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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): APRIL 30, 1998
EXCITE, INC.
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(Exact name of Registrant as specified in its charter)
CALIFORNIA
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(State or other jurisdiction of incorporation)
0-28064 77-0378215
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(Commission (IRS Employer
File Number) Identification No.)
555 Broadway, Redwood City, CA 94063
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(Address of principal executive offices) (Zip Code)
(650) 568-6000
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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The undersigned registrant hereby reports the following items related to
the Registrant's results of operations subsequent to its acquisition of
Classifieds2000, Inc. ("Classifieds2000") on April 1, 1998, as set forth below
and in the pages attached hereto:
ITEM 5: OTHER EVENTS
The Company's revenues and net loss for the 30-day period ended April 30,
1998 were $7.4 million and $78.4 million, respectively. The basic and diluted
net loss per share for the 30-day period ended April 30, 1998 was $(3.43). The
net loss includes nonrecurring charges of $56.8 million related to the Company's
agreement with Netscape Communication Corporation ("Netscape") and $16.2 million
related to the write-off of in-process technology associated with the
acquisition of certain assets.
In April 1998, the Company and Netscape entered into a two-year agreement
(the "Netcenter Agreement") with respect to Netscape's recently announced
"Netcenter" online service. Under the Netcenter Agreement, the Company will,
among other things, provide, host and sell advertising for certain co-branded
content channels, a co-branded Web search service and a co-branded Web directory
service to be offered on Netscape's Netcenter online service (collectively the
"Co-Branded Services"). In addition, the Company's Classifieds2000 service will
be featured as the provider of classified advertising (excluding career and job
posting classified ads) for the Netcenter service. The Company will also be
featured as a "premier provider" on the "Net Search" page of Netscape's Web site
and will also be similarly featured on the Netcenter "Netcenter Widget" tool.
The Company will be responsible for advertising sales for, and will pay to
Netscape a percentage of advertising revenues generated from, the Co-Branded
Services, and will also be required to make payments based upon the amount of
traffic generated from the Net Search page and the Netcenter Widget tool. The
Company has paid $50.0 million and will pay an additional $20.0 million by June
30, 1998 as a prepayment of its obligations under the Netcenter Agreement (the
"Cash Payment"). No amounts will be paid to Netscape until such time as the
amount of revenues generated by Co-Branded Services which would be payable to
Netscape thereunder equals the portion of the Cash Payment attributable to
traffic and royalty payments under the Netcenter Agreement. In addition, the
Company has issued a warrant to Netscape to purchase 423,079 shares of the
Company's Common Stock at an exercise price of approximately $59.09 per share
and a second warrant to purchase shares of the Company's Common Stock at an
aggregate exercise price of up to $25.0 million, subject to reduction to $10.0
million in certain circumstances. The fair value of the first warrant and the
aggregate $10.0 million exercise price of the second warrant that is not subject
to contingencies initially has been estimated to be $16.1 million.
The Company expects to incur $56.8 million of distribution license fees and
data acquisition costs in the second quarter of 1998, consisting of $40.7
million attributable to the Cash Payment and $16.1 million attributable to the
warrants. The remaining $29.3 million of the Cash Payment and the warrant
valuation will be amortized over the two-year term of the Netcenter Agreement.
The Company may record additional charges related to the warrants in the second
quarter of 1998 and future periods due to the resolution of contingencies
regarding the remaining $15.0 million aggregate exercise price of the second
warrant and under certain other conditions.
Also in April 1998, the Company acquired certain assets, including
in-process technology of approximately $16.2 million that was expensed in April,
for a total purchase price of approximately $16.5 million in a transaction
accounted for as an asset purchase. In connection with this acquisition, the
Company issued approximately 165,000 shares of Common Stock, assumed options and
warrants to purchase approximately 159,000 shares of Common Stock, assumed net
liabilities of approximately $540,000 and incurred approximately $175,000 in
merger-related expenses primarily for legal and other professional fees.
On April 1, 1998, the Company acquired Classifieds2000 in a transaction
accounted for as a pooling of interests. The revenue and net loss amounts set
forth above include 30 days of combined operations of Excite and
Classifieds2000. This information is reported for purposes of complying with the
Securities and Exchange Commission's Accounting Series Release 135. The amounts
set forth above are not necessarily indicative of the results of operations for
the Company's quarter ending June 30, 1998 or for the fiscal year ending
December 31, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this amendment to be signed on its behalf by
the undersigned thereunto duly authorized.
EXCITE, INC.
Date: May 19, 1998 By: /s/ Robert C. Hood
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Robert C. Hood
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer
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