===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to ________
COMMISSION FILE NUMBER: 0-20939
CNET NETWORKS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3696170
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 CHESTNUT STREET
SAN FRANCISCO, CA 94111
(Address of principal executive officers) (zip code)
TELEPHONE NUMBER (415) 364-8000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
As of October 31, 2000 there were 137,140,479 shares of the registrant's common
stock outstanding.
===============================================================================
<PAGE>
Part 1. Financial Information
Item 1. Financial Statements
CNET NETWORKS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000's OMITTED)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . $203,051 $53,063
Investments in marketable debt securities . 39,433 65,985
Investments in marketable equity securities 121,552 785,909
Accounts receivable, net. . . . . . . . . . 34,714 24,628
Other current assets. . . . . . . . . . . . 30,928 18,743
Restricted cash . . . . . . . . . . . . . . 822 740
------------- -------------
Total current assets . . . . . . . . . 430,500 949,068
Investments in marketable debt securities. . . . 98,061 109,802
Investments in marketable equity securities. . . 8,203 -
Property and equipment, net. . . . . . . . . . . 45,071 30,044
Other assets . . . . . . . . . . . . . . . . . . 116,197 50,609
Goodwill, net . . . . . . . . . . . . . . . . . 634,588 90,788
------------- -------------
Total assets . . . . . . . . . . . . . $1,332,620 $1,230,311
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable. . . . . . . . . . . . . . $7,443 $11,461
Accrued liabilities . . . . . . . . . . . . 32,159 16,398
Current portion of long-term debt . . . . . 333 5,750
Tax related liabilities . . . . . . . . . . 60,347 311,750
------------- -------------
Total current liabilities. . . . . . . 100,282 345,359
Long-term debt & obligations. . . . . . . . . . 192,497 179,114
------------- -------------
Total liabilities. . . . . . . . . . . 292,779 524,473
Stockholders' equity:
Common stock. . . . . . . . . . . . . . . . 9 7
Additional paid in capital. . . . . . . . . 944,264 218,670
Other comprehensive income (loss). . . . . (155,312) 121,409
Retained earnings . . . . . . . . . . . . . 273,855 365,752
Treasury stock, at cost . . . . . . . . . . (22,975) -
------------- -------------
Total stockholders' equity . . . . . . 1,039,841 705,838
------------- -------------
Total liabilities and stockholders'
equity . . . . . . . . . . . . . . . $1,332,620 $1,230,311
============= =============
See accompanying notes to condensed consolidated financial statements
<PAGE>
CNET NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000's OMITTED)
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- -------------------------
2000 1999 2000 1999
------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Internet. . . . . . . . . . . . . $54,212 $26,838 $145,490 $69,041
Broadcast . . . . . . . . . . . . 2,227 1,571 7,554 4,995
------------- ------------ ------------- -----------
Total revenues . . . . . . . . 56,439 28,409 153,044 74,036
Cost of revenues:
Internet. . . . . . . . . . . . . 17,284 9,155 45,399 23,611
Broadcast . . . . . . . . . . . . 2,670 2,324 7,553 5,699
------------- ------------ ------------- -----------
Total cost of revenues . . . . 19,954 11,479 52,952 29,310
------------- ------------ ------------- -----------
Gross profit . . . . . . . . . . . . 36,485 16,930 100,092 44,726
Operating expenses:
Sales and marketing . . . . . . . 19,646 32,998 57,197 45,115
Development . . . . . . . . . . . 4,712 1,904 11,252 5,069
General and administrative. . . . 6,167 4,807 18,847 10,002
Amortization of goodwill. . . . . 67,859 5,224 162,232 6,461
------------- ------------ ------------- -----------
Total operating expenses . . . 98,384 44,933 249,528 66,647
------------- ------------ ------------- -----------
Operating income(loss) . . . . . . . (61,899) (28,003) (149,436) (21,921)
Other income (expense):
Gain on investments, net. . . . . 37,311 97,791 106,895 122,365
Interest income (expense), net. . 243 (312) 253 112
------------- ------------ ------------- -----------
Total other income (expense). . . 37,554 97,479 107,148 122,477
------------- ------------ ------------- -----------
Net income (loss) before income tax ($24,345) $69,476 ($42,288) $100,556
Income tax expense . . . . . . . 19,206 40,222 49,608 40,222
------------- ------------ ------------- -----------
Net income (loss) ($43,551) $29,254 ($91,896) $60,334
============= ============ ============= ===========
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses)
arising during the period. . . . (65,615) (4,627) (276,721) 55,161
------------- ------------ ------------- -----------
Comprehensive income (loss) ($109,166) $24,627 ($368,617) $115,495
============= ============ ============= ===========
Basic net income (loss) per share. . ($0.50) $0.40 ($1.10) $0.85
============= ============ ============= ===========
Diluted net income (loss) per share. ($0.50) $0.35 ($1.10) $0.76
============= ============ ============= ===========
Shares used in calculating
basic per share data . . . . . . . 87,073 72,536 83,485 70,790
============= ============ ============= ===========
Shares used in calculating
diluted per share data . . . . . . 87,073 86,105 83,485 79,096
============= ============ ============= ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CNET NETWORKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000's OMITTED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
2000 1999
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss). . . . . . . . . . . . . . . . . ($91,896) $60,334
Adjustments to reconcile net income (loss) to net
cash provided (used) in operating activities:
Depreciation and amortization. . . . . . . . . . 172,405 12,986
Amortization of program costs. . . . . . . . . . 5,791 5,616
Allowance for doubtful accounts. . . . . . . . . 5,381 204
Exchange of services for cost method . . . . . .
