Exhibit 99.2
Unaudited Pro Forma Consolidated Financial Statements
The following unaudited pro forma consolidated balance sheet and statements of operations give effect to the purchase transaction pursuant to a Merger Agreement dated April 29, 2004 by and among infoUSA Inc. (“infoUSA”), OneSource Information Services, Inc. (“OneSource”) and OSIS Acquisition Corp. The purchase transaction was completed on June 9, 2004. This business combination is accounted for using the purchase method of accounting.
Pro forma adjustments and the assumptions on which they are based are described in the accompanying footnotes to the pro forma consolidated financial statements. The accompanying unaudited pro forma consolidated balance sheet as of March 31, 2004 contains those pro forma adjustments necessary to reflect the business combination as if it was consummated on that date. The accompanying unaudited pro forma consolidated statements of operations for the year ended December 31, 2003 and the three months ended March 31, 2004 contain those pro forma adjustments necessary to reflect the business combination as if it was consummated on January 1, 2003. The unaudited pro forma consolidated financial statements are based upon the historical financial statements of infoUSA and OneSource and should be read in conjunction with those financial statements and notes thereto appearing in infoUSA’s Form 10-K for the year ended December 31, 2003 and Form 10-Q for the interim financial statements as of March 31, 2004 and OneSource’s annual financial statements for the year ended December 31, 2003 and interim financial statements as of March 31, 2004 included herein. The unaudited pro forma consolidated financial data have been prepared for informational purposes only. The unaudited pro forma consolidated financial data do not purport to be indicative of the results which would have actually been attained had the business combination been consummated on the dates indicated or of the results which may be expected to occur in the future.
July 30, 2004
infoUSA INC.
infoUSA Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2004
(amounts in thousands)
Historical | Historical | Pro Forma | Pro Forma | ||||||||||||||||||
infoUSA Inc. | OneSource | Adjustments | Notes | Combined | |||||||||||||||||
ASSETS | |||||||||||||||||||||
Current assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 44,894 | $ | 25,265 | $ | (24,380 | ) | A, B | $ | 45,779 | |||||||||||
Marketable securities | 3,446 | — | (885 | ) | B | 2,561 | |||||||||||||||
Trade accounts receivable, net | 36,365 | 7,642 | — | 44,007 | |||||||||||||||||
List brokerage trade accounts receivable | 10,920 | — | — | 10,920 | |||||||||||||||||
Prepaid expenses | 4,988 | 4,418 | (1,350 | ) | C | 8,056 | |||||||||||||||
Deferred marketing costs | 3,833 | — | — | 3,833 | |||||||||||||||||
Total current assets | 104,446 | 37,325 | (26,615 | ) | 115,156 | ||||||||||||||||
Property and equipment, net | 40,622 | 5,038 | — | 45,660 | |||||||||||||||||
Intangible assets, net | 250,271 | 9,093 | 95,255 | D | 354,619 | ||||||||||||||||
Deferred income taxes | — | 1,480 | — | 1,480 | |||||||||||||||||
