Local Corporation Reports Preliminary Unaudited Fourth Quarter and Full Year 2012 Results; Provides 2013 Outlook

  Local Corporation Reports Preliminary Unaudited Fourth Quarter and Full Year
  2012 Results; Provides 2013 Outlook

Business Wire

IRVINE, Calif. -- January 24, 2013

Local Corporation (NASDAQ: LOCM), a leading online local media company, today
reported preliminary unaudited fourth quarter and full year 2012 financial
results, and provided financial guidance for full year 2013.

The company previously provided 2012 revenue guidance of between $99 million
and $100 million. Fourth quarter 2012 revenue guidance was between $22 million
and $23 million, and Adjusted Net Income guidance was approximately breakeven,
or $0.00 per diluted share, assuming 23 million diluted shares outstanding.

Based on preliminary unaudited results, the company expects record revenue for
full year 2012 of approximately $98 million, about 25 percent higher than
2011. The increase was due primarily to growth in the company’s Owned &
Operated (O&O) and Network businesses, offset by a decline in legacy
subscription advertiser revenues in the company’s Sales & Ad Services (SAS)
business. The company estimates preliminary unaudited fourth quarter revenue
of approximately $20.9 million, and unaudited GAAP net loss of approximately
$4 million or $(0.18) per diluted share. Unaudited Adjusted Net Loss for the
fourth quarter 2012 is expected to be approximately $900,000 or $(0.04) per
diluted share, based on 22.1 million diluted shares outstanding. Preliminary
fourth quarter revenue is approximately $1.6 million below the mid-point of
prior guidance, primarily as a result of lower than expected monetization of
traffic from the company’s main advertising partner.

Adjusted Net Income is defined as net income (loss) excluding: provision for
income taxes; interest and other income (expense), net; depreciation;
amortization; stock based compensation charges; gain or loss on warrant
revaluation; net income (loss) from discontinued operations; gain on sale of
Rovion; impairment charges; LEC receivables reserve and severance charges. An
explanation of the company’s use of non-GAAP financial measures, including the
limitations of such measures, relative to GAAP measures is included below and
reconciliation between GAAP and non-GAAP measures, where appropriate, is
included in the financial table attached to this release.

During the fourth quarter, the company undertook a strategic review of
operations and for 2013 intends to focus on expanding margins in O&O, the
company’s largest business by revenue, and on growing the Network business,
which is the company’s most profitable business. Due to the significant
financial commitment required to successfully scale a direct sales model, the
company intends to instead focus on channel sales development for its ‘Launch
by Local’ SMB solution, which the company expects to provide annual cost
savings of approximately $4.6 million, starting immediately.

“We had a strong first half 2012, but second half growth was below initial
forecasts, due to unexpected revenue per click (RPC) declines from our main ad
partner coupled with previously announced fourth quarter ad policy changes.
Despite this, we expect to be back in growth mode with first quarter 2013
revenue projected to exceed fourth quarter 2012, and overall 2013 revenue
projected at about 12% higher than our 2012 exit run rate,” said Heath Clarke,
Local Corporation chairman and CEO. “We have taken decisive cost-cutting
measures to return the company to cash flow positive, and expect steady
revenue growth and margin improvement throughout 2013. While there are
periodic challenges when working in a competitive, dynamic and high growth
sector, these challenges often create new opportunities for future growth. We
are confident that we are well positioned to capitalize on those opportunities
with a powerful platform and an experienced team.”

“As a result of our focus on improving bottom-line results, we expect to swing
to Adjusted Net Income in the first quarter of 2013 followed by a return to
positive cash flow from operations in the second quarter, and steady cash flow
growth through the remainder of the year. We expect at least $5 million in
Adjusted Net Income for 2013,” added Ken Cragun, Local Corporation chief
financial officer.

In accordance with normal procedures, these unaudited preliminary revenue and
earnings results are subject to further review and completion of year end
accounting processes by the company and its auditors, which include the
finalization of potentially significant items that could affect these results.
The company will provide fully audited fourth quarter and full year 2012
results and announce its upcoming earnings call in due course.

Fiscal 2013 Financial Guidance:

Revenue - The company expects 2013 revenue to be between $93 million and $95
million, which at the mid-point is an increase of 12% compared to the fourth
quarter 2012 exit run rate.

Adjusted Net Income – Adjusted Net Income for 2013 is expected to be at least
$5 million.

Projected 2013 Adjusted Net Income Factors:

  *Interest Expense of $400,000
  *Income Tax Provision of $200,000
  *Depreciation Expense of $4.5 million
  *Amortization Expense of $1.3 million
  *Stock Compensation Expense of $3.8 million
  *Severance Charges of $500,000
  *Warrant Revaluation Expense and Other items are undeterminable, but may be
    significant non-cash gains or losses*

* The valuation of the warrant liability is based in large part on the
underlying price and volatility of our common stock during the quarter. Since
we cannot predict this, we cannot project the non-cash gain or loss in
connection with these warrants, and therefore cannot reasonably project our
GAAP net income (loss). We therefore cannot provide GAAP guidance, but do
report GAAP results.

As previously announced, the company will no longer provide quarterly
guidance.

