Exhibit 99.1
InfoSpace Announces Third Quarter 2007 Results
BELLEVUE, Wash. (November 1, 2007) – InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the three months ended September 30, 2007.
“We are pleased with our third quarter operating results, as we exceeded our expectations in both revenue and Adjusted EBITDA,” said Jim Voelker, Chairman and CEO of InfoSpace, Inc. “Additionally, we unlocked significant value for InfoSpace shareholders through the sale of our directory business for $225 million and the pending sale of our mobile business for $135 million. We expect to return the majority of the net proceeds from the sales to shareholders. Going forward, InfoSpace will be a leading metasearch company with a strong financial position, solid cash flows, a large distribution network and award-winning branded websites. We are honing our strategic priorities for the upcoming year to ensure we fully capitalize on these strengths and continue to drive value creation.”
Revenues for the third quarter of 2007 were $48.7 million and include both online search revenues and mobile revenues; however, they exclude online directory revenues of $8.7 million which are now treated as discontinued operations for the third quarter of 2007 and all prior periods. If the directory business had remained part of continuing operations of InfoSpace, revenues would have been $57.5 million for the third quarter of 2007.
Net loss for the third quarter of 2007, which includes the directory business as discontinued operations, was $12.3 million, or $0.37 per share.
Cash, cash equivalents, and marketable investments as of September 30, 2007 totaled $214.8 million. At the end of the quarter, the Company had no debt obligations.
Third Quarter Highlights and Recent Developments
InfoSpace:
| | • | | Closed the sale of its online directory business, including the Company’s yellow and white pages services, to Idearc for $225 million in cash. |
| | • | | Signed a definitive agreement to sell its mobile services business to Motricity for $135 million in cash. |
| | • | | Ranked highest in customer satisfaction among search engines for its flagship site Dogpile.com for the second consecutive year, according to the J.D. Power and Associates 2007 Residential Online Service Customer Satisfaction Study. |
| | • | | Launched a new version of Dogpile.com, incorporating several improved advanced search features. |
| | • | | Launched mCore™ managed web and mobile search service on Virgin Mobile. |
| | • | | Launched a customized mobile search engine and managed web service on Sprint. |
Other
Additionally, in connection with the announced transactions, Brian McManus, Executive Vice President of the Online division, will leave the Company by the end of the year.
“Brian has made significant contributions to InfoSpace during his tenure,” said Voelker. “We appreciate his dedicated service to this organization and wish him the best in his future endeavors.”
Third Quarter 2007 Segment Information and Adjusted EBITDA
Online Search
Online search revenues were $33.9 million in the third quarter of 2007, a decrease of $6.8 million, compared to the third quarter of 2006. Online search segment income was $10.1 million in the third quarter of 2007. Directory revenues of $8.7 million as well as the related operating expenses are excluded from the segment results and included as a component of discontinued operations.
Mobile
Mobile revenues were $14.9 million in the third quarter of 2007, a decrease of $32.8 million compared to the third quarter of 2006. Mobile revenues included $13.9 million of mobile services revenues in the third quarter of 2007 compared to $9.1 million in the third quarter of 2006 and the remainder is attributable to the mobile media business. Mobile segment loss was $2.4 million in the third quarter of 2007.
Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization (“Adjusted EBITDA”) from Continuing Operations
Adjusted EBITDA from continuing operations was $0.4 million in the third quarter of 2007, compared to negative Adjusted EBITDA from continuing operations of $56.2 million in the third quarter of 2006. InfoSpace’s Adjusted EBITDA from continuing operations is calculated by adjusting GAAP loss from continuing operations, which includes the effects of the restructuring charges, the payments made to employees and directors related to the cash distribution to shareholders, and sale of non-core operations, and to exclude discontinued operations, the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, and other income, net (including such items as interest income, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed in the accompanying table to the condensed consolidated financial statements.
InfoSpace’s management believes that this non-GAAP financial measure provides meaningful supplemental information regarding the Company’s performance by excluding certain expenses and gains that are not indicative of the Company’s core business operating results. InfoSpace
believes that management and its investors benefit from referring to this non-GAAP financial measure in assessing InfoSpace’s performance. Adjusted EBITDA from continuing operations should be evaluated in light of the Company’s financial results prepared in accordance with GAAP. A table reconciling the Company’s Adjusted EBITDA from continuing operations to the loss from continuing operations in accordance with GAAP accompanies the condensed consolidated financial statements in this release.
