The fair value of each option was estimated on the date of grant using the Black-Scholes option-pricing model. The following table shows the assumptions used for the grants that occurred in each fiscal year.
The impact on the Company’s results of operations of recording stock-based compensation related to stock options and the ESPP for the fiscal year ended January 31, 2007 was as follows (in thousands):
Beginning in fiscal year 2004, pursuant to the Company’s 2000 Stock Option Plan, several senior officers of the Company have been awarded shares of deferred stock with varying vesting provisions. Pursuant to a May 2003 deferred stock agreement as amended in May 2004, Mr. Condo was awarded 600,000 deferred shares of the Company’s common stock. Under the amended agreement, 150,000 shares of common stock vest on each consecutive one-year anniversary of the date of grant as long as Mr. Condo remains continuously employed with the Company through such vesting date. Notwithstanding such vesting schedule, all of the deferred shares will vest on the earlier occurrence of Mr. Condo’s termination of employment without cause, death or disability or a change of control of the Company. In accordance with the terms of the amended deferred stock agreement, tranches totaling 150,000 shares each have vested in each of the past three fiscal years. On each of these vest dates the Company withheld 48,675 of the shares at a cost of approximately $121,000, $225,000, and $365,000 respectively, to fulfill Mr. Condo’s tax obligation with respect to the award. Compensation cost for Mr. Condo’s stock award is expensed on a straight-line basis over the four-year vesting period. Deferred stock granted in January 2004, which is held by several senior officers, has a five-year cliff vesting provision, or vests immediately upon a change in control. Compensation cost for the awards granted in January 2004 is expensed on a straight-line basis over the five-year vesting period. In November 2005 an additional 200,000 shares of deferred stock were awarded to another senior officer. This grant also carries a five-year cliff vesting provision, or vest immediately upon a change in control followed (a) by the officer’s continuous employment for a period of 12 months or (b) within 12 months by a termination of employment without cause, or a substantial diminution of the officer’s duties and responsibilities compared to that immediately prior to the change of control. In January 2007, upon the termination of this officer and in accordance with his separation agreement, 160,000 shares of deferred stock were cancelled. Compensation expense, net of reversals for terminated employees, recorded by the Company in fiscal year 2007 was $1.9 million. Compensation expense of $1.4 million and $440,000 is included in general and administrative costs and research and development costs, respectively, in the accompanying consolidated statements of operations and comprehensive loss. As of January 31, 2007, an aggregate of 890,000 shares of deferred stock were outstanding. The following table summarized the deferred stock compensation plans as of January 31, 2007.
| | | | | | | | |
Deferred Stock Plan Shares | | Shares | | Weighted-
Average Grant-
Date Fair Value |
| | |
| |
|
Nonvested at February 1, 2006 | | | 1,200,000 | | $ | 6.43 | |
Granted | | | — | | | — | |
Vested | | | (150,000 | ) | | 4.37 | |
Forfeited | | | (160,000 | ) | | 12.76 | |
| |
|
| | | | |
Nonvested at January 31, 2007 | | | 890,000 | | $ | 5.64 | |
| |
|
| | | | |
As of January 31, 2007, there was $1.7 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Deferred Stock Plan. That cost is expected to be recognized over a weighted-average period of 1.8 years. The total fair value of shares vested during the years ended January 31, 2007, 2006, and 2005, was $656,000, $656,000, and $656,000, respectively.
Employee Stock Purchase Plan
The Company’s employee stock purchase plan (“ESPP”) was established for all active employees and provided participating employees the right to purchase common stock each plan quarter at a purchase price equal to the lesser of 85% of the closing price on the date of purchase or 85% of the closing price on the date of grant. Payment for the shares was facilitated through authorized payroll deductions of up to 10% of eligible annual compensation. As of July 1, 2006 the employee stock purchase plan was discontinued.
During the fourth quarter of the fiscal year ended January 31, 2002, the Convera shareholders approved an amendment to the ESPP authorizing an additional 1,000,000 shares to be reserved for issuance under the plan. These shares were included as treasury stock as of January 31, 2002 and are released from the treasury as employees purchase the shares through the ESPP. During the fiscal years 2007, 2006 and 2005 there were 17,798, 52,055 and 86,849 shares purchased by the employees, respectively, leaving 656,555 shares in treasury as of January 31, 2007.
