Attached files
file | filename |
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8-K/A - FORM 8-K/A - FUSION-IO, INC. | d560342d8ka.htm |
EX-23.1 - EX-23.1 - FUSION-IO, INC. | d560342dex231.htm |
EX-99.1 - EX-99.1 - FUSION-IO, INC. | d560342dex991.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On April 24, 2013, Fusion-io, Inc. (the Company or Fusion-io) completed its acquisition of NexGen Storage, Inc. (NexGen), pursuant to an Agreement and Plan of Merger (the Merger Agreement) entered into on April 24, 2013 between Fusion-io, NexGen and Shareholder Representative Services LLC as stockholder representative.
The unaudited pro forma condensed combined balance sheet as of December 31, 2012 and the unaudited pro forma condensed combined statements of operations for the six months ended December 31, 2012 and the year ended June 30, 2012, are based on the historical financial statements of the Company and NexGen after giving effect to the Companys acquisition of NexGen, and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements.
The Companys fiscal year end is June 30 and NexGens calendar year end is December 31. The unaudited pro forma condensed combined statement of operations for the six months ended December 31, 2012 combined the Companys historical results for the fiscal six months ended December 31, 2012 with NexGens historical results for the calendar six months ended December 31, 2012. The unaudited pro forma condensed combined statement of operations for the year ended June 30, 2012 combined the Companys historical results for the fiscal year ended June 30, 2012 with NexGens historical results for the calendar six months ended December 31, 2011 and the calendar six months ended June 30, 2012.
The unaudited pro forma condensed combined balance sheet is presented as if the acquisition of NexGen had occurred on December 31, 2012. The unaudited pro forma condensed combined statement of operations for the six months ended December 31, 2012 is presented as if the acquisition of NexGen had occurred on July 1, 2012. The unaudited pro forma condensed combined statement of operations for the year ended June 30, 2012 is presented as if the acquisition of NexGen had occurred on July 1, 2011.
The preliminary allocation of the consideration transferred used in the unaudited pro forma condensed combined financial statements is based upon preliminary estimates. These preliminary estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date) as the Company finalizes the valuations of certain tangible and intangible assets acquired and liabilities assumed in connection with its acquisition of NexGen.
The unaudited pro forma condensed combined 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 condensed combined 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 dates indicated. The pro forma adjustments are based upon information and assumptions available at the time of filing this Current Report on Form 8-K/A.
The unaudited pro forma condensed combined 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 Annual Report on Form 10-K for the year ended June 30, 2012, which was filed with the SEC on August 27, 2012, the Companys subsequent filings with the Securities and Exchange Commission, and NexGens historical financial statements as of December 31, 2012 and 2011 and for the years then ended and accompanying notes included as Exhibit 99.1 in this Current Report on Form 8K/A.
1
FUSION-IO, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of December 31, 2012
(in thousands)
Historical | ||||||||||||||||||
Fusion-io | NexGen | Pro Forma Adjustments |
Adjustment Reference |
Pro Forma Combined |
||||||||||||||
Assets |
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Current assets: |
||||||||||||||||||
Cash and cash equivalents |
$ | 368,525 | $ | 2,554 | $ | (108,973 | ) | (A) | $ | 262,106 | ||||||||
Restricted cash |
| 288 | | 288 | ||||||||||||||
Accounts receivable |
55,968 | 628 | (97 | ) | (B) | 56,499 | ||||||||||||
Inventories |
74,185 | 850 | | 75,035 | ||||||||||||||
Prepaid expenses and other current assets |
9,614 | 151 | (30 | ) | (C) | 9,735 | ||||||||||||
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Total current assets |
508,292 | 4,471 | (109,100 | ) | 403,663 | |||||||||||||
Property and equipment, net |
34,509 | 1,736 | (198 | ) | (C) | 36,047 | ||||||||||||
Intangible assets, net |
6,852 | | 15,910 | (D) | 22,762 | |||||||||||||
Goodwill |
54,777 | | 89,895 | (E) | 144,672 | |||||||||||||
Other assets |
635 | 146 | (146 | ) | (C) | 635 | ||||||||||||
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Total assets |
$ | 605,065 | $ | 6,353 | $ | (3,639 | ) | $ | 607,779 | |||||||||
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Liabilities and Stockholders Equity |