Fourth Quarter Outlook
Starting in the fourth quarter of 2007, in addition to the directory business, the Company will present its mobile business as a discontinued operation and will also adjust all prior periods. Accordingly, fourth quarter guidance for revenue, Adjusted EBITDA from continuing operations and income from continuing operations represents only the Online search business. The Company will not be providing guidance for the revenue and operating expense components of the directory or mobile businesses. In addition, the Company’s guidance excludes the potential impact of any future one-time gains or losses, including the gain from the sale of the directory business and the expected gain from the pending sale of the mobile businesses. The Adjusted EBITDA from continuing operations guidance below has been prepared in a manner consistent with the historical Adjusted EBITDA from continuing operations provided above and in the accompanying table.
For the fourth quarter of 2007, the Company expects revenue for its online search business to be between $34 million and $35 million. Additionally, the Company expects Adjusted EBITDA from continuing operations to be approximately $1 million and GAAP loss from continuing operations, to be between $7.5 million and $8.5 million, or $0.22 and $0.25 per share.
A conference call will be held today at 2 p.m. Pacific/ 5 p.m. Eastern. The live Webcast can be accessed in the Investor Relations section of the InfoSpace corporate Web site, athttp://www.infospaceinc.com. A replay of the call will be available approximately one hour after the call through November 10, 2007, at 7:30 p.m. Pacific/ 10:30 p.m. Eastern.
About InfoSpace, Inc.
InfoSpace, Inc. is a leading developer of tools and technologies to help people discover and enjoy content and information—whether on a mobile phone or on the PC. InfoSpace uses its proprietary metasearch technology to power a portfolio of branded Web sites, including Dogpile (www.dogpile.com) and WebFetch (www.webfetch.com). The Company’s mCore mobile platform creates revenue opportunities for carriers, while satisfying consumer demand for a highly relevant mobile user experience. More information can be found atwww.infospaceinc.com.
###
Source: InfoSpace, Inc.
For more information, contact:
Stacy Ybarra, InfoSpace
425.709.8127
stacy.ybarra@infospace.com
This release contains forward-looking statements relating to InfoSpace, Inc.’s operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words “believe,” “expect,” “intend,” “anticipate,” variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward looking. Forward-looking statements include, without limitation, statements regarding our expectations that we will return the majority of the net proceeds from the sales of our businesses to shareholders; our expectation that, going forward, InfoSpace will be a leading metasearch company with a strong financial position, solid cash flows, a large distribution network and award-winning branded websites; our expectation that Brian McManus will leave the Company by the end of the year; and our expectations regarding our financial performance for the fourth quarter of 2007. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect InfoSpace’s actual results include general economic, industry and market sector conditions, the progress and costs of the development of our products and services, the timing and extent of market acceptance of those products and services, our dependence on companies to distribute our products and services, the ability to successfully integrate acquired businesses and the successful execution of the Company’s strategic initiatives and restructuring plans, including the sale of its mobile business. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in InfoSpace’s most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q as filed from time to time, in the section entitled “Risk Factors,” and InfoSpace’s current reports on Form 8-K as filed from time to time. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. InfoSpace undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.
InfoSpace, Inc.
