Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TMON 2013 FINANCIAL STATEMENTS - Groupon, Inc. | tmon8-kx2013financialstate.htm |
| EX-99.1 - EXHIBIT 99.1 - LS KOREA FINANCIAL STATEMENTS - Groupon, Inc. | exhibit991-livingsocialkor.htm |
| EX-23.1 - EXHIBIT 23.1 - PWC KOREA CONSENT - Groupon, Inc. | a231-consent.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
On January 2, 2014, Groupon, Inc., ("Groupon" or the "Company") through its direct subsidiary Groupon Trailblazer, Inc., completed the acquisition of all the outstanding equity interests of LivingSocial Korea, Inc., a Korean corporation including its subsidiary Ticket Monster Inc., a Korean corporation, from LivingSocial Inc., a Delaware corporation ("LivingSocial"), and LivingSocial B.V., a Netherlands limited liability company and direct subsidiary of LivingSocial for $96.5 million in cash and Groupon, Inc. Class A common stock with a fair value of $162.9 million.
The following unaudited pro forma condensed combined consolidated financial statements have been derived by the application of pro forma adjustments to the Company's historical consolidated financial statements. The unaudited pro forma condensed combined balance sheet as of December 31, 2013 for Groupon, Inc. and LivingSocial Korea, Inc. is presented as if the acquisition had occurred on December 31, 2013. The unaudited pro forma condensed combined statement of operations of Groupon, Inc. and LivingSocial Korea, Inc. for the year ended December 31, 2013 are presented as if the acquisition had occurred on January 1, 2013. The unaudited pro forma condensed combined consolidated financial statements are being provided for illustrative purposes only and do not purport to represent what our results of operations or financial position would have been if the transaction had occurred on the dates indicated and are not intended to project our results of operations or financial position for any future period.
The acquisition has been accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the total acquisition price presented in the accompanying unaudited pro forma condensed combined consolidated financial statements has been allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Acquired goodwill represents the premium the Company paid over the fair value of the net tangible and intangible assets acquired. The unaudited pro forma condensed combined consolidated financial statements contained herein do not reflect the costs of any integration activities or benefits that may result from realization of future cost savings from operating efficiencies, or any revenue, tax, or other synergies that may result from the acquisition.
The unaudited pro forma adjustments are based on estimates, available information and certain assumptions that the Company believes are reasonable. The unaudited pro forma adjustments and primary assumptions are described in the accompanying notes. The unaudited pro forma condensed combined consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and the accompanying notes of LivingSocial Korea, Inc. included in Exhibit 99.1 in this Current Report on Form 8-K and the historical consolidated financial statements and accompanying notes of Groupon, Inc. included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.
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GROUPON, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
BALANCE SHEET
As of December 31, 2013
