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 0-23337
SPORTSLINE.COM, INC.
(Exact name of Registrant as specified in its charter)
Delaware 65-0470894
(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
2200 W. Cypress Creek Road
Fort Lauderdale, Florida 33309
(Address of principal executive offices) (Zip Code)
(954) 351-2120
(Registrant's telephone number, including area code)
(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, and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Number of shares of common stock outstanding as of September 30, 2000:
26,442,669
Page 1 of 16 Pages
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2000 and December 31, 1999.................... 3
Condensed Consolidated Statements of Operations (unaudited)
for the three and nine months ended September 30, 2000 and 1999................................................. 4
Condensed Consolidated Statements of Changes in Shareholders' Equity (unaudited)
for the nine months ended September 30, 2000.................................................................... 5
Condensed Consolidated Statements of Cash Flows (unaudited)
for the nine months ended September 30, 2000 and 1999........................................................... 6
Notes to Condensed Consolidated Financial Statements (unaudited).................................................... 7
</TABLE>
2
<PAGE>
SPORTSLINE.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 73,458 $ 45,968
Marketable securities..................................... 68,396 24,953
Deferred advertising and content costs.................... 19,530 19,530
Accounts receivable, net.................................. 15,908 11,875
Prepaid expenses and other current assets................. 11,587 14,657
---------- ----------
Total current assets.................................. 188,879 116,983
NONCURRENT MARKETABLE SECURITIES............................. --- 50,052
LICENSING RIGHTS............................................. 2,833 4,533
NONCURRENT DEFERRED ADVERTISING AND CONTENT.................. 15,750 32,398
PROPERTY AND EQUIPMENT, net.................................. 17,916 10,351
GOODWILL, net................................................ 37,522 42,823
OTHER ASSETS................................................. 20,565 14,321
---------- ----------
$ 283,465 $ 271,461
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 2,691 $ 3,296
Accrued liabilities....................................... 24,481 12,128
Current portion of deferred revenue....................... 25,106 4,160
Current portion of capital lease obligations.............. 5 170
---------- ----------
Total current liabilities............................ 52,283 19,754
DEFERRED REVENUE - LONG TERM................................. 65,457 ---
CONVERTIBLE SUBORDINATED NOTES............................... 19,608 19,608
---------- ----------
Total liabilities.................................... 137,348 39,362
---------- ----------
MINORITY INTEREST............................................ 60,778 7,443
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 3)
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 1,000,000 shares
authorized, none issued and outstanding as of
September 30, 2000 and December 31, 1999.............. --- ---
Common stock, $0.01 par value, 200,000,000 shares
authorized, 26,442,669 and 25,358,788 issued
and outstanding as of September 30, 2000 and
December 31, 1999, respectively...................... 264 254
Additional paid-in capital................................ 354,868 333,879
Accumulated other comprehensive income (loss)............. (5,575) 7
Accumulated deficit....................................... (264,218) (109,484)
---------- ----------
Total shareholders' equity............................ 85,339 224,656
---------- ----------
$ 283,465 $ 271,461
========== ==========
</TABLE>
The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed consolidated balance sheets.
3
<PAGE>
SPORTSLINE.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share and per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE.................................................. $ 26,709 $ 15,155 $ 73,704 $ 39,235
COST OF REVENUE.......................................... 12,219 8,329 31,386 20,496
----------- ---------- ----------- ---------
GROSS PROFIT............................................. 14,490 6,826 42,318 18,739
----------- ---------- ----------- ---------
OPERATING EXPENSES:
Product development.................................... 435 358 1,268 1,120
Sales and marketing.................................... 14,111 10,659 39,643 25,696
General and administrative............................. 8,971 5,930 28,126 13,948
Depreciation and amortization.......................... 10,296 7,631 30,650 20,190
----------- ---------- ----------- ---------
Total operating expenses..................... 33,813 24,578 99,687 60,954
----------- ---------- ----------- ---------
LOSS FROM OPERATIONS..................................... (19,323) (17,752) (57,369) (42,215)
INTEREST EXPENSE......................................... (319) (1,631) (894) (3,895)
INTEREST AND OTHER INCOME, net........................... 3,381 2,663 10,000 6,881
LOSS ON EQUITY INVESTMENTS............................... (114,285) --- (114,285) ---
GAIN ON SALE OF E-COMMERCE SUBSIDIARIES.................. --- --- 7,814 ---
----------- ---------- ----------- ---------
LOSS BEFORE EXTRAORDINARY GAIN........................... (130,546) (16,720) (154,734) (39,229)
EXTRAORDINARY GAIN ON EXTINGUISHMENT OF DEBT ............ --- 21,808 --- 21,808
----------- ---------- ----------- ---------
NET INCOME (LOSS)........................................ $ (130,546) $ 5,088 $ (154,734) $ (17,421)
=========== ========== =========== =========
NET INCOME (LOSS) PER SHARE - BASIC AND DILUTED:
Loss per share before extraordinary gain............ $ (4.94) $ (0.72) $ (5.91) $ (1.74)
Extraordinary gain.................................. --- 0.94 --- 0.97
----------- ---------- ----------- ---------
Net income (loss) per share - basic and diluted..... $ (4.94) $ 0.22 $ (5.91) $ (0.77)
=========== ========== =========== =========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING -
BASIC AND DILUTED...................................... 26,435,512 23,262,812 26,179,127 22,585,447
=========== ========== =========== =========
</TABLE>
The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed consolidated financial statements.
