Market Overview

Intersections Inc. Reports Second Quarter 2018 Results and Announces Refinancing Plan

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Intersections Inc. (NASDAQ:INTX) today announced financial results for
the quarter ended June 30, 2018 which are consistent with preliminary
results announced on August 16, 2018:

  • Revenue of $39 million for the second quarter and $78 million for the
    six months ended June 30, 2018.
  • $(597) thousand consolidated loss from continuing operations before
    income taxes for the second quarter compared to $(7.8) million loss in
    the second quarter of 2017.
  • $674 thousand consolidated income from continuing operations before
    income taxes for the six months ended June 30, 2018 compared to
    $(12.0) million loss for the six months ended June 30, 2017.
  • $2.9 million adjusted EBITDA for the second quarter 2018 compared to
    $(736) thousand adjusted EBITDA loss for the second quarter 2017.
  • $6.2 million adjusted EBITDA for the six months ended June 30, 2018
    compared to $(1.7) million adjusted EBITDA loss for the six months
    ended June 30, 2017.
  • $2.4 million cash provided by continuing operations for the six months
    ended June 30, 2018 compared to cash used in continuing operations of
    $(1.9) for the six months ended June 30, 2017.

"Second quarter and year-to-date 2018 consolidated income from
continuing operations and adjusted EBITDA continue to show significant
improvement compared to the prior year results," said Michael R.
Stanfield, Executive Chairman and President. "We are especially pleased
to have reached agreement on the material terms of a proposed financing
transaction, the proceeds of which we expect to use to repay our
existing secured debt and support our continuing growth plans."

Liquidity and Refinancing Update:

The Company reached agreement with an institutional investor to the
material terms of a proposed preferred equity investment, which would
provide us $29.0 million to $35.0 million of liquidity, including the
conversion of the Bridge Notes the Company entered into during the
second quarter (the "Transaction"). As of June 30, 2018, the outstanding
balance of the Company's secured debt was $17.5 million, the outstanding
balances of the Bridge Notes totaled $3.0 million, and its cash on hand
was approximately $7.7 million. The Company expects to use the proceeds
of the Transaction to fully satisfy the secured debt, prepayment
penalties and transaction costs and also provide liquidity to continue
to execute its business plan.

The consummation and actual terms of the Transaction (or any other
alternative refinancing transaction) are subject to a number of factors,
including without limitation market conditions, negotiation and
execution of definitive agreements, receipt of additional funding
commitments and satisfaction of customary closing conditions, including
any required shareholder approval. There can be no assurance that the
Company will be able to consummate the Transaction (or any other
alternative refinancing transaction) on the terms described above or at
all. If the Transaction (or any other alternative refinancing
transaction) is not funded in amounts sufficient to meet the repayment
obligations of Amendment No. 4 to the Company's Credit Agreement through
December 31, 2018, it will not be able to meet all of the repayment
obligations of the secured debt.

Consolidated Second Quarter and Year-to-Date Results:

Consolidated revenue for the quarter ended June 30, 2018 was $38.6
million, compared to $39.9 million for the quarter ended June 30, 2017.
Loss from continuing operations before income taxes for the quarter
ended June 30, 2018 was $(597) thousand, compared to $(7.8) million for
the quarter ended June 30, 2017. Adjusted EBITDA (loss) for the quarter
ended June 30, 2018 was $2.9 million, compared to $(736) thousand for
the quarter ended June 30, 2017. Basic and diluted loss from continuing
operations per share for the quarter ended June 30, 2018 was $(0.02),
compared to $(0.33) for the quarter ended June 30, 2017.

Consolidated revenue for the six months ended June 30, 2018 was $77.7
million, compared to $80.4 million for the six months ended June 30,
2017. Income (loss) from continuing operations before income taxes for
the six months ended June 30, 2018 was $674 thousand, compared to
$(12.0) million for the six months ended June 30, 2017. Adjusted EBITDA
(loss) for the six months ended June 30, 2018 was $6.2 million, compared
to $(1.7) million for the six months ended June 30, 2017. Basic and
diluted income (loss) from continuing operations per share for the six
months ended June 30, 2018 was $0.05, compared to $(0.50) for the six
months ended June 30, 2017.

