Delaware | 000-27038 | 94-3156479 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1 Wayside Road Burlington, Massachusetts 01803 |
(Address of Principal Executive Offices) |
(781) 565-5000 |
(Registrant's telephone number, including area code) |
Not applicable |
(Former name or former address, if changed since last report) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.01. Completion of Acquisition or Disposition of Assets | 3 |
Item 9.01. Financial Statements and Exhibits | 4 |
SIGNATURE | 5 |
EXHIBIT INDEX | 6 |
EX-2.1* Agreement and Plan of Merger | |
EX-23.1 Consent of Independent Auditors | |
EX-99.1 Unaudited Interim Condensed Combined Financial Statements of Tweddle Group Technologies, LLC | |
EX-99.2 Combined Financial Statements of Tweddle Group Technologies, LLC | |
EX-99.3 Unaudited Pro Forma Combined Financial Statements |
(1) | The unaudited interim condensed combined financial statements of TGT, including TGT’s unaudited condensed balance sheet as of March 31, 2013, and condensed results of operations, and cash flows for the three months ended March 31, 2013 and 2012, and statement of changes in owners' net investment for the three months ended March 31, 2013 are being filed as Exhibit 99.1 to this Form 8-K/A. |
(2) | The audited combined financial statements of TGT, including TGT’s audited balance sheet as of December 31, 2012, and results of operations, statement of changes in owners' net investment and cash flows for the year then ended, are being filed as Exhibit 99.2 to this Form 8-K/A. |
(1) | The unaudited pro forma combined statement of operations of Nuance for the year ended September 30, 2012, giving effect to the acquisitions of TGT, Vlingo Corporation, Transcend Services, Inc. and Swype, Inc.; for the six months ended March 31, 2013, giving effect to the acquisition of TGT; and the unaudited pro forma combined balance sheet of Nuance as of March 31, 2013, giving effect to the acquisition of TGT are included within Exhibit 99.3 to this Form 8-K/A. |
(d) | Exhibits |
2.1* | Asset Purchase Agreement, dated as of May 24, 2013, by and among Nuance, Telluride, Inc., Tweddle Group, Inc., Tweddle Group Technologies, LLC, The Andrew M. Tweddle Revocable Living Trust and Andrew M. Tweddle. |
23.1 | Consent of Independent Auditors. |
99.1 | Unaudited interim condensed combined financial statements of Tweddle Group Technologies, LLC. as of March 31, 2013 and for the three months ended March 31, 2013 and 2012. |
99.2 | Combined financial statements of Tweddle Group Technologies, LLC, as of December 31, 2012 and for the year then ended December 31, 2012. |
99.3 | Unaudited pro forma combined financial statements. |
NUANCE COMMUNICATIONS, INC. | ||||
By: | /s/ Thomas L. Beaudoin | |||
Thomas L. Beaudoin | ||||
Chief Financial Officer |
Exhibit No. | Description |
2.1* | Asset Purchase Agreement, dated as of May 24, 2013, by and among Nuance, Telluride, Inc., Tweddle Group, Inc., Tweddle Group Technologies, LLC, The Andrew M. Tweddle Revocable Living Trust and Andrew M. Tweddle. |
23.1 | Consent of Independent Auditors. |
99.1 | Unaudited interim condensed combined financial statements of Tweddle Group Technologies, LLC. as of March 31, 2013 and for the three months ended March 31, 2013 and 2012. |
99.2 | Combined financial statements of Tweddle Group Technologies, LLC, as of December 31, 2012 and for the year then ended December 31, 2012. |
99.3 | Unaudited pro forma combined financial statements. |
Page(s) | ||
Combined Financial Statements (unaudited) | ||
Combined Balance Sheets | 3 | |
Combined Results of Operations | 4 | |
Combined Statement of Changes in Owners’ Net Investment | 5 | |
Combined Statements of Cash Flows | 6 | |
Notes to Condensed Combined Financial Statements | 7-10 | |
ASSETS | |||||
March 31, 2013 | December 31, 2012 | ||||
Current assets: | |||||
Cash | $ | 24,520 | $ | 34,735 | |
Accounts receivable | 6,270,423 | 7,465,581 | |||
Prepaid application provider, current portion | 3,076,097 | 2,425,247 | |||
Prepaid expenses and other current assets | 203,230 | 527,203 | |||
Total current assets | 9,574,270 | 10,452,766 | |||
Property and equipment, net | 2,339,360 | 2,726,197 | |||
