[August 10, 2017] |
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Intersections Inc. Reports Second Quarter 2017 Results
Intersections Inc. (NASDAQ: INTX) today announced financial results for
the quarter ended June 30, 2017.
"We have reached a significant milestone by the end of this quarter,"
said Johan Roets, Chief Executive Officer. "We have substantially
completed the five strategic objectives we set forth in 2014 - reduce
cost, protect run-off revenue, build a differentiated product, build a
distribution capability and separate the technology platforms of our
U.S. and Canadian businesses. We are now poised for new subscriber
revenue growth in both the U.S. and Canada for the remainder of 2017 and
beyond. We have also divested all of the other businesses and activities
in Intersections Inc., allowing us to exclusively focus on the identity
theft protection market to create shareholder value."
Key Accomplishments and Developments:
-
The Company launched its Identity Guard® with Watson™
technology platform and product suite on June 26, 2017. Marketing of
the product suite to potential distribution partners in the U.S. and
Canada began in March 2017. The Company expects the Identity Guard®
with Watson™ product suite to be its primary offering going forward.
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The Company completed the divestiture of its Pet Health Monitoring
business, known as Voyce, effective July 31, 2017. The Voyce sale,
along with the sale of the Company's Bail Bond Industry Solutions
business in the first quarter of 2017 and its insurance consulting
business in the second quarter of 2017, completes the Company's
previously announced program to divest all non-core businesses and
focus solely on the personal identity theft protection market for
consumers.
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The completed divestiture program allows management to exclusively
focus on the full market launch of Identity Guard® with
Watson™, executing new partner opportunities, fine-tuning its direct
to consumer marketing, and continuing its pursuit of cost control
through streamlining and optimizing processes.
-
Identity Guard® and the Canadian business achieved
sequential revenue growth of 3.9% and 5.3%, respectively, compared to
the first quarter of 2017.
-
Refinancing of term loan completed with PEAK6 Investments, LP, on more
favorable terms than our prior term loan including a lower rate of
interest and deferral of principal payments until September 2019.
Consolidated Second Quarter Results:
Consolidated revenue for the quarter ended June 30, 2017 was $39.9
million, compared to $44.8 million for the quarter ended June 30, 2016.
Loss before income taxes for the quarter ended June 30, 2017 was $(6.2)
million, compared to $(5.3) million for the quarter ended June 30, 2016.
Consolidated adjusted EBITDA (loss) before share related compensation
and non-cash impairment charges ("Adjusted EBITDA") for the quarter
ended June 30, 2017 was $(1.3) million, compared to $(968) thousand for
the quarter ended June 30, 2016. Diluted loss per share for the quarter
ended June 30, 2017 was $(0.26), compared to $(0.23) for the quarter
ended June 30, 2016. Consolidated revenue for the six months ended June
30, 2017 was $80.4 million, compared to $90.4 million for the six months
ended June 30, 2016. Loss before income taxes for the six months ended
June 30, 2017 was $(11.0) million, compared to $(9.6) million for the
six months ended June 30, 2016. Consolidated Adjusted EBITDA (loss) for
the six months ended June 30, 2017 was $(2.9) million, compared to
$(2.0) million for the six months ended June 30, 2016. Diluted loss per
share for the six months ended June 30, 2017 was $(0.46), compared to
$(0.41) for the six months ended June 30, 2016.
Core Business (all businesses except for Voyce) Second Quarter
Highlights:
-
The Company's Identity Guard® subscriber revenue increased
3.9% to $12.5 million for the quarter ended June 30, 2017, compared to
$12.0 million for the quarter ended March 31, 2017, and decreased 3.4%
compared to revenue of $12.9 million for the quarter ended June 30,
2016. The Identity Guard® subscriber base was 329 thousand
subscribers as of June 30, 2017, compared to 333 thousand subscribers
as of March 31, 2017.
-
Revenue from the Company's U.S. financial institution clients was
$21.4 million for the quarter ended June 30, 2017 compared to revenue
of $21.9 million for the quarter ended March 31, 2017. Revenue
decreased by 0.8% per month during the second quarter, which the
Company believes is representative of normal attrition given the
discontinuation of marketing and retention efforts for this population.
-
Core Business (loss) before income taxes for the quarter ended June
30, 2017 was $(5.3) million, compared to $(4.2) million for the
quarter ended March 31, 2017, and $(257) thousand for the quarter
ended June 30, 2016. The Core Business (loss) before income taxes
compared to the prior quarter was negatively impacted by a $1.5
million non-cash loss on extinguishment of debt as a result of the
term loan refinancing closed in April 2017, and an increase of $1.0
million in the estimated liability for non-income business taxes and
interest recorded in the second quarter of 2017. These items along
with the negative impact of lower revenue primarily from our U.S.
financial institution clients caused the decrease compared to the
second quarter of 2016.
