Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A FINANCIAL STATEMENTS AND EXHIBITS - TALEO CORP | form_8ka.htm |
| EX-99.1 - WORLDWIDE COMPENSATION 2008 FINANCIAL STATEMENTS - TALEO CORP | exhibit_99-1.htm |
| EX-99.2 - WORLDWIDE COMPENSATION NINE MONTHS ENDED SEPTEMBER 30, 2009 - TALEO CORP | exhibit_99-2.htm |
| EX-23.1 - CONSENT INDEPENDENT ACCOUNTANTS - TALEO CORP | exhibit_23-1.htm |
EXHIBIT
99.3
Pro Forma Financial
Information
On
September 14, 2009, Taleo Corporation, (“the Company”) entered into an Amended
and Restated Agreement and Plan of Merger (the “Merger Agreement”) to acquire
Worldwide Compensation, Inc. (“WWC”), a private company with headquarters in
California that provides compensation management solutions. In
accordance with the terms of the Merger Agreement, the Company was to pay up to
$16.0 million in cash, subject to adjustment for any outstanding debt,
third-party expenses and certain other specified items, in exchange for all of
the issued and outstanding capital stock, options and warrants of WWC that the
Company did not already own. Fifteen percent (15%) of the consideration was to
be placed into escrow for one year following the closing to be held as security
for losses incurred by the Company in the event of certain breaches of the
representations and warranties contained in the Merger Agreement or certain
other events. Previously, in the third quarter of 2008, the Company
made an investment of $2.5 million for a 16% equity investment in and an option
to purchase WWC at a later date. In connection with the execution of
the Merger Agreement, the Company negotiated more favorable terms than the
purchase option and also terminated the purchase option. Accordingly,
the Company wrote-off the $1.1 million carrying value of the purchase option in
the third quarter of 2009.
On
January 1, 2010, the Company completed the acquisition of
WWC. Accordingly, the assets, liabilities and operating results of WWC will
be reflected in the Company’s consolidated financial statements from the date of
acquisition. The total consideration paid by the Company for the portion of
WWC that it did not already own was approximately $14.1 million in cash
including approximately $0.3 million in transaction costs. No
contingent cash payments remain for this transaction.
The
Company has accounted for the acquisition as a business combination under the
acquisition method of accounting. Under the acquisition method of accounting,
the purchase price is allocated to the assets acquired and liabilities assumed
of WWC based upon their estimated fair values. The unaudited pro forma combined
condensed consolidated financial statements below have been prepared
giving effect to all events that are directly attributable to the Merger
Agreement using the purchase method of accounting. The following
unaudited pro forma combined condensed consolidated financial statements
and related notes represent, in the opinion of management, all adjustments
necessary to present the Company’s pro forma results of operation in accordance
with Article 11 of Regulation S-X and are based upon available
information and certain assumptions considered reasonable under the
circumstances.
The
unaudited pro forma combined condensed consolidated balance sheet gives effect
to the acquisition as if the acquisition had occurred on September 30,
2009. The unaudited pro forma combined condensed consolidated
statements of operations for the fiscal year ended December 31, 2008 and
nine months ended September 30, 2009 gives effect to the acquisition as if
the acquisition had occurred on January 1, 2008.
The
unaudited pro forma combined condensed consolidated financial statements,
including the notes thereto, do not reflect any potential cost savings or other
synergies that could result from the Merger Agreement. The unaudited pro forma
combined condensed consolidated financial statements are presented for
illustrative purposes only and are not necessarily indicative of the combined
financial position or results of operations for future periods or the results
that would have been achieved if the Merger Agreement had been consummated on
the date indicated. The unaudited pro forma combined condensed consolidated
financial information should be read in conjunction with the historical
consolidated financial statements and notes thereto of the Company and other
financial information pertaining to the Company contained in its Amendment No. 1
to Annual Report on Form 10-K/A for the fiscal year ended December 31,
2008, which was filed with the SEC on October 27, 2009, and in its
Amendment No.1 to Quarterly Report on Form 10-Q/A for the quarter ended
September 30, 2009, which was filed with the SEC on November 4,
2009. Taleo historical financial information presented in the
unaudited pro forma combined condensed consolidated financial statements was
obtained from its audited financial statements as of and for the year ended
December 31, 2008 and its unaudited financial statements as of and for the nine
months ended September 30, 2009. WWC historical information presented
in the unaudited pro forma combined condensed consolidated balance sheet as
September 30, 2009 and in the unaudited pro forma combined condensed
consolidated statement of operations for the nine months ended September 30,
2009 was prepared from unaudited historical information provided by WWC and for
the year ended December 31, 2008 from WWC’s audited financial
statements.
