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Delaware | 7372 | 75-2788861 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Paul R. Tobias Wilson Sonsini Goodrich & Rosati, Professional Corporation 900 S. Capital of Texas Hwy. Las Cimas IV, Fifth Floor Austin, Texas 78746 Tel: (512) 338-5400 | William H. Hinman Jr. Simpson Thacher & Bartlett LLP 2550 Hanover Street Palo Alto, California 94304 Tel: (650) 251-5000 |
Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o
(Do not check if a smaller reporting company)
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Each Class of | Amount to | Offering Price | Aggregate Offering | Registration | ||||||||
Securities to be Registered | be Registered | Per Share | Price(1)(2) | Fee | ||||||||
Common Stock, $0.001 par value | 10,350,000 | $27.79 | $287,626,500 | $20,507.77 | ||||||||
(1) | Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and is based upon the average of the high and low sales prices of our common stock as reported on the NASDAQ Global Select Market on November 16, 2010. | |
(2) | Includes the aggregate offering price of additional shares that the underwriters have the option to purchase. |
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The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and neither we nor the selling stockholders are soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
Underwriting | ||||||||
Price to | Discounts and | Proceeds to | Proceeds to | |||||
Public | Commissions | RealPage | Selling Stockholders | |||||
Per share | $ | $ | $ | $ | ||||
Total | $ | $ | $ | $ |
Credit Suisse | Deutsche Bank Securities |
William Blair & Company | RBC Capital Markets |
JMP Securities | Pacific Crest Securities |
Wells Fargo Securities | Lazard Capital Markets |
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EX-21.1 | ||||||||
EX-23.1 | ||||||||
EX-23.2 |
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Nine Months | ||||||||||||||||
Ended September 30, | ||||||||||||||||
Year Ended December 31, | 2010 | |||||||||||||||
2007 | 2008 | 2009 | (unaudited) | |||||||||||||
(in thousands) | ||||||||||||||||
Net (loss) income | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 253 | ||||||
Depreciation and asset impairment | 4,854 | 9,847 | 9,231 | 7,657 | ||||||||||||
Amortization of intangible assets | 2,273 | 2,095 | 5,784 | 7,256 | ||||||||||||
Interest expense, net | 1,510 | 2,152 | 4,528 | 4,759 | ||||||||||||
Income tax expense (benefit) | — | 703 | (26,028 | ) | 164 | |||||||||||
Stock-based compensation expense | 490 | 1,476 | 2,805 | 3,745 | ||||||||||||
Acquisition-related expense | — | — | 844 | 453 | ||||||||||||
Adjusted EBITDA | $ | 5,984 | $ | 13,064 | $ | 25,593 | $ | 24,287 | ||||||||
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• | Increased revenues. Our solutions help our customers improve sales and marketing effectiveness, optimize pricing and occupancy and improve collection of rental payments, utility expenses, late fees and other charges. | |
• | Reduced operating costs. Our solutions help our customers streamline and automate many ongoing property management functions, centralize certain property operations, control purchasing by on-site personnel and eliminate the need to own and support property management applications and associated hardware infrastructure. | |
• | Improved quality of service for residents and prospects. Our solutions expedite the processing of a variety of recurring transactions and increase the frequency and quality of communication with residents and prospects, providing higher resident satisfaction and increased differentiation from competing properties that do not use our solutions. | |
• | Streamlined and simplified property management business processes. Our solutions share data and automate the workflow of certain business processes, thereby eliminating redundant data entry and simplifying many recurring tasks. | |
• | Ability to integrate third-party products and services. Our open architecture and application framework facilitate the integration of third-party applications and services into our solutions. | |
• | Increased visibility into property performance. Our integrated platform and common data repository enable owners and managers to gain a comprehensive view of the operational and financial performance of each of their properties. | |
• | Simple implementation and support. Our solutions include pre-configured extensions that meet the specific needs of a variety of property types and can be easily tailored by our customers to meet the specific needs of their properties or business processes. | |
• | Improved scalability. Our application infrastructure is designed to evolve with our customers’ needs. |
• | Integrated on demand software platform based on a common data repository. Our solutions are delivered through an integrated on demand software platform that provides a single point of access via the Internet to all of our products and a common repository of prospect, resident and property data. | |
• | Large and growing ecosystem of property owners, managers, prospects, residents and service providers. Our solutions automate and streamline many of the recurring transactions and interactions among a large and expanding rental housing ecosystem of property owners and managers, prospects, residents and service providers. | |
• | Comprehensive platform of on demand software solutions for property management. We provide what we believe to be the broadest range of on demand capabilities for managing the resident lifecycle and core operational processes for residential property management. |
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• | Deep rental housing industry expertise. We design our solutions based on our extensive rental housing industry expertise, insight into industry trends and developments and best practices. | |
• | Open cloud computing architecture. Our cloud computing architecture enables our solutions to interface with many of our customers’ existing systems and allows our customers to outsource the management of third-party business applications. |
• | acquire new customers; | |
• | increase the adoption of additional solutions within our existing customer base; | |
• | add new solutions to our platform; and | |
• | pursue acquisitions of complementary businesses, products and technologies. |
• | our quarterly operating results have fluctuated in the past and may fluctuate in the future, which could cause our stock price to decline; | |
• | we have a history of operating losses and may not maintain profitability in the future; | |
• | if we are unable to manage the growth of our diverse and complex operations, our financial performance may suffer; | |
• | our business depends substantially on customers renewing and expanding their subscriptions for our solutions and any increase in customer cancellations or decline in customer renewals and expansions would harm our future operating results; | |
• | we face intense competitive pressures and our failure to compete successfully could harm our operating results; | |
• | we integrate some of our solutions with competitive property management systems and if our competitors alter their applications in ways that inhibit or restrict integration in the future, our business could be harmed; |
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• | we may not be able to continue to add new customers, which could adversely affect our operating results; and | |
• | if we are not able to integrate past or future acquisitions successfully, our operating results and prospects could be harmed. |
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Common stock offered by us | 4,000,000 shares | |
Common stock offered by the selling stockholders | 5,000,000 shares | |
Total common stock offered | 9,000,000 shares | |
Common stock to be outstanding after this offering | 67,156,549 shares | |
Use of proceeds | We intend to use the net proceeds from this offering for general corporate purposes, including working capital. We also may use a portion of the net proceeds to acquire complementary businesses or technologies. We will not receive any proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds.” | |
Risk factors | You should read the “Risk Factors” section of this prospectus for a discussion of factors that you should consider carefully before deciding to invest in shares of our common stock. | |
NASDAQ Global Select Market symbol | “RP” |
• | 9,335,857 shares of common stock issuable upon the exercise of options outstanding as of September 30, 2010 (including shares of our common stock that we expect to be sold in this offering by certain selling stockholders upon the exercise of vested options at the closing of this offering), with a weighted average exercise price of $5.15 per share; | |
• | 824,800 shares of our common stock issued pursuant to restricted stock awards after September 30, 2010 under our 2010 Equity Incentive Plan; and | |
• | 3,203,433 shares of common stock reserved for future issuance under our 2010 Equity Incentive Plan. |
• | no exercise of options outstanding as of September 30, 2010; and | |
• | no exercise by the underwriters of their right to purchase up to 1,350,000 shares of common stock to cover over-allotments. |
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Nine Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
Year Ended December 31, | 2009 | 2010 | ||||||||||||||||||
2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
On demand | $ | 62,592 | $ | 95,192 | $ | 128,377 | $ | 93,185 | $ | 120,393 | ||||||||||
On premise | 11,560 | 7,582 | 3,860 | 3,346 | 6,419 | |||||||||||||||
Professional and other | 9,429 | 9,794 | 8,665 | 6,234 | 7,403 | |||||||||||||||
Total revenue | 83,581 | 112,568 | 140,902 | 102,765 | 134,215 | |||||||||||||||
Cost of revenue | 35,703 | 46,058 | 58,513 | 42,804 | 56,595 | |||||||||||||||
Gross profit | 47,878 | 66,510 | 82,389 | 59,961 | 77,620 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Product development | 21,708 | 28,806 | 27,446 | 20,273 | 26,431 | |||||||||||||||
Sales and marketing | 18,047 | 23,923 | 27,804 | 20,376 | 25,793 | |||||||||||||||
General and administrative | 9,756 | 14,135 | 20,210 | 13,275 | 20,230 | |||||||||||||||
Total operating expense | 49,511 | 66,864 | 75,460 | 53,924 | 72,454 | |||||||||||||||
Operating (loss) income | (1,633 | ) | (354 | ) | 6,929 | 6,037 | 5,166 | |||||||||||||
Interest expense and other, net | (1,510 | ) | (2,152 | ) | (4,528 | ) | (3,106 | ) | (4,749 | ) | ||||||||||
Net (loss) income before taxes | (3,143 | ) | (2,506 | ) | 2,401 | 2,931 | 417 | |||||||||||||
Income tax expense (benefit) | — | 703 | (26,028 | ) | 218 | 164 | ||||||||||||||
Net (loss) income | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||
Net (loss) income attributable to common stockholders: | ||||||||||||||||||||
Basic | $ | (9,143 | ) | $ | (10,658 | ) | $ | 10,611 | $ | (1,559 | ) | $ | (2,691 | ) | ||||||
Diluted | $ | (9,143 | ) | $ | (10,658 | ) | $ | 10,611 | $ | (1,559 | ) | $ | (2,691 | ) | ||||||
Net (loss) income per share attributable to common stockholders: | ||||||||||||||||||||
Basic | $ | (0.89 | ) | $ | (0.77 | ) | $ | 0.44 | $ | (0.07 | ) | $ | (0.08 | ) | ||||||
Diluted | $ | (0.89 | ) | $ | (0.77 | ) | $ | 0.42 | $ | (0.07 | ) | $ | (0.08 | ) | ||||||
Weighted average shares used in computing net (loss) income per share attributable to common stockholders: | ||||||||||||||||||||
Basic | 10,223 | 13,886 | 23,934 | 23,856 | 31,878 | |||||||||||||||
Diluted | 10,223 | 13,886 | 25,511 | 23,856 | 31,878 |
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Nine Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
Year Ended December 31, | 2009 | 2010 | ||||||||||||||||||
2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Pro forma net income per share attributable to common stockholders (unaudited)(1): | ||||||||||||||||||||
Basic | $ | 0.55 | $ | 0.03 | ||||||||||||||||
Diluted | $ | 0.53 | $ | 0.03 | ||||||||||||||||
Pro forma weighted average shares outstanding used in computing net income per share attributable to common stockholders (unaudited)(2): | ||||||||||||||||||||
Basic | 55,773 | 57,625 | ||||||||||||||||||
Diluted | 57,349 | 59,662 | ||||||||||||||||||
Pro forma as adjusted net income per share attributable to common stockholders (unaudited)(1): | ||||||||||||||||||||
Basic | $ | 0.48 | $ | 0.03 | ||||||||||||||||
Diluted | $ | 0.47 | $ | 0.03 | ||||||||||||||||
Pro forma as adjusted weighted average shares outstanding in computing net income per share attributable to common stockholders (unaudited)(3): | ||||||||||||||||||||
Basic | 64,000 | 65,853 | ||||||||||||||||||
Diluted | 65,577 | 67,890 |
As of September 30, | ||||||||||||||||
As of December 31, | 2010 | |||||||||||||||
2007 | 2008 | 2009 | (unaudited) | |||||||||||||
(in thousands) | ||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||
Cash and cash equivalents(4) | $ | 2,731 | $ | 4,248 | $ | 4,427 | $ | 39,394 | ||||||||
Total current assets | 30,414 | 49,119 | 51,003 | 85,677 | ||||||||||||
Total assets | 59,518 | 102,340 | 142,113 | 197,702 | ||||||||||||
Total current liabilities | 54,969 | 75,705 | 78,050 | 80,569 | ||||||||||||
Total deferred revenue | 41,052 | 47,232 | 49,428 | 50,952 | ||||||||||||
Current and long-term debt(5) | 23,809 | 48,943 | 53,990 | 41,662 | ||||||||||||
Total liabilities | 87,954 | 129,622 | 136,757 | 127,862 | ||||||||||||
Preferred stock | 78,534 | 71,675 | 71,832 | — | ||||||||||||
Total stockholders’ (deficit) equity | (106,969 | ) | (98,957 | ) | (66,476 | ) | 69,840 | |||||||||
Other Financial Data: | ||||||||||||||||
Adjusted EBITDA(6) | $ | 5,984 | $ | 13,064 | $ | 25,593 | $ | 24,287 | ||||||||
Operating cash flow | 4,441 | 7,962 | 24,758 | 14,741 | ||||||||||||
Capital expenditures | 7,122 | 10,263 | 9,509 | 7,427 |
As of December 31, | As of September 30, | |||||||||||||||
2007 | 2008 | 2009 | 2010 | |||||||||||||
Selected Operating Data: | ||||||||||||||||
Number of on demand customers at period end | 2,199 | 2,669 | 5,032 | 6,547 | ||||||||||||
Number of on demand units at period end (in thousands) | 2,800 | 3,833 | 4,551 | 5,567 | ||||||||||||
Total number of employees at period end | 654 | 922 | 1,141 | 1,311 |
(1) | Pro forma net income per share and pro forma as adjusted net income per share represent net income divided by the pro forma weighted average shares outstanding and pro forma as adjusted weighted average |
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shares outstanding, respectively, as though the conversion of our redeemable convertible preferred stock into common stock occurred on the original issuance dates. We used $17.2 million of the proceeds from our initial public offering for reduction of our indebtedness. Pro forma net income per share and pro forma as adjusted net income per share reflect the effect of our use of proceeds from the offering to repay debt. The pro forma net income per share calculation reflects our sale of 1,772,518 shares of common stock in our initial public offering used for this debt reduction after deducting underwriting discounts and commissions and our estimated offering costs payable. Pro forma net income per share and pro forma as adjusted net income per share were computed as follows: actual net income of $28.4 million and $0.3 million was increased by approximately $2.1 million and $1.5 million for the year ended December 31, 2009 and the nine months ended September 30, 2010, respectively, representing the pro forma reduction in interest expense, net of tax, resulting from the use of net offering proceeds to reduce indebtedness. | ||
(2) | Pro forma weighted average shares outstanding reflects the conversion of our redeemable convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance. The pro forma weighted average shares outstanding reflects our sale of 1,772,518 shares of common stock in our initial public offering used for the debt reduction noted in (1) above. In addition, pro forma weighted average common shares outstanding, as of December 31, 2009 and September 30, 2010, considers (a) the issuance of 1,418,669 shares of our common stock in payment of a portion of dividends accrued on our Series A, Series A1 and Series B convertible preferred stock through December 31, 2009 and declared on December 31, 2009, (b) the issuance of 342,696 shares of common stock in payment of a portion of dividends accrued on our Series A, Series A1 and Series B convertible preferred stock through March 31, 2010 and declared on April 23, 2010, (c) the issuance of 524,204 shares of our common stock in payment of a portion of accumulated and unpaid dividends on our Series A, Series A1 and Series B convertible preferred stock upon conversion on August 17, 2010 in connection with our initial public offering and (d) 155,000 shares of our common stock acquired upon the exercise of options by certain selling stockholders who participated in our initial public offering, each as if such shares had been issued on January 1, 2009. | |
(3) | Pro forma as adjusted weighted average shares outstanding reflects the conversion of our redeemable convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance. The pro forma as adjusted weighted average shares outstanding reflects our sale of 6,000,000 shares of common stock in our initial public offering, including 1,772,518 shares used for the debt reduction noted in (1) above, and the sale of 4,000,000 shares of common stock in this offering. In addition, pro forma as adjusted weighted average common shares outstanding, as of December 31, 2009 and September 30, 2010, considers (a) the issuance of 1,418,669 shares of our common stock in payment of a portion of dividends accrued on our Series A, Series A1 and Series B convertible preferred stock through December 31, 2009 and declared on December 31, 2009, (b) the issuance of 342,696 shares of common stock in payment of a portion of dividends accrued on our Series A, Series A1 and Series B convertible preferred stock through March 31, 2010 and declared on April 23, 2010, (c) the issuance of 524,204 shares of our common stock in payment of a portion of accumulated and unpaid dividends on our Series A, Series A1 and Series B convertible preferred stock upon conversion on August 17, 2010 in connection with our initial public offering (d) 155,000 shares of our common stock acquired upon the exercise of options by certain selling stockholders who participated in our initial public offering, each as if such shares had been issued on January 1, 2009. | |
(4) | Excludes restricted cash. | |
(5) | Includes capital lease obligations. | |
(6) | We define Adjusted EBITDA as net (loss) income plus depreciation and asset impairment, amortization of intangible assets, interest expense, net, income tax expense (benefit), stock-based compensation expense and acquisition-related expense. | |
We believe that the use of Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that: |
• | Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations |
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and facilitates comparisons with our peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and |
• | it is useful to exclude certain non-cash charges, such as depreciation and asset impairment, amortization of intangible assets and stock-based compensation and non-core operational charges, such as acquisition-related expense, from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be. |
We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. | ||
We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of liquidity or financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do, that they do not reflect our capital expenditures or future requirements for capital expenditures and that they do not reflect changes in, or cash requirements for, our working capital. We compensate for the inherent limitations associated with using Adjusted EBITDA measures through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net (loss) income. |
Nine Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
Year Ended December 31, | 2009 | 2010 | ||||||||||||||||||
2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net (loss) income | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||
Depreciation and asset impairment | 4,854 | 9,847 | 9,231 | 6,932 | 7,657 | |||||||||||||||
Amortization of intangible assets | 2,273 | 2,095 | 5,784 | 3,963 | 7,256 | |||||||||||||||
Interest expense, net | 1,510 | 2,152 | 4,528 | 3,106 | 4,759 | |||||||||||||||
Income tax expense (benefit) | — | 703 | (26,028 | ) | 218 | 164 | ||||||||||||||
Stock-based compensation expense | 490 | 1,476 | 2,805 | 1,904 | 3,745 | |||||||||||||||
Acquisition-related expense | — | — | 844 | 20 | 453 | |||||||||||||||
Adjusted EBITDA | $ | 5,984 | $ | 13,064 | $ | 25,593 | $ | 18,856 | $ | 24,287 | ||||||||||
Nine Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
Year Ended December 31, | 2009 | 2010 | ||||||||||||||||||
2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cost of revenue | $ | 48 | $ | 104 | $ | 367 | $ | 255 | $ | 407 | ||||||||||
Product development | 251 | 727 | 1,175 | 775 | 1,664 | |||||||||||||||
Sales and marketing | 110 | 277 | 498 | 350 | 541 | |||||||||||||||
General and administrative | 81 | 368 | 765 | 524 | 1,133 | |||||||||||||||
Total stock-based compensation expense | $ | 490 | $ | 1,476 | $ | 2,805 | $ | 1,904 | $ | 3,745 | ||||||||||
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• | the extent to which on demand software solutions maintain current and achieve broader market acceptance; | |
• | our ability to timely introduce enhancements to our existing solutions and new solutions; | |
• | our ability to increase sales to existing customers and attract new customers; | |
• | changes in our pricing policies or those of our competitors; | |
• | the variable nature of our sales and implementation cycles; | |
• | general economic, industry and market conditions in the rental housing industry that impact the financial condition of our current and potential customers; | |
• | the amount and timing of our investment in research and development activities; | |
• | technical difficulties, service interruptions or security breaches; | |
• | our ability to hire and retain qualified key personnel, including the rate of expansion of our sales force; | |
• | changes in the legal, regulatory or compliance environment related to the rental housing industry, fair credit reporting, payment processing, privacy, utility billing, the Internet ande-commerce; | |
• | the amount and timing of operating expenses and capital expenditures related to the expansion of our operations and infrastructure; | |