Consolidated Second Quarter Highlights:

  • Identity Guard® subscriber revenue was $13.4 million for
    the quarter ended June 30, 2018, compared to $13.5 million for the
    quarter ended March 31, 2018 and $12.5 million for the quarter ended
    June 30, 2017. The Identity Guard® subscriber base was 357
    thousand subscribers as of June 30, 2018, compared to 329 thousand
    subscribers as of June 30, 2017. The increase in the subscriber base
    was primarily from growth in the direct to consumer and employee
    benefits channels.
  • Revenue from U.S. financial institution clients was $18.9 million for
    the quarter ended June 30, 2018, compared to revenue of $19.6 million
    for the quarter ended March 31, 2018. Revenue decreased on average by
    approximately 1.2% per month during the second quarter, which the
    Company believes is representative of normal attrition given the
    discontinuation of marketing and retention efforts for this population.
  • Consolidated general and administrative expenses were $14.5 million
    for the quarter ended June 30, 2018, compared to $18.0 million for the
    quarter ended June 30, 2017. Adjusted G&A Expense decreased 5.5% to
    $13.5 million for the quarter ended June 30, 2018 compared to $14.3
    million for the quarter ended June 30, 2017.
  • (Loss) income from continuing operations before income taxes for the
    quarter ended June 30, 2018 was $(597) thousand, compared to $1.3
    million for the quarter ended March 30, 2018 and $(7.8) million for
    the quarter ended June 30, 2017.
  • Adjusted EBITDA (loss) for the quarter ended June 30, 2018 was $2.9
    million, compared to $3.3 million for the quarter ended March 31, 2017
    and $(736) thousand for the quarter ended June 30, 2017. The second
    quarter 2018 marked the fourth consecutive quarter of positive
    Adjusted EBITDA.

Second Quarter 2018 Business Update Conference Call:

The Company will hold a conference call to provide a second quarter 2018
business update on Tuesday, August 21, 2018 at 4:30 p.m. Eastern Time.

Interested parties can access the live webcast on the Investor's page at
Intersections Inc.'s website www.intersections.com.
The live call can be accessed by dialing the toll-free numbers below.
Those who wish to participate in the Q&A session must dial in.

   
WHAT: Intersections Inc. Second Quarter 2018 Conference Call
 
WHEN: August 21, 2018
4:30 p.m. Eastern Time
 
HOW: Dial in: 888-771-4384
International: 847-585-4409

For a current list of alternate local and International Freephone
telephone numbers, please
click here
.

 

To pre-register for the conference and receive a Participant Pass
code, please
click here
.

 

The replay of the webcast will be available August 21, 2018 at 7:00 p.m.
(Eastern Time) through August 28, 2018 at 11:59 PM (Eastern Time). The
dial-in for the replay is 888-843-7419 or 630-652-3042 with the replay
access code of 6821828#.

Non-GAAP Financial Measures:

"Adjusted EBITDA (loss)" represents consolidated income (loss) from
continuing operations before income taxes plus (minus): share related
compensation; non-cash impairment of goodwill, intangibles and other
assets; (gain) loss on sale of Captira Analytical and Habits at Work;
loss on extinguishment of debt; (benefit) from change in vacation
policy; depreciation and amortization; and interest expense.

"Adjusted G&A Expense" represents consolidated general and
administrative expenses (plus) minus: share related compensation; and
benefit from change in vacation policy.

Intersections' Consolidated Financial Statements, "Other Data" and
reconciliations of these non-GAAP financial measures to the most
directly comparable GAAP financial measures and related notes can be
found in the accompanying tables and footnotes to this release and in
the "GAAP and Non-GAAP Measures" link under the "Investor & Media" page
on our website at www.intersections.com.

