LifeLock 2014 Annual Report Download

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Please find the complete 2014 LifeLock annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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Table of contents

  • Page 1
    ...as defined in Rule 12b-2 of the Act). Yes ¨ Smaller reporting company No ý As of June 30, 2014, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant's voting common stock held by non-affiliates of the registrant was...

  • Page 2
    ...Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accountant Fees and Services...

  • Page 3
    ... our general expectations and market position, market opportunity, and market size, is based on information from various sources, on assumptions that we have made that are based on those data and other similar sources, and on our knowledge of the markets for our services. These data involve a number...

  • Page 4
    ... for consumers and consumer risk management services for enterprises. We protect our members by monitoring identity-related events, such as new account openings and credit-related applications. If we detect that a member's personally identifiable information is being used, we offer notifications and...

  • Page 5
    ... monitoring services were originally developed to help consumers monitor their credit ratings by tracking changes to their credit profiles, but as identity theft became a larger problem for consumers, the credit bureaus began marketing these services as identity theft protection. However, the credit...

  • Page 6
    ... trade publications, and U.S. government studies. Our Solution We are a leading provider of proactive identity theft protection services for consumers and consumer risk management services for enterprises. The foundation of our identity theft protection services is the LifeLock ecosystem that...

  • Page 7
    ... and elderly care, travel, stolen purse(wallet, and replacement of documents. In our enterprise business, we provide consumer risk management services, including delivering our on-demand identity risk, identity-authentication, and credit information about consumers to our enterprise customers in...

  • Page 8
    ... identity theft protection services for consumers and consumer risk management services for enterprises. The breadth and depth of our data and our predictive analytics coupled with the confirmatory alert feedback from our members provides our enterprise customers with a more effective risk...

  • Page 9
    ... LifeLock ecosystem, which enables us to offer what we believe to be the most proactive and comprehensive approach to identity theft protection and consumer risk management services available. In addition to our extensive network of members, enterprise customers, and thirdparty fulfillment partners...

  • Page 10
    ...the identity theft protection and remediation services that we currently offer to our members. LifeLock Standard Feature LifeLock Identity Alert System Lost Wallet Protection Address Change Verification Reduced Pre-Approved Credit Card Offers Black Market Website Surveillance Live Member Support...

  • Page 11
    ..., insurance, and loyalty cards. The LifeLock Wallet mobile application also offers our members access to our identity theft protection services. As part of our consumer services, we offer 24x7x365 member service support. In addition, in the event that an identity theft has actually occurred, we can...

  • Page 12
    ... own cost, create independent websites and marketing materials to drive prospective members to our consumer service offerings. Data breach . In this channel, enterprises that have experienced a data breach pay us to provide our services free of charge to the victims of the data breach. Enterprise...

  • Page 13
    ...addressable market concerned about identity theft; and our ability to offer additional services to protect consumers and enterprises against identity theft and identity fraud. Intellectual Property We protect our intellectual property rights primarily through a combination of foreign, federal, state...

  • Page 14
    ... information. At the same time, we also entered into companion orders with 35 states' attorneys general that impose on us similar injunctive provisions as the FTC Order relating to our advertising and marketing of our identity theft protection services. In addition, the FTC Order imposes on us and...

  • Page 15
    ... agencies result in federal and state inquiries and investigations. Employees As of December 31, 2014, we employed 669 people. At that date, we had 527 employees in our consumer business, of which 224 were engaged in member service and support, 90 in products and technology, 100 in marketing...

  • Page 16
    .... Our principal executive offices are located at 60 East Rio Salado Parkway, Suite 400, Tempe, Arizona 85281, and our telephone number is (480) 682-5100. Our website address is www.lifelock.com. The information on our website is not incorporated by reference into this Annual Report on Form 10-K or...

  • Page 17
    .... Several recent, highly publicized data security breaches at other companies have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems or those of our strategic partners or enterprise customers. Security technologies and information, including...

  • Page 18
    ... the development, promotion, and sale of services, to deliver competitive services at lower prices or for free, and to introduce new solutions and respond to market developments and customer requirements more quickly than we can. In addition, some of our competitors may have data that we do not have...

  • Page 19
    ... of service offerings, including designing and introducing new services; brand recognition; technology; effectiveness and cost-efficiency of customer acquisition; customer satisfaction; price; quality and reliability of customer service; and accurate identification of appropriate target markets for...

