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Intersections Inc. Reports Fourth Quarter 2016 Results And Announces Year-End Business Update Call
  • Largest independent operator in the Identity Theft Monitoring space in the U.S. and Canada
  • Strategic refocus only on identity and privacy protection services
  • Identity Guard® subscriber base increased to 380 thousand subscribers
  • Voyce primary operations were ceased in December 2016
  • Captira and Habits at Work to be sold off in first half of 2017

CHANTILLY, Va.--(BUSINESS WIRE)--Mar. 27, 2017-- Intersections Inc. (NASDAQ: INTX) today announced financial results for the quarter ended December 31, 2016.

“We made significant advances in our Identity Guard® product portfolio in 2016, initially with the release of a beta version of our new flagship product at the IBM World of Watson Conference on October 24, 2016 and thereafter with further development and testing,” said Johan Roets, Chief Executive Officer. “These actions help to ensure that by the summer of 2017, the product will be best-in-class to address three strategic objectives: 1) knowing that a consumer has an identity theft problem earlier is better than knowing later; 2) taking preventative measures to limit one’s risk profile and digital footprint can and will reduce the risk of identity theft; and 3) that everyone’s risk profile is unique and therefore must receive customized advice and tools on how to protect themselves. Our innovation on the IBM Watson technology platform will allow us to address the 88% of data in the world that is stored in unstructured format, but which could contain valuable information about our subscribers’ and their families’ personal information and risks thereto. No one else in the Identity Theft Monitoring space currently has this capability. We have also made significant investments in business development resources in the U.S. in order to avail ourselves of new market opportunities. In Canada, our new distribution partner, Sigma Loyalty Group, is solely dedicated to helping us grow the Canadian market in new segments and win back business lost in existing segments.

“We are very pleased to be entering 2017 with a complete focus on personal information security for consumers and families, as threats have never been greater,” Mr. Roets continued. “The decision to wind down Voyce operations and exit other non-core businesses not only allows us to focus our resources and leverage our core competencies in identity and personal information security, but also to provide an opportunity to significantly improve our future financial results compared to 2016. The competitive landscape in our industry in the U.S. and Canada has seen very telling changes in 2016. Experian acquired CS Identity (which had approximately $120 million of revenue in 2016) in April 2016 for $360 million. Further, Symantec acquired LifeLock (which had approximately $660 million of revenue in 2016) in September 2016 for $2.3 billion. Not only do these acquisitions change the competitive landscape for us, they also demonstrate the potential value that Intersections Inc. can create with a focused growth business in the Identity Theft Monitoring space. The two acquisitions leave Intersections Inc. as the largest independent identity theft monitoring provider in the U.S., with personal information services revenue in 2016 of $164 million and a market capitalization of approximately $93 million (as of March 24, 2017).”

Consolidated revenue for the quarter ended December 31, 2016 was $42.2 million, compared to $47.4 million for the quarter ended December 31, 2015. Loss before income taxes for the quarter ended December 31, 2016 was $(12.6) million, compared to $(18.9) million for the quarter ended December 31, 2015. Consolidated adjusted EBITDA (loss) before share related compensation and non-cash impairment charges (“Adjusted EBITDA”) for the quarter ended December 31, 2016 was $(1.8) million, compared to $(5.7) million for the quarter ended December 31, 2015. Diluted loss per share for the quarter ended December 31, 2016 was $(0.54), compared to $(0.68) for the quarter ended December 31, 2015. Consolidated revenue for the year ended December 31, 2016 was $175.7 million, compared to $203.8 million for the year ended December 31, 2015. Loss before income taxes for the year ended December 31, 2016 was $(30.5) million, compared to $(38.4) million for the year ended December 31, 2015. Consolidated Adjusted EBITDA (loss) for the year ended December 31, 2016 was $(6.6) million, compared to $(8.2) million for the year ended December 31, 2015. Diluted loss per share for the year ended December 31, 2016 was $(1.31), compared to $(2.26) for the year ended December 31, 2015.

