EXHIBIT 99.2
CLARUS CORPORATION ACQUISITION OF THE COMPANIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
On May 31, 2000, Clarus Corporation and subsidiaries (the "Company") acquired
all of the outstanding capital stock of SAI (Ireland) Limited and its
subsidiaries and related companies, SAI Recruitment Limited, I2Mobile.com
Limited and SAI America Limited (collectively, the "Companies"). The Companies
specialize in electronic payment settlement software. The purchase consideration
was approximately $63.1 million, consisting of approximately $30.0 million in
cash, 1,148,000 shares of Clarus' common stock with a fair value of $30.4
million, assumed unvested options to acquire 163,200 shares of Clarus' common
stock with an exercise price of $23.50 (estimated fair value of $1.8 million
using the Black-Scholes option pricing model) and acquisition costs of
approximately $900,000.
The unaudited pro forma financial data have been prepared using the purchase
method of accounting, whereby the total cost of the acquisition is allocated to
tangible and intangible assets acquired and liabilities assumed based upon their
respective fair values at the effective date of the acquisition. For purposes of
the unaudited pro forma financial data, such allocations have been made based
upon currently available information and management's estimates. The historical
financial statements for the year ended December 31, 1999 are derived from the
audited financial statements of Clarus Corporation and the Companies and the
historical financial statements for the three months ended March 31, 2000 are
derived from unaudited financial statements of Clarus and the Companies.
The pro forma financial data should be read in conjunction with the historical
consolidated December 31, 1999 (audited) and March 31, 2000 (unaudited)
financial statements and notes of the Company included in Clarus' annual report
on Form 10-K and Form 10-Q, respectively, filed with the Securities and Exchange
Commission (the "Commission") on March 30, 2000 and May 15, 2000 and the
historical financial statements and notes of SAI (Ireland) Limited and
subsidiaries included in this report on Form 8-K/A. The pro forma consolidated
results are not necessarily indicative of the results that would have been
achieved had the acquisition of SAI (Ireland) Limited and subsidiaries occurred
on January 1, 1999 with respect to the year ended December 31, 1999 and on
January 1, 2000 with respect to the three months ended March 31, 2000 or of
future operations.
CLARUS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
Three months ended March 31, 2000
(in thousands, except per share amounts)
Historical
-------------
Clarus SAI Pro Forma Note Pro Forma
Adjustments Consolidated
REVENUES $ 7,006 527 7,533
COST OF REVENUES 1,611 73 1,684
GROSS PROFIT 5,395 454 5,849
OPERATING EXPENSES
Research and development, exclusive of noncash expense 3,084 257 3,341
Sales and marketing, exclusive of noncash expense 6,463 140 6,603
General and administrative, exclusive of noncash expense 2,626 299 2,925
Depreciation and amortization 700 1,707 (1) 2,407
Noncash research and development expense 826 826
Noncash sales and marketing expense 1,812 1,812
Noncash general and administrative expense 1,145 1,145
--------- ---- ----- -- --------
Total operating expenses 16,656 696 1,707 19,059
OPERATING LOSS (11,261) (242) (1,707) (13,210)
INTEREST (EXPENSE) INCOME, net (170) 3 (540) (2) (707)
INCOME TAXES - 90 (90) (3) -
--------- ---- ----- -- --------
NET LOSS FROM CONTINUING OPERATIONS $(11,431) (149) (2,337) (13,917)
========= ==== ===== == ========
Net loss per common share:
Basic $ (0.93) (1.04)
Diluted $ (0.93) (1.04)
Weighted average shares outstanding
Basic 12,247 1,148 (4) 13,395
Diluted 12,247 1,148 (4) 13,395
CLARUS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
Year ending December 31, 1999
(in thousands, except per share amounts)
Historical
-------------
Clarus SAI Pro Forma Note Pro Forma
Adjustments Consolidated
