Exhibit 99.2
infoUSA Inc
Unaudited Pro Forma Consolidated Financial Statements
Unaudited Pro Forma Consolidated Financial Statements
On December 4, 2006, infoUSA Inc. (“infoUSA”) completed its merger of Opinion Research Corporation (Opinion Research). As a result of the merger, Opinion Research became a wholly-owned subsidiary of infoUSA.
The following unaudited pro forma consolidated balance sheet and statement of operations give effect to the purchase transaction pursuant to the Merger Agreement. 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 pro forma consolidated balance sheet as of September 30, 2006 contains those pro forma adjustments necessary to reflect the business combination as if it was consummated on that date. The accompanying pro forma consolidated statements of operations for the year ended December 31, 2005 and the nine months ended September 30, 2006 contain those pro forma adjustments necessary to reflect the business combination as if it was consummated on January 1, 2005. The unaudited pro form consolidated financial statements 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, 2005 and Opinion Research Corporation’s Form 10-K for the year ended December 31, 2005. 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.
February 13, 2007
infoUSA Inc.
infoUSA Inc.
Unaudited Pro Forma Consolidated Balance Sheet
As of September 30, 2006
(Amounts in thousands)
Unaudited Pro Forma Consolidated Balance Sheet
As of September 30, 2006
(Amounts in thousands)
Historical | ||||||||||||||||||||
Historical | Opinion | Pro Forma | Pro Forma | |||||||||||||||||
infoUSA Inc. | Research | Adjustments | Notes | Combined | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 3,991 | $ | 838 | $ | (341 | ) | A | $ | 4,488 | ||||||||||
Marketable securities | 3,122 | — | (1,879 | ) | B | 1,243 | ||||||||||||||
Trade accounts receivable, net | 36,656 | 22,859 | — | 59,515 | ||||||||||||||||
Unbilled services | — | 22,224 | — | 22,224 | ||||||||||||||||
List brokerage trade accounts receivable | 64,776 | — | — | 64,776 | ||||||||||||||||
Deferred income taxes | 5,128 | — | 392 | C | 5,520 | |||||||||||||||
Prepaid expenses | 6,343 | 4,550 | — | 10,893 | ||||||||||||||||
Deferred marketing costs | 3,635 | — | — | 3,635 | ||||||||||||||||
Total current assets | 123,651 | 50,471 | (1,828 | ) | 172,294 | |||||||||||||||
Property and equipment, net | 50,130 | 8,085 | — | 58,215 | ||||||||||||||||
Goodwill | 320,492 | 27,161 | 30,585 | D | 378,238 | |||||||||||||||
Intangible assets, net | 48,190 | 230 | 59,732 | E | 108,152 | |||||||||||||||
Deferred income taxes | — | 2,797 | (2,797 | ) | C | — | ||||||||||||||
Other assets | 12,044 | 3,880 | — | 15,924 | ||||||||||||||||
$ | 554,507 | $ | 92,624 | $ | 85,692 | $ | 732,823 | |||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Current portion of long-term debt | $ | 4,486 | $ | 3,000 | $ | (3,000 | ) | F | $ | 4,486 | ||||||||||
Accounts payable | 16,217 | 7,540 | — | 23,757 | ||||||||||||||||
List brokerage trade accounts payable | 54,624 | — | — | 54,624 | ||||||||||||||||
Accrued payroll expenses | 22,991 | 12,189 | — | 35,180 | ||||||||||||||||
Accrued expenses | 3,967 | 2,617 | — | 6,584 | ||||||||||||||||
Income taxes payable | 3,834 | — | (122 | ) | G | 3,712 | ||||||||||||||
Deferred revenue | 67,054 | 4,628 | — | 71,682 | ||||||||||||||||
Total current liabilities | 173,173 | 29,974 | (3,122 | ) | 200,025 | |||||||||||||||
Long-term debt, net of current portion | 132,334 | 50,306 | 81,694 | H | 264,334 | |||||||||||||||
Deferred income taxes | 21,266 | — | 16,202 | C | 37,468 | |||||||||||||||
Other liabilities | 2,016 | 3,262 | — | 5,278 | ||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||
Common stock | 138 | 55 | (55 | ) | I | 138 | ||||||||||||||
Paid-in capital | 126,111 | 21,750 | (21,750 | ) | I | 126,111 | ||||||||||||||
Retained earnings (deficit) | 100,536 | (13,478 | ) | 13,478 | I | 100,536 | ||||||||||||||
Treasury stock | (295 | ) | (261 | ) | 261 | I | (295 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | (772 | ) | 1,016 | (1,016 | ) | I | (772 | ) | ||||||||||||
Total stockholders’ equity | 225,718 | 9,082 | (9,082 | ) | I | 225,718 | ||||||||||||||
$ | 554,507 | $ | 92,624 | $ | 85,692 | $ | 732,823 | |||||||||||||
infoUSA Inc.