Condensed Consolidated Statements of Operations(1)
(Unaudited)
(Amounts in thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Three months ended | | | Nine months ended | |
| | | September 30, | | | September 30, | | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Revenues | | $ | 48,748 | | | $ | 88,346 | | | $ | 188,767 | | | $ | 257,095 | |
Operating expenses:(2) (3) | | | | | | | | | | | | | | | | |
Content and distribution | | | 16,963 | | | | 46,644 | | | | 84,876 | | | | 132,248 | |
Systems and network operations | | | 6,722 | | | | 8,111 | | | | 20,079 | | | | 22,670 | |
Product development | | | 11,713 | | | | 10,852 | | | | 40,322 | | | | 30,246 | |
Sales and marketing | | | 8,397 | | | | 12,195 | | | | 26,318 | | | | 33,277 | |
General and administrative | | | 16,903 | | | | 13,499 | | | | 65,517 | | | | 40,028 | |
Depreciation | | | 4,293 | | | | 3,184 | | | | 13,168 | | | | 9,206 | |
Amortization of intangible assets | | | 172 | | | | 2,429 | | | | 2,895 | | | | 8,015 | |
Restructuring and other, net(4) | | | 623 | | | | 57,789 | | | | (1,879 | ) | | | 57,789 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 65,786 | | | | 154,703 | | | | 251,296 | | | | 333,479 | |
| | | | | | | | | | | | | | | | |
Operating loss | | | (17,038 | ) | | | (66,357 | ) | | | (62,529 | ) | | | (76,384 | ) |
Other income, net | | | 2,716 | | | | 5,406 | | | | 12,449 | | | | 14,005 | |
| | | | | | | | | | | | | | | | |
Loss from continuing operations before income taxes | | | (14,322 | ) | | | (60,951 | ) | | | (50,080 | ) | | | (62,379 | ) |
Income tax benefit | | | 684 | | | | 12,921 | | | | 2,970 | | | | 13,257 | |
| | | | | | | | | | | | | | | | |
Loss from continuing operations | | | (13,638 | ) | | | (48,030 | ) | | | (47,110 | ) | | | (49,122 | ) |
| | | | | | | | | | | | | | | | |
Discontinued operations:(1) | | | | | | | | | | | | | | | | |
Income from discontinued operations, net of taxes | | | 1,381 | | | | 1,301 | | | | 6,183 | | | | 6,417 | |
| | | | | | | | | | | | | | | | |
Net loss | | $ | (12,257 | ) | | $ | (46,729 | ) | | $ | (40,927 | ) | | $ | (42,705 | ) |
| | | | | | | | | | | | | | | | |
Earnings per share—Basic and Diluted | | | | | | | | | | | | | | | | |
Loss from continuing operations | | | (0.41 | ) | | | (1.53 | ) | | | (1.45 | ) | | | (1.57 | ) |
Income from discontinued operations | | | 0.04 | | | | 0.04 | | | | 0.19 | | | | 0.20 | |
| | | | | | | | | | | | | | | | |
Net loss per share—Basic and Diluted | | $ | (0.37 | ) | | $ | (1.49 | ) | | $ | (1.26 | ) | | $ | (1.37 | ) |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding used in computing basic net loss per share | | | 33,158 | | | | 31,316 | | | | 32,421 | | | | 31,213 | |
| | | | | | | | | | | | | | | | |
|
| (1) In the three months ended September 30, 2007, the Company entered into a definitive agreement to sell its directory business. The operating results of the directory business have been presented as a discontinued operation for all periods presented. Amounts for the nine months ended September 30, 2007 include $0.5 million of payments made to employees related to the cash distribution to shareholders in May. Amounts include stock-based compensation expense of $0.3 million and $1.2 million for the three and nine months ended September 30, 2007, respectively, and $0.3 million and $0.5 million for the three and nine months ended September 30, 2006, respectively. Revenue and operating expenses for these discontinued operations are presented below (in thousands): | |
| | |
| | | Three months ended | | | Nine months ended | |
| | | September 30,
2007 | | | September 30,
2006 | | | September 30,
2007 | | | September 30,
2006 | |
Revenue | | $ | 8,740 | | | $ | 7,953 | | | $ | 25,895 | | | $ | 25,324 | |
