Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information gives effect to the acquisition of TradingDynamics, Inc.
("TradingDynamics") by Ariba, Inc. ("Ariba"). The acquisition will be
accounted for under the purchase method of accounting in accordance with APB
Opinion No. 16. Under the purchase method of accounting, the purchase price
is allocated to the assets acquired and liabilities assumed based on their
estimated fair values. Estimates of the fair values of the assets and
liabilities of TradingDynamics have been combined with the recorded values of
the assets and liabilities of Ariba in the unaudited pro forma condensed
consolidated financial information. The purchase price allocation for
TradingDynamics is preliminary and is unaudited.
The unaudited pro forma condensed consolidated balance sheet as of
December 31, 1999 gives effect to the TradingDynamics acquisition as if it
occurred on December 31, 1999. The Ariba balance sheet information was
derived from its unaudited December 31, 1999 balance sheet. The
TradingDynamics balance sheet information was derived from its unaudited
December 31, 1999 balance sheet. The unaudited pro forma condensed
consolidated statements of operations give pro forma effect to the
acquisition as if the transaction was consummated as of October 1, 1998. The
information for the Ariba and TradingDynamics September 30, 1999 statements
of operations was derived from their audited statements of operations for the
period ending September 30, 1999. The information for the Ariba and
TradingDynamics December 31, 1999 statements of operations was derived from
their unaudited statements of operations for the period ending December 31,
1999.
The unaudited pro forma condensed consolidated financial information
has been prepared by Company management for illustrative purposes only and is
not necessarily indicative of the condensed consolidated financial position
or results of operations in future periods or the results that actually would
have been realized had Ariba and TradingDynamics been a combined company
during the specified periods. The unaudited pro forma condensed consolidated
financial information, including the notes thereto, is qualified in its
entirety by reference to, and should be read in conjunction with, the
historical consolidated financial statements of Ariba included in its Form
10-K and Form 10-Q filed December 23, 1999 and February 14th, 2000,
respectively, with the Securities and Exchange Commission, and the historical
consolidated financial statements of TradingDynamics included as exhibit 99.1
in this Form 8-K/A.
ARIBA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
(IN THOUSANDS)
Historical
--------------------------------
TradingDynamics, Pro Forma Pro Forma
Ariba, Inc. Inc. Adjustments Combined
-------------- --------------- ------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $42,168 $516 - $ 42,684
Short-term investments 64,269 - - 64,269
Restricted cash 400 - - 400
Accounts receivable 8,820 494 - 9,314
Prepaid expenses and other current assets 6,216 41 (1,200)(4) 5,057
--------- --------- ---------- ----------
Total current assets 121,873 1,051 (1,200) 121,724
Property and equipment, net 14,106 234 - 14,340
Long-term investments 54,563 - - 54,563
Goodwill and other intangibles - - 469,277 (2) 469,277
Other assets 278 12 - 290
--------- --------- ---------- ----------
Total assets $190,820 $1,297 $468,077 $660,194
--------- --------- ---------- ----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $6,945 $307 - $ 7,252
Accrued compensation and related liabilities 10,923 95 - 11,018
Accrued liabilities 8,019 10,669 1,400 (1) (2) 20,088
Deferred revenue 46,709 395 - 47,104
Current portion of long-term debt 732 1,200 (1,200)(4) 732
--------- --------- ---------- ----------
Total current liabilities 73,328 12,666 200 86,194
Long-term debt, net of current portion 656 - - 656
--------- --------- ---------- ----------
Total liabilities 73,984 12,666 200 86,850
--------- --------- ---------- ----------
Commitments
Stockholders' equity:
Preferred stock - 5 (5)(3) -
Common stock 368 4 10 (1) (3) 382
Additional paid-in capital 192,012 20,856 436,588 (1) (3) 649,456
Deferred stock-based compensation (19,674) (13,923) 13,923 (3) (19,674)
Accumulated other comprehensive loss (604) - - (604)
Accumulated deficit (55,266) (18,311) 17,361 (3) (5) (56,216)
--------- --------- ---------- ----------
Total stockholders' equity 116,836 (11,369) 467,877 573,344
--------- --------- ---------- ----------
Total liabilities and stockholders' equity $190,820 $1,297 $468,077 $660,194
========= ========= ========== ==========
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