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Current liabilities: |
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Accounts payable |
$ | 9,109 | $ | 451 | $ | (97 | ) | (B) | $ | 9,463 | ||||||||
Accrued and other current liabilities |
33,850 | 863 | 390 | (F) | 35,080 | |||||||||||||
(23 | ) | (C) | ||||||||||||||||
Deferred revenue |
27,203 | 77 | | 27,280 | ||||||||||||||
Long-term debt, current portion |
| 976 | (976 | ) | (I) | | ||||||||||||
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Total current liabilities |
70,162 | 2,367 | (706 | ) | 71,823 | |||||||||||||
Derivative warrant liability |
| 25 | (25 | ) | (C) | | ||||||||||||
Deferred revenue, less current portion |
10,927 | 92 | | 11,019 | ||||||||||||||
Deferred rent |
| 171 | (171 | ) | (C) | | ||||||||||||
Long-term debt, net of current portion |
| 2,509 | (2,509 | ) | (I) | | ||||||||||||
Other liabilities |
13,591 | | (67 | ) | (C) | 13,524 | ||||||||||||
Commitments and contingencies |
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Stockholders equity: |
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Preferred stock |
| 11,926 | (11,926 | ) | (G) | | ||||||||||||
Common stock |
19 | 5 | (5 | ) | (G) | 19 | ||||||||||||
Additional paid-in capital |
575,272 | 114 | (114 | ) | (G) | 576,690 | ||||||||||||
1,418 | (H) | |||||||||||||||||
Accumulated other comprehensive loss |
(12 | ) | | | (12 | ) | ||||||||||||
Accumulated deficit |
(64,894 | ) | (10,856 | ) | 10,856 | (G) | (65,284 | ) | ||||||||||
(390 | ) | (F) | ||||||||||||||||
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Total stockholders equity |
510,385 | 1,189 | (161 | ) | 511,413 | |||||||||||||
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Total liabilities and stockholders equity |
$ | 605,065 | $ | 6,353 | $ | (3,639 | ) | $ | 607,779 | |||||||||
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See accompanying notes to unaudited pro forma condensed combined consolidated financial statements
2
FUSION-IO, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2012
(in thousands, except per share amounts)
Historical | ||||||||||||||||||
Fusion-io | NexGen | Pro Forma Adjustments |
Adjustment Reference |
Pro Forma Combined |
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(in thousands, except per share data) | ||||||||||||||||||
Revenue |
$ | 238,684 | $ | 1,021 | $ | (385 | ) | (AA) | $ | 239,320 | ||||||||
Cost of revenue |
94,004 | 617 | (385 | ) | (AA) | 96,111 | ||||||||||||
1,875 | (BB) | |||||||||||||||||
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Gross profit |
144,680 | 404 | (1,875 | ) | 143,209 | |||||||||||||
Operating expenses: |
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Sales and marketing |
53,696 | 2,433 | 812 | (CC) | 57,104 | |||||||||||||
163 | (BB) | |||||||||||||||||
Research and development |
43,995 | 1,588 | 1,210 | (CC) | 47,018 | |||||||||||||
225 | (DD) | |||||||||||||||||
General and administrative |
31,646 | 1,327 | 1,976 | (CC) | 34,722 | |||||||||||||
(227 | ) | (DD) | ||||||||||||||||
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Total operating expenses |
129,337 | 5,348 | 4,159 | 138,844 | ||||||||||||||
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Income (loss) from operations |
15,343 | (4,944 | ) | (6,034 | ) | 4,365 | ||||||||||||
Other income (expense): |
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Interest income |
213 | 1 | | 214 | ||||||||||||||
Interest expense |
(48 | ) | (27 | ) | 27 | (EE) | (48 | ) | ||||||||||
Other income |
(14 | ) | | | (14 | ) | ||||||||||||
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Income (loss) before income taxes |
15,494 | (4,970 | ) | (6,007 | ) | 4,517 | ||||||||||||
Income tax expense |
(9,829 | ) | | 1,650 | (FF) | (8,179 | ) | |||||||||||
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Net income (loss) |
$ | 5,665 | $ | (4,970 | ) | $ | (4,357 | ) | $ | (3,662 | ) | |||||||
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Net income (loss) per common share: |
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Basic |
$ | 0.06 | $ | (0.04 | ) | |||||||||||||
Diluted |
$ | 0.05 | $ | (0.04 | ) | |||||||||||||
Weighted average number of shares: |
||||||||||||||||||
Basic |
95,030 | 95,030 | ||||||||||||||||
Diluted |
108,737 | 95,030 |
See accompanying notes to unaudited pro forma condensed combined consolidated financial statements
3
FUSION-IO, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2012
(in thousands, except per share amounts)
Historical | ||||||||||||||||||
Fusion-io | NexGen | Pro Forma Adjustments |
Adjustment Reference |
Pro Forma Combined |
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(in thousands, except per share data) | ||||||||||||||||||
Revenue |
$ | 359,349 | $ | 275 | $ | (813 | ) | (AA) | $ | 358,811 | ||||||||