• | the timing of revenue and expenses related to recent and potential acquisitions or dispositions of businesses or technologies; | |
• | our ability to integrate acquisitions in a cost-effective and timely manner; | |
• | litigation and settlement costs, including unforeseen costs; and | |
• | new accounting pronouncements and changes in accounting standards or practices, particularly any affecting the recognition of subscription revenue or accounting for mergers and acquisitions. |
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• | successfully supporting and maintaining a broad range of solutions; | |
• | maintaining continuity in our senior management and key personnel; | |
• | attracting, retaining, training and motivating our employees, particularly technical, customer service and sales personnel; | |
• | enhancing our financial and accounting systems and controls; | |
• | enhancing our information technology infrastructure; and | |
• | managing expanded operations in geographically dispersed locations. |
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• | our inability to market our solutions in a cost-effective manner to new customers or in new vertical or geographic markets; | |
• | our inability to expand our sales to existing customers; | |
• | our inability to build and promote our brand; and | |
• | perceived security, reliability, quality or compatibility problems with our solutions. |
• | difficulties in integrating and managing the operations and technologies of the companies we acquire; | |
• | diversion of our management’s attention from normal daily operations of our business; | |
• | our inability to maintain the key employees, the key business relationships and the reputations of the businesses we acquire; | |
• | the acquisitions may generate insufficient revenue to offset our increased expenses associated with acquisitions; | |
• | our responsibility for the liabilities of the businesses we acquire, including, without limitation, liabilities arising out of their failure to maintain effective data security and privacy controls prior to the acquisition; |
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• | difficulties in complying with new regulatory standards to which we were not previously subject; | |
• | delays in our ability to implement internal standards, controls, procedures and policies in the businesses we acquire; and | |
• | adverse effects of acquisition activity on the key performance indicators we use to monitor our performance as a business. |
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• | extended power loss; | |
• | telecommunications failures from multiple telecommunication providers; | |
• | natural disaster or an act of terrorism; | |
• | software and hardware errors, or failures in our own systems or in other systems; | |
• | network environment disruptions such as computer viruses, hacking and similar problems in our own systems and in other systems; | |
• | theft and vandalism of equipment; and | |
• | actions or events caused by or related to third parties. |
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• | develop superior products or services, gain greater market acceptance and expand their offerings more efficiently or more rapidly; | |
• | adapt to new or emerging technologies and changes in customer requirements more quickly; | |
• | take advantage of acquisition and other opportunities more readily; | |
• | adopt more aggressive pricing policies and devote greater resources to the promotion of their brand and marketing and sales of their products and services; and | |
• | devote greater resources to the research and development of their products and services. |
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• | a reduction in new sales or subscription renewal rates; |
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• | unexpected sales credits or refunds to our customers, loss of customers and other potential liabilities; | |
• | delays in customer payments, increasing our collection reserve and collection cycle; | |
• | diversion of development resources and associated costs; | |
• | harm to our reputation and brand; and | |
• | unanticipated litigation costs. |
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• | liability for customer costs related to disputed or fraudulent merchant transactions if those amounts exceed the amount of the customer reserves we have established to make such payments; | |
• | limits on the amount of custodial balances that any single ODFI will underwrite; | |
• | reliance on bank sponsors and card payment processors and other service providers to process bank card transactions; | |
• | failure by us or our bank sponsors to adhere to applicable laws and regulatory requirements or the standards of the Visa and MasterCard credit card associations; | |
• | incidences of fraud or a security breach or our failure to comply with required external audit standards; and | |
• | our inability to increase our fees at times when Visa and MasterCard increase their merchant transaction processing fees. |
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• | reducing the number of occupied sites and units on which we earn revenue; | |
• | preventing our customers from expanding their businesses and managing new properties; | |
• | causing our customers to reduce spending on our solutions; | |
• | subjecting us to increased pricing pressure in order to add new customers and retain existing customers; | |
• | causing our customers to switch to lower-priced solutions provided by our competitors or internally developed solutions; | |
• | delaying or preventing our collection of outstanding accounts receivable; and | |
• | causing payment processing losses related to an increase in customer insolvency. |
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• | incur additional indebtedness or guarantee indebtedness of others; | |
• | create liens on our assets; | |
• | enter into mergers or consolidations; | |
• | dispose of assets; | |
• | prepay indebtedness or make changes to our governing documents and certain of our agreements; |
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• | pay dividends and make other distributions on our capital stock, and redeem and repurchase our capital stock; | |
• | make investments, including acquisitions; | |
• | enter into transactions with affiliates; and | |
• | make capital expenditures. |
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• | variations in our operating results or in expectations regarding our operating results; | |
• | variations in operating results of similar companies; | |
• | announcements of technological innovations, new solutions or enhancements, strategic alliances or agreements by us or by our competitors; | |
• | announcements by competitors regarding their entry into new markets, and new product, service and pricing strategies; | |
• | marketing and advertising initiatives by us or our competitors; | |
• | the gain or loss of customers; | |
• | threatened or actual litigation; | |
• | major changes in our board of directors or management; | |
• | recruitment or departure of key personnel; | |
• | changes in the estimates of our operating results or changes in recommendations by any research analysts that elect to follow our common stock; | |
• | market conditions in our industry and the economy as a whole; | |
• | the overall performance of the equity markets; | |
• | sales of our shares of common stock by existing stockholders; |
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• | volatility in our stock price, which may lead to higher stock-based compensation expense under applicable accounting standards; and | |
• | adoption or modification of regulations, policies, procedures or programs applicable to our business. |
• | 26,000 shares will be eligible for sale immediately upon completion of this offering; and | |
• | shares will be eligible for sale upon the expiration oflock-up agreements, after February 7, 2011 (180 days following the date of our initial public offering prospectus), subject in some cases to volume and other restrictions of Rule 144 and Rule 701 under the Securities Act of 1933, as amended, or the Securities Act; and | |
• | shares will be eligible for sale upon the expiration oflock-up agreements 90 days following the date of this prospectus, subject in some cases to volume and other restrictions of Rule 144 and Rule 701 under the Securities Act. |
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• | a classified board of directors whose members serve staggered three-year terms; | |
• | not providing for cumulative voting in the election of directors; | |
• | authorizing our board of directors to issue, without stockholder approval, preferred stock with rights senior to those of our common stock; | |
• | prohibiting stockholder action by written consent; and | |
• | requiring advance notification of stockholder nominations and proposals. |
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Low | High | |||||||
Year Ending December 31, 2010 | ||||||||
Third Quarter (beginning August 12, 2010) | $ | 12.42 | $ | 19.99 | ||||
Fourth Quarter (through November 16, 2010) | $ | 18.78 | $ | 32.96 |
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• | an actual basis; and | |
• | a pro forma basis to reflect (i) our receipt of the net proceeds from our sale of shares of common stock in this offering, based on an assumed offering price of $27.08 per share, the closing price of our common stock on the NASDAQ Global Select Market on November 16, 2010 after deducting estimated underwriting discounts and commissions and estimated offering expenses and (ii) the application of the net proceeds from this offering as described under “Use of Proceeds.” |
As of September 30, 2010 | ||||||||
Actual | Pro Forma | |||||||
(unaudited) | ||||||||
Cash and cash equivalents(1) | $ | 39,394 | $ | 142,151 | ||||
Revolving credit facility | 2,040 | 2,040 | ||||||
Current and long term-debt(2) | 39,622 | 39,622 | ||||||
Stockholders’ (deficit) equity: | ||||||||
Common stock, $0.001 par value per share; 125,000,000 shares authorized, 63,365,592 shares issued and 63,156,549 outstanding, actual; 125,000,000 shares authorized, 67,365,592 shares issued and 67,156,549 outstanding, pro forma | $ | 63 | $ | 67 | ||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued or outstanding, actual and pro forma | ||||||||
Additional paid in capital | 160,298 | 263,051 | ||||||
Treasury stock | (958 | ) | (958 | ) | ||||
Accumulated deficit | (89,544 | ) | (89,544 | ) | ||||
Accumulated other comprehensive income | (19 | ) | (19 | ) | ||||
Total stockholders’ equity | 69,840 | 172,597 | ||||||
Total capitalization | $ | 111,502 | $ | 214,259 | ||||
• | 9,335,857 shares of common stock issuable upon the exercise of options outstanding as of September 30, 2010 (including shares of our common stock that we expect to be sold in this offering by certain selling stockholders upon the exercise of vested options at the closing of this offering), with a weighted average exercise price of $5.15 per share; | |
• | 824,800 shares of our common stock issued pursuant to restricted stock awards after September 30, 2010 under our 2010 Equity Incentive Plan; and | |
• | 3,203,433 shares of common stock reserved for future issuance under our 2010 Equity Incentive Plan. |
(1) | Assumes that the net proceeds of common stock we are selling will be held initially as cash and cash equivalents. | |
(2) | Includes capital lease obligations. |
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Nine Months | ||||||||||||||||||||||||||||
Year Ended December 31, | Ended September 30, | |||||||||||||||||||||||||||
2005 | 2006 | 2009 | 2010 | |||||||||||||||||||||||||
(unaudited) | (unaudited) | 2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||
On demand | $ | 21,049 | $ | 36,525 | $ | 62,592 | $ | 95,192 | $ | 128,377 | $ | 93,185 | $ | 120,393 | ||||||||||||||
On premise | 17,277 | 15,183 | 11,560 | 7,582 | 3,860 | 3,346 | 6,419 | |||||||||||||||||||||
Professional and other | 4,801 | 6,937 | 9,429 | 9,794 | 8,665 | 6,234 | 7,403 | |||||||||||||||||||||
Total revenue | 43,127 | 58,645 | 83,581 | 112,568 | 140,902 | 102,765 | 134,215 | |||||||||||||||||||||
Cost of revenue | 29,168 | 29,596 | 35,703 | 46,058 | 58,513 | 42,804 | 56,595 | |||||||||||||||||||||
Gross profit | 13,959 | 29,049 | 47,878 | 66,510 | 82,389 | 59,961 | 77,620 | |||||||||||||||||||||
Operating expense: | ||||||||||||||||||||||||||||
Product development | 15,075 | 16,959 | 21,708 | 28,806 | 27,446 | 20,273 | 26,431 | |||||||||||||||||||||
Sales and marketing | 7,142 | 10,487 | 18,047 | 23,923 | 27,804 | 20,376 | 25,793 | |||||||||||||||||||||
General and administrative | 5,782 | 6,267 | 9,756 | 14,135 | 20,210 | 13,275 | 20,230 | |||||||||||||||||||||
Total operating expense | 27,999 | 33,713 | 49,511 | 66,864 | 75,460 | 53,924 | 72,454 | |||||||||||||||||||||
Operating (loss) income | (14,040 | ) | (4,664 | ) | (1,633 | ) | (354 | ) | 6,929 | 6,037 | 5,166 | |||||||||||||||||
Interest expense and other, net | (381 | ) | (508 | ) | (1,510 | ) | (2,152 | ) | (4,528 | ) | (3,106 | ) | (4,749 | ) | ||||||||||||||
Net (loss) income before taxes | (14,421 | ) | (5,172 | ) | (3,143 | ) | (2,506 | ) | 2,401 | 2,931 | 417 | |||||||||||||||||
Income tax expense (benefit) | — | — | — | 703 | (26,028 | ) | 218 | 164 | ||||||||||||||||||||
Net (loss) income | $ | (14,421 | ) | $ | (5,172 | ) | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||||
Net (loss) income attributable to common stockholders: | ||||||||||||||||||||||||||||
Basic | $ | (19,426 | ) | $ | (10,590 | ) | $ | (9,143 | ) | $ | (10,658 | ) | $ | 10,611 | $ | (1,559 | ) | $ | (2,691 | ) | ||||||||
Diluted | $ | (19,426 | ) | $ | (10,590 | ) | $ | (9,143 | ) | $ | (10,658 | ) | $ | 10,611 | $ | (1,559 | ) | $ | (2,691 | ) | ||||||||
Net (loss) income per share attributable to common stockholders: | ||||||||||||||||||||||||||||
Basic | $ | (2.03 | ) | $ | (1.06 | ) | $ | (0.89 | ) | $ | (0.77 | ) | $ | 0.44 | $ | (0.07 | ) | $ | (0.08 | ) | ||||||||
Diluted | $ | (2.03 | ) | $ | (1.06 | ) | $ | (0.89 | ) | $ | (0.77 | ) | $ | 0.42 | $ | (0.07 | ) | $ | (0.08 | ) |
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Nine Months | ||||||||||||||||||||||||||||
Year Ended December 31, | Ended September 30, | |||||||||||||||||||||||||||
2005 | 2006 | 2009 | 2010 | |||||||||||||||||||||||||
(unaudited) | (unaudited) | 2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||||||
Weighted average shares used in computing net (loss) income per share attributable to common stockholders: | ||||||||||||||||||||||||||||
Basic | 9,544 | 10,011 | 10,223 | 13,886 | 23,934 | 23,856 | 31,878 | |||||||||||||||||||||
Diluted | 9,544 | 10,011 | 10,223 | 13,886 | 25,511 | 23,856 | 31,878 | |||||||||||||||||||||
Pro forma net income per share attributable to common stockholders (unaudited)(1): | ||||||||||||||||||||||||||||
Basic | $ | 0.55 | $ | 0.03 | ||||||||||||||||||||||||
Diluted | $ | 0.53 | $ | 0.03 | ||||||||||||||||||||||||
Pro forma weighted average shares outstanding used in computing net income per share attributable to common stockholders (unaudited)(2): | ||||||||||||||||||||||||||||
Basic | 55,773 | 57,625 | ||||||||||||||||||||||||||
Diluted | 57,349 | 59,662 | ||||||||||||||||||||||||||
Pro forma as adjusted net income per share attributable to common stockholders (unaudited)(1): | ||||||||||||||||||||||||||||
Basic | $ | 0.48 | $ | 0.03 | ||||||||||||||||||||||||
Diluted | $ | 0.47 | $ | 0.03 | ||||||||||||||||||||||||
Pro forma as adjusted weighted average shares outstanding in computing net income per share attributable to common stockholders (unaudited)(3): | ||||||||||||||||||||||||||||
Basic | 64,000 | 65,853 | ||||||||||||||||||||||||||
Diluted | 65,577 | 67,890 |
As of December 31, | As of September 30, | |||||||||||||||||||||||
2005 | 2006 | 2010 | ||||||||||||||||||||||
(unaudited) | (unaudited) | 2007 | 2008 | 2009 | (unaudited) | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents(4) | $ | 5,341 | $ | 2,493 | $ | 2,731 | $ | 4,248 | $ | 4,427 | $ | 39,394 | ||||||||||||
Total current assets | 16,951 | 18,843 | 30,414 | 49,119 | 51,003 | 85,677 | ||||||||||||||||||
Total assets | 27,292 | 32,511 | 59,518 | 102,340 | 142,113 | 197,702 | ||||||||||||||||||
Total current liabilities | 34,025 | 44,178 | 54,969 | 75,705 | 78,050 | 80,569 | ||||||||||||||||||
Total deferred revenue | 33,114 | 36,283 | 41,052 | 47,232 | 49,428 | 50,952 | ||||||||||||||||||
Current and long-term debt(5) | 3,849 | 6,682 | 23,809 | 48,943 | 53,990 | 41,662 | ||||||||||||||||||
Total liabilities | 49,275 | 59,485 | 87,954 | 129,622 | 136,757 | 127,862 | ||||||||||||||||||
Preferred stock | 66,514 | 72,300 | 78,534 | 71,675 | 71,832 | — | ||||||||||||||||||
Total stockholders’ (deficit) equity | (88,497 | ) | (99,274 | ) | (106,969 | ) | (98,957 | ) | (66,476 | ) | 69,840 | |||||||||||||
Other Financial Data: | ||||||||||||||||||||||||
Adjusted EBITDA(6) | $ | (8,162 | ) | $ | (692 | ) | $ | 5,984 | $ | 13,064 | $ | 25,593 | $ | 24,287 | ||||||||||
Operating cash flow | (2,614 | ) | 969 | 4,441 | 7,962 | 24,758 | 14,741 | |||||||||||||||||
Capital expenditures | 3,970 | 5,597 | 7,122 | 10,263 | 9,509 | 7,427 |
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As of December 31, | As of September 30, | |||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||||
Selected Operating Data: | ||||||||||||||||||||||||
Number of on demand customers at period end | 1,025 | 1,469 | 2,199 | 2,669 | 5,032 | 6,547 | ||||||||||||||||||
Number of on demand units at period end (in thousands) | 1,181 | 1,708 | 2,800 | 3,833 | 4,551 | 5,567 | ||||||||||||||||||
Total number of employees at period end | 478 | 532 | 654 | 922 | 1,141 | 1,311 |
(1) | Pro forma net income per share and pro forma as adjusted net income per share represent net income divided by the pro forma weighted average shares outstanding and pro forma as adjusted weighted average shares outstanding, respectively, as though the conversion of our redeemable convertible preferred stock into common stock occurred on the original issuance dates. We used $17.2 million of the proceeds from our initial public offering for reduction of our indebtedness. Pro forma net income per share and pro forma as adjusted net income per share reflect the effect of our use of proceeds from our initial public offering to repay debt. The pro forma net income per share calculation reflects our sale of 1,772,518 shares of common stock in our initial public offering used for this debt reduction after deducting underwriting discounts and commissions and our estimated offering costs payable. Pro forma net income per share and pro forma as adjusted net income per share were computed as follows: actual net income of $28.4 million and $0.3 million was increased by approximately $2.1 million and $1.5 million for the year ended December 31, 2009 and the nine months ended September 30, 2010, respectively, representing the pro forma reduction in interest expense, net of tax, resulting from the use of net offering proceeds to reduce indebtedness. | |
(2) | Pro forma weighted average shares outstanding reflects the conversion of our redeemable convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance. The pro forma weighted average shares outstanding reflects the use of proceeds of our sale of 1,772,518 shares of common stock in our initial public offering for the debt reduction noted in (1) above. In addition, pro forma weighted average common shares outstanding, as of December 31, 2009 and September 30, 2010, considers (a) the issuance of 1,418,669 shares of our common stock in payment of a portion of dividends accrued on our Series A, Series A1 and Series B convertible preferred stock through December 31, 2009 and declared on December 31, 2009, (b) the issuance of 342,696 shares of common stock in payment of a portion of dividends accrued on our Series A, Series A1 and Series B convertible preferred stock through March 31, 2010 and declared on April 23, 2010, (c) the issuance of 524,204 shares of our common stock in payment of a portion of accumulated and unpaid dividends on our Series A, Series A1 and Series B convertible preferred stock upon conversion on August 17, 2010 in connection with our initial public offering and (d) 155,000 shares of our common stock acquired upon the exercise of options by certain selling stockholders who participated in our initial public offering, each as if such shares had been issued on January 1, 2009. | |
(3) | Pro forma as adjusted weighted average shares outstanding reflects the conversion of our redeemable convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred on the original dates of issuance. The pro forma as adjusted weighted average shares outstanding reflects our sale of 6,000,000 shares of common stock in our initial public offering, including 1,772,518 shares used for the debt reduction noted in (1) above, and the sale of 4,000,000 shares of common stock in this offering. In addition, pro forma as adjusted weighted average common shares outstanding, as of December 31, 2009 and September 30, 2010, considers (a) the issuance of 1,418,669 shares of our common stock in payment of a portion of dividends accrued on our Series A, Series A1 and Series B convertible preferred stock through December 31, 2009 and declared on December 31, 2009, (b) the issuance of 342,696 shares of common stock in payment of a portion of dividends accrued on our Series A, Series A1 and Series B convertible preferred stock through March 31, 2010 and declared on April 23, 2010, (c) the issuance of 524,204 shares of our common stock in payment of a portion of accumulated and unpaid dividends on our Series A, Series A1 and Series B convertible preferred stock upon conversion on August 17, 2010 in connection with our initial public offering (d) 155,000 shares of our common stock acquired upon the exercise of options by certain selling stockholders who participated in our initial public offering, each as if such shares had been issued on January 1, 2009. | |
(4) | Excludes restricted cash. |
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(5) | Includes capital lease obligations. | |
(6) | We define Adjusted EBITDA as net (loss) income plus depreciation and asset impairment, amortization of intangible assets, interest expense, net, income tax expense (benefit), stock-based compensation expense and acquisition-related expense. | |
We believe that the use of Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that: |
• | Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with our peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and | |
• | it is useful to exclude certain non-cash charges, such as depreciation and asset impairment, amortization of intangible assets and stock-based compensation and non-core operational charges, such as acquisition-related expense, from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be. |
We use Adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. | ||
We do not place undue reliance on Adjusted EBITDA as our only measure of operating performance. Adjusted EBITDA should not be considered as a substitute for other measures of liquidity or financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do, that they do not reflect our capital expenditures or future requirements for capital expenditures and that they do not reflect changes in, or cash requirements for, our working capital. We compensate for the inherent limitations associated with using Adjusted EBITDA measures through disclosure of these limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net (loss) income. |
Nine Months Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Net (loss) income | $ | (14,421 | ) | $ | (5,172 | ) | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||||
Depreciation and asset impairment | 2,010 | 3,269 | 4,854 | 9,847 | 9,231 | 6,932 | 7,657 | |||||||||||||||||||||
Amortization of intangible assets | 3,868 | 670 | 2,273 | 2,095 | 5,784 | 3,963 | 7,256 | |||||||||||||||||||||
Interest expense, net | 381 | 508 | 1,510 | 2,152 | 4,528 | 3,106 | 4,759 | |||||||||||||||||||||
Income tax expense (benefit) | — | — | — | 703 | (26,028 | ) | 218 | 164 | ||||||||||||||||||||
Stock-based compensation expense | — | 33 | 490 | 1,476 | 2,805 | 1,904 | 3,745 | |||||||||||||||||||||
Acquisition-related expense | — | — | — | — | 844 | 20 | 453 | |||||||||||||||||||||
Adjusted EBITDA | $ | (8,162 | ) | $ | (692 | ) | $ | 5,984 | $ | 13,064 | $ | 25,593 | $ | 18,856 | $ | 24,287 | ||||||||||||
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Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||||
Year Ended December 31, | 2009 | 2010 | ||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Cost of revenue | $ | — | $ | — | $ | 48 | $ | 104 | $ | 367 | $ | 255 | $ | 407 | ||||||||||||||
Product development | — | — | 251 | 727 | 1,175 | 775 | 1,664 | |||||||||||||||||||||
Sales and marketing | — | — | 110 | 277 | 498 | 350 | 541 | |||||||||||||||||||||
General and administrative | — | 33 | 81 | 368 | 765 | 524 | 1,133 | |||||||||||||||||||||
Total stock-based compensation expense | $ | — | $ | 33 | $ | 490 | $ | 1,476 | $ | 2,805 | $ | 1,904 | $ | 3,745 | ||||||||||||||
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CONDITION AND RESULTS OF OPERATIONS
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Nine Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
Year Ended December 31, | 2009 | 2010 | ||||||||||||||||||
2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||
(in thousands, except dollar per unit data) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
Total revenue | $ | 83,581 | $ | 112,568 | $ | 140,902 | $ | 102,765 | $ | 134,215 | ||||||||||
On demand revenue | $ | 62,592 | $ | 95,192 | $ | 128,377 | $ | 93,185 | $ | 120,393 | ||||||||||
On demand revenue as a percentage of total revenue | 74.9% | 84.6% | 91.1% | 90.7% | 89.7% | |||||||||||||||
Ending on demand units | 2,800 | 3,833 | 4,551 | 4,265 | 5,567 | |||||||||||||||
Average on demand units | 2,293 | 3,138 | 4,128 | 4,035 | 5,059 | |||||||||||||||
Annualized on demand revenue per average on demand unit | $ | 27.30 | $ | 30.34 | $ | 31.10 | $ | 30.79 | $ | 31.73 | ||||||||||
Adjusted EBITDA | $ | 5,984 | $ | 13,064 | $ | 25,593 | $ | 18,856 | $ | 24,287 | ||||||||||
Adjusted EBITDA as a percentage of total revenue | 7.2% | 11.6% | 18.2% | 18.3% | 18.1% |
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Nine Months Ended | ||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net (loss) income | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||
Depreciation and asset impairment | 4,854 | 9,847 | 9,231 | 6,932 | 7,657 | |||||||||||||||
Amortization of intangible assets | 2,273 | 2,095 | 5,784 | 3,963 | 7,256 | |||||||||||||||
Interest expense, net | 1,510 | 2,152 | 4,528 | 3,106 | 4,759 | |||||||||||||||
Income tax expense (benefit) | — | 703 | (26,028 | ) | 218 | 164 | ||||||||||||||
Stock-based compensation expense | 490 | 1,476 | 2,805 | 1,904 | 3,745 | |||||||||||||||
Acquisition-related expense | — | — | 844 | 20 | 453 | |||||||||||||||
Adjusted EBITDA | $ | 5,984 | $ | 13,064 | $ | 25,593 | $ | 18,856 | $ | 24,287 | ||||||||||
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As of September 30, | ||||||||||||||||
As of December 31, | 2010 | |||||||||||||||
2007 | 2008 | 2009 | (unaudited) | |||||||||||||
(in thousands) | ||||||||||||||||
Term loan | $ | 9,583 | $ | 12,650 | $ | 33,688 | $ | 38,734 | ||||||||
Revolver | 8,584 | 10,000 | — | 2,040 | ||||||||||||
Secured promissory note | — | 10,000 | 10,000 | — | ||||||||||||
Promissory notes issued to preferred stockholders | — | 11,064 | 8,173 | — | ||||||||||||
Capital lease obligations | 5,642 | 5,229 | 2,129 | 888 | ||||||||||||
Interest bearing acquisition-related liabilities | 3,455 | 2,966 | 2,470 | 2,086 |
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• | there is persuasive evidence of an arrangement; | |
• | the solution and/or service has been provided to the customer; | |
• | the collection of the fees is probable; and | |
• | the amount of fees to be paid by the customer is fixed or determinable. |
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• | Vendor specific objective evidence (VSOE), if available. The price at which we sell the element in a separate stand-alone transaction; | |
• | Third-party evidence of selling price (TPE), if VSOE of selling price is not available. Evidence from us or other companies of the value of a largely interchangeable element in a transaction; and | |
• | Estimated selling price (ESP), if neither VSOE nor TPE of selling price is available. Our best estimate of the stand-alone selling price of an element in a transaction. |
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Risk-free interest rates | 1.5-4.8 | % | ||
Expected option life (in years) | 6 | |||
Dividend yield | 0 | % | ||
Expected volatility | 50-60 | % |
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Exercise Price | Fair Value | |||||||||||
Grant Date | Options Granted | Per Share | Per Share | |||||||||
February 2009 | 718,750 | $ | 6.00 | $ | 5.44 | |||||||
June 2009 | 285,500 | 6.00 | 5.76 | |||||||||
September 2009 | 881,000 | 6.00 | 5.04 | |||||||||
October 2009 | 112,500 | 6.00 | 5.04 | |||||||||
November 2009 | 236,250 | 6.00 | 5.04 | |||||||||
December 2009 | 50,000 | 6.00 | 5.66 | |||||||||
February 2010 | 920,500 | 7.50 | 6.74 | |||||||||
April 2010 | 12,500 | 7.50 | 6.74 | |||||||||
May 2010 | 465,250 | 8.00 | 7.96 | |||||||||
June 2010 | 150,000 | 8.00 | 7.96 | |||||||||
July 2010 | 569,250 | 9.00 | 8.78 |
• | our current and historical operating performance; | |
• | our expected future operating performance; | |
• | our financial condition at the grant date; | |
• | the liquidation rights and other preferences of our preferred stock; | |
• | any recent privately negotiated sales of our securities to independent third parties; | |
• | input from management; | |
• | the lack of marketability of our common stock; | |
• | the potential future marketability of our common stock; | |
• | the business risks inherent in our business and in technology companies, generally; | |
• | the market performance of comparable publicly traded companies; and |
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• | the U.S. and global capital market conditions. |
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• | Substantially Enhanced Balance Sheet and Financial Condition. The proceeds of a successful public offering strengthened substantially our balance sheet by increasing our cash and reducing our outstanding indebtedness. Additionally, the completion of our public offering provided us with access to the public company debt and equity markets. | |
• | Substantially Enhanced Liquidity and Marketability of Our Stock. The valuation of our common stock by our compensation committee on July 14, 2010 reflected the fact that the common stock on that date was illiquid and the risk that, in view of difficult public offering market conditions, a public offering remained uncertain. The valuation reflected a successful offering and represents an estimate of the fair value of the unrestricted, freely tradeable stock sold in a public offering market without liquidity and marketability discounts. | |
• | IPO Scenario Probability. The valuation of our common stock by our compensation committee on July 14, 2010 assumed a 20% probability that we would remain a private company through 2010 and reflected the execution and timing risks associated with the completion of our public offering. However, the price range set forth on the cover of this prospectus assumes the successful completion of our public offering, resulting in an increased common stock valuation as compared to our prior valuations. | |
• | Conversion of Preferred Stock. Prior to our initial public offering, our redeemable convertible preferred stock enjoyed substantial economic rights and preferences over our common stock, including fair value redemption rights and cumulative dividends. Our initial public offering price reflected the conversion of our redeemable convertible preferred stock upon the completion of our initial public offering and the corresponding elimination of these preferences resulting in an increased common stock valuation. |
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Nine Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
Year Ended December 31, | 2009 | 2010 | ||||||||||||||||||
2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
On demand | $ | 62,592 | $ | 95,192 | $ | 128,377 | $ | 93,185 | $ | 120,393 | ||||||||||
On premise | 11,560 | 7,582 | 3,860 | 3,346 | 6,419 | |||||||||||||||
Professional and other | 9,429 | 9,794 | 8,665 | 6,234 | 7,403 | |||||||||||||||
Total revenue | 83,581 | 112,568 | 140,902 | 102,765 | 134,215 | |||||||||||||||
Cost of revenue(1) | 35,703 | 46,058 | 58,513 | 42,804 | 56,595 | |||||||||||||||
Gross profit | 47,878 | 66,510 | 82,389 | 59,961 | 77,620 | |||||||||||||||
Operating expense: | ||||||||||||||||||||
Product development(1) | 21,708 | 28,806 | 27,446 | 20,273 | 26,431 | |||||||||||||||
Sales and marketing(1) | 18,047 | 23,923 | 27,804 | 20,376 | 25,793 | |||||||||||||||
General and administrative(1) | 9,756 | 14,135 | 20,210 | 13,275 | 20,230 | |||||||||||||||
Total operating expense | 49,511 | 66,864 | 75,460 | 53,924 | 72,454 | |||||||||||||||
Operating (loss) income | (1,633 | ) | (354 | ) | 6,929 | 6,037 | 5,166 | |||||||||||||
Interest expense and other, net | (1,510 | ) | (2,152 | ) | (4,528 | ) | (3,106 | ) | (4,749 | ) | ||||||||||
Net (loss) income before taxes | (3,143 | ) | (2,506 | ) | 2,401 | 2,931 | 417 | |||||||||||||
Income tax expense (benefit) | — | 703 | (26,028 | ) | 218 | 164 | ||||||||||||||
Net (loss) income | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||
(1) | Includes stock-based compensation expense as follows: |
Nine Months Ended | ||||||||||||||||||||
September 30, | ||||||||||||||||||||
Year Ended December 31, | 2009 | 2010 | ||||||||||||||||||
2007 | 2008 | 2009 | (unaudited) | (unaudited) | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cost of revenue | $ | 48 | $ | 104 | $ | 367 | $ | 255 | $ | 407 | ||||||||||
Product development | 251 | 727 | 1,175 | 775 | 1,664 | |||||||||||||||
Sales and marketing | 110 | 277 | 498 | 350 | 541 | |||||||||||||||
General and administrative | 81 | 368 | 765 | 524 | 1,133 |
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Year Ended December 31, | Nine Months Ended September 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(as a percentage of total revenue) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
On demand | 74.9 | % | 84.6 | % | 91.1 | % | 90.7 | % | 89.7 | % | ||||||||||
On premise | 13.8 | 6.7 | 2.7 | 3.3 | 4.8 | |||||||||||||||
Professional and other | 11.3 | 8.7 | 6.1 | 6.1 | 5.5 | |||||||||||||||
Total revenue | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Cost of revenue | 42.7 | 40.9 | 41.5 | 41.7 | 42.2 | |||||||||||||||
Gross profit | 57.3 | 59.1 | 58.5 | 58.3 | 57.8 | |||||||||||||||
Operating expense: | ||||||||||||||||||||
Product development | 26.0 | 25.6 | 19.5 | 19.7 | 19.7 | |||||||||||||||
Sales and marketing | 21.6 | 21.3 | 19.7 | 19.8 | 19.2 | |||||||||||||||
General and administrative | 11.7 | 12.6 | 14.3 | 12.9 | 15.1 | |||||||||||||||
Total operating expenses | 59.3 | 59.5 | 53.5 | 52.5 | 54.0 | |||||||||||||||
Operating (loss) income | (2.0 | ) | (0.3 | ) | 4.9 | 5.9 | 3.8 | |||||||||||||
Interest expense and other, net | (1.8 | ) | (1.9 | ) | (3.2 | ) | (3.0 | ) | (3.5 | ) | ||||||||||
Net (loss) income before taxes | (3.8 | ) | (2.2 | ) | 1.7 | 2.9 | 0.3 | |||||||||||||
Income tax expense (benefit) | 0.0 | 0.6 | (18.5 | ) | 0.2 | 0.1 | ||||||||||||||
Net (loss) income | (3.8 | ) | (2.9 | ) | 20.2 | 2.6 | 0.2 | |||||||||||||
Nine Months Ended September 30, | ||||||||||||||||
2009 | 2010 | Change | % Change | |||||||||||||
(in thousands, except dollar per unit data) | ||||||||||||||||
Revenue: | ||||||||||||||||
On demand | $ | 93,185 | $ | 120,393 | $ | 27,208 | 29.2 | % | ||||||||
On premise | 3,346 | 6,419 | 3,073 | 91.8 | ||||||||||||
Professional and other | 6,234 | 7,403 | 1,169 | 18.8 | ||||||||||||
Total revenue | $ | 102,765 | $ | 134,215 | $ | 31,450 | 30.6 | |||||||||
On demand unit metrics: | ||||||||||||||||
Ending on demand units | 4,265 | 5,567 | 1,302 | 30.5 | ||||||||||||
Average on demand units | 4,035 | 5,059 | 1,024 | 25.4 | ||||||||||||
Annualized on demand revenue per average on demand unit | $ | 30.79 | $ | 31.73 | $ | 0.94 | 3.1 |
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Nine Months Ended September 30, | ||||||||||||||||
2009 | 2010 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Cost of revenue | $ | 37,748 | $ | 47,683 | $ | 9,935 | 26.3 | % | ||||||||
Depreciation and amortization | 5,056 | 8,912 | 3,856 | 76.3 | ||||||||||||
Total cost of revenue | $ | 42,804 | $ | 56,595 | $ | 13,791 | 32.2 | |||||||||
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Nine Months Ended September 30, | ||||||||||||||||
2009 | 2010 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Product development | $ | 18,646 | $ | 24,746 | $ | 6,100 | 32.7 | % | ||||||||
Depreciation and amortization | 1,627 | 1,685 | 58 | 3.6 | ||||||||||||
Total product development expense | $ | 20,273 | $ | 26,431 | $ | 6,158 | 30.4 | |||||||||
Nine Months Ended September 30, | ||||||||||||||||
2009 | 2010 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Sales and marketing | $ | 17,317 | $ | 22,636 | $ | 5,319 | 30.7 | % | ||||||||
Depreciation and amortization | 3,059 | 3,157 | 98 | 3.2 | ||||||||||||
Total sales and marketing expense | $ | 20,376 | $ | 25,793 | $ | 5,417 | 26.6 | |||||||||
Nine Months Ended September 30, | ||||||||||||||||
2009 | 2010 | Change | %Change | |||||||||||||
(in thousands) | ||||||||||||||||
General and administrative | $ | 12,315 | $ | 19,128 | $ | 6,813 | 55.3 | % | ||||||||
Depreciation and amortization | 960 | 1,102 | 142 | 14.8 | ||||||||||||
Total general and administrative expense | $ | 13,275 | $ | 20,230 | $ | 6,955 | 52.4 | |||||||||
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Year Ended December 31, | ||||||||||||||||
2008 | 2009 | Change | % Change | |||||||||||||
(in thousands, except dollar per unit data) | ||||||||||||||||
Revenue: | ||||||||||||||||
On demand | $ | 95,192 | $ | 128,377 | $ | 33,185 | 34.9 | % | ||||||||
On premise | 7,582 | 3,860 | (3,722 | ) | (49.1 | ) | ||||||||||
Professional and other | 9,794 | 8,665 | (1,129 | ) | (11.5 | ) | ||||||||||
Total revenue | $ | 112,568 | $ | 140,902 | $ | 28,334 | 25.2 | |||||||||
On demand unit metrics: | ||||||||||||||||
Ending on demand units | 3,833 | 4,551 | 718 | 18.7 | ||||||||||||
Average on demand units | 3,138 | 4,128 | 990 | 31.5 | ||||||||||||
On demand revenue per average on demand unit | $ | 30.34 | $ | 31.10 | $ | 0.76 | 2.5 |
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Year Ended December 31, | ||||||||||||||||
2008 | 2009 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Cost of revenue | $ | 40,783 | $ | 51,260 | $ | 10,477 | 25.7 | % | ||||||||
Depreciation and amortization | 5,275 | 7,253 | 1,978 | 37.5 | ||||||||||||
Total cost of revenue | $ | 46,058 | $ | 58,513 | $ | 12,455 | 27.0 | |||||||||
Year Ended December 31, | ||||||||||||||||
2008 | 2009 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Product development | $ | 26,514 | $ | 25,277 | $ | (1,237 | ) | (4.7 | )% | |||||||
Depreciation and amortization | 2,292 | 2,169 | (123 | ) | (5.4 | ) | ||||||||||
Total product development expense | $ | 28,806 | $ | 27,446 | $ | (1,360 | ) | (4.7 | ) | |||||||
Year Ended December 31, | ||||||||||||||||
2008 | 2009 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Sales and marketing | $ | 21,649 | $ | 23,744 | $ | 2,095 | 9.7 | % | ||||||||
Depreciation and amortization | 2,274 | 4,060 | 1,786 | 78.5 | ||||||||||||
Total sales and marketing expense | $ | 23,923 | $ | 27,804 | $ | 3,881 | 16.2 | |||||||||
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Year Ended December 31, | ||||||||||||||||
2008 | 2009 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
General and administrative | $ | 12,979 | $ | 18,923 | $ | 5,944 | 45.8 | % | ||||||||
Depreciation and amortization | 1,156 | 1,287 | 131 | 11.3 | ||||||||||||
Total general and administrative expense | $ | 14,135 | $ | 20,210 | $ | 6,075 | 43.0 | |||||||||
Year Ended December 31, | ||||||||||||||||
2007 | 2008 | Change | % Change | |||||||||||||
(in thousands, except dollar per unit data) | ||||||||||||||||
Revenue: | ||||||||||||||||
On demand | $ | 62,592 | $ | 95,192 | $ | 32,600 | 52.1 | % | ||||||||
On premise | 11,560 | 7,582 | (3,978 | ) | (34.4 | ) | ||||||||||
Professional and other | 9,429 | 9,794 | 365 | 3.9 | ||||||||||||
Total revenue | $ | 83,581 | $ | 112,568 | $ | 28,987 | 34.7 | |||||||||
On demand unit metrics: | ||||||||||||||||
Ending on demand units | 2,800 | 3,833 | 1,033 | 36.9 | ||||||||||||
Average on demand units | 2,293 | 3,138 | 845 | 36.9 | ||||||||||||
On demand revenue per average on demand unit | $ | 27.30 | $ | 30.34 | $ | 3.04 | 11.1 |
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Year Ended December 31, | ||||||||||||||||
2007 | 2008 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Cost of revenue | $ | 32,056 | $ | 40,783 | $ | 8,727 | 27.2 | % | ||||||||
Depreciation and amortization | 3,647 | 5,275 | 1,628 | 44.6 | ||||||||||||
Total cost of revenue | $ | 35,703 | $ | 46,058 | $ | 10,355 | 29.0 | |||||||||
Year Ended December 31, | ||||||||||||||||
2007 | 2008 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Product development | $ | 20,459 | $ | 26,514 | $ | 6,055 | 29.6 | % | ||||||||
Depreciation and amortization | 1,249 | 2,292 | 1,043 | 83.5 | ||||||||||||
Total product development | $ | 21,708 | $ | 28,806 | $ | 7,098 | 32.7 | |||||||||
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Year Ended December 31, | ||||||||||||||||
2007 | 2008 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
Sales and marketing | $ | 16,215 | $ | 21,649 | $ | 5,434 | 33.5 | % | ||||||||
Depreciation and amortization | 1,832 | 2,274 | 442 | 24.1 | ||||||||||||
Total sales and marketing expense | $ | 18,047 | $ | 23,923 | $ | 5,876 | 32.6 | |||||||||
Year Ended December 31, | ||||||||||||||||
2007 | 2008 | Change | % Change | |||||||||||||
(in thousands) | ||||||||||||||||
General and administrative | $ | 9,357 | $ | 12,979 | $ | 3,622 | 38.7 | % | ||||||||
Depreciation and amortization | 399 | 1,156 | 757 | 189.7 | ||||||||||||
Total general and administrative expense | $ | 9,756 | $ | 14,135 | $ | 4,379 | 44.9 | |||||||||
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Three Months Ended, | ||||||||||||||||||||||||||||||||||||
September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | ||||||||||||||||||||||||||||
2008 | 2008 | 2009 | 2009 | 2009 | 2009 | 2010 | 2010 | 2010 | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||
On demand | $ | 24,520 | $ | 27,462 | $ | 29,264 | $ | 30,852 | $ | 33,069 | $ | 35,192 | $ | 37,207 | $ | 39,659 | $ | 43,097 | ||||||||||||||||||
On premise | 1,766 | 1,774 | 1,437 | 1,441 | 468 | 514 | 1,868 | 2,424 | 2,127 | |||||||||||||||||||||||||||
Professional and other | 2,982 | 2,525 | 1,942 | 2,175 | 2,117 | 2,431 | 2,303 | 2,726 | 2,804 | |||||||||||||||||||||||||||
Total revenue | 29,268 | 31,761 | 32,643 | 34,468 | 35,654 | 38,137 | 41,378 | 44,809 | 48,028 | |||||||||||||||||||||||||||
Cost of revenue(1) | 12,074 | 13,113 | 13,035 | 14,568 | 15,201 | 15,709 | 17,858 | 18,534 | 20,203 | |||||||||||||||||||||||||||
Gross profit | 17,194 | 18,648 | 19,608 | 19,900 | 20,453 | 22,428 | 23,520 | 26,275 | 27,825 | |||||||||||||||||||||||||||
Operating expense: | ||||||||||||||||||||||||||||||||||||
Product development(1) | 6,932 | 8,132 | 6,711 | 6,887 | 6,675 | 7,173 | 8,315 | 8,989 | 9,127 | |||||||||||||||||||||||||||
Sales and marketing(1) | 6,325 | 6,690 | 6,180 | 6,833 | 7,363 | 7,428 | 7,540 | 8,825 | 9,428 | |||||||||||||||||||||||||||
General and administrative(1) | 3,648 | 3,858 | 4,536 | 4,187 | 4,552 | 6,935 | 6,522 | 6,739 | 6,969 | |||||||||||||||||||||||||||
Total operating expense | 16,905 | 18,680 | 17,427 | 17,907 | 18,590 | 21,536 | 22,377 | 24,553 | 25,524 | |||||||||||||||||||||||||||
Operating (loss) income | 289 | (32 | ) | 2,181 | 1,993 | 1,863 | 892 | 1,143 | 1,722 | 2,301 | ||||||||||||||||||||||||||
Interest expense and other, net | (493 | ) | (781 | ) | (985 | ) | (998 | ) | (1,123 | ) | (1,422 | ) | (1,464 | ) | (1,463 | ) | (1,822 | ) | ||||||||||||||||||
Net (loss) income before taxes | (204 | ) | (813 | ) | 1,196 | 995 | 740 | (530 | ) | (321 | ) | 259 | 479 | |||||||||||||||||||||||
Income tax expense (benefit) | — | 638 | 69 | 85 | 64 | (26,246 | ) | (118 | ) | 95 | 187 | |||||||||||||||||||||||||
Net (loss) income | $ | (204 | ) | $ | (1,451 | ) | $ | 1,127 | $ | 910 | $ | 676 | $ | 25,716 | $ | (203 | ) | $ | 164 | $ | 292 | |||||||||||||||
(1) | Includes stock-based compensation expense as follows: |
Three Months Ended, | ||||||||||||||||||||||||||||||||||||
September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | ||||||||||||||||||||||||||||
