Exhibit 99.2
Unaudited Pro Forma Condensed Combining Financial Information
The unaudited pro forma condensed combining financial information for
Commerce One, Inc. ("Commerce One") set forth below gives effect to the
acquisition of Mergent Systems, Inc. ("Mergent"). The historical financial
information has been derived from, and is qualified by reference to, the
condensed consolidated financial information of Commerce One for the period
ended December 31, 1999 and the financial statements of Mergent included
elsewhere herein and should be read in conjunction with those financial
statements and the notes thereto. The unaudited pro forma condensed combining
statement of operations data for the year ended December 31, 1999 set forth
below give effect to the acquisition as if it occurred on January 1, 1999.
The unaudited pro forma condensed combining balance sheet as of December 31,
1999 set forth below gives effect to the acquisition of Mergent as if it
occurred on that date. The information set forth below should be read in
conjunction with the consolidated financial statements and notes thereto of
Commerce One which will be included in its Annual Report on Form 10-K for the
year ended December 31, 1999 to be filed with the Securities and Exchange
Commission. The unaudited pro forma condensed combining financial information
does not purport to represent what the consolidated results of operations or
financial condition of Commerce One would actually have been if the Mergent
acquisition had in fact occurred on such dates or the future consolidated
results of operations or financial condition of Commerce One.
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Commerce One, Inc.
Unaudited Pro Forma Condensed Combining Balance Sheet
December 31, 1999
(IN THOUSANDS)
HISTORICAL
------------------------------------------------- -------------- ---------------
MERGENT PRO FORMA PRO FORMA
COMMERCE ONE SYSTEMS, INC. BUSINESS COMBINED
DECEMBER 31, DECMBER 31, COMBINATION DECEMBER 31,
1999 1999 COMBINED ADJUSTMENTS 1999
----------------- --------------- --------------- -------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $51,792 $ 1,117 $52,909 (3) $ (10,000) $42,909
Short-term investments 72,814 - 72,814 72,814
Accounts receivable, net 15,845 - 15,845 15,845
Prepaid expenses and other
current assets 4,656 53 4,709 4,709
----------------- --------------- --------------- -------------- ---------------
Total current assets 145,107 1,170 146,277 (10,000) 136,277
Property and equipment, net 11,892 187 12,079 12,079
Other assets - 67 67 67
Intangibles assets, net 227,611 - 227,611 (1)(3) 141,877 369,488
----------------- --------------- --------------- -------------- ---------------
Total assets $384,610 $1,424 $386,034 $131,877 $517,911
================= =============== =============== ============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,885 $ 179 $ 7,064 $ $ 7,064
Accrued compensation and related 3,972 - 3,972 3,972
expenses
Current portion of capital lease 274 3 277 277
obligation
Current portion of notes payable 411 - 411 411
Deferred revenue 40,414 60 40,474 40,474
Other current liabilities 15,671 - 15,671 (3) 268 15,939
----------------- --------------- --------------- -------------- ---------------
Total current liabilities 67,627 242 67,869 268 68,137
Capital lease obligations - 4 4 4
Notes payable 262 - 262 262
Stockholders' equity:
Convertible preferred stock - 2,449 2,449 (5) (2,449) -
Common Stock 423,839 1,337 425,176 (1)(3)(5) 136,592 561,768
Deferred stock compensation (4,110) (978) (5,088) (5) 978 (4,110)
Note receivable from stockholders - (40) (40) (5) 40 -
Accumulated deficit (102,556) (1,590) (104,146)(1)(5) (3,552) (107,698)
Accumulated other comprehensive loss (452) - (452) - (452)
----------------- --------------- --------------- -------------- ---------------
Total stockholder' equity 316,721 1,178 317,899 131,609 449,508
----------------- --------------- --------------- -------------- ---------------
Total liabilities and stockholders' equity $384,610 $ 1,424 $386,034 $131,877 $517,911
================= =============== =============== ============== ===============
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL
INFORMATION.
