UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): January 28, 2003
LookSmart, Ltd.
(Exact name of registrant as specified in its charter)
Delaware | | 000-26357 | | 13-3904355 |
(State or other jurisdiction | | (Commission | | (IRS Employer |
of incorporation) | | File Number) | | Identification No.) |
625 Second Street, San Francisco, California | | 94107 |
(Address of principal executive offices) | | (Zip Code) |
(415) 348-7000
Registrant’s telephone number, including area code
Item 5—Other Events.
On January 28, 2003, the Company announced the following financial results for the fourth quarter of 2002:
Revenue Grows 65%:LookSmart reported fourth quarter 2002 revenue of $31.3 million, a 65 percent increase from the fourth quarter 2001, a 31 percent sequential increase over revenues of $23.8 in the third quarter 2002, and significantly higher than the Company’s expectation of $27.0 million.
Company Reaches Net Profitability:Under GAAP, LookSmart’s net income for the fourth quarter 2002 was $34.6 million or $0.33 per diluted share, which includes a net gain of $32.6 million for the retirement of the debt related to the BT LookSmart joint venture and $1.4 million of costs incurred for the restructuring of joint venture operations. This is the first quarter of GAAP profitability in the Company’s history. This compares to a net loss of ($11.1) million, which includes an asset impairment charge of $4.1 million, or ($0.12) per share for the fourth quarter 2001, and a net loss of ($0.5) million or ($0.00) per share for the third quarter 2002.
Listings Revenue Up 126%:Listings revenue of $27.3 million grew 126 percent from the fourth quarter 2001, and increased 45 percent sequentially from the third quarter 2002. Large business listings revenue increased to $23.3 million in the fourth quarter, a 147 percent increase from the comparable year ago quarter and a 46 percent increase over $15.9 million for the third quarter 2002. Small business listings rose to $4.0 million, a 40 percent sequential increase from $2.8 million in the third quarter 2002. Listings revenue now represents 87 percent of LookSmart’s total revenue.
Paid Clicks Rise 155%:During the fourth quarter paid clicks grew to 160 million, up 155 percent from the year-ago period and up 33 percent from the prior quarter’s 120 million clicks. Average revenue per click, or the average cost-per-click to advertisers, was $0.17, consistent with the prior quarter.
Successful Settlement of BT LookSmart Debt: On December 4, 2002 LookSmart and BT Group (BT, formerly British Telecommunications, plc) agreed to restructure their joint venture, BT LookSmart. LookSmart agreed to pay BT $3.5 million from its unrestricted cash and one million shares of LookSmart common stock in exchange for the complete resolution of the joint venture and the related debt of $40.2 million. In addition, LookSmart returned $1.5 million in restricted cash to BT (the remaining proceeds of the loan), and LookSmart and BT will share equally any restructuring costs. The net impact of this transaction was a gain of $32.6 million.
Continued Strong Cash Balance: Cash and short-term investments were $51.3 million as of December 31, 2002. This is the result of $3.1 million of cash generated during the quarter, less the $3.5 million cash payment made to BT.
