Investools Inc. (MM) (NASDAQ:IEDU)
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INVESTools Inc. (Nasdaq:IEDU), the market leader in fulfilling
the lifelong education needs of self-directed investors, today announced
financial results for the quarter and nine months ended September 30,
2006.
Year-over-year third quarter highlights include:
Sales Transaction Volume increased from $38.5 million to $56.6
million, or 47 percent.
GAAP Revenue decreased from $37.0 million to $35.6 million, or 4
percent.
Adjusted EBITDA increased from $6.8 million to $12.0 million, or 77
percent.
Net loss of $9.9 million, compared to $4.0 million of net income last
year.
Cash, cash equivalents and marketable securities increased to $69.5
million, net of $1.3 million paid for thinkorswim-related transaction
costs.
Alumni base increased to 264,000.
Active subscribers to the Company’s websites
increased to 85,300.
“The third quarter resulted in sales
transaction volume of $56.6 million, a year-over-year increase of 47%,
driven by the enrollment of over 4,400 INVESTools’
branded students and 35% upsell rates for advanced education sales in
our workshops, both quarterly records. Seasonally lower event schedules
and student enrollments with our co-marketing partners were consistent
with our third quarter expectations,” said Lee
K. Barba, Chairman and CEO of INVESTools. “Continued
success with our new coaching model is converting our students to
subscription-based education services at improved margins.”
“We are pleased with the progress we have made
toward a successful closing of the merger with thinkorswim in early
2007. With approximately six weeks since the announcement of the merger
on September 19th, we have experienced a higher degree of student
acceptance of the thinkorswim brokerage platform than anticipated which
is increasing our confidence in the long-term recurring revenue streams
and increased lifetime value of our 264,000 graduates.”
In October 2006 we signed an agreement with NASDAQ®
to distribute customized investor education content developed by
INVESTools on the NASDAQ.com Web site, a leading exchange site serving
more than 26 million monthly page views to over 1.8 million unique
visitors per month.
Conference Call Information
A conference call to discuss the financial results is scheduled for
10:00 a.m. Eastern today. The live call is being webcast by CCBN and
will be available through INVESTools’
corporate website at www.investools.com
(About Us / Investor Relations).
The webcast is also being distributed over CCBN’s
Investor Distribution Network to both institutional and individual
investors. Individual investors can listen to the call through CCBN’s
individual investor center at www.earnings.com
or by visiting any of the investor sites in CCBN’s
Individual Investor Network. Institutional investors can access the call
via CCBN’s password-protected event
management site, StreetEvents (www.streetevents.com).
Please allow extra time prior to the call to visit the site and to
download the streaming media software required to listen to the Internet
broadcast. The online archive of the broadcast will be available within
two hours following completion of the live call.
About INVESTools Inc.
INVESTools offers a full range of investor education products and
services that provide lifelong learning in a variety of interactive
delivery formats, including instructor-led online courses, in-person
workshops, "at home" study programs, one-on-one and group online
coaching sessions and telephone, live-chat and email support.
Approximately 264,000 investors around the world have graduated from
INVESTools' investor education programs. Log on to http://www.investools.com
to learn more about the INVESTools Method™ --
one of the most widely recognized, adopted and endorsed approaches to
investor education.
All statements in this press release that are not historical are
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements
may be identified by words such as “believe,”
“intend,” “expect,”
“may,” “could,”
“would,” “will,”
“should,” “plan,”
“project,” “contemplate,”
“anticipate,” or
similar statements. Because these statements reflect the Company’s
current views concerning future events, these forward-looking statements
are subject to risks and uncertainties. The Company has made
every reasonable effort to ensure that the information and assumptions
on which these statements and projections are based are current,
reasonable, and complete. However, a variety of factors
could cause actual results to differ materially from the projections,
anticipated results or other expectations expressed in this press
release, including, without limitation, the success of brand development
efforts and strategic alliances; demand for the Company’s
products and services; the ability to compete effectively and adjust to
changing market conditions; inability to protect the Company’s
proprietary technology; difficulties or delays in developing improved
products when expected or desired and with the additional features
contemplated or desired; the potential for intellectual property
infringement, warranty, product liability, and other claims; the
uncertainties associated with governmental regulation; and other factors
detailed from time to time in INVESTools’ SEC
filings. The forward-looking statements are made only as of the
date hereof and the Company assumes no obligation to publicly
update or revise the forward-looking statements whether as a result of
new information, future events, or otherwise.