Forward-Looking Statements:

Statements in this release relating to future plans, results,
performance, expectations, achievements and the like are considered
"forward-looking statements" under the Private Securities Litigation
Reform Act of 1995. You can identify forward-looking statements by the
fact that they do not relate strictly to historical or current facts.
These statements may include words such as "anticipate," "estimate,"
"expect," "project," "plan," "intend," "believe," "may," "should," "can
have," "likely" and other words and terms of similar meaning in
connection with any discussion of the timing or nature of future
operating or financial performance or other events. Those
forward-looking statements involve known and unknown risks and
uncertainties and are subject to change based on various factors and
uncertainties that may cause actual results to differ materially from
those expressed or implied by those statements, including our ability to
consummate a refinancing transaction; our ability to maintain sufficient
liquidity and produce sufficient cash flow to pay our debt service
obligations and fund our business and growth strategy; our needs for
additional capital to grow our business, including our ability to
maintain compliance with the covenants under our term loan or seek
additional sources of debt and/or equity financing; the success of our
strategic objectives; our ability to meet the targets disclosed by
management with respect to costs and revenue, and that these targets do
not represent historical performance, projected results or guidance; our
ability to generate revenue from our partner sales strategy and business
development pipeline with our distribution partners; the timing and
success of new product launches and other growth initiatives, including
our Identity Guard
® with Watson
service; the continuing impact of the regulatory environment on our
business; the continued dependence on a small number of financial
institutions for a majority of our revenue and to service our U.S.
financial institution customer base; our ability to execute our strategy
and previously announced transformation plan; our incurring additional
restructuring charges; our incurring additional charges for non-income
business taxes or otherwise, or impairment costs or charges on goodwill
and/or other assets; our ability to control costs; and our failure to
protect private data due to a security breach or other unauthorized
access. Factors and uncertainties that may cause actual results to
differ include but are not limited to the risks disclosed under
"Forward-Looking Statements," "Item 1. Business—Government Regulation"
and "Item 1A. Risk Factors" in the Company's most recent Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q and in its recent other
filings with the U.S. Securities and Exchange Commission. The Company
undertakes no obligation to revise or update any forward-looking
statements unless required by applicable law.

About Intersections:

Intersections Inc. (NASDAQ:INTX) provides innovative software solutions
to help consumers and businesses manage the potential risks associated
with the proliferation of their data in the virtual world. Under its
IDENTITY GUARD® brand, the company utilizes advanced
data-enabled technologies, including artificial intelligence, to help
monitor, manage and protect sensitive information. Headquartered in
Chantilly, Virginia, the company was founded in 1996. To learn more,
visit www.intersections.com.

Explanatory Note:

The information in the following tables is presented giving effect to
the disposal of Voyce, with its historical financial results reflected
as discontinued operations. Additionally, the results in the following
tables have been updated to reflect an adjustment to our share based
compensation expense, which is recorded in general and administrative
expenses on our condensed consolidated statements of operations. For
additional information, please see "—Basis of Presentation and
Consolidation
" as well as "—Revision to Previously Issued
Financial Statements
" in Note 2 of our most recent Form 10-Q.

   
INTERSECTIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
REVENUE $ 38,619 39,935 $ 77,698 80,384
OPERATING EXPENSES:
Marketing 911 3,163 1,823 6,613
Commission 8,901 9,756 18,206 19,504
Cost of revenue 12,421 13,569 24,803 26,568
General and administrative 14,510 17,962 27,638 34,343
Loss on disposition of Captira Analytical (24 ) 106
Impairment of intangibles and other assets (86 )
Depreciation 1,564 1,288 3,017 2,588
Amortization 49   47   98   93  
Total operating expenses 38,356   45,675   75,585   89,815  
INCOME (LOSS) FROM OPERATIONS 263 (5,740 ) 2,113 (9,431 )
Interest expense, net (823 ) (603 ) (1,354 ) (1,195 )
Loss on extinguishment of debt (1,525 ) (1,525 )
Other (expense) income, net (37 ) 103   (85 ) 137  
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (597 ) (7,765 ) 674 (12,014 )
Income tax benefit   18   523   28  
(LOSS) INCOME FROM CONTINUING OPERATIONS (597 ) (7,747 ) 1,197 (11,986 )
Loss from discontinued operations, net of tax   (856 )   (1,419 )
NET (LOSS) INCOME $ (597 ) $ (8,603 ) $ 1,197   $ (13,405 )
Basic (loss) earnings per common share:
(Loss) income from continuing operations $ (0.02 ) $ (0.33 ) $ 0.05 $ (0.50 )
Loss from discontinued operations   (0.03 )   (0.06 )
Basic net (loss) income per common share $ (0.02 ) $ (0.36 ) $ 0.05   $ (0.56 )
Diluted (loss) earnings per common share:
(Loss) income from continuing operations $ (0.02 ) $ (0.33 ) $ 0.05 $ (0.50 )
Loss from discontinued operations   (0.03 )   (0.06 )
Diluted net (loss) income per common share $ (0.02 ) $ (0.36 ) $ 0.05   $ (0.56 )
Weighted average common shares outstanding—basic 24,317 23,823 24,260 23,750
Weighted average common shares outstanding—diluted 24,317 23,823 24,595 23,750
 