LOOKSMART, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS—GAAP BASIS
(In thousands, except per share amounts)
| | | Three Months Ended 31-Dec
| | Twelve Months Ended 31-Dec
| |
| | | 2001
| | | 2002
| | 2001
| | | 2002
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| Revenues: | | | | | | | | | | | | | | | |
| Listings | | $ | 12,063 | | | $ | 27,256 | | $ | 35,714 | | | $ | 74,659 | |
| Advertising | | | 3,009 | | | | 432 | | | 22,855 | | | | 6,097 | |
| Licensing | | | 3,398 | | | | 3,564 | | | 14,868 | | | | 14,699 | |
| Ecommerce | | | 528 | | | | — | | | 9,523 | | | | 573 | |
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| Total revenues | | | 18,998 | | | | 31,252 | | | 82,960 | | | | 96,028 | |
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| Cost of revenues: | | | | | | | | | | | | | | | |
| Listings | | | 3,331 | | | | 13,068 | | | 8,869 | | | | 31,723 | |
| Advertising | | | 1,182 | | | | 1,348 | | | 5,116 | | | | 5,598 | |
| Ecommerce | | | 240 | | | | — | | | 5,799 | | | | 64 | |
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| Total cost of revenues | | | 4,753 | | | | 14,416 | | | 19,784 | | | | 37,385 | |
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| Gross profit | | | 14,245 | | | | 16,836 | | | 63,176 | | | | 58,643 | |
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| Operating expenses: | | | | | | | | | | | | | | | |
| Sales and marketing | | | 6,318 | | | | 4,986 | | | 40,822 | | | | 20,786 | |
| Product development | | | 5,841 | | | | 5,851 | | | 30,124 | | | | 23,139 | |
| General and administrative | | | 1,867 | | | | 2,477 | | | 10,698 | | | | 10,261 | |
| Amortization of goodwill | | | 905 | | | | — | | | 4,630 | | | | — | |
| Asset impairment and restructuring charges | | | 4,049 | | | | — | | | 15,840 | | | | — | |
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| Total operating expenses | | | 18,980 | | | | 13,314 | | | 102,114 | | | | 54,186 | |
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| Income/(Loss) from operations | | | (4,735 | ) | | | 3,522 | | | (38,938 | ) | | | 4,457 | |
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| Non-operating income (expenses) | | | (3,974 | ) | | | 30,944 | | | (17,521 | ) | | | 24,367 | |
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| Income/(Loss) from continuing operations before income taxes | | | (8,709 | ) | | | 34,466 | | | (56,459 | ) | | | 28,824 | |
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| Income taxes & minority interest | | | (78 | ) | | | 103 | | | (133 | ) | | | 80 | |
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Income/(Loss) from continuing operations | | | (8,787 | ) | | | 34,569 | | | (56,592 | ) | | | 28,904 | |
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Loss on discontinued operations | | | (2,297 | ) | | | — | | | (2,975 | ) | | | (972 | ) |
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Net income/(loss) | | | (11,084 | ) | | | 34,569 | | | (59,567 | ) | | | 27,932 | |
LOOKSMART, LTD
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
| | | 31-Dec-01
| | 31-Dec-02
|
ASSETS | | | | | | |
| Cash | | $ | 29,766 | | $ | 47,696 |
| Short-Term Investments | | | 14,346 | | | 3,568 |
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| Total Unrestricted Cash and Short-Term Investments | | | 44,112 | | | 51,264 |
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| Restricted Cash | | | 3,728 | | | — |
| Accounts Receivable, net | | | 9,294 | | | 15,852 |
| Other Current Assets | | | 3,667 | | | 3,914 |
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Total Current Assets | | | 60,801 | | | 71,030 |
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| Property, Plant and Equipment, net | | | 10,272 | | | 9,404 |
| Goodwill and Intangibles, net | | | 9,969 | | | 15,034 |
| Other Assets | | | 5,060 | | | 5,086 |
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Total Assets | | $ | 86,102 | | $ | 100,554 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
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| Current portion of long-term debt | | $ | 0 | | $ | 104 |
| Accounts Payable | | | 2,323 | | | 3,333 |
| Deferred Revenue—current portion | | | 9,152 | | | 7,798 |
| Other Current Liabilities | | | 14,647 | | | 19,513 |
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Total Current Liabilities | | | 26,122 | | | 30,748 |
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| Long Term Liabilities | | | 36,336 | | | 1,904 |
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Total Liabilities | | | 62,458 | | | 32,652 |
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Total Equity | | | 23,644 | | | 67,902 |
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Total Liabilities and Stockholders’ Equity | | $ | 86,102 | | $ | 100,554 |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | LookSmart, Ltd. (Registrant) |
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January 28, 2003
| | | | /s/ Dianne Dubois
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| Date | | | | Dianne Dubois, Chief Financial Officer |
