201
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Imran Khan
(1-212) 622-6693
imran.t.khan@jpmorgan.com
Table 122: GOOG Annual Income Statement
$ in millions
2007 2008E 2009E 2010E
Gross Revenue 16,594.0 21,405.2 22,616.7 27,090.5
TAC 4,935.8 5,716.3 5,020.2 5,328.3
TAC % 85.3% 88.9% 89.6% 90.0%
Google websites 10,624.7 14,310.3 16,182.0 20,297.6
Google Network websites 852.1 714.3 580.8 592.0
DoubleClick(1) 284.2 428.8 467.6
Licensing and other Revenues 181.3 664.4 833.8 872.6
Net Revenues 11,658.1 15,688.9 17,596.5 21,762.2
Y/Y growth 59.8% 34.6% 12.2% 23.7%
Q/Q growth
Cost of Revenues 1,690.9 2,684.2 3,287.9 4,245.9
Gross Profit 9,967.2 13,004.7 14,308.6 17,516.3
Gross Margins 85.5% 82.9% 81.3% 80.5%
Contribution GM
R&D 1,550.2 2,052.1 2,269.8 2,872.6
Sales & Marketing 1,329.6 1,736.0 1,939.8 2,426.2
General & Administrative 1,134.4 1,576.5 1,649.4 2,039.7
Stock based compensation 868.6 1,118.6 1,165.0 1,260.0
- -
Total Expenses 6,573.7 9,167.4 10,311.8 12,844.4
-
Operating Income 5,084.4 6,521.4 7,284.7 8,917.8
Pro Forma Operating Income 5,953.0 7,640.0 8,449.7 10,177.8
Operating Margins 43.6% 41.6% 41.4% 41.0%
Pro Forma Operating Margins 51.1% 48.7% 48.0% 46.8%
Interest Income (Expense) 589.6 321.5 345.0 415.0
EBT 5,674 6,843 7,630 9,332.8
Less Taxes 1,470 1,623 1,745 2,134.1
Tax Rate 26% 23.7% 22.9% 22.9%
EBITDA 6,920.7 9,142.4 10,209.7 12,277.8
Margins 59.4% 58.3% 58.0% 56.4%
EAT 4,203.7 5,220.3 5,885.1 7,198.7
Tax Benefit > Stock Comp & Foundation 143.0 229.1 266.5 288.2
Pro forma EAT 4,929.3 6,109.8 6,783.7 8,170.6
GAAP EPS 13.29 16.43 18.36 22.25
Pro forma EPS 15.59 19.23 21.16 25.26
Diluted Sharecount 316.2 317.8 320.5 323.5
Source: Company reports and J.P. Morgan estimates.
202
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Table 123: GOOG Quarterly Income Statement
$ in millions
Q1 -07 Q2-07 Q3-07 Q4-07 Q1 -08 Q2-08 Q3-08 Q4-08E Q1 -09E Q2-09E Q3-09E Q4-09E
Gross Revenue 3,664.0 3,872.0 4,231.4 4,826.7 5,186.0 5,367.2 5,541.4 5,310.6 5,454.4 5,552.8 5,588.2 6,021.2
TAC 1,125.0 1,150.0 1,221.0 1,439.8 1,486.0 1,474.0 1,495.0 1,261.3 1,286.6 1,218.5 1,194.2 1,320.9
TAC % 83.6% 85.1% 83.9% 88.0% 88.1% 89.0% 89.0% 89.5% 89.5% 89.5% 89.5% 90.0%
Google websites 2,282.1 2,486.3 2,734.8 3,121.5 3,400.4 3,530.1 3,672.1 3,707.6 3,818.5 3,988.1 4,046.1 4,329.3
Google Network websites 220.3 202.1 233.7 196.0 200.1 181.3 184.9 148.0 150.9 143.0 140.1 146.8
DoubleClick(1) - 87.5 93.0 103.7 98.5 103.2 107.9 119.2
Licensing and other Revenues 36.5 33.6 41.9 69.3 99.5 181.8 189.4 193.7 198.5 203.2 207.9 224.2