  • Page 20
    ... in recent years and is projected to continue to increase. The services we develop for users of these alternative devices may not be attractive for users. In December 2013, in connection with our acquisition of Lemon, we launched the LifeLock Wallet mobile application. On May 16, 2014, we announced...

  • Page 21
    ... of our subscription revenue model and the efficacy and attractiveness of the LifeLock ecosystem by decreasing the amount of data being added to our data repositories. Ue depend on strategic partners in our consumer business, and our inability to maintain our existing and secure new relationships...

  • Page 22
    ...and other laws governing credit information, consumer privacy and marketing, servicing of consumer products and services, and insurance products and services. In addition, our business is subject to the FTC Order, as well as the companion orders with 35 states' attorneys general that we entered into...

  • Page 23
    ... offer consumer financial products and services. The CFPB has broad regulatory, supervisory, and enforcement powers and may exercise authority with respect to our services, or the marketing and servicing of those services, by overseeing our financial institution or credit reporting agency customers...

  • Page 24
    ... information. At the same time, we also entered into companion orders with 35 states' attorneys general that impose on us similar injunctive provisions as the FTC Order relating to our advertising and marketing of our identity theft protection services. In addition, the FTC Order imposes on us and...

  • Page 25
    ... in Item 3 of this Annual Report on Form 10-K, we are presently engaged in ongoing discussions with the FTC Staff regarding the FTC's inquiry into our compliance with the FTC Order, and we are presently subject to various securities and consumer class action complaints. We cannot predict the outcome...

  • Page 26
    ... of enterprise customers. For example, in 2014, 2013, and 2012, sales derived through ID Analytics' top ten customers accounted for approximately 71%, 65%, and 70%, respectively, of ID Analytics' revenue for those periods. Some of these customers also provide services that compete with our consumer...

  • Page 27
    ...the event that our actual results differ from our forecasts or we adjust our forecasts in future periods, our operating results and financial position could be materially and adversely affected and our stock price could decline. These risks are increased by our acquisitions of ID Analytics and Lemon...

  • Page 28
    ... on December 31, 2014. In addition, our acquisitions of ID Analytics in March 2012 and Lemon in December 2013 increased our revenue, facilities, and number of employees, and we will likely hire additional employees in the future. We must successfully manage our growth to achieve our objectives...

  • Page 29
    ... difficulties, which could adversely affect our growth rate and operating results. Our experience in acquiring other businesses is limited. Our only acquisitions to date have been the acquisition of ID Analytics in March 2012 and the acquisition of Lemon in December 2013. We may not realize all of...

  • Page 30
    ... acquired company; potential post-closing claims against or litigation with sellers of the acquired company; challenges inherent in effectively managing an increased number of employees in diverse locations; failure of acquired businesses to achieve expected results; the risk of impairment charges...

  • Page 31
    ... business, we must have sufficient working capital to continue to make significant investments in our service offerings, advertising, technology, and other activities. As a result, in addition to the revenue we generate from our business, we may need additional equity or debt financing to provide...

  • Page 32
    ... to release the source code of our proprietary software to the public. This would allow our competitors to create similar services and platforms with lower development effort and time and ultimately could reduce or eliminate our ability to commercialize or profit from our services. Although we have...

  • Page 33
    ... we entered into a settlement agreement with the New York State Department of Taxation and Finances regarding our historic and ongoing tax collection obligations. We currently collect and remit sales tax in several states related to the sale of our consumer services. Additional states or one or more...

  • Page 34
    ... with us. In addition, changes in billing systems in the future could increase the per transaction cost that we pay. Any increases in our credit card fees could adversely affect our operating results, particularly if we elect not to raise the retail list price for our consumer services to offset the...

  • Page 35
    ...and operating results. In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations...

  • Page 36
    ... services or new pricing policies by us or by our competitors; regulatory or political developments; litigation and governmental or regulatory investigations; acquisitions or strategic alliances by us or by our competitors; and general economic, political, and financial market conditions or events...

  • Page 37
    ... sales and issuances of our common stock or rights to purchase common stock by us, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall. We intend to issue additional securities...

