Intersections Inc. Reports Fourth Quarter 2015 Results
-
Identity Guard® subscriber base and revenue continue
year-over-year growth -
Restructuring plan started in 2014 and further actions in 2015
expected to generate $19.0 million in annualized cost savings -
Raised $7.5 million gross proceeds from private placement of common
stock - Completed a $20 million long term debt financing in March 2016
CHANTILLY, Va.–(BUSINESS WIRE)–Intersections Inc. (NASDAQ: INTX) today announced financial results for
the quarter ended December 31, 2015.
“We have implemented our cost reduction program, raised incremental
equity and debt capital, and are well positioned to grow our Identity
Guard® business and our new Voyce® animal health
monitoring business. I am pleased that our efforts in 2015 yielded over
16% revenue growth in our U.S. Identity Guard business compared to 2014
and that our restructuring and cost reduction initiatives are expected
to achieve the $19.0 million of annualized cost savings that we targeted
when the effort began in 2014,” said Michael Stanfield, Chairman and
Chief Executive Officer. “Our team’s efforts to reposition Intersections
with new and different business models are beginning to bear fruit. I
applaud the fortitude and perseverance of our dedicated and resourceful
team.”
Consolidated revenue for the quarter ended December 31, 2015 was $47.4
million, compared to $56.6 million for the quarter ended December 31,
2014. Consolidated adjusted EBITDA (loss) before share related
compensation and non-cash impairment charges for the quarter ended
December 31, 2015 was $(6.0) million, compared to $693 thousand for the
quarter ended December 31, 2014. Net loss for the quarter ended December
31, 2015 was $(14.1) million, compared to $(22.0) million for the
quarter ended December 31, 2014.
Consolidated revenue for the year ended December 31, 2015 was $203.8
million, compared to $246.6 million for the year ended December 31,
2014. Consolidated adjusted EBITDA (loss) before share related
compensation and non-cash impairment charges for the year ended December
31, 2015 was $(8.5) million, compared to $(2.6) million for the year
ended December 31, 2014. Net loss for the year ended December 31, 2015
was $(44.5) million, compared to $(30.7) million for the year ended
December 31, 2014. As previously announced, the Company recorded
non-cash expenses of $7.4 million and $14.1 million related to the
remeasurement of its investment in White Sky, Inc. and a valuation
allowance on its net deferred tax assets, respectively, in the year
ended December 31, 2015. Additionally, in the fourth quarter of 2015,
the Company recorded a non-cash impairment of goodwill of $10.3 million.
Diluted loss per share for the year ended December 31, 2015 was $(2.26),
compared to $(1.66) for the year ended December 31, 2014.
As of December 31, 2015, the Company had a cash balance of $11.5
million, including aggregate gross proceeds of $7.5 million from the
sale of its common stock through a private placement, and no debt
outstanding under its revolving credit facility. On March 21, 2016, the
Company completed a $20 million term loan financing with Crystal
Financial LLC. The Company will use up to a maximum of $15 million of
the proceeds from the term loan in connection with the market launch of
the Voyce pet health monitoring business, with the remaining portion to
be used for general corporate purposes of the Company’s Identity Guard
and other businesses. For the duration of the three-year term of the
Crystal debt financing, any additional capital needs of Voyce can only
be funded from cash generated from Voyce’s operations or a third-party
equity investment directly into Voyce, which is subject to limitations
in the credit agreement. In connection with the term loan, the Company
terminated its existing loan agreement with Silicon Valley Bank. Loeb
Partners served as the exclusive placement agent in this transaction.
Fourth Quarter Financial Highlights:
-
Revenue from the Company’s U.S. financial institution clients for the
fourth quarter was $26.7 million with a base of 829 thousand
subscribers as of December 31, 2015. The subscriber base decreased by
3.8% compared to September 30, 2015, which the Company believes is
representative of normal attrition given the ceased marketing and
retention efforts for this population. -
Revenue from the Company’s Consumer Direct, or Identity Guard,
subscriber base for the fourth quarter was $14.2 million, 17.2% higher
than the fourth quarter of 2014. The Identity Guard subscriber base
was 363 thousand as of December 31, 2015, 6.5% higher than December
31, 2014. -
During the quarter ended December 31, 2015, the Company determined
that goodwill associated with the Insurance and Other Consumer
Services reporting unit was impaired and recorded a goodwill
impairment charge of $10.3 million, which increased consolidated net
loss for the period. -
Consolidated adjusted EBITDA (loss) before share related compensation
and non-cash impairment charges for the quarter ended December 31,
2015 includes approximately $(4.4) million from our Pet Health
Monitoring segment, which was funded from available cash on hand,
compared to $(3.0) million for the quarter ended December 31, 2014. -
Consolidated cash flows (used in) operations for the quarter ended
December 31, 2015 were approximately $(2.7) million, compared to cash
flows provided by operations of $2.3 million for the quarter ended
December 31, 2014.