Net Revenues 2,538.9 2,722.0 3,010.4 3,386.9 3,700.0 3,893.2 4,046.4 4,049.2 4,167.9 4,334.2 4,394.1 4,700.3
Y/Y growth 65.8% 62.9% 61.5% 51.9% 45.7% 43.0% 34.4% 19.6% 12.6% 11.3% 8.6% 16.1%
Q/Q growth 13.9% 7.2% 10.6% 12.5% 9.2% 5.2% 3.9% 0.1% 2.9% 4.0% 1.4% 7.0%
Cost of Revenues 341.0 402.6 437.5 509.8 615.4 664.2 667.7 737.0 766.9 801.8 826.1 893.1
Gross Profit 2,197.9 2,319.4 2,572.8 2,877.1 3,084.7 3,229.0 3,378.7 3,312.3 3,401.0 3,532.4 3,568.0 3,807.2
Gross Margins 86.6% 85.2% 85.5% 84.9% 83.4% 82.9% 83.5% 81.8% 81.6% 81.5% 81.2% 81.0%
Contribution GM 83.9% 80.9% 81.1% 81.6% 76.4% 77.7% 77.8% 65.7% 67.6% 68.8% 54.4% 76.0%
R&D 287.6 375.1 418.1 469.4 479.3 494.9 535.3 542.6 541.8 550.4 571.2 606.3
Sales & Marketing 275.3 319.2 350.9 384.2 404.3 442.0 444.3 445.4 454.3 489.8 483.3 512.3
General & Administrative 230.0 278.9 288.0 337.5 374.1 441.4 376.4 384.7 391.8 407.4 413.0 437.1
Stock based compensation 183.9 241.5 198.0 245.3 280.8 272.8 280.0 285.0 285.0 285.0 295.0 300.0
Total Expenses 1,317.7 1,617.3 1,692.5 1,946.1 2,153.8 2,315.2 2,303.7 2,394.6 2,439.8 2,534.5 2,588.7 2,748.9
Operating Income 1,221.2 1,104.6 1,317.8 1,440.7 1,546.2 1,578.0 1,742.7 1,654.6 1,728.1 1,799.8 1,805.4 1,951.4
Pro Forma Operating Income 1,405.1 1,346.1 1,515.8 1,686.0 1,827.0 1,850.7 2,022.7 1,939.6 2,013.1 2,084.8 2,100.4 2,251.4
Operating Margins 48% 41% 44% 43% 42% 41% 43% 41% 41% 42% 41% 42%
Pro Forma Operating Margins 55.3% 49.5% 50.4% 49.8% 49.4% 47.5% 50.0% 47.9% 48.3% 48.1% 47.8% 47.9%
Interest Income (Expense) 130.7 137.1 154.4 167.3 167.3 57.9 21.2 75.0 75.0 80.0 85.0 105.0
EBT 1,352 1,242 1,472 1,608 1,714 1,636 1,764 1,730 1,803 1,880 1,890 2,056
Less Taxes 350 317 402 402 406 388 418 410 415 432 435 463
Tax Rate 26% 25% 27% 25% 24% 24% 24% 24% 23% 23% 23% 23%
EBITDA 1,610.1 1,569.5 1,765.2 1,976.0 2,163.5 2,242.3 2,409.0 2,327.6 2,423.1 2,516.8 2,548.4 2,721.4
Margins 63.4% 57.7% 58.6% 58.3% 58.5% 57.6% 59.5% 57.5% 58.1% 58.1% 58.0% 57.9%
EAT 1,002.2 925.1 1,070.0 1,206.4 1,307.1 1,247.4 1,346.2 1,319.7 1,388.4 1,447.4 1,455.6 1,593.7
Tax Benefit > Stock Comp & Foundation 26.8 43.0 31.0 42.3 50.7 47.8 63.1 67.5 65.6 65.6 67.9 67.5
Pro forma EAT 1,159.3 1,123.6 1,236.9 1,409.5 1,537.1 1,472.4 1,563.1 1,537.1 1,607.8 1,666.9 1,682.7 1,826.2
GAAP EPS 3.18 2.93 3.38 3.79 4.12 3.92 4.24 4.15 4.35 4.52 4.53 4.95
Pro forma EPS 3.68 3.56 3.91 4.43 4.84 4.63 4.92 4.83 5.04 5.21 5.24 5.67
Diluted Sharecount 314.9 315.5 316.6 317.9 317.4 318.0 317.8 318.0 319.0 320.0 321.0 322.0
Source: Company reports and J.P. Morgan estimates.
