Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information gives effect to the acquisitions of TradingDynamics, Inc.
("TradingDynamics") and Tradex Technologies, Inc. ("Tradex") by Ariba, Inc.
("Ariba"). The acquisitions 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 and Tradex have been
combined with the recorded values of the assets and liabilities of Ariba in the
unaudited pro forma condensed consolidated financial information.
The unaudited pro forma condensed consolidated balance sheet as of
December 31, 1999 gives effect to the acquisitions as if they occurred on
December 31, 1999. The Ariba balance sheet information was derived from its
unaudited December 31, 1999 balance sheet. The TradingDynamics and Tradex
balance sheet information was derived from their 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 September 30,
1999 statement of operations was derived from its audited statements of
operations for the year ended September 30, 1999. The information for the
TradingDynamics September 30, 1999 statement of operations was derived from its
audited statements of operations for the year ended September 30, 1999. The
information for the Tradex September 30, 1999 statement of operations was
derived from its unaudited statements of operations for the year ended
September 30, 1999. The information for the Ariba, TradingDynamics and Tradex
December 31, 1999 statements of operations was derived from their unaudited
statements of operations for the three months ended 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, TradingDynamics and Tradex been a combined company
during the specified periods. The unaudited pro forma condensed consolidated
financial information, including the notes thereto, is qualified in their
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, the historical consolidated financial
statements of TradingDynamics included in Ariba's Form 8-K/A filed April 4th
with the Securities and Exchange Commission and the historical consolidated
financial statements of Tradex 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
-------------------------------------------
Tradex
TradingDynamics, Technologies, Pro Forma Pro Forma
Ariba, Inc. Inc. Inc. Adjustments Combined
------------- ------------- ------------- -------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 42,168 $ 516 $ 16,705 -- $ 59,389
Short-term investments 64,269 -- -- -- 64,269
Restricted cash 400 -- -- -- 400
Accounts receivable 8,820 494 1,711 -- 11,025
Prepaid expenses and other
current assets 6,216 41 204 (1,200)(5) 5,261
----------- ----------- ----------- ----------- -----------
Total current assets 121,873 1,051 18,620 (1,200) 140,344
Property and equipment, net 14,106 234 3,740 -- 18,080
Long-term investments 54,563 -- 568 -- 55,131
Goodwill and other intangibles -- -- -- 2,766,114(2)(4) 2,766,114
Other assets 278 12 -- -- 290
----------- ----------- ----------- ----------- -----------
Total assets $ 190,820 $ 1,297 $ 22,928 $ 2,764,914 $ 2,979,959
=========== =========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,945 $ 307 $ 462 -- $ 7,714
Accrued compensation and related
liabilities 10,923 95 1,561 236(1)(2) 12,815
Accrued liabilities 8,019 10,669 497 29,921(1) 49,106
Deferred revenue 46,709 395 13,338 (2,668)(4) 57,774
Preferred dividend payable -- -- 921 (921)(6) --
Current portion of long-term debt 732 1,200 750 (1,200)(5) 1,482
----------- ----------- ----------- ----------- -----------
Total current liabilities 73,328 12,666 17,529 25,368 128,891
Long-term debt, net of current portion 656 -- -- -- 656
----------- ----------- ----------- ----------- -----------
Total liabilities 73,984 12,666 17,529 25,368 129,547
----------- ----------- ----------- ----------- -----------
Commitments
Stockholders' equity:
Preferred stock -- 5 91 (96)(3) --
Common stock 368 4 55 24(1)(3) 451
Additional paid-in capital 192,012 20,856 27,982 2,697,405(1)(3) 2,938,255
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) (22,729) 28,290(3)(7) (68,016)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity 116,836 (11,369) 5,399 2,739,546 2,850,412
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders'
equity $ 190,820 $ 1,297 $ 22,928 $ 2,764,914 $ 2,979,959
=========== =========== =========== =========== ===========
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
-------------------------------------------
Tradex
TradingDynamics, Technologies, Pro Forma Pro Forma
Ariba, Inc. Inc. Inc. Adjustments Combined
----------- ----------- ------------- -------------- --------------
Revenues:
