EX-99.3 5 f87875a1exv99w3.txt EXHIBIT 99.3 Exhibit 99.3 The following unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the combined financial position or results of operations for future periods or the financial position or results of operations that actually would have been realized had Documentum and eRoom been a combined company during the specified periods. The unaudited pro forma condensed combined financial statements, including the related notes, are qualified in their entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements and related notes of Documentum, included in its Form 10-K and Form 10-Q filed with the Securities and Exchange Commission on March 29, 2002 (as amended on August 29, 2002) and November 14, 2002, respectively, and the historical consolidated financial statements and related notes of eRoom, included elsewhere in this Form 8-K/A. The following unaudited pro forma condensed combined financial statements give effect to the merger between Documentum and eRoom using the purchase method of accounting. The unaudited pro forma condensed combined financial statements are based on the respective historical financial statements of Documentum and eRoom. The unaudited pro forma condensed combined financial information has been prepared on the basis of assumptions described in the notes to the unaudited pro forma condensed combined financial statements. In the opinion of management, all adjustments necessary to present fairly this unaudited pro forma condensed combined financial information have been made. The unaudited pro forma condensed combined balance sheet as of September 30, 2002 assumes the merger took place on September 30, 2002. The unaudited pro forma condensed combined statements of operations for the nine months ended and year ended September 30, 2002 and December 31, 2001, respectively, include the results of both Documentum's and eRoom's operations assuming the merger took place on January 1, 2002 and 2001, respectively. The unaudited pro forma condensed combined statements of operations do not include the estimated effect of the approximately $4,700,000 of a nonrecurring charge for the write off of acquired in-process research and development. DOCUMENTUM, INC. PRO FORMA COMBINED BALANCE SHEET (IN THOUSANDS) UNAUDITED
SEPTEMBER 30, 2002 ---------------------------------------------------- HISTORICAL PRO FORMA ----------------------- -------------------------- DOCUMENTUM eROOM ADJUSTMENTS COMBINED ---------- ------- ------------ -------- ASSETS CURRENT ASSETS: Cash and cash equivalents 76,244 16,380 (12,605)(a) 80,019 Short-term investments 97,792 -- -- 97,792 Accounts receivable, net 43,728 5,743 -- 49,471 Other current assets 26,904 -- -- 26,904 ------- ------ ------ ------- TOTAL CURRENT ASSETS 244,668 22,123 (12,605) 254,186 Property and equipment, net 25,642 1,209 (439)(c) 26,412 Long-term investments 60,151 -- -- 60,151 Intangible assets, net 2,369 -- 22,450 (a) 24,819 Goodwill 8,317 -- 78,219 (a) 86,536 Other assets 11,870 129 -- 11,999 ------- ------ ------ ------- 353,017 23,461 87,625 464,103 ======= ====== ====== ======= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 3,855 309 -- 4,164 Accrued liabilities 41,330 4,313 6,940 (c) 52,583 Deferred Revenue 29,849 19,977 (15,302)(c) 34,524 Current portion of long-term debt -- 343 -- 343 Current portion of capital lease obligation 47 -- -- 47 ------- ------ ------ ------- TOTAL CURRENT LIABILITIES 75,081 24,942 (8,362) 91,661 Long-term debt 125,000 262 -- 125,262 Other long-term liabilities 661 -- -- 661 Total stockholders' (deficit) equity 152,275 (1,743) 95,987 (a) 246,519 ------- ------ ------ ------- 353,017 23,461 87,625 464,103 ======= ====== ====== =======
DOCUMENTUM, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) UNAUDITED
NINE MONTHS ENDED SEPTEMBER 30, 2002 ---------------------------------------------------------- HISTORICAL PRO FORMA --------------------- ----------------------------- DOCUMENTUM eROOM ADJUSTMENTS COMBINED ---------- ------ ----------- -------- Revenue 160,897 26,628 -- 187,525 Cost of Revenue 43,406 4,957 -- 48,363 ------- ------ ------ ------- GROSS MARGIN 117,491 21,671 -- 139,162 ------- ------ ------ ------- Operating expenses: Sales and marketing 70,384 14,785 -- 85,169 Research and development 27,688 5,297 -- 32,985 General and administrative 18,727 1,442 7,894 (b),(c) 28,063 Restructuring costs 1,043 -- -- 1,043 Employee stock-based compensation expense -- 2,836 -- 2,836 ------- ------ ------ ------- Total operating expenses 117,842 24,360 7,894 150,096 ------- ------ ------ ------- LOSS FROM OPERATIONS (351) (2,689) (7,894) (10,934) Interest and other income, net 125 132 -- 257 Provision for (benefit from) income taxes (68) -- 84 (d) 16 ------- ------ ------ ------- NET LOSS (158) (2,557) (7,977) (10,692) ======= ====== ====== ======= Basic and diluted net loss per share -- (0.23) Shares used in computing basic and diluted net loss per share 39,527 7,773 (a) 47,300 ======= ====== =======