ARIBA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical
----------------------------
TradingDynamics, Pro Forma Pro Forma
Ariba, Inc. Inc. Adjustments Combined
----------- --------------- ------------ --------------
Revenues:
License $ 26,768 $ 505 -- $ 27,273
Maintenance and service 18,604 -- -- 18,604
----------- ----------- ----------- -----------
Total revenues 45,372 505 -- 45,877
----------- ----------- ----------- -----------
Cost of revenues:
License 724 34 -- 758
Maintenance and service 8,089 -- -- 8,089
----------- ----------- ----------- -----------
Total cost of revenues 8,813 34 -- 8,847
----------- ----------- ----------- -----------
Gross profit 36,559 471 -- 37,030
----------- ----------- ----------- -----------
Operating expenses:
Sales and marketing 33,859 561 -- 34,420
Research and development 11,620 2,166 -- 13,786
General and administrative 7,917 973 -- 8,890
Amortization of goodwill and other
intangibles -- -- 156,426 (2) 156,426
Amortization of stock-based compensation 14,584 2,024 (2,024)(3) 14,584
----------- ----------- ----------- -----------
Total operating expenses 67,980 5,724 154,402 228,106
----------- ----------- ----------- -----------
Loss from operations (31,421) (5,253) (154,402) (191,076)
Other income, net 2,219 87 -- 2,306
----------- ----------- ----------- -----------
Net loss before taxes (29,202) (5,166) (154,402) (188,770)
Provision for income taxes 98 -- -- 98
----------- ----------- ----------- -----------
Net loss $ (29,300) $ (5,166) $ (154,402) $ (188,868)
----------- ----------- ----------- -----------
Basic and diluted net loss per share $ (0.42) $ (2.45)
----------- -----------
Shares used in computing basic and diluted net
loss per share 70,064 7,171 77,235
----------- ----------- -----------
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
ARIBA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical
----------------------------------
TradingDynamics, Pro Forma Pro Forma
Ariba, Inc. Inc. Adjustments Combined
---------------------------------- ------------ -------------
Revenues:
License $ 15,784 $ 229 -- $ 16,013
Maintenance and service 7,695 -- -- 7,695
------------- ------------- ----------- ------------
Total revenues 23,479 229 -- 23,708
------------- ------------- ----------- ------------
Cost of revenues:
License 321 -- -- 321
Maintenance and service 3,121 -- -- 3,121
------------- ------------- ----------- ------------
Total cost of revenues 3,442 -- -- 3,442
------------- ------------- ----------- ------------
Gross profit 20,037 229 -- 20,266
------------- ------------- ----------- ------------
Operating expenses:
Sales and marketing 19,774 870 -- 20,644
Research and development 4,443 840 -- 5,283
General and administrative 3,421 516 -- 3,937
Amortization of goodwill and other
intangibles -- -- 39,107 (2) 39,107
Amortization of stock-based compensation 4,719 3,599 (3,599)(3) 4,719
------------- ------------- ----------- ------------
Total operating expenses 32,357 5,825 35,508 73,690
------------- ------------- ----------- ------------
Loss from operations (12,320) (5,596) (35,508) (53,424)
Other income, net 2,059 7 -- 2,066
------------- ------------- ----------- ------------
Net loss before taxes (10,261) (5,589) (35,508) 51,358
Provision for income taxes 73 -- -- 73
------------- ------------- ----------- ------------
Net loss $ (10,334) $ (5,589) $ (35,508) $ (51,431)
============= ============= =========== ============
Basic and diluted net loss per share $ (0.07) $ (0.32)
============= ============
Shares used in computing basic and diluted net
loss per share 155,980 7,171 163,151
============= =========== ============
See accompanying notes to unaudited pro forma condensed consolidated financial
information.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
BASIS OF PRESENTATION
Ariba acquired TradingDynamics on January 20, 2000 for a total
purchase price of $458.9 million in a transaction accounted for as a
purchase. Ariba exchanged approximately 7,171,000 shares of Ariba common
stock with a fair value of $366.6 million for all of the outstanding stock of
TradingDynamics. The common stock was valued using Ariba's average stock
price on the date the merger agreement was announced including the prices of
the stock 2 days before and after the announcement. The average value was
$51.13. Ariba also assumed all of the outstanding stock options and warrants
of TradingDynamics with a fair value of approximately $90.9 million. The
options and warrants were valued using a black-scholes option pricing model
with the inputs of .9572 for volatility, 3 years for expected life, 6.53% for
the risk-free interest rate and a market value of $51.13 as described above.
