Attached files
| file | filename |
|---|---|
| 8-K/A - LIVE FILING - LIONBRIDGE TECHNOLOGIES INC /DE/ | htm_45777.htm |
| EX-99.1 - EX-99.1 - LIONBRIDGE TECHNOLOGIES INC /DE/ | exhibit2.htm |
| EX-99.2 - EX-99.2 - LIONBRIDGE TECHNOLOGIES INC /DE/ | exhibit3.htm |
| EX-23.1 - EX-23.1 - LIONBRIDGE TECHNOLOGIES INC /DE/ | exhibit1.htm |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial information is based on the assumptions set forth in the notes to such information. The unaudited pro forma adjustments made in the compilation of the unaudited pro forma financial information are based upon available information and assumptions that the Company considers to be reasonable, and have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the Securities and Exchange Commission (“SEC”).
The pro forma adjustments are preliminary and have been made solely for informational purposes. The actual results reported by the combined company in periods following the acquisition may differ significantly from that reflected in these unaudited pro forma condensed combined financial statements for a number of reasons, including but not limited to cost savings from operating efficiencies, synergies and the impact of the incremental costs incurred in integrating the two companies. As a result, the pro forma condensed combined information is not intended to represent and does not purport to be indicative of what the combined company’s financial condition or results of operations would have been had the acquisition and borrowing been completed on the applicable dates of this pro forma condensed combined financial information. In addition, the pro forma condensed combined financial information does not purport to project the future financial condition and results of operations of the combined company.
The pro forma condensed combined financial statements are based on various assumptions, including assumptions relating to the consideration paid and the allocation thereof to the assets acquired and liabilities assumed from Productive Resources, LLC based on preliminary estimates of fair value. The pro forma assumptions and adjustments are described in the accompanying notes presented on the following pages. Pro forma adjustments are those that are directly attributable to the transaction, are factually supportable and, with respect to the unaudited pro forma condensed combined statement of operations, are expected to have a continuing impact on the consolidated results. The final purchase price and the allocation thereof may differ from that reflected in the pro forma condensed combined financial statements after final working capital adjustments are performed
The unaudited pro forma condensed combined statements of operations included herein do not reflect any potential cost savings or other operating efficiencies that should result from the integration of the companies.
These unaudited pro forma condensed combined financial information and the accompanying notes should be read together with (1) the Company’s audited consolidated financial statements and accompanying notes, as of and for the fiscal year ended December 31, 2011, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the SEC on March 14, 2012 and (2) the Company’s unaudited condensed consolidated financial statements and accompanying notes as of and for the three months ended March 31, 2012 and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2012, which was filed with the SEC on May 9, 2012, (3) the Productive Resources, LLC audited consolidated financial statement for the years ended December 31, 2011 and 2010, included as exhibit 99.1, and (4) the Productive Resources, LLC reviewed consolidated financial statement for the three months ended March 31, 2012 and 2011, included as exhibit 99.2.
The actual operating results for Productive Resources will be consolidated with the Company’s operating results for all periods subsequent to the acquisition date of June 1, 2012.
The unaudited pro forma condensed combined statements of operations of Lionbridge and Productive resources for the year ended December 31, 2011 gives effect to the acquisition of Productive Resources by Lionbridge as if it had occurred effective January 1, 2011.
The unaudited pro forma condensed combined statements of operations of Lionbridge and Productive resources for the three months ended March 31, 2012 gives effect to the acquisition of Productive Resources by Lionbridge as if it had occurred effective January 1, 2011.
The unaudited pro forma condensed combined balance sheet of Lionbridge and Productive Resources at March 31, 2012 gives effect to the acquisition of Productive Resources by Lionbridge as if it had occurred effective March 31, 2012.
