Unaudited Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated financial statements have been derived from Bankrate and Caring’s historical audited financial statements, as adjusted to give effect to the acquisition of Caring, Inc. The unaudited pro forma condensed consolidated balance sheet gives effect to the acquisition as if it had occurred as of December 31, 2013. The unaudited pro forma condensed consolidated statement of operations gives effect to the acquisition as if it had occurred as of January 1, 2013.
The unaudited pro forma condensed consolidated financial statements are based on certain assumptions which we believe to be reasonable and will have a continuing impact on us. The pro forma adjustments are described in the notes.
The pro forma adjustments are preliminary and are based on information obtained to date by management, and are subject to revision as additional information becomes available as to, among other things, the fair value of acquired assets and liabilities as well as any pre-acquisition contingencies and final determination of acquisition related costs. The actual adjustments described in the notes will be made as of the closing date of the acquisition and may differ from those reflected in these unaudited pro forma condensed consolidated financial statements. Revisions to preliminary purchase price allocation of the acquisition may have a significant impact on the pro forma amounts of total assets, total liabilities and stockholders' equity, operating expenses and costs, depreciation and amortization and income tax expense.
The unaudited pro forma condensed consolidated financial information is presented for informational purposes only. The unaudited pro forma condensed consolidated financial information does not purport to represent what our results of operations or financial condition would have been had the acquisition actually occurred on the dates indicated, and they do not purport to project our results of operations or financial condition for any future period or as of any future date. Further, the unaudited pro forma condensed consolidated financial information does not reflect the impact of any cost savings or other exit activities that may result from or in connection with the acquisition.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2013
| | | | | | | | | | |
| | As of December 31, 2013 |
| | | | | | Proforma | | | |
(In thousands) | | Bankrate | Caring | Adjustments | | Pro Forma |
Assets | | | | | | | | | | |
Cash and cash equivalents | | $ | 230,071 | $ | 5,081 | $ | (55,753) | (a) | $ | 179,399 |
Accounts receivable, net of allowance for doubtful accounts | | | 61,962 | | 1,015 | | - | | | 62,977 |
Deferred income taxes | | | 7,155 | | - | | - | | | 7,155 |
Prepaid expenses and other current assets | | | 9,736 | | 200 | | - | | | 9,936 |
Total current assets | | | 308,924 | | 6,296 | | (55,753) | | | 259,467 |
| | | | | | | | | | |
Furniture, fixtures and equipment, net of accumulated depreciation | | | 12,930 | | 89 | | - | | | 13,019 |
Intangible assets, net of accumulated amortization | | | 350,206 | | 35 | | 29,465 | (b) | | 379,706 |
Goodwill | | | 611,975 | | 57 | | 23,057 | (b) | | 635,089 |
Other assets | | | 12,776 | | 113 | | 9,963 | (c) | | 22,852 |
Total assets | | $ | 1,296,811 | $ | 6,590 | $ | 6,732 | | $ | 1,310,133 |
| | | | | | | | | | |
Liabilities | | | | | | | | | | |
Accounts payable | | | 7,149 | | 922 | | - | | | 8,071 |
Accrued expenses | | | 40,546 | | 715 | | - | | | 41,261 |
Deferred revenue and customer deposits | | | 3,792 | | 653 | | (470) | (d) | | 3,975 |
Accrued interest | | | 7,379 | | - | | - | | | 7,379 |
Other current liabilities | | | 24,595 | | - | | - | | | 24,595 |
Total current liabilities | | | 83,461 | | 2,290 | | (470) | | | 85,281 |
| | | | | | | | | | |
Deferred income taxes | | | 51,699 | | - | | 11,500 | (e) | | 63,199 |
Long term debt, net of unamortized discount | | | 297,021 | | 7,307 | | (7,307) | (f) | | 297,021 |
Other liabilities | | | 25,668 | | 811 | | (809) | (g) | | 25,670 |
Total liabilities | | $ | 457,849 | $ | 10,408 | $ | 2,914 | | $ | 471,171 |
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Commitments and contingencies | | | | | | | | | | |
| | | | | | | | | | |
Total stockholders' equity (deficit) | | | 838,962 | | (3,818) | | 3,818 | (h) | | 838,962 |
Total liabilities and stockholders' equity | | $ | 1,296,811 | $ | 6,590 | $ | 6,732 | | $ | 1,310,133 |