Unaudited Pro Forma Consolidated Statements of Operations
For the year ended December 31, 2005
(amounts in thousands, except per share amounts)
Unaudited Pro Forma Consolidated Statements of Operations
For the year ended December 31, 2005
(amounts in thousands, except per share amounts)
Historical | ||||||||||||||||||||
Historical | Opinion | Pro Forma | Pro Forma | |||||||||||||||||
infoUSA Inc. | Research | Adjustments | Notes | Combined | ||||||||||||||||
Net sales | $ | 383,158 | $ | 190,192 | $ | — | $ | 573,350 | ||||||||||||
Costs and expenses: | ||||||||||||||||||||
Database and production costs | 108,106 | 138,637 | — | 246,743 | ||||||||||||||||
Selling, general and administrative | 185,873 | 36,827 | — | 222,700 | ||||||||||||||||
Depreciation and amortization of operating assets | 12,818 | 3,584 | (170 | ) | J | 16,232 | ||||||||||||||
Amortization of intangible assets | 18,098 | — | 4,788 | K | 22,886 | |||||||||||||||
Total operating costs and expenses | 324,895 | 179,048 | 4,618 | 508,561 | ||||||||||||||||
Operating income (loss) | 58,263 | 11,144 | (4,618 | ) | 64,789 | |||||||||||||||
Other expense, net: | ||||||||||||||||||||
Discontinued equity offering expense | — | (1,334 | ) | — | (1,334 | ) | ||||||||||||||
Investment income | 2,934 | — | — | 2,934 | ||||||||||||||||
Other charges | (190 | ) | (140 | ) | — | (330 | ) | |||||||||||||
Interest expense | (11,841 | ) | (6,113 | ) | (3,242 | ) | L | (21,196 | ) | |||||||||||
Other expense, net | (9,097 | ) | (7,587 | ) | (3,242 | ) | (19,926 | ) | ||||||||||||
Income (loss) before income taxes | 49,166 | 3,557 | (7,860 | ) | 44,863 | |||||||||||||||
Income taxes | 17,659 | 1,919 | (2,830 | ) | M | 16,748 | ||||||||||||||
Income (loss) from continuing operations | 31,507 | 1,638 | (5,030 | ) | 28,115 | |||||||||||||||
Discontinued operations | ||||||||||||||||||||
Loss from discontinued operations, net of tax | — | (5,081 | ) | — | (5,081 | ) | ||||||||||||||
Loss on disposal, net of tax | — | (1,077 | ) | — | (1,077 | ) | ||||||||||||||
Loss from discontinued operations | — | (6,158 | ) | — | (6,158 | ) | ||||||||||||||
Net income (loss) | $ | 31,507 | $ | (4,520 | ) | $ | (5,030 | ) | $ | 21,957 | ||||||||||
Basic earnings per share: | ||||||||||||||||||||
Basic earnings per share: | $ | 0.59 | $ | 0.41 | ||||||||||||||||
Weighted average shares outstanding: | 53,850 | 53,850 | ||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Diluted earnings per share: | $ | 0.58 | $ | 0.41 | ||||||||||||||||
Weighted average shares outstanding: | 54,040 | 54,040 | ||||||||||||||||||
infoUSA Inc.
