The accompanying
notes are an integral part of these condensed consolidated financial statements.
The accompanying
notes are an integral part of these condensed consolidated financial statements.
The accompanying
notes are an integral part of these condensed consolidated financial statements.
Notes to Condensed Consolidated Financial
Statements
1. Organization
Cision Ltd., a Cayman Islands company
and its subsidiaries (collectively, “Cision”, or the “Company”), is a leading provider of cloud-based
software, media intelligence and distribution services, and other related professional services to the marketing and public relations
industry. Communications professionals use the Company’s products and services to identify and connect with media influencers,
manage industry relationships, create and distribute content, monitor media coverage, perform advanced analytics and measure the
effectiveness of their campaigns. The Company has primary offices in Chicago, Illinois, Beltsville, Maryland, Ann Arbor, Michigan,
New York, New York, Cleveland, Ohio, and Albuquerque, New Mexico with additional offices in the United States, as well as China,
Finland, France, Hong Kong, Germany, India, Indonesia, Malaysia, Norway, Portugal, Sweden, Taiwan and the United Kingdom.
On March 19, 2017, the Company entered
into a definitive agreement (the “Merger Agreement”) with Capitol Acquisition Corp. III (NASDAQ: CLAC; “Capitol”),
a public investment vehicle, whereby the parties agreed to merge, resulting in the Company becoming a publicly listed company.
This merger closed on June 29, 2017 (“Merger”), which resulted in the following (the “Transactions”):
|
·
|
Holders of 490,078 shares of Capitol common stock sold in its
initial public offering exercised their rights to convert those shares to cash at a conversion price of approximately $10.04
per share, or an aggregate of approximately $4.9 million. The per share conversion price of approximately $10.04 for holders
of public shares electing conversion was paid out of Capitol’s trust account, which had a balance immediately prior
to the closing of approximately $326.3 million.
|
|
·
|
Of the remaining funds in the trust account: (i) approximately
$16.2 million was used to pay Capitol’s transaction expenses and (ii) the balance of approximately $305.2 million was
released to Cision to be used for working capital and general corporate purposes, including to pay down $294.0 million of
the 2016 Second Lien Credit Facility, plus a 1% fee and interest. The debt repayment occurred in July 2017 (see Note 5).
|
|
·
|
Immediately after giving effect to the Transactions (including
as a result of the conversions described above and certain forfeitures of Capitol common stock and warrants immediately prior
to the closing), there were 120,512,402 ordinary shares and warrants to purchase 24,375,596 ordinary shares of Cision issued
and outstanding.
|
|
·
|
Upon the closing, Capitol’s common stock, warrants and
units ceased trading, and Cision’s ordinary shares and warrants began trading on the NYSE and NYSE MKT, respectively,
under the symbol “CISN” and “CISN WS,” respectively.
|
|
·
|
Upon the completion of the Transactions, Canyon Holdings (Cayman),
L.P., (“Cision Owner”) an exempted limited partnership formed for the purpose of owning and acquiring Cision through
a series of transactions, received 82,075,873 ordinary shares of the Company and 1,969,841 warrants to purchase ordinary shares
of the Company, in exchange for all of the share capital and $450.5 million in Convertible Preferred Equity Certificates (“CPECs”)
of Cision. Cision Owner also obtained the right to receive certain additional securities of the Company upon the occurrence
of certain events. In October 2017, as a result of the Company’s share price meeting the Minimum Target per the
Merger Agreement, the Company issued 2,000,000 shares to Cision Owner.
|
|
·
|
At the closing of the Transactions, Cision Owner held approximately
68% of the issued and outstanding ordinary shares of the Company and stockholders of Capitol held approximately 32% of the
issued and outstanding shares of the Company.
|
The Merger Agreement, Transactions and
items related thereto are more fully described in the Company’s proxy statement/prospectus filed on June 15, 2017.
2. Significant Accounting Policies
Basis of Presentation and Earnings
per Share
The Transactions were accounted for as
a reverse merger in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
This determination was primarily based on Cision comprising the ongoing operations of the combined entity, Cision’s senior
management comprising the majority of the senior management of the combined company, and the prior shareholders of Cision having
a majority of the voting power of the combined entity. Accordingly, the Transactions have been treated equivalent to Cision issuing
stock for the net monetary assets of Capitol, accompanied by a recapitalization. The net assets of Capitol at the merger date
have been stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Transactions
in these financial statements are those of Cision. As a result, these financial statements represent the continuation of Cision
Ltd. and the historical shareholders’ equity and earnings per share calculations of Cision prior to the Transactions have
been retrospectively adjusted for the equivalent number of shares received by Cision’s Owner, where applicable, pursuant
to the Transactions. The accumulated deficit of Cision has been carried forward after the Transactions.
Notes to Condensed
Consolidated Financial Statements (continued)
Prior to the June 29, 2017 Transactions,
earnings per share was calculated using the two-class method. On June 29, 2017, all outstanding classes of equity of Cision were
contributed in exchange for 82,075,873 common shares. Immediately after the Transactions, 120,512,402 common shares were outstanding.
Subsequent to the Merger, earnings per share will be calculated based on the weighted number of common shares then outstanding.
As part of the Transactions, the historical number of outstanding common shares of Class B-1, Class C-1 and Class V, in aggregate,
has been adjusted to 28,369,644 common shares, in order to retroactively reflect the Merger exchange ratio. Historical earnings
per share also gives effect to this adjustment through June 29, 2017, the date of the Merger. This retroactive adjustment also
eliminates the need for a two-class method earnings per share calculation (Note 7).
The accompanying consolidated financial
statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all the information and
footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair
statement have been included. The accompanying condensed consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited financial statements
as of that date, but does not include all disclosures including notes required by GAAP. Operating results for the three months
ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018
or any other period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with
the Company’s Annual Report on Form 10-K filed on March 13, 2018.
Use of Estimates
The preparation of financial statements
in conformity with GAAP requires management to make certain estimates and assumptions. On an on-going basis, the Company evaluates
its estimates, including, but not limited to, those related to the allowance for doubtful accounts, software development costs,
useful lives of property, equipment and internal use software, intangible assets and goodwill, contingent liabilities, and fair
value of equity-based awards and income taxes. The Company bases its estimates on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets
and liabilities as well as the reported amounts of revenues and expenses during the period. Actual results could differ from these
estimates.
