EX-99.1 3 y10101exv99w1.htm EX-99.1: UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS EX-99.1
 

Exhibit 99.1

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

     On June 14, 2005, DoubleClick Inc. (“DoubleClick”) and its subsidiary, DoubleClick International TechSolutions Limited, entered into a purchase and sale agreement with Aprimo, Incorporated and its subsidiary, Aprimo UK Limited (collectively, “Aprimo”), pursuant to which DoubleClick sold to Aprimo substantially all of the assets and liabilities of DoubleClick’s Enterprise Marketing Solutions (“EMS”) business, including all of the capital stock of certain subsidiaries historically included in EMS. Aprimo paid $16.5 million in cash (subject to certain adjustments as described in the Agreement) for the EMS business.

     In connection with the transaction, DoubleClick and Aprimo entered into (i) a reseller agreement, pursuant to which DoubleClick may continue to resell certain of the EMS products as part of DoubleClick’s data management solutions, and (ii) an integration agreement, pursuant to which DoubleClick and Aprimo will work to integrate certain of the EMS products with DoubleClick’s DARTmail solution.

Pro Forma Financial Information

     The following unaudited pro forma condensed consolidated financial information has been prepared based on the historical financial statements of DoubleClick after giving effect to the sale to Aprimo of substantially all of the assets and liabilities related to EMS, and the assumptions and adjustments described in the accompanying notes to these unaudited pro forma consolidated financial statements. The unaudited pro forma consolidated statements of operations give effect to the disposal of EMS by DoubleClick as if it had occurred on January 1, 2002 and the unaudited pro forma consolidated balance sheet gives effect to the disposal of EMS by DoubleClick as if it had occurred on March 31, 2005. The unaudited pro forma consolidated financial statements was derived by adjusting the historical financial statements of DoubleClick for the removal of assets, liabilities, revenues and expenses associated with EMS and the pro forma adjustments described in the footnotes.

     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 audited historical consolidated financial statements and notes thereto included in DoubleClick’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as filed with the Securities and Exchange Commission on March 16, 2005, and the unaudited interim consolidated financial statements and notes thereto included in DoubleClick’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, as filed with the Securities and Exchange Commission on May 10, 2005.

     The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have actually been reported had the disposition occurred January 1, 2002 for statements of operation purposes and as of March 31, 2005 for balance sheet purposes, nor is it necessarily indicative of the future financial position or results of operations. The pro forma adjustments are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K.

 


 

DOUBLECLICK INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
As of March 31, 2005
(Unaudited, in thousands, except share amounts)

                                         
 
  Historical                           Pro Forma
 
  DCLK   EMS   Adjustments           DCLK
 
                             
                                     
ASSETS
                                   
 
                                   
CURRENT ASSETS:
                                   
Cash and cash equivalents
  $ 120,016     $     $ 16,500     (1)   $ 136,516  
Investments in marketable securities
    295,515                       295,515  
Restricted cash
    1,635                       1,635  
Accounts receivable, net
    79,746       (2,796 )               76,950  
Prepaid expenses and other current assets
    14,409       (398 )               14,011  
 
                           
Total current assets
    511,321       (3,194 )     16,500           524,627  
 
                                   
Investment in marketable securities
    108,509                       108,509  
Restricted cash
    11,668                       11,668  
Property and equipment, net
    80,391       (330 )               80,061  
Goodwill
    72,727       (14,213 )               58,514  
Intangible assets, net
    19,513       (1,009 )               18,504  
Investment in affiliates
    5,673                       5,673  
Other assets
    13,645                       13,645  
 
                           
 
                                   
Total assets
  $ 823,447     $ (18,746 )   $ 16,500         $ 821,201  
 
                           
 
                                   
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                   
 
                                   
CURRENT LIABILITIES:
                                   
Accounts payable
  $ 26,614     $     $         $ 26,614  
Accrued expenses and other current liabilities
    48,431       (738 )     2,100     (2) (3)     49,793  
Deferred revenue
    13,563       (3,952 )               9,611  
 
                           
Total current liabilities
    88,608       (4,690 )     2,100           86,018  
 
                                   
Convertible subordinated notes — Zero Coupon, due 2023
    135,000                       135,000  
Other long term liabilities
    20,377                       20,377  
 
                           
 