(in thousands)
Groupon, Inc. Historical (audited) | LivingSocial Korea, Inc. Historical (audited) | Pro Forma Adjustments (1) | Notes | Pro Forma Combined | |||||||||||||||||
Assets | |||||||||||||||||||||
Current assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 1,240,472 | $ | 24,769 | $ | — | $ | (96,496 | ) | a | $ | 1,168,745 | |||||||||
Accounts receivable, net | 83,673 | 15,822 | — | 1,900 | b | 101,395 | |||||||||||||||
Deferred income taxes | 27,938 | — | — | 1,264 | c | 29,202 | |||||||||||||||
Prepaid expenses and other current assets | 210,415 | 5,302 | — | — | 215,717 | ||||||||||||||||
Total current assets | 1,562,498 | 45,893 | — | (93,332 | ) | 1,515,059 | |||||||||||||||
Property, equipment and software, net | 134,423 | 5,495 | 501 | — | d | 140,419 | |||||||||||||||
Goodwill | 220,827 | 50,755 | (50,755 | ) | 219,065 | e | 439,892 | ||||||||||||||
Intangible assets, net | 28,443 | 38,499 | (38,499 | ) | 109,094 | d, f | 137,537 | ||||||||||||||
Investments | 20,652 | — | — | — | 20,652 | ||||||||||||||||
Deferred income taxes, non-current | 35,941 | — | — | — | 35,941 | ||||||||||||||||
Other non-current assets | 39,226 | 3,021 | — | — | 42,247 | ||||||||||||||||
Total Assets | $ | 2,042,010 | $ | 143,663 | $ | (88,753 | ) | $ | 234,827 | $ | 2,331,747 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||
Accounts payable | $ | 27,573 | $ | 8,937 | $ | — | $ | — | $ | 36,510 | |||||||||||
Accrued merchant and supplier payables | 752,943 | 87,400 | — | — | 840,343 | ||||||||||||||||
Accrued expenses | 226,986 | 22,674 | — | 1,563 | g | 251,223 | |||||||||||||||
Due to related parties | — | 154 | (154 | ) | — | h | — | ||||||||||||||
Deferred income taxes, current | 47,558 | — | — | — | 47,558 | ||||||||||||||||
Other current liabilities | 132,718 | 1,313 | — | — | 134,031 | ||||||||||||||||
Total current liabilities | 1,187,778 | 120,478 | (154 | ) | 1,563 | 1,309,665 | |||||||||||||||
Deferred income taxes, non-current | 10,853 | — | — | 1,264 | c | 12,117 | |||||||||||||||
Other non-current liabilities | 131,697 | 5,287 | — | — | 136,984 | ||||||||||||||||
Total Liabilities | 1,330,328 | 125,765 | (154 | ) | 2,827 | 1,458,766 | |||||||||||||||
Stockholders' Equity | |||||||||||||||||||||
Class A common stock | 67 | — | — | 2 | i | 69 | |||||||||||||||
Class B common stock | — | — | — | — | — | ||||||||||||||||
Common stock | — | — | — | — | — | ||||||||||||||||
Additional paid-in capital | 1,584,211 | 232,483 | (232,483 | ) | 162,860 | i, j | 1,747,071 | ||||||||||||||
Treasury stock, at cost | (46,587 | ) | — | — | — | (46,587 | ) | ||||||||||||||
Accumulated deficit | (848,870 | ) | (216,840 | ) | 216,840 | (1,563 | ) | g, j | (850,433 | ) | |||||||||||
Accumulated other comprehensive income | 24,830 | 2,255 | (2,255 | ) | — | j | 24,830 | ||||||||||||||
Total Groupon, Inc. Stockholders' Equity | 713,651 | 17,898 | (17,898 | ) | 161,299 | 874,950 | |||||||||||||||
Noncontrolling interests | (1,969 | ) | — | — | — | (1,969 | ) | ||||||||||||||
Total Equity | 711,682 | 17,898 | (17,898 | ) | 161,299 | 872,981 | |||||||||||||||
Total Liabilities and Equity | $ | 2,042,010 | $ | 143,663 | $ | (18,052 | ) | $ | 164,126 | $ | 2,331,747 | ||||||||||
The accompanying notes are an integral part of, and should be read together with, this unaudited pro forma condensed combined consolidated balance sheet.
(1) See note 2 in the accompanying notes for discussion of pro forma adjustments.