Recent Accounting Pronouncements
As long as the Company remains an Emerging
Growth Company, the Company plans to adopt new accounting standards using the effective dates available for nonpublic entities
except as otherwise noted below.
New Accounting Pronouncements Adopted
In March 2016, the FASB issued ASU 2016-09,
Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting.
ASU 2016-09, which amends several
aspects of accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and
statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company has elected to early
adopt this guidance on a prospective basis beginning January 1, 2018. The Company has also elected to continue its historical accounting
practice of estimating forfeitures in determining the amount of stock-based compensation expense to recognize, rather than accounting
for forfeitures as they occur. Therefore, the adoption of ASU 2016-09 did not have an impact on the Company’s consolidated
financial statements.
In October 2016, the FASB issued ASU No.
2016-16,
Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory
. The amendments of ASU No. 2016-16
were issued to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory.
Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset
has been sold to an outside party which has resulted in diversity in practice and increased complexity within financial reporting.
The amendments of this ASU would require an entity to recognize the income tax consequences of an intra-entity transfer of an
asset other than inventory when the transfer occurs and do not require new disclosure requirements. The Company elected to early
adopt ASU 2016-16 in the first quarter of fiscal 2018 and applied the guidance on a modified retrospective basis and recorded
a cumulative-effect adjustment to retained earnings in the amount of $1.1 million.
In January 2017, the FASB issued ASU 2017-04,
Intangibles-Goodwill and Other (Topic 350)
. The ASU eliminates Step 2 of the goodwill impairment test, which requires determining
the fair value of assets acquired or liabilities assumed in a business combination. Under the amendments in this update, a goodwill
impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An entity should recognize
an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss
recognized should not exceed the total amount of goodwill allocated to that reporting unit. The Company elected to early adopt
ASU 2017-04 in the first quarter of fiscal 2018 and it did not have an impact on the Company’s consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09,
Compensation – Stock Compensation: Scope of Modification Accounting
, which provides guidance about which changes to
the terms or conditions of a share-based payment award require an entity to apply modification accounting. An entity will account
for the effects of a modification unless the fair value of the modified award is the same as the original award, the vesting conditions
of the modified award are the same as the original award and the classification of the modified award as an equity instrument or
liability instrument is the same as the original award. The Company adopted ASU 2017-09 in the first quarter of fiscal 2018 and
it did not have an impact on the Company’s consolidated financial statements.
Notes to Condensed
Consolidated Financial Statements (continued)
Recent Accounting Pronouncements Not Yet Effective
In May 2014, the FASB issued ASU 2014-09,
Revenue from Contracts with Customers (Topic 606)
. Topic 606 supersedes existing revenue recognition requirements in ASU
Topic 605,
Revenue Recognition
, and requires the recognition of revenue when promised goods or services are transferred
to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those
goods or services. The accounting for the recognition of costs related to obtaining customer contracts under Topic 606 is significantly
different than current guidance, and Topic 606 will likely result in sales commissions and certain other costs capitalized, which
will then be amortized over an estimated customer life. The Company will adopt this ASU effective for fiscal year 2019 using the
modified retrospective transition method. The Company is in the process of evaluating the impact of this standard on its consolidated
financial statements.
In February 2018, the FASB issued ASU
2018-02,
Income Statement – Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated
Other Comprehensive Income
, which will allow a reclassification from accumulated other comprehensive income to retained earnings
for the tax effects resulting from “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution
on the Budget for Fiscal Year 2018” (the “Act”) that are stranded in accumulated other comprehensive income.
This ASU also requires certain disclosures about stranded tax effects; however, it does not change the underlying guidance that
requires that the effect of a change in tax laws or rates be included in income from continuing operations. This ASU is effective
on January 1, 2019, with early adoption permitted. It must be applied either in the period of adoption or retrospectively to each
period in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. The Company is
in the process of evaluating the impact of this standard on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01,
Business Combinations (Topic 805) Clarifying the Definition of a Business
. The amendments in this update clarify the definition
of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted
for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas of accounting including
acquisitions, disposals, goodwill, and consolidation. This ASU is effective for the Company’s fiscal year 2019 and interim
periods within that year. The Company does not believe the adoption of this standard will have a material impact on its consolidated
financial statements.
In November 2016, the FASB issued ASU
2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the Emerging Issues Task Force),
which requires
restricted cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement
of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance
sheet. This ASU is effective for the Company’s fiscal year 2019, with early adoption permitted. The Company does not believe
the adoption of this standard will have a material impact on its consolidated financial statements.
In February 2016, the FASB issued ASU
2016-02,
Leases (Topic 842)
. ASU 2016-02 requires lessees to recognize lease assets and lease liabilities on the balance
sheet and requires expanded disclosures about leasing arrangements. This ASU is effective for the Company’s fiscal year
2020 and interim periods within 2021, with early adoption permitted. The Company is in the process of evaluating the impact of
this standard on its consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01,
Financial Instruments: Recognition and Measurement of Financial Assets and Financial Liabilities
. This change primarily
affects the accounting for equity investments, financial liabilities under the fair value options and the presentation and disclosure
requirements for financial instruments. This ASU is effective for the Company’s fiscal year 2019, with early adoption permitted
for certain provisions for the new guidance. The Company does not believe the adoption of this standard will have a material impact
on its consolidated financial statements.
Notes to Condensed
Consolidated Financial Statements (continued)
3. Business Combinations and Dispositions
Sale of Vintage Net Assets
On March 10, 2017, the Company sold substantially
all of the assets of its Vintage corporate filings business for approximately $26.6 million and received approximately $23.7 million
in cash after escrow and expenses. The transaction resulted in a gain of approximately $1.8 million which was recorded as other
income in the consolidated statements of operations and comprehensive income (loss). The Company was required to provide the purchaser
with certain immaterial transition services through the end of 2017.
