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Local Corporation Reports Fourth Quarter And Fiscal 2012 Financial Results

Stocks in this article: LOCM

A limitation of non-GAAP Adjusted Net Income (Loss) is that it excludes items that often have a material effect on the company’s net income and earnings per common share calculated in accordance with GAAP. Therefore, management compensates for this limitation by using Adjusted Net Income (Loss) in conjunction with net income (loss) and net income (loss) per share measures. The company believes that Adjusted Net Income (Loss) provides investors with an additional tool for evaluating the company’s core performance, which management uses in its own evaluation of overall performance, and as a base-line for assessing the future earnings potential of the company. While the GAAP results are more complete, the company prefers to allow investors to have this supplemental metric since, with reconciliation to GAAP; it may provide greater insight into the company’s financial results. The non-GAAP measures should be viewed as a supplement to, and not as a substitute for, or superior to, GAAP net income (loss) or earnings (loss) per share.

       
 

LOCAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)

 
December 31, December 31,
  2012     2011  
ASSETS
Current assets:
Cash $ 3,696 $ 10,394
Restricted cash 42 10
Accounts receivable, net of allowances of $250 and $550, respectively 10,618 11,678
Note receivable 319 392
Prepaid expenses and other current assets 648 732
Assets held for sale   -     2,187  
Total current assets 15,323 25,393
 
Property and equipment, net 6,769 8,018
Goodwill 21,850 31,370
Intangible assets, net 3,932 8,833
Long term note receivable - 350
Long term receivable, net 1,585 1,778
Escrow receivable 390 -
Deposits   58     69  
Total assets $ 49,907   $ 75,811  
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 8,367 $ 12,193
Accrued compensation 829 2,152
Deferred rent 452 551
Warrant liability 5 207
Other accrued liabilities 1,315 2,422
Revolving line of credit 10,000 8,000
Deferred revenue 203 281
Liabilities held for sale   -     32  
Total current liabilities   21,171     25,838  
Deferred income taxes   302     265  
Total liabilities   21,473     26,103  
 
Commitments and contingencies
 
Stockholders’ equity:
Convertible preferred stock, $0.00001 par value; 10,000 shares authorized; none issued and outstanding for all periods presented - -
Common stock, $0.00001 par value; 65,000 shares authorized; 22,172 and 22,082 issued and outstanding, respectively - -
Additional paid-in capital 122,036 119,068
Accumulated deficit   (93,602 )   (69,360 )
Stockholders’ equity   28,434     49,708  
Total liabilities and stockholders’ equity $ 49,907   $ 75,811  
 
 
LOCAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)

       

Three Months Ended December 31,

Year Ended December 31,

  2012       2011     2012       2011  
Revenue $ 20,898   $ 25,298   $ 97,773   $ 78,259  
Costs and expenses:
Cost of revenues 15,859 14,984 71,657 49,258
Sales and marketing 4,075 6,573 18,905 20,441
General and administrative 4,059 3,275 11,765 12,156
Research and development 1,398 2,142 5,082 6,538
Amortization of intangibles 494 1,551 4,102 5,136
Impairment of goodwill and intangible assets   4,100     -     10,551     -  
 
Total operating expenses   29,985     28,525     122,062     93,529  
 
Operating loss (9,087 ) (3,227 ) (24,289 ) (15,270 )
 
Interest and other income (expense), net (100 ) (101 ) (425 ) (413 )
Change in fair value of warrant liability   30     150     202     2,633  
 
Loss from continuing operations before income taxes (9,157 ) (3,178 ) (24,512 ) (13,050 )
 
(Benefit) Provision for income taxes   (9 )   71     111     178  
 
Net loss from continuing operations $ (9,148 ) $ (3,249 ) $ (24,623 ) $ (13,228 )
Income (loss) from discontinued operations (net of taxes)   1,257     (557 )   381     (1,331 )
Net loss   (7,891 )   (3,806 )   (24,242 )   (14,559 )
 
Per share data:
Basic net loss per share from continuing operations $ (0.41 ) $ (0.15 ) $ (1.11 ) $ (0.62 )
Basic net income (loss) per share from discontinued operations $ 0.06   $ (0.03 ) $ 0.02   $ (0.06 )
Basic net loss per share $ (0.36 ) $ (0.17 ) $ (1.10 ) $ (0.68 )
 
Diluted net loss per share from continuing operations $ (0.41 ) $ (0.15 ) $ (1.11 ) $ (0.62 )
Diluted net income (loss) per share from discontinued operations $ 0.06   $ (0.03 ) $ 0.02   $ (0.06 )
Diluted net loss per share $ (0.36 ) $ (0.17 ) $ (1.10 ) $ (0.68 )
 
 
Basic weighted average shares outstanding 22,131 22,076 22,098 21,384
Diluted weighted average shares outstanding 22,131 22,076 22,098 21,384
 
