EX-99.3 7 v035284_ex99-3.htm

Bankrate, Inc.
 
Pro Forma Condensed Combined Balance Sheet
  
September 30, 2005 (Unaudited)
  
   
       
Pro Forma
        
Pro Forma
        
   
Bankrate
  
Wescoco
  
Adjustments
    
MMIS/Interest
  
Adjustments
        
   
September 30,
  
September 30,
  
Wescoco
    
September 30,
  
MMIS/Interest
    
Pro Forma
  
   
2005
  
2005
  
(See Notes)
    
2005
  
(See Notes)
    
Combined
  
 Assets
                              
                               
Cash and cash equivalents
  
$
40,041,788
  
$
121,777
  
$
(10,086,064
)
  
(A)
$
-
  
$
(30,105,686
)
  
(A)
$
(28,185
)
Accounts and notes receivable, net
    
5,826,615
   
906,149
             
1,529,226
           
8,261,990
 
Deferred income taxes
    
5,996,940
                                   
5,996,940
 
Prepaid and other current assets
    
306,821
   
22,868
             
27,000
           
356,689
 
 Total current assets
    
52,172,164
   
1,050,794
   
(10,086,064
)
      
1,556,226
   
(30,105,686
)
      
14,587,434
 
                                               
Furniture, fixtures and equipment, net
    
912,165
   
86,951
   
(9,581
)
  
(B)
  
579,625
   
(429,504
)
  
(B)
  
1,139,656
 
Deferred income taxes
    
1,069,303
                                   
1,069,303
 
Intangible assets, net
   
144,806
   
75,650
   
3,315,971
   
(C)
  
28,846
   
8,241,154
   
(C)
  
11,806,427
 
Goodwill
                
6,402,556
   
(C)
        
22,457,727
   
(C)
  
28,860,283
 
Other assets
    
319,813
   
68,812
                           
388,625
 
                                               
 Total assets
  
$
54,618,251
  
$
1,282,207
  
$
(377,118
)
    
$
2,164,697
  
$
163,691
      
$
57,851,728
  
                                               
 Liabilities and Stockholders' Equity
                                              
                                               
Liabilities:
                                              
Bank overdrafts
  
$
-
  
$
-
  
$
-
      
$
284,807
          
$
284,807
  
Accounts payable
    
1,514,834
   
617,176
             
1,162,801
           
3,294,811
 
Accrued expenses
    
2,822,260
   
287,913
             
187,079
           
3,297,252
 
Accrued Interest
    
-
   
37,439
   
(37,439
)
  
(D)
                  
-
 
Deferred revenue
    
349,590
                   
686,044
             
1,035,634
 
Current maturities of long term debt
          
1,500,000
   
(1,500,000
)
  
(D)
                  
-
 
Other current liabilities
    
151,096
                   
7,657
           
158,753
 
 Total current liabilities
    
4,837,780
   
2,442,528
   
(1,537,439
)
      
2,328,388
   
-
       
8,071,257
 
                                               
Other liabilities
    
170,121
   
1,500,000
   
(1,500,000
)
  
(D)
                  
170,121
 
                                               
 Total liabilities
    
5,007,901
   
3,942,528
   
(3,037,439
)
      
2,328,388
   
-
       
8,241,378
 
                                               
Stockholders' equity:
                                              
Preferred stock
                                          
-
 
Common stock
    
158,203
   
125
   
(125
)
  
(E)
  
2,000
   
(2,000
)
  
(E)
  
158,203
 
Additional paid in capital
    
70,331,620
   
500,000
   
(500,000
)
  
(E)
                  
70,331,620
 
Accumulated deficit
    
(20,879,473
)
  
(3,160,446
)
  
3,160,446
   
(E)
  
(165,691
)
  
165,691
   
(E)
  
(20,879,473
)
 Total stockholders' equity
    
49,610,350
   
(2,660,321
)
  
2,660,321
       
(163,691
)
  
163,691
       
49,610,350
 
                                               
 Total liabilities and stockholders' equity
 
$
54,618,251
  
$
1,282,207
  
$
(377,118
)
    
$
2,164,697
  
$
163,691
      
$
57,851,728
  
 
See accompanying notes to pro forma condensed combined financial statements.
 