4
<PAGE>
SPORTSLINE.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(amounts in thousands except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
Additional Other
Paid-In Comprehensive Accumulated Comprehensive
Shares Amount Capital Income (Loss) Deficit Loss
------ ------ ------- ------------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1999 25,358,788 $ 254 $333,879 $ 7 $ (109,484)
Exercise of CBS warrants 500,000 5 11,495 -- --
Noncash issuance of common stock and
options pursuant to acquisition of
subsidiary 277,152 3 8,161 -- --
Noncash issuance of common stock
and options pursuant to sale
of subsidiaries 28,439 -- 2,888 -- --
Equity activity of subsidiary -- -- (5,087) -- --
Issuance of common stock pursuant to
the Employee Stock Purchase Plan 33,058 -- 531 -- --
Net proceeds from exercise of common
stock warrants 57,000 1 364 -- --
Noncash issuance of common stock
warrants -- -- 1,195 -- --
Issuance of common stock from exercise
of employee options 188,232 1 1,442 -- --
Comprehensive loss:
Net loss -- -- -- -- (154,734) $ (154,734)
Cumulative translation adjustment -- -- -- (5,582) -- (5,582)
-----------
Comprehensive loss $ (160,316)
===========
------------------------------------------------------------------------
Balances at September 30, 2000 26,442,669 $ 264 $354,868 (5,575) $(264,218)
========================================================================
</TABLE>
The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed consolidated financial statements.
5
<PAGE>
SPORTSLINE.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ...................................................................... $(154,734) $ (17,421)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ............................................. 30,650 20,190
Other noncash expenses .................................................... 1,567 309
Minority interest in consolidated subsidiaries ............................ (1,992) (95)
Loss on equity investments ................................................ 114,285 --
Gain on sale of e-commerce subsidiaries ................................... (7,814) --
Extraordinary gain on extinquishment of debt .............................. -- (21,808)
Changes in operating assets and liabilities
Accounts receivable .................................................... (5,481) (3,881)
Prepaid expenses and other current assets .............................. 3,098 (3,378)
Accounts payable ....................................................... 1,367 (1,943)
Accrued liabilities .................................................... 10,417 4,220
Deferred revenue ....................................................... (11,424) 624
--------- ---------
Net cash used in operating activities .................................. (20,061) (23,183)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales (Purchases) of marketable securities, net ............................... 1,608 (47,228)
Purchases of property and equipment ........................................... (14,579) (5,051)
Purchase of licensing rights .................................................. -- (8,500)
Acquisition of businesses ..................................................... (11) (4,287)
--------- ---------
Net cash used in investing activities .................................. (12,982) (65,066)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock of subsidiary ....................... 52,500 7,500
Net proceeds from issuance of common stock and exercise of common
stock warrants and options ................................................ 13,839 5,894
Proceeds from issuance of convertible subordinated notes, net of costs ........ -- 145,445
Repurchase of convertible subordinated notes .................................. -- (37,568)
Repayment of capital lease obligations and long term borrowings ............... (159) (197)
--------- ---------
Net cash provided by financing activities .............................. 66,180 121,074
--------- ---------
Effect of exchange rate changes on cash ....................................... (5,647) --
--------- ---------
Net increase in cash and cash equivalents ......................................... 27,490 32,825
CASH AND CASH EQUIVALENTS, beginning of period .................................... 45,968 31,684
========= =========
CASH AND CASH EQUIVALENTS, end of period .......................................... $ 73,458 $ 64,509
========= =========
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Noncash portion of sale of e-commerce subsidiaries ............................ $ 3,579 $ --
========= =========
Noncash investments in businesses ............................................. $ 103,297 $ --
========= =========
Noncash issuance of common stock warrants to PGA Tour ......................... $ -- $ 3,238
========= =========
Noncash issuance of common stock pursuant to acquisition of subsidiary ........ $ 8,164 $ 3,147
========= =========
Noncash issuance of common stock of subsidiary ................................ $ -- $ 4,936
========= =========
Noncash issuance of common stock and options pursuant to sale of subsidiaries $ 2,888 $ --
========= =========
Noncash issuance of common stock warrants ..................................... $ 1,195 $ --
========= =========
Noncash issuance of common stock and common stock warrants pursuant
to CBS agreement .......................................................... $ -- $ 59,688
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest ........................................................ $ 988 $ 2,376
========= =========
</TABLE>
The accompanying notes to condensed consolidated financial statements are
an integral part of these condensed consolidated financial statements.
6
<PAGE>
SPORTSLINE.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands except share and per share data)
(1) NATURE OF OPERATIONS:
SportsLine.com, Inc. ("SportsLine.com" or the "Company"), formerly
known as SportsLine USA, Inc., was incorporated on February 23, 1994 and began
recognizing revenue from its operations in September 1995. The Company is at the
leading edge of media companies, providing Internet sports content, community
and e-commerce on a global basis. SportsLine.com's content includes more than
one million pages of multimedia sports information, entertainment and
merchandise. The Company's flagship Internet sports service
(http://cbs.sportsline.com) was renamed CBS SportsLine.com as part of an
exclusive promotional and content agreement with CBS Corporation ("CBS") in
March 1997. SportsLine.com produces the official league Web sites for Major
League Baseball, PGA TOUR and NFL Europe League, and serves as the primary
sports content provider for America Online, Netscape and Excite. Sports.com
Limited ("Sports.com"), a majority owned subsidiary of SportsLine.com, launched
its first site in August 1999 and is the leading mobile and fixed internet
provider of European sports content, community and commerce providing
comprehensive European coverage in English of football, rugby, Formula One,
rally, cricket, boxing, tennis and golf as well all sports in local languages in
France, Germany, Italy and Spain.