Employee Savings Plan
The Company has an employee savings plan that qualifies under Section 401(k) of the Internal Revenue Code. Under the plan, participating eligible employees in the United States may defer up to 100 percent of their pre-tax salary, but not more than statutory limits. The plan was amended in the fiscal year ended January 31, 2001 to allow the Company to match $0.50 on every dollar up to the maximum of 8% of the employee’s contribution on total compensation.
For the fiscal years ended January 31, 2007, 2006 and 2005, the Company contributed approximately $421, $424 and $483, respectively, to the employee savings plan.
In accordance with a separation agreement with a former senior officer of the Company the vesting of 62,500 stock options, originally scheduled to vest at various dates in the current fiscal year, were accelerated to September 11, 2006. FAS 123(R) stipulates that a modification to the terms of an award should be treated as an exchange of the original award for a new award with total compensation cost equal to the grant-date fair value of the original award plus the incremental value (if any) of the modification of the award. Under statement 123(R), the calculation of the incremental value is based on the excess of the fair value of the new (modified) award based on current circumstances over the fair value of the original option measured immediately before its terms are modified based on current circumstances. This incremental cost, plus the measured but unrecognized cost remaining from the original award is to be recognized over the service period of the modified award, or immediately, if the modified award vests as of the date of the modification.
The modified award was valued using the Black-Scholes model using current year valuation assumptions with the exception of the expected term. In this case, because the vesting and exercise date of September 11, 2006 was known, an expected term of 45 days or 0.12 years was used. Based on these valuation inputs the valuation of the modified option grants was $155,000 compared to a valuation of $163,000 for the valuation of the original grants. As a result there is no incremental cost to the valuation of the modified shares. However, because the term of the
F-21
modified award expired in the third quarter of the current fiscal year, the entire remaining expense related to the modified options was taken in fiscal year 2007.
| |
(14) | COMMITMENTS AND CONTINGENCIES |
Lease Commitments
The Company conducts its operations using leased facilities. The leases terminate at various dates through fiscal year 2011 with options to renew. Certain leases provide for scheduled rent increases and obligate the Company to pay shared portions of the operating expenses such as taxes, maintenance and repair costs. The Company also has operating leases for equipment that is included in the figures below. Future minimum rental payments under non-cancelable operating leases as of January 31, 2007 are as follows (in thousands):
| | | | |
Year Ending
January 31, | | | | |
| | | | |
2008 | | $ | 1,499 | |
2009 | | | 907 | |
2010 | | | 742 | |
2011 | | | 56 | |
2012 and beyond | | | — | |
| |
|
| |
| | $ | 3,204 | |
| |
|
| |
Total rental expense under operating leases was approximately $1.6 million, $1.8 million, and $2.7 million for fiscal years 2007, 2006 and 2005, respectively.
Contingencies
On November 1, 2001, DSMC, Incorporated (“DSMCi”) filed a complaint against the Company in the U.S. District Court for the District of Columbia in which it alleged that the Company misappropriated DSMCi’s trade secrets, and engaged in civil conspiracy with the NGT Library, Inc. (“NGTL”), an affiliate of the National Geographic Society, to obtain access to DSMCi’s trade secrets, and was unjustly enriched by the Company’s alleged access to and use of such trade secrets. In its complaint, DSMCi seeks $5 million in actual damages and $10 million in punitive damages from the Company. DSMCi subsequently amended its complaint to add copyright infringement-related claims. NGTL intervened in the litigation as a co-defendant with Convera, and filed counterclaims against DSMCi. Convera moved to compel arbitration of DSMCi’s claims; the District Court denied the motion, and Convera filed an interlocutory appeal. The D.C. Circuit, in November 2003, ruled that it did not have jurisdiction to consider the appeal. During December 2005, DSMCi and NGTL entered into a Settlement Agreement and Release. The U.S. District Court dismissed claims against NGTL on December 23, 2005.
In July 2006, the Company filed a motion for summary judgment, seeking dismissal of all claims made by DSMCi in the U.S. District Court.
On March 27, 2007, the U.S. District Court partially granted the Company’s motion for summary judgment. The Company’s motion for dismissal of the claims of misappropriation of DSMCi trade secrets and copyright infringement were both denied, however, the motions for dismissal of all claims of civil conspiracy leveled against the Company by DSMCi, were granted. The Court also affirmed that Convera is entitled to set off the full amount of DSMCi’s settlement of the NTGL claim against any damages awarded in trial.
The U.S. District Court issued a pretrial order directing the parties to file a joint pre trial statement by May 15, 2007, in preparation for trial, which is presently expected to be scheduled to commence in the fall of 2007.
