Attached files
file | filename |
---|---|
8-K/A - FORM 8-K/A - SYNCHRONOSS TECHNOLOGIES INC | c06390e8vkza.htm |
EX-99.2 - EXHIBIT 99.2 - SYNCHRONOSS TECHNOLOGIES INC | c06390exv99w2.htm |
EX-23.2 - EXHIBIT 23.2 - SYNCHRONOSS TECHNOLOGIES INC | c06390exv23w2.htm |
EX-99.1 - EXHIBIT 99.1 - SYNCHRONOSS TECHNOLOGIES INC | c06390exv99w1.htm |
EX-23.1 - EXHIBIT 23.1 - SYNCHRONOSS TECHNOLOGIES INC | c06390exv23w1.htm |
Exhibit 99.3
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
On July 19, 2010, Synchronoss Technologies, Inc. (the Company) completed the acquisition of
FusionOne, Inc. (FusionOne) pursuant to the Agreement and Plan of Merger dated July 6, 2010.
The unaudited pro forma combined condensed balance sheet as of June 30, 2010 is presented as if the
acquisition of FusionOne had occurred on June 30, 2010. The unaudited pro forma combined condensed
statements of operations are presented as if the acquisitions of FusionOne had occurred on January
1, 2009 with recurring merger-related adjustments reflected in each of the periods presented.
The acquisitions have been accounted for using the acquisition method of accounting and,
accordingly, the total estimated purchase consideration of the acquisitions were allocated to the
tangible assets and identifiable intangible assets acquired and liabilities assumed based on their
relative fair values. The excess of the purchase consideration over the net tangible and
identifiable intangible assets acquired and liabilities assumed were recorded as goodwill.
Determination of the FusionOne purchase price and allocations of the FusionOne purchase price used
in the unaudited pro forma combined condensed financial statements are based upon preliminary
estimates and assumptions. These preliminary estimates and assumptions could change significantly
during the measurement period as the Company finalizes the valuations of the net tangible assets
and intangible assets acquired and liabilities assumed. Any change could result in material
variances between our future financial results and the amounts presented in these unaudited
combined condensed financial statements, including variances in fair values recorded, as well as
expenses associated with these items.
The unaudited pro forma combined condensed statements of operations do not reflect nonrecurring
acquisition related charges resulting from the acquisition transactions.
The unaudited pro forma combined condensed statements are for information purposes only and do not
purport to represent what the Companys actual results would have been if the acquisitions had been
completed as of the date indicated above or that may be achieved in the future. The unaudited pro
forma combined condensed statement of operations does not include the effects of any cost savings
from operating efficiencies and synergies that may result from the acquisitions.
The unaudited pro forma combined condensed financial statements, including the notes thereto,
should be read in conjunction with the Companys historical financial statements included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2009 filed on March 9, 2010,
and FusionOnes historical financial statements for the year ended December 31, 2009 and for the
six-month period ended June 30, 2010 included as Exhibits 99.1 and 99.2 in this Current Report on
Form 8-K/A.