-
Core Business Adjusted EBITDA (loss) for the quarter ended June 30,
2017 was $(673) thousand, compared to $(934) thousand for the quarter
ended March 31, 2017 and $3.6 million for the quarter ended June 30,
2016. Core Business Adjusted EBITDA for the quarter ended
June 30, 2017 was negatively impacted compared to the prior year by
$800 thousand related to the increase in the estimated liability for
non-income business taxes, and the negative impact of lower revenue
primarily from our U.S. financial institution clients.
Liquidity:
As of June 30, 2017, the Company had a cash balance of $9.5 million, and
an outstanding principal balance of $20.0 million under the New Credit
Agreement, as amended. Cash used in operating activities for the six
months ended June 30, 2017 was $(3.5) million, of which approximately
$(1.9) million was used to fund the wind-down of the Voyce business.
Cash provided by operating activities for the quarter ended June 30,
2017 was $250 thousand, which includes the use of approximately $(500)
thousand to fund Voyce wind-down activities.
The Company began expanding its business development capabilities in
2016 to address market channel and distribution opportunities and
continued the expansion of this team in the first six months of 2017. As
a result, cash used in operating activities for the six month period
includes approximately $2.4 million for business development activities,
the significant majority of which is personnel cost. The Company expects
to continue its spending on business development activities at
approximately the same level as the first six months of 2017 for the
remainder of 2017.
Cash used in operating activities included $4.0 million and $1.3 million
in the first and second quarters of 2017, respectively, for deferred
subscription and solicitation costs related to our direct to consumer
marketing, for a total of $5.3 million for the six month period. The
Company implemented changes beginning in the second quarter to reduce
the cash marketing spending in this channel and expects the use of cash
for this purpose to continue to decline for the remainder of 2017.
The Company continued to develop new product features primarily for the
Identity Guard® with Watson™ platform during the
six month period ending June 30, 2017. As a result, the Company invested
approximately $1.6 million in internally developed capitalized software
for the six month period. The Company expects to continue its
investments in product development at approximately the same level as
the first six months of 2017 for the remainder of 2017.
For additional information, Please see "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations-Liquidity
and Capital Resources" in our most recent Form 10-Q.
Second Quarter 2017 Business Update Conference Call:
The Company previously announced that it will hold a conference call to
provide a second quarter 2017 business update on Thursday, August 10,
2017 at 4:30 p.m. Eastern Time.
You may access the live webcast on the Investor's page at Intersections
Inc.'s website www.intersections.com.
You can also access the call by dialing the toll free numbers below. If
you wish to participate in the Q&A session, you must dial in.
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WHAT:
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Intersections Inc. Second Quarter 2017 Conference Call
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WHEN:
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August 10, 2017
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4:30 p.m. Eastern Time
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HOW:
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Dial in: 888-771-4384 or 847-585-4409
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International: For a current list of alternate local and
International Freephone telephone numbers, please
click here.
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Participant Pass code: 5272118#
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To pre-register for the conference, please
click here.
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The replay of the webcast will be available August 10, 2017 at 7:00 p.m.
(Eastern Time) thru August 18, 2017 at 11:59 PM (Eastern Time). The
dial-in for the replay is either 888-843-7419 or 630-652-3042 with the
replay access code of 5272118#.
Non-GAAP Financial Measures:
Intersections' Consolidated Financial Statements, "Other Data" and
reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures and related notes can be
found in the accompanying tables and footnotes to this release and in
the "GAAP and Non-GAAP Measures" link under the "Investor & Media" page
on our website at www.intersections.com.
Forward-Looking Statements:
Statements in this release relating to future plans, results,
performance, expectations, achievements and the like are considered
"forward-looking statements" under the Private Securities
Litigation Reform Act of 1995. You can identify forward-looking
statements by the fact that they do not relate strictly to historical or
current facts. These statements may include words such as "anticipate,"
"estimate," "expect," "project," "plan," "intend," "believe," "may,"
"should," "can have," "likely" and other words and terms of similar
meaning in connection with any discussion of the timing or nature of
future operating or financial performance or other events. Those
forward-looking statements involve known and unknown risks and
uncertainties and are subject to change based on various factors and
uncertainties that may cause actual results to differ materially from
those expressed or implied by those statements, including the success of
our strategic objectives; our ability to generate revenue from our
partner sales strategy and business development pipeline with our
distribution partners; the impact of shutting down and then divesting
our Pet Health Monitoring segment; the timing and success of new product
launches and other growth initiatives, including our new Identity Guard®
with Watson™ product; the continuing impact of the regulatory
environment on our business; the continued dependence on a small number
of financial institutions for a majority of our revenue and to service
our U.S. financial institution customer base; our ability to execute our
strategy and previously announced transformation plan; our incurring
additional restructuring charges; our incurring additional charges for
non-income business taxes or otherwise, or impairment costs or charges
on goodwill and/or other assets; our ability to control costs; our
expectations about marketing and investment expenditures described under
"Liquidity" above; our ability to maintain sufficient liquidity and
produce sufficient cash flow to fund our business, growth strategy and
debt service obligations; and our needs for additional capital to grow
our business, including our ability to maintain compliance with the
covenants under our term loan or seek additional sources of debt and/or
equity financing. Factors and uncertainties that may cause actual
results to differ include but are not limited to the risks disclosed
under "Forward-Looking Statements," "Item 1. Business-Government
Regulation" and "Item 1A. Risk Factors" in the Company's most recent
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and in its
recent other filings with the U.S. Securities and Exchange Commission.