In connection with this litigation, the Company brought an arbitration claim against NGTL on September 13, 2005, seeking indemnification for its defense costs and potential liability pursuant to an indemnity provision in a service agreement between NGTL and the Company. In response, NGTL brought a cross claim against the Company under the same contract provision for indemnification of NGTL’s respective costs and liability. On June 5, 2006, the
F-22
parties entered a joint stipulation to stay the arbitration pending completion of summary judgment briefing in the underlying litigation between the Company and DSMCi to avoid duplication of efforts. The resolution of the issues in that underlying litigation may also resolve some or all of the matters at issue in the arbitration.
In addition, from time to time, the Company is a party to various legal proceedings, claims, disputes and litigation arising in the ordinary course of business, including that noted above. The Company believes that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse affect on its financial position, operations or cash flow. However, because of the nature and inherent uncertainties of litigation, should the outcome of these actions or future actions be unfavorable, Convera’s financial position, operations and cash flows could be materially adversely affected.
The Company is engaged in the design, development, marketing and support of search, retrieval and categorization solutions. All of the Company’s revenues result from the sale of the Company’s software products and related services for all fiscal years presented. In fiscal year 2005, the Company commenced this development effort that resulted in the Excalibur product which became commercially available product during fiscal year 2006. Accordingly the Company considered itself to have two reportable segments beginning as of and for the period ended January 31, 2005. These segments are the license, implementation and support of its enterprise search business (e.g., RetrievalWare) and its Web indexing segment (e.g. Excalibur). The Company continued to report segmented information throughout fiscal 2006 for these two segments. Beginning in fiscal year 2007, the Company consolidated the resources of both product offerings and considered itself to have one reportable segment. The consolidation of these two segments resulted from the majority of the customer products for Excalibur being the existing federal and commercial customer base for RetrievalWare. After the launch of the first Excalibur B2B publisher site in November 2006, the customer prospects and sales pipeline for Excalibur became increasingly diverted from the federal and commercial customer base of RetrievalWare to B2B publishers. Accordingly the Company reevaluated its single segment presentation and reinstated the segmentation of the enterprise search and web indexing segment.
The Company’s chief operating decision-making group currently reviews financial information presented on a consolidated basis, accompanied by disaggregated information about revenues, expenses and relevant balance sheet items for both product segments and by geographic region for purposes of making operating decisions and assessing financial performance.
The accounting policies of the segments are generally the same as those described in “Note 2. Summary Of Significant Accounting Policies”above. Our chief operating decision-making group evaluates the performance of our operating segments based on a measure of their contribution to operations, which consists of net revenue less the cost of revenue and directly identifiable research and development costs. The Web Indexing segment also includes amortization of capitalized research and development costs and impairment charges related to the Excalibur Web product. Beginning in Fiscal 2007, in connection with the consolidation of resources and view of the business as a single segment the sales and marketing groups and general and administrative costs were no longer available for the chief operating decision group to evaluate on a segmented basis, Accordingly, the comparative selected financial information by reportable segment shown below has been adjusted to include these cost with Corporate and Other costs.
