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EX-99.1 - EX-99.1 - Match Group, Inc.a2211936zex-99_1.htm
EX-99.3 - EX-99.3 - Match Group, Inc.a2211936zex-99_3.htm

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Exhibit 99.2

About, Inc.

Table of Contents

 
  Page  

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 24, 2012 (WITH COMPARATIVE BALANCES AS OF DECEMBER 25, 2011), AND FOR THE THREE AND SIX MONTHS ENDED JUNE 24, 2012 AND JUNE 26, 2011:

       

Condensed Consolidated Statements of Operations (Unaudited)

   
B-2
 

Condensed Consolidated Balance Sheets (Unaudited)

   
B-3
 

Condensed Consolidated Statement of Shareholder's Equity (Unaudited)

   
B-4
 

Condensed Consolidated Statements of Cash Flows (Unaudited)

   
B-5
 

Notes to the Condensed Consolidated Financial Statements (Unaudited)

   
B-6
 

   

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

B-1



ABOUT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 
  For the Three Months Ended   For the Six Months Ended  
 
  June 24,
2012
  June 26,
2011
  June 24,
2012
  June 26,
2011
 
 
  (13 weeks)
  (26 weeks)
 
 
  (In thousands)
 

Revenues

                         

Advertising

  $ 24,031   $ 26,385   $ 46,665   $ 56,051  

Other

    1,379     1,459     2,689     2,935  
                   

Total revenues

    25,410     27,844     49,354     58,986  

Operating costs

                         

Production costs

    9,492     8,750     19,349     18,709  

Selling, general and administrative costs

    5,750     4,913     10,667     9,199  

Depreciation and amortization

    2,263     2,706     4,437     5,456  

Impairment of goodwill

    194,732         194,732      
                   

(Loss)/income before income taxes

    (186,827 )   11,475     (179,831 )   25,622  

Income tax benefit/(expense)

    62,457     (4,147 )   59,930     (9,260 )
                   

Net (loss)/income

  $ (124,370 ) $ 7,328   $ (119,901 ) $ 16,362  
                   

   

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

B-2



ABOUT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
  June 24,
2012
  December 25,
2011
 
 
  (In thousands)
 

Assets

             

Current assets

             

Cash

  $ 1,241   $ 5,499  

Accounts receivable (net of allowances of $135 in 2012 and $138 in 2011)

    18,157     14,368  

Other current assets

    2,240     1,538  
           

Total current assets

    21,638     21,405  

Other assets

             

Property and equipment (less accumulated depreciation and amortization of $6,666 in 2012 and $6,133 in 2011)

    1,755     1,763  

Intangible assets acquired:

             

Goodwill (less accumulated impairment loss of $194,732 in 2012)

    172,544     367,276  

Other intangible assets acquired (less accumulated amortization of $61,429 in 2012 and $58,937 in 2011)

    14,718     17,210  
           

Total intangible assets acquired

    187,262     384,486  

Deferred income taxes

    13,364      

Miscellaneous assets

    10,594     9,909  
           

Total assets

  $ 234,613   $ 417,563  
           

Liabilities and shareholder's equity

             

Current liabilities

             

Accounts payable

  $ 3,930   $ 4,235  

Accrued compensation and other related liabilities

    1,683     2,404  

Accrued expenses

    1,265     838  
           

Total current liabilities

    6,878     7,477  

Deferred income taxes

        48,199  

Other liabilities

    195     287  

Commitments and contingencies

             

Shareholder's equity

             

Parent company investment

    227,540     361,600  
           

Total shareholder's equity

    227,540     361,600  
           

Total liabilities and shareholder's equity

  $ 234,613   $ 417,563  
           

   

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

B-3



ABOUT, INC.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY

(Unaudited)

 
  Total
Shareholder's
Equity
 
 
  (In thousands)
 

Balance as of December 25, 2011

  $ 361,600  

Net loss for the six months ended June 24, 2012

    (119,901 )

Net decrease in Parent company investment

    (14,159 )
       

Balance as of June 24, 2012

  $ 227,540  
       

   

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

B-4



ABOUT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
  For the Six
Months Ended
 