The Company undertakes no obligation to revise or update any
forward-looking statements unless required by applicable law.
About Intersections:
Intersections Inc. (Nasdaq: INTX) provides innovative, information based
solutions that help consumers manage risks and make better informed life
decisions. Under its Identity Guard® brand and other brands,
the Company helps consumers monitor, manage and protect against the
risks associated with their identities and personal information.
Headquartered in Chantilly, Virginia, the Company was founded in 1996.
To learn more, visit www.intersections.com.
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INTERSECTIONS INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(in thousands, except per share data)
|
(unaudited)
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|
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Three Months Ended June 30,
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Six Months Ended June 30,
|
|
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2017
|
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2016
|
|
2017
|
|
2016
|
REVENUE
|
|
$
|
39,935
|
|
|
$
|
44,751
|
|
|
$
|
80,384
|
|
|
$
|
90,399
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OPERATING EXPENSES:
|
|
|
|
|
|
|
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Marketing
|
|
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3,165
|
|
|
|
3,532
|
|
|
|
6,630
|
|
|
|
8,097
|
|
Commission
|
|
|
9,756
|
|
|
|
10,887
|
|
|
|
19,504
|
|
|
|
22,109
|
|
Cost of revenue
|
|
|
13,569
|
|
|
|
13,151
|
|
|
|
26,572
|
|
|
|
27,949
|
|
General and administrative
|
|
|
16,145
|
|
|
|
19,773
|
|
|
|
33,140
|
|
|
|
36,919
|
|
(Gain) loss on dispositions of Captira and Habits at Work
|
|
|
(24
|
)
|
|
|
-
|
|
|
|
106
|
|
|
|
-
|
|
Impairment of intangibles and other assets
|
|
|
164
|
|
|
|
-
|
|
|
|
180
|
|
|
|
-
|
|
Depreciation
|
|
|
1,288
|
|
|
|
1,589
|
|
|
|
2,588
|
|
|
|
3,245
|
|
Amortization
|
|
|
47
|
|
|
|
192
|
|
|
|
93
|
|
|
|
384
|
|
Total operating expenses
|
|
|
44,110
|
|
|
|
49,124
|
|
|
|
88,813
|
|
|
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98,703
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LOSS FROM OPERATIONS
|
|
|
(4,175
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)
|
|
|
(4,373
|
)
|
|
|
(8,429
|
)
|
|
|
(8,304
|
)
|
Interest expense, net
|
|
|
(603
|
)
|
|
|
(840
|
)
|
|
|
(1,195
|
)
|
|
|
(1,082
|
)
|
Loss on extinguishment of debt
|
|
|
(1,525
|
)
|
|
|
-
|
|
|
|
(1,525
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)
|
|
|
-
|
|
Other income (expense), net
|
|
|
103
|
|
|
|
(94
|
)
|
|
|
137
|
|
|
|
(181
|
)
|
LOSS BEFORE INCOME TAXES
|
|
|
(6,200
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)
|
|
|
(5,307
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)
|
|
|
(11,012
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)
|
|
|
(9,567
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)
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Income tax benefit (expense)
|
|
|
18
|
|
|
|
-
|
|
|
|
28
|
|
|
|
(7
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)
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NET LOSS
|
|
$
|
(6,182
|
)
|
|
$
|
(5,307
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)
|
|
$
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(10,984
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)
|
|
$
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(9,574
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)
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Net loss per common share-basic and diluted
|
|
$
|
(0.26
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)
|
|
$
|
(0.23
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)
|
|
$
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(0.46
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)
|
|
$
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(0.41
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)
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Weighted average common shares outstanding-basic and diluted
|
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24,155
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|
|
|
23,268
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|
|
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23,916
|
|
|
|
23,078
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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INTERSECTIONS INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(in thousands, except par value)
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(unaudited)
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|
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June 30, 2017
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|
December 31, 2016
