<PAGE>
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information gives effect to the acquisition of Arbor Administrative Services,
Inc. d/b/a Arbor Associates ("Arbor") by eBenX, Inc. ("eBenX"). The acquisition
will be accounted for under the purchase method of accounting in accordance with
APB Opinion No. 16. Under the purchase method of accounting, the purchase price
is allocated to the assets acquired and liabilities assumed based on their
estimated fair values. Estimates of the fair values of the assets and
liabilities of Arbor have been combined with the recording values of the assets
and liabilities of eBenX in the unaudited pro forma condensed consolidated
financial information. The purchase price allocation for Arbor is preliminary
and is unaudited.
The unaudited pro forma condensed consolidated balance sheet as of June 30,
2000 gives effect to the Arbor acquisition as if it occurred on June 30, 2000.
The eBenX balance sheet information was derived from its unaudited June 30, 2000
balance sheet. The Arbor balance sheet information was derived from its
unaudited June 30, 2000 balance sheet. The unaudited pro forma condensed
consolidated statements of operations give pro forma effect to the acquisition
as if the transaction was consummated as of January 1, 1999. The information
for the eBenX and Arbor statements of operations was derived from their audited
statements of operations for the year ended December 31, 1999. The information
for the eBenX and Arbor statements of operations was derived from their
unaudited statements of operations for the six-month period ended June 30, 2000.
The unaudited pro forma condensed consolidated financial information has
been prepared by Company management for illustrative purposes only and is not
necessarily indicative of the condensed consolidated financial position or
results of operations in future periods or the results that actually would have
been realized had eBenX and Arbor been a combined company during the specified
periods. 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 historical consolidated financial
statements of eBenX included in its annual Form 10-K and quarterly Form 10-Qs
filed with the Securities and Exchange Commission, and the historical
consolidated financial statements of Arbor included as Exhibit 99.1 in this Form
8-K/A.
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<PAGE>
EBENX, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000
(In thousands)
<TABLE>
<CAPTION>
Historical
----------------------
Arbor
eBenX, Associates Pro Forma Pro Forma
Inc. Inc. Adjustments Combined
-------- ----------- ------------ ----------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 921 $ 1,026 $ -- $ 1,947
Accounts receivable, net of allowance.............. 3,815 535 -- 4,350
Unbilled revenue................................... 824 -- -- 824
Prepaid expenses and other......................... 1,267 66 -- 1,333
Short-term investments............................. 102,377 -- (19,637) (1) 82,740
-------- ------- ------------ --------
Total current assets.............................. 109,204 1,627 (19,637) 91,194
Property and equipment, net........................ 7,964 1,130 -- 9,094
Deposits........................................... 99 44 -- 143
Notes receivable due from officers................. -- 546 (96) (1) 450
Intangible assets.................................. -- 14,021 (14,021) (2) --
Goodwill........................................... -- -- 68,331 (2) 68,331
-------- ------- ----------- --------
Total assets...................................... $117,267 $17,368 $ 34,577 $169,212
======== ======= =========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... $ 420 $ 695 $ -- $ 1,115
Accrued compensation............................... 672 74 -- 746
Accrued expenses................................... 2,561 374 535 (1) 3,470
Accrued offering costs............................. 166 -- -- 166
Deferred revenue................................... 190 780 -- 970
Current portion of capital lease obligation........ -- 94 -- 94
Senior demand note................................. -- 974 (974) (1) --
-------- ------- -------- --------
Total current liabilities......................... 4,009 2,991 (439) 6,561
Capital lease obligation............................ -- 104 -- 104
Convertible preferred stock......................... -- 1,000 (1,000) (3) --
Shareholders' equity:
Common stock....................................... 164 1 25 (1) 190
Additional paid-in capital......................... 127,306 24,135 30,297 (1)(3) 181,738
Deferred stock-based compensation.................. (3,262) (5,434) 265 (1)(3) (8,431)
Accumulated other comprehensive loss............... (24) -- -- (24)
Retained deficit................................... (10,926) (5,429) 5,429 (3) (10,926)
-------- ------- ------------ --------
Total shareholders' equity........................ 113,258 13,273 36,016 162,547
-------- ------- ------------ --------
Total liabilities and shareholders' equity.......... $117,267 $17,368 $ 34,577 $169,212
======== ======= ============ ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
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<PAGE>
EBENX, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical
-----------------------
Arbor
eBenX, Associates Pro Forma Pro Forma
Inc. Inc. Adjustments Combined
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenue............................................... $17,526 $4,276 $ -- $ 21,802
Cost of services.......................................... 13,372 2,112 -- 15,484
------- ------ --------- --------
Gross profit............................................ 4,154 2,164 -- 6,318
------- ------ --------- --------
Operating expenses:
Selling, general and administrative...................... 5,118 1,608 -- 6,726
Research and development................................. 4,012 692 -- 4,704
Amortization of stock-based compensation................. 767 490 -- 1,257
Amortization of goodwill................................. -- -- 22,777 (2) 22,777
------- ------ --------- --------
