Exhibit 99.3
DOUBLE-TAKE SOFTWARE, INC.
UNAUDITED PRO FORMA
Condensed Consolidated Financial Statements
UNAUDITED PRO FORMA
Condensed Consolidated Financial Statements
On December 24, 2007, Double-Take Software acquired 100% of the shares outstanding of TimeSpring Software Corporation, which is now known as Double-Take Canada. The purchase price paid in cash was approximately $8.3 million plus transaction costs and working capital adjustments which totaled approximately $1.5 million. A portion of the amount paid to the selling shareholders will be held in escrow.
The following represents preliminary allocation of the purchase price of Double-Take Canada. The acquisition adjustments are based on currently available information and upon certain assumptions and estimates that the Company believes are reasonable. The acquisition of Double-Take Canada was accounted for using the purchase method of accounting, and the assets acquired and liabilities assumed were accounted for at their fair market values at the acquisition date based on preliminary estimates. The purchase price allocation is preliminary and subject to adjustment based on the preparation of and review by the selling shareholders of the closing balance sheet of Double-Take Canada within 90 days of the closing of the transaction.
The details of the purchase price allocation are as follows (in thousands):
Purchase price paid to selling shareholders | $ | 8,000 | ||
Operating expense reimbursement paid to selling shareholders | 339 | |||
Transaction costs | 620 | |||
Working capital acquired | 818 | |||
Total purchase price | $ | 9,777 | ||
The estimated fair value of identifiable assets and liabilities on the date of the acquisition are as follows (in thousands):
Accounts receivable | $ | 60 | ||
Prepaid expenses and other current assets | 1,215 | |||
Bank overdraft | (149 | ) | ||
Accounts payable | (25 | ) | ||
Accrued expenses | (113 | ) | ||
Other liabilities | (92 | ) | ||
Deferred revenue | (36 | ) | ||
Property and equipment | 453 | |||
Technology related intangibles (5 year life) | 1,936 | |||
Net assets acquired | $ | 3,249 | ||
Excess of purchase price over net assets acquired (goodwill) | $ | 6,528 | ||
The following pro forma financial data has been prepared by the Company to give effect to our acquisition of Double-Take Canada. The pro forma adjustments, which are based upon available information and upon assumptions that the Company believes are reasonable, are described in the accompanying notes.
The unaudited pro forma balance sheet at September 30, 2007 has been prepared to give effect to the acquisition of Double-Take Canada as if it had occurred on September 30, 2007.
The unaudited pro forma statements of operations combines the statement of operations with Double-Take Canada’s for the year ended December 31, 2006 and for the nine month period ended September 30, 2007, to reflect the acquisition of Double-Take Canada as if the acquisition had been completed and was effective as of January 1, 2006 and January 1, 2007, respectively.
The financial effects to the Company of the acquisition of Double-Take Canada as presented in the pro forma financial data are not necessarily indicative of the consolidated financial position or results of operations the Company would have obtained if the Double-Take Canada acquisition had actually occurred on the dates described above, nor are they necessarily indicative of the results of future operations. The pro forma financial data should be read in conjunction with the accompanying notes, which are an integral part of the pro forma information, and the historical financial statement of Double-Take Software, Inc. and Double-Take Canada and the related notes.
