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 June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-22557
PEAPOD, INC.
(Exact name of Registrant as specified in its charter)
Delaware 36-4118175
- ----------------------------------- ------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of Incorporation or Organization)
9933 Woods Drive, Skokie, Illinois 60077
(Address of principal executive offices) (ZIP Code)
(847) 583-9400
(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 such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
The number of shares outstanding of the registrant's common stock,
$0.01 par value ("Common Stock") as of July 22, 1998 was 16,966,853.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
PEAPOD, INC.
BALANCE SHEETS
(in thousands, except for share data)
June 30, December 31,
1998 1997
------------ -----------
(unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................ $ 4,511 $ 54,079
Marketable securities ................................................ 42,945 8,798
Receivables, net of bad debt allowance of $351 and $352 as
of June 30, 1998 and December 31, 1997, respectively ............... 936 1,195
Prepaid expenses ..................................................... 455 444
Other current assets ................................................. 867 228
-------- --------
Total current assets ............................................ 49,714 64,744
Property and equipment:
Computer equipment and software ...................................... 5,420 4,499
Service equipment and other .......................................... 1,327 1,053
-------- --------
Property and equipment, at cost ........................................... 6,747 5,552
Accumulated depreciation ............................................. (3,124) (2,301)
-------- --------
Net property and equipment ................................................ 3,623 3,251
Capitalized software development costs .................................... 1,330 998
Goodwill, net of accumulated amortization of $193 and $174
as of June 30, 1998 and December 31, 1997, respectively ................ 97 117
-------- --------
Total assets .................................................... $ 54,764 $ 69,110
======== ========
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable ..................................................... $ 3,216 $ 7,514
Accrued compensation ................................................. 479 1,258
Other accrued liabilities ............................................ 932 926
Current deferred service fees ........................................ 1,553 1,969
Current obligations under capital lease .............................. 675 727
-------- --------
Total current liabilities ....................................... 6,855 12,394
Deferred service fees ..................................................... 887 1,212
Obligations under capital lease, less current obligations ................. 389 701
-------- --------
Total liabilities ............................................... 8,131 14,307
Stockholders' equity:
Preferred stock, $.01 par value, authorized 5,000,000
shares, none issued and outstanding ............................... -- --
Common stock, $.01 par value, 50,000,000 shares authorized,
16,984,940 and 16,852,557 shares issued and outstanding at
June 30, 1998 and December 31, 1997, respectively ............... 170 169
Additional paid-in capital ........................................... 63,611 63,148
Accumulated other comprehensive income -
Unrealized loss on available for sale securities ................ (25) --
Accumulated deficit .................................................. (16,954) (8,495)
Treasury stock, at cost, 23,014 and 2,000 shares at June 30, 1998
and December 31, 1997, respectively .......................... (169) (19)
-------- --------
Total stockholders' equity ...................................... 46,633 54,803
======== ========
Total liabilities and stockholders' equity ...................... 54,764 $ 69,110
======== ========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEAPOD, INC.
STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)
(unaudited)
Three months ended June 30,
--------------------------------
--------------- ---------------
1998 1997
--------------- ---------------
<S> <C> <C>
Revenues:
Net product sales ....................... $ 14,438 $ 10,177
Member and retailer services ............ 2,606 3,271
Interactive marketing services .......... 436 565
Licensing services ...................... 50 --
------------ ------------
Total revenues ..................... 17,530 14,013
Costs and expenses:
Cost of goods sold ...................... 13,586 9,539
Fulfillment operations .................. 5,028 4,287
General and administrative .............. 1,626 1,570
Marketing and selling ................... 1,154 1,138
System development and maintenance ...... 821 303
Depreciation and amortization ........... 509 378
------------ ------------
Total costs and expenses ........... 22,724 17,215
------------ ------------
Operating loss ............................... (5,194) (3,202)
Other income (expense):
Interest expense ........................ (33) (30)
Interest income ......................... 752 201
============ ============
Net loss ..................................... $ (4,475) $ (3,031)
============ ============
Net loss per share:
Basic ................................... $ (0.26) $ (0.22)
Diluted ................................. $ (0.26) $ (0.22)
Shares used to compute net loss per share:
Basic ................................... 16,925,120 13,522,753
Diluted ................................. 16,925,120 13,522,753
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEAPOD, INC.
STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)
(unaudited)
Six months ended June 30,
-------------------------------
------------- -----------
1998 1997
------------- -----------
<S> <C> <C>
Revenues:
Net product sales ....................... $ 29,933 $ 19,393
Member and retailer services ............ 5,399 5,741
Interactive marketing services .......... 962 990
Licensing services ...................... 100 --
------------ ------------
Total revenues ..................... 36,394 26,124
Costs and expenses:
Cost of goods sold ...................... 28,159 18,162
Fulfillment operations .................. 10,207 8,157
General and administrative .............. 2,991 2,309
Marketing and selling ................... 2,538 2,496
System development and maintenance ...... 1,431 679
Depreciation and amortization ........... 972 590
------------ ------------
Total costs and expenses ........... 46,298 32,393
------------ ------------
Operating loss ............................... (9,904) (6,269)
Other income (expense):
Interest expense ........................ (89) (45)
Interest income ......................... 1,535 336
============ ============
Net loss ..................................... $ (8,458) $ (5,978)
============ ============
Net loss per share:
Basic ................................... $ (0.50) $ (0.46)
Diluted ................................. $ (0.50) $ (0.46)
Shares used to compute net loss per share:
Basic ................................... 16,892,460 13,063,494
Diluted ................................. 16,892,460 13,063,494
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEAPOD, INC.
STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
Three Months Ended June 30,
--------------------------
1998 1997
------- -------
<S> <C> <C>
Net loss ............................................. $(4,475) $(3,031)
Other comprehensive loss:
Unrealized gain on available for sale securities 46 --
------- -------
Comprehensive loss ................................... $(4,429) $(3,031)
======= =======
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEAPOD, INC.
STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
Six Months Ended June 30,
--------------------------
1998 1997
------- -------
<S> <C> <C>
Net loss ............................................. $(8,458) $(5,978)
Other comprehensive loss:
Unrealized loss on available for sale securities (25) --
------- -------
Comprehensive loss ................................... $(8,483) $(5,978)
======= =======
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEAPOD, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended June 30,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................................. $ (8,458) $ (5,978)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ......................................... 972 590
Stock and options issued for services rendered ........................ 45 533
Changes in operating assets and liabilities:
(Increase) decrease in receivables, net ........................... 259 (1,936)
(Increase) decrease in prepaid expenses ........................... (11) 101
(Increase) decrease in other current assets ....................... (638) (60)
Increase (decrease) in accounts payable ........................... (4,298) (145)
Increase (decrease) in accrued compensation ....................... (779) 155
Increase (decrease) in other accrued liabilities .................. 6 1,056
Increase (decrease) in deferred service fees ...................... (741) 1,114
-------- --------
Net cash used in operating activities ......................... (13,643) (4,570)
Cash flows from investing activities:
Property and equipment purchased .......................................... (1,155) (658)
Capitalized software development costs .................................... (463) (355)
Unrealized loss on investments ............................................ (25) --
Net purchases of marketable securities ................................... (34,147) --
-------- --------
Net cash used in investing activities ......................... (35,790) (1,013)
Cash flows from financing activities:
Proceeds from issuance of stock, net of offering costs .................... -- 58,449
Proceeds from issuance of stock upon exercise of options .................. 269 57
Payments on capital lease obligations ..................................... (404) (175)
-------- --------
Net cash provided by (used in) financing activities ........... (135) 58,331
-------- --------
Net increase (decrease) in cash ............................................... (49,568) 52,748
Cash and cash equivalents at beginning of period .............................. 54,079 13,039
======== ========
Cash and cash equivalents at end of period .................................... $ 4,511 $ 65,787
======== ========
Supplemental disclosure of cash flows information--interest paid $ 85 $ 30
Supplemental disclosures of noncash investing and
financing activity:
Options exercised by sale of stock to the Company ................... 150 --
Equipment on capital leases.......................................... 40 625
======== ========
See accompanying notes to financial statements .....................
</TABLE>
<PAGE>
PEAPOD, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation. The unaudited interim financial statements included
herein have been prepared by the Company, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain notes and
other information normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted from the interim financial statements presented in
this quarterly report on Form 10-Q in accordance with such rules and
regulations. In the opinion of the Company's management, the accompanying
financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary to state fairly the financial position of
the Company as of June 30, 1998, and the results of its operations and cash
flows for the periods indicated. The results of operations for the periods
covered are not necessarily indicative of the results to be expected for
the full year.