 
Bankrate, Inc.
Pro Forma Condensed Combined Statement of Operations
September 30, 2005 (Unaudited)
 
                                 
   
Historical
  
Historical
        
Historical
              
   
Bankrate
  
Wescoco
  
Pro Forma
    
MMIS/Interest
  
Pro Forma
          
   
Nine Months
  
Nine Months
  
Adjustments
    
Nine Months
  
Adjustments
          
   
September 30,
  
September 30,
  
Wescoco
    
September 30,
  
MMIS/Interest
      
Pro Forma
  
Revenue:
  
2005
  
2005
  
(See Notes)
    
2005
  
(See Notes)
      
Combined
  
 Online publishing
  
$
31,684,841
  
$
5,379,281
  
$
-
      
$
2,669,430
  
$
-
      
$
39,733,552
  
 Print publishing and licensing
    
3,474,061
   
-
   
-
       
9,153,067
   
-
       
12,627,128
 
 Total revenue
    
35,158,902
   
5,379,281
   
-
       
11,822,497
   
-
       
52,360,680
 
Cost of revenue:
                                              
 Online publishing
    
5,365,122
   
4,499,072
   
-
       
485,481
   
-
       
10,349,675
 
 Print publishing and licensing
    
3,295,487
   
-
   
-
       
6,802,758
   
-
       
10,098,245
 
 Total cost of revenue
    
8,660,609
   
4,499,072
   
-
       
7,288,239
   
-
       
20,447,920
 
                                               
Gross margin
    
26,498,293
   
880,209
   
-
       
4,534,258
   
-
       
31,912,760
 
                                               
Operating expenses:
                                              
 Sales
   
2,756,038
   
-
   
-
       
31,788
   
-
       
2,787,826
 
 Marketing
    
4,609,621
   
19,463
   
-
       
16,517
   
-
       
4,645,601
 
 Product development
    
1,711,638
   
-
   
-
       
-
   
-
       
1,711,638
 
 General and administrative
   
6,296,676
   
2,588,199
   
-
       
2,835,954
   
-
       
11,720,829
 
 Depreciation and amortization
    
578,385
   
39,149
   
303,533
   
(F)
  
109,822
   
743,491
 
(F)
  
1,774,380
 
     
15,952,358
   
2,646,811
   
303,533
       
2,994,081
   
743,491
       
22,640,274
 
 Income from operations
    
10,545,935
   
(1,766,602
)
  
(303,533
)
      
1,540,177
   
(743,491
)
      
9,272,486
 
Other income:
                                              
 Interest income (expense)
    
655,295
   
(175,421
)
  
14,574
   
(G)
  
-
   
(491,471
)
(G)
    
2,977
 
 Insurance recovery in excess of costs and expenses
    
220,705
   
-
   
-
       
-
   
-
       
220,705
 
 Total other income
    
876,000
   
(175,421
)
  
14,574
       
-
   
(491,471
)
      
223,682
 
                                               
 Income before income taxes
    
11,421,935
   
(1,942,023
)
  
(288,959
)
      
1,540,177
   
(1,234,962
)
      
9,496,168
 
Provision for income taxes
    
(4,340,336
)
  
-
   
847,773
   
(H)
  
-
   
(115,982
)
(H)
    
(3,608,545
)
 Net income
 
$
7,081,599
  
$
(1,942,023
)
$
558,814
      
$
1,540,177
  
$
(1,350,944
)
    
$
5,887,623
  
                                               
Basic and diluted net income per share:
                                              
 Basic
  
$
0.45
                                  
$
0.37
  
 Diluted
  
$
0.42
                                  
$
0.35
  
Weighted average common shares outstanding:
                                             
 Basic
    
15,802,409
                                   
15,802,409
 
 Diluted
    
16,762,149
                                   
16,762,149
 
 
See accompanying notes to pro forma condensed combined financial statements.
 
 

 Bankrate, Inc.
 Pro Forma Condensed Combined Statement of Operations
December 31, 2004 (Unaudited)
 
                               
   
Historical
  
Historical
        
Historical
            
   
Bankrate
  
Wescoco
  
Pro Forma
    
MMIS/Interest
  
Pro Forma
        
   
Year Ended
  
Period Ended
  
Adjustments
    
Year Ended
  
Adjustments
        
   
December 31,
  
December 31,
  
Wescoco
    
December 31,
  
MMIS/Interest
    
Pro Forma
  
Revenue:
  
2004
  
2004
  
(See Notes)
    
2004
  
(See Notes)
    
Combined
  
Online publishing
  
$
33,942,241
  
$
2,703,180
  
$
-
      
$
3,339,848
  
$
-
      
$
39,985,269
  
Print publishing and licensing
    
5,262,020
   
-
   
-
       
12,886,226
   
-
       
18,148,246
 
Total revenue
    
39,204,261
   
2,703,180
   
-
       
16,226,074
   
-
       
58,133,515
 
Cost of revenue:
                                              
