EX-99.1 2 a16-8946_1ex99d1.htm EX-99.1

Exhibit 99.1

 

UNITED ONLINE, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Overview

 

On April 19, 2016, Classmates Media Corporation (“Seller”), a Delaware corporation and wholly-owned subsidiary of United Online, Inc., a Delaware corporation (“United Online”), completed the sale of all of the stock of its wholly-owned subsidiary, MyPoints.com, Inc., a Delaware corporation (“MyPoints”), to Prodege, LLC, a California limited liability company (“Purchaser”), pursuant to the Stock Purchase Agreement, dated as of and entered into on April 19, 2016, by and among Purchaser, United Online and Seller (the “Agreement”).  The purchase price received for MyPoints was approximately $13,000,000 in cash, subject to a post-closing purchase price adjustment.  The Agreement includes customary representations, warranties and covenants of each party, some of which survive the closing of the transaction for a period of time. In connection with the closing of the transaction, the parties have entered into a transition services agreement, pursuant to which Seller is to provide, among other things, certain accounting and information technology services for a limited period of time after the closing of the transaction.

 

Basis of Presentation

 

The unaudited pro forma condensed consolidated financial statements reflect adjustments to United Online’s historical financial results in connection with the sale of MyPoints. The following unaudited pro forma condensed consolidated financial statements should be read in conjunction with United Online’s historical consolidated financial statements and accompanying notes.

 

The unaudited pro forma condensed consolidated statements of operations give effect to the sale of MyPoints as if it occurred on January 1, 2013. The unaudited pro forma condensed consolidated balance sheet gives effect to the sale of MyPoints as if it occurred as of December 31, 2015, United Online’s latest balance sheet date. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements.

 

The pro forma adjustments are based on available information and assumptions that United Online’s management believes are (a) directly attributable to the sale, (b) are factually supportable and (c) with respect to the statements of operations, have continuing impact on the consolidated results. The pro forma adjustments may differ from those that will be calculated to report United Online’s discontinued operations in United Online’s future filings.  The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what United Online’s results of operations or balance sheet would have been had the sale of MyPoints occurred on the dates indicated. The unaudited pro forma condensed consolidated financial information also should not be considered representative of United Online’s future results of operations or financial position.

 



 

UNITED ONLINE, INC.

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 

FOR THE YEAR ENDED DECEMBER 31, 2015

 

(in thousands, except per share amounts)

 

 

 

United Online
Historical

 

Pro Forma
Adjustments (1)

 

Pro Forma
United Online (1)

 

Revenues

 

  $

151,118

 

  $

(38,022)

  (a)

  $

113,096

 

Operating expenses:

 

 

 

 

 

 

 

Cost of revenues

 

62,806

 

(22,970)

  (a)

39,836

 

Sales and marketing

 

27,396

 

(9,182)

  (a)

18,214

 

Technology and development

 

14,865

 

(2,745)

  (a)

12,120

 

General and administrative

 

37,088

 

(2,361)

  (a)(b)

34,727

 

Amortization of intangible assets

 

409

 

(285)

  (a)

124

 

Restructuring and other exit costs

 

1,468

 

2

  (a)

1,470

 

Total operating expenses

 

144,032

 

(37,541)

 

106,491

 

Operating income

 

7,086

 

(481)

 

6,605

 

Interest income

 

448

 

 

448

 

Other income, net

 

932

 

 

932

 

Income before income taxes

 

8,466

 

(481)

 

7,985

 

Provision for income taxes

 

3,959

 

(644)

  (a)(f)

3,315

 

Income from continuing operations

 

4,507

 

163

 

4,670

 

Income allocated to participating securities

 

(1,162)

 

 

(1,162)

 

Income from continuing operations attributable to common stockholders

 

  $

3,345

 

  $

163

 

  $

3,508

 

Basic income from continuing operations per common share

 

  $

0.23

 

 

 

  $

0.24

 

Shares used to calculate basic income from continuing operations per common share

 

14,673

 

 

 

14,673

 

Diluted income from continuing operations per common share

 

  $

0.23

 

 

 

  $

0.24

 

Shares used to calculate diluted income from continuing operations per common share

 

14,727

 

 

 

14,727

 

 

 

(1)   United Online pro forma results include costs that were historically allocated to MyPoints for services provided by United Online.  United Online will continue to provide similar services for a limited time in connection with a transition services agreement.

