<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of
1934
For the quarterly period ended March 31, 2000
or
[ ]Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period ended from _____ to _____
Commission File Number 000-25943
Media Metrix, Inc.
(Exact name of registrant as specified in its charter)
Delaware 11-3374729
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 Park Avenue South
New York, NY 10003
(Address of principal executive offices) (Zip Code)
(212) 515-8700
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date:
Common Stock, par value $.01 per share, 19,839,716 shares outstanding
as of May 8, 2000
<PAGE> 2
Media Metrix, Inc.
Index
PART I Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets--
March 31, 2000 and December 31, 1999.............................1
Consolidated Statements of Operations--
Three Months Ended March 31, 2000 and 1999.......................2
Consolidated Statement of Stockholders' Equity--
Three Months Ended March 31, 2000................................3
Consolidated Statements of Cash Flows--
Three Months Ended March 31, 2000 and 1999.......................4
Notes to Consolidated Financial Statements.......................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................6
Item 3. Quantitative and Qualitative Disclosures of Market Risk.........12
PART II Other Information
Item 1. Legal Proceedings...............................................13
Item 2. Changes in Securities and Use of Proceeds.......................13
Item 3. Defaults Upon Senior Securities.................................13
Item 4. Submission of Matters to a Vote of Security Holders.............13
Item 5. Other Information...............................................14
Item 6. Exhibits and Reports on Form 8-K................................14
Signatures
<PAGE> 3
Part I. Financial Information
Media Metrix, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ---------
ASSETS (Unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 86,552 $ 97,364
Marketable securities 15,206 14,877
Receivables:
Trade, less allowance for doubtful accounts of $580 in 2000
and $500 in 1999 6,643 5,473
Expenditures billable to clients 2,325 520
--------- ---------
Total receivables 8,968 5,993
Prepaid expenses and other current assets 589 454
--------- ---------
Total current assets 111,315 118,688
Property and equipment, at cost, net of accumulated depreciation
and amortization of $1,229 in 2000 and $561 in 1999 8,461 5,308
Intangibles acquired, net of accumulated amortization
of $13,357 in 2000 and $7,792 in 1999 54,610 52,948
Due from minority interests in consolidated subsidiaries 964 1,617
Other assets 452 283
--------- ---------
Total assets $ 175,802 $ 178,844
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 11,277 $ 10,116
Due to The NPD Group, Inc. 308 444
Advance billings to clients 7,038 5,126
Current portion of long-term debt 202 196
--------- ---------
Total current liabilities 18,825 15,882
Long-term debt 120 173
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value--5,000,000 shares authorized -- --
Common stock, $.01 par value--60,000,000 shares authorized;
shares issued and outstanding--19,812,466 in 2000 and
19,681,999 in 1999 198 197
Additional paid-in capital 204,155 202,031
Accumulated other comprehensive loss (151) (83)
Accumulated deficit (46,219) (38,110)
Deferred compensation (1,126) (1,246)
--------- ---------
Total stockholders' equity 156,857 162,789
--------- ---------
Total liabilities and stockholders' equity $ 175,802 $ 178,844
========= =========
</TABLE>
See accompanying notes.
1
<PAGE> 4
Media Metrix, Inc.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except for per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
-------- --------
<S> <C> <C>
Revenues $ 10,204 $ 3,178
Costs of revenues 4,411 1,720
-------- --------
Gross profit 5,793 1,458
Operating expenses:
Research and development 2,916 681
Sales and marketing 4,129 1,335
General and administrative 3,089 1,049
Amortization of deferred compensation and
other stock-based compensation 282 108
Amortization of intangibles 5,565 749
-------- --------
Total operating expenses 15,981 3,922
-------- --------
Loss from operations (10,188) (2,464)
Minority interests 478 --
Interest and other income, net 1,601 80
-------- --------
Net loss (8,109) (2,384)
Preferred stock dividends -- (82)
-------- --------
Net loss applicable to common stockholders $ (8,109) $ (2,466)
======== ========
Basic and diluted net loss per share applicable to
common stockholders $ (0.41) $ (0.19)
======== ========
Shares used in the calculation of basic and
diluted net loss per share applicable to common
stockholders 19,718 13,296
======== ========
</TABLE>
See accompanying notes.
2
<PAGE> 5
Media Metrix, Inc.