Other assets | 5,939 | 1,806 | — | 7,745 | |||||||||||||||||
$ | 401,278 | $ | 54,742 | $ | 68,640 | $ | 524,660 | ||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||
Current portion of long-term debt | $ | 52,264 | $ | 1,046 | $ | 18,954 | E, A | $ | 72,264 | ||||||||||||
Accounts payable | 12,361 | 1,033 | — | 13,394 | |||||||||||||||||
List brokerage trade accounts payable | 7,642 | — | — | 7,642 | |||||||||||||||||
Accrued payroll expenses | 12,924 | 1,602 | — | 14,526 | |||||||||||||||||
Accrued expenses | 3,398 | 4,195 | — | 7,593 | |||||||||||||||||
Income taxes payable | 2,545 | — | — | 2,545 | |||||||||||||||||
Deferred income taxes | 3,098 | 692 | — | 3,790 | |||||||||||||||||
Deferred revenue | 24,328 | 26,111 | (11,489 | ) | F | 38,950 | |||||||||||||||
Total current liabilities | 118,560 | 34,679 | 7,465 | 160,704 | |||||||||||||||||
Long-term debt, net of current portion | 121,221 | 1,266 | 67,546 | E,A | 190,033 | ||||||||||||||||
Deferred income taxes | 8,124 | — | 12,426 | G | 20,550 | ||||||||||||||||
Other liabilities | 1,397 | — | — | 1,397 | |||||||||||||||||
Stockholders’ equity: | |||||||||||||||||||||
Common stock | 132 | 133 | (133 | ) | H | 132 | |||||||||||||||
Paid-in capital | 100,768 | 36,767 | (36,767 | ) | H | 100,768 | |||||||||||||||
Retained earnings (accumulated deficit) | 56,305 | (6,983 | ) | 6,983 | H | 56,305 | |||||||||||||||
Treasury stock | (3,008 | ) | (12,183 | ) | 12,183 | H | (3,008 | ) | |||||||||||||
Notes receivable from officers | (329 | ) | — | — | (329 | ) | |||||||||||||||
Accumulated other comprehensive income (loss) | (1,892 | ) | 1,063 | (1,063 | ) | H | (1,892 | ) | |||||||||||||
Total stockholders’ equity | 151,976 | 18,797 | (18,797 | ) | 151,976 | ||||||||||||||||
$ | 401,278 | $ | 54,742 | $ | 68,640 | $ | 524,660 | ||||||||||||||
See accompanying notes to pro forma financial statements
infoUSA Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2003
(amounts in thousands, except per share amounts)
Historical | Historical | Pro Forma | Pro Forma | |||||||||||||||
infoUSA | OneSource | Adjustments | Notes | Combined | ||||||||||||||
Net sales | $ | 311,345 | $ | 57,284 | $ | (13,313 | ) | I | $ | 355,316 | ||||||||
Costs and expenses: | ||||||||||||||||||
Database and production costs | 87,074 | 26,901 | — | 113,975 | ||||||||||||||
Selling, general and administrative | 144,068 | 23,283 | (1,644 | ) | J | 165,707 | ||||||||||||
Depreciation and amortization | 27,849 | 3,388 | 5,169 | K | 36,406 | |||||||||||||
Non-cash stock compensation | 219 | — | — | 219 | ||||||||||||||
Restructuring charges | 1,861 | — | — | 1,861 | ||||||||||||||
Provision for litigation settlement | 1,667 | — | — | 1,667 | ||||||||||||||
Acquisition costs | 57 | — | — | 57 | ||||||||||||||
Total costs and expenses | 262,795 | 53,572 | 3,525 | 319,892 | ||||||||||||||
Operating income (loss) | 48,550 | 3,712 | (16,838 | ) | 35,424 | |||||||||||||
Other income (expense): | ||||||||||||||||||
Investment income | 1,149 | 446 | — | 1,595 | ||||||||||||||
Other charges | (6,385 | ) | — | — | (6,385 | ) | ||||||||||||
Interest expense | (11,547 | ) | (83 | ) | (4,949 | ) | L | (16,579 | ) | |||||||||