  • Page 38
    ..., operational, and compliance policies, including with regard to certain of our services, our data security program, and our and Mr. Davis' compliance with the FTC Order. The Consolidated Amended Complaint alleged that, as a result, certain public statements made by Ms. Schneider and Messrs. Davis...

  • Page 39
    ... our business, operational, and compliance policies, including with regard to certain of our services, our data security program, and our and Mr. Davis' compliance with the FTC Order. The Second Consolidated Amended Complaint alleges that, as a result, certain public statements made by Messrs. Davis...

  • Page 40
    ... seek certification of a nationwide class of consumers who are or were subscribers of our identity theft protection services since January 19, 2014, compensatory damages, and attorneys' fees and costs. We were served with the complaint on January 22, 2015. An answer or other responsive pleading is...

  • Page 41
    ... 2012. Prior to that time, there was no public market for our common stock. The following table sets forth, for the periods indicated, the high and low sales price of our common stock as quoted on The New York Stock Exchange. High Low Fiscal Year Ended December 31 2014: First Quarter Second Quarter...

  • Page 42
    ... 31, 2014 ITEM 6. SELECTED FINTNCITL DTTT Total Number of Shares Purchased - - 3,429 Tverage Price Paid Per Share - - 17.09 Total Number of Shares Purchased as Part of Publicly Tnnounced Plans or Programs - - - $ The following selected financial data should be read together with "Management...

  • Page 43
    ...2013 and 2012 only include the results for Lemon and ID Analytics since the respective dates of acquisition. Year Ended December 31, 2014 Consolidated Statements of Operations Data: Revenue: Consumer revenue Enterprise revenue Total revenue Cost of services (1) Gross profit Costs and expenses: Sales...

  • Page 44
    ... and Operational Data: Cumulative ending members (1) Gross new members (2) Member retention rate (3) Average cost of acquisition per member (4) Monthly average revenue per member (5) Enterprise transactions (6) Adjusted net income (loss) (7) Adjusted EBITDA (8) Free cash flow (9) 2013 2012 2011 2010...

  • Page 45
    ...-Key Metrics-Key Operating Metrics-Monthly average revenue per member." We calculate enterprise transactions as the total number of transactions processed for either an identity risk or credit risk score during the relevant period. For more information, see "Management's Discussion and Analysis of...

  • Page 46
    ... resulting from changes in our deferred tax assets, and acquisition related expenses. For the year ended December 31, 2014, we have also excluded the impact of the legal reserve for a possible settlement with the FTC and the legal settlement in our favor resulting from indemnification claims we...

  • Page 47
    ...made with respect to our Lemon acquisition. For the year ended December 31, 2012, we have also excluded favorable legal settlements related to insurance claims for legal costs that were incurred in 2008 and 2009. Historically, in calculating adjusted EBITDA, we also excluded changes in fair value of...

  • Page 48
    ... of favorable legal settlements related to insurance claims for legal costs that were incurred in 2008 and 2009. For the year ended December 31, 2010, we have added to net cash used in operating activities the $11.0 million for a consumer redress payment pursuant to the FTC Order. We use free cash...

  • Page 49
    ... in this Annual Report on uorm 10-K. Overview We are a leading provider of proactive identity theft protection services for consumers and consumer risk management services for enterprises. We protect our members by monitoring identity-related events, such as new account openings and credit-related...

  • Page 50
    ...cards. The LifeLock Wallet mobile application also offers our members access to our identity theft protection services. We derive the substantial majority of our revenue from member subscription fees. We also derive revenue from transaction fees from our enterprise customers. At the end of July 2014...

  • Page 51
    ...,039 244,885 Cumulative ending members Gross new members Member retention rate Average cost of acquisition per member Monthly average revenue per member Enterprise transactions $ $ Cumulative ending members. We calculate cumulative ending members as the total number of members at the end of the...

  • Page 52
    ... of our new suite of products in July 2014, and increased awareness of data breaches and identity theft. Member retention rate. We define member retention rate as the percentage of members on the last day of the prior year who remain members on the last day of the current year, or for quarterly...

  • Page 53
    ... rate was driven, in part, by the cancellation of breach members who enrolled in previous years and the impact of an increased number of member credit and debit cards that were replaced as a result of large data breaches during the fourth quarter of 2013. Average cost of acquisition per member...

