Attached files
file | filename |
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8-K - FORM 8-K - JDA SOFTWARE GROUP INC | p17827e8vk.htm |
EX-99.4 - EX-99.4 - JDA SOFTWARE GROUP INC | p17827exv99w4.htm |
EX-99.3 - EX-99.3 - JDA SOFTWARE GROUP INC | p17827exv99w3.htm |
EX-99.2 - EX-99.2 - JDA SOFTWARE GROUP INC | p17827exv99w2.htm |
EX-23.1 - EX-23.1 - JDA SOFTWARE GROUP INC | p17827exv23w1.htm |
EX-23.2 - EX-23.2 - JDA SOFTWARE GROUP INC | p17827exv23w2.htm |
EX-99.1 - EX-99.1 - JDA SOFTWARE GROUP INC | p17827exv99w1.htm |
Exhibit 99.5
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Description of the Transaction
On January 28, 2010, we completed the acquisition of i2 Technologies, Inc. (i2) for
approximately $599.8 million, which includes cash consideration of approximately $431.8 million and
the issuance of approximately 6.2 million shares of our common stock with an acquisition date fair
value of approximately $168.0 million, or $26.88 per share, determined on the basis of the closing
market price of our common stock on the date of acquisition (the Merger).
Under the terms of the Merger Agreement, each issued and outstanding share of i2 common stock
was converted into the right to receive $12.70 in cash and 0.2562 of a share of JDA common stock
(the Merger Consideration). Holders of i2 common stock did not receive any fractional JDA shares
in the Merger. Instead, the total number of shares that each holder of i2 common stock received in
the Merger was rounded down to the nearest whole number, and JDA paid cash for any resulting
fractional share determined by multiplying the fraction by $26.65, which represents the average
closing price of JDA common stock on Nasdaq for the five consecutive trading days ending three days
prior to the effective date of the Merger.
Each outstanding option to acquire i2 common stock was canceled and terminated at the
effective time of the Merger and converted into the right to receive the Merger Consideration with
respect to the number of shares of i2 common stock that would have been issuable upon a net
exercise of such option, assuming the market value of the i2 common stock at the time of such
exercise was equal to the value of the Merger Consideration as of the close of trading on the day
immediately prior to the effective date of the Merger. Any outstanding option with a per share
exercise price that was greater than or equal to such amount was cancelled and terminated and no
payment was made with respect thereto. In addition, each i2 restricted stock unit award
outstanding immediately prior to the effective time of the Merger was fully vested and cancelled,
and each holder of such awards became entitled to receive the Merger Consideration for each share
of i2 common stock into which the vested portion of the awards would otherwise have been
convertible. Each i2 restricted stock award was vested immediately prior to the effective time of
the Merger and was entitled to receive the Merger Consideration.
Each outstanding share of i2s Series B Preferred Stock was converted into the right to
receive $1,100 per share in cash, which is equal to the stated change of control liquidation value
of each such share plus all accrued and unpaid dividends thereon through the effective date of the
Merger.
At the effective time of the Merger, each outstanding warrant to purchase shares of i2s
common stock ceased to represent a right to acquire i2s common stock and was assumed by JDA and
converted into a warrant with the right to receive upon exercise, the Merger Consideration that
would have been received as a holder of i2 common stock if such i2 warrant had been exercised prior
to the Merger. In total, 420,237 warrants to purchase i2 common stock at an exercise price of
$15.4675 were assumed and converted into the right to receive the Merger Consideration upon
exercise, including 107,663 shares of JDA common stock.
The Merger is being accounted for using the acquisition method of accounting, with JDA
identified as the acquirer, and the operating results of i2 have been included in our consolidated
financial statements from the date of acquisition. Under the acquisition method of accounting, all
assets acquired and liabilities assumed will be recorded at their respective acquisition-date fair
values. We have allocated all goodwill recorded in the i2 acquisition ($66.0 million) to our
Supply Chain reportable business segment. None of the goodwill recorded in the i2 acquisition is
deductible for tax purposes. In addition, we have initially recorded $116.1 million in other
intangible assets including $76.2 million for customer-based intangibles (maintenance relationships
and future technological enhancements, service relationships and a covenant not-to-complete), $25.6
million for technology-based intangibles consisting of developed technology and $14.3 million for
marketing-based intangibles consisting of trademark and trade names. The purchase price allocation
on this acquisition has not been finalized. We have retained an independent third party appraiser
for the intangible assets to assist management in its valuation; however, we are still in the
process of obtaining all information necessary to determine the fair values of the
1
acquired assets. This could result in adjustments to the carrying value of the assets and
liabilities acquired, the useful lives of intangible assets and the residual amount allocated to
goodwill. The initial allocation of the purchase price is based on the best estimates of
management and is subject to revision based on the final valuations and estimates of useful lives.
