Supplemental Guarantor Financial Information

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Guarantor Financial Information

Supplemental Guarantor Financial Information

In February 2016, EIG Investors (the “Issuer”) issued $350.0 million aggregate principal amount of its 10.875% Senior Notes due 2024 (refer to Note 9, Notes Payable), which it exchanged for new 10.875% Senior Notes due 2024 pursuant to a registration statement on Form S-4. The registered exchange offer for the Senior Notes was completed on January 30, 2017. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by Holdings, the Issuer, and the following wholly-owned subsidiaries: EIG, Bluehost Inc., FastDomain Inc., Domain Name Holding Company, Inc., Endurance International Group – West, Inc., HostGator.com LLC, A Small Orange, LLC, Constant Contact, and P.D.R Solutions (U.S.) LLC (collectively, the “Subsidiary Guarantors”), subject to certain customary guarantor release conditions. Holdings’ other domestic subsidiaries and its foreign subsidiaries (collectively, the “Non-Guarantor Subsidiaries”) have not guaranteed the Senior Notes.

P.D.R Solutions (U.S.) LLC became a Subsidiary Guarantor on April 25, 2019. The condensed consolidated financial statements have been revised for all periods presented to reflect this new guarantor entity.

SinglePlatform, LLC ceased being a Subsidiary Guarantor on December 5, 2019 due to the Company's sale of the SinglePlatform business, including SinglePlatform, LLC.

The following tables present supplemental condensed consolidating balance sheet information of Holdings (“Parent”), the Issuer, the Subsidiary Guarantors and the Non-Guarantor Subsidiaries as of December 31, 2019 and March 31, 2020, and supplemental condensed consolidating results of operations for the three months ended March 31, 2019 and 2020:

Condensed Consolidating Balance Sheets

December 31, 2019

(in thousands)

	Parent		Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	195	$	1		$	80,642		$	30,427		$	—		$	111,265
Restricted cash	—		—			1,732			—			—			1,732
Accounts receivable	—		—			8,762			1,462			—			10,224
Prepaid domain name registry fees	—		—			48,943			6,294			—			55,237
Prepaid commissions	—		—			37,910			525			—			38,435
Prepaid expenses and other current assets	—		90			26,847			3,756			—			30,693
Total current assets	195		91			204,836			42,464			—			247,586
Intercompany receivables—net	32,845		172,807			(87,398		)	(118,254		)	—			—
Property and equipment—net	—		—			72,751			13,174			—			85,925
Operating lease right-of-use assets	—		—			86,111			4,408			—			90,519
Goodwill	—		—			1,677,587			157,723			—			1,835,310
Other intangible assets—net	—		—			243,994			1,008			—			245,002
Investment in subsidiaries	163,934		1,693,565			61,023			—			(1,918,522		)	—
Prepaid commissions, net of current portion	—		—			48,289			491			—			48,780
Other assets	—		1,784			27,215			1,965			—			30,964
Total assets	$	196,974	$	1,868,247		$	2,334,408		$	102,979		$	(1,918,522	)	$	2,584,086
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	—	$	—		$	9,474		$	580		$	—		$	10,054
Accrued expenses and other current liabilities	20		23,554			59,695			7,141			—			90,410
Deferred revenue	—		—			345,116			24,359			—			369,475
Operating lease liabilities—short term	—		—			18,513			2,680			—			21,193
Current portion of notes payable	—		31,606			—			—			—			31,606
Current portion of financed equipment	—		—			790			—			—			790
Deferred consideration—short term	—		—			2,201			—			—			2,201
Total current liabilities	20		55,160			435,789			34,760			—			525,729
Deferred revenue—long term	—		—			94,471			5,181			—			99,652
Operating lease liabilities—long term	—		—			76,166			1,985			—			78,151
Notes payable	—		1,649,867			—			—			—			1,649,867
Deferred consideration	—		—			—			—			—			—
Other long-term liabilities	—		(714		)	34,417			30			—			33,733
Total liabilities	20		1,704,313			640,843			41,956			—			2,387,132
Equity	196,954		163,934			1,693,565			61,023			(1,918,522		)	196,954
Total liabilities and stockholders' equity	$	196,974	$	1,868,247		$	2,334,408		$	102,979		$	(1,918,522	)	$	2,584,086

Condensed Consolidating Balance Sheets

March 31, 2020

(unaudited, in thousands)