Explanation and Reconciliation of Non-GAAP Information
The Company believes that sales transaction volume is an important
measure of business volume. Sales transaction volume is a non-GAAP
financial measure and represents sales in a particular period before the
effect of recognition of deferred revenue from prior periods and the
deferral of current period sales. It is consistent with the amount of
cash receipts from selling activities in the period and with the
majority of the components of cost of revenue. The table below provides
a reconciliation of sales transaction volume to revenue for the periods
indicated:
Three Months Ended
Sept 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
($ in millions)
2006
2006
2006
2005
2005
Sales transaction volume
$
56.6
73.4
$
58.7
$
50.0
$
38.5
Change to deferred revenue
(21.0)
(35.0)
(19.9)
(13.2)
(1.5)
Revenue
$
35.6
$
38.4
$
38.8
$
36.8
$
37.0
The Company believes that Adjusted EBITDA as shown in the table below is
a valuable representation of operating performance given the impact of
accounting for deferred revenue and for costs associated with deferred
revenue. The table below provides a reconciliation of net income (loss)
to Adjusted EBITDA for the periods indicated:
Three Months Ended
Sept 30,
Jun 30,
Mar 31,
Dec 31,
Sep 30,
($ in millions)
2006
2006
2006
2005
2005
Net income (loss)
$
(9.9)
$
(20.3)
$
(9.9)
$
(4.2)
$
4.0
Depreciation and amortization
1.2
1.2
1.1
0.9
0.6
Income tax (benefit) expense
(0.9)
—
—
0.1
—
Other non-cash items
0.4
2.0
0.6
1.8
0.6
Net change in deferred revenue
21.2
35.0
19.9
12.8
1.6
Adjusted EBITDA
$
12.0
$
17.9
$
11.7
$
11.4
$
6.8
These non-GAAP financial measures may not be comparable to similarly
titled measurements used by other companies and should not be used
generally as a substitute for revenue, net income (loss) or other GAAP
operating measurements.
The table below provides information on the number of graduates during
the period indicated. The Company defines a graduate as someone who has
purchased or attended as a spouse, the foundational Stocks or Currency
course.
Three Months Ended
Sept 30,
June 30,
Mar, 31
Dec 31,
Sept 30,
2006
2006
2006
2005
2005
Paid graduates
10,200
14,800
9,800
10,300
7,700
Spouses
5,500
9,900
5,400
5,600
2,700
Total graduates
15,700
24,700
15,100
15,900
10,400
The following table outlines the workshop upsell rates during the period
indicated. During the third quarter of 2006, the Company introduced a
subscription based Trading Rooms product as an alternative upsell at the
workshop.
Three Months Ended
Sept 30,
June 30,
Mar, 31
Dec 31,
Sept 30,
2006
2006
2006
2005
2005
P.H.D.
19%
27%
25%
25%
20%
Master
37%
32%
36%
35%
37%
Associate
36%
41%
39%
40%
43%
Trading Rooms
7%
-
-
-
-
Blended Upsell Rate
35%
27%
33%
31%
30%
Workshop upsell rates are the sales that take place at the workshops for
advanced product sales. Upsell rates do not include sales from the
Company’s other sales operations.