F-23
The following table contains selected financial information for our operations by reportable segments and a reconciliation of the information by segment to our consolidated totals for the years ended January 31, 2007, 2006 and 2005 (in thousands):
| | | | | | | | | | | | | |
| | Enterprise
Search
(RetrievalWare) | | Web
Indexing
(Excalibur) | | Corporate
and Other | | Consolidated | |
| |
| |
| |
| |
| |
Fiscal 2007 | | | | | | | | | | | | | |
Revenues | | $ | 16,402 | | $ | 269 | | $ | — | | $ | 16,671 | |
Depreciation | | | 178 | | | 3,143 | | | 409 | | | 3,730 | |
Amortization of capitalized research and development costs | | | — | | | 3,045 | | | — | | | 3,045 | |
Impairment of capitalized research and development costs, equipment and prepaid expenses | | | — | | | 6,407 | | | — | | | 6,407 | |
Total expenses | | | 8,742 | | | 28,350 | | | 26,673 | | | 63,765 | |
Net operating gain (loss) | | | 7,660 | | | (28,081 | ) | | (26,673 | ) | | (47,094 | ) |
Other income, net | | | — | | | — | | | 2,267 | | | 2,267 | |
Net gain (loss) before income taxes | | | 7,660 | | | (28,081 | ) | | (24,406 | ) | | (44,827 | ) |
Income tax benefit | | | — | | | — | | | — | | | — | |
|
Net gain (loss) | | $ | 7,660 | | $ | (28,081 | ) | $ | (24,406 | ) | $ | (44,827 | ) |
| |
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | |
Fiscal 2006 | | | | | | | | | | | | | |
Revenues | | $ | 20,988 | | $ | 20 | | $ | — | | $ | 21,008 | |
Depreciation1 | | | 333 | | | 863 | | | 312 | | | 1,508 | |
Amortization of capitalized research and development costs | | | — | | | 1,012 | | | — | | | 1,012 | |
Restructuring | | | — | | | — | | | — | | | — | |
Total expenses | | | 11,037 | | | 5,531 | | | 19,303 | | | 35,871 | |
Net operating gain (loss) | | | 9,951 | | | (5,511 | ) | | (19,303 | ) | | (14,863 | ) |
Other income, net | | | — | | | — | | | 602 | | | 602 | |
Net gain (loss) before income taxes | | | 9,951 | | | (5,511 | ) | | (18,701 | ) | | (14,261 | ) |
Income tax benefit | | | — | | �� | — | | | — | | | — | |
|
Net gain (loss) | | $ | 9,951 | | $ | (5,511 | ) | $ | (18,701 | ) | $ | (14,261 | ) |
| |
|
| |
|
| |
|
| |
|
| |
| | | | | | | | | | | | | |
Fiscal 2005 | | | | | | | | | | | | | |
Revenues | | $ | 25,698 | | $ | — | | $ | — | | $ | 25,698 | |
Depreciation | | | 654 | | | 400 | | | 530 | | | 1,584 | |
Restructuring | | | 944 | | | — | | | — | | | 944 | |
Total expenses | | | 17,289 | | | 4,164 | | | 24,240 | | | 45,693 | |
Net operating gain (loss) | | | 8,409 | | | (4,164 | ) | | (24,240 | ) | | (19,995 | ) |
Other income, net | | | — | | | — | | | 175 | | | 175 | |
Net gain (loss) before income taxes | | | 8,409 | | | (4,164 | ) | | (24,065 | ) | | (19,820 | ) |
Income tax benefit | | | — | | | — | | | — | | | — | |
|
Net gain (loss) | | $ | 8,409 | | $ | (4,164 | ) | $ | (24,065 | ) | $ | (19,820 | ) |
| |
|
| |
|
| |
|
| |
|
| |
(1) Additional depreciation expense of $1,396 for the Web Indexing segment is included with capitalized research and product development cost on the accompanying balance sheet.
F-24
Operating segment assets are those directly used in, or allocable to, that segment’s operations. For the Enterprise Search segment, operating assets consist primarily of trade receivables; prepaid expenses; goodwill and other intangible assets. For the Web Indexing segment, operating assets consist primarily of computer equipment for the Web hosting facility and prepaid expenses directly associated with the Web Indexing product. For the year ended January 31, 2006 the Web Indexing segment also included capitalized research and product development costs. Corporate and Other assets include corporate cash and cash equivalents; the net book value of corporate equipment and leasehold improvements; and other corporate and marketing shared prepaid expanses and other assets.
