|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
54-1955550
|
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification Number) |
Large accelerated filer
|
|
þ
|
|
Accelerated filer
|
|
¨
|
Non-accelerated filer
|
|
o
|
|
Smaller reporting company
|
|
¨
|
|
|
|
|
Emerging growth company
|
|
¨
|
|
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|
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ITEM 1.
|
FINANCIAL STATEMENTS
|
|
As of
|
|
As of
|
||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
47,876
|
|
|
$
|
37,859
|
|
Restricted cash
|
6,338
|
|
|
7,266
|
|
||
Accounts receivable, net of allowances of $1,073 and $1,991, respectively ($2,759 and $2,899 of accounts receivable attributable to related parties, respectively)
|
61,900
|
|
|
82,029
|
|
||
Prepaid expenses and other current assets
|
20,254
|
|
|
15,168
|
|
||
Insurance recoverable on litigation settlements
|
—
|
|
|
37,232
|
|
||
Total current assets
|
136,368
|
|
|
179,554
|
|
||
Property and equipment, net
|
27,315
|
|
|
28,893
|
|
||
Other non-current assets
|
9,572
|
|
|
7,259
|
|
||
Deferred tax assets
|
3,591
|
|
|
4,532
|
|
||
Intangible assets, net
|
135,110
|
|
|
159,777
|
|
||
Goodwill
|
641,594
|
|
|
642,424
|
|
||
Total assets
|
$
|
953,550
|
|
|
$
|
1,022,439
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable ($1,467 and $2,715 attributable to related parties, respectively)
|
$
|
19,716
|
|
|
$
|
27,889
|
|
Accrued expenses ($5,089 and $5,857 attributable to related parties, respectively)
|
48,352
|
|
|
86,031
|
|
||
Accrued litigation settlements
|
4,375
|
|
|
27,718
|
|
||
Other current liabilities
|
8,029
|
|
|
10,485
|
|
||
Customer advances ($2,188 and $2,755 attributable to related parties, respectively)
|
72,119
|
|
|
98,367
|
|
||
Total current liabilities
|
152,591
|
|
|
250,490
|
|
||
Financing derivatives (related party)
|
21,800
|
|
|
—
|
|
||
Senior secured convertible notes (related party)
|
175,850
|
|
|
—
|
|
||
Deferred tax liabilities
|
6,033
|
|
|
3,641
|
|
||
Accrued litigation settlements
|
875
|
|
|
90,800
|
|
||
Other non-current liabilities
|
27,859
|
|
|
21,016
|
|
||
Total liabilities
|
385,008
|
|
|
365,947
|
|
||
Commitments and contingencies
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at September 30, 2018 and December 31, 2017; no shares issued or outstanding as of September 30, 2018 and December 31, 2017
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value per share; 150,000,000 shares authorized as of September 30, 2018 and 100,000,000 shares authorized as of December 31, 2017; 65,664,431 shares issued and 58,899,635 shares outstanding as of September 30, 2018, and 60,053,843 shares issued and 57,289,047 shares outstanding as of December 31, 2017
|
59
|
|
|
60
|
|
||
Additional paid-in capital
|
1,549,371
|
|
|
1,407,717
|
|
||
Accumulated other comprehensive loss
|
(9,013
|
)
|
|
(6,224
|
)
|
||
Accumulated deficit
|
(741,891
|
)
|
|
(609,091
|
)
|
||
Treasury stock, at cost, 6,764,796 and 2,764,796 shares as of September 30, 2018 and December 31, 2017, respectively
|
(229,984
|
)
|
|
(135,970
|
)
|
||
Total stockholders’ equity
|
568,542
|
|
|
656,492
|
|
||
Total liabilities and stockholders’ equity
|
$
|
953,550
|
|
|
$
|
1,022,439
|
|
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Accumulated
Deficit
|
|
Treasury stock, at cost
|
|
Total
Stockholders’
Equity
|
|||||||||||||||
Shares
|
|
Amount
|
|
|||||||||||||||||||||||
Balance as of December 31, 2017
|
57,289,047
|
|
|
$
|
60
|
|
|
$
|
1,407,717
|
|
|
$
|
(6,224
|
)
|
|
$
|
(609,091
|
)
|
|
$
|
(135,970
|
)
|
|
$
|
656,492
|
|
Adoption of ASC 606
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(736
|
)
|
|
—
|
|
|
(736
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(132,064
|
)
|
|
—
|
|
|
(132,064
|
)
|
||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,789
|
)
|
|
—
|
|
|
—
|
|
|
(2,789
|
)
|
||||||
Subscription receivable
|
—
|
|
|
—
|
|
|
8,566
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,566
|
|
||||||
Common Stock warrants issuable
|
—
|
|
|
—
|
|
|
5,545
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,545
|
|
||||||
Exercise of Common Stock options, net
|
222,229
|
|
|
—
|
|
|
2,855
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,855
|
|
||||||
Shares issued in connection with settlement of litigation
|
4,024,115
|
|
|
4
|
|
|
90,764
|
|
|
|
|
|
|
|
|
90,768
|
|
|||||||||
Repurchase of Common Stock in exchange for senior secured convertible notes
|
(4,000,000
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(94,014
|
)
|
|
(94,021
|
)
|
||||||
Restricted stock units vested
|
1,550,272
|
|
|
2
|
|
|
10,296
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,298
|
|
||||||
Payments for taxes related to net share settlement of equity awards
|
(186,028
|
)
|
|
—
|
|
|
(4,663
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,663
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
28,291
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,291
|
|
||||||
Balance as of September 30, 2018
|
58,899,635
|
|
|
$
|
59
|
|
|
$
|
1,549,371
|
|
|
$
|
(9,013
|
)
|
|
$
|
(741,891
|
)
|
|
$
|
(229,984
|
)
|
|
$
|
568,542
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(132,064
|
)
|
|
$
|
(209,487
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation
|
12,974
|
|
|
18,229
|
|
||
Amortization of intangible assets
|
24,706
|
|
|
25,669
|
|
||
Stock-based compensation
|
31,191
|
|
|
15,366
|
|
||
Deferred tax provision
|
2,828
|
|
|
3,787
|
|
||
Change in fair value of financing derivatives
|
10,141
|
|
|
—
|
|
||
Accretion of debt discount
|
3,327
|
|
|
—
|
|
||
Amortization of deferred financing costs
|
703
|
|
|
—
|
|
||
Gain on forgiveness of obligation
|
—
|
|
|
(4,000
|
)
|
||
Accrued litigation settlements to be settled in Common Stock
|
—
|
|
|
90,800
|
|
||
Other
|
253
|
|
|
646
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
19,480
|
|
|
22,731
|
|
||
Prepaid expenses and other assets
|
3,502
|
|
|
(34,593
|
)
|
||
Accounts payable, accrued expenses, and other liabilities
|
(22,449
|
)
|
|
50,214
|
|
||
Customer advances
|
(28,531
|
)
|
|
(7,063
|
)
|
||
Net cash used in operating activities
|
(73,939
|
)
|
|
(27,701
|
)
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Sales of marketable securities
|
—
|
|
|
15,000
|
|
||
Purchases of property and equipment
|
(2,183
|
)
|
|
(7,596
|
)
|
||
Capitalized internal-use software costs
|
(7,447
|
)
|
|
—
|
|
||
Net cash (used in) provided by investing activities
|
(9,630
|
)
|
|
7,404
|
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
||||
Proceeds from borrowings on senior secured convertible notes (related party)
|
100,000
|
|
|
—
|
|
||
Debt issuance costs
|
(5,132
|
)
|
|
—
|
|
||
Financing proceeds received on subscription receivable (related party)
|
7,998
|
|
|
9,011
|
|
||
Proceeds from the exercise of stock options
|
2,855
|
|
|
—
|
|
||
Payments for taxes related to net share settlement of equity awards
|
(4,663
|
)
|
|
(1,514
|
)
|
||
Principal payments on capital lease and software license arrangements
|
(7,260
|
)
|
|
(12,699
|
)
|
||
Net cash provided by (used in) financing activities
|
93,798
|
|
|
(5,202
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(1,140
|
)
|
|
595
|
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
9,089
|
|
|
(24,904
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
45,125
|
|
|
88,341
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
54,214
|
|
|
$
|
63,437
|
|
|
|
|
|
||||
|
As of September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
47,876
|
|
|
$
|
54,782
|
|
Restricted cash
|
6,338
|
|
|
8,655
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
54,214
|
|
|
$
|
63,437
|
|
|
|
|
|
||||
Supplemental cash flow disclosures:
|
|
|
|
||||
Interest paid ($4,467 of 2018 interest paid attributable to related party)
|
$
|
5,069
|
|
|
$
|
1,444
|
|
Income taxes paid
|
666
|
|
|
479
|
|
1.
|
Organization
|
2.
|
Summary of Significant Accounting Policies
|
i.
|
Ratings and Planning
|
ii.
|
Analytics and Optimization
|
iii.