|
TALEO
CORPORATION
|
||||||||||||||||||||
|
UNAUDITED
PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE
SHEET
|
||||||||||||||||||||
|
AS
OF SEPTEMBER 30, 2009
|
||||||||||||||||||||
|
(in
thousands, except share and per share data)
|
||||||||||||||||||||
|
Historical
|
||||||||||||||||||||
|
Taleo
|
Worldwide
Compensation
|
Pro
Forma Adjustments
|
Notes
|
Pro
Forma Combined
|
||||||||||||||||
|
ASSETS
|
||||||||||||||||||||
|
Current
assets:
|
||||||||||||||||||||
|
Cash
and cash equivalents
|
$ | 76,513 | $ | 477 | $ | (13,855 | ) | (2 | ) | $ | 63,135 | |||||||||
|
Accounts
receivable, net
|
46,155 | 354 | (190 | ) | (3 | ) | 46,319 | |||||||||||||
|
Other
current assets
|
18,212 | 98 | (92 | ) | (4 | ) | 18,218 | |||||||||||||
|
Total
current assets
|
140,880 | 929 | (14,137 | ) | 127,672 | |||||||||||||||
|
Property
and equipment, net
|
24,198 | 142 | 24 | (5 | ) | 24,364 | ||||||||||||||
|
Goodwill
|
91,027 | - | 13,920 | (6 | ) | 104,947 | ||||||||||||||
|
Other
intangibles, net
|
34,116 | - | 2,500 | (7 | ) | 36,616 | ||||||||||||||
|
Other
non-current assets
|
5,680 | 3 | (1,417 | ) | (8 | ) | 4,266 | |||||||||||||
|
Total
assets
|
$ | 295,901 | $ | 1,074 | $ | 890 | $ | 297,865 | ||||||||||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||||||
|
Accounts
payable and accrued liabilities
|
$ | 21,094 | $ | 401 | $ | (154 | ) | (9 | ) | $ | 21,341 | |||||||||
|
Deferred
revenue and customer deposits
|
72,555 | 1,739 | (1,426 | ) | (10 | ) | 72,868 | |||||||||||||
|
Other
current liabilities
|
573 | 211 | (211 | ) | (11 | ) | 573 | |||||||||||||
|
Total
current liabilities
|
94,222 | 2,351 | (1,791 | ) | 94,782 | |||||||||||||||
|
Non-current
liabilities:
|
||||||||||||||||||||
|
Non-current
deposits and long-term deferred revenue
|
13,055 | 691 | (173 | ) | (10 | ) | 13,573 | |||||||||||||
|
Other
non-current liabilities
|
4,401 | - | - | 4,401 | ||||||||||||||||
|
Total
liabilities
|
111,678 | 3,042 | (1,964 | ) | 112,756 | |||||||||||||||
|
Stockholders’
equity:
|
||||||||||||||||||||
|
Series A
preferred stock
|
— | 1,812 | (1,812 | ) | (12 | ) | - | |||||||||||||
|
Series B
preferred stock
|
— | 2,479 | (2,479 | ) | (12 | ) | - | |||||||||||||
|
Common
stock
|
— | 150 | (150 | ) | (12 | ) | - | |||||||||||||
|
Additional
paid-in capital
|
264,224 | 21 | (21 | ) | (12 | ) | 264,224 | |||||||||||||
|
Accumulated
deficit
|
(81,622 | ) | (6,430 | ) | 7,316 | (13 | ) | (80,736 | ) | |||||||||||
|
Treasury
stock and accumulated other comprehensive income
|
1,621 | - | - | 1,621 | ||||||||||||||||
|
Total
stockholders’ equity
|
184,223 | (1,968 | ) | 2,854 | 185,109 | |||||||||||||||
|
Total
liabilities and stockholders’ equity
|
$ | 295,901 | $ | 1,074 | $ | 890 | $ | 297,865 | ||||||||||||
|
See
accompanying Notes to Pro Forma Combined Condensed Consolidated Financial
Statements.