  • Page 54
    ... premium service offerings, which accounted for more than 40% of our gross new members for the year ended December 31, 2014. Enterprise transactions. We calculate enterprise transactions as the total number of enterprise transactions processed for either an identity risk or credit risk score during...

  • Page 55
    ... Financial Data of this Annual Report on Form 10-K. Factors Tffecting Our Performance Customer acquisition costs. We expect to continue to make significant expenditures to grow our member and enterprise customer bases. Our average cost of acquisition per member and the number of new members we...

  • Page 56
    ... members subscribe to our consumer services on a monthly or annual, automatically renewing basis and pay us the full subscription fee at the beginning of each subscription period, in most cases by authorizing us to directly charge their credit or debit cards. In some cases, we offer members a free...

  • Page 57
    ... because we offer wholesale pricing to our strategic partners. In prior periods, our gross margin has also been negatively impacted by sales taxes we paid on behalf of our members and settlements with state tax authorities. Conversely, operating efficiencies in our member services organization can...

  • Page 58
    ... 31, 2013. The increase in members and monthly average revenue per member resulted from the continued success of our premium service offerings, including the release of our new LifeLock Advantage and LifeLock Ultimate Plus services at the end of July 2014, and our advertising and marketing campaigns...

  • Page 59
    ...other enterprise customers. In addition, we acquired ID Analytics on March 14, 2012 and, accordingly, our enterprise revenue for the year ended December 31, 2012 only includes the revenue contributed by ID Analytics since that date. Cost of Services and Gross Profit Year Ended December 31, 2014 Cost...

  • Page 60
    ..., and sales and marketing expenses from ID Analytics, primarily consisting of personnel costs, since our March 2012 acquisition. The increase in our sales and marketing expenses reflected our investment to drive new membership growth, our continued advertising of our LifeLock Ultimate service, and...

  • Page 61
    ... 2012 to 2013 % Change 173.3% Income tax expense for the year ended December 31, 2014 was $3.4 million compared with income tax benefit of $37.5 million for the year ended December 31, 2013. Our effective tax rate for the year ended December 31, 2014 differed from the statutory federal and state...

  • Page 62
    ... growth. We also invested a net $49.4 million of cash in marketable securities. For the year ended December 31, 2012, we used $157.4 million of cash to acquire ID Analytics and $7.5 million of cash to acquire property and equipment, primarily related to the establishment of an additional data center...

  • Page 63
    .... Borrowings under the Senior Credit Facility bear interest at a per annum rate equal to, at our option, either (a) a base rate equal to the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America...

  • Page 64
    ... a new credit agreement. Borrowings under the prior senior credit facility carried a per annum interest rate equal to, at our option, either (a) a base rate equal to the highest of (i) the Federal Funds Rate, plus .50%, (ii) the rate of interest in effect for such day as publicly announced from time...

  • Page 65
    ... of the subscription period. We also provide consumer services for which the primary customer is an enterprise purchasing identity theft protection services on behalf of its employees or customers. In such cases, we defer revenue for each member until the member's account has been activated. We then...

  • Page 66
    ... assets. We review our acquired-intangible assets annually in the fourth quarter of our fiscal year and whenever events and changes in circumstances indicate the carrying amount of the acquired-intangible assets may not be recoverable. If such events or changes in circumstances occur, we compare the...

  • Page 67
    ...of the segments. In our consumer segment, we offer identity theft protection services to consumers on a monthly or annual subscription basis. In our enterprise segment, we offer consumer risk management services to enterprise customers who pay us based on their monthly volume of transactions with us...

  • Page 68
    ITEM 8. FINTNCITL STTTEMENTS TND SUPPLEMENTTRY DTTT LifeLock, Inc. Consolidated Financial Statements Ts of December 31, 2014 and 2013 and for the Years Ended December 31, 2014, 2013, and 2012 Table of Contents Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets ...

  • Page 69
    ...the Public Company Accounting Oversight Board (United States), LifeLock, Inc.'s internal control over financial reporting as of December 31, 2014, ...2013 framework) and our report dated February 19, 2015 expressed an unqualified opinion thereon. (s( Ernst & Young LLP Phoenix, Arizona February 19, 2015...

  • Page 70
    .... In our opinion, LifeLock, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the...