Double-Take Software, Inc. — TimeSpring
Balance Sheet
September 30, 2007
(unaudited)
Balance Sheet
September 30, 2007
(unaudited)
Pro Forma | ||||||||||||||||
Double- | as Adjusted | |||||||||||||||
Double- | Take | for the | ||||||||||||||
Take (1) | Canada (2) | Acquistion | Pro Forma | |||||||||||||
(in thousands of US $) | (historical) | |||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | 38,845 | 391 | (9,157 | )3 | 30,079 | |||||||||||
Short term investments | 28,561 | — | 28,561 | |||||||||||||
Accounts receivable, net of allowance for doubtful accounts | 16,068 | 200 | 16,268 | |||||||||||||
Prepaid expenses and other current assets | 2,751 | 841 | 3,592 | |||||||||||||
Deferred tax assets | 2,849 | — | 2,849 | |||||||||||||
Total current assets | 89,074 | 1,432 | (9,157 | ) | 81,349 | |||||||||||
Property and equipment, net | 3,274 | 469 | 3,743 | |||||||||||||
Goodwill | 3,059 | — | 6,528 | 4 | 9,587 | |||||||||||
Intangible Asset — Customer relationship | 1,653 | — | 1,653 | |||||||||||||
Intangible Asset — Marketing relationship | 1,655 | — | 1,655 | |||||||||||||
Intangible Asset — Technology Related | — | — | 1,936 | 4 | 1,936 | |||||||||||
Other assets | 150 | — | 150 | |||||||||||||
Total assets | 98,865 | 1,901 | (693 | ) | 100,073 | |||||||||||
LIABILITIES, REDEEMABLE SHARES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | 1,273 | 147 | 1,420 | |||||||||||||
Accrued expenses | 4,425 | 105 | 800 | 3, 5 | 5,330 | |||||||||||
Other liabilities | 360 | — | 360 | |||||||||||||
Deferred revenue | 21,284 | 139 | 21,423 | |||||||||||||
Total current liabilities | 27,342 | 391 | 800 | 28,533 | ||||||||||||
Long-term deferred revenue | 4,463 | — | 4,463 | |||||||||||||
Long-term deferred rent | 306 | — | 306 | |||||||||||||
Loans payable | — | 5,627 | (5,627 | ) 6 | — | |||||||||||
Long-term capital lease obligation | 3 | 17 | 20 | |||||||||||||
Total long-term liabilities | 4,772 | 5,644 | (5,627 | ) | 4,789 | |||||||||||
Total liabilities | 32,114 | 6,035 | (4,827 | ) | 33,322 | |||||||||||
Redeemable preferred shares | — | 24,662 | (24,662 | ) 7 | — | |||||||||||
Stockholders’ equity (deficit) | ||||||||||||||||
Common Stock | 22 | 2,707 | (2,707 | ) 7 | 22 | |||||||||||
Additional paid in capital | 146,313 | — | 146,313 | |||||||||||||
Cumulative translation adjustment | (5 | ) | — | (5 | ) | |||||||||||
Accumulated deficit | (79,579 | ) | (31,503 | ) | 31,503 | 7 | (79,579 | ) | ||||||||
Total stockholders’ equity (deficit) | 66,751 | (28,796 | ) | 28,796 | 66,751 | |||||||||||
Total liabilities, redeemable shares and stockholders’ equity (deficit) | 98,865 | 1,901 | (693 | ) | 100,073 | |||||||||||
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
(dollars in thousands, except where noted otherwise)
(dollars in thousands, except where noted otherwise)
(1) | Derived from the unaudited balance sheet for Double-Take Software, Inc. at September 30, 2007. | |
(2) | Derived from the unaudited consolidated balance sheet for Double-Take Canada at September 30, 2007 and converted from Canadian dollars to US dollars using the $/Cdn exchange rate on September 30, 2007 of 0.9959. The balance sheet was adjusted to conform to US GAAP by reducing other assets by $34, redeemable preferred stock by $281 and accumulated deficit by $247 to net costs associated with redeemable preferred stock. | |
(3) | The components of the pro forma adjustment to cash are as follows: |
Purchase price paid to selling shareholders | $ | 8,000 | ||
Operating expense reimbursement paid to selling shareholders | 339 | |||
Working capital acquired | 818 | |||
Cash paid to selling shareholders at closing | $ | 9,157 | ||
Transaction costs not accrued on Double-Take Software’s balance sheet as of September 30 and not paid at closing (recorded as accrued expense instead of reducing cash) | $ | 620 | ||
(4) | Intangible assets resulting from the acquisition of Double-Take Canada. | |
(5) | Accrual for acquisition costs incurred after September 30, 2007. | |
(6) | Elimination of debt on Double-Take Canada books as of September 30, 2007. All debt was paid off by the selling shareholders concurrent with the acquisition of Double-Take Canada by Double-Take Software, Inc. | |
(7) | Adjustments to eliminate the equity related to the Double-Take Canada equity. |
Double-Take Software Inc.