The Company distributes a broad range of up-to-date news, scores,
player and team statistics and standings, photos and audio and video clips
obtained from CBS and other leading sports news organizations and the Company's
superstar athletes; offers instant odds and picks; produces and distributes
entertaining, interactive and original programming such as editorials and
analyses from its in-house staff and freelance journalists; and produces and
offers contests, games, and fantasy league products.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
include the accounts of SportsLine.com and its wholly and majority owned
subsidiaries.
The Company acquired International Golf Outlet, Inc. in June 1998 and
TennisDirect.com, Inc. in August 1999, and accounted for these transactions
using the purchase method of accounting. The purchases resulted in goodwill of
$3,180. Such goodwill was being amortized over an estimated life of ten years.
In May 1999, the Company acquired Golf Club Trader, Inc. The purchase was
accounted for using the pooling-of-interests method of accounting. As of January
2000, the aforementioned companies were sold to MVP.com, Inc. ("MVP") in
exchange for an equity interest in MVP resulting in a one-time gain of $7,814.
In addition, the Company entered into a 10-year strategic e-commerce and
marketing agreement with MVP pursuant to which MVP operates the Company's
domestic e-commerce business. These transactions with MVP resulted in the
Company receiving an investment in MVP totaling $100,000. Such investment was
initially recorded at estimated fair value. During the third quarter 2000, the
Company deemed its investment in MVP to be permanently impaired and wrote down
the value of its investment to $5,000. The Company's estimate was based on the
recent market downturn during the second and third quarters of 2000 which caused
similar declines in publicly-traded internet e-commerce companies' market
values, the difficulty experienced by MVP in raising additional capital and an
assessment of MVP's financial condition and prospects. Additionally, MVP is
overdue with its scheduled payment for the fourth quarter of 2000 and is
negotiating with the Company and its other financial and strategic partners to
obtain additional funding. The Company also is discussing with MVP a potential
restructuring of payment terms for the remainder of the MVP agreement,
conditioned on MVP securing additional financing. The Company cannot currently
predict the outcome of these discussions. Furthermore, several of the Company's
other equity investments in certain Internet companies have been adversely
affected by the recent market downturn and these were written down by $19,285.
Sports.com was formed in May 1999. In May 1999, Sports.com purchased
SportsWeb, which was accounted for using the purchase method of accounting,
which resulted in goodwill of $584 that is being amortized over five years. In
June 1999, Sports.com acquired the sports division of Infosis Group. The Company
also accounted for this transaction using the purchase method of accounting
resulting in goodwill of $2,526 which is being amortized over five years. A
liability of $60,778 has been reflected in the Company's consolidated balance
sheet as of September 30, 2000 to reflect the minority interest in Sports.com.
The Company consolidates 100% of the losses of Sports.com which has historically
been offset by the allocation of a portion of such losses to third party holders
of Sports.com common stock. However, pursuant to generally accepted accounting
principles, the Company is only able to allocate such losses to third party
holders of common stock up to the amount of such third parties' investment in
the common stock. Accordingly, in future periods, the Company expects to
recognize 100% of the losses of Sports.com without offsets.
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States 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 accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments, consisting
7
<PAGE>
SPORTSLINE.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(amounts in thousands except share and per share data)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(Continued)
only of normal recurring accruals considered necessary for a fair presentation,
have been included in the accompanying unaudited financial statements. All
significant intercompany transactions and balances have been eliminated in
consolidation. Operating results for the three and nine months ended September
30, 2000 are not necessarily indicative of the results that may be expected for
any subsequent period or the full year ending December 31, 2000. For further
information, refer to the consolidated financial statements and notes thereto,
included in the Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1999. Certain prior period amounts have been reclassified to
conform to the current period presentation.
Per Share Amounts
Net loss per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period.
Common equivalent shares consist of the incremental common shares issuable upon
conversion of all convertible preferred stock (using the if-converted method)
and shares issuable upon exercise of stock options and warrants (using the
treasury stock method). There were 8,573,357 and 8,120,472 options and warrants
outstanding at September 30, 2000 and 1999, respectively, that could potentially
dilute earnings per share in the future. Such options and warrants were not
included in the computation of diluted net loss per share because to do so would
have been antidilutive for all periods presented.
Revenue by Type
Revenue by type for the three months and nine months ended September
30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Advertising........................................ $20,907 $7,797 $59,604 $20,082
Subscription based services........................ 1,780 1,338 4,913 3,996
E-commerce......................................... 29 3,660 93 9,542
Content licensing and other........................ 3,993 2,360 9,094 5,615
------------ ----------- ----------- -----------
$26,709 $15,155 $73,704 $39,235
============ =========== =========== ===========
</TABLE>
Barter transactions, in which the Company primarily received
advertising in exchange for content or advertising on its Web sites, accounted
for approximately 14% and 18% of total revenue for the three months ended
September 30, 2000 and 1999, respectively. Barter transactions are recorded on a
basis consistent with similar recent cash transactions of the Company pursuant
to EITF Issue No. 99-17, "Accounting for Advertising Barter Transactions."
Barter transactions accounted for 15% and 19% of total revenue for the nine
months ended September 30, 2000 and 1999, respectively.