                                   
Total liabilities
    243,985       (4,690 )     2,100           241,395  
 
                           
 
                                   
STOCKHOLDERS’ EQUITY:
                                   
Preferred stock, par value $0.001; 5,000,000 shares authorized, none outstanding
                           
Common stock, par value $0.001; 400,000,000 shares authorized, 140,564,907 shares issued
    141                       141  
Treasury stock, 14,864,925 shares
    (109,223 )                     (109,223 )
Additional paid-in capital
    1,296,807                       1,296,807  
Accumulated deficit
    (612,930 )     (14,056 )     14,400     (4)     (612,586 )
Other accumulated comprehensive income
    4,667                       4,667  
 
                           
Total stockholders’ equity
    579,462       (14,056 )     14,400           579,806  
 
                           
 
                                   
Total liabilities and stockholders’ equity
  $ 823,447     $ (18,746 )   $ 16,500         $ 821,201  
 
                           

The accompanying notes are an integral part of these financial statements.

 


 

DOUBLECLICK INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2005
(Unaudited, in thousands, except per share amounts)

                                 
    Historical                     Pro Forma  
    DCLK     EMS     Adjustments     DCLK  
Revenue
  $ 76,346     $ (2,295 )   $     $ 74,051  
 
                               
Cost of revenue
    23,380       (354 )           23,026  
 
                       
 
                               
Gross profit
    52,966       (1,941 )           51,025  
 
                               
Operating expenses:
                               
Sales and marketing
    29,053       (602 )           28,451  
General and administrative
    11,507       85             11,592  
Product development
    14,503       (2,819 )           11,684  
Amortization of intangibles
    1,640       (499 )           1,141  
 
                       
Total operating expenses
    56,703       (3,835 )           52,868  
 
                               
Income from operations
    (3,737 )     1,894             (1,843 )
 
                               
Other income (expense)
                               
Equity in losses of affiliates
    (88 )                 (88 )
Interest and other, net
    3,291                   3,291  
 
                       
Total other income
    3,203                   3,203  
 
                               
Income before income taxes
    (534 )     1,894             1,360  
Provision for income taxes
    383                     383  
 
                       
 
                               
Net income (loss)
  $ (917 )   $ 1,894     $     $ 977  
 
                       
 
                               
Basic net income (loss) per share
  $ (0.01 )                   $ 0.01  
 
                           
 
                               
Weighted average shares used in basic net income (loss) per share
    125,914                       125,914  
 
                           
 
                               
Diluted net income (loss) per share
  $ (0.01 )                   $ 0.01  
 
                           
 
                               
Weighted average shares used in diluted net income (loss) per share
    125,914                       139,216  
 
                           

The accompanying notes are an integral part of these financial statements.

 


 

DOUBLECLICK INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2004
(Unaudited, in thousands, except per share amounts)

                                 
    Historical                     Pro Forma  
    DCLK     EMS     Adjustments     DCLK  
Revenue
  $ 68,047     $ (1,202 )   $     $ 66,845  
 
                               
Cost of revenue
    22,565       (1,006 )           21,559  
 
                       
 
                               
Gross profit
    45,482       (196 )           45,286  
 
                               
Operating expenses:
                               
Sales and marketing
    25,650       (1,635 )           24,015  
General and administrative
    8,074       (25 )           8,049  
Product development
    8,491       (1,697 )           6,794  
Amortization of intangibles
    637       (36 )           601  
 
                       
Total operating expenses
    42,852       (3,393 )           39,459  
 
                               
Income from operations
    2,630       3,197             5,827  
 
                               
Other income (expense)
                               
Equity in losses of affiliates
    (186 )                 (186 )
Gain on distribution from affiliates
    2,400                   2,400  
Interest and other, net
    3,474                   3,474  
 
                       
Total other income
    5,688                   5,688  
 
                               
Income before income taxes
    8,318       3,197             11,515  
Provision for income taxes
    625                   625  
 
                       
 
                               
Net income
  $ 7,693     $ 3,197     $     $ 10,890  
 
                       
 
                               
Basic net income per share
  $ 0.06                     $ 0.08  
 
                           
 
                               
Weighted average shares used in basic net income per share
    137,099                       137,099  
 
                           
 
                               
Diluted net income per share
  $ 0.05                     $ 0.07  
 
                           
 
                               
Weighted average shares used in diluted net income per share
    151,384                       151,384  
 
                           

The accompanying notes are an integral part of these financial statements.