 

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

 



 

UNITED ONLINE, INC.

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 

FOR THE YEAR ENDED DECEMBER 31, 2014

 

(in thousands, except per share amounts)

 

 

 

United Online
Historical

 

Pro Forma
Adjustments (1)

 

 

 

Pro Forma
United Online (1)

 

Revenues

 

  $

165,719

 

  $

(32,218)

 

(a)

 

  $

133,501

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of revenues

 

61,101

 

(15,282)

 

(a)

 

45,819

 

Sales and marketing

 

32,030

 

(9,897)

 

(a)

 

22,133

 

Technology and development

 

17,219

 

(3,471)

 

(a)

 

13,748

 

General and administrative

 

48,388

 

(2,677)

 

(a)

 

45,711

 

Amortization of intangible assets

 

421

 

(284)

 

(a)

 

137

 

Restructuring and other exit costs

 

3,054

 

(1,457)

 

(a)

 

1,597

 

Total operating expenses

 

162,213

 

(33,068)

 

 

 

129,145

 

Operating income

 

3,506

 

850

 

 

 

4,356

 

Interest income

 

388

 

-

 

 

 

388

 

Other income, net

 

505

 

-

 

 

 

505

 

Income before income taxes

 

4,399

 

850

 

 

 

5,249

 

Provision for income taxes

 

841

 

1,275

 

(a)(f)

 

2,116

 

Income from continuing operations

 

3,558

 

(425)

 

 

 

3,133

 

Income allocated to participating securities

 

340

 

-

 

 

 

340

 

Income from continuing operations attributable to common stockholders

 

  $

3,898

 

  $

(425)

 

 

 

  $

3,473

 

Basic income from continuing operations per common share

 

  $

0.28

 

 

 

 

 

  $

0.25

 

Shares used to calculate basic income from continuing operations per common share

 

14,115

 

 

 

 

 

14,115

 

Diluted income from continuing operations per common share

 

  $

0.28

 

 

 

 

 

  $

0.25

 

Shares used to calculate diluted income from continuing operations per common share

 

14,119

 

 

 

 

 

14,119

 

 

(1)   United Online pro forma results include costs that were historically allocated to MyPoints for services provided by United Online.  United Online will continue to provide similar services for a limited time in connection with a transition services agreement.

 

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

 



 

UNITED ONLINE, INC.

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 

FOR THE YEAR ENDED DECEMBER 31, 2013

 

(in thousands, except per share amounts)

 

 

 

United Online
Historical

 

Pro Forma
Adjustments (1)

 

 

 

Pro Forma
United Online (1)

 

Revenues

 

  $

177,131

 

  $

(42,884)

 

(a)

 

  $

134,247

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of revenues

 

62,035

 

(23,030)

 

(a)

 

39,005

 

Sales and marketing

 

38,518

 

(12,728)

 

(a)

 

25,790

 

Technology and development

 

18,305

 

(4,454)

 

(a)

 

13,851

 

General and administrative

 

58,508

 

(3,357)

 

(a)

 

55,151

 

Amortization of intangible assets

 

399

 

(263)

 

(a)

 

136

 

Restructuring and other exit costs

 

1,192

 

(1,192)

 

(a)

 

-

 

Impairment of goodwill, intangible assets and long-lived assets

 

37,756

 

-

 

 

 

37,756

 

Total operating expenses

 

216,713

 

(45,024)

 

 

 

171,689

 

Operating loss

 

(39,582)

 

2,140

 

 

 

(37,442)

 

Interest income

 

260

 

-

 

 

 

260

 

Interest expense

 

(12)

 

-

 

 

 

(12)

 

Other income, net

 

213

 

5

 

(a)

 

218

 

Loss before income taxes

 

(39,121)

 

2,145

 

 

 

(36,976)

 

Provision for income taxes

 

46,595

 

(7,316)

 

(a)(f)

 

39,279

 

Loss from continuing operations

 

(85,716)

 

9,461

 

 

 

(76,255)

 

Income allocated to participating securities

 

(1,195)

 

-

 

 

 

(1,195)

 

Loss from continuing operations attributable to common stockholders

 

  $

(86,911)

 

  $

9,461

 

 

