true-20201130
0001327318false00013273182020-11-302020-11-30



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported)
 
November 30, 2020
TrueCar, Inc.
(Exact name of registrant as specified in its charter)

Delaware 001-36449 04-3807511
(State or other jurisdiction of
incorporation)
 (Commission File Number) (IRS Employer
Identification No.)

120 Broadway, Suite 200
Santa Monica, California 90401
(Address of principal executive offices, including zip code)
 
(800) 200-2000
(Registrant’s telephone number, including area code)
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareTRUEThe Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
    Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.







Item 2.01    Completion of Acquisition or Disposition of Assets.

    On November 30, 2020, TrueCar, Inc., a Delaware corporation (the “Company”), completed the previously-announced sale (the “Divestiture”) of all of the outstanding equity interests of ALG, LLC, a Delaware limited liability company, successor by conversion to ALG, Inc., a Delaware corporation, and wholly-owned subsidiary of the Company (“ALG”), to J.D. Power, a Delaware corporation (the “Buyer”), for $112.5 million in cash (subject to customary working capital and other adjustments) pursuant to the Membership Interest Purchase Agreement, dated as of July 31, 2020 (the “Purchase Agreement”), by and among the Company, ALG and the Buyer. As previously disclosed, the Purchase Agreement provides for the Buyer to pay the Company (i) a potential cash earnout of up to $7.5 million based upon ALG’s achievement of certain revenue metrics in 2020 and (ii) a potential cash earnout of up to $15 million based upon ALG’s achievement of certain revenue metrics in 2022.

    There is no material relationship that is required to be disclosed in this Current Report on Form 8-K pursuant to Item 2.01(c) of Form 8-K.

    The foregoing description of the Divestiture does not purport to be complete and is qualified in its entirety by reference to the complete text of the Purchase Agreement, a copy of which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2020.

Item 7.01    Regulation FD Disclosure.
 
    Also on November 30, 2020, the Company issued a press release announcing the completion of the Divestiture. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

    The information in this Item 7.01 and in Item 9.01 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01    Financial Statements and Exhibits.

(b)    Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial statements and accompanying notes are filed herewith to give effect to the Divestiture and are incorporated by reference into this Item 9.01:

Unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017.
Unaudited pro forma condensed consolidated balance sheet as of September 30, 2020.
Notes to the unaudited pro forma condensed consolidated financial statements.

(d)    Exhibits.
99.1    Press Release issued by TrueCar, Inc., dated November 30, 2020.
99.2    Unaudited Pro Forma Condensed Consolidated Financial Statements.





SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 TRUECAR, INC.
  
By:/s/ Jeff Swart
 Jeff Swart
 EVP, General Counsel & Secretary
 Date:  December 3, 2020


Document


Exhibit 99.1

https://cdn.kscope.io/b6417e6f749cdd45b026982a2dcdac29-image1.jpg


TrueCar Closes Sale of ALG Subsidiary to J.D. Power

SANTA MONICA, Calif., November 30, 2020 – TrueCar, Inc. (NASDAQ: TRUE), the most efficient and transparent online destination to find a car, announced today that it closed the previously announced sale of its ALG subsidiary to J.D. Power.

The total consideration of $135 million includes an upfront cash payment of $112.5 million received at closing, and total deferred payments of up to $22.5 million based on certain financial results. This transaction enriches TrueCar’s cash balance, which as of today exceeds $270 million. The company has no outstanding debt on its balance sheet.

TrueCar will use proceeds from the ALG divestiture to support its share repurchase program of up to $75 million, which is already underway, and to maintain strategic flexibility.

“We are very pleased to reach today’s milestone, which reinforces our commitment to creating shareholder value. With over $270 million of cash on the balance sheet and no outstanding debt, we are in a strong financial position to accelerate toward our vision of building the most flexible and convenient digital car buying marketplace,” said Mike Darrow, President & CEO of TrueCar.

Goldman Sachs & Co. LLC. served as exclusive financial advisor to TrueCar in connection with the transaction and Cooley LLP served as legal counsel.

About TrueCar

TrueCar is a leading automotive digital marketplace that enables car buyers to connect to our nationwide network of Certified Dealers. We are building the industry's most personalized and efficient car buying experience as we seek to bring more of the purchasing process online. Consumers who visit our marketplace will find a suite of vehicle discovery tools, price ratings and market context on new and used cars – all with a clear view of what's a great deal. When they are ready, TrueCar will enable them to connect with a local Certified Dealer who shares in our belief that truth, transparency and fairness are the foundation of a great car buying experience. As part of our marketplace, TrueCar powers car-buying programs for over 250 leading brands, including AARP, Sam’s Club, and American Express. Nearly half of all new-car buyers engage with TrueCar powered sites, where they buy smarter and drive happier. TrueCar is headquartered in Santa Monica, California, with offices in Austin, Texas and Boston, Massachusetts.

