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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
MAY 15, 2000 (MAY 10, 2000)
TELESCAN, INC.
Exact Name of Registrant as Specified in its Charter
DELAWARE 0-17508 061489574
State of Incorporation or I.R.S. Employer
Organization Commission File Number Identification No.
5959 CORPORATE DRIVE
SUITE 2000
HOUSTON, TEXAS 77036
Address of Principal Executive Offices (Zip Code)
(281) 588-9700
Registrant's telephone number,
including area code
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS.
On May 10, 2000, Telescan, Inc. (the "Company") issued a press release
announcing its earnings for the quarter ended March 31, 2000. The press release
also discusses a change in accounting and a restatement of December 31, 1999 and
1998 financial statements arising from the consensus reached by the Emerging
Issues Task Force on March 16, 2000 (Issue No. 00-3) relating to the accounting
for hosting arrangements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibits are filed as part of this report:
99.1 Press Release issued by Telescan, Inc. on May 10, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 17, 2000
TELESCAN, INC.
By: /s/ ROGER C. WADSWORTH
Roger C. Wadsworth
Senior Vice President
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FOR IMMEDIATE RELEASE:
May 10, 2000
TELESCAN REPORTS 107% RISE IN REVENUE FOR FIRST QUARTER 2000
REVENUE AND EARNINGS REACH NEW RECORD
ONE-TIME GAIN OF $12 MILLION ON INVESTMENT IN GLOBALNETFINANCIAL.COM
COMPANY CONFORMS WITH EITF ISSUE NO. 00-3
HOUSTON, May 10, 2000 -- Telescan, Inc. (Nasdaq/NM:TSCN) today reported that
revenue rose 107% to a record $9.8 million in the quarter ended March 31, 2000
from $4.7 million, as restated, for the same period a year earlier, reflecting
excellent gains in the company's B2B commerce business and its INVESTools
investment advisory subscription business unit.
Reflecting a pre-tax gain of $12.0 million from the sale of GlobalNet
Financial.com shares, earnings were $8.2 million, after charges totaling $4.0
million for tax provisions and certain non-recurring charges. This results in
earnings for the quarter of $0.49 per basic and $0.47 per diluted share versus a
restated loss of $1.2 million, or a loss of $0.09 per basic and diluted share,
in the same period in 1999. General and administrative costs include $2.0
million in non-recurring charges related to execution of the GlobalNet options
and modification of an international agreement as part of the Company's
globalization strategy.
Revenue from B2B strategic alliances increased 241% to $3.7 million for the
quarter from $1.1 million, as restated, in the first quarter of 1999, validating
Telescan's growth strategy of expanding its private label business segment. At
the Company's INVESTools subsidiary, revenue jumped nearly three fold, or $2.0
million, over the first quarter of 1999, reflecting increases in subscription,
advertising and marketing service revenues. Wallstreetcity.com, the Company's
investor supersite, continued its growth, averaging 21 million page views in the
first quarter, with advertising revenues doubling over the same period of the
prior year. Revenue from the non-financial operations increased 69% to $1.2
million over the same period in 1999.
Lee Barba, Telescan's Chief Executive Officer, said, "As the leading provider of
financial tools and analytics on the Internet, as well as financial website
development and hosting to our B2B partners, Telescan is benefiting from
investors' growing appetite for more control over their financial decisions on
the Web. Every time an investor uses Telescan research data or one of its
analytical tools on a partner's site, Telescan's revenue stream expands."
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Highlights of the quarter included:
o Launched 50 pages of content on AOL's Personal Finance Channel
o Forged a technology alliance with Forbes.com to collaborate on
technologies enabling Forbes.com to become a pioneer in presenting
innovative financial tools and analytics on the Web
o Expanded alliance with GlobalNet Financial.com to develop and host
additional websites
o Formed a strategic alliance with Stockwalk.com to offer online analytics
and brokerage services to small, mid-sized regional banks and made an
equity investment, resulting in a $2.3 million investment in
Stockwalk.com
o Formed a strategic alliance with InvestorIQ to provide ProSearch(TM)
technology to InvestorIQ.com's investment research website and received a
13.3% ownership interest in InvestorIQ.com in exchange for a $1.75
million equity investment
o Added a major 3 year private-label alliance to be launched in the second
quarter of 2000
"Since joining Telescan, I have spent the majority of my time analyzing our
marketplace and measuring how our businesses are succeeding in relation to the
opportunities available in their respective markets. While we have been
extremely successful to date, we have the capabilities and resources to become
more aggressive in mining the Internet's potential for enhancing investors'
ability to understand the financial markets and to make the best investment
decisions. Our technological expertise and the growing relationships we have
been building with some of the most exciting brand names in the financial
services industry, such as America Online, American Express, Forbes, GlobalNet
Financial.com and NBC, create a solid foundation for our future growth
strategy," Barba added.
