Local Corporation Reports Fourth Quarter and Fiscal 2012 Financial Results

  Local Corporation Reports Fourth Quarter and Fiscal 2012 Financial Results

Business Wire

IRVINE, Calif. -- February 14, 2013

Local Corporation (NASDAQ: LOCM), a leading online local media company, today
reported its financial results for the fourth quarter and fiscal 2012.

“We are pleased to reiterate our prior guidance for 2013 revenue growth of
about 12 percent above our fourth quarter 2012 exit run rate and anticipate
first quarter 2013 revenues will exceed fourth quarter 2012 revenues. 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 projecting at least
$5.0 million in Adjusted Net Income for 2013,**” said Heath Clarke, Local
Corporation chairman and CEO. “We achieved record organic traffic levels
during the fourth quarter, a strategic goal of the company. We believe there
are many opportunities for growth and margin expansion and remain confident
that we are well positioned with a powerful platform, great intellectual
property and a team that has proven experience in navigating this rapidly
changing, high-growth sector.”

Full Year 2012 Results Highlights:

• Revenue – Record revenue of $97.8 million for the year ended Dec. 31, 2012,
was a 25 percent increase over $78.3 million in 2011.

• GAAP Net Income (Loss) – GAAP Net Loss was $24.2 million, or ($1.10) per
diluted share, for the year ended Dec. 31, 2012. This compares to a GAAP Net
Loss of $14.6 million, or ($0.68) per diluted share, for the year ended Dec.
31, 2011.

• Adjusted Net Income (Loss) – Adjusted Net Loss was $553,000, or ($0.03) per
diluted share, for the year ended Dec. 31, 2012. This compares to an Adjusted
Net Loss of $1.7 million, or ($0.08) per diluted share, for the year ended
Dec. 31, 2011.

Adjusted Net Income (Loss) 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 tables attached to this release.

Fourth Quarter Results Highlights:

“We had previously reported fourth quarter revenue below initial forecasts,
due to revenue per click declines from our main ad partner coupled with fourth
quarter ad policy changes. We have been adapting to these policy changes and
based on our continued results, we are reiterating our prior guidance for
2013,” added Ken Cragun, Local Corporation chief financial officer.

                                                                
SUMMARY RESULTS
(in thousands, except per share amounts)
                                                                    
                                          Q4 2012     Q3 2012     Q4 2011
Consumer Properties:
Owned & Operated                          $ 12,450     $ 18,340     $ 17,536
Network                                     7,636        4,961        5,065
Business Solutions                         812        1,470      2,697  
Revenue                                   $ 20,898    $ 24,771    $ 25,298 
                                                                    
Adjusted Net Income (Loss)*               $ (924   )   $ 36         $ 768
Less interest and other income              (100   )     (131   )     (101   )
(expense), net
Less (provision) benefit for income         9            (22    )     (71    )
taxes
Less non-cash depreciation,
amortization and                            (2,295 )     (3,466 )     (3,432 )

stock compensation
Plus gain on revaluation of warrants        30           65           150
Less net loss from discontinued             (201   )     (140   )     (557   )
operations
Less LEC reserve                            (1,407 )     -            -
Plus gain on sale of Rovion                 1,458        -            -
Less Spreebird impairment charge            (4,100 )     -            -
Less severance charges                     (361   )    (144   )    (563   )
GAAP net loss                             $ (7,891 )   $ (3,802 )   $ (3,806 )
                                                                    
Diluted Adjusted Net Income (Loss) per    $ (0.04  )   $ 0.00       $ 0.03
share *
Diluted GAAP net loss per share           $ (0.36  )   $ (0.17  )   $ (0.17  )

Diluted weighted average shares used
for Adjusted Net Income (Loss) per          22,131       22,245       22,179
share
Diluted weighted average shares used        22,131       22,092       22,076
for GAAP net loss per share
                                                                    
Cash                                      $ 3,696      $ 3,706      $ 10,394
                                                                             
Prior period balances have been reclassified to conform to current period
reporting
                                                                             
* See detailed reconciliation of GAAP to non-GAAP measures in the financial
tables attached to this release.
                                                                             

• Revenue – Fourth quarter 2012 revenue of $20.9 million represents a decrease
of 16 percent over third quarter 2012 revenue of $24.8 million and a 17
percent decrease over fourth quarter 2011 revenues of $25.3 million.