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ASSETS
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CURRENT ASSETS:
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|
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Cash and cash equivalents
|
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$
|
9,505
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$
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10,857
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Accounts receivable, net of allowance for doubtful accounts of $11
(2017) and $15 (2016)
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|
|
7,159
|
|
|
|
7,972
|
|
Prepaid expenses and other current assets
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|
|
4,122
|
|
|
|
3,864
|
|
Inventory
|
|
|
-
|
|
|
|
250
|
|
Income tax receivable
|
|
|
2,553
|
|
|
|
3,314
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|
Deferred subscription solicitation and commission costs
|
|
|
4,313
|
|
|
|
5,050
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Assets held for sale
|
|
|
-
|
|
|
|
104
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|
Total current assets
|
|
|
27,652
|
|
|
|
31,411
|
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PROPERTY AND EQUIPMENT, net
|
|
|
10,519
|
|
|
|
10,611
|
|
GOODWILL
|
|
|
9,763
|
|
|
|
9,763
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INTANGIBLE ASSETS, net
|
|
|
117
|
|
|
|
210
|
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OTHER ASSETS
|
|
|
1,128
|
|
|
|
862
|
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TOTAL ASSETS
|
|
$
|
49,179
|
|
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$
|
52,857
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
|
|
|
|
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Accounts payable
|
|
$
|
1,536
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|
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$
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2,536
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Accrued expenses and other current liabilities
|
|
|
11,357
|
|
|
|
11,068
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Accrued payroll and employee benefits
|
|
|
5,236
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|
|
|
4,256
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|
Commissions payable
|
|
|
377
|
|
|
|
316
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Current portion of long-term debt, net
|
|
|
-
|
|
|
|
2,146
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|
Capital leases, current portion
|
|
|
448
|
|
|
|
471
|
|
Deferred revenue
|
|
|
6,973
|
|
|
|
8,295
|
|
Liabilities held for sale
|
|
|
-
|
|
|
|
104
|
|
Total current liabilities
|
|
|
25,927
|
|
|
|
29,192
|
|
LONG-TERM DEBT, net
|
|
|
19,129
|
|
|
|
10,092
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OBLIGATIONS UNDER CAPITAL LEASES, less current portion
|
|
|
633
|
|
|
|
865
|
|
OTHER LONG-TERM LIABILITIES
|
|
|
3,218
|
|
|
|
3,436
|
|
DEFERRED TAX LIABILITY, net
|
|
|
1,905
|
|
|
|
1,905
|
|
TOTAL LIABILITIES
|
|
|
50,812
|
|
|
|
45,490
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|
STOCKHOLDERS' EQUITY:
|
|
|
|
|
Common stock at $0.01 par value, shares authorized 50,000; shares
issued 27,920 (2017) and 27,303 (2016); shares outstanding 23,897
(2017) and 23,733 (2016)
|
|
|
279
|
|
|
|
273
|
|
Additional paid-in capital
|
|
|
143,729
|
|
|
|
142,247
|
|
Warrants
|
|
|
2,140
|
|
|
|
-
|
|
Treasury stock, shares at cost; 4,022 (2017) and 3,570 (2016)
|
|
|
(35,466
|
)
|
|
|
(33,822
|
)
|
Accumulated deficit
|
|
|
(112,315
|
)
|
|
|
(101,331
|
)
|
TOTAL STOCKHOLDERS' EQUITY
|
|
|
(1,633
|
)
|
|
|
7,367
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
49,179
|
|
|
$
|
52,857
|
|
|
|
|
|
|
|
|
|
|
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INTERSECTIONS INC.
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(in thousands)
|
(unaudited)
|
|
|
|
Six Months Ended June 30,
|
|
|
2017
|
|
2016
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
Net loss
|
|
$
|
(10,984
|
)
|
|
$
|
(9,574
|
)
|
Adjustments to reconcile net loss to cash flows used in operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
2,681
|
|
|
|
3,645
|
|
Amortization of debt issuance costs
|
|
|
168
|
|
|
|
387
|
|
Accretion of debt discount
|
|
|
29
|
|
|
|
-
|
|
Provision for doubtful accounts
|
|
|
(4
|
)
|
|
|
25
|
|
(Gain) loss on disposal of fixed assets
|
|
|
(4
|
)
|
|
|
256
|
|
Share based compensation
|
|
|
2,420
|
|
|
|
2,601
|
|
Amortization of deferred subscription solicitation costs
|
|
|
6,053
|
|
|
|
7,170
|
|
Loss on disposition of Captira Analytical
|
|
|
130
|
|
|
|
-
|
|
Gain on disposition of Habits at Work
|
|
|
(24
|
)
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
1,525
|
|
|
|
-
|
|