SYNCHRONOSS TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(In thousands)
Historical | ||||||||||||||||
As of June 30, 2010 | Pro Forma | Pro Forma | ||||||||||||||
Synchronoss | FusionOne | Adjustments | Combined | |||||||||||||
ASSETS |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 92,168 | $ | 2,664 | $ | (32,172 | )(a) | $ | 62,660 | |||||||
Marketable securities |
2,204 | | 2,204 | |||||||||||||
Accounts receivable, net |
30,375 | 374 | 30,749 | |||||||||||||
Prepaid expenses and other current assets |
6,251 | 167 | 6,418 | |||||||||||||
Deferred tax assets |
1,468 | | 1,468 | |||||||||||||
Total current assets |
132,466 | 3,205 | (32,172 | ) | 103,499 | |||||||||||
Marketable Securities |
7,909 | | 7,909 | |||||||||||||
Property and equipment, net |
25,690 | 631 | 26,321 | |||||||||||||
Goodwill |
6,911 | | 25,957 | (b) | 32,868 | |||||||||||
Intangible assets, net |
2,221 | | 32,700 | (b) | 34,921 | |||||||||||
Deferred tax assets |
9,000 | | 9,000 | |||||||||||||
Other assets |
2,314 | 48 | 2,362 | |||||||||||||
Total assets |
$ | 186,511 | $ | 3,884 | $ | 26,485 | $ | 216,880 | ||||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Accounts payable |
$ | 4,757 | $ | 528 | $ | 5,285 | ||||||||||
Accrued expenses |
6,079 | 1,847 | 2,161 | (c) | 10,087 | |||||||||||
Current portion of capital lease obligations |
| 167 | 167 | |||||||||||||
Customer advances |
| 1,280 | 1,280 | |||||||||||||
Deferred revenue, current |
4,023 | 7,118 | (4,510 | )(d) | 6,631 | |||||||||||
Total current liabilities |
14,859 | 10,940 | (2,349 | ) | 23,450 | |||||||||||
Lease financing obligation long-term |
9,181 | | 9,181 | |||||||||||||
Warrant liability |
| 6,000 | (6,000 | )(e) | | |||||||||||
Capital lease obligations, less current portion |
| 3 | 3 | |||||||||||||
Deferred revenue, less current portion |
| 3,000 | (2,800 | )(d) | 200 | |||||||||||
Contingent purchase price |
| | 16,600 | 16,600 | ||||||||||||
Other liabilities |
1,605 | | 1,605 | |||||||||||||
Stockholders equity: |
||||||||||||||||
Convertible preferred stock |
| 103 | (103 | )(f) | | |||||||||||
Common stock |
3 | 20 | (20 | )(f) | 3 | |||||||||||
Treasury stock |
(23,713 | ) | | (23,713 | ) | |||||||||||
Additional paid-in capital |
126,504 | 161,476 | (154,340 | )(f)(g) | 133,640 | |||||||||||
Accumulated other comprehensive income |
2 | (11 | ) | 11 | (f) | 2 | ||||||||||
Retained earnings |
58,070 | (177,647 | ) | 175,486 | (c)(f) | 55,909 | ||||||||||
Total stockholders equity |
160,866 | (16,059 | ) | 21,034 | 165,841 | |||||||||||
Total liabilities and stockholders equity |
$ | 186,511 | $ | 3,884 | $ | 26,485 | $ | 216,880 | ||||||||
See notes to Unaudited Pro Forma Combined Condensed Financial Statements
2
SYNCHRONOSS TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2009
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2009
(In thousands, except per share data)
Historical | ||||||||||||||||
For the twelve months ended | ||||||||||||||||
December 31, 2009 | Pro Forma | Pro Forma | ||||||||||||||
Synchronoss | FusionOne | Adjustments | Combined | |||||||||||||
Net revenues |
$ | 128,805 | $ | 9,126 | $ | 137,931 | ||||||||||
Costs and expenses: |
||||||||||||||||
Cost of services* |
64,455 | 1,822 | 66,277 | |||||||||||||
Research and development |
13,153 | 11,480 | 24,633 | |||||||||||||
Selling, general and administrative |
23,650 | 10,655 | 34,305 | |||||||||||||
Depreciation and amortization |
8,499 | 1,043 | 2,638 | (h) | 12,180 | |||||||||||
Total costs and expenses |
109,757 | 25,000 | 2,638 | 137,395 | ||||||||||||
Income/(loss) from operations |
19,048 | (15,874 | ) | (2,638 | ) | 536 | ||||||||||
Interest and other income/(expense) |
(215 | ) | (135 | ) | (350 | ) | ||||||||||
Income before income tax expense |
18,833 | (16,009 | ) | (2,638 | ) | 186 | ||||||||||
Income tax expense |
(6,536 | ) | 62 | (6,474 | ) | |||||||||||
Net income |
$ | 12,297 | $ | (15,947 | ) | $ | (2,638 | ) | $ | (6,288 | ) | |||||
Net income per common share: |
||||||||||||||||
Basic |
$ | 0.40 | $ | (0.20 | ) | |||||||||||
Diluted |
$ | 0.39 | $ | (0.20 | ) | |||||||||||
Weighted-average common shares outstanding: |
||||||||||||||||
Basic |
