UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 7, 2020 (June 30, 2020)
Match Group, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 0-20570 | 59-2712887 | ||
|
(State or other jurisdiction
of incorporation) |
(Commission
File No.) |
(I.R.S. Employer
Identification No.) |
| 8750 North Central Expressway, Suite 1400 | 75231 | |
| Dallas,TX | (Zip Code) | |
| (Address of principal executive offices) |
Registrant’s telephone number, including area code: (214) 576-9352
IAC/InterActiveCorp
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| (Title of each class) | (Trading Symbol(s)) | (Name of each exchange on which registered) | ||
| Common Stock, par value $0.001 per share | MTCH |
The
Nasdaq Stock Market LLC
(Nasdaq Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Introductory Note.
On July 2, 2020, Match Group, Inc. (“New Match” or the “Company”) filed a Current Report on Form 8-K (the “Initial Filing”) disclosing the closing on June 30, 2020 of the transactions contemplated by that certain Transaction Agreement (the “Transaction Agreement”), dated as of December 19, 2019 and amended as of April 28, 2020 and as further amended as of June 22, 2020, by and among (i) IAC/InterActiveCorp, a Delaware corporation (“Old IAC”) and now known as Match Group, Inc., (ii) IAC Holdings, Inc., a Delaware corporation (“IAC Holdings”) (now known as IAC/InterActiveCorp (“New IAC”)), (iii) Valentine Merger Sub LLC, a Delaware limited liability company and now known as Match Group Holdings II, LLC (“Match Merger Sub”), and (iv) Match Group, Inc., a Delaware corporation (“Old Match”).
This Amendment No. 1 on Form 8-K/A amends the Initial Filing to include the pro forma financial information required by Item 9.01(b) of Form 8-K, and should be read in conjunction with the Initial Filing. Except as described herein, all other information in the Initial Filing remains unchanged.
| Item 9.01. | Financial Statements and Exhibits. |
(b) Pro Forma Financial Information.
The unaudited pro forma condensed consolidated balance sheet as of March 31, 2020 and the unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2020 and the years ended December 31, 2019, 2018 and 2017, and the related notes thereto, are included as Exhibit 99.1 hereto and incorporated by reference into this Item 9.01(b).
(d) Exhibits.
| Exhibit No. | Description of Exhibit | |
| 99.1 | The unaudited pro forma condensed consolidated balance sheet as of March 31, 2020 and the unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2020 and the years ended December 31, 2019, 2018 and 2017. | |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Match Group, Inc. | |||
| By: | /s/ Jared F. Sine | ||
| Name: | Jared F. Sine | ||
| Title: | Chief Legal Officer & Secretary | ||
Date: July 7, 2020
Exhibit 99.1
Match group, Inc.
Unaudited Pro Forma Condensed Consolidated Financial Statements
On June 30, 2020, IAC/InterActiveCorp, a Delaware corporation (“Old IAC”) and now known as Match Group, Inc. (“New Match” or the “Company”), IAC Holdings, Inc. (“IAC Holdings”) and now known as IAC/InterActiveCorp (“New IAC”), Valentine Merger Sub LLC (“Match Merger Sub”), and Match Group, Inc. (“Old Match”) completed the separation of the businesses of Old Match from the remaining businesses of Old IAC through a series of transactions (which we refer to as the “Separation”) that resulted in the pre-transaction stockholders of the Company owning shares in two, separate public companies—(1) New Match, which retained the businesses of Old Match and certain Old IAC financing subsidiaries, and (2) New IAC, which was renamed “IAC/InterActiveCorp” and which owns Old IAC’s other businesses—and the pre-transaction stockholders of Old Match (other than Old IAC) owning shares in New Match.
As a result of the Separation, the operations of New IAC will be accounted for as a discontinued operation by New Match in accordance with ASC 205, Presentation of Financial Statements (“ASC 205”). The following unaudited pro forma condensed consolidated financial statements present 1) New IAC as discontinued operations, 2) the recapitalization of Old IAC equity into New Match equity (“Recapitalization”), and 3) “Financing and Other Adjustments” including the private placement of $500 million of 4.625% Senior Notes (“4.625% Senior Notes”), the redemption of the outstanding 6.375% Senior Notes (“6.375% Senior Notes”), and a draw on the revolving credit facility, each by Old Match prior to the Separation, in accordance with Article 11 of the Securities and Exchange Commission’s Regulation S-X.
