Attached files
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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 Companys common stock with a deemed value at issuance of approximately $9.1 million, 1.0 million shares of the Companys 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 Companys 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 Companys 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 Companys 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 iContacts 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 Companys 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 |
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Current assets: |
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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 | ||||||||||||||
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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 | ||||||||||||||
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Total assets |
$ | 195,743 | $ | 23,245 | $ | 70,234 | $ | 289,222 | ||||||||||
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Current liabilities: |
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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 | ||||||||||||
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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 | ||||||||||||||
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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 | ||||||||||||
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Total liabilities and stockholders equity (deficit) |
$ | 195,743 | $ | 23,245 | $ | 70,234 | $ | 289,222 | ||||||||||
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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 |
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Revenues |
$ | 114,874 | $ | 47,869 | $ | | $ | 162,743 | ||||||||||
Cost of revenues |
21,857 | 8,483 | 3,935 | L, N | 34,275 | |||||||||||||
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Gross profit |
93,017 | 39,386 | (3,935 | ) | 128,468 | |||||||||||||
Operating expenses: |
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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 | |||||||||||||
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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): |
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Interest and other income |
317 | | | 317 | ||||||||||||||
Interest expense |
(38 | ) | (803 | ) | 803 | O | (38 | ) | ||||||||||
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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 | ||||||||||||||
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Net loss |
$ | (14,577 | ) | $ | (6,755 | ) | $ | (9,544 | ) | $ | (30,876 | ) | ||||||
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Net loss per share: |
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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 | |||
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Total purchase consideration |
$ | 176,926 | ||
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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 |
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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 | ) | ||||
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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 | |||||
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Total preliminary purchase price |
$ | 176,926 | ||||
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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 iContacts 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 iContacts deferred revenue balance.
(I) To reflect the fair value adjustment related to iContacts 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 iContacts 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 iContacts existing definite-lived intangible assets.
(M) To reflect the removal of amortization expense related to iContacts 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.