investments. . . . . . . . . . . . . . . . . (12,106) (3,383)
Impairment of privately held investments . . . . 5,203 -
Gain on investment sales . . . . . . . . . . . . (67,031) (122,365)
Foreign currency translation gain. . . . . . . . (182) -
Interest paid to derivative instrument holders . 1,966 -
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . (15,467) (6,057)
Other current assets. . . . . . . . . . . . . (12,407) (10,064)
Other assets. . . . . . . . . . . . . . . . . (2,644) 260
Accounts payable. . . . . . . . . . . . . . . (4,017) 13,157
Accrued liabilities . . . . . . . . . . . . . 15,763 6,490
Tax related liabilities . . . . . . . . . . . (4,418) 36,349
Benefit from exercises of stock options . . . 8,425 3,873
------------ -----------
Net cash provided by (used in) operating
activities . . . . . . . . . . . . . . . 4,766 (2,600)
------------ -----------
Cash flows from investing activities:
Purchase of marketable debt securities. . . . . . . (132,523) (136,482)
Purchase of equity investments. . . . . . . . . . . (42,404) -
Proceeds from sale of marketable debt securities. . 158,345 101,729
Proceeds from sale of marketable equity securities. 169,485 12,328
Investments in privately held companies . . . . . . (46,523) (20,991)
Cash paid for acquisitions. . . . . . . . . . . . . (4,043) (39,113)
Purchases of equipment. . . . . . . . . . . . . . . (23,813) (13,848)
Purchases of programming assets . . . . . . . . . . (5,651) (6,084)
Deferred interest . . . . . . . . . . . . . . . . . - (690)
------------ -----------
Net cash provided by (used)
in investing activities . . . . . . . . . 72,873 (103,151)
------------ -----------
Cash flows from financing activities:
Net proceeds from issuance of convertible debt. . . - 166,943
Proceeds from issuance of derivative instruments. . 81,629 -
Net proceeds from employee stock purchase plan. . . 1,315 661
Net proceeds from exercise of options and warrants 12,380 5,666
Purchase of treasury stock. . . . . . . . . . . . . (22,975) -
Principal payments on capital leases. . . . . . . . - (42)
Principal payments on equipment note. . . . . . . . - (1,640)
------------ -----------
Net cash provided by financing activities. 72,349 171,588
------------ -----------
Net increase (decrease) in cash and cash equivalents. 149,988 65,837
Cash and cash equivalents at beginning of period . . 53,063 51,538
------------ -----------
Cash and cash equivalents at end of period . . . . . $203,051 $117,375
============ ===========
Supplemental disclosure of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . $4,728 $4,342
Taxes paid. . . . . . . . . . . . . . . . . . . . . $28,459 $-
Supplemental disclosure of noncash transactions:
Issuance of common stock for acquisitions . . . . . $703,476 $30,253
Unrealized gain (loss) on marketable securities and
investments, net of deferred tax liability . . . ($276,721) $55,161
Issuance of debt for acquisitions . . . . . . . . . $- $10,098
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CNET NETWORKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited
condensed consolidated financial statements reflect all adjustments,
consisting only of normal recurring adjustments, considered
necessary for a fair presentation of the financial condition,
results of operations and cash flows for the periods presented.
These condensed financial statements should be read in conjunction
with the audited consolidated financial statements included in the
Company's most recent annual report on Form 10-K, as filed with the
Securities and Exchange Commission, which contains additional
financial and operating information and information concerning the
significant accounting policies followed by the Company.
The condensed consolidated results of operations for the three
and nine months ended September 30, 2000 are not necessarily indicative
of the results to be expected for the current year or any other period.
Net Income (Loss) Per Share
Basic net income (loss) per share is computed using the weighted
average number of shares of common stock outstanding during the period and
diluted net income (loss) per share is computed using the weighted average
number of shares of common stock and common stock equivalents outstanding
during the period. Basic and diluted net loss per share for the three months
ended September 30, 2000 does not include the effect of approximately
5,704,967 common shares related to options with an average exercise price of
$13.80 or approximately 791,144 shares of unvested restricted stock with
an average exercise price of $12.79 or approximately 4,622,624 common shares
related to the Convertible Subordinated Debt offering with an average exercise
of $37.40 because their effect is anti-dilutive. Basic and diluted net loss
for the nine months ended September 30, 2000 does not include the effect of
approximately 6,692,187 common shares related to options with an average
price of $14.43 or approximately 852,469 shares of unvested restricted stock
with an average exercise price of $5.07 or approximately 4,622,624 common
shares related to the Convertible Subordinated Debt offering at an average
exercise price of $37.40 because their effect is anti-dilutive. Net income
per share for the three months ended September 30, 1999, does include the effect
of the potential conversion of convertible debt to approximately 4,622,624
common shares related to the Convertible Subordinated Debt offering because
its effect is dilutive. Net income for the nine months ended September 30,
1999 does not include the effect of the potential conversion of convertible
debt to approximately 3,475,180 common shares because its effect is anti-
dilutive.
The following table sets forth the computation of net income
(loss) per share (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
(unaudited)
<S> <C> <C> <C> <C>
Net income (loss) ($43,551) $29,254 ($91,896) $60,334
Interest from convertible note 1,312
-------------- ------------ ------------- -----------
($43,551) $30,556 ($91,896) $60,334
Basic and diluted: ============== ============ ============= ==========
Weighted average common shares
outstanding 87,073 72,536 83,485 70,790
============== ============ ============= ==========
Basic net income (loss) per share ($0.50) $0.40 ($1.10) $0.85
============== ============ ============= ===========
Weighted average common shares
and dilutive common stock equivalents
outstanding 87,073 86,105 83,485 79,096
============== ============ ============= ===========
Diluted net income (loss) per share ($0.50) $0.35 ($1.10) $0.76
============== ============ ============= ===========
</TABLE>
Income Taxes
Income tax expense has been recorded based on an estimated
effective tax rate for the year ended December 31, 2000. The estimated
effective tax rate has taken into consideration the book tax difference
for goodwill amortization in connection with the Company's acquisitions
earlier this year.