In late 2016, the Board of Directors approved the closure of the Company’s Pet Health Monitoring business, also known as Voyce, which generated a loss before income taxes of $(29.4) million for the year ended December 31, 2016. The discontinuation of Voyce commercial operations will enable the Company’s growth strategy and capital to be directed to the Identity Guard® business. To further the Company’s strategic focus, it also sold the business comprising the Bail Bonds Industry Solutions segment in early 2017.

Fourth Quarter Results:

  • Revenue from the Company’s Identity Guard® subscriber base was $13.4 million for the quarter ended December 31, 2016 with a base of 380 thousand subscribers as of December 31, 2016, 1.6% higher than as of December 31, 2015.
  • Revenue from the Company’s U.S. financial institution clients was $22.8 million for the quarter ended December 31, 2016 with a base of 705 thousand subscribers as of December 31, 2016. The subscriber base decreased by 1.2% per month during the fourth quarter, which the Company believes is representative of normal attrition given the discontinuation of marketing and retention efforts for this population.
  • Core Business (the aggregate of all businesses of Intersections Inc. except for its Pet Health Monitoring, or Voyce, business) income (loss) before income taxes for the quarter ended December 31, 2016 was $190 thousand compared to $(13.8) million for the quarter ended December 31, 2015. Core Business Adjusted EBITDA (loss) for the quarter ended December 31, 2016 was $3.6 million compared to $(973) thousand for the quarter ended December 31, 2015. As a result of the decision to exit the Bail Bonds Industry Solutions segment and the Habits at Work consulting business, we recorded non-cash asset impairments totaling $1.4 million in the fourth quarter of 2016.
  • Voyce loss before income taxes for the quarter ended December 31, 2016 was $(12.8) million compared to $(5.1) million for the quarter ended December 31, 2015. Voyce Adjusted EBITDA (loss) for the quarter ended December 31, 2016 was $(5.4) million compared to $(4.7) million for the quarter ended December 31, 2015. As a result of the ceased operations, we recorded non-cash asset impairments totaling $7.0 million in the fourth quarter of 2016.
  • As of December 31, 2016, the Company had a cash balance of $10.9 million, and an outstanding principal balance of $13.4 million under its term loan with Crystal Financial SPV LLC. For additional information, Please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our most recent Form 10-K.

Year-End Results:

  • Revenue from the Company’s Identity Guard® subscriber base for the year ended December 31, 2016 was $54.5 million compared to $55.6 million for the prior year. Revenue and subscriber growth during the year was negatively impacted by reduced marketing on a year to date basis compared to the prior year, as the Company prepared for the launch of its new product utilizing the IBM Watson platform in the fourth quarter of 2016.
  • Revenue from the Company’s U.S. financial institution clients for the year ended December 31, 2016 was $96.2 million.
  • Core Business (loss) before income taxes for the year ended December 31, 2016 was $(1.1) million compared to $(19.0) million for the year ended December 31, 2015. Core Business Adjusted EBITDA for the year ended December 31, 2016 was $13.2 million compared to $9.9 million for the year ended December 31, 2015.
  • Voyce loss before income taxes for the year ended December 31, 2016 was $(29.4) million compared to $(19.4) million for the year ended December 31, 2015. Voyce Adjusted EBITDA (loss) for the year ended December 31, 2016 was $(19.8) million compared to $(18.1) million for the year ended December 31, 2015.

Year-End 2016 Business Update Conference Call:

The Company also announced today that it will hold a conference call to provide a year-end 2016 business update on Monday, April 3, 2017 at 4:00 p.m. Eastern Time.

You may access the live webcast on the Investor's page at Intersections Inc.’s website www.intersections.com.

You can also access the call by dialing the toll free numbers below. If you wish to participate in the Q&A session, you must dial in.

WHAT:     Q4 2016 Intersections Inc. Earnings Conference Call
 
WHEN: April 3, 2017
4:00 p.m. Eastern Time
 
HOW:

To register for the conference, please click here.

You will receive an email confirmation that will include the dial-in number, passcode, and PIN to be used when joining your event.