Consolidated Statement of Stockholders' Equity
Three months ended March 31, 2000
(Unaudited)
(in thousands, except for share data)
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON STOCK PAID-IN COMPREHENSIVE ACCUMULATED DEFERRED STOCKHOLDERS'
SHARES AMOUNT CAPITAL LOSS DEFICIT COMPENSATION EQUITY
---------- --------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 19,681,999 $ 197 $ 202,031 $ (83) $ (38,110) $ (1,246) $ 162,789
Comprehensive loss:
Net loss -- -- -- -- (8,109) -- (8,109)
Unrealized losses on marketable securities -- -- -- (5) -- -- (5)
Foreign currency translation -- -- -- (63) -- -- (63)
-----------
Total comprehensive loss (8,177)
Issuance of common stock in connection with
acquisition 52,000 -- 1,759 -- -- -- 1,759
Exercise of warrants and stock options 78,467 1 203 -- -- -- 204
Amortization of deferred compensation -- -- -- -- -- 120 120
Acceleration of vesting on options -- -- 162 -- -- -- 162
---------- --------- --------- --------- --------- ----------- -----------
Balance at March 31, 2000 19,812,466 $ 198 $ 204,155 $ (151) $ (46,219) $ (1,126) $ 156,857
========== ========= ========= ========= ========= =========== ===========
</TABLE>
See accompanying notes.
<PAGE> 6
Media Metrix, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
2000 1999
-------- --------
OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (8,109) $ (2,384)
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for bad debts 80 60
Depreciation and amortization of property and equipment 668 65
Amortization of deferred compensation and other stock-based
compensation 120 108
Acceleration of vesting on options 162 --
Amortization of intangibles 5,565 749
Minority interests 478 --
Changes in operating assets and liabilities:
Receivables (2,604) (1,050)
Prepaid expenses and other current assets 1,282 (174)
Other assets (19) 3
Accounts payable and accrued liabilities (909) (1,039)
Advance billings to clients 1,908 352
Due to The NPD Group, Inc. (136) (3,367)
-------- --------
Net cash used in operating activities (1,514) (6,677)
INVESTING ACTIVITIES
Cash paid for acquisition (5,692) --
Purchase of marketable securities (334) --
Purchases of property and equipment (3,501) (52)
Security deposits (40) --
-------- --------
Net cash used in investing activities (9,567) (52)
FINANCING ACTIVITIES
Repayments on long-term debt (47) (29)
Proceeds from exercise of warrants and options 204 1,210
Contributions from minority interests 175 --
Payment of offering costs -- (79)
-------- --------
Net cash provided by financing activities 332 1,102
-------- --------
Effect of exchange rate changes on cash (63) --
-------- --------
Net decrease in cash and cash equivalents (10,812) (5,627)
Cash and cash equivalents at beginning of period 97,364 8,012
-------- --------
Cash and cash equivalents at end of period $ 86,552 $ 2,385
======== ========
SUPPLEMENTAL INFORMATION
Interest paid $ 6 $ 17
======== ========
</TABLE>
See accompanying notes.
4
<PAGE> 7
Media Metrix, Inc.
Notes to Consolidated Financial Statements
March 31, 2000
A. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three - month period ended March 31,
2000 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2000.
The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required to by generally accepted accounting principles for
complete financial statements.
For further information, refer to the financial statements and footnotes thereto
for the year ended December 31, 1999 included in Media Metrix' Annual Report on
Form 10-K as filed with the Securities and Exchange Commission.
B. ACQUISITION
Effective January 1, 2000, Media Metrix acquired the Internet audience
measurement business operated by SIFO Group AB ("SIFO") in Sweden. The new
company, MMXI Nordic, is a wholly owned subsidiary of Media Metrix. Media Metrix
acquired all of the outstanding shares of MMXI Nordic in exchange for $5,692,000
and 52,000 shares of Media Metrix common stock. In connection with this
acquisition, SIFO purchased 8.0% of MMXI Europe, reducing Media Metrix'
ownership to 50.1%.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Statements in this Quarterly Report on Form 10-Q concerning our future prospects
are "forward looking statements" under the federal securities laws. Forward
looking statements involve risks and uncertainties, and future events and
circumstances could differ significantly from those anticipated in the
forward-looking statements. We cannot assure you that future results will be
achieved, and actual results could differ materially from forecasts and
estimates. Important factors that could cause actual results to differ
materially are discussed in the section "Risk Factors" included in our Annual
Report on Form 10-K. You are encouraged to review such risk factors carefully.