REVENUES $38,142 3,633 41,775
COST OF REVENUES 15,868 308 16,176
GROSS PROFIT 22,274 3,325 25,599
OPERATING EXPENSES
Research and development, exclusive of noncash expense 9,003 1,421 10,424
Sales and marketing, exclusive of noncash expense 15,982 1,437 17,419
General and administrative, exclusive of noncash expense 6,241 932 7,173
Depreciation and amortization 3,399 6,828 (1) 10,227
Noncash research and development expense - -
Noncash sales and marketing expense 1,930 1,930
Noncash general and administrative expense 874 874
-------- ----- ------- -- --------
Total operating expenses 37,429 3,790 6,828 48,047
OPERATING LOSS (15,155) (465) (6,828) (22,448)
GAIN ON SALE OF ERP BUSINESS 9,417 (1) 9,416
INTEREST (EXPENSE) INCOME, net 337 2 (2,163) (2) (1,824)
INCOME TAXES - 160 (160) (3) -
-------- ----- ------- -- --------
NET LOSS FROM CONTINUING OPERATIONS $ (5,401) (304) (9,151) (14,856)
======== ===== ======= == ========
Net loss per common share:
Basic $ (0.49) (1.21)
Diluted $ (0.49) (1.21)
Weighted average shares outstanding
Basic 11,097 1,148 (4) 12,245
Diluted 11,097 1,148 (4) 12,245
CLARUS CORPORATION ACQUISITION OF THE COMPANIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
Note 1: ALLOCATION OF PURCHASE PRICE
The acquisition was treated as a purchase for accounting purposes, and
accordingly, the assets and liabilities were recorded based on their preliminary
fair value at the date of acquisition. Clarus retained a third-party valuation
firm to assist in its evaluation of developed technologies and in-process
research and development. A valuation of the Companies developmental products
was performed to determine their stage of development, their expected income
generating ability, as well as risk factors associated with achieving
technological feasibility. Clarus expensed approximately $8.3 million to in-
process research and development in the second quarter of 2000 in accordance
with generally accepted accounting principles. The values ascribed to intangible
assets, their respective useful lives, and the expected amount of monthly,
quarterly and annual amortization are as follows:
Intangible Useful
Asset Life Monthly Quarterly Annual
(in thousands) (in years) Amortization Amortization Amortization
-----------------------------------------------------------------------
Goodwill $49,809 8 $519 $1,557 $6,228
Developed technologies 4,100 8 43 129 516
Assembled workforce 450 7 5 15 60
Customer base 100 4 2 6 24
------ ------
$1,707 $6,828
====== ======
The write-off of in-process research and development of $8.3 million is not
reflected in the accompanying pro forma consolidated statements of operations,
as it represents a nonrecurring charge directly attributable to the transaction.
The Companies' historical statement of operations for the year ended December
31, 1999 and for the three months ended March 31, 2000 have been converted from
Irish Pounds to US Dollars using an average exchange rate of 1.3539 and 1.2539
for the respective periods.
Note 2. INTEREST EXPENSE
In connection with the payment of approximately $30.9 million in cash in
conjunction with the acquisition, including transaction costs, the Company has
assumed that such amounts were borrowed using short-term borrowing arrangements
at the Company's estimated incremental borrowing rate of 7%. As a result, the
Company has reflected pro forma adjustments to interest expense of $540,000 with
respect to the three months ended March 31, 2000 and $2,163,000 with respect to
the year ended December 31, 1999 to provide for interest expense on these
borrowings.
Note 3. INCOME TAX BENEFIT
The income tax benefit recognized by the Companies was eliminated because Clarus
expects to provide a valuation allowance against substantially all deferred
income tax assets for the foreseeable future.
Note 4. PRO FORMA NET LOSS PER COMMON SHARE
The pro forma basic and diluted net loss per common share use the historical
weighted average shares outstanding of Clarus' common stock, adjusted for the
effect of the acquisition.