About Local Corporation

Local Corporation (NASDAQ:LOCM) is a leading online local media company that
connects brick-and-mortar businesses with over a million online and mobile
consumers each day using a variety of innovative digital marketing products.
To advertise, or for more information, visit: http://www.localcorporation.com.

Forward Looking Statements

This press release contains certain “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Words or expressions such as 'anticipate,'
'believe,' 'estimate,' 'plans,' 'expect,' 'intend,' ‘project,’ ‘forecast,’
‘potential,’ ‘feel’ and similar expressions and phrases are intended to
identify such forward-looking statements. Any forward-looking statements are
based on the beliefs of our management as well as assumptions made by and
information currently available to our management. Actual results could differ
materially from those contemplated by the forward-looking statements as a
result of certain factors, including, but not limited to, our advertising
partners paying less revenue per click and revenues to us for our search
results, our ability to purchase advertising from third parties to drive users
to our sites, our ability to adapt our business following the shifts in our
monetization partners, our ability to monetize the Local.com domain, including
at a profit, our ability to retain a monetization partner for the Local.com
domain and other web properties under our management that allows us to operate
profitably, our ability to develop, market and operate our local-search
technologies, our ability to market the Local.com domain as a destination for
consumers seeking local-search results, our ability to grow our business by
enhancing our local-search services, including through businesses we acquire,
the integration and future performance of our Spreebird business and our
Krillion business, the possibility that the information and estimates used to
predict anticipated revenues and expenses associated with the businesses we
acquire are not accurate, difficulties executing integration strategies or
achieving planned synergies, the possibility that integration costs and
go-forward costs associated with the businesses we acquire will be higher than
anticipated, our ability to successfully expand our sales channels for new and
existing products and services, our ability to increase the number of
businesses that purchase our advertising products, our ability to successfully
bill our monthly subscription customers, our ability to expand our advertiser
and distribution networks, our ability to integrate and effectively utilize
our acquisitions' technologies, our ability to develop our products and sales,
marketing, finance and administrative functions and successfully integrate our
expanded infrastructure, as well as our dependence on major advertisers,
competitive factors and pricing pressures, changes in legal and regulatory
requirements, and general economic conditions. Any forward-looking statements
reflect our current views with respect to future events and are subject to
these and other risks, uncertainties and assumptions relating to our
operations, results of operations, growth strategy and liquidity. All
subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by this
paragraph. Unless otherwise stated, all site traffic and usage statistics are
from third-party service providers engaged by the company.

Our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on
Form 10-Q, recent Current Reports on Form 8-K and Form 8-K/A, and other
Securities and Exchange Commission filings discuss the foregoing risks as well
as other important risk factors that could contribute to such differences or
otherwise affect our business, results of operations and financial condition.
The forward-looking statements in this release speak only as of the date they
are made. We undertake no obligation to revise or update publicly any
forward-looking statement for any reason.

Non-GAAP Financial Measures

This press release includes the non-GAAP financial measure of “Adjusted Net
Income” and “Adjusted Net Loss” which we define as net income (loss)
excluding: provision for income taxes; interest and other income (expense),
net; depreciation; amortization; stock based compensation charges; gain or
loss on warrant revaluation; net income (loss) from discontinued operations;
gain on sale of Rovion; impairment charges; LEC receivables reserve and
severance charges. Adjusted Net Income (Loss), as defined above, is not a
measurement under GAAP. Adjusted Net Income (Loss) is reconciled to net income
(loss) which we believe is the most comparable GAAP measure. A reconciliation
of net income (loss) to Adjusted Net Income (Loss) is set forth at the end of
this press release.

Management believes that Adjusted Net Income (Loss) provides useful
information to investors about the company’s performance because it eliminates
the effects of period-to-period changes in income from interest on the
company’s cash and marketable securities, expense from the company’s financing
transactions and the costs associated with income tax expense, capital
investments, stock-based compensation expense, warrant revaluation charges and
severance charges which are not directly attributable to the underlying
performance of the company’s business operations. Management uses Adjusted Net
Income (Loss) in evaluating the overall performance of the company’s business
operations.

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 or earnings per share.

LOCAL CORPORATION
RECONCILIATION OF EXPECTED GAAP NET LOSS TO EXPECTED ADJUSTED NET LOSS
(in thousands, except per share amounts)
(Unaudited)
                                                 
                                                      Three Months
                                                      Ended December 31,
                                                          2012      
Expected GAAP net loss                                $    (4,000    )
                                                      
Plus interest and other income (expense), net              100
Plus depreciation and amortization                         1,600
Plus stock-based compensation                              800
Less revaluation of warrants                               -
Plus net loss from discontinued operations                 200
Plus severance charges                                     400
Plus LEC Reserve                                           1,400
Less gain on sale of Rovion                               (1,400    )
Expected Adjusted Net Loss                            $    (900      )
                                                      
GAAP net loss per share                               $    (0.18     )
Adjusted Net Loss per share                           $    (0.04     )
                                                      
Basic weighted average shares outstanding                  22,100

Contact:

Investor Relations and Media Relations Contact:
Local Corporation
Cameron Triebwasser
949-789-5223
ctriebwasser@local.com