2008 | 2008 | 2009 | 2009 | 2009 | 2009 | 2010 | 2010 | 2010 | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||
Cost of revenue | $ | 21 | $ | 41 | $ | 67 | $ | 85 | $ | 103 | $ | 112 | $ | 123 | $ | 144 | $ | 140 | ||||||||||||||||||
Product development | 170 | 218 | 246 | 252 | 277 | 400 | 507 | 530 | 627 | |||||||||||||||||||||||||||
Sales and marketing | 76 | 86 | 98 | 117 | 135 | 148 | 164 | 176 | 201 | |||||||||||||||||||||||||||
General and administrative | 101 | 112 | 154 | 159 | 211 | 241 | 300 | 442 | 391 | |||||||||||||||||||||||||||
Total stock-based compensation expense | $ | 368 | $ | 457 | $ | 565 | $ | 613 | $ | 726 | $ | 901 | $ | 1,094 | $ | 1,292 | $ | 1,359 | ||||||||||||||||||
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Three Months Ended, | ||||||||||||||||||||||||||||||||||||
September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | ||||||||||||||||||||||||||||
2008 | 2008 | 2009 | 2009 | 2009 | 2009 | 2010 | 2010 | 2010 | ||||||||||||||||||||||||||||
(as a percentage of total revenue) | ||||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||
On demand | 83.8 | % | 86.5 | % | 89.6 | % | 89.5 | % | 92.7 | % | 92.3 | % | 89.9 | % | 88.5 | % | 89.7 | % | ||||||||||||||||||
On premise | 6.0 | 5.6 | 4.4 | 4.2 | 1.3 | 1.3 | 4.5 | 5.4 | 4.4 | |||||||||||||||||||||||||||
Professional and other | 10.2 | 8.0 | 5.9 | 6.3 | 5.9 | 6.4 | 5.6 | 6.1 | 5.8 | |||||||||||||||||||||||||||
Total revenue | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||||||||||||||
Software and services | 41.3 | 41.3 | 39.9 | 42.3 | 42.6 | 41.2 | 43.2 | 41.4 | 42.1 | |||||||||||||||||||||||||||
Gross profit | 58.7 | 58.7 | 60.1 | 57.7 | 57.4 | 58.8 | 56.8 | 58.6 | 57.9 | |||||||||||||||||||||||||||
Operating expense: | ||||||||||||||||||||||||||||||||||||
Product development | 23.7 | 25.6 | 20.6 | 20.0 | 18.7 | 18.8 | 20.1 | 20.1 | 19.0 | |||||||||||||||||||||||||||
Sales and marketing | 21.6 | 21.1 | 18.9 | 19.8 | 20.7 | 19.5 | 18.2 | 19.7 | 19.6 | |||||||||||||||||||||||||||
General and administrative | 12.5 | 12.1 | 13.9 | 12.1 | 12.8 | 18.2 | 15.8 | 15.0 | 14.5 | |||||||||||||||||||||||||||
Total operating expenses | 57.8 | 58.8 | 53.4 | 52.0 | 52.1 | 56.5 | 54.1 | 54.8 | 53.1 | |||||||||||||||||||||||||||
Operating (loss) income | 1.0 | (0.1 | ) | 6.7 | 5.8 | 5.2 | 2.3 | 2.8 | 3.9 | 4.8 | ||||||||||||||||||||||||||
Interest expense and other, net | (1.7 | ) | (2.5 | ) | (3.0 | ) | (2.9 | ) | (3.1 | ) | (3.7 | ) | (3.5 | ) | (3.3 | ) | (3.8 | ) | ||||||||||||||||||
Net (loss) income before taxes | (0.7 | ) | (2.6 | ) | 3.7 | 2.9 | 2.1 | (1.4 | ) | (0.8 | ) | 0.6 | 1.0 | |||||||||||||||||||||||
Income tax expense (benefit) | 0.0 | 2.0 | 0.2 | 0.2 | 0.2 | (68.8 | ) | (0.3 | ) | 0.2 | 0.4 | |||||||||||||||||||||||||
Net (loss) income | (0.7 | ) | (4.6 | ) | 3.5 | 2.6 | 1.9 | 67.4 | (0.5 | ) | 0.4 | 0.6 | ||||||||||||||||||||||||
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• | Adjusted EBITDA provides investors and other users of our financial information consistency and comparability with our past financial performance, facilitates period-to-period comparisons of operations and facilitates comparisons with our peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results; and | |
• | it is useful to exclude certain non-cash charges, such as depreciation and asset impairment, amortization of intangible assets and stock-based compensation and non-core operational charges, such as acquisition-related expense, from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and these expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be. |
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Three Months Ended, | ||||||||||||||||||||||||||||||||||||
September 30, | December 31, | March 31, | June 30, | September 30, | December 31, | March 31, | June 30, | September 30, | ||||||||||||||||||||||||||||
2008 | 2008 | 2009 | 2009 | 2009 | 2009 | 2010 | 2010 | 2010 | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||
Net (loss) income | $ | (204 | ) | $ | (1,451 | ) | $ | 1,127 | $ | 910 | $ | 676 | $ | 25,716 | $ | (203 | ) | $ | 164 | $ | 292 | |||||||||||||||
Depreciation and asset impairment | 2,244 | 3,750 | 2,043 | 2,470 | 2,419 | 2,299 | 2,456 | 2,595 | 2,606 | |||||||||||||||||||||||||||
Amortization of intangible assets | 331 | 774 | 1,362 | 1,322 | 1,279 | 1,821 | 2,214 | 2,282 | 2,760 | |||||||||||||||||||||||||||
Interest expense, net | 493 | 781 | 985 | 998 | 1,123 | 1,422 | 1,464 | 1,472 | 1,822 | |||||||||||||||||||||||||||
Income tax expense (benefit) | — | 638 | 69 | 85 | 64 | (26,246 | ) | (118 | ) | 95 | 187 | |||||||||||||||||||||||||
Stock-based compensation expense | 368 | 457 | 565 | 613 | 726 | 901 | 1,094 | 1,292 | 1,359 | |||||||||||||||||||||||||||
Acquisition-related expense | — | — | — | — | 20 | 824 | 324 | 69 | 61 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 3,232 | $ | 4,949 | $ | 6,151 | $ | 6,398 | $ | 6,307 | $ | 6,737 | $ | 7,231 | $ | 7,968 | $ | 9,087 | ||||||||||||||||||
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Nine Months Ended | ||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net cash provided by operating activities | $ | 4,441 | $ | 7,962 | $ | 24,758 | $ | 17,541 | $ | 14,741 | ||||||||||
Net cash (used) in investing activities | (16,155 | ) | (32,320 | ) | (24,676 | ) | (10,121 | ) | (24,658 | ) | ||||||||||
Net cash provided by financing activities | 11,952 | 25,875 | 97 | 4,244 | 44,903 |
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Payments Due by Period | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Total | 1 year | 1-3 years | 3-5 years | 5 years | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Long-term debt obligations | $ | 73,687 | $ | 11,053 | $ | 22,106 | $ | 40,528 | $ | — | ||||||||||
Interest payments on long-term debt obligations(1) | 9,102 | 2,681 | 4,299 | 2,122 | — | |||||||||||||||
Capital (finance) leases | 2,273 | 1,670 | 603 | — | — | |||||||||||||||
Operating lease obligations | 27,051 | 4,922 | 8,197 | 7,591 | 6,341 | |||||||||||||||
Acquisition-related liabilities(2) | 12,359 | 1,653 | 9,842 | 864 | — | |||||||||||||||
$ | 124,472 | $ | 21,979 | $ | 45,047 | $ | 51,105 | $ | 6,341 | |||||||||||
(1) | The amount of interest payments on long-term debt obligations represents current obligations as of December 31, 2009, but reflects the interest rates in effect per our June 2010 debt amendment and our additional $30.0 million borrowing on our delayed draw in November 2010. These payments are subject to change based on changes to interest rates. | |
(2) | We have made several acquisitions in which a portion of the cash purchase price is payable at various times through 2014. |
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Number of | ||||
Property Size | Estimated Units | |||
(in millions) | ||||
Single-family properties | ||||
1 unit | 14.5 | |||
2-4 units | 7.8 | |||
Multi-family properties | ||||
5-9 units | 5.3 | |||
10-49 units | 8.4 | |||
50 or more units | 3.7 | |||
Total Rental Units | 39.7 | |||
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Resident Lifecycle Stage | Property Owner/Manager Objectives | |
Prospect | • increase number of leads through effective marketing | |
• optimize the advertising spending and marketing budget for each property | ||
• capture every lead in a timely manner | ||
• create a compelling online experience for each property | ||
• identify quality prospects | ||
• determine appropriate market rental rates | ||
• increase prospect-to-resident conversion rates | ||
Applicant | • automate application process | |
• assess applicant credit history and ability to pay rent | ||
• assess applicant criminal background | ||
• determine optimal rental rates and lease terms required to maximize revenue | ||
• manage risk through renter’s insurance programs | ||
Residency | • foster resident retention through effective communications and responsive service | |
• manage rental payments and collections | ||
• maintain property, including improvements and routine maintenance | ||
• manage service provider network, including utilities and telecommunications vendors | ||
• renew as high a percentage of lease expirations as possible | ||
• determine optimal renewal rental rates required to maximize revenue | ||
Post-residency | • improve collection of move-out expenses, including uncovered repairs and unpaid utilities | |
• manage process to efficiently and cost-effectively prepare the unit for new residents | ||
• process final account statements and security deposit refunds |
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Legacy information technology solutions designed to manage the rental housing property management process are inadequate. |
• | require significant customization to implement, which frequently inhibits upgrading to new versions or platforms in a timely manner; | |
• | require information technology, or IT, resources to support integration points between property management systems and disparate value-added services; | |
• | require IT resources to implement and maintain data security, data integrity, performance and business continuity solutions; | |
• | lack scalability and flexibility to account for the expansion or contraction of a property portfolio; | |
• | lack robust marketing and tracking capabilities for converting prospects to residents; | |
• | lack effective spend management capabilities for controlling property management costs; | |
• | lack comprehensive analytics for pricing and yield optimization; | |
• | lack workflow level integration; | |
• | do not provide owners and managers with visibility into overall property performance; and | |
• | cannot be easily updated to meet new regulations and compliance requirements. |
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• | conventional single-family properties (four units or less); | |
• | conventional multi-family properties (five or more units); | |
• | affordable Housing and Urban Development, or HUD, properties; | |
• | affordable tax credit properties; | |
• | privatized military housing; | |
• | student housing; and | |
• | senior living. |
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Product Center | Key Functionality | |
OneSite Leasing & Rents | Prospects, generates, presents and records price quotations, generates lease documents, schedules move-ins and posts financial transactions to the resident ledger for both new residents and renewal of existing resident leases. Six versions support the unique needs of our target residential rental markets. | |
OneSite Facilities | Manages asset warranties, service requests and unit turnovers so that when a resident moves out, the resident ledger is automatically updated with any damages to be incorporated into the resident’s final account statement. | |
OneSite Purchasing | Manages work orders and procurement activities and calculates operating budget variances. | |
OneSite Accounting | Provides back-office general ledger, accounts payable and cash management functions. We license OneSite Accounting from a third-party accounting software provider and have modified it to meet the needs of the rental housing industry. | |
OneSite Budgeting | Enables owners and managers to budget property performance and transfer budgets into the general ledger. |
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Product Center | Key Functionality | |
CrossFire Content Management System | Provides a central repository of property marketing and listing content, including descriptions, photos, video or animated tours, floor plans and site plans. | |
CrossFire Contact Center | Provides call and email routing technology and agent staffing on a permanent or overflow basis to answer phone calls and emails from prospects or residents. | |
CrossFire Lead2Lease | Provides phone and Internet lead tracking and lead management services integrated with popular property management systems. | |
CrossFire Leasing Portal | Enables owners and managers to create customized property websites with rich content and search capabilities, including transaction widgets for checking availability, generating a price quote, applying for residency, leasing an apartment online and paying rent and deposits online. | |
CrossFire PropertyLinkOnline | Provides a syndication service that pushes property content to search engines, Internet listing services and classified listing websites. | |
CrossFire Resident Portal | Provides a portal that enables residents to view community events, enter or check the status of service requests, review statements, pay rent online and renew leases. | |
CrossFire Studio | Provides advertising and marketing planning services through a talented team of multi-family marketing experts including advertising placement and performance evaluation, leasing and renewal campaign design and marketing consulting services. |
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Product Center | Key Functionality | |
YieldStar Price Optimizer | Uses current customer and market data and statistically derived supply/demand forecasts and price elasticity models to calculate and present optimal prices for each rental unit. | |
YieldStar Pricing Advisory Services | Offers outsourced pricing management advisory services for owners and managers who want to utilize Price Optimizer without incurring the costs to staff and support it in-house. | |
M/PF Research | Provides multi-family housing market research through a well-established and trusted name in multi-family market intelligence. The M/PF Research database includes monthly and quarterly information on occupancy and rents for more than 39,000 rental housing properties in the United States representing 294 defined metropolitan statistical areas as of February 2010. |
Product Center | Key Functionality | |
LeasingDesk Screening | Evaluates an applicant’s credit using a scoring model calibrated to predict resident default and payment behavior by leveraging our proprietary database of resident rental payment history generated from our property management systems. | |
Criminal Background Services | Ascertains if a prospective resident has committed a crime or been evicted from a previous apartment by accessing databases that are aggregated from third-party data providers. | |
Credit Optimizer | Allows owners and managers to optimize credit thresholds based on occupancy levels and adjust deposit and rent amounts based on the default risk of the resident in a yield neutral manner. Credit Optimizer is expected to remain in beta testing throughout 2010. | |
LeasingDesk Insurance Services | Offers liability and renter’s insurance. Liability policies protect owners and managers against financial loss due to resident-caused damage, while renter’s insurance provides additional coverage for resident personal belongings in the event of loss. |
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Product Center | Key Functionality | |
Convergent Billing Services | Provides automated monthly invoicing services enabling owners and managers to increase collections by sending each resident a monthly invoice that combines rent, small balances and utility charges onto a single invoice. | |
Energy Recovery Services | Provides automated utility billing services to enable owners and managers to detect and collect utility costs that are the residents’ responsibility. | |
Infrastructure Services | Provides contractor services to install electric, gas and water meters in apartment communities through three individual product centers. Velocity also provides consulting services to assist owners and managers in implementing and managing energy, media, data and telecom services at their communities. |
Product Center | Key Functionality | |
OpsBuyer | Integrates purchase orders, onsite accounts payable, automated workflow approval (including mobile approvals), budget and spend limit control, centralized expense reporting tools and document management through our on demand spend management tool. | |
OpsMarket | Enables owners and managers to create private marketplaces to manage the transactions between their properties and their preferred suppliers and service providers through our on demand eProcurement solution. | |
OpsInvoice | Provides an on demand invoice management solution that centralizes the processing of both electronic and paper invoices across the owner’s or manager’s portfolio. | |
OpsAdvantage | Offers a catalog of negotiated discounts for selected vendors across several major purchasing categories for owners and managers that are too small to negotiate volume discounts. | |
OpsBid | Provides an on demand procurement system used primarily for larger capital and rehab related purchases that are not ordered regularly. |
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Cloud Services | Key Functionality | |
Portfolio Reporting | Aggregates the data from our other solutions and third-party applications and gives owners and managers access to business critical reports and actionable analytical information about the performance of their properties. | |
Document Management | Provides storage, retrieval, security, and archiving of all documents and forms associated with a property management company’s business processes and procedures. | |
Payment Processing | Enables owners and managers to collect rent and other payments electronically from residents through check, money order, automated clearing house, or ACH, or credit/debit card. | |
Online Learning | Allows owners and managers to train geographically dispersed employees in a cost-effective and timely fashion, and allows employees to complete their coursework at their convenience. |
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• | field marketing events for customers and prospects; | |
• | participation in, and sponsorship of, user conferences, trade shows and industry events; | |
• | customer programs, including user meetings and our online customer community; | |
• | online marketing activities, including email campaigns, online advertising, web campaigns, webinars and use of social media, including blogging, Facebook, and Twitter; | |
• | public relations; and | |
• | use of our website to provide product and company information, as well as learning opportunities for potential customers. |
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• | in the multi-family ERP market, AMSI Property Management (owned by Infor Global Solutions, Inc.), MRI Software LLC and Yardi Systems, Inc. and, in the single-family ERP market, AppFolio, Inc. and DIY Real Estate Solutions (recently acquired by Yardi Systems, Inc.); | |
• | in the applicant screening market, ChoicePoint Inc. (a subsidiary of Reed Elsevier Group plc), CoreLogic, Inc (formerly First Advantage Corporation, an affiliate of the First American Corporation), TransUnion Rental Screening Solutions, Inc. (a subsidiary of TransUnion LLC) and Yardi Systems, Inc. (following its recent acquisition of RentGrow Inc., an applicant screening provider), On-Site.com and many other smaller regional and local screening companies; | |
• | in the insurance market, Assurant, Inc., Bader Company, CoreLogic, Inc. and a number of national insurance underwriters (including GEICO Corporation, The Allstate Corporation, State Farm Fire and Casualty Company, Farmers Insurance Exchange, Nationwide Mutual Insurance Company and United Services Automobile Association) that market renters insurance; | |
• | in the CRM market, contact center and call tracking service providers Call Source Inc., Yardi Systems, Inc. (which recently announced its intention to build a call center) and numerous regional and local call centers, lead tracking solution providers Call Source, Inc. Lead Tracking Solutions (a division of O.C. Concepts, Inc.) and Who’s Calling, Inc., content syndication providers Realty DataTrust Corporation, RentSentinel.com (owned by Yield Technologies, Inc.), RentEngine (owned by MyNewPlace.com), rentbits.com, Inc. and companies providing web portal services, includingApartments24-7.com, Inc., Ellipse Communications, Inc., Property Solutions International, Inc., Spherexx.com, Yardi Systems, Inc., Internet listing sources and many other smaller web portal designers; | |
• | in the utility billing market, American Utility Management, Inc., Conservice, LLC, ista North America, Inc., NWP Services Corporation, Yardi Systems, Inc. (following its recent acquisition of Energy Billing Systems, Inc.) and many other smaller regional or local utilities; | |
• | in the revenue management market, PROS Holdings, Inc., The Rainmaker Group, Inc. and Yardi Systems, Inc.; | |
• | in the spend management market, SiteStuff, Inc. (owned by Yardi Systems, Inc., AvidXchange, Inc., Nexus Systems, Inc., Oracle Corporation; and | |
• | in the payment processing space, Chase Paymentech Solutions, LLC (a subsidiary of JPMorgan Chase & Co.), First Data Corporation, Fiserv, Inc., MoneyGram International, Inc., NWP Services Corporation, Property Solutions International, Inc., RentPayment.com (a subsidiary of Yapstone, Inc.), Yardi Systems, Inc. and a number of national banking institutions. |
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Name | Age | Position(s) | ||
Stephen T. Winn | 64 | Chairman of the Board, Chief Executive Officer and Director | ||
Timothy J. Barker | 48 | Chief Financial Officer and Treasurer | ||
Dirk D. Wakeham | 44 | President | ||
Margot Lebenberg | 43 | Executive Vice President, Chief Legal Officer and Secretary | ||
Ashley Chaffin Glover | 38 | Executive Vice President, Multifamily Solutions | ||
Jason D. Lindwall | 39 | Chief Operations Officer | ||
Alfred R. Berkeley, III(1),(2) | 66 | Director | ||
Richard M. Berkeley(2),(3) | 58 | Director | ||
Peter Gyenes(1),(2),(3) | 65 | Director | ||
Jeffrey T. Leeds(3) | 54 | Director | ||
Jason A. Wright(1),(2),(3) | 38 | Director |
(1) | Member of our audit committee. | |
(2) | Member of our compensation committee. | |
(3) | Member of our nominating and governance committee |
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• | The Class I directors are Peter Gyenes and Alfred R. Berkeley, III; | |
• | The Class II directors are Jeffrey T. Leeds and Richard M. Berkeley; and | |
• | The Class III directors are Stephen T. Winn and Jason A. Wright. |
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• | selecting and hiring our independent auditors; | |
• | approving the audit and non-audit services to be performed by our independent auditors; | |
• | evaluating the qualifications, performance and independence of our independent auditors; | |
• | monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; | |
• | reviewing the adequacy and effectiveness of our internal control policies and procedures; | |