• GAAP Net Income (Loss) – Fourth quarter 2012 GAAP Net Loss was $7.9 million,
or ($0.36) per diluted share, compared to a third quarter 2012 GAAP Net Loss
of $3.8 million, or ($0.17) per diluted share. The fourth quarter GAAP net
loss included an impairment charge of $4.1 million, as well as a reserve of
$1.4 million for the long-term LEC receivable. Also included in the fourth
quarter GAAP net loss is a gain on the sale of Rovion’s assets of $1.5
million.

• Adjusted Net Income (Loss) – Fourth quarter 2012 Adjusted Net Loss was
$924,000, or ($0.04) per diluted share, as compared to third quarter 2012
Adjusted Net Income of $36,000, or $0.00 per diluted share.

• Cash – The company’s cash balance was $3.7 million as of Dec. 31, 2012,
unchanged from the Sept. 30, 2012, cash balance. During the fourth quarter
2012, the company had negative cash flow from operations offset by cash
proceeds from the sale of Rovion’s assets and an additional draw on the line
of credit.

• Debt – On Dec. 31, 2012, the company had borrowings of $10.0 million
outstanding under its Square One Bank line of credit.

Fourth Quarter 2012 Operating Highlights:

• Record Organic and Mobile Traffic – Overall traffic on the site and network
was 100 million monthly unique visitors (MUVs) in the fourth quarter 2012,
slightly down from third quarter 2012 traffic and up 7 percent from the year
ago period. Organic traffic on the site and network was a record 45 million
MUVs in the fourth quarter 2012, up 15 percent from the third quarter 2012 and
up 51 percent from the year ago period. Organic traffic is defined as all
non-SEM sourced traffic. Overall mobile traffic was 25 million MUVs in the
fourth quarter 2012, slightly up from the third quarter 2012 and up 220
percent from a year ago period.

• Spreebird Impairment Charge – The fourth quarter impairment charge of $4.1
million for Spreebird is the result of a further decline in the market value
of peer companies coupled with lower projections for this business line, due
to the company’s decision to exit its direct sales efforts of its Launch by
Local product of which Spreebird was a planned component. The current
impairment charge recorded is management’s best estimate at this time and the
final Spreebird impairment charge will be disclosed in the company’s 2012
Annual Report on Form 10-K.

• Local Exchange Carrier (“LEC”) reserve – During the fourth quarter, the
company recorded an additional $1.4 million reserve relating to its long-term
LEC receivable. An additional reserve was recorded, due to the cessation of
billing by the LEC’s and the longer-term nature of the receivable.

Consumer Properties:

Owned & Operated (O&O):

• Revenue – Fourth quarter 2012 total revenue related to the O&O business unit
was $12.5 million, down 29 percent from fourth quarter 2011 O&O revenue of
$17.5 million and down 32 percent from third quarter 2012 O&O revenue of $18.3
million. This decline was primarily due to ad policy changes and reduced
revenues per click from a major partner.

• Monetization of Traffic – Revenue per thousand visitors (RKV) for fourth
quarter 2012 was $230, down 17 percent from third quarter 2012 RKV of $276 and
down 31 percent from fourth quarter 2011 RKV of $332.

Network:

• Revenue – Fourth quarter 2012 total revenue related to the Network business
unit was $7.6 million, up 52 percent from the $5.1 million Network revenue
recorded in the fourth quarter 2011 and $5.0 million recorded in the third
quarter 2012.

• Network Sites – The Network business unit ended the fourth quarter 2012 with
over 1,200 regional media sites.