The initial estimated weighted average amortization period for all intangible assets acquired in
this transaction that are subject to amortization is 6.7 years.
The following table summarizes our initial estimate of the fair values of the assets
acquired and liabilities assumed at the date of acquisition.
Weighted | ||||||||||||
Average | ||||||||||||
Useful | Amortization | |||||||||||
Life | Period | |||||||||||
Cash |
$ | 218,348 | ||||||||||
Fair value of trade accounts receivable acquired |
31,711 | |||||||||||
Fair value of other current assets acquired |
50,038 | |||||||||||
Fair value of fixed assets acquired |
3,116 | |||||||||||
Customer-based intangibles |
76,200 | 1-7 years | 6 years | |||||||||
Technology-based intangibles |
25,600 | 7 years | 7 years | |||||||||
Marketing-based intangibles |
14,300 | 5 years | 5 years | |||||||||
Long-term deferred tax assets acquired |
218,322 | |||||||||||
Fair value of other non-current assets |
3,925 | |||||||||||
Total assets acquired |
641,560 | |||||||||||
Goodwill |
66,041 | |||||||||||
Total assets acquired |
$ | 707,601 | ||||||||||
Fair value of deferred revenue assumed |
$ | (62,614 | ) | |||||||||
Fair value of other current liabilities assumed |
(41,128 | ) | ||||||||||
Fair value of other non-current liabilities assumed |
(4,105 | ) | ||||||||||
Total liabilities assumed |
(107,847 | ) | ||||||||||
Net assets acquired from i2 Technologies, Inc |
$ | 599,754 | ||||||||||
As of the date of the acquisition, the gross contractual amount of trade accounts
receivable acquired were $35.4 million, of which approximately
$3.7 million is expected to be
uncollectable.
Liabilities have been recognized for certain assumed customer and labor disputes of $7.7
million and $268,000, respectively. The potential undiscounted amount of all future payments that
we could be required to make to settle the customer and labor disputes is estimated to range
between $5.2 million and $9.4 million and $73,000 and $1.2 million, respectively.
Basis of Pro Forma Presentation
The unaudited pro forma condensed combined statement of income for the year ended
December 31, 2009 combines the historical JDA consolidated statement of income for the year ended
December 31, 2009 with the historical i2 consolidated statement of operations for the year ended
December 31, 2009 giving effect to the merger as if it had occurred on January 1, 2009. The
unaudited pro forma condensed combined statement of operations for the three months ended March 31,
2010 combines the historical JDA consolidated statement of operations for the three months ended
March 31, 2010 with the i2s internal consolidated statement of operations for the month of January
2010, giving effect to the Merger as if it had occurred on January 1, 2010.
The unaudited pro forma condensed combined financial information provided herein does not
purport to represent the results of operations or financial position of JDA that would have
actually resulted had the Merger been completed as of the dates indicated, nor should the
information be taken as indicative of the future results of operations or financial position of the
combined company. The unaudited pro forma condensed combined financial statements do not reflect
the impacts of any potential operational efficiencies, cost savings or economies of scale that JDA
may achieve with respect to the combined operations of JDA and i2.
2
The unaudited pro forma condensed combined pro forma financial statements should be read in
conjunction with the historical consolidated financial statements and accompanying notes of JDA and
i2 that appear elsewhere herein.
