Exhibit 99.2
ARIBA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Effective August 28, 2000, Ariba, Inc., ("the Company"), acquired
SupplierMarket.com, ("SupplierMarket"), a leading provider of online
collaborative sourcing technologies that allows buyers and suppliers of
direct and indirect materials to locate new trading partners, negotiate
purchases and collaborate on the Internet. The following unaudited pro forma
condensed consolidated financial information gives effect to the acquisition
of SupplierMarket by the Company. The acquisition was accounted for using the
purchase method of accounting assumed and accordingly, the purchase price was
allocated to the assets acquired and liabilities assumed based on their
estimated fair values on the acquisition date.
The total purchase price of approximately $607.1 million consisted of an
exchange of 5,249,330 shares of the Company's Common Stock with a fair value
of $478.7 million, assumed stock options with a fair value of approximately
$108.4 million and other acquisition related expenses of approximately $20.0
million consisting primarily of payments for financial advisor and other
professional fees. Of the total purchase price, $3.2 million was allocated to
property and equipment, $4.2 million was allocated to net assets acquired,
excluding property and equipment, $124.6 million to deferred compensation and
the remainder was allocated to intangible assets, including in-process
technology ($14.6 million), core technology ($7.9 million), assembled
workforce ($6.5 million) and goodwill ($446.1 million). The acquired
in-process technology was expensed in the period the transaction was
consummated. The other intangible assets of core technology, assembled
workforce and goodwill are being amortized over their estimated useful lives
of three years.
In addition, the Company has recently completed other acquisitions which are
considered in the accompanying pro forma condensed consolidated financial
information.
On January 20, 2000, the Company acquired TradingDynamics, Inc.,
("TradingDynamics"), which provided business-to-business Internet trading
applications, including business-to-business auction, request for quote
("RFQ"), reverse auction, and bid/ask-style exchange mechanisms. The
acquisition was accounted for using the purchase method of accounting and
accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based on their estimated fair values on the acquisition
date.
The purchase price of approximately $465.0 million consisted of an exchange
of 7,274,656 shares of the Company's Common Stock with a fair value of $371.9
million, assumed stock options with a fair value of $91.7 million, and other
acquisition related expenses of approximately $1.4 million consisting
primarily of payments for financial advisor and other professional fees. Of
the total purchase price, $224,000 was allocated to property and equipment,
$13.4 million was allocated to net liabilities acquired excluding property
and equipment, and the remainder was allocated to intangible assets,
including in-process technology ($950,000), core technology ($4.4 million),
covenants not-to-compete ($1.3 million), assembled workforce ($1.1 million)
and goodwill
($470.5 million). The acquired in-process technology was expensed in the
period the transaction was consummated. The other intangible assets of
developed technology, covenants not-to-compete, assembled workforce and
goodwill are being amortized over their estimated useful lives of three years.
On March 8, 2000, the Company acquired Tradex Technologies, Inc., ("Tradex")
which provided solutions for net markets. The acquisition was accounted for
using the purchase method of accounting and accordingly, the purchase price
was allocated to the assets acquired and liabilities assumed based on their
estimated fair values on the acquisition date.
The purchase price of approximately $2.3 billion consisted of an exchange of
34,059,336 shares of Common Stock with a fair value of $2.1 billion, assumed
stock options with a fair value of approximately $207.5 million, and other
acquisition related expenses of approximately $28.8 million consisting
primarily of payments for financial advisor and other professional fees. Of
the total purchase price, $3.5 million was allocated to property and
equipment, $75.7 million was allocated to net assets acquired, excluding
property and equipment, and the remainder was allocated to intangible assets,
including in-process technology ($11.8 million), core technology ($7.9
million), trademarks ($2.0 million), assembled workforce ($5.4 million) and
goodwill ($2.2 billion). The acquired in-process technology was expensed in
the period the transaction was consummated. The other intangible assets of
core technology, trademarks, assembled workforce and goodwill are being
amortized over their estimated useful lives of three years.
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.
The accompanying unaudited pro forma condensed consolidated balance sheet
gives effect to the consummated acquisition of SupplierMarket as if it had
occurred on June 30, 2000, by combining the balance sheet of SupplierMarket
with the unaudited balance sheet of the Company at June 30, 2000. The
acquisitions of TradingDynamics and Tradex were consummated prior to June 30,
2000, therefore, the Company's historical consolidated balance sheet at June
30, 2000, reflects these acquisitions.