|
Movies Reporting and Analytics
|
(In thousands)
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||
By Solution group:
|
|
|
|
|
||||
Ratings and Planning
|
|
$
|
70,499
|
|
|
$
|
210,569
|
|
Analytics and Optimization
|
|
22,215
|
|
|
68,479
|
|
||
Movies Reporting and Analytics
|
|
10,150
|
|
|
31,124
|
|
||
Total
|
|
$
|
102,864
|
|
|
$
|
310,172
|
|
By Geographical markets:
|
|
|
|
|
||||
United States
|
|
$
|
90,250
|
|
|
$
|
269,532
|
|
Europe
|
|
8,014
|
|
|
26,022
|
|
||
Latin America
|
|
2,407
|
|
|
7,016
|
|
||
Canada
|
|
1,487
|
|
|
5,441
|
|
||
Other
|
|
706
|
|
|
2,161
|
|
||
Total
|
|
$
|
102,864
|
|
|
$
|
310,172
|
|
Timing of revenue recognition:
|
|
|
|
|
||||
Products and services transferred at a point in time
|
|
$
|
22,689
|
|
|
$
|
80,264
|
|
Products and services transferred over time
|
|
80,175
|
|
|
229,908
|
|
||
Total
|
|
$
|
102,864
|
|
|
$
|
310,172
|
|
|
|
As of
|
|
As of
|
||||
(In thousands)
|
|
September 30, 2018
|
|
January 1, 2018
|
||||
Accounts receivable, net
|
|
$
|
61,900
|
|
|
$
|
81,914
|
|
Current and non-current contract assets
|
|
1,770
|
|
|
612
|
|
||
Current and non-current contract costs
|
|
2,460
|
|
|
500
|
|
||
Current customer advances
|
|
72,119
|
|
|
99,886
|
|
||
Non-current customer advances
|
|
608
|
|
|
1,975
|
|
(In thousands)
|
|
Customer advances (current)
|
||
Revenue recognized that was included in the customer advances balance at the beginning of period
|
|
$
|
(81,254
|
)
|
Cash received or amounts billed in advance and not recognized as revenue
|
|
54,023
|
|
•
|
As of the date of initial application of January 1, 2018, and under the commission plan in place until then, costs to obtain a contract (generally commissions) qualified for the practical expedient allowing such costs to be expensed as incurred, consistent with Topic 605. Therefore, there was no change in accounting as of the date of initial application. Effective January 1, 2018, the Company implemented a new commission plan whereby the Company expects some costs to obtain a contract to continue to qualify for the practical expedient, but the Company expects to incur some commissions costs that meet the criteria for capitalization as the amortization period is over
one
year.
|
•
|
Certain fulfillment costs meet the criteria for capitalization as they relate directly to a contract, generate or enhance a resource being used in satisfying the Company's performance obligation, and are expected to be recovered.
|
(In thousands)
|
|
As previously reported as of December 31, 2017
|
|
New revenue standard adjustments
|
|
As adjusted as of January 1, 2018
|
||||||
Accounts receivable, net
|
|
$
|
82,029
|
|
|
$
|
(115
|
)
|
|
$
|
81,914
|
|
Current and non-current contract assets
|
|
—
|
|
|
612
|
|
|
612
|
|
|||
Current and non-current contract costs
|
|
—
|
|
|
500
|
|
|
500
|
|
|||
Current customer advances
|
|
98,367
|
|
|
1,519
|
|
|
99,886
|
|
|||
Other current liabilities
|
|
2,998
|
|
|
292
|
|
|
3,290
|
|
|||
Non-current customer advances
|
|
2,053
|
|
|
(78
|
)
|
|
1,975
|
|
|||
Stockholders' equity
|
|
656,492
|
|
|
(736
|
)
|
|
655,756
|
|
I.
|
Impact on Condensed Consolidated Balance Sheets
|
Impact of changes in accounting policies
|
||||||||||||
As of September 30, 2018
|
|
As reported
|
|
Adjustments
|
|
Balance without adoption of Topic 606
|
||||||
Accounts receivable, net
|
|
$
|
61,900
|
|
|
$
|
1,354
|
|
|
$
|
63,254
|
|
Current and non-current contract assets
|
|
1,770
|
|
|
(1,770
|
)
|
|
—
|
|
|||
Current and non-current contract costs
|
|
2,460
|
|
|
(2,460
|
)
|
|
—
|
|
|||
|
|
|
|
|
|
|
||||||
Current customer advances
|
|
72,119
|
|
|
(350
|
)
|
|
71,769
|
|
|||
Other current liabilities
|
|
8,029
|
|
|
(210
|
)
|
|
7,819
|
|
|||
Other non-current liabilities
|
|
27,859
|
|
|
(148
|
)
|
|
27,711
|
|
|||
Accumulated deficit
|
|
(741,891
|
)
|
|
(2,168
|
)
|
|
(744,059
|
)
|
II.
|
Impact on Condensed Consolidated Statements of Operations and Comprehensive Loss
|
Impact of changes in accounting policies
|
||||||||||||
For the Three Months Ended September 30, 2018
|
|
As reported
|
|
Adjustments
|
|
Balance without adoption of Topic 606
|
||||||
Revenues
|
|
$
|
102,864
|
|
|
$
|
(198
|
)
|
|
$
|
102,666
|
|
Cost of revenues
|
|
49,446
|
|
|
483
|
|
|
49,929
|
|
|||
Selling and marketing
|
|
24,866
|
|
|
13
|
|
|
24,879
|
|
|||
Income tax provision
|
|
(400
|
)
|
|
—
|
|
|
(400
|
)
|
|||
Net loss
|
|
$
|
(24,637
|
)
|
|
$
|
(694
|
)
|
|
$
|
(25,331
|
)
|
Net loss per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(0.42
|
)
|
|
|
|
|
$
|
(0.44
|
)
|
|
Diluted
|
|
$
|
(0.42
|
)
|
|
|
|
|
$
|
(0.44
|
)
|
|
Weighted-average number of shares used in per share calculation - Common Stock:
|
|
|
|
|
|
|
||||||
Basic
|
|
58,212,306
|
|
|
|
|
58,212,306
|
|
||||
Diluted
|
|
58,212,306
|
|
|
|
|
58,212,306
|
|
Impact of changes in accounting policies
|
||||||||||||
For the Nine Months Ended September 30, 2018
|
|
As reported
|
|
Adjustments
|
|
Balance without adoption of Topic 606
|
||||||
Revenues
|
|
$
|
310,172
|
|
|
$
|
(944
|
)
|
|
$
|
309,228
|
|
Cost of revenues
|
|
148,226
|
|
|
1,897
|
|
|
150,123
|
|
|||
Selling and marketing
|
|
80,418
|
|
|
63
|
|
|
80,481
|
|
|||
Income tax provision
|
|
(3,916
|
)
|
|
—
|
|
|
(3,916
|
)
|
|||
Net loss
|
|
$
|
(132,064
|
)
|
|
$
|
(2,904
|
)
|
|
$
|
(134,968
|
)
|
Net loss per common share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(2.32
|
)
|
|
|
|
$
|
(2.37
|
)
|
||
Diluted
|
|
$
|
(2.32
|
)
|
|
|
|
$
|
(2.37
|
)
|
||
Weighted-average number of shares used in per share calculation - Common Stock:
|
|
|
|
|
|
|
||||||
Basic
|
|
56,877,186
|
|
|
|
|
56,877,186
|
|
||||
Diluted
|
|
56,877,186
|
|
|
|
|
56,877,186
|
|
III.
|
Impact on Condensed Consolidated Statements of Cash Flows
|
Impact of changes in accounting policies
|
||||||||||||
For the Nine Months Ended September 30, 2018
|
|
As reported
|
|
Adjustments
|
|
Balance without adoption of Topic 606
|
||||||
Operating activities
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(132,064
|
)
|
|
$
|
(2,904
|
)
|
|
$
|
(134,968
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
86,123
|
|
|
2,904
|
|
|
89,027
|
|
|||
Net cash used in operating activities
|
|
(73,939
|
)
|
|
—
|
|
|
(73,939
|
)
|
|||
Investing activities
|
|
(9,630
|
)
|
|
—
|
|
|
(9,630
|
)
|
|||
Financing activities
|
|
93,798
|
|
|
—
|
|
|
93,798
|
|
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
|
|
(1,140
|
)
|
|
—
|
|
|
(1,140
|
)
|
|||
Net increase in cash, cash equivalents and restricted cash
|
|
9,089
|
|
|
—
|
|
|
9,089
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
|
45,125
|
|
|
—
|
|
|
45,125
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
|
54,214
|
|
|
—
|
|
|
54,214
|
|
|||
Cash and cash equivalents
|
|
47,876
|
|
|
—
|
|
|
47,876
|
|
|||
Restricted cash
|
|
6,338
|
|
|
—
|
|
|
6,338
|
|
|||
Total cash, cash equivalents and restricted cash
|
|
$
|
54,214
|
|
|
$
|
—
|
|
|
$
|
54,214
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Transition services agreement income from the Digital Analytix ("DAx") disposition
|
$
|
2,120
|
|
|
$
|
2,662
|
|
|
$
|
6,967
|
|
|
$
|
8,489
|
|
Change in fair value of financing derivatives
|
(5,681
|
)
|
|
—
|
|
|
(10,141
|
)
|
|
—
|
|
||||
Gain on forgiveness of obligation
|
—
|
|
|
4,000
|
|
|
—
|
|
|
4,000
|
|
||||
Other
|
1,850
|
|
|
(43
|
)
|
|
2,347
|
|
|
(3
|
)
|
||||
Total other (expense) income, net
|
$
|
(1,711
|
)
|
|
$
|
6,619
|
|
|
$
|
(827
|
)
|
|
$
|
12,486
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Stock options, stock appreciation rights, restricted stock units and senior secured convertible notes
|
10,313,338
|
|
|
2,786,714
|
|
|
8,591,253
|
|
|
2,845,542
|
|
3.