Marketable Securities
The Company adopted Statement of Financial Accounting Standards
(FASB No. 115), "Accounting for Certain Investments in Debt and Equity
Securities." The Company determines the appropriate classification of debt
and equity securities at the time of purchase and reevaluates such
designation as of each balance sheet date. Investments classified
as available for sale are reported at market value, with the
unrealized gains and losses, net of tax, reported as a separate
component of other comprehensive income (loss) in stockholders' equity.
Realized gains and losses on sales of investments and declines in
value determined to be other than temporary are included in other income
(expense).
As of September 30, 2000, the Company owns 882,326 shares
of Vignette Corporation ("Vignette"), 150,880 shares of Beyond.com,
1,381,680 shares of Mail.com, Inc. ("Mail.com"), 6,497,584
shares of NBC Internet Inc., ("NBCi) (1,250,000 of these shares are pledged;
see Note 2), 1,000,000 shares of Niku Corp. ("Niku"), 1,085,943 shares of
Deltathree.com, Inc. ("deltathree"), 240,000 shares of Ebiz Enterprises,
Inc. ("Ebiz"), and 5,754 shares of Digital River, Inc. ("Digital River"),
200,000 shares of Siebel Systems, Inc. ("Siebel"), 136,363 shares of Virage,
Inc. ("Virage"), 97,121 shares of Asiacontent.com Ltd. ("Asiacontent"), 90,395
share of Insiderstreet.com, Inc. ("Insiderstreet"), 2,000,000 shares of
Virtual Technology Corp. ("NetDirect"), and 500,000 shares of Infe.com,
Inc. ("INFE"), all public companies.
Recent Accounting Pronouncements
The FASB recently issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended by SFAS No.
137 in June 1999, and SFAS No. 138 in June 2000 establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments imbedded in other contracts (collectively referred
to as derivatives), and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement
of financial position and measure those instruments at fair value. For a
derivative not designated as a hedging instrument, changes in the fair value
of the derivative are recognized in earnings in the period of change. The
Company will be required to adopt SFAS No. 133 for the year ended December
31, 2001. Management is evaluating the potential impact of the adoption of
SFAS No. 133 on the financial position and operations of the Company.
In December 1999, the SEC issued Staff Accounting Bulletin ("SAB")
No. 101. The SAB summarized certain of the SEC Staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. SAB No. 101B was issued June 26, 2000 which allows registrants
until the fourth quarter of years beginning after December 15, 1999 to
implement SAB No. 101. SAB No. 101 as amended and any resulting change
in accounting principle that a registrant would have to report, is effective
no later than the Company's fiscal quarter ending December 31, 2000.
CNET does not expect the application of SAB No. 101 to have a material
effect in its financial position or results of operations, nor do we expect
to report a change in accounting principle resulting from its application.
In March 2000, FASB issued Financial Interpretation No. 44 ("FIN44").
FIN 44 clarifies (a) the definition of employee for purposes of applying
Accounting Principles Board ("APB") Opinion 25, Accounting for Stock Issued
to Employees, (b) the criteria for determining whether a plan qualifies as
a noncompensatory plan, (c) the accounting consequence of various
modifications to the terms of a previously fixed stock option or award, and
(d) the accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain conclusions in
this Interpretation cover specific events that occur after either December 15,
1998, or January 12, 2000. To the extent that this Interpretation covers
events occurring during the period after December 15, 1998, or January 12,
2000, but before the effective date of July 1, 2000, the effects of applying
this Interpretation are recognized on a prospective basis from July 1, 2000.
The application of FIN 44 did not have a material effect on CNET's financial
position or results of operations.
(2) Debt
In February 2000, the Company issued an indexed debt instrument
in a public offering of Trust Automatic Common Exchange Securities
("Traces") by NBCi through an Automatic Common Exchange Security Trust
(the "Trust"). The Traces offering consisted of 1,250,000 instruments
which were sold for $81.38 per share, with gross proceeds to the
Company of $102 million ($82 million net of $20 million prepaid interest
described below). The Traces bear interest at an annual rate
of 7.25%, which will be paid on a quarterly basis by the Trust.
The Traces are payable on February 15, 2003, whereby the holder
can exchange each security with the Company for either (i) between
.833 shares and one share of NBCi common stock that the
Company holds, (ii) cash equal to the value of those shares, or
(iii) a combination of those shares and cash, at the election of the
Company. The Company has recorded its obligation to the Trust as
long-term debt. As a part of the transaction, the Company pledged
1,250,000 shares of NBCi common stock and contributed approximately $20
million as prepaid interest to the Trust. The Company has recorded
the pledged shares (at market value) and the prepaid interest as
long-term investment in marketable equity securities and other assets,
respectively.
The number of shares, or the amount of cash, that a holder will
receive in exchange for a security will vary, depending on the average
market price of the common stock of NBCi over the twenty business
days before the exchange date. If the average market price is between
$81.38 and $97.65, then the holder will receive the value commensurate
with one share of NBCi common stock for each Trace. If the
average market price is equal to or greater than $97.65, then the
holder will receive value commensurate with 0.833 shares of NBCi common
stock for each Trace. If the average market price is less than $81.38,
then the holder will receive value commensurate with one share of NBCi
common stock for each Trace.
On September 30, 2000 the closing price of NBCi common stock was
$6.5625 per share. Accordingly the Company adjusted its long-term
debt related to the Traces to $8.2 million, resulting in an unrealized
gain of $7.5 million for the three month period ended September 30, 2000
which was recorded in other comprehensive income (loss) in the stockholders'
equity section of the balance sheet.
(3) Other Income (Expense)
The Company's reported other income (expense) includes a 19% share
of the unconsolidated losses of CNET Asia, a joint venture CNET entered
into on January 12, 2000 with Asiacontent.com, a leading Asia
Internet media network. The operations of the joint venture began in April,
and the Company's share of the losses amounted to $352,715 for the three month
period ended September 30, 2000, and $733,723 for the nine month period ended
September 30, 2000.