   
INTERSECTIONS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
 
June 30, 2018 December 31, 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,665 $ 8,502
Accounts receivable, net of allowance for doubtful accounts of $50
(2018) and $34 (2017)
6,321 8,225
Contract assets 529
Prepaid expenses and other current assets 3,959 3,232
Income tax receivable 1,308 2,545
Deferred subscription solicitation and commission costs   1,655  
Total current assets 19,782 24,159
PROPERTY AND EQUIPMENT, net 9,594 11,040
GOODWILL 9,763 9,763
INTANGIBLE ASSETS, net 200 58
CONTRACT COSTS 401
OTHER ASSETS 1,323   1,459  
TOTAL ASSETS $ 41,063   $ 46,479  
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,366 $ 3,498
Accrued expenses and other current liabilities 9,150 8,533
Accrued payroll and employee benefits 1,029 1,501
Commissions payable 353 141
Current portion of long-term debt, net 19,929
Capital leases, current portion 345 423
Contract liabilities, current 4,770   7,759  
Total current liabilities 37,942 21,855
LONG-TERM DEBT, net 20,736
OBLIGATIONS UNDER CAPITAL LEASES, non-current 214 392
OTHER LONG-TERM LIABILITIES 1,891 2,895
DEFERRED TAX LIABILITY, net 7   7  
TOTAL LIABILITIES 40,054   45,885  
 
STOCKHOLDERS' EQUITY:
Common stock at $0.01 par value, shares authorized 50,000; shares
issued 28,438 (2018) and 28,194 (2017); shares outstanding 24,331
(2018) and 24,102 (2017)
284 282
Additional paid-in capital 151,108 150,305
Warrants 2,840 2,840
Treasury stock, shares at cost; 4,107 (2018) and 4,092 (2017) (35,781 ) (35,745 )
Accumulated deficit (117,442 ) (117,088 )
TOTAL STOCKHOLDERS' EQUITY 1,009   594  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 41,063   $ 46,479  
 
 
NTERSECTIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Six Months Ended June 30,
2018   2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,197 $ (13,405 )
Less: loss from discontinued operations, net of tax   (1,419 )
Income (loss) from continuing operations 1,197 (11,986 )
Adjustments to reconcile net income (loss) to cash flows from
operating activities:
Depreciation and amortization 3,115 2,681
Amortization of debt issuance costs 63 168
Accretion of debt discount 148 29
Provision for doubtful accounts 16 (4 )
Share based compensation 1,019 4,772
Amortization of deferred subscription solicitation costs 6,053
Amortization of contract costs 424
Loss on disposition of Captira Analytical 130
Gain on disposition of Habits at Work (24 )
Loss on extinguishment of debt 1,525
Changes in assets and liabilities:
Accounts receivable 1,426 808
Contract assets (1,429 )
Prepaid expenses, other current assets and other assets (779 ) (672 )
Income tax receivable, net 1,237 760
Deferred subscription solicitation and commission costs (5,316 )
Contract costs (503 )
Accounts payable and accrued liabilities (872 ) 638
Commissions payable (5 ) 46
Contract liabilities, current (1,628 ) (1,290 )
Other long-term liabilities (1,004 ) (218 )
Cash flows provided by (used in) continuing operations 2,425 (1,900 )
Cash flows used in discontinued operations   (1,623 )
Net cash provided by (used in) operating activities 2,425   (3,523 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash paid for the disposition of Captira Analytical (315 )
Decrease (increase) in restricted cash 25
Acquisition of property and equipment (1,760 ) (2,748 )
Cash flows used in continuing operations (1,760 ) (3,038 )
Cash flows provided by discontinued operations   94  
Net cash used in investing activities (1,760 ) (2,944 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 3,000
Repayments of debt (including fees of $45 thousand) (4,045 ) (13,920 )
Repurchase of common stock (1,510 )
Proceeds from issuance of warrants 21,500
Cash paid for debt and equity issuance costs (22 ) (323 )
Capital lease payments (256 ) (286 )
Withholding tax payment on vesting of restricted stock units (179 ) (667 )
Cash flows (used in) provided by financing activities (1,502 ) 4,794  
DECREASE IN CASH AND CASH EQUIVALENTS (837 ) (1,673 )
CASH AND CASH EQUIVALENTS — beginning of period 8,502 10,797
Cash reclassified to assets held for sale at beginning of period   381  
CASH AND CASH EQUIVALENTS — end of period $ 7,665   $ 9,505  
 
