Exhibit 99.2
PRO FORMA FINANCIAL INFORMATION
INDEX
PAGE
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Description of Pro Forma Financial Information P-2
Unaudited Pro Forma Consolidated Condensed Balance
Sheet as of June 30, 1999 P-3
Unaudited Pro Forma Consolidated Condensed Statement of P-4
Operations for the Six Months ended June 30, 1999
Unaudited Pro Forma Consolidated Condensed Statement of P-5
Operations for the Year ended December 31, 1998
Notes to Unaudited Pro Forma Financial Information P-6-7
P-1
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma financial information gives effect to the Atcom,
Inc. acquisition as if such transaction had been consummated on June 30, 1999 in
the case of the Unaudited Pro Forma Consolidated Condensed Balance Sheet of CAIS
Internet, Inc., and on January 1, 1998 in the case of the Unaudited Pro Forma
Consolidated Condensed Statements of Operations of CAIS Internet, Inc. The pro
forma consolidated condensed financial information is presented for illustrative
purposes only and is not necessarily indicative of what CAIS Internet, Inc.'s
actual financial position and results of operations would have been had the
above-referenced transaction been consummated as of the above-referenced dates
or of the financial position or results of operations that may be reported by
CAIS Internet, Inc. in the future.
The following data should be read in conjunction with CAIS Internet, Inc.'s
Consolidated Financial Statements and related notes included in CAIS Internet,
Inc.'s Form S-1 and Atcom, Inc.'s Consolidated Financial Statements and related
notes included elsewhere herein.
P-2
CAIS INTERNET, INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(in thousands)
June 30, 1999
-------------------------------------------------------------
Pro Forma Pro Forma
CAIS Internet Atcom Adjustments CAIS Internet
------------- ----------- ------------ -------------
Current Assets
Cash and cash equivalents $ 104,416 $ 1,080 $ (440) (1) $ 105,056
Accounts receivable, net of allowance for doubtful accounts 1,133 316 1,449
Prepaid expense and other current assets 1,543 118 1,661
Inventories - 26 26
------------- ----------- ------------ -------------
Total current assets 107,092 1,540 (440) 108,192
------------- ----------- ------------ ------------
Property and equipment, net 7,736 556 8,292
Deferred debt financing costs, net 1,389 - 1,389
Intangibles and goodwill 1,370 - 41,720 (2) 43,090
Receivable from officer 400 - 400
Other assets - 68 68
------------- ----------- ------------ ------------
Total noncurrent assets 10,895 624 41,720 53,239
------------- ----------- ------------ ------------
Total assets $ 117,987 $ 2,164 $ 41,280 $ 161,431
============= =========== ============ ============
Current liabilities
Accounts payable and accrued expenses $ 8,935 $ 984 $ 1,469 (2) $ 11,388
Notes payable - 350 (350) (1) -
Unearned revenues 619 - 619
Customer deposits - 4 4
------------- ----------- ------------ ------------
Total current liabilities 9,554 1,338 1,119 12,011
------------- ----------- ------------ ------------
Deferred rent, net of current portion 694 - 694
------------- ----------- ------------ ------------
Total liabilities 10,248 1,338 1,119 12,705
Note payable to officer - 90 (90) (1) -
Put Warrants 1,267 1,267
Series D Redeemable Convertible Preferred Stock - 4,686 (4,686) (3) -
Commitments and Contingencies
Stockholders' equity (deficit) -
Series A Convertible Preferred Stock - 907 (907) (3) -
Series B Convertible Preferred Stock - 725 (725) (3) -
Series C Convertible Preferred Stock - 1,363 (1,363) (3) -
Common stock 198 32 25 (2) 223
(32) (3)
Additional paid-in capital 145,716 40,962 (2) 186,678
Warrants outstanding 9,382 14 (14) (3) 9,382
Deferred compensation (4,444) (4,444)
Note receivable from officer - (75) 75 (3) -
Accumulated equity (deficit) (44,380) (6,916) 6,916 (3) (44,380)
------------- ----------- ------------ ------------
Total stockholders' equity (deficit) 106,472 (3,950) 44,937 147,459
------------- ----------- ------------ ------------
Total liabilities and stockholders' equity (deficit) $ 117,987 $ 2,164 $ 41,280 $ 161,431
============= =========== ============ ============
The accompanying notes are an integral part of these pro forma consolidated
condensed statements.
P-3
CAIS INTERNET, INC.
