EX-99.1 3 d832010dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Carbonite To Be Acquired by OpenText for $23.00 Per Share

Transaction Follows Comprehensive Process Run by Board to Maximize Value for Shareholders

Represents 78% Premium to Carbonite’s Unaffected Stock Price on September 5, 2019

Announces Third Quarter 2019 Financial Results

BOSTON, MA - November 11, 2019 - Carbonite, Inc. (NASDAQ: CARB), a global leader in data protection and cybersecurity, today announced that it has entered into a definitive agreement to be acquired by OpenTextTM (NASDAQ: OTEX, TSX:OTEX), a market leader in Enterprise Information Management software and solutions, for $23.00 per Carbonite share in cash. The transaction values Carbonite at an enterprise value of approximately $1.42 billion and represents a 78% premium to Carbonite’s unaffected closing stock price on September 5, 2019, the last trading day before a media report was published speculating about a potential sale process.

“Following expressions of interest from multiple parties, the Carbonite Board conducted a thorough and comprehensive process, which included contact with a number of strategic and financial parties, to identify the best way to maximize shareholder value,” said Steve Munford, Interim Chief Executive Officer and President/Executive Chairman of the Board of Carbonite. “The Board strongly believes that a transaction with OpenText delivers compelling, immediate and substantial cash value to shareholders.

Munford continued, “Carbonite has expanded its solutions to become a leader in cyber resiliency. We have grown through both organic and inorganic opportunities over the years, enhancing our routes to market, diversifying our customer base, and assembling a talented workforce, while adding meaningful scale. Joining with OpenText is an exciting next step for Carbonite.”

OpenText is a leader in Enterprise Information Management (EIM), both on-premises and for cloud services, offering the only complete solution for EIM with a comprehensive view of all the information within an organization. OpenText operates in 40 countries, providing a tested platform for growth and new sales opportunities.

The transaction is subject to customary closing conditions, including the tender of a majority of the outstanding shares of Carbonite common stock and regulatory approvals.

J.P. Morgan Securities LLC acted as financial advisor to Carbonite, and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisor.

Third Quarter 2019 Results:

Carbonite also announced financial results for the third quarter ended September 30, 2019:

 

  •  

Revenue of $125.6 million increased 62% year-over-year.

 

  •  

Non-GAAP revenue of $135.0 million increased 71% year-over-year.1

 

  •  

Net loss was ($14.0) million, compared to net income of $0.6 million in 2018.

 

  •  

Net loss per share was ($0.40) (basic and diluted), as compared to net income per share of $0.02 (basic and diluted) in 2018.

 

  •  

Non-GAAP net income per share was $0.61 (basic) and $0.60 (diluted), as compared to $0.53 (basic) and $0.48 (diluted) in 2018.2

 

  •  

Adjusted EBITDA of $40.2 million, or 30% of non-GAAP revenue, compared to $23.0 million, or 29% of non-GAAP revenue in 2018.3

Conference Call

The public is invited to listen to the OpenText conference call today at 9:00 a.m. ET (6:00 a.m. PT) by dialing 1-800-319-4610 (toll-free) or +1-604-638-5340 (international). Please dial-in 15 minutes ahead of time to ensure proper connection. Alternatively, a live webcast of the conference call will be available on the Investor Relations section of the Company’s website at investors.opentext.com.

A replay of the call will be available beginning November 11, 2019 at 10:30 a.m. ET through 11:59 p.m. on November 25, 2019 and can be accessed by dialing 1-855-669-9658 (toll-free) or +1-604-674-8052 (international) and using passcode 3870 followed by the number sign.

In light of the transaction with OpenText announced today, Carbonite has cancelled its third quarter results conference call that had been scheduled for Tuesday, November 12, 2019 at 5:30 pm ET and will not be providing a business outlook for the fourth quarter of 2019.

Non-GAAP Financial Measures

To supplement our consolidated financial statements presented in accordance with GAAP, this press release contains non-GAAP financial measures, including non-GAAP revenue, non-GAAP net income and non-GAAP net income per share, and adjusted EBITDA.

The Company believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and ordinary results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods and uses these measures in financial reports prepared for management and the Company’s board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software-as-a-service companies, many of which present similar non-GAAP financial measures to investors.

The Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant items that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management. The Company urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures provided in the tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.

 

 

1

Non-GAAP revenue excludes the impact of purchase accounting adjustments for acquisitions.

2

Non-GAAP net income and non-GAAP net income per share excludes the impact of purchase accounting adjustments on acquired deferred revenue, amortization expense on intangible assets, stock-based compensation expense, litigation-related expense, restructuring-related expense, acquisition-related expense, non-cash debt interest expense, intangible asset impairment charges, CEO recruitment expense, and the income tax effect of non-GAAP adjustments.

3

Adjusted EBITDA is calculated by excluding the impact of interest expense, net, income taxes, depreciation, amortization, purchase accounting adjustments on acquired deferred revenue, stock-based compensation expense, litigation-related expense, restructuring-related expense, intangible asset impairment charges, acquisition-related expense, and CEO recruitment expense from net (loss) income.

Notice to Investors and Security Holders

The offer referred to in this press release has not yet commenced. The description contained in this press release is neither an offer to purchase nor a solicitation of an offer to sell any securities, nor is it a substitute for the tender offer materials that OpenText and Merger Sub will file with the SEC. The solicitation and offer to buy Shares will only be made pursuant to an offer to purchase and related tender offer materials. At the time the Offer is commenced, OpenText and Merger Sub will file a tender offer statement on Schedule TO and thereafter Carbonite will file a solicitation/recommendation statement on Schedule 14D-9 with the SEC with respect to the Offer. THE TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WILL CONTAIN IMPORTANT INFORMATION. ANY HOLDERS OF SHARES ARE URGED TO READ THESE DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SHARES. The offer to purchase, the related letter of transmittal and the solicitation/recommendation statement will be made available for free at the SEC’s website at www.sec.gov. Additional copies may be obtained for free by contacting OpenText or Carbonite. Copies of the documents filed with the SEC by Carbonite will be available free of charge on Carbonite’s internet website at https://investor.carbonite.com or by contacting Carbonite’s Investor Relations Department at (617) 587-1102. Copies of the documents filed with the SEC by OpenText will be available free of charge on OpenText’s internet website at https://investors.opentext.com or by contacting OpenText’s Investor Relations Department at (415) 963-0825.

In addition to the offer to purchase, the related letter of transmittal and certain other tender offer documents, as well as the solicitation/recommendation statement, Carbonite and OpenText will each file annual, quarterly and current reports with the SEC. You may read and copy any reports or other information filed by OpenText or Carbonite at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Carbonite’s and OpenText’s filings with the SEC are also available to the public from commercial document-retrieval services and at the website maintained by the SEC at http://www.sec.gov.

Forward Looking Statements

The information contained in this press release is as of November 11, 2019. Carbonite assumes no obligation to update forward-looking statements contained in this press release as the result of new information or future events or developments.

This press release contains forward-looking information related to Carbonite, OpenText and the proposed acquisition of Carbonite by OpenText that involves substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Forward-looking statements in this document and the accompanying exhibits include, among other things, statements about the potential benefits of the proposed acquisition, Carbonite’s and OpenText’s plans, objectives, expectations and intentions, the anticipated timing of closing of the proposed acquisition and expected plans for financing the proposed acquisition. Risks and uncertainties include, among other things, risks related to the satisfaction or waiver of the conditions to closing the proposed acquisition (including the failure to obtain necessary regulatory approvals) in the anticipated timeframe or at all, including uncertainties as to how many of Carbonite’s stockholders will tender their shares in the tender offer and the possibility that the acquisition does not close; the possibility that competing offers may be made; risks related to obtaining the requisite consents to the acquisition, including, without limitation, the timing (including possible delays) and receipt of regulatory approvals from various governmental entities (including any conditions, limitations or restrictions placed on these approvals and the risk that one or more governmental entities may deny approval); risks related to the ability to realize the anticipated benefits of the proposed acquisition, including the possibility that the expected benefits and accretion from the proposed acquisition will not be realized or will not be realized within the expected time period; the risk that the businesses will not be integrated successfully; Carbonite’s ability to integrate the Webroot acquisition and achieve the expected benefits of such acquisition; Carbonite’s ability to profitably attract new customers and retain existing customers; Carbonite’s dependence on the market for cloud backup services, and its ability to manage growth, changes in economic or regulatory conditions or other trends affecting the Internet and the information technology industry; disruption from the transaction making it more difficult to maintain business and operational relationships; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the proposed acquisition; other business effects, including the effects of industry, market, economic, political or regulatory conditions; future exchange and interest rates; and changes in tax and other laws, regulations, rates and policies.