3
JDA SOFTWARE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2009
(in thousands, except per share data)
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2009
(in thousands, except per share data)
Historical | Pro Forma | |||||||||||||||||||
Description | JDA | i2 | Reclassification | Adjustments | Pro Forma | |||||||||||||||
Revenues: |
||||||||||||||||||||
Software licenses |
88,786 | 31,766 | (1) | $ | 120,552 | |||||||||||||||
Software solutions |
0 | 55,093 | (55,093) | (1) | 0 | |||||||||||||||
Subscriptions and other recurring revenues |
0 | 23,327 | (1) | 23,327 | ||||||||||||||||
Maintenance services |
179,336 | 73,134 | 252,470 | |||||||||||||||||
Product Revenues |
268,122 | 128,227 | 0 | 0 | 396,349 | |||||||||||||||
Consulting services |
107,618 | 94,583 | 202,201 | |||||||||||||||||
Reimbursed expenses |
10,060 | 0 | 10,060 | |||||||||||||||||
Service Revenues |
117,678 | 94,583 | 0 | 0 | 212,261 | |||||||||||||||
Total Revenues |
385,800 | 222,810 | 0 | 0 | 608,610 | |||||||||||||||
Cost of Revenues: |
||||||||||||||||||||
Cost of software licenses and subscriptions |
3,241 | 9,564 | (1) | 12,805 | ||||||||||||||||
Cost of software solutions |
0 | 9,564 | (9,564) | (1) | 0 | |||||||||||||||
Amortization of acquired software technology |
3,920 | 0 | 3,657 | (3) | 7,577 | |||||||||||||||
Cost of maintenance services |
43,165 | 8,929 | 52,094 | |||||||||||||||||
Cost of Product Revenues |
50,326 | 18,493 | 0 | 3,657 | 72,476 | |||||||||||||||
Cost of consulting services |
85,285 | 59,973 | 145,258 | |||||||||||||||||
Reimbursed expenses |
10,060 | 0 | 10,060 | |||||||||||||||||
Cost of Service Revenues |
95,345 | 59,973 | 0 | 0 | 155,318 | |||||||||||||||
Total Cost of Revenues |
145,671 | 78,466 | 0 | 3,657 | 227,794 | |||||||||||||||
Gross Profit |
240,129 | 144,344 | 0 | (3,657 | ) | 380,816 | ||||||||||||||
Operating Expenses: |
||||||||||||||||||||
Product development |
51,318 | 26,629 | 77,947 | |||||||||||||||||
Sales and marketing |
66,001 | 36,962 | 102,963 | |||||||||||||||||
General and administrative |
47,664 | 41,000 | 88,664 | |||||||||||||||||
Amortization of intangibles |
23,633 | 25 | 17,749 | (3) | 41,407 | |||||||||||||||
Restructuring charges and adjustments to reserves |
6,865 | 2,975 | 9,840 | |||||||||||||||||
Acquisition-related costs |
4,768 | 0 | 4,768 | |||||||||||||||||
Intellectual property settlement, net |
0 | 935 | 935 | |||||||||||||||||
Total Operating Expense |
200,249 | 108,526 | 0 | 17,749 | 326,524 | |||||||||||||||
Operating Income (Loss) |
39,880 | 35,818 | 0 | (21,406 | ) | 54,292 | ||||||||||||||
Interest expense and amortization of loan fees |
(2,712 | ) | (899 | ) | (22,367) (2), | (5) | (25,978 | ) | ||||||||||||
Finance costs on abandoned acquisition |
767 | 0 | 767 | |||||||||||||||||
Foreign currency hedge and transaction gain (loss), net |
0 | (1,755 | ) | 677 | (1) | (1,078 | ) | |||||||||||||
Loss on extinguishment of debt |
0 | (892 | ) | (892 | ) | |||||||||||||||
Interest income and other, net |
1,253 | 325 | (967) | (1) | (611) | (4) | 0 | |||||||||||||
Other income (expense), net |
0 | (1,142 | ) | 290 | (1) | (852 | ) | |||||||||||||
Income (Loss) Before Income Taxes |
39,188 | 31,455 | 0 | (44,384 | ) | 26,259 | ||||||||||||||
Income tax (provision) benefit |
(12,849 | ) | 147 | 15,534 | (7) | 2,832 | ||||||||||||||
Net Income |
26,339 | 31,602 | 0 | (28,850 | ) | 29,091 | ||||||||||||||
Consideration paid in excess of carrying value of the repurchase of redeemable preferred stock |
(8,593 | ) | 0 | (8,593 | ) | |||||||||||||||
Preferred stock dividends and accretion of discount |
(3,215 | ) | 3,215 | (6) | 0 | |||||||||||||||
Income Applicable to Common Shareholders |
17,746 | 28,387 | 0 | (25,635 | ) | 20,498 | ||||||||||||||
Earnings Per Share Applicable to Common Shareholders: |
||||||||||||||||||||
Basic earnings per share |
$ | 0.51 | $ | 1.05 | $ | 0.50 | ||||||||||||||
Diluted earnings per share |
$ | 0.50 | $ | 1.03 | $ | 0.49 | ||||||||||||||
Shares Used to Compute Earnings Per Share: |
||||||||||||||||||||
Basic earning per share |
34,936 | 27,128 | 6,249 | (8) | 41,185 | |||||||||||||||
Diluted earnings per share |