Business Solutions:

• Revenue – Fourth quarter 2012 revenue was $812,000, down 70 percent from
fourth quarter 2011 revenue of $2.7 million and down 46 percent from third
quarter 2012 revenue of $1.5 million. The reduction was primarily due to the
previously disclosed phasing out of legacy subscription customers.

• Digital Media Enrollments – The company ended the fourth quarter 2012 with
approximately 950 Launch by Local subscribers. The company also has over
10,000 additional subscribers via its self-service, network and channel
partners.

Recent News Highlights:

• 2012 Technology Fast 500™ – The company was a Deloitte Technology Fast 500™
company for the third consecutive year, in the technology, media,
telecommunications, life sciences and clean technology companies category in
North America.

• Pay-Per-Call patent granted – On Nov. 6, 2012, the company was granted a
patent which covers a pay-per-call Enhanced Directory Assistance (EDA) method
or system. The patent describes an EDA method and/or system whereby
pay-per-call advertiser listings are provided to consumers in response to
directory assistance inquiries. The company believes this patent may cover an
instrumental system and method for monetizing specific types of local searches
by consumers on mobile devices.The company continues to develop its patent
prosecution and monetization strategy.

• Launch of vertical sites – During the fourth quarter, the company launched
the first in a series of industry-specific, content driven websites designed
to further extend its reach and engagement with local consumers and
businesses.

• Web domain name patent – On Dec. 12, 2012, the company was granted a patent
which covers a method and system for the bulk acquisition and development of
multiple web domain names.

• Launch of U.K. version of flagship search site – In January 2013, the
company launched the U.K. version of its flagship search site. The new U.K.
site allows consumers to find local businesses, products and services in the
United Kingdom.

• Appointment of new board member – In January 2013, the company announced the
appointment of Frederick G. Thiel to its board of directors. Thiel brings over
25 years of senior level strategic management experience in the software,
media, Internet and technology industries.

• Record fourth quarter organic and mobile traffic - The company reached
record organic traffic of 45 million MUVs and record mobile traffic of 25
million MUVs during the fourth quarter.

• Company renews and extends $12 million credit facility - The company renewed
its $12 million credit facility with Square 1 Bank under substantially similar
terms. The maturity date of the facility was extended to Feb. 3, 2015.

Fiscal 2013 Financial Guidance:

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

Adjusted Net Income – Adjusted Net Income for 2013 is expected to be at least
$5 million, which would result in approximately $1 million in debt-free cash
flow. The company defines debt-free cash flow as cash provided by operating
activities, less capital expenditures.

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 period. 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 we do
report GAAP results.

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

Conference Call Information:

Chairman and CEO Heath Clarke and CFO Ken Cragun will host a conference call
today at 5 p.m. ET to discuss the results and outlook. Investors and analysts
can participate in the call by dialing 1-877-454-9136 or 1-617-826-1724,
passcode # 94830233. To listen to the webcast, or to view the press release,
please visit the Investor Relations section of the Local Corporation website
at: http://ir.local.com. Institutional investors can access the call via
Thomson/CCBN's password-protected event management site, StreetEvents, at:
www.streetevents.com.

The replay can be accessed for approximately one week starting at 7:30 p.m. ET
the day of the call by dialing 1-800-585-8367 or 1-404-537-3406, passcode #
94830233. A replay of the webcast will be available for approximately 90 days
on the company's website, starting approximately one hour after the completion
of the call.

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, including at a profit, 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 adapt to policy changes promulgated by our advertising partners and
traffic acquisition partners, 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, the
possibility of impairment of assets associated with the businesses we have
acquired, 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, LEC receivables reserve,
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 (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      10,618         11,678
  and $550, respectively
  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        Year Ended
                           December 31,              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              4,059        3,275        11,765        12,156
    administrative
    Research and             1,398        2,142        5,082         6,538
    development
    Amortization of          494          1,551        4,102         5,136
    intangibles
    Impairment of
    goodwill and            4,100      -          10,551      -       
    intangible assets
                                                                   
