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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
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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Item 5 of the Company's Current Report on Form 8-K originally filed on
May 19, 1998 is amended to read as follows:
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 $21.5 million, respectively. The basic and
diluted net loss per share for the 30-day period ended April 30, 1998 was
$(0.92) The net loss includes nonrecurring charges of $16.2 million related to
the write-off of in-process technology associated with the acquisition of
certain assets in April 1998.
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 was estimated to be
$16.1 million.
In April 1998 the Company capitalized $29.3 million as Prepaid
Distribution Fees and charged $56.8 million to operations as a non-recoverable
portion of the prepayment to Netscape. The Company had previously concluded that
there was no reasonable basis to assume a probable recovery of the value of the
prepayment and warrants issued to Netscape. Specifically, the Company had
developed a valuation model to calculate the anticipated incremental net
revenues that would be earned from the Netcenter Agreement over its term of two
years. This model determined that an amount of $56.8 million was not expected to
be recovered from anticipated future revenue streams.
After discussions with the Staff of the Securities and Exchange
Commission (the "SEC"), the Company has revised the original accounting for this
transaction and increased the fair value of the warrants issued in this
transaction by $3.8 million. The total consideration of $89.9 million has been
capitalized as Prepaid Netscape Distribution Fees and Trademarks. The amount
capitalized represents the amount of the sum of the prepayments ($70.0 million)
and the independent valuation of the warrants issued ($19.9 million) from the
Netcenter Agreement. The $89.9 million, representing the combined value of
marketing and distribution rights, trademarks and other exclusivities, which
extend over the term of the Netcenter Agreement, will be recognized ratably over
the term of the agreement as distribution services are received, commencing with
the launch of the service in June, 1998.
As a result of the revised orignial accouting for the Netcenter
Agreement, the Company has made an adjustment to decrease the amount previously
expensed as distribution license fees and data acquisition costs during the
30-day period ended April 30, 1998. The effect of this reallocation on the
Company's previously reported net loss and basic and diluted net loss per share
is as follows (in thousands, except per share data; unaudited):
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<TABLE>
<CAPTION>
30-DAY PERIOD ENDED
STATEMENT OF OPERATIONS: APRIL 30, 1998
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AS REPORTED RESTATED
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<S> <C> <C>
Net loss $ (78,360) $ (21,528)
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Basic and diluted net loss per share $ (3.43) $ (0.92)
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</TABLE>
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: October 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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