Income (loss) before income taxes | 31,767 | 4,075 | (21,787 | ) | 14,055 | |||||||||||||
Income taxes | 12,072 | 1,528 | (8,279 | ) | M | 5,321 | ||||||||||||
Net income (loss) | $ | 19,695 | $ | 2,547 | $ | (13,508 | ) | $ | 8,734 | |||||||||
Basic earnings (loss) per share: | ||||||||||||||||||
Net income (loss) | $ | 0.38 | $ | 0.17 | ||||||||||||||
Average shares outstanding | 51,576 | 51,576 | ||||||||||||||||
Diluted earnings (loss) per share: | ||||||||||||||||||
Net income (loss) | $ | 0.38 | $ | 0.17 | ||||||||||||||
Average shares outstanding | 51,714 | 51,714 | ||||||||||||||||
See accompanying notes to pro forma financial statements
infoUSA Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 2004
(amounts in thousands, except per share amounts)
Historical | Historical | Pro Forma | Pro Forma | |||||||||||||||
infoUSA | OneSource | Adjustments | Notes | Combined | ||||||||||||||
Net sales | $ | 80,811 | $ | 14,339 | $ | — | $ | 95,150 | ||||||||||
Costs and expenses: | ||||||||||||||||||
Database and production costs | 23,861 | 6,846 | — | 30,707 | ||||||||||||||
Selling, general and administrative | 40,179 | 7,097 | — | 47,276 | ||||||||||||||
Depreciation and amortization | 6,760 | 798 | 1,293 | N | 8,851 | |||||||||||||
Non-cash stock compensation | 182 | — | — | 182 | ||||||||||||||
Restructuring charges | 615 | — | — | 615 | ||||||||||||||
Acquisition costs | 3 | — | — | 3 | ||||||||||||||
Total costs and expenses | 71,600 | 14,741 | 1,293 | 87,634 | ||||||||||||||
Operating income (loss) | 9,211 | (402 | ) | (1,293 | ) | 7,516 | ||||||||||||
Other income (expense): | ||||||||||||||||||
Investment income | 201 | 160 | — | 361 | ||||||||||||||
Other charges | (144 | ) | — | — | (144 | ) | ||||||||||||
Interest expense | (2,214 | ) | (39 | ) | (1,206 | ) | O | (3,459 | ) | |||||||||
Income (loss) before income taxes | 7,054 | (281 | ) | (2,499 | ) | 4,274 | ||||||||||||
Income taxes | 2,681 | (99 | ) | (950 | ) | P | 1,632 | |||||||||||
Net income (loss) | $ | 4,373 | $ | (182 | ) | $ | (1,549 | ) | $ | 2,642 | ||||||||
Basic earnings (loss) per share: | ||||||||||||||||||
Net income (loss) | $ | 0.08 | $ | 0.05 | ||||||||||||||
Average shares outstanding | 52,338 | 52,338 | ||||||||||||||||
Diluted earnings (loss) per share: | ||||||||||||||||||
Net income (loss) | $ | 0.08 | $ | 0.05 | ||||||||||||||
Average shares outstanding | 52,955 | 52,955 | ||||||||||||||||
See accompanying notes to pro forma financial statements
Notes to Unaudited Pro Forma Consolidated Financial Statements
(Amounts in thousands)
(1) BASIS OF PRESENTATION
The unaudited pro forma consolidated balance sheet reflects the historical financial position of infoUSA Inc. and subsidiaries (“infoUSA”) and OneSource Information Services, Inc. and subsidiaries (“OneSource”) at March 31, 2004, with pro forma adjustments as if the business combination had taken place on March 31, 2004. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2003 and the three months ended March 31, 2004 reflect the historical results of operations of infoUSA and OneSource, with pro forma adjustments based on the assumption the business combination was effective January 1, 2003.