Equity transactions, in which the Company received equity in companies
in exchange for advertising and promotion accounted for approximately 17% and 0%
of total revenue for the three months ended September 30, 2000 and 1999,
respectively, and 15% and 0% of total revenue for the nine months ended
September 30, 2000 and 1999, respectively.
Recent Accounting Pronouncements
The Company adopted SFAS No. 130, "Reporting Comprehensive Income,"
during the year ended December 31, 1998. SFAS No. 130 establishes standards for
the reporting and display of comprehensive income (loss) and its components in a
full set of financial statements. The objective of SFAS No. 130 is to report
comprehensive income (loss), a measure of all changes in equity of an enterprise
that result from transactions and other economic events in a period, other than
transactions with owners. The Company has elected to disclose comprehensive
income (loss) in the consolidated statements of stockholders' equity. For the
three and nine months ended September 30, 1999, comprehensive loss equaled net
loss. For the three and nine months ended September 30, 2000, comprehensive loss
equaled $132,119 and $160,316, respectively.
In June 1999, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of FASB Statement No. 133." SFAS No. 137 defers for one year
the effective date of
8
<PAGE>
SPORTSLINE.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(amounts in thousands except share and per share data)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(Continued)
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities".
SFAS No. 133 will now apply to all fiscal quarters of all fiscal years beginning
after June 15, 2000. SFAS No. 133, as further amended by SFAS No. 138, will
require the Company to recognize all derivatives on the balance sheet as either
assets or liabilities measured at fair value. Derivatives that do not qualify
for hedge accounting must be adjusted to fair value through income. The Company
will adopt SFAS No. 133 effective January 1, 2001. The Company believes that the
adoption of SFAS No. 133 will not have a material impact on its consolidated
financial statements, as the Company currently has no derivatives.
The Company adopted SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" effective January 1, 1999. SOP
98-1 establishes criteria for determining which costs of developing or obtaining
internal-use computer software should be charged to expense and which should be
capitalized. Such adoption did not have a material effect on the Company's
consolidated financial position or results of operations. The Emerging Issues
Task Force (EITF) of the FASB reached a consensus on EITF Issue 00-2,
"Accounting for Web Site Development Costs." This consensus provides guidance on
what types of costs incurred to develop Web sites should be capitalized or
expensed. The Company adopted this consensus on July 1, 2000. Such adoption did
not have a material effect on the Company's consolidated financial position or
results of operations.
In July 2000, the EITF reached a consensus on EITF Issue 99-19,
"Reporting Revenue Gross as a Principal versus Net as an Agent." This consensus
provides guidance concerning under what circumstances a company should report
revenue based on (a) the gross amount billed to a customer because it has earned
revenue from the sale of goods or services or (b) the net amount retained (that
is, the amount billed to the customer less the amount paid to a supplier)
because it has earned a commission or fee. Application of the provisions of this
consensus did not change the Company's existing accounting policies.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
In June 2000, the SEC issued SAB No. 101B to defer the effective date of
implementation of SAB 101. The Company is required to adopt SAB 101 in the
fourth quarter of fiscal 2000. The Company does not expect the adoption of SAB
101 to have a material effect on its financial position or results of
operations.
Segment Reporting
The Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" for the year ended December 31, 1998. SFAS
No. 131 establishes standards for the way public business enterprises report
information about operating segments in annual financial statements and requires
those enterprises to report selected information about operating segments in
interim financial reports issued to stockholders.
In the third quarter of 1999, the Company began operating in two
segments. The following information is disclosed, per SFAS No. 131, based on the
method management uses to organize financial information for making operating
decisions and assessing performance. The Company currently has two major lines
of businesses that share the same infrastructure: United States and Europe.
A summary of the segment financial information is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
--------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C>
Total revenue:
United States $ 23,701 $ 14,579 $ 67,113 $ 38,659
Europe 3,008 576 6,591 576
--------------------- ---------------------- ------------------- ---------------------
$ 26,709 $ 15,155 $ 73,704 $ 39,235
===================== ====================== =================== =====================
Loss from operations:
United States $ (11,345) $ (16,064) $ (34,276) $ (40,527)
Europe (7,978) (1,688) (23,093) (1,688)
--------------------- ---------------------- ------------------- ---------------------
$ (19,323) $ (17,752) $ (57,369) $ (42,215)
===================== ====================== =================== =====================
</TABLE>
9
<PAGE>
SPORTSLINE.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(amounts in thousands except share and per share data)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:--(Continued)
<TABLE>
<S> <C> <C> <C> <C>
Interest income (expense), net:
United States $ 2,685 $ 881 $ 6,753 $ 2,835
Europe 377 151 2,353 151
--------------------- ---------------------- ------------------- ---------------------
$ 3,062 $ 1,032 $ 9,106 $ 2,986
===================== ====================== =================== =====================
Net loss before extraordinary gain:
United States $ (122,945) $ (15,183) $ (133,994) $ (37,692)
Europe (7,601) (1,537) (20,740) (1,537)
--------------------- ---------------------- ------------------- ---------------------
$ (130,546) $ (16,720) $ (154,734) $ (39,229)
===================== ====================== =================== =====================
Total assets as of September 30:
United States $ 241,729 $ 282,929
Europe 41,736 14,426
------------------- ---------------------
$ 283,465 $ 297,355
==========================================
</TABLE>
(3) COMMITMENTS AND CONTINGENCIES:
On December 28, 1999, an action entitled Fantasy Sports Properties,
Inc. v. SportsLine.com, Inc., Yahoo! Inc., ESPN, Inc. and Sandbox Entertainment,
Inc., was commenced in the United States District Court for the Eastern District
of Virginia. The plaintiff seeks damages and injunctive relief for the alleged
infringement by the Company and the named co-defendants of a U.S. patent
entitled "Computerized Statistical Football Game," which is allegedly owned by
the plaintiff. The Company in its Answer, Affirmative Defenses and Counterclaim
has taken the position that it has not infringed the subject patent and that the
patent is invalid, and has sought a declaratory judgment of non-infringement and
invalidity. The Company intends to vigorously defend itself in this action.