(4) Comprehensive Income (Loss)
The Company has adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income," which established standards for
reporting and disclosures of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general
purpose financial statements. Financial statements for earlier
periods have been reclassified for comparative purposes.
During the three months ended September 30, 2000 the Company
reported unrealized holding losses net of deferred taxes arising from
from investments amounting to $65.6 million. This includes an unrealized gain
of $7.5 million related to the Traces debt (see Note 2) for which no taxes were
recorded.
(5) Legal Proceedings
In August 1999, the Simon Property Group filed a complaint
against mySimon, Inc., which became a subsidiary of CNET Networks, Inc.
on February 29, 2000. The Simon Property Group is a real estate invest-
ment trust that owns and develops mall properties. The
complaint, which was filed in the Southern District of Indiana at
Indianapolis, alleges that our "mySimon" mark infringes the Simon Property
Group's "SIMON" mark. On August 31, 2000 a jury found that our
"mySimon" mark infringes on the Simon Property Group's "SIMON" mark.
The jury awarded Simon Property Group damages of $26.5 million. We believe
that the jury verdict was not supported by the facts or the law and we plan to
appeal the verdict. The judge presiding over the trial has not yet entered
judgment on the verdict, nor has he ruled on Simon Property Group's request
that mySimon relinquish its name. Unless the verdict is overturned on appeal
and unless the judge does not require mySimon to relinquish its name,
there could be a material adverse effect on our business, financial
condition and results of operation.
(6) Segment Information
The Company has adopted the provisions of SFAS No. 131, "Disclosure
About Segments of an Enterprise and Related Information." SFAS No. 131
establishes standards for the reporting by public business enterprises
of information about operating segments, products and services,
geographic areas and major customers. The method for determining what
information to report is based on the way that management organizes the
operating segments within the Company for making operating decisions and
assessing financial performance.
The Company's chief operating decision maker is considered to be the
Company's Chief Executive Officer ("CEO"). The CEO reviews financial
information presented on a consolidated basis accompanied by disaggregated
information about revenue and cost of revenue by operating segment for
purposes of making operating decisions and assessing financial performance.
The consolidated information reviewed by the CEO is identical to the
information presented in the accompanying financial statement of
operations. The Company operates in two segments, Internet operations and
broadcast operations. Asset information regarding Internet operations
and broadcast operations is as follows:
<TABLE>
<CAPTION>
(000s)
(unaudited)
September 30, December 31,
2000 1999
--------- ---------
<S> <C> <C>
Broadcast 1,286 1,241
CNET Online 1,331,334 1,229,070
---------- ----------
Consolidated Total 1,332,620 1,230,311
========== ==========
</TABLE>
(7) Subsequent Events
On October 17, 2000, CNET consummated its acquisition of Ziff Davis, Inc.
in exchange for the issuance of approximately 50 million shares of CNET
common stock. The merger agreement provides for the merger of a subsidiary
of CNET with and into Ziff-Davis with Ziff-Davis surviving the merger. As a
result of the merger, each share of Ziff-Davis common stock (NYSE:ZD)
converted to 0.3397 shares of CNET common stock (NASDAQ: CNET) and each
share of ZDNet common stock (NYSE: ZDZ) converted to 0.5932 shares of CNET
common stock. The transaction will be recorded using the purchase method of
of accounting. Any recorded goodwill will be amortized using the straight
line method over three years.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
Overview
CNET Networks, Inc. is a global media company, producing two branded
Internet networks, a computer product database and television and
radio programming for both consumers and businesses. Using unbiased
content as our platform, we have built marketplaces for technology
products, and, through our CNET Data Services subsidiary, are the
primary provider of information powering the computer and electronics
sales and distribution channels. Our Internet networks serve millions
of users each day. CNET Data Services licenses its multi-lingual
product database to U.S. and European online computer retailers, re-
sellers and e-commerce companies.
Our products and services provide a platform for advertisers to create
brand awareness and sell products to our large, tech-savvy audience. CNET
is also actively providing information and services to businesses to enable
and enhance online retailing of computer and technology products. Our
products and services are designed to inform buyers and link them with
sellers of products and services to create a dynamic, efficient
marketplace.
We earn revenues from:
- sales of banner and sponsorship advertisements on our
online network
- fees based on the number of users who visit the
websites of our merchant partners, which we refer to
as leads
- advertising sales and licensing fees from our television
and radio programming
- revenues from licensing our original content
- revenues from merchandising services within our product database
On October 17, 2000, we completed the acquisition of ZDNet, Inc. in ex-
change for the issuance of approximately 50 million shares of CNET Networks,
Inc. common stock. The acquisition will increase our global reach in providing
technology information and related services to businesses and individuals
across multiple platforms. We will account for this transaction using the
purchase method of accounting, and will consolidate the results of ZDNet in
our financial statements beginning October 17, 2000. For a complete description
of the ZDNet transaction see our Amendment No.1 to Registration Statement on
Form S-4 filed September 8, 2000 and our Current Report on Form 8-K filed
October 27, 2000, as amended on November 13, 2000.
Results of Operations
The following discussion does not include the results of ZDNet as that
transaction did not close until after September 30, 2000.
Revenues
Total Revenues
Total revenues were $56.4 million and $28.4 million for the
three months and $153.0 million and $74.0 million for the nine months
ended September 30, 2000 and 1999, respectively.
Internet Revenues
Internet revenues were $54.2 million and $26.8 million for the three
months and $145.5 million and $69.0 million for the nine months ended
September 30, 2000 and 1999, respectively. Internet revenues consist
primarily of revenues derived from the sale of advertisements on
pages delivered to users of our Internet network. Revenues also
include revenues from licensing our original content and from
licensing our product database and related technology. Advertising
programs are generally delivered on either an "impression" based
program or a "performance" based program. An impression based program
earns revenues when an advertisement is delivered to a user of our
Internet network. A performance based program earns revenues when a
user of our Internet network responds to an advertisement by linking
to an advertiser's Internet network. Performance based programs
include revenues generated from lead-based compensation from our
shopping services. Advertising rates vary depending upon whether a
program is impression or performance based, where advertisements are
placed, and the amount and length of the advertiser's commitment.
