EXHIBIT 99-2
YOUCENTRIC, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS, STATEMENTS OF OPERATIONS, AND
CASH FLOWS AS OF AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2000 AND 2001
YOUCENTRIC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
SEPTEMBER 30,
2000 2001
------------- --------
ASSETS
Current assets:
Cash and cash equivalents................................................................. $5,925 $4,298
Marketable securities..................................................................... 9,098 6,711
Accounts receivable (net of allowance of $200 at September 30, 2000 and 2001, respectively) 9,686 3,797
Prepaid expense and other current assets.................................................. 4,548 1,303
Deferred contract costs................................................................... 384 --
Cash and cash equivalents (restricted).................................................... 1,295 --
------- -------
Total current assets................................................................. 30,936 16,109
Certificate of deposit (restricted)......................................................... -- 1,341
Property and equipment, net................................................................. 3,924 3,911
------- -------
Total assets................................................................................ $34,860 $21,361
======= =======
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Current maturities of capital lease obligations........................................... $302 $113
Accounts payable and other accrued liabilities............................................ 8,139 5,309
Deferred revenues......................................................................... 2,233 2,227
Billings in excess of earned revenues..................................................... 9,134 1,905
Income taxes payable...................................................................... 88 --
------- -------
Total current liabilities............................................................ 19,896 9,554
------- -------
Capital lease obligations................................................................... 327 214
------- -------
Deferred lease liability.................................................................... -- 196
------- -------
Deferred tax liability...................................................................... 516 --
------- -------
Redeemable convertible preferred stock:
Series A, no par value, liquidation preference $1.92 per share, 4,159,446 shares
authorized, issued, and outstanding at September 30, 2000 and 2001, respectively......... 25,300 25,860
------ ------
Series B, no par value, liquidation preference $12.02 per share, 2,911,900 shares
authorized, 2,572,376 shares issued and outstanding at September 30, 2000 and 2001,
respectively............................................................................ 28,596 29,164
------ ------
Series C, no par value, liquidation preference $0.44 per share, 103,384,150 shares
authorized, 75,815,012 shares issued and outstanding at September 30, 2001.............. -- 20,531
------- -------
Shareholders' deficiency:
Common stock, $0.001 and no par value, 50,000,000 and 250,000,000 shares authorized,
16,096,326 and 32,728,826 shares issued and outstanding, at September 30, 2000 and 2001,
respectively............................................................................ 18,362 33
Additional paid-in capital................................................................ -- 27,743
Accumulated deficit....................................................................... (58,127) (91,934)
Accumulated other comprehensive loss...................................................... (10) --
------- -------
Total shareholders' deficiency....................................................... (39,775) (64,158)
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Total liabilities and shareholders' deficiency.............................................. $34,860 $21,361
======= =======
</Table>
YOUCENTRIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
2000 2001
----------- --------
Revenues:
Software license, customization and implementation revenues................ $8,675 $10,459
Professional services and maintenance revenues............................. 2,247 4,143
----- -----
Total revenues......................................................... 10,922 14,602
Operating expenses:
Cost of revenues........................................................... 4,139 4,632
Sales and marketing........................................................ 8,455 11,742
Research and development................................................... 4,032 6,043
General and administrative................................................. 6,601 4,976
Special charges............................................................ -- 1,851
Stock based compensation*.................................................. 17,712 6,901
------ -----
Total operating expenses............................................... 40,939 36,145
------ ------
Operating loss............................................................... (30,017) (21,543)
Other income, net............................................................ 740 182
--- ---
Loss before income taxes..................................................... (29,277) (21,361)
Income tax expense........................................................... 486 --
--- --
Net loss..................................................................... (29,763) (21,361)
Accretion for preferred stock redemption feature, preferred stock dividends
and offering costs......................................................... (6,337) (780)
------ ----
Net loss attributable to common shareholders................................. $(36,100) $(22,141)
======== ========
Basic and diluted net loss per share attributable to common shareholders..... $ (2.25) $ (0.91)
======= =======