The Company held options to purchase approximately 2.8 million shares of
GlobalNet Financial.com at an exercise price of $12.00 per share. During the
first quarter Telescan sold approximately 700,000 previously acquired shares of
GlobalNet Financial.com resulting in a pre-tax gain of $12.0 million. These
proceeds were used to exercise a portion of the option. During the second
quarter an additional 50,000 shares of GlobalNet Financial.com were sold, which
proceeds were used in combination with a cashless exercise to complete the
exercise of the option. The Company said it expects to report a gain of $8.7
million from the transaction in the second quarter, which could be offset by
special charges as management continues its review of operations to determine
which Telescan businesses provide the greatest growth potential and which
businesses do not offer sufficient returns. The Company currently retains
approximately 2.5 million shares of GlobalNet Financial.com common stock.
On March 16, 2000, the Emerging Issues Task Force ("EITF") reached a consensus
on Issue No. 00-3 that addresses the applicability of accounting guidance for
hosting arrangements. During 1999 and 1998, the Company recognized revenues from
license fees related to certain hosting arrangements upon execution of the
license agreement, as opposed to recognizing the fees ratably over the term of
the hosting arrangement. As a result, the timing of reporting revenue from
license fees related to these types of hosting arrangements requires revision to
comply with EITF Issue No. 00-3 and the relevant accounting guidance. The effect
of these revisions is to defer the time in which revenue is recognized. These
revisions also resulted in an increase in deferred revenue reflected on the
Company's balance sheet at December 31, 1999 and 1998. The total years' effect
of these revisions was to reduce revenues by $4.2 million and $1.7 million for
the years ended December 31, 1999 and 1998, respectively. These revenues, which
have been deferred, will be recognized ratably over two to four years, based on
the remaining term of the related hosting agreements. Of these, $600,000 was
recognized in the first quarter of 2000 with $2.5 million expected to be
recognized in 2000. In the first quarter approximately $800,000 in new license
fees were deferred. The Company will file with the SEC as soon as practicable to
reflect the complete restated results.
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ABOUT TELESCAN
Houston-based Telescan (HTTP://WWW.TELESCAN.COM) is an industry leader in
providing Internet services, innovative solutions for online technology and data
retrieval tools for the financial and publishing industries, and also provides
proprietary analytics and content to individual investors. Telescan's Internet
supersite, Wall Street City(R) (HTTP://WWW.WALLSTREETCITY.COM), provides a
powerful suite of search tools, technical analysis and financial data.
Telescan's wholly owned subsidiary, INVESTools Inc., operates the leading
investment advisory subscription website (WWW.INVESTOOLS.COM), featuring
portfolio advice from proven money managers.
Telescan provides Internet services via private-label versions of its
proprietary Internet technology to many of the nation's leading financial
services and media companies, including America Online, American Express,
Forbes, GlobalNetFinancial.com, NBC, and Time Inc. New Media (Fortune).
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: EXCEPT FOR HISTORICAL INFORMATION, THE MATTERS DISCUSSED IN THIS NEWS
RELEASE THAT MAY BE CONSIDERED FORWARD-LOOKING STATEMENTS COULD BE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE THE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE PROJECTED. THESE INCLUDE UNCERTAINTIES IN THE MARKET,
COMPETITION, LEGAL, SUCCESS OF MARKETING EFFORTS AND OTHER RISKS DETAILED FROM
TIME TO TIME IN THE COMPANY'S SEC REPORTS. THE COMPANY ASSUMES NO OBLIGATION TO
UPDATE THE INFORMATION IN THIS RELEASE.
# # #
Contacts:
Lee Barba, CEO, Telescan, Inc., 212-332-3256
Craig Shinbaum, IR, or Keither Lanigan, Media, of Stern & Co.; 212-888-0044
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TELESCAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
QUARTER ENDED MARCH 31,
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2000 1999
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(Restated)
Revenue ................................................ 9,827 4,736
Costs and expenses
Cost of service ...................................... 4,780 3,043
Selling and marketing ................................ 1,495 1,112
General and administrative ........................... 5,573 1,749
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Total costs and expenses ............................... 11,848 5,904
Loss from operations ................................... (2,021) (1,168)
Other expense (income), net
Interest (income) expense ............................ (244) 29
Gain on sale of stock ................................ (12,001) --
Other ................................................ -- 60
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Income (loss) before income taxes and minority interest 10,224 (1,257)
Income tax expense ..................................... 2,041 --
Minority interest loss ................................. -- (32)
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Net income (loss) ...................................... 8,183 (1,225)
Preferred dividends .................................... 37 38
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Net income (loss) available to common shareholders ..... 8,146 (1,263)
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Net income (loss) per share - basic .................... 0.49 (0.09)
Net income (loss) per share - diluted .................. 0.47 (0.09)
Average Basic Shares ................................... 16,633 14,068
Average Diluted Shares ................................. 17,469 14,068