2015 Results:
-
The 16.1% growth in our Identity Guard revenue in 2015 and the savings
from cost reduction initiatives partially offset the revenue and
profitability declines principally caused by the declining subscriber
base acquired through U.S. financial institution clients and the
increased costs associated with the product launch of our Pet Health
Monitoring segment. -
Actions taken in connection with our plan to streamline operations and
reduce our cost structures, which was initiated in late 2014, and the
continued evaluation of our cost structure in 2015, are expected to
achieve more than $19.0 million of aggregate annualized cost savings. -
Consolidated adjusted EBITDA (loss) before share related compensation
and non-cash impairment charges for the year ended December 31, 2015
includes approximately $(16.9) million from our Pet Health Monitoring
segment, which was funded from available cash on hand, compared to
$(13.4) million for the year ended December 31, 2014. -
As a result of the Company’s declining profitability, the Company
increased income tax expense in its consolidated statements of
operations in the year ended December 31, 2015, primarily related to
the establishment of a valuation allowance on its net deferred tax
assets for the portion of the future tax benefit that, more likely
than not, will not be realized. The valuation allowance increased by
$14.1 million in the year ended December 31, 2015. The timing of
realization of these deferred tax assets will depend on the timing of
the Company’s future profitability. -
As previously announced, on June 26, 2015, the Company acquired
substantially all of the net assets of White Sky, Inc., in which it
previously held an equity interest that was recorded as a long-term,
cost method investment. This acquisition provides opportunities to
expand the Company’s product integration and development, marketing
and operational efficiencies. Based upon the estimated fair value of
the business prior to the acquisition, the Company recorded a non-cash
impairment charge of $7.4 million before income taxes in the year
ended December 31, 2015. -
Consolidated cash flows (used in) operations for the year ended
December 31, 2015 were approximately $(269) thousand, compared to cash
flows provided by operations of $4.9 million for the year ended
December 31, 2014.
Non-GAAP Financial Measures:
Intersections’ Consolidated Financial Statements, “Other Data” and
reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures and related notes can be
found in the accompanying tables and footnotes to this release and in
the “GAAP and Non-GAAP Measures” link under the “Investor & Media” page
on our website at www.intersections.com.
Forward-Looking Statements:
Statements in this release relating to future plans, results,
performance, expectations, achievements and the like are considered
“forward-looking statements.” You can identify forward-looking
statements by the fact that they do not relate strictly to historical or
current facts. These statements may include words such as “anticipate,”
“estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,”
“should,” “can have,” “likely” and other words and terms of similar
meaning in connection with any discussion of the timing or nature of
future operating or financial performance or other events. Those
forward-looking statements involve known and unknown risks and
uncertainties and are subject to change based on various factors and
uncertainties that may cause actual results to differ materially from
those expressed or implied by those statements, including the timing and
success of new product launches, including our Identity Guard®,
Voyce® and Voyce Pro™ platforms, and other
growth initiatives; the continuing impact of the regulatory environment
on our business; the continued dependence on a small number of financial
institutions for a majority of our revenue and to service our
U.S. financial institution customer base; our ability to execute our
strategy and previously announced transformation plan; our incurring
additional restructuring and/or impairment charges; our ability to
control costs; and our needs for additional capital to grow our
business, including our ability to maintain compliance with the
covenants under our new term loan or seek additional sources of debt
and/or equity financing. Factors and uncertainties that may cause actual
results to differ include but are not limited to the risks disclosed
under “Forward-Looking Statements,” “Item 1. Business—Government
Regulation” and “Item 1A. Risk Factors” in the Company’s most recent
Annual Report on Form 10-K, and in its Quarterly Reports on Form 10-Q
and other filings with the U.S. Securities and Exchange Commission. The
Company undertakes no obligation to revise or update any forward-looking
statements unless required by applicable law.