For purposes of these unaudited pro forma condensed consolidated financial statements, the Separation, Recapitalization, and the Financing and Other Adjustments are assumed to have occurred as of January 1, 2019 with respect to the unaudited pro forma condensed consolidated statements of operations, and as of March 31, 2020 with respect to the unaudited pro forma condensed consolidated balance sheet. The pro forma condensed consolidated statements of operations for the years ended December 31, 2018 and 2017 present New IAC as a discontinued operation.
The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2020 and the years ended December 31, 2019, 2018 and 2017 have been derived from, and should be read in conjunction with the following historical financial statements (including the notes thereto):
• the unaudited historical consolidated statements of operations of the Company for the three months ended March 31, 2020; and
• the audited historical consolidated statements of operations of the Company for the years ended December 31, 2019, 2018, and 2017.
The unaudited pro forma condensed consolidated balance sheet as of March 31, 2020 has been derived from, and should be read in conjunction with the unaudited historical consolidated balance sheet (including the notes thereto) of the Company as of March 31, 2020.
The pro forma information has been prepared to reflect adjustments to historical financial information that are (i) directly attributable to the Separation, Recapitalization, or Financing and Other Adjustments, (ii) factually supportable, and (iii) with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on the operating results.
The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have been achieved if the Separation, Recapitalization, or Financing and Other Adjustments had occurred on the dates assumed, nor is it indicative of future operating results or financial position.
The pro forma adjustments are based upon information and assumptions available at the time of the filing. The pro forma information should be read in conjunction with the accompanying notes thereto and the historical consolidated financial statements and related notes thereto.
2
NEW MATCH
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2020
(In thousands, except par value amounts)
|
Old IAC
Consolidated |
Adjustment
to Reflect Discontinued Operations (1) |
Notes | Recapitalization | Notes |
Financing
and
Other Adjustments |
Notes |
New Match
Pro Forma |
||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 2,822,729 | $ | (2,716,553 | ) | $ | (15,686 | ) | (4) | $ | 82,478 | (6) | $ | 184,361 | |||||||||||||||||
| (8,607 | ) | (2) | 20,000 | (7) | |||||||||||||||||||||||||||
| 1,408,848 | (8) | ||||||||||||||||||||||||||||||
| (1,408,848 | ) | (8) | |||||||||||||||||||||||||||||
| Short-term investments | 20,000 | (20,000 | ) | - | - | - | |||||||||||||||||||||||||
| Marketable securities | 49,912 | (49,912 | ) | - | - | - | |||||||||||||||||||||||||
| Accounts receivable, net | 375,854 | (207,581 | ) | - | - | 168,273 | |||||||||||||||||||||||||
| Other current assets | 267,814 | (140,213 | ) | - | 1,747 | (9) | 129,348 | ||||||||||||||||||||||||
| Total current assets | 3,536,309 | (3,142,866 | ) | (15,686 | ) | 104,225 | 481,982 | ||||||||||||||||||||||||
| Property and equipment, net | 373,561 | (271,477 | ) | - | - | 102,084 | |||||||||||||||||||||||||
| Goodwill | 3,042,139 | (1,816,723 | ) | - | - | 1,225,416 | |||||||||||||||||||||||||