Operating expenses | | | 7,359 | | | | 6,652 | | | | 19,712 | | | | 18,907 | |
| | | | | | | | | | | | | | | | |
Income from discontinued operations | | $ | 1,381 | | | $ | 1,301 | | | $ | 6,183 | | | $ | 6,417 | |
| | | | | | | | | | | | | | | | |
|
| (2) Stock-based compensation expense for the three and nine months ended September 30, 2007 and 2006 is allocated among the following captions (in thousands): | |
| | |
| | | Three months ended | | | Nine months ended | |
| | | September 30,
2007 | | | September 30,
2006 | | | September 30,
2007 | | | September 30,
2006 | |
Systems and network operations | | $ | 1,085 | | | $ | 478 | | | $ | 2,283 | | | $ | 1,119 | |
Product development | | | 2,767 | | | | 671 | | | | 6,168 | | | | 1,749 | |
Sales and marketing | | | 2,905 | | | | 1,260 | | | | 6,821 | | | | 3,677 | |
General and administrative | | | 6,226 | | | | 2,136 | | | | 12,865 | | | | 6,546 | |
| | | | | | | | | | | | | | | | |
Total stock-based compensation expense | | $ | 12,983 | | | $ | 4,545 | | | $ | 28,137 | | | $ | 13,091 | |
| | | | | | | | | | | | | | | | |
|
| (3) For the nine months ended September 30, 2007 operating expenses include payments made to employees and directors related to the cash distribution to shareholders in May 2007. This amount is allocated among the following captions (in thousands): | |
| | | |
| | | | | | | | | Nine months ended | |
| | | | | | | | | September 30,
2007 | | | September 30,
2006 | |
Systems and network operations | | | | | | | | | | $ | 409 | | | $ | — | |
Product development | | | | | | | | | | | 1,476 | | | | — | |
Sales and marketing | | | | | | | | | | | 2,117 | | | | — | |
General and administrative | | | | | | | | | | | 17,825 | | | | — | |
| | | | | | | | | | | | | | | | |
Total | | | | | | | | | | $ | 21,827 | | | $ | — | |
| | | | | | | | | | | | | | | | |
(4) For the three and nine months ended September 30, 2007 restructuring and other, net consists of a gain on the sale of the assets related to the mobile media operations of $0 and $3.3 million, respectively, and adjustments to estimated restructuring charges of $0.6 million and $1.4 million, respectively. For the three and nine months ended September 30, 2006 restructuring and other, net consists of a restructuring charge of $57.8 million, comprised of goodwill and other intangible asset impairment of $44.5 million, employee separation costs of $6.3 million, a benefit of $1.1 million related to stock compensation, losses on contractual commitments of $5.6 million, and costs of $2.4 million for abandoned facilities.
InfoSpace, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
| | | | | | | | |
| | | September 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
ASSETS | | | | | | | | |
| | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 113,647 | | | $ | 163,505 | |
Short-term investments, available-for-sale | | | 101,125 | | | | 238,444 | |
Accounts receivable, net | | | 35,271 | | | | 67,951 | |
Prepaid expenses and other current assets | | | 14,408 | | | | 16,130 | |
Assets of discontinued operations | | | 76,261 | | | | 83,045 | |
| | | | | | | | |
Total current assets | | | 340,712 | | | | 569,075 | |
Property and equipment, net | | | 33,458 | | | | 30,548 | |
Goodwill and other intangible assets, net | | | 55,537 | | | | 58,432 | |
Deferred tax assets, net | | | 99,989 | | | | 100,789 | |
Other long-term assets | | | 8,908 | | | | 6,995 | |
| | | | | | | | |
Total assets | | $ | 538,604 | | | $ | 765,839 | |
| | | | | | | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 11,791 | | | $ | 12,454 | |
Accrued expenses and other current liabilities | | | 35,478 | | | | 58,415 | |
Short-term deferred revenue | | | 8,842 | | | | 6,205 | |
Liabilities of discontinued operations | | | 8,265 | | | | 9,211 | |
