CONVERSANT, INC. - FORM 8-K/A - EX-99.4 - EXHIBIT 99.4 - November 9, 2011

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8-K/A - FORM 8-K/A - CONVERSANT, INC.a2011q408ka.htm
EX-23.1 - EXHIBIT 23.1 - CONVERSANT, INC.a2011q408kadotomifs_ex231.htm
EX-99.2 - EXHIBIT 99.2 - CONVERSANT, INC.a2011q408kadotomifs_ex992.htm
EX-23.2 - EXHIBIT 23.2 - CONVERSANT, INC.a2011q408kadotomifs_ex232.htm
EX-99.1 - EXHIBIT 99.1 - CONVERSANT, INC.a2011q408kadotomifs_ex991.htm
EX-99.3 - EXHIBIT 99.3 - CONVERSANT, INC.a2011q408kadotomifs_ex993.htm


Exhibit 99.4



UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On August 31, 2011, ValueClick, Inc. ("ValueClick" or the "Company") completed the acquisition of Dotomi, Inc. ("Dotomi"), a leading provider of data-driven, intelligent display media for major retailers. Under the terms of the agreement, the Company acquired all outstanding equity interests in Dotomi for total consideration of $288.1 million, consisting of cash consideration of $171.8 million, 7.1 million shares of the Company's stock valued at $109.4 million, and approximately 0.5 million shares of fully vested stock options assumed valued at $6.9 million. In addition, ValueClick assumed approximately 0.4 million unvested shares of restricted stock and 0.5 million unvested options to purchase shares of ValueClick common stock.

The following unaudited pro forma condensed combined statements of operations combine the historical results of operations of ValueClick and the historical operating results of Dotomi for the year ended December 31, 2010 and for the six-month period ended June 30, 2011 as if the acquisition had occurred as of January 1, 2010.

The pro forma condensed combined statements of operations should be read in conjunction with the separate financial statements and related notes thereto of ValueClick, as filed with the Securities and Exchange Commission (“SEC”) in its Form 10-K filed February 28, 2011 and its Form 10-Q filed November 9, 2011, and in conjunction with the separate financial statements and related notes thereto of Dotomi included as Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3 to this Form 8-K/A.

The consolidated balance sheet of ValueClick as of September 30, 2011 included in ValueClick’s Form 10-Q filed with the SEC on November 9, 2011 reflects the acquisition of Dotomi. As such, no pro-forma condensed combined balance sheet is included in this Form 8-K/A.

These pro-forma condensed combined results of operations are not necessarily indicative of the combined results of operations had the acquisition occurred at the beginning of the period indicated above or the future results of operations. In the opinion of ValueClick’s management, all significant adjustments necessary to reflect the effects of the merger that can be factually supported within SEC regulations covering the preparation of pro forma financial statements have been made. The pro forma adjustments as presented are based on estimates and certain information that is currently available to ValueClick’s management. Such pro forma adjustments could change as additional information becomes available, as estimates are refined or as additional events occur.








VALUECLICK, INC.
Unaudited Pro Forma Condensed Combined Statements of Operations
Year Ended December 31, 2010
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Historical ValueClick
 
Historical Dotomi
 
Pro Forma Adjustments
 
 
Pro Forma Combined
Revenues
 
$
430,798

 
$
49,895

 
$
—

 
 
$
480,693

Cost of revenues
 
116,802

 
14,346

 
—

 
 
131,148

 
Gross profit
 
313,996

 
35,549

 
—

 
 
349,545

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Sales and marketing
 
112,282

 
8,007

 
3,463

(A)
 
123,752

 
General and administrative
 
53,536

 
6,374

 
2,738

(A)
 
62,648

 
Technology
 
35,047

 
7,642

 
2,438

(A)
 
45,127

 
Amortization of intangible assets
 
20,611

 
—

 
19,206

(B)
 
39,817

 
Total operating expenses
 
221,476

 
22,023

 
27,845

 
 
271,344

 
 
 
 
 
 
 
 
 
 
 
Income from operations
 
92,520

 
13,526

 
(27,845
)
 
 
78,201

 
Interest and other income (expense)
 
2,204

 
(7
)
 
(1,099
)
(C)
 
1,098

Income before income tax expense
 
94,724

 
13,519

 
(28,944
)
 
 
79,299

 
Income tax expense (benefit)
 
14,120

 
5,831

 
(12,160
)
(D)
 
7,791

Income from continuing operations
 
80,604

 
7,688

 
(16,784
)
 
 
71,508

 
 
 
 
 
 
 
 
 
 
Loss from discontinued operations
 
(134
)
 
—

 
—

 
 
(134
)
Gain on sale, net of tax
 
10,040

 
—

 
—

 
 
10,040

Net income (loss)
 
$
90,510

 
$
7,688

 
$
(16,784
)
 
 
$
81,414

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per common share
 
1.11

 
 
 
 
 
 
0.91

Diluted net income per common share
 
1.10

 
 
 
 
 
 
0.90

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - Basic
 
81,615

 
 
 
7,481

(E)
 
89,096

Weighted-average shares outstanding - Diluted
 
82,334

 
 
 
7,681

(E)
 
90,015

 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to the unaudited pro forma condensed combined financial statements.







