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Mar 26, 2018

comScore Files 10-K for 2017 and Provides Business Update

Filing Contains Financial Statements for 2015, 2016 and 2017 and Restated Results for 2013 and 2014
Also Files Quarterly Reports on Form 10-Q for 2017
Company to Seek Relisting on Nasdaq
Focus On Driving Growth in Core Business Lines and Delivering Efficiencies
Will Host Conference Call and Webcast on Monday, March 26 at 8:00 AM ET

RESTON, Va., March 26, 2018 /PRNewswire/ -- comScore, Inc. (OTC: SCOR) announced today that it has filed its Annual Report on Form 10-K for the year ended December 31, 2017, which contains audited Consolidated Financial Statements for the years ended December 31, 2017, 2016 and 2015, and includes unaudited restated results for 2014 and 2013.  In addition, the Company filed its Quarterly Reports on Form 10-Q for the quarters ended September 30, June 30 and March 31, 2017 and is now current on its periodic filings with the Securities and Exchange Commission ("SEC") and has begun the process to relist its common stock on the Nasdaq Stock Market.

Bill Livek, comScore's Executive Vice Chairman and President said, "The completion of our restatement process and the filing of current financials is an important step for our company as it allows us to move forward and focus our full attention on delivering on the vast potential of our business.  On behalf of the Board, I'd like to thank our investors, customers and employees for their patience during this process, and assure them that, as a result of this process, we are significantly improving our accounting policies and procedures as we also constantly reinforce ethical compliance throughout our organization.  With these matters behind us, we are confident that our strong assets, market-leading technologies and excellent team will enable us to deliver improved services to our customers, stay ahead of our competitors and deliver long-term value to our stockholders."

Livek continued, "Over the past several months our Board and management have taken significant steps to reset and refocus our company so we can deliver on our customer-centric promise of making advertising and audiences more valuable for our clients across every screen, platform and device.  We have focused on driving growth in our core business lines through product enhancements, implementing cross-platform management – which is a massive opportunity – and relentlessly driving toward improved profitability through efficiency in all facets of our business.  While there is much to be done, we are excited about the business enhancements and progress we've made and are encouraged by our path forward -- one that will allow us to deliver industry-leading solutions that our clients need today and into the future."

The Company expects to hold a call to discuss 2018 first quarter results in early May and hold its 2018 Annual Meeting of Stockholders later in the second quarter of this year.

Financial Restatement and Remediation Initiatives

As previously disclosed, in February 2016, the Audit Committee of the comScore Board of Directors commenced an internal investigation, with the assistance of outside advisors, into matters related to the Company's revenue recognition practices, disclosures, internal controls, corporate culture and certain employment practices.  As a result of the issues identified in the investigation and management's subsequent review, the Company concluded that it could no longer support the prior accounting for non-monetary contracts recorded by the Company during 2013, 2014 and 2015 and that adjustments to the Company's accounting for certain non-monetary and monetary transactions, certain business and asset acquisitions, deferred tax assets and other accounting matters were required.  The Company has also taken actions to strengthen its compliance controls and reinforce a strong corporate culture of ethics and client service.

The Company has now completed its review of substantially all of its accounting policies, significant accounting transactions, related party transactions, and other financial, internal control and disclosure matters.  The Form 10-K filed Friday, March 23, 2018 contains the adjustment or restatement of certain previously filed or furnished consolidated financial statements for 2015, 2014 and 2013.  It also contains audited Consolidated Financial Statements for 2017, 2016 and 2015 (see Appendix A).

As described in the Form 10-K, the Company's review identified various material weaknesses in internal control, including entity level controls and in certain accounting practices. Certain material weaknesses have been remediated as of December 31, 2017 and others are being remediated through additional work expected to be completed in 2018.

The Company's remediation initiatives include significant changes in how it approaches compliance.  When fully implemented and operational, the Company believes these measures will fully remediate the identified deficiencies and strengthen its internal control over financial reporting.  These remediation initiatives, as well as the Company's remaining material weaknesses requiring remediation as of December 31, 2017, are detailed in the Form 10-K filed Friday, March 23, 2018.

Conference Call and Webcast

comScore will hold a conference call on Monday, March 26 at 8:00 AM ET to provide a business update. To access the conference call live, dial (866) 547-1509 in the U.S. and (920) 663-6208 for international callers using the passcode: 6736369 or listen via webcast on the Investor Relations section of the company's website at http://ir.comscore.com/events.cfm.