Basic and diluted weighted average shares outstanding........................ 16,033 24,386
====== ======
*Stock-based compensation:
Cost of software licenses, customization, implementation, professional
services and maintenance................................................. $2,052 $497
Sales and marketing........................................................ 4,853 2,941
Research and development................................................... 6,097 1,054
General and administrative................................................. 4,710 2,409
----- -----
Total.................................................................. $17,712 $ 6,901
======= =======
</Table>
YOUCENTRIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
2000 2001
------------- ---------
Cash flows from operating activities:
Net loss................................................................... $ (29,763) $ (21,361)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for credit losses.............................................. 200 24
Loss on disposal of property and equipment............................... -- 63
Depreciation and amortization............................................ 495 1,183
Deferred income taxes.................................................... 496 --
Stock based compensation................................................. 17,712 6,901
Non-cash special charges................................................. -- 850
Changes in assets and liabilities which provided (used) cash:
Accounts receivable...................................................... (4,223) (497)
Prepaids and other current assets........................................ (3,785) 1,729
Deferred contract costs.................................................. (294) 203
Deferred lease liability................................................. -- 63
Accounts payable and other accrued liabilities........................... 3,970 (1,392)
Billings in excess of earned revenues.................................... 2,995 (5,486)
Deferred revenues........................................................ 368 339
Income taxes payable..................................................... (24) --
--- --
Net cash used in operating activities................................. (11,853) (17,381)
------- -------
Cash flows from investing activities:
Purchase of property and equipment....................................... (3,003) (511)
Purchase of certificate of deposits (restricted)......................... -- (24)
Net purchase of marketable securities.................................... (10,412) 416
-------- ---
Net cash used in investing activities................................. (13,415) (119)
------- ----
Cash flow from financing activities:
Principal payments on capital leases..................................... (143) (214)
Net proceeds from sale of preferred stock................................ 28,865 20,383
------ ------
Net cash provided by financing activities............................. 28,722 20,169
------ ------
Net increase in cash and cash equivalents.................................. 3,454 2,669
Cash and cash equivalents:
Beginning of period...................................................... 2,471 1,629
----- -----
End of period............................................................ $5,925 $4,298
====== ======
Supplemental disclosure of cash flow information:
Cash paid for interest................................................... $20 $148
=== ====
Cash paid for income taxes............................................... $-- $2
=== ==
Supplemental disclosure of non-cash investing and financing
activities:
Leased asset additions and related obligations........................... $263 $--
==== ===
Accretion of preferred stock redemption feature, dividends and offering
costs ................................................................ $6,337 $780
====== ====
Issuance of common stock................................................. $-- $17
=== ===
</Table>
1. DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION
ACCOUNTING PRINCIPLES. The financial statements and accompanying notes are
prepared in accordance with generally accepted accounting principles in the
United States of America.
DESCRIPTION OF BUSINESS. YOUcentric, Inc. and its subsidiaries (the "Company")
develop, market and support e-business relationship management software
products. The Company operates in the United States and Europe. The Company's
customers principally consist of large, domestic companies who are end users of
its software products and services. The Company's products are based in large
part upon the Java programming language. Sales of the Company's product depend
on the continued acceptance of Java-based applications and continued development
support for Java.
PRINCIPLES OF CONSOLIDATION. The financial statements include the accounts of
YOUcentric, Inc. and its subsidiaries including YOUcentric, Ltd, which is
located in the United Kingdom and YOUcentric, GmbH, which is located in Germany.
Subsequent to December 31, 2000 YOUcentric, SARL, which is located in France,
was formed. All subsidiaries are owned 100% by YOUcentric, Inc. Significant
intercompany transactions and balances have been eliminated.
INTERIM FINANCIAL STATEMENTS. The consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and disclosures normally included in audited financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures contained herein are adequate to make the information
presented not misleading. The consolidated financial statements reflect all
adjustments, which include only normal recurring adjustments, which are, in the
opinion of management, necessary to present fairly the results of operations for
the periods presented. These consolidated financial statements should be read in
conjunction with the financial statements and notes thereto presented above for
the year ended December 31, 2000. Results of operations for any interim period
are not necessarily indicative of results to be expected for a full year.