The replay of the webcast will be available on this website for four business days after the live call. The dial-in for the replay is either 888.843.7419 or 630.652.3042 with the replay access code of 5795601#.

Non-GAAP Financial Measures:

Intersections' Consolidated Financial Statements, "Other Data" and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures and related notes can be found in the accompanying tables and footnotes to this release and in the "GAAP and Non-GAAP Measures" link under the "Investor & Media" page on our website at www.intersections.com.

Forward-Looking Statements:

Statements in this release relating to future plans, results, performance, expectations, achievements and the like are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,'' “plan,” “intend,” “believe,” “may,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Those forward-looking statements involve known and unknown risks and uncertainties and are subject to change based on various factors and uncertainties that may cause actual results to differ materially from those expressed or implied by those statements, including the timing and success of new product launches, including our Identity Guard® platform and other growth initiatives; the continuing impact of the regulatory environment on our business; the continued dependence on a small number of financial institutions for a majority of our revenue and to service our U.S. financial institution customer base; our ability to execute our strategy and previously announced transformation plan; our incurring additional restructuring charges; our incurring impairment charges on goodwill and/or assets, including assets related to our Voyce® business; our ability to control costs; and our needs for additional capital to grow our business, including our ability to maintain compliance with the covenants under our term loan or seek additional sources of debt and/or equity financing. Factors and uncertainties that may cause actual results to differ include but are not limited to the risks disclosed under “Forward-Looking Statements,” “Item 1. Business—Government Regulation” and “Item 1A. Risk Factors” in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and in its recent other filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to revise or update any forward-looking statements unless required by applicable law.

About Intersections:

Intersections Inc. (Nasdaq: INTX) provides innovative, information based solutions that help consumers manage risks and make better informed life decisions. Under its Identity Guard® brand and other brands, the company helps consumers monitor, manage and protect against the risks associated with their identities and personal information. Headquartered in Chantilly, Virginia, the company was founded in 1996. To learn more, visit www.intersections.com.

   
INTERSECTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
Three Months Ended Year Ended
December 31, December 31,
2016   2015 2016   2015
NET REVENUE $ 42,201 $ 47,408 $ 175,662 $ 203,827
OPERATING EXPENSES:
Marketing 3,022 4,243 14,707 20,568
Commission 10,140 11,611 42,776 50,837
Cost of services revenue 12,442 15,949 53,837 64,932
Cost of hardware revenue 104 217 1,381 608
General and administrative 18,331 22,388 75,274 80,799
Impairment of goodwill 10,318 10,318
Impairment of intangibles and other assets 8,471 8,471 7,355
Depreciation 1,507 1,579 6,238 5,977
Amortization   93   206   577   687
Total operating expenses   54,110   66,511   203,261   242,081
LOSS FROM OPERATIONS (11,909 ) (19,103 ) (27,599 ) (38,254 )
Interest expense (666 ) (160 ) (2,369 ) (313 )
Other (expense) income, net   (68 )   319   (482 )   181
LOSS BEFORE INCOME TAXES (12,643 ) (18,944 ) (30,450 ) (38,386 )
INCOME TAX BENEFIT (EXPENSE)   (145 )   4,848   (19 )   (6,102 )
NET LOSS $ (12,788 ) $ (14,096 ) $ (30,469 ) $ (44,488 )
 
Basic and diluted loss per common share $ (0.54 ) $ (0.68 ) $ (1.31 ) $ (2.26 )
Weighted average shares outstanding, basic and diluted 23,500 20,782 23,259 19,677
 
INTERSECTIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
(unaudited)
 