Total operating expenses................................ 9,897 2,790 22,777 35,464
------- ------ --------- --------
Loss from operations...................................... (5,743) (626) (22,777) (29,146)
Interest income and other, net............................ 716 419 -- 1,135
Equity in loss of limited partnership interest............ -- (323) -- (323)
Minority interest in loss of subsidiary................... -- 114 -- 114
------- ------ --------- --------
Net loss.................................................. $(5,027) $ (416) $(22,777) $(28,220)
======= ====== ========= ========
Net loss per share:
Basic and diluted........................................ $ (1.18) $ (4.12)
======= ========
Shares used in calculation of net loss per share:
Basic and diluted........................................ 4,253 2,596 (1) 6,849
======= ========= ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
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<PAGE>
EBENX, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2000
(In thousands, except per share data)
<TABLE>
<CAPTION>
Historical
-------------------------
Arbor
eBenX, Associates Pro Forma Pro Forma
Inc. Inc. Adjustments Combined
---------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
Net revenue............................................... $11,970 $ 2,198 $ -- $ 14,168
Cost of services.......................................... 9,095 1,295 -- 10,390
---------- ------- --------- --------
Gross profit............................................ 2,875 903 -- 3,778
---------- ------- --------- --------
Operating expenses:
Selling, general and administrative...................... 5,309 1,167 -- 6,476
Research and development................................. 3,413 1,305 -- 4,718
Amortization of stock-based compensation................. 1,140 1,156 -- 2,296
Amortization of goodwill................................. -- 389 10,999 (2) 11,388
---------- ------- --------- --------
Total operating expenses................................ 9,862 4,017 10,999 24,878
---------- ------- --------- --------
Loss from operations...................................... (6,987) (3,114) (10,999) (21,000)
Interest income and other, net............................ 3,310 23 -- 3,333
---------- ------- --------- --------
Net loss.................................................. $(3,677) $(3,091) $ (10,999) $(17,767)
========== ======= ========= ========
Net loss per share:
Basic and diluted........................................ $(.23) $ (.95)
========== ========
Shares used in calculation of net loss per share:
Basic and diluted........................................ 16,173 2,596 (1) 18,769
========== ====== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
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<PAGE>
EBENX, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
eBenX acquired Arbor on September 6, 2000 for a total purchase price of
$67.8 million in a transaction accounted for as a purchase. eBenX paid $17
million in cash and exchanged approximately 2,596,000 shares of eBenX stock with
a fair value of $44.6 million for all of the outstanding common stock of Arbor.
The common stock was valued using eBenX's average closing stock price on the
date prior to and the date of the announcement. eBenX also assumed all of the
outstanding restricted stock, stock options and warrants of Arbor at a fair
value of $4.8 million. The options and warrants were valued using a Black-
Scholes option pricing model with inputs of .90 for volatility, 2 years for
expected life, 6.35% for the risk-free interest rate, and a market value of
$17.19. The restricted stock was valued at a market value of $17.19 per share.
The acquisition will be accounted for under the purchase method of
accounting in accordance with APB Opinion No. 16. Under the purchase method of
accounting, the purchase price is allocated to the assets acquired and
liabilities assumed based on their estimated fair values. Preliminary estimates
based on management's best estimates of the fair values of the assets and
liabilities of Arbor have been combined with the recorded values of the assets
and liabilities of eBenX in the unaudited pro forma condensed consolidated
financial information. These allocations are subject to change pending a final
analysis of the value of the assets acquired and liabilities assumed.
Unaudited Pro Forma Adjustments
(1) Reflects the cash outlay, the issuance of shares of eBenX common stock and
the assumption of all outstanding options and warrants in connection with
the acquisition, for an aggregate purchase price of approximately $67.8
million, including $1.4 million in transaction costs. No financing costs
were included in the pro forma statements because the cash portion of the
proceeds paid were assumed to come from the eBenX IPO proceeds.
(2) Reflects the excess of the purchase price over the fair value of the assets
and liabilities acquired in the purchase transaction. The book value of
tangible assets and liabilities acquired are assumed to approximate fair
value. Goodwill and other intangible assets will be amortized on a
straight-line basis over three years. The purchase price is allocated as
follows (in thousands):
Total purchase price $67,827
Fair value of tangible assets acquired (504)
-------
Goodwill and other intangible assets $68,331
=======
(3) Reflects the elimination of the historical equity accounts of Arbor.
PRO FORMA NET LOSS PER SHARE
The unaudited pro forma combined net loss per share is based upon the
weighted average number of vested outstanding shares of common stock of eBenX
during the periods presented, plus the number of shares issued to consummate the
acquisition of Arbor as if the acquisition occurred at the beginning of the
period presented.
CONFORMING AND RECLASSIFICATION ADJUSTMENTS
There were no material adjustments required to conform the accounting
policies of eBenX and Arbor. Certain amounts have been reclassified to conform
to eBenX's financial statement presentation.
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