From time to time, the Company is involved in other litigation arising
out of its operations in the normal course of business. In the opinion of
management, the Company is not currently a party to any legal proceedings, the
adverse outcome of which, individually or in the aggregate, would have a
material adverse effect on the Company's consolidated financial position or
results of operations.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements which
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements. Factors
that might cause or contribute to such differences include, among others,
competitive pressures, the growth rate of the Internet, constantly changing
technology and market acceptance of the Company's products and services.
Investors are also directed to consider the other risks and uncertainties
discussed in the Company's Securities and Exchange Commission filings, including
those discussed under the caption "Risk Factors That May Affect Future Results"
in the Company's Annual Report on Form 10-K/A for the year ended December 31,
1999. The Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. The following discussion also should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto included elsewhere in this Report.
Results of Operations
Revenue
Total revenue for the quarter ended September 30, 2000 and 1999 was
$26,709,000 and $15,155,000, respectively. Total revenue for the nine months
ended September 30, 2000 and 1999 was $73,704,000 and $39,235,000, respectively.
The increase in revenue was primarily due to increased advertising sales and
content licensing. Advertising revenue for the three months ended September 30,
2000 and 1999 represented 78% and 51%, respectively, of total revenue.
Advertising revenue increased primarily as a result of a higher number of
impressions sold and revenue recognized under the MVP agreement which commenced
during the first quarter of 2000. Contributing to the increase in advertising
sales during the three and nine months ended September 30, 2000 were (i)
increased spending by repeat traditional advertisers such as Anheuser Busch,
MasterCard, and Miller Lite; (ii) increased revenue from major golf tournaments
such as The PGA Championship as a result of the Company capitalizing on its
relationship with the PGA TOUR; (iii) increased cross-selling efforts pursuant
to the Company's relationship with CBS during the start of the NCAA Football and
NFL seasons; (iv) the shift from paid to free fantasy enabling the Company to
allow advertisers such as Miller Lite to capitalize on a larger audience and (v)
an increase in the number of impressions available for sale. MVP is overdue with
its scheduled payment for the fourth quarter of 2000 and is negotiating with the
Company and its other financial and strategic partners to obtain additional
funding. The Company also is discussing with MVP a potential restructuring of
payment terms for the remainder of the MVP agreement, conditioned on MVP
securing additional financing. The Company cannot currently predict the outcome
of these discussions.
Subscription based services revenue increased $442,000 in the three
months ended September 30, 2000 compared to the same period in 1999 and $917,000
in the nine months ended September 30, 2000 compared to the same period in 1999.
Subscription based services revenue from memberships decreased in 2000 due to a
restructuring of the Company's membership program. However, commencing in the
second quarter of 2000 the Company began to recognize subscription revenue
relating to statistical data and other content as a result of its acquisition of
DBC Sports. In July 2000, the Company began offering its fantasy products and
services for free which will result in a decline in subscription service revenue
in further periods. However, the Company expects this new strategy to result in
an increase in fantasy players and enhance its ability to generate incremental
advertising revenue through database marketing and new sponsorship and
advertising sales.
E-commerce revenue decreased to $29,000 in the three months ended
September 30, 2000 from $3,660,000 for the three months ended September 30,
1999. E-commerce revenue decreased to $93,000 in the nine months ended September
30, 2000 from $9,542,000 for the nine months ended September 30, 1999. Effective
as of January 1, 2000, the Company sold its domestic e-commerce business to MVP.
E-commerce revenue currently consists solely of revenue generated by Sports.com.
Content licensing and other revenue increased $1,633,000 in the three
months ended September 30, 2000 compared to the same period in 1999 and
$3,479,000 in the nine months ended September 30, 2000 compared to the same
period in 1999. The increase in content revenue was mostly due to fees generated
by Sports.com for the production of the official French Olympic site and to a
lesser extent other international content revenue.
As of September 30, 2000, the Company had current deferred revenue of
$25,106,000, of which $14,126,000 related to its multi-year agreements with
Internet Sports Network and theglobe.com, and $65,457,000 of long-term deferred
revenue related to the agreement with MVP relating to services which had not yet
been provided.
Barter transactions, in which the Company primarily received
advertising in exchange for content or advertising on its Web sites, accounted
for approximately 14% and 18% of total revenue for the three months ended
September 30, 2000 and 1999, respectively. Barter transactions accounted for 15%
and 19% of total revenue for the nine months ended September 30, 2000 and 1999,
respectively. Barter transactions are recorded on a basis consistent with
similar recent cash transactions of the Company pursuant to EITF Issue No.
99-17, "Accounting for Advertising Barter Transactions." Management intends to
continue to maximize
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cash advertising and content licensing revenue, although the Company will
continue to enter into barter relationships when deemed appropriate.
Equity transactions, in which the Company received equity in companies
in exchange for advertising and promotion, accounted for approximately 17% and
0% of total revenue for the three months ended September 30, 2000 and 1999,
respectively, and 15% and 0% of total revenue for the nine months ended
September 30, 2000 and 1999, respectively.
