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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
JUNE 30, 2000
CNET NETWORKS, INC.
(Exact Name of Registrant as Specified in Charter)
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<CAPTION>
<S> <C> <C>
DELAWARE 0-20939 13-3696170
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
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150 CHESTNUT STREET,
SAN FRANCISCO, CALIFORNIA 94111
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(415) 395-7800
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ITEM 5. OTHER EVENTS.
On February 29, 2000, CNET Networks, Inc., a Delaware corporation
("CNET") completed the acquisition of mySimon, Inc. pursuant to which CNET
issued approximately 10.7 million shares of its common stock and 364,000
options, having a combined total value of approximately $678.2 million.
Additional information about this acquisition may be found in CNET's Form
8-K/A-1 filed May 15, 2000, which is incorporated by reference into this Form
8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not Applicable.
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed financial statements,
including the notes thereto, give effect to the February 29, 2000 acquisition of
mySimon, Inc. ("mySimon") by CNET Networks, Inc. ("CNET") in a transaction
accounted for as a purchase. In connection with the acquisition, CNET issued
10,725,927 shares of its common stock and 364,730 options, having a combined
total value of approximately $678.2 million, to the shareholders of mySimon. The
condensed financial statements are based on and are qualified in their entirety
by reference to, and should be read in conjunction with, the consolidated
financial statements of CNET as previously filed, and mySimon, included herein.
The unaudited pro forma condensed statements of operations for the year
ended December 31, 1999 give effect to the acquisition of mySimon as if it had
occurred on January 1, 1999. The unaudited pro forma condensed statements of
operations for the six months ended June 30, 2000 give effect to the acquisition
of mySimon as if it had occurred on January 1, 2000.
These statements are not necessarily indicative of the actual financial
position or results of operations of CNET as of the date or for the period
indicated or the financial position or results of operations that CNET would
have experienced if the transaction for which the statements give pro forma
effect had in fact occurred at the times assumed. Also, the statements do not
purport to represent CNET's future financial position or results of operations.
These statements should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements included in CNET's Form 10-K for the year
ended December 31, 1999 and CNET's Form 10-Q for the quarter ended June 30,
2000, each of which is incorporated by reference into this Form 8-K.
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CNET NETWORKS, INC.
Pro Forma Combined Statement of Operations
(unaudited - in thousands, except per share data)
Year Ended December 31, 1999
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<CAPTION>
CNET AND
CNET MYSIMON PRO FORMA MYSIMON
ADJUSTMENT PRO FORMA
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<S> <C> <C> <C> <C>
Revenues:
Internet $ 104,887 $ 1,683 $ -- $ 106,570
Broadcast 7,458 -- -- 7,458
------------ ------------ ------------ ------------
Total revenues 112,345 1,683 -- 114,028
------------ ------------ ------------ ------------
Cost of revenues:
Internet 35,619 475 (2,338)(a) 33,756
Broadcast 8,341 -- (520)(a) 7,821
------------ ------------ ------------ ------------
Total cost of revenues 43,960 475 (2,858) 41,577
------------ ------------ ------------ ------------
Gross profit 68,385 1,208 2,858 72,451
------------ ------------ ------------ ------------
Operating expenses:
Sales and marketing 91,660 11,630 (215)(a) 103,075
Development 7,561 2,894 (978)(a) 9,477
General and administrative 15,266 5,320 (3,823)(a) 13,505
(3,258)(b)
Depreciation and amortization of property and equipment -- -- 7,874 (a) 7,874
Amortization of goodwill and other intangible assets 15,036 -- 221,764 (c) 236,800
------------ ------------ ------------ ------------
Total operating expenses 129,523 19,844 221,364 370,731
------------ ------------ ------------ ------------
Operating loss (61,138) (18,636) (218,506) (298,280)
Other income (expense):
Gain on investments 734,138 -- -- 734,138
Interest income, net 1,223 519 -- 1,742
------------ ------------ ------------ ------------
Total other income 735,361 519 -- 735,880
------------ ------------ ------------ ------------
Income (loss) before income taxes 674,223 (18,117) (218,506) 437,600
Income tax expense (257,315) -- -- (257,315)
------------ ------------ ------------ ------------
Net income (loss) $ 416,908 $ (18,117) $ (218,506) $ 180,285
============ ============ ============ ============
Basic net income per share $ 5.80 $ 2.18
============ ============
Diluted net income per share $ 5.00 $ 1.91
============ ============
Shares used in calculating basic per share data 71,820 82,545
============ ============
Shares used in calculating diluted per share data 83,373 94,332
============ ============
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CNET NETWORKS, INC.