Advertising revenues are recognized in the period in which the
advertisements are delivered. Our ability to sustain or increase
revenues for Internet advertising will depend on numerous factors,
which include, but are not limited to, our ability to increase our
inventory of delivered Internet pages on which advertisements can be
displayed and our ability to maintain or increase advertising rates.
The increase in Internet revenues of $27.4 million for the three
month and $76.4 million for the nine month periods ended September
30, 2000 compared to the same periods in 1999 were primarily
attributable to an increase in impression and performance based
advertising programs sold on our network. This increase in
advertising programs sold was due to increased demand from
advertisers and increased availability of advertising programs.
Additional advertising programs were available due to an increase in
the number of pages delivered to users of our network and increased
leads sent to advertisers on our network. Average daily pages
delivered were 17.9 million for the three month period and 17.0
million pages for the nine month period ended September 30, 2000 an
increase of 57% over 11.4 million for the three month period and 61%
for the nine month period in September 30, 1999, respectively. Our
shopping services generated an average of approximately 213,000 leads
per day during the three month period and approximately 211,000 leads
per day during the nine month period ended September 30, 2000, an
increase of 46% and 66% over the same periods in 1999.
Internet revenues included revenues from mySimon, which we began
to consolidate into our financial results effective February 29,
2000. Revenues related to mySimon were approximately $3.5 million
for the three months and $7.1 million for the period from March 1,
2000 through September 30, 2000.
A portion of our revenues are received in the form of securities
of our customers. Revenues in the form of securities of our customers
amounted to $5.8 million and $1.8 million for the three months and
$ 12.1 million and $3.4 million for the nine month periods ended
September 30, 2000 and 1999, respectively. In addition, a portion of
our Internet revenues were derived from barter transactions whereby we
delivered advertisements on our Internet channels in exchange for
advertisements on the Internet sites of other companies. Revenues
related to barter transactions were $4.2 million and $1.5 million for
the three months and $9.2 million and $4.2 million for the nine months
ended September 30, 2000 and 1999 respectively.
Broadcast Revenues
Broadcast revenues were $2.2 million and $1.6 million for the
three months and $7.6 million and $5.0 million for the nine months
ended September 30, 2000 and 1999, respectively.
For the three and nine month periods ended September 30, 1999, a
significant portion of our broadcast revenues were derived from our
licensing agreements with USA Networks. These licensing agreements
with USA Networks generated revenues of approximately $500,000 and
$1.5 million for the three and nine month periods ended September 30,
1999, respectively. Our agreement with USA Networks expired on
December 31, 1999 and was not renewed.
In May 1999 we entered into an agreement with the National
Broadcasting Company ("NBC") whereby NBC granted certain rights to
CNBC, Inc. ("CNBC") to carry the sixty minute television program we
produce called "CNET News.com". The term of the agreement is from
October 1, 1999 through September 30, 2002 and CNBC will pay us an
annual fee based on the cost of production, not to exceed $2.5
million per year. We also have the right to sell certain commercial
time available on the program. We also produce a television program,
TV.com, which is exclusively distributed by Trans World International
("TWI"). We sell advertisements on TV.com and pay a distribution fee
to TWI. In January 2000 we announced the launch of CNET Radio, an
all technology news station broadcast in the San Francisco Bay Area.
CNET Radio was launched in collaboration with AMFM, Inc. We will
share revenues earned from advertising on CNET Radio with AMFM, Inc.
Internet operations accounted for 96% and 94% of total revenues
and broadcast operations accounted for 4% and 6% of total revenues
for the three months ended September 30, 2000 and 1999, respectively.
Internet operations accounted for 95% and 93% of total revenues and
broadcast operations accounted for 5% and 7% of total revenues for
the nine months ended September 30, 2000 and 1999, respectively.
Cost of Revenues
Total Cost of Revenues
Total cost of revenues were $20.0 million and $11.5 million
for the three months and $53.0 million and $29.3 million for the nine
months ended September 30, 2000 and 1999, respectively. Cost of
revenues include costs associated with the production and delivery
of our Internet channels, creation of our product database and
related technology, and our broadcast programming. The principal
elements of cost of revenues for our Internet operations have been
payroll and related expenses for the editorial, production and
technology staff, and costs for facilities and equipment. The
principal elements of cost of revenues for our broadcast operations
have been the production costs of our broadcast programs, which
primarily consist of payroll and related expenses for the editorial
and production staff and costs for facilities and equipment.
Cost of Internet Revenues
Cost of Internet revenues were $17.3 million and $9.2 million
for the three months and $45.4 million and $23.6 million for the nine
months ended September 30, 2000 and 1999, respectively, representing
32%, 34%, 31% and 34% of the related revenues, respectively. The
increase of $8.1 million and $21.8 million for the three and nine
month periods ended September 30, 2000 as compared to the same
periods in 1999 were primarily attributable to increases in personnel
and personnel related costs. In addition, we had additional costs for
server depreciation and bandwidth costs related to delivering an
increased number of average daily pages.
Cost of Broadcast Revenues
Cost of broadcast revenues were $2.7 million and $2.3 million
for the three months and $7.6 million and $5.7 million for the nine
months ended September 30, 2000 and 1999, respectively, representing
approximately 120%, 148%, 100% and 114% of the related revenues. The
increase of $346,000 and $1.9 million for the three and nine month
periods ended September 30, 2000 as compared to the same periods in
1999 related primarily to increases in personnel and personnel
related costs for CNET Radio and costs associated with CNET News.com
and TV.com.