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
| (a) | | Reflects the cash consideration paid in the transaction. |
| (b) | | Reflects the elimination of historical goodwill and intangible assets and the recording of intangible assets and the excess purchase price over the net asset value acquired as determined in the preliminary purchase price allocation. |
| (c) | | Reflects the elimination of deferred financing costs of $37,000 related to the existing debt at Caring. In addition, reflects the recording of a deferred tax asset of $10.0 million related to net operating losses at Caring at the federal statutory rate. |
| (d) | | Reflects the adjustment of deferred revenue to fair value as determined in the preliminary purchase price allocation. |
| (e) | | Reflects the recording of a deferred tax liability at Bankrate’s estimated tax rate. |
| (f) | | Reflects the elimination of the existing long term debt obligation at Caring which was satisfied in connection with the acquisition. |
| (g) | | Reflects the elimination of the existing warrant liabilities at Caring which were satisfied in connection with the acquisition. |
| (h) | | Reflects the elimination of the stockholders’ deficit at Caring in connection with the acquisition. |
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Fiscal Year Ended December 31, 2013
| | | | | | | | | |
| | Fiscal year ended December 31, 2013 |
| | | | | Proforma | | | |
(In thousands) | Bankrate | Caring (1) | Adjustments | | Pro Forma |
Revenue | $ | 457,432 | $ | 6,928 | $ | (326) | (a) | $ | 464,034 |
Cost of revenue (excludes depreciation and amortization) | | 151,050 | | 6,960 | | 159 | (b) | | 158,169 |
Gross margin | | 306,382 | | (32) | | (485) | | | 305,865 |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Sales | | 15,067 | | 3,078 | | 13 | (b) | | 18,158 |
Marketing | | 113,478 | | 620 | | 117 | (b) | | 114,215 |
Product development and technology | | 18,746 | | 2,357 | | 228 | (b) | | 21,331 |
General and administrative | | 56,134 | | 1,120 | | 15 | (c) | | 57,269 |
Acquisition, offering and related expenses | | 50 | | - | | - | | | 50 |
Changes in fair value of contingent acquisition consideration | | 16,065 | | - | | - | | | 16,065 |
Depreciation and amortization | | 60,127 | | 108 | | 3,521 | (d) | | 63,756 |
| | 279,667 | | 7,283 | | 3,894 | | | 290,844 |
Income (loss) from operations | | 26,715 | | (7,315) | | (4,379) | | | 15,021 |
| | | | | | | | | |
Interest and other expenses, net | | 24,981 | | 259 | | (260) | (e) | | 24,980 |
Loss on early extinguishment of debt | | 17,175 | | - | | - | | | 17,175 |
Loss before taxes | | (15,441) | | (7,574) | | (4,119) | | | (27,134) |
Income tax benefit | | (5,439) | | - | | (4,560) | (f) | | (9,999) |
Net (loss) income | $ | (10,002) | $ | (7,574) | $ | 441 | | $ | (17,135) |
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
| (1) | | The classification of Caring’s statement of operations is a pro forma adjustment to conform to Bankrate’s presentation. While some reclassifications have been included, further reclassifications may be necessary to conform to those classifications that are determined by the combined company to be most appropriate. |
| (a) | | Reflects the fair value adjustment to deferred revenue as if purchase accounting was applied as of January 1, 2013. |
| (b) | | Reflects stock-based compensation expense related to awards granted in connection with the acquisition to Caring employees. |
| (c) | | Reflects stock-based compensation expense related to awards granted in connection with the acquisition to Caring employees. In addition, the adjustment reflects the elimination of historical stock-based compensation expense and board of director costs. |
| (d) | | Reflects the elimination of historical amortization expense of $47,000 and estimates the impact on amortization of approximately $3.6 million as if purchase accounting was applied as of January 1, 2013. |
| (e) | | Reflects the elimination of historical interest expense of $266,000 related to the existing debt of Caring which was satisfied in connection with the acquisition as well as the elimination of the change in fair value of warrant liabilities of $6,000. |
| (f) | | Reflects the tax effect of the pro forma adjustments at the statutory rate as well as the tax benefit from the Caring, Inc. loss at the statutory rate. |
