Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - Carbonite Inc | exhibit993auditedfinancial.htm |
| EX-23.1 - EXHIBIT 23.1 - Carbonite Inc | exhibit231consent.htm |
| 8-K/A - 8-K/A - Carbonite Inc | double-take8xka.htm |
Exhibit 99.4
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
As previously disclosed, on January 31, 2017, Carbonite, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Agreement”) to acquire all of the outstanding capital stock of Double-Take Software, Inc. ("Double-Take") The following unaudited pro forma condensed combined financial information and related notes combine the historical financial statements of Carbonite and Double-Take.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2016 gives effect to the acquisition as if it had occurred on January 1, 2016, the beginning of our fiscal year. The unaudited pro forma condensed combined balance sheet gives effect to the acquisition as if it had occurred on December 31, 2016. The historical condensed combined financial information has been adjusted to give effect to pro forma events that are: 1) directly attributable to the acquisition; 2) factually supportable; and 3) with respect to the statement of operations, expected to have a continuing impact on the combined results. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma condensed combined financial information have been made. The assumptions underlying the pro forma adjustments are described fully in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information is derived from and should be read in conjunction with the Company's historical audited financial statements for the fiscal year ended December 31, 2016, which are available in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and the historical audited financial statements of Double-Take included in this Form 8-K/A.
The allocation of the purchase price as reflected in the unaudited pro forma condensed combined financial information was based on a preliminary valuation of the assets acquired and liabilities assumed, and the accounting is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. This allocation of the purchase price depends upon certain estimates and assumptions, all of which are preliminary and, in some instances, are incomplete and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. Any adjustments to the preliminary estimated fair value amounts could have a significant impact on the unaudited pro forma condensed combined financial information contained herein, and our future results of operations and financial position.
The unaudited pro forma condensed combined financial information is for informational purposes only and should not be considered indicative of actual results that would have been achieved if Double-Take had been acquired and the other transactions had been completed on the date or for the periods presented, and does not purport to indicate the results of operations or financial position as of any future date or for any future period.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 2016
(in thousands)
Historical | |||||||||||||||||
Carbonite | Double-Take | Pro Forma Adjustments | Notes | Pro Forma Combined | |||||||||||||
ASSETS | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | 59,152 | $ | 778 | $ | (20,440 | ) | a, b, c | $ | 39,490 | |||||||
Marketable securities | — | — | — | — | |||||||||||||
Trade accounts receivable, less allowances for doubtful accounts | 16,639 | 6,930 | (722 | ) | c | 22,847 | |||||||||||
Prepaid expenses and other current assets | 7,325 | 264 | (106 | ) | c | 7,483 | |||||||||||
Restricted cash | 135 | — | — | 135 | |||||||||||||
Total current assets | 83,251 | 7,972 | (21,268 | ) | 69,955 | ||||||||||||
Property and equipment, net | 23,872 | 527 | (85 | ) | c | 24,314 | |||||||||||
Other assets | 157 | 1,814 | (1,772 | ) | c, k | 199 | |||||||||||
Acquired intangible assets, net | 13,751 | — | 35,300 | d | 49,051 | ||||||||||||
Goodwill | 23,728 | — | 49,779 | d | 73,507 | ||||||||||||
Total assets | $ | 144,759 | $ | 10,313 | $ | 61,954 | $ | 217,026 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable | $ | 5,819 | $ | 857 | $ | (221 | ) | c | $ | 6,455 | |||||||
Accrued expenses | 19,768 | 2,906 | (854 | ) | c | 21,820 | |||||||||||
Current portion of deferred revenue | 86,311 | 13,170 | (3,738 | ) | c, e | 95,743 | |||||||||||
Total current liabilities | 111,898 | 16,933 | (4,813 | ) | 124,018 | ||||||||||||
Deferred revenue, net of current portion | 21,280 | 2,785 | (1,717 | ) | c, e | 22,348 | |||||||||||
