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8-K/A - FORM 8-K/A - SYNCHRONOSS TECHNOLOGIES INCc06390e8vkza.htm
EX-99.2 - EXHIBIT 99.2 - SYNCHRONOSS TECHNOLOGIES INCc06390exv99w2.htm
EX-23.2 - EXHIBIT 23.2 - SYNCHRONOSS TECHNOLOGIES INCc06390exv23w2.htm
EX-99.1 - EXHIBIT 99.1 - SYNCHRONOSS TECHNOLOGIES INCc06390exv99w1.htm
EX-23.1 - EXHIBIT 23.1 - SYNCHRONOSS TECHNOLOGIES INCc06390exv23w1.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 Company’s 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 Company’s historical financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 filed on March 9, 2010, and FusionOne’s 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
(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

 

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SYNCHRONOSS TECHNOLOGIES, INC.
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

 

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SYNCHRONOSS TECHNOLOGIES, INC.
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

 

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SYNCHRONOSS TECHNOLOGIES, INC.
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 FusionOne’s 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 FusionOne’s 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 Company’s Common Stock valued at approximately $7.1 million based on the Company’s 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  
 
     

 

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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 Company’s 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 FusionOne’s deferred revenue balance to fair value, as there is a legal performance obligation for contracts acquired.

 

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(e) To eliminate FusionOne’s 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 FusionOne’s 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 Company’s common stock valued at approximately $7.1 million based on the Company’s 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  
 
                       

 

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