Blue Coat Systems (BCSI) 8-K/A Report of Independent Auditors

Exhibit 99.2

Pro Forma Financial Information

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF BLUE COAT SYSTEMS, INC. AND PERMEO TECHNOLOGIES, INC.

The Unaudited Pro Forma Condensed Combined Statement of Operations for the nine months ended January 31, 2006 and for the year ended April 30, 2005 and the Unaudited Pro Forma Condensed Combined Balance Sheet as of January 31, 2006, are based on the historical financial statements of Blue Coat Systems, Inc. (“Blue Coat” or the “Company”) and Permeo Technologies, Inc. (“Permeo”), after giving effect to the acquisition of Permeo on March 3, 2006 under the purchase method of accounting and the assumptions and preliminary pro forma adjustments described in the accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

The Unaudited Pro Forma Condensed Combined Balance Sheet as of January 31, 2006 is presented as if the combination had taken place on January 31, 2006 by combining the condensed consolidated balance sheet of Blue Coat as of January 31, 2006 with the balance sheet of Permeo as of December 31, 2005, including the allocation of the preliminary purchase price to the Permeo assets acquired and liabilities assumed from Permeo.

The Unaudited Pro Forma Condensed Combined Statement of Operations for the nine months ended January 31, 2006 is presented as if the combination had taken place on May 1, 2004 by combining the Condensed Consolidated Statement of Operations of Blue Coat for the nine months ended January 31, 2006 with the Statement of Operations of Permeo for the nine months ended December 31, 2005.

The Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended April 30, 2005 is presented as if the combination had taken place on May 1, 2004 by combining the Condensed Consolidated Statement of Operations for Blue Coat for the year ended April 30, 2005 with the Statement of Operations of Permeo for the year ended March 31, 2005.

The Unaudited Pro Forma Condensed Combined Financial Statements are based on the estimates and assumptions set forth in the accompanying notes including assumptions relating to the allocation of the total preliminary purchase price to the assets and liabilities based upon estimates of their fair value. The Unaudited Pro Forma Condensed Combined Financial Statements are prepared for illustrative purposes only and are not necessarily indicative of the results that would have been achieved had the transaction been consummated as of the dates indicated or that may be achieved in the future.

The Unaudited Pro Forma Condensed Combined Financial Statements should be read in conjunction with (i) the historical financial statements of Blue Coat included in Blue Coat’s (a) Annual Report on Form 10-K for the year ended April 30, 2005 and (b) Quarterly Report on Form 10-Q for the three and nine months ended January 31, 2006, (ii) the historical consolidated financial statements of Permeo included elsewhere in this Form 8-K/A and (iii) other information pertaining to Blue Coat and Permeo.

BLUE COAT SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

January 31, 2006

(amounts in thousands)

	Blue Coat As of January 31, 2006			Permeo As of December 31, 2005			Pro Forma Adjustments			Pro Forma Combined
ASSETS
Current assets:
Cash and cash equivalents	$	60,554		$	1,161		$	(14,946	)(a)	$	46,769
Short-term investment		10,080			—			—			10,080
Accounts receivable, net		18,222			394			—			18,616
Inventories		959			—			—			959
Prepaid expenses and other current assets		3,850			83			—			3,933
Total current assets		93,665			1,638			(14,946	)		80,357
Property and equipment, net		7,187			549			(59	)(e)		7,677
Restricted investments		1,357			—			—			1,357
Goodwill		24,753			—			37,071	(d)		61,824
Identifiable intangible assets, net		3,083			—			5,100	(c)		8,183
Other assets		810			12			—			822
Total assets	$	130,855		$	2,199		$	27,166		$	160,220
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,145		$	128		$	(128	)(e)	$	5,145
Accrued payroll and related benefits		5,197			894			(369	)(e)		5,722
Deferred revenue		23,522			1,964			(1,799	)(j)		23,687
Accrued restructuring		1,362			—			1,042	(e)		2,404
Other accrued liabilities		3,699			667			1,017	(f)		4,808
								(575	)(e)
Total current liabilities		38,925			3,653			(812	)		41,766
Deferred rent, less current portion		1,465			—			—			1,465
Accrued restructuring, less current portion		253			—			—			253
Deferred revenue, less current portion		6,154			—			—			6,154
Total liabilities		46,797			3,653			(812	)		49,638
Commitments and contingencies
Stockholders’ equity:
Preferred stock		—			24,032			(24,032	)(g)		—
Common stock		2			3			(3	)(g)		2
Additional paid-in capital		934,424			196			(196	)(g)		964,674
								29,619	(b)
								631	(i)
Treasury stock		(903	)		—			—			(903	)
Deferred stock compensation		(2	)		(91	)		91	(g)		(428	)
								(426	)(k)
Accumulated deficit		(849,466	)		(25,594	)		25,594	(g)		(852,766	)
								(3,300	)(n)
Accumulated other comprehensive income		3			—			—			3
Total stockholders’ equity		84,058			(1,454	)		27,978			110,582
Total liabilities and stockholders’ equity	$	130,855		$	2,199		$	27,166		$	160,220