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES:
Equipment additions accrued but not paid $ 36   $ 133  
Withholding tax payments accrued on vesting of restricted stock
units and stock option exercises
$ 71  

 

$ 185  
Intangible asset placed in service but paid in prior year $ 240   $  
Shares withheld in lieu of withholding taxes on vesting of
restricted stock awards
$   $ 163  
Debt issuance costs accrued but not paid $ 48   $  
 
 

INTERSECTIONS INC.

OTHER DATA

(in thousands)

(unaudited)

 

Revenue

The following tables provide comparative details of our revenue
information for the quarters ended June 30, 2018, March 31, 2018 and
June 30, 2017, and for the six months ended June 30, 2018 and 2017:

   
Quarter Ended
June 30,   March 31,   June 30,  
2018 2018   Change 2017   Change
Identity Guard® Services (1) $ 13,393 $ 13,514 (0.9 )% $ 12,482 7.3 %
Canadian business 3,166 3,231 (2.0 )% 3,220 (1.7 )%
U.S. financial institutions 18,855 19,559 (3.6 )% 21,365 (11.7 )%
Breach services & other (1)   1,680   1,269 32.4 %   1,311 28.1 %
Personal Information Services revenue 37,094 37,573 (1.3 )% 38,378 (3.3 )%
Other business units   1,525   1,505 1.3 %   1,557 (2.1 )%
Consolidated revenue $ 38,619 $ 39,078 (1.2 )% $ 39,935 (3.3 )%
 
 
Six Months Ended June 30,
2018 2017   Change
Identity Guard® (1) $ 26,908 $ 24,494 9.9 %
Canadian business 6,397 6,279 1.9 %
U.S. financial institutions 38,414 42,268 (11.2 )%
Breach services & other (1)   2,949   2,947 0.1 %
Personal Information Services revenue 74,668 76,988 (3.0 )%
Other business units   3,030   11,890 (10.8 )%
Consolidated revenue $ 77,698 $ 80,384 (3.3 )%
 
___________________________________

(1)

 

We periodically refine the criteria used to calculate and report
our subscriber data. In 2017, we determined that certain
subscribers who receive our breach response services should no
longer be included in the presentation of Identity Guard®
Services subscribers or revenue due to the nonrecurring nature of
our breach response services. For comparability, all periods
presented have been recast to reflect this change in subscribers
and revenue.

 

INTERSECTIONS INC.

OTHER DATA, continued

(in thousands)

(unaudited)

Personal Information Services Segment Subscribers

The following tables provide details of our Personal Information
Services segment subscriber information for the three and six months
ended June 30, 2018:

       

 

Financial
Institution

Identity Guard®
Services (1)

Canadian
Business Lines

Total
Balance at March 31, 2018 620 357 150 1,109
Additions 18 33 51
Cancellations (22 ) (18 ) (24 ) (64 )
Balance at June 30, 2018 580   357   159   1,096  
 
 

Financial
Institution

Identity Guard®
Services (1)

Canadian
Business Lines

Total
Balance at December 31, 2017 620 359 161 1,140
Additions 37 50 87
Cancellations (40 ) (39 ) (52 ) (131 )
Balance at June 30, 2018 580   357   159   1,096  
 
____________________________
(1)   We periodically refine the criteria used to calculate and report our
subscriber data. In 2017, we determined that certain subscribers who
receive our breach response services should no longer be included in
the presentation of Identity Guard® Services subscribers
or revenue due to the nonrecurring nature of our breach response
services. For comparability, all periods presented have been recast
to reflect this change in subscribers and revenue.
 
 

INTERSECTIONS INC.