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Imran Khan
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imran.t.khan@jpmorgan.com
Table 124: GOOG Annual Balance Sheet
$ in millions
2007 2008E 2009E 2010E
Cash and Cash Equivalents 3,909.0 7,183.3 12,965.0 20,889.8
Short term investments 8,137.0 6,042.1 6,042.1 6,042.1
Accounts Receivable 2,162.5 2,429.5 2,350.1 2,391.1
Income taxes receivable 145.3 - - -
Deferred Income Tax 68.5 111.4 111.4 111.4
Prepaid revenue share,expenses and other assets 694.2 809.8 705.0 777.1
Total Current Assets 15,116.5 16,576.2 22,173.8 30,211.6
- -
Non-marketable equity securities 1,059.7 1,100.9 1,100.9 1,100.9
Property, Plant, and Equipment 4,039.3 5,587.2 7,095.2 8,595.2
Goodwill 2,299.4 4,821.6 4,821.6 4,821.6
Intangible Assets 446.6 1,047.7 1,047.7 1,047.7
Deferred income taxes, net 33.2 - - -
Prepaid revenue share, expenses and other non current assets 168.5 426.5 426.5 426.5
Total Assets 23,163.2 29,560.1 36,665.7 46,203.5
Accounts Payable 282.1 445.4 423.0 478.2
Accrued Compensation and benefits 588.4 647.9 799.1 1,076.0
Accrued Expenses and other current liabilities 465.0 465.7 540.5 687.5
Accrued revenue share 522.0 516.3 564.0 717.3
Deferred revenue 178.1 200.5 232.8 316.8
Income taxes payable - - - -
Current portion of equipment leases - - - -
Total Current Liabilities 2,035.6 2,275.8 2,559.4 3,275.9
Long term portion of equipment leases - - - -
Deferred revenue, long term 30.2 30.0 30.0 30.0
Liability for stock options exercised early, long term - - - -
Deferred income taxes - 20.4 20.4 20.4
Income taxes payable, long-term 478.4 - - -
Other long term liabilities 101.9 161.1 161.1 161.1
Total Long Term Liabilities 610.5 211.5 211.5 211.5
- -
Total Stockholders’ equity 20,517.1 27,072.8 33,894.8 42,716.2
- -
Total Liabilities & Equity 23,163.2 29,560.1 36,665.7 46,203.5
Source: Company reports and J.P. Morgan estimates.
204
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Imran Khan
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imran.t.khan@jpmorgan.com
Table 125: GOOG Annual Cash Flow Statement
$ in millions
2007 2008E 2009E 2010E
Operating Activities
Net income 4,203.7 5,220.3 5,885.1 7,198.7
Depreciation and Amortization 807.7 1,224.8 1,492.0 1,800.0
Amortization of Warrants - - - -
Amortization of Intangibles 159.9 277.6 268.0 300.0
In process R&D - - - -
Stock based compensation 868.6 1,118.6 1,165.0 1,260.0
Excess tax benefit from stock-based award activity (379.2) (214.8) (260.0) (260.0)
Other (204.0) (100.2) - -
Changes in WC (48.3) (46.1) (16.6) 23.6
Accounts Receivables (837.2) (330.3) (79.4) 41.0
Income taxes 744.8 552.7 300.0 350.0
Prepaid revenue share,expenses and other assets (298.7) (227.6) (104.8) 72.1
Accounts Payable 70.1 52.5 (22.4) 55.2
Accrued Expenses and other liabilities 418.9 (29.1) 74.9 146.9
Accrued revenue share 150.3 (4.1) 47.7 153.3
Deferred revenue 70.3 21.5 32.2 84.1
Tax Benefit from exercise Option - - - -
Non Recurring Portion - - - -
Net Cash provided by Operating Activities 4,674.6 7,516.0 8,781.8 11,224.8
FCF 2,271.8 4,825.3 5,781.8 7,924.8
Investing Activities
Purchase of PP&E (2,402.8) (2,690.6) (3,000.0) (3,300.0)
Purchase of short term investments (15,997.1) (7,814.3) - -
Maturities and sale of short term investments 15,659.5 9,634.9 - -
Investments in non-marketable equity securities (34.5) (45.9) - -
Acquisitions, net of cash acquired (906.7) (3,386.6) - -
Change in other assets - - - -
Net Cash used in Investing Activities (3,681.6) (4,302.6) (3,000.0) (3,300.0)
Financing Activities
Proceeds from issuance of convertible preference stock - - - -
Proceeds from IPO/Public Offering - - - -
Proceeds from exercise of stock options 23.9 (38.3) - -
Proceeds from exercise of warrants - - - -
Payments of notes receivables from shareholders - - - -
Excess tax benefits from stock-based award activity 379.2 114.8 - -
Payment of Principal on capital leases and eqpt loans - - - -
Net Cash provided by Financing Activities 403.1 76.5 - -
Effect of Exchange rate changes 40.0 (15.6) - -
Net Increase (Decrease) in Cash & Equivalents 1,436.1 3,274.3 5,781.8 7,924.8
Cash and Cash Equivalents - Beginning 2,473.1 3,909.2 7,183.4 12,965.2
Cash and Cash Equivalents - Ending 3,909.2 7,183.4 12,965.2 20,890.0
Source: Company reports and J.P. Morgan estimates.