BLUE COAT SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

NINE MONTHS ENDED JANUARY 31, 2006

(amounts in thousands, except per share amounts)

	Historical
	Blue Coat Nine months ended January 31, 2006			Permeo Nine months ended December 31, 2005			Pro Forma Adjustments			Pro Forma Combined
Net revenue:
Product	$	87,550		$	1,709		$	—		$	89,259
Service		18,037			1,096			—			19,133
Total net revenue		105,587			2,805			—			108,392
Cost of revenue:
Product		24,465			—			504	(h)		24,969
Service		6,927			295			—			7,222
Total cost of revenue		31,392			295			504			32,191
Gross profit		74,195			2,510			(504	)		76,201
Operating expenses:
Research and development		17,696			2,846			52	(l)		20,594
Sales and marketing		37,808			3,160			48	(l)		41,016
General and administrative		8,713			1,841			7	(l)		10,561
Amortization of intangible assets		522			—			43	(h)		565
Total operating expenses		64,739			7,847			150			72,736
Operating income		9,456			(5,337	)		(654	)		3,465
Interest income		1,460			51			(330	)(m)		1,181
Other expense		(101	)		—			—			(101	)
Income before income taxes		10,815			(5,286	)		(984	)		4,545
Provision for income taxes		257			—			—			257
Net income	$	10,558		$	(5,286	)	$	(984	)	$	4,288
Net income per common share:
Basic	$	0.83								$	0.31
Diluted	$	0.73								$	0.27
Weighted average shares used in computing net income per common share:
Basic		12,674						1,138	(o)		13,812
Diluted		14,544						1,418			15,962

BLUE COAT SYSTEMS, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS

TWELVE MONTHS PERIOD ENDED APRIL 30, 2005

(amounts in thousands, except per share amounts)

	Historical
	Blue Coat Twelve months ended April 30, 2005			Permeo Twelve months ended March 31, 2005			Pro Forma Adjustments			Pro Forma Combined
Net revenue:
Product	$	78,495		$	1,105		$	—		$	79,600
Service		17,691			973			—			18,664
Total net revenue		96,186			2,078			—			98,264
Cost of revenue:
Product		25,589			—			671	(h)		26,260
Service		5,721			199			—			5,920
Total cost of revenue		31,310			199			671			32,180
Gross profit		64,876			1,879			(671	)		66,084
Operating expenses:
Research and development		16,549			2,933			70	(l)		19,552
Sales and marketing		33,882			3,111			66	(l)		37,059
General and administrative		9,075			1,812			9	(l)		10,896
Restructuring (reversal)		(96	)								(96	)
Amortization of intangible assets		648			—			57	(h)		705
Total operating expenses		60,058			7,856			202			68,116
Operating income		4,818			(5,977	)		(873	)		(2,032	)
Interest income		700			66			(236	)(m)		530
Other expense		(26	)		—			—			(26	)
Income before income taxes		5,492			(5,911	)		(1,109	)		(1,528	)
Provision for income taxes		(117	)		—			—			(117	)
Net income	$	5,375		$	(5,911	)	$	(1,109	)	$	(1,645	)
Net income per common share:
Basic	$	0.46								$	(0.13	)
Diluted	$	0.41								$	(0.13	)
Weighted average shares used in computing net income per common share:
Basic		11,628						1,138	(o)		12,766
Diluted		12,977						1,138	(o)		12,766

Note 1. Purchase Price Allocation

On March 3, 2006, Blue Coat completed its acquisition of Permeo. The estimated purchase price of approximately $46,213,000 consisted of $14,946,000 cash consideration, 1,361,000 shares of Blue Coat common stock valued at $29,619,000, approximately $1,017,000 in estimated direct transaction costs, and Permeo options assumed by Blue Coat valued at approximately $631,000. This estimated purchase price has been allocated to the tangible and intangible assets acquired with the excess purchase price being allocated to goodwill.