OVERVIEW
We provide Internet audience measurement products and services to
leading Internet advertisers, advertising agencies, media companies, technology
companies and financial institutions. We have been at the forefront of the
development and coordination of technology and standards needed to facilitate
advertising and transactions between companies doing business over the Internet.
The quality and depth of our customer base and our customer renewal rate of over
95% reflect our position as a widely accepted Internet audience measurement
service. As a result of our acquisition of AdRelevance in October 1999, we now
offer advertising measurement products and services to our customers.
Our business was originally conducted as a division within The NPD
Group, Inc. ("NPD"), a leading marketing research firm. Prior to March 1996, we
were engaged primarily in product research and development. In March 1996, PC
Meter, L.P., was formed to further commercialize our Internet audience
measurement business in an entity separate from NPD, although NPD continued to
provide PC Meter with administrative and support services and technology
licenses. By July 1996, we increased the size of our panel to over 10,000
individuals and significantly increased our product offerings. In April 1997, PC
Meter was merged into Media Metrix, and we raised approximately $4.0 million in
a private placement to fund the expansion of our business. The assets and
liabilities and related revenues and expenses of PC Meter have been reflected in
our financial statements at their historical book values.
In November 1998, we merged with RelevantKnowledge, then our leading
competitor. Following the merger, we increased our panel size and began to
integrate the best technological features from each company into our systems and
processes.
In October 1999, we acquired AdRelevance. The acquisition was
structured as a stock-for-stock transaction valued at approximately $59.4
million. In addition, we may issue additional shares of our common stock and
options and warrants having a value of approximately $4.3 million, based on the
closing price of our common stock on March 31, 2000, if AdRelevance achieves
certain post-closing goals. In connection with our acquisition
6
<PAGE> 9
of AdRelevance, we recognized $54.3 million of intangibles, which are being
amortized over a three-year period. Also, a non-recurring in-process research
and development cost of $6.8 million was expensed at the time of the
acquisition.
In connection with the formation of each of its international joint
ventures, Media Metrix granted each of its joint venture partners an option,
subject to certain conditions, to exchange such partner's shares in the
respective joint ventures for shares of Media Metrix common stock. If any
partner elects to exercise its option to convert its shares into shares of Media
Metrix common stock, Media Metrix will need to record additional goodwill in an
amount equal to the difference between the then fair market value of the shares
of Media Metrix' common stock multiplied by the number of shares issued and the
net book value of the joint venture of which such partner is a shareholder
attributable to such partner.
Our revenues are derived from our measurement products and services.
Our product offerings include both syndicated products and customized products.
We sell our syndicated products on an annual subscription basis. We typically
bill our syndicated clients, in advance, for up to the next twelve months of
products. Since 1997, syndicated products have accounted for approximately 90%
of our revenues, while customized products and services have accounted for
approximately 10%. Our combined customer base increased from approximately 100
customers at the end of 1997 to more than 750 as of March 31, 2000. Of the
customers subscribing under annual contracts for our syndicated products and
services in the first quarter of 1999, over 95% remained customers at the end of
the first quarter of 2000. With this high customer retention rate, we have a
growing base of recurring revenues from our syndicated products and services. In
addition, of the contracts renewed in first quarter of 2000, we experienced an
average increase in contract dollar value of over 40% due to the purchase of
additional services by our renewing clients.
We recognize revenues for the syndicated products and services over the
term of the related contract as services are provided. Revenues for customized
products and services are recognized in the period in which the product or
service is delivered.
Our business model is based on creating multiple products and services
from our core panel-based market research, technologies and databases. We began
establishing a panel of individuals under continuous measurement in 1996. Today,
the core U.S. panel consists of 50,000 individuals under continuous measurement.
We recruit individuals to become members of our panel through random digit dial
(RDD) telephone solicitation. We also use direct mail to reach individuals
identified within the RDD sample. We incur costs in connection with recruiting
and retaining members of our panel. These costs are expensed in the year
incurred. Our rate of expense growth, other than panel and production, is
primarily driven by increases in headcount and sales and marketing expenditures.
We have incurred significant losses from operations since our
inception. We incurred losses from operations of $10.2 million in the first
three months of 2000, $25.9 million in 1999, $7.2 million in 1998 and $4.7
million in 1997. As of March 31, 2000, we had an accumulated deficit of $46.2
million.