2. REDEEMABLE CONVERTIBLE PREFERRED STOCK - SERIES C. During 2001 the Company
completed the sale of 75,815,012 shares of its Series C Preferred Stock to two
investors for cash consideration of $22 million. In addition, the Company
received a commitment from a different investor to fund an additional $2 million
within 270 days of May 3, 2001. The commitment was on terms identical to the
initial funding of the $22 million and was reduced to the extent the Company
raised such amount from other investors prior to the dates noted above. In
connection with the sale of the Company as described below, the Company and the
investor with the $2 million commitment subsequently entered into an agreement
terminating the commitment and such funds were never received.
The Series C Preferred Stock has voting rights equal to one share of common
stock and is currently convertible into one share of common stock, subject to
certain adjustments in the event of certain future stock issuances. Other rights
and preferences of the shares of Series C Preferred Stock include liquidation
and redemption preferences. The holders of the Series C Preferred Stock are
entitled to participate on an as converted basis in any dividend declared on
Common Stock. The Series C Preferred Stock is redeemable upon 45 days prior
notice to the Company from the holders of a majority of the Series C Preferred
Stock, at any time after May 13, 2005. The redemption price shall equal the
original purchase price per share paid, all accrued but unpaid cumulative
dividends, plus an amount that when taken together with the above payments shall
equal 8% per annum, compounded annually, and prorated for any partial year, of
the original purchase price, for the period from May 3, 2001 to the date the
redemption payment is made.
In connection with the Series C Preferred Stock issuance, the Board of Directors
was increased from seven to nine. The holders of Common stock, Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock have the
right to designate three, one, one and two directors, respectively. In addition,
all stockholders voting as a single class will elect the remaining two
directors.
In addition, the terms of the Series A Preferred Stock and Series B Preferred
Stock were amended and the conversion ratios were adjusted so that each share of
Series A Preferred Stock converts into 4.831767 shares of common stock and each
share
of Series B Preferred Stock converts into 21.521934 shares of common stock.
Also, the redemption date for the Series A Preferred Stock and Series B
Preferred Stock was changed to May 13, 2005.
3. COMMON STOCK. During 2001, the Company reincorporated from the state of North
Carolina into the state of Delaware. In connection with the Company's
reincorporating in the state of Delaware, the Company established a par value on
its common stock of $0.001 per share. Previously the Company's common stock had
no par value.
On May 15, 2001, the Company granted 16,625,000 shares of restricted stock to
certain members of management of which 25% of such shares were immediately
vested. The remaining 75% were subject to forfeiture in the event the employee
was terminated. Such termination provisions lapsed ratably over a 3 year period
and lapsed in full in the event of a change in control transaction
On May 15, 2001, the Company also granted 18,235,000 options to certain
employees during 2001. These options had an exercise price of $0.00166667. 25%
of the options became vested on September 15, 2001 while the remaining options
became vested in 25% increments on May 15, 2002, May 15, 2003 and May 15, 2004.
4. SPECIAL CHARGES. During 2001 the Company incurred various special charges
including an additional accruals established for future lease obligations
associated with the Company's prior corporate headquarters ($850,000), fees paid
to investment bankers in connection with the planned sale of the Company
($800,000) and expenses associated with a reduction in force ($279,000). The
Company also reversed approximately $78,000 of accruals established during 2000
associated with the Company's withdrawn IPO.
5. CONTINGENCIES. The Company is subject to legal proceedings and claims that
have arisen in the ordinary course of its business and have not been finally
adjudicated. In management's opinion, the ultimate resolution of these matters
will not have a material effect on the Company's results of operations, cash
flows or financial condition.
6. SUBSEQUENT EVENTS. On November 16, 2001, J.D. Edwards & Company completed its
acquisition of the Company. Under the terms of the Agreement and Plan of
Reorganization, J.D. Edwards acquired all of the issued and outstanding capital
stock of the Company, in exchange for $95.4 million of consideration, paid with
a combination of 7.7 million J.D. Edwards' shares of common stock and $6.0
million in cash. Pursuant to the agreement, YOUcentric became a wholly-owned
subsidiary of J.D. Edwards.
In addition, certain vested and unvested options to purchase YOUcentric capital
stock outstanding at the time of the acquisition under YOUcentric's stock option
plans were assumed by J.D. Edwards. The fair value of the options assumed was
$2.8 million. These options were converted into options to purchase an
equivalent number of shares of J.D. Edwards common stock based upon the
acquisition share exchange ratio.