Attached files
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| 8-K/A - FORM 8-K/A - XO GROUP INC. | v397805_8ka.htm |
Exhibit 99.1
XO Group Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
(In thousands, except per share data)
On December 30, 2014, XO Group Inc. (the “Company”) completed the disposition of its Ijie operations in China and Hong Kong (the “Ijie Operations”) to PUM Development Co, Ltd. and Novel Horizon Ventures Limited (collectively, the “Counterparties”), pursuant to arrangements among the Company, the Counterparties and TK Investment Company Limited (“TK Investment”). The disposition consisted of the acquisition by the Counterparties of 95% of the issued share capital of TK Investment, which holds the Ijie Operations, for consideration consisting primarily of the assumption of ongoing operating responsibility of the Ijie Operations, plus a nominal cash payment of $1.00. The Company will retain 5% of the issued share capital of TK Investment.
The following Unaudited Pro Forma Condensed Consolidated Financial Statements were derived from the Company’s historical Consolidated Financial Statements and reflect the Company’s historical Consolidated Statements of Operations recast as if the sale of the Ijie Operations occurred on January 1, 2013 (the first day of fiscal 2013) and the Company’s historical Consolidated Balance Sheet recast as if the sale of the Ijie Operations occurred on September 30, 2014. These Unaudited Pro Forma Condensed Consolidated Financial Statements should be read together with the Company’s historical Consolidated Financial Statements and accompanying Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014.
The assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the Unaudited Pro Forma Condensed Consolidated Financial Statements. Management believes the assumptions used and pro forma adjustments derived from such assumptions are reasonable under the circumstances and are based upon currently available information.
The Unaudited Pro Forma Condensed Consolidated Financial Statements are presented for informational purposes only and are subject to a number of uncertainties and assumptions and do not purport to represent what the Company’s actual results of operations or financial position would have been had the disposition of the Ijie Operations occurred on the dates previously described. All nonrecurring charges or credits and related tax effects which result directly from the transaction have not been included in the Unaudited Pro Forma Condensed Consolidated Statement of Operations. Additionally, these statements are not necessarily indicative of future operating results or financial condition of the Company as of any future date or for any future period.
XO GROUP INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2014
(Amounts in Thousands )
| As Reported | Pro Forma Adjustments | As Adjusted | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 85,683 | $ | (2,427 | )(a) | $ | 83,256 | |||||
| Accounts receivable, net of allowances | 15,778 | (177 | ) | 15,601 | ||||||||
| Inventories | 1,620 | - | 1,620 | |||||||||
| Deferred production and marketing costs | 586 | - | 586 | |||||||||
| Deferred tax assets, current portion | 3,037 | - | 3,037 | |||||||||
| Prepaid expenses and other current assets | 6,143 | (168 | ) | 5,975 | ||||||||
| Total current assets | 112,847 | (2,772 | ) | 110,075 | ||||||||
| Long-term restricted cash and investments | 3,124 | - | 3,124 | |||||||||
| Property and equipment, net | 15,967 | (60 | ) | 15,907 | ||||||||
| Intangible assets, net | 3,200 | (7 | ) | 3,193 | ||||||||
| Goodwill | 42,436 | - | 42,436 | |||||||||
| Deferred tax assets | 16,638 | - | 16,638 | |||||||||
| Investments | 5,490 | - | 5,490 | |||||||||
| Other assets | 296 | (24 | ) | 272 | ||||||||
| Total assets | 199,998 | (2,863 | ) | 197,135 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable and accrued expenses | 11,268 | 86 | (b) | 11,354 | ||||||||
| Deferred revenue | 16,353 | (173 | ) | 16,180 | ||||||||
| Total current liabilities | 27,621 | (87 | ) | 27,534 | ||||||||
| Deferred tax liabilities | 3,607 | - | 3,607 | |||||||||
| Deferred rent | 5,338 | - | 5,338 | |||||||||
| Other liabilities | 1,931 | - | 1,931 | |||||||||
| Total liabilities | 38,497 | (87 | ) | 38,410 | ||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders' equity: | ||||||||||||
| Preferred stock | - | - | - | |||||||||
| Common stock | 269 | - | 269 | |||||||||
| Additional paid-in-capital | 171,186 | - | 171,186 | |||||||||
| Accumulated other comprehensive loss | (248 | ) | 248 | - | ||||||||
| Accumulated deficit | (9,706 | ) | (3,024 | )(c) | (12,730 | ) | ||||||
| Total stockholders' equity | 161,501 | (2,776 | ) | 158,725 | ||||||||
| Total liabilities and stockholders' equity | $ | 199,998 | $ | (2,863 | ) | $ | 197,135 | |||||
(a) Represents total cash and cash equivalents that would have been part of the net assets acquired by the Counterparties as part of the Ijie Operations as of September 30, 2014, as well as estimated costs directly attributable to the sale of $0.3 million. Cash and cash equivalents as of November 30, 2014 was $1.1 million.
(b) Includes $1.1 million of accounts payable and accrued expenses assumed by the counterparties, offset by $0.2 million that XO Group Inc. is required to pay the counterparties for cash collected from national advertising customers, and a $1.0 million contingent tax liability.