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GROUPON, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENT OF OPERATIONS
For the year ended December 31, 2013
(in thousands, except share and per share amounts)
Groupon, Inc. Historical (audited) | LivingSocial Korea, Inc. Historical (audited) | Adjustments for Operations Not Acquired (2) | Pro Forma Adjustments (1) | Notes | Pro Forma Combined | ||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||
Third party and other | $ | 1,654,654 | $ | 113,314 | $ | (3,025 | ) | $ | (11,525 | ) | $ | — | k | $ | 1,753,418 | ||||||||||
Direct | 919,001 | 2,080 | — | — | — | 921,081 | |||||||||||||||||||
Total revenue | 2,573,655 | 115,394 | (3,025 | ) | (11,525 | ) | — | 2,674,499 | |||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||||
Third party and other | 232,062 | 28,344 | (693 | ) | 277 | — | l | 259,990 | |||||||||||||||||
Direct | 840,060 | 1,503 | — | 64 | — | l | 841,627 | ||||||||||||||||||
Total cost of revenue | 1,072,122 | 29,847 | (693 | ) | 341 | — | 1,101,617 | ||||||||||||||||||
Gross profit | 1,501,533 | 85,547 | (2,332 | ) | (11,866 | ) | — | 1,572,882 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Marketing | 214,824 | 30,015 | (781 | ) | (11,525 | ) | — | k | 232,533 | ||||||||||||||||
Selling, general and administrative | 1,210,966 | 125,327 | (2,630 | ) | 2,586 | 26,280 | l, m | 1,362,529 | |||||||||||||||||
Depreciation and amortization | — | 16,841 | (107 | ) | (16,734 | ) | — | l, m | — | ||||||||||||||||
Acquisition-related benefit, net | (11 | ) | — | — | — | — | (11 | ) | |||||||||||||||||
Total operating expenses | 1,425,779 | 172,183 | (3,518 | ) | (25,673 | ) | 26,280 | 1,595,051 | |||||||||||||||||
Income (loss) from operations | 75,754 | (86,636 | ) | 1,186 | 13,807 | (26,280 | ) | (22,169 | ) | ||||||||||||||||
Loss on equity method investments | (44 | ) | — | — | — | — | (44 | ) | |||||||||||||||||
Other (expense) income, net | (94,619 | ) | (1,032 | ) | 110 | — | — | (95,541 | ) | ||||||||||||||||
Income (loss) before provision (benefit) for income taxes | (18,909 | ) | (87,668 | ) | 1,296 | 13,807 | (26,280 | ) | (117,754 | ) | |||||||||||||||
Provision (benefit) for income taxes | 70,037 | 183 | — | — | — | 70,220 | |||||||||||||||||||
Net (loss) income | (88,946 | ) | (87,851 | ) | 1,296 | 13,807 | (26,280 | ) | (187,974 | ) | |||||||||||||||
Net income attributable to noncontrolling interests | (6,447 | ) | — | — | — | — | (6,447 | ) | |||||||||||||||||
Net (loss) income attributable to Groupon, Inc. | $ | (95,393 | ) | $ | (87,851 | ) | $ | 1,296 | $ | 13,807 | $ | (26,280 | ) | $ | (194,421 | ) | |||||||||
Net loss per share | |||||||||||||||||||||||||
Basic | $(0.14) | $(0.29) | |||||||||||||||||||||||
Diluted | $(0.14) | $(0.29) | |||||||||||||||||||||||
Weighted average number of shares outstanding | |||||||||||||||||||||||||
Basic | 663,910,194 | 13,825,283 | n | 677,735,477 | |||||||||||||||||||||
Diluted | 663,910,194 | 13,825,283 | n | 677,735,477 | |||||||||||||||||||||
The accompanying notes are an integral part of, and should be read together with, this unaudited pro forma condensed combined consolidated statement of operations.
(1) See note 2 in the accompanying notes for discussion of pro forma adjustments.
(2) See note 3 in the accompanying notes for discussion of adjustments related to operations not acquired.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
1. ACQUISITION PRICE ALLOCATION
The following table summarizes the allocation of the aggregate acquisition price of the LivingSocial Korea, Inc. acquisition (in thousands):
Acquisition Price Allocation | ||||
Cash and cash equivalents | $ | 24,769 | ||
Accounts receivable | 17,722 | |||
Deferred income taxes | 1,264 | |||
Prepaid expenses and other assets | 8,323 | |||
Property, equipment and software | 5,996 | |||
Goodwill | 219,065 | |||
Intangible Assets:(1) | ||||
Subscriber relationships | 57,022 | |||
Merchant relationships | 32,176 | |||
Developed technology | 571 | |||
Trade name | 19,325 | |||
Total assets acquired | $ | 386,233 | ||
Accounts payable and other liabilities | $ | 15,537 | ||
Accrued merchant and supplier payables | 87,400 | |||
Accrued expenses | 22,674 | |||
Deferred income taxes | 1,264 | |||
Total liabilities assumed | $ | 126,875 | ||
Total Acquisition Price | $ | 259,358 | ||
(1) The acquired intangible assets have estimated useful lives of between 2 and 5 years.