Cost of Revenue
Cost of revenue for the three months ended September 30, 2000 and 1999
was $12,219,000 and $8,329,000, respectively. Cost of revenue for the nine
months ended September 30, 2000 and 1999 was $31,386,000 and $20,496,000
respectively. The increase in cost of revenue was primarily the result of
increased revenue sharing under the Company's agreements with CBS, Major League
Baseball and the PGA TOUR and, to a lesser extent, increases in the costs of
content fees and telecommunications needed to support and deliver services. Also
contributing to the increase was Sports.com's production costs related to the
French Olympic site and the continuing high level of employee costs required for
its start up (Sports.com accounted for 35% of total consolidated cost of revenue
in the third quarter of 2000). As a percentage of revenue, cost of revenue
decreased to 46% for the three months ended September 30, 2000 from 55% for the
three months ended September 30, 1999. For the nine months ended September 30,
2000 and 1999 cost of revenue decreased to 43% from 52%.
Gross Profit
Gross profit for the three months ended September 30, 2000 and 1999 was
$14,490,000 and $6,826,000, respectively. Gross profit for the nine months ended
September 30, 2000 and 1999 was $42,318,000 and $18,739,000 respectively. The
increase in gross profit was primarily attributable to an increase in
advertising revenue as a percentage of total revenues and the decrease in
e-commerce revenue. E-commerce revenue historically has had lower gross profit
margins than advertising revenue; effective January 1, 2000, the Company sold
its domestic e-commerce business to MVP. Consequently, as a percentage of
revenue, gross profit increased to 54% for the three months ended September 30,
2000 from 45% for the three months ended June 30, 1999. For the nine months
ended September 30, 2000 and 1999 gross profit increased to 57% from 48%.
Operating Expenses
Product Development. For the three months ended September 30, 2000 and
1999, product development costs were $435,000 and $358,000, respectively. For
the nine months ended September 30, 2000 and 1999, product development costs
were $1,268,000 and $1,120,000, respectively. The Company believes that
investments in product development are required to remain competitive.
Consequently, the Company intends to continue to invest resources in product
development. As a percentage of revenue, product development expense was 2% for
the three and nine months ended September 30, 2000 and for the three and nine
months ended September 30, 1999.
Sales and Marketing. For the three months ended September 30, 2000 and
1999, sales and marketing expense was $14,111,000 and $10,659,000, respectively.
Sales and marketing expense for the nine months ended September 30, 2000 and
1999 was $39,643,000 and $25,696,000 respectively. The increase in sales and
marketing expense was primarily the result of increased advertising in
television and other related to the launch of the Company's free fantasy
offerings, as well as the addition of expenses related to Sports.com. These
increases were partially offset by expenses eliminated or reduced as a result of
the sale of the Company's domestic e-commerce business effective January 1,
2000. For the three months ended September 30, 2000, Sports.com accounted for
$3,928,000, or 28%, of sales and marketing expense. Barter transactions
accounted for approximately 28% and 26% of sales and marketing expense for the
three months ended September 30, 2000 and 1999, respectively and 27% and 29% of
sales and marketing expense for the nine months ended September 30, 2000 and
1999, respectively. As a percentage of revenue, sales and marketing expense
decreased to 53% for the three months ended September 30, 2000 from 70% for the
three months ended September 30, 1999. For the nine months ended September 30,
2000 and 1999 sales and marketing decreased to 54% from 65%, as a percentage of
revenue.
General and Administrative. General and administrative expense for the
three months ended September 30, 2000 and 1999 was $8,971,000 and $5,930,000,
respectively. General and administrative expense for the nine months ended
September 30, 2000 and 1999 was $28,126,000 and $13,948,000 respectively. The
increase in general and administrative expense in the third period was primarily
attributable to expenses related to Sports.com, including increases in rent and
occupancy expense and payroll. The increase in salary and related expenses was
due to the addition of personnel, particularly in the technology area. The
Company increased general and administrative expense in order to develop and
maintain the administrative infrastructure necessary to support the growth of
its business. Sports.com accounted for 27% of total general and administrative
expense in the third quarter of 2000. The Company expects to incur additional
start-up expenses as Sports.com continues its expansion in the European market.
As a percentage of revenue, general and administrative expense decreased to 34%
for the three months ended September 30, 2000 from 39% for the three
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months ended September 30, 1999, and increased to 38% for the nine months ended
September 30, 2000 from 36% for the nine months ended September 30, 1999.
Depreciation and Amortization. Depreciation and amortization expense
was $10,296,000 and $7,631,000 for the three months ended September 30, 2000 and
1999, respectively. Depreciation and amortization expense was $30,650,000 and
$20,190,000 for the nine months ended September 30, 2000 and 1999, respectively.
The increase in depreciation and amortization expense was primarily due to the
amortization of amounts related to the Company's agreements with CBS, PGA TOUR
and Westwood One and Sports.com's agreement with IMG and, to a lesser extent,
additional property and equipment. Additionally, goodwill amortization increased
because of acquisitions made by the Company in the second half of 1999. In
future periods, the Company anticipates total amortization expense to increase
as a result of the agreements mentioned above and the goodwill amortization of
recent acquisitions.
Under the Company's agreement with CBS, the Company issued shares of
Common Stock and warrants to purchase Common Stock in consideration of CBS's
advertising and promotional efforts and its license to the Company of the right
to use certain CBS logos and television-related sports content. The value of the
advertising and content will be recorded annually in the balance sheet as
deferred advertising and content costs and amortized to depreciation and
amortization expense over each related contract year. Total expense under the
CBS agreement was $12,966,000 for the nine months ended September 30, 2000 and
will be $4,322,000 for the remainder of 2000.