December 31,
2016   2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,857 $ 11,471
Accounts receivable, net of allowance for doubtful accounts of $15 (2016) and $115 (2015) 7,972 8,163
Prepaid expenses and other current assets 3,864 7,524
Inventory, net 250 2,253
Income tax receivable 3,314 7,730
Deferred subscription solicitation and commission costs 5,050 6,961
Assets held for sale   104  
Total current assets 31,411 44,102
PROPERTY AND EQUIPMENT, net 10,611 13,438
GOODWILL 9,763 9,763
INTANGIBLE ASSETS, net 210 1,693
OTHER ASSETS   862   1,034
TOTAL ASSETS $ 52,857 $ 70,030
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,536 $ 3,207
Accrued expenses and other current liabilities 11,068 15,845
Accrued payroll and employee benefits 4,256 7,091
Commissions payable 316 375
Current portion of long-term debt, net 2,146
Capital leases, current portion 471 631
Deferred revenue 8,295 2,380
Liabilities held for sale   104  
Total current liabilities 29,192 29,529
LONG-TERM DEBT, net 10,092
OBLIGATIONS UNDER CAPITAL LEASES, less current portion 865 1,147
OTHER LONG-TERM LIABILITIES 3,436 3,971
DEFERRED TAX LIABILITY, net   1,905   1,905
TOTAL LIABILITIES   45,490   36,552
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Common stock at $0.01 par value, shares authorized 50,000; shares issued 27,303 (2016) and 26,730 (2015); shares outstanding 23,733 (2016) and 23,236 (2015) 273 267
Additional paid-in capital 142,247 137,705
Treasury stock, shares at cost; 3,570 (2016) and 3,494 (2015) (33,822 ) (33,632 )
Accumulated deficit   (101,331 )   (70,862 )
TOTAL STOCKHOLDERS’ EQUITY   7,367   33,478
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 52,857 $ 70,030
   
INTERSECTIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (30,469 ) $ (44,488 )
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation 6,238 5,977
Depreciation of other operating assets 24
Amortization 577 687
Deferred income tax, net 13,356
Amortization of debt issuance cost 884 109
Provision for doubtful accounts (89 ) 100
Adjustment for surplus and obsolete inventories 801
Loss on disposal of fixed assets 451 65
Share based compensation 4,882 5,441
Amortization of deferred subscription solicitation and commission costs 12,656 17,538
Impairment of goodwill, intangibles and other assets 8,471 17,673
Changes in assets and liabilities:
Accounts receivable 57 7,221
Prepaid expenses and other current assets 3,661 979
Inventory, net (2,585 ) (2,253 )
Income tax, net 4,415 (1,036 )
Deferred subscription solicitation and commission costs (10,744 ) (17,578 )
Other assets 79 782
Accounts payable (845 ) (2,147 )
Accrued expenses and other current liabilities (4,895 ) (3,305 )
Accrued payroll and employee benefits (2,793 ) 1,810
Commissions payable (59 ) (94 )
Deferred revenue 5,916 (532 )
Other long-term liabilities   (554 )   (574 )
Cash flows used in operating activities   (3,921 )   (269 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash received for the liquidating distribution of White Sky, Inc. 57
Cash paid for acquisition of technology related intangible (202 )
Cash paid for the business acquisitions (626 )
Increase in restricted cash (375 )
Proceeds from sale of property and equipment 394
Acquisition of property and equipment   (6,685 )   (4,212 )
Cash flows used in investing activities   (6,609 )   (5,040 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 20,000
Repayments of debt (6,568 )
Cash paid for debt issuance costs (1,990 )
Stock issuance proceeds, net of stock issuance costs 7,394
Capital lease payments (719 ) (696 )
Withholding tax payment on vesting of restricted stock units and stock option exercises   (486 )   (1,243 )
Cash flows provided by financing activities   10,237   5,455
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (293 ) 146
CASH AND CASH EQUIVALENTS — Beginning of period 11,471 11,325
Less: cash reclassified to assets held for sale at end of period   (321 )  
CASH AND CASH EQUIVALENTS — End of period $ 10,857 $ 11,471
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 1,641 $ 179
Cash paid for taxes $ 28 $ 230
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
Equipment obtained under capital lease, including acquisition costs $ 923 $ 926
Equipment additions accrued but not paid $ 423 $ 115
Shares withheld in lieu of withholding taxes on vesting of restricted stock awards $ 39 $ 141
Shares issued in the business acquired from White Sky, Inc., net of liquidating distributions $ $ 576
Shares issued in the business acquired from Health at Work Wellness Actuaries LLC $ $ 1,551
Transfer of land and building to held for sale $ $ 214
 

INTERSECTIONS INC.