| Intangible assets, net | 671,467 | (452,096 | ) | - | - | 219,371 | |||||||||||||||||||||||||
| Long-term investments | 301,592 | (296,491 | ) | - | - | 5,101 | |||||||||||||||||||||||||
| Deferred income taxes | 190,849 | 39,155 | - | - | 230,004 | ||||||||||||||||||||||||||
| Other non-current assets | 318,832 | (267,704 | ) | - | 532 | (9) | 51,660 | ||||||||||||||||||||||||
| Total assets | $ | 8,434,749 | $ | (6,208,202 | ) | $ | (15,686 | ) | $ | 104,757 | $ | 2,315,618 | |||||||||||||||||||
| Liabilities and shareholders’ equity | |||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||
| Current portion of long-term debt | $ | 13,750 | $ | (13,750 | ) | $ | - | $ | - | $ | - | ||||||||||||||||||||
| Accounts payable, trade | 102,367 | (90,983 | ) | - | - | 11,384 | |||||||||||||||||||||||||
| Deferred revenue | 433,728 | (215,671 | ) | - | - | 218,057 | |||||||||||||||||||||||||
| Accrued expenses and other current liabilities | 514,571 | (336,557 | ) | - | 26,473 | (9) | 203,540 | ||||||||||||||||||||||||
| (947 | ) | (2) | |||||||||||||||||||||||||||||
| Total current liabilities | 1,064,416 | (657,908 | ) | - | 26,473 | 432,981 | |||||||||||||||||||||||||
| Long-term debt, net | 3,625,008 | (228,643 | ) | - | 98,227 | (6) | 3,514,592 | ||||||||||||||||||||||||
| 20,000 | (7) | ||||||||||||||||||||||||||||||
| Income taxes payable | 18,398 | (6,076 | ) | - | - | 12,322 | |||||||||||||||||||||||||
| Deferred income taxes | 19,398 | (2,995 | ) | - | - | 16,403 | |||||||||||||||||||||||||
| Other long-term liabilities | 210,274 | (186,459 | ) | - | - | 23,815 | |||||||||||||||||||||||||
| Redeemable noncontrolling interests | 42,431 | (42,152 | ) | - | - | 279 | |||||||||||||||||||||||||
| Shareholders’ equity: | |||||||||||||||||||||||||||||||
| Common stock $0.001 par value | 264 | - | (184 | ) | (3) | - | - | ||||||||||||||||||||||||
| (80 | ) | (5) | |||||||||||||||||||||||||||||
| Class B convertible common stock $0.001 par value | 16 | - | (10 | ) | (3) | - | - | ||||||||||||||||||||||||
| (6 | ) | (5) | |||||||||||||||||||||||||||||
| Common stock—New Match $0.001 par value | - | - | 57 | (4) | 17 | (8) | 257 | ||||||||||||||||||||||||
| 183 | (5) | ||||||||||||||||||||||||||||||
| Additional paid-in capital | 11,412,142 | (3,135,737 | ) | 534,876 | (4) | 1,408,831 | (8) | 8,786,972 | |||||||||||||||||||||||
| (98 | ) | (5) | (1,408,848 | ) | (8) | ||||||||||||||||||||||||||
| (24,194 | ) | (9) | |||||||||||||||||||||||||||||
| Retained earnings (deficit) | 1,478,885 | (1,478,885 | ) | (10,309,417 | ) | (3) | (15,749 | ) | (6) | (10,332,827 | ) | ||||||||||||||||||||
| (7,661 | ) | (2) | |||||||||||||||||||||||||||||
| Accumulated other comprehensive (loss) income | (157,285 | ) | 17,926 | - | - | (139,359 | ) | ||||||||||||||||||||||||
| Treasury stock | (10,309,612 | ) | - | 10,309,612 | (3) | - | - | ||||||||||||||||||||||||
| Total shareholders’ equity | 2,424,410 | (4,604,357 | ) | 534,933 | (39,943 | ) | (1,684,957 | ) | |||||||||||||||||||||||
| Noncontrolling interests | 1,030,414 | (479,612 | ) | (550,619 | ) | (4) | - | 183 | |||||||||||||||||||||||
| Total shareholders’ equity | 3,454,824 | (5,083,969 | ) | (15,686 | ) | (39,943 | ) | (1,684,774 | ) | ||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 8,434,749 | $ | (6,208,202 | ) | $ | (15,686 | ) | $ | 104,757 | $ | 2,315,618 | |||||||||||||||||||
See Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements.