Pro Forma Combined Statement of Operations
(unaudited - in thousands, except per share data)
Six Months Ended June 30, 2000
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<CAPTION>
MYSIMON CNET AND
CNET 1/1/00 - PRO FORMA MYSIMON
2/28/00 ADJUSTMENT PRO FORMA
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<S> <C> <C> <C> <C>
Revenues:
Internet $ 91,278 $ 1,060 $ -- $ 92,338
Broadcast 5,327 -- -- 5,327
---------- ---------- ---------- ----------
Total revenues 96,605 1,060 -- 97,665
---------- ---------- ---------- ----------
Cost of production
Cost of revenues:
Internet 28,115 122 (1,153)(a) 27,084
Broadcast 4,883 -- (68)(a) 4,815
---------- ---------- ---------- ----------
Total cost of revenues 32,998 122 (1,221) 31,899
---------- ---------- ---------- ----------
Gross profit 63,607 938 1,221 65,766
---------- ---------- ---------- ----------
Operating expenses:
Sales and marketing 37,551 3,672 (59)(a) 41,164
Development 6,540 652 (429)(a) 6,763
General and administrative 12,680 6,041 (4,985)(a) 12,522
(1,214)(b)
Depreciation and amortization of property and equipment -- -- 2,973 (a) 2,973
Amortization of goodwill and intangible assets 94,373 -- 55,701 (c) 150,074
---------- ---------- ---------- ----------
Total operating expenses 151,144 10,365 51,987 213,496
---------- ---------- ---------- ----------
Operating loss (87,537) (9,427) (50,766) (147,730)
Other income (expense):
Gain on investments 69,584 -- -- 69,584
Other income, net 10 86 -- 96
---------- ---------- ---------- ----------
Total other income 69,594 86 -- 69,680
---------- ---------- ---------- ----------
Loss before income taxes (17,943) (9,341) (50,766) (78,050)
Income tax expense (30,402) -- -- (30,402)
---------- ---------- ---------- ----------
Net loss $ (48,345) $ (9,341) $ (50,766) $ (108,452)
========== ========== ========== ==========
Basic net loss per share $ (0.59) $ (1.33)
========== ==========
Diluted net loss per share $ (0.59) $ (1.33)
========== ==========
Shares used in calculating basic per share data 81,536 81,536
========== ==========
Shares used in calculating diluted per share data 81,536 81,536
========== ==========
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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(1) Basis of Presentation
The unaudited pro forma combined statement of operations for the year
ended December 31, 1999 gives effect to CNET's acquisition of mySimon as if it
had occurred on January 1, 1999. The unaudited pro forma combined statement of
operations for the six months ended June 30, 2000 gives effect to CNET's
acquisition of mySimon as if it had occurred on January 1, 2000. The combined
financial statements, including the notes thereto, should be read in conjunction
with the consolidated financial statements of CNET, as previously filed on Form
10-K and Form 10-Q, and mySimon, included herein.
(2) Pro Forma Adjustments
(a) Reflects the reclassification of certain expenses.
(b) Reflects the elimination of stock based compensation.
(c) Reflects six month amortization of goodwill.
(d) Reflects one-year amortization of goodwill.
(3) Pro forma income (loss) per share
The pro forma basic and diluted net income (loss) per share calculation
assumes that the 10,725,927 shares of CNET's common stock and 364,730 options
issued in the mySimon acquisition were outstanding for the entire year in 1999.
For the six months ended June 30, 2000, the options are not included in the per
share calculation because their effect is anti-dilutive.
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(c) Exhibits.
The exhibits listed below and in the accompanying Exhibit Index are
filed as part of this Current Report on Form 8-K.
EXHIBIT NO. TITLE
99.1 Current Report on Form 8-K/A filed May 15, 2000 (incorporated
herein by reference)
99.2 Form 10-K for the fiscal year ended December 31, 1999
(incorporated herein by reference)
99.3 Form 10-Q for the fiscal quarter ended June 30, 2000
(incorporated herein by reference)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 30, 2000
CNET NETWORKS, INC.
By: /s/ DOUGLAS WOODRUM
-----------------------------
Name: Douglas Woodrum
Title: Chief Financial Officer
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
99.1 Current Report on Form 8-K/A filed May 15, 2000 (incorporated
herein by reference)
99.2 Form 10-Q for the fiscal quarter ended June 30, 2000
(incorporated herein by reference)
99.3 Form 10-K for the fiscal year ended December 31, 1999
(incorporated herein by reference)
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