The accompanying unaudited pro forma condensed consolidated statement of
operations gives effect to these consummated acquisitions as if they had
occurred on October 1, 1998 by consolidating the results of operations of:
- - TradingDynamics for the year ended September 30, 1999 and the period from
October 1, 1999 to January 20, 2000 with the results of operations of the
Company for the year ended September 30, 1999 and nine months ended June
30, 2000, respectively.
- - Tradex for the twelve months ended September 30, 1999 and the period from
October 1, 1999 to March 8, 2000 with the results of operations of the
Company for the year ended September 30, 1999 and the nine months ended
June 30, 2000, respectively.
- - SupplierMarket for the period of inception (February 12, 1999) through
December 31, 1999 and the nine months ended June 30, 2000 with the results
of operations of the Company for the year ended September 30, 1999 and the
nine months ended June 30, 2000, respectively.
- - SupplierMarket's quarterly results for the quarter ended December 31,
1999 included revenues of $52,000 and a net loss of $4.1 million and are
included in both the unaudited pro forma condensed consolidated
statements of operations for the year ended September 30, 1999 and
the nine month period ended June 30, 2000.
- - 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, Tradex and
SupplierMarket 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 the Company included in its Form 10-K and Forms
10-Q filed December 23, 1999, February 14, 2000, May 15, 2000 and August
14, 2000, respectively, with the Securities and Exchange Commission, the
historical consolidated financial statements of TradingDynamics included
in the Company's Form 8-K/A filed April 4, 2000 with the Securities and
Exchange Commission, the historical consolidated financial statements of
Tradex included in Ariba's Form 8-K/A filed May 16, 2000 and the
historical financial statements of SupplierMarket included as Exhibit
99.1 in this Form 8-K/A.
CONFORMING AND RECLASSIFICATIONS ADJUSTMENTS
There were no material adjustments required to conform the accounting policies
of Ariba and SupplierMarket. Certain amounts have been reclassified to conform
to Ariba's financial statement presentation.
ARIBA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000
(IN THOUSANDS)
HISTORICAL ADJUSTMENTS
------------------------------ ----------------------
ARIBA INC. SUPPLIERMARKET.COM (A) (B) PRO FORMA
---------- ------------------ -------- ----------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $152,267 $3,578 $ - $ - $155,845
Short-term investments 63,636 - - - 63,636
Restricted cash 31,480 1,264 - - 32,744
Accounts receivable 43,969 828 - - 44,797
Other current assets 11,025 194 - - 11,219
---------- ------- -------- --------- ----------
Total current assets 302,377 5,864 - - 308,241
Property and equipment, net 32,093 3,165 - - 35,258
Long-term investments 90,772 - - - 90,772
Goodwill and other intangible
assets 3,145,330 - - 460,558 3,605,888
Other assets 398 - - - 398
---------- ------- -------- --------- ----------
Total assets $3,570,970 $9,029 $ $460,558 $4,040,557
---------- ------- -------- --------- ----------
---------- ------- -------- --------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $9,048 $750 $ - $20,000 $29,798
Accrued compensation and related
liabilities 43,928 535 - - 44,463
Accrued liabilities 25,019 351 - - 25,370
Deferred revenues 153,670 - - - 153,670
Current portion of long-term
obligations 582 - - - 582
---------- ------- -------- --------- ----------
Total current liabilities 232,247 1,636 - 20,000 253,883
Long-term obligations 533 - - - 533
---------- ------- -------- --------- ----------
232,780 1,636 - 20,000 254,416
---------- ------- -------- --------- ----------
Stockholders' equity:
Common stock 476 33 (33) 10 486
Additional paid-in capital 3,850,159 76,788 (76,788) 587,161 4,437,320
Deferred compensation (13,386) (15,943) 15,943 (124,620) (138,006)
Accumulated other comprehensive
loss (694) - - - (694)
Accumulated deficit (498,365) (53,485) 53,485 (14,600) (512,965)
---------- ------- -------- --------- ----------
Total stockholders' equity 3,338,190 7,393 (7,393) 447,951 3,786,141
---------- ------- -------- --------- ----------
Total liabilities and
stockholders' equity $3,570,970 $9,029 ($7,393) $467,951 $4,040,557
---------- ------- -------- --------- ----------
---------- ------- -------- --------- ----------
See accompanying notes to unaudited pro forma condensed consolidated
financial information.