 


 

DOUBLECLICK INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2004
(Unaudited, in thousands, except per share amounts)

                                 
    Historical                     Pro Forma  
    DCLK     EMS     Adjustments     DCLK  
Revenue
  $ 301,623     $ (9,927 )   $     $ 291,696  
 
                               
Cost of revenue
    86,959       (3,986 )           82,973  
 
                       
 
                               
Gross profit
    214,664       (5,941 )           208,723  
 
                               
Operating expenses:
                               
Sales and marketing
    104,029       (5,452 )           98,577  
General and administrative
    35,864       (708 )           35,156  
Product development
    46,459       (8,887 )           37,572  
Amortization of intangibles
    5,228       (1,788 )           3,440  
Impairment of goodwill and intangible assets
    5,592       (5,592 )            
Restructuring credits, net
    (4,514 )                 (4,514 )
 
                       
Total operating expenses
    192,658       (22,427 )           170,231  
 
                               
Income from operations
    22,006       16,486             38,492  
 
                               
Other income (expense)
                               
Equity in losses of affiliates
    (1,299 )                 (1,299 )
Gain on distribution from affiliates
    2,400                   2,400  
Gain on sale of investment in affiliates
    7,125                   7,125  
Interest and other, net
    10,485                   10,485  
 
                       
Total other income
    18,711                   18,711  
 
                               
Income before income taxes
    40,717       16,486             57,203  
Provision for income taxes
    3,207                   3,207  
 
                       
 
                               
Net income
  $ 37,510     $ 16,486     $     $ 53,996  
 
                       
 
                               
Basic net income per share
  $ 0.29                     $ 0.41  
 
                           
 
                               
Weighted average shares used in basic net income per share
    131,159                       131,159  
 
                           
 
                               
Diluted net income per share
  $ 0.26                     $ 0.37  
 
                           
 
                               
Weighted average shares used in diluted net income per share
    144,178                       144,178  
 
                           

The accompanying notes are an integral part of these financial statements.

 


 

DOUBLECLICK INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2003
(Unaudited, in thousands, except per share amounts)

                                 
    Historical                     Pro Forma  
    DCLK     EMS     Adjustments     DCLK  
Revenue
  $ 271,337     $ (6,430 )   $     $ 264,907  
 
                               
Cost of revenue
    94,131       (4,060 )           90,071  
 
                       
 
                               
Gross profit
    177,206       (2,370 )           174,836  
 
                               
Operating expenses:
                               
Sales and marketing
    92,308       (5,672 )           86,636  
General and administrative
    36,063       (287 )           35,776  
Product development
    39,180       (5,827 )           33,353  
Amortization of intangibles
    5,896       (131 )           5,765  
Restructuring credits, net
    (9,092 )                 (9,092 )
 
                       
Total operating expenses
    164,355       (11,917 )           152,438  
 
                               
Income from operations
    12,851       9,547             22,398  
 
                               
Other income (expense)
                               
Equity in losses of affiliates
    (2,551 )                 (2,551 )
Loss on early extinguishment of debt
    (4,406 )                 (4,406 )
Interest and other, net
    12,063                   12,063  
 
                       
Total other income
    5,106                   5,106  
 
                               
Income before income taxes
    17,957       9,547             27,504  
Provision for income taxes
    1,039                     1,039  
 
                       
 
                               
Net income
  $ 16,918     $ 9,547     $     $ 26,465  
 
                       
 
                               
Basic net income per share
  $ 0.12                     $ 0.19  
 
                           
 
                               
Weighted average shares used in basic net income per share
    137,074                       137,074  
 
                           
 
                               
Diluted net income per share
  $ 0.11                     $ 0.18  
 
                           
 
                               
Weighted average shares used in diluted net income per share
    150,345                       150,345  
 
                           

The accompanying notes are an integral part of these financial statements.

