EFTA01377976.pdf

contingent consideration arrangemerts For a reoonciliaton of Adjusted EBITDA to operating ircome for our ',stone& results, see 'Selected historical combined financial and other information" (2) The fotowing table reconciles Actuated EBITDA to operating income for the year ended December 31 2014 and the trailing twelve months ended September 30, 2015. and also reconcres Adjusted EBITDA to Actuated EBITDA as per the Credit Agreement for each such period. in each case pro tome for the acquisition of P1entyCfFish the swarm of the Match Notes borrowings under the Term Loan Factity this offenng and 13 Table of Contents the related borrowings under the Revolving Creed Facility and application of proceeds of Mese transactions as if each had occurred on January 1, 2014 The Credit Agreement assesses covenant compliance on a pro forma trailing twat -month tests and provides for adustments to exclude certain charges not associated with the underlying operating performers, of the business, includes) the exclusion of restructuring cogs and the addback of the write.c4 of deferred revenue arising from purchase accounting Pro forma trailing Pro (emus twelve months year ended ended December 31,. September 30, 2014 2015 (In thousands) Operating income 5 250,262 S 238846 Stock-based compensation expense 20,851 35,223 Depreciation 27,557 30,831 Amortization of intangibles 20,268 18757 Acquisition-related contingent consideration fa value adjustments (12.912) (10.810) Adjusted EBITDA 5 308026 S 308647 Costs incurred related to the ttrearNinng of systems and consolidation of European operabors(3) 4,886 18394 Acquisition-related deferred revenue write-cbeinsi4) 11 776 5 575 Adjusted EBITDA as per the Credit Agreernert(5) rr22,688 t— I2I— ,618 — (3) We are a.rrently in the process of an ongoing strearrentrig and partial consclolation of the techrokgy and network systems and infrastructures of a number of our businesses. including Match. OurTure and Meow The goal of this poled is to rnxlernee, optimize and improve the scaibbity and cost effecateress of these systems and infrastructures and to increase our ability to deploy product changes more rapidly across devices and product lines (4) Unted States generally accepted accourting crimples or GAAP, require the historical deterred reverue balance of acquired businesses to be recorded at far value following the acqualion The actustment to fair value reduces the balance of deferred revenue Therefore. following an acquisitor,. GAAP reported revenue and operating income is reduced The a4strnent which is non-cash in nature and primarily relates to the acqusition of The PrinCetOn Review and FnendScol24, reflects the reduction in operating ncorne anscg from the acqasmon related adjustment to deferred reverue (5) Actuated EBITDA as per the Credit Agreement for the year ended December 31. 2013 was 5275.7 million calculated as Adjusted EBITDA of 5271 2 million plus $4 5 alion in Equisitioo related deferred revenue writedowns For the year ended December 31, 2013 there was no adjustment fa costs incurred related to the strearriinng of systems and consolidation of European operations Adsated EBITDA as per the Credit Ageement for the year ended December 31. 2012 equals Adjusted EBITDA as there were no adjustments for costs incurred related to tre strearrlinng of systems and consolidation of European operations and acquabon-related deferred revenue write-downs Pro forma trailing Pro forma twelve months year ended ended December 31, September 30, 2014 2015 (in thousands) Free Cash Flow(1) 178.741 $ 184697 Plus Capital expenditures 24.964 28.703 Net cash provided by operating activities 203.705 $ 213.400 (1) We define Free Cash Flow as net Cash provided by operating ectryilbs, less captal experdtures The table above reconciles Free Cash Flow to net cash provided by operatrg activities for the year ended December 31, 2014 and the trailing twelve months ended September 30. 2015. in each case pro forma for the acquisition of PlentyaFish We believe Free Cash Flow is risen./ to investors because it represents the cash that our operating businesses generate before tang into account cash movements that are non-operational. Free Cash Flow has certain linstabOnS in that it does not represent Ire total increase or decrease in the cash balance for the period, nor aces it represent the residual cash flow for discretionary expenditures Therefore we Milt it is important to evaluate Free Cash Flow along with our combined statements of cash flows Free Cash Flow should not be considered as a substitute for. nor supenor to. GAAP measures 14 Table of Contents A. of December 311 Pro forma as of As of September 30, September 30, 2013 2014 2015 2015 http:www sec.gov An:Itivcs 'edam dotal 575189110010474691500643.1122264511^-t IS0+2013 827:17 AA CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075136 CONFIDENTIAL SONY GM_00221320 EFTA01377976