Promissory note to Vero Holdings | — | 2,776 | (2,776 | ) | c | — | |||||||||||
Borrowings under credit facility | — | — | 39,200 | b | 39,200 | ||||||||||||
Other long-term liabilities | 5,747 | 8,186 | (7,938 | ) | c | 5,995 | |||||||||||
Total liabilities | 138,925 | 30,680 | 21,956 | 191,561 | |||||||||||||
Stockholders’ equity: | |||||||||||||||||
Common stock | 285 | — | — | 285 | |||||||||||||
Additional paid-in capital | 177,931 | — | 5,733 | a | 183,664 | ||||||||||||
Accumulated deficit | (165,042 | ) | (18,963 | ) | 32,861 | c, d | (151,144 | ) | |||||||||
Treasury stock | (10,657 | ) | — | — | (10,657 | ) | |||||||||||
Accumulated other comprehensive income | 3,317 | (1,404 | ) | 1,404 | c | 3,317 | |||||||||||
Total stockholders’ equity | 5,834 | (20,367 | ) | 39,998 | 25,465 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 144,759 | $ | 10,313 | $ | 61,954 | $ | 217,026 | |||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial information.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2016
(in thousands, except per share and per share data)
Historical | |||||||||||||||||
Carbonite | Double-Take | Pro Forma Adjustments | Notes | Pro Forma Combined | |||||||||||||
Revenue | $ | 206,986 | $ | 40,729 | $ | (4,503 | ) | h | $ | 243,212 | |||||||
Cost of revenue | 60,937 | 6,169 | 5,860 | f | 72,966 | ||||||||||||
Gross profit | 146,049 | 34,560 | (10,363 | ) | 170,246 | ||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 33,298 | 10,889 | — | 44,187 | |||||||||||||
General and administrative | 41,332 | 3,730 | (418 | ) | f, g | 44,644 | |||||||||||
Sales and marketing | 73,347 | 18,768 | 750 | f | 92,865 | ||||||||||||
Restructuring charges | 856 | — | — | 856 | |||||||||||||
Total operating expenses | 148,833 | 33,387 | 332 | 182,552 | |||||||||||||
Loss from operations | (2,784 | ) | 1,173 | (10,695 | ) | (12,306 | ) | ||||||||||
Interest and other income (expense), net | 68 | 414 | 1,138 | i | 1,620 | ||||||||||||
Loss before income taxes | (2,716 | ) | 1,587 | (9,557 | ) | (10,686 | ) | ||||||||||
Provision for income taxes | 1,383 | 884 | (225 | ) | k | 2,042 | |||||||||||
Net loss | $ | (4,099 | ) | $ | 703 | $ | (9,332 | ) | $ | (12,728 | ) | ||||||
Basic and diluted net loss per share attributable to common stockholders | $ | (0.15 | ) | $ | (0.47 | ) | |||||||||||
Weighted-average number of common shares used in computing basic and diluted net loss per share | 27,028,636 | 332,326 | j | 27,360,962 | |||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial information.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(in thousands, except share and per share)
1. Basis of Presentation
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2016 was derived from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and the audited historical financial information of Double-Take for the year ended October 31, 2016, and has been prepared as if the acquisition had occurred on January 1, 2016. The unaudited pro forma condensed combined balance sheet as of December 31, 2016 combines the consolidated balance sheet included in our Annual Report on Form 10-K, filed with the SEC on March 16, 2017, with the historical audited balance sheet for Double-Take as of October 31, 2016 included in this Form 8-K/A, and has been prepared as if the acquisition had occurred on December 31, 2016. The unaudited pro forma condensed combined financial information herein has been prepared to illustrate the effects of the acquisition in accordance with U.S. GAAP.
We have accounted for the acquisition under the acquisition method of accounting in accordance with the authoritative guidance on business combinations under the provisions of Accounting Standards Codification (“ASC”) 805, Business Combinations. The allocation of the purchase price as reflected in the unaudited pro forma condensed combined financial information was based on a preliminary valuation of the assets acquired and liabilities assumed, and the accounting is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. This allocation of the purchase price depends upon certain estimates and assumptions, all of which are preliminary and, in some instances, are incomplete and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. Differences between these preliminary estimates and the final purchase accounting may occur, and these differences could be material.
The unaudited pro forma condensed combined financial information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods presented, nor is it necessarily indicative of the future results of the combined company.