3
NEW MATCH
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2020
(In thousands, except per share data)
|
Old IAC
Consolidated |
Adjustment
to Reflect Discontinued Operations (1) |
Notes | Recapitalization | Notes |
Financing
and
Other Adjustments |
Notes |
New Match
Pro Forma |
|||||||||||||||||||||||||
| Revenue | $ | 1,228,765 | $ | (684,123 | ) | $ | - | $ | - | $ | 544,642 | |||||||||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||||||||||||||
| Cost of revenue | 323,221 | (179,327 | ) | - | - | 143,894 | ||||||||||||||||||||||||||
| Selling and marketing expense | 432,697 | (308,207 | ) | - | - | 124,490 | ||||||||||||||||||||||||||
| General and administrative expense | 256,021 | (173,214 | ) | - | - | 79,318 | ||||||||||||||||||||||||||
| (3,489 | ) | (2) | ||||||||||||||||||||||||||||||
| Product development expense | 105,733 | (61,963 | ) | - | - | 43,770 | ||||||||||||||||||||||||||
| Depreciation | 24,738 | (15,344 | ) | - | - | 9,394 | ||||||||||||||||||||||||||
| Amortization of intangibles | 52,162 | (45,759 | ) | - | - | 6,403 | ||||||||||||||||||||||||||
| Goodwill and intangible asset impairment charge | 211,973 | (211,973 | ) | - | - | - | ||||||||||||||||||||||||||
| Total operating costs and expenses | 1,406,545 | (999,276 | ) | - | - | 407,269 | ||||||||||||||||||||||||||
| Operating (loss) income | (177,780 | ) | 315,153 | - | - | 137,373 | ||||||||||||||||||||||||||
| Interest expense | (44,866 | ) | 2,217 | - | 619 | (6) | (42,104 | ) | ||||||||||||||||||||||||
| (74 | ) | (7) | ||||||||||||||||||||||||||||||
| Other (expense) income, net | (49,893 | ) | 53,748 | - | - | 3,855 | ||||||||||||||||||||||||||
| (Loss) earnings before income taxes | (272,539 | ) | 371,118 | - | 545 | 99,124 | ||||||||||||||||||||||||||
| Income tax benefit (provision) | 89,896 | (39,149 | ) | - | (127 | ) | (9) | 50,620 | ||||||||||||||||||||||||
| Net (loss) earnings | (182,643 | ) | 331,969 | - | 418 | 149,744 | ||||||||||||||||||||||||||
| Net (earnings) loss attributable to noncontrolling interests | (28,397 | ) | (2,372 | ) | 31,186 | (4) | - | 417 | ||||||||||||||||||||||||
| Net (loss) earnings attributable to shareholders | $ | (211,040 | ) | $ | 329,597 | $ | 31,186 | $ | 418 | $ | 150,161 | |||||||||||||||||||||
| Basic (loss) earnings per share | $ | (2.49 | ) | $ | 0.58 | |||||||||||||||||||||||||||
| Diluted (loss) earnings per share | $ | (2.49 | ) | $ | 0.55 | |||||||||||||||||||||||||||
| Weighted average basic shares outstanding | 84,839 | 257,775 | ||||||||||||||||||||||||||||||
| Weighted average diluted shares outstanding | 84,839 | 275,248 | ||||||||||||||||||||||||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
4
NEW MATCH
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2019
(In thousands, except per share data)
|
Old IAC
Consolidated |
Adjustment
to Reflect Discontinued Operations (1) |
Notes | Recapitalization | Notes |
Financing and
Other Adjustments |
Notes |
New Match
Pro Forma |
|||||||||||||||||||||||||
| Revenue | $ | 4,757,055 | $ | (2,705,798 | ) | $ | - | $ | - | $ | 2,051,257 | |||||||||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||||||||||||||
| Cost of revenue | 1,127,420 | (600,237 | ) | - | - | 527,183 | ||||||||||||||||||||||||||
| Selling and marketing expense | 1,629,623 | (1,202,183 | ) | - | - | 427,440 | ||||||||||||||||||||||||||
| General and administrative expense | 888,950 | (630,468 | ) | - | - | 256,107 | ||||||||||||||||||||||||||
| (2,375 | ) | (2) | ||||||||||||||||||||||||||||||
| Product development expense | 345,417 | (193,457 | ) | - | - | 151,960 | ||||||||||||||||||||||||||
| Depreciation | 88,399 | (54,043 | ) | - | - | 34,356 | ||||||||||||||||||||||||||
| Amortization of intangibles | 92,595 | (83,868 | ) | - | - | 8,727 | ||||||||||||||||||||||||||
| Goodwill and intangible asset impairment charge | 3,318 | (3,318 | ) | - | - | - | ||||||||||||||||||||||||||
| Total operating costs and expenses | 4,175,722 | (2,769,949 | ) | - | - | 1,405,773 | ||||||||||||||||||||||||||