Online publishing
    
5,534,456
   
2,191,937
   
-
       
440,702
   
-
       
8,167,095
 
Print publishing and licensing
    
4,359,444
   
-
   
-
       
9,872,823
   
-
       
14,232,267
 
Total cost of revenue
    
9,893,900
   
2,191,937
   
-
       
10,313,525
   
-
       
22,399,362
 
 
                                              
Gross margin
    
29,310,361
   
511,243
   
-
       
5,912,549
   
-
       
35,734,153
 
 
                                              
Operating expenses:
                                              
Sales
   
4,186,799
   
-
   
-
       
59,623
   
-
       
4,246,422
 
Marketing
    
6,357,424
   
9,859
   
-
       
22,436
   
-
       
6,389,719
 
Product development
    
2,405,676
   
141,680
   
-
       
-
   
-
       
2,547,356
 
General and administrative
   
6,667,448
   
2,528,943
   
-
       
4,407,129
   
-
       
13,603,520
 
Legal settlements
    
510,000
   
-
   
-
       
-
   
-
       
510,000
 
Severance charge
    
260,000
   
-
   
-
       
-
   
-
       
260,000
 
Depreciation and amortization
    
742,659
   
27,303
   
404,711
   
(F)
  
308,846
   
991,322
   
(F)
  
2,474,841
 
 
    
21,130,006
   
2,707,785
   
404,711
       
4,798,034
   
991,322
       
30,031,858
 
Income from operations
    
8,180,355
   
(2,196,542
)
  
(404,711
)
      
1,114,515
   
(991,322
)
      
5,702,295
 
Other income:
                                              
Interest income (expense)
    
410,107
   
(24,005
)
  
(70,522
)
  
(G)
  
-
   
(307,580
)
  
(G)
  
8,000
 
Insurance recovery in excess of costs and expenses
    
-
   
-
   
-
       
-
   
-
       
-
 
Total other income
    
410,107
   
(24,005
)
  
(70,522
)
      
-
   
(307,580
)
      
8,000
 
 
                                              
Income before income taxes
    
8,590,462
   
(2,220,547
)
  
(475,233
)
      
1,114,515
   
(1,298,902
)
      
5,710,295
 
Provision for income taxes
    
4,765,660
   
-
   
1,064,235
    
(H)
  
-
   
72,792
    
(H)
  
5,902,687
  
Net income
 
$
13,356,122
  
$
(2,220,547
)
$
589,002
      
$
1,114,515
  
$
(1,226,110
)
    
$
11,612,982
  
 
                                              
Basic and diluted net income per share:
                                              
Basic
  
$
0.87
                                   $
0.75
  
Diluted
  
$
0.84
                                   $
0.73
  
Weighted average common shares outstanding:
                                             
Basic
    
15,438,097
                                   
15,438,097
 
Diluted
    
15,975,382
                                   
15,975,382
 
 
 See accompanying notes to pro forma condensed combined financial statements.
 
 
NOTES TO PROFORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(A)  
To reflect cash paid by Bankrate, Inc. (“Bankrate”) to acquire Wescoco LLC (“Wescoco”) and Mortgage Market Information Services, Inc. and Interest.com, Inc. (collectively, “MMIS”) and to reflect transaction costs for the acquisitions.
 
(B)  
To reflect the fair value adjustment of fixed assets of Wescoco and MMIS acquired.
 
(C)  
To reflect the fair value of intangible assets of Wescoco and MMIS acquired and to reflect goodwill arising from the excess acquisition cost over the fair value of tangible and intangible assets of Wescoco and MMIS acquired.
 
The purchase price, purchase price allocation and payment for the acquisition are summarized as follows:
 
   
Wescoco
  
MMIS/Interest.com
  
           
Total purchase price (Cash Paid)
  
$
10,086,064
  
$
30,105,686
  
Total net assets acquired:
    
54,521
   
(333,634
)
Excess purchase price over net assets acquired
    
10,031,543
   
30,439,320
  
Identified intangible assets:
    
3,400,000
   
8,270,000
 
Goodwill
  
$
6,631,543
    
22,169,320
 
 
(D)  
To adjust for Wescoco debt and associated accrued interest not assumed by Bankrate.
 
(E)  
To reflect the elimination of shareholders equity accounts of Wescoco and MMIS.
 
(F)  
To adjust depreciation and amortization expense reflecting the fair value of tangible and intangible assets acquired using the straight-line method over a weighted average period for tangible assets of three years and periods ranging from three to twenty years for intangible assets.
 
(G)  
To reflect the decrease in interest income resulting from the decrease in Bankrate cash used to make the acquisitions and to adjust for interest expense related to debt not assumed by Bankrate.
 
(H)  
To reflect the tax provision arising out of the acquisitions using rates ranging from 38% to 40% for the periods presented.