 


 

DOUBLECLICK INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2002
(Unaudited, in thousands, except per share amounts)

                                 
    Historical                     Pro Forma  
    DCLK     EMS     Adjustments     DCLK  
Revenue
  $ 300,198     $ (536 )   $     $ 299,662  
 
                               
Restructuring charge
    4,374                   4,374  
Cost of revenue
    109,406       (564 )           108,842  
 
                       
 
                               
Gross profit
    186,418       28             186,446  
 
                               
Operating expenses:
                               
Sales and marketing
    101,527       (1,133 )           100,394  
General and administrative
    46,401       (213 )           46,188  
Product development
    39,790       (577 )           39,213  
Amortization of intangibles
    12,392       (30 )           12,362  
Impairment of goodwill and intangible assets
    47,077                   47,077  
Restructuring charges, net
    94,011                   94,011  
 
                       
Total operating expenses
    341,198       (1,953 )           339,245  
 
                               
Loss from operations
    (154,780 )     1,981             (152,799 )
 
                               
Other income (expense)
                               
Equity in losses of affiliates
    (331 )                   (331 )
Impairment of investments in affiliates
    (14,147 )                   (14,147 )
Gain on early extinguishment of debt
    11,855                     11,855  
Gain on sale of investment in affiliates
    7,880                     7,880  
Gain on sale of businesses, net
    17,946                     17,946  
Interest and other, net
    15,932                     15,932  
 
                       
Total other income
    39,135                   39,135  
 
                               
Loss before income taxes
    (115,645 )     1,981             (113,664 )
Provision for income taxes
    4,794                     4,794  
 
                       
Loss before minority interest
    (120,439 )     1,981             (118,458 )
Minority interest in results of consolidated subsidiaries
    2,549                     2,549  
 
                       
 
                               
Net loss
  $ (117,890 )   $ 1,981     $     $ (115,909 )
 
                       
 
                               
Basic net loss per share
  $ (0.87 )                   $ (0.85 )
 
                           
 
                               
Weighted average shares used in basic net loss per share
    135,840                       135,840  
 
                           
 
                               
Diluted net income per share
  $ (0.87 )                   $ (0.85 )
 
                           
 
                               
Weighted average shares used in diluted net loss per share
    135,840                       135,840  
 
                           

The accompanying notes are an integral part of these financial statements.

 


 

DOUBLECLICK INC.

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — Basis of Pro Forma Presentation

     The pro forma condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.

     The unaudited pro forma consolidated financial information of DoubleClick and EMS has been prepared based on the historical consolidated balance sheets of DoubleClick and EMS as of March 31, 2005 and the historical consolidated statements of operations for DoubleClick and EMS for the years ended December 31, 2004, 2003 and 2002, and the three months ended March 31, 2005 and 2004, after giving effect to the adjustments and assumptions described below.

     DoubleClick and EMS employ accounting policies that are in accordance with generally accepted accounting principles in the United States. In management’s opinion, all material adjustments necessary to reflect fairly the pro forma financial position and pro forma results of operations of DoubleClick and EMS have been made.

     The ongoing activity presented in these pro forma condensed consolidated financial statements represents DoubleClick’s Tech and Data divisions as well as its corporate assets, liabilities and expenses that will not be divested in the sale of EMS. This pro forma financial information is presented for illustrative purposes only, and is not necessarily indicative of the operating results and financial position that might have been achieved had the transaction described above occurred on the dates indicated, nor is it necessarily indicative of the operating results and financial position that may occur in the future.

NOTE 2 —Pro Forma Assumptions

     The consolidated financial information of EMS has been prepared based on the historical consolidated financial records of DoubleClick as of March 31, 2005 and for the years ended December 31, 2004, 2003 and 2002, and the three months ended March 31, 2005 and 2004, after giving effect to the following adjustments and assumptions:

    Corporate overhead has not been allocated to the EMS results of operations for any periods presented.

    Certain prepaid expenses and accrued liabilities that were historically recorded as part of the EMS business have not been included in the EMS financial statements because they relate to DoubleClick’s ongoing corporate operations.

    Cash and the associated investment income as well as accounts payable that were historically recorded as a part of the EMS business have not been included in the EMS financial statements because the balances will remain with DoubleClick.

     The accompanying unaudited pro forma consolidated financial information has been prepared as if the divestiture was completed on March 31, 2005 for balance sheet purposes and as of January 1, 2002 for statement of operations purposes and reflects the following pro forma adjustments.

Other pro forma adjustments:

  (1)   To reflect sale consideration of $16.5 million in cash from Aprimo.

  (2)   To record the estimated tax effect of pro forma adjustments considering management’s current expectations of available net operating losses and credits as well as our effective tax rate, including estimated tax expense associated with the gain on the disposition.

