Attached files
Exhibit 99.4
TIBCO SOFTWARE INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements are based on the historical financial statements of TIBCO Software Inc. (“TIBCO”) and DataSynapse, Inc. (“DataSynapse”) after giving effect to TIBCO’s acquisition of DataSynapse on August 21, 2009 as described in Note 2 of these unaudited pro forma condensed combined financial statements and the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined balance sheet as of May 31, 2009 is presented as if our acquisition of DataSynapse had occurred on May 31, 2009.
The unaudited pro forma condensed combined statements of operations for the six months ended May 31, 2009, and year ended November 30, 2008, are presented as if the DataSynapse acquisition had occurred on December 1, 2007 and was carried forward through each of the aforementioned respective periods.
The preliminary allocation of the purchase price used in the unaudited pro forma condensed combined financial statements is based upon a preliminary valuation of certain assets and liabilities acquired. Our estimates and assumptions are subject to change upon the finalization of the valuation. The primary areas of the purchase price allocation which are not yet finalized relate to tangible assets, identifiable intangible assets, the fair value of deferred revenues, the fair value of net deferred tax assets and liabilities, as well as the amount of resulting goodwill.
The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of our consolidated results of operations or financial position that we would have reported had the DataSynapse acquisition been completed as of the dates presented, and should not be taken as a representation of our future consolidated results of operations or financial position. The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and/or cost savings that we may achieve with respect to the combined companies. The unaudited pro forma financial statements also do not include the effects of restructuring activities and post merger synergy.
The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes of TIBCO Software Inc. included in the respective annual reports on Form 10-K and quarterly reports on Form 10-Q, and DataSynapse’s historical consolidated financial statements for the year ended December 31, 2008 and for the six months ended June 30, 2009, which are included as Exhibits 99.2 and 99.3, respectively, to this Current Report on Form 8-K/A.
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TIBCO SOFTWARE INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET OF TIBCO AND DATASYNAPSE
As of May 31, 2009
(Unaudited)
(in thousands)
| Historical | Pro Forma | |||||||||||||
| TIBCO | DataSynapse | |||||||||||||
| May 31, 2009 |
June 30, 2009 |
Adjustments | Combined | |||||||||||
| Assets | ||||||||||||||
| Current assets: |
||||||||||||||
| Cash and cash equivalents |
$ | 327,491 | $ | 1,168 | $ | (27,700 | ) {a} | $ | 300,959 | |||||
| Short-term investments |
2,108 | — | — | 2,108 | ||||||||||
| Accounts receivable, net of allowances |
97,964 | 4,983 | — | 102,947 | ||||||||||
| Prepaid expenses and other current assets |
44,644 | 583 | 97 | {b} | 45,324 | |||||||||
| Total current assets |
472,207 | 6,734 | (27,603 | ) | 451,338 | |||||||||
| Property and equipment, net |
99,584 | 952 | (557 | ) {c} | 99,979 | |||||||||
| Goodwill |
356,700 | — | 3,428 | {d} | 360,128 | |||||||||
| Acquired intangible assets, net |
68,597 | — | 24,150 | {d} | 92,747 | |||||||||
| Long-term deferred income tax assets |
70,117 | — | 3,719 | {e} | 73,836 | |||||||||
| Other assets |
41,652 | 853 | (390 | ) {f} | 42,115 | |||||||||
| Total assets |
$ | 1,108,857 | $ | 8,539 | $ | 2,747 | $ | 1,120,143 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||
| Current liabilities: |
||||||||||||||
| Accounts payable |
$ | 16,527 | $ | 1,093 | $ | — | $ | 17,620 | ||||||
| Accrued liabilities |
75,942 | 2,402 | 837 | {g} | 79,181 | |||||||||
| Accrued excess facilities costs |
5,542 | — | — | 5,542 | ||||||||||
| Deferred revenue |
145,628 | 8,849 | (2,473 | ) {h} | 152,004 | |||||||||
| Current portion of long-term debt |
2,090 | 13,163 | (13,163 | ) {i} | 2,090 | |||||||||
| Total current liabilities |
245,729 | 25,507 | (14,799 | ) | 256,437 | |||||||||
| Accrued excess facilities costs, less current portion |
3,383 | — | — | 3,383 | ||||||||||
| Long-term deferred revenue |
