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Exhibit 99.2
PRECISE SOFTWARE SOLUTIONS AND SAVANT
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
have been prepared to give effect to the acquisition of Savant Corporation
(Savant) under the purchase method of accounting after giving effect to the pro
forma adjustments described in the accompanying notes.
The following unaudited pro forma condensed combined balance sheet as of
September 30, 2000 gives effect to the acquisition of Savant as if it had
occurred on such date, and reflects the allocation of the purchase price to the
Savant assets acquired based on their estimated fair values at the date of
acquisition. The excess of the consideration paid by Precise in the acquisition
over the fair value at Savant's identifiable assets and liabilities has been
recorded as goodwill.
The following unaudited pro forma condensed combined statements of
operations combine the historical statements of operations of Precise and
Savant. The unaudited pro forma condensed combined statement of operations for
the nine months ended September 30, 2000 and for the year ended December 31,
1999, give effect to the acquisition as if it had occurred on January 1, 1999,
and combine the historical unaudited statements of operations of Precise and
Savant for such period. It is expected that following the acquisition Precise
will incur additional costs, which are expected to be significant to the
combined results of operations, in connection with integrating the two
companies. Integration costs are not included in the accompanying unaudited pro
forma condensed combined financial statements. This pro forma information should
be read in conjunction with the respective consolidated historical financial
statements (including notes thereto) of Precise and Savant, for the year ended
December 31, 1999 and for the nine months period ended September 30, 2000,
appearing elsewhere herein.
Unaudited pro forma condensed combined 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 acquisition occurred at the beginning of the periods presented,
nor is it necessarily indicative of future financial position or results of
operations. These unaudited pro forma condensed combined financial statements
are based upon the respective historical financial statements of Precise and
Savant and do not incorporate, nor do they assume, any benefits from cost
savings or synergies of the combined company. The pro forma adjustments are
based on available financial information and certain estimates and assumptions
that the Company believes are reasonable and that are set forth in the notes to
the unaudited pro forma condensed combined financial statements.
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PRO FORMA FINANCIAL INFORMATION
PRECISE SOFTWARE SOLUTIONS AND SAVANT
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO
------------------- PRO FORMA FORMA
PRECISE SAVANT ADJUSTMENTS REFERENCES COMBINED
-------- -------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 25,447 $ 489 $ (2,800) A,B $ 23,136
Marketable securities.................... 29,149 -- -- 29,149
Trade receivable, net...................... 3,507 494 -- 4,001
Other account receivables and prepaid
expenses................................. 3,253 60 -- 3,313
-------- -------- -------- --------
Total current assets............. 61,356 1,043 (2,800) 59,599
Long-Term investments...................... 25,981 -- -- 25,981
Property and equipment, net................ 1,994 123 -- 2,117
Severance pay fund......................... 445 -- -- 445
Other assets, net.......................... 778 873 5,227 C,D 6,878
Goodwill................................... -- -- 8,847 E 8,847
-------- -------- -------- --------
Total assets..................... $ 90,554 $ 2,039 $ 11,274 $103,867
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade payables............................. $ 1,894 $ 119 -- $ 2,013
Deferred revenues.......................... 2,154 701 -- 2,855
Current portion of notes payable to related
party.................................... -- 581 -- 581
Employee and payroll accruals.............. 1,128 240 -- 1,368
Accrued expenses........................... 1,807 -- -- 1,807
Other accounts payable..................... 339 40 379
-------- -------- -------- --------
Total current liabilities........ 7,322 1,681 -- 9,003
Accrued severance pay...................... 753 -- -- 753
Redeemable Convertible Preferred Shares.... -- 1,421 (1,421) G --
SHAREHOLDERS' EQUITY:
Ordinary shares.......................... 177 -- 4 F 181
Additional paid-in capital............... 109,877 1,721 12,107 F,G 123,705
Deferred stock compensation.............. (3,915) -- -- (3,915)
Accumulated other comprehensive loss..... (41) -- -- (41)
Accumulated deficit........................ (23,619) (2,784) 584 G,H (25,819)
-------- -------- -------- --------
Total liabilities and
shareholders' equity........... $ 90,544 $ 2,039 $ 11,274 $103,867
======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
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PRECISE SOFTWARE SOLUTIONS AND SAVANT
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PRECISE SAVANT ADJUSTMENTS REFERENCES COMBINED
------- ------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Revenues, net................................. $17,926 $2,578 $ -- $ 20,504
Cost of revenues.............................. 1,658 139 -- 1,797
------- ------ ------- --------
Gross profit.................................. 16,268 2,439 -- 18,707
------- ------ ------- --------
Operating expenses:
Research and development, net............... 3,437 335 -- 3,772
Selling and marketing, net.................. 13,787 1,317 -- 15,104
General and administration.................. 2,640 903 -- 3,543
Amortization of purchased intangible
assets................................... -- -- 1,786 I 1,786
Amortization of stock-based compensation.... 4,953 -- -- 4,953
------- ------ ------- --------
Total operating expenses............ 24,817 2,555 1,786 29,158
------- ------ ------- --------
Income (loss) from operations................. (8,549) (116) (1,786) (10,451)
Financial income (expense):
Interest income.......................... 1,372 8 -- 1,380
Interest expense......................... -- (60) -- (60)
------- ------ ------- --------
Net other income (expense).................... 1,372 (52) -- 1,320
------- ------ ------- --------
Net loss...................................... (7,177) $ (168) $(1,786) $ (9,131)
