EXHIBIT 99.2
Unaudited Pro Forma Condensed Combining Financial Information
The unaudited pro forma condensed combining financial information for
ProBusiness set forth below gives effect to the acquisition of Conduit on a
pooling of interests basis as if it had occurred at the beginning of each period
presented. The unaudited pro forma condensed combining balance sheet combines
ProBusiness' historical balance sheet as of March 31, 1999 with Conduit's
consolidated balance sheet as of March 31, 1999, giving effect to the
acquisition as if it had occurred on March 31, 1999. The historical financial
information of ProBusiness as set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and ProBusiness' Annual Report on Form 10-K for the years ended June
30, 1998 and 1997 and the Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, 1999 and 1998. The historical financial information of
Conduit as set forth below should be read in conjunction with the audited
consolidated balance sheets of Clemco, Inc. and subsidiary as of December 31,
1998 and 1997 and the related consolidated statements of operations,
shareholders' deficit and cash flows for each of the years in the three-year
period ended December 31, 1998 included elsewhere herein and should be read in
conjunction with such financial statements and the notes thereto. Conduit's
historical financial information has been recast in conformity with ProBusiness'
June 30 fiscal year end and do not include any adjustments resulting from the
merger. The pro forma information is not necessarily indicative of the combined
operating results or financial position that would have occurred had the merger
transaction been consummated at the beginning of the periods presented, nor is
it necessarily indicative of future combined operating results or financial
position.
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET AS OF MARCH 31, 1999
(IN THOUSANDS)
March 31, 1999
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Pro forma
business
combination
ProBusiness Conduit adjustments Pro forma
-------------------- ------------------ ---------------- ------------------
Assets
Current Assets:
Cash and cash equivalents $ 80,969 $ 1,796 $ 82,765
Accounts receivable, net of allowance 3,328 95 3,423
Prepaid expenses and other current assets 3,725 671 4,396
-------------------- ------------------ ---------------- ------------------
88,022 2,562 - 90,584
Payroll tax funds invested 648,902 - 648,902
-------------------- ------------------ ---------------- ------------------
Total current assets 736,924 2,562 - 739,486
Equipment, furniture and fixtures, net 23,889 637 24,526
Other assets 14,053 74 14,127
-------------------- ------------------ ---------------- ------------------
Total assets $ 774,866 $ 3,273 $ - $ 778,139
-------------------- ------------------ ---------------- ------------------
-------------------- ------------------ ---------------- ------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable, accrued liabilities,
current portion of capital lease
obligations and deferred revenue $ 20,756 $ 1,014 $ 6,851 (a) $ 28,621
Payroll tax funds collected but unremitted 648,902 - 648,902
-------------------- ------------------ ---------------- ------------------
Total current liabilities 669,658 1,014 6,851 677,523
Capital lease obligations, less current
portion 897 52 949
Stockholders' equity 104,311 2,207 (6,851)(a) 99,667
-------------------- ------------------ ---------------- ------------------
Total liabilities and stockholders' equity $ 774,866 $ 3,273 $ - $ 778,139
-------------------- ------------------ ---------------- ------------------
-------------------- ------------------ ---------------- ------------------
See accompanying notes to unaudited pro forma condensed combining financial
information.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31,1999 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Nine Months Ended March 31, 1999 Nine Months Ended March 31, 1998
---------------------------------------- ----------------------------------------
PRO FORMA PRO FORMA
ProBusiness Conduit COMBINED ProBusiness Conduit COMBINED
------------- ----------- ------------ ------------- ----------- ------------
Revenue $ 50,126 $ 1,261 $ 51,387 $ 33,163 $ 1,152 $ 34,315
Operating expenses:
Cost of providing services 25,057 1,150 26,207 17,215 797 18,012
General and administrative 7,464 429 7,893 5,061 410 5,471
Research and development 4,298 2,301 6,599 3,343 889 4,232
Client acquisition costs 20,625 911 21,536 13,639 610 14,249
------------- ----------- ------------ ------------- ----------- ------------
Total operating expenses 57,444 4,791 62,235 39,258 2,706 41,964
------------- ----------- ------------ ------------- ----------- ------------
Loss from operations (7,318) (3,530) (10,848) (6,095) (1,554) (7,649)
Interest expense (718) (56) (774) (461) (54) (515)
Other income 2,308 - 2,308 502 - 502
------------- ----------- ------------ ------------- ----------- ------------
Net loss $ (5,728) $ (3,586) $ (9,314) $ (6,054) $ (1,608) $ (7,662)
