UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
May 28, 2003
Ask Jeeves, Inc.
| Delaware (State or Other Jurisdiction of Incorporation) | 000-26521 (Commission File Number) | 94-3334199 (I.R.S. Employer Identification Number) |
5858 Horton Street, Suite 350
Emeryville, California 94608
(510) 985-7400
ITEM 5. OTHER EVENTS AND REQUIRED FD DISCLOSURE
On May 28, 2003, Ask Jeeves, Inc. (the “Registrant”) entered into a definitive Asset Purchase Agreement with Kanisa Inc. (“Kanisa”) (the “Asset Purchase Agreement”) pursuant to which the Registrant has agreed, subject to various conditions, to sell certain assets used in Registrant’s Jeeves Solutions business to Kanisa for up to $4.25 million. The terms of the Asset Purchase Agreement provide that Kanisa will pay $3.5 million at closing and issue a promissory note in the amount of $750,000, subject to certain downward adjustments described in the Asset Purchase Agreement. The transaction is expected to close in July 2003.
Risk Factor Disclosure
If the proposed sale of the Registrant’s Jeeves Solutions division is delayed or is not completed, the division might experience lower sales volume and lose employees.
The Registrant has announced that it has entered into an agreement to sell its Jeeves Solutions division. The Registrant faces the risk that the sale might not close. If the sale does not close on schedule or at all, the division’s corporate customers might be concerned that the Registrant and/or any ultimate buyer will not adequately support the product, which might cause present corporate customers to seek to terminate their relationships with Jeeves Solutions resulting in lower revenues. In addition, a failure to close the sale of the division on schedule or at all might make it difficult to make new sales. Lower sales would result in lower revenues for the division. In addition, the uncertainty introduced by a delayed or terminated sale might cause employees of the division to seek other employment, resulting in increased turnover. Increased turnover might lower productivity, resulting in decreased customer satisfaction and, ultimately, lower sales revenues.
ITEM 7. FINANCIAL STATEMENTS,PRO FORMAFINANCIAL INFORMATION AND EXHIBITS.
| (a) | Financial Statements of Business Acquired | |
| Not applicable. | ||
| (b) | Pro FormaFinancial Information | |
| Pro forma financial information regarding the proposed disposition of Jeeves Solutions division is included below. | ||
| (c) | Exhibits |
| Exhibit | Description | |
| 10.1 | Asset Purchase Agreement dated May 28, 2003 by and between Ask Jeeves, Inc. and Kanisa Inc. |
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following pro forma condensed consolidated financial information is based on the historical financial statements of Ask Jeeves, Inc. and has been prepared to illustrate the pro forma effect of the pending disposition of the Jeeves Solutions division.
The unaudited pro forma consolidated balance sheet as of March 31, 2003 is presented as if the disposition had occurred and all assets and liabilities relating to the division had been liquidated at that date. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2003 and for the year ended December 31, 2002 assume that the disposition occurred as of January 1, 2002.
The pro forma adjustments are based upon available information and assumptions that our management believes are reasonable. The unaudited consolidated statements of operations are not necessarily indicative of our future results of operations or the results of operations which might have occurred had the proposed disposition occurred as of the dates stated above. The pro forma adjustments are described in the footnotes.
The unaudited pro forma consolidated financial information should be read in conjunction with our audited financial statements and related notes included in our Form 8-K filed on May 29, 2003, the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or MD&A, included in our Form 10-K filed March 12, 2003, and our unaudited interim financial statements and the related MD&A included in our Form 10-Q filed May 2, 2003, all of which are incorporated herein by this reference.