License $ 26,768 $ 505 $ 1,853 -- $ 29,126
Maintenance and service 18,604 -- 2,839 -- 21,443
----------- ----------- ----------- ----------- -----------
Total revenues 45,372 505 4,692 -- 50,569
----------- ----------- ----------- ----------- -----------
Cost of revenues:
License 724 34 -- -- 758
Maintenance and service 8,089 -- 3,958 -- 12,047
----------- ----------- ----------- ----------- -----------
Total cost of revenues 8,813 34 3,958 -- 12,805
----------- ----------- ----------- ----------- -----------
Gross profit 36,559 471 734 -- 37,764
----------- ----------- ----------- ----------- -----------
Operating expenses:
Sales and marketing 33,859 561 6,052 -- 40,472
Research and development 11,620 2,166 1,279 -- 15,065
General and administrative 7,917 973 2,205 -- 11,095
Amortization of goodwill and other
intangibles -- -- -- 922,038(2) 922,038
Amortization of stock-based compensation 14,584 2,024 -- (2,024)(3) 14,584
----------- ----------- ----------- ----------- -----------
Total operating expenses 67,980 5,724 9,536 920,014 1,003,254
----------- ----------- ----------- ----------- -----------
Loss from operations (31,421) (5,253) (8,802) (920,014) (965,490)
Other income, net 2,219 87 (57) -- 2,249
----------- ----------- ----------- ----------- -----------
Net loss before taxes (29,202) (5,166) (8,859) (920,014) (963,241)
Provision for income taxes 98 -- -- -- 98
----------- ----------- ----------- ----------- -----------
Net loss (29,300) (5,166) (8,859) (920,014) (963,339)
Preferred dividend -- -- (521) 521(6) --
----------- ----------- ----------- ----------- -----------
Net loss applicable to common stockholders $ (29,300) $ (5,166) $ (9,380) $ (919,493) $ (963,339)
=========== =========== =========== =========== ===========
Basic and diluted net loss per share $ (0.42) $ (8.65)
=========== ===========
Shares used in computing basic and diluted
net loss per share 70,064 41,334 111,398
=========== =========== ===========
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
--------------------------------------------
Tradex
TradingDynamics, Technologies, Pro Forma Pro Forma
Ariba, Inc. Inc. Inc. Adjustments Combined
--------- ----------------- ------------- -------------- --------------
Revenues:
License $ 15,784 $ 229 $ 1,088 -- $ 17,101
Maintenance and service 7,695 -- 1,526 -- 9,221
--------- --------- --------- --------- ---------
Total revenues 23,479 229 2,614 -- 26,322
--------- --------- --------- --------- ---------
Cost of revenues:
License 321 -- -- -- 321
Maintenance and service 3,121 -- 2,151 -- 5,272
--------- --------- --------- --------- ---------
Total cost of revenues 3,442 -- 2,151 -- 5,593
--------- --------- --------- --------- ---------
Gross profit 20,037 229 463 -- 20,729
--------- --------- --------- --------- ---------
Operating expenses:
Sales and marketing 19,774 870 4,586 -- 25,230
Research and development 4,443 840 1,275 -- 6,558
General and administrative 3,421 516 2,544 -- 6,481
Amortization of goodwill and other
intangibles -- -- -- 230,510(2) 230,510
Amortization of stock-based compensation 4,719 3,599 -- (3,599)(3) 4,719
--------- --------- --------- --------- ---------
Total operating expenses 32,357 5,825 8,405 226,911 273,498
--------- --------- --------- --------- ---------
Loss from operations (12,320) (5,596) (7,942) (226,911) (252,769)
Other income, net 2,059 7 191 -- 2,257
--------- --------- --------- --------- ---------
Net loss before taxes (10,261) (5,589) (7,751) (226,911) (250,512)
Provision for income taxes 73 -- -- -- 73
--------- --------- --------- --------- ---------
Net loss (10,334) (5,589) (7,751) (226,911) (250,585)
Preferred dividend -- -- (400) 400(6) --
--------- --------- --------- --------- ---------
Net loss applicable to common stockholders $ (10,334) $ (5,589) $ (8,151) $(226,511) $(250,585)
========= ========= ========= ========= =========
Basic and diluted net loss per share $ (0.07) $ (1.27)
========= =========
Shares used in computing basic and diluted net
loss per share 155,980 41,334 197,314
========= ========= =========
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 $465.0 million in a transaction accounted for as a purchase. Ariba
exchanged approximately 7,274,656 shares of Ariba common stock with a fair value
of $371.9 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 two days before and
after the announcement. The average value was $51.13. Ariba also assumed all of
the outstanding stock options of TradingDynamics with a fair value of
approximately $91.7 million. The options 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.