| Operating income | 581,333 | 64,151 | - | - | 645,484 | |||||||||||||||||||||||||||
| Interest expense | (153,563 | ) | 12,993 | - | 2,470 | (6) | (138,396 | ) | ||||||||||||||||||||||||
| (296 | ) | (7) | ||||||||||||||||||||||||||||||
| Other income (expense), net | 66,741 | (68,765 | ) | - | - | (2,024 | ) | |||||||||||||||||||||||||
| Earnings before income taxes | 494,511 | 8,379 | - | 2,174 | 505,064 | |||||||||||||||||||||||||||
| Income tax benefit (provision) | 49,309 | (57,534 | ) | - | (515 | ) | (9) | (8,740 | ) | |||||||||||||||||||||||
| Net earnings | 543,820 | (49,155 | ) | - | 1,659 | 496,324 | ||||||||||||||||||||||||||
| Net (earnings) loss attributable to noncontrolling interests | (112,689 | ) | 9,288 | 103,707 | (4) | - | 306 | |||||||||||||||||||||||||
| Net earnings attributable to shareholders | $ | 431,131 | $ | (39,867 | ) | $ | 103,707 | $ | 1,659 | $ | 496,630 | |||||||||||||||||||||
| Basic earnings per share | $ | 5.12 | $ | 1.94 | ||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 4.50 | $ | 1.77 | ||||||||||||||||||||||||||||
| Weighted average basic shares outstanding | 84,261 | 256,527 | ||||||||||||||||||||||||||||||
| Weighted average diluted shares outstanding | 90,043 | 281,201 | ||||||||||||||||||||||||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
5
NEW MATCH
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2018
(In thousands, except per share data)
| Old IAC Consolidated |
Adjustment
to Reflect Discontinued Operations (1) |
New Match
Pro Forma |
||||||||||
| Revenue | $ | 4,262,892 | $ | (2,533,042 | ) | $ | 1,729,850 | |||||
| Operating costs and expenses: | ||||||||||||
| Cost of revenue | 911,146 | (501,146 | ) | 410,000 | ||||||||
| Selling and marketing expense | 1,519,440 | (1,099,486 | ) | 419,954 | ||||||||
| General and administrative expense | 774,079 | (591,826 | ) | 182,253 | ||||||||
| Product development expense | 309,329 | (177,299 | ) | 132,030 | ||||||||
| Depreciation | 75,360 | (40,533 | ) | 34,827 | ||||||||
| Amortization of intangibles | 108,399 | (107,081 | ) | 1,318 | ||||||||
| Total operating costs and expenses | 3,697,753 | (2,517,371 | ) | 1,180,382 | ||||||||
| Operating income (loss) | 565,139 | (15,671 | ) | 549,468 | ||||||||
| Interest expense | (109,327 | ) | 14,759 | (94,568 | ) | |||||||
| Other income (expense), net | 305,746 | (298,237 | ) | 7,509 | ||||||||
| Earnings before income taxes | 761,558 | (299,149 | ) | 462,409 | ||||||||
| Income tax provision | (3,811 | ) | (7,496 | ) | (11,307 | ) | ||||||
| Net earnings | 757,747 | (306,645 | ) | 451,102 | ||||||||
| Net (earnings) loss attributable to noncontrolling interests | (130,786 | ) | 136,133 | 5,347 | ||||||||
| Net earnings attributable to shareholders | $ | 626,961 | $ | (170,512 | ) | $ | 456,449 | |||||
| Basic earnings per share | $ | 7.52 | $ | 2.30 | ||||||||
| Diluted earnings per share | $ | 6.59 | $ | 1.99 | ||||||||
| Weighted average basic shares outstanding | 83,407 | 198,375 | ||||||||||
| Weighted average diluted shares outstanding | 91,322 | 217,200 | ||||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
6
NEW MATCH
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2017
(In thousands, except per share data)
|
Old IAC
Consolidated |
Adjustment
to Reflect Discontinued Operations (1) |
New Match
Pro Forma |
||||||||||
| Revenue | $ | 3,307,239 | $ | (1,976,578 | ) | $ | 1,330,661 | |||||
| Operating costs and expenses: | ||||||||||||
| Cost of revenue | 651,008 | (371,509 | ) | 279,499 | ||||||||
| Selling and marketing expense | 1,381,221 | (1,005,611 | ) | 375,610 | ||||||||
| General and administrative expense | 719,257 | (537,874 | ) | 181,383 | ||||||||
| Product development expense | 250,879 | (149,729 | ) | 101,150 | ||||||||
| Depreciation | 74,265 | (39,582 | ) | 34,683 | ||||||||
| Amortization of intangibles | 42,143 | (40,675 | ) | 1,468 | ||||||||
| Total operating costs and expenses | 3,118,773 | (2,144,980 | ) | 973,793 | ||||||||