|
Long-term Debt
|
•
|
Credit Adjusting Discount Rate
: The Company estimated a market based discount rate of
25%
.
|
•
|
Stock Price
: The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Initial Notes issuance, January 16, 2018, which was
$24.45
per share.
|
•
|
Risk Free Rate
: Assumed to be
2.2%
based on the Federal Reserve bond yield.
|
•
|
Volatility
: Based on the historical volatility of the Company's Common Stock, determined to be
41.3%
as of the valuation date.
|
•
|
Term
: Based on the time period of the Notes maturity,
4
years.
|
•
|
Stock Price
: The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Initial Notes issuance, January 16, 2018, which was
$24.45
per share.
|
•
|
Risk Free Rate
: Assumed to be
1.6%
based on the Federal Reserve bond yield with a term commensurate with the remaining life of the Notes Option.
|
•
|
Volatility
: Based on the historical volatility of the Company's Common Stock, determined to be
38.4%
as of the valuation date.
|
•
|
Term
: Based on the time period of the Notes Option,
6
months.
|
•
|
Risk Free Rate
: Assumed to be
2.2%
based on the U.S. Treasury bonds on the valuation date with a term commensurate with the remaining life of the change of control derivative.
|
•
|
Probability
: The Company utilized a range between
0%
and
10%
to estimate the likelihood of occurrence.
|
•
|
Term
: Based on the time period of the feature,
4
years.
|
•
|
Stock Price
: The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Initial Notes issuance, January 16, 2018, which was
$24.45
per share.
|
•
|
Volatility
: The Company determined volatility to be
39.6%
based on the historical volatility of its Common Stock daily volume weighted average price with a look-back period commensurate with the term of the warrants.
|
•
|
Dividend Yield
: Assumed to be
zero
based on the historical payout history of the Company.
|
•
|
Risk Free Rate
: Assumed to be
2.4%
based on U.S. Treasury bonds on the valuation date with a
5
-year term.
|
•
|
Stock Price
: The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Option Notes, May 17, 2018, which was
$21.75
per share.
|
•
|
Risk Free Rate
: Assumed to be
1.8%
based on the Federal Reserve bond yield with a term commensurate with the remaining life of the Notes Option.
|
•
|
Volatility
: Based on the historical volatility of the Company's Common Stock, determined to be
26.3%
as of the valuation date.
|
•
|
Term
: Based on the time period of the expected exercise of the Notes Option,
0.16
years.
|
•
|
Credit Adjusting Discount Rate
: The Company estimated a market-based discount rate of
24%
.
|
•
|
Stock Price
: The stock price was measured using the closing bid price of the Common Stock on the OTC Pink Tier on the closing date of the Option Notes issuance,
May 17, 2018
, which was
$21.75
per share.
|
•
|
Risk Free Rate
: Assumed to be
2.8%
based on the Federal Reserve bond yield.
|
•
|
Volatility
: Based on the historical volatility of the Company's Common Stock, determined to be
42.6%
as of the valuation date.
|
•
|
Term
: Based on the time period of the Option Notes maturity,
3.7
years.
|
•
|
Risk Free Rate
: Assumed to be
2.8%
based on U.S. Treasury bonds on the valuation date with a term commensurate with the remaining life of the change of control derivative.
|
•
|
Probability
: The Company utilized a range between
0%
and
10%
to estimate the likelihood of occurrence.
|
•
|
Term
: Based on the time period of the feature,
3.7
years.
|
|
|
|
As of
|
|||||||||||
|
|
|
September 30, 2018
|
|||||||||||
(In thousands, except interest rates)
|
Stated Interest Rate
|
Effective Interest Rate
|
Face Value
|
Original Issuance Discount
|
Deferred Financing Costs
|
Net Carrying Value
|
||||||||
Initial Notes, due January 16, 2022
|
6.0%
|
11.5%
|
$
|
151,500
|
|
$
|
(18,676
|
)
|
$
|
(3,931
|
)
|
$
|
128,893
|
|
Option Notes, due January 16, 2022
|
6.0%
|
8.5%
|
50,500
|
|
(3,317
|
)
|
(226
|
)
|
46,957
|
|
||||
Total
|
|
|
$
|
202,000
|
|
$
|
(21,993
|
)
|
$
|
(4,157
|
)
|
$
|
175,850
|
|
4.
|
Fair Value Measurements
|
|
|
As of
|
|
As of
|
||||||||||||||||||||||||||||
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
(In thousands)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Money market funds
(1)
|
|
$
|
913
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
913
|
|
|
$
|
860
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
860
|
|
Investment in equity securities
(2)
|
|
4,964
|
|
|
—
|
|
|
—
|
|
|
4,964
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total
|
|
$
|
5,877
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,877
|
|
|
$
|
860
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
860
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Financing derivatives: no hedging designation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate reset
(3)
|
|
—
|
|
|
—
|
|
|
18,100
|
|
|
18,100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Change of control redemption
(4)
|
|
—
|
|
|
—
|
|
|
3,700
|
|
|
3,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,800
|
|
|
$
|
21,800
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(In thousands)
|
|
Financing Derivative Liabilities
|
||
Balance as of December 31, 2017
|
|
$
|
—
|
|
Issuances
|
|
17,359
|
|
|
Total losses included in other (expense) income, net
(1)
|
|
10,141
|
|
|
Settlement
(2)
|
|
(5,700
|
)
|
|
Balance as of September 30, 2018
|
|
$
|
21,800
|
|
|
Fair value measurements as of September 30, 2018
|
||||||
|
Significant valuation technique
|
|
Significant unobservable inputs
|
|
Input
|
||
Interest rate reset derivative liability
|
Discounted Cash Flow
|
|
Discount rate
|
|
24.0%
|
||
|
|
|
Stock price
|
|
$18.23
|
||
|
|
|
Risk-free rate
|
|
2.9%
|
||
|
|
|
Volatility
|
|
43.7%
|
||
|
|
|
Term
|
|
3.30 years
|
||
|
|
|
|
|
|
||
Change of control redemption derivative liability
|
Option pricing model
|
|
Probability
|
|
0-10%
|
||
|
|
|
Risk-free rate
|
|
2.9%
|
5.
|
Accrued Expenses
|
|
|
As of
|
|
As of
|
||||
|
|
September 30,
|
|
December 31,
|
||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Payroll and payroll-related
|
|
$
|
14,641
|
|
|
$
|
20,821
|
|
Expected retention awards
|
|
—
|
|
|
16,947
|
|
||
Accrued data costs
|
|
15,866
|
|
|
14,445
|
|
||
Professional fees
|
|
7,647
|
|
|
14,456
|
|
||
Restructuring
|
|
2,196
|
|
|
9,184
|
|
||
Amounts due to Adobe
|
|
988
|
|
|
5,395
|
|
||
Accrued interest
|
|
3,018
|
|
|
—
|
|
||
Other
|
|
3,996
|
|
|
4,783
|
|
||
|
|
$
|
48,352
|
|
|
$
|
86,031
|
|
6.
|
Income Taxes
|
7.
|
Stockholders' Equity
|
Unvested Stock Awards
|
|
Restricted
Stock Awards
|
|
Restricted
Stock Units
|
|
Number of
Shares
Underlying
Awards
|
|
Weighted
Average
Grant-Date
Fair Value
|
|||||
Unvested as of December 31, 2017
|
|
2,125
|
|
|
779,912
|
|
|
782,037
|
|
|
$
|
37.22
|
|
Granted
|
|
—
|
|
|
2,688,031
|
|
|
2,688,031
|
|
|
22.92
|
|
|
Vested and delivered
|
|
(2,125
|
)
|
|
(1,550,272
|
)
|
|
(1,552,397
|
)
|
|
28.42
|
|
|
Forfeited
|
|
—
|
|
|
(72,490
|
)
|
|
(72,490
|
)
|
|
30.68
|
|
|
Unvested as of September 30, 2018
|
|
—
|
|
|
1,845,181
|
|
|
1,845,181
|
|
|
$
|
24.07
|
|
|
|
Number of
shares
|
|
Weighted-Average
Exercise Price
|
|||
Options outstanding as of December 31, 2017
|
|
3,444,252
|
|
|
$
|
30.65
|
|
Options exercised
(1)
|
|
(347,752
|
)
|
|
15.45
|
|
|
Options expired
|
|
(1,987,107
|
)
|
|
40.43
|
|
|
Options outstanding as of September 30, 2018
|
|
1,109,393
|
|
|
$
|
17.91
|
|
Options exercisable as of September 30, 2018
|
|
1,109,393
|
|
|
$
|
17.91
|
|
8.
|
Related Party Transactions
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues
(1)
|
|
$
|
3,115
|
|
|
$
|
3,385
|
|
|
$
|
7,550
|
|
|
$
|
9,730
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
|
2,473
|
|
|
3,446
|
|
|
7,779
|
|
|
10,333
|
|
||||
Selling and marketing
|
|
43
|
|
|
52
|
|
|
128
|
|
|
120
|
|
||||
Research and development
|
|
47
|
|
|
37
|
|
|
147
|
|
|
90
|
|
||||
General and administrative
|
|
180
|
|
|
582
|
|
|
369
|
|
|
743
|
|
||||
Investigation and audit related
(2)
|
|
—
|
|
|
5,303
|
|
|
—
|
|
|
12,160
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Interest (expense) income, net
|
|
(4,642
|
)
|
|
148
|
|
|
(11,253
|
)
|
|
551
|
|
|
|
As of
|
|
As of
|
||||
|
|
September 30,
|
|
December 31,
|
||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Accounts receivable, net
|
|
$
|
2,759
|
|
|
$
|
2,899
|
|
Subscription Receivable (Additional paid-in capital)
|
|
1,689
|
|
|
10,254
|
|
||
Accounts payable
|
|
1,467
|
|
|
2,715
|
|
||
Accrued expenses
|
|
5,089
|
|
|
5,857
|
|
||
Customer advances
|
|
2,188
|
|
|
2,755
|
|
||
Financing derivatives
|
|
21,800
|
|
|
—
|
|
||
Senior secured convertible notes
|
|
175,850
|
|
|
—
|
|
9.
