Business Context and Reporting Period
This Form 8-K was filed by comScore, Inc. on September 11, 2017, reporting events occurring on September 8 and September 10, 2017. The filing addresses significant governance changes, executive departures, updates on a pending financial restatement, and proposed settlements for pending litigation.
Key Financial Metrics and Material Changes
The filing does not report standard operating metrics such as revenue, profit, or cash flow for a specific period. Instead, it details material financial obligations and costs associated with governance and legal matters:
- Interim CFO Compensation: The Company will pay CrossCountry Consulting LLC $60,000 per month for the services of Interim CFO David Kay.
- Restatement Costs: The Company paid CrossCountry approximately $13.2 million in fees during 2016 and the first eight months of 2017 for accounting advisory and audit preparation services.
- Executive Severance: Resigning CFO David Chemerow is entitled to severance payments totaling approximately $650,000 over 17 months, plus continued vesting of restricted stock units and COBRA coverage.
- Litigation Settlements:
- Securities Class Action: Proposed settlement involves $27.2 million in cash (fully funded by insurers) and $82.8 million in comScore common stock.
- Shareholder Derivative Actions: Proposed settlement includes a $10 million cash payment to the Company (funded by insurers) and a contribution of $8 million in comScore common stock for attorneys' fees.
- Rentrak Litigation: Company contribution of $1.66 million toward a $19 million total settlement.
Guidance, Outlook, and Management Commentary
Restatement Timeline: The Company announced that the restatement process is more complex and time-consuming than anticipated due to the volume of small-dollar customer contracts. The Company now intends to file restated financial information for 2013 and 2014, along with audited statements for 2015, 2016, and 2017, in a consolidated filing. The earliest expected filing date is March 2018.
Litigation Status: The Company has reached proposed settlement terms for several class action and derivative proceedings, subject to court approval. The Company denies all claims of wrongdoing or liability in the securities class action settlement.
Risks and Contingencies: The filing highlights risks related to the timing of the restatement, the costs of audits and litigation, and the diversion of management attention. A fairness hearing for the Rentrak settlement is scheduled for September 12, 2017.
Important Facts for Investor Verification
- Verification of the March 2018 target date for the consolidated filing of restated and audited financial statements.
- Confirmation of court approval for the proposed $110 million (cash and stock) securities class action settlement.
- Assessment of the impact of the $13.2 million already paid to CrossCountry and ongoing monthly fees on liquidity.
- Confirmation of the reduction of the Board of Directors from twelve to five members and the appointment of Susan Riley as Chair.
- Monitoring of the fairness hearing for the Rentrak litigation settlement scheduled for September 12, 2017.