205
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Imran Khan
(1-212) 622-6693
imran.t.khan@jpmorgan.com
IAC, Neutral, ($15.77)
We expect IAC’s growth to moderate in 2009 due to weakness in the Media &
Advertising group, likely pressure on personals pricing increases, and exposure to
foreign currency effects (19% of the business is in int’l markets, and currency is not
hedged). However, we do feel the company is better positioned than some of its
competitors, with only 4% of its business tied to display advertisements and a cash
balance of ~$2B. IAC trades at 3.6x our F’09 EBITDA estimate of $234M. We are
introducing a $16 December 2009 price target and reiterating our Neutral rating.
• We think Ask.com revenue will grow only 1% Y/Y in F'09. We think the
Ask.com business will be significantly impacted by a combination of lower
commercial oriented query volumes, CPC declines, and the anniversary of the
new Google contract. We also note that the Media & Advertising segment has
international exposure, which will likely be negatively impacted by the
strengthening dollar.
• We are concerned that the growth in Personals revenue is unsustainable. In
F’08, we estimate that a little over half the revenue growth was due to pricing
increases. Given the weak consumer environment, we think it is unlikely that
IAC can continue to raise prices in 2009, and it may have to start being more
promotional.
• We believe management will begin to allocate its large cash reserve. We
think it is likely that management will take advantage of low valuations and the
frozen credit market through strategic acquisitions in search, local, and content as
well as possible share repurchases of IAC stock.
• 2009 drivers. In our view, the following factors will drive EXPE shares in 2009:
(1) possible share buybacks, (2) reduction in the emerging businesses investment,
and (3) paid-click growth.
• Adjusting 4Q’08 estimates. We are maintaining our 4Q’08 revenue and
EBITDA estimates of $381M and $52M, respectively, but are lowering our pro
forma EPS estimate to $0.23 from $0.26 to account for lower-than-expected
interest rates.
Our current and newly introduced 2010 estimates are in the table below:
Table 126: IAC Financial Snapshot
$ in millions, except per share data
IACI 4Q'08E F'08E F'09E F'10E F'08E Y/Y F'09E Y/Y F'10E Y/Y
J.P. Morgan
Revenue 381.4 1,475.5 1,548.1 1,687.3 10.7% 4.9% 9.0%
EBITDA 51.9 176.1 234.3 258.3 25.5% 33.1% 10.2%
Pro Forma EPS 0.23 0.34 1.02 1.10 -25.9% 202.7% 7.4%
Consensus
Revenue 370.1 1,462.0 1,522.9 1,640.5 9.7% 4.2% 7.7%
EBITDA 53.4 189.0 231.7 235.8 34.7% 22.6% 1.8%
Pro Forma EPS 0.21 0.48 0.96 1.18 5.4% 100.0% 22.9%
Source: J.P. Morgan estimates, Company data, and Bloomberg
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Our Estimates and Outlook for 2009
We are slightly adjusting our F’09 revenue, EBITDA, and pro forma EPS estimates.