The aggregate acquisition-date fair value of the consideration transferred consisted of the following (in thousands):
Fair Value of Consideration Transferred | Fair Value | |||
Cash | $ | 96,496 | ||
Issuance of 13,825,283 shares of Class A common stock | 162,862 | |||
Total | $ | 259,358 | ||
The fair value of the Groupon Class A common stock issued as consideration was measured based on the stock price upon closing of the transaction on January 2, 2014.
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. PRO FORMA ADJUSTMENTS TO UNAUDITED CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet
a. | Adjustment to reflect the cash paid to the sole stockholder of LivingSocial Korea, Inc. as part of the acquisition consideration. |
b. | Adjustment to record an indemnification receivable of $1.9 million from LivingSocial Inc. |
c. | Adjustment to record the deferred income tax asset of $1.3 million and non-current deferred income tax liability of $1.3 million related to the acquisition. |
d. | Adjustment to reclassify $0.5 million of software from intangible assets to property, equipment and software, net as of December 31, 2013 to conform to Groupon's presentation. |
e. | Adjustment to eliminate the historical LivingSocial Korea, Inc. goodwill of $50.8 million and record goodwill created as a result of the acquisition of approximately $219.1 million. |
f. | Adjustment to eliminate the remaining historical net book value of LivingSocial Korea Inc.'s intangible assets of $38.0 million and to record intangible assets created as a result of the acquisition of $109.1 million. Fair values for the intangible assets were determined based on the income and cost approaches. The intangible assets acquired were trade name, developed technology, merchant relationships and subscriber relationships and are being amortized on a straight-line basis over the following useful lives: |
Identifiable Intangible Assets | Useful Life | |
Trade name | 5 years | |
Developed technology | 2 years | |
Merchant relationships | 3 years | |
Subscriber relationships | 5 years | |
g. | Adjustment to record transaction costs for this acquisition that were incurred by Groupon after December 31, 2013. |
h. | Adjustment to eliminate the historical LivingSocial Korea, Inc. due to related parties of $0.2 million, which was not assumed in the acquisition. |
i. | Adjustment to record common stock and additional paid-in capital related to the issuance of 13,825,283 shares of Groupon Class A common stock issued to the sole stockholder of LivingSocial Korea, Inc. as part of the acquisition consideration. |
j. | Adjustment to eliminate LivingSocial Korea, Inc.'s historical stockholder's equity (additional paid-in capital, accumulated deficit and accumulated other comprehensive income). |
Statement of Operations
k. | Adjustment to reclassify $11.5 million of discount incentives for the year ended December 31, 2013 from marketing expense to a reduction of revenue to conform to Groupon's presentation. |
l. | Adjustment to reclassify $2.9 million of depreciation and amortization of property, equipment and software for the year ended December 31, 2013 to selling, general and administrative expense and cost of revenue to conform to Groupon's presentation. |
m. | Adjustment to eliminate $13.8 million of historical amortization expense recorded for LivingSocial Korea, Inc.'s pre-existing intangible assets and to record $26.3 million of amortization expense for the intangible assets recognized upon Groupon's acquisition of LivingSocial Korea, Inc. for the year ended December 31, 2013. The intangible assets acquired include trade name, developed technology, merchant relationships and subscriber relationships. These intangible assets are being amortized on a straight-line basis over the useful life of the underlying assets which range from 2 to 5 years. |
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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
n. | Adjustment to increase the denominator of the net loss per share calculations to reflect the issuance of Groupon Class A common stock issued to the sole stockholder of LivingSocial Korea, Inc. as part of the acquisition consideration. |
3. ADJUSTMENTS FOR OPERATIONS NOT ACQUIRED
Groupon did not acquire a Malaysia-based subsidiary of LivingSocial Korea, Inc., as that subsidiary was sold to LivingSocial, Inc. on December 26, 2013. Accordingly, the balances relating to that entity have been excluded from the unaudited pro forma condensed combined consolidated statement of operations.
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