|
||||||||||||||||||||
|
TALEO
CORPORATION
|
||||||||||||||||||||
|
UNAUDITED
PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
||||||||||||||||||||
|
FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009
|
||||||||||||||||||||
|
(in
thousands, except per share data)
|
||||||||||||||||||||
|
Historical
|
||||||||||||||||||||
|
Taleo
|
Worldwide
Compensation
|
Pro
forma Adjustments
|
Notes
|
Pro
forma Combined
|
||||||||||||||||
|
Revenue:
|
||||||||||||||||||||
|
Application
|
$ | 128,988 | $ | 590 | $ | - | $ | 129,578 | ||||||||||||
|
Consulting
|
18,924 | - | - | 18,924 | ||||||||||||||||
|
Total
revenue
|
147,912 | 590 | - | 148,502 | ||||||||||||||||
|
Cost
of revenue:
|
||||||||||||||||||||
|
Application
|
30,901 | 762 | 212 | (14 | ) | 31,875 | ||||||||||||||
|
Consulting
|
18,758 | - | - | 18,758 | ||||||||||||||||
|
Total
cost of revenue
|
49,659 | 762 | 212 | 50,633 | ||||||||||||||||
|
Gross
profit
|
98,253 | (172 | ) | (212 | ) | 97,869 | ||||||||||||||
|
Operating
expenses:
|
||||||||||||||||||||
|
Sales
and marketing
|
49,536 | 882 | 123 | (14 | ) | 50,541 | ||||||||||||||
|
Research
and development
|
26,138 | 966 | 59 | (14 | ) | 27,163 | ||||||||||||||
|
General
and administrative
|
25,742 | 509 | - | 26,251 | ||||||||||||||||
|
Total
operating expenses
|
101,416 | 2,357 | 182 | 103,955 | ||||||||||||||||
|
Operating
loss
|
(3,163 | ) | (2,529 | ) | (394 | ) | (6,086 | ) | ||||||||||||
|
Other
income / (expense):
|
||||||||||||||||||||
|
Interest
income
|
246 | 1 | (21 | ) | (15 | ) | 226 | |||||||||||||
|
Interest
expense
|
(130 | ) | - | (130 | ) | |||||||||||||||
|
Worldwide
Compensation purchase option write-off
|
(1,084 | ) | - | - | - | (1,084 | ) | |||||||||||||
|
Total
other income / (expense), net
|
(968 | ) | 1 | (21 | ) | (988 | ) | |||||||||||||
|
Loss
before provision for / (benefit from) income taxes
|
(4,131 | ) | (2,528 | ) | (415 | ) | (7,074 | ) | ||||||||||||
|
Provision
for / (benefit from) income taxes
|
(831 | ) | - | (116 | ) | (16 | ) | (947 | ) | |||||||||||
|
Net
loss
|
$ | (3,300 | ) | $ | (2,528 | ) | $ | (299 | ) | $ | (6,127 | ) | ||||||||
|
Net
loss per share attributable to Class A common stockholders — basic
and diluted
|
$ | (0.11 | ) | $ | (0.20 | ) | ||||||||||||||
|
Weighted-average
Class A common shares — basic and diluted
|
30,540 | 30,540 | ||||||||||||||||||
|
See
accompanying Notes to Pro Forma Combined Condensed Consolidated Financial
Statements.