• | discussing the scope and results of the audit with the independent auditors and reviewing with management and the independent auditors our interim and year-end operating results; | |
• | preparing the audit committee report required in this prospectus and in our annual proxy statement; and | |
• | reviewing and evaluating, at least annually, its own performance and that of its members, including compliance with the committee charter. |
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• | reviewing and approving corporate goals and objectives relevant to compensation of our Chief Executive Officer and other executive officers; | |
• | reviewing and approving the following for our Chief Executive Officer and our other executive officers: annual base salaries, annual incentive bonuses, including the specific goals and amounts, equity compensation, employment agreements, severance arrangements and change in control arrangements and any other benefits, compensation or arrangements; | |
• | reviewing the succession planning for our executive officers; | |
• | reviewing and recommending compensation goals and bonus and stock compensation criteria for our employees; | |
• | reviewing and recommending compensation programs for outside directors; | |
• | preparing the compensation discussion and analysis and compensation committee report that the SEC requires in our annual proxy statement; | |
• | administering, reviewing and making recommendations with respect to our equity compensation plans; and | |
• | reviewing and evaluating, at least annually, its own performance and that of its members, including compliance with the committee charter. |
• | assisting our board of directors in identifying prospective director nominees and recommending nominees for each annual meeting of stockholders to the board of directors; | |
• | reviewing developments in corporate governance practices and developing and recommending governance principles applicable to our board of directors; |
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• | overseeing the evaluation of our board of directors and management; | |
• | recommending members for each board committee to our board of directors; | |
• | reviewing and monitoring our code of business conduct and ethics and actual and potential conflicts of interest of members of our board of directors and officers; and | |
• | reviewing and evaluating, at least annually, its own performance and that of its members, including compliance with the committee charter. |
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Retainer | $6,000 per quarter | |
Audit committee chair retainer | $4,500 per quarter | |
Audit committee member (excluding chair) retainer | $3,000 per quarter | |
Other board committee chair retainer | $3,000 per quarter | |
Other committee member (excluding chair) retainer | $1,500 per quarter | |
Annual equity grant | $50,000 restricted stock value(1) |
(1) | The forfeiture provision of each annual restricted stock grant will lapse with respect to 5% of the restricted shares subject to the grant each quarter commencing on the first day of the calendar quarter immediately following the grant date for 15 consecutive quarters and the forfeiture provision will lapse with respect to the remaining 25% of the restricted shares subject to the grant on the first day of the next following calendar quarter, subject to the continuous service of the director through each applicable date. |
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Fees Earned or | Option | |||||||||||
Name | Paid in Cash ($) | Awards ($)(1) | Total ($) | |||||||||
Alfred R. Berkeley, III | — | — | — | |||||||||
Richard M. Berkeley | — | — | — | |||||||||
Peter Gyenes | — | $ | 158,257 | (2) | $ | 158,257 | ||||||
Jeffrey T. Leeds | — | — | — | |||||||||
Jason A. Wright | — | — | — |
(1) | Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 8 of Notes to Consolidated Financial Statements for the year ended December 31, 2009 for a discussion of assumptions made in determining the grant date fair value of our stock option awards. | |
(2) | Reflects contingent grant to Mr. Gyenes of options to purchase 50,000 shares of our common stock at an exercise price of $6.00 per share on December 18, 2009. The contingencies of the grant were satisfied and the grant became effective on December 29, 2009. This grant was subsequently cancelled and terminated and replaced by a grant to Mr. Gyenes of options to purchase 60,000 shares of our common stock at an exercise price of $7.50 on February 25, 2010. The aggregate grant date fair value of this subsequent grant computed in accordance with FASB ASC Topic 718 is $222,589. |
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• | attract, retain and motivate skilled and knowledgeable executive talent; | |
• | ensure that executive compensation is aligned with our corporate strategies and business objectives; and | |
• | align the incentives of the named executive officers with the creation of value for stockholders. |
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• | Publicly Held Companies Surveys. Two private surveys regarding executive compensation in the technology industry, the Watson Wyatt Executive Compensation Survey and the Towers Perrin Executive Compensation Survey; and | |
• | Select Peer Group. Publicly available data for a competitive peer group of publicly traded on demand software and services companies of similar size experiencing rapid revenue growth comparable to ours with total employees in the range of 500 to 1,000, or the Select Peer Group. |
Blackboard Inc. | RightNow Technologies | |
DealerTrack Holdings, Inc. | NetSuite Inc. | |
Kenexa Corporation | Unica Corporation | |
Ultimate Software Group, Inc. | Callidus Software Inc. | |
Omniture, Inc. | athenahealth, Inc | |
Concur Technologies, Inc. | SuccessFactors, Inc. | |
Taleo Corporation | Constant Contact, Inc. | |
SumTotal Systems, Inc. | DemandTec, Inc. |
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2008 Base | 2009 Base | |||||||||||||
Named Executive Officer | Current Title | Salary(1) | Salary(2) | % Increase | ||||||||||
Stephen T. Winn | Chief Executive Officer, Chairman of the Board | $ | 400,000 | $ | 400,000 | — | ||||||||
Timothy J. Barker | Chief Financial Officer and Treasurer | 285,000 | 315,000 | 10.5 | % | |||||||||
Dirk D. Wakeham | President(3) | 250,000 | 260,000 | (4) | 4.0 | |||||||||
Ashley Chaffin Glover | Executive Vice President, Multifamily Solutions(5) | 220,000 | 260,000 | (6) | 18.2 | |||||||||
William E. Van Valkenberg(7) | Chief Legal Officer and Secretary | — | 300,000 | — |
(1) | Reflects base salary at end of 2008. | |
(2) | Reflects base salary at beginning of 2009. | |
(3) | Mr. Wakeham assumed the title and responsibilities of President in January 2010. He served as our Executive Vice President, Property Solutions, from April 2009 to January 2010 and as our Senior Vice President, President, LeasingDesk Risk Mitigation Systems, for prior periods in 2009. |
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(4) | Mr. Wakeham’s salary was increased from $260,000 to $300,000 effective April 1, 2009 in connection with his promotion to Executive Vice President, Property Solutions. | |
(5) | Ms. Chaffin Glover assumed the title and responsibilities of Executive Vice President, Multifamily Solutions in January 2010. She served as our Executive Vice President, Resident Solutions from April 2009 to January 2010 and as our Senior Vice President, President, Velocity Utility and Billing Services, for prior periods in 2009. | |
(6) | Ms. Chaffin Glover’s salary was increased from $260,000 to $300,000 effective April 1, 2009 in connection with her promotion to Executive Vice President, Resident Solutions. | |
(7) | Mr. Van Valkenberg commenced his employment with us in September 2009 after providing consulting services to us from June 2009 to September 2009. Mr. Van Valkenberg’s employment with us ended and he ceased to be an executive officer effective as of May 11, 2010. |
2009 Base | 2010 Base | |||||||||||||
Named Executive Officer | Title | Salary(1) | Salary(2) | % Increase | ||||||||||
Stephen T. Winn | Chief Executive Officer, Chairman of the Board | $ | 400,000 | $ | 400,000 | — | ||||||||
Timothy J. Barker | Chief Financial Officer and Treasurer | 315,000 | 350,000 | 11.1 | % | |||||||||
Dirk D. Wakeham | President(3) | 300,000 | (4) | 330,000 | 10.0 | |||||||||
Ashley Chaffin Glover | Executive Vice President, Multifamily Solutions(5) | 300,000 | (6) | 320,000 | 6.7 | |||||||||
William E. Van Valkenberg(7) | Chief Legal Officer and Secretary | 300,000 | 300,000 | — |
(1) | Reflects base salary at the end of 2009. | |
(2) | Reflects base salary at beginning of 2010. | |
(3) | Mr. Wakeham assumed the title and responsibilities of President in January 2010. He served as our Executive Vice President, Property Solutions, from April 2009 to January 2010 and as our Senior Vice President, President, LeasingDesk Risk Mitigation Systems, for prior periods in 2009. | |
(4) | Mr. Wakeham’s salary was increased from $260,000 to $300,000 effective April 1, 2009 in connection with his promotion to Executive Vice President, Property Solutions. | |
(5) | Ms. Chaffin Glover assumed the title and responsibilities of Executive Vice President, Multifamily Solutions in January 2010. She served as our Executive Vice President, Resident Solutions from April 2009 to January 2010 and as our Senior Vice President, President, Velocity Utility and Billing Services, for prior periods in 2009. | |
(6) | Ms. Chaffin Glover’s salary was increased from $260,000 to $300,000 effective April 1, 2009 in connection with her promotion to Executive Vice President, Resident Solutions. | |
(7) | Mr. Van Valkenberg commenced his employment with us in September 2009 after providing consulting services to us from June 2009 to September 2009. Mr. Van Valkenberg’s employment with us ended and he ceased to be an executive officer effective as of May 11, 2010. |
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Note: | The 2009 Management Incentive Plan results are different from similar metrics disclosed elsewhere in this registration statement as they were based on preliminary results and included add backs for purchase accounting and other one-time adjustments related to license fees billed at the initial order date. For 2009 Management Incentive Plan purposes, the license fees billed at the initial order date are recognized on a straight-line basis over the contractual term. For GAAP reporting purposes, license fees billed at the initial order date are recognized as revenue on a straight-line basis over the longer of the contractual term or the period in which the customer is expected to benefit, which we consider to be four years. |
2009 | Actual Bonus as | |||||||||||
Target | Actual | a Percent of | ||||||||||
Executive | Bonus ($) | Bonus ($) | Target Bonus | |||||||||
Stephen T. Winn | $ | 300,000 | $ | 246,765 | 82.3 | % | ||||||
Timothy J. Barker | 157,500 | 149,240 | 94.8 | |||||||||
Dirk D. Wakeham | 150,000 | 131,585 | 87.7 | |||||||||
Ashley Chaffin Glover | 150,000 | 120,335 | 80.2 | |||||||||
William E. Van Valkenberg(1) | 40,685 | 34,878 | 85.7 |
(1) | Mr. Van Valkenberg commenced his employment with us in September 2009. Mr. Van Valkenberg’s annual bonus opportunity under the 2009 Management Incentive Plan was subject to proration based on the actual number of days he was employed by us during 2009. Mr. Van Valkenberg’s employment with us ended and he ceased to be an executive officer effective as of May 11, 2010. |
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• | The stock option vests in equal quarterly installments over 16 consecutive quarters commencing on the first day of the calendar quarter immediately following the grant date; or | |
• | The stock option vests with respect to 5% of the shares subject to the stock option each quarter commencing on the first day of the calendar quarter immediately following the grant date for 15 consecutive quarters and, with respect to the remaining 25% of the shares subject to the stock option, on the first day of the next following calendar quarter, subject to continued service through each applicable date. We anticipate using this vesting schedule as our standard vesting schedule for future option grants subject to the discretion of our compensation committee. |
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Non-Equity | ||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||
Option | Plan | All Other | ||||||||||||||||||||||||
Awards | Compensation | Compensation | ||||||||||||||||||||||||
Name and Principal Position | Year | Salary ($) | Bonus ($) | ($)(1) | ($)(2) | ($)(3) | Total ($) | |||||||||||||||||||
Stephen T. Winn | 2009 | $ | 400,000 | — | — | $ | 246,765 | $ | 3,675 | $ | 650,440 | |||||||||||||||
Chairman of the Board and Chief Executive Officer | ||||||||||||||||||||||||||
Timothy J. Barker | 2009 | 315,000 | — | $ | 320,631 | 149,240 | 3,675 | 788,546 | ||||||||||||||||||
Chief Financial Officer and Treasurer | ||||||||||||||||||||||||||
Dirk D. Wakeham(4) | 2009 | 290,000 | (5) | — | 256,505 | 131,585 | 51,853 | (6) | 729,943 | |||||||||||||||||
President | ||||||||||||||||||||||||||
Ashley Chaffin Glover(7) | 2009 | 290,000 | (8) | — | 256,505 | 120,335 | 3,675 | 670,515 | ||||||||||||||||||
Executive Vice President, Multifamily Solutions | ||||||||||||||||||||||||||
William E. Van Valkenberg(9) | 2009 | 79,615 | — | 372,726 | 34,878 | 96,338 | (10) | 583,557 | ||||||||||||||||||
Chief Legal Officer and Secretary |
(1) | Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 8 of Notes to Consolidated Financial Statements for the year ended December 31, 2009 for a discussion of assumptions made in determining the grant date fair value of our stock option awards. | |
(2) | Represents awards under our 2009 Management Incentive Plan. The material terms of these annual incentive awards are described in this section under “Compensation Discussion and Analysis — Compensation Components — Performance-Based Bonuses.” | |
(3) | Represents the amount of our matching contributions under our 401(k) savings plan unless additional forms of other compensation are also indicated in relevant footnotes to this table. | |
(4) | Mr. Wakeham assumed the title and responsibilities of President in January 2010. He served as our Executive Vice President, Property Solutions, from April 2009 to January 2010 and as our Senior Vice President, President, LeasingDesk Point of Lease Systems, for prior periods in 2009. | |
(5) | Mr. Wakeham’s salary was increased from $260,000 to $300,000 in April 2009 in conjunction with his promotion to Executive Vice President, Property Solutions. | |
(6) | Consists of (i) $1,304 of matching contributions under our 401(k) savings plan, (ii) $43,510 of relocation related expense reimbursements and (iii) tax gross-up of $7,039 associated with taxable relocation related expenses. | |
(7) | Ms. Chaffin Glover assumed the title and responsibilities of Executive Vice President, Multifamily Solutions in January 2010. She served as our Executive Vice President, Resident Solutions from April 2009 to January 2010 and as our Senior Vice President, President, Velocity Utility and Billing Services, for prior periods in 2009. | |
(8) | Ms. Chaffin Glover’s salary was increased from $260,000 to $300,000 in April 2009 in conjunction with her promotion to Executive Vice President, Resident Solutions. | |
(9) | Mr. Van Valkenberg commenced his employment with us in September 2009 and provided consulting services to us from June 2009 to September 2009. His 2009 compensation represents the amounts paid to him as an employee from September 24, 2009 to December 31, 2009 and as a consultant for prior periods in 2009. Mr. Van Valkenberg’s employment with us ended and he ceased to be an executive officer effective as of May 11, 2010. Mr. Van Valkenberg is entitled to receive certain payments and benefits pursuant to the terms of an Employment Release Agreement entered into on June 8, 2010. See “Related Party Transactions — Employment Arrangements and Indemnification Agreements.” |
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(10) | Consists of (i) $125 of matching contributions under our 401(k) savings plan, (ii) $7,742 of relocation related expense reimbursements, (iii) tax gross-up of $3,753 associated with taxable relocation related expenses, (iv) $65,000 in consulting payments paid to Mr. Van Valkenberg in accordance with the terms of his consulting agreement prior to commencement of his full-time employment with us and (v) $19,717 in expense reimbursements paid to Mr. Van Valkenberg in accordance with the terms of his consulting agreement prior to commencement of his full-time employment with us. |
All Other Option | ||||||||||||||||||||||||||||
Awards: | ||||||||||||||||||||||||||||
Number of | Grant Date | |||||||||||||||||||||||||||
Estimated Future Payouts Under | Securities | Exercise or Base | Fair Value of | |||||||||||||||||||||||||
Non-Equity Incentive Plan Awards ($)(1) | Underlying | Price of Option | Option | |||||||||||||||||||||||||
Name | Grant Date | Minimum | Target | Maximum | Options (#) | Awards ($/Sh)(2) | Awards ($)(3) | |||||||||||||||||||||
Stephen T. Winn | 2/26/2009 | — | $ | 300,000 | $ | 600,000 | — | — | — | |||||||||||||||||||
Timothy J. Barker | 2/26/2009 | — | — | — | 125,000 | (4) | $ | 6.00 | $ | 320,631 | ||||||||||||||||||
2/26/2009 | — | 157,500 | 315,000 | — | — | — | ||||||||||||||||||||||
Dirk D. Wakeham | 2/26/2009 | — | — | — | 100,000 | (4) | 6.00 | 256,505 | ||||||||||||||||||||
2/26/2009 | — | 150,000 | 300,000 | — | — | — | ||||||||||||||||||||||
Ashley Chaffin Glover | 2/26/2009 | — | — | — | 100,000 | (4) | 6.00 | 256,505 | ||||||||||||||||||||
2/26/2009 | — | 150,000 | 300,000 | — | — | — | ||||||||||||||||||||||
William E. Van Valkenberg(6) | 9/28/2009 | — | — | — | 150,000 | (5) | 6.00 | 372,726 | ||||||||||||||||||||
9/24/2009 | — | 40,685 | 81,370 | — | — | — |
(1) | Represents awards under our Management Incentive Plan for fiscal 2009. The material terms of these annual incentive awards are discussed in this section under “Compensation Discussion and Analysis — Compensation Components — Performance-Based Bonuses.” | |
(2) | In determining the exercise price of options granted in 2009, our compensation committee retained an independent valuation firm to complete a contemporaneous common stock valuation using the probability-weighted expected return method, which involved analyzing future values under two possible outcomes and then probability-weighting those values. | |
(3) | Reflects the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 8 of Notes to Consolidated Financial Statements for the year ended December 31, 2009 for a discussion of assumptions made in determining the grant date fair value of our stock option awards. | |
(4) | Stock options vest in equal quarterly installments over 16 consecutive quarters commencing on the first day of the calendar quarter immediately following the grant date, subject to continued service through each applicable date. | |
(5) | Stock option vests with respect to 5% of the shares subject to the stock option each quarter commencing on the first day of the calendar quarter immediately following the grant date for 15 consecutive quarters and, with respect to the remaining 25% of the shares subject to the stock option, on the first day of the next following calendar quarter, subject to continued service through each applicable date. | |
(6) | Pursuant to the terms of his option agreement, when Mr. Van Valkenberg ceased to be a service provider, the unvested portion of his option immediately terminated, and Mr. Van Valkenberg had a period of 90 days following the date he ceased to be a service provider in which to exercise any options that were vested at such date. Pursuant to the terms of his Employment Release Agreement dated June 8, 2010, Mr. Van Valkenberg ceased to be a service provider after July 31, 2010. As of July 31, 2010, Mr. Van Valkenberg was vested in a total of 30,000 shares under his option agreement, with an exercise price of $6.00 per share. The remaining unvested options held by Mr. Van Valkenberg were forfeited effective as of August 1, 2010. |
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Option Awards | ||||||||||||||||
Number of | Number of | |||||||||||||||
Securities | Securities | |||||||||||||||
Underlying | Underlying | |||||||||||||||
Unexercised | Unexercised Options | Option | ||||||||||||||
Options | That Have Not | Exercise | Option | |||||||||||||
Name | Exercisable (#)(1) | Vested (#) | Price ($) | Expiration Date | ||||||||||||
Stephen T. Winn | — | — | — | — | ||||||||||||
Chairman of the Board and Chief Executive Officer | ||||||||||||||||
Timothy J. Barker | 125,000 | — | $2.00 | 10/27/2015 | ||||||||||||
Chief Financial Officer and Treasurer | 37,500 | 12,500 | 2.50 | 12/15/2016 | ||||||||||||
32,812 | 42,188 | 7.00 | 3/1/2018 | |||||||||||||
23,437 | 101,563 | 6.00 | 2/26/2019 | |||||||||||||
Dirk D. Wakeham | 78,125 | 46,875 | 3.00 | 4/12/2017 | ||||||||||||
President | 32,812 | 42,188 | 7.00 | 3/1/2018 | ||||||||||||
18,750 | 81,250 | 6.00 | 2/26/2019 | |||||||||||||
Ashley Chaffin Glover | 100,000 | — | 2.00 | 3/3/2015 | ||||||||||||
Executive Vice President, Multifamily | 25,000 | — | 2.00 | 12/13/2015 | ||||||||||||
Solutions | 18,750 | 6,250 | 2.50 | 12/15/2016 | ||||||||||||
21,875 | 28,125 | 7.00 | 3/1/2018 | |||||||||||||
18,750 | 81,250 | 6.00 | 2/26/2019 | |||||||||||||
William E. Van Valkenberg | 7,500 | 142,500 | 6.00 | 9/28/2019 | ||||||||||||
Chief Legal Officer and Secretary(2) |
(1) | The listed stock options were granted under our 1998 Stock Incentive Plan. Stock options granted to Ms. Chaffin Glover and Messrs. Barker and Wakeham vest ratably over 16 quarters commencing on the first day of the calendar quarter immediately following the grant date, subject to continued service through each applicable vesting date, and the stock option granted to Mr. Van Valkenberg vests with respect to 5% of the shares subject to the stock option each quarter commencing on the first day of the calendar quarter immediately following the grant date for 15 consecutive quarters and the remaining 25% of the on the first day of the next following calendar quarter, subject to continued service through each applicable date. | |