We are now modeling F’09 revenue, EBITDA, and EPS of $1.55B, $234M, and
$1.02 vs. our prior estimates of $1.54B, $234M, and $1.11, respectively. This
represents Y/Y growth of 5%, 33%, and 203%, respectively.
We are looking for 1% Y/Y revenue growth in the Media & Advertising segment, as
we think it will be significantly impacted by a combination of lower commercial
oriented query volumes, CPC declines, and the anniversary of the new Google
contract. We are looking for 2% Y/Y OIBA growth, as we think there will be some
residual benefit of the new Google contract in the first quarter.
Table 127: Media & Advertising Growth by Type
$ in millions
F'08E F'09E
Proprietary Revenue 548.5 591.9
Network Revenue 250.5 215.1
Proprietary Revenue Y/Y Growth 31.1% 7.9%
Network Revenue Y/Y Growth -26.3% -14.1%
Source: Company reports and J.P. Morgan estimates.
We think the Match business will decline 4% Y/Y to a revenue base of $357M. We
feel this business will be pressured by both lower demand in a weak economic
environment and pricing pressures, as the environment could potentially become
more promotional.
Table 128: Match Business Metrics
$ in millions
F’08E F’09E
Match revenue $370 $357
y/y % growth 6.2% -3.6%
Paid subscribers 1,322.1 1,314.1
y/y % growth 2.8% -0.6%
Revenue per paid subscriber $280 $272
y/y % growth 3.4% -3.0%
Source: Company reports and J.P. Morgan estimates.
Finally, we expect ServiceMagic to grow F’09 revenue by 25% Y/Y, a deceleration
from F’08 expected growth of 36% Y/Y.
Our Estimates and Outlook for 2010
We are introducing F’10 revenue, EBITDA, and pro forma EPS estimates of $1.69B,
$258M, and $1.10, which represent Y/Y growth of 9%, 10%, and 7%, respectively.
Our estimates assume the beginning of an economic recovery and flat foreign
currency exchange rates. Thus, we see revenue growing 6% Y/Y in the Media &
Advertising segment, as we think increases in ad spend will be slightly offset by
search market share losses. We see ServiceMagic and Match revenue growing 22%
and 7% Y/Y, respectively as we expect both businesses to benefit from an economic
recovery.
207
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We Are Introducing a Price Target of $16
In introducing price targets for our coverage, we have derived multiples based on 5-
year forward EBIT CAGRs. We believe the historical record does not provide a
meaningful guide to valuation as (a) the majority of the companies in our coverage
did not have a track record as public companies through the previous recession and
(b) even the public companies were still in their early-growth (and, for some, rapid
growth) stage during the last economic downturn.
As such, given our projection for IAC of a ~8% F’09 - F’14 EBIT CAGR, and our
view of the beginning of a possible economic turnaround in 2H’09, we believe the
stock can achieve a 8x EV/EBIT multiple to our F’09 EBIT estimate (in line with the
current valuation of 8x our F’09 estimate) and thus arrive at our December 2009
price target of $16.
The parameters of our EV/EBIT multiple analysis are in the table below:
Table 129: Growth Outlook
$ in millions
2009E 2010E 2011E 2012E 2013E 2014E
Revenues 1,548.1 1,687.3 1,805.4 1,895.7 1,990.4 2,090.0
Y/Y change 9.0% 7% 5% 5% 5%
Less: Operating Expenses 1,517.4 1,652.0 1,765.7 1,854.0 1,946.6 2,044.0
As % of total revenues 98.0% 97.9% 97.8% 97.8% 97.8% 97.8%
Operating Income (Loss) 30.7 35.3 39.7 41.7 43.8 46.0
Operating margin 2.0% 2.1% 2.2% 2.2% 2.2% 2.2%
Source: Company reports and J.P. Morgan estimates.
Table 130: EV/EBIT Multiple Analysis
EV/EBIT Multiple Analysis
5 yr forward EBIT CAGR 8%
1x EBIT Growth 8
2009 EBIT 30.7
Implied Enterprise Value 245.9
+ Cash 1,971.5
- Debt -
Market Value 2,217.4
Share count 140.1
2009 Price Target 15.83
Source: Company reports and J.P. Morgan estimates
Valuation and Rating Analysis
On an EV/EBITDA basis, IACI trades at 4x our $234M FY09 EBITDA estimate, vs.
its e-commerce peer group which trades at 6x.