8,982 | 1,779 | (1,622 | ) {h} | 9,139 | |||||||||
| Long-term deferred income tax liabilities |
14,600 | — | 139 | {e} | 14,739 | |||||||||
| Long-term income tax liabilities |
13,421 | — | 152 | {e} | 13,573 | |||||||||
| Long-term debt, less current portion |
41,466 | — | — | 41,466 | ||||||||||
| Other long-term liabilities |
4,075 | 130 | — | 4,205 | ||||||||||
| Total Liabilities |
331,656 | 27,416 | (16,130 | ) | 342,942 | |||||||||
| Mandatory redeemable convertible preferred stock |
— | 71,028 | (71,028 | ) {j} | — | |||||||||
| Minority interest |
560 | — | — | 560 | ||||||||||
| Stockholders’ equity (deficit) |
776,641 | (89,905 | ) | 89,905 | {j} | 776,641 | ||||||||
| Total liabilities and stockholders’ equity |
$ | 1,108,857 | $ | 8,539 | $ | 2,747 | $ | 1,120,143 | ||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
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TIBCO SOFTWARE INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS OF TIBCO AND DATASYNAPSE
For the Six Months Ended May 31, 2009
(Unaudited)
(in thousands, except per share data)
| Historical | Pro Forma | |||||||||||||
| TIBCO | DataSynapse | |||||||||||||
| For the six months ended | ||||||||||||||
| May 31, 2009 |
June 30, 2009 |
Adjustments | Combined | |||||||||||
| Revenue: |
||||||||||||||
| License |
$ | 95,306 | $ | 3,561 | $ | — | $ | 98,867 | ||||||
| Service and maintenance |
180,260 | 7,465 | — | 187,725 | ||||||||||
| Total revenue |
275,566 | 11,026 | — | 286,592 | ||||||||||
| Cost of revenue: |
||||||||||||||
| License |
14,303 | 41 | 1,067 | {d} | 15,411 | |||||||||
| Service and maintenance |
63,649 | 1,584 | (29 | ) {c} | 65,204 | |||||||||
| Total cost of revenue |
77,952 | 1,625 | 1,038 | 80,615 | ||||||||||
| Gross profit |
197,614 | 9,401 | (1,038 | ) | 205,977 | |||||||||
| Operating expenses: |
||||||||||||||
| Research and development |
51,394 | 2,904 | (64 | ) {c} | 54,234 | |||||||||
| Sales and marketing |
93,571 | 6,005 | (218 | ) {c} | 99,358 | |||||||||
| General and administrative |
21,945 | 1,896 | (42 | ) {c} | 23,799 | |||||||||
| Amortization of acquired intangible assets |
7,452 | — | 869 | {d} | 8,321 | |||||||||
| Total operating expenses |
174,362 | 10,805 | 545 | 185,712 | ||||||||||
| Income (loss) from operations |
23,252 | (1,404 | ) | (1,583 | ) | 20,265 | ||||||||
| Interest and other income (expense), net |
1,496 | (929 | ) | 578 | {k} | 1,145 | ||||||||
| Income (loss) before provision for income taxes and minority interest |
24,748 | (2,333 | ) | (1,005 | ) | 21,410 | ||||||||
| Provision for income taxes |
8,950 | 57 | (388 | ) {l} | 8,619 | |||||||||
| Minority interest, net of tax |
95 | — | — | 95 | ||||||||||
| Net income (loss) |
$ | 15,703 | $ | (2,390 | ) | $ | (617 | ) | $ | 12,696 | ||||
| Net income per share: |
||||||||||||||
| Basic |
$ | 0.09 | $ | 0.07 | ||||||||||
| Diluted |
$ | 0.09 | $ | 0.07 | ||||||||||
| Shares used in computing net income per share: |
||||||||||||||
| Basic |
171,460 | 171,460 | ||||||||||||
| Diluted |
172,614 | 172,614 | ||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
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TIBCO SOFTWARE INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS OF TIBCO AND DATASYNAPSE
For the Year Ended November 30, 2008
(Unaudited)
(in thousands, except per share data)
| Historical | Pro Forma | |||||||||||||
| TIBCO | DataSynapse | |||||||||||||
| For the year ended | ||||||||||||||
| November 30, 2008 |
December 31, 2008 |
Adjustments | Combined | |||||||||||
| Revenue: |
||||||||||||||
| License |
$ | 273,415 | $ | 14,999 | $ | — | $ | 288,414 | ||||||
| Service and maintenance |
371,056 | 15,511 | — | 386,567 | ||||||||||
| Total revenue |
644,471 | 30,510 | — | 674,981 | ||||||||||
| Cost of revenue: |
||||||||||||||
| License |
30,276 | 455 | 2,133 | {d} | 32,864 | |||||||||
| Service and maintenance |
147,622 | 3,935 | (65 | ) {c} | 151,492 | |||||||||
| Total cost of revenue |
177,898 | 4,390 | 2,068 | 184,356 | ||||||||||
| Gross profit |
466,573 | 26,120 | (2,068 | ) | 490,625 | |||||||||
| Operating expenses: |
||||||||||||||
| Research and development |
106,594 | 8,504 | (141 | ) {c} | 114,957 | |||||||||
| Sales and marketing |
224,641 | 29,108 | (484 | ) {c} | 253,265 | |||||||||
| General and administrative |
53,046 | 5,545 | (92 | ) {c} | 58,499 | |||||||||
| Amortization of acquired intangible assets |
16,557 | — | 1,739 | {d} | 18,296 | |||||||||