OTHER DATA, continued

(unaudited)

 
Intersections Inc.
Reconciliation of Non-GAAP Financial Measures
 

The tables below include financial information prepared in accordance
with accounting principles generally accepted in the United States
("GAAP"), as well as other financial measures referred to as non-GAAP
financial measures. Adjusted EBITDA and Adjusted G&A Expense (as defined
below) are presented in a manner consistent with the way management
evaluates operating results and which management believes is useful to
investors and others. Share related compensation includes non-cash share
based compensation. An explanation regarding the Company's use of
non-GAAP financial measures and a reconciliation of non-GAAP financial
measures used by the Company to GAAP measures is provided below. These
non-GAAP financial measures should be considered in addition to, but not
as a substitute for, net income (loss), general and administrative
expense, and the other information prepared in accordance with GAAP, and
may not be comparable to similarly titled measures reported by other
companies. Management strongly encourages shareholders to review our
financial statements and publicly-filed reports in their entirety and
not to rely on any single financial measure.

Adjusted EBITDA represents consolidated (loss) income from continuing
operations before income taxes plus (minus): share related compensation;
non-cash impairment of goodwill, intangibles and other assets; (gain)
loss on sale of Captira Analytical and Habits at Work; loss on
extinguishment of debt; (benefit) from change in vacation policy;
depreciation and amortization; and interest expense. We believe that the
consolidated Adjusted EBITDA calculation provides useful information to
investors because they are indicators of our operating performance, and
we use these measures in communications with our board of directors,
creditors, investors and others concerning our financial performance.
Adjusted EBITDA is commonly used as a basis for investors and analysts
to evaluate and compare the periodic and future operating performance
and value of companies within our industry. Our Board of Directors and
management use Adjusted EBITDA to evaluate the operating performance of
the Company. In addition, consolidated Adjusted EBITDA, as defined in
our Credit Agreement with PEAK6 Investments, L.P., as amended, is used
to measure covenant compliance.

We provide this information to show the impact of share related
compensation on our operating results, as it is excluded from our
internal operating and budgeting plans and measurements of financial
performance; however, we do consider the dilutive impact to our
shareholders when awarding share related compensation and consider both
the Black-Scholes value and GAAP value (to the extent applicable) in
connection therewith, and value such awards accordingly.

 

INTERSECTIONS INC.

OTHER DATA, continued

(unaudited)

 

We do not consider share related compensation charges when we evaluate
the performance of our individual business groups or formulate our short
and long-term operating plans. Due to its nature, individual managers
generally are unable to project the impact of share related compensation
and accordingly we do not hold them accountable for the impact of equity
award grants. When we consider making share related compensation grants,
we primarily take into account the need to attract and retain high
quality employees, overall shareholder dilution and the Black-Scholes
values of the equity grant to the recipient, rather than the potential
accounting charges associated with such grants. For comparability
purposes, we believe it is useful to provide a non-GAAP financial
measure that excludes share related compensation in order to better
understand the long-term performance of our core business and to compare
our results to the results of our peer companies because of varying
available valuation methodologies and the variety of award types that
companies can use under GAAP. Furthermore, the value of share related
compensation is determined using a complex formula that incorporates
factors, such as market volatility, that are beyond our control.
Accordingly, we believe that the presentation of Adjusted EBITDA when
read in conjunction with our reported GAAP results can provide useful
supplemental information to our management, to investors and to our
lenders regarding financial and business trends relating to our
financial condition and results of operations.

Adjusted EBITDA has limitations due to the fact it does not include all
compensation related expenses. For example, if we only paid cash based
compensation as opposed to a portion in share related compensation, the
cash compensation expense included in our general and administrative
expenses would be higher. We compensate for this limitation by providing
information required by GAAP about outstanding share based awards in the
footnotes to our financial statements in our SEC filings. We believe
equity based compensation is an important element of our compensation
program and all forms of share related awards are valued and included as
appropriate in our operating results.

Adjusted G&A Expense represents consolidated general and administrative
expenses (plus) minus: share related compensation; and benefit from
change in vacation policy. We believe that the consolidated Adjusted G&A
Expense calculation provides useful information to investors because
they are indicators of our operating performance, and we use these
measures in communications with our board of directors, creditors,
investors and others concerning our financial performance.