ARIBA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL
------------------------------------------------------------------
TRADING TRADEX PRO
ARIBA, INC. DYNAMICS, INC. TECHNOLOGIES, INC. SUPPLIERMARKET.COM ADJUSTMENTS FORMA
----------- -------------- ------------------ ------------------- ----------- -----------
Revenues:
License $26,768 $505 $ 1,853 $ - $ - $29,126
Maintenance and services 18,604 - 2,839 52 - 21,495
-------- ------- ------- -------- ----------- -----------
Total revenues 45,372 505 4,692 52 - 50,621
Cost of revenues:
License 724 34 - - - 758
Maintenance and services 8,089 - 3,958 108 - 12,155
-------- ------- ------- -------- ----------- -----------
Total cost of revenues 8,813 34 3,958 108 - 12,913
-------- ------- ------- -------- ----------- -----------
Gross profit 36,559 471 734 (56) - 37,708
-------- ------- ------- -------- ----------- -----------
Operating expenses:
Sales and marketing 33,859 561 6,052 2,397 - 42,869
Research and development 11,620 2,166 1,279 516 - 15,581
General and administrative 7,917 973 2,205 636 - 11,731
Amortization of goodwill &
other intangibles (C) - - - - 1,045,500 1,045,500
Amortization of stock-based
compensation (D) 14,584 2,024 - 2,732 30,850 50,190
-------- ------- ------- -------- ----------- -----------
Total operating expenses 67,980 5,724 9,536 6,281 1,076,350 1,123,002
Loss from operations (31,421) (5,253) (8,802) (6,337) (1,076,350) (1,085,294)
Other income (expense), net 2,219 87 (57) 280 - 2,529
-------- ------- ------- -------- ----------- -----------
Net loss before taxes (29,202) (5,166) (8,859) (6,057) (1,076,350) (1,082,765)
Provision for income taxes 98 - - - - 98
-------- ------- ------- -------- ----------- -----------
Net loss (29,300) (5,166) (8,859) (6,057) (1,076,350) (1,082,863)
Preferred dividend (E) - - (521) - 521 -
-------- ------- ------- -------- ----------- -----------
Net loss applicable to common
stockholders ($29,300) ($5,166) ($9,380) ($6,057) ($1,075,829) ($1,082,863)
-------- ------- ------- -------- ----------- -----------
-------- ------- ------- -------- ----------- -----------
Pro Forma net loss per share - basic
and diluted (F) ($0.42) ($9.67)
-------- -----------
-------- -----------
Weighted average shares - basic and
diluted 70,064 41,934 111,998
-------- -----------
-------- -----------
See accompanying notes to unaudited pro forma condensed consolidated
financial information.
ARIBA, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL
------------------------------------------------------------------
TRADING TRADEX PRO
ARIBA, INC. DYNAMICS, INC. TECHNOLOGIES, INC. SUPPLIERMARKET.COM ADJUSTMENTS FORMA
----------- -------------- ------------------ ------------------- ----------- -----------
Revenues:
License $95,545 $364 $5,665 $ - $ - $101,574
Maintenance and services 48,641 - 4,652 804 - 54,097
--------- ------- --------- --------- --------- ----------
Total revenues 144,186 364 10,317 804 - 155,671
Cost of revenues:
License 5,358 - 208 - - 5,566
Maintenance and services 18,524 - 3,973 610 - 23,107
--------- ------- --------- --------- --------- ----------
Total cost of revenues 23,882 - 4,181 610 - 28,673
--------- ------- --------- --------- --------- ----------
Gross profit 120,304 364 6,136 194 - 126,998
--------- ------- --------- --------- --------- ----------
Operating expenses:
Sales and marketing 121,616 1,955 12,865 19,869 - 156,305
Research and development 22,338 1,514 2,436 1,883 - 28,171
General and administrative 13,963 1,006 8,011 5,462 - 28,442
Amortization of goodwill &
other intangibles (C) 388,679 - - - 479,025 867,704
In-process research and
development 12,750 - - - - 12,750
Business partner warrants 13,575 - - - - 13,575
Amortization of stock-based
compensation (D) 9,958 4,334 - 4,642 17,728 36,662
--------- ------- --------- --------- --------- ----------
Total operating expenses 582,879 8,809 23,312 31,856 496,753 1,143,609
Loss from operations (462,575) (8,445) (17,176) (31,662) (496,753) (1,016,611)
Other income (expense), net 10,017 1 751 913 - 11,682
--------- ------- --------- --------- --------- ----------
Net loss before taxes (452,558) (8,444) (16,425) (30,749) (496,753) (1,004,929)
Provision for income taxes 875 - - - 875
--------- ------- --------- --------- --------- ----------
Net loss (453,433) (8,444) (16,425) (30,749) (496,753) (1,005,804)
Preferred dividend (E) - - (701) - 701 -
--------- ------- --------- --------- --------- ----------
Net loss applicable to common
stockholders ($453,433) ($8,444) ($17,126) ($30,749) ($496,052) ($1,005,804)
--------- ------- --------- --------- --------- ----------
--------- ------- --------- --------- --------- ----------
Pro Forma net loss per share - basic
and diluted (F) ($2.46) ($4.35)
--------- ----------
--------- ----------
Weighted average shares - basic and
diluted 184,566 46,583 231,149
--------- ----------
--------- ----------
See accompanying notes to unaudited pro forma condensed consolidated
financial information.
