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EXHIBIT 99.2
QUEST SOFTWARE, INC. AND MBR TECHNOLOGIES, INC.
PRO FORMA INFORMATION
On December 17, 1999 the Company, through a wholly owned subsidiary,
acquired all of the outstanding common stock and stock options of MBR
Technologies, Inc. (MBR) in exchange for 93,471 shares of Quest Common Stock
valued at $9,323,732, a cash payment of $1,313,583 and the assumption of net
liabilities of $340,000. The acquisition was accounted for as a purchase.
The following unaudited pro forma combined results of operations for the
years ended December 31, 1999 and 1998 assumes that the acquisition had occurred
on January 1, 1998. The pro forma combined results of operations is presented
for information purposes only, is based on historical information, and does not
necessarily reflect the actual results that would have occurred nor is it
necessarily indicative of future results of the combined enterprise.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(1) To reflect the increase in goodwill amortization expense ($11,534M/60 x 12)
on a straight-line basis over five years resulting from the acquisition.
(2) To reflect the decrease in interest income due to the use of cash in the
acquisition at a 5% annual yield.
(3) To reflect the decrease in income tax expense resulting from the utilization
of the operating loss of MBR for the year.
(4) To adjust for the 93,471 shares of Quest common stock issued in the
acquisition of MBR.
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QUEST SOFTWARE, INC. AND MBR TECHNOLOGIES
UNAUDITED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
QUEST MBR COMBINED
SOFTWARE TECHNOLOGIES TOTAL PRO FORMA
DECEMBER 31, DECEMBER 17, DECEMBER 31, PRO FORMA DECEMBER 31,
1999 1999 1999 ADJUSTMENTS 1999
------------ ------------ ------------ ----------- ------------
Revenues:
Licenses.............................. $54,269 $ 380 $54,649 $ -- $54,649
Services.............................. 16,599 190 16,789 -- 16,789
------- ----- ------- ------- -------
Total revenues................... 70,868 570 71,438 -- 71,438
Cost of Revenues:
Licenses.............................. 2,998 346 3,344 -- 3,344
Services.............................. 4,195 195 4,390 -- 4,390
------- ----- ------- ------- -------
Total cost of revenues........... 7,193 541 7,734 -- 7,734
------- ----- ------- ------- -------
Gross profit............................ 63,675 29 63,704 -- 63,704
Operating expenses:
Sales and marketing................... 32,078 149 32,227 -- 32,227
Research and development.............. 15,980 209 16,189 -- 16,189
General and administrative............ 9,906 524 10,430 -- 10,430
Compensation costs and goodwill
amortization....................... 1,243 -- 1,243 2,307(1) 3,550
------- ----- ------- ------- -------
Total operating expenses......... 59,207 882 60,089 2,307 62,396
------- ----- ------- ------- -------
Income (loss) from operations........... 4,468 (853) 3,615 (2,307) 1,308
Other income (expense), net............. 1,202 (31) 1,171 (71)(2) 1,100
------- ----- ------- ------- -------
Income before income tax provision...... 5,670 (884) 4,786 (2,378) 2,408
Income tax provision.................... 2,273 1 2,274 (384)(3) 1,890
------- ----- ------- ------- -------
Net income (loss)....................... 3,397 (885) 2,512 (1,994) 518
Preferred stock dividends............... 590 -- 590 -- 590
------- ----- ------- ------- -------
Net income (loss) applicable to common
shareholders.......................... $ 2,807 $(885) $ 1,922 $(1,994) $ (72)
======= ===== ======= ======= =======
Basic and diluted net income per
share................................. $ 0.07 $ (0.00)
======= =======
Weighted average shares:
Basic................................. 37,677 93(4) 37,270
Diluted............................... 41,805 93(4) 41,898
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QUEST SOFTWARE, INC. AND MBR TECHNOLOGIES
UNAUDITED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
QUEST MBR COMBINED
SOFTWARE TECHNOLOGIES TOTAL PRO FORMA
DECEMBER 31, MARCH 31, DECEMBER 31, PRO FORMA DECEMBER 31,
1998 1999 1998 ADJUSTMENTS 1998
------------ ------------ ------------ ----------- ------------
Revenues:
Licenses....................... $24,901 $ 122 $25,023 $ -- $25,023
Services....................... 9,889 146 10,035 -- 10,035
------- ----- ------- ------- -------
Total revenues............ 34,790 268 35,058 -- 35,058
Cost of revenues:
Licenses....................... 3,433 337 3,770 -- 3,770
Services....................... 2,507 66 2,573 -- 2,573
------- ----- ------- ------- -------
Total cost of revenues.... 5,940 403 6,343 -- 6,343
------- ----- ------- ------- -------
Gross profit (loss).............. 28,850 (135) 28,715 -- 28,715
Operating expenses:
Sales and marketing............ 11,836 62 11,898 -- 11,898
Research and development....... 8,047 301 8,348 -- 8,348
General and administrative..... 5,278 368 5,646 2,307(1) 7,953
------- ----- ------- ------- -------
Total operating
expenses............... 25,161 731 25,892 2,307 28,199
------- ----- ------- ------- -------
Income from (loss) operations.... 3,689 (866) 2,823 (2,307) 516
Other income (expense), net...... 336 (7) 329 (71)(2) 258
------- ----- ------- ------- -------
Income before income tax
provision...................... 4,025 (873) 3,152 (2,378) 774
Income tax provision............. 1,679 1 1,680 (394)(3) 1,286
------- ----- ------- ------- -------
Net income (loss)................ $ 2,346 $(874) $ 1,472 $(1,984) $ (512)
======= ===== ======= ======= =======
Basic and diluted net income per
share.......................... $ 0.05 $ (0.01)
Weighted average shares:
Basic.......................... 44,261 93(4) 44,354
Diluted........................ 44,459 93(4) 44,552
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