Under the Company's current agreement with AOL, which became effective in
October 1998, the Company issued shares of Common Stock and warrants to purchase
Common Stock and made a cash payment in consideration of AOL's advertising and
promotional efforts. The value of the advertising has been recorded on the
balance sheet as deferred advertising costs and is amortized to depreciation and
amortization expense over each related contract year. Total amortization expense
under the AOL agreement was $3,681,000 for the nine months ended September 30,
2000 and will be $1,227,000 for the remainder of 2000. The AOL agreement expires
in October 2001.
Under the Company's agreement with Westwood One, which became effective
in August 1999, the Company issued shares of Common Stock in consideration for a
three-year promotional and programming agreement. The value of the common stock
has been recorded on the balance sheet as deferred consulting costs and is
amortized to depreciation and amortization expense over each related contract
year. Total amortization expense under the Westwood One agreement was $2,250,000
for the nine months ended September 30, 2000 and will be $750,000 for the
remainder of 2000.
Under the Company's agreement with PGA TOUR, which became effective in
April 1999, the Company paid an up-front licensing fee of $8,500,000. The
licensing fee has been recorded on the balance sheet as licensing rights and is
amortized to depreciation and amortization expense over each related contract
year. Total amortization expense under PGA TOUR agreement was $1,701,000 for the
nine months ended September 30, 2000 and will be $567,000 for the remainder of
2000.
Interest Expense. Interest expense was $319,000 for the three months
ended September 30, 2000 compared to $1,631,000 for the three months ended
September 30, 1999. Interest expense was $894,000 for the nine months ended
September 30, 2000 compared to $3,895,000 for the nine months ended September
30, 1999. The decrease in interest expense was primarily due to the retirement
in the third and fourth quarters of 1999 of approximately $130,000,000 of the
$150,000,000 principal amount of Convertible Subordinated Notes which were
originally issued in March 1999.
Interest and Other Income, Net. Interest and other income, net for the
three months ended September 30, 2000 was $3,381,000 compared to $2,663,000 for
the three months ended September 30, 1999. Interest and other income, net for
the nine months ended September 30, 2000 was $10,000,000 compared to $6,881,000
for the nine months ended September 30, 1999. The increase was primarily
attributable to the higher than average balances of cash and cash equivalents
and marketable securities. Sports.com contributed to the increase by recording a
realized gain on currency exchange upon receipt of funding of a private
placement of preferred stock during the first quarter of 2000.
Loss on Equity Investments. Several of the Company's equity investments
in certain Internet companies, including MVP, have been adversely affected by
the recent market downturn, which has significantly decreased their equity
valuations. As a result, during the third quarter of 2000 the Company recorded a
non-cash charge of $114,285,000 to write down the value of these investments to
their estimated fair value as of September 30, 2000.
Gain on Sale of E-Commerce Subsidiaries. Effective January 1, 2000, the
Company sold to MVP three of its subsidiaries which engaged in e-commerce
activity (International Golf Outlet, Inc., Golf Club Trader, Inc. and
TennisDirect.com, Inc.). The sale resulted in a one-time gain of $7,814,000
recognized during the nine months ended September 30, 2000.
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Liquidity and Capital Resources
As of September 30, 2000, the Company's primary source of liquidity
consisted of $73,458,000 in cash and cash equivalents, an increase of
$27,490,000 from December 31, 1999, and $68,396,000 in current marketable
securities, an increase of $43,443,000 from December 31, 1999. The increase in
cash and cash equivalents is primarily due to a private placement of preferred
stock by Sports.com in the first quarter of 2000. The increase in current
marketable securities is the result of changes in investment maturities (which
was offset by a decrease of $50,052,000 in noncurrent marketable securities from
December 31, 1999).
The Company has obtained revolving credit facilities for the lease
financing of computers and other equipment purchases. Outstanding amounts under
the facilities bear interest at variable rates of approximately 9%. As of
September 30, 2000, the Company owed $5,000 under these facilities which will be
repaid in the fourth quarter.
As of September 30, 2000, current deferred advertising and content
costs totaled $19,530,000 and long-term deferred advertising and content costs
totaled $15,750,000, which represented costs related to the CBS and AOL
agreements. These amounts will be amortized to depreciation and amortization
expense over the terms of the respective agreement. Accrued liabilities totaled
$24,481,000 as of September 30, 2000, an increase of $12,353,000 from December
31, 1999, primarily due to increases in accruals for expenses related to sale of
the Company's e-commerce subsidiaries to MVP, deferred rent and revenue sharing.
Net cash used in operating activities was $20,061,000 and $23,183,000
for the nine months ended September 30, 2000 and 1999, respectively. The
principal uses of cash for all periods were to fund the Company's net losses
from operations and the increase in accounts receivable and deferred revenue,
partially offset by increases in depreciation and amortization and accrued
liabilities.
Net cash used in investing activities was $12,982,000 and $65,066,000
for the nine months ended September 30, 2000 and 1999, respectively. The
principal use of cash during 2000 in investing activities was for the purchases
of property and equipment related to the Company's facilities. In 1999, net cash
used in investing activities was primarily for the purchase of current and
non-current marketable securities.
