Business Context and Reporting Period
Company: Marchex, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 27, 2013
Reporting Period: Quarter and fiscal year ended December 31, 2012.
This filing announces the issuance of a press release and conference call regarding financial results for the period ended December 31, 2012. The filing also discloses material impairments and valuation allowances determined during the fourth quarter of 2012.
Key Financial Metrics and Material Changes
The filing does not provide specific revenue, profit, cash flow, or margin figures for the period; these are contained in the referenced Press Release (Exhibit 99.1). However, the filing details significant non-cash charges impacting financial condition:
- Goodwill Impairment: Preliminary determination to record an estimated pre-tax $16.7 million non-cash impairment charge on goodwill.
- Deferred Tax Assets: Preliminary determination to record an estimated $16.4 million non-cash charge to income tax expense to establish a partial valuation allowance on federal deferred tax assets (totaling approximately $45 million).
- Cash Impact: The filing explicitly states these charges will not result in any current or future cash expenditures.
Material Changes: The company announced a proposed spin-off transaction during the fourth quarter of 2012 and commenced segmenting financial results for Archeo, Inc. ("Archeo"). Goodwill amounts allocated to Archeo initiated the expected non-cash impairment charges.
Guidance, Outlook, and Risks
Management Commentary: Marchex is referencing non-GAAP financial information in its press release and conference call. A reconciliation of non-GAAP measures to GAAP measures is included in the press release.
Contingencies and Risks:
- Spin-off Transaction: The proposed spin-off of Archeo, Inc. is a significant corporate development affecting segment reporting and goodwill allocation.
- Tax Realization: Management assessed that it is more likely than not that the company will be unable to realize the value of certain federal deferred tax assets.
- Finalization of Charges: The impairment and valuation allowance charges are preliminary and will be finalized in the Form 10-K filing for the fiscal year ended December 31, 2012.
Investor Verification Checklist
- Review the full text of the Press Release (Exhibit 99.1) for specific GAAP and non-GAAP revenue, earnings, and cash flow figures.
- Verify the final amounts of the goodwill impairment and deferred tax valuation allowance in the upcoming Form 10-K.
- Assess the status and timeline of the proposed spin-off transaction for Archeo, Inc.
- Examine the reconciliation of non-GAAP financial measures provided in the press release to understand adjustments made to GAAP results.