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As Of Filer Filing As/For/On Docs:Pgs Issuer Agent 8/09/07 Infospace Inc 10-Q 6/30/07 14:127 RR Donnelley/FA
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 466K
2: EX-10.6 Amended and Restated 2001 Nonstatutory Stock HTML 44K
Option Plan
3: EX-10.33 Form of Amended and Restated 2001 Nonstatutory HTML 18K
Stock Option Plan
4: EX-10.34 Form of Restricted Stock Unit Award Tax HTML 14K
Withholding Election Form
5: EX-10.35 Form of Restated 1996 Flexible Stock Incentive HTML 18K
6: EX-10.36 Amended and Restated Employment Agreement HTML 60K
7: EX-10.37 Amended and Restated Employment Agreement HTML 60K
8: EX-10.38 Amended and Restated Employment Agreement HTML 60K
9: EX-10.39 Amended and Restated Employment Agreement HTML 60K
10: EX-10.40 Amended and Restated Employment Agreement HTML 69K
11: EX-31.1 Certification of Principal Executive Officer HTML 13K
12: EX-31.2 Certification of Principal Financial Officer HTML 13K
13: EX-32.1 Certification of Principal Executive Officer HTML 9K
14: EX-32.2 Certification of Principal Financial Officer HTML 9K
| Form 10-Q |
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 June 30, 2007
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) |
(I.R.S. 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. x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨
Indicate by check mark whether the registrant is a shell company (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 | |
| Common Stock, Par Value $.0001 |
33,170,315 |
INFOSPACE, INC.
FORM 10-Q
PART I—FINANCIAL INFORMATION
Item 1. —Financial Statements
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
| June 30, 2007 |
December 31, 2006 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 110,342 | $ | 163,505 | ||||
| Short-term investments, available-for-sale |
87,458 | 238,444 | ||||||
| Accounts receivable, net of allowance of $1,263 and $1,240 |
60,820 | 78,742 | ||||||
| Other receivables |
2,836 | 3,402 | ||||||
| Prepaid expenses and other current assets |
11,763 | 14,753 | ||||||
| Total current assets |
273,219 | 498,846 | ||||||
| Property and equipment, net |
39,993 | 33,212 | ||||||
| Goodwill |
104,424 | 104,424 | ||||||
| Other intangible assets, net |
16,095 | 19,565 | ||||||
| Deferred tax assets, net |
100,771 | 101,571 | ||||||
| Other long-term assets |
9,206 | 8,221 | ||||||
| Total assets |
$ | 543,708 | $ | 765,839 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 13,515 | $ | 13,031 | ||||
| Accrued expenses and other current liabilities |
43,382 | 61,156 | ||||||
| Short-term deferred revenue |
9,271 | 6,708 | ||||||
| Total current liabilities |
66,168 | 80,895 | ||||||
| Long-term liabilities: |
||||||||
| Other liabilities and long-term deferred revenue |
626 | 877 | ||||||
| Deferred tax liabilities |
5,502 | 5,502 | ||||||
| Total long-term liabilities |
6,128 | 6,379 | ||||||
| Total liabilities |
72,296 | 87,274 | ||||||
| Commitments and contingencies (Note 5) |
— | — | ||||||
| Stockholders’ equity: |
||||||||
| Common stock, par value $.001—authorized, 900,000,000 shares; issued and outstanding, 33,124,379 and 31,392,862 shares |
3 | 3 | ||||||
| Additional paid-in capital |
1,534,423 | 1,712,897 | ||||||
| Accumulated deficit |
(1,064,283 | ) | (1,035,613 | ) | ||||
| Accumulated other comprehensive income |
1,269 | 1,278 | ||||||
| Total stockholders’ equity |
471,412 | 678,565 | ||||||
| Total liabilities and stockholders’ equity |
$ | 543,708 | $ | 765,839 | ||||
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
- 3 -
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Revenues |
$ | 70,530 | $ | 95,846 | $ | 157,173 | $ | 186,120 | ||||||||
| Operating expenses: |
||||||||||||||||
| Content and distribution |
28,904 | 46,121 | 70,521 | 87,733 | ||||||||||||