  • Page 71
    LIFELOCK, INC. CONSOLIDTTED BTLTNCE SHEETS (in thousands, except share and per share amounts) December 31, 2014 Tssets Current assets: Cash and cash equivalents Marketable securities Trade and other receivables, net Deferred tax assets, net Prepaid expenses and other current assets Total current ...

  • Page 72
    LIFELOCK, INC. CONSOLIDTTED STTTEMENTS OF OPERTTIONS (in thousands, except per share amounts) Year Ended December 31, 2014 Revenue: Consumer revenue Enterprise revenue Total revenue Cost of services Gross profit Costs and expenses: Sales and marketing Technology and development General and ...

  • Page 73
    LIFELOCK, INC. CONSOLIDTTED STTTEMENTS OF COMPREHENSIVE INCOME (in thousands) Year Ended December 31, 2014 Net income Other comprehensive loss, net of tax Unrealized loss on marketable securities Comprehensive income $ 2,495 (98) $ 2,397 $ $ 2013 54,455 (18) 54,437 $ $ 2012 23,503 - 23,503 See ...

  • Page 74
    LIFELOCK, INC. CONSOLIDTTED STTTEMENTS OF CONVERTIBLE REDEEMTBLE PREFERRED STOCK TND STOCKHOLDERS' EQUITY (DEFICIT) (in thousands, except share amounts) Convertible Redeemable Preferred Stock Series T Shares Tmount Balance, January 6,750 1, 2012 6,428,571 Issuance of stock, net of offering - costs ...

  • Page 75
    Stockholders' Equity (Deficit) Tdditional Common Stock Shares Balance, January 1, 2012 Issuance of stock, net of offering costs Stock option and warrant exercises Common shares surrendered on net settlement of option and warrant exercises Share-based compensation Accretion on convertible redeemable ...

  • Page 76
    ... Purchases of marketable securities Sale and maturities of marketable securities Premiums paid for company-owned life insurance policies Decrease in restricted cash Net cash used in investing activities Financing activities Proceeds from: Term loan Initial public offering, net of offering costs...

  • Page 77
    ...equipment acquired through leasehold incentives Supplemental information for non-cash financing activities: Convertible redeemable preferred stock issued as part of purchase price for ID Analytics Preferred stock embedded derivative issued as part of purchase price for ID Analytics 2013 2012 $ 161...

  • Page 78
    ... subscribers, whom we refer to as our members, on an annual or monthly subscription basis. We also provide consumer risk management services to our enterprise customers. We were incorporated in Delaware on April 12, 2005 and are headquartered in Tempe, Arizona. On March 14, 2012, we acquired ID...

  • Page 79
    ...the segments. In our consumer segment, we offer proactive identity theft protection services to our members on an annual or monthly subscription basis. In our enterprise segment, we offer consumer risk management services to our enterprise customers. Revenue Recognition-Consumer Segment We recognize...

  • Page 80
    ... assets. We review our acquired-intangible assets annually in the fourth quarter of our fiscal year and whenever events and changes in circumstances indicate the carrying amount of the acquired-intangible assets may not be recoverable. If such events or changes in circumstances occur, we compare the...

  • Page 81
    ... maturities of three months or less when acquired. Cash and cash equivalents are deposited in or managed by major financial institutions and at times exceed Federal Deposit Insurance Corporation insurance limits. Cash and cash equivalents also include credit card and debit card receivables. The...

  • Page 82
    ...-use software systems. Our development costs are primarily incurred in the United States and primarily devoted to enhancing our consumer and enterprise service offerings. Share-Based Compensation We measure share-based compensation cost at fair value using the Black-Scholes option pricing model...

  • Page 83
    ... consolidated financial statements. 3. Business Combinations Acquisition of Lemon In December 2013, we acquired Lemon, a mobile wallet innovator. In connection with this acquisition, we launched our new LifeLock mobile application. The aggregate purchase price consisted of approximately $42,369 of...

  • Page 84
    ... of ID Analytics In the first quarter of 2012, we acquired ID Analytics, a provider of fraud and risk solutions and a strategic technology partner of ours since 2009. The aggregate purchase price consisted of approximately $166,474 of cash paid at the closing (cash paid net of cash acquired was...