LIONBRIDGE TECHNOLOGIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(Unaudited)
(Amounts in thousands, except per share data)
| Year Ended December 31, 2011 | ||||||||||||||||||||
| Productive | Pro Forma | Pro Forma | ||||||||||||||||||
| Lionbridge | Resources | Adjustment | Combined | |||||||||||||||||
Revenue..................................................................... |
$ | 427,856 | $ | 10,713 | $ | (692 | ) | ( a ) | $ | 437,877 | ||||||||||
Operating expenses: |
||||||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization included
below)................................................ |
296,221 | 6,927 | (692 | ) | ( a ) | 302,456 | ||||||||||||||
Sales and marketing................................................ |
33,563 | 204 | 0 | 33,767 | ||||||||||||||||
General and administrative........................................ |
75,047 | 2,161 | 107 | ( d ) | 77,315 | |||||||||||||||
Research and development....................................... |
5,765 | 0 | 0 | 5,765 | ||||||||||||||||
Depreciation and amortization.................................... |
5,956 | 74 | 0 | 6,030 | ||||||||||||||||
Amortization of acquisition-related intangible assets.......... |
2,332 | 0 | 777 | ( b ) | 3,109 | |||||||||||||||
Restructuring and other charges |
3,369 | 0 | 0 | 3,369 | ||||||||||||||||
Total operating expenses.................................. |
422,253 | 9,366 | 192 | 431,811 | ||||||||||||||||
Income (loss) from operations.............................................. |
5,603 | 1,347 | (884 | ) | 6,066 | |||||||||||||||
Interest expense: |
||||||||||||||||||||
Interest on outstanding debt........................................ |
722 | 94 | 193 | ( c ) | 1,009 | |||||||||||||||
Amortization of deferred financing costs......................... |
100 | 0 | 0 | 100 | ||||||||||||||||
Interest income................................................................ |
71 | 5 | 0 | 76 | ||||||||||||||||
Other (income) expense, net................................................. |
3,195 | (1 | ) | 0 | 3,194 | |||||||||||||||
Income (loss) before income taxes.......................................... |
1,657 | 1,259 | (1,077 | ) | 1,839 | |||||||||||||||
Benefit for income taxes...................................................... |
(71 | ) | 0 | 0 | (71 | ) | ||||||||||||||
Net income (loss)............................................................ |
$ | 1,728 | $ | 1,259 | $ | (1,077 | ) | $ | 1,910 | |||||||||||
Net income (loss) per share of common stock: |
||||||||||||||||||||
Basic.................................................................. |
$ | 0.03 | $ | 0.03 | ||||||||||||||||
Diluted................................................................ |
$ | 0.03 | $ | 0.03 | ||||||||||||||||
Weighted average number of common shares outstanding: |
||||||||||||||||||||
Basic................................................................... |
57,859 | 57,859 | ||||||||||||||||||
Diluted................................................................ |
59,478 | 59,478 | ||||||||||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed combined
financial statements.
LIONBRIDGE TECHNOLOGIES, INC.
PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(Amounts in thousands, except per share data)
| Three months Ended March 31, 2012 | ||||||||||||||||||||
| Productive | Pro Forma | Pro Forma | ||||||||||||||||||
| Lionbridge | Resources | Adjustment | Combined | |||||||||||||||||
Revenue..................................................................... |
$ | 112,096 | $ | 2,888 | $ | (141 | ) | (a) | $ | 114,843 | ||||||||||
Operating expenses: |
||||||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization included |
78,173 | 1,905 | (141 | ) | (a) | 79,937 | ||||||||||||||
below)................................................ |
||||||||||||||||||||
Sales and marketing................................................ |
8,509 | 83 | 0 | 8,592 | ||||||||||||||||
General and administrative........................................ |
19,176 | 551 | (5 | ) | ( d,e ) | 19,722 | ||||||||||||||
Research and development....................................... |
1,362 | 0 | 0 | 1,362 | ||||||||||||||||
Depreciation and amortization.................................... |
1,645 | 23 | 0 | 1,668 | ||||||||||||||||
Amortization of acquisition-related intangible assets.......... |
480 | 0 | 194 | ( b ) | 674 | |||||||||||||||
Restructuring and other charges |
284 | 0 | 0 | 284 | ||||||||||||||||
Total operating expenses.................................. |
109,629 | 2,562 | 48 | 112,239 | ||||||||||||||||
Income (loss) from operations.............................................. |
2,467 | 326 | (189 | ) | 2,604 | |||||||||||||||
Interest expense: |
||||||||||||||||||||
Interest on outstanding debt........................................ |
190 | 23 | 49 | ( c ) | 262 | |||||||||||||||
Amortization of deferred financing costs......................... |
25 | 0 | 0 | 25 | ||||||||||||||||
Interest income................................................................ |
20 | 0 | 0 | 20 | ||||||||||||||||
Other (income) expense, net................................................. |
(31 | ) | (4 | ) | 0 | (35 | ) | |||||||||||||
Income (loss) before income taxes.......................................... |
2,303 | 307 | (238 | ) | 2,372 | |||||||||||||||
Benefit for income taxes...................................................... |
582 | 0 | 0 | 582 | ||||||||||||||||
Net income (loss)............................................................ |
$ | 1,721 | $ | 307 | $ | (238 | ) | $ | 1,790 | |||||||||||
Net income (loss) per share of common stock: |
||||||||||||||||||||
Basic.................................................................. |
$ | 0.03 | $ | 0.03 | ||||||||||||||||
Diluted................................................................ |
$ | 0.03 | $ | 0.03 | ||||||||||||||||
Weighted average number of common shares outstanding: |
||||||||||||||||||||
Basic................................................................... |
58,557 | 58,557 | ||||||||||||||||||
Diluted................................................................ |
59,662 | 59,662 | ||||||||||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.
