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.