|
Commitments and Contingencies
|
(In thousands)
|
|
||
Remainder of 2018
|
$
|
6,056
|
|
2019
|
13,077
|
|
|
2020
|
10,810
|
|
|
2021
|
10,240
|
|
|
2022
|
7,480
|
|
|
Thereafter
|
38,994
|
|
|
Total minimum lease payments
|
$
|
86,657
|
|
10.
|
Organizational Restructuring
|
(In thousands)
|
|
Accrued Balance as of
December 31, 2017
|
|
Restructuring Expense for
the Nine Months Ended September 30, 2018 (1) |
|
Payments
|
|
Foreign Exchange
|
|
Accrued Balance as of
September 30, 2018
|
||||||||||
Severance pay and benefits
|
|
$
|
8,972
|
|
|
$
|
4,924
|
|
|
$
|
(11,900
|
)
|
|
$
|
3
|
|
|
$
|
1,999
|
|
Lease exit and other direct costs
|
|
212
|
|
|
272
|
|
|
(287
|
)
|
|
—
|
|
|
197
|
|
|||||
Total
|
|
$
|
9,184
|
|
|
$
|
5,196
|
|
|
$
|
(12,187
|
)
|
|
$
|
3
|
|
|
$
|
2,196
|
|
11.
|
Subsequent Events
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||||||
(In thousands)
|
|
Dollars
|
|
% of Revenue
|
|
Dollars
|
|
% of Revenue
|
|
Dollars
|
|
% of Revenue
|
|
Dollars
|
|
% of Revenue
|
||||||||||||
Revenues
(1)
|
|
$
|
102,864
|
|
|
100.0
|
%
|
|
$
|
100,323
|
|
|
100.0
|
%
|
|
$
|
310,172
|
|
|
100.0
|
%
|
|
$
|
300,623
|
|
|
100.0
|
%
|
Cost of revenues
|
|
49,446
|
|
|
48.1
|
%
|
|
48,803
|
|
|
48.6
|
%
|
|
148,226
|
|
|
47.8
|
%
|
|
143,417
|
|
|
47.7
|
%
|
||||
Selling and marketing
|
|
24,866
|
|
|
24.2
|
%
|
|
29,873
|
|
|
29.8
|
%
|
|
80,418
|
|
|
25.9
|
%
|
|
90,796
|
|
|
30.2
|
%
|
||||
Research and development
|
|
18,742
|
|
|
18.2
|
%
|
|
21,580
|
|
|
21.5
|
%
|
|
58,347
|
|
|
18.8
|
%
|
|
64,102
|
|
|
21.3
|
%
|
||||
General and administrative
|
|
18,707
|
|
|
18.2
|
%
|
|
22,331
|
|
|
22.3
|
%
|
|
66,067
|
|
|
21.3
|
%
|
|
53,426
|
|
|
17.8
|
%
|
||||
Investigation and audit related
|
|
696
|
|
|
0.7
|
%
|
|
21,392
|
|
|
21.3
|
%
|
|
37,446
|
|
|
12.1
|
%
|
|
56,469
|
|
|
18.8
|
%
|
||||
Amortization of intangible assets
|
|
7,896
|
|
|
7.7
|
%
|
|
8,491
|
|
|
8.5
|
%
|
|
24,706
|
|
|
8.0
|
%
|
|
25,669
|
|
|
8.5
|
%
|
||||
Settlement of litigation, net
|
|
—
|
|
|
—
|
%
|
|
81,799
|
|
|
81.5
|
%
|
|
5,250
|
|
|
1.7
|
%
|
|
82,417
|
|
|
27.4
|
%
|
||||
Restructuring
|
|
51
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
5,141
|
|
|
1.7
|
%
|
|
—
|
|
|
—
|
%
|
||||
Total expenses from operations
|
|
120,404
|
|
|
117.1
|
%
|
|
234,269
|
|
|
233.5
|
%
|
|
425,601
|
|
|
137.2
|
%
|
|
516,296
|
|
|
171.7
|
%
|
||||
Loss from operations
|
|
(17,540
|
)
|
|
(17.1
|
)%
|
|
(133,946
|
)
|
|
(133.5
|
)%
|
|
(115,429
|
)
|
|
(37.2
|
)%
|
|
(215,673
|
)
|
|
(71.7
|
)%
|
||||
Interest expense, net
|
|
(4,682
|
)
|
|
(4.6
|
)%
|
|
(148
|
)
|
|
(0.1
|
)%
|
|
(11,711
|
)
|
|
(3.8
|
)%
|
|
(554
|
)
|
|
(0.2
|
)%
|
||||
Other (expense) income, net
|
|
(1,711
|
)
|
|
(1.7
|
)%
|
|
6,619
|
|
|
6.6
|
%
|
|
(827
|
)
|
|
(0.3
|
)%
|
|
12,486
|
|
|
4.2
|
%
|
||||
Loss from foreign currency transactions
|
|
(304
|
)
|
|
(0.3
|
)%
|
|
(298
|
)
|
|
(0.3
|
)%
|
|
(181
|
)
|
|
(0.1
|
)%
|
|
(1,523
|
)
|
|
(0.5
|
)%
|
||||
Loss before income tax provision
|
|
(24,237
|
)
|
|
(23.6
|
)%
|
|
(127,773
|
)
|
|
(127.4
|
)%
|
|
(128,148
|
)
|
|
(41.3
|
)%
|
|
(205,264
|
)
|
|
(68.3
|
)%
|
||||
Income tax provision
|
|
(400
|
)
|
|
(0.4
|
)%
|
|
(2,296
|
)
|
|
(2.3
|
)%
|
|
(3,916
|
)
|
|
(1.3
|
)%
|
|
(4,223
|
)
|
|
(1.4
|
)%
|
||||
Net loss
|
|
$
|
(24,637
|
)
|
|
(24.0
|
)%
|
|
$
|
(130,069
|
)
|
|
(129.7
|
)%
|
|
$
|
(132,064
|
)
|
|
(42.6
|
)%
|
|
$
|
(209,487
|
)
|
|
(69.7
|
)%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
(1)
|
|
% of Revenue
|
|
$ Variance
|
|
% Variance
|
|||||||||
Ratings and Planning
|
$
|
70,499
|
|
|
68.4
|
%
|
|
$
|
69,483
|
|
|
69.3
|
%
|
|
$
|
1,016
|
|
|
1.5
|
%
|
Analytics and Optimization
|
22,215
|
|
|
21.6
|
%
|
|
21,175
|
|
|
21.1
|
%
|
|
1,040
|
|
|
4.9
|
%
|
|||
Movies Reporting and Analytics
|
10,150
|
|
|
10.0
|
%
|
|
9,665
|
|
|
9.6
|
%
|
|
485
|
|
|
5.0
|
%
|
|||
Total revenues
|
$
|
102,864
|
|
|
100
|
%
|
|
$
|
100,323
|
|
|
100
|
%
|
|
$
|
2,541
|
|
|
2.5
|
%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
(1)
|
|
% of Revenue
|
|
$ Variance
|
|
% Variance
|
|||||||||
Ratings and Planning
|
$
|
210,569
|
|
|
67.9
|
%
|
|
$
|
206,464
|
|
|
68.7
|
%
|
|
$
|
4,105
|
|
|
2.0
|
%
|
Analytics and Optimization
|
68,479
|
|
|
22.1
|
%
|
|
65,922
|
|
|
21.9
|
%
|
|
2,557
|
|
|
3.9
|
%
|
|||
Movies Reporting and Analytics
|
31,124
|
|
|
10.0
|
%
|
|
28,237
|
|
|
9.4
|
%
|
|
2,887
|
|
|
10.2
|
%
|
|||
Total revenues
|
$
|
310,172
|
|
|
100
|
%
|
|
$
|
300,623
|
|
|
100
|
%
|
|
$
|
9,549
|
|
|
3.2
|
%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
(1)
|
|
% of Revenue
|
|
$ Variance
|
|
% Variance
|
|||||||||
Digital Audience
|
$
|
49,467
|
|
|
48.1
|
%
|
|
$
|
55,430
|
|
|
55.3
|
%
|
|
$
|
(5,963
|
)
|
|
(10.8
|
)%
|
TV and Cross-Platform
|
29,775
|
|
|
28.9
|
%
|
|
23,754
|
|
|
23.7
|
%
|
|
6,021
|
|
|
25.3
|
%
|
|||
Advertising
|
13,472
|
|
|
13.1
|
%
|
|
11,474
|
|
|
11.4
|
%
|
|
1,998
|
|
|
17.4
|
%
|
|||
Movies
|
10,150
|
|
|
9.9
|
%
|
|
9,665
|
|
|
9.6
|
%
|
|
485
|
|
|
5.0
|
%
|
|||
Total revenues
|
$
|
102,864
|
|
|
100
|
%
|
|
$
|
100,323
|
|
|
100
|
%
|
|
$
|
2,541
|
|
|
2.5
|
%
|
|
Nine Months ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
(1)
|
|
% of Revenue
|
|
$ Variance
|
|
% Variance
|
|||||||||
Digital Audience
|
$
|
157,137
|
|
|
50.7
|
%
|
|
$
|
167,733
|
|
|
55.8
|
%
|
|
$
|
(10,596
|
)
|
|
(6.3
|
)%
|
TV and Cross-Platform
|
84,547
|
|
|
27.3
|
%
|
|
71,138
|
|
|
23.7
|
%
|
|
13,409
|
|
|
18.8
|
%
|
|||
Advertising
|
37,365
|
|
|
12.0
|
%
|
|
33,515
|
|
|
11.1
|
%
|
|
3,850
|
|
|
11.5
|
%
|
|||
Movies
|
31,123
|
|
|
10.0
|
%
|
|
28,237
|
|
|
9.4
|
%
|
|
2,886
|
|
|
10.2
|
%
|
|||
Total revenues
|
$
|
310,172
|
|
|
100
|
%
|
|
$
|
300,623
|
|
|
100
|
%
|
|
$
|
9,549
|
|
|
3.2
|
%
|
|
Three Months Ended September 30,
|
|
|
|||||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
Employee costs
|
$
|
14,031
|
|
|
13.6
|
%
|
|
$
|
15,506
|
|
|
15.5
|
%
|
|
$
|
(1,475
|
)
|
|
(9.5
|
)%
|
Data costs
|
14,991
|
|
|
14.6
|
%
|
|
12,036
|
|
|
12.0
|
%
|
|
2,955
|
|
|
24.6
|
%
|
|||
Panel costs
|
5,743
|
|
|