 
  June 24,
2012
  June 26,
2011
 
 
  (26 weeks)
 
 
  (In thousands)
 

Net cash provided by operating activities

  $ 12,331   $ 20,847  
           

Cash flows from investing activities

             

Capital expenditures

    (2,430 )   (1,493 )

Proceeds from the sale of assets

        4,597  
           

Net cash (used in)/provided by investing activities

    (2,430 )   3,104  
           

Cash flows from financing activities

             

Net transfers to the Parent company

    (14,159 )   (24,612 )
           

Net cash used in financing activities

    (14,159 )   (24,612 )
           

Net decrease in cash

    (4,258 )   (661 )

Cash at the beginning of the year

    5,499     1,763  
           

Cash at the end of the quarter

  $ 1,241   $ 1,102  
           

   

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

B-5



ABOUT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Acquisition by IAC/InterActiveCorp

        On September 24, 2012, IAC/InterActiveCorp ("IAC") completed the acquisition of 100% of About, Inc., consisting of About.com, ConsumerSearch.com, CalorieCount.com and related businesses (collectively, the "Company," "The About Group," "we," "our" or "us") from The New York Times Company (the "Parent" company).

Basis of Presentation

        These condensed consolidated financial statements have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of The New York Times Company. The condensed consolidated financial statements reflect the historical financial position, results of operations and cash flows of The About Group businesses since their respective dates of acquisition by The New York Times Company, and the allocation of overhead and certain expenses associated with centralized support functions of The New York Times Company based on the historical financial statements and accounting records of The New York Times Company and using the historical results of operations and historical bases of the assets and liabilities of The About Group businesses. However, for the purposes of these financial statements, income taxes have been computed for The About Group on an as if stand-alone, separate tax return basis.

        All intracompany transactions and balances between and among the Company and its subsidiaries have been eliminated. All intercompany transactions between The About Group and The New York Times Company have been included in these condensed consolidated financial statements and are considered to be effectively settled for cash in the condensed consolidated financial statements at the time the transaction is recorded. The total net effect of the settlement of these intercompany transactions is reflected in the condensed consolidated statement of cash flows as a financing activity and in the condensed consolidated balance sheet as "Parent company investment."

        In the opinion of management, the assumptions underlying the historical consolidated financial statements of The About Group, including the basis on which the expenses have been allocated from The New York Times Company, are reasonable. However, the allocations may not reflect the expenses that we may have incurred as an independent, stand-alone company for the periods presented.

        The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the consolidated financial position, results of operations, and cash flows of The About Group had The About Group been a stand-alone company for the periods presented. Operating results for the interim periods are not necessarily indicative of a full year's operations. The fiscal periods included herein comprise 13 weeks for the three month periods and 26 weeks for the full six-month periods. The accompanying unaudited condensed consolidated interim

B-6



ABOUT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 1—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

financial statements should be read in conjunction with the Company's audited consolidated financial statements for the fiscal year ended December 25, 2011.

Principles of Consolidation

        The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intracompany transactions and balances between and among the Company and its subsidiaries have been eliminated.

Use of Estimates

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated financial statements. Actual results could differ from these estimates.

NOTE 2—CONCENTRATIONS

        The About Group generates revenues through cost-per-click advertising (sponsored links for which the Company is paid when user clicks on the ad), display advertising and e-commerce (including sales lead generation). Almost all of our revenues (95% for all periods presented) are derived from the sale of cost-per-click advertising and display advertising. Cost-per-click advertising, represented 58% and 57% for the three and six months ended June 24, 2012, respectively, and 56% and 57% for the three and six months ended June 26, 2011, respectively, of the Company's total advertising revenues, is principally derived from an arrangement with Google under which third-party advertising is placed on the Company's Web sites. For the three and six months ended June 24, 2012, revenue earned from Google for cost-per-click and display advertising was $16.1 million and $31.5 million, respectively. For the three and six months ended June 26, 2011, revenue earned from Google for cost-per-click and display advertising was $16.2 million and $34.5 million, respectively. Accounts receivable related to revenue earned from Google totaled $8.4 million and $4.4 million at June 24, 2012 and December 25, 2011, respectively.