|
||||||||||||||||||||
|
TALEO
CORPORATION
|
||||||||||||||||||||
|
UNAUDITED
PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
||||||||||||||||||||
|
FOR
THE YEAR ENDED DECEMBER 31, 2008
|
||||||||||||||||||||
|
(in
thousands, except per share data)
|
||||||||||||||||||||
|
Historical
|
||||||||||||||||||||
|
Taleo
|
Worldwide
Compensation
|
Pro
forma Adjustments
|
Notes
|
Pro
forma Combined
|
||||||||||||||||
|
Revenue:
|
||||||||||||||||||||
|
Application
|
$ | 138,628 | $ | 258 | $ | - | $ | 138,886 | ||||||||||||
|
Consulting
|
29,791 | - | - | 29,791 | ||||||||||||||||
|
Total
revenue
|
168,419 | 258 | - | 168,677 | ||||||||||||||||
|
Cost
of revenue:
|
||||||||||||||||||||
|
Application
|
32,376 | 647 | 307 | (14 | ) | 33,330 | ||||||||||||||
|
Consulting
|
25,269 | - | - | 25,269 | ||||||||||||||||
|
Total
cost of revenue
|
57,645 | 647 | 307 | 58,599 | ||||||||||||||||
|
Gross
profit
|
110,774 | (389 | ) | (307 | ) | 110,078 | ||||||||||||||
|
Operating
expenses:
|
||||||||||||||||||||
|
Sales
and marketing
|
53,827 | 767 | 302 | (14 | ) | 54,896 | ||||||||||||||
|
Research
and development
|
30,994 | 1,029 | 351 | (14 | ) | 32,374 | ||||||||||||||
|
General
and administrative
|
32,382 | 670 | 287 | (14 | ) | 33,339 | ||||||||||||||
|
Restructuring
|
1,914 | - | - | 1,914 | ||||||||||||||||
|
Total
operating expenses
|
119,117 | 2,466 | 940 | 122,523 | ||||||||||||||||
|
Operating
loss
|
(8,343 | ) | (2,855 | ) | (1,247 | ) | (12,445 | ) | ||||||||||||
|
Other
income / (expense):
|
||||||||||||||||||||
|
Interest
income
|
1,717 | 16 | (318 | ) | (15 | ) | 1,415 | |||||||||||||
|
Interest
expense
|
(199 | ) | (4 | ) | - | (203 | ) | |||||||||||||
|
Total
other income / (expense), net
|
1,518 | 12 | (318 | ) | 1,212 | |||||||||||||||
|
Loss
before provision for income taxes
|
(6,825 | ) | (2,843 | ) | (1,565 | ) | (11,233 | ) | ||||||||||||
|
Provision
/ (benefit) for income taxes
|
1,303 | - | (49 | ) | (16 | ) | 1,254 | |||||||||||||
|
Net
loss
|
$ | (8,128 | ) | $ | (2,843 | ) | $ | (1,516 | ) | $ | (12,487 | ) | ||||||||
|
Net
loss per share attributable to Class A common stockholders — basic
and diluted
|
$ | (0.29 | ) | $ | (0.45 | ) | ||||||||||||||
|
Weighted-average
Class A common shares — basic and diluted
|
27,569 | 27,569 | ||||||||||||||||||
|
See
accompanying Notes to Pro Forma Combined Condensed
Consolidated Financial Statements.
|
||||||||||||||||||||
Notes
to the Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements
NOTE
1. BASIS OF PRESENTATION
The
unaudited pro forma combined condensed consolidated financial statements
included herein have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission.
NOTE
2. DESCRIPTION OF THE WORLDWIDE COMPENSATION, INC. ACQUISITION
(1) On
September 14, 2009, Taleo Corporation (“the Company”) entered into an Amended
and Restated Agreement and Plan of Merger (the “Merger Agreement”) to acquire
Worldwide Compensation, Inc. (“WWC”), a private company with headquarters in
California that provides compensation management solutions. In
accordance with the terms of the Merger Agreement, the Company was to pay up to
$16.0 million in cash, subject to adjustment for any outstanding debt,
third-party expenses and certain other specified items, in exchange for all of
the issued and outstanding capital stock, options and warrants of WWC that the
Company did not already own. Fifteen percent (15%) of the consideration was to
be placed into escrow for one year following the closing to be held as security
for losses incurred by the Company in the event of certain breaches of the
representations and warranties contained in the Merger Agreement or certain
other events. Previously, in the third quarter of 2008, the Company
made an investment of $2.5 million for a 16% equity investment in and an option
to purchase WWC at a later date. In connection with the execution of
the Merger Agreement, the Company negotiated more favorable terms than the
purchase option and also terminated the purchase option. Accordingly,
the Company wrote-off the $1.1 million carrying value of the purchase option in
the third quarter of 2009.
