Exhibit 99.7
Calculation of Pro Forma Senior Debt Net Leverage Ratio as of July 31, 2021
Non-GAAP Financial Measures
To provide investors with additional information regarding the Company in addition to that as determined by generally accepted accounting principles in the United States (“GAAP”), the Company discloses the following non-GAAP financial measures: Adjusted EBITDA and total net senior debt leverage ratio. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, operating income, cash flows, or any other measure calculated in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
Adjusted EBITDA Reconciliation
EBITDA represents net income (loss) for the respective periods excluding depreciation and amortization expense, interest income (expense) and income taxes. The Company defines Adjusted EBITDA as EBITDA excluding non-operating gains (losses); executive and management transition costs; restructuring costs; non-cash impairment charges and write downs; transaction, settlement, and integration costs, net; rebranding costs; and non-cash share-based compensation expense. The Company has included the “Adjusted EBITDA” measure in its EBITDA reconciliation in order to adequately assess the operating performance of its television and online businesses and in order to maintain comparability to its analyst's coverage and financial guidance, when given. Management believes that the Adjusted EBITDA measure allows investors to make a meaningful comparison between its business operating results over different periods of time with those of other similar companies. In addition, management uses Adjusted EBITDA as a metric to evaluate operating performance under the Company’s management and executive incentive compensation programs. EBITDA and Adjusted EBITDA are both non-GAAP measures and should not be construed as an alternative to operating income (loss), net income (loss) or to cash flows from operating activities as determined in accordance with generally accepted accounting principles (“GAAP”) and should not be construed as a measure of liquidity.
The following table presents a reconciliation of Adjusted EBITDA to net income (loss) attributable to shareholders, as adjusted on a pro forma combined basis to include the Company’s portal and advertising business that was acquired in July 2021 and the proposed acquisition of all of the issued and outstanding equity interests of 123tv Invest GmbH, a limited liability company organized under the laws of Germany, and 123tv Holding GmbH, a limited liability company organized under the laws of Germany.
iMEDIA BRANDS, INC.
AND SUBSIDIARIES
Reconciliation of Net Income (Loss) Attributable to Shareholders to Adjusted EBITDA:
(Unaudited)
(in thousands)
For the Twelve-Month Periods Ended | ||||||||||||||||||||||||
July 31, 2021 | June 30, 2021 | July 31, 2021 | July 31, 2021 | |||||||||||||||||||||
Consolidated | 123tv | Portal and Ad | Pro Forma | |||||||||||||||||||||
ShopHQ | Emerging | iMedia | (Historical) | (Historical) | Combined | |||||||||||||||||||
Net income (loss) attributable to shareholders | $ | (14,937 | ) | $ | 8,213 | $ | 4,139 | $ | (2,585 | ) | ||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Depreciation and amortization | 34,121 | 1,222 | - | 35,343 | ||||||||||||||||||||
Interest income | (41 | ) | - | - | (41 | ) | ||||||||||||||||||
Interest expense | 5,351 | 24 | - | 5,375 | ||||||||||||||||||||
Income taxes | 60 | 799 | - | 859 | ||||||||||||||||||||
EBITDA (as defined) | $ | 24,200 | $ | 354 | $ | 24,554 | $ | 10,258 | $ | 4,139 | $ | 38,951 | ||||||||||||
A reconciliation of EBITDA to Adjusted EBITDA is as follows: | ||||||||||||||||||||||||
EBITDA (as defined) | $ | 24,200 | $ | 354 | $ | 24,554 | $ | 10,258 | $ | 4,139 | $ | 38,951 | ||||||||||||
Adjustments: | ||||||||||||||||||||||||
Non-operating losses | - | - | - | 1,738 | - | 1,738 | ||||||||||||||||||
One-time customer concessions | 341 | - | 341 | - | - | 341 | ||||||||||||||||||
Transaction, settlement and integration costs, net | 790 | 1,756 | 2,546 | - | - | 2,546 | ||||||||||||||||||
Non-cash share-based compensation expense | 2,673 | - | 2,673 | - | - | 2,673 | ||||||||||||||||||
Loss on Debt Extinquishment | 654 | - | 654 | - | - | 654 | ||||||||||||||||||
Restructuring costs | 506 | - | 506 | - | - | 506 | ||||||||||||||||||
Adjusted EBITDA | $ | 29,164 | $ | 2,110 | $ | 31,274 | $ | 11,996 | $ | 4,139 | $ | 47,409 |
Total Net Senior Debt Leverage Ratio Reconciliation
Total net senior debt represents the long term credit facility, plus unamortized debt issuance costs, plus a seller note within other long term liabilities plus any additional senior debt, less debt subordinated in right of payment to the Company’s senior debt and less unrestricted cash. Total net senior debt leverage ratio is the ratio of total net senior debt to the Company’s pro forma combined last-twelve month Adjusted EBITDA.
The Company has included the “total net senior debt leverage ratio” measure as this is measured by the Company’s senior lender for compliance with the Company’s (together with its subsidiary borrowers) maximum senior net leverage ratio. Management believes that the total net senior debt leverage ratio allows investors to have a meaningful understanding of the Company’s compliance with its senior lender’s maximum senior net leverage ratio covenant.
The following table presents a reconciliation of total debt to total net senior debt leverage ratio:
iMEDIA BRANDS, INC.
AND SUBSIDIARIES
Reconciliation of Total Debt to Total Net Senior Debt:
(Unaudited)
(in thousands)
As of July 31, 2021 | ||||||||||||
As Reported | Pro Forma | Pro Forma | ||||||||||
iMedia | Adjustments | Combined | ||||||||||
Long term credit facility | $ | 73,919 | $ | - | $ | 73,919 | ||||||
Add: unamortized debt issuance costs | 1,826 | - | 1,826 | |||||||||
Seller note within other long term liabilities | 10,000 | - | 10,000 | |||||||||
Senior Notes (assuming exercise of the underwriters' overallotment option) | - | 80,000 | 80,000 | |||||||||
Total debt | $ | 85,745 | $ | 80,000 | $ | 165,745 | ||||||
Less: seller note | 10,000 | - | 10,000 | |||||||||
Less: unrestricted cash | 20,918 | (4,009 | ) | 16,909 | ||||||||
Total net senior debt | $ | 54,827 | $ | 84,009 | $ | 138,836 | ||||||
LTM Adjusted EBITDA | $ | 31,274 | $ | 16,135 | $ | 47,409 | ||||||
Total net senior debt leverage ratio | 1.8 | 2.9 |