DOCUMENTUM, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) UNAUDITED
TWELVE MONTHS ENDED DECEMBER 31, 2001 ---------------------------------------------------------- HISTORICAL PRO FORMA --------------------- ----------------------------- DOCUMENTUM eROOM ADJUSTMENTS COMBINED ---------- ------ ----------- -------- Revenue 185,712 29,539 -- 215,251 Cost of Revenue 56,080 6,604 -- 62,684 ------- ------ ------- ------- GROSS MARGIN 129,632 22,935 -- 152,567 ------- ------ ------- ------- Operating expenses: Sales and marketing 100,564 21,556 -- 122,120 Research and development 34,720 7,164 -- 41,884 General and administrative 25,158 2,273 10,491 (b),(c) 37,922 Restructuring costs 6,271 -- -- 6,271 Employee stock-based compensation expense -- 4,114 -- 4,114 ------- ------ ------- ------- Total operating expenses 166,713 35,107 10,491 212,311 ------- ------ ------- ------- LOSS FROM OPERATIONS (37,081) (12,172) (10,491) (59,744) Interest and other income, net 3,580 416 -- 3,996 Permanent impairment of investment (2,012) -- -- (2,012) Provision for (benefit from) income taxes 2,780 -- (588)(d) 2,192 ------- ------ ------- ------- NET LOSS (38,293) (11,756) (9,903) (59,952) ======= ====== ======= ======= Basic and diluted net loss per common share (1.01) (1.31) ======= ====== ======= ======= Shares used in computing basic and diluted net loss per common share 37,934 7,773 (a) 45,707 ======= ======= =======
DOCUMENTUM, INC. NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION The unaudited pro forma condensed combined financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. However the Company believes that the disclosures are adequate to make the information presented not misleading. NOTE 2. PURCHASE PRICE ALLOCATION In accordance with Statement of Financial Accounting Standards (SFAS) No. 141, the merger is accounted for as a purchase of eRoom by Documentum. The purchase price has been allocated based upon the fair value of the assets acquired and liabilities assumed. The following table summarizes the components of the total purchase price and the estimated purchase price allocation (in thousands, except per share and option amounts): Cash....................................................................... $12,605 Fair value of Documentum common stock (7,772,708 shares)................... 90,816 Fair value of stock options assumed (1,605,108 options assumed)............ 8,127 Transaction costs.......................................................... 6,940 Total purchase price.............................................. 118,488 Book value of net tangible assets at 9/30/02............................... $23,022 Book value of net liabilities at 9/30/02................................... (9,903) Estimated acquired intangibles............................................. 22,450 Write off of in-process research and development*.......................... 4,700 Goodwill................................................................... 78,219 Net assets acquired............................................... 118,488
* In-process research and development of $4,700,000 was expensed in the period in which the acquisition was consummated. Accordingly the in-process research and development is reflected in the pro forma condensed combined balance sheet as an addition to accumulated deficit. The pro forma condensed combined statements of operations do not include the in-process research and development of $4,700,000 as it is considered a non-recurring charge. NOTE 3. PRO FORMA ADJUSTMENTS The following adjustments have been reflected in the unaudited pro forma condensed combined financial statements: (a) To record cash consideration, common stock issued, options issued, and record the allocation of purchase price to intangible assets arising from the transaction. Common stock and options issued are based on the number of shares issued and options assumed in the actual transaction which closed on December 10, 2002 (b) Adjustment to record the amortization of identifiable intangible assets, excluding goodwill and intangible assets with indefinite lives, resulting from the allocation of purchase price. The pro forma adjustment assumes that the identifiable intangibles will be amortized on a straight-line basis over the following estimated lives: Core Developed Technology........................ 2 years Maintenance Contracts............................ 2 years License Contracts................................ 3 years Subscription Contracts........................... 1 year Executor Contracts............................... 2 years OEM Contracts.................................... 3 years
(c) To adjust assets acquired and liabilities assumed from eRoom to fair value. (d) To apply Documentum's statutory tax rate to the results of eRoom's operations.