5.6
|
%
|
|
5,160
|
|
|
5.1
|
%
|
|
583
|
|
|
11.3
|
%
|
|||
Systems and bandwidth costs
|
5,984
|
|
|
5.8
|
%
|
|
5,277
|
|
|
5.3
|
%
|
|
707
|
|
|
13.4
|
%
|
|||
Rent and depreciation
|
3,041
|
|
|
3.0
|
%
|
|
4,284
|
|
|
4.3
|
%
|
|
(1,243
|
)
|
|
(29.0
|
)%
|
|||
Professional fees
|
1,125
|
|
|
1.1
|
%
|
|
1,531
|
|
|
1.5
|
%
|
|
(406
|
)
|
|
(26.5
|
)%
|
|||
Sample and survey costs
|
1,354
|
|
|
1.3
|
%
|
|
1,479
|
|
|
1.5
|
%
|
|
(125
|
)
|
|
(8.5
|
)%
|
|||
Technology
|
1,679
|
|
|
1.6
|
%
|
|
1,303
|
|
|
1.3
|
%
|
|
376
|
|
|
28.9
|
%
|
|||
Royalties and resellers
|
755
|
|
|
0.7
|
%
|
|
359
|
|
|
0.4
|
%
|
|
396
|
|
|
110.3
|
%
|
|||
Other
|
743
|
|
|
0.7
|
%
|
|
1,868
|
|
|
1.9
|
%
|
|
(1,125
|
)
|
|
(60.2
|
)%
|
|||
Total cost of revenues
|
$
|
49,446
|
|
|
48.1
|
%
|
|
$
|
48,803
|
|
|
48.6
|
%
|
|
$
|
643
|
|
|
1.3
|
%
|
|
Nine Months Ended September 30,
|
|
|
|||||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
Employee costs
|
$
|
43,696
|
|
|
14.1
|
%
|
|
$
|
44,703
|
|
|
14.9
|
%
|
|
$
|
(1,007
|
)
|
|
(2.3
|
)%
|
Data costs
|
41,758
|
|
|
13.5
|
%
|
|
31,756
|
|
|
10.6
|
%
|
|
10,002
|
|
|
31.5
|
%
|
|||
Panel costs
|
17,199
|
|
|
5.5
|
%
|
|
18,165
|
|
|
6.0
|
%
|
|
(966
|
)
|
|
(5.3
|
)%
|
|||
Systems and bandwidth costs
|
17,864
|
|
|
5.8
|
%
|
|
15,332
|
|
|
5.1
|
%
|
|
2,532
|
|
|
16.5
|
%
|
|||
Rent and depreciation
|
9,473
|
|
|
3.1
|
%
|
|
13,253
|
|
|
4.4
|
%
|
|
(3,780
|
)
|
|
(28.5
|
)%
|
|||
Professional fees
|
3,855
|
|
|
1.2
|
%
|
|
4,425
|
|
|
1.5
|
%
|
|
(570
|
)
|
|
(12.9
|
)%
|
|||
Sample and survey costs
|
4,532
|
|
|
1.5
|
%
|
|
4,173
|
|
|
1.4
|
%
|
|
359
|
|
|
8.6
|
%
|
|||
Technology
|
4,779
|
|
|
1.5
|
%
|
|
3,810
|
|
|
1.3
|
%
|
|
969
|
|
|
25.4
|
%
|
|||
Royalties and resellers
|
2,247
|
|
|
0.7
|
%
|
|
2,214
|
|
|
0.7
|
%
|
|
33
|
|
|
1.5
|
%
|
|||
Other
|
2,823
|
|
|
0.9
|
%
|
|
5,586
|
|
|
1.9
|
%
|
|
(2,763
|
)
|
|
(49.5
|
)%
|
|||
Total cost of revenues
|
$
|
148,226
|
|
|
47.8
|
%
|
|
$
|
143,417
|
|
|
47.7
|
%
|
|
$
|
4,809
|
|
|
3.4
|
%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
Employee costs
|
$
|
20,253
|
|
|
19.7
|
%
|
|
$
|
22,167
|
|
|
22.1
|
%
|
|
$
|
(1,914
|
)
|
|
(8.6
|
)%
|
Rent and depreciation
|
1,582
|
|
|
1.5
|
%
|
|
3,018
|
|
|
3.0
|
%
|
|
(1,436
|
)
|
|
(47.6
|
)%
|
|||
Travel
|
1,374
|
|
|
1.3
|
%
|
|
1,617
|
|
|
1.6
|
%
|
|
(243
|
)
|
|
(15.0
|
)%
|
|||
Professional fees
|
760
|
|
|
0.7
|
%
|
|
1,491
|
|
|
1.5
|
%
|
|
(731
|
)
|
|
(49.0
|
)%
|
|||
Other
|
897
|
|
|
0.9
|
%
|
|
1,580
|
|
|
1.6
|
%
|
|
(683
|
)
|
|
(43.2
|
)%
|
|||
Total selling and marketing expenses
|
$
|
24,866
|
|
|
24.2
|
%
|
|
$
|
29,873
|
|
|
29.8
|
%
|
|
$
|
(5,007
|
)
|
|
(16.8
|
)%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
Employee costs
|
$
|
64,728
|
|
|
20.9
|
%
|
|
$
|
67,703
|
|
|
22.5
|
%
|
|
$
|
(2,975
|
)
|
|
(4.4
|
)%
|
Rent and depreciation
|
5,554
|
|
|
1.8
|
%
|
|
7,966
|
|
|
2.6
|
%
|
|
(2,412
|
)
|
|
(30.3
|
)%
|
|||
Travel
|
3,694
|
|
|
1.2
|
%
|
|
5,241
|
|
|
1.7
|
%
|
|
(1,547
|
)
|
|
(29.5
|
)%
|
|||
Professional fees
|
2,897
|
|
|
0.9
|
%
|
|
4,896
|
|
|
1.6
|
%
|
|
(1,999
|
)
|
|
(40.8
|
)%
|
|||
Marketing events
|
363
|
|
|
0.1
|
%
|
|
838
|
|
|
0.3
|
%
|
|
(475
|
)
|
|
(56.7
|
)%
|
|||
Other
|
3,182
|
|
|
1.0
|
%
|
|
4,152
|
|
|
1.4
|
%
|
|
(970
|
)
|
|
(23.4
|
)%
|
|||
Total selling and marketing expenses
|
$
|
80,418
|
|
|
25.9
|
%
|
|
$
|
90,796
|
|
|
30.2
|
%
|
|
$
|
(10,378
|
)
|
|
(11.4
|
)%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
Employee costs
|
$
|
14,469
|
|
|
14.1
|
%
|
|
$
|
17,344
|
|
|
17.3
|
%
|
|
$
|
(2,875
|
)
|
|
(16.6
|
)%
|
Rent and depreciation
|
1,804
|
|
|
1.8
|
%
|
|
1,851
|
|
|
1.8
|
%
|
|
(47
|
)
|
|
(2.5
|
)%
|
|||
Technology
|
1,260
|
|
|
1.2
|
%
|
|
1,239
|
|
|
1.2
|
%
|
|
21
|
|
|
1.7
|
%
|
|||
Professional fees
|
699
|
|
|
0.7
|
%
|
|
496
|
|
|
0.5
|
%
|
|
203
|
|
|
40.9
|
%
|
|||
Other
|
510
|
|
|
0.5
|
%
|
|
650
|
|
|
0.6
|
%
|
|
(140
|
)
|
|
(21.5
|
)%
|
|||
Total research and development expenses
|
$
|
18,742
|
|
|
18.2
|
%
|
|
$
|
21,580
|
|
|
21.5
|
%
|
|
$
|
(2,838
|
)
|
|
(13.2
|
)%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
Employee costs
|
$
|
46,186
|
|
|
14.9
|
%
|
|
$
|
51,292
|
|
|
17.1
|
%
|
|
$
|
(5,106
|
)
|
|
(10.0
|
)%
|
Rent and depreciation
|
5,335
|
|
|
1.7
|
%
|
|
5,683
|
|
|
1.9
|
%
|
|
(348
|
)
|
|
(6.1
|
)%
|
|||
Technology
|
3,833
|
|
|
1.2
|
%
|
|
3,309
|
|
|
1.1
|
%
|
|
524
|
|
|
15.8
|
%
|
|||
Professional fees
|
1,650
|
|
|
0.5
|
%
|
|
1,824
|
|
|
0.6
|
%
|
|
(174
|
)
|
|
(9.5
|
)%
|
|||
Other
|
1,343
|
|
|
0.4
|
%
|
|
1,994
|
|
|
0.7
|
%
|
|
(651
|
)
|
|
(32.6
|
)%
|
|||
Total research and development expenses
|
$
|
58,347
|
|
|
18.8
|
%
|
|
$
|
64,102
|
|
|
21.3
|
%
|
|
$
|
(5,755
|
)
|
|
(9.0
|
)%
|
|
Three Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
Employee costs
|
$
|
7,903
|
|
|
7.7
|
%
|
|
$
|
11,322
|
|
|
11.3
|
%
|
|
$
|
(3,419
|
)
|
|
(30.2
|
)%
|
Professional fees
|
4,639
|
|
|
4.5
|
%
|
|
4,111
|
|
|
4.1
|
%
|
|
528
|
|
|
12.8
|
%
|
|||
DAx transition services agreement
|
2,119
|
|
|
2.1
|
%
|
|
2,661
|
|
|
2.7
|
%
|
|
(542
|
)
|
|
(20.4
|
)%
|
|||
Rent and depreciation
|
1,138
|
|
|
1.1
|
%
|
|
877
|
|
|
0.9
|
%
|
|
261
|
|
|
29.8
|
%
|
|||
Other
|
2,908
|
|
|
2.8
|
%
|
|
3,360
|
|
|
3.3
|
%
|
|
(452
|
)
|
|
(13.5
|
)%
|
|||
Total general and administrative expenses
|
$
|
18,707
|
|
|
18.2
|
%
|
|
$
|
22,331
|
|
|
22.3
|
%
|
|
$
|
(3,624
|
)
|
|
(16.2
|
)%
|
|
Nine Months Ended September 30,
|
|
|
|
|
|||||||||||||||
(In thousands)
|
2018
|
|
% of Revenue
|
|
2017
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
|||||||||
Employee costs
|
$
|
30,308
|
|
|
9.8
|
%
|
|
$
|
22,822
|
|
|
7.6
|
%
|
|
$
|
7,486
|
|
|
32.8
|
%
|
Professional fees
|
16,519
|
|
|
5.3
|
%
|
|
10,654
|
|
|
3.5
|
%
|
|
5,865
|
|
|
55.0
|
%
|
|||
DAx transition services agreement
|
6,967
|
|
|
2.2
|
%
|
|
8,412
|
|
|
2.8
|
%
|
|
(1,445
|
)
|
|
(17.2
|
)%
|
|||
Rent and depreciation
|
3,297
|
|
|
1.1
|
%
|
|
2,640
|
|
|
0.9
|
%
|
|
657
|
|
|
24.9
|
%
|
|||
Bad debt expense
|
397
|
|
|
0.1
|
%
|
|
501
|
|
|