About Intersections:
Intersections Inc. (Nasdaq: INTX) provides innovative, information based
solutions that help consumers manage risks and make better informed life
decisions. Under its Identity Guard brand and other brands, the company
helps consumers monitor, manage and protect against the risks associated
with their identities and personal information. The company’s subsidiary
Intersections Insurance Services provides insurance and other services
that help consumers manage risks and achieve personal goals. The
company’s i4C Innovations subsidiary provides Voyce, a groundbreaking
pet wellness monitoring system for pet owners and veterinarians.
Headquartered in Chantilly, Virginia, the company was founded in 1996.
To learn more, visit www.intersections.com.
|
INTERSECTIONS INC. |
||||||||||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||
|
Three Months Ended |
Year Ended |
|||||||||||||||
| 2014 | 2015 | 2014 | 2015 | |||||||||||||
| REVENUE | ||||||||||||||||
| Services | $ | 56,556 | $ | 47,400 | $ | 246,642 | $ | 203,779 | ||||||||
| Hardware | — | 8 | — | 48 | ||||||||||||
| Net revenue | 56,556 | 47,408 | 246,642 | 203,827 | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Marketing | 4,518 | 4,243 | 23,227 | 20,568 | ||||||||||||
| Commission | 14,303 | 11,611 | 63,130 | 50,837 | ||||||||||||
| Cost of services revenue | 19,969 | 15,949 | 86,675 | 64,932 | ||||||||||||
| Cost of hardware revenue | 57 | 217 | 135 | 608 | ||||||||||||
| General and administrative | 18,256 | 22,388 | 80,935 | 80,799 | ||||||||||||
| Impairment of goodwill | 25,837 | 10,318 | 25,837 | 10,318 | ||||||||||||
| Impairment of intangibles and other long-lived assets | — | — | — | 7,355 | ||||||||||||
| Depreciation | 1,401 | 1,579 | 5,656 | 5,977 | ||||||||||||
| Amortization | 848 | 206 | 3,407 | 687 | ||||||||||||
| Total operating expenses | 85,189 | 66,511 | 289,002 | 242,081 | ||||||||||||
| LOSS FROM OPERATIONS | (28,633 | ) | (19,103 | ) | (42,360 | ) | (38,254 | ) | ||||||||
| Interest expense | (87 | ) | (160 | ) | (604 | ) | (313 | ) | ||||||||
| Other (expense) income, net | (291 | ) | 319 | (669 | ) | 181 | ||||||||||
| LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (29,011 | ) | (18,944 | ) | (43,633 | ) | (38,386 | ) | ||||||||
| INCOME TAX BENEFIT (EXPENSE) | 7,042 | 4,848 | 14,086 | (6,102 | ) | |||||||||||
| LOSS FROM CONTINUING OPERATIONS | (21,969 | ) | (14,096 | ) | (29,547 | ) | (44,488 | ) | ||||||||
| LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX | — | — | (1,147 | ) | — | |||||||||||
| NET LOSS | $ | (21,969 | ) | $ | (14,096 | ) | $ | (30,694 | ) | $ | (44,488 | ) | ||||
| Basic and diluted loss per common share: | ||||||||||||||||
| Loss from continuing operations | $ | (1.19 | ) | $ | (0.68 | ) | $ | (1.60 | ) | $ | (2.26 | ) | ||||
| Loss from discontinued operations | — | — | (0.06 | ) | — | |||||||||||
| Basic and diluted loss per common share | $ | (1.19 | ) | $ | (0.68 | ) | $ | (1.66 | ) | $ | (2.26 | ) | ||||
| Cash dividends declared per common share | $ | — | $ | — | $ | 0.20 | $ | — | ||||||||
| Weighted average shares outstanding, basic and diluted | 18,579 | 20,782 | 18,487 | 19,677 | ||||||||||||
|
INTERSECTIONS INC. |
||||||||
|
CONSOLIDATED BALANCE SHEETS |
||||||||
|
(in thousands, except par value) |
||||||||
| As of December 31, | ||||||||
| 2014 | 2015 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 11,325 | $ | 11,471 | ||||
|
Accounts receivable, net of allowance for doubtful accounts of $5 (2014) and $115 (2015) |
15,479 | 8,163 | ||||||
| Prepaid expenses and other current assets | 8,289 | 7,524 | ||||||
| Inventory, net | — | 2,253 | ||||||
| Income tax receivable | 8,107 | 7,730 | ||||||