A further description of risks and uncertainties relating to Carbonite can be found in Carbonite Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and in its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed with the SEC and available at www.sec.gov and www.carbonite.com.

About Carbonite

Carbonite provides a robust Data Protection Platform for businesses, including backup, disaster recovery, high availability and workload migration technology. The Carbonite Data Protection Platform supports businesses on a global scale with secure cloud infrastructure. To learn more, visit www.carbonite.com and follow us on Twitter at @Carbonite.

Carbonite, Inc. serves customers through three brands: Carbonite data protection, Webroot cybersecurity, and MailStore email archiving.

Investor Relations Contact:

Jeremiah Sisitsky

Carbonite

781-928-0713

investor.relations@carbonite.com

Media Contact:

Kristin Miller

Carbonite

720-842-3481

media@carbonite.com

Carbonite, Inc.

Consolidated Statement of Operations

(Unaudited)

 

     Three Months Ended
September 30,		     Nine Months Ended
September 30,		  
     2019     2018     2019     2018  
     (in thousands, except share and per share amounts)  

Revenue:

         

Services

    $ 118,824     $ 70,290     $ 304,758     $ 193,678  

Product

      6,772       7,392       23,563       25,764  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total revenue

      125,596       77,682       328,321       219,442  

Cost of revenue:

         

Services

      30,355       17,094       71,413       50,782  

Product

      540       417       1,363       1,348  

Amortization of intangible assets

      9,072       4,317       21,447       11,067  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total cost of revenue

      39,967       21,828       94,223       63,197  
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      85,629       55,854       234,098       156,245  
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses:

         

Research and development

      28,753       14,914       72,439       43,152  

General and administrative

      16,226       11,159       54,782       39,079  

Sales and marketing

      37,417       21,184       96,127       63,130  

Amortization of intangible assets

      10,134       3,924       24,199       8,515  

Restructuring charges

      —         357       702       1,260  
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      92,530       51,538       248,249       155,136  
  

 

 

    

 

 

    

 

 

    

 

 

  

(Loss) income from operations

      (6,901 )      4,316       (14,151 )      1,109  

Interest expense

      (10,795 )      (2,873 )      (26,650 )      (8,894 ) 

Interest income

      212       390       1,595       803  

Other income (expense), net

      587       (147 )      974       48  
  

 

 

    

 

 

    

 

 

    

 

 

  

(Loss) income before income taxes

      (16,897 )      1,686       (38,232 )      (6,934 ) 

(Benefit) provision for income taxes

      (2,941 )      1,100       (15,005 )      (13,777 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net (loss) income

    $ (13,956 )    $ 586     $ (23,227 )    $ 6,843  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net (loss) income per share:

         

Basic

    $ (0.40 )    $ 0.02     $ (0.67 )    $ 0.23  

Diluted

    $ (0.40 )    $ 0.02     $ (0.67 )    $ 0.21  

Weighted-average shares outstanding:

         

Basic

      34,639,762       32,876,529       34,423,099       29,965,390  

Diluted

      34,639,762       36,454,443       34,423,099       32,762,302  

Carbonite, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

     September 30,
2019		     December 31,
2018		  
     (in thousands)  
ASSETS     

Current assets:

     

Cash and cash equivalents

    $ 98,537     $ 198,087  

Trade accounts receivable, net

      43,407       31,569  

Prepaid expenses and other current assets

      22,854       10,409  
  

 

 

    

 

 

  

Total current assets

      164,798       240,065  

Property and equipment, net

      44,199       34,101  

Right-of-use lease assets

      44,826       —    

Other assets

      24,519       13,876  

Acquired intangible assets, net

      391,786       117,963  

Goodwill

      543,957       155,086  
  

 

 

    

 

 

  