These financial statements should be read in conjunction with the audited
financial statements and notes thereto of the Company for the year ended
December 31, 1997, which are included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission.
2. Conversion. Peapod, Inc. ("Company") is the successor to a business
originally founded in 1989 as a Delaware corporation and operated since
1992 through an Illinois limited partnership ("Peapod LP"). In December
1996, the Company was incorporated in Delaware. In a conversion (the
"Conversion") that was effected on May 31, 1997 (i) all of the equity
interests in Peapod LP were transferred to the Company in exchange for
12,656,417 shares of Common Stock, (ii) Peapod LP was dissolved, (iii) all
of the assets and liabilities of Peapod LP were transferred to the Company
and (iv) outstanding options and warrants for equity interests in Peapod LP
were converted into options and warrants for shares of Common Stock. The
transfer of the assets and liabilities of Peapod LP to the Company have
been recorded by the Company at the historical carrying values of Peapod
LP. On June 16, 1997 ("Offering Date"), the Company closed an initial
public offering of 4,000,000 shares of Common Stock at $16.00 per share
generating net proceeds of approximately $58.1 million.
3. Earnings Per Share. The Company applies SFAS No. 128, Earnings Per Share,
in computing earnings per share. Basic net loss per share is computed using
the weighted average number of common shares outstanding. Diluted net loss
per share is computed using the weighted average number of common shares
outstanding and equivalent shares based on the assumed exercise of stock
options and warrants (using the treasury stock method). Prior periods' net
loss per share has been restated to conform to the requirements of SFAS No.
128.
4. Reclassifications. Certain prior year balances have been reclassified to
conform with the current year presentation (i.e., for the three months
ended June 30, 1998 and June 30, 1997, grocery discounts of $852,000 and
$638,000, respectively, have been reclassified from Member and retailer
services to a reduction in Cost of goods sold).
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS
The following table sets forth certain unaudited financial information
from the Statements of Operations as a percentage of total revenues:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- ---------------------------
------------ ----------- ------------ ------------
1998 1997 1998 1997
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Net product sales....................... 82 % 73 % 82 % 74 %
Member and retailer services............ 15 23 15 22
Interactive marketing services.......... 3 4 3 4
Licensing services...................... * -- * --
------------ ----------- ------------ ------------
Total revenues..................... 100 100 100 100
Costs and expenses:
Cost of goods sold...................... 77 68 77 69
Fulfillment operations.................. 29 31 28 31
General and administrative.............. 9 11 8 9
Marketing and selling................... 7 8 7 10
System development and maintenance...... 5 2 4 3
Depreciation and amortization........... 3 3 3 2
------------ ----------- ------------ ------------
Total costs and expenses........... 130 123 127 124
------------ ----------- ------------ ------------
Operating loss............................... (30) (23) (27) (24)
Other income (expense):
Interest expense........................ * * * *
Interest income......................... 4 1 4 1
============ =========== ============ ============
Net loss..................................... (26) % (22) % (23) % (23) %
============ =========== ============ ============
* - Less than 1%
</TABLE>
Comparison of Three Months Ended June 30, 1998 and June 30, 1997
Net product sales. Net product sales, which is revenue from the sale of
groceries and other products to members, increased by 42% from $10,177,000 in
the quarter ended June 30, 1997 to $14,438,000 in the quarter ended June 30,
1998. This increase was due to a 33% increase in the number of orders, from
93,200 in the quarter ended June 30, 1997 to 123,800 in the quarter ended June
30, 1998 and a 7% increase in the average order size for the same time period.
Membership, measured as customers transacting within the last 12 months,
increased 42% from 73,400 members at June 30, 1997 to 104,000 at June 30, 1998.
Increases in the Company's membership base and orders resulted largely from
increased penetration in existing markets (i.e., Boston, Columbus, San Francisco
and Chicago) and the development of the Peapod service in markets that were new
on June 30, 1997 (i.e., Houston, Dallas and Austin).