Purchase of Bulletin Intelligence
On March 27, 2017, the Company acquired
all of the membership interests of Bulletin Intelligence, LLC, Bulletin News Network, LLC, and Bulletin News Investment, LLC (collectively,
“Bulletin Intelligence”). The Company acquired Bulletin Intelligence to expand the Company’s ability to deliver
actionable intelligence to senior leadership teams. During the three months ended March 31, 2017, the Company incurred acquisition-related
transaction costs of $1.0 million, which are included in general and administrative expense in the condensed consolidated statements
of operations and comprehensive income (loss). The acquisition was accounted for under the purchase method of accounting. The operating
results have been included in the accompanying condensed consolidated financial statements beginning March 27, 2017.
The purchase price was $71.8 million and
consisted of $60.5 million in cash, the issuance of 70,000 Class A Shares by Cision Owner with a fair value of $5.2 million and
contingent consideration valued at $6.1 million. The fair value of the contingent consideration was determined using a Monte Carlo
simulation which utilized management's projections of Bulletin Intelligence revenues over the earn-out period, and is considered
a Level 3 measurement. Changes in fair value subsequent to the acquisition date will be recognized in earnings each reporting
period until the arrangement is settled. The Company is required to pay contingent consideration that can be earned during the
years ending December 31, 2017 and December 31, 2018 for each year dependent on the achievement of financial targets as defined
by the agreement with no cap. For the year ended December 31, 2017, the former owners of Bulletin Intelligence earned $2.9 million
in relation to the earn out, which was paid in March 2018. On the date of acquisition, the Company entered into a loan agreement
with Cision Owner for $7.0 million and recorded a payable to Cision Owner of $7.0 million in the condensed consolidated balance
sheet, which was contributed in the quarter ended June 30, 2017. The $1.8 million difference between the fair value of the Class
A Units and the amount due to Cision Owner has been recorded as interest expense.
The purchase price has been allocated
to the assets acquired and liabilities assumed based on fair values as of the acquisition date.
The following table summarizes the allocation
of the purchase price paid by the Company to the fair value of the assets and liabilities of Bulletin Intelligence acquired on
March 27, 2017. The identifiable intangible assets include the trade name, customer relationships and purchased technology and
are being amortized over four to ten years on an accelerated basis. The Company completed the purchase price allocation during
the three months ended March 31, 2018.
(in thousands)
|
|
|
|
Cash and cash equivalents
|
|
$
|
11,457
|
|
Accounts receivable, net
|
|
|
5,232
|
|
Prepaid and other assets
|
|
|
216
|
|
Property, equipment and software, net
|
|
|
704
|
|
Trade name
|
|
|
1,070
|
|
Customer relationships
|
|
|
28,870
|
|
Purchased technology
|
|
|
9,510
|
|
Goodwill
|
|
|
19,520
|
|
Total assets acquired
|
|
|
76,579
|
|
Accounts payable and accrued liabilities
|
|
|
(3,481
|
)
|
Deferred revenue
|
|
|
(1,271
|
)
|
Total liabilities assumed
|
|
|
(4,752
|
)
|
Net assets acquired
|
|
$
|
71,827
|
|
Goodwill will be deductible for tax purposes.
The excess of the purchase price over the total net identifiable assets has been recorded as goodwill, which is attributable primarily
to synergies expected from the expanded technology and service capabilities from the integrated business as well as the value
of the assembled workforce.
Purchase of Argus
On June 22, 2017, the Company acquired
all of the outstanding shares of L’Argus de la Presse (“Argus”), a Paris-based provider of media monitoring
solutions, for €6.0 million (approximately $6.8 million) paid in cash at closing and up to €1.1 million (approximately
$1.2 million) to be paid in cash over the next four years, subject to a working capital adjustment. The Company acquired Argus
to deliver enhanced access to French media content, helping its global customer base understand and quantify the impact of their
communications and media coverage in France.
Notes to Condensed
Consolidated Financial Statements (continued)
The acquisition was accounted for under
the purchase method of accounting. The operating results have been included in the accompanying condensed consolidated financial
statements beginning June 22, 2017.
The purchase price has been allocated
to the assets acquired and liabilities assumed based on fair values as of the acquisition date.
The following table summarizes the allocation
of the purchase price based on currently available information by the Company to the fair value of the assets and liabilities
of Argus acquired on June 22, 2017. The amounts related to intangible assets shown below are subject to adjustment as additional
information is obtained about the facts and circumstances that existed at the date of acquisition. The identifiable intangible
assets include the trade name, customer relationships and purchased technology and are being amortized over four to eight years
on an accelerated basis. The Company expects to complete the purchase price allocation during the three months ended June 30,
2018.
(in thousands)
|
|
|
|
Cash and cash equivalents
|
|
$
|
897
|
|
Accounts receivable, net
|
|
|
12,543
|
|
Prepaid and other assets
|
|
|
2,346
|
|
Property, equipment and software, net
|
|
|
5,543
|
|
Trade name
|
|
|
79
|
|
Customer relationships
|
|
|
1,989
|
|
Purchased technology
|
|
|
796
|
|
Goodwill
|
|
|
5,092
|
|
Total assets acquired
|
|
|
29,285
|
|
Accounts payable, accrued liabilities, and other liabilities
|
|
|
(16,610
|
)
|
Deferred revenue
|
|
|
(4,627
|
)
|
Total liabilities assumed
|
|
|
(21,237
|
)
|
Net assets acquired
|
|
$
|
8,048
|
|
Goodwill is not deductible for tax purposes.
The preliminary purchase price is subject to customary post-closing adjustments. The excess of the purchase price over the total
net identifiable assets has been recorded as goodwill which is attributable primarily to synergies expected from the expanded
technology and service capabilities from the integrated business as well as the value of the assembled workforce in accordance
with GAAP.
Purchase of CEDROM
On December 19, 2017, the Company acquired
all of the outstanding shares of CEDROM, a Montréal-based provider of digital media monitoring solutions, for CAD 33.1
million (approximately $25.9 million) paid in cash at closing, subject to a working capital adjustment. The Company acquired CEDROM
to enhance access to media content from print, radio, television, web, and social media to help customers understand and quantify
the impact of their communications in Canada and France.
The acquisition was accounted for under
the purchase method of accounting. The operating results have been included in the accompanying condensed consolidated financial
statements beginning December 19, 2017.
The purchase price has been preliminarily
allocated to the assets acquired and liabilities assumed based on fair values as of the acquisition date.