Although we think IAC deserves a
similar multiple as the group, we see greater upside potential in other stocks in our
coverage universe, hence the Neutral rating.
Risks to Our Rating
Shares could outperform those of other companies in our coverage universe if the
company is able to sustain growth in its Media & Advertising business and in the
Personals business despite a competitive search market and international pressures or
if the company introduces a large share buyback program. The company’s shares
could underperform if the company is unable to achieve higher query volumes from
Ask.com, macroeconomic pressures impact ServiceMagic more than expected,
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and/or international weakness weights on Personals. Strategic acquisitions could
also weigh on the company’s performance.
209
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Table 131: IACI Annual Income Statement
$ in millions
2007 2008E 2009E 2010E
Revenue 1,332.6 1,475.5 1,548.1 1,687.3
COGS and SG&A 1,192.2 1,299.4 1,313.8 1,429.0
Stock-based compensation 73.5 94.8 82.8 91.2
Depreciation 59.9 68.7 74.4 81.7
Amortization of non-cash marketing 49.7 15.0 12.8 13.8
Amortization of intangibles 35.7 32.6 33.6 36.3
Extraordinary expense -
Operating Income (78.5) (35.0) 30.7 35.3
OIBA 80.4 107.4 159.9 176.6
Operating Margin -5.9% -2.4% 2.0% 2.1%
EBITDA 140.4 176.1 234.3 258.3
EBITDA margin 10.5% 11.9% 15.1% 15.3%
Other income 74.4 (134.8) 72.0 72.0
Pretax income (4.1) (169.8) 102.7 107.3
Proforma pretax income 116.4 104.1 231.9 248.6
Income tax expense (benefit) 2.3 (94.5) 40.1 41.8
Tax rate (as reported) NA NA 39% 39%
Proforma tax expense (benefit) 48.6 56.9 90.5 96.9
Tax rate (pro forma) NA NA 39.0% 39.0%
Minority interest in (income) loss of consol. subsid 2.0 1.6 1.6 2.0
Earnings from cont. ops (4.4) (73.7) 64.3 67.4
Proforma earnings from cont. ops 69.8 48.8 143.1 153.6
Discontinued operations
Gain Loss on sale of discontinued ops net tax
Earnings before preferred dividends (4.4) (73.7) 64.3 67.4
Proforma earnings before preferred dividends 69.8 48.8 143.1 153.6
Preferred dividends - - - -
Net income (4.4) (73.7) 64.3 67.4
Proforma net income 69.8 48.8 143.1 153.6
GAAP Diluted EPS (0.97) (2.65) 0.46 0.48
Pro forma EPS 0.46 0.34 1.02 1.10
GAAP Diluted Weighted Ave. Shares 145.68 139.76 140.10 140.10
Adjusted EPS weighted shares outstanding 152.875 143.225 140.1 140.1
Source: Company reports and J.P. Morgan estimates.