Sales and Marketing
Sales and marketing expenses consist primarily of payroll and
related expenses, consulting fees and advertising expenses. Sales and
marketing expenses were $19.6 million and $33.0 million for the three
months and $57.2 million and $45.1 million for the nine months ended
September 30, 2000 and 1999, respectively, representing 35%, 116%, 37%
and 61% of total revenues for each of the periods. Sales and marketing
expenses decreased $13.4 million for the three months ended September
30, 2000 compared to the same period in 1999. The decrease primarily
related to a reduction in spending on marketing campaigns designed to
build awareness in our brands. Sales and marketing expenses increased
$12.1 million for the nine month period ended September 30, 2000
compared to the same period in 1999. The increase in sales and
marketing expenses primarily related to marketing campaigns designed
to continue to build awareness of our brands, both CNET and mySimon,
and to drive additional traffic to our sites. Prior to July 1999, we
had not significantly marketed our brand.
Development
Development expenses include expenses for the development and
production of new Internet channels and research and development of
new or improved technologies, including payroll and related expenses
for editorial, production and technology staff, as well as costs for
facilities and equipment.
Development expenses were $4.7 million and $1.9 million for the
three months and $11.3 million and $5.1 million for the nine months
ended September 30, 2000 and 1999, respectively, representing 8%, 7%,
7% and 7% of total revenues for each of the periods. The increase in
development expenses of $2.8 million and $6.2 million for the three
and nine month periods ended September 30, 2000 as compared to the
same periods in 1999 were attributable to additional personnel costs
related to the enhancement of the functionality of our Internet
network, including mySimon.
General and Administrative
General and administrative expenses consist of payroll and
related expenses for executive, finance and administrative personnel,
professional fees and other general corporate expenses. General and
administrative expenses were $6.2 million and $4.8 million for the
three months and $18.8 million and $10.0 million for the nine months
ended September 30, 2000 and 1999, respectively, representing 11%,
17%, 12% and 14% of total revenues for each of the periods,
respectively. General and administrative expenses increased $1.4
million and $8.8 million for the three and nine month periods ended
September 30, 2000 compared to the same periods in 1999. The
increases primarily related to facilitating our growth, such as
increased personnel and personnel related costs.
Goodwill Amortization
Goodwill amortization expenses relate to the amortization of the
goodwill we record for companies we have acquired where we use the
purchase method of accounting. Goodwill amortization expenses were
$67.9 million and $5.2 million for the three months and $162.2
million and $6.5 million for the nine months ended September 30, 2000
and 1999, respectively. During 1999, these acquisitions included
Winfiles.com, GDT, Nordby, Savvy Search and Manageable Software
Services, Inc. During the nine months ended September 30, 2000 we
acquired mySimon, Digital Media Services ("DMS") and Apollo Solutions
for which we used the purchase method of accounting. We began
amortizing the goodwill associated with the acquisitions of mySimon,
DMS and Apollo Solutions on the effective dates of the acquisitions,
which were February 29, 2000, February 16, 2000, and July 1, 2000,
respectively. Goodwill attributed to the mySimon, DMS and Apollo
Solutions acquisitions totaled $ 705,640 million which we are amortizing
on a straight-line basis over an estimated useful life of three years.
Gain (loss) on Investments
We had a net gain on investments of $37.3 million and $97.8
million for the three months and $106.9 million and $122.4 million
for the nine months ended September 30, 2000 and 1999, respectively.
The gain on investments for the three and nine months ended September
30, 2000 was primarily related to sales of a portion of our equity
holdings in Vignette for gains of approximately $44.6 million and $94.6
million for the three and nine month periods, respectively, and a gain
of approximately $23.9 million in the nine month period which we
recognized related to a merger between a privately-held company in
which we held an equity investment and Siebel Systems Inc. The gains
on investments for the nine months ended September 30, 1999 related
to the merger agreement between beyond.com and BuyDirect.com which
resulted in our owning shares of beyond.com.
Income Taxes
We recorded an income tax expense of $19.2 million and $40.2
million for the three months and $49.6 million and $40.2 million for
the nine months ended September 30, 2000. The income tax expense
recorded during each of the periods in 2000 and 1999 was based on an
estimated tax rate for each year ended December 31, and is primarily
related to the net gains on investment sales. The estimated effective
tax rate has taken into consideration the goodwill amortization in
connection with various acquisitions which is not tax deductible.
Net Income (Loss)
We recorded a net loss of $43.6 million or $0.50 per diluted
share for the three months ended September 30, 2000 compared to net
income of $29.3 million or $0.35 per diluted share for the three
months ended September 30, 1999. We recorded a net loss of $91.9
million or $1.10 per diluted share for the nine months ended
September 30, 2000 compared to net income of $60.3 million or $0.76
per diluted share for the nine months ended September 30, 1999. Net
income decreased $72.8 million for the three months ended September 30,
2000 as compared to the comparable period in 1999. The decrease
related primarily to additional goodwill amortization of $62.6
million, an increase in operating income (before goodwill
amortization) of $28.7 million, a decrease in net gains on
investments of $60.5 million and a decrease in the provision for
income taxes of $21.0 million. Net income decreased $152.2 million
for the nine months ended September 30, 2000 as compared to the
comparable period in 1999. The decrease related primarily to
additional goodwill amortization of $155.8 million, an increase in
operating income (before goodwill amortization) of $28.3 million, a
decrease in net gains on investments of $15.5 million and an increase
in the provision for income taxes of $9.4 million.
Recent Accounting Pronouncements
See Note 1 to the condensed consolidated financial statements.
Liquidity and Capital Resources
As of September 30, 2000, we had cash and cash equivalents of
$203.1 million compared to $53.1 million on December 31, 1999. In
addition, on September 30, 2000 we had investments in short and long
term marketable debt securities of $137.5 million and investments in
short and long term marketable equity securities of $129.8 million.