Total assets

    $ 1,214,085     $ 561,091  
  

 

 

    

 

 

  
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

     

Accounts payable

    $ 7,355     $ 2,114  

Accrued compensation

      20,388       11,620  

Accrued expenses and other current liabilities

      32,499       15,844  

Current portion of deferred revenue

      183,361       121,553  
  

 

 

    

 

 

  

Total current liabilities

      243,603       151,131  

Long-term debt

      590,789       118,305  

Long-term lease liabilities

      43,404       —    

Deferred revenue, net of current portion

      41,638       29,151  

Long-term deferred tax liabilities

      40,343       1,456  

Other long-term liabilities

      8,171       3,838  
  

 

 

    

 

 

  

Total liabilities

      967,948       303,881  

Stockholders’ equity:

     

Common stock

      374       366  

Additional paid-in capital

      466,738       451,618  

Treasury stock, at cost

      (47,593 )      (48,522 ) 

Accumulated other comprehensive (loss) income

      (2,253 )      1,650  

Accumulated deficit

      (171,129 )      (147,902 ) 
  

 

 

    

 

 

  

Total stockholders’ equity

      246,137       257,210  
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 1,214,085     $ 561,091  
  

 

 

    

 

 

  

Carbonite, Inc.

Consolidated Statement of Cash Flows (Unaudited)

 

     Nine Months Ended
September 30,		  
     2019     2018  
     (in thousands)  

Operating activities

     

Net (loss) income

    $ (23,227 )    $ 6,843  

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation and amortization

      57,685       29,622  

Amortization of right-of-use lease assets

      5,776       —    

Amortization of deferred costs

      2,224       1,521  

Gain on disposal of equipment

      (114 )      (245 ) 

Impairment of other long-lived assets

      6,000       —    

Impairment of capitalized software

      126       653  

Stock-based compensation expense

      15,005       13,461  

Benefit for deferred income taxes

      (15,131 )      (16,228 ) 

Non-cash interest expense related to amortization of debt discount

      6,260       4,712  

Other non-cash items, net

      (618 )      136  

Changes in assets and liabilities, net of acquisition:

     

Accounts receivable

      6,586       (7,001 ) 

Prepaid expenses and other current assets

      (1,004 )      (2,281 ) 

Other assets

      (2,125 )      (4,655 ) 

Accounts payable

      4,665       (5,811 ) 

Accrued expenses and other current liabilities

      (1,745 )      3,341  

Other long-term liabilities

      (9,129 )      (38 ) 

Deferred revenue

      17,054       9,784  
  

 

 

    

 

 

  

Net cash provided by operating activities

      68,288       33,814  
  

 

 

    

 

 

  

Investing activities

     

Purchases of property and equipment

      (9,510 )      (9,927 ) 

Proceeds from sale of property and equipment and businesses

      138       657  

Proceeds from maturities of derivatives

      1,809       2,596  

Purchases of derivatives

      (6 )      (1,403 ) 

Payment for intangibles

      —         (5,750 ) 

Payment for acquisition, net of cash acquired

      (621,703 )      (144,597 ) 
  

 

 

    

 

 

  

Net cash used in investing activities

      (629,272 )      (158,424 ) 
  

 

 

    

 

 

  

Financing activities

     

Proceeds from exercise of stock options

      340       1,139  

Proceeds from issuance of common stock for secondary offering

      —         199,302  

Proceeds from issuance of treasury stock under employee stock purchase plan

      1,582       1,215  

Payments of withholding taxes in connection with restricted stock unit vesting

      (905 )      (2,154 ) 

Proceeds from long-term borrowings, net of debt issuance costs

      528,980       88,068  

Payments on long-term borrowings

      (65,000 )      (90,000 ) 
  

 

 

    

 

 

  

Net cash provided by financing activities

      464,997       197,570  
  

 

 

    

 

 

  

Effect of currency exchange rate changes on cash

      (1,124 )      (210 ) 

Net decrease in cash, cash equivalents and restricted cash

      (97,111 )      72,750  

Cash, cash equivalents and restricted cash, beginning of period

      198,087       128,231  
  

 

 

    

 

 

  

Cash, cash equivalents and restricted cash, end of period

    $ 100,976     $ 200,981  
  

 

 

    

 

 

  

Carbonite, Inc.