OTHER DATA

(in thousands)

(unaudited)

 

Personal Information Services Segment Revenue

 
The following tables provide details of our Personal Information Services segment revenue information for the three months and years ended December 31, 2016 and 2015:
 
Quarters Ended December 31,
2016     2015     2016   2015
Bank of America $ 18,497 $ 21,247 46.7 % 48.4 %
All other financial institution clients 4,306 5,416 10.9 % 12.3 %
IDENTITY GUARD® 13,355 14,179 33.7 % 32.3 %
Canadian business lines 3,084 3,076 7.8 % 7.0 %
Other   343   0.9 % 0.0 %
Total Personal Information Services revenue $ 39,585 $ 43,918 100.0 % 100.0 %
 
Years Ended December 31,
2016     2015     2016   2015
Bank of America $ 77,841 $ 89,932 47.6 % 47.7 %
All other financial institution clients 18,361 25,492 11.2 % 13.5 %
IDENTITY GUARD® 54,545 55,594 33.3 % 29.5 %
Canadian business lines 12,488 17,511 7.6 % 9.3 %
Other   467   0.3 % 0.0 %
Total Personal Information Services revenue $ 163,702 $ 188,529 100.0 % 100.0 %
 

INTERSECTIONS INC.

OTHER DATA, continued

(in thousands)

(unaudited)

 

Personal Information Services Segment Subscribers

 
The following tables provide details of our Personal Information Services segment subscriber information for the three months and years ended December 31, 2016 and 2015:
 

Three months ended:

 

Financial
Institution

 

IDENTITY
GUARD®

 

Canadian
Business Lines

  Total
Balance at September 30, 2016   732   375   161   1,268
Additions 1 41 30 72
Cancellations   (28 )   (36 )   (29 )   (93 )
Balance at December 31, 2016   705   380   162   1,247
Balance at September 30, 2015 861 389 164 1,414
Additions 2 37 30 69
Cancellations   (34 )   (63 )   (29 )   (126 )
Balance at December 31, 2015   829   363   165   1,357

Years ended:

       

Financial
Institution

IDENTITY
GUARD®

Canadian
Business Lines

Total
Balance at December 31, 2014   1,421   342   296   2,059
Additions 4 253 103 360
Cancellations   (596 )   (232 )   (234 )   (1,062 )
Balance at December 31, 2015 829 363 165 1,357
Reclassification (1) (11 ) 11
Additions 2 200 123 325
Cancellations   (115 )   (194 )   (126 )   (435 )
Balance at December 31, 2016   705   380   162   1,247
  ____________________________
(1) We periodically refine the criteria used to calculate and report our subscriber data. In the year ended December 31, 2016, we reclassified certain subscribers that receive our breach response services, and the associated revenue, from the Financial Institution category to the Identity Guard® category. The reclassification is excluded from our calculations of decrease and increase in subscribers in our Financial Institution and Consumer Direct categories, respectively.

INTERSECTIONS INC.
OTHER DATA, continued
(unaudited)

Intersections Inc.
Reconciliation of Non-GAAP Financial Measures

The table below includes financial information prepared in accordance with accounting principles generally accepted in the United States, or GAAP, as well as other financial measures referred to as non-GAAP financial measures. Consolidated adjusted EBITDA before share related compensation and non-cash impairment charges (“Adjusted EBITDA”) is presented in a manner consistent with the way management evaluates operating results and which management believes is useful to investors and others. Share related compensation includes non-cash share based compensation. An explanation regarding the company’s use of non-GAAP financial measures and a reconciliation of non-GAAP financial measures used by the company to GAAP measures is provided below. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, net income (loss) and the other information prepared in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies. Management strongly encourages shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