(2) | Pursuant to the terms of his option agreement, when Mr. Van Valkenberg ceased to be a service provider, the unvested portion of his option immediately terminated, and Mr. Van Valkenberg had a period of 90 days following the date he ceased to be a service provider in which to exercise any options that were vested at such date. Pursuant to the terms of his Employment Release Agreement dated June 8, 2010, Mr. Van Valkenberg ceased to be a service provider on July 31, 2010. As of July 31, 2010, Mr. Van Valkenberg was vested in a total of 30,000 shares under his option agreement, with an exercise price of $6.00 per share. The remaining unvested options were forfeited effective as of August 1, 2010. |
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• | conviction for criminal acts; | |
• | making a materially false statement to our auditors or legal counsel; | |
• | falsification of any corporate document or form; | |
• | any material breach by the named executive officer of his or her material obligations to us or of any published company policy; | |
• | any material breach by the named executive officer of the provisions of his or her employment agreement; | |
• | making a material misrepresentation of fact or omission to disclose material facts in relation to transactions occurring in our business and financial matters; and | |
• | continued performance of his or her duties in an incompetent, unprofessional, unsuccessful, insubordinate or negligent manner. |
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Termination on | ||||||||||||||||||||||
Death or | ||||||||||||||||||||||
Disability or | ||||||||||||||||||||||
Without Cause | ||||||||||||||||||||||
or Good Reason | ||||||||||||||||||||||
Termination | Within 12 Months of a | |||||||||||||||||||||
Termination on | without | Business | Business | |||||||||||||||||||
Death or | Death or | Cause or for | Combination | Combination | ||||||||||||||||||
Named Executive Officer | Compensation | Disability | Disability | Good Reason | Transaction | Transaction | ||||||||||||||||
Stephen T. Winn | Severance Payment | — | — | $600,000 | (1) | — | — | |||||||||||||||
Salary Continuation | — | $200,000 | — | — | — | |||||||||||||||||
Bonus | — | — | 300,000 | (1),(2) | — | — | ||||||||||||||||
Total | — | $200,000 | $900,000 | — | ||||||||||||||||||
Timothy J. Barker | Salary Continuation | — | $157,500 | (3) | $157,500 | (3) | — | $315,000 | (6) | |||||||||||||
Option Acceleration | $39,500 | (4) | — | — | $39,500 | (5),(6) | — | |||||||||||||||
Total | $39,500 | $157,500 | $157,500 | $39,500 | $315,000 | |||||||||||||||||
Dirk D. Wakeham | Salary Continuation | — | $150,000 | $150,000 | — | — | ||||||||||||||||
Option Acceleration | $124,688 | (4) | — | — | — | — | ||||||||||||||||
Total | $124,688 | $150,000 | $150,000 | — | — | |||||||||||||||||
Ashley Chaffin Glover | Salary Continuation | — | $150,000 | $150,000 | — | — | ||||||||||||||||
Option Acceleration | $19,750 | (4) | — | — | — | — | ||||||||||||||||
Total | $19,750 | $150,000 | $150,000 | — | — | |||||||||||||||||
William E. Van Valkenberg(7) | Salary Continuation | — | $150,000 | $150,000 | — | — | ||||||||||||||||
Option Acceleration | — | — | — | — | — | |||||||||||||||||
Total | — | $150,000 | $150,000 | — | — | |||||||||||||||||
(1) | Amount would not be paid in the event of Mr. Winn’s termination in connection with our liquidation, dissolution or winding up, whether voluntary or involuntary, or cessation of our business in the ordinary course for any reason. | |
(2) | Value represents target bonus for Mr. Winn for 2009. Subject to achievement of any criteria or conditions to the payment of Mr. Winn’s target bonus which are contingent on our earnings or other financial performance for the year. | |
(3) | Amount of salary continuation payment if termination is not within twelve months following the consummation of a business combination transaction. | |
(4) | Value represents the gain our named executive officers would receive, calculated as the positive difference between our stock price on December 31, 2009 and the exercise price of the named executive officer’s unvested options subject to acceleration upon the named executive officer’s death or disability pursuant to our 1998 Stock Incentive Plan. On December 31, 2009, our stock price was $5.66. | |
(5) | Value represents the gain Mr. Barker would receive, calculated as the positive difference between our stock price on December 31, 2009 and the exercise price of Mr. Barker’s unvested options subject to acceleration upon a business combination transaction pursuant to the terms of certain of his stock option agreements with us. On December 31, 2009, our stock price was $5.66. | |
(6) | Amount reflects payments that would have been made pursuant to Mr. Barker’s employment agreement, as amended on January 1, 2010, if the amended employment agreement had been in effect on December 31, 2009 in order to provide meaningful, current information. |
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(7) | Mr. Van Valkenberg’s employment with us ended and he ceased to be an executive officer effective as of May 11, 2010. On June 8, 2010, we entered into an Employment Release Agreement with Mr. Van Valkenberg which is described in “Certain Relationships and Related Party Transactions — Employment Arrangements and Indemnification Agreements.” Under the Release Agreement, we will pay Mr. Van Valkenberg cash payments of up to approximately $185,000. |
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• | 10,000,000 shares of our common stock; | |
• | 5.0% of our outstanding shares on the last day of the immediately preceding fiscal year; or | |
• | such other amount as our board of directors may determine. |
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• | any breach of the director’s duty of loyalty to us or our stockholders; | |
• | any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; | |
• | unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or | |
• | any transaction from which the director derived an improper personal benefit. |
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• | provided for the voting of shares with respect to the constituency of our board of directors and our compensation committee and audit committee; | |
• | provided for the redemption, on certain terms and conditions, of all or any portion of the Series A Convertible Preferred Stock held by Advance Capital and its affiliates; | |
• | granted our preferred stockholders certain rights of first refusal and co-sale with respect to proposed transfers of our securities by certain stockholders; | |
• | granted our preferred stockholders a right of first offer with respect to sales of our shares by us, subject to specified exclusions (which exclusions are expected to include the sale of the shares pursuant to this prospectus); and | |
• | obligated us to deliver periodic financial statements to our major investors. |
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• | Mr. Van Valkenberg’s employment with us terminated on May 11, 2010; | |
• | from May 11, 2010 through July 31, 2010, Mr. Van Valkenberg continued to serve as a consultant to us providing consulting services as specifically requested; | |
• | Mr. Van Valkenberg’s options continued to vest through July 31, 2010 and such vested options to purchase 30,000 shares were exercisable through October 29, 2010 and were exercised in full prior to that date; | |
• | we paid Mr. Van Valkenberg $5,000 for relocation expenses and reimbursed him $14,395.16 for rent due for the balance of the term of his apartment rental in Dallas, Texas; | |
• | we paid Mr. Van Valkenberg his base salary for a period of six months following May 11, 2010 and up to 40 hours of his accrued and unused vacation balance plus an additional payment of $10,000 for May 31, 2010; | |
• | to the extent permitted by law, we will indemnify Mr. Van Valkenberg for judgments, fines, settlement payments and expenses in any claim or proceeding to which he is made a party by reason of his performance of the consulting services contemplated by the Employment Release Agreement; and | |
• | in consideration of the Employment Release Agreement and all payments and benefits paid or accorded to Mr. Van Valkenberg under the Employment Release Agreement, Mr. Van Valkenberg releases us, and our past and present parents, affiliates, subsidiaries, benefit plans, directors, officers, fiduciaries, employees, agents, attorneys, successors and assigns from all claims related in any way to his employment with or separation from us, whether known or unknown or hereafter arising, from the beginning of time up to and including the date of the Employment Release Agreement. |
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• | each person or group of affiliated persons known by us to be the beneficial owner of more than 5% of our common stock; | |
• | each of our named executive officers; | |
• | each of our directors; | |
• | all executive officers and directors as a group; and | |
• | each of our selling stockholders. |
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Shares Beneficially | ||||||||||||||||||||||||||||||||
Number of | Owned After the | |||||||||||||||||||||||||||||||
Shares | Offering if Over- | |||||||||||||||||||||||||||||||
Shares Beneficially | Subject | Allotment Option | ||||||||||||||||||||||||||||||
Shares Beneficially Owned | Number of | Owned After the | to Over- | is Exercised | ||||||||||||||||||||||||||||
Prior to the Offering | Shares | Offering | Allotment | in Full | ||||||||||||||||||||||||||||
Name of Beneficial Owner | Shares | Percentage | Offered | Shares | Percentage | Option | Shares | Percentage | ||||||||||||||||||||||||
5% Stockholders: | ||||||||||||||||||||||||||||||||
Entities affiliated with Apax Excelsior VI, L.P.(1) | 11,245,371 | 17.8 | % | 2,103,540 | 9,141,831 | 13.6 | % | 1,135,912 | 8,005,919 | 11.9 | % | |||||||||||||||||||||
Stephen T. Winn and entities affiliated with Stephen T. Winn(2) | 28,749,874 | 45.5 | 800,000 | 27,949,874 | 41.6 | — | 27,949,874 | 41.6 | ||||||||||||||||||||||||
Named Executive Officers and Directors: | ||||||||||||||||||||||||||||||||
Stephen T. Winn(2) | 28,749,874 | 45.5 | 800,000 | 27,949,874 | 41.6 | — | 27,949,874 | 41.6 | ||||||||||||||||||||||||
Timothy J. Barker(3) | 473,340 | * | 50,000 | 423,340 | * | — | 423,340 | * | ||||||||||||||||||||||||
Dirk D. Wakeham(4) | 209,187 | * | 30,000 | 179,187 | * | — | 179,187 | * | ||||||||||||||||||||||||
Ashley Chaffin Glover(5) | 217,500 | * | 40,000 | 177,500 | * | — | 177,500 | * | ||||||||||||||||||||||||
William E. Van Valkenberg(6) | 30,000 | * | — | 30,000 | * | — | 30,000 | * | ||||||||||||||||||||||||
Alfred R. Berkeley, III(7) | 149,166 | * | 30,000 | 119,166 | * | — | 119,166 | * | ||||||||||||||||||||||||
Richard M. Berkeley(8) | 2,250,162 | 3.6 | 280,000 | 1,970,162 | 2.9 | — | 1,970,162 | 2.9 | ||||||||||||||||||||||||
Peter Gyenes(9) | 15,666 | * | — | 15,666 | * | — | 15,666 | * | ||||||||||||||||||||||||
Jeffrey T. Leeds(10) | 2,049,252 | 3.2 | 456,264 | 1,592,988 | 2.4 | 214,088 | 1,378,900 | 2.1 | ||||||||||||||||||||||||
Jason A. Wright(1) | 11,245,371 | 17.8 | 2,103,540 | 9,141,831 | 13.6 | 1,135,912 | 8,005,919 | 11.9 | ||||||||||||||||||||||||
All executive officers and directors as a group (11 people)(11) | 45,443,268 | 70.9 | 3,794,804 | 41,648,464 | 61.2 | 1,350,000 | 40,298,464 | 59.3 | ||||||||||||||||||||||||
Other Selling Stockholders: | ||||||||||||||||||||||||||||||||
Entities affiliated with Advance Capital Partners, L.P.(12) | 1,989,448 | 3.2 | % | 396,460 | 1,592,988 | 2.4 | % | 214,088 | 1,378,900 | 2.1 | % | |||||||||||||||||||||
Entities affiliated with Camden Partners Strategic Fund III, L.P.(13) | 2,135,162 | 3.4 | 250,000 | 1,885,162 | 2.8 | — | 1,885,162 | 2.8 |
(1) | Represents 9,609,176 shares held by Apax Excelsior VI, L.P., 784,925 shares held by Apax Excelsior VI-A C.V., 522,907 shares held by Apax Excelsior VI-B C.V. and 328,363 shares held by Patricof Private Investment Club III, L.P. Apax Managers, Inc., or Apax Managers, is the general partner of Apax Excelsior VI Partners, L.P., or Apax Excelsior VI Partners, which is the general partner of each of Apax Excelsior VI, L.P., Apax Excelsior VI-A C.V., Apax Excelsior VI-B C.V. and Patricof Private Investment Club III, or the Apax Funds. John F. Megrue is the sole director of Apax Managers, Inc. and may be deemed to have voting and dispositive power over the shares held by the Apax Funds. Mr. Megrue disclaims beneficial ownership over the shares held by the Apax Funds except to the extent of his pecuniary interest therein. The address of the Apax Funds and their affiliated entities and individuals is 601 Lexington Avenue, New York, New York 10022. For a discussion of our material relationships with the Apax Funds and affiliated entities, see “Certain Relationships and Related Party Transactions.” | |
(2) | Represents 21,285,172 shares held by Seren Capital, Ltd., 125,000 shares held by Seren Catalyst, L.P., 615,625 shares held by Stephen T. Winn 1996 Family LPA, 5,371,577 shares held by Stephen T. Winn and 1,352,500 shares held by Melinda G. Winn and Stephen T. Winn, as trustees of the Melinda G. Winn 2010 QTIP Trust. Stephen T. Winn is the sole manager and president of Seren Capital Management, L.L.C., which is the general partner of Seren Capital, Ltd. and Seren Catalyst, L.P., or the Seren Partnerships and, by virtue of this relationship, has sole voting and dispositive power over the shares held by the Seren Partnerships. Mr. Winn is the general partner of the Stephen T. Winn 1996 Family LPA and has voting and dispositive power over the shares held by the Stephen T. Winn 1996 Family LPA. Stephen T. Winn and Melinda G. Winn are trustees of the Melinda G. Winn 2010 QTIP Trust and share voting and dispositive power over the shares held by the Melinda G. Winn 2010 QTIP Trust. For a discussion of our material relationships with Mr. Winn and his affiliated entities, see “Certain Relationships and Related Party Transactions.” |
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(3) | Represents 165,841 shares held by Timothy J. Barker and 307,499 shares issuable upon the exercise of options to purchase shares of our common stock held by Mr. Barker that are fully vested and exercisable within 60 days of November 1, 2010. For a discussion of our material relationships with Mr. Barker, see “Certain Relationships and Related Party Transactions.” | |
(4) | Represents shares issuable upon the exercise of options to purchase shares of our common stock held by Mr. Wakeham that are fully vested and exercisable within 60 days of November 1, 2010. | |
(5) | Represents shares issuable upon the exercise of options to purchase shares of our common stock held by Ms. Chaffin Glover that are fully vested and exercisable within 60 days of November 1, 2010. | |
(6) | Represents 30,000 shares held by Mr. Van Valkenberg. Mr. Van Valkenberg’s employment with us ended and he ceased to be an executive officer effective as of May 11, 2010. | |
(7) | Represents 91,666 shares held by Alfred R. Berkeley, III, of which 12,500 are subject to a repurchase right held by us which lapses with respect to an additional 520.8 shares on the last day of each calendar month provided that Mr. Berkeley remains a director on each such applicable date and 5,999 are subject to forfeiture to us, which forfeiture restriction lapses as to an additional 333.3 shares on the first day of each calendar quarter and as to the remaining 1,666.5 shares on April 1, 2014, provided that Mr. Berkeley remains a director on each such applicable date, and 57,500 held by Muriel Van Dusen Berkeley and Richard M. Berkeley, as Trustees of the 2009 Berkeley Family Resource Trust dated12/11/2009, or the Berkeley Family Trust. Muriel Van Dusen Berkeley and Richard M. Berkeley are the trustees of the Berkeley Family Trust and share voting and dispositive power over the shares held by the Berkeley Family Trust. By virtue of his relationship with his spouse, Muriel Van Dusen Berkeley, Alfred R. Berkeley may be deemed to share voting and dispositive power over the shares held by the Berkeley Family Trust. Mr. Berkeley is an affiliate of a broker-dealer, purchased the securities in the ordinary course of business and, at the time of the purchase of the securities to be resold, had no agreements or understandings, directly or indirectly, with any person to distribute the securities. | |
(8) | Represents 2,049,933 shares held by Camden Partners Strategic Fund III, L.P., 85,229 shares held by Camden Partners StrategicFund III-A, L.P., 57,500 held by Muriel Van Dusen Berkeley and Richard M. Berkeley, as Trustees of the 2009 Berkeley Family Resource Trust dated12/11/2009 and 57,500 held by Richard M. Berkeley, as Trustee of the Alfred and Muriel Berkeley Survivorship Trust dated12/1/2005. Camden Partners Strategic Manager, LLC, or Camden Partners Strategic Manager, is the managing member of Camden Partners Strategic III, LLC, or Camden Partners Strategic III, which is the general partner of each of Camden Partners Strategic Fund III, L.P. and Camden Partners Strategic Fund III-A, L.P., or the Camden Funds. Because Richard M. Berkeley is the managing member of Camden Partners Strategic Manager, Camden Partners Strategic Manager is the managing member of Camden Partners Strategic III and Camden Partners Strategic III is the general partner of each of the Camden Funds, Mr. Berkeley may be deemed to have voting and dispositive power over the shares held by the Camden Funds. Mr. Berkeley and Muriel Van Dusen Berkeley are the trustees of the 2009 Berkeley Family Resource Trust dated12/11/2009, or the Berkeley Family Trust, and share voting and dispositive power over the shares held by the Berkeley Family Trust along with Alfred R. Berkeley, who may be deemed to share voting and dispositive power over the shares held by the Berkeley Family Trust by virtue of his relationship with his spouse, Muriel Van Dusen Berkeley. Mr. Berkeley is the trustee of the Alfred and Muriel Berkeley Survivorship Trust dated12/1/2005, or the Berkeley Survivorship Trust, and has voting and dispositive power over the shares held by the Berkeley Survivorship Trust. Mr. Berkeley disclaims beneficial ownership of shares held by the Berkeley Family Trust and the Berkeley Survivorship Trust, except to the extent of any pecuniary interest therein. Mr. Berkeley is an affiliate of a broker-dealer, purchased the securities in the ordinary course of business and, at the time of the purchase of the securities to be resold, had no agreements or understandings, directly or indirectly, with any person to distribute the securities. The address of the Camden Funds and their affiliated entities and individuals is 500 E. Pratt Street, Suite 1200, Baltimore, Maryland 21202. For a discussion of our material relationships with Camden Partners and its affiliated entities, see “Certain Relationships and Related Party Transactions.” The Camden Funds are not affiliated with Camden Property Trust. | |
(9) | Represents 9,000 shares issuable upon the exercise of options to purchase shares of our common stock held by Mr. Gyenes that are fully vested and exercisable within 60 days of November 1, 2010 and 6,666 restricted shares of our common stock, of which 5,999 are subject to forfeiture to us, which forfeiture restriction lapses as to an additional 333.3 shares on the first day of each calendar quarter and as to the |
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remaining 1,666.5 shares on April 1, 2014, provided that Mr. Gyenes remains a director on each such applicable date. | ||
(10) | Represents 59,804 shares held by Jeffrey T. Leeds, 474,968 shares held by Advance Capital Offshore Partners, L.P. and 1,514,480 shares held by Advance Capital Partners, L.P. Because Mr. Leeds is a member of Advance Capital Management, LLC, which is the general partner of Advance Capital Associates, L.P., which is the general partner of Advance Capital Partners, L.P. and Advance Capital Offshore Associates, LDC, which is the general partner of Advance Capital Offshore Partners, L.P., Mr. Leeds may be deemed to have voting and dispositive power of the shares held by Advance Capital Offshore Partners, L.P. and Advance Capital Partners, L.P. Mr. Leeds is an affiliate of a broker-dealer, purchased the securities in the ordinary course of business and, at the time of the purchase of the securities to be resold, had no agreements or understandings, directly or indirectly, with any person to distribute the securities. The address of the Advance Capital Funds and their affiliated entities and individuals is 350 Park Avenue, 23rd Floor, New York, New York 10022. For a discussion of our material relationships with Mr. Leeds, see “Certain Relationships and Related Party Transactions.” | |
(11) | Consists of 5,725,554 shares held of record by our directors and executive officers, of which 12,500 shares are subject to a repurchase right held by us that lapses with respect to an additional 520.8 shares on the last day of each calendar month provided that Mr. A. Berkeley remains one of our directors on each such applicable date, 11,998 are subject to forfeiture to us, which forfeiture restriction lapses as to an additional 333.3 shares on the first day of each calendar quarter and 1,666.5 shares on April 1, 2014, provided that Mr. A. Berkeley remains one of our directors on each such applicable date, and as to an additional 333.3 shares on the first day of each calendar quarter and 1,666.5 shares on April 1, 2014, provided that Mr. Gyenes remains one of our directors on each such applicable date, 884,436 shares issuable upon the exercise of options held by our directors and executive officers that are fully vested and exercisable within 60 days of November 1, 2010 and 38,833,278 shares held by entities over which our directors and executive officers may be deemed to have voting or dispositive power. Excludes Mr. Van Valkenberg, as he was no longer an executive officer as of May 11, 2010. | |
(12) | Represents 474,968 shares held by Advance Capital Offshore Partners, L.P. and 1,514,480 shares held by Advance Capital Partners, L.P. Advance Capital Management, LLC, or Advance Capital Management, is the general partner of Advance Capital Associates, L.P., or Advance Capital Associates, which is the general partner of Advance Capital Partners, L.P. and Advance Capital Offshore Associates, LDC, which is the general partner of Advance Capital Offshore Partners, L.P. Because Jeffrey T. Leeds and Robert A. Bernstein are the members of Advance Capital Management, which is the general partner of Advance Capital Associates, which is the general partner of Advance Capital Partners, L.P. and Advance Capital Offshore Associates, LDC, which is the general partner of Advance Capital Offshore Partners, L.P., Messrs. Leeds and Bernstein may be deemed to have sole voting and dispositive power of the shares held by Advance Capital Offshore Partners, L.P. and Advance Capital Partners, L.P., or the Advance Capital Funds. The address of the Advance Capital Funds and their affiliated entities and individuals is 350 Park Avenue, 23rd Floor, New York, New York 10022. For a discussion of our material relationships with the Advance Capital Funds and affiliated entities, see “Certain Relationships and Related Party Transactions.” | |