Prepaid application provider, net of current portion | 4,002,874 | 3,293,871 | |||
Total assets | $ | 15,916,504 | $ | 16,472,834 | |
LIABILITIES AND OWNERS' NET INVESTMENT | |||||
Current liabilities: | |||||
Trade accounts payable | $ | 1,982,597 | $ | 1,968,295 | |
Accrued expenses | 550,200 | 483,276 | |||
Note payable | 117,611 | 117,019 | |||
Capital lease, current portion | 173,684 | 172,812 | |||
Deferred revenue | 12,789,892 | 9,865,514 | |||
Total current liabilities | 15,613,984 | 12,606,916 | |||
Note payable, net of current portion | 140,240 | 169,866 | |||
Capital lease, net of current portion | 207,106 | 250,855 | |||
Deferred revenue, net of current portion | 23,950,011 | 18,854,671 | |||
Other liabilities | 98,517 | 103,214 | |||
Total liabilities | $ | 40,009,858 | $ | 31,985,522 | |
Commitments and contingencies (Note 9) | |||||
Owners' net investment | (24,093,354) | (15,512,688) | |||
Total liabilities and owners' net investment | $ | 15,916,504 | $ | 16,472,834 | |
See accompanying notes to unaudited condensed combined financial statements. |
Three months ended March 31, | |||||
2013 | 2012 | ||||
Revenue | $ | 2,450,611 | $ | 257,962 | |
Cost of Sales | 3,272,675 | 1,518,049 | |||
Gross margin | (822,064) | (1,260,087) | |||
Operating expenses: | |||||
Research and development expenses | 3,055,224 | 2,224,552 | |||
General and administrative expenses | 498,210 | 376,909 | |||
Selling expenses | 373,482 | 262,399 | |||
Total operating expenses | 3,926,916 | 2,863,860 | |||
Operating loss | (4,748,980) | (4,123,947) | |||
Interest expense | (51,839) | - | |||
Net loss before income tax expense | (4,800,819) | (4,123,947) | |||
Income tax expense | - | - | |||
Net loss | $ | (4,800,819) | $ | (4,123,947) | |
See accompanying notes to unaudited condensed combined financial statements. |
Three Months Ended March 31, 2013 | |||
Balance at December 31, 2012 | $ | (15,512,688) | |
Net loss | (4,800,819) | ||
Net transfers to owners | (3,779,847) | ||
Balance at March 31, 2013 | $ | (24,093,354) | |
See accompanying notes to unaudited condensed combined financial statements. |
Three months ended March 31, | ||||||
2013 | 2012 | |||||
Cash flows from operating activities: | ||||||
Net loss | $ | (4,800,819) | $ | (4,123,947) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||
Depreciation and amortization | 395,797 | 283,616 | ||||
Loss on retirement of property and equipment | 629 | - | ||||
Changes in operating assets and liabilities: | ||||||
Decrease (increase) in: | ||||||
Accounts receivable | 1,195,158 | (1,561,068) | ||||
Prepaid application provider | (1,359,853) | (836,346) | ||||
Prepaid expenses and other current assets | 323,973 | (272,753) | ||||
Increase (decrease) in: | ||||||
Trade accounts payable | 14,302 | 399,187 | ||||
Accrued expenses | 66,924 | 160,381 | ||||
Deferred revenue | 8,019,718 | 3,730,507 | ||||
Other long term liabilities | (4,697) | 289,805 | ||||
Net cash provided by (used in) operating activities | 3,851,132 | (1,930,618) | ||||
Cash flows used in investing activities: | ||||||
Capital expenditures | (9,589) | (368,555) | ||||
Net cash used in investing activities | (9,589) | (368,555) | ||||
Cash flows from financing activities: | ||||||
Payment on capital lease | (42,877) | - | ||||
Payment on note payable | (29,034) | - | ||||
Net transfer (to) from owners | (3,779,847) | 2,284,896 | ||||
Net cash (used in) provided by financing activities | (3,851,758) | 2,284,896 | ||||
Net decrease in cash | (10,215) | (14,277) | ||||
Cash, beginning of period | 34,735 | 57,904 | ||||
Cash, end of period | $ | 24,520 | $ | 43,627 | ||
Supplemental disclosure of cash flow information: | ||||||
Interest paid | $ | 3,462 | $ | - | ||
See accompanying notes to unaudited condensed combined financial statements. |
(1) | Organization and Nature of Operations |
(2) | Basis of Presentation |
(3) | Significant Accounting Policies |
(4) | Prepaid Expenses and Other Current Assets |
March 31, | December 31, | ||||
2013 | 2012 | ||||
Prepaid cost of sales | $ | - | $ | 300,000 | |
Deposit account | 28,925 | 28,925 | |||
Prepaid maintenance | 80,118 | 107,749 | |||
Other prepaid expenses and current assets | 94,187 | 90,529 | |||