Unaudited Pro Forma Consolidated Statements of Operations
For the nine months ended September 30, 2006
(amounts in thousands, except per share amounts)
Unaudited Pro Forma Consolidated Statements of Operations
For the nine months ended September 30, 2006
(amounts in thousands, except per share amounts)
Historical | ||||||||||||||||||||
Historical | Opinion | Pro Forma | Pro Forma | |||||||||||||||||
infoUSA Inc. | Research | Adjustments | Notes | Combined | ||||||||||||||||
Net sales | $ | 309,760 | $ | 144,960 | $ | — | $ | 454,720 | ||||||||||||
Costs and expenses: | ||||||||||||||||||||
Database and production costs | 78,717 | 104,809 | — | 183,526 | ||||||||||||||||
Selling, general and administrative | 166,450 | 28,140 | — | 194,590 | ||||||||||||||||
Depreciation and amortization of operating assets | 10,072 | 2,859 | (14 | ) | N | 12,917 | ||||||||||||||
Amortization of intangible assets | 11,539 | — | 3,591 | O | 15,130 | |||||||||||||||
Total operating costs and expenses | 266,778 | 135,808 | 3,577 | 406,163 | ||||||||||||||||
Operating income (loss) | 42,982 | 9,152 | (3,577 | ) | 48,557 | |||||||||||||||
Other expense, net: | ||||||||||||||||||||
Investment income | 368 | — | — | 368 | ||||||||||||||||
Other charges | (196 | ) | (1,243 | ) | — | (1,439 | ) | |||||||||||||
Interest expense | (8,321 | ) | (4,803 | ) | (1,974 | ) | P | (15,098 | ) | |||||||||||
Other expense, net | (8,149 | ) | (6,046 | ) | (1,974 | ) | (16,169 | ) | ||||||||||||
Income (loss) before income taxes | 34,833 | 3,106 | (5,551 | ) | 32,388 | |||||||||||||||
Income taxes | 12,546 | 2,079 | (1,998 | ) | Q | 12,627 | ||||||||||||||
Income (loss) from continuing operations | 22,287 | 1,027 | (3,553 | ) | 19,761 | |||||||||||||||
Discontinued operations | ||||||||||||||||||||
Loss from discontinued operations, net of tax | — | (139 | ) | — | (139 | ) | ||||||||||||||
Loss on disposal, net of tax | — | (364 | ) | — | (364 | ) | ||||||||||||||
Loss from discontinued operations | — | (503 | ) | — | (503 | ) | ||||||||||||||
Net income (loss) | $ | 22,287 | $ | 524 | $ | (3,553 | ) | $ | 19,258 | |||||||||||
Basic earnings per share: | ||||||||||||||||||||
Basic earnings per share: | $ | 0.41 | $ | 0.35 | ||||||||||||||||
Weighted average shares outstanding: | 54,822 | 54,822 | ||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Diluted earnings per share: | $ | 0.40 | $ | 0.35 | ||||||||||||||||
Weighted average shares outstanding: | 55,177 | 55,177 | ||||||||||||||||||
Notes to Unaudited Pro Forma Consolidated Financial Statements
(Amounts in thousands)
(Amounts in thousands)
(1) BASIS OF PRESENTATION
The unaudited pro forma consolidated balance sheet reflects the historical financial position of infoUSA Inc. (“infoUSA”) and Opinion Research Corporation (“Opinion Research”) at September 30, 2006, with pro forma adjustments as if the business combination had taken place on September 30, 2006. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2005 and the nine months ended September 30, 2006 reflect the historical results of operations of infoUSA and Opinion Research, with pro forma adjustments based on the assumption the business combination was effective January 1, 2005.