Cost of revenue |
159,045 | 208 | (813 | ) | (AA) | 162,190 | ||||||||||||
3,750 | (GG) | |||||||||||||||||
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Gross profit |
200,304 | 67 | (3,750 | ) | 196,621 | |||||||||||||
Operating expenses: |
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Sales and marketing |
87,171 | 2,389 | 1,632 | (HH) | 91,509 | |||||||||||||
325 | (GG) | |||||||||||||||||
(8 | ) | (II) | ||||||||||||||||
Research and development |
60,006 | 1,712 | 2,437 | (HH) | 64,630 | |||||||||||||
475 | (II) | |||||||||||||||||
General and administrative |
58,423 | 1,256 | 3,958 | (HH) | 63,586 | |||||||||||||
(51 | ) | (II) | ||||||||||||||||
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Total operating expenses |
205,600 | 5,357 | 8,768 | 219,725 | ||||||||||||||
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Loss from operations |
(5,296 | ) | (5,290 | ) | (12,518 | ) | (23,104 | ) | ||||||||||
Other income (expense): |
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Interest income |
384 | 10 | | 394 | ||||||||||||||
Interest expense |
(177 | ) | (6 | ) | 6 | (EE) | (177 | ) | ||||||||||
Other income |
121 | | | 121 | ||||||||||||||
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Loss before income taxes |
(4,968 | ) | (5,286 | ) | (12,512 | ) | (22,766 | ) | ||||||||||
Income tax expense |
(615 | ) | | 331 | (FF) | (284 | ) | |||||||||||
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Net loss |
$ | (5,583 | ) | $ | (5,286 | ) | $ | (12,181 | ) | $ | (23,050 | ) | ||||||
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Net loss per common share: |
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Basic |
$ | (0.06 | ) | $ | (0.26 | ) | ||||||||||||
Diluted |
$ | (0.06 | ) | $ | (0.26 | ) | ||||||||||||
Weighted average number of shares: |
||||||||||||||||||
Basic |
87,674 | 87,674 | ||||||||||||||||
Diluted |
87,674 | 87,674 |
See accompanying notes to unaudited pro forma condensed combined consolidated financial statements
4
FUSION-IO, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma condensed combined financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.
The Company accounts for business combinations pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations. In accordance with ASC 805, the Company recognizes separately from goodwill, the identifiable assets acquired, the liabilities assumed, and any noncontrolling interests in an acquiree, generally at the acquisition date fair value as defined by ASC 820, Fair Value Measurements and Disclosures. Goodwill as of the acquisition date is measured as the excess of consideration fair value transferred and the net of the identifiable assets acquired and the liabilities assumed at the acquisition date.
The Company has made significant assumptions and estimates in determining the consideration transferred and the preliminary allocation of the consideration transferred in the unaudited pro forma condensed combined financial statements. These preliminary estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date) as the Company finalizes the valuation of certain tangible and intangible assets acquired and liabilities assumed in connection with the acquisition. These changes could result in material variances between the Companys future financial results and the amounts presented in these unaudited pro forma condensed combined financial statements, including variances in fair values recorded, as well as expenses and cash flows associated with these items.
The unaudited pro forma condensed combined financial statements are not intended to represent or be indicative of the Companys consolidated results of operations or financial position that would have been reported had the NexGen acquisition been completed as of the dates presented, and should not be taken as a representation of the Companys future consolidated results of operations or financial position. The unaudited pro forma condensed combined financial statements have been adjusted to give effect to pro forma events that are (i) directly attributable to the acquisitions, (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and associated cost savings that the Company may achieve with respect to the combined companies. The unaudited pro forma condensed combined financial statements should be read in conjunction with the Companys historical consolidated financial statements and accompanying notes included in its Annual Report on Form 10-K for the year ended June 30, 2012, the Companys subsequent filings with the Securities and Exchange Commission, and NexGens historical financial statements as of December 31, 2012 and 2011 and for the years then ended and accompanying notes included as Exhibit 99.1 in this Current Report on Form 8K/A.