Prepaid expenses and other current assets | $ | 203,230 | $ | 527,203 |
(5) | Property and Equipment, Net |
March 31, | December 31, | |||||
2013 | 2012 | |||||
Machinery and equipment | $ | - | $ | 2,705 | ||
Computer equipment and software | 4,480,247 | 4,470,659 | ||||
Office equipment | 271,217 | 271,217 | ||||
Leasehold improvements | 272,605 | 272,605 | ||||
Total property and equipment | 5,024,069 | 5,017,186 | ||||
Less accumulated depreciation | (2,684,709) | (2,290,989) | ||||
Property and equipment, net | $ | 2,339,360 | $ | 2,726,197 |
(6) | Accrued Expenses |
March 31, | December 31, | |||
2013 | 2012 | |||
Accrued vacation | $ | 414,788 | $ | 376,327 |
Deferred rent | 16,183 | 13,579 | ||
Other accrued expenses | 119,229 | 93,370 | ||
Accrued expenses | $ | 550,200 | $ | 483,276 |
(7) | Employee Post‑Retirement Benefit Plan |
(8) | Related Party Transactions and Owners’ Net Investment |
(a) | Allocation of General Corporate and Other Expenses |
Three months ended | ||||
March 31 | ||||
2013 | 2012 | |||
Selling expenses | $ | 246,564 | $ | 138,225 |
General and administrative expenses | 166,242 | 95,501 | ||
Total | $ | 412,806 | $ | 233,726 |
(b) | Owners’ Net Investment |
Allocation of overhead/other expenses | $ | 412,806 | |||||
Net advances to owners | (4,192,653) | ||||||
Total net transfers to owners | $ | (3,779,847) |
(9) | Commitments and Contingencies |
(a) | Other Commitments |
(b) | Litigation |
(10) | Subsequent Events |
Page(s) | ||
Independent Auditors’ Report | 3 - 4 | |
Combined Financial Statements: | ||
Combined Balance Sheet | 5 | |
Combined Results of Operations | 6 | |
Combined Statement of Changes in Owners' Net Investment | 7 | |
Combined Statement of Cash Flows | 8 | |
Notes to Combined Financial Statements | 9 - 18 | |
ASSETS | ||||
Current assets: | ||||
Cash | $ | 34,735 | ||
Accounts receivable | 7,465,581 | |||
Prepaid application provider, current portion | 2,425,247 | |||
Prepaid expenses and other current assets | 527,203 | |||
Total current assets | 10,452,766 | |||
Property and equipment, net | 2,726,197 | |||
Prepaid application provider, net of current portion | 3,293,871 | |||
Total assets | $ | 16,472,834 | ||
LIABILITIES AND OWNERS' NET INVESTMENT | ||||
Current liabilities: | ||||
Trade accounts payable | $ | 1,968,295 | ||
Accrued expenses | 483,276 | |||
Note payable | 117,019 | |||
Capital lease, current portion | 172,812 | |||
Deferred revenue | 9,865,514 | |||
Total current liabilities | 12,606,916 | |||
Note payable, net of current portion | 169,866 | |||
Capital lease, net of current portion | 250,855 | |||
Deferred revenue, net of current portion | 18,854,671 | |||
Other liabilities | 103,214 | |||
Total liabilities | $ | 31,985,522 | ||
Commitments and contingencies (Note 10) | ||||
Owners' net investment | (15,512,688 | ) | ||
Total liabilities and owners' net investment | $ | 16,472,834 | ||
See accompanying notes to combined financial statements. |
Revenue | $ | 4,440,212 | |
Cost of Sales | 9,674,073 | ||
Gross margin | (5,233,861) | ||
Operating expenses: | |||
Research and development expenses | 10,545,660 | ||
General and administrative expenses | 1,973,545 | ||
Selling expenses | 1,052,280 | ||
Total operating expenses | 13,571,485 | ||
Operating loss | (18,805,346) | ||
Interest expense | (152,586) | ||
Net loss before income tax expense | (18,957,932) | ||
Income tax expense | - | ||
Net loss | $ | (18,957,932) | |
See accompanying notes to combined financial statements. |
Owners' Net Investment | ||
Balance at December 31, 2011 | $ | 1,227,177 |
Net loss | (18,957,932) | |
Net transfers from owners | 2,218,067 | |
Balance at December 31, 2012 | $ | (15,512,688) |
See accompanying notes to combined financial statements. |
Cash flows from operating activities: | |||
Net loss | $ | (18,957,932) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 1,389,033 | ||
Loss on retirement of property and equipment | 2,916 | ||
Changes in operating assets and liabilities: | |||
Decrease (increase) in: | |||
Accounts receivable | (6,228,193) | ||
Prepaid application provider | (5,268,000) | ||
Prepaid expenses and other current assets | (408,002) | ||
Increase (decrease) in: | |||