VALUECLICK, INC.
Unaudited Pro Forma Condensed Combined Statements of Operations
Six-Month Period Ended June 30, 2011
(in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Historical ValueClick
 
Historical Dotomi
 
Pro Forma Adjustments
 
 
Pro Forma Combined
Revenues
 
$
241,573

 
$
34,935

 
$
—

 
 
$
276,508

Cost of revenues
 
72,975

 
8,839

 
—

 
 
81,814

 
Gross profit
 
168,598

 
26,096

 
—

 
 
194,694

 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
Sales and marketing
 
57,417

 
4,656

 
328

(A)
 
62,401

 
General and administrative
 
26,085

 
4,452

 
(96
)
(A)
 
30,441

 
Technology
 
21,019

 
5,650

 
381

(A)
 
27,050

 
Amortization of intangible assets
 
11,035

 
—

 
8,528

(B)
 
19,563

 
Total operating expenses
 
115,556

 
14,758

 
9,141

 
 
139,455

 
 
 
 
 
 
 
 
 
 
 
Income from operations
 
53,042

 
11,338

 
(9,141
)
 
 
55,239

 
Interest and other income (expense)
 
1,065

 
—

 
(371
)
(C)
 
694

Income before income tax expense
 
54,107

 
11,338

 
(9,512
)
 
 
55,933

 
Income tax expense (benefit)
 
20,264

 
4,046

 
(3,284
)
(D)
 
21,026

Net income (loss)
 
$
33,843

 
$
7,292

 
$
(6,228
)
 
 
34,907

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per common share
 
0.42

 
 
 
 
 
 
0.40

Diluted net income per common share
 
0.42

 
 
 
 
 
 
0.39

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares outstanding - Basic
 
79,829

 
 
 
7,481

(E)
 
87,310

Weighted-average shares outstanding - Diluted
 
80,847

 
 
 
7,831

(E)
 
88,678

 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited pro forma condensed combined statements of operations.








VALUECLICK, INC.
NOTES TO PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
NOTE 1—SUMMARY OF TRANSACTION
On August 31, 2011, ValueClick, Inc. ("ValueClick" or the "Company") completed the acquisition of Dotomi, Inc. ("Dotomi"), a leading provider of data-driven, intelligent display media for major retailers. Under the terms of the agreement, the Company acquired all outstanding equity interests in Dotomi for total consideration of $288.1 million, consisting of cash consideration of $171.8 million, 7.1 million shares of the Company's stock valued at $109.4 million, and approximately 0.5 million shares of fully vested stock options assumed valued at $6.9 million. In addition, ValueClick assumed approximately 0.4 million unvested shares of restricted stock and 0.5 million unvested options to purchase shares of ValueClick common stock.

Dotomi provides the Company with a unique set of data-driven targeting capabilities combined with expertise in brand strategy and creative development. These factors contributed to a purchase price in excess of the fair value of Dotomi's net tangible and intangible assets acquired, and, as a result, the Company has recorded goodwill in connection with this transaction. The results of Dotomi's operations are included in the Company's consolidated financial statements beginning on August 31, 2011.

The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values, and the useful lives, in years, assigned to intangible assets, is as follows (in thousands):

Cash
 
 
$
23,624

Accounts receivable and other assets
 
 
12,659

Deferred tax assets
 
 
6,080

Property and equipment
 
 
4,452

 
 
Useful life
 
Amortizable intangible assets:
 
 
 
   Customer, affiliate and advertiser relationships
 
5
56,860

   Developed technologies and websites
 
4
19,880

   Trademarks, trade names and domain names
 
5
3,570

   Covenants not to compete
 
1
2,150

Goodwill
 
 
208,064

   Total assets acquired
 
 
337,339

Deferred tax liability
 
 
(39,154
)
Income taxes payable
 
 
(2,574
)
Other liabilities assumed
 
 
(7,488
)
   Total
 
 
$
288,123


The identifiable intangible assets, goodwill and deferred income taxes resulting from this acquisition are based upon preliminary valuation assumptions and may change based on final analysis. Any such change may result in reclassification between identifiable intangible assets, goodwill and deferred income taxes.

NOTE 2—PRO FORMA ADJUSTMENTS

The pro forma adjustments on the attached pro forma condensed combined statements of operations for ValueClick and Dotomi include the following:

(A)
Reflects stock-based compensation expense associated with the approximately 0.4 million shares of unvested restricted stock and 0.5 million shares of unvested stock options assumed in connection with the acquisition.
(B)
Reflects amortization expense related to the acquired intangible assets of Dotomi, calculated over the estimated useful lives on a straight-line basis.
(C)
Reflects additional net interest expense associated with utilization of the Company's cash and marketable securities as




well as borrowing under the Company's credit facility to fund the cash portion of the purchase price. Debt under the Company's credit facility bears interest at the one month London Interbank Offered Rate ("LIBOR") plus an applicable margin rate of 1.50%.
(D)
Reflects the adjustment to the Company's income tax expense resulting from the pro forma impact of the transaction. The estimated income tax rates are based on the applicable enacted statutory tax rates for the periods referenced above.
(E)
Reflects additional shares and dilutive equity awards issued in connection with the acquisition.


CONVERSANT, INC. Reports