ARIBA, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(A) To reflect the elimination of the stockholders' equity accounts of
SupplierMarket.
(B) To allocate the purchase price, assuming the acquisition of Supplier
Market occurred on June 30, 2000.
SUPPLIERMARKET
--------------------
Value of stock issued $478,741
Value of options assumed 108,430
Estimated acquisition costs 20,000
--------------------
Total purchase price $607,171
====================
Property and equipment $3,165
Net assets acquired, excluding property and equipment 4,228
Deferred compensation 124,620
In-process technology* 14,600
Goodwill and other intangible assets 460,558
--------------------
Total $607,171
====================
* In-process technology in the amount of $950,000 for TradingDynamics, $11.8
million for Tradex and $14.6 million for SupplierMarket was expensed in the
period in which the acquisition was consummated. Accordingly, the
in-process technology in the amount of $14.6 million for SupplierMarket is
reflected in the Pro Forma Condensed Consolidated Balance Sheet as an
addition to Accumulated Deficit. The unaudited pro forma condensed
consolidated statements of operations do not include the charges for
in-process technology of approximately $14.6 million for SupplierMarket as
it is considered a non-recurring charge.
(C) To record amortization of goodwill and other intangible assets
associated with the acquisitions of TradingDynamics, Tradex and
SupplierMarket as follows: assembled workforce totaling $13.0 million,
covenants not-to-compete totaling $1.3 million, trademarks totaling $2.0
million, core technology totaling $20.2 million and goodwill totaling
$3.1 billion over the estimated period of benefit of three years.
Intangible assets associated with the acquisition of SupplierMarket
includes assembled workforce totaling $6.5 million, core technology
totaling $7.9 million and goodwill totaling approximately $446.1million
over the estimated period of benefit of three years.
(D) In accordance with the FASB Interpretation No. 44, ("FIN 44") issued in
March 2000, "Accounting for Certain Transactions Involving Stock
Compensation--an Interpretation of APB 25", the Company has allocated a
portion of the purchase price to deferred compensation based on the
unvested options issued in conjunction with the consummation of the
SupplierMarket acquisition. The deferred compensation is being amortized
over the period in which the related options vest.
- The full year adjustment reflects the amortization of stock based
compensation associated with the acquisition of SupplierMarket totaling
approximately $35.6 million and the elimination of the historical stock
based compensation expense of approximately $2.0 million for
TradingDynamics and $2.7 million for SupplierMarket, for the year ended
September 30, 1999.
- The nine month period adjustment reflects the amortization of stock
based compensation associated with the acquisition of SupplierMarket
totaling approximately $26.7 million and the elimination of the
historical stock based compensation expense of approximately $4.3
million for TradingDynamics and $4.6 million for SupplierMarket, for the
nine months ended June 30, 2000.
(D) To reflect the elimination of the preferred dividend payable account of
Tradex.
(E) Pro forma basic net loss per share for the year ended September 30, 1999
is computed using the weighted average number of Common Shares
outstanding. Pro forma diluted net loss per share is computed by
dividing the net loss for the period by the weighted average number of
Common and Potential Common shares outstanding during the period if
their effect is dilutive. Potential Common Shares comprise restricted
Common Stock, shares held in escrow, and incremental Common and
Preferred shares issuable upon the exercise of the stock options and
warrants and upon conversion of Series A, B and BB Convertible Preferred
Stock. The adjustment to historical weighted average shares outstanding
result from inclusion of actual shares issued in conjunction with the
consummated acquisitions, respectively, as if such shares were
outstanding from October 1, 1998.