Following the conference call, a replay will be available via webcast at http://ir.comscore.com/events-presentations.

APPENDIX A

 

COMSCORE, INC.


CONSOLIDATED BALANCE SHEETS


(In thousands, except share amounts)



December 31,


2017


2016

Assets




Current assets:




Cash and cash equivalents

$

37,859



$

84,111


Restricted cash

7,266



4,230


Marketable securities



28,412


Accounts receivable, net of allowance ($2,899 and $8,412 of accounts receivable
attributable to related parties)

82,029



96,230


Prepaid expenses and other current assets ($0 and $2,923 attributable to related
parties)

15,168



19,450


Insurance recoverable on litigation settlements

37,232




Total current assets

179,554



232,433


Property and equipment, net

28,893



42,001


Other non-current assets ($0 and $185 attributable to related parties)

7,259



7,176


Deferred tax assets

4,532



5,117


Intangible assets, net

159,777



194,168


Goodwill

642,424



639,897


Total assets

$

1,022,439



$

1,120,792


Liabilities and Stockholders' Equity




Current liabilities:




Accounts payable ($2,715 and $17 attributable to related parties)

$

27,889



$

7,204


Accrued expenses ($5,857 and $5,141 attributable to related parties)

86,031



52,907


Accrued litigation settlements

27,718




Other short-term liabilities

2,998



2,860


Deferred revenue ($2,755 and $4,654 attributable to related parties)

98,367



99,412


Deferred rent

1,239



590


Capital lease obligations

6,248



12,904


Total current liabilities

250,490



175,877


Deferred rent

9,394



9,009


Deferred revenue

2,053



2,733


Deferred tax liabilities

3,641



7,688


Capital lease obligations

2,103



8,003


Accrued litigation settlements

90,800




Other long-term liabilities

7,466



12,629


Total liabilities

365,947



215,939


Commitments and contingencies




Stockholders' equity:




Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at
December 31, 2017 and 2016; no shares issued or outstanding as of December 31, 2017 or 2016




Common stock, $0.001 par value per share; 100,000,000 shares authorized as of
December 31, 2017 and 2016; 60,053,843 shares issued and 57,289,047 shares o
utstanding as of December 31, 2017 and 59,937,393 shares issued and 57,172,597
shares outstanding as of December 31, 2016, respectively

60



60


Additional paid-in capital

1,407,717



1,380,881


Accumulated other comprehensive loss

(6,224)



(12,420)


Accumulated deficit

(609,091)



(327,698)


Treasury stock, at cost, 2,764,796 shares as of December 31, 2017 and 2016, respectively

(135,970)



(135,970)


Total stockholders' equity

656,492



904,853


Total liabilities and stockholders' equity

$

1,022,439



$

1,120,792


 

COMSCORE, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


(In thousands, except share and per share data)




Years Ended December 31,



2017


2016


2015

Revenues


$

403,549



$

399,460



$

270,803









Cost of revenues 


193,605



173,080



111,904


Selling and marketing


130,509



126,311



96,344


Research and development


89,023



86,975



52,718


General and administrative


74,651



97,517



72,493


Investigation and audit related


83,398



46,617




Amortization of intangible assets


34,823



31,896



8,608


(Gain) loss on asset dispositions




(33,457)



4,671


Settlement of litigation, net


82,533



2,363



(840)


Restructuring


10,510






Total expenses from operations


699,052



531,302



345,898


Loss from operations


(295,503)



(131,842)



(75,095)


Interest expense, net


(661)



(478)



(1,321)


Other income, net


15,205



12,371



9


Loss from foreign currency transactions


(3,151)



(1,231)



(1,331)


Loss before income taxes


(284,110)



(121,180)



(77,738)


Income tax benefit (provision)


2,717



4,007



(484)


Net loss


$

(281,393)



$

(117,173)



$

(78,222)


Net loss per common share:







Basic


$

(4.90)



$

(2.10)



$

(2.07)


Diluted


(4.90)



(2.10)



(2.07)


Weighted-average number of shares used in per share
calculation - Common Stock:







Basic


57,485,755



55,728,090



37,879,091


Diluted


57,485,755



55,728,090



37,879,091


Comprehensive loss:







Net loss


$

(281,393)



$

(117,173)



$

(78,222)


Other comprehensive income (loss):







Foreign currency cumulative translation adjustment


6,168



(1,170)



(5,775)


Unrealized gain on marketable securities, net


24



169




Reclassification of realized loss on the sale of marketable
securities, net


4



19




Total comprehensive loss


$

(275,197)