| Systems and network operations |
7,484 | 7,880 | 14,209 | 14,988 | ||||||||||||
| Product development |
15,882 | 12,467 | 30,624 | 21,775 | ||||||||||||
| Sales and marketing |
11,153 | 12,567 | 20,102 | 22,130 | ||||||||||||
| General and administrative |
35,099 | 12,547 | 48,793 | 26,633 | ||||||||||||
| Depreciation |
4,809 | 3,457 | 9,400 | 6,774 | ||||||||||||
| Amortization of intangible assets |
1,668 | 3,611 | 3,470 | 7,319 | ||||||||||||
| Restructuring and other, net |
(1,669 | ) | — | (2,502 | ) | — | ||||||||||
| Total operating expenses |
103,330 | 98,650 | 194,617 | 187,352 | ||||||||||||
| Operating loss |
(32,800 | ) | (2,804 | ) | (37,444 | ) | (1,232 | ) | ||||||||
| Other income, net |
4,384 | 4,723 | 9,575 | 8,595 | ||||||||||||
| Income (loss) before income taxes |
(28,416 | ) | 1,919 | (27,869 | ) | 7,363 | ||||||||||
| Income tax benefit (provision) |
286 | (900 | ) | (801 | ) | (3,339 | ) | |||||||||
| Net income (loss) |
$ | (28,130 | ) | $ | 1,019 | $ | (28,670 | ) | $ | 4,024 | ||||||
| Earnings (loss) per share – Basic |
$ | (0.86 | ) | $ | 0.03 | $ | (0.89 | ) | $ | 0.13 | ||||||
| Earnings (loss) per share – Diluted |
$ | (0.86 | ) | $ | 0.03 | $ | (0.89 | ) | $ | 0.12 | ||||||
| Weighted average shares outstanding used in computing basic net income (loss) per share |
32,626 | 31,239 | 32,047 | 31,162 | ||||||||||||
| Weighted average shares outstanding used in computing diluted net income (loss) per share |
32,626 | 32,931 | 32,047 | 32,925 | ||||||||||||
| Other comprehensive income (loss): |
||||||||||||||||
| Net income (loss) |
$ | (28,130 | ) | $ | 1,019 | $ | (28,670 | ) | $ | 4,024 | ||||||
| Foreign currency translation adjustment |
(5 | ) | 153 | 19 | 227 | |||||||||||
| Net unrealized gain (loss) on investments |
(12 | ) | (86 | ) | (28 | ) | 173 | |||||||||
| Comprehensive income (loss) |
$ | (28,147 | ) | $ | 1,086 | $ | (28,679 | ) | $ | 4,424 | ||||||
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
- 4 -
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
| Six Months Ended |
||||||||
| 2007 | 2006 | |||||||
| Operating activities: |
||||||||
| Net income (loss) |
$ | (28,670 | ) | $ | 4,024 | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
12,870 | 14,093 | ||||||
| Stock-based compensation |
16,097 | 8,744 | ||||||
| Deferred income taxes |
800 | 2,765 | ||||||
| Gain on sale of assets |
(3,313 | ) | — | |||||
| Restructuring |
811 | — | ||||||
| Other |
384 | 78 | ||||||
| Cash provided (used) by changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
17,713 | 7,039 | ||||||
| Other receivables |
2,189 | 408 | ||||||
| Prepaid expenses and other current assets |
3,042 | 2,242 | ||||||
| Other long-term assets |
|
1,015 |
|
(2,315 | ) | |||
| Accounts payable |
(1,959 | ) | (1,701 | ) | ||||
| Accrued expenses and other current and long-term liabilities |
(19,075 | ) | 2,524 | |||||
| Deferred revenue |
2,306 | 119 | ||||||
| Net cash provided by operating activities |
4,210 | 38,020 | ||||||
| Investing activities: |
||||||||
| Purchases of property and equipment |
(13,847 | ) | (10,082 | ) | ||||
| Proceeds from the sale of assets |
2,223 | 33 | ||||||
| Loan to equity investee |
(2,000 | ) | — | |||||
| Proceeds from sales and maturities of investments |
225,480 | 231,263 | ||||||
| Purchases of investments |
(74,523 | ) | (233,053 | ) | ||||
| Net cash provided (used) by investing activities |
137,333 | (11,839 | ) | |||||
| Financing activities: |
||||||||
| Dividend paid |
(208,203 | ) | — | |||||
| Proceeds from stock option and warrant exercises |
12,756 | 2,564 | ||||||
| Proceeds from issuance of stock through employee stock purchase plan |
741 | 943 | ||||||
| Net cash provided (used) by financing activities |
(194,706 | ) | 3,507 | |||||
| Net increase (decrease) in cash and cash equivalents |