(c) The estimated loss from the disposition of the Ijie Operations was calculated as follows:
| Cash Proceeds | $ | - | ||
| Less: Carrying value of net assets Ijie Operations | (1,526 | ) | ||
| Estimated costs directly attributable to the sale | (250 | ) | ||
| Tax contingency | (1,000 | ) | ||
| Realization of cumulative translation adjustment | (248 | ) | ||
| Estimated loss on sale | $ | (3,024 | ) |
XO GROUP INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
(Amounts in Thousands, Except for Per Share Data)
| Net revenue: | As Reported | Proforma Adjustments | As Adjusted | |||||||||
| Online sponsorship and advertising | $ | 65,522 | $ | (604 | ) | $ | 64,918 | |||||
| Registry services | 7,954 | - | 7,954 | |||||||||
| Merchandise | 13,159 | - | 13,159 | |||||||||
| Publishing and other | 19,973 | (66 | ) | 19,907 | ||||||||
| Total net revenue | 106,608 | (670 | ) | 105,938 | ||||||||
| Cost of revenue: | ||||||||||||
| Online sponsorship and advertising | 1,337 | (170 | ) | 1,167 | ||||||||
| Merchandise | 8,106 | - | 8,106 | |||||||||
| Publishing and other | 5,920 | (59 | ) | 5,861 | ||||||||
| Total cost of revenue | 15,363 | (229 | ) | 15,134 | ||||||||
| Gross profit | 91,245 | (441 | ) | 90,804 | ||||||||
| Operating expenses: | ||||||||||||
| Product and content development | 26,274 | (851 | ) | 25,423 | ||||||||
| Sales and marketing | 32,606 | (1,162 | ) | 31,444 | ||||||||
| General and administrative | 18,778 | (943 | )(a) | 17,835 | ||||||||
| Depreciation and amortization | 5,393 | (43 | ) | 5,350 | ||||||||
| Total operating expenses | 83,051 | (2,999 | ) | 80,052 | ||||||||
| Income (loss) from operations | 8,194 | 2,558 | 10,752 | |||||||||
| Loss in equity interests | (243 | ) | - | (243 | ) | |||||||
| Interest and other income, net | 55 | (33 | ) | 22 | ||||||||
| Income from continuing operations before income taxes | 8,006 | 2,525 | 10,531 | |||||||||
| Provision for income taxes | 3,551 | 951 | (b) | 4,502 | ||||||||
| Net income from continuing operations | $ | 4,455 | $ | 1,574 | $ | 6,029 | ||||||
| Net income per share: | ||||||||||||
| Basic | $ | 0.18 | $ | 0.24 | ||||||||
| Diluted | $ | 0.17 | $ | 0.24 | ||||||||
| Weighted average number of shares used in calculating net earnings per share | ||||||||||||
| Basic | 25,159 | 25,159 | ||||||||||
| Diluted | 25,547 | 25,547 | ||||||||||
(a) Includes a $0.6 million favorable adjustment for foreign value-added tax, interest and penalties and excludes $0.6 million of Ijie related costs that we
expect to continue to incur following the sale of the Ijie Operations.
(b) Reflects the effective tax rate of the As Adjusted Statement of Operations, which were adjusted for discrete tax items related to the Ijie Operations.
XO GROUP INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(Amounts in Thousands, Except for Per Share Data)
| Net revenue: | As Reported | Proforma Adjustments | As Adjusted | |||||||||
| Online sponsorship and advertising | $ | 81,661 | $ | (821 | ) | $ | 80,840 | |||||
| Registry services | 7,926 | - | 7,926 | |||||||||
| Merchandise | 18,406 | - | 18,406 | |||||||||
| Publishing and other | 25,821 | (267 | ) | 25,554 | ||||||||
| Total net revenue | 133,814 | (1,088 | ) | 132,726 | ||||||||
| Cost of revenue: | ||||||||||||
| Online sponsorship and advertising | 1,927 | (144 | ) | 1,783 | ||||||||
| Merchandise | 11,296 | - | 11,296 | |||||||||
| Publishing and other | 9,178 | (250 | ) | 8,928 | ||||||||
| Total cost of revenue | 22,401 | (394 | ) | 22,007 | ||||||||
| Gross profit | 111,413 | (694 | ) | 110,719 | ||||||||
| Operating expenses: | ||||||||||||
| Product and content development | 29,877 | (853 | ) | 29,024 | ||||||||
| Sales and marketing | 39,718 | (1,776 | ) | 37,942 | ||||||||
| General and administrative | 23,073 | (2,043 | )(a) | 21,030 | ||||||||
| Long-lived asset impairment charges | 1,430 | - | 1,430 | |||||||||
| Depreciation and amortization | 4,808 | (126 | ) | 4,682 | ||||||||
| Total operating expenses | 98,906 | (4,798 | ) | 94,108 | ||||||||
| Income (loss) from operations | 12,507 | 4,104 | 16,611 | |||||||||
| Loss in equity interests | (2,016 | ) | - | (2,016 | ) | |||||||
| Interest and other income, net | 144 | (12 | ) | 132 | ||||||||
| Income from continuing operations before income taxes | 10,635 | 4,092 | 14,727 | |||||||||
| Provision for income taxes | 4,841 | 1,632 | (b) | 6,473 | ||||||||
| Net income from continuing operations | $ | 5,794 | $ | 2,460 | $ | 8,254 | ||||||
| Net income per share: | ||||||||||||
| Basic | $ | 0.24 | $ | 0.34 | ||||||||
| Diluted | $ | 0.23 | $ | 0.32 | ||||||||
| Weighted average number of shares used in calculating net earnings per share | ||||||||||||
| Basic | 24,620 | 24,620 | ||||||||||
| Diluted | 25,596 | 25,596 | ||||||||||
(a) Includes a $0.6 million unfavorable adjustment for foreign value-added tax, interest and penalties and excludes $0.7 million of Ijie related costs that we
expect to continue to incur following the sale of the Ijie Operations.
(b) Reflects the effective tax rate of the As Adjusted Statement of Operations, which were adjusted for discrete tax items related to the Ijie Operations.