35,258 | 27,526 | 6,249 | 41,507 | ||||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial statements
4
JDA SOFTWARE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2010
(in thousands, except per share data)
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2010
(in thousands, except per share data)
Historical | Pro Forma | |||||||||||||||||||
Description | JDA | i2 | Reclassification | Adjustments | Pro Forma | |||||||||||||||
Revenues: |
||||||||||||||||||||
Software licenses |
24,437 | 2,029 | (1) | 26,466 | ||||||||||||||||
Software solutions |
3,450 | (3,450) | (1) | 0 | ||||||||||||||||
Subscription services |
4,287 | 0 | 1,421 | 5,708 | ||||||||||||||||
Maintenance services |
57,060 | 5,416 | 62,476 | |||||||||||||||||
Product Revenues |
85,784 | 8,866 | 0 | 94,650 | ||||||||||||||||
Consulting services |
43,002 | 6,160 | 49,162 | |||||||||||||||||
Reimbursed expenses |
2,845 | 0 | 2,845 | |||||||||||||||||
Service Revenues |
45,847 | 6,160 | 0 | 0 | 52,007 | |||||||||||||||
Total Revenues |
131,631 | 15,026 | 0 | 0 | 146,657 | |||||||||||||||
Cost of Revenues: |
||||||||||||||||||||
Cost of software licenses and subscriptions |
1,008 | 0 | (396) | (1) | 612 | |||||||||||||||
Cost of software solutions |
(396 | ) | 396 | (1) | 0 | |||||||||||||||
Amortization of acquired software technology |
1,576 | 0 | 305 | (3) | 1,881 | |||||||||||||||
Cost of maintenance services |
12,033 | 873 | 12,906 | |||||||||||||||||
Cost of Product Revenues |
14,617 | 477 | 0 | 305 | 15,399 | |||||||||||||||
Cost of consulting services |
35,269 | 5,651 | 40,920 | |||||||||||||||||
Reimbursed expenses |
2,845 | 0 | 2,845 | |||||||||||||||||
Cost of Service Revenues |
38,114 | 5,651 | 0 | 0 | 43,765 | |||||||||||||||
Total Cost of Revenues |
52,731 | 6,128 | 0 | 305 | 59,164 | |||||||||||||||
Gross Profit |
78,900 | 8,898 | 0 | (305 | ) | 87,493 | ||||||||||||||
Operating Expenses: |
||||||||||||||||||||
Product development |
17,277 | 4,025 | 21,302 | |||||||||||||||||
Sales and marketing |
21,112 | 6,140 | 27,252 | |||||||||||||||||
General and administrative |
17,697 | 7,121 | 24,818 | |||||||||||||||||
Amortization of intangibles |
8,566 | 0 | 1,481 | (3) | 10,047 | |||||||||||||||
Restructuring charges and adjustments to reserves |
7,758 | 0 | 7,758 | |||||||||||||||||
Acqusition-related costs |
6,743 | 0 | 6,743 | |||||||||||||||||
Total Operating Expense |
79,153 | 17,286 | 0 | 1,481 | 97,920 | |||||||||||||||
Operating Income (Loss) |
(253 | ) | (8,388 | ) | 0 | (1,786 | ) | (10,427 | ) | |||||||||||
Interest expense and amortization of loan fees |
(6,086 | ) | 0 | (6,086 | ) | |||||||||||||||
Foreign currency hedge and transaction gain (loss), net |
0 | (184 | ) | 961 | (1) | 777 | ||||||||||||||
Loss on extinguishment of debt |
0 | 0 | 0 | |||||||||||||||||
Interest income (loss) |
1,123 | 3 | (1,084) | (1) | (42) | (4) | 0 | |||||||||||||
Other income (expense), net |
0 | (4,455 | ) | 123 | (1) | (4,332 | ) | |||||||||||||
Income (Loss) Before Income Taxes |
(5,216 | ) | (13,024 | ) | 0 | (1,828 | ) | (20,068 | ) | |||||||||||
Income tax provision (benefit) |
(948 | ) | 223 | (640) | (7) | (1,365 | ) | |||||||||||||
Net Income (loss) |
(4,268 | ) | (13,247 | ) | 0 | (1,188 | ) | (18,703 | ) | |||||||||||
Earnings Per Share Applicable to Common Shareholders: |
||||||||||||||||||||
Basic earnings per share |
( $0.11 | ) | ( $0.45 | ) | ||||||||||||||||
Diluted earnings per share |
( $0.11 | ) | ($0.45 | ) | ||||||||||||||||
Shares Used to Compute Earnings Per Share: |
||||||||||||||||||||
Basic earning per share |
39,343 | 1,875 | (8) | 41,218 | ||||||||||||||||
Diluted earnings per share |
39,343 | 1,875 | 41,218 | |||||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial statements
5
JDA SOFTWARE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(in thousands, except per share data and as otherwise noted)
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(in thousands, except per share data and as otherwise noted)
Unaudited Pro Forma Condensed Combined Statements of Income
(1) | Entry records certain reclassifications to conform the JDA and i2 presentations. | ||