On
January 1, 2010, the Company completed the acquisition of
WWC. Accordingly, the assets, liabilities and operating results of WWC will
be reflected in the Company’s consolidated financial statements from the date of
acquisition. The total consideration paid by the Company for the portion of
WWC that it did not already own was approximately $14.1 million in cash
including approximately $0.3 million in transaction costs. No
contingent cash payments remain for this transaction.
Additionally
in April 2008, the Company had entered into a reseller agreement with WWC to
sell WWC compensation management solutions. The Company recorded
revenue related to this agreement on a net basis in its statement of
operations. At January 1, 2010, the Company had $47,000 in
receivables from WWC and $97,000 in payables to WWC related to this reseller
agreement. The effect of this activity has been eliminated in
the September 30, 2009 unaudited pro forma combined condensed consolidated
balance sheet of the Company.
The pro
forma financial statements were prepared using a three step process: (1)
allocate the WWC purchase price to the net identified assets based on their fair
value as of January 1, 2010 with the excess purchase price over the net
identifiable asset being recorded as goodwill (2) determine the gain
on the remeasurement of the 16% previously held equity interest in WWC to fair
value as of January 1, 2010 and (3) include the carrying value of the 16%
previously held equity interest in the purchase price. The aggregate
of these three components represents the Company’s total interest in
WWC.
Purchase of Remaining 84%
Equity Interest in WWC
The
Company took control of WWC when it purchased the remaining 84% equity interest
from the former shareholders of WWC. Under the acquisition method of
accounting, the total purchase price paid for the 100% equity interest has been
preliminarily allocated to the net identifiable assets based on their estimated
fair value at the date of acquisition. As part of the process, the Company
performed a valuation analysis to determine the fair values of certain
identifiable intangible assets of WWC as of the valuation date. This analysis
was used as the basis for the preliminary allocation of the purchase price among
the acquired identifiable intangible assets of WWC. The excess of the purchase
price over the net identifiable assets has been recorded to
goodwill. The Company expects the allocation of the purchase price to
be final in the first quarter of 2010. The Company does not expect a
material change in the preliminary allocation of the purchase price.
|
Purchase
Price
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Cash
|
$ | 13,378 | ||
|
Reclassification
16% previously held equity interest
|
1,414 | |||
|
Gain
on remeasurement of previously held interest in WWC
|
886 | |||
|
Total
purchase price
|
$ | 15,678 | ||
|
Preliminary
allocation of purchase price
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Accounts
receivable, net
|
$ | 308 | ||
|
Other
current assets
|
6 | |||
|
Property
and equipment
|
166 | |||
|
Goodwill
|
13,920 | |||
|
Intangible
assets
|
2,500 | |||
|
Current
liabilities
|
(391 | ) | ||
|
Deferred
revenue
|
(831 | ) | ||
|
Total
estimated purchase price
|
$ | 15,678 | ||
Remeasurement of 16%
Previously Held Equity Interest in WWC
In
September of 2008, the Company made an investment of $2.5 million for a 16%
equity investment and an option to purchase WWC at a later
date. The Company assigned $1.4 million to the 16% equity
interest and $1.1 million to the purchase option. In connection with
the execution of the September 14, 2009 Merger Agreement, the Company negotiated
more favorable terms than the purchase option and also terminated the purchase
option. Accordingly, the Company wrote-off the $1.1 million carrying
value of the purchase option in the third quarter of 2009. On
January 1, 2010, the Company closed the acquisition of the remaining 84% equity
interest in WWC, took control of the entity, and remeasured the 16% previously
held equity interest to its fair value. The difference between the
$1.4 million book value and the $2.3 million fair value of the 16% previously
held interest will be recorded as a gain in the statement of operations for the
three months ending March 31, 2010 and the $1.4 million book value of the equity
investment will be included in the purchase price.