7
<PAGE> 10
We expect that we will incur significant expenses in the future
associated with our ongoing international expansion, particularly costs
associated with recruiting and maintaining panels in a number of countries. We
plan on continuing to hire personnel to manage our current and anticipated
international operations and on entering into joint ventures with local
partners. In addition, we intend to invest heavily in further development and
improvement of our technologies and development of additional products and
services.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated our results of
operations expressed as a percentage of revenues:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
2000 1999
------ ------
<S> <C> <C>
Revenues 100.0% 100.0%
Costs of revenues 43.2 54.1
------ ------
Gross profit 56.8 45.9
Operating expenses:
Research and development 28.6 21.4
Sales and marketing 40.5 42.0
General and administrative 30.3 33.0
Amortization of deferred compensation and
other stock-based compensation 2.7 3.4
Amortization of intangibles 54.5 23.6
------ ------
Total operating expenses 156.6 123.4
------ ------
Loss from operations (99.8) (77.5)
Minority interests 4.6 --
Interest and other income, net 15.7 2.5
------ ------
Net loss (79.5)% (75.0)%
------ ------
</TABLE>
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Revenues. Revenues increased 221.1% to $10.2 million for the three
months ended March 31, 2000 from $3.2 million for the three months ended March
31, 1999. Sales of syndicated audience measurement products and services
accounted for approximately 90% of revenues for each of the three months ended
March 31, 2000 and 1999. Sales of customized products and services accounted for
the remaining revenues. The increase in revenues was due primarily to a
substantial increase in the number of our customers, including customers
acquired in connection with the RelevantKnowledge and AdRelevance mergers and
due to our international growth, and an increase in the amount of products and
services sold to our customers.
8
<PAGE> 11
Costs of Revenues. Costs of revenues consist primarily of costs
associated with the recruitment and maintenance of the panel, data collection
and production costs. Panel and data collection costs include costs associated
with mailing and printing, incentives, help desk and associated personnel.
Production costs include computer usage charges, printing, report distribution
costs and personnel costs. Gross profit was $5.8 million for the three months
ended March 31, 2000, or 56.8% of revenues. Gross profit was $1.5 million for
the three months ended March 31, 1999, or 45.9% of revenues. The increase in
gross profit as a percentage of revenues for the three months ended March 31,
2000 over the prior period was due to an increase in revenues, without a
commensurate increase in costs.
In the three months ended March 31, 2000, Media Metrix invested
approximately $1.5 million in recruiting panels and other start up costs in
connection with its international operations in the U.K., France, Germany,
Sweden, Canada, Japan and Australia. However, Media Metrix has not realized
sufficient revenues from its international operations to offset against these
costs, which has resulted in a lower overall gross margin for the period
compared to the gross margin applicable to the U.S. operations alone for the
same period.
Research and Development. Research and development costs consist
primarily of personnel and other related costs attributable to the development
of new products and services. All research and development costs have been
expensed as incurred. Research and development costs were $2.9 million for the
three months ended March 31, 2000, or 28.6% of revenues. Research and
development costs were $681,000 for the three months ended March 31, 1999, or
21.4% of revenues. The increase in research and development costs as a
percentage of revenues for the three months ended March 31, 2000 was due
primarily to increases in research and development personnel and consulting
costs, including certain costs relating to our new data warehouse and client
interface systems which will be introduced in the second quarter of 2000.
Sales and Marketing. Sales and marketing costs consist of personnel,
commissions, travel and entertainment expenses, public relations costs, trade
show expenses, seminars and marketing materials. Sales and marketing costs were
$4.1 million for the three months ended March 31, 2000, or 40.5% of revenues.
Sales and marketing costs were $1.3 million for the three months ended March 31,
1999, or 42.0% of revenues. The increase in absolute dollars was due primarily
to the increase in sales and marketing personnel, including the addition of
personnel in connection with our acquisition of AdRelevance and our
international expansion, as well as additional marketing costs. The decrease in
sales and marketing costs as a percentage of revenues was due primarily to
revenues increasing at a greater rate.
General and Administrative. General and administrative costs consist
primarily of personnel, lease payments for our facilities, telephone and
utilities and professional services fees. General and administrative costs were
$3.1 million for the three months ended March 31, 2000, or 30.3% of revenues.
General and administrative costs were $1.0 million for the three months ended
March 31, 1999, or 33.0% of revenues. The increase in absolute dollars was due
to the expenses associated with our international expansion and increased
personnel and expansion of our office facilities, including the addition of
personnel and office facilities in
9
<PAGE> 12
connection with our acquisition of AdRelevance. The decrease in general and
administrative costs as a percentage of revenues was due primarily to revenues
increasing at a greater rate.