| Operating income | 188,466 | 168,402 | 356,868 | |||||||||
| Interest expense | (105,295 | ) | 22,544 | (82,751 | ) | |||||||
| Other expense, net | (16,213 | ) | (14,115 | ) | (30,328 | ) | ||||||
| Earnings before income taxes | 66,958 | 176,831 | 243,789 | |||||||||
| Income tax benefit | 291,050 | (185,877 | ) | 105,173 | ||||||||
| Net earnings | 358,008 | (9,046 | ) | 348,962 | ||||||||
| Net (earnings) loss attributable to noncontrolling interests | (53,084 | ) | 52,905 | (179 | ) | |||||||
| Net earnings attributable to shareholders | $ | 304,924 | $ | 43,859 | $ | 348,783 | ||||||
| Basic earnings per share | $ | 3.81 | $ | 1.83 | ||||||||
| Diluted earnings per share | $ | 3.18 | $ | 1.55 | ||||||||
| Weighted average basic shares outstanding | 80,089 | 190,484 | ||||||||||
| Weighted average diluted shares outstanding | 85,310 | 202,901 | ||||||||||
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
7
New Match
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Adjustments related to Discontinued Operations:
| (1) | To reflect New IAC as a discontinued operation by New Match in accordance with ASC 205. For the years ended December 31, 2018 and 2017, this adjustment also reflects the reversal of the historical net earnings of Old Match attributable to noncontrolling interests. |
| (2) | To reflect estimated Old Match Separation-related transaction costs of $8.6 million which were unpaid as of March 31, 2020, of which $7.7 million had not yet been incurred as of March 31, 2020 and $0.9 million had been incurred and accrued as of March 31, 2020. The unaudited pro forma condensed consolidated statement of operations reflects the reversal of Old Match Separation-related transaction costs incurred of $3.5 million and $2.4 million for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively. These costs are considered to be non-recurring in nature and, as such, have been excluded from the unaudited pro forma condensed consolidated statement of operations. |
Adjustment related to the Recapitalization
| (3) | To reflect the retirement of Old IAC treasury shares. Prior to the Separation, Old IAC retired all outstanding treasury shares, which consisted of 184,339,945 shares of common stock with a par value of $0.001 and 10,368,000 shares of Class B convertible common stock with a par value of $0.001. |
| (4) | To reflect the acquisition of the Old Match noncontrolling interests, which are the shares of common stock of Old Match not held by Old IAC, in accordance with the terms of the Separation. For purposes of the unaudited pro forma condensed consolidated financial statements, we are using (i) the Old Match stock price of $104.05 per share reflecting the closing price as of June 30, 2020, less the $3.00 cash consideration per share, and (ii) 5,228,526 shares of outstanding Match common stock that have made the cash election. |
| (In thousands) | ||||
| Number of outstanding shares of Match common stock electing cash consideration | 5,229 | |||
| Cash consideration per share | $ | 3.00 | ||
| Cash consideration paid | $ | 15,686 | ||
| Add: Fair value of shares of New Match common stock issued:(a) | ||||
| New Match common stock $0.001 par value | $ | 57 | ||
| Additional paid-in capital | 5,963,970 | |||
| Total fair value of consideration transferred | 5,979,713 | |||
| Less: Reversal of noncontrolling interest carrying value | (550,619 | ) | ||
| Loss on purchase of noncontrolling interest recognized in Additional paid-in capital | $ | 5,429,094 | ||
|
|
| (a) | Assumed price is $104.05 per share, which is the closing Match per share stock price on June 30, 2020, less the $3.00 cash consideration per share. |
The unaudited pro forma condensed consolidated statement of operations also reflects the reversal of the historical net earnings of Old Match attributable to noncontrolling interest of $31.2 million and $103.7 million for the three months ended March 31, 2020 and year ended December 31, 2019, respectively.