Impairment of intangibles and other long-lived assets
|
|
|
250
|
|
|
|
-
|
|
Changes in assets and liabilities:
|
|
|
|
|
Accounts receivable
|
|
|
816
|
|
|
|
(2,824
|
)
|
Prepaid expenses, other current assets and other assets
|
|
|
(649
|
)
|
|
|
575
|
|
Income tax receivable, net
|
|
|
760
|
|
|
|
720
|
|
Deferred subscription solicitation and commission costs
|
|
|
(5,316
|
)
|
|
|
(4,682
|
)
|
Accounts payable and accrued liabilities
|
|
|
88
|
|
|
|
(4,545
|
)
|
Commissions payable
|
|
|
46
|
|
|
|
(40
|
)
|
Deferred revenue
|
|
|
(1,290
|
)
|
|
|
1,463
|
|
Other long-term liabilities
|
|
|
(218
|
)
|
|
|
790
|
|
Cash flows used in operating activities
|
|
|
(3,523
|
)
|
|
|
(4,033
|
)
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
Net cash paid for the disposition of Captira Analytical
|
|
|
(315
|
)
|
|
|
-
|
|
Decrease (increase) in restricted cash
|
|
|
115
|
|
|
|
(375
|
)
|
Proceeds from sale of property and equipment
|
|
|
4
|
|
|
|
394
|
|
Acquisition of property and equipment
|
|
|
(2,748
|
)
|
|
|
(2,972
|
)
|
Cash flows used in investing activities
|
|
|
(2,944
|
)
|
|
|
(2,953
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from issuance of debt
|
|
|
20,000
|
|
|
|
20,000
|
|
Repayments of debt
|
|
|
(13,920
|
)
|
|
|
(1,644
|
)
|
Repurchase of common stock
|
|
|
(1,510
|
)
|
|
|
-
|
|
Proceeds from issuance of warrants
|
|
|
1,500
|
|
|
|
-
|
|
Cash paid for debt and equity issuance costs
|
|
|
(323
|
)
|
|
|
(1,856
|
)
|
Capital lease payments
|
|
|
(286
|
)
|
|
|
(347
|
)
|
Withholding tax payment on vesting of restricted stock units
|
|
|
(667
|
)
|
|
|
(321
|
)
|
Cash flows provided by financing activities
|
|
|
4,794
|
|
|
|
15,832
|
|
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(1,673
|
)
|
|
|
8,846
|
|
CASH AND CASH EQUIVALENTS - Beginning of period
|
|
|
10,857
|
|
|
|
11,471
|
|
Cash reclassified to assets held for sale at beginning of period
|
|
|
321
|
|
|
|
-
|
|
CASH AND CASH EQUIVALENTS - End of period
|
|
$
|
9,505
|
|
|
$
|
20,317
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES:
|
|
|
|
|
Equipment obtained under capital lease, including acquisition costs
|
|
$
|
-
|
|
|
$
|
105
|
|
Equipment additions accrued but not paid
|
|
$
|
133
|
|
|
$
|
130
|
|
Withholding tax payments accrued on vesting of restricted stock
units and stock option exercises
|
|
$
|
185
|
|
|
$
|
33
|
|
Shares withheld in lieu of withholding taxes on vesting of
restricted stock awards
|
|
$
|
163
|
|
|
$
|
18
|
|
|
|
|
|
|
|
|
|
|
|
INTERSECTIONS INC.
|
OTHER DATA
|
(in thousands)
|
(unaudited)
|
|
Personal Information Services Segment Revenue
|
|
The following tables provide comparative details of our Personal
Information Services segment revenue information for the three month
periods ended June 30, 2017, March 31, 2017 and June 30, 2016, and
for the six month periods ended June 30, 2017 and 2016:
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
June 30, 2017
|
|
|
March 31, 2017
|
|
|
Change
|
|
|
June 30, 2016
|
|
|
Change
|
Identity Guard® (1)
|
|
|
$
|
12,482
|
|
|
$
|
12,012
|
|
|
3.9%
|
|
|
$
|
12,920
|
|
|
(3.4)%
|
Canadian business
|
|
|
|
3,220
|
|
|
|
3,059
|
|
|
5.3%
|
|
|
|
3,227
|
|
|
(0.2)%
|
U.S. financial institutions
|
|
|
|
21,365
|
|
|
|
21,903
|
|
|
(2.5)%
|
|
|
|
24,530
|
|
|
(12.9)%
|
Breach services & other (1)
|
|
|
|
1,311
|
|
|
|
1,636
|
|
|
(19.9)%
|
|
|
|
890
|
|
|
47.3%
|
Sub total
|
|
|
|
38,378
|
|
|
|
38,610
|
|
|
(0.6)%
|
|
|
|
41,567
|
|
|
(7.7)%
|
Other business units
|
|
|
|
1,557
|
|
|
|
1,839
|
|
|
(15.3)%
|
|
|
|
3,184
|
|
|
(51.1)%
|
Consolidated revenue
|
|
|
$
|
39,935
|
|
|
$
|
40,449
|
|
|
(1.3)%
|
|
|
$
|
44,751
|
|
|
(10.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
June 30, 2016
|
|
|
Change
|
|
|
|
|
|
|
Identity Guard® (1)
|
|
|
$
|
24,494
|
|
|
$
|
26,105
|
|
|
(6.2)%
|
|
|
|
|
|
|
Canadian business
|
|
|
|
6,279
|
|
|
|
6,247
|
|
|
0.5%
|
|
|
|
|
|
|
U.S. financial institutions
|
|
|
|
43,268
|
|
|
|
49,866
|
|
|
(13.2)%
|
|
|
|
|
|
|
Breach services & other (1)
|
|
|
|
2,947
|
|
|
|
1,828
|
|
|
61.2%
|
|
|
|
|
|
|
Sub total
|
|
|
|
76,988
|
|
|
|
84,046
|
|
|
(8.4)%
|
|
|
|
|
|
|
Other business units
|
|
|
|
3,396
|
|
|
|
6,353
|
|
|
(46.5)%
|
|
|
|
|
|
|
Consolidated revenue
|
|
|
$
|
80,384
|
|
|
$
|
90,399
|
|
|
(11.1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________________
|
(1)
|
|
|
We periodically refine the criteria used to calculate and report our
subscriber data. In the six months ended June 30, 2017, we
determined that certain subscribers who receive our breach response
services should no longer be included in the presentation of
Identity Guard® subscribers or revenue due to the
nonrecurring nature of our breach response services. For
comparability, all periods presented have been recast to reflect
this change in subscribers and revenue.