0.2
|
%
|
|
(104
|
)
|
|
(20.8
|
)%
|
|||
Other
|
8,579
|
|
|
2.8
|
%
|
|
8,397
|
|
|
2.8
|
%
|
|
182
|
|
|
2.2
|
%
|
|||
Total general and administrative expenses
|
$
|
66,067
|
|
|
21.3
|
%
|
|
$
|
53,426
|
|
|
17.8
|
%
|
|
$
|
12,641
|
|
|
23.7
|
%
|
|
Three Months Ended September 30,
|
||||||
(In thousands)
|
2018
|
|
2017
|
||||
Transition services agreement income from the DAx disposition
|
$
|
2,120
|
|
|
$
|
2,662
|
|
Change in fair value of financing derivatives
|
(5,681
|
)
|
|
—
|
|
||
Gain on forgiveness of obligation
|
—
|
|
|
4,000
|
|
||
Other
|
1,850
|
|
|
(43
|
)
|
||
Total other (expense) income, net
|
$
|
(1,711
|
)
|
|
$
|
6,619
|
|
|
Nine Months Ended September 30,
|
||||||
(In thousands)
|
2018
|
|
2017
|
||||
Transition services agreement income from the DAx disposition
|
$
|
6,967
|
|
|
$
|
8,489
|
|
Change in fair value of financing derivatives
|
(10,141
|
)
|
|
—
|
|
||
Gain on forgiveness of obligation
|
—
|
|
|
4,000
|
|
||
Other
|
2,347
|
|
|
(3
|
)
|
||
Total other (expense) income, net
|
$
|
(827
|
)
|
|
$
|
12,486
|
|
•
|
Adjusted EBITDA does not reflect tax or interest payments that represent a reduction in cash available to us;
|
•
|
Depreciation and amortization are non-cash charges and the assets being depreciated may have to be replaced in the future. Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA and non-GAAP net loss do not reflect cash payments relating to litigation and the Audit Committee investigation described herein, such as litigation and investigation-related costs, costs associated with tax projects, restructuring costs, audits and other professional, consulting or other fees incurred in connection with our 2017 and prior-year audits and all related legal proceedings, all of which represent a reduction in cash available to us;
|
•
|
Adjusted EBITDA and non-GAAP net loss do not consider the impact of stock-based compensation and similar arrangements;
|
•
|
Adjusted EBITDA and non-GAAP net loss do not consider possible cash gains or losses related to our financing derivatives or investment in equity securities; and
|
•
|
Other companies, including companies in our industry, may calculate any of these non-GAAP financial measures differently, which reduces their usefulness as comparative measures.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss (GAAP)
|
$
|
(24,637
|
)
|
|
$
|
(130,069
|
)
|
|
$
|
(132,064
|
)
|
|
$
|
(209,487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax provision
|
400
|
|
|
2,296
|
|
|
3,916
|
|
|
4,223
|
|
||||
Interest expense, net
|
4,682
|
|
|
148
|
|
|
11,711
|
|
|
554
|
|
||||
Depreciation
|
4,135
|
|
|
6,233
|
|
|
12,974
|
|
|
18,229
|
|
||||
Amortization of intangible assets
|
7,896
|
|
|
8,491
|
|
|
24,706
|
|
|
25,669
|
|
||||
EBITDA
|
(7,524
|
)
|
|
(112,901
|
)
|
|
(78,757
|
)
|
|
(160,812
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation
|
6,311
|
|
|
8,722
|
|
|
31,191
|
|
|
15,366
|
|
||||
Investigation and audit related
|
696
|
|
|
21,392
|
|
|
37,446
|
|
|
56,469
|
|
||||
Settlement of litigation, net
|
—
|
|
|
81,799
|
|
|
5,250
|
|
|
82,417
|
|
||||
Restructuring costs
|
51
|
|
|
—
|
|
|
5,141
|
|
|
—
|
|
||||
Other expense (income), net
(1)
|
5,699
|
|
|
(3,963
|
)
|
|
9,834
|
|
|
(4,003
|
)
|
||||
Adjusted EBITDA
|
$
|
5,233
|
|
|
$
|
(4,951
|
)
|
|
$
|
10,105
|
|
|
$
|
(10,563
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
(In thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net loss (GAAP)
|
$
|
(24,637
|
)
|
|
$
|
(130,069
|
)
|
|
$
|
(132,064
|
)
|
|
$
|
(209,487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation
|
6,311
|
|
|
8,722
|
|
|
31,191
|
|
|
15,366
|
|
||||
Investigation and audit related
|
696
|
|
|
21,392
|
|
|
37,446
|
|
|
56,469
|
|
||||
Settlement of litigation, net
|
—
|
|
|
81,799
|
|
|
5,250
|
|
|
82,417
|
|
||||
Restructuring costs
|
51
|
|
|
—
|
|
|
5,141
|
|
|
—
|
|
||||
Other expense (income), net
(1)
|
5,699
|
|
|
(3,963
|
)
|
|
9,834
|
|
|
(4,003
|
)
|
||||
Non-GAAP net loss
|
$
|
(11,880
|
)
|
|
$
|
(22,119
|
)
|
|
$
|
(43,202
|
)
|
|
$
|
(59,238
|
)
|
|
|
Nine Months Ended September 30,
|
||||||
(In thousands)
|
|
2018
|
|
2017
|
||||
Condensed Consolidated Statements of Cash Flow Data:
|
|
|
|
|
||||
Net cash used in operating activities
|
|
$
|
(73,939
|
)
|
|
$
|
(27,701
|
)
|
Net cash (used in) provided by investing activities
|
|
$
|
(9,630
|
)
|
|
$
|
7,404
|
|
Net cash provided by (used in) financing activities
|
|
$
|
93,798
|
|
|
$
|
(5,202
|
)
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
$
|
(1,140
|
)
|
|
$
|
595
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
If the Conversion Premium
(as of the applicable
Interest Reset Date) is:
|
|
Then the Interest Rate from
the applicable Interest Reset
Date until the next
subsequent Interest Reset
Date shall be:
|
1.0 or less
|
|
4.0%
|
1.05
|
|
4.3%
|
1.10
|
|
4.7%
|
1.15
|
|
5.0%
|
1.20
|
|
5.3%
|
1.25
|
|
5.7%
|
1.30
|
|
6.0%
|
1.35
|
|
8.0%
|
1.40
|
|
10.0%
|
1.45 or higher
|
|
12.0%
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
•
|
Designed and implemented compensating controls to mitigate the risk of material misstatement related to revenue that exists due to our revenue contract complexity and dependency on manual processes, multiple accounting systems, and technologies that require modernization;
|
•
|
Designed and implemented controls to facilitate timely and accurate accounting for contracts in our international operations;
|
•
|
Improved accounting processes in-country, including consolidation of third-party accounting services, clarification of in-country roles and responsibilities, and headquarters-level oversight and review of financial information and reconciliations;
|
•
|
Increased the number of staff and level of expertise in the revenue and technical accounting groups;
|
•
|
Implemented enhanced training on policies, procedures, controls, and products for revenue accounting and technical staff; and
|
•
|
Transitioned revenue accounting functions that were previously performed by consultants to our internal accounting teams.