INVESTOOLS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
September 30,2006
December 31,2005
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
32,660
$
11,466
Marketable securities
36,473
16,871
Accounts receivable, net of allowance ($73 and $55)
5,184
3,353
Current portion of restricted cash
—
4,722
Other current assets
7,562
3,133
Total current assets
81,879
39,545
Long-term restricted cash
373
366
Goodwill
18,085
18,085
Intangible assets, net of accumulated amortization ($3,715 and
$1,891)
3,375
5,199
Furniture and equipment, net of accumulated depreciation ($4,089 and
$2,403)
15,188
8,890
Other long-term assets
1,357
614
Total assets
$
120,257
$
72,699
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current portion of deferred revenue
$
131,037
$
68,215
Accounts payable
6,621
3,210
Accrued payroll
5,141
3,522
Accrued tax liabilities
7,700
7,359
Other current liabilities
10,038
4,193
Current portion of capitalized lease obligations
176
125
Total current liabilities
160,713
86,624
Other long-term accrued liabilities
264
—
Long-term portion of capitalized lease obligations
543
513
Long-term portion of deferred revenue
22,249
9,301
Total liabilities
183,769
96,438
Stockholders’ deficit:
Common stock $0.01 par value (45,133 and 44,754 shares issued and
outstanding, respectively)
451
447
Additional paid-in capital
127,600
131,162
Accumulated other comprehensive loss
(19)
(116)
Deferred stock compensation
—
(3,742)
Accumulated deficit
(191,544)
(151,490)
Total stockholders’ deficit
(63,512)
(23,739)
Total liabilities and stockholders’
deficit
$
120,257
$
72,699
INVESTOOLS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2006
2005
2006
2005
Revenue
$
35,552
$
37,019
$
112,729
$
101,804
Costs and expenses
Cost of revenue
26,291
18,254
90,841
68,844
Selling expense
12,154
9,383
36,208
27,329
General and administrative expense
8,353
5,439
25,039
17,402
Special charges
195
18
3,185
58
Total costs and expenses
46,993
33,094
155,273
113,633
Income (loss) from operations
(11,441)
3,925
(42,544)
(11,829)
Other income
Gain (loss) on sale of assets
—
—
10
(93)
Interest income and other, net
646
108
1,581
397
Other income
646
108
1,591
304
Net income (loss) before income taxes and cumulative effect of
accounting change
(10,795)
4,033
(40,953)
(11,525)
Income tax benefit
(907)
(5)
(851)
—
Net income (loss) before cumulative effect of accounting change
(9,888)
4,038
(40,102)
(11,525)
Cumulative effect of accounting change
—
—
48
—
Net income (loss)
$
(9,888)
$
4,038
(40,054)
$
(11,525)
Net income (loss) per common share –
basic
$
(0.22)
$
0.09
$
(0.89)
$
(0.26)
Weighted average common shares outstanding –
basic
45,111
45,009
44,999
44,996
Net income (loss) per common share –
diluted
$
(0.22)
$
0.09
$
(0.89)
$
(0.26)
Weighted average common shares outstanding –
diluted
45,111
46,790
44,999
44,996
INVESTOOLS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2006
2005
2006
2005
Cash flows from operating activities:
Net income (loss)
$
(9,888)
$
4,038
$
(40,054)
$
(11,525)
Reconciling adjustments:
Depreciation and amortization
1,194
645
3,510
1,814
Deferred taxes
28
—
84
—
Stock compensation expense
342
150
833
402
Provision for sales return reserve
11
410
326
1,493
Provision for lease termination
—
—
213
—
(Recovery of) provision for bad debt
3
(7)
(32)
51
(Gain) loss on sale of assets
—
—
(10)
93
Impairment of internally developed software
—
—
1,464
—
Loss on marketable securities
73
—
73
—
Changes in operating assets and liabilities, net of the effect of
acquired businesses:
Accounts receivable
(2,260)
(194)
(1,799)
(1,175)
Restricted cash
—
(1)
—
2
Other assets
(719)
(269)
(2,378)
(763)
Accounts payable
189
1,096
1,437
(845)
Deferred revenue
21,168
1,580
76,137
24,201
Accrued payroll
1,291
740
1,619
1,144
Other liabilities
3,623
(101)
4,223
(2,911)
Accrued tax liabilities
(1,712)
409
(394)
1,097
Net cash provided by operating activities
13,343
8,496
45,252
13,078
Cash flows from investing activities:
Purchases of marketable securities
—
(2,636)
(23,403)
(2,636)
Proceeds from the maturity of marketable securities