NOTE 2. NEXGEN ACQUISITION
On April 24, 2013, the Company acquired 100% of the stock of NexGen, a developer of hybrid storage systems based in Louisville, Colorado, pursuant to the Merger Agreement dated April 24, 2013. For purposes of the unaudited pro forma condensed combined balance sheet, the consideration transferred was $110,488,000, consisting of (i) $108,973,000 in cash, (ii) $1,418,000 in assumed stock options, and (iii) $97,000 elimination of intercompany balances.
Of the cash consideration, $17,854,000 of cash was deposited in escrow as partial security for the indemnification obligations of the NexGen stockholders pursuant to the Merger Agreement. This amount, less any indemnification claims, will be distributed promptly following April 24, 2014.
In addition, the Company agreed to pay $5,000,000 in cash to one of the selling stockholders in twelve equal quarterly installments and issue 339,627 in shares of the Companys common stock to another selling stockholder, which is subject to a repurchase right that lapses in twelve equal quarterly installments. The quarterly installments for both the cash and restricted stock amounts are subject to ongoing employment requirements.
The Company also assumed NexGens options and restricted stock units that were unvested at the time of the merger that were converted into unvested options to purchase 822,927 shares of the Companys common stock and
5
FUSION-IO, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
84,808 of the Companys restricted stock units. The fair value of the assumed options was estimated using the Black-Scholes-Merton option pricing model with market assumptions. Option pricing models require the use of highly subjective market assumptions, including expected stock price volatility, which if changed, can materially affect fair value estimates. The more significant assumptions used in estimating the fair value of these stock options include expected volatility of 65.0%, expected option term of between 3.9 years and 5.7 years and a risk-free interest rate of 0.70%.
Subsequent to the acquisition, the Company will recognize over the underlying future service period up to approximately $23,701,000 of stock-based compensation expense related to cash and restricted stock held back by the Company and the fair value of assumed stock-based awards.
Preliminary Allocation of Consideration Transferred
Pursuant to the Companys business combinations accounting policy, the total consideration transferred for NexGen was allocated to the preliminary net tangible and intangible assets based upon their preliminary fair values as set forth below. The acquisition of NexGen adds to the Companys software defined storage product portfolio and expands the Companys reach into small to medium enterprise markets. These factors contributed to a consideration transferred in excess of the fair value of the NexGen net tangible and intangible assets acquired, and as a result, the Company has recorded goodwill in connection with this transaction. The Company does not expect the goodwill associated with the acquisition of NexGen to be deductible for tax purposes. The preliminary allocation of the consideration transferred was based upon a preliminary valuation and the Companys estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date).
The Companys preliminary allocation of consideration transferred for NexGen is as follows (in thousands):
Consideration Transferred |
Amount | |||
Net tangible assets |
$ | 4,683 | ||
Identifiable intangible assets |
15,910 | |||
Goodwill |
89,895 | |||
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Total |
$ | 110,488 | ||
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NOTE 3. PRO FORMA ADJUSTMENTS
The unaudited pro forma condensed combined balance sheet and statements of operations give effect to the following pro forma adjustments:
(A) | Adjustment to record the cash consideration transferred to the former NexGen stockholders. |
(B) | Adjustment to record the elimination of intercompany balances. |
(C) | Adjustment to remeasure the acquired assets and assumed liabilities to fair value. |
(D) | Adjustment to record the fair value of the following identifiable intangible assets (in thousands): |
Amount | ||||
Developed technology |
$ | 15,000 | ||
Trade names |
520 | |||
Customer relationships |
390 | |||
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Total |
$ | 15,910 | ||
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6
FUSION-IO, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(E) | Adjustment to record goodwill. |
(F) | Adjustment to record non-recurring transaction costs incurred by the Company in connection with the acquisition. |
(G) | Adjustments to record the elimination of NexGens historical stockholders equity. |
(H) | Adjustment to record the estimated fair value of consideration related to assumed stock options. |
(I) | Adjustments to eliminate the long-term debt not assumed in connection with the acquisition. |
(AA) | Adjustments to eliminate the impact of sales transactions with NexGen. |
(BB) | Adjustment to record the amortization expense related to the intangible assets acquired as if the acquisition of NexGen had occurred on July 1, 2012 as shown in the table below (in thousands). |
NexGen Historical Amortization Expense |
Estimated Amortization Expense |
Difference | ||||||||||
Cost of revenue |
$ | | $ | 1,875 | $ | 1,875 | ||||||
Sales and marketing |
| 163 | 163 | |||||||||
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Total |
$ | | $ | 2,038 | $ | 2,038 | ||||||
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Estimated amortization expense by intangible asset category as if the acquisition of NexGen had occurred on July 1, 2012 and the respective estimated useful life of each intangible asset category are shown below (dollar amounts in thousands).