 
LOCAL CORPORATION
Supplemental Consolidated Statements of Operations Information
Stock-based Compensation Expense*

(in thousands, except per share data)

(Unaudited)

       

Three Months Ended December 31,

Year Ended December 31,

  2012     2011   2012     2011
Cost of revenues $ 22 $ 12 $ 83 $ 177
Sales and marketing 226 296 1,071 1,250
General and administrative 389 422 1,377 1,849
Research and development   64   74   227   387
Total stock-based compensation expense $ 701 $ 804 $ 2,758 $ 3,663
Net stock compensation expense per share
Basic $ 0.03 $ 0.04 $ 0.12 $ 0.17
Diluted $ 0.03 $ 0.04 $ 0.12 $ 0.17
 

*- Excludes impact of discontinued operations.

 
 
LOCAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

         
Year Ended December 31,
  2012       2011  
Cash flows from operating activities:
Net loss $ (24,242 ) $ (14,559 )
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization 8,173 8,736
Provision for doubtful accounts 1,507 125
Stock-based compensation expense 2,895 3,824
Revaluation of warrants (202 ) (2,633 )
Deferred income taxes 114 126
Impairment of goodwill and intangible assets 10,551 -
Gain on sale of assets (1,458 ) -
Changes in operating assets and liabilities:
Accounts receivable (447 ) (1,263 )
Note receivable 423 258
Long term receivable 193 (146 )
Prepaid expenses and other 86 714
Other non-current assets 9 (12 )
Accounts payable and accrued liabilities (6,392 ) 4,548
Deferred revenue   (101 )   (466 )
Net cash used in operating activities   (8,891 )   (748 )
 
Cash flows from investing activities:
Capital expenditures (3,358 ) (4,361 )
Increase in restricted cash (32 ) -
Increase in notes receivable - (1,085 )
Decrease in notes receivable - 1,085
Acquisition, net of cash acquired - (15,969 )
Purchases of intangible assets - (822 )
Proceeds from the sale of assets   3,510     -  
Net cash provided by (used in) investing activities   120     (21,152 )
 
Cash flows from financing activities:
Proceeds from exercise of options 80 291
Proceeds from issuance of common stock - 18,227
Payment of revolving credit facility (3,374 ) (7,000 )
Proceeds from revolving credit facility 5,374 8,000
Payment of financing related costs   (7 )   (303 )
Net cash provided by financing activities   2,073     19,215  
Net decrease in cash and cash equivalents (6,698 ) (2,685 )
Cash and cash equivalents, beginning of period   10,394     13,079  
Cash and cash equivalents, end of period $ 3,696   $ 10,394  
 
Supplemental Cash Flow Information:
Interest paid $ 425   $ 229  
Income taxes paid $ 12   $ 11  
 
 
LOCAL CORPORATION
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS)

(in thousands, except per share amounts)

(Unaudited)

       
Three Months Ended December 31,

Three Months Ended September 30,

  2012       2011     2012  
GAAP net loss $ (7,891 ) $ (3,806 ) $ (3,802 )
Plus interest and other income (expense), net 100 101 131
Plus provision for income taxes (9 ) 71 22
Plus amortization of intangibles 494 1,551 1,865
Plus depreciation 1,100 1,077 935
Plus stock-based compensation 701 804 666
Less revaluation of warrants (30 ) (150 ) (65 )
Plus net loss from discontinued operations 201 557 140
Plus LEC reserve 1,407 - -
Less gain on sale of Rovion (1,458 ) - -
Plus asset impairment charge 4,100 - -
Plus severance charges   361     563     144  
 
Adjusted Net Income (Loss) $ (924 ) $ 768   $ 36  
 
Diluted Adjusted Net Income (Loss) per share $ (0.04 ) $ 0.03   $ 0.00  
 
Diluted weighted average shares outstanding 22,131 22,179 22,245
 

Prior period balances have been reclassified to conform to current period reporting

 

Year ended December 31, 2012

Year ended December 31, 2011

Net loss $ (24,242 ) $ (14,559 )
Plus interest and other income (expense), net 425 413
Plus provision for income taxes 111 178
Plus amortization of intangibles 4,102 5,136
Plus depreciation 3,803 3,278
Plus stock-based compensation 2,758 3,663
Less revaluation of warrants (202 ) (2,633 )
Plus net loss from discontinued operations 1,077 1,331
Plus asset Impairment charge 10,551 -
Plus LEC reserve 1,407 -
Less gain on sale of Rovion (1,458 ) -
Plus severance charges   1,115     1,461  
 
Adjusted Net Loss $ (553 ) $ (1,732 )
 
Diluted Adjusted Net Loss per share $ (0.03 ) $ (0.08 )
 
Diluted weighted average shares 22,098 21,384




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