<PAGE> 1
================================================================================
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): DECEMBER 31, 1998
EXCITE, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE
------------------------------------------------------
(State or other jurisdiction of incorporation)
<TABLE>
<S> <C>
0-28064 77-0378215
- --------------------------- -------------------------
(Commission (IRS Employer
File Number) Identification No.)
</TABLE>
555 Broadway, Redwood City, CA 94063
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(650) 568-6000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
================================================================================
<PAGE> 2
ITEM 5: OTHER EVENTS
The Company's revenue of $54.1 million for the fourth quarter ended
December 31, 1998, was up 163% from the $20.5 million for the corresponding
fourth quarter of 1997. Revenue for the fourth quarter represented a 23%
sequential increase over the $44.0 million reported in the third quarter of
1998.
The net loss for the fourth quarter of 1998 was $5.8 million, or $0.11 per
share. These results compare to a net loss of $13.0 million, or $0.39 per share,
for the corresponding quarter of the prior year.
For the total year, the Company generated revenue of $154.1 million and a
net loss of $37.0 million, or $0.78 per share. For 1997, the Company generated
revenue of $54.1 million, and a net loss of $41.4 million, or $1.47 per share.
The Company has taken the initiative to conform its accounting for
acquisition-related in-process research and development charges in response to
recent Securities and Exchange Commission interpretative guidelines.
Accordingly, the Company has reduced this charge to $6.2 million from the $16.2
million charge it recorded in the Second Quarter of 1998 to reflect the
acquisition of Throw, Inc., a small technology company. The $10.0 million
reduction in the value of the in-process technology, will be capitalized as
goodwill and amortized over 3 years. Amortization related to the Throw
acquisition for the fourth quarter and total year amounted to $0.9 million and
$2.7 million, respectively.
The Company generated $25 million in cash flow from operations in the
fourth quarter. Cash on hand at December 31, 1998 increased $21.3 million to
$61.6 million, principally due to significantly improved cash collections. Days
sales outstanding improved 15 days to 61 during the quarter.
2
<PAGE> 3
EXCITE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------- --------------------------------
1998 1997 1998 1997
-------------- --------------- -------------- ---------------
(1)
<S> <C> <C> <C> <C>
Revenues (2) $ 54,095 $ 20,548 $ 154,105 $ 54,114
Cost of revenues:
Hosting costs 5,259 2,532 16,161 8,586
Royalties and other cost of revenues 4,037 1,994 12,912 4,235
Amortization of purchased technology -- 1,938 -- 8,214
-------------- --------------- -------------- --------------
Total cost of revenues 9,296 6,464 29,073 21,035
-------------- --------------- -------------- --------------
Gross profit 44,799 14,084 125,032 33,079
Operating expenses:
Research and development 7,863 5,679 29,205 16,694
Sales and marketing 21,086 10,671 62,372 32,009
Distribution license fees and data 6,894 4,412 21,723 9,365
acquisition costs
General and administrative 5,625 3,508 16,573 9,477
In-process technology -- -- 6,200 2,346
Merger and acquisition related costs,
including amortization of goodwill and 829 2,043 4,903 3,989
other purchased intangibles
Amortization of prepaid Netscape service 7,574 -- 17,673 --
-------------- --------------- -------------- --------------
Total operating expenses 49,871 26,313 158,649 73,880
-------------- --------------- -------------- --------------
Operating loss (5,072) (12,229) (33,617) (40,801)
Interest expense and other, net (239) (277) (1,223) (114)
Equity share of losses of affiliated company (490) (477) (2,134) (477)
-------------- --------------- -------------- ---------------
Net loss $ (5,801) $ (12,983) $ (36,974) $ (41,392)
============== =============== ============== ==============
Basic and diluted net loss per share (3) $ (0.11) $ (0.39) $ (0.78) $ (1.47)
============== =============== ============== ==============
Shares used in computing net loss per share (3) 51,511 33,231 47,475 28,155
============== =============== ============== ==============
</TABLE>
(1) Derived from audited consolidated financial statements at December 31,
1997.
(2) Related party revenue was $5.2 million and $8.3 million for the three and
twelve months ended December 31, 1998, respectively.
(3) All of the share and per share data have been adjusted to reflect the
two-for-one stock split for stockholders of record as of the close of
business on July 6, 1998.
3
<PAGE> 4
EXCITE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------------ -----------------
(1)
<S> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 61,605 $ 32,066
Accounts receivable, net 36,592 20,907
Prepaid Netscape distribution costs and trademarks, current portion 45,473 --
Prepaid expenses and other current assets 4,848 2,149
------------------ -----------------
Total current assets 148,518 55,122
Property and equipment, net 35,937 15,143
Investment in affiliated company 2,243 --
Prepaid Netscape distribution costs and trademarks 20,954 --
Intangible assets, net 8,792 1,771
Other assets 4,229 4,657
------------------ -----------------
$ 220,673 $ 76,693
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Bank line of credit and other notes payable $ 6,100 $ 6,100
Accounts payable 13,079 5,717
Accrued compensation 9,038 4,794
Related party liabilities 5,092 1,575
Capital lease obligations, current portion 7,133 3,178
Non-lease financing, current portion 1,531 1,176
Deferred revenue 2,843 4,588
Other accrued liabilities 14,222 5,024
------------------ -----------------
Total current liabilities 59,038 32,152
Capital lease obligations 11,668 3,076
Non-lease financing 1,568 1,613
Convertible note 5,000 5,000
Stockholders' equity 143,399 34,852
------------------ ----------------
$ 220,673 $ 76,693
================== =================
</TABLE>
(1) Derived from audited consolidated financial statements at December 31,
1997.
4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
EXCITE, INC.
Date: January 25, 1999 By: /s/ Robert C. Hood
--------------------------------
Robert C. Hood
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer
5