1,365
1,965
3,865
6,135
Proceeds from the sale of equipment
—
—
10
40
Purchases of furniture and equipment
(1,689)
(1,595)
(7,161)
(5,766)
Deferred acquisition costs
(1,323)
—
(1,323)
—
Working capital adjustment (cash paid) related to business
acquisitions, net of cash received
—
102
—
(7,777)
Net cash used in investing activities
(1,647)
(2,164)
(28,012)
(10,004)
Cash flows from financing activities:
Payments on capital leases
(42)
(31)
(112)
(40)
Changes in long-term restricted cash
(2)
(193)
4,715
(3,219)
Repurchase of stock
—
(990)
(1,360)
(990)
Proceeds from exercise of stock options
39
37
711
127
Net cash provided by (used in) financing
activities
(5)
(1,177)
3,954
(4,122)
Increase (decrease) in cash and cash equivalents
11,691
5,155
21,194
(1,048)
Cash and cash equivalents:
Beginning of period
20,969
4,533
11,466
10,736
End of period
$
32,660
$
9,688
$
32,660
$
9,688
INVESTools Inc. (Nasdaq:IEDU), the market leader in fulfilling the
lifelong education needs of self-directed investors, today announced
financial results for the quarter and nine months ended September 30,
2006.
Year-over-year third quarter highlights include:
-- Sales Transaction Volume increased from $38.5 million to $56.6
million, or 47 percent.
-- GAAP Revenue decreased from $37.0 million to $35.6 million, or
4 percent.
-- Adjusted EBITDA increased from $6.8 million to $12.0 million,
or 77 percent.
-- Net loss of $9.9 million, compared to $4.0 million of net
income last year.
-- Cash, cash equivalents and marketable securities increased to
$69.5 million, net of $1.3 million paid for
thinkorswim-related transaction costs.
-- Alumni base increased to 264,000.
-- Active subscribers to the Company's websites increased to
85,300.
"The third quarter resulted in sales transaction volume of $56.6
million, a year-over-year increase of 47%, driven by the enrollment of
over 4,400 INVESTools' branded students and 35% upsell rates for
advanced education sales in our workshops, both quarterly records.
Seasonally lower event schedules and student enrollments with our
co-marketing partners were consistent with our third quarter
expectations," said Lee K. Barba, Chairman and CEO of INVESTools.
"Continued success with our new coaching model is converting our
students to subscription-based education services at improved
margins."
"We are pleased with the progress we have made toward a successful
closing of the merger with thinkorswim in early 2007. With
approximately six weeks since the announcement of the merger on
September 19th, we have experienced a higher degree of student
acceptance of the thinkorswim brokerage platform than anticipated
which is increasing our confidence in the long-term recurring revenue
streams and increased lifetime value of our 264,000 graduates."
In October 2006 we signed an agreement with NASDAQ(R) to
distribute customized investor education content developed by
INVESTools on the NASDAQ.com Web site, a leading exchange site serving
more than 26 million monthly page views to over 1.8 million unique
visitors per month.
Conference Call Information
A conference call to discuss the financial results is scheduled
for 10:00 a.m. Eastern today. The live call is being webcast by CCBN
and will be available through INVESTools' corporate website at
www.investools.com (About Us / Investor Relations).
The webcast is also being distributed over CCBN's Investor
Distribution Network to both institutional and individual investors.
Individual investors can listen to the call through CCBN's individual
investor center at www.earnings.com or by visiting any of the investor
sites in CCBN's Individual Investor Network. Institutional investors
can access the call via CCBN's password-protected event management
site, StreetEvents (www.streetevents.com). Please allow extra time
prior to the call to visit the site and to download the streaming
media software required to listen to the Internet broadcast. The
online archive of the broadcast will be available within two hours
following completion of the live call.