Trade accounts payable | 1,450,969 | ||
Accrued expenses | 257,565 | ||
Deferred revenue | 26,636,866 | ||
Other long term liabilities | (43,811) | ||
Net cash used in operating activities | (1,168,589) | ||
Cash flows used in investing activities: | |||
Capital expenditures | (906,258) | ||
Net cash used in investing activities | (906,258) | ||
Cash flows from financing activities: | |||
Payment on capital lease | (99,210) | ||
Payment on note payable | (67,180) | ||
Net transfer from owners | 2,218,067 | ||
Net cash provided by financing activities | 2,051,677 | ||
Net decrease in cash | (23,170) | ||
Cash, beginning of year | 57,905 | ||
Cash, end of year | $ | 34,735 | |
Supplemental disclosure of cash flow information: | |||
Interest paid | $ | 9,481 | |
Noncash financing and investing activities: | |||
Property and equipment acquired under capital lease | 517,224 | ||
Property and equipment acquired under notes payable | 350,236 | ||
See accompanying notes to combined financial statements. |
(1) | Organization and Nature of Operations |
(2) | Basis of Presentation |
(3) | Summary of Significant Accounting Policies |
(a) | Principles of Combination |
(b) | Use of Estimates |
(c) | Revenue Recognition and Deferred Revenue |
(d) | Concentration Risk |
(e) | Cash |
(f) | Accounts Receivable |
(g) | Prepaid application provider |
(h) | Property and Equipment |
Years | ||
Machinery and equipment | 5 | |
Office equipment | 5 | |
Computer equipment and software | 3 | |
Leasehold improvements | 5 |
(i) | Impairment of Long‑Lived Assets |
(j) | Fair Value Measurements |
(k) | Research and Development Costs |
(l) | Software Development Costs |
(m) | Interest Expense |
(n) | Income Taxes |
(4) | Prepaid Expenses and Other Current Assets |
Prepaid cost of sales | $ | 300,000 | |
Deposit account | 28,925 | ||
Prepaid maintenance | 107,749 | ||
Other prepaid expenses and current assets | 90,529 | ||
Prepaid expenses and other current assets | $ | 527,203 |
(5) | Property and Equipment, Net |
Machinery and equipment | $ | 2,705 | |
Computer equipment and software | 4,470,659 | ||
Office equipment | 271,217 | ||
Leasehold improvements | 272,605 | ||
Total property and equipment | 5,017,186 | ||
Less accumulated depreciation | (2,290,989) | ||
Property and equipment, net | $ | 2,726,197 |
(6) | Accrued Expenses |
Accrued vacation | $ | 376,327 | |
Deferred rent | 13,579 | ||
Other accrued expenses | 93,370 | ||
Accrued expenses | $ | 483,276 |
(7) | Employee Post‑Retirement Benefit Plan |
(8) | Related Party Transactions and Owners’ Net Investment |
(a) | Allocation of General Corporate and Other Expenses |
Selling expenses | $ | 541,169 | ||
General and administrative expenses | 382,458 | |||
Total | $ | 923,627 |
(b) | Owners’ Net Investment |
Allocation of overhead/other expenses | $ | 923,627 | ||
Net advances from Owners | 1,294,440 | |||
Total net transfers from Owners | $ | 2,218,067 |
(9) | Note Payable |
Note payable | $ | 294,174 | |||
Less amount representing interest | (7,289) | ||||
Present value of notes payable obligation | 286,885 | ||||
Less current portion | (117,019) | ||||
Notes payable obligations, net of current portion | $ | 169,866 |
(10) | Commitments and Contingencies |
(a) | Operating Lease |
Year ending December 31: | |||
2013 | $ | 314,126 | |
2014 | 324,539 | ||
2015 | 334,952 | ||
2016 | 345,363 | ||
Total | $ | 1,318,980 |
(b) | Capital Lease |
Year ending December 31: | ||||
2013 | $ | 179,765 | ||
2014 | 179,765 | |||
2015 | 74,902 | |||
Total minimum lease payments | 434,432 | |||
Less amount representing interest | (10,765) | |||
Present value of lease obligation | 423,667 | |||
Less current portion | (172,812) | |||
Lease obligations, net of current portion | $ | 250,855 |
(c) | Other Commitments |
(d) | Litigation |
(11) | Phantom Stock |
(12) | Subsequent Events |
Historical Swype | Historical Transcend | ||||||||||||||||||||||||||
Historical | for the period | for the period | |||||||||||||||||||||||||
Nuance for | from | from | |||||||||||||||||||||||||
the Year | October 1, | October 1, | |||||||||||||||||||||||||
Ended | 2011 to | 2011 to | |||||||||||||||||||||||||