 

  $

(77,450)

 

Basic loss from continuing operations per common share

 

  $

(6.55)

 

 

 

 

 

  $

(5.84)

 

Shares used to calculate basic loss from continuing operations per common share

 

13,261

 

 

 

 

 

13,261

 

Diluted loss from continuing operations per common share

 

  $

(6.55)

 

 

 

 

 

  $

(5.84)

 

Shares used to calculate diluted loss from continuing operations per common share

 

13,261

 

 

 

 

 

13,261

 

 

(1)   United Online pro forma results include costs that were historically allocated to MyPoints for services provided by United Online.  United Online will continue to provide similar services for a limited time in connection with a transition services agreement.

 

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

 



 

UNITED ONLINE, INC.

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

 

DECEMBER 31, 2015

 

(in thousands)

 

 

 

United Online
Historical

 

Pro Forma
Adjustments

 

 

 

Pro Forma
United Online

 

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

  $

104,832

 

  $

11,791

 

(a)(c)

 

  $

116,623

 

Accounts receivable, net of allowance

 

13,424

 

(7,473)

 

(a)

 

5,951

 

Inventories, net

 

6,878

 

(5,246)

 

(a)

 

1,632

 

Other current assets

 

10,241

 

(957)

 

(a)(f)

 

9,284

 

Total current assets

 

135,375

 

(1,885)

 

 

 

133,490

 

Property and equipment, net

 

13,256

 

(3,740)

 

(a)

 

9,516

 

Deferred tax assets, net

 

1,514

 

-

 

 

 

1,514

 

Goodwill

 

46,660

 

(22,516)

 

(a)

 

24,144

 

Intangible assets, net

 

335

 

(71)

 

(a)

 

264

 

Other assets

 

1,070

 

(52)

 

(a)

 

1,018

 

Total assets

 

  $

198,210

 

  $

(28,264)

 

 

 

  $

169,946

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

  $

8,460

 

  $

(465)

 

(a)(d)

 

  $

7,995

 

Accrued liabilities

 

10,252

 

(2,054)

 

(a)

 

8,198

 

Member redemption liability

 

6,781

 

(6,781)

 

(a)

 

-

 

Deferred revenue

 

13,431

 

(224)

 

(a)

 

13,207

 

Total current liabilities

 

38,924

 

(9,524)

 

 

 

29,400

 

Member redemption liability

 

11,322

 

(11,322)

 

(a)

 

-

 

Deferred revenue

 

17

 

(17)

 

(a)

 

-

 

Deferred tax liabilities, net

 

4,621

 

(1,921)

 

(a)

 

2,700

 

Other liabilities

 

5,706

 

(392)

 

(a)

 

5,314

 

Total liabilities

 

60,590

 

(23,176)

 

 

 

37,414

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock

 

1

 

-

 

 

 

1

 

Additional paid-in capital

 

222,164

 

-

 

 

 

222,164

 

Accumulated other comprehensive loss

 

(4,086)

 

-

 

 

 

(4,086)

 

Accumulated deficit

 

(80,459)

 

(5,088)

 

(e)

 

(85,547)

 

Total stockholders’ equity

 

137,620

 

(5,088)

 

 

 

132,532

 

Total liabilities and stockholders’ equity

 

  $

198,210

 

  $

(28,264)

 

 

 

  $

169,946

 

 

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

 



 

UNITED ONLINE, INC.

 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL

 

STATEMENTS

 

(a)       Adjustments reflect the results of operations, assets, liabilities, and historical operating results included in the sale of MyPoints.

 

(b)      Adjustments reflect the elimination of non-recurring MyPoints sales transaction-related costs totaling $0.1 million, which were directly related to the sale.

 

(c)       Adjustment reflects the approximately $11.8 million in cash received, which was net of the estimated $1.2 million post-closing purchase price adjustment, for the sale of MyPoints, net of the cash and cash equivalents balance of MyPoints.

 

(d)      Adjustment reflects accrued transaction-related costs totaling $0.2 million directly related to the sale.

 

(e)       Adjustment reflects the estimated after-tax effect on retained earnings from the sale, including the after-tax loss on the sale of MyPoints.

 

(f)        Adjustments reflects the tax effect of the pro forma adjustments at the applicable combined federal and state statutory income tax rates.