The following table summarizes the preliminary
allocation of the purchase price based on currently available information by the Company to the fair value of the assets and liabilities
of CEDROM. The amounts related to taxes and intangible assets shown below are preliminary and subject to adjustment as additional
information is obtained about the facts and circumstances that existed at the date of acquisition. The identifiable intangible
assets include the trade name, customer relationships and purchased technology and are being amortized over five to twelve years
on an accelerated basis. The Company expects to complete the purchase price allocation during the three months ended June 30,
2018.
Notes to Condensed
Consolidated Financial Statements (continued)
(in thousands)
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,394
|
|
Accounts receivable, net
|
|
|
2,955
|
|
Prepaid and other assets
|
|
|
1,749
|
|
Property, equipment and software, net
|
|
|
1,256
|
|
Trade name
|
|
|
1,061
|
|
Customer relationships
|
|
|
3,517
|
|
Purchased technology
|
|
|
7,765
|
|
Goodwill
|
|
|
16,642
|
|
Total assets acquired
|
|
|
37,339
|
|
Accounts payable, accrued liabilities, and other liabilities
|
|
|
(4,288
|
)
|
Deferred revenue
|
|
|
(3,709
|
)
|
Deferred taxes
|
|
|
(3,412
|
)
|
Total liabilities assumed
|
|
|
(11,409
|
)
|
Net assets acquired
|
|
$
|
25,930
|
|
Goodwill is not deductible for tax purposes.
The preliminary purchase price is subject to customary post-closing adjustments. The excess of the purchase price over the total
net identifiable assets has been recorded as goodwill which is primarily attributable to synergies expected from the expanded
technology and service capabilities from the integrated business as well as the value of the assembled workforce in accordance
with GAAP.
Purchase of Prime
On January 23, 2018, the Company completed
its acquisition of PRIME Research (“Prime”). The purchase price was approximately €75.7 million ($94.1 million)
and consisted of approximately €53.1 million ($65.4 million) in cash consideration, the issuance of approximately 1.7 million
ordinary shares valued at €16.4 million ($20.1 million), and up to €6.2 million ($8.6 million) of deferred payments
due within 18 months. The Company has the discretion to pay up to €2.5 million ($3.1 million) of the deferred payments with
ordinary shares. The acquisition of Prime will expand the Company’s comprehensive data-driven offerings that help communications
professionals identify influencers, craft meaningful campaigns, and attribute business value to those efforts. At the date
of the acquisition, Prime had over 700 employees with offices in Brazil, China, Germany, India, Switzerland, the United Kingdom,
and the United States.
Total acquisition costs related to the
Prime acquisition were $5.4 million of which $2.3 million were incurred during the three months ended March 31, 2018 and were included
in general and administrative expense in the condensed consolidated statements of operations and comprehensive income (loss). The
acquisition was accounted for under the purchase method of accounting. The operating results are included in the accompanying condensed
consolidated financial statements from January 23, 2018.
The purchase price has been preliminarily
allocated to the assets acquired and liabilities assumed based on fair values as of the acquisition date.
The following table summarizes the preliminary
allocation of the purchase price based on currently available information by the Company to the fair value of the assets and liabilities
of Prime. The amounts related to taxes and intangible assets shown below are preliminary and subject to adjustment as additional
information is obtained about the facts and circumstances that existed at the date of acquisition. The identifiable intangible
assets include the trade name, customer relationships and purchased technology and are being amortized over three to eleven years
on an accelerated basis. The Company expects to complete the purchase price allocation on or before January 31, 2019.
(in thousands)
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,711
|
|
Accounts receivable, net
|
|
|
8,186
|
|
Prepaid and other assets
|
|
|
1,320
|
|
Property, equipment and software, net
|
|
|
1,207
|
|
Trade name
|
|
|
1,436
|
|
Customer relationships
|
|
|
17,903
|
|
Purchased technology
|
|
|
9,881
|
|
Goodwill
|
|
|
57,465
|
|
Total assets acquired
|
|
|
100,109
|
|
Accounts payable, accrued liabilities, and other liabilities
|
|
|
(5,627
|
)
|
Deferred revenue
|
|
|
(426
|
)
|
Total liabilities assumed
|
|
|
(6,053
|
)
|
Net assets acquired
|
|
$
|
94,056
|
|
Notes to Condensed
Consolidated Financial Statements (continued)
Approximately $38.8 million of goodwill
is deductible for tax purposes pending any purchase price adjustments. The preliminary purchase price is subject to customary
post-closing adjustments. The excess of the purchase price over the total net identifiable assets has been recorded as goodwill
which is primarily attributable to synergies expected from the expanded technology and service capabilities from the integrated
business as well as the value of the assembled workforce in accordance with GAAP.
The acquired entities of Bulletin Intelligence,
Argus, CEDROM and Prime together contributed revenue of $31.1 million for the three months ended March 31, 2018. Net loss from
these acquisitions for the same period is impracticable to determine due to the extent of integration activities.
Supplemental Unaudited Pro Forma
Information
The unaudited pro forma information below
gives effect to the acquisitions of Bulletin Intelligence, Argus, and CEDROM as if they had occurred as of January 1, 2016 and
Prime as if it had occurred as of January 1, 2017. The pro forma results presented below show the impact of the acquisitions and
related costs as well as the increase in interest expense related to acquisition-related debt.