About INVESTools Inc.
INVESTools offers a full range of investor education products and
services that provide lifelong learning in a variety of interactive
delivery formats, including instructor-led online courses, in-person
workshops, "at home" study programs, one-on-one and group online
coaching sessions and telephone, live-chat and email support.
Approximately 264,000 investors around the world have graduated from
INVESTools' investor education programs. Log on to
http://www.investools.com to learn more about the INVESTools
Method(TM) -- one of the most widely recognized, adopted and endorsed
approaches to investor education.
All statements in this press release that are not historical are
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements may
be identified by words such as "believe," "intend," "expect," "may,"
"could," "would," "will," "should," "plan," "project," "contemplate,"
"anticipate," or similar statements. Because these statements reflect
the Company's current views concerning future events, these
forward-looking statements are subject to risks and uncertainties. The
Company has made every reasonable effort to ensure that the
information and assumptions on which these statements and projections
are based are current, reasonable, and complete. However, a variety of
factors could cause actual results to differ materially from the
projections, anticipated results or other expectations expressed in
this press release, including, without limitation, the success of
brand development efforts and strategic alliances; demand for the
Company's products and services; the ability to compete effectively
and adjust to changing market conditions; inability to protect the
Company's proprietary technology; difficulties or delays in developing
improved products when expected or desired and with the additional
features contemplated or desired; the potential for intellectual
property infringement, warranty, product liability, and other claims;
the uncertainties associated with governmental regulation; and other
factors detailed from time to time in INVESTools' SEC filings. The
forward-looking statements are made only as of the date hereof and the
Company assumes no obligation to publicly update or revise the
forward-looking statements whether as a result of new information,
future events, or otherwise.
Explanation and Reconciliation of Non-GAAP Information
The Company believes that sales transaction volume is an important
measure of business volume. Sales transaction volume is a non-GAAP
financial measure and represents sales in a particular period before
the effect of recognition of deferred revenue from prior periods and
the deferral of current period sales. It is consistent with the amount
of cash receipts from selling activities in the period and with the
majority of the components of cost of revenue. The table below
provides a reconciliation of sales transaction volume to revenue for
the periods indicated:
-0-
*T
Three Months Ended
----------------------------------------
Sept 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ in millions) 2006 2006 2006 2005 2005
-------- ------- ------- ------- -------
Sales transaction volume $ 56.6 73.4 $ 58.7 $ 50.0 $38.5
Change to deferred revenue (21.0) (35.0) (19.9) (13.2) (1.5)
-------- ------- ------- ------- -------
Revenue $ 35.6 $ 38.4 $ 38.8 $ 36.8 $37.0
======== ======= ======= ======= =======
*T
The Company believes that Adjusted EBITDA as shown in the table
below is a valuable representation of operating performance given the
impact of accounting for deferred revenue and for costs associated
with deferred revenue. The table below provides a reconciliation of
net income (loss) to Adjusted EBITDA for the periods indicated:
-0-
*T
Three Months Ended
----------------------------------------
Sept 30, Jun 30, Mar 31, Dec 31, Sep 30,
($ in millions) 2006 2006 2006 2005 2005
-------- ------- ------- ------- -------
Net income (loss) $(9.9) $(20.3) $(9.9) $(4.2) $ 4.0
Depreciation and amortization 1.2 1.2 1.1 0.9 0.6
Income tax (benefit) expense (0.9) -- -- 0.1 --
Other non-cash items 0.4 2.0 0.6 1.8 0.6
Net change in deferred revenue 21.2 35.0 19.9 12.8 1.6
-------- ------- ------- ------- -------
Adjusted EBITDA $12.0 $ 17.9 $11.7 $11.4 $ 6.8
======== ======= ======= ======= =======
*T
These non-GAAP financial measures may not be comparable to
similarly titled measurements used by other companies and should not
be used generally as a substitute for revenue, net income (loss) or
other GAAP operating measurements.
