    


  


LIABILITIES AND STOCKHOLDERS’ EQUITY
                 
Current liabilities:
                 
Accounts payable
  
$
3,495
 
  
$
9,139
 
Accrued expenses and other current liabilities
  
 
19,877
 
  
 
25,791
 
Short-term deferred revenue
  
 
11,589
 
  
 
15,794
 
    


  


Total current liabilities
  
 
34,961
 
  
 
50,724
 
Long-term deferred revenue
  
 
1,590
 
  
 
3,693
 
    


  


Total liabilities
  
 
36,551
 
  
 
54,417
 
Contingencies (Note 9)
  
 
—  
 
  
 
—  
 
Stockholders’ equity:
                 
Preferred stock, par value $.0001—Authorized, 15,000,000 shares; issued and outstanding, 2 shares, respectively
  
 
—  
 
  
 
—  
 
Common stock, par value $.0001—Authorized, 900,000,000 shares; issued and outstanding, 30,927,107 and 30,778,930 shares, respectively
  
 
3
 
  
 
3
 
Additional paid-in capital
  
 
1,704,356
 
  
 
1,702,550
 
Accumulated deficit
  
 
(1,191,565
)
  
 
(910,725
)
Deferred expense—warrants
  
 
(155
)
  
 
(680
)
Unearned compensation
  
 
(1,264
)
  
 
(7,881
)
Accumulated other comprehensive income (loss)
  
 
555
 
  
 
(679
)
    


  


Total stockholders’ equity
  
 
511,930
 
  
 
782,588
 
    


  


Total liabilities and stockholders’ equity
  
$
548,481
 
  
$
837,005
 
    


  


 
See accompanying notes to unaudited condensed consolidated financial statements.
 

3


Table of Contents
INFOSPACE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
Three and Nine Months Ended September 30, 2002 and 2001
 
    
Three Months Ended
September 30,

    
Nine Months Ended
September 30,

 
    
2002

    
2001

    
2002

    
2001

 
    
(Amounts in thousands, except per share data)
 
Revenues (including related party revenues of $654, $3,819, $2,162 and $28,376 respectively)
  
$
33,571
 
  
$
33,051
 
  
$
99,981
 
  
$
130,558
 
Cost of revenue
  
 
8,661
 
  
 
9,460
 
  
 
28,045
 
  
 
31,795
 
    


  


  


  


Gross profit
  
 
24,910
 
  
 
23,591
 
  
 
71,936
 
  
 
98,763
 
Operating expenses:
                                   
Product development
  
 
8,372
 
  
 
9,051
 
  
 
27,315
 
  
 
31,407
 
Sales, general and administrative
  
 
19,564
 
  
 
27,694
 
  
 
69,351
 
  
 
95,472
 
Impairment of intangible assets
  
 
15,474
 
  
 
99,157
 
  
 
15,474
 
  
 
99,157
 
Amortization of goodwill
  
 
—  
 
  
 
51,153
 
  
 
—  
 
  
 
162,688
 
Amortization of other intangible assets
  
 
3,120
 
  
 
6,830
 
  
 
14,784
 
  
 
18,299
 
Acquisition and other related charges
  
 
—  
 
  
 
(4,504
)
  
 
—  
 
  
 
(3,504
)
Other charges, net
  
 
22
 
  
 
1,660
 
  
 
821
 
  
 
1,827
 
Restructuring charges
  
 
1,056
 
  
 
13,755
 
  
 
1,056
 
  
 
15,410
 
    


  


  


  


Total operating expenses
  
 
47, 608
 
  
 
204,796
 
  
 
128,801
 
  
 
420,756
 
    


  


  


  


Loss from operations
  
 
(22,698
)
  
 
(181,205
)
  
 
(56,865
)
  
 
(321,993
)
Loss on investments
  
 
(5,532
)
  
 
(26,753
)
  
 
(22,788
)
  
 
(88,451
)
Other income, net
  
 
1,706
 
  
 
3,764
 
  
 
5,765
 
  
 
14,327
 
    


  


  


  


Loss before income tax expense, minority interest and cumulative effect of changes in accounting principle
  
 
(26,524
)
  
 
(204,194
)
  
 
(73,888
)
  
 
(396,117
)
Minority interest
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
(17
)
Income tax expense
  
 
(93
)
  
 
(557
)
  
 
(333
)
  
 
(744
)
    


  


  


  


Loss before cumulative effect of changes in accounting principle
  
 
(26,617
)
  
 
(204,751
)
  
 
(74,221
)
  
 
(396,878
)
Cumulative effect of changes in accounting principle
  
 
—  
 
  
 
—  
 
  
 
(206,619
)
  
 
(3,171
)
    


  


  


  


Net loss
  
$
(26,617
)
  
$
(204,751
)
  
$
(280,840
)
  
$
(400,049
)
    


  


  


  


Basic and diluted net loss per share:
                                   
Prior to cumulative effect of changes in accounting principle
  
$
(0.86
)
  
$
(6.38
)
  
$
(2.40
)
  
$
(12.29
)
Cumulative effect of changes in accounting principle
  
 
—  
 
  
 
—  
 
  
 
(6.69
)
  
 
(0.10
)
    


  


  


  


Basic and diluted net loss per share
  
$
(0.86
)
  
$
(6.38
)
  
$
(9.09
)
  
$
(12.39
)
    


  


  


  


Shares used in basic and diluted net loss per share calculations
  
 
30,912
 
  
 
32,072
 
  
 
30,892
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