(13) | Represents 2,049,933 shares held by Camden Partners Strategic Fund III, L.P. and 85,229 shares held by Camden Partners StrategicFund III-A, L.P. Camden Partners Strategic Manager, LLC, or Camden Partners Strategic Manager, is the managing member of Camden Partners Strategic III, LLC, or Camden Partners Strategic III, which is the general partner of Camden Partners Strategic Fund III, L.P. and Camden Partners StrategicFund III-A, L.P., or the Camden Funds. Because Richard M. Berkeley, Don Hughes, Dick Johnston and David Warnock are the managing members of Camden Partners Strategic Manager, Camden Partners Strategic Manager is managing member of Camden Partners Strategic III and Camden Partners Strategic III is the general partner of the Camden Funds, Messrs. Berkeley, Hughes, Johnston and Warnock may be deemed to have voting and dispositive power over the shares held by the Camden Funds. The address of the Camden Funds and their affiliated entities and individuals is 500 E. Pratt Street, Suite 1200, Baltimore, Maryland 21202. For a discussion of our material relationships with the Camden Funds and affiliated entities, see “Certain Relationships and Related Party Transactions.” The Camden Funds are not affiliated with Camden Property Trust. |
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• | 125,000,000 shares are designated as common stock; and | |
• | 10,000,000 shares are designated as preferred stock. |
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• | Prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; | |
• | Upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, (1) shares owned by persons who are directors and also officers and (2) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or | |
• | At or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder. |
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Date | Number of Shares | |||
On the date of this prospectus | 26,000 | |||
At various times beginning after February 7, 2011 (180 days following the date of our initial public offering prospectus), subject to extension for up to an additional 34 days | ||||
At various times beginning more than 90 days following the date of this prospectus, subject to extension as described under “Underwriting” |
• | 1% of the number of shares of common stock then outstanding, which will equal approximately 671,565 shares immediately after the offering; or | |
• | the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. |
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• | offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or | |
• | enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, |
• | offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or | |
• | enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, |
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CONSEQUENCES TONON-U.S. HOLDERS
• | banks, insurance companies or other financial institutions; | |
• | persons subject to the alternative minimum tax; | |
• | tax-exempt organizations; | |
• | controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S. federal income tax; | |
• | dealers in securities or currencies; | |
• | traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; | |
• | persons that own, or are deemed to own, more than five percent of our capital stock (except to the extent specifically set forth below); | |
• | certain former citizens or long-term residents of the United States; | |
• | persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; | |
• | persons who do not hold our common stock as a capital asset (within the meaning of Section 1221 of the Internal Revenue Code; and | |
• | persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code. |
• | an individual citizen or resident of the United States; |
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• | a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or any political subdivision thereof; | |
• | an estate whose income is subject to U.S. federal income tax regardless of its source; or | |
• | a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (y) which has made an election to be treated as a U.S. person. |
• | the gain is effectively connected with your conduct of a U.S. trade or business (and, if an income tax treaty applies, the gain is attributable to a permanent establishment maintained by you in the United States); | |
• | you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or | |
• | our common stock constitutes a U.S. real property interest by reason of our status as a U.S. real property holding corporation, or a USRPHC, for U.S. federal income tax purposes at any time within |
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the shorter of the five-year period preceding the disposition or your holding period for our common stock. |
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Underwriter | Number of Shares | |||
Credit Suisse Securities (USA) LLC | ||||
Deutsche Bank Securities Inc. | ||||
RBC Capital Markets, LLC | ||||
William Blair & Company, L.L.C. | ||||
JMP Securities LLC | ||||
Pacific Crest Securities LLC | ||||
Wells Fargo Securities, LLC | ||||
Lazard Capital Markets LLC | ||||
Total | 9,000,000 | |||
Per Share | Total | |||||||||||||||
Without | With | Without | With | |||||||||||||
Over-allotment | Over-allotment | Over-allotment | Over-allotment | |||||||||||||
Underwriting discounts and commissions paid by us | $ | $ | $ | $ | ||||||||||||
Expenses payable by us | $ | $ | $ | $ | ||||||||||||
Underwriting discounts and commissions paid by the selling stockholders | $ | $ | $ | $ | ||||||||||||
Expenses payable by the selling stockholders | $ | $ | $ | $ |
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• | Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. | |
• | Over-allotment transactions involve sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment optionand/or purchasing shares in the open market. | |
• | Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are |
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concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. |
• | Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
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• | the purchaser is entitled under applicable provincial securities laws to purchase the common stock without the benefit of a prospectus qualified under those securities laws, | |
• | where required by law, that the purchaser is purchasing as principal and not as agent, | |
• | the purchaser has reviewed the text above under Resale Restrictions, and | |
• | the purchaser acknowledges and consents to the provision of specified information concerning its purchase of the common stock to the regulatory authority that by law is entitled to collect the information. |
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(in thousands, except share and per share amounts)
December 31, | September 30, | Pro Forma | ||||||||||||||
2008 | 2009 | 2010 | September 30, 2010 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 4,248 | $ | 4,427 | $ | 39,394 | ||||||||||
Restricted cash | 14,131 | 14,886 | 12,941 | |||||||||||||
Accounts receivable, less allowance for doubtful accounts of $2,895, $2,222, and $2,464 at December 31, 2008 and 2009 and September 30, 2010 (unaudited), respectively | 27,459 | 25,841 | 24,948 | |||||||||||||
Deferred tax asset, net of valuation allowance | — | 3,110 | 1,799 | |||||||||||||
Other current assets | 3,281 | 2,739 | 6,595 | |||||||||||||
Total current assets | 49,119 | 51,003 | 85,677 | |||||||||||||
Property, equipment, and software, net | 19,137 | 20,749 | 21,048 | |||||||||||||
Goodwill | 17,849 | 27,366 | 37,380 | |||||||||||||
Identified intangible assets, net | 15,125 | 22,891 | 34,571 | |||||||||||||
Deferred tax asset, net of valuation allowance | — | 17,803 | 16,628 | |||||||||||||
Other assets | 1,110 | 2,301 | 2,398 | |||||||||||||
Total assets | $ | 102,340 | $ | 142,113 | $ | 197,702 | ||||||||||
Liabilities, redeemable convertible preferred stock and stockholders’ (deficit) equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 3,405 | $ | 3,705 | $ | 6,523 | ||||||||||
Accrued expenses and other current liabilities | 13,255 | 10,830 | 11,449 | |||||||||||||
Current portion of deferred revenue | 38,712 | 39,976 | 43,459 | |||||||||||||
Current portion of long-term debt | 6,216 | 8,412 | 6,281 | |||||||||||||
Customer deposits held in restricted accounts | 14,117 | 15,127 | 12,857 | |||||||||||||
Total current liabilities | 75,705 | 78,050 | 80,569 | |||||||||||||
Deferred revenue | 8,520 | 9,452 | 7,493 | |||||||||||||
Deferred tax liability | 1,132 | — | — | |||||||||||||
Revolving credit facility | 10,000 | — | 2,040 | |||||||||||||
Long-term debt, less current portion | 27,498 | 43,449 | 32,453 | |||||||||||||
Other long-term liabilities | 6,767 | 5,806 | 5,307 | |||||||||||||
Total liabilities | 129,622 | 136,757 | 127,862 | |||||||||||||
Commitments and contingencies (Note 9) | ||||||||||||||||
Redeemable convertible preferred stock, Series A and A1, $0.001 par value: authorized, issued and outstanding 25,906,250 shares at December 31, 2008 and 2009 and zero at September 30, 2010 (unaudited), respectively (liquidation value $51,823, $51,823 and zero at December 31, 2008 and 2009 and September 30, 2010 (unaudited), respectively): | 51,724 | 51,786 | — | |||||||||||||
Redeemable convertible preferred stock, Series B, $0.001 par value: authorized, issued and outstanding 1,625,000 shares at December 31, 2008 and 2009 and zero at September 30, 2010 (unaudited), respectively (liquidation value $6,500, $6,500 and zero at December 31, 2008 and 2009 and September 30, 2010 (unaudited), respectively): | 6,478 | 6,491 | — | |||||||||||||
Redeemable convertible preferred stock, Series C, $0.001 par value: authorized, issued and outstanding 1,512,498 shares at December 31, 2008 and 2009 and zero at September 30, 2010 (unaudited), respectively (liquidation value $13,613, $13,613 and zero at December 31, 2008 and 2009 and September 30, 2010 (unaudited), respectively): | 13,473 | 13,555 | — | |||||||||||||
Stockholders’ (deficit) equity: | ||||||||||||||||
Common stock, $0.001 par value: 67,500,000, 67,500,000 and 125,000,000 shares authorized and 23,771,624, 26,667,319 and 63,365,592 issued and 23,702,182, 26,460,781 and 63,156,549 outstanding as of December 31, 2008, 2009 and September 30, 2010 (unaudited), respectively | 25 | 27 | 63 | 67 | ||||||||||||
Additional paid-in capital | 19,693 | 24,232 | 160,298 | 263,051 | ||||||||||||
Treasury stock shares, at cost — 69,442, 206,538 and 209,043 shares as of December 31, 2008 and 2009 and September 30, 2010 (unaudited), respectively | (449 | ) | (938 | ) | (958 | ) | (958 | ) | ||||||||
Accumulated deficit | (118,226 | ) | (89,797 | ) | (89,544 | ) | (89,544 | ) | ||||||||
Accumulated other comprehensive loss | — | — | (19 | ) | (19 | ) | ||||||||||
Total stockholders’ (deficit) equity | (98,957 | ) | (66,476 | ) | 69,840 | 172,597 | ||||||||||
Total liabilities, redeemable convertible preferred stock and stockholders’ (deficit) equity | $ | 102,340 | $ | 142,113 | $ | 197,702 | ||||||||||
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(in thousands, except per share amounts)
Nine Months Ended | ||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
Revenue: | ||||||||||||||||||||
On demand | $ | 62,592 | $ | 95,192 | $ | 128,377 | $ | 93,185 | $ | 120,393 | ||||||||||
On premise | 11,560 | 7,582 | 3,860 | 3,346 | 6,419 | |||||||||||||||
Professional and other | 9,429 | 9,794 | 8,665 | 6,234 | 7,403 | |||||||||||||||
Total revenue | 83,581 | 112,568 | 140,902 | $ | 102,765 | $ | 134,215 | |||||||||||||
Cost of revenue(1) | 35,703 | 46,058 | 58,513 | 42,804 | 56,595 | |||||||||||||||
Gross profit | 47,878 | 66,510 | 82,389 | 59,961 | 77,620 | |||||||||||||||
Operating expense: | ||||||||||||||||||||
Product development(1) | 21,708 | 28,806 | 27,446 | 20,273 | 26,431 | |||||||||||||||
Sales and marketing(1) | 18,047 | 23,923 | 27,804 | 20,376 | 25,793 | |||||||||||||||
General and administrative(1) | 9,756 | 14,135 | 20,210 | 13,275 | 20,230 | |||||||||||||||
Total operating expense | 49,511 | 66,864 | 75,460 | 53,924 | 72,454 | |||||||||||||||
Operating (loss) income | (1,633 | ) | (354 | ) | 6,929 | 6,037 | 5,166 | |||||||||||||
Interest expense and other, net | (1,510 | ) | (2,152 | ) | (4,528 | ) | (3,106 | ) | (4,749 | ) | ||||||||||
(Loss) income before income taxes | (3,143 | ) | (2,506 | ) | 2,401 | 2,931 | 417 | |||||||||||||
Income tax expense (benefit) | — | 703 | (26,028 | ) | 218 | 164 | ||||||||||||||
Net (loss) income | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||
Net (loss) income attributable to common stockholders | ||||||||||||||||||||
Basic | $ | (9,143 | ) | $ | (10,658 | ) | $ | 10,611 | $ | (1,559 | ) | $ | (2,691 | ) | ||||||
Diluted | $ | (9,143 | ) | $ | (10,658 | ) | $ | 10,611 | $ | (1,559 | ) | $ | (2,691 | ) | ||||||
Net (loss) income per share attributable to common stockholders | ||||||||||||||||||||
Basic | $ | (0.89 | ) | $ | (0.77 | ) | $ | 0.44 | $ | (0.07 | ) | $ | (0.08 | ) | ||||||
Diluted | $ | (0.89 | ) | $ | (0.77 | ) | $ | 0.42 | $ | (0.07 | ) | $ | (0.08 | ) | ||||||
Weighted average shares used in computing net (loss) income per share attributable to common stockholders | ||||||||||||||||||||
Basic | 10,223 | 13,886 | 23,934 | 23,856 | 31,878 | |||||||||||||||
Diluted | 10,223 | 13,886 | 25,511 | 23,856 | 31,878 | |||||||||||||||
Pro forma net income per share attributable to common stockholders (unaudited)(2) | ||||||||||||||||||||
Basic | $ | 0.55 | $ | 0.03 | ||||||||||||||||
Diluted | $ | 0.53 | $ | 0.03 | ||||||||||||||||
Pro forma weighted average shares outstanding used in computing net income per share attributable to common stockholders (unaudited)(2) | ||||||||||||||||||||
Basic | 55,773 | 57,625 | ||||||||||||||||||
Diluted | 57,349 | 59,662 | ||||||||||||||||||
Pro forma as adjusted net income per share attributable to common stockholders (unaudited)(2) | ||||||||||||||||||||
Basic | $ | 0.48 | $ | 0.03 | ||||||||||||||||
Diluted | $ | 0.47 | $ | 0.03 | ||||||||||||||||
Pro forma as adjusted weighted average shares outstanding used in computing net income per share attributable to common stockholders (unaudited)(2) | ||||||||||||||||||||
Basic | 64,000 | 65,853 | ||||||||||||||||||
Diluted | 65,577 | 67,890 | ||||||||||||||||||
(1) Includes stock-based compensation expense as follows: | ||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
Cost of revenue | $ | 48 | $ | 104 | $ | 367 | $ | 255 | $ | 407 | ||||||||||
Product development | 251 | 727 | 1,175 | 775 | 1,664 | |||||||||||||||
Sales and marketing | 110 | 277 | 498 | 350 | 541 | |||||||||||||||
General and administrative | 81 | 368 | 765 | 524 | 1,133 |
(2) | Pro forma and pro forma as adjusted net income per share and pro forma and pro forma as adjusted weighted average shares outstanding are computed in contemplation of our public offering. See Note 11 for discussion of calculations. |
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(in thousands)
Accumulated | |||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible | Additional | Other | Total | ||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Paid-in | Comprehensive | Accumulated | Treasury Shares | Stockholders’ | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Income | Deficit | Shares | Amount | (Deficit) Equity | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2006 | 27,532 | $ | 72,300 | 10,066 | $ | 10 | $ | 12,591 | — | $ | (111,874 | ) | — | — | $ | (99,273 | ) | ||||||||||||||||||||||||
Accretion of redeemable convertible preferred stock | — | 6,234 | — | — | (6,234 | ) | — | — | — | — | (6,234 | ) | |||||||||||||||||||||||||||||
Exercise of stock options | — | — | 485 | 1 | 968 | — | — | — | — | 969 | |||||||||||||||||||||||||||||||
Exercise of stock warrants | — | — | 87 | — | 175 | — | — | — | — | 175 | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 490 | — | — | — | — | 490 | |||||||||||||||||||||||||||||||
Warrants issued to a customer | — | — | — | — | 47 | — | — | — | — | 47 | |||||||||||||||||||||||||||||||
Net (loss) | — | — | — | — | — | — | (3,143 | ) | — | — | (3,143 | ) | |||||||||||||||||||||||||||||
Balance as of December 31, 2007 | 27,532 | 78,534 | 10,638 | 11 | 8,037 | — | (115,017 | ) | — | — | (106,969 | ) | |||||||||||||||||||||||||||||
Issuance of redeemable convertible preferred stock | 1,512 | 13,357 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Accretion of redeemable convertible preferred stock | — | 7,698 | — | — | (7,698 | ) | — | — | — | — | (7,698 | ) | |||||||||||||||||||||||||||||
Exercise of stock options | — | — | 332 | 1 | 770 | — | — | — | — | 771 | |||||||||||||||||||||||||||||||
Exercise of stock warrants | — | — | 4,653 | 4 | 267 | — | — | — | — | 271 | |||||||||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock dividends | (27,914 | ) | 8,148 | 9 | 16,841 | — | — | — | — | 16,850 | |||||||||||||||||||||||||||||||
Treasury stock purchase, at cost | — | — | — | — | — | — | — | (69 | ) | $ | (449 | ) | (449 | ) | |||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 1,476 | — | — | — | — | 1,476 | |||||||||||||||||||||||||||||||
Net (loss) | — | — | — | — | — | — | (3,209 | ) | — | — | (3,209 | ) | |||||||||||||||||||||||||||||
Balance as of December 31, 2008 | 29,044 | 71,675 | 23,771 | 25 | 19,693 | — | (118,226 | ) | (69 | ) | (449 | ) | (98,957 | ) | |||||||||||||||||||||||||||
Accretion of redeemable convertible preferred stock | — | 5,678 | — | — | (5,678 | ) | — | — | — | — | (5,678 | ) | |||||||||||||||||||||||||||||
Exercise of stock options | — | — | 178 | — | 543 | — | — | — | — | 543 | |||||||||||||||||||||||||||||||
Exercise of stock warrants | — | — | 200 | — | 4 | — | — | — | — | 4 | |||||||||||||||||||||||||||||||
Common stock warrants converted | — | — | 16 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock dividends | — | (5,521 | ) | 1,419 | 1 | 3,004 | — | — | — | — | 3,005 | ||||||||||||||||||||||||||||||
Issuances related to acquisitions | — | — | 1,083 | 1 | 3,861 | — | — | — | — | 3,862 | |||||||||||||||||||||||||||||||
Treasury stock purchase, at cost | — | — | — | — | — | — | — | (137 | ) | (489 | ) | (489 | ) | ||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 2,805 | — | — | — | — | 2,805 | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 28,429 | — | — | 28,429 | |||||||||||||||||||||||||||||||
Balance as of December 31, 2009 | 29,044 | 71,832 | 26,667 | 27 | 24,232 | — | (89,797 | ) | (206 | ) | (938 | ) | (66,476 | ) | |||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | (19 | ) | — | — | — | (19 | ) | |||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | 253 | — | — | 253 | |||||||||||||||||||||||||||||||
Total comprehensive income (loss) | 234 | ||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable convertible preferred stock | — | 3,030 | — | — | (3,030 | ) | — | — | — | — | (3,030 | ) | |||||||||||||||||||||||||||||
Exercise of stock options | — | — | 266 | — | 664 | — | — | — | — | 664 | |||||||||||||||||||||||||||||||
Common Stock Warrants converted | — | — | 8 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock | — | (1,161 | ) | 343 | — | 726 | — | — | — | — | 726 | ||||||||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock due to initial public offering | (29,044 | ) | (73,701 | ) | 29,568 | 30 | 73,005 | — | — | — | — | 73,035 | |||||||||||||||||||||||||||||
Issuance restricted stock | — | — | 513 | — | 3,274 | — | — | — | — | 3,274 | |||||||||||||||||||||||||||||||
Treasury stock purchase, at cost | — | — | — | — | — | — | — | (3 | ) | (20 | ) | (20 | ) | ||||||||||||||||||||||||||||
Issuance of common stock through initial public offering, net of issuance costs | 6,000 | 6 | 57,682 | 57,688 | |||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 3,745 | — | — | — | — | 3,745 | |||||||||||||||||||||||||||||||
Balance as of September 30, 2010 (unaudited) | — | $ | — | $ | 63,365 | $ | 63 | $ | 160,298 | $ | (19 | ) | $ | (89,544 | ) | (209 | ) | $ | (958 | ) | $ | 69,840 | |||||||||||||||||||
F-5
Table of Contents
(in thousands)
Nine Months Ended | ||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net (loss) income | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||||||||
Depreciation and amortization | 7,127 | 10,997 | 14,769 | 10,703 | 14,856 | |||||||||||||||
Deferred tax expense (benefit) | — | 489 | (26,308 | ) | — | (162 | ) | |||||||||||||
Stock-based compensation | 490 | 1,476 | 2,805 | 1,904 | 3,745 | |||||||||||||||
Loss on disposal of assets | — | 115 | 127 | 192 | 57 | |||||||||||||||
Impairment of assets | — | 830 | 119 | — | — | |||||||||||||||
Acquisition-related contingent consideration | — | — | — | — | 39 | |||||||||||||||
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations: | ||||||||||||||||||||
Accounts receivable | (5,168 | ) | (7,622 | ) | 2,407 | 3,488 | 1,840 | |||||||||||||
Customer deposits | — | (105 | ) | 255 | (79 | ) | (325 | ) | ||||||||||||
Other current assets | (330 | ) | (203 | ) | 559 | 80 | (3,870 | ) | ||||||||||||
Other assets | (375 | ) | (290 | ) | (1,140 | ) | (888 | ) | (72 | ) | ||||||||||
Accounts payable | 939 | (579 | ) | 645 | 600 | 1,621 | ||||||||||||||
Accrued compensation, taxes and benefits | 210 | 934 | (461 | ) | (882 | ) | (427 | ) | ||||||||||||
Deferred revenue | 4,382 | 5,561 | 1,094 | (969 | ) | (3,041 | ) | |||||||||||||
Other current and long-term liabilities | 309 | (432 | ) | 1,458 | 679 | 227 | ||||||||||||||
Net cash provided by operating activities | 4,441 | 7,962 | 24,758 | 17,541 | 14,741 | |||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Purchases of property, equipment and software | (7,122 | ) | (10,263 | ) | (9,509 | ) | (6,334 | ) | (7,427 | ) | ||||||||||
Acquisition of businesses, net of cash acquired | (9,033 | ) | (22,057 | ) | (15,167 | ) | (3,787 | ) | (17,231 | ) | ||||||||||
Net cash used by investing activities | (16,155 | ) | (32,320 | ) | (24,676 | ) | (10,121 | ) | (24,658 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from initial public offering, net of underwriting discount and offering costs | $ | — | $ | — | $ | — | $ | — | $ | 57,688 | ||||||||||