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Unaudited Pro Forma Condensed Consolidated Balance Sheets
March 31, 2003
| Pro Forma | |||||||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||||
| (unaudited) | |||||||||||||||
| ASSETS | |||||||||||||||
| Current assets: | |||||||||||||||
| Cash and cash equivalents | $ | 31,848 | $ | — | $ | 31,848 | |||||||||
| Marketable securities | 7,289 | — | 7,289 | ||||||||||||
| Restricted cash and marketable securities | 11,065 | — | 11,065 | ||||||||||||
| Total cash, cash equivalents and marketable securities | 50,202 | — | 50,202 | ||||||||||||
| Accounts receivable, net | 9,436 | (1,381 | ) | 8,055 | |||||||||||
| Prepaid expenses and other current assets | 2,679 | (301 | ) | 2,378 | |||||||||||
| Total current assets | 62,317 | (1,682 | ) | 60,635 | |||||||||||
| Property and equipment, net | 10,127 | (283 | ) | 9,844 | |||||||||||
| Intangible assets, net | 2,419 | — | 2,419 | ||||||||||||
| Other long-term assets | 1,275 | — | 1,275 | ||||||||||||
| Total assets | $ | 76,138 | $ | (1,965 | ) | $ | 74,173 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: | |||||||||||||||
| Accounts payable | $ | 2,020 | $ | (19 | ) | $ | 2,001 | ||||||||
| Accrued compensation and related expenses | 3,772 | (546 | ) | 3,226 | |||||||||||
| Accrued marketing expenses | 822 | (55 | ) | 767 | |||||||||||
| Accrued restructuring costs | 2,060 | (75 | ) | 1,985 | |||||||||||
| Other accrued liabilities | 7,484 | (61 | ) | 7,423 | |||||||||||
| Deferred revenue | 9,242 | (1,946 | ) | 7,296 | |||||||||||
| Borrowings under line of credit | 11,000 | — | 11,000 | ||||||||||||
| Total current liabilities | 36,400 | (2,702 | ) | 33,698 | |||||||||||
| Other liabilities | 326 | — | 326 | ||||||||||||
| Total liabilities | 36,726 | (2,702 | ) | 34,024 | |||||||||||
| Commitments and contingencies | |||||||||||||||
| Stockholders’ equity: | |||||||||||||||
| Common stock, $.001par value; 150,000,000 shares authorized; 42,871,824 shares issued and outstanding at March 31, 2003 | 728,021 | — | 728,021 | ||||||||||||
| Deferred stock compensation | (5 | ) | — | (5 | ) | ||||||||||
| Accumulated deficit | (689,044 | ) | — | (689,044 | ) | ||||||||||
| Accumulated other comprehensive income | 440 | — | 440 | ||||||||||||
| Total stockholders’ equity | 39,412 | — | 39,412 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 76,138 | $ | (2,702 | ) | $ | 73,436 | ||||||||
See accompanying notes.
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Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2002
| Pro Forma | |||||||||||||||
| Historical | Adjustments | Pro Forma | |||||||||||||
| Revenues: | |||||||||||||||
| Web Properties | $ | 58,763 | $ | — | $ | 58,763 | |||||||||
| Jeeves Solutions | 15,373 | (9,088 | )(a) | 6,285 | |||||||||||
| Total revenues | 74,136 | (9,088 | ) | 65,048 | |||||||||||
| Cost of revenues: | |||||||||||||||
| Web Properties | 16,960 | 2,335 | (b) | 19,295 | |||||||||||
| Jeeves Solutions | 6,175 | (6,175 | )(b) | — | |||||||||||
| Total cost of revenues | 23,135 | (3,840 | ) | 19,295 | |||||||||||
| Gross profit (loss) | 51,001 | (5,248 | ) | 45,753 | |||||||||||
| Operating expenses: Product development | 17,992 | (4,706 | ) | 13,286 | |||||||||||
| Sales and marketing | 35,742 | (9,799 | ) | 25,943 | |||||||||||
| General and administrative | 15,497 | (359 | ) | 15,138 | |||||||||||
| Stock-based compensation | 90 | (14 | ) | 76 | |||||||||||
| Impairment of long-lived assets | 2,593 | — | 2,593 | ||||||||||||
| Restructuring costs | 2,470 | (817 | ) | 1,653 | |||||||||||
| Total operating expenses | 74,384 | (15,695 | ) | 58,689 | |||||||||||
| Operating income (loss) | (23,383 | ) | 10,447 | (12,936 | ) | ||||||||||
| Gain on acquisition of joint venture | 974 | — | 974 | ||||||||||||
| Interest and other income, net | 1,106 | — | 1,106 | ||||||||||||
| Net income (loss) before income tax provision | (21,303 | ) | 10,447 | (10,856 | ) | ||||||||||
| Income tax provision | — | — | — | ||||||||||||
| Net income (loss) | $ | (21,303 | ) | $ | 10,447 | $ | (10,856 | ) | |||||||
| Net income (loss) per share Basic | $ | (.52 | ) | $ | .25 | $ | (.27 | ) | |||||||
| Diluted | $ | (.52 | ) | $ | .25 | $ | (.27 | ) | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 40,698,137 | 40,698,137 | 40,698,137 | ||||||||||||
| Diluted | 40,698,137 | 40,698,137 | 40,698,137 | ||||||||||||
See accompanying notes.