|
|
|
|
|
|
INTERSECTIONS INC.
|
OTHER DATA, continued
|
(in thousands)
|
(unaudited)
|
|
Personal Information Services Segment Subscribers
|
|
The following tables provide details of our Personal Information
Services segment subscriber information for the three and six months
ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
Three months ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Institution
|
|
Identity Guard® (1)
|
|
Canadian Business Lines
|
|
Total
|
|
|
(in thousands)
|
Balance at March 31, 2017
|
|
682
|
|
|
333
|
|
|
160
|
|
|
1,175
|
|
Additions
|
|
-
|
|
|
30
|
|
|
28
|
|
|
58
|
|
Cancellations
|
|
(19
|
)
|
|
(34
|
)
|
|
(27
|
)
|
|
(80
|
)
|
Balance at June 30, 2017
|
|
663
|
|
|
329
|
|
|
161
|
|
|
1,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Institution
|
|
Identity Guard® (1)
|
|
Canadian Business Lines
|
|
Total
|
|
|
(in thousands)
|
Balance at December 31, 2016
|
|
705
|
|
|
317
|
|
|
162
|
|
|
1,184
|
|
Additions
|
|
2
|
|
|
78
|
|
|
58
|
|
|
138
|
|
Cancellations
|
|
(44
|
)
|
|
(66
|
)
|
|
(59
|
)
|
|
(169
|
)
|
Balance at June 30, 2017
|
|
663
|
|
|
329
|
|
|
161
|
|
|
1,153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________________
|
(1)
|
|
|
We periodically refine the criteria used to calculate and report our
subscriber data. In the six months ended June 30, 2017, we
determined that certain subscribers who receive our breach response
services should no longer be included in the presentation of
Identity Guard® subscribers or revenue due to the
nonrecurring nature of our breach response services. For
comparability, all periods presented have been recast to reflect
this change in subscribers and revenue.
|
|
|
|
|
INTERSECTIONS INC. OTHER DATA, continued (unaudited)
Intersections Inc. Reconciliation of Non-GAAP Financial Measures
The table below includes financial information prepared in accordance
with accounting principles generally accepted in the United States,
("GAAP"), as well as other financial measures referred to as non-GAAP
financial measures. Consolidated adjusted EBITDA (loss) before share
related compensation and non-cash impairment charges ("Adjusted EBITDA")
is presented in a manner consistent with the way management evaluates
operating results and which management believes is useful to investors
and others. Share related compensation includes non-cash share based
compensation. An explanation regarding the Company's use of non-GAAP
financial measures and a reconciliation of non-GAAP financial measures
used by the Company to GAAP measures is provided below. These non-GAAP
financial measures should be considered in addition to, but not as a
substitute for, net income (loss) and the other information prepared in
accordance with GAAP, and may not be comparable to similarly titled
measures reported by other companies. Management strongly encourages
shareholders to review our financial statements and publicly-filed
reports in their entirety and not to rely on any single financial
measure.
Consolidated Adjusted EBITDA represents consolidated loss before income
taxes plus: share related compensation; non-cash impairment of goodwill,
intangibles and other assets; adjustment for surplus and obsolete
inventories; (gain) loss on disposal of fixed assets; (gain) loss on
sale of Captira Analytical and Habits at Work; loss on extinguishment of
debt; depreciation and amortization; and interest expense. We believe
that the consolidated Adjusted EBITDA calculation provides useful
information to investors because they are indicators of our operating
performance, and we use these measures in communications with our board
of directors, creditors, investors and others concerning our financial
performance. Consolidated Adjusted EBITDA is commonly used as a basis
for investors and analysts to evaluate and compare the periodic and
future operating performance and value of companies within our industry.