LIONBRIDGE TECHNOLOGIES, INC.
MARCH 31, 2012 PRO FORMA CONDENSED COMBINED BALANCE SHEET
(Unaudited)
(Amounts in thousands)
| Productive | Pro Forma | Pro Forma | ||||||||||||||||||
| Lionbridge | Resources | Adjustment | Combined | |||||||||||||||||
ASSETS |
||||||||||||||||||||
Current assets: |
||||||||||||||||||||
Cash and cash equivalents........................ |
$ | 19,932 | $ | 66 | $ | (744 | ) | ( f,j ) | $ | 19,254 | ||||||||||
Accounts receivable, net........................... |
62,961 | 1,890 | (148 | ) | ( g ) | 64,703 | ||||||||||||||
Unbilled receivables ............................... |
27,825 | 879 | (45 | ) | ( h ) | 28,659 | ||||||||||||||
Other current assets .............................. |
10,781 | 118 | 10,899 | |||||||||||||||||
Total current assets ........................ |
121,499 | 2,953 | (937 | ) | 123,515 | |||||||||||||||
Property and equipment, net........................... |
21,935 | 458 | (244 | ) | ( j ) | 22,149 | ||||||||||||||
Goodwill ................................................... |
9,675 | 0 | 5,890 | ( m ) | 15,565 | |||||||||||||||
Other intangible assets, net.............................. |
6,776 | 0 | 7,500 | ( i ) | 14,276 | |||||||||||||||
Other assets................................................. |
5,562 | 2350 | (2,338 | ) | ( j ) | 5,574 | ||||||||||||||
Total assets.................................... |
$ | 165,447 | $ | 5,761 | $ | 9,871 | $ | 181,079 | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||
Current portion of long-term debt............... |
$ | 0 | $ | 700 | $ | (700 | ) | ( j) | $ | 0 | ||||||||||
Accounts payable................................. |
21,257 | 88 | (148 | ) | ( g ) | 21,197 | ||||||||||||||
Accrued compensation and benefits............ |
17,712 | 536 | 0 | 18,248 | ||||||||||||||||
Other accrued expenses and current liabilities... |
22,894 | 72 | (66 | ) | ( h,j ) | 22,900 | ||||||||||||||
Deferred revenue.................................... |
11,353 | 41 | 0 | 11,394 | ||||||||||||||||
Total current liabilities........................ |
73,216 | 1,437 | (914 | ) | 73,739 | |||||||||||||||
Long-term debt.............................................. |
24,700 | 1,209 | 8,791 | ( f,j ) | 34,700 | |||||||||||||||
Deferred income taxes, long-term......................... |
641 | 0 | 3,173 | ( l ) | 3,814 | |||||||||||||||
Other long-term liabilities.................................. |
13,231 | 0 | 1,936 | ( f ) | 15,167 | |||||||||||||||
Total stockholders’ equity ................................. |
53,659 | 3,115 | (3,115 | ) | ( k ) | 53,659 | ||||||||||||||
Total liabilities and stockholders’ equity............... |
$ | 165,447 | $ | 5,761 | $ | 9,871 | $ | 181,079 | ||||||||||||
The accompanying notes are an integral part of the unaudited pro forma condensed combined
financial statements.
Lionbridge Technologies, Inc.
Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
1. Summary of Transaction
On June 1, 2012, the Company acquired Productive Resources, LLC. (“PRI”) for $10.5 million in cash (inclusive of working capital adjustment) and deferred payments totaling $2.0 million that are payable in three annual payments starting on the first anniversary of the purchase. PRI is a provider of outsourced technical engineering, documentation and drafting solutions. PRI is included in the Company’s Global Language and Content (“GLC”) segment. PRI provides Lionbridge with operations in the Midwestern region of the US and long-standing relationships with clients in the manufacturing sector. The acquisition also expands the Company’s delivery model for addressing all aspects of client’s global content lifecycle, including drafting, illustration, documentation, translation and support.
The fair value of the consideration transferred, as if the transaction occurred on March 31, 2012, was estimated at $12.5 million as follows:
Initial cash payment, net of working capital adjustment |
$ | 10,514,000 | ||
Fair value of deferred cash payments |
1,936,000 | |||
Total consideration transferred |
$ | 12,450,000 | ||
Summary of the purchase price allocation associated with the acquisition of PRI, as if the transaction occurred on March 31, 2012, were as follows:
Cash |
$ | 29,000 | ||
Accounts receivable |
1,742,000 | |||
Unbilled receivables |
834,000 | |||
Prepaid and other assets |
130,000 | |||
Property and equipment |
214,000 | |||
Intangible assets |
7,500,000 | |||
Goodwill |
5,890,000 | |||
Total assets |
16,339,000 | |||
Accounts payable |
(88,000 | ) | ||
Accrued compensation and benefits |
(536,000 | ) | ||
Other liabilities |
(92,000 | ) | ||
Deferred tax liabilities |
(3,173,000 | ) | ||
Total consideration transferred |
$ | 12,450,000 | ||
2. Intangible Assets
Based on the preliminary allocation of the purchase price, the following amounts have been
allocated to identifiable intangible assets (in thousands):
Customer relationships |
6,200,000 | |||
Non-compete agreement |
1,300,000 | |||
Total intangible assets |
7,500,000 |
The estimated fair value attributed to the customer relationships was determined based upon a discounted cash flow forecast. Cash flows were discounted at a rate of 16%. The fair value of the customer relationships will be amortized over a period of 12 years on a straight-line basis, which approximates the pattern in which the economic benefits of the completed technologies are expected to be realized.