|
|
Three Months Ended March
31,
|
|
(in thousands, except per share data)
|
|
2018
|
|
|
2017
|
|
Revenue
|
|
$
|
182,334
|
|
|
$
|
175,118
|
|
Net income (loss)
|
|
|
1,398
|
|
|
|
(24,593
|
)
|
Net income (loss) per share – basic and
diluted
|
|
|
0.01
|
|
|
|
(0.87
|
)
|
4. Goodwill and Intangibles
Changes in the carrying amounts of goodwill
since December 31, 2017 consisted of the following:
(in thousands)
|
|
|
|
Balance as of December 31, 2017
|
|
$
|
1,136,403
|
|
Measurement period adjustment of Bulletin Intelligence
|
|
|
(1,950
|
)
|
Acquisition of Prime Research
|
|
|
57,465
|
|
Effects of foreign currency
|
|
|
6,442
|
|
Balance as of March 31, 2018
|
|
$
|
1,198,360
|
|
Definite-lived intangible assets consisted
of the following at March 31, 2018 and December 31, 2017:
|
|
March 31, 2018
|
|
(in thousands)
|
|
Gross
Carrying
Amount
|
|
|
Foreign
Currency
Translation
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
Trade names and brand
|
|
$
|
371,871
|
|
|
$
|
(1,028
|
)
|
|
$
|
(86,187
|
)
|
|
$
|
284,656
|
|
Customer relationships
|
|
|
321,862
|
|
|
|
(10,470
|
)
|
|
|
(179,334
|
)
|
|
|
132,058
|
|
Purchased technology
|
|
|
143,711
|
|
|
|
(4,721
|
)
|
|
|
(93,326
|
)
|
|
|
45,664
|
|
Balances at March 31, 2018
|
|
$
|
837,444
|
|
|
$
|
(16,219
|
)
|
|
$
|
(358,847
|
)
|
|
$
|
462,378
|
|
Notes to Condensed
Consolidated Financial Statements (continued)
|
|
December 31, 2017
|
|
(in thousands)
|
|
Gross
Carrying
Amount
|
|
|
Foreign
Currency
Translation
|
|
|
Accumulated
Amortization
|
|
|
Net Carrying
Amount
|
|
Trade names and brand
|
|
$
|
370,435
|
|
|
$
|
(1,519
|
)
|
|
$
|
(75,273
|
)
|
|
$
|
293,643
|
|
Customer relationships
|
|
|
302,009
|
|
|
|
(12,472
|
)
|
|
|
(168,460
|
)
|
|
|
121,077
|
|
Purchased technology
|
|
|
133,830
|
|
|
|
(5,276
|
)
|
|
|
(86,983
|
)
|
|
|
41,571
|
|
Balances at December 31, 2017
|
|
$
|
806,274
|
|
|
$
|
(19,267
|
)
|
|
$
|
(330,716
|
)
|
|
$
|
456,291
|
|
Weighted-average useful life at March 31, 2018
|
|
Years
|
|
Trade names and brand
|
|
|
12.5
|
|
Customer relationships
|
|
|
6.8
|
|
Purchased technology
|
|
|
3.8
|
|
Future expected amortization of intangible
assets at March 31, 2018 is as follows:
(in thousands)
|
|
|
|
Remainder of 2018
|
|
$
|
79,383
|
|
2019
|
|
|
86,622
|
|
2020
|
|
|
63,454
|
|
2021
|
|
|
51,871
|
|
2022
|
|
|
38,532
|
|
Thereafter
|
|
|
142,516
|
|
|
|
$
|
462,378
|
|
5. Debt
Debt consisted of the following at March
31, 2018 and December 31, 2017:
|
|
March 31, 2018
|
|
(in thousands)
|
|
Short-Term
|
|
|
Long-Term
|
|
|
Total
|
|
2017 First Lien Credit Facility
|
|
$
|
13,430
|
|
|
$
|
1,322,821
|
|
|
$
|
1,336,251
|
|
Unamortized debt discount and issuance
costs
|
|
|
—
|
|
|
|
(49,074
|
)
|
|
|
(49,074
|
)
|
Balances at March 31, 2018
|
|
$
|
13,430
|
|
|
$
|
1,273,747
|
|
|
$
|
1,287,177
|
|
|
|
December 31, 2017
|
|
(in thousands)
|
|
Short-Term
|
|
|
Long-Term
|
|
|
Total
|
|
2017 First Lien Credit Facility
|
|
$
|
13,349
|
|
|
$
|
1,318,262
|
|
|
$
|
1,331,611
|
|
Unamortized debt discount and issuance costs
|
|
|
—
|
|
|
|
(52,141
|
)
|
|
|
(52,141
|
)
|
Balances at December 31, 2017
|
|
$
|
13,349
|
|
|
$
|
1,266,121
|
|
|
$
|
1,279,470
|
|
2017 First Lien Credit Facility
On August 4, 2017, the Company entered
into a refinancing amendment and incremental facility amendment (the “2017 First Lien Credit Facility”) to the 2016
First Lien Credit Facility, with Deutsche Bank AG, New York Branch, as administrative agent and collateral agent, and a syndicate
of commercial lenders. The 2017 First Lien Credit Facility provided for a tranche of refinancing term loans which refinanced the
term loans under the 2016 First Lien Credit Facility in full and provided for additional term loans of $131.2 million. Upon effectiveness
of the 2017 First Lien Credit Facility, the 2017 First Lien Credit Facility consists of:
|
(i)
|
a revolving credit facility, which
permits borrowings and letters of credit of up to $75.0 million (the “2017 Revolving
Credit Facility”), of which up to $25.0 million may be used or issued as standby
and trade letters of credit;
|
|
(ii)
|
a $960.0 million Dollar-denominated
term credit facility (the “2017 First Lien Dollar Term Credit Facility”);
and
|
Notes to Condensed
Consolidated Financial Statements (continued)
|
(iii)
|
a €250.0 million Euro-denominated
term credit facility (the “2017 First Lien Euro Term Credit Facility”) and,
together with the 2017 First Lien Dollar Term Credit Facility, the “2017 First
Lien Term Credit Facility” and collectively with the 2017 Revolving Credit Facility,
the “2017 First Lien Credit Facility”).
|
The Company used the proceeds from the
2017 First Lien Term Credit Facility to repay all amounts then outstanding under the 2016 First Lien Credit Facility, all amounts
outstanding under the 2016 Second Lien Credit Facility, pay all related fees and expenses, and retained remaining cash for general
corporate purposes. The Company terminated the 2016 Second Lien Credit Facility in connection with establishing the 2017 First
Lien Credit Facility.
On December 14, 2017, the Company amended
the 2017 First Lien Credit Facility to borrow an additional $75.0 million of 2017 First Lien Dollar Term Credit Facility. The
Company used the money for its acquisition of Prime Research Group.
On February 8, 2018, the Company completed
its debt repricing transaction on its 2017 First Lien Credit Facility and 2017 Revolver Credit Facility. The 2017 First Lien Credit
Facility margins were lowered for the alternate base rate, LIBOR rate and EURIBOR rate by 1.00%, 1.00% and 0.75%, respectively.