|
Remeasurement
of previously held interest in WWC
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Fair
value of 16% previously held interest in WWC
|
$ | 2,300 | ||
|
Carrying
value of 16% equity investment in WWC
|
(1,414 | ) | ||
|
Gain
on remeasurement of previously held interest in WWC
|
$ | 886 | ||
The
following adjustments have been reflected in the unaudited pro forma combined
condensed consolidated financial statements and the preliminary allocation of
purchase price table:
Balance
Sheet
(2) Adjustment to record the
payments of $13.4 million cash related to the acquisition of WWC.
|
Consideration
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Cash
paid by the Company at the closing of the WWC acquisition
|
$ | (13,378 | ) | |
|
Elimination
of WWC cash balance at September 30, 2009
|
(477 | ) | ||
|
Total
cash consideration
|
$ | (13,855 | ) | |
(3) Adjustments to record the
fair value of WWC accounts receivable as of January 1, 2010 and to eliminate WWC
and Taleo receivables associated with a product reseller agreement between the
two companies. WWC accounts receivables acquired on January 1, 2010
included a $97,000 receivable from the Company. As of the same date,
the Company had a $47,000 receivable from WWC. The entry below
eliminates this activity from the balance sheet as of September 30,
2009:
|
Accounts
receivable
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Historical
accounts receivable - WWC
|
$ | (354 | ) | |
|
Fair
value of accounts receivable - WWC
|
308 | |||
|
Elimination
of Taleo receivable from WWC
|
(47 | ) | ||
|
Elimination
of WWC receivable from Taleo
|
(97 | ) | ||
|
Adjustment
to accounts receivable
|
$ | (190 | ) | |
(4) Adjustment to write-off
WWC other current assets with no future value.
|
Other
current assets
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Historical
other current assets - WWC
|
$ | (98 | ) | |
|
Fair
value of other current asset - WWC
|
6 | |||
|
Adjustment
to other current assets
|
$ | (92 | ) | |
(5) Adjustment to record the
value of certain WWC fixed assets at their estimated fair value as of January 1,
2010.
|
Property
and Equipment
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Historical
fixed assets - WWC
|
$ | (142 | ) | |
|
Fair
value of fixed assets - WWC
|
166 | |||
|
Adjustment
to property and equipment
|
$ | 24 | ||
(6) Adjustment to record the excess purchase price over the estimated fair value of the identifiable net assets acquired from WWC on January 1, 2010. Additionally, as a result of the Company taking control of WWC, it remeasured its 16% previously held equity interest to fair value as of the acquisition date, January 1, 2010. As a result of the remeasurement, the Company recognized a $0.9 million gain as an adjustment to accumulated deficit and goodwill:
|
Goodwill
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Cash
|
$ | 13,378 | ||
|
16%
previously held equity interest
|
1,414 | |||
|
Gain
on remeasurement of previously held interest in WWC
|
886 | |||
|
Fair
value of 100% interest in WWC
|
15,678 | |||
|
Fair
value of identifiable assets, net
|
(1,758 | ) | ||
|
Adjustment
to goodwill
|
$ | 13,920 | ||
(7) Adjustment to record the
allocation of the acquisition cost to the estimated fair value of intangible
assets acquired:
|
Identifiable
intangible assets
|
Average
Estimated Useful Life
(Years)
|
Amount
|
||||||
|
(In
thousands)
|
||||||||
|
Developed
Technology
|
7 | $ | 1,400 | |||||
|
Customer
Relationships
|
7 | 1,080 | ||||||
|
Tradename
and non-compete agreements
|
4 | 20 | ||||||
|
Total
WWC intangible assets acquired adjustment
|
$ | 2,500 | ||||||
(8) Adjustment to reclassify carrying value of 16% previously held equity interest to goodwill as a result of the Company taking control of WWC:
|
Other
non current assets
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Historical
non current assets - WWC
|
$ | (3 | ) | |
|