Intangible Asset Amount |
Estimated Useful Life |
Estimated Amortization Expense |
||||||||||
Developed technology |
$ | 15,000 | 4 years | $ | 1,875 | |||||||
Trade names |
520 | 2 years | 130 | |||||||||
Customer relationships |
390 | 6 years | 33 | |||||||||
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Total |
$ | 15,910 | $ | 2,038 | ||||||||
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(CC) | Adjustment to record the difference between NexGens historical stock-based compensation expense and the estimated stock-based compensation expense as if the acquisition of NexGen had occurred on July 1, 2012 as shown in the table below (in thousands). |
NexGen Historical
Stock-Based Compensation |
Estimated
Stock-Based Compensation |
Difference | ||||||||||
Sales and marketing |
$ | 14 | $ | 826 | $ | 812 | ||||||
Research and development |
18 | 1,228 | 1,210 | |||||||||
General and administrative |
11 | 1,987 | 1,976 | |||||||||
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Total |
$ | 43 | $ | 4,041 | $ | 3,998 | ||||||
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7
FUSION-IO, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(DD) | Adjustment to record the difference between NexGens historical depreciation expense and the estimated depreciation expense based upon the remeasurement of the related property and equipment to fair value as if the acquisition of NexGen had occurred on July 1, 2012 as shown in the table below (in thousands). |
NexGen Historical Depreciation Expense |
Estimated Depreciation Expense |
Difference | ||||||||||
Research and development |
$ | | $ | 225 | $ | 225 | ||||||
General and administrative |
264 | 37 | (227 | ) | ||||||||
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Total |
$ | 264 | $ | 262 | $ | (2 | ) | |||||
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(EE) | Adjustments to record the elimination of interest expense related to the long-term debt not assumed in connection with the acquisition. |
(FF) | Adjustments to record the impact of pretax losses generated by NexGen. |
(GG) | Adjustment to record the amortization expense related to the intangible assets acquired as if the acquisition of NexGen had occurred on July 1, 2011 as shown in the table below (in thousands). |
NexGen Historical Amortization Expense |
Estimated Amortization Expense |
Difference | ||||||||||
Cost of revenue |
$ | | $ | 3,750 | $ | 3,750 | ||||||
Sales and marketing |
| 325 | 325 | |||||||||
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Total |
$ | | $ | 4,075 | $ | 4,075 | ||||||
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Estimated amortization expense by intangible asset category as if the acquisition of NexGen had occurred on July 1, 2011 and the respective estimated useful life of each intangible asset category are shown below (dollar amounts in thousands).
Intangible Asset Amount |
Estimated Useful Life |
Estimated Amortization Expense |
||||||||||
Developed technology |
$ | 15,000 | 4 years | $ | 3,750 | |||||||
Trade names |
520 | 2 years | 260 | |||||||||
Customer relationships |
390 | 6 years | 65 | |||||||||
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Total |
$ | 15,910 | $ | 4,075 | ||||||||
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(HH) | Adjustment to record the difference between NexGens historical stock-based compensation expense and the estimated stock-based compensation expense as if the acquisition of NexGen had occurred on July 1, 2011 as shown in the table below (in thousands). |
8
FUSION-IO, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NexGen Historical
Stock-Based Compensation |
Estimated
Stock-Based Compensation |
Difference | ||||||||||
Sales and marketing |
$ | 18 | $ | 1,650 | $ | 1,632 | ||||||
Research and development |
18 | 2,455 | 2,437 | |||||||||
General and administrative |
16 | 3,974 | 3,958 | |||||||||
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Total |
$ | 52 | $ | 8,079 | $ | 8,027 | ||||||
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(II) | Adjustment to record the difference between NexGens historical depreciation expense and the estimated depreciation expense based upon the remeasurement of the related property and equipment to fair value as if the acquisition of NexGen had occurred on July 1, 2011 as shown in the table below (in thousands). |
NexGen Historical Depreciation Expense |
Estimated Depreciation Expense |
Difference | ||||||||||
Sales and marketing |
$ | 8 | $ | | $ | (8 | ) | |||||
Research and development |
19 | 494 | 475 | |||||||||
General and administrative |
132 | 81 | (51 | ) | ||||||||
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Total |
$ | 159 | $ | 575 | $ | 416 | ||||||
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9