The 2017 Revolver Credit Facility margins were lowered for the alternate base rate, LIBOR rate and EURIBOR rate by 0.75%, 0.75%
and 0.50%, respectively.
The obligations under the 2017 First Lien
Credit Facility are collateralized by substantially all of the assets of Cision’s subsidiary, Canyon Companies S.à.r.l.
and each of its subsidiaries organized in the United States (or any state thereof), the United Kingdom, the Netherlands, Luxembourg,
and Ireland, subject to certain exceptions.
Interest is charged on U.S. dollar borrowings
under the 2017 First Lien Credit Facility, at the Company’s option, at a rate based on (1) the adjusted LIBOR (a rate equal
to the London interbank offered rate adjusted for statutory reserves) or (2) the alternate base rate (a rate that is highest of
the (i) Deutsche Bank AG, New York Branch’s prime lending rate, (ii) the overnight federal funds rate plus 50 basis points
or (iii) the one-month adjusted LIBOR plus 1%), in each case, plus an applicable margin.
The margin applicable to loans under the
2017 First Lien Dollar Term Credit Facility bearing interest at the alternate base rate is 3.25%; the margin applicable to loans
under the 2017 First Lien Dollar Term Credit Facility bearing interest at the adjusted LIBOR is 4.25%, provided that each such
rate is reduced by 25 basis points if the first lien net leverage ratio of Canyon Companies S.à.r.l. and its restricted
subsidiaries under the 2017 First Lien Credit Facility is less than or equal to 4.00:1.00 at the end of the most recent fiscal
quarter. Interest is charged on Euro borrowings under the 2017 First Lien Credit Facility at a rate based on the adjusted EURIBOR
(a rate equal to the Euro interbank offered rate adjusted for statutory reserves), plus an applicable margin. The margin applicable
to loans under the 2017 First Lien Euro Term Credit Facility bearing interest at the adjusted LIBOR is 4.25%, provided that each
such rate is reduced by 25 basis points if the first lien net leverage ratio of Canyon Companies S.à.r.l. and its restricted
subsidiaries under the 2017 First Lien Credit Facility is less than or equal to 4.00:1.00 at the end of the most recent fiscal
quarter. As of March 31, 2018, the applicable interest rate under the 2017 First Lien Dollar Term Credit Facility and the 2017
First Lien Euro Term Credit Facility was 5.13% and 3.50%, respectively.
The margin applicable to loans under the
2017 Revolving Credit Facility bearing interest at the alternate base rate, the adjusted LIBOR, and the adjusted Euro interbank
offered rate bear interest at rates of 3.00%, 4.00%, and 4.00% respectively; provided that each such rate is reduced by 25 basis
points if the first lien net leverage ratio of Canyon Companies S.à.r.l. and its restricted subsidiaries under the 2017
First Lien Credit Facility is less than or equal to 4.00:1.00 at the end of the most recent fiscal quarter. The maturity dates
of the 2017 Revolving Credit Facility and the 2017 First Lien Term Credit Facility are June 16, 2022 and June 16, 2023, respectively.
As of March 31, 2018, the Company had
no outstanding borrowings and $1.1 million of outstanding letters of credit under the 2017 Revolving Credit Facility and $1,336.3
million outstanding under the 2017 First Lien Credit Facility.
The Company incurred approximately $2.0
million in financing costs in connection with the February 2018 repricing of the 2017 First Lien Credit Facility of which $0.1
million are being amortized using the effective interest method. As a result of this transaction, the Company recorded a loss on
extinguishment of $2.4 million.
The Company began to make quarterly principal
payments starting December 31, 2017 under each of the 2017 First Lien Dollar Term Credit Facility of $2.6 million and the 2017
First Lien Euro Term Credit Facility of €0.6 million (which amount may be reduced by the application of voluntary and mandatory
prepayments pursuant to the terms of the 2017 First Lien Credit Facility), with the remaining balance due June 16, 2023.
Notes to Condensed
Consolidated Financial Statements (continued)
The Company may also be required to make
certain mandatory prepayments of the 2017 First Lien Credit Facility out of excess cash flow and upon the receipt of proceeds
of asset sales and certain insurance proceeds (in each case, subject to certain minimum dollar thresholds and rights to reinvest
the proceeds as set forth in the 2017 First Lien Credit Facility).
The 2017 First Lien Credit Facility includes
a total net leverage financial maintenance covenant. Such covenant requires that, as of the last day of each fiscal quarter, the
total net leverage ratio of Canyon Companies S.à.r.l. and its restricted subsidiaries under the 2017 First Lien Credit
Facility cannot exceed the applicable ratio set forth in the 2017 First Lien Credit Facility for such quarter (subject to certain
rights to cure any failure to meet such ratio as set forth in the 2017 First Lien Credit Facility). The 2017 First Lien Credit
Facility is also subject to certain customary affirmative covenants and negative covenants. Under the 2017 First Lien Credit Facility,
the Company’s subsidiaries have restrictions on making cash dividends, subject to certain exceptions, including that the
subsidiaries are permitted to declare and pay cash dividends: (a) in any amount, so long as the total net leverage ratio under
the 2017 First Lien Credit Facility would not exceed 3.75 to 1.00 after making such payment; (b) in an amount per annum not greater
than 6.0% of (i) the market capitalization of the Company’s ordinary shares (based on the average closing price of its shares
during the 30 trading days preceding the declaration of such payment) plus (ii) the $305.2 million in proceeds we received in
the business combination with Capitol; (c) in an amount that does not exceed the sum of (i) $20.0 million, plus (ii) 50% of consolidated
net income of the Company’s subsidiaries from January 1, 2016 to the end of the most recent quarter plus (iii) certain other
amounts set forth in the definition of “Available Amount” in the Company’s 2017 First Lien Credit Facility (provided
that it may only include the amounts of consolidated net income described in clause (ii) if the Company’s total net leverage
ratio would not exceed 5.00 to 1.00 after making such payment); and (d) in an amount that does not exceed the total net proceeds
we receive from any public or private offerings of its ordinary shares or similar equity interests. As of March 31, 2018, the
Company was in compliance with these covenants.
The 2017 First Lien Credit Facility provides
that an event of default will occur upon specified change of control events. “Change in Control” is defined to include,
among other things, the failure by Cision Owner, its affiliates and certain other “Permitted Holders” to beneficially
own, directly or indirectly through one or more holding company parents of Cision, a majority of the voting equity of the borrower
thereunder.