| Deferred subscription solicitation costs | 6,922 | 6,961 | ||||||
| Total current assets | 50,122 | 44,102 | ||||||
| PROPERTY AND EQUIPMENT, net | 14,764 | 13,438 | ||||||
| DEFERRED TAX ASSET, net | 11,849 | — | ||||||
| LONG-TERM INVESTMENT | 8,384 | — | ||||||
| GOODWILL | 17,398 | 9,763 | ||||||
| INTANGIBLE ASSETS, net | 763 | 1,693 | ||||||
| OTHER ASSETS | 1,301 | 1,034 | ||||||
| TOTAL ASSETS | $ | 104,581 | $ | 70,030 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 5,356 | $ | 3,207 | ||||
| Accrued expenses and other current liabilities | 18,907 | 15,845 | ||||||
| Accrued payroll and employee benefits | 5,034 | 7,091 | ||||||
| Commissions payable | 468 | 375 | ||||||
| Capital leases, current portion | 592 | 631 | ||||||
| Deferred revenue | 2,869 | 2,380 | ||||||
| Deferred tax liability, net, current portion | 702 | — | ||||||
| Total current liabilities | 33,928 | 29,529 | ||||||
| OBLIGATIONS UNDER CAPITAL LEASES, less current portion | 981 | 1,147 | ||||||
| OTHER LONG-TERM LIABILITIES | 4,545 | 3,971 | ||||||
| DEFERRED TAX LIABILITY, net | — | 1,905 | ||||||
| TOTAL LIABILITIES | 39,454 | 36,552 | ||||||
| COMMITMENTS AND CONTINGENCIES (see Notes 17 and 18) | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
|
Common stock at $0.01 par value, shares authorized 50,000; shares issued 22,158 (2014) and 26,730 (2015); shares outstanding 18,978 (2014) and 23,236 (2015) |
222 | 267 | ||||||
| Additional paid-in capital | 123,975 | 137,705 | ||||||
| Treasury stock, shares at cost; 3,180 (2014) and 3,494 (2015) | (32,696 | ) | (33,632 | ) | ||||
| Accumulated deficit | (26,374 | ) | (70,862 | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | 65,127 | 33,478 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 104,581 | $ | 70,030 | ||||
|
INTERSECTIONS INC. |
||||||||
|
CONSOLIDATED STATEMENT OF CASH FLOWS |
||||||||
|
(in thousands) |
||||||||
| Year Ended December 31, | ||||||||
| 2014 | 2015 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (30,694 | ) | $ | (44,488 | ) | ||
|
Adjustments to reconcile net loss to cash flows provided by (used in) operating activities: |
||||||||
| Depreciation | 6,615 | 5,977 | ||||||
| Amortization | 3,407 | 687 | ||||||
| Deferred income tax, net | (10,555 | ) | 13,356 | |||||
| Amortization of debt issuance cost | 156 | 109 | ||||||
| Provision for doubtful accounts | (21 | ) | 100 | |||||
| Loss on disposal of fixed assets | 893 | 65 | ||||||
| Share based compensation | 4,425 | 5,441 | ||||||
|
Excess tax benefit upon vesting of restricted stock units and stock option exercises |
(284 | ) | — | |||||
|
Amortization of non-cash consideration exchanged for additional investment |
(618 | ) | — | |||||
| Amortization of deferred subscription solicitation costs | 16,642 | 17,538 | ||||||
| Impairment of goodwill, intangibles and other long-lived assets | 25,837 | 17,673 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 5,616 | 7,221 | ||||||
| Prepaid expenses and other current assets | (2,774 | ) | 979 | |||||
| Inventory, net | — | (2,253 | ) | |||||
| Income tax, net | (9,059 | ) | (1,036 | ) | ||||
| Deferred subscription solicitation costs | (16,476 | ) | (17,578 | ) | ||||
| Other assets | 48 | 782 | ||||||
| Accounts payable | 4,417 | (2,147 | ) | |||||
| Accrued expenses and other current liabilities | 5,557 | (3,305 | ) | |||||
| Accrued payroll and employee benefits | 1,779 | 1,810 | ||||||
| Commissions payable | (34 | ) | (94 | ) | ||||
| Deferred revenue | (800 | ) | (532 | ) | ||||
| Other long-term liabilities | 849 | (574 | ) | |||||
| Cash flows provided by (used in) operating activities | 4,926 | (269 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Cash paid for acquisition of technology related intangible | (150 | ) | (202 | ) | ||||