September 30, | October 6, | Pro Forma | Pro Forma | April 30, | Pro Forma | Pro Forma | |||||||||||||||||||||
2012 (A) | 2011 (B) | Adjustments | Combined | 2012 (C) | Adjustments | Combined | |||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||
Product and licensing | $ | 740,726 | $ | — | $ | — | $ | 740,726 | $ | — | $ | — | $ | 740,726 | |||||||||||||
Professional services and hosting | 673,943 | — | — | 673,943 | 77,904 | — | 751,847 | ||||||||||||||||||||
Maintenance and support | 236,840 | — | — | 236,840 | — | — | 236,840 | ||||||||||||||||||||
Total revenues | 1,651,509 | — | — | 1,651,509 | 77,904 | — | 1,729,413 | ||||||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||||||
Product and licensing | 74,837 | — | — | 74,837 | — | — | 74,837 | ||||||||||||||||||||
Professional services and hosting | 424,733 | — | — | 424,733 | 47,675 | 4,720 | (B1) | 477,128 | |||||||||||||||||||
Maintenance and support | 45,325 | — | — | 45,325 | — | — | 45,325 | ||||||||||||||||||||
Amortization of intangible assets | 60,034 | — | — | 60,034 | — | 631 | (B2) | 60,665 | |||||||||||||||||||
Total cost of revenues | 604,929 | — | — | 604,929 | 47,675 | 5,351 | 657,955 | ||||||||||||||||||||
Gross profit (loss) | 1,046,580 | — | — | 1,046,580 | 30,229 | (5,351 | ) | 1,071,458 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||
Research and development | 225,441 | — | — | 225,441 | 3,496 | (817 | ) | (B1) | 228,120 | ||||||||||||||||||
Sales and marketing | 369,205 | — | — | 369,205 | 2,126 | — | 371,331 | ||||||||||||||||||||
General and administrative | 163,318 | — | — | 163,318 | 22,753 | (3,903 | ) | (B1) | 172,468 | ||||||||||||||||||
(9,700 | ) | (B3) | |||||||||||||||||||||||||
Amortization of intangible assets | 95,416 | — | — | 95,416 | 1,105 | 3,803 | (B2) | 100,324 | |||||||||||||||||||
Acquisition related costs, net | 58,746 | — | (975 | ) | (A1) | 57,771 | — | (9,259 | ) | (B3) | 48,512 | ||||||||||||||||
Restructuring and other charges, net | 8,268 | — | — | 8,268 | — | — | 8,268 | ||||||||||||||||||||
Total operating expenses | 920,394 | — | (975 | ) | 919,419 | 29,480 | (19,876 | ) | 929,023 | ||||||||||||||||||
Income (loss) from operations | 126,186 | — | 975 | 127,161 | 749 | 14,525 | 142,435 | ||||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||||||
Interest income | 2,234 | — | — | 2,234 | 100 | (565 | ) | (B4) | 1,769 | ||||||||||||||||||
Interest expense | (85,286 | ) | — | — | (85,286 | ) | (9 | ) | — | (85,295 | ) | ||||||||||||||||
Other (expense) income, net | 22,168 | — | — | 22,168 | (237 | ) | — | 21,931 | |||||||||||||||||||
Income (loss) before income taxes | 65,302 | — | 975 | 66,277 | 603 | 13,960 | 80,840 | ||||||||||||||||||||
Provision for (benefit from) income taxes | (141,833 | ) | — | — | (141,833 | ) | (4,871 | ) | — | (146,704 | ) | ||||||||||||||||
Net income (loss) | $ | 207,135 | $ | — | $ | 975 | $ | 208,110 | $ | 5,474 | $ | 13,960 | $ | 227,544 | |||||||||||||
Net income per share: | |||||||||||||||||||||||||||
Basic | $ | 0.67 | $ | 0.67 | $ | 0.73 | |||||||||||||||||||||
Diluted | $ | 0.65 | $ | 0.65 | $ | 0.70 | |||||||||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||||||
Basic | 306,371 | 306,371 | 306,371 | ||||||||||||||||||||||||
Diluted | 320,822 | 320,822 | 320,822 |
Historical Vlingo | |||||||||||||||||||||||
for the period | Historical | ||||||||||||||||||||||
from | TGT | ||||||||||||||||||||||
October 1, | for the year | ||||||||||||||||||||||
2011 to | ended | ||||||||||||||||||||||
May 31, | Pro Forma | Pro Forma | December 31, | Pro Forma | Pro Forma | ||||||||||||||||||
2012 (D) | Adjustments | Combined | 2012 (E) | Adjustments | Combined | ||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Product and licensing | $ | 402 | $ | — | $ | 741,128 | $ | — | $ | — | $ | 741,128 | |||||||||||
Professional services and hosting | 3,246 | — | 755,093 | 4,440 | — | 759,533 | |||||||||||||||||
Maintenance and support | — | — | 236,840 | — | — | 236,840 | |||||||||||||||||
Total revenues | 3,648 | — | 1,733,061 | 4,440 | — | 1,737,501 | |||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||
Product and licensing | 27 | — | 74,864 | — | — | 74,864 | |||||||||||||||||
