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8-K/A - FORM 8-K/A - Vocus, Inc.d348131d8ka.htm
EX-23.1 - EXHIBIT 23.1 - Vocus, Inc.d348131dex231.htm
EX-99.1 - EXHIBIT 99.1 - Vocus, Inc.d348131dex991.htm

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On February 24, 2012, Vocus Inc. (the Company) acquired all of the outstanding shares of iContact Corporation (iContact), a provider of cloud-based email and social marketing software that enables organizations to create and publish professional-quality emails designed to engage, educate and retain customers. The Company believes the acquisition will provide an email capability component to its marketing suite. The purchase price consisted of approximately $89.6 million of cash, 401,672 shares of the Company’s common stock with a deemed value at issuance of approximately $9.1 million, 1.0 million shares of the Company’s newly-created Series A convertible preferred stock with a deemed value at issuance of approximately $77.5 million, and a promissory note in the principal amount of $0.7 million, aggregating to approximately $166.9 million of total consideration, net of $10.0 million cash acquired. The Series A convertible preferred stock does not provide for interest and is entitled to participate in any dividends declared on the Company’s common stock on an as-converted basis. On February 24, 2017, the Company will be required to redeem each issued and outstanding share of Series A convertible preferred stock for $77.30 per share from its legally available funds, or such lesser amount of shares as it may then redeem under Delaware corporate law. Each share of Series A convertible preferred stock is convertible into shares of the Company’s common stock at any time at the option of the holder. For conversions occurring on or before February 24, 2017, each share of Series A convertible preferred stock may be converted into 3.0256 shares of common stock (subject to customary adjustments, and subject to increase if the Company fails to fulfill its obligation to redeem the preferred stock on February 24, 2017). On and after February 25, 2017, each share of Series A convertible preferred stock which has not been redeemed may be converted into 3.3282 shares of common stock (subject to customary adjustments).

The unaudited pro forma condensed combined balance sheet gives effect to the transaction as if it had occurred on December 31, 2011. The unaudited pro forma combined statement of operations for the year ended December 31, 2011 gives effect to the transaction as if it had occurred on January 1, 2011.

The unaudited pro forma financial data was prepared from the Company’s audited historical consolidated financial statements included in its annual report filed on Form 10-K for the year ended December 31, 2011, filed on March 15, 2012, and iContact’s audited historical financial statements as of and for the year ended December 31, 2011, included in this Current Report on Form 8-K/A, and should be read in conjunction with those financial statements.

The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not indicative of either future results of operations or results that might have been achieved if the transaction had been consummated as of the date indicated.

The unaudited pro forma consolidated financial information is based upon currently available information and assumptions and estimates which the Company believes are reasonable. These assumptions and estimates, however, are subject to change. The Company’s management believes that all adjustments have been made that are necessary to fairly present the pro forma information.


Vocus, Inc. and Subsidiaries

Unaudited Pro Forma Condensed Combined Balance Sheet

As of December 31, 2011

(in thousands)

 

     Vocus, Inc.      iContact     Pro Forma
Adjustments
         Pro Forma
Combined
 

Current assets:

            

Cash and cash equivalents

   $ 98,284       $ 17,447      $ (94,282   A, B    $ 21,449   

Short-term investments

     9,895         —          —             9,895   

Accounts receivable, net of allowance for doubtful accounts

     23,504         160        —             23,664   

Current portion of deferred income taxes

     82         —          194      C      276   

Prepaid expenses and other current assets

     1,966         588        —             2,554   
  

 

 

    

 

 

   

 

 

      

 

 

 

Total current assets

     133,731         18,195        (94,088        57,838   

Property equipment and software, net

     17,843         3,369        (598   D      20,614   

Intangible assets, net

     5,094         1,494        31,113      E      37,701   

Goodwill

     38,029         —          133,807      F      171,836   

Other assets

     1,046         187        —             1,233   
  

 