|
•
|
Developed a new and enhanced policy for accounting for business combinations;
|
•
|
Adopted a reservation of authority policy requiring Board of Directors approval for any business combinations or significant asset acquisitions; and
|
•
|
Performed an assessment of the finance department's technical accounting competencies and capabilities to evaluate and properly account for a proposed business combination or asset acquisition, including evaluation of key assumptions in forecasts to support the value for any business combinations and asset acquisitions.
|
•
|
Designed and implemented controls to mitigate risks associated with manual processes and complex accounting transactions;
|
•
|
Increased the number, experience level and skills of the personnel involved in our general ledger and financial reporting functions through hiring and improved training programs;
|
•
|
Aligned our team and closing processes to reduce the amount of time it takes to complete the close cycle;
|
•
|
Added additional corporate level reviews of our financial results within both domestic and international subsidiaries, including more robust analysis of fluctuations, to improve our ability to review, understand and analyze our financial results, trends and key performance metrics;
|
•
|
Enhanced and strengthened our documentation and review procedures relating to our key account reconciliations, including additional supervisory controls;
|
•
|
Developed a responsibility matrix to facilitate oversight and responsibility over the financial close, and increased communication of accountability; and
|
•
|
Transitioned to our internal accounting teams close processes and procedures that were previously performed by outside parties.
|
•
|
Designed and implemented new quarterly and annual control processes over our tax positions and processes;
|
•
|
Hired additional tax personnel to facilitate timely execution of controls; and
|
•
|
Engaged an external accounting firm to provide an additional layer of review over our tax reporting process, including the review of our quarterly and annual income tax provision calculations as well as our annual U.S. federal and material state income tax returns.
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
i.
|
Shares withheld to satisfy minimum statutory withholding tax obligations due upon the vesting of certain restricted stock units and exercise of certain stock options, which shares were valued at the then current fair market value of the shares.
|
|
|
Total Number of Shares Purchased or Withheld
|
|
Average Price Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(1)
|
|
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Repurchased Under the Plans or Programs
(1)
|
||||||
July 1 - July 31, 2018
|
|
141
|
|
(2)
|
$
|
20.61
|
|
|
—
|
|
|
$
|
—
|
|
August 1 - August 31, 2018
|
|
2,691
|
|
(2)
|
18.99
|
|
|
—
|
|
|
—
|
|
||
September 1 - September 30, 2018
|
|
14,796
|
|
(2)
|
19.69
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
17,628
|
|
|
$
|
19.59
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
During the three months ended
September 30, 2018
, there were no shares purchased pursuant to our share repurchase programs. On March 5, 2016, our Board of Directors suspended the share repurchase program indefinitely.
|
(2)
|
Shares withheld to cover minimum statutory withholding taxes due upon the vesting of certain restricted stock units and exercise of certain stock options. For restricted stock units and stock options, these amounts do not represent issued shares.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit
No.
|
|
Exhibit
Document
|
|
|
|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
10.9*
|
|
|
|
|
|
|
COM
S
CORE
, I
NC
.
|
|||
|
|
|
||
|
By:
|
/s/ Gregory A. Fink
|
||
|
|
Gregory A. Fink
|
||
|
|
Chief Financial Officer and Treasurer
|
||
|
|
(Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer)
|
(a)
|
Subject to the terms and conditions of this Agreement, the PRSUs covered by this Agreement shall Vest on March 1, 2021 (the “
Vesting Date
”) to the extent that the performance goals described in the Statement of Performance Goals for these PRSUs are achieved, once determined and certified by the Committee in its sole discretion, conditioned upon the Grantee’s continuous service with the Company or a Subsidiary through the Vesting Date (the period from the Date of Grant until the Vesting Date, the “
Vesting Period
”). Except as otherwise provided herein, any PRSUs that do not so Vest will be forfeited, including if the Grantee ceases to be in continuous service with the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuous service” (or substantially similar terms) means the absence of any interruption or termination of the Grantee’s service as an Employee, Director or consultant to the Company or a Subsidiary. Continuous service shall not
|
(b)
|
Except as otherwise provided in any employment, severance, change in control or similar agreement between the Grantee and the Company or any Subsidiary (an “
Individual Agreement
”), any PRSUs that have not Vested pursuant to
Section 5
by the end of the Vesting Period will be forfeited automatically and without further notice after the end of the Vesting Period (or earlier if, and on such date that, Grantee ceases to be in continuous service with the Company or a Subsidiary prior to the end of the Vesting Period).
|
(a)
|
Payment for the PRSUs, after and to the extent they have Vested (“
Vested PRSUs
”), shall be made in the form of Common Stock. To the extent the PRSUs are Vested PRSUs on the dates set forth below and to the extent such Vested PRSUs have not previously been settled, the Company will settle such Vested PRSUs as follows:
|
(i)
|
As soon as administratively practicable following (but no later than thirty (30) days following) the date of the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, payment of the Vested PRSUs shall be made to the Grantee;
|
(ii)
|
If the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code occurs prior to the Vesting of the PRSUs and the PRSUs Vest in accordance with an Individual Agreement, payment of the Vested PRSUs shall be made between March 1, 2021 and March 15, 2021; and
|
(iii)
|
On the date of a Change of Control, payment of the Vested PRSUs shall be made to the Grantee;
provided
,
however
, that if such Change of Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code and the regulations thereunder, and where Section 409A of the Code applies to such distribution, the Grantee is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to this
Section 6
as though such Change of Control had not occurred.
|
(b)
|
If the PRSUs become payable on the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code and the Grantee is a “specified employee” as determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code, then, to the extent necessary to comply with Section 409A of the Code, payment for
|
(c)
|
Except to the extent provided by Section 409A of the Code and permitted by the Committee, no Common Stock may be issued to the Grantee at a time earlier than otherwise expressly provided in this Agreement.
|
(d)
|
The Company’s obligations to the Grantee with respect to the PRSUs will be satisfied in full upon the issuance of Common Stock corresponding to such PRSUs.
|
(a)
|
The Grantee shall have no rights of ownership in the Common Stock underlying the PRSUs and no right to vote the Common Stock underlying the PRSUs until the date on which the Common Stock underlying the PRSUs is issued or transferred to the Grantee pursuant to
Section 6
above.
|
(b)
|
From and after the Date of Grant and until the earlier of (i) the time when the PRSUs Vest and are paid in accordance with
Section 6
hereof or (ii) the time when the Grantee’s right to receive shares of Common Stock in payment of the PRSUs is forfeited in accordance with
Section 5
hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Grantee shall be credited with cash per PRSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including Vesting, payment and forfeitability) as apply to the PRSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the PRSUs to which they relate.
|
(c)
|
The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Stock in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
|
(a)
|
Payment for the RSUs, after and to the extent they have become nonforfeitable (“
Vested RSUs
”), shall be made in the form of Common Stock. To the extent the RSUs are Vested RSUs on the dates set forth below and to the extent such Vested
|
(i)
|
As soon as administratively practicable following (but no later than thirty (30) days following) the date of the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, payment of the Vested RSUs shall be made to the Grantee; and
|
(ii)
|
On the date of a Change of Control, payment of the Vested RSUs shall be made to the Grantee;
provided
,
however
, that if such Change of Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code and the regulations thereunder, and where Section 409A of the Code applies to such distribution, the Grantee is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to this
Section 5
as though such Change of Control had not occurred.
|
(b)
|
If the RSUs become payable on the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code and the Grantee is a “specified employee” as determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code, then, to the extent necessary to comply with Section 409A of the Code, payment for the RSUs shall be made on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of the Grantee’s “separation from service.” Notwithstanding the foregoing, if the Grantee dies following the Grantee’s “separation from service,” but before the six (6) month anniversary of the “separation from service,” then any payment delayed in accordance with this
Section 5(b)
will be payable as soon as administratively practicable after the date of the Grantee’s death.
|
(c)
|
The Company’s obligations to the Grantee with respect to the RSUs will be satisfied in full upon the issuance of Common Stock corresponding to such RSUs.
|
(a)
|
The Grantee shall have no rights of ownership in the Common Stock underlying the RSUs and no right to vote the Common Stock underlying the RSUs until the date on which the Common Stock underlying the RSUs is issued or transferred to the Grantee pursuant to
Section 5
above.