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Unaudited Pro Forma Condensed Combining Statements of Operations
Year ended December 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
HISTORICAL
-------------------------------------------------
MERGENT PRO FORMA
COMMERCE ONE SYSTEMS, INC. BUSINESS PRO FORMA
DECEMBER 31, DECEMBER 31, COMBINATION DECEMBER 31,
1999 1999 COMBINED ADJUSTMENTS 1999
---------------- ------------------ -------------- --------------- ----------------
Revenues:
License fees $24,571 $ 20 $24,591 $ - $24,591
Services 8,986 13 8,999 - 8,999
---------------- ------------------ -------------- --------------- ----------------
Total revenues 33,557 33 33,590 - 33,590
Cost of revenues:
License fees 484 - 484 - 484
Services 15,586 - 15,586 - 15,586
---------------- ------------------ -------------- --------------- ----------------
Total cost of revenue 16,070 - 16,070 - 16,070
Gross profit 17,487 33 17,520 - 17,520
Operating expenses:
Sales and marketing 31,547 460 32,007 - 32,007
Product development 20,496 374 20,870 - 20,870
General and administrative 5,050 532 5,582 5,582
Purchased in-process research and
development 9,374 - 9,374 - 9,374
Amortization of deferred stock
compensation 2,323 285 2,608 - 2,608
Amortization of goodwill and
other intangible assets 11,133 - 11,133(2) 28,882 40,015
---------------- ------------------ -------------- --------------- ----------------
Total operating expenses 79,923 1,651 81,574 28,882 110,456
---------------- ------------------ -------------- --------------- ----------------
Loss from operations (62,436) (1,618) (64,054) (28,882) (92,936)
Interest income, net 3,302 11 3,313 - 3,313
Provision for income taxes 4,188 - 4,188 - 4,188
---------------- ------------------ -------------- --------------- ----------------
Net loss $(63,322) $(1,607) $(64,929) $(28,882) $(93,811)
================ ================== ============== =============== ================
Basic and diluted net loss per share $(2.60) $(3.72)
================ ================
Number of shares used in calculation of
basic and diluted net loss per
share (4) 24,374 25,245
=================== ================
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL
INFORMATION.
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Notes to Unaudited Pro Forma Condensed Combining Financial Information
Commerce One acquired Mergent on January 7, 2000 in a transaction accounted
for as a purchase. The total purchase cost was approximately $148.2 million
consisting of approximately 871,000 shares of Commerce One common stock with
a fair value of approximately $122.6 million, the assumption of outstanding
stock options with a fair value of approximately $15.3 million, cash of $10.0
million and transaction costs of approximately $268,000.
Pro forma adjustments for the unaudited pro forma condensed combining balance
sheet as of December 31, 1999 and statements of operations for the period ended
December 31, 1999 are as follows:
1. To reflect the preliminary allocation of the purchase cost.
The total estimated purchase price for the acquisition has been allocated
on a preliminary basis to assets and liabilities of Mergent based on
management's best estimates of their fair value with the excess costs
over the net assets acquired allocated to goodwill. The preliminary
allocation has resulted in a charge for purchased in-process research
and development estimated to be $5.1 million and estimated goodwill
and identified intangible assets of $141.9 million which is being
amortized over a period of one to five years. This allocation is subject
to change pending a final analysis of the value of the assets acquired
and liabilities assumed.
2. To reflect amortization of goodwill and other intangible assets resulting
from the acquisition.
The pro forma condensed combining statement of operations for the year
ended December 31, 1999 does not include the charge for purchased
research and development of approximately $5.1 million since it is
considered a non-recurring charge. The charge will be recorded by
Commerce One in the three months ended March 31, 2000.
3. To reflect the acquisition of all of the outstanding stock of Mergent.
4. Basic and diluted net loss per share has been adjusted to reflect the
issuance of approximately 871,000 shares of Commerce One common stock, as
if these shares had been outstanding for the entire period. Dilutive
options and warrants are excluded from the computation as their effect is
antidilutive.
5. To reflect the elimination of the historical shareholder's equity accounts
of Mergent.
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