|
Cash paid for the business acquired from White Sky, Inc., net of cash received |
— | (625 | ) | |||||
|
Cash paid for the business acquired from Health at Work Wellness Actuaries LLC |
— | (1 | ) | |||||
| Acquisition of property and equipment | (7,957 | ) | (4,212 | ) | ||||
| Cash flows used in investing activities | (8,107 | ) | (5,040 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Stock issuance proceeds, net of stock issuance costs | — | 7,394 | ||||||
| Cash dividends paid on common shares | (3,674 | ) | — | |||||
|
Excess tax benefit upon vesting of restricted stock units and stock option exercises |
284 | — | ||||||
| Capital lease payments | (853 | ) | (696 | ) | ||||
| Cash proceeds from stock option exercises | 105 | — | ||||||
|
Withholding tax payment on vesting of restricted stock units and stock option exercises |
(2,276 | ) | (1,243 | ) | ||||
| Cash flows (used in) provided by financing activities | (6,414 | ) | 5,455 | |||||
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (9,595 | ) | 146 | |||||
| CASH AND CASH EQUIVALENTS — Beginning of period | 20,920 | 11,325 | ||||||
| CASH AND CASH EQUIVALENTS — End of period | $ | 11,325 | $ | 11,471 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | 161 | $ | 179 | ||||
| Cash paid for taxes | $ | 5,703 | $ | 230 | ||||
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES: |
||||||||
| Equipment obtained under capital lease, including acquisition costs | $ | — | $ | 926 | ||||
| Equipment additions accrued but not paid | $ | 174 | $ | 115 | ||||
|
Shares withheld in lieu of withholding taxes on vesting of restricted stock awards |
$ | 58 | $ | 141 | ||||
|
Shares issued in the business acquired from White Sky, Inc., net of liquidating distributions |
$ | — | $ | 576 | ||||
|
Shares issued in the business acquired from Health at Work Wellness Actuaries LLC |
$ | — | $ | 1,551 | ||||
| Transfer of land and building to held for sale | $ | — | $ | 214 | ||||
INTERSECTIONS INC.
OTHER DATA
In 2014, we reorganized our business into one that we believe will build
our Identity Guard® brand and Canadian business lines as growth engines
for our identity theft and privacy protection solution, and we believe
we continue to provide the highest level of service for our existing
U.S. financial institution clients. As a result of the reorganization,
we refined our criteria used to calculate and report the other data in
the tables below.
The following tables provide details of our Personal Information
Services segment revenue information for the three months and years
ended December 31, 2014 and 2015 (in thousands):
|
Personal Information Services Segment Revenue |
||||||||||||
| Three Months Ended December 31, | ||||||||||||
| 2014 | 2015 | 2014 | 2015 | |||||||||
| Bank of America | $ | 24,929 | $ | 21,247 | 47.6 | % | 48.4 | % | ||||
| All other financial institution clients | 8,747 | 5,416 | 16.7 | % | 12.3 | % | ||||||
| Consumer direct | 12,099 | 14,179 | 23.1 | % | 32.3 | % | ||||||
| Canadian business lines | 6,600 | 3,076 | 12.6 | % | 7.0 | % | ||||||
| Total Personal Information Services revenue | $ | 52,375 | $ | 43,918 | 100.0 | % | 100.0 | % | ||||
| Year Ended December 31, | ||||||||||||
| 2014 | 2015 | 2014 | 2015 | |||||||||
| Bank of America | $ | 105,372 | $ | 89,932 | 46.2 | % | 47.7 | % | ||||
| All other financial institution clients | 45,436 | 25,492 | 19.9 | % | 13.5 | % | ||||||
| Consumer direct | 47,869 | 55,594 | 21.0 | % | 29.5 | % | ||||||
| Canadian business lines | 29,422 | 17,511 | 12.9 | % | 9.3 | % | ||||||
| Total Personal Information Services revenue | $ | 228,099 | $ | 188,529 | 100.0 | % | 100.0 | % | ||||
INTERSECTIONS INC.