Unaudited Pro Forma Consolidated Condensed Statement of Operations
(in thousands except per share amounts)
Six Months Ended June 30, 1999
---------------------------------------------------------------------
Pro Forma Pro Forma
CAIS Internet Atcom Adjustments CAIS Internet
------------- ------------- ------------- -------------
Net revenues $ 3,420 $ 874 $ 4,294
Cost of services 2,568 506 3,074
Operating expenses:
Selling, general and administrative 9,480 2,386 11,866
Depreciation and amortization 747 - $ 6,953 (4) 7,700
Fair value of stock issued to third party for services 723 - 723
Non-cash compensation 3,121 - 3,121
------------- ------------- ------------- -------------
Total operating expenses 14,071 2,386 6,953 23,410
------------- ------------- ------------- -------------
Loss from operations (13,219) (2,018) (6,953) (22,190)
Interest and other income (expense):
Interest income 540 27 567
Interest expense (1,122) (5) (1,127)
Other expense, net (10) - (10)
------------- ------------- ------------- -------------
Total interest and other income (expense) (592) 22 - (570)
------------- ------------- ------------- -------------
Loss from continuing operations before income taxes (13,811) (1,996) (6,953) (22,760)
Provision for income taxes - - -
------------- ------------- ------------- -------------
Loss from continuing operations (13,811) (1,996) (6,953) (22,760)
Loss from discontinued operations (340) - (340)
------------- ------------- ------------- -------------
Loss before extraordinary item (14,151) (1,996) (6,953) (23,100)
Extraordinary item -- early extinguishment of debt (551) - (551)
------------- ------------- ------------- -------------
Net loss (14,702) (1,996) (6,953) (23,651)
Dividends on preferred stock (350) - (350)
------------- ------------- ------------- -------------
Net loss attributable to common stockholders $(15,052) $ (1,996) $ (6,953) $(24,001)
============= ============= ============= =============
Basic and diluted earnings (loss) per share:
Loss attributable to common stockholders
before discontinued operations and
extraordinary item $ (1.17) $ (1.58)
Discontinued operations (0.03) (0.02)
Extraordinary item (0.04) (0.04)
------------- -------------
Total $ (1.24) $ (1.64)
============= =============
Weighted-average common shares outstanding --
basic and diluted 12,139 2,493 (5) 14,632
============= ============= =============
The accompanying notes are an integral part of these pro forma consolidated
condensed statements.
P-4
CAIS INTERNET, INC.
Unaudited Pro Forma Consolidated Condensed Statement of Operations
(in thousands except per share amounts)
Twelve Months Ended December 31, 1998
------------------------------------------------------------------------
Pro Forma Pro Forma
CAIS Internet Atcom Adjustments CAIS Internet
------------- ------------- ------------- -------------
Net revenues $ 5,315 $ 1,797 $ (77) (6) $ 7,035
Cost of services 3,118 955 (77) (6) 3,996
Operating expenses:
Selling, general and administrative 10,657 3,619 14,276
Depreciation and amortization 1,270 - 13,907 (4) 15,177
Non-cash compensation 1,426 - 1,426
------------- ------------- ------------- -------------
Total operating expenses 13,353 3,619 13,907 30,879
------------- ------------- ------------- -------------
Loss from operations (11,156) (2,777) (13,907) (27,840)
Interest and other income (expense):
Interest income - 61 61
Interest expense (1,090) - (1,090)
Other expense, net (11) - (11)
------------- ------------- ------------- -------------
Total interest and other income (expense) (1,101) 61 - (1,040)
------------- ------------- ------------- -------------
Loss from continuing operations before income taxes (12,257) (2,716) (13,907) (28,880)
Provision for income taxes - - -
------------- ------------- ------------- -------------
Loss from continuing operations (12,257) (2,716) (13,907) (28,880)
Income (loss) from discontinued operations (671) - (671)
------------- ------------- ------------- -------------
Net loss attributable to common stockholders $(12,928) $ (2,716) $ (13,907) $(29,551)
============= ============= ============= =============
Basic and diluted earnings (loss) per share:
Loss attributable to common stockholders
before discontinued operations $ (1.24) $ (2.34)
Discontinued operations (0.07) (0.05)
------------- -------------
Total $ (1.31) $ (2.39)
============= =============
Weighted-average common shares outstanding --
basic and diluted 9,869 2,493 (5) 12,362
============= ============= =============
The accompanying notes are an integral part of these pro forma consolidated
condensed statements.
P-5
NOTES TO PRO FORMA FINANCIAL INFORMATION
The pro forma financial information is based on the following assumptions
and adjustments (in thousands except share and per share amounts):
(1) Reflects the repayment of $440 by Atcom of certain outstanding notes
payable to officers and financial institutions.
(2) Reflects the amounts related to the Atcom transaction:
Total purchase consideration and transactions costs are anticipated to be
as follows:
Amount
-------
2,493,383 common shares of CAIS Internet issued at $12.375
per share (the three-day average closing price of CAIS
Internet's common stock surrounding and including the
date of the signing and announcement of the Atcom
transaction)............................................. $30,856
838,969 options to purchase common shares of CAIS
Internet at the estimated fair value..................... 10,131
Estimated transaction costs............................... 1,469
-------
$42,456
The anticipated purchase consideration and transaction costs have been
allocated for pro forma purposes as follows:
Amount
--------
Cash................................... $ 640
Other current and long-term assets..... 528
Property and equipment, net............ 556
Intangibles and goodwill............... 41,720
Accounts payable and accrued expenses.. (984)
Other current liabilities.............. (4)
--------
$42,456
The above purchase price allocation is preliminary and may change upon
final determination of the fair value of net assets acquired. The Company has
not specifically identified amounts to assign to other intangibles including
but not limited to existing technology, existing workforce, and installed
customer base. Changes in the amounts allocated to such assets could result
in changes to the amount of goodwill recorded.
An amortization period of three years has been selected and
utilized in the pro forma financial information for goodwill and other
identifiable intangible assets, which is expected in all material respects to
be representative of the amortization expense that will result from the
ultimate allocation to the specific intangible assets.
P-6
(3) Reflects the conversion of Atcom Series A, B, and C Convertible Preferred
Stock and Series D Redeemable Convertible Preferred Stock into Atcom common
stock prior to the conversion into CAIS Internet common stock, and the
elimination of equity accounts of Atcom, upon consolidation.
(4) Reflects the amortization over a three-year life of the excess of purchase
price of Atcom over the fair market value of net assets acquired.
(5) Reflects common shares issued in connection with the Atcom transaction.
(6) Reflects the elimination of transactions between CAIS Internet and Atcom.
P-7