Pro Forma Consolidated Statements of Operations
Year ended December 31, 2006
(unaudited)
Pro Forma Consolidated Statements of Operations
Year ended December 31, 2006
(unaudited)
Double- | Pro Forma as | |||||||||||||||
Double- | Take | Adjusted for the | ||||||||||||||
(in thousands of US $, except share and per share amounts) | Take (1) | Canada (2) | Acquistion | Pro Forma | ||||||||||||
Revenue: | ||||||||||||||||
Software licenses | 38,418 | 400 | 38,818 | |||||||||||||
Maintenance and professional services | 22,422 | 133 | 22,555 | |||||||||||||
Total Revenue | 60,840 | 533 | — | 61,373 | ||||||||||||
Cost of Revenue: | ||||||||||||||||
Software licenses | 1,355 | 55 | 1,410 | |||||||||||||
Maintenance and professional services | 6,193 | — | 6,193 | |||||||||||||
Total Cost of Revenue | 7,548 | 55 | — | 7,603 | ||||||||||||
Gross profit | 53,292 | 478 | — | 53,770 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Sales and marketing | 22,211 | 2,397 | 24,608 | |||||||||||||
Research and development | 10,679 | 1,190 | 11,869 | |||||||||||||
General and administrative | 11,824 | 1,672 | 13,496 | |||||||||||||
Depreciation and amortization | 1,613 | 202 | 387 | 3 | 2,202 | |||||||||||
Total Operating Expenses | 46,327 | 5,461 | 387 | 52,175 | ||||||||||||
Income (loss) from Operations | 6,965 | (4,983 | ) | (387 | ) | 1,595 | ||||||||||
Interest Income | 319 | 118 | 437 | |||||||||||||
Interest Expense | (91 | ) | (255 | ) | 237 | 4 | (109 | ) | ||||||||
Foreign Exchange gains (losses) | 56 | — | — | 56 | ||||||||||||
Income (loss) before income taxes | 7,249 | (5,120 | ) | (150 | ) | 1,979 | ||||||||||
Income tax expense (benefit) | 494 | — | (494 | ) | ||||||||||||
Net income (loss) | 6,755 | (5,120 | ) | (150 | ) | 1,485 | ||||||||||
Accretion on redeemable shares | (4,496 | ) | (1,528 | ) | 1,528 | 5 | (4,496 | ) | ||||||||
Dividends on redeemable shares | (2,830 | ) | (2,830 | ) | ||||||||||||
Net income (loss) attributable to shareholders | (571 | ) | (6,648 | ) | 1,378 | (5,841 | ) | |||||||||
Net Loss per share attributable to common stock holders | ||||||||||||||||
Basic | (0.13 | ) | (1.36 | ) | ||||||||||||
Diluted | (0.13 | ) | (1.36 | ) | ||||||||||||
Weighted average number of shares used in per share amounts: | ||||||||||||||||
Basic and diluted | 4,306 | 4,306 | ||||||||||||||
Diluted | 4,306 | 4,306 | ||||||||||||||
Double-Take Software Inc.