Notes to Condensed
Consolidated Financial Statements (continued)
Future Minimum Principal Payments
Future minimum principal payments of debt
as of March 31, 2018 are as follows:
(in thousands)
|
|
|
|
Remainder of 2018
|
|
$
|
9,987
|
|
2019
|
|
|
13,349
|
|
2020
|
|
|
13,349
|
|
2021
|
|
|
13,349
|
|
2022
|
|
|
13,349
|
|
Thereafter
|
|
|
1,272,868
|
|
|
|
$
|
1,336,251
|
|
6. Stockholders’ Equity and
Equity-Based Compensation
Preferred Stock
The Company is authorized to issue 20,000,000
shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined
from time to time by the Company’s board of directors. As of March 31, 2018 and December 31, 2017, there are no shares of
preferred stock issued or outstanding.
Common Stock
The Company is authorized to issue 480,000,000
shares of common stock with a par value of $0.0001 per share.
Prior to the Merger, Cision Owner issued
equity units to employees for compensation purposes pursuant to the terms of its limited partnership agreement. Stock-based compensation
was recorded based on the grant date fair values of these awards and will continue to be recorded until full vesting of these
units has occurred. As a result of the consummation of the Merger, these outstanding units, held by Cision Owner, were converted
into common stock of Cision. Any forfeitures of unvested units will be redistributed to existing unit holders and not returned
to the Company. Equity awards to employees subsequent to the Merger will be made pursuant to the Company’s 2017 Omnibus
Incentive Plan described below.
Equity-based compensation is classified
in the condensed consolidated statements of operations and comprehensive income (loss) in a manner consistent with the statements
of operations’ classification of an employee’s salary and benefits as follows:
|
|
Three Months Ended March 31,
|
|
(in thousands)
|
|
2018
|
|
|
2017
|
|
Cost of revenue
|
|
$
|
136
|
|
|
$
|
70
|
|
Selling and marketing
|
|
|
88
|
|
|
|
66
|
|
Research and development
|
|
|
123
|
|
|
|
109
|
|
General and administrative
|
|
|
994
|
|
|
|
748
|
|
Total equity-based compensation expense
|
|
$
|
1,341
|
|
|
$
|
993
|
|
The 2017 Omnibus Incentive Plan
In June 2017, the Company adopted the
2017 Omnibus Incentive Plan (the “2017 Plan”). The 2017 Plan provides for grants of stock options, stock appreciation
rights, restricted stock, other stock-based awards and other cash-based awards. Directors, officers and other employees of the
Company and its subsidiaries, as well as others performing consulting or advisory services for the Company, are eligible for grants
under the 2017 Plan.
The 2017 Plan reserves up to 6,100,000
ordinary shares of the Company for issuance in accordance with the plan’s terms, subject to certain adjustments. The purpose
of the plan is to provide the Company’s officers, directors, employees and consultants who, by their position, ability and
diligence are able to make important contributions to the Company’s growth and profitability, with an incentive to assist
the Company in achieving its long-term corporate objectives, to attract and retain executive officers and other employees of outstanding
competence and to provide such persons with an opportunity to acquire an equity interest in the Company.
Notes to Condensed
Consolidated Financial Statements (continued)
The Company estimated the fair value of
employee stock options using the Black-Scholes option pricing model. The fair values of stock options granted under the 2017 Plan
were estimated using the following assumptions:
|
|
Three Months Ended March
31, 2018
|
|
Stock price volatility
|
|
|
50
|
%
|
Expected term (years)
|
|
|
6.3
|
|
Risk-free interest rate
|
|
|
2.3
|
%
|
Dividend yield
|
|
|
0
|
%
|
A summary of employee stock option activity
for the three months ended March 31, 2018 under the Company’s 2017 Plan is presented below:
|
|
Number of
Options
|
|
|
Weighted-
Average
Exercise
Price per
Share
|
|
|
Weighted-
Average
Contractual
Term
|
|
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding as of December 31, 2017
|
|
|
691,500
|
|
|
$
|
12.78
|
|
|
|
9.7
|
|
|
$
|
—
|
|
Granted
|
|
|
117,500
|
|
|
|
12.00
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited
|
|
|
(46,000
|
)
|
|
|
12.78
|
|
|
|
—
|
|
|
|
—
|
|
Options outstanding as of March 31, 2018
|
|
|
763,000
|
|
|
$
|
12.66
|
|
|
|
9.5
|
|
|
$
|
—
|
|
The aggregate intrinsic value is calculated
as the difference between the exercise price of the underlying stock option awards and the quoted closing price of the Company’s
common stock as of March 31, 2018.
A summary of restricted stock units activity
for the three months ended March 31, 2018 under the Company’s 2017 Plan is presented below:
|
|
Number of Shares
Underlying
Stock Awards
|
|
|
Weighted-Average
Grant Date
Fair Value
|
|
Restricted stock units outstanding as of December 31, 2017
|
|
|
34,945
|
|
|
$
|
12.40
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
(375
|
)
|
|
|
—
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
Restricted stock units outstanding as of March 31, 2018
|
|
|
34,570
|
|
|
$
|
12.40
|
|
As of March 31, 2018, the Company had
$4.2 million of unrecognized compensation expense related to the unvested portion of outstanding stock options and restricted
stock units expected to be recognized on a straight-line basis over the weighted-average remaining service period.
7. Net Loss Per share
Basic net loss per share is computed by
dividing net loss by the weighted-average number of shares of common stock outstanding during the period as retroactively adjusted
for the Merger (Note 1). For the three months ended March 31, 2018 and 2017, the Company has excluded the potential effect of
warrants to purchase shares of common stock totaling 800,349 shares, additional earn out shares, as described in Note 1, and the
dilutive effect of stock options and restricted stock awards, as described in Note 6, in the calculation of diluted loss per share,
as the effect would be anti-dilutive due to losses incurred. As a result, diluted loss per common share is the same as basic loss
per common share for all periods presented below.
|
|
Three Months Ended March
31,
|
|
(in thousands, except share and per
share data)
|
|
2018
|
|
|
2017
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(413
|
)
|
|
$
|
(22,993
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding – basic
and diluted
|
|
|
123,946,264
|
|
|
|
28,369,644
|
|
|
|
|
|
|
|
|
|
|
Net loss per share – basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.81
|
)
|
Notes to Condensed
Consolidated Financial Statements (continued)
8. Income Taxes
The provision for income taxes is based
on the current estimate of the annual effective tax rate adjusted to reflect the tax impact of items discrete to the fiscal period.
