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 JUNE 30, 2003 |
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO |
Commission File No. 0-25681
(Exact name of registrant as specified in its charter)
| Florida | 65-0423422 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| 11811 U.S. Highway One, Suite 101 North Palm Beach, Florida |
33408 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (561) 630-2400
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 checkmark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ X ] No [ ]
The number of outstanding shares of the issuer’s common stock as of July 31, 2003 was as follows: 14,907,343 shares of Common Stock, $.01 par value.
Bankrate, Inc.
Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2003
Index
Introductory Note
This Report and our other communications and statements may contain “forward-looking statements,” including statements about our beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. For information concerning these factors and related matters, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Report, and the following sections of our Annual Report on Form 10-K for the year ended December 31, 2002 (the “2002 Form 10-K”): (a) “Risk Factors” in Item 1, “Business,” and (b) “Introduction” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
2
Item 1. INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Bankrate, Inc.
(Unaudited)
| June 30, 2003 |
December 31, 2002 |
|||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 16,959,195 | $ | 11,000,561 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $200,000 at June 30, 2003 and December 31, 2002 |
3,172,529 | 2,378,535 | ||||||
| Other current assets |
271,877 | 370,886 | ||||||
| Total current assets |
20,403,601 | 13,749,982 | ||||||
| Furniture, fixtures and equipment, net |
963,560 | 912,651 | ||||||
| Intangible assets, net |
142,990 | 206,915 | ||||||
| Other assets |
378,350 | 303,547 | ||||||
| Total assets |
$ | 21,888,501 | $ | 15,173,095 | ||||
| Liabilities and Stockholders’ Equity |
||||||||
| Liabilities: |
||||||||
| Accounts payable |
$ | 1,089,792 | $ | 809,068 | ||||
| Other accrued expenses |
3,113,023 | 3,072,771 | ||||||
| Deferred revenue |
278,686 | 255,081 | ||||||
| Other current liabilities |
255,126 | 243,891 | ||||||
| Total current liabilities |
4,736,627 | 4,380,811 | ||||||
| Other liabilities |
215,931 | 142,226 | ||||||
| Total liabilities |
4,952,558 | 4,523,037 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, 10,000,000 shares authorized and undesignated |
— | — | ||||||
| Common stock, par value $.01 per share—100,000,000 shares authorized; 14,812,338 and 13,998,168 shares issued and outstanding at June 30, 2003 and December 31, 2002, respectively |
148,124 | 139,982 | ||||||
| Additional paid in capital |
65,670,400 | 63,932,578 | ||||||
| Accumulated deficit |
(48,882,581 | ) | (53,422,502 | ) | ||||
| Total stockholders’ equity |
16,935,943 | 10,650,058 | ||||||
| Total liabilities and stockholders’ equity |
$ | 21,888,501 | $ | 15,173,095 | ||||
See accompanying notes to condensed financial statements.
3
Bankrate, Inc.
Condensed Statements of Operations
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, | |||||||||||
| 2003 |
2002 |
2003 |
2002 | |||||||||
| Revenue: |
||||||||||||
| Online publishing |
$ | 8,197,339 | $ | 5,267,775 | $ | 15,531,532 | $ | 9,980,744 | ||||
| Print publishing and licensing |
1,354,752 | 934,274 | 2,567,145 | 1,858,223 | ||||||||
| Total revenue |
9,552,091 | 6,202,049 | 18,098,677 | 11,838,967 | ||||||||
| Cost of revenue: |
||||||||||||
| Online publishing |
1,341,636 | 934,968 | 2,582,048 | 1,817,065 | ||||||||
| Print publishing and licensing |
1,057,106 | 667,206 | 1,970,200 | 1,338,969 | ||||||||
| Total cost of revenue |
2,398,742 | 1,602,174 | 4,552,248 | 3,156,034 | ||||||||
| Gross margin |
7,153,349 | 4,599,875 | 13,546,429 | 8,682,933 | ||||||||
| Operating expenses: |
||||||||||||
| Sales |