(53,163 | ) | 29,688 | |||||
| Cash and cash equivalents: |
||||||||
| Beginning of period |
163,505 | 153,013 | ||||||
| End of period |
$ | 110,342 | $ | 182,701 | ||||
See accompanying notes to unaudited Condensed Consolidated Financial Statements.
- 5 -
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| 1. | The Company and Basis of Presentation |
InfoSpace, Inc. (the “Company” or “InfoSpace”) develops tools and technologies that assist consumers with finding content and information on the Internet or mobile phone. The Company offers online search and directory services that enable Internet users to locate information, merchants, individuals, and products online. The Company offers search and directory services through its Web sites as well as through the Web properties of distribution partners. The Company also delivers data technology solutions, consulting, and management services for the mobile operator market, including portal, storefront, search, and messaging solutions. In addition, through June 30, 2007, the Company provided mobile media content products, including ringtones, graphics, and games to subscribers of its mobile customers.
The accompanying unaudited Condensed Consolidated Financial Statements include all adjustments, consisting of normal recurring adjustments that, in the opinion of management, are necessary to present fairly the financial information set forth herein. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Results of operations for the three and six months ended June 30, 2007 are not necessarily indicative of future financial results. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts may differ, perhaps materially, from these financial estimates.
Investors should read these interim financial statements and related notes in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.
| 2. | Income Taxes |
In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. (“FIN”) 48, Accounting for Uncertainty in Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
The Company adopted FIN 48 on January 1, 2007. As a result of the adoption, the Company did not recognize a change in the liability for unrecognized tax benefits. Had the Company recognized a change in the liability for unrecognized tax benefits it would have recorded an adjustment to the January 1, 2007 balance in accumulated deficit. The balance of unrecognized tax benefits at January 1, 2007 was $18.8 million, which, if recognized, would affect the effective tax rate.
The amount of unrecognized tax benefits may change during the next twelve months; however, any change is not expected to have a material impact on the results of operations or the financial position of the Company.
The Company and one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2002, although net operating loss carryforwards and tax credit carryforwards from any year are subject to examination and adjustment for at least three years following the year in which they are fully utilized. As of June 30, 2007, no significant adjustments have been proposed relative to the Company’s tax positions.
The Company has recognized immaterial interest and penalties related to unrecognized tax benefits in interest expense and operating expenses, respectively, as of January 1, 2007 and in the three and six months ended June 30, 2007.
- 6 -
| 3. | Stock-Based Compensation |
The Company has included the following amounts for stock-based compensation cost, including the cost related to the Employee Stock Purchase Plan (“ESPP”), in the accompanying unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2007 and 2006 (in thousands):
| Three Months Ended June 30, |
Six Months Ended June 30, | |||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||
| Systems and network operations |
||||||||||||