Our Board of Directors and management use consolidated Adjusted EBITDA
to evaluate the operating performance of the Company. In addition,
consolidated Adjusted EBITDA, as defined in our New Credit Agreement
with PEAK6 Investments, L.P., as amended, is used to measure covenant
compliance.
We provide this information to show the impact of share related
compensation on our operating results, as it is excluded from our
internal operating and budgeting plans and measurements of financial
performance; however, we do consider the dilutive impact to our
shareholders when awarding share related compensation and consider both
the Black-Scholes value and GAAP value (to the extent applicable) in
connection therewith, and value such awards accordingly.
INTERSECTIONS INC. OTHER DATA, continued (unaudited)
We do not consider share related compensation charges when we evaluate
the performance of our individual business groups or formulate our short
and long-term operating plans. Due to its nature, individual managers
generally are unable to project the impact of share related compensation
and accordingly we do not hold them accountable for the impact of equity
award grants. When we consider making share related compensation grants,
we primarily take into account the need to attract and retain high
quality employees, overall shareholder dilution and the Black-Scholes
values of the equity grant to the recipient, rather than the potential
accounting charges associated with such grants. For comparability
purposes, we believe it is useful to provide a non-GAAP financial
measure that excludes share related compensation in order to better
understand the long-term performance of our core business and to compare
our results to the results of our peer companies because of varying
available valuation methodologies and the variety of award types that
companies can use under GAAP. Furthermore, the value of share related
compensation is determined using a complex formula that incorporates
factors, such as market volatility, that are beyond our control.
Accordingly, we believe that the presentation of consolidated Adjusted
EBITDA when read in conjunction with our reported GAAP results can
provide useful supplemental information to our management, to investors
and to our lenders regarding financial and business trends relating to
our financial condition and results of operations.
Consolidated Adjusted EBITDA has limitations due to the fact it does not
include all compensation related expenses. For example, if we only paid
cash based compensation as opposed to a portion in share related
compensation, the cash compensation expense included in our general and
administrative expenses would be higher. We compensate for this
limitation by providing information required by GAAP about outstanding
share based awards in the footnotes to our financial statements in our
SEC filings. We believe equity based compensation is an important
element of our compensation program and all forms of share related
awards are valued and included as appropriate in our operating results.
The following table reconciles Core Business, Voyce and consolidated
income (loss) before income taxes to consolidated Adjusted EBITDA, as
defined, for the previous six quarters through June 30, 2017. In
managing our business, we analyze our performance quarterly on a
consolidated income (loss) before income tax basis.
In the second quarter of 2016, we ceased adding other expense (income)
to consolidated loss before income taxes as part of our calculation of
Adjusted EBITDA, to be consistent with the definition of Adjusted EBITDA
in our Prior Credit Agreement. Prior periods have been recast to reflect
the new presentation. For additional information, Please see "Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operations-Liquidity and Capital Resources" in our most recent Form
10-Q.
|
INTERSECTIONS INC.
|
OTHER DATA, continued
|
(unaudited)
|
|
Core Business, Voyce and consolidated Adjusted EBITDA (in
thousands):
|
|
|
|
2017 Quarter Ended
|
|
2016 Quarter Ended
|
|
|
June 30
|
|
March 31
|
|
December 31
|
|
September 30
|
|
June 30
|
|
March 31
|
Reconciliation from consolidated (loss) income before income taxes
to consolidated Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Business (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes
|
|
$
|
(5,313
|
)
|
|
$
|
(4,214
|
)
|
|
$
|
190
|
|
|
$
|
(1,857
|
)
|
|
$
|
(257
|
)
|
|
$
|
869
|
|
Non-cash share based compensation
|
|
|
1,290
|
|
|
|
1,130
|
|
|
|
(38
|
)
|
|
|
2,319
|
|
|
|
1,446
|
|
|
|
1,155
|
|
Impairment of goodwill, intangibles and other assets