There were also $1.4 million of direct transaction costs related to the
merger.
The acquisition will be accounted for under the purchase method of
accounting in accordance with APB Opinion No. 16. Under the purchase method
of accounting, the purchase price is allocated to the assets acquired and
liabilities assumed based on their estimated fair values. Preliminary
estimates based on management's best estimates of the fair values of the
assets and liabilities of TradingDynamics have been combined with the
recorded values of the assets and liabilities of Ariba in the unaudited pro
forma condensed consolidated financial information. These allocations are
subject to change pending a final analysis of the value of the assets
acquired and liabilities assumed.
On March 2, 2000, the Board of Directors authorized a two-for-one
stock split of the Company's common stock, to be effected in the form of a
stock dividend. The stock split will be effected by distribution to each
stockholder of record as of March 20, 2000 of one share of the Company's
common stock for each share of common stock held. All of the pro forma
condensed consolidated financial information presented herein has been
adjusted to give effect to the stock split.
PRO FORMA ADJUSTMENTS
(1) To reflect the issuance of 7,171,000 shares of Ariba Common Stock and
the assumption of all outstanding options and warrants in conjunction
with the TradingDynamics acquisition, for an aggregate purchase price of
approximately $458.9 million, including approximately $1.4 million of
transaction costs.
(2) To reflect the excess of the purchase price over the fair value of assets
and liabilities acquired in connection with the TradingDynamics
acquisition. The purchase price allocation is based on management's
estimates of the fair values of the tangible assets, intangible assets and
technology which has not reached technological feasibility and therefore
has no alternative future use. The book value of tangible assets and
liabilities acquired are presently believed to approximate fair value.
The goodwill and other intangible assets will be amortized on a
straight-line basis over three years. The total purchase price paid for
the acquisition is summarized as follows (in thousands):
Property and equipment $234
Net liabilities acquired, excluding property
and equipment (11,603)
In-process research and development 950
Goodwill and other intangibles 469,277
----------
Total $458,858
==========
(3) To reflect the elimination of the stockholders' equity accounts of
TradingDynamics.
(4) To reflect the elimination of Ariba's loan to TradingDynamics.
(5) Ariba will record an immediate write-off of in-process technology at
the consummation of the acquisition. The unaudited pro forma condensed
consolidated statements of operations do not include the charge for
in-process technology of approximately $950,000 since it is considered
a non-recurring charge. The charge will be taken by Ariba in the three
months ended March 31, 2000.
PRO FORMA NET LOSS PER SHARE
The unaudited pro forma combined net loss per share is based upon
the weighted average number of vested outstanding shares of common stock of
Ariba during the period presented, plus the number of shares issued to
consummate the acquisition of TradingDynamics as if the acquisition occurred
at the beginning of the period presented.
CONFORMING AND RECLASSIFICATION ADJUSTMENTS
There were no material adjustments required to conform the
accounting policies of Ariba and TradingDynamics. Certain amounts have been
reclassified to conform to Ariba's financial statement presentation.
SUBSEQUENT EVENT
On March 8, 2000, Ariba consummated a merger with Tradex
Technologies, Inc., a leading provider of solutions for Net Markets. This
merger will be accounted for as a purchase transaction. An 8-K/A with the
required financial information for this merger will be filed at a later date.