$

(118,155)



$

(83,997)










 

COMSCORE, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)



Years Ended December 31,


2017


2016


2015

Operating activities






Net loss

$

(281,393)



$

(117,173)



$

(78,222)


Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:






Depreciation

23,339



25,439



22,595


Amortization of intangible assets

34,823



31,896



8,608


Provision for bad debts

983



1,507



3,167


Stock-based compensation

17,314



46,495



46,983


Deferred tax benefit

(3,203)



(3,997)



(121)


(Gain) loss on asset dispositions



(33,457)



4,671


Realized loss on marketable securities

4



19




Loss from equity method investment

63



406




Loss (gain) on disposition of property and equipment

125



275



(2)


Gain on forgiveness of obligation

(4,000)






Accrued litigation settlements to be settled in Common Stock

90,800






Non-cash vendor consideration





48,253


Changes in operating assets and liabilities, net of effect of
acquisitions:






Accounts receivable

14,529



4,009



1,542


Prepaid expenses and other assets

(33,165)



(3,928)



(863)


Accounts payable, accrued expenses, and other liabilities

85,001



(12,972)



(1,057)


Deferred revenue

(2,638)



5,962



5,206


Deferred rent

1,013



(393)



(1,403)


Net cash (used in) provided by operating activities

(56,405)



(55,912)



59,357








Investing activities






Net cash received (paid) in disposition of assets



42,980



(2,535)


Acquisitions, net of cash acquired



37,086



(10,117)


Acquisitions, net of cash acquired (related party)



(27,328)




Sales of marketable securities

28,436



2,188




Purchase of property and equipment

(10,182)



(7,106)



(4,325)


Net cash provided by (used in) investing activities

18,254



47,820



(16,977)








Financing activities






Proceeds from the issuance of common stock





204,741


Financing proceeds received on subscription receivable (related
party)

11,012



8,954



3,503


Proceeds from the exercise of stock options



4,139



11,623


Repurchase of common stock (withholding taxes)

(1,514)



(18,292)



(28,160)


Repurchase of common stock (treasury shares)



(27,292)



(105,916)


Excess tax benefits from stock-based compensation





(1,335)


Principal payments on capital lease and software license
arrangements

(17,016)



(18,838)



(16,622)


Stock issuance costs





(4,368)


Net cash (used in) provided by financing activities

(7,518)



(51,329)



63,466


Effect of exchange rate changes on cash

2,453



776



(1,875)


Net (decrease) increase in cash, cash equivalents and restricted cash

(43,216)



(58,645)



103,971


Cash, cash equivalents and restricted cash at beginning of year

88,341



146,986



43,015


Cash, cash equivalents and restricted cash at end of year

$

45,125



$

88,341



$

146,986





















Years Ended December 31,


2017


2016


2015

Cash and cash equivalents

$

37,859



$

84,111



$

146,986


Restricted cash

7,266



4,230




Total cash, cash equivalents and restricted cash

$

45,125



$

88,341



$

146,986














Supplemental cash flow disclosures:






Interest paid

$

1,691



$

1,962



$

1,906


Income taxes paid

497



1,717



1,790








Supplemental non-cash investing and financing activities:






Stock issued in connection with acquisition - Rentrak

$



$

753,418



$


Stock issued in connection with WPP arrangements





49,034


Capital lease and software license obligations incurred

191



14,842



22,531


Leasehold improvements acquired through lease incentives





372


Accrued capital expenditures

336



3,060



532


 

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of federal and state securities laws, including, without limitation, comScore's expectations as to the impact of product enhancements on the success of comScore's business, future stockholder value, improvements in accounting and compliance policies and procedures, expected growth in the business and improvements in profitability, and the timing of the Company's 2018 annual meeting of stockholders and earnings call for the first quarter of 2018. These statements involve risks and uncertainties that could cause our actual results to differ materially from expectations, including, but not limited to, comScore's ability to achieve its expected financial and operational results. For additional discussion of risk factors, please refer to comScore's respective Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and other filings that comScore makes from time to time with the Securities and Exchange Commission (the "SEC"), which are available on the SEC's website (www.sec.gov).

Investors are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. comScore does not intend or undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after the date of this press release, or to reflect the occurrence of unanticipated events.

Contact:

Jim Barron/Robin Weinberg


212-687-8080


press@comscore.com

 

Cision View original content:http://www.prnewswire.com/news-releases/comscore-files-10-k-for-2017-and-provides-business-update-300619245.html

SOURCE comScore, Inc.

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