Professional services and hosting | 3,758 | — | 480,886 | 9,674 | — | 490,560 | |||||||||||||||||
Maintenance and support | — | — | 45,325 | — | — | 45,325 | |||||||||||||||||
Amortization of intangible assets | 245 | 219 | (C1) | 61,129 | — | 957 | (D1) | 62,086 | |||||||||||||||
Total cost of revenues | 4,030 | 219 | 662,204 | 9,674 | 957 | 672,835 | |||||||||||||||||
Gross profit (loss) | (382 | ) | (219 | ) | 1,070,857 | (5,234 | ) | (957 | ) | 1,064,666 | |||||||||||||
Operating expenses: | |||||||||||||||||||||||
Research and development | 5,264 | — | 233,384 | 10,546 | — | 243,930 | |||||||||||||||||
Sales and marketing | 3,854 | — | 375,185 | 1,052 | — | 376,237 | |||||||||||||||||
General and administrative | 6,786 | (3,064 | ) | (C3) | 176,190 | 1,973 | — | 178,163 | |||||||||||||||
— | — | — | — | — | — | ||||||||||||||||||
Amortization of intangible assets | 171 | 57 | (C1) | 100,552 | — | 2,689 | (D1) | 103,241 | |||||||||||||||
Acquisition related costs, net | — | (7,876 | ) | (C3) | 40,636 | — | — | 40,636 | |||||||||||||||
Restructuring and other charges, net | — | — | 8,268 | — | — | 8,268 | |||||||||||||||||
Total operating expenses | 16,075 | (10,883 | ) | 934,215 | 13,571 | 2,689 | 950,475 | ||||||||||||||||
Income (loss) from operations | (16,457 | ) | 10,664 | 136,642 | (18,805 | ) | (3,646 | ) | 114,191 | ||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest income | — | (382 | ) | (C2) | 1,387 | — | (146 | ) | (D2) | 1,241 | |||||||||||||
Interest expense | (1,088 | ) | 1,088 | (C4) | (85,295 | ) | (153 | ) | 153 | (D3) | (85,295 | ) | |||||||||||
Other (expense) income, net | (282 | ) | (13,444 | ) | (C5) | 8,205 | — | — | 8,205 | ||||||||||||||
Income (loss) before income taxes | (17,827 | ) | (2,074 | ) | 60,939 | (18,958 | ) | (3,639 | ) | 38,342 | |||||||||||||
Provision for (benefit from) income taxes | 4 | — | (146,700 | ) | — | (8,700 | ) | (D4) | (155,400 | ) | |||||||||||||
Net income (loss) | $ | (17,831 | ) | $ | (2,074 | ) | $ | 207,639 | $ | (18,958 | ) | $ | 5,061 | $ | 193,742 | ||||||||
Net income per share: | |||||||||||||||||||||||
Basic | $ | 0.67 | $ | 0.63 | |||||||||||||||||||
Diluted | $ | 0.65 | $ | 0.60 | |||||||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic | 306,371 | 306,371 | |||||||||||||||||||||
Diluted | 320,822 | 320,822 |
(A) | As reported in Nuance's Form 10-K for the year ended September 30, 2012 as filed with the SEC. |
(B) | The results of operations for Swype are included in the reported Nuance amounts from its acquisition date of October 6, 2011. The activity for the period October 1, 2011 through October 5, 2011 is not material. |
(C) | As derived from Transcend's unaudited consolidated information for the seven months ended April 30, 2012. |
(D) | As derived from Vlingo's unaudited financial information for the eight months ended May 31, 2012. |
(E) | As derived from TGT's audited combined financial statements for the year ended December 31, 2012. |
Historical | Historical | ||||||||||||||
Nuance for the | TGT for the | ||||||||||||||
Six months ended | Six months ended | Pro Forma | Pro Forma | ||||||||||||
March 31, 2013 (A) | March 31, 2013 (B) | Adjustments | Combined | ||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Revenues: | |||||||||||||||
Product and licensing | $ | 371,786 | $ | — | $ | — | $ | 371,786 | |||||||
Professional services and hosting | 413,569 | 4,546 | — | 418,115 | |||||||||||
Maintenance and support | 127,912 | — | — | 127,912 | |||||||||||
Total revenues | 913,267 | 4,546 | — | 917,813 | |||||||||||
Cost of revenues: | |||||||||||||||
Product and licensing | 49,252 | — | — | 49,252 | |||||||||||
Professional services and hosting | 263,690 | 6,757 | — | 270,447 | |||||||||||
Maintenance and support | 27,895 | — | — | 27,895 | |||||||||||
Amortization of intangible assets | 32,920 | — | 479 | (D1) | 33,399 | ||||||||||
Total cost of revenues | 373,757 | 6,757 | 479 | 380,993 | |||||||||||
Gross profit (loss) | 539,510 | (2,211 | ) | (479 | ) | 536,820 | |||||||||
Operating expenses: | |||||||||||||||
Research and development | 141,274 | 6,126 | — | 147,400 | |||||||||||
Sales and marketing | 215,483 | 702 | — | 216,185 | |||||||||||