| Total operating expenses |
400,838 | 43,157 | 1,022 | 445,017 | ||||||||||
| Income (loss) from operations |
65,735 | (17,037 | ) | (3,090 | ) | 45,608 | ||||||||
| Interest and other income (expense), net |
5,095 | (2,008 | ) | 1,302 | {k} | 4,389 | ||||||||
| Income (loss) before provision for income taxes and minority interest |
70,830 | (19,045 | ) | (1,788 | ) | 49,997 | ||||||||
| Provision for income taxes |
18,314 | 153 | (691 | ) {l} | 17,776 | |||||||||
| Minority interest, net of tax |
105 | — | — | 105 | ||||||||||
| Net income (loss) |
$ | 52,411 | $ | (19,198 | ) | $ | (1,097 | ) | $ | 32,116 | ||||
| Net income per share: |
||||||||||||||
| Basic |
$ | 0.29 | $ | 0.18 | ||||||||||
| Diluted |
$ | 0.29 | $ | 0.17 | ||||||||||
| Shares used in computing net income per share: |
||||||||||||||
| Basic |
180,525 | 180,525 | ||||||||||||
| Diluted |
183,742 | 183,742 | ||||||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed combined financial statements.
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TIBCO SOFTWARE INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma condensed combined balance sheet as of May 31, 2009 and the unaudited pro forma condensed combined statements of operations for the six months ended May 31, 2009 and for the year ended November 30, 2008 are based on the historical financial statements of TIBCO Software Inc. (“TIBCO”) and DataSynapse Inc. (“DataSynapse”) after giving effect to our acquisition of DataSynapse (“Acquisition”) and the assumptions and adjustments described in the notes herein. DataSynapse’s fiscal year ended on December 31, 2008 and six months ended on June 30, 2009 and these historical results have been combined with our November 30, 2008 fiscal year and six months ended May 31, 2009, respectively, without adjusting the accounting periods. In addition, certain historical TIBCO and DataSynapse balances have been reclassified to conform to the pro forma combined presentation. No pro forma adjustments were required to conform DataSynapse accounting policies to TIBCO’s accounting policies.
The unaudited pro forma condensed combined balance sheet as of May 31, 2009 is presented as if the Acquisition occurred on May 31, 2009, and due to different fiscal period ends, combines the historical balance sheet for TIBCO at May 31, 2009 and the historical balance sheet of DataSynapse at June 30, 2009.
The unaudited pro forma condensed combined statement of operations of TIBCO and DataSynapse for the six months ended May 31, 2009 is presented as if the Acquisition had taken place on December 1, 2007 and, due to different fiscal period ends, combines the historical results of TIBCO for the six months ended May 31, 2009 and the historical results of DataSynapse for the six months ended June 30, 2009.
The unaudited pro forma condensed combined statement of operations of TIBCO and DataSynapse for the year ended November 30, 2008 is presented as if the Acquisition had taken place on December 1, 2007, and due to different fiscal period ends, combines the historical results of TIBCO for the year ended November 30, 2008 and the historical results of DataSynapse for the year ended December 31, 2008.
The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of the consolidated results of operations or financial position of TIBCO that would have been reported had the Acquisition been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial position of TIBCO. Additionally, the net tangible assets of DataSynapse that we acquired on August 21, 2009 were substantially different from the net assets presented in the unaudited pro forma condensed combined balance sheet, primarily as a result of lower accounts receivable balances and higher accrued liabilities balance from decreased sales volume during DataSynapse’s third fiscal quarter prior to the date of the Acquisition.
2. DATASYNAPSE ACQUISITION
On August 21, 2009, pursuant to the Agreement and Plan of Merger (the “DataSynapse Merger Agreement”), TIBCO acquired DataSynapse, Inc., a Delaware corporation (“DataSynapse”) and a provider of enterprise grid and cloud computing software. TIBCO paid $27.7 million in cash to acquire the outstanding shares of capital stock of DataSynapse. In connection with the acquisition, TIBCO has also incurred transaction costs of approximately $0.8 million. The total purchase price of DataSynapse, including transaction costs, was $28.5 million.