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Table 132: IACI Quarterly Income Statement
$ in millions
1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08E 1Q'09E 2Q'09E 3Q'09E 4Q'09E
Revenue 299.8 318.6 335.4 378.9 370.7 354.2 369.3 381.4 391.0 377.4 380.1 399.7
COGS and SG&A 278.4 281.4 282.5 349.9 334.7 313.7 321.5 329.6 340.1 316.9 313.8 343.0
Stock-based compensation 17.7 18.0 16.6 21.2 18.9 18.6 38.7 18.6 20.7 20.7 20.7 20.7
Depreciation 14.2 14.7 15.1 15.9 17.3 17.5 17.3 16.6 18.5 18.5 18.7 18.7
Amortization of non-cash marketing 0.5 23.5 9.1 16.6 2.8 3.1 6.1 3.0 3.1 3.1 3.3 3.3
Amortization of intangibles 8.0 8.0 10.3 9.4 8.1 7.7 8.3 8.5 8.3 8.3 8.5 8.5
Extraordinary expense
Operating Income (19.0) (27.0) 1.7 (34.2) (11.1) (6.4) (22.6) 5.2 0.3 9.8 15.1 5.5
OIBA 7.2 22.5 37.7 13.1 18.7 23.0 30.5 35.3 32.4 41.9 47.6 38.0
Operating Margin -6.4% -8.5% 0.5% -9.0% -3.0% -1.8% -6.1% 1.4% 0.1% 2.6% 4.0% 1.4%
EBITDA 21.4 37.2 52.8 29.0 36.0 40.5 47.8 51.9 50.9 60.4 66.3 56.7
EBITDA margin 7.1% 11.7% 15.8% 7.6% 9.7% 11.4% 12.9% 13.6% 13.0% 16.0% 17.4% 14.2%
Other income 10.5 15.6 12.9 35.4 11.7 (100.5) (64.0) 18.0 18.0 18.0 18.0 18.0
Pretax income (8.5) (11.4) 14.6 1.2 0.6 (106.9) (86.6) 23.2 18.3 27.8 33.1 23.5
Proforma pretax income 20.1 36.2 44.1 16.0 25.4 52.1 (26.6) 53.3 50.4 59.9 65.6 56.0
Income tax expense (benefit) (2.7) (5.1) 11.1 (1.0) 4.0 (22.3) (85.3) 9.0 7.1 10.9 12.9 9.2
Tax rate (as reported) NA NA NA NA NA NA NA 39% 39% 39% 39% 39%
Proforma tax expense (benefit) 3.9 12.9 20.3 11.5 15.0 27.0 (5.9) 20.8 19.7 23.4 25.6 21.8
Tax rate (pro forma) 19% 36% 46% 71% 59% 52% 22% 39% 39% 39% 39% 39%
Minority interest in (income) loss of consol. subsid (0.1) 0.2 1.5 0.5 0.3 0.5 0.4 0.4 0.4 0.4 0.4 0.4
Earnings from cont. ops (6.0) (6.1) 4.9 2.8 (3.1) (84.2) (0.9) 14.5 11.6 17.4 20.6 14.7
Proforma earnings from cont. ops 16.1 23.4 25.3 5.1 10.7 25.5 (20.3) 32.9 31.1 37.0 40.4 34.6
Discontinued operations 66.7 65.7 67.1 -372.7 55.9 -360 -14.7 - - - - -
Gain Loss on sale of discontinued ops net tax - 35.1 (1.6) - - 22.5 0.8
Earnings before preferred dividends 60.7 94.7 70.4 (369.9) 52.8 (421.7) (14.8) 14.5 11.6 17.4 20.6 14.7
Proforma earnings before preferred dividends 16.1 23.4 25.3 5.1 10.7 25.5 (20.3) 32.9 31.1 37.0 40.4 34.6
Preferred dividends - - - - - - - - - - -
Net income 60.7 94.6 70.5 (369.9) 52.8 (421.6) (14.8) 14.5 11.6 17.4 20.6 14.7
Proforma net income 16.1 23.4 25.3 5.1 10.7 25.5 (20.3) 32.9 31.1 37.0 40.4 34.6
GAAP Diluted EPS 0.42 0.66 0.47 (2.53) 0.38 (3.02) (0.11) 0.10 0.08 0.12 0.15 0.11
Pro forma EPS 0.10 0.15 0.17 0.03 0.07 0.17 (0.14) 0.23 0.22 0.26 0.29 0.25
GAAP Diluted Weighted Ave. Shares 143.6 143.7 149.0 146.4 139.4 139.4 140.1 140.1 140.1 140.1 140.1 140.1
Adjusted EPS weighted shares outstanding 155.1 154.4 152.3 149.7 146.5 146.2 140.1 140.1 140.1 140.1 140.1 140.1
Source: Company reports and J.P. Morgan estimates.
. 8,595.2
Goodwill 2,299.4 4, 821. 6 4, 821. 6 4, 821. 6
Intangible Assets 446.6 1,047.7 1,047.7 1,047.7
Deferred income taxes, net 33.2 - - -
Prepaid revenue. 5,310.6 5,454.4 5,552.8 5,588.2 6, 021. 2
TAC 1,125.0 1,150.0 1, 221. 0 1,439.8 1,486.0 1,474.0 1,495.0 1,261.3 1,286.6 1 ,218 .5 1,194.2 1,320.9
TAC % 83.6%