------------- ----------- ------------ ------------- ----------- ------------
------------- ----------- ------------ ------------- ----------- ------------
Basic and diluted net loss per share $ (0.29) $ (2.05) $ (0.44) $ (0.40) $ (1.43) $ (0.47)
------------- ----------- ------------ ------------- ----------- ------------
------------- ----------- ------------ ------------- ----------- ------------
Shares used in computing basic and
diluted net loss per share 19,558 1,749 21,307 15,298 1,122 16,420
------------- ----------- ------------ ------------- ----------- ------------
------------- ----------- ------------ ------------- ----------- ------------
See accompanying notes to unaudited pro forma condensed combining financial
information.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1998 AND 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Year ended June 30, 19998 Year ended June 30, 1997
---------------------------------------- ----------------------------------------
PRO FORMA PRO FORMA
ProBusiness Conduit COMBINED ProBusiness Conduit COMBINED
------------- ----------- ------------ ------------- ----------- ------------
Revenue $ 46,317 $ 1,450 $ 47,767 $ 27,374 $ 2,006 $ 29,380
Operating expenses:
Cost of providing services 23,859 1,076 24,935 13,659 1,433 15,092
General and administrative 6,727 572 7,299 4,282 543 4,825
Research and development 4,585 1,323 5,908 2,841 1,000 3,841
Client acquisition costs 17,858 913 18,771 11,706 537 12,243
------------- ----------- ------------ ------------- ----------- ------------
Total operating expenses 53,029 3,884 56,913 32,488 3,513 36,001
------------- ----------- ------------ ------------- ----------- ------------
Loss from operations (6,712) (2,434) (9,146) (5,114) (1,507) (6,621)
Interest expense (557) (51) (608) (1,190) (17) (1,207)
Other income 752 - 752 59 - 59
------------- ----------- ------------ ------------- ----------- ------------
Net loss $ (6,517) $ (2,485) $ (9,002) $ (6,245) $ (1,524) $ (7,769)
------------- ----------- ------------ ------------- ----------- ------------
------------- ----------- ------------ ------------- ----------- ------------
Basic and diluted net loss per share $ (0.41) $ (2.13) $ (0.53) $ (0.59) $ (2.66) $ (0.70)
------------- ----------- ------------ ------------- ----------- ------------
------------- ----------- ------------ ------------- ----------- ------------
Shares used in computing basic and
diluted net loss per share 15,722 1,168 16,890 10,533 574 11,107
------------- ----------- ------------ ------------- ----------- ------------
------------- ----------- ------------ ------------- ----------- ------------
See accompanying notes to unaudited pro forma condensed combining financial
information.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL
INFORMATION
The adjustments to the unaudited pro forma condensed combining balance
sheet give effect to the assumed issuance of approximately 1.7 million shares
of ProBusiness common stock and an anticipated charge for merger related
expenses totaling approximately $6.9 million. Such merger related expenses
include investment advisory fees, regulatory filing costs, legal and
accounting expenses, employee transition expenses, general and administrative
expenses, and other transaction costs. The unaudited pro forma condensed
combining financial statements do not include adjustments to conform the
accounting policies of Conduit to those followed by Pro Business nor do they
include merger related adjustments for redundant capacity and assets. The
nature and extent of such adjustments will be based upon further study and
analysis. The unaudited pro forma condensed combining statements of
operations do not reflect these non-recurring charges, which ProBusiness
anticipates will be recorded during the quarter in which the merger is
consummated.
ProBusiness issued approximately 1.7 million shares of its common stock
to Conduit Parent's stockholders in exchange for all of the outstanding
capital stock of Conduit Parent, and all outstanding options and warrants to
purchase Conduit Parent's capital stock were converted into options and
warrants to purchase approximately 83,000 shares of ProBusiness common stock.
The merger was accounted for under the pooling of interests method of
accounting.
The pro forma combined per share amounts in the unaudited pro forma
condensed combining statements of operations are based upon the historical
weighted average number of shares of common stock of ProBusiness outstanding
during each period presented. In addition, the shares of ProBusiness common
stock to be issued in connection with the merger, based on the equivalent
weighted average shares of Conduit outstanding during each period presented,
are treated as outstanding during each such period.
Certain financial statement balances of Conduit have been reclassified
to conform with the ProBusiness financial statement presentation.
The adjustment to the unaudited pro forma condensed combining balance
sheet is as follows:
(a) To record accrual for anticipated merger related expenses and
transaction costs.