| | | | | | | | |
Total current liabilities | | | 64,376 | | | | 86,285 | |
Long-term liabilities: | | | 679 | | | | 989 | |
| | | | | | | | |
Total liabilities | | | 65,055 | | | | 87,274 | |
| | |
Stockholders’ equity: | | | | | | | | |
Common stock | | | 3 | | | | 3 | |
Additional paid-in capital | | | 1,548,655 | | | | 1,712,897 | |
Accumulated deficit | | | (1,076,540 | ) | | | (1,035,613 | ) |
Accumulated other comprehensive income | | | 1,431 | | | | 1,278 | |
| | | | | | | | |
Total stockholders’ equity | | | 473,549 | | | | 678,565 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 538,604 | | | $ | 765,839 | |
| | | | | | | | |
Summary of cash and short-term investments: | | | | | | | | |
Cash and cash equivalents | | $ | 113,647 | | | $ | 163,505 | |
Short-term investments, available-for-sale | | | 101,125 | | | | 238,444 | |
| | | | | | | | |
Cash and short-term investments | | $ | 214,772 | | | $ | 401,949 | |
| | | | | | | | |
InfoSpace, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
| | | | | | | | |
| | | Nine months ended | |
| | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | |
Operating activities: | | | | | | | | |
Net loss | | $ | (40,927 | ) | | $ | (42,705 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | | | | | | |
Income from discontinued operations | | | (6,183 | ) | | | (6,417 | ) |
Depreciation and amortization | | | 16,063 | | | | 17,221 | |
Stock-based compensation | | | 28,137 | | | | 13,091 | |
Deferred income taxes | | | 800 | | | | (9,622 | ) |
Net gain on sale of assets | | | (3,148 | ) | | | — | |
Restructuring | | | 1,369 | | | | 57,783 | |
Other | | | 193 | | | | 95 | |
Cash provided (used) by changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | 32,375 | | | | 9,737 | |
Other receivables | | | — | | | | (1,403 | ) |
Prepaid expenses and other current assets | | | 2,647 | | | | 4,172 | |
Other long-term assets | | | 87 | | | | (947 | ) |
Accounts payable | | | 4,369 | | | | 1,192 | |
Accrued expenses and other current and long-term liabilities | | | (28,551 | ) | | | (4,007 | ) |
Deferred revenue | | | 2,321 | | | | 428 | |
| | | | | | | | |
Net cash provided by operating activities | | | 9,552 | | | | 38,618 | |
| | |
Investing activities: | | | | | | | | |
Purchases of property and equipment | | | (20,971 | ) | | | (17,372 | ) |
Proceeds from the sale of assets | | | 3,016 | | | | 153 | |
Loan to equity investee | | | (2,000 | ) | | | — | |
Proceeds from sales and maturities of investments | | | 265,199 | | | | 261,614 | |
Purchases of investments | | | (127,834 | ) | | | (277,283 | ) |
| | | | | | | | |
Net cash provided (used) by investing activities | | | 117,410 | | | | (32,888 | ) |
| | |
Financing activities: | | | | | | | | |
Dividend paid | | | (208,203 | ) | | | — | |
Proceeds from stock option and warrant exercises | | | 12,947 | | | | 3,061 | |
Proceeds from issuance of stock through employee stock purchase plan | | | 1,381 | | | | 1,832 | |
| | | | | | | | |
Net cash (used) provided by financing activities | | | (193,875 | ) | | | 4,893 | |
| | | | | | | | |
| | |
Discontinued operations: | | | | | | | | |
Net cash provided by operating activities attributable to discontinued operations | | | 17,346 | | | | 9,979 | |
Net cash used by investing activities attributable to discontinued operations | | | (291 | ) | | | (1,058 | ) |
| | | | | | | | |
Net cash provided by discontinued operations | | | 17,055 | | | | 8,921 | |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | (49,858 | ) | | | 19,544 | |
| | |
Cash and cash equivalents: | | | | | | | | |
Beginning of period | | | 163,505 | | | | 153,013 | |
| | | | | | | | |
End of period | | $ | 113,647 | | | $ | 172,557 | |
| | | | | | | | |
InfoSpace, Inc.