The table below provides information on the number of graduates
during the period indicated. The Company defines a graduate as someone
who has purchased or attended as a spouse, the foundational Stocks or
Currency course.
-0-
*T
Three Months Ended
------------------------------------------
Sept 30, June 30, Mar, 31 Dec 31, Sept 30,
2006 2006 2006 2005 2005
-------- -------- ------- ------- --------
Paid graduates 10,200 14,800 9,800 10,300 7,700
Spouses 5,500 9,900 5,400 5,600 2,700
-------- -------- ------- ------- --------
Total graduates 15,700 24,700 15,100 15,900 10,400
======== ======== ======= ======= ========
*T
The following table outlines the workshop upsell rates during the
period indicated. During the third quarter of 2006, the Company
introduced a subscription based Trading Rooms product as an
alternative upsell at the workshop.
-0-
*T
Three Months Ended
------------------------------------------
Sept 30, June 30, Mar, 31 Dec 31, Sept 30,
2006 2006 2006 2005 2005
-------- -------- ------- ------- --------
P.H.D. 19% 27% 25% 25% 20%
Master 37% 32% 36% 35% 37%
Associate 36% 41% 39% 40% 43%
Trading Rooms 7% - - - -
Blended Upsell Rate 35% 27% 33% 31% 30%
*T
Workshop upsell rates are the sales that take place at the
workshops for advanced product sales. Upsell rates do not include
sales from the Company's other sales operations.
-0-
*T
INVESTOOLS INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
September December
30, 31,
2006 2005
----------- ----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 32,660 $ 11,466
Marketable securities 36,473 16,871
Accounts receivable, net of allowance ($73
and $55) 5,184 3,353
Current portion of restricted cash -- 4,722
Other current assets 7,562 3,133
----------- ----------
Total current assets 81,879 39,545
Long-term restricted cash 373 366
Goodwill 18,085 18,085
Intangible assets, net of accumulated
amortization ($3,715 and $1,891) 3,375 5,199
Furniture and equipment, net of accumulated
depreciation ($4,089 and $2,403) 15,188 8,890
Other long-term assets 1,357 614
----------- ----------
Total assets $120,257 $ 72,699
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of deferred revenue $131,037 $ 68,215
Accounts payable 6,621 3,210
Accrued payroll 5,141 3,522
Accrued tax liabilities 7,700 7,359
Other current liabilities 10,038 4,193
Current portion of capitalized lease
obligations 176 125
----------- ----------
Total current liabilities 160,713 86,624
Other long-term accrued liabilities 264 --
Long-term portion of capitalized lease
obligations 543 513
Long-term portion of deferred revenue 22,249 9,301
----------- ----------
Total liabilities 183,769 96,438
Stockholders' deficit:
Common stock $0.01 par value (45,133 and
44,754 shares issued and outstanding,
respectively) 451 447
Additional paid-in capital 127,600 131,162
Accumulated other comprehensive loss (19) (116)
Deferred stock compensation -- (3,742)
Accumulated deficit (191,544) (151,490)
----------- ----------
Total stockholders' deficit (63,512) (23,739)
----------- ----------
Total liabilities and stockholders' deficit $120,257 $ 72,699
=========== ==========
*T
-0-
*T
INVESTOOLS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2006 2005 2006 2005
----------- -------- --------- ---------
Revenue $35,552 $37,019 $112,729 $101,804
Costs and expenses
Cost of revenue 26,291 18,254 90,841 68,844
Selling expense 12,154 9,383 36,208 27,329
General and administrative
expense 8,353 5,439 25,039 17,402
Special charges 195 18 3,185 58
----------- -------- --------- ---------
Total costs and expenses 46,993 33,094 155,273 113,633
----------- -------- --------- ---------
Income (loss) from
operations (11,441) 3,925 (42,544) (11,829)