Ariba acquired Tradex on March 8, 2000 for a total purchase price of
$2.3 billion in a transaction accounted for as a purchase. Ariba exchanged
approximately 34,059,336 shares of Ariba common stock with a fair value of $2.1
billion for all of the outstanding stock of Tradex. 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 two days before and after the announcement.
The average value was $60.93. Ariba also assumed all of the outstanding stock
options of Tradex with a fair value of approximately $207.5 million. The options
were valued using a black-scholes option pricing model with the inputs of .9572
for volatility, 3 years for expected life, 6.55% for the risk-free interest rate
and a market value of $60.93 as described above. There were also $28.8 million
of direct transaction costs related to the merger.
The acquisitions were 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. Management's best
estimates of the fair values of the assets and liabilities of TradingDynamics
and Tradex have been combined with the recorded values of the assets and
liabilities of Ariba in the unaudited pro forma condensed consolidated financial
information.
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 was 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.
Prior to the consummation of the Ariba and Tradex merger, Tradex
received a private placement of $85.0 million. This amount is not reflected
on the December 31, 1999 Tradex balance sheet because it occurred subsequent
to December 31, 1999. In the final purchase price allocation the private
placement will result in an increase of $85.0 million in the net assets
acquired by Ariba and a reduction of $85.0 million in the goodwill recorded
by Ariba.
PRO FORMA ADJUSTMENTS
(1) a. To reflect the issuance of 7,274,656 shares of Ariba Common Stock
and the assumption of all outstanding options in conjunction with the
TradingDynamics acquisition, for an aggregate purchase price of
approximately $465.0 million, including approximately $1.4 million of
transaction costs.
b. To reflect the issuance of 34,059,336 shares of Ariba Common Stock and
the assumption of all outstanding options in conjunction with the
Tradex acquisition, for an aggregate purchase price of approximately
$2.3 billion, including approximately $28.8 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 and Tradex
acquisitions. The purchase price allocations are 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 assumed 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 acquisitions are
summarized as follows (in thousands):
TRADINGDYNAMICS:
Property and equipment $ 234
Net (liabilities) acquired, excluding property and equipment (11,603)
In-process research and development 950
Goodwill and other intangibles 475,422
-----------
Total $ 465,003
===========
TRADEX:
Property and equipment $ 3,740
Net assets acquired, excluding property and equipment 2,580
In-process research and development 11,800
Goodwill and other intangibles 2,293,360
-----------
Total $ 2,311,480
===========
(3) To reflect the elimination of the stockholders' equity accounts of
TradingDynamics and Tradex.
(4) To record a reduction of deferred revenue related to the estimated
calculation of Ariba's obligation to perform future services equal to
the expected costs to provide the services plus a normal profit margin.
(5) To reflect the elimination of Ariba's loan to TradingDynamics.
(6) To reflect the elimination of the preferred dividend payable account of
Tradex.
(7) 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 charges for
in-process technology of approximately $950,000 and $11.8 million for
TradingDynamics and Tradex, respectively, since they are considered
non-recurring charges. The charges 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 periods presented, plus the number of shares issued to consummate the
acquisitions of TradingDynamics and Tradex 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 Tradex. Certain amounts have been reclassified to conform
to Ariba's financial statement presentation.