Member and retailer services. Revenues from member and retailer
services include subscription, service and other fees paid by members and retail
partners related to Peapod's online shopping and delivery operations. Fees from
such services decreased 20% from $3,271,000 in the quarter ended June 30, 1997
to $2,606,000 in the quarter ended June 30, 1998. This decrease is primarily
attributable to an absence of market openings and related fees in the quarter
ended June 30, 1998 compared to the openings of the Texas and Atlanta markets in
the quarter ended June 30, 1997. Market opening fees, paid by retailers, are
recognized during the period in which a new market opens. Discounts on groceries
received from retailers, which were previously included in Member and retailer
services, have been reclassified as a reduction in Cost of goods sold.
Interactive marketing services. Revenues from interactive marketing
services include fees from consumer goods companies for interactive advertising,
promotion and research services. Fees from such services decreased by 23% from
$565,000 in the quarter ended June 30, 1997 to $436,000 in the quarter ended
June 30, 1998. The decrease is primarily due to lower contract fees for
interactive sponsorships during the period.
Licensing services. Revenues from licensing services include the
license, maintenance and transaction fees received for the Company's proprietary
software. In the quarter ended June 30, 1998, $50,000 has been recognized for
maintenance fees relating to the licensing of the Company's software to Coles-
Myer, where no such fees were recognized in the quarter ended June 30, 1997.
Cost of goods sold. Cost of goods sold includes groceries and other
products purchased on behalf of its members, net of returns and discounts. Cost
of goods sold increased from $9,539,000 in the quarter ended June 30, 1997 to
$13,586,000 in the quarter ended June 30, 1998, commensurate with the growth in
net product sales.
Fulfillment operations. Fulfillment operations expenses include (i) the
direct costs relating to the shopping, packing and delivery of member orders,
(ii) salaries and overhead expenses of each fulfillment center, (iii) salaries
and overhead expenses for each metropolitan market and (iv) salaries and
overhead expenses for certain field support functions such as recruiting,
training, database merchandising and customer support. Fulfillment operations
expenses increased 17% from $4,287,000 in the quarter ended June 30, 1997 to
$5,028,000 in the quarter ended June 30, 1998. The increase is primarily
attributable to (i) increases in salaries and overhead expenses for fulfillment
centers; (ii) the direct costs of shopping, packing and delivering the increased
volume of member orders; and (iii) salaries and overhead expenses for customer
support functions to support increases in the Company's membership.
At June 30, 1998, Peapod fulfilled member orders from 39 fulfillment
centers across seven metropolitan markets serving 6,273,000 households compared
to 59 fulfillment centers across eight metropolitan markets at June 30, 1997
covering 6,414,000 households. The evolution of the Company's fulfillment model
has resulted in economies of scale as fulfillment centers have been consolidated
into more centralized and dedicated facilities. In addition, the Atlanta market
ceased operations in January 1998.
General and administrative. General and administrative expenses, which
include corporate staff, accounting, finance, human resources, occupancy and
business development departments increased 4% from $1,570,000 in the quarter
ended June 30, 1997 to $1,626,000 in the quarter ended June 30, 1998. The
increase is primarily attributable to occupancy, telecommunications and
compensation related expenses to support the Company's growth in these corporate
staff functions.
Marketing and selling. Marketing and selling expenses include the cost
of member acquisition and retention marketing, such as radio advertising and
direct mail, as well as certain costs relating to public relations and
interactive marketing services. The Company expenses all such costs as incurred.
Marketing and selling expenses increased by 1% from $1,138,000 in the quarter
ended June 30, 1997 to $1,154,000 in the quarter ended June 30, 1998.
System development and maintenance. System development and maintenance
expenses, which include new product development as well as the maintenance and
enhancement of existing systems, increased 171% from $303,000 in the quarter
ended June 30, 1997 to $821,000 in the quarter ended June 30, 1998. The increase
is primarily attributable to increased compensation expenses to support the
Company's growth and its software licensing initiative. In addition, $158,000 of
development costs were capitalized in the second quarter of 1998 related to the
next version of the Company's consumer software compared to $193,000 of such
costs in the second quarter of 1997.
Depreciation and amortization. Depreciation and amortization increased
35% from $378,000 in the quarter ended June 30, 1997 to $509,000 in the quarter
ended June 30, 1998. This increase is the result of equipment added to support
new members, fulfillment centers and new employees and changes in the
depreciable lives of certain capital assets already in service.
