Item 2.02 Results of Operations and Financial
Condition.
Under the October 2017 Amendment (previously described in a Current Report on Form 8-K filed with the U.S. Securities
and Exchange Commission on October 3, 2017), the Company agreed to furnish the following selected financial information on a Current Report on Form 8-K on or prior to October 12, 2017:
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The Company expects its first quarter 2017 revenue to be between $151 and $156 million and its second quarter 2017 revenue to be between $154 and $159 million.
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The Company expects its first quarter 2017 Adjusted EBITDA
(+,*)
to be between $14 and $19 million and its second quarter 2017 Adjusted EBITDA to be between $15 and
$20 million.
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The Company expects its consolidated cash balance as of December 31, 2017 to be at or above $50 million. Significant additional uses of cash since our prior year-end cash-balance forecast include greater than
previously anticipated auditor and professional fees for accounting services for the 2016 audit andto a lesser extentone-time lender fees and various commercial uses.
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With respect to the first and second quarter 2017 Adjusted EBITDA estimates in this Current Report
on Form 8-K, a quantitative reconciliation to their most directly comparable GAAP financial measure is not available without unreasonable efforts due to current uncertainty with respect to the Companys income tax and goodwill impairment
analyses (and any related adjustments) in those periods that are excluded from Adjusted EBITDA. We believe that these items may have a significant impact on our final GAAP financial results for these periods. See also About Non-GAAP
Financial Measure below.
In addition, based on managements current internal forecast for 2017, the Company expects to
remain in compliance with the consolidated first-lien net leverage ratio contained in the Amended Credit Agreement.
Our estimated first
and second quarter 2017 revenue and estimated Adjusted EBITDA performance above is preliminary and unaudited. The estimates are subject to the completion and finalization of quarter-end and 2016 year-end financial and accounting
2
procedures, and reflect managements estimates based solely upon information available to management as of the date of this Current Report on Form 8-K. Further, our estimated Adjusted EBITDA
performance above should not be viewed as a substitute for quarterly financial statements prepared in accordance with generally accepted accounting principles in the United States of America.
The information in this Item 2.02 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended (the
Exchange Act
), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the
Securities
Act
), or the Exchange Act, except as expressly set forth by specific reference in such filing.
* About Non-GAAP Financial Measure
To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting
principles, or GAAP, we present Adjusted EBITDA, which is a non-GAAP financial measure, as a measure of our performance. The presentation of Adjusted EBITDA is not intended to be considered in isolation from, or as a substitute for, or superior to,
net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to net cash provided by operating activities or any other measures of our cash flows or liquidity.
Adjusted EBITDA is one of the primary measures used by our management and Board of Directors to understand and evaluate our financial
performance and operating trends, including period-to-period comparisons, to prepare and approve our annual budget and to develop short- and long-term operational plans. Additionally, Adjusted EBITDA is one of the primary measures used by the
Compensation Committee of our Board of Directors to establish the funding targets for (and subsequent funding of) our Annual Incentive Plan bonuses for our employees and executives. We believe our presentation of Adjusted EBITDA is useful to
investors both because it allows for greater transparency with respect to key metrics used by management in its financial and operational decision-making and because our management frequently uses it in discussions with investors, commercial
bankers, securities analysts and other users of our financial statements.
We define Adjusted EBITDA as net income (loss) before
(a) income tax expense (benefit), (b) interest income (expense), (c) change in fair value of financial instruments, (d) other (income) expense, including primarily, when applicable, (gains) losses from investments, loss on
disposal and impairment of fixed assets and foreign-currency transactions (gains) losses, (e) goodwill impairment expense, (f) depreciation and amortization (including relating to equity-method investments), (g) stock-based
compensation, (h) acquisition, integration and realignment expenses, including acquisition-related expenses and transaction costs and legal, accounting and other professional fees attributable to acquisition and corporate realignment
activities, (i) extraordinary professional accounting fees relating to our 2016 and 2017 audits, (j) operation realignment set-up fees, (k) employee severance and termination benefits as well as employee retention and relocation
costs, (l) settlement fees and expenses (and related third-party professional fees) and loss-contingency reserves for actual or threatened litigation pertaining to liabilities (that existed prior to their acquisition date) at companies or
businesses that we acquired through our M&A activities, (m) non-cash GAAP purchase accounting adjustments for certain deferred revenue and costs and (n) restructuring expenses pursuant to our integration plan announced
on September 23, 2014. Management does not consider these items to be indicative of our core operating results.