	Parent		Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	1,716	$	1		$	78,183		$	31,908		$	—		$	111,808
Restricted cash	—		—			1,731			—			—			1,731
Accounts receivable	—		—			9,199			1,432			—			10,631
Prepaid domain name registry fees	—		—			50,407			6,177			—			56,584
Prepaid commissions	—		—			37,927			494			—			38,421
Prepaid expenses and other current assets	—		57			32,223			3,809			—			36,089
Total current assets	1,716		58			209,670			43,820			—			255,264
Intercompany receivables—net	19,229		130,452			(27,304		)	(122,377		)	—			—
Property and equipment—net	—		—			79,709			12,475			—			92,184
Operating lease right-of-use assets	—		—			81,533			3,345			—			84,878
Goodwill	—		—			1,677,587			156,742			—			1,834,329
Other intangible assets, net	—		—			226,819			852			(1		)	227,670
Investment in subsidiaries	171,824		1,725,932			59,193			—			(1,956,949		)	—
Prepaid commissions, net of current portion	—		—			51,564			486			—			52,050
Other assets	—		1,615			27,818			2,043			—			31,476
Total assets	$	192,769	$	1,858,057		$	2,386,589		$	97,386		$	(1,956,950	)	$	2,577,851
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	—	$	—		$	14,283		$	396		$	—		$	14,679
Accrued expenses and other current liabilities	724		13,282			62,238			6,396			—			82,640
Deferred revenue	—		—			354,589			22,929			—			377,518
Operating lease liabilities—short term	—		—			18,328			1,981			—			20,309
Current portion of notes payable	—		31,606			—			—			—			31,606
Current portion of financed equipment	—		—			6,081			—			—			6,081
Deferred consideration—short term	—		—			2,225			—			—			2,225
Total current liabilities	724		44,888			457,744			31,702			—			535,058
Deferred revenue—long term	—		—			97,181			4,911			—			102,092
Operating lease liabilities—long term	—		—			71,774			1,566			—			73,340
Notes payable	—		1,641,938			—			—			—			1,641,938
Financed equipment, long-term	—		—			597			—			—			597
Other long-term liabilities	—		(594		)	33,361			14			—			32,781
Total liabilities	724		1,686,232			660,657			38,193			—			2,385,806
Equity	192,045		171,825			1,725,932			59,193			(1,956,950		)	192,045
Total liabilities and stockholders' equity	$	192,769	$	1,858,057		$	2,386,589		$	97,386		$	(1,956,950	)	$	2,577,851

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

Three Months Ended March 31, 2019

(unaudited, in thousands)

	Parent			Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	—		$	268,459	$	15,593		$	(3,369	)	$	280,683
Cost of revenue	—			—			117,032		10,191			(3,369		)	123,854
Gross profit	—			—			151,427		5,402			—			156,829
Operating expense:
Sales and marketing	—			—			63,738		2,850			—			66,588
Engineering and development	—			—			21,602		2,092			—			23,694
General and administrative	—			58			31,051		284			—			31,393
Total operating expense	—			58			116,391		5,226			—			121,675
(Loss) income from operations	—			(58		)	35,036		176			—			35,154
Interest expense and other income—net	—			37,044			14		(135		)	—			36,923
(Loss) income before income taxes and equity earnings of unconsolidated entities	—			(37,102		)	35,022		311			—			(1,769		)
Income tax (benefit) expense	—			(8,830		)	10,149		400			—			1,719
(Loss) income before equity earnings of unconsolidated entities	—			(28,272		)	24,873		(89		)	—			(3,488		)
Equity loss (income) of unconsolidated entities, net of tax	3,488			(24,784		)	89		—			21,207			—
Net (loss) income	$	(3,488	)	$	(3,488	)	$	24,784	$	(89	)	$	(21,207	)	$	(3,488	)
Comprehensive income (loss):
Foreign currency translation adjustments	—			—			—		(401		)	—			(401		)
Unrealized gain (loss) on cash flow hedge, net of taxes	—			(961		)	—		—			—			(961		)
Total comprehensive (loss) income	$	(3,488	)	$	(4,449	)	$	24,784	$	(490	)	$	(21,207	)	$	(4,850	)

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

Three Months Ended March 31, 2020

(unaudited, in thousands)

	Parent			Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenue	$	—		$	—		$	260,579	$	15,564		$	(3,949	)	$	272,194
Cost of revenue	—			—			108,425		11,788			(3,949		)	116,264
Gross profit	—			—			152,154		3,776			—			155,930
Operating expense:
Sales and marketing	—			—			65,647		1,544			—			67,191
Engineering and development	—			—			23,911		2,963			—			26,874
General and administrative	482			61			31,160		(827		)	—			30,876
Total operating expense	482			61			120,718		3,680			—			124,941
(Loss) income from operations	(482		)	(61		)	31,436		96			—			30,989
Interest expense and other income—net	—			32,546			120		(102		)	—			32,564
(Loss) income before income taxes and equity earnings of unconsolidated entities	(482		)	(32,607		)	31,316		198			—			(1,575		)
Income tax (benefit) expense	—			(7,759		)	7,769		659			—			669
(Loss) income before equity earnings of unconsolidated entities	(482		)	(24,848		)	23,547		(461		)	—			(2,244		)
Equity loss (income) of unconsolidated entities, net of tax	1,762			(23,088		)	462		—			20,864			—
Net (loss) income	$	(2,244	)	$	(1,760	)	$	23,085	$	(461	)	$	(20,864	)	$	(2,244	)
Comprehensive income (loss):
Foreign currency translation adjustments	—			—			—		(557		)	—			(557		)
Unrealized gain (loss) on cash flow hedge, net of taxes	—			372			—		—			—			372
Total comprehensive (loss) income	$	(2,244	)	$	(1,388	)	$	23,085	$	(1,018	)	$	(20,864	)	$	(2,429	)