Net cash provided by operating activities of $4.8 million for the
nine months ended September 30, 2000 included a net loss of $91.9
million and non-cash gains on investments sales of $67.0 million and
depreciation and amortization totaling $178.2 million. Net cash used
in operating activities of $2.6 million for the nine months ended
September 30, 1999 was primarily due to net income of $60.3 million
and changes in operating assets and liabilities of $44.0 million,
offset by non-cash gains on investments of $122.4 million. Net cash
provided by investing activities of $72.9 million for the nine months
ended September 30, 2000 was primarily attributable to proceeds from
the sale of marketable debt and equity securities offset by the
purchase of marketable debt and equity securities, investments in
privately held companies, cash paid for acquisitions and capital
expenditures. Net cash used in investing activity of $103.2
million for the nine months ended September 30, 1999 was primarily
related to investments in marketable debt securities. Cash provided
by financing activities of $72.3 million for the nine months ended
September 30, 2000 was primarily attributable to the net proceeds
from the issuance of our TRACES security of $81.6 million. Cash
provided by financing activities of $171.6 million for the nine
months ended September 30, 1999 was primarily attributable to proceeds
from the issuance of convertible debt of $167.0 million. We believe
that existing funds will be sufficient to meet our anticipated cash
needs for working capital and capital expenditures for the next 12
months.
As of September 30, 2000 we had obligations outstanding under
notes payable totaling $190.0 million. Notes payable included $173
million of 5% Convertible Subordinated Notes, due 2006. In addition,
the liability related to our TRACES security was $8.2 million on
September 30, 2000. Such obligations were incurred to obtain
proceeds for general corporate purposes, to finance acquisitions and
increases in marketing expenditures.
Seasonality and Cyclicality
We believe that advertising sales in traditional media, such as
television, are generally lower in the first and third calendar
quarters of each year than in the respective preceding quarters and
that advertising expenditures fluctuate significantly with economic
cycles. Depending on the extent to which the Internet is accepted as
an advertising medium, seasonality and cyclicality in the level of
advertising expenditures generally could become more pronounced for
Internet advertising. Advertising expenditures account for
substantially all of our revenues, and seasonality and cyclicality in
advertising expenditures generally, or with respect to Internet-based
advertising specifically, could therefore have a material adverse
effect on our business, financial condition or operating results. We
may also experience seasonality in connection with our shopping
services, which may reflect seasonal trends in the retail industry.
The level of consumer retail spending generally decreases in the
first and third calendar quarters.
Special Note Regarding Forward-Looking Statements and Risk
Factors
Certain statements in this Quarterly Report on Form 10-Q contain "forward-
looking statements." Forward-looking statements are any statements other
than statements of historical fact. Examples of forward-looking statements
include projections of earnings, revenues or other financial items,
statements of the plans and objectives of management for future operations,
and statements concerning proposed new products and services, and
any statements of assumptions underlying any of the foregoing. In some
cases, you can identify forward-looking statements by the use of words
such as "may", "will", "expects", "should", "believes", "plans",
"anticipates", "estimates", "predicts", "potential", or "continue", and
any other words of similar meaning.
Statements regarding the company's future financial performance or
results of operations, including expected revenue growth, EBITDA
growth, growth in leads to merchants, future expenses, future
operating margins and other future or expected performance are subject
to the following risks: that expected synergies of the ZDNet
acquisition will not be achieved; that the businesses will not be
integrated successfully; that acquisition costs will be greater than
expected; the acquisition of businesses or the launch of new lines of
business, which could increase operating expense and dilute operating
margins; the inability to identify, develop and achieve success for
new products, services and technologies; the inability to attract new
customers for the company's channel services products; increased
competition, which could lead to decreases in users or negative
pressure on the company's pricing and the need for increased
marketing; the inability to maintain, establish or renew relationships
with commerce, advertising, marketing, technology, and content
providers; a decrease in the growth of advertising spending on the
Internet in general or on CNET Networks' properties in particular;
failure of advertisers to meet their commitments under the their
contracts to purchase advertising; costs associated with technological
improvements and to the general risks associated with the company'
businesses. For risks about CNET's business, see its registration
statement on Form S-4 filed September 8, 2000, in connection with the
Ziff-Davis merger, its Form 10-K for the year-ended December 31, 1999
and subsequent Forms 10-Q and Forms 8-K, including under the captions
"Risk Factors" and "Management's Discussion and Analysis of Results of
Operations." For risks about Ziff-Davis's business, which may also
apply to its business as part of CNET Networks, see its Form 10-K for
the-year ended December 31, 1999 and subsequent Forms 10-Q and Forms
8-K, as well as its definitive proxy statement dated February 7, 2000
and other SEC filings, including under the captions "Risk Factors" and
"Management's Discussion and Analysis of Results of Operations."
Any or all of our forward-looking statements in this report and in any
other public statements we make may turn out to be wrong. They can be
affected by inaccurate assumptions we might make or by known or
unknown risks and uncertainties. Many factors mentioned in the
discussion in this report will be important in determining future
results. Consequently, no forward-looking statement can be
guaranteed. Actual future results may vary materially. We undertake
no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.
You are advised, however, to consult any further disclosures we make
on related subjects in our reports to the SEC. Also note that we
provide the following cautionary discussion of risks, uncertainties
and possibly inaccurate assumptions relevant to our businesses. These
are factors that we think could cause our actual results to differ
materially from expected and historical results. Other factors
besides those listed here could also adversely affect us. This
discussion is provided as permitted by the Private Securities
Litigation Reform Act of 1995. Factors besides those listed here could
also adversely affect us. This discussion is provided as permitted by
the Private Securities Litigation Reform Act of 1995.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
We are exposed to the impact of interest rate changes and changes in
the market values of our investments.
