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Summary Quarterly Pro Forma Non-GAAP Financial Information
Basis of Presentation Description
The reported financial statements and schedules for Sizmek reflect the combined historical results of operations for Digital Generation, Inc.s (DG) online business conducted through its online subsidiaries and an allocable portion of certain DG corporate expenses. These combined financial statements include expense allocations for (1) certain corporate functions historically provided by DG, including, but not limited to, finance, audit, legal, information technology, human resources, communications, compliance, and shared services; and (2) share-based compensation. The allocations may not, however, reflect the full expense Sizmek would have incurred as an independent, publicly traded company for the periods presented. We believe Sizmek has benefited from sharing the corporate cost structure of DG rather than incurring such costs ourselves on a stand-alone basis. For 2013, DG incurred consolidated corporate overhead of $24.2 million. The amount of such 2013 corporate overhead that was allocated to Sizmek in the reported financial statements was $9.1 million; in accordance with the allocation principles for preparing carve out financial statements. As a result, these carve out financial statements include corporate overhead expenses which represent approximately 40% of DGs total corporate overhead for 2013. After the spin-off, we expect about 70% to 75% of DGs total corporate overhead will shift to Sizmek, rather than the 40% that has been allocated in these financial statements. Accordingly, it is expected our operating expenses will increase on a stand-alone basis by approximately $8 million to $9 million. Actual costs that may have been incurred if we had been a stand-alone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. For comparison purposes, we have included a schedule reconciling amounts reflected on a combined basis with pro forma amounts which include the increased corporate overhead expenses expected on a stand-alone basis.
The following information was filed by Sizmek Inc. (SZMK) on Friday, February 21, 2014 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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