Other income (expense). Other income (expense) includes interest paid
on capital leases and interest earned on cash balances and marketable
securities. Interest expense increased from $30,000 in the quarter ended June
30, 1997 to $33,000 in the quarter ended June 30, 1998. Interest income
increased from $201,000 in the quarter ended June 30, 1997 to $752,000 in the
quarter ended June 30, 1998, resulting from the investment of proceeds from the
issuance of equity in both 1996 and 1997.
Comparison of Six Months Ended June 30, 1998 and June 30, 1997
- ---------------------------------------------------------------
Net product sales. Net product sales increased by 54% from $19,393,000
in the six months ended June 30, 1998 compared to $29,933,000 in the first six
months ended June 30, 1997. This increase was due to a 46% increase in the
number of orders, from 178,100 in the six months ended June 30, 1997 to 260,400
for the same period in 1998 and a 7% increase in the average order size.
Member and retailer services. Revenues from member and retailer
services decreased 6% from $5,741,000 in the six months ended June 30, 1997 to
$5,399,000 in the six months ended June 30, 1998.. This decrease is primarily
attributable to an absence of market openings and the related fees in the six
months ended June 30, 1998 compared to the openings of the Texas and Atlanta
markets in the six months ended June 30, 1997. Market opening fees, paid by
retailers, are recognized during the period in which a new market opens.
Discounts on groceries received from retailers, which were previously included
in Member and retailer services, have been reclassified as a reduction in Cost
of goods sold
Interactive marketing services. Revenues from interactive marketing
services decreased by 3% from $990,000 in the six months ended June 30, 1997 to
$962,000 in the six months ended June 30, 1998. The decrease is primarily due to
lower contract fees for interactive sponsorships during the period.
Licensing services. In the six months ended June 30, 1998, $100,000
has been recognized for maintenance fees relating to the licensing of the
Company's software to Coles-Myer, where no such fees were recognized in the six
months ended June 30, 1997.
Cost of goods sold. Cost of goods sold increased from $18,162,000 in
the six months ended June 30, 1997 to $28,159,000 in the six months ended June
30, 1998, commensurate with the growth in Net product sales.
Fulfillment operations. Fulfillment operations expenses increased 25%
from $8,157,000 in the six months ended June 30, 1997 to $10,207,000 in the six
months ended June 30, 1998. The increase is primarily attributable to (i) the
direct costs of shopping, packing and delivering the increased volume of member
orders; (ii) increases in salaries and overhead expenses for fulfillment
centers; and (iii) salaries and overhead expenses for customer support functions
to support increases in the Company's membership base.
General and administrative. General and administrative expenses
increased 30% from $2,309,000 in the six months ended June 30, 1997 to
$2,991,000 in the six months ended June 30, 1998. The increase is primarily
attributable to occupancy, telecommunications and compensation related expenses
to support the Company's growth in these corporate staff functions.
Marketing and selling. Marketing and selling expenses increased by 2% from
$2,496,000 in the six months ended June 30, 1997 to $2,538,000 in the six months
ended June 30, 1998.
System development and maintenance. System development and maintenance
expenses increased 111% from $679,000 in the six months ended June 30, 1997 to
$1,431,000 in the six months ended June 30, 1998. The increase is primarily
attributable to increased compensation expenses to support the Company's growth
and its software licensing initiative. In addition, $463,000 of development
costs were capitalized in the first six months of 1998 related to the next
version of the Company's consumer software compared to $355,000 of such costs in
the first six months of 1997.
Depreciation and amortization. Depreciation and amortization increased
65% from $590,000 in the six months ended June 30, 1997 to $972,000 in the six
months ended June 30, 1998. This increase is the result of equipment added to
support new members, fulfillment centers and new employees and changes in the
depreciable lives of certain capital assets already in service.
Other income (expense). Interest expense increased from $45,000 in the
six months ended June 30, 1997 to $89,000 in the six months ended June 30, 1998.