2. Preliminary Purchase Price Allocation
On January 31, 2017, the Company entered into a Stock Purchase Agreement to acquire all of the outstanding capital stock of Double-Take. Double-Take develops, sells, and supports affordable software that allows IT organizations of all sizes to move, manage, protect, and recover workloads across any distance and any combination of physical and virtual server environments. Double-Take’s products and services are marketed and sold worldwide through their direct sales force and a network of business partners and distributors. The following table summarizes the preliminary purchase price allocation as if the acquisition had occurred on December 31, 2016, which is the assumed acquisition date for the purpose of the pro forma balance sheet (in thousands):
Fair value of consideration transferred: | |||
Cash, net of cash acquired | $ | 58,862 | |
Fair value of equity instruments | 5,733 | ||
Fair value of total consideration | $ | 64,595 | |
Fair value of assets acquired and liabilities assumed: | |||
Accounts receivable, net | $ | 6,208 | |
Prepaid and other current assets | 158 | ||
Property and equipment | 442 | ||
Other long-term assets | 42 | ||
Intangible assets | 35,300 | ||
Goodwill | 49,779 | ||
Total assets acquired | 91,929 | ||
Accounts payable | (637 | ) | |
Accrued liabilities | (2,051 | ) | |
Other current liabilities | (100 | ) | |
Deferred revenues | (10,500 | ) | |
Deferred tax liability | (13,898 | ) | |
Other non-current liabilities | (148 | ) | |
Net assets acquired | $ | 64,595 | |
The significant intangible assets identified in the preliminary purchase price allocation discussed above include developed technology, tradenames and customer relationships, which are amortizing over their respective useful lives on a straight line basis. The preliminary allocations of the purchase price are subject to revisions as additional information is obtained about the facts and circumstances that existed as of the acquisition date. Developed technology consists of products that have reached technological feasibility and tradenames represent acquired company and product names. To value the developed technology asset, the Company utilized the income approach, specifically a discounted cash-flow method known as the multi-period excess earnings method. The tradename intangible was valued using a relief from royalty method, which considers both the market approach and the income approach. Customer relationships represent the underlying relationships with certain customers to provide ongoing services for products sold. The Company utilized the replacement cost/lost profits methodology to derive the fair value of the customer relationships. The following table presents the estimated fair values and useful lives of the identifiable intangible assets acquired:
Amount | Weighted Average Useful Life | ||||
(in thousands) | (in years) | ||||
Developed technology | $ | 29,300 | 5 | ||
Customer relationships | 4,500 | 6 | |||
Tradenames | 1,500 | 8 | |||
Total identifiable intangible assets | $ | 35,300 | |||
3. Pro Forma Adjustments
The following describes the pro forma adjustments related to the acquisition that have been made in the accompanying unaudited pro forma condensed combined balance sheet as of December 31, 2016 and unaudited pro forma condensed combined statements of operations for the year ended December 31, 2016, giving effect to the acquisition as if it had been consummated at the beginning of the periods presented, all of which are based on preliminary estimates that could change significantly as additional information is obtained:
a. | Represents the cash consideration of $59.8 million paid by the Company and the delivery of 332,326 shares of the Company's common stock with a fair value of $5.7 million in connection with the Stock Purchase Agreement. |
b. | Reflects $39.2 million in borrowings under the fourth amendment to the Credit Facility with Silicon Valley Bank used to finance the acquisition. |
c. | Represents (i) the elimination of assets, liabilities, and historical equity accounts excluded from the Stock Purchase Agreement between the Company and Vero Parent, (ii) adjustments to the fair value of assets acquired and liabilities assumed and (iii) the elimination of Double-Take's equity. |
d. | Represents the recording of significant intangible assets and goodwill identified in the preliminary purchase price allocation, in addition to an increase in the deferred tax liability from the tax impact from the fair value adjustments related to intangible assets and the release of a corresponding amount to the valuation allowance. However, the income tax benefit related to the reduction of the valuation allowance is not included in the pro forma income statement because the effect is nonrecurring. Refer to Note 2—Preliminary Purchase Price Allocation included within this Form 8-K/A for additional information regarding the fair value of intangible assets acquired and the useful lives for each intangible asset. |
e. | To record the preliminary fair value adjustment (step-down) for deferred revenue of $5.0 million. |
f. | Represents the preliminary estimate of amortization expense for the year ended December 31, 2016 related to the acquired identifiable intangible assets calculated as if the acquisition had occurred on January 1, 2016. Refer to Note 2—Preliminary Purchase Price Allocation included within this Form 8-K/A for additional information regarding the amortization lives of the intangible assets expected to be recognized. The adjustment to amortization expense has been recorded on a straight line basis and is as follows (in thousands): |
Year ended December 31, 2016 | |||
Cost of revenues | $ | 5,860 | |
General and administrative | 188 | ||
Sales and marketing | 750 | ||
Total | $ | 6,798 | |
g. | To eliminate $0.6 million in transaction costs recorded by the Company in connection with the acquisition. These amounts include legal, investment banker and audit fees, and were recorded as follows in the respective statement of operations for the twelve months ended December 31, 2016 (in thousands): |
Year ended December 31, 2016 | |||
Cost of revenues | $ | — | |
Research and development | — | ||
General and administrative | 606 | ||
Sales and marketing | — | ||
Total | $ | 606 | |
h. | To reflect estimated amortization of preliminary fair value adjustment for acquired deferred revenue of $4.5 million. |
i. | To eliminate $1.1 million interest expense related to promissory note with Vero Parent and to reflect the interest expense for the year ended December 31, 2016 related to the Company's $39.2 million draw-down on the credit facility calculated as if the acquisition had occurred on January 1, 2016. |
j. | To record the impact of delivering 332,326 shares of the Company's common stock with a fair value of $5.7 million in connection with the Stock Purchase Agreement. |
k. | To record the tax effect of combining the Carbonite and Double-Take businesses. |