Reconciliation of GAAP to Non-GAAP Measures (Unaudited)

(In thousands, except share and per share amounts)

Reconciliation of GAAP Revenue to Non-GAAP Revenue

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
     2019      2018      2019      2018  

GAAP revenue

    $ 125,596      $ 77,682      $ 328,321      $ 219,442  

Add:

            

Fair value adjustment of acquired deferred revenue

      9,448        1,427        24,738        4,425  
  

 

 

     

 

 

     

 

 

     

 

 

  

Non-GAAP revenue

    $ 135,044      $ 79,109      $ 353,059      $ 223,867  
  

 

 

     

 

 

     

 

 

     

 

 

  

Reconciliation of GAAP Net (Loss) Income and Net (Loss) Income per Share to Non-GAAP Net Income and Net Income per Share

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
     2019     2018      2019     2018  

GAAP net (loss) income

    $ (13,956 )    $ 586      $ (23,227 )    $ 6,843  

Add:

          

Fair value adjustment of acquired deferred revenue

      9,448       1,427        24,738       4,425  

Amortization of intangibles

      19,206       8,241        45,646       19,582  

Stock-based compensation expense

      5,288       4,983        15,005       13,461  

Litigation-related expense

      88       22        259       85  

Restructuring-related expense

      —         357        702       1,260  

Acquisition-related expense

      1,572       219        12,307       6,196  

Intangible asset impairment charges

      6,000       —          6,000       —    

CEO recruitment expense

      604       —          604       —    

Non-cash debt interest expense

      2,305       1,611        6,260       4,712  

Less:

          

Income tax effect of non-GAAP adjustments

      9,367       126        31,822       16,944  
  

 

 

    

 

 

     

 

 

    

 

 

  

Non-GAAP net income

    $ 21,188     $ 17,320      $ 56,472     $ 39,620  
  

 

 

    

 

 

     

 

 

    

 

 

  

GAAP net (loss) income per share:

          

Basic

    $ (0.40 )    $ 0.02      $ (0.67 )    $ 0.23  

Diluted

    $ (0.40 )    $ 0.02      $ (0.67 )    $ 0.21  

Non-GAAP net income per share:

          

Basic

    $ 0.61     $ 0.53      $ 1.64     $ 1.32  

Diluted

    $ 0.60     $ 0.48      $ 1.60     $ 1.21  

GAAP weighted-average shares outstanding:

          

Basic

      34,639,762       32,876,529        34,423,099       29,965,390  

Diluted

      34,639,762       36,454,443        34,423,099       32,762,302  

Non-GAAP weighted-average shares outstanding:

          

Basic

      34,639,762       32,876,529        34,423,099       29,965,390  

Diluted

      35,176,186       36,454,443        35,248,853       32,762,302  

Reconciliation of EBITDA and Adjusted EBITDA to Net (Loss) Income

 

     Three Months Ended
September 30,		      Nine Months Ended
September 30,		  
     2019     2018      2019     2018  

Net (loss) income

    $ (13,956 )    $ 586      $ (23,227 )    $ 6,843  

Adjustments:

          

Interest expense, net

      10,583       2,483        25,055       8,091  

Income tax (benefit) provision

      (2,941 )      1,100        (15,005 )      (13,777 ) 

Depreciation and amortization

      23,471       11,859        57,685       29,622  
  

 

 

    

 

 

     

 

 

    

 

 

  

EBITDA

      17,157       16,028        44,508       30,779  

Adjustments to EBITDA:

          

Fair value adjustment of acquired deferred revenue

      9,448       1,427        24,738       4,425  

Stock-based compensation expense

      5,288       4,983        15,005       13,461  

Litigation-related expense

      88       22        259       85  

Restructuring-related expense

      —         357        702       1,260  

Intangible asset impairment charges

      6,000       —          6,000       —    

Acquisition-related expense

      1,572       219        12,307       6,196  

CEO recruitment expense

      604       —          604       —    
  

 

 

    

 

 

     

 

 

    

 

 

  

Adjusted EBITDA

    $ 40,157     $ 23,036      $ 104,123     $ 56,206