For more information, please visit www.truecar.com, and follow us on Facebook or Twitter. TrueCar media line: +1-844-469-8442 (US toll-free) Email: pr@truecar.com

TrueCar Contacts:
Danny Vivier
Vice President, Investor Relations & Strategic Finance
investors@truecar.com
(760) 505-9654

Shadee Malekafzali
Senior Director, Public Relations
shadee@truecar.com
(925) 408-0394


Document

Exhibit 99.2

TRUECAR, INC. 
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 


Overview

On November 30, 2020, TrueCar, Inc., a Delaware corporation (the “Company”), completed the previously-announced sale (the “Divestiture”) of all of the outstanding equity interests of ALG, LLC, a Delaware limited liability company, successor by conversion to ALG, Inc., a Delaware corporation, and wholly-owned subsidiary of the Company (“ALG”), to J.D. Power, a Delaware corporation (the “Buyer”), for $112.5 million in cash (subject to customary working capital and other adjustments) pursuant to the Membership Interest Purchase Agreement, dated as of July 31, 2020 (the “Purchase Agreement”), by and among the Company, ALG and the Buyer. Additionally, the Purchase Agreement provides for the Buyer to pay the Company (i) a potential cash earnout of up to $7.5 million based upon ALG’s achievement of certain revenue metrics in 2020 and (ii) a potential cash earnout of up to $15 million based upon ALG’s achievement of certain revenue metrics in 2022.

Basis of Presentation

The unaudited pro forma condensed consolidated financial statements are based on currently available information and assumptions at the time of filing. The historical financial information included in the unaudited pro forma condensed consolidated balance sheet as of September 30, 2020 is derived from and should be read in conjunction with the Company’s unaudited financial statements in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020, as filed with the Securities and Exchange Commission (the “SEC”) on November 6, 2020. The historical financial information included in the unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 are derived from and should be read in conjunction with the Company’s audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 28, 2020. An unaudited pro forma condensed consolidated statement of operations for the nine months ended September 30, 2020 is omitted as no pro forma adjustments are applicable and ALG was previously classified as discontinued operations in our condensed consolidated statements of comprehensive income (loss) included in our Form 10-Q filed on November 6, 2020.

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2020 gives effect to the sale of ALG as if it occurred on September 30, 2020. The unaudited pro forma condensed consolidated statements of operations give effect to the sale of ALG as if it occurred on January 1, 2017, the beginning of the earliest period presented. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements and do not include any potential earnout payments since they are contingent based upon the achievement of certain future ALG revenue metrics in 2020 and 2022.

The unaudited pro forma adjustments are based on currently available information and assumptions that the Company’s management believes are (a) directly attributable to the sale; (b) are factually supportable; and (c) with respect to the statements of operations, have continuing impact on the consolidated results. Actual adjustments, however, may differ materially from the information presented. The unaudited pro forma adjustments may differ from the amounts that will be calculated to report the Company’s discontinued operations in the Company’s future filings. Pro forma adjustments do not include allocations of corporate costs, as those are not directly attributable to the Divestiture. The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what the Company’s results of operations or balance sheet would have been had the sale of ALG occurred on the dates indicated. The unaudited pro forma condensed consolidated financial information also should not be considered representative of the Company’s future results of operations or financial position.


1


TRUECAR, INC. 
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET 
(In thousands)


September 30, 2020
Pro Forma
 HistoricalAdjustmentsPro Forma
Assets  
Current assets  
Cash and cash equivalents$178,699 $113,114 (a)$291,813 
Accounts receivable, net40,723 — 40,723 
Prepaid expenses 7,197 — 7,197 
Other current assets5,904 — 5,904 
Current assets of discontinued operations27,280 (27,280)(b)— 
Total current assets259,803 85,834 345,637 
Property and equipment, net23,789 — 23,789 
Operating lease right-of-use assets31,752 — 31,752 
Goodwill51,205 — 51,205 
Intangible assets, net7,200 — 7,200 
Equity method investment20,433 — 20,433 
Other assets3,367 52 (d)3,419 
Total assets$397,549 $85,886 $483,435 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable $13,140 $— $13,140 
Accrued employee expenses5,117 — 5,117 
Operating lease liabilities, current4,625 — 4,625 
Accrued expenses and other current liabilities16,196 3,200 (d)20,618 
1,222 (c)
Current liabilities of discontinued operations754 (754)(b)— 
Total current liabilities39,832 3,668 43,500 
Deferred tax liabilities442 (442)(d)— 
Operating lease liabilities, net of current portion33,312 — 33,312 
Other liabilities2,060 — 2,060 
Total liabilities75,646 3,226 78,872 
Stockholders’ Equity  
Common stock11 — 11 
Additional paid-in capital764,276 — 764,276 
Accumulated deficit(442,384)82,660 (e)(359,724)
Total stockholders’ equity321,903 82,660 404,563 
Total liabilities and stockholders’ equity$397,549 $85,886 $483,435 