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| (5) | To reflect the Reclassification of Old IAC’s equity into New Match equity. These changes include the reclassification of each share of Old IAC $0.001 par value common stock and Class B common stock into a number of shares of New Match $0.001 par value common stock based upon the Reclassification Exchange Ratio (as defined in the transaction agreement dated December 19, 2019 and amended as of April 28, 2020 and June 22, 2020) of 2.16. Subsequent to the Separation, New Match has a single class capital structure and New IAC has no ownership interest in New Match. |
Financing and Other Adjustments:
| (6) | To reflect Old Match’s debt financing and redemption transactions, which closed on May 19, 2020, to fund a portion of the payments to New IAC and Old Match shareholders making a cash election pursuant to the Separation. Old Match issued an aggregate principal amount of $500 million of 8-year notes with an interest rate of 4.625% and incurred estimated debt issuance costs of $4.8 million. Old Match also redeemed in full the $400 million aggregate principal amount of its 6.375% Senior Notes due 2024, satisfying and discharging all of its obligations under the associated indenture dated June 1, 2016. The transaction resulted in a loss on extinguishment of debt of approximately $15.8 million, which includes a redemption premium of $12.8 million and unamortized debt issuance costs of $3.0 million. The loss on extinguishment of debt is reflected in the unaudited pro forma condensed consolidated balance sheet; however, as the amount is non-recurring in nature, it has been excluded from the unaudited pro forma condensed consolidated statement of operations. |
This adjustment reflects the increase to cash and cash equivalents and long-term debt as of March 31, 2020 and the related net decrease to interest expense of $0.6 million for the three months ended March 31, 2020 and $2.5 million for the year ended December 31, 2019. These amounts include changes to cash interest expense resulting from the issuance of the 4.625% Senior Notes and redemption of the 6.375% Senior Notes and changes to the associated amortization of debt issuance costs.
| (7) | To reflect $20 million of borrowings under Old Match’s revolving credit facility at an interest rate of 1.48% to fund a portion of the payments to New IAC and Old Match shareholders making a cash election pursuant to the Separation, and estimated interest expense associated with the borrowing of $0.1 million for the three months ended March 31, 2020 and $0.3 million for the year ended December 31, 2019. |
| (8) | Old IAC entered into agreements with third parties to sell $1.4 billion of shares of Old IAC Class M common stock (or New Match common stock) (the “Old IAC Class M Equity Offering”). Immediately following the closing of the Old IAC Class M Equity Offering, New Match transferred to New IAC all proceeds it received pursuant to the Old IAC Class M Equity Offering. |
The pro forma condensed consolidated financial statements reflect the issuance and sale of 17.3 million shares of Old IAC Class M common stock for cash proceeds of $1.4 billion, using a stock price of $82.00 per share per the purchase agreement, net of $13.0 million in placement fees and other expenses. All net proceeds of the offering are reflected as a cash contribution to New IAC.
| (9) | Under the terms of the transaction agreement related to the Separation, New IAC will indemnify New Match for certain unrecognized tax benefits that relate solely to New IAC businesses prior to the Separation, which were retained by New Match. An estimated indemnification asset of $1.7 million and $0.5 million is reflected within other current assets and other non-current assets in the unaudited pro forma condensed consolidated balance sheet, respectively. Additionally, under the terms of the Tax Matters Agreement, New Match is obligated to remit to New IAC an estimated $26.5 million of tax refunds when received. The obligation is reflected within the accrued expenses and other current liabilities in the unaudited pro forma condensed consolidated balance sheet. |
The income tax impact of the pro forma adjustments was determined using ordinary annual effective tax rates of 23% and 24% applied to the pro forma adjustments within the unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2020 and the year ended December 31, 2019, respectively.