(2) DESCRIPTION OF TRANSACTION
On June 9, 2004, OneSource merged with OSIS Acquisition Corp., a wholly owned subsidiary of infoUSA. Consideration for the merger was $111,765 in cash, comprised of $2,254 of financing costs, $4,005 of acquisition-related costs and $105,506 for the outstanding common stock of OneSource. The acquisition was funded through an amended credit facility. The acquisition is accounted for using the purchase method of accounting. The aggregate purchase price of the acquisition has been preliminarily allocated based upon management’s best estimate of the fair value of identifiable assets and liabilities of OneSource at the date of acquisition as follows:
Item | Value | Amortization Life | ||||||
Current assets | $ | 33,663 | ||||||
Property and equipment, net | 5,038 | |||||||
Long-term assets | 3,286 | |||||||
Goodwill | 69,584 | |||||||
Deferred financing costs | 2,254 | 6 years | ||||||
Developed technology | 8,953 | 5 years | ||||||
CorpTech database | 2,591 | 3 years | ||||||
Customer List – browser | 15,965 | 6 years | ||||||
Customer List – CorpTech | 562 | 4 years | ||||||
Trademark and Tradename | 4,439 | 20 years | ||||||
Current liabilities | (7,522 | ) | ||||||
Deferred revenue | (14,622 | ) | ||||||
Deferred tax liability | (12,426 | ) | ||||||
Total | $ | 111,765 | ||||||
(3) PRO FORMA ADJUSTMENTS TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Adjustments to Financial Statements
A summary of pro forma adjustments required to give effect to the acquisition of OneSource as of December 31, 2003 are as follows (dollars in 000’s):
Pro Forma Consolidated Balance Sheet – March 31, 2004:
A. | Cash and cash equivalents — An entry of $24,380 has been made to record the payment in full of OneSource debt outstanding as of the acquisition date of $2,312, receipt of debt proceeds to execute the transaction of $111,765, aggregate consideration paid for OneSource including acquisition and financing costs of $111,765, the conversion of marketable securities held in OneSource common stock to cash of $885 (Note B) and repayment of debt using the remaining cash of Onesource of $22,953. | |||
B. | Marketable securities — An entry of $885 has been made to reflect the payment for OneSource common stock held by |
infoUSA at the time of acquisition. | ||||
C. | Prepaid expenses — An entry has been made for $1,350 to reduce deferred commission costs to the valuation amount. | |||
D. | Goodwill — An entry has been made to record goodwill and other intangible assets totaling $104,348 pursuant to purchase accounting. | |||
E. | Long-term debt — An entry of $86,500 has been made to record the payment in full of OneSource debt outstanding of $2,312 as of the acquisition date, receipt of acquisition debt proceeds of $111,765 to execute the transaction and repayment of debt using the remaining cash of OneSource of $22,953. | |||
F. | Deferred revenue — An entry has been made for $11,489 to reduce deferred revenue to the fair value of the assumed liability for fulfillment of customer obligations plus a normal profit margin at acquisition. | |||
G. | Deferred income taxes – An entry has been made to record deferred income taxes of $12,426 on certain intangibles specifically identified as part of the valuation of acquired assets that are deductible for income tax purposes. | |||
H. | Equity accounts — Entries have been made to eliminate OneSource equity accounts in consolidation. |
Pro Forma Consolidated Statement of Operations – Year ended December 31, 2003:
I. | Net sales — An entry has been made to reduce revenue by $13,313 for a valuation of acquired deferred revenue. | |||
J. | Selling, general and administrative costs — An entry has been made for $1,644 to reduce deferred commission costs to the valuation amount. | |||
K. | Depreciation and amortization – An entry has been made for $5,169 to record additional amortization expense of $5,496 associated with the identified intangibles subject to amortization and to eliminate amortization expense previously recorded by Onesource of $327. | |||
L. | Interest expense — An entry has been made for $4,949 to record interest expense of $4,573 and amortization of deferred financing costs of $376 associated with the net borrowing used to finance the acquisition of OneSource. | |||
M. | Income taxes — An entry has been made for $8,279 to record income taxes using an effective income tax rate of 38% for the effects of the previous entries described. |
Pro Forma Consolidated Statement of Operations – Three months ended March 31, 2004: |
N. | Depreciation and amortization – An entry has been made for $1,293 to record additional amortization expense of $1,374 associated with the identified intangibles subject to amortization and to eliminate amortization expense previously recorded by Onesource of $81. | |||
O. | Interest expense — An entry has been made for $1,206 to record interest expense of $1,112 and amortization of deferred financing costs of $94 associated with the net borrowing used to finance the acquisition of OneSource. | |||
P. | Income taxes — An entry has been made for $950 to record income taxes using an effective income tax rate of 38% for the effects of the previous entries described. |