1,139,281 | 944,433 | 2,165,667 | 1,795,317 | ||||||||
| Marketing |
1,372,091 | 966,692 | 2,569,725 | 1,890,287 | ||||||||
| Product development |
562,536 | 350,845 | 1,090,180 | 680,725 | ||||||||
| General and administrative |
1,458,278 | 1,243,169 | 2,928,328 | 2,377,396 | ||||||||
| Depreciation and amortization |
162,817 | 123,286 | 353,880 | 266,993 | ||||||||
| 4,695,003 | 3,628,425 | 9,107,780 | 7,010,718 | |||||||||
| Income from operations |
2,458,346 | 971,450 | 4,438,649 | 1,672,215 | ||||||||
| Interest income (expense), net |
62,880 | 30,492 | 101,272 | 19,658 | ||||||||
| Gain on early extinguishment of debt |
— | — | — | 2,021,792 | ||||||||
| Income before income taxes |
2,521,226 | 1,001,942 | 4,539,921 | 3,713,665 | ||||||||
| Income taxes |
— | — | — | — | ||||||||
| Net income |
$ | 2,521,226 | $ | 1,001,942 | $ | 4,539,921 | $ | 3,713,665 | ||||
| Basic and diluted net income per share: |
||||||||||||
| Basic |
$ | 0.17 | $ | 0.07 | $ | 0.32 | $ | 0.27 | ||||
| Diluted |
$ | 0.16 | $ | 0.07 | $ | 0.30 | $ | 0.26 | ||||
| Weighted average common shares outstanding: |
||||||||||||
| Basic |
14,472,485 | 13,996,950 | 14,318,221 | 13,996,950 | ||||||||
| Diluted |
15,478,477 | 14,375,393 | 15,277,304 | 14,261,815 | ||||||||
See accompanying notes to condensed financial statements.
4
Condensed Statements of Cash Flows
(Unaudited)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 4,539,921 | $ | 3,713,665 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Gain on early extinguishment of debt |
— | (2,021,792 | ) | |||||
| Depreciation and amortization |
353,880 | 266,993 | ||||||
| Provision for doubtful accounts |
— | 19,392 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Increase in accounts receivable |
(793,994 | ) | (940,054 | ) | ||||
| (Increase) decrease in other assets |
18,932 | (287,659 | ) | |||||
| Increase in accounts payable |
280,724 | 50,920 | ||||||
| Increase in accrued expenses |
39,625 | 281,918 | ||||||
| Increase in other liabilities |
86,193 | 136,771 | ||||||
| Increase (decrease) in deferred revenue |
23,605 | (92,575 | ) | |||||
| Net cash provided by operating activities |
4,548,886 | 1,127,579 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of equipment |
(334,962 | ) | (142,230 | ) | ||||
| Net cash used in investing activities |
(334,962 | ) | (142,230 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Principal payments on capital lease obligations |
(1,254 | ) | (30,406 | ) | ||||
| Proceeds from exercise of stock options |
1,745,964 | — | ||||||
| Repayment of 10% convertible subordinated note payable |
— | (3,400,000 | ) | |||||
| Net cash provided by (used in) financing activities |
1,744,710 | (3,430,406 | ) | |||||
| Net increase (decrease) in cash and cash equivalents |
5,958,634 | (2,445,057 | ) | |||||
| Cash and equivalents, beginning of period |
11,000,561 | 9,755,032 | ||||||
| Cash and equivalents, end of period |
$ | 16,959,195 | $ | 7,309,975 | ||||
| Supplemental disclosures of cash flow information: |
||||||||
| Cash paid during the period for interest |
$ | — | $ | 44,928 | ||||
See accompanying notes to condensed financial statements.
5
BANKRATE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2003
(Unaudited)
NOTE 1—ORGANIZATION AND ACCOUNTING POLICIES
The Company
Bankrate, Inc. (the “Company”) owns and operates an Internet-based consumer banking marketplace. The Company’s flagship Web site, Bankrate.com, is the Web’s leading aggregator of information on more than 190 financial products, including mortgages, credit cards, new and used automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans and online banking fees. Additionally, the Company provides financial applications and information to a network of distribution partners and through national and state publications. The Company is organized under the laws of the state of Florida.
On January 9, 2003, the Company’s common stock began trading on the Nasdaq SmallCap Market under its existing stock symbol “RATE.”