Interest Rate Risk. Our exposure to market rate risk for changes in
interest rates relates primarily to our investment portfolio. We have not
used derivative financial instruments in our investment portfolio. We
invest our excess cash in debt instruments of the U.S. Government and its
agencies, and in high-quality corporate issuers and, by policy, limit the
amount of credit exposure to any one issuer. We protect and preserve our
invested funds by limiting default, market and reinvestment risk.
Investments in both fixed rate and floating rate interest earning
instruments carry a degree of interest rate risk. Fixed rate securities
may have their fair market value adversely impacted due to a rise in
interest rates, while floating rate securities may produce less income than
expected if interest rates fall. Due in part to these factors, our future
investment income may fall short of expectations due to changes in interest
rates or we may suffer losses in principal if forced to sell securities
which have declined in market value due to changes in interest rates.
Investment Risk. We invest in equity instruments of privately-held,
information technology companies for business and strategic purposes.
These investments are included in other long-term assets and are accounted
for under the cost method when our ownership is less that 20% and the
Company doesn't exert significant influence. For these non-quoted
investments, our policy is to regularly review the assumptions underlying
the operating performance and cash flow forecasts in assessing the carrying
values. We identify and record impairment losses on investments when
events and circumstances indicate that such assets might be impaired.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In August 1999, the Simon Property Group filed a complaint
against mySimon, Inc., which became a subsidiary of CNET Networks, Inc.
on February 29, 2000. The Simon Property Group is a real estate invest-
ment trust that owns and develops mall properties. The
complaint, which was filed in the Southern District of Indiana at
Indianapolis, alleges that our "mySimon" mark infringes the Simon Property
Group's "SIMON" mark. On August 31, 2000 a jury found that our
"mySimon" mark infringes on the Simon Property Group's "SIMON" mark.
The jury awarded Simon Property Group damages of $26.5 million. We believe
that the jury verdict was not supported by the facts or the law and we plan to
appeal the verdict. The judge presiding over the trial has not yet entered
judgment on the verdict, nor has he ruled on Simon Property Group's request
that mySimon relinquish its name. Unless the verdict is overturned on appeal
and unless the judge does not require mySimon to relinquish its name,
there could be a material adverse effect on our business, financial
condition and results of operation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 17, 2000 CNET held a special meeting of stockholders at which
it approved (a) the issuance of CNET common stock in connection with the
Agreement and Plan of Merger, dated as of July 19, 2000, among CNET Networks,
Inc., Ziff-Davis, Inc. and TD Merger Sub, Inc., a wholly-owned subsidiary of
CNET and (b) the CNET Networks, Inc. 2000 Stock Option Plan. Votes on the
share issuance were as follows: 53,885,963 in favor, 353,398 against, and
42,945 abstaining. Votes on the stock option plan were as follows:
46,805,788 in favor, 7,307,585 against and 169,933 abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
2.1(1) Purchase Agreement, dated August 30, 1999, among ZD Inc., ZD
Holdings (Europe) Ltd. and Harte-Hanks, Inc.
2.2(1) Purchase Agreement, dated November 17, 1999 between ZD Inc. and
WP Education Holdings LLC.
2.3(1) Purchase Agreement, dated November 19, 1999 between ZD Inc. and
Vulcan Programming Inc.
2.4(1) Purchase Agreement, dated December 6, 1999 among ZD Inc., ZD
Holdings (Europe) Ltd. and WS-ZD Acquisition, Inc.
10.1(1) Amended 1998 Incentive Compensation Plan
10.2(1) Amended 1998 Employee Stock Purchase Plan
10.3(1) License Agreement, dated April 5, 2000 between Ziff-Davis Inc. and
Ziff Davis Media, Inc.
10.4(1) License Agreement, dated April 5, 2000 between ZD Inc. and
Ziff Davis Publishing Holdings, Inc.
10.5(1) License Agreement, dated April 5, 2000 between ZD Inc. and
Ziff Davis Publishing Holdings, Inc.
10.6(1) Services Agreement, dated April 5, 2000 between ZD Inc. and
Ziff Davis Media, Inc.
10.7(1) Transition Services Agreement, dated April 5, 2000 between
ZD, Inc. and Ziff Davis Media, Inc.
10.8(1) Side Letter Agreement, dated as of April 5, 2000, by and among
Ziff Davis Media, Inc., ZD Inc., and ZD Holdings (Europe) Ltd.
10.9 Lease of Ziff-Davis Inc.'s headquarters at 28 East 28th Street, New
York, New York (incorporated by reference to the exhibit in
Ziff-Davis Inc.'s Registration Statement of Form S-1,
File No. 333-46493)
10.10 (1) Agreement and Consent to Assignment, dated as of April 4, 2000, by
and among 63 Madison Associates, L.P., ZD Inc. and Ziff Davis
Publishing Inc.
10.11(1) Assignment and Assumption of Lease, dated as of April 5, 2000
between ZD Inc. and Ziff-Davis, Inc.
10.12(1) Agreement of Sublease, dated March 10, 2000, between ZD, Inc. and
Ziff-Davis, Inc.
10.13 Bill of Sale and Assignment, dated as of February 4, 1999, between
MAC Holdings (America) Inc. and ZD Inc. (incorporated by reference
to the exhibit in Ziff-Davis Inc.'s Current Report on Form 8-K,
File No. 001-14055)
(1) Incorporated by reference to the exhibit to the Ziff-Davis, Inc. Annual
Report on Form 10-K for the year ended December 31, 1999, filed April
13, 2000.
(b) Reports on Form 8-K.
Current Report on Form 8-K filed:
July 21, 2000
August 31, 2000
September 5, 2000
October 27, 2000
October 31, 2000
November 13, 2000
27.1* Financial Data Schedule
____________________
*Filed herewith
SIGNATURES
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 thereunto duly authorized.
CNET Networks, INC.
(Registrant)
/s/ Douglas N. Woodrum
________________________
Douglas N. Woodrum
Executive Vice President,
Chief Financial Officer
November 14, 2000
Date