Interest income increased from $336,000 in the six months ended June 30, 1997 to
$1,535,000 in the six months ended June 30, 1998, resulting from the investment
of proceeds from the issuance of equity in both 1996 and 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities increased from $4,570,000 in the first
six months of 1997 to $13,643,000 in the first six months of 1998. The increase
in cash used in operating activities was primarily attributable to decreases in
accounts payable, increased net losses and decreases in deferred service fees,
partially offset by decreases in receivables. As of June 30, 1998, the Company
had $4,511,000 in cash and cash equivalents, and $42,945,000 in marketable
securities. In 1997, the Company sold equity which generated aggregate net
proceeds of $58,846,000, including $58,120,000 net proceeds from the Company's
initial public offering of Common Stock in June 1997 (the "IPO"). The Company
uses its working capital to fund ongoing operations, marketing programs and
geographic expansion and to further develop its products and services.
The Company anticipates that existing cash and marketable securities
will be sufficient to fund the Company's operations and capital requirements for
the foreseeable future. However, no assurance can be given that changing
business circumstances will not require additional capital for reasons that are
not currently anticipated or that the necessary capital will then be available
to the Company on favorable terms, or at all.
The Company believes that inflation has not had a material effect on
its operations.
YEAR 2000
The Company has evaluated the impact of the Year 2000 issue on its
business and does not expect to incur significant costs associated with Year
2000 compliance or that Year 2000 issues will have a material impact on the
Company's business, results of operations or financial condition. The Company's
proprietary software systems and applications are currently Year 2000 compliant.
Certain operating systems of third party vendors on which certain Company
software resides are net yet Year 2000 compliant. However, these vendors have
indicated to the Company that Year 2000 compliant upgrades are either available,
or will be available shortly, and the Company intends to install these upgrades
by the end of 1998. With respect to its grocery retail partners, to the extent
that any of the Company's retail partners' computer systems are not Year 2000
compliant, the Company has established alternative procedures for obtaining
relevant retailer information at a minimal cost to the Company.
PART II
OTHER INFORMATION
Item 5. Other Information
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995.
Certain statements in this report relative to markets for the
Company's products and trends in the Company's operations or
financial results, as well as other statements including words
such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend" or other similar expressions, constitute
"forward-looking statements" under The Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
are contained in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and in other
portions of this report. Such forward-looking statements are
subject to known and unknown risks, uncertainties and other
factors which may cause actual results to be materially
different from those contemplated by the forward-looking
statements. Such factors include, among other things: (1) the
developing nature of the markets for the Company's services
and the rapid technological change relating thereto; (2) the
Company's relationship with its retail partners and its
interactive marketing services and research customers; (3) the
Company's ability to execute its growth strategies; (4) the
extent to which the Company is able to attract and retain key
personnel; (5) competition; (6) general economic conditions;
(7) regulations; and (8) the risk factors or uncertainties
listed from time to time in the Company's filings with the
Securities and Exchange Commission.
Item 6. Exhibits and Reports on form 8-K.
(a) Exhibits - The following exhibits are filed herewith or
are incorporated herein:
Exhibit
No. Description
27 -- Financial Data Schedule
(b)Reports on Form 8-K - The Registrant filed no Current
Reports on Form 8-K during the quarter ended June 30,
1998.
<PAGE>
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 thereunto duly authorized.
Peapod, Inc.
----------------------
(Registrant)
August 3, 1998
/s/ Dan Rabinowitz
-----------------------
Dan Rabinowitz
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 4,511
<SECURITIES> 42,945
<RECEIVABLES> 936
<ALLOWANCES> 351
<INVENTORY> 0
<CURRENT-ASSETS> 49,714
<PP&E> 6,747
<DEPRECIATION> 3,124
<TOTAL-ASSETS> 54,764
<CURRENT-LIABILITIES> 6,855
<BONDS> 0
0
0
<COMMON> 170
<OTHER-SE> 46,463
<TOTAL-LIABILITY-AND-EQUITY> 54,764
<SALES> 29,933
<TOTAL-REVENUES> 36,394
<CGS> 28,159
<TOTAL-COSTS> 46,298
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 89
<INCOME-PRETAX> (8,458)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,458)
<EPS-PRIMARY> (0.50)
<EPS-DILUTED> (0.50)
<FN>
This schedule contains summary financial information extracted from the
balance sheet as of June 30, 1998 and the statements of operations for the six
months ended June 30, 1998 and is qualified in its entirety by reference to such
financial statements.
</FN>
</TABLE>