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Unaudited Pro Forma Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2003
| Revenues: | |||||||||||||||
| Web Properties | $ | 21,584 | $ | — | $ | 21,584 | |||||||||
| Jeeves Solutions | 3,578 | (2,447 | )(a) | 1,131 | |||||||||||
| Total revenues | 25,162 | (2,447 | ) | 22,715 | |||||||||||
| Cost of revenues: | |||||||||||||||
| Web Properties | 5,038 | 478 | (b) | 5,516 | |||||||||||
| Jeeves Solutions | 1,190 | (1,190 | )(b) | — | |||||||||||
| Total cost of revenues | 6,228 | (712 | ) | 5,516 | |||||||||||
| Gross profit (loss) | 18,934 | (1,735 | ) | 17,199 | |||||||||||
| Operating expenses: Product development | 4,296 | (751 | ) | 3,545 | |||||||||||
| Sales and marketing | 8,169 | (1,278 | ) | 6,891 | |||||||||||
| General and administrative | 4,281 | (1 | ) | 4,280 | |||||||||||
| Restructuring costs | 466 | (466 | ) | — | |||||||||||
| Total operating expenses | 17,212 | (2,496 | ) | 14,716 | |||||||||||
| Operating income (loss) | 1,722 | 761 | 2,483 | ||||||||||||
| Gain on acquisition of joint venture | 6,124 | — | 6,124 | ||||||||||||
| Interest and other income, net | 180 | — | 180 | ||||||||||||
| Net income (loss) before income tax provision | 8,026 | 761 | 8,787 | ||||||||||||
| Income tax provision | 335 | — | 335 | ||||||||||||
| Net income (loss) | $ | 7,691 | $ | 761 | $ | 8,452 | |||||||||
| Net income (loss) per share Basic | $ | 0.18 | $ | .01 | $ | 0.19 | |||||||||
| Diluted | $ | 0.16 | $ | .01 | $ | 0.17 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 42,197,514 | 42,197,514 | 42,197,514 | ||||||||||||
| Diluted | 48,619,325 | 48,619,325 | 48,619,325 | ||||||||||||
See accompanying notes.
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NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
| 1. | Basis of Presentation |
The unaudited pro forma condensed consolidated financial information is based on the historical financial statements of the Company and has been prepared to illustrate the pro forma effect of the pending disposition of the Jeeves Solutions division.
The unaudited pro forma consolidated balance sheet as of March 31, 2003 is presented as if the disposition had occurred and all assets and liabilities relating to the division had been liquidated at that date. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2003 and for the year ended December 31, 2002 assume that the disposition occurred as of January 1, 2002.
| 2. | Pro Forma Adjustments |
(a) Includes revenues relating to the Jeeves Solutions operations in the pending disposition. Such revenue excludes licensing revenues from the Company’s joint ventures, A.J.J. Co. Ltd. (Japan) and the Ask Jeeves UK partnership, prior to the Company’s acquisition of the remaining interests in the UK partnership, which are being retained by the Company.
(b) Includes facilities and license related costs of approximately $478,000 and $2.3 million for the three months ended March 31, 2003 and year ended December 31, 2002, respectively, which had been allocated to Jeeves Solutions “Cost of Revenues” and are now included in Web Properties “Cost of Revenues.”
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| ASK JEEVES, INC. (Registrant) | ||
| Date: May 29, 2003 | By: /s/ Brett M. Robertson Brett M. Robertson General Counsel and Secretary |
EXHIBIT INDEX
| Exhibit No. | Description | |
| 10.1 | Asset Purchase Agreement, dated May 28, 2003, between Ask Jeeves, Inc. and Kanisa Inc. |
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