  (3)   To reflect the $0.6 million in estimated direct expenses of the transaction including legal and accounting fees.

  (4)   To reflect the net proceeds and resulting gain on the sale of assets sold to and the liabilities assumed by Aprimo.

         
Total consideration
  $ 16,500  
Transaction costs
    (600 )
Income Taxes
    (1,500 )
 
     
Net total proceeds
    14,400  
Net assets acquired by Aprimo
    (14,056 )
 
     
Pro forma net gain
  $ 344  
 
     

 


 

NOTE 3 —Unaudited Pro Forma Earnings Per Share Data

     Basic and diluted pro forma earnings per share were calculated using the weighted average shares outstanding of DoubleClick for the years ended December 31, 2004, 2003 and 2002, and the three months ended March 31, 2004. For the three months ended March 31, 2005, pro forma weighted average dilutive shares include the effect of DoubleClick’s dilutive stock options and Convertible Subordinated Notes. These items were excluded from DoubleClick’s historical weighted average shares since their effect would have had an antidilutive effect for the period.

NOTE 4 —Contingencies

     In April 2002, a consolidated amended class action complaint alleging violation of the federal securities laws in connection with DoubleClick’s follow-on offerings was filed in the United States District Court for the Southern District of New York naming as defendants DoubleClick, some of its officers and directors and certain underwriters of DoubleClick’s follow-on offerings. Approximately 300 other issuers and their underwriters have had similar suits filed against them, all of which are included in a single coordinated proceeding in the Southern District of New York. In October 2002, the action was dismissed against the named officers and directors without prejudice. However, claims against DoubleClick remain. In July 2002, DoubleClick and the other issuers in the consolidated cases filed motions to dismiss the amended complaint for failure to state a claim, which was denied as to DoubleClick in February 2003.

     In June 2003, DoubleClick’s Board of Directors conditionally approved a proposed partial settlement with the plaintiffs in this matter. In June 2004, an agreement of settlement was submitted to the court for preliminary approval. The court granted the preliminary approval motion on February 15, 2005, subject to certain modifications. If the parties are able to agree upon the required modifications, and such modifications are acceptable to the court, notice will be given to all class members of the settlement, a “fairness” hearing will be held and if the court determines that the settlement is fair to the class members, the settlement will be approved. There can be no assurance that this proposed settlement would be approved and implemented in its current form, or at all. If this settlement is not finalized, DoubleClick intends to dispute these allegations and defend this lawsuit vigorously.

     DoubleClick is defending a class action lawsuit filed in September 2003 in the Court of Common Pleas in Allegheny County, Pennsylvania alleging, among other things, deceptive business practices, fraud, misrepresentation, invasion of privacy and right of association relating to allegedly deceptive content of online advertisement that plaintiffs assert we delivered to consumers. The action seeks, among other things, injunctive relief, compensatory and punitive damages and attorneys’ fees and costs. DoubleClick believes the claims in this case are without merit and intends to defend this action vigorously.

     On April 23, 2005, DoubleClick signed a definitive agreement to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity. If the merger is terminated under certain circumstances, DoubleClick will be obligated to pay a termination fee of $28 million.

     On April 27, 2005, a purported class action lawsuit related to the merger was filed against DoubleClick, each of its directors, certain of its executive officers and Hellman & Freidman LLC and JMI Equity in the Supreme Court of the State of New York for the County of New York. The lawsuit alleges, among other things, that the merger consideration to be paid to DoubleClick’s stockholders in the merger is unfair and inadequate. In addition, the complaint alleges that DoubleClick’s directors violated their fiduciary duties by, among other things, failing to take all reasonable steps to assure the maximization of stockholder value, including the implementation of a bidding mechanism to foster a fair auction of DoubleClick to the highest bidder or the exploration of strategic alternatives that will return greater or equivalent short-term value to DoubleClick’s stockholders. The complaint seeks, among other relief, certifications of the lawsuit as a class action, a declaration that the merger is unfair, unjust and inequitable to our stockholders, an injunction preventing completion of the merger at a price that is not fair and equitable, compensatory damages to the class, attorneys’ fees and expenses, along with such other relief as the court might find just and proper. DoubleClick believes this lawsuit is without merit and plans to defend it vigorously.