  • Page 85
    ... Goodwill and Other Intangible Tssets The changes in carrying amount of goodwill for the years ended December 31, 2014 and 2013 were as follows: Goodwill - December 31, 2012 Additions Goodwill - December 31, 2013 Goodwill - December 31, 2014 Our acquisition-related intangible assets as of December...

  • Page 86
    ...: 2014 Legal settlements Marketing, commissions and other services Employee salaries, wages, and benefits Consulting, contract labor and professional fees Fixed assets Sales, use, property, and income taxes Other Total accrued expenses and other liabilities 9. Financing Trrangements Credit Agreement...

  • Page 87
    ... of credit for each letter of credit, which fee will be equal to the applicable rate then in effect, multiplied by the daily maximum amount available to be drawn under the letter of credit. The initial applicable rate for the letter of credit is 1.50%, subject to adjustment from time to time based...

  • Page 88
    ...of the voting shares are able to elect all of the directors. We issue stock-based awards to our employees in the form of stock options, restricted stock units, and restricted stock awards. We also have an employee stock purchase plan. Preferred Stock We have authorized 10,000,000 shares of preferred...

  • Page 89
    ... vesting monthly over the remaining vesting period. In October 2012, we adopted the LifeLock, Inc. 2012 Incentive Compensation Plan, or the 2012 Plan, which superseded the 2006 Plan. The total remaining shares of 4,902,708 available for issuance under the 2006 Plan were added to the number of...

  • Page 90
    ... for the years ended December 31, 2014 and 2013, respectively. Stock Options The following table summarizes information on the activity of stock options, including performance-based options, under the 2006 and 2012 Plans for the years ended December 31: 2014 Weighted Tverage Exercise Price Per Share...

  • Page 91
    ...the years ended December 31, 2014, 2013, and 2012, respectively. Such amounts were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions at December 31: 2014 Expected volatility Expected dividend yield Risk-free interest rate Expected term (years) 46...

  • Page 92
    ...2014 and 2013, the fair value of our financial assets was as follows: Level 1 December 31, 2014 Assets: Money market funds (1) Corporate bonds (2) Municipal bonds (2) Commercial... in marketable securities Includes commercial paper with maturities of three months or less at time of purchase of ...

  • Page 93
    ...0.09 In 2014, 2013, and 2012, potentially dilutive securities were not included in the calculation of diluted net income per share, as their impact would be anti-dilutive. The following weighted-average number of outstanding employee stock options, restricted stock units and restricted stock awards...

  • Page 94
    ... 2012 was principally attributable to the generation of operating profits and net deferred tax liabilities established in connection with the acquisition of ID Analytics. The components of income tax provision were as follows at December 31: 2014 Current: U.S. federal U.S. state and local taxes...

  • Page 95
    ... in a credit to additional paid in capital. We are subject to taxation in the United States and various states. All of our tax years are still subject to U.S. federal, state, and local tax authorities due to our net operating loss, which started in 2006. As of December 31, 2014, 2013, and 2012, our...

  • Page 96
    ..., we offer proactive identity theft protection services to consumers on an annual or monthly subscription basis. In our enterprise segment, we offer consumer risk management services to our enterprise customers. Financial information about our segments for the year ended December 31, 2014 and as...

  • Page 97
    ... of our services, our data security program, and our and Mr. Davis' compliance with the FTC Order, wherein we settled the FTC's allegations challenging certain of our advertising and marketing practices. The Consolidated Amended Complaint alleged that, as a result, certain public statements made...

  • Page 98
    ...Federal Declaratory Judgment Act. Plaintiffs also seek certification of a nationwide class of consumers who are or were subscribers of our identity theft protection services since January 19, 2014, compensatory damages, attorneys' fees and costs. We were served with the complaint on January 22, 2015...

  • Page 99
    ... of the quarterly information when read in conjunction with the audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K: Three Months Ended Dec 31, 2014 Revenue: Consumer revenue Enterprise revenue Total revenue Gross profit Income (loss...

  • Page 100
    ... assumption within the Black-Scholes option pricing model used to compute our share-based compensation expense since our initial public offering in October 2012. We remediated this material weakness by, among other things, implementing a process of additional enhanced review of estimates and...

  • Page 101
    ... 120 days after the end of our fiscal year ended December 31, 2014, and is incorporated in this Annual Report on Form 10-K by reference. We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers, and employees, including our principal executive officer and...