General and administrative | 74,774 | 1,106 | — | 75,880 | |||||||||||
Amortization of intangible assets | 51,427 | — | 1,345 | (D1) | 52,772 | ||||||||||
Acquisition related costs, net | 31,181 | — | (1,595 | ) | (D5) | 29,586 | |||||||||
Restructuring and other charges, net | 6,729 | — | — | 6,729 | |||||||||||
Total operating expenses | 520,868 | 7,934 | (250 | ) | 528,552 | ||||||||||
Income (loss) from operations | 18,642 | (10,145 | ) | (229 | ) | 8,268 | |||||||||
Other income (expense): | — | ||||||||||||||
Interest income | 943 | — | (59 | ) | (D2) | 884 | |||||||||
Interest expense | (67,995 | ) | (97 | ) | 97 | (D3) | (67,995 | ) | |||||||
Other (expense) income, net | (7,421 | ) | — | — | (7,421 | ) | |||||||||
Income (loss) before income taxes | (55,831 | ) | (10,242 | ) | (191 | ) | (66,264 | ) | |||||||
Provision for (benefit from) income taxes | (7,887 | ) | — | (3,971 | ) | (D4) | (11,858 | ) | |||||||
Net income (loss) | $ | (47,944 | ) | $ | (10,242 | ) | $ | 3,780 | $ | (54,406 | ) | ||||
Net income per share: | |||||||||||||||
Basic | $ | (0.15 | ) | $ | (0.17 | ) | |||||||||
Diluted | $ | (0.15 | ) | $ | (0.17 | ) | |||||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 314,006 | 314,006 | |||||||||||||
Diluted | 314,006 | 314,006 |
(A) | As reported in Nuance’s Form 10-Q for the six months ended March 31, 2013 as filed with the SEC. |
(B) | As derived from TGT's unaudited financial information for the six months ended March 31, 2013. |
Historical | Historical | ||||||||||||||
Nuance at | TGT at | Pro Forma | Pro Forma | ||||||||||||
March 31, 2013 (A) | March 31, 2013 (B) | Adjustments | Combined | ||||||||||||
(in thousands) | |||||||||||||||
ASSETS | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 1,005,302 | $ | 25 | $ | (82,862 | ) | (D6) | $ | 922,465 | |||||
Accounts receivable, net | 372,571 | 6,270 | — | 378,841 | |||||||||||
Prepaid expenses and other current assets | 108,333 | 3,279 | — | 111,612 | |||||||||||
Deferred tax asset | 82,565 | — | — | 82,565 | |||||||||||
Total current assets | 1,568,771 | 9,574 | (82,862 | ) | 1,495,483 | ||||||||||
Land, building and equipment, net | 132,648 | 2,340 | — | 134,988 | |||||||||||
Goodwill | 3,224,086 | — | 47,171 | (D7) | 3,271,257 | ||||||||||
Other intangible assets, net | 969,372 | — | 30,900 | (D8) | 1,000,272 | ||||||||||
Other assets | 195,863 | 4,003 | — | 199,866 | |||||||||||
Total assets | $ | 6,090,740 | $ | 15,917 | $ | (4,791 | ) | $ | 6,101,866 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Current portion of long-term debt and capital leases | $ | 4,847 | $ | 291 | $ | (291 | ) | (D6) | $ | 4,847 | |||||
Contingent and deferred acquisition payments | 25,007 | — | — | 25,007 | |||||||||||
Accounts payable | 119,367 | 1,983 | — | 121,350 | |||||||||||
Accrued expenses and other current liabilities | 169,324 | 550 | — | 169,874 | |||||||||||
Deferred revenue | 249,934 | 12,790 | (9,099 | ) | (D9) | 253,625 | |||||||||
Total current liabilities | 568,479 | 15,614 | (9,390 | ) | 574,703 | ||||||||||
Long-term portion of debt and capital leases | 2,336,750 | 347 | (347 | ) | (D6) | 2,336,750 | |||||||||
Deferred revenue, net of current portion | 138,354 | 23,950 | (19,147 | ) | (D9) | 143,157 | |||||||||
Deferred tax liability | 189,282 | — | — | 189,282 | |||||||||||
Other liabilities | 89,018 | 99 | — | 89,117 | |||||||||||
Total liabilities | 3,321,883 | 40,010 | (28,884 | ) | 3,333,009 | ||||||||||
Commitments and contingencies | |||||||||||||||
Stockholders' equity: | |||||||||||||||
Preferred stock | 4,631 | — | — | 4,631 | |||||||||||
Common stock | 321 | — | — | 321 | |||||||||||
Additional paid-in capital | 3,007,517 | — | — | 3,007,517 | |||||||||||
Treasury stock, at cost | (16,788 | ) | — | — | (16,788 | ) | |||||||||
Accumulated other comprehensive loss | (17,725 | ) | — | — | (17,725 | ) | |||||||||
Accumulated deficit | (209,099 | ) | (24,093 | ) | 24,093 | (D10) | (209,099 | ) | |||||||
Total stockholders' equity | 2,768,857 | (24,093 | ) | 24,093 | 2,768,857 | ||||||||||
Total liabilities and stockholders' equity | $ | 6,090,740 | $ | 15,917 | $ | (4,791 | ) | $ | 6,101,866 |
(A) | As reported in Nuance’s Form 10-Q for the six months ended March 31, 2013 as filed with the SEC. |