            Total
            operating       29,985     28,525     122,062     93,529  
            expenses
                                                                   
Operating loss               (9,087 )     (3,227 )     (24,289 )     (15,270 )
                                                                   
    Interest and other
    income (expense),        (100   )     (101   )     (425    )     (413    )
    net
    Change in fair value    30         150        202         2,633   
    of warrant liability
                                                                   
Loss from continuing
operations before income     (9,157 )     (3,178 )     (24,512 )     (13,050 )
taxes
                                                                   
    (Benefit) Provision     (9     )    71         111         178     
    for income taxes
                                                                   
Net loss from continuing   $ (9,148 )   $ (3,249 )   $ (24,623 )   $ (13,228 )
operations
Income (loss) from
discontinued operations     1,257      (557   )    381         (1,331  )
(net of taxes)
Net loss                    (7,891 )    (3,806 )    (24,242 )    (14,559 )
                                                                   
Per share data:
Basic net loss per share
from continuing            $ (0.41  )   $ (0.15  )   $ (1.11   )   $ (0.62   )
operations
Basic net income (loss)
per share from             $ 0.06      $ (0.03  )   $ 0.02       $ (0.06   )
discontinued operations
Basic net loss per share   $ (0.36  )   $ (0.17  )   $ (1.10   )   $ (0.68   )
                                                                   
Diluted net loss per
share from continuing      $ (0.41  )   $ (0.15  )   $ (1.11   )   $ (0.62   )
operations
Diluted net income
(loss) per share from      $ 0.06      $ (0.03  )   $ 0.02       $ (0.06   )
discontinued operations
Diluted net loss per       $ (0.36  )   $ (0.17  )   $ (1.10   )   $ (0.68   )
share
                                                                   
                                                                   
Basic weighted average       22,131       22,076       22,098        21,384
shares outstanding
Diluted weighted average     22,131       22,076       22,098        21,384
shares outstanding
                                                                             
                                                                             

LOCAL CORPORATION
Supplemental Consolidated Statements of Operations Information
Stock-based Compensation Expense*
(in thousands, except per share data)
(Unaudited)
                                                        
                                        Three Months Ended   Year Ended
                                        December 31,         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          $  701      $ 804    $ 2,758   $ 3,663
expense
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           10,551        -
       assets
       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              (6,392  )     4,548
             liabilities
             Deferred revenue                         (101    )    (466    )
                 Net cash used in operating           (8,891  )    (748    )
                 activities
                                                                   
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)       120         (21,152 )
                 investing activities
                                                                   
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       2,073       19,215  
                 activities
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
                               Three Months Ended December 31,   Ended
                                                                 September 30,
                                  2012           2011         2012    
GAAP net loss                  $   (7,891   )     $  (3,806  )   $  (3,802  )
Plus interest and other            100               101            131
income (expense), net
Plus provision for income          (9       )        71             22
taxes
Plus amortization of               494               1,551          1,865
intangibles
Plus depreciation                  1,100             1,077          935
Plus stock-based                   701               804            666
compensation
Less revaluation of warrants       (30      )        (150    )      (65     )
Plus net loss from                 201               557            140
discontinued operations
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    $   (0.04    )     $  0.03       $  0.00    
(Loss) per share
                                                                 
Diluted weighted average           22,131            22,179         22,245
shares outstanding
                                                               
Prior period balances have been reclassified to conform to current period
reporting
                                                               
                               Year ended         Year ended
                               December 31,       December 31,
                               2012               2011
Net loss                       $   (24,242  )     $  (14,559 )
Plus interest and other            425               413
income (expense), net
Plus provision for income          111               178
taxes
Plus amortization of               4,102             5,136
intangibles
Plus depreciation                  3,803             3,278
Plus stock-based                   2,758             3,663
compensation
Less revaluation of warrants       (202     )        (2,633  )
Plus net loss from                 1,077             1,331
discontinued operations
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      $   (0.03    )     $  (0.08   )
per share
                                                               
Diluted weighted average           22,098            21,384
shares

Contact:

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