Other income
Gain (loss) on sale of
assets -- -- 10 (93)
Interest income and other,
net 646 108 1,581 397
----------- -------- --------- ---------
Other income 646 108 1,591 304
----------- -------- --------- ---------
Net income (loss) before
income taxes and cumulative
effect of accounting change (10,795) 4,033 (40,953) (11,525)
Income tax benefit (907) (5) (851) --
----------- -------- --------- ---------
Net income (loss) before
cumulative effect of
accounting change (9,888) 4,038 (40,102) (11,525)
Cumulative effect of
accounting change -- -- 48 --
----------- -------- --------- ---------
Net income (loss) $(9,888) $ 4,038 (40,054) $(11,525)
=========== ======== ========= =========
Net income (loss) per common
share - basic $ (0.22) $ 0.09 $ (0.89) $ (0.26)
=========== ======== ========= =========
Weighted average common
shares outstanding - basic 45,111 45,009 44,999 44,996
=========== ======== ========= =========
Net income (loss) per common
share - diluted $ (0.22) $ 0.09 $ (0.89) $ (0.26)
=========== ======== ========= =========
Weighted average common
shares outstanding - diluted 45,111 46,790 44,999 44,996
=========== ======== ========= =========
*T
-0-
*T
INVESTOOLS INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
----------- ------- --------- ---------
Cash flows from operating
activities:
Net income (loss) $(9,888) $4,038 $(40,054) $(11,525)
Reconciling adjustments:
Depreciation and
amortization 1,194 645 3,510 1,814
Deferred taxes 28 -- 84 --
Stock compensation expense 342 150 833 402
Provision for sales return
reserve 11 410 326 1,493
Provision for lease
termination -- -- 213 --
(Recovery of) provision for
bad debt 3 (7) (32) 51
(Gain) loss on sale of
assets -- -- (10) 93
Impairment of internally
developed software -- -- 1,464 --
Loss on marketable
securities 73 -- 73 --
Changes in operating assets
and liabilities, net of
the effect of acquired
businesses:
Accounts receivable (2,260) (194) (1,799) (1,175)
Restricted cash -- (1) -- 2
Other assets (719) (269) (2,378) (763)
Accounts payable 189 1,096 1,437 (845)
Deferred revenue 21,168 1,580 76,137 24,201
Accrued payroll 1,291 740 1,619 1,144
Other liabilities 3,623 (101) 4,223 (2,911)
Accrued tax liabilities (1,712) 409 (394) 1,097
----------- ------- --------- ---------
Net cash provided by
operating activities 13,343 8,496 45,252 13,078
----------- ------- --------- ---------
Cash flows from investing
activities:
Purchases of marketable
securities -- (2,636) (23,403) (2,636)
Proceeds from the maturity
of marketable securities 1,365 1,965 3,865 6,135
Proceeds from the sale of
equipment -- -- 10 40
Purchases of furniture and
equipment (1,689) (1,595) (7,161) (5,766)
Deferred acquisition costs (1,323) -- (1,323) --
Working capital adjustment
(cash paid) related to
business acquisitions, net
of cash received -- 102 -- (7,777)
----------- ------- --------- ---------
Net cash used in
investing activities (1,647) (2,164) (28,012) (10,004)
----------- ------- --------- ---------
Cash flows from financing
activities:
Payments on capital leases (42) (31) (112) (40)
Changes in long-term
restricted cash (2) (193) 4,715 (3,219)
Repurchase of stock -- (990) (1,360) (990)
Proceeds from exercise of
stock options 39 37 711 127
----------- ------- --------- ---------
Net cash provided by
(used in) financing
activities (5) (1,177) 3,954 (4,122)
----------- ------- --------- ---------
Increase (decrease) in cash
and cash equivalents 11,691 5,155 21,194 (1,048)
Cash and cash equivalents:
Beginning of period 20,969 4,533 11,466 10,736
----------- ------- --------- ---------
End of period $32,660 $9,688 $ 32,660 $ 9,688
=========== ======= ========= =========
*T