(2) | Entry records the increase in interest expense and amortization of loan fees arising from the amortization of underwriter fees, original issue discount (OID) and other loan origination fees on the issuance of $275 million in five-year, 8.0% senior notes in order to finance the transaction. The pro forma assumes straight-line amortization of the placement fees and other loan origination fees over an estimated five-year term. The pro forma assumes amortization of the OID over an estimated five-year term using the effective interest method. These calculations only apply to the year ended December 31, 2009 as the historical financial statements for the three months ended March 31, 2010 already reflect a full quarter of related amortization. |
Year | Three Months | |||||||
Ended | Ended | |||||||
12-31-09 | 3-31-10 | |||||||
Amortization of underwriter fees |
$ | 1,100 | $ | | ||||
Amortization of OID |
479 | | ||||||
Amortization of
other loan origination fees |
242 | | ||||||
$ | 1,821 | $ | | |||||
Less amounts recorded in the JDA
historical financial statements |
(110 | ) | ||||||
$ | 1,711 | |||||||
(3) | Entry eliminates i2 historical amortization expense and records the increase in amortization expense arising from the purchase accounting adjustments as follows: |
Three Months | ||||||||||||
Amortization | Ended | Ended | ||||||||||
Period | 12-31-09 | 3-31-10 | ||||||||||
Technology-based intangibles |
7 Years | $ | 3,657 | $ | 914 | |||||||
Less amounts recorded in the JDA
historical financial statements |
| (609 | ) | |||||||||
Less amounts recorded in the i2
historical financial statements |
| | ||||||||||
$ | 3,657 | $ | 305 | |||||||||
Customer-based intangibles |
1 -7 Years | $ | 14,914 | $ | 3,729 | |||||||
Marketing-based intangibles |
5 Years | 2,860 | 715 | |||||||||
17,774 | 4,444 | |||||||||||
Less amounts recorded in the JDA
historical financial statements |
| (2,963 | ) | |||||||||
Less amounts recorded in the i2
historical financial statements |
(25 | ) | | |||||||||
$ | 17,749 | $ | 1,481 | |||||||||
6
(4) | The pro forma adjustment for the year ended December 31, 2009 and the three months ended March 31, assumes that all interest income would be eliminated as the remaining cash balances would be used for operating purposes and would not be available for investment. |
Year | Three Months | |||||||
Ended | Ended | |||||||
12-31-09 | 3-31-10 | |||||||
JDA historical interest income |
286 | 39 | ||||||
i2 historical interest income |
325 | 3 | ||||||
611 | 42 | |||||||
Less interest income on combined cash balances
used to fund cash obligations of the Merger |
(611 | ) | (42 | ) | ||||
$ | | $ | | |||||
(5) | Entry records interest expense on the senior unsecured notes used to effect the Merger as of January 1, 2009 and 2010. These calculations only apply to the year ended December 31, 2009 as the historical financial statements for the three months ended March 31, 2010 already reflect this interest. |
Year | Three Months | |||||||
Ended | Ended | |||||||
12-31-09 | 3-31-10 | |||||||
Interest expense on $275 million of senior
unsecured
notes calculated at an interest rate of
8.0% |
$ | 22,000 | $ | | ||||
Less amounts recorded in the JDA
historical financial statements |
(1,344 | ) | ||||||
$ | 20,656 | |||||||
(6) | Entry eliminates i2s historical preferred stock dividend and related accretion of discount on their Series B convertible preferred stock. | ||
(7) | Entry records an incremental income tax (provision) benefit on the pro forma adjustments at the statutory rate of 35% for the year ended December 31, 2009 and the three months ended March 31, 2010. | ||
(8) | Adjusts the shares used to compute earnings per share applicable to common shareholders to include 6,249,213 JDA common shares issued as share consideration to i2 common equity holders. The shares were issued on January 28, 2010; accordingly, the historical weighted average shares for the three months ended March 31, 2010 already include approximately 2/3 of the shares issued in connection with the acquisition. The adjustment for the three months ended March 31, 2010 includes the additional 1/3 of the shares or approximately 1,874,764. |
7