Consolidated Adjusted EBITDA represents consolidated loss before income taxes plus: share related compensation; non-cash impairment of goodwill, intangibles and other long-lived assets; (gain) loss on disposal of fixed assets; adjustment for surplus and obsolete inventories; depreciation and amortization; and interest (income) expense. We believe that the consolidated Adjusted EBITDA calculation provides useful information to investors because they are indicators of our operating performance, and we use these measures in communications with our board of directors, creditors, investors and others concerning our financial performance. Consolidated Adjusted EBITDA is commonly used as a basis for investors and analysts to evaluate and compare the periodic and future operating performance and value of companies within our industry. Our Board of Directors and management use consolidated Adjusted EBITDA to evaluate the operating performance of the company. In addition, consolidated Adjusted EBITDA, as defined in our credit agreement, as amended, with Crystal Financial SPV LLC (“Amended Credit Agreement”) is used to measure covenant compliance.

We provide this information to show the impact of share related compensation on our operating results, as it is excluded from our internal operating and budgeting plans and measurements of financial performance; however, we do consider the dilutive impact to our shareholders when awarding share related compensation and consider both the Black-Scholes value and GAAP value (to the extent applicable) in connection therewith, and value such awards accordingly.

INTERSECTIONS INC.
OTHER DATA, continued
(unaudited)

We do not consider share related compensation charges when we evaluate the performance of our individual business groups or formulate our short and long-term operating plans. Due to its nature, individual managers generally are unable to project the impact of share related compensation and accordingly we do not hold them accountable for the impact of equity award grants. When we consider making share related compensation grants, we primarily take into account the need to attract and retain high quality employees, overall shareholder dilution and the Black-Scholes values of the equity grant to the recipient, rather than the potential accounting charges associated with such grants. For comparability purposes, we believe it is useful to provide a non-GAAP financial measure that excludes share related compensation in order to better understand the long-term performance of our core business and to compare our results to the results of our peer companies because of varying available valuation methodologies and the variety of award types that companies can use under GAAP. Furthermore, the value of share related compensation is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Accordingly, we believe that the presentation of consolidated Adjusted EBITDA when read in conjunction with our reported GAAP results can provide useful supplemental information to our management, to investors and to our lenders regarding financial and business trends relating to our financial condition and results of operations.

Consolidated Adjusted EBITDA has limitations due to the fact it does not include all compensation related expenses. For example, if we only paid cash based compensation as opposed to a portion in share related compensation, the cash compensation expense included in our general and administrative expenses would be higher. We compensate for this limitation by providing information required by GAAP about outstanding share based awards in the footnotes to our financial statements in our SEC filings. We believe equity based compensation is an important element of our compensation program and all forms of share related awards are valued and included as appropriate in our operating results.

The following table reconciles Core Business, Voyce and consolidated income (loss) before income taxes to consolidated Adjusted EBITDA, as defined, for the previous eight quarters through December 31, 2016. In managing our business, we analyze our performance quarterly on a consolidated income (loss) before income tax basis.

In the second quarter of 2016, we ceased adding other expense (income) to consolidated loss before income taxes as part of our calculation of Adjusted EBITDA, to be consistent with the definition of Adjusted EBITDA in our Credit Agreement. Prior periods have been recast to reflect the new presentation. For additional information, Please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our most recent Form 10-K.

 
INTERSECTIONS INC.
OTHER DATA, continued
(unaudited)
 

Core Business, Voyce and consolidated Adjusted EBITDA (in thousands):

   
2016 Quarter Ended 2015 Quarter Ended
December 31   September 30   June 30   March 31 December 31   September 30   June 30   March 31

Reconciliation from consolidated loss before income taxes to consolidated Adjusted EBITDA:

Core Business (1):
Income (loss) before income taxes (2) $ 190 $ (1,857 ) $ (257 ) $ 870 $ (13,835 ) $ (2,043 ) $ (6,209 ) $ 3,115
Non-cash share based compensation (38 ) 2,319 1,446 1,155 1,018 1,422 1,427 1,574
Impairment of goodwill, intangibles and other assets 1,428 10,318 7,355
Loss on disposal of fixed assets 6 6 256 2 1 7
Depreciation 1,239 1,082 1,179 1,249 1,175 1,096 1,237 1,265
Amortization 81 81 174 177 189 188 142 119
Interest expense (income), net   664   620   840   242   160   71   (21 )   103
Core Business Adjusted EBITDA $ 3,570 $ 2,251 $ 3,638 $ 3,693 $ (973 ) $ 735 $ 3,931 $ 6,183
 
Voyce Business:
Loss before income taxes (2) $ (12,833 ) $ (6,384 ) $ (5,050 ) $ (5,129 ) $ (5,109 ) $ (4,668 ) $ (4,827 ) $ (4,810 )
Impairment of goodwill, intangibles and other assets 7,043
Adjustment for surplus and obsolete inventories 801
Loss on disposal of fixed assets 91 96 2 53
Depreciation 268 404 410 407 404 392 376 32
Depreciation of other operating assets 4 4 15 1
Amortization 12 18 18 16 17 18 14
Interest expense (income), net   2   1            
Voyce Adjusted EBITDA $ (5,413 ) $ (5,060 ) $ (4,607 ) $ (4,705 ) $ (4,686 ) $ (4,258 ) $ (4,437 ) $ (4,725 )
 
Consolidated:
Consolidated loss before income taxes $ (12,643 ) $ (8,241 ) $ (5,307 ) $ (4,259 ) $ (18,944 ) $ (6,711 ) $ (11,036 ) $ (1,695 )
Non-cash share based compensation (38 ) 2,319 1,446 1,155 1,018 1,422 1,427 1,574
Impairment of goodwill, intangibles and other assets 8,471 10,318 7,355
Adjustment for surplus and obsolete inventories 801
Loss on disposal of fixed assets 97 102 256 4 1 60
Depreciation 1,507 1,486 1,589 1,656 1,579 1,488 1,613 1,297
Depreciation of other operating assets 4 4 15 1
Amortization 93 99 192 193 206 206 156 119
Interest expense (income), net   666   621   840   242   160   71   (21 )   103
Consolidated Adjusted EBITDA $ (1,843 ) $ (2,809 ) $ (969 ) $ (1,012 ) $ (5,659 ) $ (3,523 ) $ (506 ) $ 1,458
 
 
INTERSECTIONS INC.
OTHER DATA, continued
(in thousands)
(unaudited)
 
  Year Ended December 31, 2016   Year Ended December 31, 2015
Core Business (1)   Voyce   Consolidated Core Business (1)   Voyce   Consolidated

Reconciliation from consolidated loss before income taxes to consolidated Adjusted EBITDA:

Consolidated loss before income taxes (2) $ (1,054 ) $ (29,396 ) $ (30,450 ) $ (18,972 ) $ (19,414 ) $ (38,386 )
Non-cash share based compensation 4,882 4,882 5,441 5,441
Impairment of goodwill, intangibles and other long-lived assets 1,428 7,043 8,471 17,673 17,673
Adjustment for surplus and obsolete inventories 801 801
Loss on disposal of fixed assets 268 187 455 10 55 65
Depreciation 4,749 1,489 6,238 4,773 1,204 5,977
Depreciation of other operating assets 24 24
Amortization 513 64 577 638 49 687
Interest expense (income), net   2,366   3   2,369   313     313
Consolidated Adjusted EBITDA $ 13,152 $ (19,785 ) $ (6,633 ) $ 9,876 $ (18,106 ) $ (8,230 )
 
______________________________
(1)   “Core Business” comprises all the business of Intersections Inc. with the exception of its Voyce business.
(2) In the year ended December 31, 2016, we implemented an allocation policy to charge a portion of general and administrative expenses from our Corporate business unit into our other segments. The charge is a reasonable estimate of the services provided by our Corporate business unit to support each segment’s operations. For comparability, the results of operations for the year ended December 31, 2015 have been recast to reflect this allocation.

Source: Intersections Inc.

Intersections Inc.
Ron Barden, 703-488-6810
IR@intersections.com

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