|
(b)
|
From and after the Date of Grant and until the earlier of (i) the time when the RSUs become nonforfeitable and are paid in accordance with
Section 5
hereof or (ii) the time when the Grantee’s right to receive Common Stock in payment of the RSUs is forfeited in accordance with
Section 4
hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Grantee shall be credited with cash per RSU equal to the amount of such dividend. Any amounts
|
(c)
|
The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Stock in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
|
(a)
|
Subject to the terms and conditions of this Agreement, the PRSUs covered by this Agreement shall Vest on March 1, 2021 (the “
Vesting Date
”) to the extent that the performance goals described in the Statement of Performance Goals for these PRSUs are achieved, once determined and certified by the Committee in its sole discretion, conditioned upon the Grantee’s continuous service with the Company or a Subsidiary through the Vesting Date (the period from the Date of Grant until the Vesting Date, the “
Vesting Period
”). Except as otherwise provided herein, any PRSUs that do not so Vest will be forfeited, including if the Grantee ceases to be in continuous service with the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuous service” (or substantially similar terms) means the absence of any interruption or termination of the Grantee’s service as an Employee, Director or consultant to the Company or a Subsidiary. Continuous service shall not be considered interrupted or terminated in the case of transfers between locations of
|
(b)
|
Except as otherwise provided in any employment, severance, change in control or similar agreement between the Grantee and the Company or any Subsidiary, any PRSUs that have not Vested pursuant to
Section 5
by the end of the Vesting Period will be forfeited automatically and without further notice after the end of the Vesting Period (or earlier if, and on such date that, Grantee ceases to be in continuous service with the Company or a Subsidiary prior to the end of the Vesting Period).
|
(a)
|
Payment for the PRSUs, after and to the extent they have Vested, shall be made in the form of Common Stock. Payment shall be made between March 1, 2021 and March 15, 2021 (but, unless the Grantee enters into a deferral arrangement in accordance with procedures established by the Company, in no event later than required to satisfy the short-term deferral exemption under Section 409A of the Code).
|
(b)
|
Except to the extent provided by Section 409A of the Code and permitted by the Committee, no Common Stock may be issued to the Grantee at a time earlier than otherwise expressly provided in this Agreement.
|
(c)
|
The Company’s obligations to the Grantee with respect to the PRSUs will be satisfied in full upon the issuance of Common Stock corresponding to such PRSUs.
|
(a)
|
The Grantee shall have no rights of ownership in the Common Stock underlying the PRSUs and no right to vote the Common Stock underlying the PRSUs until the date on which the Common Stock underlying the PRSUs is issued or transferred to the Grantee pursuant to
Section 6
above.
|
(b)
|
From and after the Date of Grant and until the earlier of (i) the time when the PRSUs Vest and are paid in accordance with
Section 6
hereof or (ii) the time when the Grantee’s right to receive shares of Common Stock in payment of the PRSUs is forfeited in accordance with
Section 5
hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Grantee shall be credited with cash per PRSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including Vesting, payment and forfeitability) as apply to the PRSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the PRSUs to which they relate.
|
(c)
|
The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Stock in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
|
(a)
|
Payment for the RSUs, after and to the extent they have become nonforfeitable, shall be made in the form of Common Stock. Payment shall be made as soon as administratively practicable following the date that the RSUs become nonforfeitable pursuant to
Section 4
hereof (but, unless the Grantee enters into a deferral
|
(b)
|
The Company’s obligations to the Grantee with respect to the RSUs will be satisfied in full upon the issuance of Common Stock corresponding to such RSUs.
|
(a)
|
The Grantee shall have no rights of ownership in the Common Stock underlying the RSUs and no right to vote the Common Stock underlying the RSUs until the date on which the Common Stock underlying the RSUs is issued or transferred to the Grantee pursuant to
Section 5
above.
|
(b)
|
From and after the Date of Grant and until the earlier of (i) the time when the RSUs become nonforfeitable and are paid in accordance with
Section 5
hereof or (ii) the time when the Grantee’s right to receive Common Stock in payment of the RSUs is forfeited in accordance with
Section 4
hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Grantee shall be credited with cash per RSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including vesting, payment and forfeitability) as apply to the RSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the RSUs to which they relate.
|
(c)
|
The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Stock in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
|
(a)
|
Normal Vesting
. The RSUs covered by this Agreement shall become nonforfeitable and payable to the Grantee pursuant to
Section 5
hereof in substantially equal installments on each of ____________, ____________, and ____________ if the Grantee remains in continuous service with the Company or a Subsidiary until each such date (the period from the Date of Grant until the last such vesting date, the “
Vesting Period
”). Subject to the terms of the Plan, RSUs that do not so become nonforfeitable will be forfeited, including if the Grantee ceases to be in continuous service with the Company or a Subsidiary prior to the end of the Vesting Period. For purposes of this Agreement, “continuous service” (or substantially similar terms) means the absence of any interruption or termination of the Grantee’s service as an Employee, Director or consultant to the Company or a Subsidiary. Continuous service shall not be considered interrupted or terminated in the case of transfers between locations of the Company and its Subsidiaries. Further, continuous service shall not be considered interrupted or terminated in the case of the Grantee’s cessation of service as an Employee, Director or consultant to the Company or a Subsidiary (each, a “
Participant Class
”), so long as the Grantee continues serving in another Participant Class.
|
(b)
|
Qualifying Termination
. Notwithstanding
Section 4(a)
to the contrary, the RSUs covered by this Agreement (to the extent not already nonforfeitable) shall become nonforfeitable and payable to the Grantee pursuant to
Section 5
hereof if the
|
(c)
|
Change of Control
. Notwithstanding
Section 4(a)
to the contrary, the RSUs covered by this Agreement (to the extent not already nonforfeitable) shall become nonforfeitable and payable to the Grantee pursuant to
Section 5
hereof on the date of a Change of Control that occurs prior to the end of the Vesting Period if the Grantee remains in continuous service until such date. For purposes of this Agreement, the term “Change of Control” shall have the meaning given to such term in the Employment Agreement.
|
5.
|
Form and Time of Payment of RSUs
.
|
(a)
|
Payment for the RSUs, after and to the extent they have become nonforfeitable (“
Vested RSUs
”), shall be made in the form of Common Stock. To the extent the RSUs are Vested RSUs on the dates set forth below and to the extent such Vested RSUs have not previously been settled, the Company will settle such Vested RSUs as follows:
|
(i)
|
As soon as administratively practicable following (but no later than thirty (30) days following) the date of the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, payment of the Vested RSUs shall be made to the Grantee; and
|
(ii)
|
On the date of a Change of Control, payment of the Vested RSUs shall be made to the Grantee;
provided
,
however
, that if such Change of Control would not qualify as a permissible date of distribution under Section 409A(a)(2)(A) of the Code and the regulations thereunder, and where Section 409A of the Code applies to such distribution, the Grantee is entitled to receive the corresponding payment on the date that would have otherwise applied pursuant to this
Section 5
as though such Change of Control had not occurred.
|
(b)
|
If the RSUs become payable on the Grantee’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code and the Grantee is a “specified employee” as determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code, then, to the extent necessary to comply with Section 409A of the Code, payment for the RSUs shall be made on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of the Grantee’s “separation from service.” Notwithstanding the foregoing, if the Grantee dies following the Grantee’s “separation from service,” but before the six (6) month anniversary of the “separation from service,” then any payment delayed in accordance with this
Section 5(b)
will
|
(c)
|
The Company’s obligations to the Grantee with respect to the RSUs will be satisfied in full upon the issuance of Common Stock corresponding to such RSUs.
|
6.
|
Dividend Equivalents; Voting and Other Rights
.
|
(a)
|
The Grantee shall have no rights of ownership in the Common Stock underlying the RSUs and no right to vote the Common Stock underlying the RSUs until the date on which the Common Stock underlying the RSUs is issued or transferred to the Grantee pursuant to
Section 5
above.
|
(b)
|
From and after the Date of Grant and until the earlier of (i) the time when the RSUs become nonforfeitable and are paid in accordance with
Section 5
hereof or (ii) the time when the Grantee’s right to receive Common Stock in payment of the RSUs is forfeited in accordance with
Section 4
hereof, on the date that the Company pays a cash dividend (if any) to holders of Common Stock generally, the Grantee shall be credited with cash per RSU equal to the amount of such dividend. Any amounts credited pursuant to the immediately preceding sentence shall be subject to the same applicable terms and conditions (including vesting, payment and forfeitability) as apply to the RSUs based on which the dividend equivalents were credited, and such amounts shall be paid in cash at the same time as the RSUs to which they relate.
|
(c)
|
The obligations of the Company under this Agreement will be merely that of an unfunded and unsecured promise of the Company to deliver Common Stock in the future, and the rights of the Grantee will be no greater than that of an unsecured general creditor. No assets of the Company will be held or set aside as security for the obligations of the Company under this Agreement.
|
/s/ Bryan J. Wiener
|
Bryan J. Wiener
|
Chief Executive Officer
|
(Principal Executive Officer)
|
/s/ Gregory A. Fink
|
Gregory A. Fink
|
Chief Financial Officer and Treasurer
|
(Principal Financial Officer)
|
/s/ Bryan J. Wiener
|
Bryan J. Wiener
|
Chief Executive Officer
|
(Principal Executive Officer)
|
/s/ Gregory A. Fink
|
Gregory A. Fink
|
Chief Financial Officer and Treasurer
|
(Principal Financial Officer)
|