The Company expects its annual effective tax rate to be approximately 106.5% in 2018. The benefit for income taxes results in an
effective tax rate of 97.7% for the three months ended March 31, 2018. The difference between the annual effective rate and the
effective rate in the quarter accounts for subsidiaries with pre-tax losses for which no tax benefit can be recognized and subsidiaries
in jurisdictions with a zero percent tax rate. This rate includes the impact of permanent differences and an increase in the valuation
allowance expected to be necessary at the end of the year for certain disallowed interest in the United States and United Kingdom.
The United States permanent differences are primarily related to nondeductible transaction costs, nondeductible equity compensation
and income from Canadian subsidiaries that is taxable in the United States as a result of the Tax Cuts and Jobs Act of 2017 (the
“Tax Act”). The United Kingdom permanent differences are primarily related to nondeductible interest expense. The increase
in the valuation allowance in both countries is related to tax deferred interest expense that is not more likely than not realizable.
The effective tax rate for the three months
ended March 31, 2017 was a benefit of 23.5%. The benefit from income taxes for the quarter ended March 31, 2017 was primarily driven
by non-operating losses resulting from significant interest expense and the reversal of deferred tax liabilities relating to intangible
assets.
SAB 118 addresses situations where the
accounting is incomplete for certain income tax effects of the Tax Act upon issuance of a company’s financial statements
for the reporting period which include the enactment date. SAB 118 allows for a provisional amount to be recorded if it is a reasonable
estimate of the impact of the Tax Act. Additionally, SAB 118 allows for a measurement period to finalize the impacts of the Tax
Act, not to extend beyond one year from the date of enactment.
Estimates were used in determining the
amount of the Tax Act’s one-time transition tax on the Company’s Canadian subsidiaries’ accumulated, unremitted
earnings, the balance of deferred tax assets and liabilities subject to the reduction in the U.S. federal tax rate, and the required
change in valuation allowance required as a result of the new limitations on interest deductibility. Additional information (primarily
prior year tax returns and underlying historical data to calculate the cumulative earnings and profits adjustments) is required
to accurately complete the determination of the impact of the Tax Act on the aforementioned items.
In accordance with SAB 118, we recorded,
as a provisional estimate, a $11.9 million non-cash tax expense through income from continuing operations in the period ended
December 31, 2017. This amount is a reasonable estimate of the tax effects of the Tax Act on our financial statements. We will
continue to analyze the effects of the Tax Act on the financial statements and operations and record any additional impacts as
they are identified during the measurement period provided for in SAB 118. No adjustments have been made to the provisional amounts
as of March 31, 2018.
The Company’s estimates related
to liabilities for uncertain tax positions require it to make judgments regarding the sustainability of each uncertain tax position
based on its technical merits. If it determines it is more likely than not that a tax position will be sustained based on its
technical merits, the Company records the impact of the position in its condensed consolidated financial statements at the largest
amount that is greater than fifty percent likely of being realized upon ultimate settlement. The estimates are updated at each
reporting date based on the facts, circumstances and information available. As of March 31, 2018, the Company believes the reasonably
possible total amount of unrecognized tax benefits that could increase or decrease in the next twelve months as a result of various
statute expirations, audit closures, and/or tax settlements would not be material to its condensed consolidated financial statements.
9. Commitments and Contingencies
The Company has various non-cancelable
operating leases, primarily related to office real estate, that expire through 2035 and generally contain renewal options for
up to five years. Lease incentives, payment escalations and rent holidays specified in the lease agreements are accrued or deferred
as appropriate as a component of rent expense which is recognized on a straight-line basis over the terms of occupancy. As of
March 31, 2018 and December 31, 2017, lease related liabilities of $13.4 million and $10.2 million, respectively, is included
in other liabilities.
Notes to Condensed
Consolidated Financial Statements (continued)
Rent expense was $4.6 million and $3.2
million for the three months ended March 31, 2018 and 2017, respectively.
Litigation and Claims
The Company from time to time is subject
to lawsuits, investigations and claims arising out of the ordinary course of business, including those related to commercial transactions,
contracts, government regulation, and employment matters. In the opinion of management, based on all known facts, all such matters
are either without merit or are of such kind, or involve such amounts that would not have a material effect on the financial position
or results of operations of the Company if disposed of unfavorably.
10. Geographic Information
The following table lists revenue for
the three months ended March 31, 2018 and 2017 by geographic region:
|
|
Three Months Ended March
31,
|
|
(in thousands)
|
|
2018
|
|
|
2017
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Americas – U.S.
|
|
$
|
106,399
|
|
|
$
|
99,860
|
|
Rest of Americas
|
|
|
15,365
|
|
|
|
11,928
|
|
EMEA
|
|
|
50,576
|
|
|
|
28,788
|
|
APAC
|
|
|
6,953
|
|
|
|
5,242
|
|
|
|
$
|
179,293
|
|
|
$
|
145,818
|
|
The following table lists long-lived assets,
net of amortization, as of March 31, 2018 and December 31, 2017 by geographic region:
(in thousands)
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
Long-lived assets, net
|
|
|
|
|
|
|
|
|
Americas – U.S.
|
|
$
|
1,151,968
|
|
|
$
|
1,141,210
|
|
Rest of Americas
|
|
|
141,048
|
|
|
|
145,837
|
|
EMEA
|
|
|
396,076
|
|
|
|
336,937
|
|
APAC
|
|
|
32,652
|
|
|
|
29,816
|
|
|
|
$
|
1,721,744
|
|
|
$
|
1,653,800
|
|
11. Subsequent Event
In April 2018, the Company reduced its
2017 First Lien Dollar Credit Facility by making a $30.0 million voluntary prepayment pursuant to the terms of our 2017 First Lien
Credit Facility.
CISION LTD. AND ITS SUBSIDIARIES