======= ====== ======= ========
Basic and diluted net loss per share.......... $ (0.76) $ (0.92)
======= ========
Weighted average number of shares used in
computing basic and diluted net loss per
share....................................... 9,451 9,963
======= ========
Basic and diluted pro forma net loss per
share....................................... $ (0.41) $ (0.51)
======= ========
Weighted average number of shares used in
computing pro forma basic and diluted net
loss per share.............................. 17,403 17,915
======= ========
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
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PRECISE SOFTWARE SOLUTIONS AND SAVANT
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
PRECISE SAVANT ADJUSTMENTS REFERENCES COMBINED
------- ------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Revenues, net................................ $11,614 $ 3,629 $ -- $15,243
Cost of revenues............................. 1,647 88 -- 1,735
------- ------- ------- -------
Gross profit................................. 9,967 3,541 -- 13,508
------- ------- ------- -------
Operating expenses:
Research and development, net.............. 2,891 1,442 -- 4,333
Selling and marketing, net................. 7,913 1,585 -- 9,498
General and administration................. 1,598 881 -- 2,479
Amortization of purchased intangible
assets.................................. -- -- 2,381 I 2,381
Amortization of stock-based compensation... 234 -- -- 234
------- ------- ------- -------
Total operating expenses........... 12,636 3,908 2,381 18,925
------- ------- ------- -------
Income (loss) from operations................ (2,669) (367) (2,381) (5,417)
Financial income (expense):
Interest income............................ 71 11 -- 82
Interest expense........................... -- (148) -- (148)
------- ------- ------- -------
Net other income (expense)................... 71 (137) -- (66)
------- ------- ------- -------
Net income (loss)............................ $(2,598) $ (504) $(2,381) $(5,483)
======= ======= ======= =======
Basic and diluted net loss per share......... $ (0.79) $ (1.44)
======= =======
Weighted average number of shares used in
computing basic and diluted net loss per
share...................................... 3,299 3,811
======= =======
Basic and diluted pro forma net loss per
share...................................... $ (0.22) $ (0.45)
======= =======
Weighted average number of shares used in
computing pro forma basic and diluted net
loss per share............................. 11,637 12,149
======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
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PRECISE SOFTWARE SOLUTIONS AND SAVANT
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA)
NOTE 1
The unaudited pro forma condensed combined financial statements reflect the
purchase of Savant Corporation ("Savant"). The total purchase price consisted of
$2,800 in cash and $13,081 in shares, which represented the market value of
512,455 ordinary shares at the date of the agreement, and included $300 of
transaction costs, consisting primarily of legal, accounting, and valuation
fees.
In addition, Savant will have the right to receive additional consideration
based on the achievement of certain post-acquisition revenue performance
targets.
Based upon a preliminary valuation of tangible and intangible assets
acquired, Precise has allocated the total cost of the acquisition to Savant
assets as follows (in thousands) (This allocation is for pro forma purposes
only. Actual fair values will be based on financial information at the
acquisition date):
<TABLE>
<CAPTION>
SEPTEMBER 30,
2000
-------------
<S> <C>
Tangible assets acquired.................................... $ (515)
Intangible assets-assembled workforce, customer lists, and
goodwill.................................................. 11,747
Completed technology........................................ 3,200
In-process research and development......................... 2,200
-------
$16,632
=======
</TABLE>
NOTE 2
The pro forma condensed combined balance sheet includes the adjustments
necessary to give effect to the acquisition as if it had occurred on September
30, 2000 and to reflect the allocation of the acquisition cost to the fair value
of tangible and intangible assets acquired as noted above, including the
elimination of Savant's equity account.
The amount of excess of cost attributable to in process research and
development of Savant is estimated to be in the sum of approximately $2,200.
This amount will be recorded as research and development cost during the fiscal
quarter in which the acquisition is consummated. This expense has not been
included in Pro Forma Combined Condensed Statements of Operations as it does not
represent a continuing expense.
Adjustments included in the pro forma condensed combined balance sheet are
summarized as follows (in thousands):
(A) Cash consideration paid for Savant
(B) Transaction costs.
(C) Elimination of Savant's capitalized software costs.
(D) Valuation of Savant's intangible assets of $6,100.
(E) Valuation of Savant's goodwill of $8,847.
(F) Issuance of shares in amount of $13,831
(G) Elimination of the Savant equity accounts and the conversion of
the redeemable shares.
(H) Write off estimated of acquired in-process research and
development of $2,200.
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PRECISE SOFTWARE SOLUTIONS AND SAVANT
NOTES TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
U.S. DOLLARS IN THOUSANDS (EXCEPT SHARE AND PER SHARE DATA)
NOTE 3
The pro forma condensed combined statements of operations include the
adjustments necessary to give effect to the acquisition as if it had occurred on
January 1, 1999. Adjustments included in the pro forma condensed combined
statements of operations are summarized as follows:
(I) Amortization of purchased intangible assets.
Amortization of acquired intangible assets is calculated using the
following estimated useful lives:
<TABLE>
<S> <C>
Assembled workforce......................................... 5 years
Goodwill.................................................... 7 years
Customer lists.............................................. 7 years
Completed technology........................................ 5 years
</TABLE>
Amortization for the year ended December 31, 1999 and for the nine months
ended September 30, 2000 was $2,381 and $1,786, respectively.
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