See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
2


TRUECAR, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)


Year Ended December 31, 2019
Pro Forma
HistoricalAdjustmentsPro Forma
Revenues$353,880 $(18,834)(b)$335,046 
Costs and operating expenses: 
Cost of revenue33,427 (5,598)(b)27,829 
Sales and marketing229,342 (2,365)(b)226,977 
Technology and development57,188 (1,076)(b)56,112 
General and administrative65,148 (829)(b)64,319 
Depreciation and amortization25,591 (4,926)(b)20,665 
Total costs and operating expenses410,696 (14,794)395,902 
Loss from operations(56,816)(4,040)(60,856)
Interest income3,495 (1,014)(b)2,481 
Loss from equity method investment(1,280)— (1,280)
Loss before income taxes(54,601)(5,054)(59,655)
Provision for income taxes289 (205)(f)84 
Loss from continuing operations$(54,890)$(4,849)$(59,739)
Loss from continuing operations per share:
Basic and diluted$(0.52)$(0.56)
Weighted average common shares outstanding, basic and diluted105,805 105,805 


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
3


TRUECAR, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)



Year Ended December 31, 2018
Pro Forma
HistoricalAdjustmentsPro Forma
Revenues$353,571 $(18,482)(b)$335,089 
Costs and operating expenses: 
Cost of revenue31,154 (5,018)(b)26,136 
Sales and marketing213,415 (2,207)(b)211,208 
Technology and development61,348 (1,097)(b)60,251 
General and administrative54,140 (1,379)(b)52,761 
Depreciation and amortization22,677 (4,881)(b)17,796 
Total costs and operating expenses382,734 (14,582)368,152 
Loss from operations(29,163)(3,900)(33,063)
Interest income3,314 (525)(b)2,789 
Interest expense(2,649)— (2,649)
Loss before income taxes(28,498)(4,425)(32,923)
Benefit from income taxes(177)(130)(f)(307)
Loss from continuing operations$(28,321)$(4,295)$(32,616)
Loss from continuing operations per share:
Basic and diluted$(0.28)$(0.32)
Weighted average common shares outstanding, basic and diluted102,149 102,149 


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
4


TRUECAR, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)



Year Ended December 31, 2017
Pro Forma
HistoricalAdjustmentsPro Forma
Revenues$323,149 $(18,822)(b)$304,327 
Costs and operating expenses: 
Cost of revenue28,227 (4,601)(b)23,626 
Sales and marketing185,397 (1,815)(b)183,582 
Technology and development59,070 (1,274)(b)57,796 
General and administrative61,646 (1,968)(b)59,678 
Depreciation and amortization22,472 (4,812)(b)17,660 
Total costs and operating expenses356,812 (14,470)342,342 
Loss from operations(33,663)(4,352)(38,015)
Interest income1,260 (116)(b)1,144 
Interest expense(2,610)— (2,610)
Loss before income taxes(35,013)(4,468)(39,481)
Benefit from income taxes(2,164)(486)(f)(2,650)
Loss from continuing operations$(32,849)$(3,982)$(36,831)
Loss from continuing operations per share:
Basic and diluted$(0.35)$(0.39)
Weighted average common shares outstanding, basic and diluted94,865 94,865 


See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
5



TRUECAR, INC. 
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1.    Basis of Presentation

The unaudited pro forma condensed consolidated financial statements give effect to the pro forma adjustments necessary to reflect the Divestiture as if the transaction had occurred on September 30, 2020 in the unaudited pro forma balance sheet as of September 30, 2020 and on January 1, 2017 in the unaudited pro forma statements of operations for the years ended December 31, 2019, 2018 and 2017.
2.    Pro Forma Adjustments

The unaudited pro forma condensed consolidated financial statements include the following adjustments:

(a)Represents the increase in cash and cash equivalents resulting from the pro forma consideration received of $113.1 million. No adjustment has been made to the sale proceeds for any potential post-closing adjustments or potential receipt of cash earnouts (up to $22.5 million) since they are contingent based upon the achievement of certain future ALG revenue metrics in 2020 and 2022.
(b)Reflects the historical assets, liabilities and operating results related to the Divestiture.
(c)Represents certain accrued transaction costs related to the Divestiture.
(d)Represents the estimated tax effects arising from the Divestiture; adjustments include estimated taxes payable of $3.2 million, calculated based on information available as of September 30, 2020, for the gain recognized on the Divestiture.
(e)Reflects the estimated after-tax effect on accumulated deficit from the gain on the Divestiture. No adjustment has been made for any potential post-closing adjustments or potential earnouts (up to $22.5 million) since they are contingent based upon the achievement of certain future ALG revenue metrics in 2020 and 2022.
(f)Represents the estimated income tax impact of the pro forma adjustments. The tax effect of the pro forma adjustments was calculated using the historical statutory rates in effect for the periods presented.
6