30,813 | 398 | 31,211 | |||||||||||||
Diluted |
31,145 | 398 | 31,543 | |||||||||||||
See notes to Unaudited Pro Forma Combined Condensed Financial Statements
3
SYNCHRONOSS TECHNOLOGIES, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2010
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2010
(In thousands, except per share data)
Historical | ||||||||||||||||
For the six months ended | ||||||||||||||||
June 30, 2010 | Pro Forma | Pro Forma | ||||||||||||||
Synchronoss | FusionOne | Adjustments | Combined | |||||||||||||
Net revenues |
$ | 72,281 | $ | 9,989 | $ | 82,270 | ||||||||||
Costs and expenses: |
||||||||||||||||
Cost of services* |
36,655 | 851 | 37,506 | |||||||||||||
Research and development |
9,191 | 5,423 | 14,614 | |||||||||||||
Selling, general and administrative |
12,845 | 4,620 | 17,465 | |||||||||||||
Depreciation and amortization |
3,852 | 358 | 1,319 | (h) | 5,529 | |||||||||||
Total costs and expenses |
62,543 | 11,252 | 1,319 | 75,114 | ||||||||||||
Income/(loss) from operations |
9,738 | (1,263 | ) | (1,319 | ) | 7,156 | ||||||||||
Interest expense and other expense |
(334 | ) | (12 | ) | (346 | ) | ||||||||||
Income before income tax expense |
9,404 | (1,275 | ) | (1,319 | ) | 6,810 | ||||||||||
Income tax expense |
(3,718 | ) | | (3,718 | ) | |||||||||||
Net income |
$ | 5,686 | $ | (1,275 | ) | $ | (1,319 | ) | $ | 3,092 | ||||||
Net income per common share: |
||||||||||||||||
Basic |
$ | 0.18 | $ | 0.10 | ||||||||||||
Diluted |
$ | 0.18 | $ | 0.10 | ||||||||||||
Weighted-average common shares outstanding: |
||||||||||||||||
Basic |
31,124 | 398 | 31,522 | |||||||||||||
Diluted |
32,057 | 398 | 32,455 | |||||||||||||
See notes to Unaudited Pro Forma Combined Condensed Financial Statements
4
SYNCHRONOSS TECHNOLOGIES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRO FORMA PRESENTATION
On July 19, 2010, Synchronoss Technologies, Inc. (the Company) completed the acquisition of
FusionOne, Inc. (FusionOne) pursuant to the Agreement and Plan of Merger and Reorganization dated
July 6, 2010 (the Merger Agreement).
The unaudited pro forma combined condensed balance sheet as of June 30, 2010 is based on the
historical financial statements of the Company and FusionOne after giving effect to the acquisition
adjustments resulting from the acquisition of FusionOne. The unaudited pro forma combined balance
sheet as of June 30, 2010 is presented as if the acquisition had occurred on June 30, 2010.
The unaudited pro forma combined condensed statements of operations for the year ended
December 31, 2009 are based on the historical financial statements of the Company for the year then
ended and FusionOnes historical financial statements for the year then ended after giving effect
to the acquisition adjustments. The unaudited pro forma combined condensed statements of
operations for the six months ended June 30, 2010 are based on the historical financial statements
of the Company for the period then ended and FusionOnes historical financial statements for the
period then ended after giving effect to the acquisition adjustments. The unaudited pro forma
combined condensed statements of operations is presented as if the FusionOne acquisition had
occurred on January 1, 2009.
2. FUSIONONE ACQUISITION
On July 19, 2010, the Company completed the acquisition of FusionOne. Pursuant to the Merger
Agreement, the Company paid approximately $32.0 million in cash and issued approximately 400
thousand common shares of the Companys Common Stock valued at approximately $7.1 million based on
the Companys July 19, 2010 closing stock price per share, and potentially may make payments
totaling up to $35 million in cash and stock, based on achievements of certain financial targets
for the period from July 1, 2010 through December 31, 2011.
The Company accounted for this business combination by applying the acquisition method, and
accordingly, the estimated purchase price was allocated to the tangible assets and identifiable
intangible assets acquired and liabilities assumed based upon their relative fair values. The
excess of the purchase price over the net tangible and identifiable intangible assets and
liabilities was recorded as goodwill.