The following tables reconcile 1) consolidated income (loss) from
continuing operations before income taxes to Adjusted EBITDA, and 2)
consolidated general and administrative expenses to Adjusted G&A Expense
for the previous six quarters through June 30, 2018. The information in
the following tables is presented giving effect to the disposal of
Voyce, with its historical financial results reflected as discontinued
operations. We made adjustments to our historical financial results for
certain costs and overhead allocations to either discontinued or
continuing operations for the year ended December 31, 2017; for
additional information, please see "Note 2 — Basis of Presentation and
Consolidation" in our most recent Form 10-Q. In managing our business,
we analyze our performance quarterly on a consolidated income (loss)
before income tax basis.

   
INTERSECTIONS INC.
OTHER DATA, continued
(in thousands, unaudited)
 

Consolidated Adjusted EBITDA (as recast and revised):

 
2018 Quarter Ended 2017 Quarter Ended
June 30   March 31 December 31   September 30   June 30   March 31
Reconciliation from consolidated (loss) income from continuing
operations before income taxes to consolidated Adjusted EBITDA:
Consolidated (loss) income from continuing operations before income
taxes (1)
$ (597 ) $ 1,271 $ 1,270 $ (2,960 ) $ (7,765 ) $ (4,249 )
Non-cash share based compensation (1) 1,015 4 1,948 1,809 3,676 1,096
Impairment of goodwill, intangibles and other assets (86 ) 86
(Gain) loss on sales of Captira Analytical and Habits at Work (24 ) 130
Loss on extinguishment of debt 1,525
Benefit from change in vacation policy (1,113 )
Depreciation and amortization 1,613 1,502 1,548 1,407 1,335 1,346
Interest expense, net   823     531   332     701     603     592  
Consolidated Adjusted EBITDA $ 2,854   $ 3,308 $ 3,985   $ 957   $ (736 ) $ (999 )
 
 
Six Months Ended June 30,
2018   2017
Reconciliation from consolidated income (loss) from continuing
operations before income taxes to consolidated Adjusted EBITDA:
Consolidated income (loss) from continuing operations before income
taxes
$ 674 $ (12,014 )
Non-cash share based compensation 1,019 4,772
Loss on sales of Captira Analytical and Habits at Work 106
Loss on extinguishment of debt 1,525
Benefit from change in vacation policy
Depreciation and amortization 3,115 2,681
Interest expense, net   1,354     1,195  
Consolidated Adjusted EBITDA $ 6,162   $ (1,735 )
Consolidated Revenue from Continuing Operations $ 77,698   $ 80,384  
Consolidated Adjusted EBITDA % of Revenue   7.9 %   (2.2 )%
 

Note (1): The results of operations for the year ended December 31, 2017
have been recast to show the effects of our discontinued operations and
to reflect an adjustment to our share based compensation expense. For
additional information, please see Note 21 to our consolidated financial
statements in our most recent Form 10-K.

   
INTERSECTIONS INC.
OTHER DATA, continued
(in thousands, unaudited)
 

Consolidated Adjusted G&A Expense (as recast and revised):

 
2018 Quarter Ended 2017 Quarter Ended
June 30   March 31 December 31   September 30   June 30   March 31
Reconciliation from consolidated general and administrative expenses
to Adjusted G&A Expense:
 
Consolidated general and administrative expenses (1) $ 14,510 $ 13,128 $ 13,361 $ 14,826 $ 17,962 $ 16,381
Non-cash share based compensation (1) (1,015 ) (4 ) (1,948 ) (1,809 ) (3,676 ) (1,096 )
Benefit from change in vacation policy             1,113              
Adjusted G&A Expense $ 13,495     $ 13,124   $ 12,526   $ 13,017   $ 14,286   $ 15,285  
 
 
Year Ended December 31,
2018   2017
Reconciliation from consolidated general and administrative expenses
to Adjusted G&A Expense:
Consolidated general and administrative expenses $ 27,638 $ 34,343
Non-cash share based compensation (1,019 ) (4,772 )
Benefit from change in vacation policy        
Adjusted G&A Expense $ 26,619   $ 29,571  
 

Note (1): The results of operations for the year ended December 31, 2017
have been recast to show the effects of our discontinued operations and
to reflect an adjustment to our share based compensation expense. For
additional information, please see Note 21 to our consolidated financial
statements in our most recent Form 10-K.

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