The following table reconciles each segments total assets to the Company’s consolidated total assets for the years ended January 31, 2007 and 2006 (in thousands):
| | | | | | | |
| | Fiscal Years Ended January 31, | |
| |
| |
| | 2007 | | 2006 | |
| |
| |
| |
Enterprise Search Products (RetrievalWare) | | | | | | | |
Equipment and leasehold improvements, net of accumulated depreciation | | $ | 141 | | $ | 247 | |
Goodwill | | | 2,275 | | | 2,275 | |
All other assets | | | 3,833 | | | 6,094 | |
| |
|
| |
|
| |
Total assets for segment | | $ | 6,249 | | $ | 8,616 | |
| |
|
| |
|
| |
| | | | | | | |
Web Indexing (Excalibur) | | | | | | | |
Equipment and leasehold improvements, net of accumulated depreciation | | $ | 3,344 | | $ | 8,234 | |
Capitalized research and product development costs | | | — | | | 7,102 | |
All other assets | | | 172 | | | 761 | |
| |
|
| |
|
| |
Total assets for segment | | $ | 3,516 | | $ | 16,097 | |
| |
|
| |
|
| |
| | | | | | | |
Reconciliation to Consolidated total assets | | | | | | | |
Total assets – both reporting segments | | $ | 9,765 | | $ | 24,713 | |
Cash – unallocated | | | 47,433 | | | 37,741 | |
Equipment and leasehold improvements, net of accumulated depreciation – unallocated | | | 443 | | | 671 | |
All other assets – unallocated | | | 1,640 | | | 1,092 | |
| |
|
| |
|
| |
Total assets – consolidated | | $ | 59,281 | | $ | 64,217 | |
| |
|
| |
|
| |
Operations by Geographic Area
The following table presents information about the Company’s operations by geographical area (in thousands):
| | | | | | | | | | |
| | Fiscal Years Ended January 31, | |
| |
| |
| | 2007 | | 2006 | | 2005 | |
| |
| |
| |
| |
Sales to customers: | | | | | | | | | | |
United States | | $ | 11,299 | | $ | 15,767 | | $ | 18,171 | |
United Kingdom | | | 5,357 | | | 4,472 | | | 6,608 | |
All Other | | | 15 | | | 769 | | | 919 | |
| |
|
| |
|
| |
|
| |
| | $ | 16,671 | | $ | 21,008 | | $ | 25,698 | |
| |
|
| |
|
| |
|
| |
Long-lived assets: | | | | | | | | | | |
United States | | $ | 6,846 | | $ | 18,983 | | $ | 9,350 | |
All Other | | | 146 | | | 661 | | | 187 | |
| |
|
| |
|
| |
|
| |
| | $ | 6,992 | | $ | 19,644 | | $ | 9,537 | |
| |
|
| |
|
| |
|
| |
F-25
Major Customers
Revenues derived from contracts and orders issued by agencies of the U.S. Government were approximately $9.5 million, $11.3 million and $11.6 million, respectively, in the fiscal years ended January 31, 2007, 2006 and 2005. These revenues, expressed as a percentage of total revenues for each such fiscal year, were approximately 57%, 54% and 45%, respectively. For the fiscal year ended January 31, 2007 there were no individual customers that accounted for more than 10% of the Company’s total revenues. For the fiscal year ended January 31, 2006 one customer accounted for approximately $3.0 million or 14% of the Company’s total revenues. One reseller customer accounted for approximately $4.3 million or 17% of the Company’s total revenues for the fiscal year ended January 31, 2005. In both years the revenue was part of the Enterprise Search (RetrievalWare) segment.
| |
(16) | SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (in thousands): |
| | | | | | | | | | |
| | For the Fiscal Years Ended January 31, | |
| |
| |
| | 2007 | | 2006 | | 2005 | |
| |
| |
| |
| |
Supplemental Disclosures of Non-cash Investing and Financing Activities: | | | | | | | | | | |
Stock options exercised under deferred compensation arrangements | | $ | 365 | | $ | 225 | | $ | 121 | |
Cash paid for interest | | $ | 154 | | $ | 306 | | $ | — | |
| |
(17) | SELECTED QUARTERLY INFORMATION (UNAUDITED)
(Amounts in thousands except per share data.) |
| | | | | | | | | | | | | |
| | 1st Quarter | | 2nd Quarter | | 3rd Quarter | | 4th Quarter | |
| |
| |
| |
| |
| |
2007: | | | | | | | | | | | | | |
Revenues | | $ | 4,668 | | $ | 3,312 | | $ | 5,935 | | $ | 2,756 | |
Amortization of capitalized research and product development costs | | | (1,014 | ) | | (1,016 | ) | | (1,016 | ) | | — | |
Impairment of capitalized research & development costs, equipment and prepaid expenses | | | — | | | — | | | (6,407 | ) | | — | |
Operating loss | | | (10,389 | ) | | (11,711 | ) | | (14,655 | ) | | (10,339 | ) |
Other income | | | 373 | | | 649 | | | 643 | | | 602 | |
Net loss | | | (10,016 | ) | | (11,062 | ) | | (14,012 | ) | | (9,737 | ) |
| | | | | | | | | | | | | |
Basic and diluted loss per common share | | $ | (0.20 | ) | $ | (0.21 | ) | $ | (0.27 | ) | $ | (0.18 | ) |
| | | | | | | | | | | | | |
2006: | | | | | | | | | | | | | |
Revenues | | $ | 5,078 | | $ | 7,804 | | $ | 4,512 | | $ | 3,613 | |
Operating loss | | | (2,495 | ) | | (100 | ) | | (2,732 | ) | | (9,536 | ) |
Restructuring charges | | | (56 | ) | | — | | | (1 | ) | | — | |
Other income | | | — | | | — | | | — | | | — | |
Net loss | | | (2,469 | ) | | (25 | ) | | (2,491 | ) | | (9,276 | ) |
| | | | | | | | | | | | | |
Basic and diluted loss per common share | | $ | (0.06 | ) | $ | (0.00 | ) | $ | (0.05 | ) | $ | (0.20 | ) |
F-26
On March 23, 2005 the Company secured a $5 million term loan from Silicon Valley Bank (“SVB”), the primary subsidiary of Silicon Valley Bancshares (NASDAQ: SIVB). The four-year, term facility was secured to provide financing for capital purchases including those for the Excalibur Web product. The loan incurred interest at 7% per annum and was secured by a first lien on all corporate assets, excluding intellectual property. During the fiscal years ended January 31, 2007 and 2006 the Company recorded interest expense of approximately $154,000 and $306,000, respectively. The Company retired this facility on February 28, 2006.