The allocation of the estimated purchase price, based on the fair value of certain components, consisted of the following at January 31, 2006 (in thousands):

Consideration and direct transaction costs:
Cash	$	14,946		(I)
Fair value of Blue Coat common stock		29,619		(II)
Estimated direct transaction costs		1,017		(III)
Fair value of assumed Permeo options		631		(IV)
Total purchase price	$	46,213
Allocation of purchase price:
Cash and cash equivalents	$	1,161		(V)
Accounts receivable		394		(V)
Other current assets		83		(V)
Property and equipment		490		(V)
Other assets		12		(V)
Liabilities assumed		(1,824	)	(V)
Deferred stock compensation		426		(VI)
Identifiable intangible assets		8,400		(VII)
Goodwill		37,071		(VIII)
Total purchase price	$	46,213

(I) Cash paid, as part of the purchase consideration.

(II) The Blue Coat common shares were valued for accounting purposes using the average market price of $21.76 per share, which is based on the average closing price of Blue Coat’s common stock for a period of two days before and including the consummation date of the transaction (March 3, 2006).

(III) Estimated direct transaction costs incurred by Blue Coat relate primarily to legal, consulting, accounting fees associated with the acquisition.

(IV) Permeo options assumed by Blue Coat were valued in accordance with the provisions of SFAS No. 141, “Business Combinations” by using the Black-Scholes option valuation model and the following assumptions: volatility – 80%; dividend yield – 0%; expected life – 4.62 years; and risk-free interest rate – 4.72%.

(V) Assets acquired and liabilities assumed are based on fair values and management assumptions at the acquisition date.

(VI) Purchase consideration associated with the outstanding unvested portion of Permeo options assumed by Blue Coat will be amortized over the remaining vesting period.

(VII) To establish the value of the intangible assets, the Company used an income approach, which values an asset based on the earnings capacity of such asset based on the future cash flows that could potentially be generated by the asset over its estimated remaining life. These cash flows are discounted to their present value using a discount rate, which would provide sufficient risk-adjusted return to a potential investor and an appropriate level of risk. The present value of the cash flows over the life of the asset is summed to equal the estimated value of the asset.

The acquired intangible assets and their estimated useful lives are as follows (in thousands):

Identifiable intangible assets	Amortization period	Amount
Developed technology	7 years	$	4,700
Customer relationships	7 years		400
In-process technology	N/A		3,300
Total		$	8,400

(VIII) In accordance with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets,” the estimated excess of the purchase price over the net identifiable assets acquired (the “Goodwill”) is not amortized in the accompanying pro forma condensed combined consolidated financial statements.

Note 2. Pro Forma Adjustments

Pro forma adjustments giving effect to the acquisition in the unaudited pro forma condensed combined financial statements are as follows:

(a) To reflect the cash payment as part of the purchase consideration discussed in Note 1 above.

(b) To reflect the issuance of shares of Blue Coat common stock at the closing of this acquisition as part of the purchase consideration as discussed in Note 1 above.

(c) To reflect the estimated fair value of identifiable intangible assets acquired as discussed in Note 1 above, net of in-process technology discussed in Note 2 (n).

(d) To reflect the Goodwill originating from this acquisition as discussed in Note 1 above.

(e) To reflect the fair value adjustments to tangible assets acquired and liabilities assumed based on management estimates.

(f) To reflect the estimated direct transaction costs of this acquisition as discussed in Note 1 above.

(g) To eliminate Stockholder’s equity accounts recorded on Permeo’s historical financial statements as of December 31, 2005.

(h) To reflect the amortization of identifiable intangible assets on a straight-line basis over seven years as discussed in Note 1 above. Developed technology is amortized into “Cost of revenue – Products” and Customer Relationships is amortized into “Operating expenses’.

(i) To reflect the fair value of the assumed options of Permeo as part of the purchase consideration at the closing of this acquisition as discussed in Note 1 above.

(j) To adjust for the difference between the preliminary fair value and the historical amount of Permeo’s deferred revenue in accordance with management’s estimate.

(k) To reflect the deferred stock compensation related to the assumption of Permeo’s unvested options as discussed in Note 1 above.

(l) To reflect the amortization of deferred stock compensation based on the intrinsic value of the assumed Permeo’s unvested options as discussed in Note 1 above.

(m) To reduce the interest income in connection with the cash payment as part of the purchase consideration and the estimated payment of Permeo’s transaction costs discussed in Note 1 above.

(n) To reflect the write-off of acquired in-process technology.

(o) To reflect the estimated issuance of Blue Coat common stock, net of escrow shares.