(2) DESCRIPTION OF TRANSACTION
On December 4, 2006, Opinion Research merged with infoUSA. Consideration for the merger was approximately $132 million in cash, which was funded through a credit facility. The acquisition is accounted for using the purchase method of accounting. The aggregate purchase price of the acquisition has been allocated based upon a preliminary valuation of the fair value of identifiable assets and liabilities of Opinion Research at the date of acquisition as follows:
Amortization Life | ||||||||
Current assets | $ | 48,655 | ||||||
Property and equipment, net | 7,895 | |||||||
Long-term assets | 2,491 | |||||||
Acquisition costs | 3,962 | |||||||
Goodwill | 57,746 | |||||||
Customer relationships – Government | 38,975 | 10 years | ||||||
Customer relationships – Market | 7,166 | 8 years | ||||||
Tradename | 10,942 | Indefinite | ||||||
Current liabilities | (26,095 | ) | ||||||
Long-term liabilities | (19,396 | ) | ||||||
Total | $ | 132,341 | ||||||
(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 Opinion Research as of September 30, 2006 are as follows (dollars in 000’s):
Pro Forma Consolidated Balance Sheet – September 30, 2006:
A. | Cash and cash equivalents — An entry has been made to record the receipt of debt proceeds to execute the transaction of $132,000, and aggregate consideration paid for Opinion Research including acquisition costs of $132,341, of which includes the payment in full of Opinion Research debt outstanding as of the acquisition date of $53,306, and the conversion of marketable securities held in Opinion Research common stock of $1,879 (Note B). | ||
B. | Marketable securities — An entry has been made to reflect the conversion of Opinion Research common stock held by infoUSA at the time of acquisition of $1,879. | ||
C. | Deferred income taxes – Entries have been made to record deferred income taxes on certain intangibles specifically identified as part of the valuation of acquired assets that are deductible for income tax purposes but not for financial reporting purposes. | ||
D. | Goodwill — An entry has been made to record goodwill of $57,746 pursuant to purchase accounting, which is offset by entries recorded to eliminate the goodwill previously recorded by Opinion Research of $27,161. | ||
E. | Intangible assets, net — An entry has been made to record the preliminary valuation of the fair value of identifiable assets of Opinion Research at the date of acquisition of $59,732. | ||
F. | Current portion of long-term debt — An entry has been made totaling $3,000 to record the payment in full of Opinion Research debt outstanding as of the acquisition date. |
G. | Income taxes payable – An entry has been made to adjust the income taxes payable account to reflect the effect of the acquisition for $(122). | ||
H. | Long-term debt — An entry has been made totaling $50,306 to record the payment in full of Opinion Research debt outstanding as of the acquisition date, and receipt of debt proceeds of $132,000 to execute the transaction. | ||
I. | Equity accounts — Entries have been made to eliminate Opinion Research equity accounts as part of purchase accounting. |
Pro Forma Consolidated Statement of Operations – Year ended December 31, 2005:
J. | Depreciation and amortization — An entry has been made to eliminate amortization expense previously recorded by Opinion Research of $170. | ||
K. | Amortization of intangible assets — An entry has been made to record additional amortization expense of $4,788 associated with the identified intangibles subject to amortization. | ||
L. | Interest expense — An entry has been made for $9,355 to record interest expense associated with the borrowing used to finance the acquisition of Opinion Research and to eliminate the interest expense previously recorded by Opinion Research of $6,113 since this debt was paid in full on the acquisition date. | ||
M. | Income taxes — An entry has been made for $2,830 to record income taxes using an effective income tax rate of 36% for the effects of the previous entries described. |
Pro Forma Consolidated Statement of Operations – Year ended September 30, 2006:
N. | Depreciation and amortization — An entry has been made to eliminate amortization expense previously recorded by Opinion Research of $14. | ||
O. | Amortization of intangible assets — An entry has been made to record additional amortization expense of $3,591 associated with the identified intangibles subject to amortization. | ||
P. | Interest expense — An entry has been made for $6,777 to record interest expense associated with the borrowing used to finance the acquisition of Opinion Research and to eliminate the interest expense previously recorded by Opinion Research of $4,803 since this debt was paid in full on the acquisition date. | ||
Q. | Income taxes — An entry has been made for $1,998 to record income taxes using an effective income tax rate of 36% for the effects of the previous entries described. |