 

    

 

 

   

 

 

      

 

 

 

Total assets

   $ 195,743       $ 23,245      $ 70,234         $ 289,222   
  

 

 

    

 

 

   

 

 

      

 

 

 

Current liabilities:

            

Accounts payable and accrued expenses

   $ 17,883       $ 4,659      $ —           $ 22,542   

Current portion of notes payable and capital lease obligations

     176         221        449      G      846   

Current portion of deferred revenue

     62,010         3,174        (1,826   H      63,358   
  

 

 

    

 

 

   

 

 

      

 

 

 

Total current liabilities

     80,069         8,054        (1,377        86,746   

Notes payable and capital lease obligations, net of current portion

     854         5,012        (5,012   G      854   

Other liabilities

     8,331         930        (930   I      8,331   

Deferred income taxes

     2,781         —          194      C      2,975   

Deferred revenue, net of current portion

     987         —          —             987   
  

 

 

    

 

 

   

 

 

      

 

 

 

Total liabilities

     93,022         13,996        (7,125        99,893   

Redeemable convertible preferred stock

     —           54,015        23,475      J      77,490   

Stockholders’ equity (deficit)

     102,721         (44,766     53,884      K, P      111,839   
  

 

 

    

 

 

   

 

 

      

 

 

 

Total liabilities and stockholders’ equity (deficit)

   $ 195,743       $ 23,245      $ 70,234         $ 289,222   
  

 

 

    

 

 

   

 

 

      

 

 

 


Vocus, Inc. and Subsidiaries

Unaudited Pro Forma Combined Statement of Operations

For the Year Ended December 31, 2011

(Dollars in thousands, except per share data)

 

     Vocus, Inc.     iContact     Pro Forma
Adjustments
         Pro Forma
Combined
 

Revenues

   $ 114,874      $ 47,869      $ —           $ 162,743   

Cost of revenues

     21,857        8,483        3,935      L, N      34,275   
  

 

 

   

 

 

   

 

 

      

 

 

 

Gross profit

     93,017        39,386        (3,935        128,468   

Operating expenses:

           

Sales and marketing

     57,543        26,098        —             83,641   

Research and development

     7,561        11,742        (443   M      18,860   

General and administrative

     30,129        7,498        —             37,627   

Amortization of intangible assets

     2,021        —          6,855      N      8,876   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total operating expenses

     97,254        45,338        6,412           149,004   

Loss from operations

     (4,237     (5,952     (10,347        (20,536

Other income (expense):

           

Interest and other income

     317        —          —             317   

Interest expense

     (38     (803     803      O      (38
  

 

 

   

 

 

   

 

 

      

 

 

 

Total other income (expense)

     279        (803     803           279   

Loss before provision for income taxes

     (3,958     (6,755     (9,544        (20,257

Provision for income taxes

     10,619        —          —             10,619   
  

 

 

   

 

 

   

 

 

      

 

 

 

Net loss

   $ (14,577   $ (6,755   $ (9,544      $ (30,876
  

 

 

   

 

 

   

 

 

      

 

 

 

Net loss per share:

           

Basic and diluted

   $ (0.78          $ (1.61

Basic and diluted weighted-average shares used in computing per share amounts

     18,743,305          401,672      P      19,144,977   


Notes to Unaudited Pro Forma Condensed Combined Financial Statements

 

1. Basis of Pro Forma Presentation

The Unaudited Pro Forma Condensed Combined Financial Statements and explanatory notes give effect to the combination of Vocus, Inc. (Vocus) and iContact Corporation (iContact). The acquisition was accounted for under the purchase method of accounting.

The unaudited pro forma condensed combined balance sheet gives effect to the acquisition as if it had occurred on December 31, 2011. The unaudited pro forma combined statement of operations for the year ended December 31, 2011 is presented as if the acquisition had occurred on January 1, 2011.