NOTE 3—IMPAIRMENT OF ASSETS

        Goodwill is not amortized but tested for impairment annually or in an interim period if certain circumstances indicate a possible impairment may exist. Our policy is to perform our annual goodwill impairment test in the fourth quarter of our fiscal year. However, due to certain impairment indicators, we performed an interim impairment test as of June 24, 2012.

        The interim impairment test resulted in a $194.7 million non-cash charge in the second quarter of 2012 for the impairment of goodwill. While we saw improvements in total advertising trends in the second quarter of 2012 compared with first-quarter 2012 levels, our expectations for future operating results and cash flows in the long-term are lower than our previous estimates primarily driven by a reassessment of the sustainability of our estimated long-term growth rate for display advertising. The reduction in our estimated long-term growth rate resulted in the carrying value of the net assets being greater than their fair value, and therefore a write-down of goodwill to its fair value was required. The

B-7



ABOUT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 3—IMPAIRMENT OF ASSETS (Continued)

fair value of goodwill was the residual fair value after allocating the total fair value to its other assets, net of liabilities.

        The impairment charge in the second quarter of 2012 was related to goodwill. The total fair value was determined using a discounted cash flow model (present value of future cash flows). We estimated a 3.5% annual growth rate to arrive at a residual year representing the perpetual cash flows. The residual year cash flow was capitalized to arrive at the terminal value. Utilizing a discount rate of 15.0%, the present value of the cash flows during the projection period and terminal value were aggregated to estimate the fair value. In our 2011 annual impairment test, we had assumed a 5.0% annual growth rate and a 13.8% discount rate. In determining the appropriate discount rate, we considered the weighted-average cost of capital for comparable companies.

NOTE 4—GOODWILL AND OTHER INTANGIBLE ASSETS ACQUIRED

        The following tables display the carrying amount of goodwill and other intangible assets acquired as of June 24, 2012 and December 25, 2011.

        The table below includes goodwill impaired during the second quarter of 2012 (see Note 3).

        The changes in the carrying amount of goodwill were as follows:

 
  Amount  
 
  (In thousands)
 

Balance as of December 25, 2011

  $ 367,276  

Goodwill impairment recorded in the three months ended June 24, 2012

    (194,732 )
       

Balance as of June 24, 2012

  $ 172,544  
       

        Other intangible assets acquired were as follows:

 
  June 24, 2012   December 25, 2011  
 
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net   Weighted
Average
Useful Life
(Years)
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net   Weighted
Average
Useful Life
(Years)
 
 
  (In thousands, except years)
 

Amortized other intangible assets:

                               

Customer lists

  $ 34,197   $ (31,197 ) $ 3,000     5.8   $ 34,197   $ (30,296 ) $ 3,901     5.8  

Content

    21,384     (19,433 )   1,951     7.8     21,384     (18,133 )   3,251     7.8  

Other

    10,799     (10,799 )       5.6     10,799     (10,508 )   291     5.6  
                                       

Total

  $ 66,380   $ (61,429 )   4,951     6.4   $ 66,380   $ (58,937 )   7,443     6.4  
                                           

Unamortized other intangible assets:

                               

Trade names

                9,767                       9,767        
                                               

Total other intangible assets acquired

  $ 14,718                     $ 17,210        
                                               

B-8



ABOUT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 4—GOODWILL AND OTHER INTANGIBLE ASSETS ACQUIRED (Continued)

        Amortization expense related to other intangible assets acquired that are subject to amortization was $1.1 million and $1.7 million for the three months ended June 24, 2012 and June 26, 2011, respectively, and $2.5 million and $3.4 million for the six months ended June 24, 2012 and June 26, 2011, respectively, and is included in "Depreciation and amortization" in the accompanying condensed consolidated statements of operations.

        Amortization expense for the next five years related to these intangible assets is expected to be as follows:

 
  Amount  
 
  (In thousands)
 

Remainder of 2012

  $ 2,204  

2013

    1,521  

2014

    560  

2015

    328  

2016

    251  

2017

    87  
       

Total

  $ 4,951  
       

NOTE 5—FAIR VALUE MEASUREMENTS

        Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability.