On March 31, 2007, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with FAST Search & Transfer, Inc (“FAST”), to sell the assets used exclusively in the Company’s RetrievalWare enterprise search business and provide a perpetual royalty free license to certain RetrievalWare intellectual property for a total of $23 million in cash, subject to adjustment for changes to working capital, FAST will also assume certain liabilities and obligations of the RetrievalWare business. The Company executed the sale of the RetrievalWare business to focus its attention and resources on the development and growth of its Excalibur vertical search business. The sale of the RetrievalWare business is expected to close during the second quarter of fiscal 2008.
The Company determined that the plan of sale criterion set forth in FAS No. 144 “Accounting for Impairment or Disposal of Long-Lived Assets” were met on this transaction date and the assets and liabilities of the RetrievalWare business to be disposed will commence to be classified as “held for sale” at this date and until the transaction closes.
The assets and liability pool sold to FAST in this transaction is a components of the Enterprise Search segment as discussed in Note 15, Segment Reporting., the balances of these assets are as follows (amounts in 000’s):
| | | | | | | |
| | January 31, | |
| |
| |
| | 2007 | | 2006 | |
| |
| |
| |
Assets | | | | | | | |
Cash and cash equivalents | | $ | — | | $ | — | |
Accounts receivable, net of allowance | | | 2,694 | | | 4,364 | |
Prepaid expenses and other | | | 740 | | | 609 | |
| |
|
| |
|
| |
Current assets | | | 3,434 | | | 4,973 | |
| | | | | | | |
Equipment | | | 214 | | | 269 | |
Goodwill | | | 2,275 | | | 2,275 | |
Other assets | | | 199 | | | 751 | |
| |
|
| |
|
| |
Assets | | $ | 6,122 | | $ | 8,267 | |
| |
|
| |
|
| |
| | | | | | | |
Liabilities & enterprise equity | | | | | | | |
Accounts payable | | $ | — | | $ | — | |
Accrued expenses | | | 490 | | | 834 | |
Deferred revenue | | | 3,265 | | | 4,177 | |
| |
|
| |
|
| |
Current liabilities | | | 3,754 | | | 5,011 | |
| |
|
| |
|
| |
| | | | | | | |
Net enterprise equity | | $ | 2,368 | | $ | 3,256 | |
| |
|
| |
|
| |
All RetrievalWare assets and liabilities listed above are stated at fair value less the costs to sell these components of the asset pool. Equipment reflects a $22,000 charge to write the assets down from carrying value to fair value less costs to sell.
F-27
The revenues and pre-tax profits generated by the RetrievalWare business being sold to FAST for the years ended January 31, 2007, 2006 and 2005 are as follows (in thousands):
| | | | | | | | | | |
| | Year Ended January 31, | |
| |
| |
| | 2007 | | 2006 | | 2005 | |
| |
| |
| |
| |
| | | | | | | |
Revenues | | $ | 16,402 | | $ | 20,988 | | $ | 25,698 | |
| |
|
| |
|
| |
|
| |
| | | | | | | | | | |
Pre tax profit | | $ | 696 | | $ | 5,403 | | $ | 540 | |
| |
|
| |
|
| |
|
| |
The Transaction is subject to a number of customary closing conditions, including the Company’s receipt of a fairness opinion from its independent financial advisor that the consideration to be received by the Company in connection with the Transaction is fair to the Company from a financial point of view.
F-28