Reclassification
of 16% previously held equity interest to goodwill
|
(1,414 | ) | ||
|
Adjustment
to non-current assets
|
$ | (1,417 | ) | |
(9) Adjustment to record the
January 1, 2010 fair value of WWC accounts payable and accrued liabilities
assumed by the Company (sales commissions, accrued vacation and other expense
liabilities) and to eliminate WWC and Taleo payables associated with a product
reseller agreement between the two companies. WWC accounts payables
acquired on January 1, 2010 included a $47,000 payable to the
Company. As of the same date, the Company had a $97,000 payable to
WWC. The entry below eliminates this activity from the balance sheet
as of September 30, 2009:
|
Accounts
payable and accrued liabilities
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Accounts
payable and accrued liabilities - WWC
|
$ | (401 | ) | |
|
Fair
value of accounts payable and accrued liabilities WWC
|
391 | |||
|
Elimination
of Taleo payable to WWC
|
(97 | ) | ||
|
Elimination
of WWC payable to Taleo
|
(47 | ) | ||
|
Adjustment
to accounts payable and accrued liabilities
|
$ | (154 | ) | |
(10) Adjustments to record a write-down of deferred revenue to the estimated fair value of the contractual obligation to customers as of January 1, 2010:
|
Deferred
revenue
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Historical deferred
revenue - WWC
|
$ | (1,739 | ) | |
|
Fair
value of deferred revenue - WWC
|
313 | |||
|
Adjustment
to deferred revenue
|
$ | (1,426 | ) | |
|
Historical
long-term deferred revenue - WWC
|
$ | (691 | ) | |
|
Fair
value of long-term deferred revenue - WWC
|
518 | |||
|
Adjustment
to long-term deferred revenue
|
$ | (173 | ) |
(11) Adjustment to current
liabilities to eliminate WWC restricted stock repurchase liability that no
longer exists after the Company acquired WWC.
|
Other
current and non-current liabilities
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Historical
other current liabilities - WWC
|
$ | (211 | ) | |
|
Fair
value of current liabilities - WWC
|
- | |||
|
Adjustment
to current and non-current liabilities
|
$ | (211 | ) | |
(12) Adjustment to eliminate
preferred stock and common stock. WWC stockholders received $13.4
million in cash as consideration for their equity interest in WWC.
|
Stockholders'
equity
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Adjustment
to write-off WWC Series A preferred stock
|
$ | (1,812 | ) | |
|
Adjustment
to write-off WWC Series B preferred stock
|
$ | (2,479 | ) | |
|
Adjustment
to write-off WWC common stock
|
$ | (150 | ) | |
|
Adjustment
to write-off WWC additional paid-in capital
|
$ | (21 | ) | |
(13) Adjustment to reflect the
elimination of the historical WWC accumulated deficit.
|
Accumulated
deficit
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Adjustment
to write-off WWC accumulated deficit
|
$ | 6,430 | ||
|
Gain
on remeasurement of 16% previously held equity interest in
WWC
|
886 | |||
|
Adjustment
to accumulated defict resulting from purchase of WWC
|
$ | 7,316 | ||
Remeasurement
of the Company’s 16% previously held equity interest in WWC to its fair value as
a result of the Company taking control of WWC on January 1, 2010:
|
Remeasurement
of previously held interest in WWC
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Fair
value of 16% previously held interest in WWC
|
$ | 2,300 | ||
|
Carrying
value of 16% equity investment in WWC
|
(1,414 | ) | ||
|
Gain
on remeasurement of previously held interest in WWC
|
$ | 886 | ||
Statement of
Operations
(14) Adjustment to increase share-based
compensation expense as a result of the Company granting restricted stock to
former WWC employees on their hire date, January 1,
2010. Had the Company acquired WWC on January 1, 2008, share-based
compensation expense for both the nine months ended September 30, 2009 and the
year ended December 31, 2008 would have increased by approximately $0.1
million.