Segment Information(1)
(Unaudited)
(Amounts in thousands)
| | | | | | | | | | | | | | | | |
| | | Three months ended | | | Nine months ended | |
| | | September 30, | | | September 30, | | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Online search | | | | | | | | | | | | | | | | |
Revenue | | $ | 33,851 | | | $ | 40,615 | | | $ | 101,479 | | | $ | 119,747 | |
Content and distribution expenses | | | 15,274 | | | | 17,157 | | | | 42,820 | | | | 49,424 | |
Operating expenses(2) | | | 8,481 | | | | 8,081 | | | | 25,481 | | | | 23,531 | |
| | | | | | | | | | | | | | | | |
Segment income | | | 10,096 | | | | 15,377 | | | | 33,178 | | | | 46,792 | |
Segment margin | | | 29.8 | % | | | 37.9 | % | | | 32.7 | % | | | 39.1 | % |
| | | | |
Mobile | | | | | | | | | | | | | | | | |
Revenue | | | 14,897 | | | | 47,731 | | | | 87,288 | | | | 137,348 | |
Content and distribution expenses | | | 1,689 | | | | 29,487 | | | | 42,056 | | | | 82,823 | |
Operating expenses(2) | | | 15,585 | | | | 24,487 | | | | 54,615 | | | | 68,894 | |
| | | | | | | | | | | | | | | | |
Segment loss | | | (2,377 | ) | | | (6,243 | ) | | | (9,383 | ) | | | (14,369 | ) |
Segment margin | | | -16.0 | % | | | -13.1 | % | | | -10.7 | % | | | -10.5 | % |
| | | | |
Total | | | | | | | | | | | | | | | | |
Total revenue | | | 48,748 | | | | 88,346 | | | | 188,767 | | | | 257,095 | |
Total content and distribution expenses | | | 16,963 | | | | 46,644 | | | | 84,876 | | | | 132,247 | |
Total segment operating expenses(2) | | | 24,066 | | | | 32,568 | | | | 80,096 | | | | 92,425 | |
| | | | | | | | | | | | | | | | |
Total segment income | | | 7,719 | | | | 9,134 | | | | 23,795 | | | | 32,423 | |
Total segment margin | | | 15.8 | % | | | 10.3 | % | | | 12.6 | % | | | 12.6 | % |
| | | | |
Corporate | | | | | | | | | | | | | | | | |
Operating expenses(2) (3) | | | 6,686 | | | | 7,544 | | | | 44,003 | | | | 20,706 | |
Depreciation | | | 4,293 | | | | 3,184 | | | | 13,168 | | | | 9,206 | |
Amortization of intangible assets | | | 172 | | | | 2,429 | | | | 2,895 | | | | 8,015 | |
Stock-based compensation | | | 12,983 | | | | 4,545 | | | | 28,137 | | | | 13,091 | |
Restructuring and other, net(4) | | | 623 | | | | 57,789 | | | | (1,879 | ) | | | 57,789 | |
Other income, net | | | (2,716 | ) | | | (5,406 | ) | | | (12,449 | ) | | | (14,005 | ) |
Income tax benefit | | | (684 | ) | | | (12,921 | ) | | | (2,970 | ) | | | (13,257 | ) |
Income from discontinued operations(5) | | | (1,381 | ) | | | (1,301 | ) | | | (6,183 | ) | | | (6,417 | ) |
| | | | | | | | | | | | | | | | |
Net loss | | $ | (12,257 | ) | | $ | (46,729 | ) | | $ | (40,927 | ) | | $ | (42,705 | ) |
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(1) In the nine months ended September 30, 2007, the Company realigned its operations and, as a result, changed the way it presents its financial information to its chief operating decision maker to better reflect how management measures operating performance. (2) For 2007, amounts include expenses directly attributable to the reportable business units and, in addition, include certain indirect expenses allocated to the reportable business units based on internal usage measurements. Segment operating expenses do not include allocations for certain indirect general and administrative expenses, depreciation and amortization expense, stock-based compensation expense, restructuring and other charges, non-operating gains and losses, income taxes or interest income. Segment information for 2006 is presented in a manner consistent with measures used for reporting 2007 segment information. (3) Amount for the nine months ended September 30, 2007 includes $21.8 million of payments made to employees and directors related to the cash distribution to shareholders in May. (4) Amounts for the three and nine months ended September 30, 2007 consist of gains on the sale of the assets related to the mobile media operations of $0 and $3.3 million, respectively, and adjustments to estimated restructuring charges of $0.6 million and $1.4 million, respectively. Amounts for the three and nine months ended September 30, 2006 consist of a restructuring charge of $57.8 million, comprised of goodwill and other intangible asset impairment of $44.5 million, employee separation costs of $6.3 million, a benefit of $1.1 million related to stock compensation, losses on contractual commitments of $5.6 million, and costs of $2.4 million for abandoned facilities. (5) In the three months ended September 30, 2007, the Company entered into a definitive agreement to sell its directory business. The operating results of the directory business have been presented as a discontinued operation for all periods presented. The amount for the nine months ended September 30, 2007 includes $0.5 million of payments made to employees related to the cash distribution to shareholders in May 2007. Amounts include stock-based compensation expense of $0.3 million and $1.2 million for the three and nine months ended September 30, 2007, respectively, and $0.3 million and $0.5 million for the three and nine months ended September 30, 2006, respectively. Revenue and operating expenses for these discontinued operations are presented below (in thousands): | |