Amortization of Deferred Compensation and Other Stock-based
Compensation. Amortization of deferred compensation and other stock-based
compensation of $282,000 for the three months ended March 31, 2000 and $108,000
for the three months ended March 31, 1999 represents a non-cash compensation
expense recorded in connection with stock options granted in 1999 and 1998 and
the acceleration of the vesting provisions of certain stock options resulting in
a new measurement date.
Amortization of Intangibles. Amortization charges of $5.6 million for
the three months ended March 31, 2000 represent the amortization of intangibles
acquired in our merger with RelevantKnowledge and our acquisitions of
AdRelevance and MMXI Nordic. Amortization charges of $749,000 for the three
months ended March 31, 1999 represent the amortization of RelevantKnowledge's
panel and other intangibles acquired in that merger.
Loss from Operations. Loss from operations was $10.2 million for the
three months ended March 31, 2000, or 99.8% of revenues. Our loss from
operations was $2.5 million for the three months ended March 31, 1999, or 77.5%
of revenues. Loss from operations in terms of absolute dollars was higher in the
three months ended March 31, 2000 due to the continued expansion of our business
in the United States and internationally, the acquisition of AdRelevance and
amortization of intangibles. The increase in loss from operations as a
percentage of revenues was due to an increase in amortization of intangibles
from the AdRelevance and MMXI Nordic acquisition offset by an increase in
revenues relative to the increases in costs of revenues and operating costs. We
expect these losses to continue as our business continues to expand both in the
United States and internationally over the next few quarters.
Minority Interests. Minority interests consist of the loss related to
our partners' interests in our foreign subsidiaries.
Interest and Other Income, net. Interest and other income, net of
interest expense was $1.6 million, or 15.7% of revenues, for the three months
ended March 31, 2000 as compared to $80,000 for the three months ended March 31,
1999, or 2.5% of revenues. The increase in interest and other income was due to
the investment of the proceeds of our initial and secondary public offerings.
LIQUIDITY AND CAPITAL RESOURCES
Since our inception, we have financed our operations primarily through
an initial investment and loan by NPD, the private placement of equity
securities, RelevantKnowledge's cash on hand at the time of the merger, cash
from operations and the proceeds of public offerings. On May 12, 1999, we
completed the initial public offering of 3,250,000 shares of our common stock
for gross proceeds of $55.3 million, and net proceeds of $49.4 million. On
October 29, 1999, we completed a secondary offering of 3,000,000 shares of our
common
10
<PAGE> 13
stock. Of the shares offered, Media Metrix sold 1,500,000 shares and 1,500,000
shares were sold by existing stockholders. Gross proceeds to Media Metrix were
$75.8 million, and net proceeds to Media Metrix were $71.1 million.
Net cash used in operating activities was $1.5 million for the three
months ended March 31, 2000, compared to $6.7 million for the three months ended
March 31, 1999. The variance for 2000 compared to 1999 was primarily due to the
net repayment of $3.4 million to NPD during 1999 for services performed under a
management agreement.
Net cash used in investing activities was $9.6 million for the three
months ended March 31, 2000, compared to $52,000 for the three months ended
March 31, 1999. The increase was primarily attributable to cash paid for the
Internet audience measurement business operated by SIFO Group AB in Sweden and
the purchase of fixed assets due to the growth of the business both domestically
and internationally and the computer equipment purchased related to the building
of our data warehouse and our new client interface system.
Net cash provided by financing activities was $332,000 for the three
months ended March 31, 2000, compared to $1.1 million for the three months ended
March 31, 1999. Cash provided by financing activities for both 2000 and 1999
primarily relate to proceeds received from the exercise of warrants and stock
options offset by repayments on our long-term debt.
As of March 31, 2000, we had $86.6 million of cash and cash equivalents
and $15.2 million of marketable securities. As of March 31, 2000, our principal
commitments consisted of accrued obligations under our agreements with NPD in
the amount of $308,000.
We expect to invest at least an additional $20 million over the next
year in our international operations, in improvements in our technology and data
delivery systems and in connection with lease commitments and related capital
improvements associated with the expansion of our business. We currently
anticipate that we will experience an increase in our capital expenditures and
lease commitments consistent with our anticipated growth in operations,
infrastructure and personnel, including in connection with the ongoing
separation of our systems from those of NPD. We currently anticipate that we
will continue to experience growth in our operating expenses for the foreseeable
future and that operating expenses will be a material use of our cash resources.