Total estimated purchase price is summarized as follows:
Cash consideration |
$ | 32,200 | ||
Value of Synchronoss common stock issued |
7,100 | |||
Estimated fair value of contingent cash payments (earnout) |
16,600 | |||
Total preliminary estimated purchase price |
$ | 55,900 | ||
For purposes of this pro forma analysis, the above estimated purchase price has been allocated
based upon a preliminary estimate of the fair value of assets acquired and liabilities assumed (the
Company expects the purchase price allocation will be finalized in 2011):
Net tangible assets (liabilities) |
$ | (2,757 | ) | |
Identifiable intangible assets |
||||
Trade name |
500 | |||
Technology |
15,000 | |||
Customer relationships |
17,200 | |||
Assembled workforce |
2,900 | |||
Goodwill, excluding assembled workforce |
23,057 | |||
Total purchase price |
$ | 55,900 | ||
5
The fair values of the trade name and the technology were determined based on an income
approach using the relief-from-royalty method. A royalty rate of 10% was used to value both the
trade name and the technology. The royalty rate was based on third-party licensing transactions
for similar technologies and companies. The remaining useful lives of the trade name and the
technology were estimated based on the pattern of projected economic benefit of the asset and
expected migration from existing to future technology.
The fair value of the customer relationships were determined based on an income approach using
the excess earnings method. A discount rate of 17.0% was used to value the customer relationships.
The discount rate was estimated using a discount rate based on the implied rate of return of the
transaction, adjusted for the specific risk profile of the asset. The remaining useful life of the
customer relationships was estimated based on projected customer attrition rates and new customer
acquisition, and the pattern of projected economic benefit of the asset.
The fair value of the assembled workforce was determined based on a cost approach using the
replacement cost. The fair value was determined by considering hiring and training costs which
were estimated to be 20% of total compensation multiplied by the current workforce. The assembled
workforce is considered a component of goodwill, therefore, there is no estimated useful life and
it will not be amortized. Rather, it will be tested for impairment at least annually as a
component of goodwill.
Of the total purchase price, $26.0 million remains as goodwill. Goodwill represents the
excess of the purchase price over the fair value of the underlying net tangible and identifiable
intangible assets acquired and liabilities assumed and goodwill is not deductible for tax purposes.
The acquisition of FusionOne is intended to complement and to further enhance the Companys
product offerings. These new opportunities, among other factors were the reasons for the purchase
price resulting in the recognition of a significant amount of goodwill. Goodwill amounts are not
amortized, but rather are tested for impairment at least annually. In the event that the Company
determines that the value of goodwill has become impaired, the Company will record an accounting
charge for the amount of impairment during the fiscal quarter in which such determination is made.
3. PRO FORMA ADJUSTMENTS
The unaudited pro forma combined condensed balance sheets and statements of operations give
effect to the following pro forma adjustments:
(a) To record the payment of the cash portion of the FusionOne merger consideration of
approximately $32.2 million.
(b) To record the estimated fair value of identifiable intangible assets and goodwill
resulting from the FusionOne acquisition (see footnote 2 above).
(c) To record direct transaction costs related to the acquisition of FusionOne.
(d) To adjust FusionOnes deferred revenue balance to fair value, as there is a legal
performance obligation for contracts acquired.
6
(e) To eliminate FusionOnes warrant liability cancelled with closing date gross closing
consideration in pursuant to Section 2.01(c) (iii) of the July 6, 2010 merger agreement.
(f) To eliminate FusionOnes historical redeemable convertible preferred stock, common stock,
additional paid-in capital, accumulated comprehensive loss and accumulated deficit.
(g) To record the issuance of 397,990 shares of the Companys common stock valued at
approximately $7.1 million based on the Companys July 19, 2010 closing stock price per share.
(h) To record amortization expense for the year ended December 31, 2009 and for the six months
ended June 30, 2010, related to acquired intangibles resulting from the FusionOne acquisition as
follows:
Expense for the | Expense for the | |||||||||||||||
Estimated useful | year ended | six months ended | ||||||||||||||
Intangible Assets | Estimated fair value | life (in years) | December 31, 2009 | June 30, 2010 | ||||||||||||
Trade name |
$ | 500 | 8.0 | $ | 63 | $ | 31 | |||||||||
Technology |
15,000 | 10.0 | 1,500 | 750 | ||||||||||||
Customer relationships |
17,200 | 16.0 | 1,075 | 538 | ||||||||||||
Total preliminary estimated purchase price |
$ | 32,700 | $ | 2,638 | $ | 1,319 | ||||||||||
7