        The fair value hierarchy consists of three levels:

            Level 1—quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;

            Level 2—inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

            Level 3—unobservable inputs for the asset or liability.

Assets Measured and Recorded at Fair Value on a Non-Recurring Basis

        Certain non-financial assets, such as goodwill, other intangible assets, property and equipment and certain investments, are only recorded at fair value if an impairment charge is recognized. The

B-9



ABOUT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 5—FAIR VALUE MEASUREMENTS (Continued)

following table presents non-financial assets that were measured and recorded at fair value on a non-recurring basis and the impairment loss recorded during 2012 on those assets:

 
   
  Fair Value Measured and
Recorded Using
   
 
 
  Carrying
Value as of
June 24, 2012
  Impairment
Losses
2012
 
 
  Level 1   Level 2   Level 3  
 
  (In thousands)
 

Goodwill

  $ 172,544   $   $   $ 172,544   $ 194,732  
                       

NOTE 6—INCOME TAXES

        We had an income tax benefit of $62.5 million (effective tax rate of 33.4%) for the three months ended June 24, 2012 and an income tax benefit of $59.9 million (effective tax rate of 33.3%) for the six months ended June 24, 2012. The effective tax rates for the three and six months ended June 24, 2012 are lower than the statutory rate of 35% due to non-deductible impairment charges.

        We had an income tax expense of $4.1 million (effective tax rate of 36.1%) for the three months ended June 26, 2011 and an income tax expense of $9.3 million (effective tax rate of 36.1%) for the six months ended June 26, 2011. The effective tax rates for the three and six months ended June 26, 2011 are higher than the statutory rate of 35% due to state taxes.

NOTE 7—CONTINGENCIES

        There are various legal actions that have arisen in the ordinary course of business and are pending against us. Although, it is the opinion of management after reviewing these actions with our legal counsel that resolving claims against us will not have a material impact on the liquidity, results of operations, or financial position of the Company, these matters are subject to inherent uncertainties and management's view of these matters may change in the future.

NOTE 8—RELATED PARTY TRANSACTIONS AND PARENT COMPANY INVESTMENT

        These condensed consolidated financial statements reflect allocated expenses associated with The New York Times Company overhead and centralized support functions. The expenses generally include compensation and benefit costs, as well as other general overhead costs related to the support functions. Allocations are based on a number of utilization measures, including headcount and proportionate effort. The About Group recorded allocated costs of $0.6 million and $0.8 million for the three months ended June 24, 2012 and June 26, 2011, respectively, and $1.2 million and $1.5 million for the six months ended June 24, 2012 and June 26, 2011, respectively. These allocated costs are principally included in "Selling, general and administrative costs" in the accompanying condensed consolidated statements of operations.

B-10



ABOUT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

NOTE 8—RELATED PARTY TRANSACTIONS AND PARENT COMPANY INVESTMENT (Continued)

        Net transfers to the Parent company are included within the Parent company investment. The components of the net transfers to the Parent company for the six months ended June 24, 2012 are as follows:

 
  Amount  
 
  (In thousands)
 

Cash transfers from The About Group

  $ (47,615 )

Funding by the Parent company for expenses

    29,598  

Corporate allocations, including current income tax benefit

    2,789  

Other

    1,069  
       

Net decrease in the Parent company investment

  $ (14,159 )
       

NOTE 9—SUBSEQUENT EVENTS

        In preparing these condensed consolidated financial statements, management evaluated subsequent events through December 4, 2012 on which date the condensed consolidated financial statements were available for issuance.

        On September 24, 2012, The New York Times Company completed the sale of The About Group to IAC pursuant to a stock purchase agreement dated as of August 26, 2012. As consideration for the acquisition of the equity of The About Group IAC paid to The New York Times Company $300 million in cash, plus an amount equal to the estimated net working capital of $16.3 million at closing.

B-11




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ABOUT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
ABOUT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
ABOUT, INC. CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY (Unaudited)
ABOUT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
ABOUT, INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)