IMPACT OF YEAR 2000
In prior years, we discussed the nature and progress of our plans to
become ready for the Year 2000. In late 1999, we completed the remediation and
testing of our systems. As a result of those planning and implementation
efforts, we did not experience any significant disruptions in our essential
information technology and non-information technology systems. We believe that
our systems successfully responded to the Year 2000 date change. We are not
aware of any material problems resulting from Year 2000 issues, either with our
products, our internal systems or the products and services of third parties. We
will continue to monitor our essential computer systems and applications and
those of our suppliers and licensors
11
<PAGE> 14
throughout the year 2000 to ensure that any latent Year 2000 matters that may
arise are addressed promptly.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
The carrying values of financial instruments including cash and cash
equivalents, accounts receivable, accounts payable and notes payable,
approximate fair value because of the short maturity of these instruments.
We have historically had very low exposure to changes in foreign
currency exchange rates, therefore we have not used derivative financial
instruments to manage foreign currency fluctuation risk. We conduct business on
a worldwide basis through our international subsidiaries. As we continue to
expand globally, the risk of foreign currency exchange rate fluctuation may
increase. Therefore, in the future, we may consider utilizing derivative
instruments to mitigate such risks. Currently, we manage our level of exposure
by denominating international sales and payment of related expense in the
foreign subsidiaries' local currency.
12
<PAGE> 15
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS.
The effective date of our first registration statement, filed on Form
S-1 under the Securities Act of 1933 (No. 333-72883) relating to the initial
public offering of our Common Stock, was May 6, 1999. A total of 3,250,000
shares of our common stock were sold at a price of $17.00 per share to an
underwriting syndicate led by Donaldson, Lufkin & Jenrette Securities
Corporation, BancBoston Robertson Stephens Inc. and Thomas Weisel Partners LLC.
The offering commenced on May 7, 1999, and closed on May 12, 1999. An additional
200,000 shares of common stock were sold on behalf selling stockholders as part
of the same offering. The initial public offering resulted in gross proceeds of
$55.3 million, $3.9 million of which was applied toward the underwriting
discount. Expenses related to the offering totaled approximately $2.0 million.
Net proceeds to us and the selling stockholders were $49.4 million and $3.2
million, respectively. From the time of receipt through March 31, 2000, proceeds
were applied as follows:
- - $4.8 million towards the redemption of our redeemable preferred stock
from The NPD Group, Inc.;
- - $15.2 million for working capital purposes;
- - $5.7 million for the Internet audience measurement business operated by
SIFO Group AB in Sweden; and
- - the remainder has been invested in short term, investment grade
securities.
From October 1, 1999 through December 31, 1999, we issued 697,664
shares of our common stock to the shareholders of AdRelevance in connection with
our acquisition of AdRelevance in October 1999.
No underwriters were engaged in connection with the issuance of the
shares to the AdRelevance shareholders. The issuance of the shares was made in
reliance upon the exemption from registration set forth in Section 4(2) of the
Securities Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
13
<PAGE> 16
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
Current Report on Form 8-K, dated March 20, 2000, relating to the
acquisition of MMXI Nordic from Osprey Research B.V.
14
<PAGE> 17
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.
Media Metrix, Inc.
(Registrant)
Dated: May 15, 2000 By: /s/ Tod Johnson
-----------------
Tod Johnson
Chief Executive Officer
Dated: May 15, 2000 By: /s/ Thomas A. Lynch
---------------------
Thomas A. Lynch
Chief Financial Officer,
Secretary and Treasurer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Registrant
Company Condensed Consolidated Balance Sheet (Unaudited) for March 31, 2000 and
Condensed Consolidated Statement of Income (Unaudited) for the Three Months
ended March 31, 2000 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 86,552
<SECURITIES> 15,206
<RECEIVABLES> 9,548
<ALLOWANCES> (580)
<INVENTORY> 0
<CURRENT-ASSETS> 111,315
<PP&E> 9,690
<DEPRECIATION> (1,229)
<TOTAL-ASSETS> 175,802
<CURRENT-LIABILITIES> 18,825
<BONDS> 0
0
0
<COMMON> 198
<OTHER-SE> 156,659
<TOTAL-LIABILITY-AND-EQUITY> 175,802
<SALES> 10,204
<TOTAL-REVENUES> 10,204
<CGS> 4,411
<TOTAL-COSTS> 4,411
<OTHER-EXPENSES> 15,981
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> (8,109)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,109)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,109)
<EPS-BASIC> (0.41)
<EPS-DILUTED> (0.41)
</TABLE>