|
|
|
(86
|
)
|
|
|
86
|
|
|
|
1,428
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Loss on disposal of fixed assets
|
|
|
-
|
|
|
|
-
|
|
|
|
6
|
|
|
|
6
|
|
|
|
256
|
|
|
|
-
|
|
(Gain) loss on sale of Captira Analytical and Habits at Work
|
|
|
(24
|
)
|
|
|
130
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
1,525
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
1,332
|
|
|
|
1,342
|
|
|
|
1,320
|
|
|
|
1,163
|
|
|
|
1,353
|
|
|
|
1,424
|
|
Interest expense, net
|
|
|
603
|
|
|
|
592
|
|
|
|
664
|
|
|
|
620
|
|
|
|
840
|
|
|
|
242
|
|
Core Business Adjusted EBITDA
|
|
$
|
(673
|
)
|
|
$
|
(934
|
)
|
|
$
|
3,570
|
|
|
$
|
2,251
|
|
|
$
|
3,638
|
|
|
$
|
3,690
|
|
Voyce Business:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
$
|
(887
|
)
|
|
$
|
(598
|
)
|
|
$
|
(12,833
|
)
|
|
$
|
(6,384
|
)
|
|
$
|
(5,050
|
)
|
|
$
|
(5,129
|
)
|
Impairment of goodwill, intangibles and other assets
|
|
|
250
|
|
|
|
(70
|
)
|
|
|
7,043
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Adjustment for surplus and obsolete inventories
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
801
|
|
|
|
-
|
|
|
|
-
|
|
(Gain) loss on disposal of fixed assets
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
91
|
|
|
|
96
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
3
|
|
|
|
4
|
|
|
|
284
|
|
|
|
426
|
|
|
|
444
|
|
|
|
424
|
|
Interest expense, net
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
Voyce Adjusted EBITDA
|
|
$
|
(634
|
)
|
|
$
|
(668
|
)
|
|
$
|
(5,413
|
)
|
|
$
|
(5,060
|
)
|
|
$
|
(4,606
|
)
|
|
$
|
(4,705
|
)
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated loss before income taxes
|
|
$
|
(6,200
|
)
|
|
$
|
(4,812
|
)
|
|
$
|
(12,643
|
)
|
|
$
|
(8,241
|
)
|
|
$
|
(5,307
|
)
|
|
$
|
(4,260
|
)
|
Non-cash share based compensation
|
|
|
1,290
|
|
|
|
1,130
|
|
|
|
(38
|
)
|
|
|
2,319
|
|
|
|
1,446
|
|
|
|
1,155
|
|
Impairment of goodwill, intangibles and other assets
|
|
|
164
|
|
|
|
16
|
|
|
|
8,471
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Adjustment for surplus and obsolete inventories
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
801
|
|
|
|
-
|
|
|
|
-
|
|
(Gain) loss on disposal of fixed assets
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
97
|
|
|
|
102
|
|
|
|
256
|
|
|
|
-
|
|
(Gain) loss on sale of Captira Analytical and Habits at Work
|
|
|
(24
|
)
|
|
|
130
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
1,525
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
1,335
|
|
|
|
1,346
|
|
|
|
1,604
|
|
|
|
1,589
|
|
|
|
1,797
|
|
|
|
1,848
|
|
Interest expense, net
|
|
|
603
|
|
|
|
592
|
|
|
|
666
|
|
|
|
621
|
|
|
|
840
|
|
|
|
242
|
|
Consolidated Adjusted EBITDA
|
|
$
|
(1,307
|
)
|
|
$
|
(1,602
|
)
|
|
$
|
(1,843
|
)
|
|
$
|
(2,809
|
)
|
|
$
|
(968
|
)
|
|
$
|
(1,015
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2017
|
|
|
Six Months Ended June 30, 2016
|
|
|
Core Business (1)
|
|
Voyce
|
|
Consolidated
|
|
|
Core Business (1)
|
|
Voyce
|
|
Consolidated
|
Reconciliation from consolidated (loss) income before income taxes
to consolidated Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated (loss) income before income taxes
|
|
$
|
(9,527
|
)
|
|
$
|
(1,485
|
)
|
|
$
|
(11,012
|
)
|
|
|
$
|
612
|
|
$
|
(10,179
|
)
|
|
$
|
(9,567
|
)
|
Non-cash share based compensation
|
|
|
2,420
|
|
|
|
-
|
|
|
|
2,420
|
|
|
|
|
2,601
|
|
|
-
|
|
|
|
2,601
|
|
Impairment of goodwill, intangibles and other assets
|
|
|
-
|
|
|
|
180
|
|
|
|
180
|
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
(Gain) loss on disposal of fixed assets
|
|
|
-
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
|
256
|
|
|
-
|
|
|
|
256
|
|
Loss on sale of Captira Analytical and Habits at Work
|
|
|
106
|
|
|
|
-
|
|
|
|
106
|
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Loss on extinguishment of debt
|
|
|
1,525
|
|
|
|
-
|
|
|
|
1,525
|
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
2,674
|
|
|
|
7
|
|
|
|
2,681
|
|
|
|
|
2,777
|
|
|
868
|
|
|
|
3,645
|
|
Interest expense, net
|
|
|
1,195
|
|
|
|
-
|
|
|
|
1,195
|
|
|
|
|
1,082
|
|
|
-
|
|
|
|
1,082
|
|
Consolidated Adjusted EBITDA
|
|
$
|
(1,607
|
)
|
|
$
|
(1,302
|
)
|
|
$
|
(2,909
|
)
|
|
|
$
|
7,328
|
|
$
|
(9,311
|
)
|
|
$
|
(1,983
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
______________________________
|
(1)
|
|
|
"Core Business" comprises all the business of Intersections Inc.
with the exception of its Voyce business
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170810006119/en/
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