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| | | Three months ended | | | Nine months ended | |
| | | September 30,
2007 | | | September 30,
2006 | | | September 30,
2007 | | | September 30,
2006 | |
Revenue | | $ | 8,740 | | | $ | 7,953 | | | $ | 25,895 | | | $ | 25,324 | |
Operating expenses | | | 7,359 | | | | 6,652 | | | | 19,712 | | | | 18,907 | |
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Income from discontinued operations | | $ | 1,381 | | | $ | 1,301 | | | $ | 6,183 | | | $ | 6,417 | |
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InfoSpace, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure
Adjusted EBITDA from Continuing Operations Reconciliation(1)
(Unaudited)
(Amounts in thousands)
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| | | Three months ended | | | Nine months ended | |
| | | September 30, | | | September 30, | | | September 30, | | | September 30, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Loss from continuing operations(2) | | $ | (13,638 | ) | | $ | (48,030 | ) | | $ | (47,110 | ) | | $ | (49,122 | ) |
Depreciation | | | 4,293 | | | | 3,184 | | | | 13,168 | | | | 9,206 | |
Amortization of intangible assets | | | 172 | | | | 2,429 | | | | 2,895 | | | | 8,015 | |
Stock-based compensation | | | 12,983 | | | | 4,545 | | | | 28,137 | | | | 13,091 | |
Other income, net(3) | | | (2,716 | ) | | | (5,406 | ) | | | (12,449 | ) | | | (14,005 | ) |
Income tax benefit | | | (684 | ) | | | (12,921 | ) | | | (2,970 | ) | | | (13,257 | ) |
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Adjusted EBITDA from continuing operations | | $ | 410 | | | $ | (56,199 | ) | | $ | (18,329 | ) | | $ | (46,072 | ) |
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Adjusted EBITDA from Continuing Operations Reconciliation for Forward Looking Guidance(4)
(Amounts in thousands)
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| | | Ranges for the three months ending | |
| | | December 31, 2007 | |
Loss from continuing operations | | $ | (7,500 | ) | | $ | (8,500 | ) |
Depreciation and amortization of intangible assets | | | 2,000 | | | | 2,500 | |
Stock-based compensation | | | 8,500 | | | | 9,500 | |
Other income, net(3) | | | (2,000 | ) | | | (2,500 | ) |
Income tax provision | | | — | | | | — | |
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Adjusted EBITDA from continuing operations | | $ | 1,000 | | | $ | 1,000 | |
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(1) Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") from continuing operations is a non-GAAP financial measure and is reconciled to loss from continuing operations, which the Company's management believes to be the most comparable generally accepted accounting principles ("GAAP") measure. Adjusted EBITDA from continuing operations results are calculated by adjusting GAAP loss from continuing operations to exclude the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense and other income, net (including such items as interest income, litigation settlements and contingencies, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed above. This calculation excludes the directory business, as it has been classified as discontinued operations in all periods presented. The Company uses this non-GAAP financial measure for internal management purposes, when publicly providing guidance on possible future results, and as a means to evaluate period to period comparisons. The Company's management believes that this non-GAAP financial measure is a common measure used by investors and analysts to evaluate its performance. This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the results of operations and trends affecting the Company's business. This non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, or superior to, income from continuing operations in accordance with GAAP.
(2) As presented in the unaudited Condensed Consolidated Statements of Operations.
(3) Other income, net, primarily consists of interest income, gains or losses from the disposal of assets, and foreign currency transaction gains or losses.
(4) Adjusted EBITDA from continuing operations reconciliation for forward looking guidance excludes both the directory and mobile businesses, as each will be classified as discontinued operations in future periods.