The acquisition was accounted for using the purchase method of accounting. A summary of the estimated purchase price of the acquisition is as follows (in thousands):
| Cash paid |
$ | 27,700 | |
| Direct transaction costs |
837 | ||
| Total purchase price |
$ | 28,537 | |
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TIBCO SOFTWARE INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Continued)
The preliminary allocation of the purchase price as if the Acquisition occurred on May 31, 2009, is as follows (in thousands):
| Cash acquired |
$ | 1,168 | ||
| Other assets acquired |
6,424 | |||
| Deferred income tax assets |
3,816 | |||
| Identifiable intangible assets |
24,150 | |||
| Goodwill |
3,428 | |||
| Total assets acquired |
38,986 | |||
| Liabilities assumed |
(10,158 | ) | ||
| Deferred income tax liabilities |
(139 | ) | ||
| Long-term income tax liabilities |
(152 | ) | ||
| Total liabilities assumed |
(10,449 | ) | ||
| Net assets acquired |
$ | 28,537 | ||
The amount of the total purchase price allocated to the tangible assets acquired was assigned based on the fair values as of the date of the acquisition. The fair value assigned to identifiable intangible assets acquired was determined using the income approach which discounts expected future cash flows to present value using estimated assumptions determined by management. Identifiable intangible assets acquired consist of existing technology, customer base, patents/core technology, trademarks, and maintenance agreements. TIBCO believes that these identified intangible assets will have no residual value after their estimated economic useful lives. These identifiable intangible assets are subject to amortization on a straight line basis as this best approximates the benefit period related to these assets (in thousands, except amortization period):
| Gross Amount at Acquisition Date |
Weighted Average Amortization Period | ||||
| Existing technology |
$ | 12,800 | 6.0 years | ||
| Customer base |
3,200 | 8.0 years | |||
| Patents/core technology |
2,200 | 5.0 years | |||
| Trademarks |
850 | 5.0 years | |||
| Maintenance agreements |
5,100 | 7.0 years | |||
| $ | 24,150 | 6.4 years | |||
Goodwill represents the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired. Goodwill amounts are not amortized, but rather are tested for impairment at least annually. In the event that TIBCO determines that the value of goodwill has become impaired, it will incur an accounting charge for the amount of impairment during the fiscal quarter in which such determination is made.
Net deferred tax assets and liabilities include tax effects of fair value adjustments related to identifiable intangible assets, property, deferred revenues and net operating loss carryforwards. Upon the finalization of the combined company’s legal entity structure and the restructuring plans, additional adjustments to deferred taxes may be required.
3. PRO FORMA ADJUSTMENTS
The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet and statements of operations:
| {a} | To reflect cash paid in connection with the acquisition of DataSynapse. |
| {b} | To record the preliminary fair value of certain prepaid expenses and other current assets. |
| {c} | To record the difference between the preliminary fair value and the historical balance of DataSynapse property and equipment and the reduction in depreciation expense related to the decreased basis of fixed assets acquired. |
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TIBCO SOFTWARE INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Continued)
| {d} | To establish the preliminary fair value of goodwill and amortizable intangible assets and to record additional amortization expenses related to intangible assets acquired. |
| {e} | To record the preliminary adjustment for deferred income tax assets and deferred income tax liabilities related to identifiable intangible assets, property, deferred revenues and net operating loss carryforwards. |
| {f} | To eliminate DataSynapse prepaid debt issuing cost due to paying off term loan. |
| {g} | To accrue the direct costs of the transaction. |
| {h} | To record the preliminary fair value adjustment to deferred revenue acquired. The preliminary fair value represents an amount equivalent to the estimated cost and an appropriate profit margin to perform services related to DataSynapse software support contracts based on the deferred revenue balances of DataSynapse as of June 30, 2009 and does not reflect the actual fair value adjustment as of the date of acquisition. |
| {i} | To eliminate DataSynapse term loan balance. In connection with the Acquisition, a portion of the cash consideration was used to satisfy DataSynapse’s existing term loan obligation. |
| {j} | To eliminate DataSynapse historical mandatory redeemable convertible preferred stock and stockholders’ equity. |
| {k} | To reflect the estimated cash portion of the purchase price and resulting decrease in interest income based on the weighted average rate of return for the periods presented. In addition, to adjust the interest expense associated with paying off the term loan early. |
| {l} | To record income tax impact on pro forma adjustments at the blended federal and state statutory tax rate. The pro forma combined provision for income taxes does not reflect the amounts that would have resulted had TIBCO and DataSynapse filed consolidated income tax returns during the periods presented. |
4. EARNINGS PER SHARE
As TIBCO paid cash for the DataSynapse outstanding stock and no DataSynapse stock or stock-based awards were issued at the time of acquisition, the pro forma weighted average number of common shares and the diluted weighted average shares outstanding are the same as TIBCO’s historical amounts.
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