  • Page 102
    .... SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Additions (recoveries) - charged to costs and expenses $ 233 114 79 - - - $ 2. Year ended December 31, Allowance for doubtful accounts(1) 2014 2013 2012 Deferred tax asset valuation allowance(2) 2014 2013 2012 (1) Beginning Balance $ 104 134 88...

  • Page 103
    ... caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LIFELOCK, INC. Dated: February 19, 2015 By: /s/ Todd Davis Todd Davis Chairman and Chief Executive Officer LIFELOCK, INC. Dated: February 19, 2015 By: /s/ Chris Power Chris Power Chief Financial Officer 100

  • Page 104
    ...Todd Davis, Chris Power, and Clarissa Cerda, and each of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form10...

  • Page 105
    ... 10.3A†10.4†10.7 Description of Exhibit Agreement and Plan of Merger, dated as of December 11, 2013, by and among LifeLock, Inc., Lavender Acquisition Corporation, Lemon, Inc., and Shareholder Representative Services LLC, as the Securityholder Representative (1) Seventh Amended and Restated...

  • Page 106
    ...Form of Stock Option Agreement and Restricted Stock Unit Agreement under 2012 Incentive Compensation Plan (27) 2012 Employee Stock Purchase Plan (28) 2012 Performance Bonus Plan (29) Severance Agreement, dated as of July 22, 2013, by and between LifeLock, Inc. and Don Beck 2015 Sales Commission Plan...

  • Page 107
    ... on Form S-1 filed with the Securities and Exchange Commission on September 27, 2012, and incorporated herein by reference. Filed as Exhibit 10.10A to the Registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 10, 2014, and incorporated herein by...

  • Page 108
    ... [****] for Address Change Alerts and Reports Service under the [****] Pricing column is changed from "[****] Customer/Month" to "[****] Customer/Month." Amendment to Exhibit C for Non-Dependent API Calls. Under the "Response Times for Service Degradations" subsection for Service Level Credits, the...

  • Page 109
    ...dealing or industry customs. In the event of a conflict...signed electronic copy of this Amendment may serve as an original. IsUserSubscribed (Equifax) IsUserSubscribed (Experian) IsUserSubscribed (TransUnion) Pull3BureauCreditReport PullTransRiskScore Subscribe (Equifax) Subscribe (Experian) Subscribe...

  • Page 110
    ..., to be effective as of the Effective Date. CSID: CSIDENTITY CORPORATION, a Delaware corporation By: /s/ John Menchaca Print Name: John Menchaca Title: SVP Date: 11/19/14 LIFELOCK: LIFELOCK, INC., a Delaware corporation By: /s/ Steven M. Seoane Print Name: Steven M. Seoane Title: CPO Date:

  • Page 111
    Exhibit 21.1 SUBSIDIARIES OF LIFELOCK, INC. Name Jurisdiction of Incorporation/Formation ID Analytics, LLC SageStream, LLC Lemon, LLC Lemon Argentina, S.R.L. Lavender Holding, LLC Delaware Delaware Delaware Argentina Delaware

  • Page 112
    ...) pertaining to the 2012 Incentive Compensation Plan and 2012 Employee Stock Purchase Plan of LifeLock, Inc. (3) Registration Statement (Form S-8 No. 333-194741) pertaining to the Lemon, Inc. 2008 Equity Incentive Plan of LifeLock, Inc.; of our report dated February 19, 2015 with respect to the...

  • Page 113
    ...CHIEF EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a), AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Todd Davis, cdrtify that: 1. 2. I havd rdvidwdd this Annual...casd of an annual rdport) that... rdgistrant's board of dirdctors...; and Any fraud, whdthdr or...

  • Page 114
    ...; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ Chris Power Chris Power Chief Financial Officer (Principal Financial and Accounting Officer) Date: February 19, 2015

  • Page 115
    ...In connection with the Annual Report on Form 10-K of LifeLock, Inc. (the "Company") for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Todd Davis, Chief Executive Officer of the Company, certify, to the best of my knowledge...

  • Page 116
    ... connection with the Annual Report on Form 10-K of LifeLock, Inc. (the "Company") for the year ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Chris Power, Chief Financial Officer of the Company, certify, to the best of my knowledge...

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