The unaudited pro forma condensed combined financial statements are based on the historical financial statements of Vocus and iContact after giving effect to the acquisition, as well as the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. 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 the Company 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 the Company. This information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements, the historical consolidated financial statements and accompanying notes of Vocus’ annual report filed on Form 10-K for the year ended December 31, 2011, filed on March 15, 2012, and the financial statements of iContact included as Exhibit 99.1 in this Current Report on Form 8-K/A.

 

2. Preliminary Purchase Price Allocation

The preliminary purchase consideration consisted of the following (in thousands):

 

Cash consideration

   $ 89,648   

Escrow note payable

     670   

Common stock

     9,118   

Series A redeemable convertible preferred stock

     77,490   
  

 

 

 

Total purchase consideration

   $ 176,926   
  

 

 

 

The purchase price is allocated on a preliminary basis to the iContact tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The excess of the purchase price over the net tangible assets acquired will be recorded as goodwill. The following summarizes the preliminary purchase price allocation:

 

     Estimated
Useful Life
   Estimated
Fair Value
 

Cash and cash equivalents

      $ 10,000   

Accounts receivable

        96   

Prepaid expenses and other current assets

        478   

Property, equipment and software

        2,625   

Accounts payable and accrued expenses

        (7,161

Deferred revenue

        (1,645

Other liabilities

        (32
     

 

 

 

Net tangibles assets acquired

        4,361   

Trade names

   3 years      1,400   

Customer relationships

   3 years      19,166   

Purchased technology

   3 years      12,041   

Goodwill

        139,958   
     

 

 

 

Total preliminary purchase price

      $ 176,926   
     

 

 

 

 

3. Pro Forma Adjustments

The following pro forma adjustments are included in the unaudited pro forma condensed combined financial statements:

(A) To reflect the cash consideration paid of $89.6 million.


(B) To reflect transaction costs of $4.6 million.

(C) To reflect net deferred tax assets and liabilities related to the acquisition.

(D) To reflect the fair value adjustment related to iContact’s existing capitalized software development costs.

(E) To reflect the fair value of acquired definite-lived intangible assets including customer relationships of $19.2 million, purchased technology of $12.0 million, and trade names of $1.4 million, offset by the removal of the existing balances of $1.5 million.

(F) To reflect the fair value of acquired goodwill based on net assets acquired and liabilities assumed as if the acquisition occurred on December 31, 2011. The difference between the amount recorded on a pro forma basis and the actual balance as of the effective dates of the acquisition is the result of changes in the assets and liabilities of iContact between December 31, 2011 and the closing date of February 24, 2012.

(G) To reflect the payoff of existing current and long-term outstanding debt obligations in connection with the acquisition of $0.2 million and $5.0 million, respectively, and to reflect the issuance of the promissory note in the principal amount of $0.7 million classified as current portion of notes payable and capital lease obligations.

(H) To reflect the fair value adjustment related to iContact’s deferred revenue balance.

(I) To reflect the fair value adjustment related to iContact’s deferred rent balance.

(J) To reflect the issuance of 1.0 million shares of Vocus’ newly-created Series A convertible preferred stock with a deemed value at issuance of $77.5 million and to reflect the payoff of iContact’s existing convertible preferred stock of $54.0 million.

(K) To eliminate the stockholders’ deficit balance of iContact of $44.8 million.

(L) To reflect the removal of amortization expense related to iContact’s existing definite-lived intangible assets.

(M) To reflect the removal of amortization expense related to iContact’s existing capitalized software development costs.

(N) To reflect amortization expense related to the acquired definite-lived intangible assets including $4.0 million classified as cost of revenues and $6.9 million classified as general and administrative expense.

(O) To reflect the removal of interest expense to reflect the payoff of existing outstanding debt obligations in connection with the acquisition.

(P) To reflect the issuance of 401,672 shares of Vocus’ common stock with a deemed value at issuance of $9.1 million.