The fair value of the non-compete agreements will be amortized over 5 years on a straight-line basis, which approximates the pattern in which the economic benefits of the non-compete agreements will be realized.
3. Pro Forma Adjustments
The pro forma adjustments in the unaudited pro forma condensed combined financial information are as follows:
Unaudited Pro Forma Condensed Combined Statements of Operations:
| (a) | Reflects elimination of Productive Resources revenues and Lionbridge costs related to the previous vender/supplier relationship. The decrease in revenue and for the year-ended December 31, 2011 and for the three months ended March 31, 2012 was $692,000 and $141,000, respectively. |
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| (b) | Reflects amortization expense related to the acquired intangible assets, calculated over the estimated useful lives on a straight-line basis (See Note 2 — Intangible Assets). The increase to amortization expense for the year-ended December 31, 2011 and for the three months ended March 31, 2012 was $777,000 and $194,000, respectively. |
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| (c) | Reflects inclusion of interest expense related to the $10 million draw on Lionbridge’s revolving line of credit and elimination of PRI interest expense. Interest expense calculated using 2.25% annual rate which represents Lionbridge’s incremental borrowing rate at January 1, 2011. The inclusion of Lionbridge’s interest expense for the year-ended December 31, 2011 and for the three months ended March 31, 2012 was $287,000 and $72,000, respectively. The elimination of Productive Resources’ interest expense for the year-ended December 31, 2011 and for the three months ended March 31, 2012 was $94,000 and $23,000, respectively. |
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| (d) | Reflects inclusion of Productive Resources lease obligations to their previously consolidated VIE, Booher Properties. Rental expense associated with the Booher Properties lease was eliminated in consolidation of the PRI Statement of Operations and a new lease was signed by Lionbridge subsequent to the acquisition. Therefore, the increase to rental expense associated with that lease for the year-ended 2011 and for the three months ended March 31, 2012 was $107,000 and $25,000, respectively |
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| (e) | Reflect elimination of deal costs related to the transaction of $30,000 for the three months ended March 31, 2012. Deal costs are primarily outside advisory fees incurred by both Productive Resources and Lionbridge. |
Unaudited Pro Forma Condensed Combined Balance Sheet:
| (f) | Reflects the consideration paid by Lionbridge to Productive Resources of $12.5 million, which includes the direct payment by Lionbridge of $707,000, borrowings of $10 million, and deferred payments with an estimated fair value of $1.9 million (See Note 1 — Summary of Transaction). |
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| (g) | Reflects elimination of Productive Resources receivables and Lionbridge liabilities related to the previous vender/supplier relationship. The decrease in receivables and payables at March 31, 2012 was $148,000. |
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| (h) | Reflects elimination of Productive Resources unbilled receivables and Lionbridge accruals related to the previous vender/supplier relationship. The decrease in unbilled receivables and accruals at March 31, 2012 was $45,000. |
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| (i) | Reflects the estimated fair values of $7.5 million of intangibles based on the preliminary allocation of the purchase price (See Note 2 — Intangible Assets). None of the goodwill and intangibles associated with this transaction will be deductable for tax purposes. |
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| (j) | Reflects elimination of seller’s assets and liabilities not included in the transaction as they related to the VIE entity not acquired by Lionbridge, Booher Properties. Assets and liabilities eliminated for Booher Properties include cash of $37,000, equipment of $244,000, other assets of $2.3 million, current portion of long-term debt of $700,000, Other accrued expenses and current liabilities of $21,000, and long-term debt of $1.2 million. |
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| (k) | Reflects elimination of Productive Resources equity of $3.1 million. |
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| (l) | Reflects inclusion of $3.2 million deferred tax liability related to the acquired intangibles. None of the goodwill and intangibles associated with this transaction will be deductable for tax purposes. |
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| (m) | Reflects inclusion of $5.9 million Goodwill (See Note 1 — Summary of Transaction). None of the goodwill and intangibles associated with this transaction will be deductable for tax purposes. |