Net cash provided by financing activities was $66,180,000 and
$121,074,000 for the nine months ended September 30, 2000 and 1999,
respectively. Financing activities in 2000 consisted principally of the issuance
of a private placement of preferred stock by Sports.com and the exercise of
warrants by CBS. In 1999, financing activities consisted mainly of the issuance
of the Convertible Subordinated Notes.
Although the Company has no material commitments for capital
expenditures, it anticipates purchasing approximately $3.0 million of property
and equipment during the remainder of 2000, primarily computer equipment and
furniture and fixtures related to the growth of the business, including the
expansion of Sports.com's infrastructure in Europe. The Company intends to
continue to pursue acquisitions of or investments in businesses, services and
technologies that are complementary to those of the Company.
The Company believes that its current cash and marketable securities
will be sufficient to fund its working capital and capital expenditure
requirements for at least the next 24 to 36 months. However, the Company expects
to continue to incur significant operating losses on a consolidated basis for at
least the next 24 to 36 months. To the extent the Company requires additional
funds to support its operations or the expansion of its business, the Company
may sell additional equity, issue debt or convertible securities or obtain
credit facilities through financial institutions. There can be no assurance that
additional financing, if required, will be available to the Company in amounts
or on terms acceptable to the Company.
Seasonality
The Company expects that its revenue will be higher leading up to and
during major U.S. sports seasons and lower at other times of the year,
particularly during the summer months. In addition, the effect of such seasonal
fluctuations in revenue could be enhanced or offset by revenue associated with
major sports events that do not occur every year, such as the Olympics and the
World Cup events. The Company believes that advertising sales in traditional
media, such as television, generally are lower in the first and third calendar
quarters of each year, 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 the cyclical nature of the level of
Internet advertising expenditures could become more pronounced. The foregoing
factors could have a material adverse affect on the Company's business, results
of operations and financial condition.
Recent Accounting Pronouncements
The Company adopted SFAS No. 130, "Reporting Comprehensive Income," during
the year ended December 31, 1998. SFAS No. 130 establishes standards for the
reporting and display of comprehensive income (loss) and its components in a
full set of financial statements. The objective of SFAS No. 130 is to report
comprehensive income (loss); a measure of all changes in equity of
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an enterprise that result from transactions and other economic events in a
period, other than transactions with owners. The Company has elected to disclose
comprehensive income (loss) in the consolidated statements of stockholders'
equity. For the three and nine months ended September 30, 1999, comprehensive
loss equaled net loss. For the three and nine months ended September 30, 2000,
comprehensive loss equaled $132,119 and $160,316, respectively.
In June 1999, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of FASB Statement No. 133." SFAS No. 137 defers for one year
the effective date of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities". SFAS No. 133 will now apply to all fiscal quarters of all
fiscal years beginning after June 15, 2000. SFAS No. 133, as further amended by
SFAS No. 138, will require the Company to recognize all derivatives on the
balance sheet as either assets or liabilities measured at fair value.
Derivatives that do not qualify for hedge accounting must be adjusted to fair
value through income. The Company will adopt SFAS No. 133 effective January 1,
2001. The Company believes that the adoption of SFAS No. 133 will not have a
material impact on its consolidated financial statements, as the Company
currently has no derivatives.
The Company adopted SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" effective January 1, 1999. SOP
98-1 establishes criteria for determining which costs of developing or obtaining
internal-use computer software should be charged to expense and which should be
capitalized. Such adoption did not have a material effect on the Company's
financial position or results of operations. The Emerging Issues Task Force
(EITF) of the FASB reached a consensus on EITF Issue 00-2, "Accounting for Web
Site Development Costs." This consensus provides guidance on what types of costs
incurred to develop Web sites should be capitalized or expensed. The Company
adopted this consensus on July 1, 2000. Such adoption did not have a material
effect on the Company's consolidated financial position or results of
operations.
In July 2000, the EITF reached a consensus on EITF Issue 99-19,
"Reporting Revenue Gross as a Principal versus Net as an Agent." This consensus
provides guidance concerning under what circumstances a company should report
revenue based on (a) the gross amount billed to a customer because it has earned
revenue from the sale of goods or services or (b) the net amount retained (that
is, the amount billed to the customer less the amount paid to a supplier)
because it has earned a commission or fee. Application of the provisions of this
consensus did not change the Company's existing accounting policies.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
In June 2000, the SEC issued SAB No. 101B to defer the effective date of
implementation of SAB 101. The Company is required to adopt SAB 101 in the
fourth quarter of fiscal 2000. The Company does not expect the adoption of SAB
101 to have a material effect on its financial position or results of
operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market rate risk for changes in interest
rates relates primarily to the Company's investment portfolio. The Company has
not used derivative financial instruments in its investment portfolio. The
Company invests its excess cash in debt instruments of the U.S. Government and
its agencies, and in high-quality corporate issuers and, by policy, limits the
amount of credit exposure to any one issuer. The Company protects and preserves
its invested funds by limiting default, market and reinvestment risk.
Investments in both fixed rate and floating rate interest earning instruments
carries 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, the Company's future investment income may
fall short of expectations due to changes in interest rates or the Company may
suffer losses in principal if forced to sell securities which have declined in
market value due to changes in interest rates.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three-month period ended
September 30, 2000.
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.
Date: November 13, 2000 SPORTSLINE.COM, INC.
(Registrant)
/s/ Michael Levy
----------------------------------------
Michael Levy
President and Chief Executive Officer
/s/ Kenneth W. Sanders
-------------------------------
Kenneth W. Sanders
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NO. EXHIBIT DESCRIPTION
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27.1 Financial Data Schedule