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Earnings per share:
| (10) | Pro forma earnings per share is calculated as follows: |
|
Three Months Ended
March 31, 2020 |
Year Ended
December 31, 2019 |
|||||||||||||||
|
Old IAC
Consolidated |
New Match
Pro Forma |
Old IAC
Consolidated |
New Match
Pro Forma |
|||||||||||||
|
(In thousands, except
per share data) |
(In thousands, except
per share data) |
|||||||||||||||
| Numerator: | ||||||||||||||||
| Net (loss) earnings from continuing operations attributable to shareholders—Basic | $ | (211,040 | ) | $ | 150,161 | $ | 431,131 | $ | 496,630 | |||||||
| Impact from publicly-traded subsidiaries’ dilutive securities | - | - | (26,063 | ) | — | |||||||||||
| Net (loss) earnings from continuing operations attributable to shareholders—Dilutive | $ | (211,040 | ) | $ | 150,161 | $ | 405,068 | $ | 496,630 | |||||||
| Denominator: | ||||||||||||||||
| Old IAC historical weighted average shares outstanding | 84,839 | — | 84,261 | — | ||||||||||||
| Weighted average basic shares outstanding after giving effect to the Recapitalization | — | 183,117 | — | 181,869 | ||||||||||||
| New Match common stock issued in connection with the acquisition of Old Match noncontrolling interest | — | 57,319 | — | 57,319 | ||||||||||||
| New Match common stock issued in connection with the Old IAC Class M Equity Offering | — | 17,339 | — | 17,339 | ||||||||||||
| Pro forma weighted average basic shares outstanding | 84,839 | 257,775 | 84,261 | 256,527 | ||||||||||||
| Dilutive securities(a) | — | 17,473 | 5,782 | 24,674 | ||||||||||||
| Pro forma weighted average diluted shares outstanding | 84,839 | 275,248 | 90,043 | 281,201 | ||||||||||||
| Earnings per share attributable to shareholders: | ||||||||||||||||
| Basic (loss) earnings per share | $ | (2.49 | ) | $ | 0.58 | $ | 5.12 | $ | 1.94 | |||||||
| Diluted (loss) earnings per share | $ | (2.49 | ) | $ | 0.55 | $ | 4.50 | $ | 1.77 | |||||||
| (a) | Dilutive securities were calculated based on Old Match securities assumed and Old IAC securities converted as part of the Separation. |
|
Year Ended
December 31, 2018 |
Year Ended
December 31, 2017 |
|||||||||||||||
|
Old IAC
Consolidated |
New Match
Pro Forma |
Old IAC
Consolidated |
New Match
Pro Forma |
|||||||||||||
|
(In thousands, except
per share data) |
(In thousands, except
per share data) |
|||||||||||||||
| Numerator: | ||||||||||||||||
| Net earnings from continuing operations attributable to shareholders—Basic | $ | 626,961 | $ | 456,449 | $ | 304,924 | $ | 348,783 | ||||||||
| Impact from publicly-traded subsidiaries’ dilutive securities | (25,228 | ) | (25,228 | ) | (33,531 | ) | (33,531 | ) | ||||||||
| Net earnings from continuing operations attributable to shareholders—Dilutive | $ | 601,733 | $ | 431,221 | $ | 271,393 | $ | 315,252 | ||||||||
| Denominator: | ||||||||||||||||
| Old IAC historical weighted average shares outstanding | 83,407 | — | 80,089 | — | ||||||||||||
| Weighted average basic shares outstanding after giving effect to the Recapitalization | — | 198,375 | — | 190,484 | ||||||||||||
| Pro forma weighted average basic shares outstanding | 83,407 | 198,375 | 80,089 | 190,484 | ||||||||||||
| Dilutive securities(a) | 7,915 | 18,825 | 5,221 | 12,417 | ||||||||||||
| Pro forma weighted average diluted shares outstanding | 91,322 | 217,200 | 85,310 | 202,901 | ||||||||||||
| Earnings per share attributable to shareholders: | ||||||||||||||||
| Basic earnings per share | $ | 7.52 | $ | 2.30 | $ | 3.81 | $ | 1.83 | ||||||||
| Diluted earnings per share | $ | 6.59 | $ | 1.99 | $ | 3.18 | $ | 1.55 | ||||||||
| (a) | Dilutive securities were calculated based on Old Match securities assumed and Old IAC securities converted as part of the Separation. |
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