OTHER DATA, continued
The following tables provide details of our Personal Information
Services segment subscriber information for the three months and years
ended December 31, 2014 and 2015 (in thousands):
|
Personal Information Services Segment Subscribers |
||||||||||||
|
Three months ended December 31, 2014 and 2015: |
||||||||||||
|
Financial |
Consumer |
Canadian |
Total | |||||||||
| Balance at September 30, 2014 | 1,477 | 337 | 315 | 2,129 | ||||||||
| Additions | 2 | 56 | 23 | 81 | ||||||||
| Cancellations | (58 | ) | (51 | ) | (42 | ) | (151 | ) | ||||
| Balance at December 31, 2014 | 1,421 | 342 | 296 | 2,059 | ||||||||
| Balance at September 30, 2015 | 861 | 389 | 164 | 1,414 | ||||||||
| Additions | 2 | 37 | 30 | 69 | ||||||||
| Cancellations | (34 | ) | (63 | ) | (29 | ) | (126 | ) | ||||
| Balance at December 31, 2015 | 829 | 363 | 165 | 1,357 | ||||||||
|
Years ended December 31, 2014 and 2015: |
||||||||||||
|
Financial |
Consumer |
Canadian |
Total | |||||||||
| Balance at December 31, 2013 | 2,067 | 301 | 332 | 2,700 | ||||||||
| Additions | 29 | 239 | 123 | 391 | ||||||||
| Cancellations | (675 | ) | (198 | ) | (159 | ) | (1,032 | ) | ||||
| Balance at December 31, 2014 | 1,421 | 342 | 296 | 2,059 | ||||||||
| Additions | 4 | 253 | 103 | 360 | ||||||||
| Cancellations | (596 | ) | (232 | ) | (234 | ) | (1,062 | ) | ||||
| Balance at December 31, 2015 | 829 | 363 | 165 | 1,357 | ||||||||
INTERSECTIONS INC.
OTHER DATA, continued
(unaudited)
Intersections Inc.
Reconciliation of Non-GAAP Financial Measures
The table below includes financial information prepared in accordance
with accounting principles generally accepted in the United States, or
GAAP, as well as other financial measures referred to as non-GAAP
financial measures. Consolidated adjusted EBITDA before share related
compensation and non-cash impairment charges is presented in a manner
consistent with the way management evaluates operating results and which
management believes is useful to investors and others. Share related
compensation includes non-cash share based compensation, as well as
dividend equivalent cash payments to restricted stock unit (“RSU”)
holders. An explanation regarding the company’s use of non-GAAP
financial measures and a reconciliation of non-GAAP financial measures
used by the company to GAAP measures is provided below. These non-GAAP
financial measures should be considered in addition to, but not as a
substitute for, net income (loss) and the other information prepared in
accordance with GAAP, and may not be comparable to similarly titled
measures reported by other companies. Management strongly encourages
shareholders to review our financial statements and publicly-filed
reports in their entirety and not to rely on any single financial
measure.
Consolidated adjusted EBITDA before share related compensation and
non-cash impairment charges represents consolidated loss before income
taxes plus share related compensation, non-cash impairment of goodwill,
intangibles and other long-lived assets, depreciation and amortization,
interest (income) expense and other (income) expense. We believe that
the consolidated adjusted EBITDA before share related compensation and
non-cash impairment charges calculation provides useful information to
investors because they are indicators of our operating performance.
Consolidated adjusted EBITDA before share related compensation and
non-cash impairment charges is commonly used as a basis for investors
and analysts to evaluate and compare the periodic and future operating
performance and value of companies within our industry. Our Board of
Directors and management use consolidated adjusted EBITDA before share
related compensation and non-cash impairment charges to evaluate the
operating performance of the company and to make compensation
determinations.
We provide this information to show the impact of share related
compensation on our operating results, as it is excluded from our
internal operating and budgeting plans and measurements of financial
performance; however, we do consider the dilutive impact to our
shareholders when awarding share related compensation and consider both
the Black-Scholes value and GAAP value (to the extent applicable) in
connection therewith, and value such awards accordingly.
INTERSECTIONS INC.
OTHER DATA, continued
(unaudited)
We do not consider share related compensation charges when we evaluate
the performance of our individual business groups or formulate our short
and long-term operating plans. Due to its nature, individual managers
generally are unable to project the impact of share related compensation
and accordingly we do not hold them accountable for the impact of equity
award grants.
Contacts
Intersections Inc.
Ron Barden, 703-488-6810
IR@intersections.com