(B) | As derived from TGT's unaudited interim condensed combined financial statements as of March 31, 2013. |
1. | BASIS OF PRO FORMA PRESENTATION |
2. | PRELIMINARY PURCHASE PRICE ALLOCATION |
Total purchase consideration paid in cash | $ | 82,837 | |
Allocation of the purchase consideration: | |||
Current assets | $ | 9,549 | |
Other assets | 6,343 | ||
Identifiable intangible assets | 30,900 | ||
Goodwill | 47,171 | ||
Total assets acquired | 93,963 | ||
Current liabilities | 6,224 | ||
Other liabilities | 4,902 | ||
Total liabilities assumed | 11,126 | ||
Net assets acquired | $ | 82,837 | |
3. | PRO FORMA ADJUSTMENTS |
(A1) | Adjustment to eliminate transactions costs directly attributable to the acquisition of Swype. |
(B1) | Adjustment to reclassify certain operating costs to conform with Nuance accounting policies. |
(B2) | Adjustment to eliminate amortization expense of $1.1 million on historical Transcend intangible assets. |
(B3) | Adjustment to eliminate transaction costs directly attributable to the acquisition of Transcend. |
(B4) | Adjustment to reduce interest income by applying the rate of return for the respective period to the assumed net decrease in cash used to fund the acquisition. |
(C1) | Adjustment to eliminate amortization expense of $0.4 million on historical Vlingo intangible assets. |
(C2) | Adjustment to reduce interest income by applying the rate of return for the respective period to the assumed net decrease in cash used to fund the acquisition. |
(C3) | Adjustment to eliminate transaction costs directly attributable to the acquisition of Vlingo. |
(C4) | Adjustment to eliminate historical interest expense relating to the existing financial indebtedness that was canceled pursuant to the acquisition of Vlingo. |
(C5) | Adjustment to eliminate the $13.7 million gain reflecting the fair value adjustment as a result of the conversion of our original investment in the non-controlling interest upon the closing of the Vlingo acquisition, together with the elimination of the change in fair value of Vlingo's historical preferred stock warrants and the success fee derivative related to the long-term debt that were canceled as part of the acquisition. |
(D1) | Adjustment to record $3.6 million and $1.8 million amortization expense for the $30.9 million of acquired intangible assets for TGT for the year ended September 30, 2012 and the six months ended March 31, 2013, respectively. Acquired intangible assets will be amortized using the straight line method except for customer relationships which will be amortized over a term consistent with the related future cash flow stream. The estimated weighted average useful life of the acquired identifiable intangible assets is 8.6 years. |
(D2) | Adjustment to reduce interest income by applying the rate of return for the respective period to the assumed net decrease in cash used to fund the acquisition. |
(D3) | Adjustment to eliminate historical interest expense relating to the existing financial indebtedness that was canceled pursuant to the TGT acquisition agreement. |
(D4) | Adjustment to record the benefit from income taxes on the TGT operating loss. |
(D5) | Adjustment to eliminate transaction costs directly attributable to the acquisition of TGT. |
(D6) | Adjustment to record cash consideration of $82.8 million paid to the sellers in connection with the acquisition of TGT. |
(D7) | Adjustment to record goodwill of $47.2 million for the purchase price in excess of the preliminary fair value of assets acquired and liabilities assumed. |
(D8) | Adjustment to record the fair value of the acquired intangible assets of $30.9 million, which consist primarily of customer relationships. The acquisition of TGT was structured as the purchase of the business assets, and therefore the goodwill and intangible assets will be deductible for tax purposes. As a result, no deferred taxes have been recorded in the opening balance sheet for these items. |
(D9) | Adjustment to reduce the historical deferred revenue and related deferred costs for TGT and to record the estimated fair value. |
(D10) | Adjustment to eliminate the historical equity of TGT. |