ITEM 2.02. Results of Operations and Financial Condition.
On April 28, 2011, Ancestry.com Inc. (the “Company”) announced via a press release its preliminary results of operations for its quarter ended March 31, 2011. A copy of the press release is attached as Exhibit 99.1 hereto. It also posted on its website management’s presentation of highlights for the quarter ended March 31, 2011, a copy of which is attached as Exhibit 99.2.
Both exhibits contain references to adjusted EBITDA and free cash flow, which are considered non-GAAP financial measures.
Management believes that adjusted EBITDA and free cash flow are useful measures of operating performance because they exclude items that the Company does not consider indicative of its core performance. In the case of adjusted EBITDA, the Company adjusts net income for such things as interest, taxes, stock-based compensation and certain non-cash and non-recurring items. Free cash flow subtracts from adjusted EBITDA the capitalization of content database costs, capital expenditures and cash paid for income taxes and interest expense. However, these non-GAAP measures should be considered in addition to, not as a substitute for or superior to, net income and net cash provided by operating activities, or other financial measures prepared in accordance with GAAP. A reconciliation to the GAAP equivalents of these non-GAAP measures is contained in the press release and is also posted on the Company’s website.
Management uses adjusted EBITDA and free cash flow as measures of operating performance; for planning purposes, including the preparation of the annual operating budget; to allocate resources to enhance the financial performance of the Company’s business; to evaluate the effectiveness of the Company’s business strategies; to provide consistency and comparability with past financial performance; to facilitate a comparison of the Company’s results with those of other companies; and in communications with the Board of Directors concerning the Company’s financial performance. The Company also uses adjusted EBITDA and has used free cash flow as factors when determining management’s incentive compensation.
The information in this Item 2.02 (including Exhibit 99.1 and Exhibit 99.2) shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended.
Item 8.01. Other Events.
On April 28, 2011, the Board of Directors approved and announced a share repurchase program (the “Share Repurchase Program”). A copy of the press release announcing the Share Repurchase Program is attached as Exhibit 99.3 hereto.
Under the Share Repurchase Program, the Company may spend up to $125 million (excluding brokers’ commissions and certain other items) to repurchase shares of its common stock from time to time through April 30, 2012, depending on market conditions, the Company’s common stock price and other factors.
Share repurchases under the Share Repurchase Program may be made through brokers or dealers in the open market or in privately negotiated transactions and may be implemented in whole or in part through the establishment of a purchase program pursuant to the safe harbor provided by Securities Exchange Act of 1934 Rule 10b5-1, block purchases or through accelerated or forward or similar stock purchases. The Company expects to fund the purchases using cash on hand and its existing credit facility.
The Company is not obligated to purchase any shares under its Share Repurchase Program. Subject to applicable corporate and securities laws, repurchases under the Share Repurchase Program, if any, may be made at such times and in such amounts as the Company deems appropriate. Purchases under the Share Repurchase Program can be discontinued, or the Share Repurchase Program may be modified or terminated, at any time.
Forward-Looking Statements
This Item 8.01 contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, levels of activity, performance, or achievements to be materially different from those anticipated in these forward-looking statements. These statements include statements regarding the repurchase of shares, the amount of shares, if any, that may be repurchased and the timing of any such repurchases. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks and uncertainties include market conditions, the Company’s common stock price, the availability of cash and credit and the Company’s failure to achieve anticipated revenues and operating results. Information concerning these and other factors that could cause results to differ materially from those contained in the forward-looking statements is included under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, and in discussions in other of its Securities and Exchange Commission filings. These forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date and the Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.
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