Pro Forma Consolidated Statements of Operations
Nine months ended September 30, 2007
(unaudited)
Pro Forma Consolidated Statements of Operations
Nine months ended September 30, 2007
(unaudited)
Double- | Pro Forma as | |||||||||||||||
Double- | Take | Adjusted for the | ||||||||||||||
(in thousands of US $, except share and per share amounts) | Take (1) | Canada (2) | Acquistion | Pro Forma | ||||||||||||
Revenue: | ||||||||||||||||
Software licenses | 34,993 | 155 | 35,148 | |||||||||||||
Maintenance and professional services | 24,251 | 119 | 24,370 | |||||||||||||
Total Revenue | 59,244 | 274 | — | 59,518 | ||||||||||||
Cost of Revenue: | ||||||||||||||||
Software licenses | 216 | 27 | 243 | |||||||||||||
Maintenance and professional services | 5,792 | — | 5,792 | |||||||||||||
Total Cost of Revenue | 6,008 | 27 | — | 6,035 | ||||||||||||
Gross profit | 53,236 | 247 | — | 53,483 | ||||||||||||
Operating Expenses: | ||||||||||||||||
Sales and marketing | 20,683 | 1,358 | 22,041 | |||||||||||||
Research and development | 8,756 | 835 | 9,591 | |||||||||||||
General and administrative | 11,007 | 1,095 | 12,102 | |||||||||||||
Depreciation and amortization | 1,707 | 144 | 290 | 3 | 2,141 | |||||||||||
Total Operating Expenses | 42,153 | 3,432 | 290 | 45,875 | ||||||||||||
Income (loss) from Operations | 11,083 | (3,185 | ) | (290 | ) | 7,608 | ||||||||||
Interest Income | 2,213 | 33 | 2,246 | |||||||||||||
Interest Expense | (39 | ) | (716 | ) | 700 | 4 | (55 | ) | ||||||||
Foreign Exchange gains (losses) | (50 | ) | — | (50 | ) | |||||||||||
Income (loss) before income taxes | 13,207 | (3,868 | ) | 410 | 9,749 | |||||||||||
Income tax expense (benefit) | (531 | ) | 2 | (529 | ) | |||||||||||
Net income (loss) | 13,738 | (3,870 | ) | 410 | 10,278 | |||||||||||
Accretion on redeemable shares | (1,305 | ) | 1,305 | 5 | — | |||||||||||
Net income (loss) attributable to shareholders | 13,738 | (5,175 | ) | 1,715 | 10,278 | |||||||||||
Net Loss per share | ||||||||||||||||
Basic | 0.65 | 0.49 | ||||||||||||||
Diluted | 0.60 | 0.45 | ||||||||||||||
Weighted average number of shares used in per share amounts: | ||||||||||||||||
Basic | 21,152 | 21,152 | ||||||||||||||
Diluted | 22,950 | 22,950 | ||||||||||||||
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(US dollars in thousands, except where noted otherwise)
(US dollars in thousands, except where noted otherwise)
(1) | Derived from the historical audited statements of operations for Double Take for the year ended December 31, 2006 and the unaudited nine months ended September 30, 2007. | |
(2) | Derived from the historical audited consolidated statement of operations for Double-Take Canada for the year ended December 31, 2006 and the nine months ended September 30, 2007 and converted from Canadian dollars to US dollars using the $/Cdn average exchange rate of 1.1340 for the year ended December 31, 2006 and 1.1049 for the nine months ended September 30, 2007. See financial statements for the periods ended September 30, 2007 and 2006, and December 31, 2006 and 2005 included as Exhibits 99.02and 99.01 to this 8-K/A. |
The statement of operations for the year ended December 31, 2006 was adjusted to conform to US GAAP as follows:
• | Reduce interest expense by $1,733 (Cdn) related to the increase in the redemption value of redeemable preferred shares. This amount is shown below as an increase in capital deficiencies for US GAAP purposes. | ||
• | Reduce interest expense by $56 (Cdn) for amortization of deferred charges that are netted against the value of preferred shares for US GAAP purposes. |
The unaudited statement of operations for the nine months ended September 30, 2007 was adjusted to conform to US GAAP as follows:
• | Reduce interest expense by $1,442 (Cdn) related to the increase in the redemption value of redeemable preferred shares. This amount is shown below as an increase in capital deficiencies for US GAAP purposes. | ||
• | Reduce interest expense by $42 (Cdn) for amortization of deferred charges that are offset against the value of preferred shares for US GAAP purposes. |
(3) | Adjustment to record amortization of the identified intangible asset recorded for the acquisition of Double-Take Canada: |
The adjustment for the year ended December 31, 2006 was calculated as follows:
Technology intangible | $ | 1,936 | ||
Estimated life | 5 | |||
Amortization for year | $ | 387 | ||
The adjustment for the nine month period ending September 30, 2007 was calculated as follows:
Full year amortization | $ | 387 | ||
Multiply by portion of year to amortize | .75 | |||
Amortization for nine months | $ | 290 | ||
(4) | Adjustment to eliminate interest expense on bank debt and shareholder debt. This debt was paid in full concurrent with the closing of the acquisition. | |
(5) | Adjustment to eliminate accretion on the redeemable of preferred shares. These shares were cancelled at the closing of the acquisition. |