Adjustment
to amortize identifiable intangible assets obtained from the acquisition of WWC
on January 1, 2010. The pro forma adjustment assumes that the identifiable
intangibles will be amortized on a straight-line basis over their estimated
lives (remaining intangibles including goodwill will be tested for
impairment). Had the Company acquired WWC on January 1, 2008,
amortization expense for both the nine months ended September 30, 2009 and the
year ended December 31, 2008 would have increased by approximately $0.3
million.
Adjustment
for depreciation expense associated with certain fixed assets obtained from the
Company’s acquisition of WWC. Had the Company acquired WWC on January
1, 2008, depreciation expense for both the nine months ended September 30, 2009
and the year ended December 31, 2008 would have increased by approximately $0.1
million.
Adjustment
for transaction costs incurred by the Company in connection with the acquisition
of WWC. The Company incurred or will incur certain legal, accounting
and consulting expenses associated with the acquisition of WWC. These
expenses will be expensed in the period incurred.
Adjustment
for incentive compensation to be paid by the Company to former employees upon
completion of a year service period with the Company.
|
Pro
Forma Expense Adjustments
|
||||||||||||||||
|
For
the Nine Months Ended September 30, 2009
|
||||||||||||||||
|
Share-based
Compensation
|
Amortization
Intangible Assets
|
Depreciation
|
Total
|
|||||||||||||
|
(In
thousands)
|
||||||||||||||||
|
Cost
of revenue
|
$ | 11 | $ | 158 | $ | 43 | $ | 212 | ||||||||
|
Sales
and marketing
|
21 | 102 | 123 | |||||||||||||
|
Research
and development
|
44 | 15 | 59 | |||||||||||||
|
General
and administrative
|
- | - | ||||||||||||||
|
Total
|
$ | 76 | $ | 260 | $ | 58 | $ | 394 | ||||||||
|
Pro
Forma Expense Adjustments
|
||||||||||||||||||||||||
|
For
the Year Ended December 31, 2008
|
||||||||||||||||||||||||
|
Share-based
Compensation
|
Amortization
Intangible Assets
|
Depreciation
|
Transaction
Cost
|
Incentive
Compensation
|
Total
|
|||||||||||||||||||
|
(In
thousands)
|
||||||||||||||||||||||||
|
Cost
of revenue
|
$ | 15 | $ | 211 | $ | 81 | $ | - | $ | - | $ | 307 | ||||||||||||
|
Sales
and marketing
|
29 | 137 | 136 | 302 | ||||||||||||||||||||
|
Research
and development
|
58 | 20 | 273 | 351 | ||||||||||||||||||||
|
General
and administrative
|
- | 287 | 287 | |||||||||||||||||||||
|
Total
|
$ | 102 | $ | 348 | $ | 101 | $ | 287 | $ | 409 | $ | 1,247 | ||||||||||||
(15) Adjustment to record a
reduction in estimated interest income earned at an assumed rate of
approximately 0.20% for the nine months ended September 30, 2009 and 2.26% for
the year ended December 31, 2008 on cash and cash equivalents as a result of the
following cash payments associated with the Company’s acquisition of the 84%
equity interest in WWC that it did not already own:
|
Total
cash payments
|
Amount
|
|||
|
(In
thousands)
|
||||
|
Purchase
consideration
|
$ | 13,378 | ||
|
Transaction
costs
|
287 | |||
|
Incentive
compensation expense
|
409 | |||
|
Total
payments
|
$ | 14,074 | ||
The
reduction in interest for the nine months ended September 30, 2009 and the year
ended December 31, 2008 totaled $21,000 and $0.3 million,
respectively.
(16) Adjustment represents a
reduction of state income tax expense relating to
changes in apportionment factors as a result of the
consummation of this transaction. The change has been adjusted in the
unaudited pro forma combined condensed consolidated statements of
operations. Had the Company acquired WWC on January 1, 2008, the tax
benefit for the nine months ended September 30, 2009 would have increased by
$0.1 million and the tax provision for the year ended December 31, 2008 would
have decreased by approximately $49,000.