Proceeds from notes payable | 10,917 | 15,521 | 35,000 | 35,000 | 10,000 | |||||||||||||||
Payments on notes payable | (7,015 | ) | (2,454 | ) | (16,853 | ) | (15,540 | ) | (23,562 | ) | ||||||||||
Proceeds from (payments on) revolving credit facility, net | 7,584 | 1,416 | (10,000 | ) | (10,000 | ) | 2,040 | |||||||||||||
Payments on capital lease obligations | (678 | ) | (2,558 | ) | (5,592 | ) | (5,050 | ) | (1,241 | ) | ||||||||||
Issuance of redeemable convertible preferred stock, net of costs | — | 13,357 | — | — | — | |||||||||||||||
Preferred stock dividend | — | — | (2,516 | ) | — | (666 | ) | |||||||||||||
Issuance of common stock | 1,144 | 1,042 | 547 | 270 | 664 | |||||||||||||||
Purchase of treasury stock | — | (449 | ) | (489 | ) | (436 | ) | (20 | ) | |||||||||||
Net cash provided by (used in) financing activities | 11,952 | 25,875 | 97 | 4,244 | 44,903 | |||||||||||||||
Net increase in cash and cash equivalents | 238 | 1,517 | 179 | 11,664 | 34,986 | |||||||||||||||
Effect of exchange rate on cash | — | — | — | — | (19 | ) | ||||||||||||||
Cash and cash equivalents: | ||||||||||||||||||||
Beginning of period | 2,493 | 2,731 | 4,248 | 4,248 | 4,427 | |||||||||||||||
End of period | $ | 2,731 | $ | 4,248 | $ | 4,427 | $ | 15,912 | $ | 39,394 | ||||||||||
Supplemental cash flow information: | ||||||||||||||||||||
Cash paid for interest | $ | 1,212 | $ | 2,651 | $ | 3,833 | $ | 2,696 | $ | 4,288 | ||||||||||
Cash paid for income taxes, net of refunds | $ | 39 | $ | 117 | $ | 228 | $ | 191 | $ | 227 | ||||||||||
Non-cash financing activities: | ||||||||||||||||||||
Fixed assets acquired under capital leases | $ | 6,320 | $ | 2,077 | $ | 2,462 | $ | 2,462 | $ | — | ||||||||||
Accrued dividends and accretion of preferred stock | $ | 6,234 | $ | 7,698 | $ | 5,678 | $ | 4,403 | $ | 3,030 | ||||||||||
Conversion of preferred stock dividend to common shares | $ | — | $ | 16,850 | $ | 3,005 | $ | — | $ | 73,732 | ||||||||||
Accrued property and equipment | $ | — | $ | — | $ | — | $ | (260 | ) | $ | 1,154 | |||||||||
F-6
Table of Contents
1. | The Company |
2. | Summary of Significant Accounting Policies |
F-7
Table of Contents
F-8
Table of Contents
Leasehold improvements | 3-10 years | |||
Data processing and communications equipment | 3-10 years | |||
Furniture, fixtures and other equipment | 3-5 years | |||
Software | 3 years |
F-9
Table of Contents
F-10
Table of Contents
• | there is persuasive evidence of an arrangement; | |
• | the solution and/or service has been provided to the customer; | |
• | the collection of the fees is probable; and | |
• | the amount of fees to be paid by the customer is fixed or determinable. |
F-11
Table of Contents
• | Vendor specific objective evidence (VSOE), if available. The price at which we sell the element in a separate stand-alone transaction; | |
• | Third-party evidence of selling price (TPE), if VSOE of selling price is not available. Evidence from us or other companies of the value of a largely interchangeable element in a transaction; and | |
• | Estimated selling price (ESP), if neither VSOE nor TPE of selling price is available. Our best estimate of the stand-alone selling price of an element in a transaction. |
F-12
Table of Contents
F-13
Table of Contents
December 31, | September 30, | |||||||||||
2008 | 2009 | 2010 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Accrued compensation, payroll taxes, and benefits | $ | 5,264 | $ | 5,034 | $ | 4,950 | ||||||
Current portion of capital leases | 2,852 | 1,540 | 736 | |||||||||
Current portion of liabilities related to acquisitions | 3,358 | 1,903 | 2,737 | |||||||||
Other current liabilities | 1,781 | 2,353 | 3,026 | |||||||||
Total accrued expenses and other current liabilities | $ | 13,255 | $ | 10,830 | $ | 11,449 | ||||||
December 31, | September 30, | |||||||||||
2008 | 2009 | 2010 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Capital leases, less current portion | $ | 2,377 | $ | 589 | $ | 152 | ||||||
Long-term liabilities related to acquisitions, less current portion | 2,470 | 2,455 | 2,668 | |||||||||
Other long-term liabilities | 1,920 | 2,762 | 2,487 | |||||||||
Total other long-term liabilities | $ | 6,767 | $ | 5,806 | $ | 5,307 | ||||||
F-14
Table of Contents
3. | Acquisitions |
F-15
Table of Contents
LeasingDesk | ||||
(in thousands) | ||||
Intangible assets: | ||||
Developed product technologies | $ | 116 | ||
Customer relationships | 2,020 | |||
Non-competition agreements | 120 | |||
Tradenames | 420 | |||
Goodwill | 5,241 | |||
Deferred revenue | (434 | ) | ||
Net other assets (liabilities) | (135 | ) | ||
Total purchase price, net of cash acquired | $ | 7,348 | ||
WebRoomz | Ops | |||||||||||
(in thousands) | ||||||||||||
Intangible assets: | ||||||||||||
Developed product technologies | $ | 228 | $ | 2,457 | ||||||||
Customer relationships | — | 4,884 | ||||||||||
Vendor relationships | — | 5,650 | ||||||||||
Tradenames | — | 1,840 | ||||||||||
Goodwill | 953 | 7,253 | ||||||||||
Deferred revenue | — | (619 | ) | |||||||||
Deferred tax liability | (644 | ) | ||||||||||
Net other assets (liabilities) | — | 809 | ||||||||||
Total purchase price, net of cash acquired | $ | 1,181 | $ | 21,630 | ||||||||
F-16
Table of Contents
F-17
Table of Contents
Evergreen | ALW | Propertyware | ||||||||||
(in thousands) | ||||||||||||
Intangible assets: | ||||||||||||
Developed product technologies | $ | — | $ | 1,192 | $ | 7,427 | ||||||
Customer relationships | 154 | 964 | 1,050 | |||||||||
Tradenames | 34 | 373 | 1,080 | |||||||||
Goodwill | 470 | 1,287 | 6,144 | |||||||||
Deferred revenue | — | (585 | ) | (451 | ) | |||||||
Deferred tax (liability) | — | (863 | ) | (3,407 | ) | |||||||
Net other assets | 227 | 415 | 78 | |||||||||
Total purchase price, net of cash acquired | $ | 885 | $ | 2,783 | $ | 11,921 | ||||||
F-18
Table of Contents
Domin-8 | ||||
(in thousands) | ||||
Intangible assets: | ||||
Developed product technologies | $ | 3,678 | ||
Customer relationships | 6,418 | |||
Tradenames | 1,278 | |||
Goodwill | 4,896 | |||
Deferred revenue | (4,502 | ) | ||
Net other assets | 1,155 | |||
Total purchase price, net of cash acquired | $ | 12,923 | ||
eREI | ||||
(in thousands) | ||||
Intangible assets: | ||||
Developed product technologies | $ | 5,279 | ||
Customer relationships | 498 | |||
Tradenames | 844 | |||
Goodwill | 5,055 | |||
Net other assets | (3,053 | ) | ||
Total purchase price, net of cash acquired | $ | 8,623 | ||
F-19
Table of Contents
Nine Months | ||||||||||||||||
Ended | ||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||
2007 | 2008 | 2009 | 2010 | |||||||||||||
Pro Forma | Pro Forma | Pro Forma | Pro Forma | |||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
(in thousands) | ||||||||||||||||
Revenue: | ||||||||||||||||
On demand | $ | 73,723 | $ | 109,453 | $ | 136,624 | $ | 121,693 | ||||||||
On premise | 17,605 | 16,673 | 13,035 | 7,169 | ||||||||||||
Professional and other | 13,723 | 15,041 | 12,080 | 7,431 | ||||||||||||
Total revenue | 105,051 | 141,167 | 161,739 | 136,293 | ||||||||||||
Net (loss) income | (6,308 | ) | (16,667 | ) | 28,663 | 48 | ||||||||||
Net (loss) income attributable to common stockholders: | ||||||||||||||||
Basic and diluted | (12,308 | ) | (24,116 | ) | 10,845 | (2,896 | ) | |||||||||
Net (loss) income per share attributable to common stockholders: | ||||||||||||||||
Basic | $ | (1.20 | ) | $ | (1.74 | ) | $ | 0.45 | $ | (0.09 | ) | |||||
Diluted | $ | (1.20 | ) | $ | (1.74 | ) | $ | 0.43 | $ | (0.09 | ) |
F-20
Table of Contents
December 31, | September 30, | |||||||||||
2008 | 2009 | 2010 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Leasehold improvements | $ | 5,069 | $ | 6,039 | $ | 7,194 | ||||||
Data processing and communications equipment | 20,078 | 26,969 | 29,404 | |||||||||
Furniture, fixtures, and other equipment | 5,233 | 6,251 | 6,883 | |||||||||
Software | 19,005 | 21,807 | 25,276 | |||||||||
49,385 | 61,066 | 68,757 | ||||||||||
Less: Accumulated depreciation and amortization | (30,248 | ) | (40,317 | ) | (47,709 | ) | ||||||
Property, equipment and software, net | $ | 19,137 | $ | 20,749 | $ | 21,048 | ||||||
5. | Goodwill and Other Intangible Assets |
(in thousands) | ||||
Balance at December 31, 2007 | $ | 9,194 | ||
Contingent consideration | 449 | |||
Goodwill acquired | 8,206 | |||
Balance at December 31, 2008 | 17,849 | |||
Contingent consideration | 1,679 | |||
Goodwill acquired | 7,838 | |||
Balance at December 31, 2009 | 27,366 | |||
Goodwill acquired | 9,951 | |||
Other | 63 | |||
Balance at September 30, 2010 | $ | 37,380 | ||
F-21
Table of Contents
December 31, 2009 | ||||||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||
Amortization | Carrying | Accumulated | Carrying | Accumulated | ||||||||||||||||||||||||
Period | Amount | Amortization | Net | Amount | Amortization | Net | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Finite-lived intangible assets | ||||||||||||||||||||||||||||
Developed technologies | 3 years | $ | 2,801 | $ | (412 | ) | $ | 2,389 | $ | 11,421 | $ | (1,870 | ) | $ | 9,551 | |||||||||||||
Customer relationships | 1-10 years | 7,539 | (2,469 | ) | 5,070 | 9,707 | (4,301 | ) | 5,406 | |||||||||||||||||||
Vendor relationships | 7 years | 5,650 | (311 | ) | 5,339 | 5,650 | (1,500 | ) | 4,150 | |||||||||||||||||||
Non-competition agreement | 4-5 years | 120 | (53 | ) | 67 | 120 | (83 | ) | 37 | |||||||||||||||||||
Total finite-lived intangible assets | 16,110 | (3,245 | ) | 12,865 | 26,898 | (7,754 | ) | 19,144 | ||||||||||||||||||||
Indefinite-lived intangible assets | ||||||||||||||||||||||||||||
Tradenames | 2,260 | — | 2,260 | 3,747 | — | 3,747 | ||||||||||||||||||||||
Total intangible assets | $ | 18,370 | $ | (3,245 | ) | $ | 15,125 | $ | 30,645 | $ | (7,754 | ) | $ | 22,891 | ||||||||||||||
September 30, 2010 (unaudited) | ||||||||||||||||
Amortization | Carrying | Accumulated | ||||||||||||||
Period | Amount | Amortization | Net | |||||||||||||
(in thousands) | ||||||||||||||||
Finite-lived intangible assets | ||||||||||||||||
Developed technologies | 3 years | $ | 20,385 | $ | (5,908 | ) | $ | 14,477 | ||||||||
Customer relationships | 1-10 years | 16,623 | (5,804 | ) | 10,819 | |||||||||||
Vendor relationships | 7 years | 5,650 | (2,265 | ) | 3,385 | |||||||||||
Non-competition agreements | 4-5 years | 120 | (105 | ) | 15 | |||||||||||
Total finite-lived intangible assets | 42,778 | (14,082 | ) | 28,696 | ||||||||||||
Indefinite-lived intangible assets | ||||||||||||||||
Tradenames | 5,875 | — | 5,875 | |||||||||||||
Total Intangible assets | $ | 48,653 | $ | (14,082 | ) | $ | 34,571 | |||||||||
(in thousands) | ||||
Year ending December 31, | ||||
2010 (3 months) | $ | 2,338 | ||
2011 | 9,924 | |||
2012 | 8,523 | |||
2013 | 4,027 | |||
2014 | 2,392 |
F-22
Table of Contents
6. | Debt |
December 31, | September 30, | |||||||||||
2008 | 2009 | 2010 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Revolver | $ | 10,000 | — | $ | 2,040 | |||||||
Term loan | 12,650 | $ | 33,688 | 38,734 | ||||||||
Promissory notes issued to preferred stockholders | 11,064 | 8,173 | — | |||||||||
Secured promissory notes | 10,000 | 10,000 | — | |||||||||
$ | 43,714 | $ | 51,861 | $ | 40,774 | |||||||
F-23
Table of Contents
(in thousands) | ||||
Year ending December 31, | ||||
2010 | $ | 6,281 | ||
2011 | 6,281 | |||
2012 | 6,281 | |||
2013 | 6,281 | |||
Thereafter | 18,320 |
7. | Redeemable Convertible Preferred Stock |
F-24
Table of Contents
8. | Share Options and Warrants |
F-25
Table of Contents
Weighted | ||||||||||||
Range of | Average | |||||||||||
Number of | Exercise | Exercise | ||||||||||
Shares | Prices | Price | ||||||||||
Balance at December 31, 2006 | 4,733,859 | $ | 2.00 - 2.50 | $ | 2.06 | |||||||
Granted | 1,116,750 | 3.00 - 5.50 | 3.68 | |||||||||
Exercised | (484,391 | ) | 2.00 | 2.00 | ||||||||
Forfeited/cancelled | (354,296 | ) | 2.00 - 3.50 | 2.13 | ||||||||
Balance at December 31, 2007 | 5,011,922 | 2.00 - 5.50 | 2.42 | |||||||||
Granted | 1,987,000 | 6.00 - 7.00 | 6.55 | |||||||||
Exercised | (332,454 | ) | 2.00 - 7.00 | 2.32 | ||||||||
Forfeited/cancelled | (431,905 | ) | 2.00 - 7.00 | 3.49 | ||||||||
Balance at December 31, 2008 | 6,234,563 | 2.00 - 7.00 | 3.67 | |||||||||
Granted | 2,284,000 | 6.00 | 6.00 | |||||||||
Exercised | (177,891 | ) | 2.00 - 6.00 | 3.05 | ||||||||
Forfeited/cancelled | (411,943 | ) | 2.00 - 7.00 | 4.18 | ||||||||
Balance at December 31, 2009 | 7,928,729 | 2.00 - 7.00 | 4.33 | |||||||||
Granted | 2,124,750 | 7.50-16.21 | 8.07 | |||||||||
Exercised | (265,572 | ) | 2.00-7.00 | 2.53 | ||||||||
Forfeited/cancelled | (452,050 | ) | 2.00-9.00 | 6.10 | ||||||||
Balance, September 30, 2010 (unaudited) | 9,335,857 | 2.00-16.21 | 5.15 | |||||||||
December 31, 2009 | September 30, 2010 (unaudited) | |||||||||||||||||||||||
Fully Vested | Fully Vested | |||||||||||||||||||||||
and | and | |||||||||||||||||||||||
Expected to | Expected to | |||||||||||||||||||||||
Vest | Non-Vested | Exercisable | Vest | Non-Vested | Exercisable | |||||||||||||||||||
Number of shares outstanding | 7,647,137 | 3,577,919 | 4,350,808 | 8,990,916 | 4,317,559 | 5,078,300 | ||||||||||||||||||
Weighted average remaining contractual life | 7.20 | 9.02 | 5.83 | 7.10 | 8.92 | 5.71 | ||||||||||||||||||
Weighted average price per share | $ | 4.26 | $ | 5.88 | $ | 3.04 | $ | 5.06 | $ | 6.98 | $ | 3.60 |
F-26
Table of Contents
Risk-free interest rates | 1.5-5.1 | % | ||
Expected option life (in years) | 6 | |||
Dividend yield | 0 | % | ||
Expected volatility | 50-60 | % |
F-27
Table of Contents
9. | Commitments and Contingencies |
December 31, | ||||||||
2008 | 2009 | |||||||
(in thousands) | ||||||||
Data processing and communications equipment | $ | 3,336 | $ | 5,679 | ||||
Software | 5,616 | 5,903 | ||||||
8,952 | 11,582 | |||||||
Less: Accumulated depreciation and amortization | (3,169 | ) | (6,411 | ) | ||||
Assets under capital lease, net | $ | 5,783 | $ | 5,171 | ||||
Operating | ||||||||
Capital Leases | Leases | |||||||
(in thousands) | ||||||||
2010 | $ | 1,670 | $ | 4,922 | ||||
2011 | 538 | 4,372 | ||||||
2012 | 65 | 3,825 | ||||||
2013 | — | 3,809 | ||||||
2014 | — | 3,782 | ||||||
Thereafter | — | 6,341 | ||||||
Total Minimum lease payments | $ | 2,273 | $ | 27,051 | ||||
Less amount representing average interest at 9.1% | (144 | ) | ||||||
2,129 | ||||||||
Less current portion | (1,540 | ) | ||||||
Long-term portion | $ | 589 | ||||||
F-28
Table of Contents
10. | Funds Held for Others |
11. | Net Income (Loss) Per Share |
F-29
Table of Contents
F-30
Table of Contents
Nine Months Ended | ||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||
Numerator: | ||||||||||||||||||||
Net (loss) income | $ | (3,143 | ) | $ | (3,209 | ) | $ | 28,429 | $ | 2,713 | $ | 253 | ||||||||
8% cumulative dividends on participating preferred stock | (6,000 | ) | (7,449 | ) | (5,521 | ) | (4,272 | ) | (2,944 | ) | ||||||||||
Undistributed earnings allocated to participating preferred and restricted stock | — | — | (12,297 | ) | — | — | ||||||||||||||
Net (loss) income attributable to common stockholders — basic and diluted | $ | (9,143 | ) | $ | (10,658 | ) | $ | 10,611 | $ | (1,559 | ) | $ | (2,691 | ) | ||||||
Denominator: | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Weighted average common shares used in computing basic net income (loss) per share | 10,223 | 13,886 | 23,934 | 23,856 | 31,878 | |||||||||||||||
Diluted: | ||||||||||||||||||||
Weighted average common shares used in computing basic net income (loss) per share | 10,223 | 13,886 | 23,934 | 23,856 | 31,878 | |||||||||||||||
Add weighted average effect of dilutive securities: | ||||||||||||||||||||
Stock options | — | — | 1,531 | — | — | |||||||||||||||
Stock warrants | — | — | 46 | — | — | |||||||||||||||
Weighted average common shares used in computing diluted net income (loss) per share | 10,223 | 13,886 | 25,511 | 23,856 | 31,878 | |||||||||||||||
Net (loss) income per common share: | ||||||||||||||||||||
Basic | $ | (0.89 | ) | $ | (0.77 | ) | $ | 0.44 | $ | (0.07 | ) | $ | (0.08 | ) | ||||||
Diluted | $ | (0.89 | ) | $ | (0.77 | ) | $ | 0.42 | $ | (0.07 | ) | $ | (0.08 | ) | ||||||
Shares used in computing pro forma net income per share (unaudited): | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Basic weighted average common shares from above | 23,934 | 31,878 | ||||||||||||||||||
Add shares issued in initial public offering and current offering, assumed conversion of convertible preferred stock and related accrued dividends | 31,839 | 25,747 | ||||||||||||||||||
Shares used in computing pro forma basic net income per share | 55,773 | 57,625 |
F-31
Table of Contents
Nine Months Ended | ||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||
2007 | 2008 | 2009 | 2009 | 2010 | ||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||
Diluted: | ||||||||||||||||||||
Diluted weighted average common shares from above | 25,511 | 31,878 | ||||||||||||||||||
Add shares issued in initial public offering and current offering, assumed conversion of convertible preferred stock and related accrued dividends excluded under the two class method | 31,838 | 27,784 | ||||||||||||||||||
Shares used in computing pro forma diluted net income per share | 57,349 | 59,662 | ||||||||||||||||||
Pro forma net income per share (unaudited): | ||||||||||||||||||||
Basic | $ | 0.55 | $ | 0.03 | ||||||||||||||||
Diluted | $ | 0.53 | $ | 0.03 | ||||||||||||||||
Shares used in computing pro forma net income per share | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Basic weighted average common shares from above | 23,934 | 31,878 | ||||||||||||||||||
Add shares used in initial public offering to retire debt, assumed conversion of convertible preferred stock and related accrued dividends | 40,066 | 33,975 | ||||||||||||||||||
Shares used in computing pro forma basic net income per share | 64,000 | 65,853 | ||||||||||||||||||
Diluted: | ||||||||||||||||||||
Diluted weighted average common shares from above | 25,511 | 31,878 | ||||||||||||||||||
Add shares used in initial public offering and current offering, assumed conversion of convertible preferred stock and related accrued dividends excluded under two class method | 40,066 | 36,012 | ||||||||||||||||||
Shares used in computing pro forma basic net income per share | 65,577 | 67,890 | ||||||||||||||||||
Pro forma net income per share: | ||||||||||||||||||||
Basic | $ | 0.48 | $ | 0.03 | ||||||||||||||||
Diluted | $ | 0.47 | $ | 0.03 |
12. | Related Party Transactions |
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Table of Contents
13. | Income Taxes |
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands) | ||||||||||||
Current: | ||||||||||||
Federal | — | — | — | |||||||||
State | — | $ | 197 | $ | 231 | |||||||
Foreign | — | 17 | 49 | |||||||||
Total current taxes | — | 214 | 280 | |||||||||
Deferred: | ||||||||||||
Federal | — | 489 | (25,147 | ) | ||||||||
State | — | — | (1,161 | ) | ||||||||
Foreign | — | — | — | |||||||||
Total deferred taxes | — | 489 | (26,308 | ) | ||||||||
Total income tax provision (benefit) | — | $ | 703 | $ | (26,028 | ) | ||||||
Year Ended December 31, | ||||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands) | ||||||||||||
Expense derived by applying the Federal income tax rate to (loss) income before taxes | $ | (1,068 | ) | $ | (872 | ) | $ | 837 | ||||
State income tax, net of federal benefit | — | 197 | 152 | |||||||||
Foreign income tax | — | 17 | (50 | ) | ||||||||
Change in valuation allowance | — | — | (27,036 | ) | ||||||||
Nondeductible expenses | 143 | 185 | 166 | |||||||||
Losses not benefitted | 1,046 | 567 | — | |||||||||
Other | (121 | ) | 609 | (97 | ) | |||||||
— | $ | 703 | $ | (26,028 | ) | |||||||
December 31, | ||||||||
2008 | 2009 | |||||||
(in thousands) | ||||||||
Deferred tax assets: | ||||||||
Property, equipment, and software | $ | 597 | — | |||||
Reserves and accrued liabilities | 6,101 | $ | 8,228 | |||||
Net operating loss carryforwards | 25,579 | 24,270 | ||||||
Total gross deferred tax assets | 32,277 | 32,498 | ||||||
Deferred tax asset valuation allowance | (31,563 | ) | (4,527 | ) | ||||
Deferred tax assets | 714 | 27,971 | ||||||
Deferred tax liabilities | ||||||||
Property, equipment, and software | — | (1,868 | ) | |||||
Other | (235 | ) | (476 | ) | ||||
Intangible assets | (1,611 | ) | (4,714 | ) | ||||
Total deferred tax liabilities | (1,846 | ) | (7,058 | ) | ||||
Net deferred tax assets/(liabilities) | $ | (1,132 | ) | $ | 20,913 | |||
F-33
Table of Contents
14. | Employee Benefit Plans |
15. | Subsequent Event |
F-34
Table of Contents
F-35
Table of Contents
December 31, | September 30, | |||||||||||
2008 | 2009 | 2010 | ||||||||||
(unaudited) | ||||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash | $ | 470 | $ | 1,086 | $ | 1,587 | ||||||
Accounts receivable, less allowance for doubtful accounts of $0, $24, and $24 at December 31, 2008 and 2009 and September 30, 2010 (unaudited), respectively | 885 | 840 | 736 | |||||||||
Other accounts receivable | 48 | 30 | 71 | |||||||||
Prepaid expenses | 40 | 186 | 250 | |||||||||
Due from members and employees | 24 | 20 | 9 | |||||||||
Total current assets | 1,467 | 2,162 | 2,653 | |||||||||
Property and equipment, net | 9,467 | 9,772 | 10,520 | |||||||||
Debt issuance costs, net | 6 | 8 | 11 | |||||||||
Due from affiliates | 105 | 22 | 22 | |||||||||
Total assets | $ | 11,045 | $ | 11,964 | $ | 13,206 | ||||||
Liabilities and members’ equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 1,174 | $ | 704 | $ | 374 | ||||||
Accrued liabilities | 255 | 243 | 490 | |||||||||
Current portion of notes payable | 313 | 383 | 427 | |||||||||
Total current liabilities | 1,742 | 1,330 | 1,291 | |||||||||
Notes payable, less current portion | 6,614 | 6,261 | 7,122 | |||||||||
Total liabilities | 8,356 | 7,591 | 8,413 | |||||||||
Members’ equity: | ||||||||||||
Members’ equity | 2,689 | 4,373 | 4,793 | |||||||||
Total members’ equity | 2,689 | 4,373 | 4,793 | |||||||||
Total liabilities and members’ equity | $ | 11,045 | $ | 11,964 | $ | 13,206 | ||||||
F-36
Table of Contents
Nine Months Ended | ||||||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||||||
2008 | 2009 | 2009 | 2010 | |||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||
Revenue: | ||||||||||||||||||||
On demand | $ | 16,281 | $ | 20,860 | $ | 15,659 | $ | 18,136 | ||||||||||||
Total revenue | 16,281 | 20,860 | 15,659 | 18,136 | ||||||||||||||||
Cost of revenue | 6,680 | 8,692 | 6,566 | 7,970 | ||||||||||||||||
Gross profit | 9,601 | 12,168 | 9,093 | 10,166 | ||||||||||||||||
Operating expense: | ||||||||||||||||||||
Salaries and commissions | 2,388 | 2,989 | 2,418 | 2,696 | ||||||||||||||||
Payroll taxes and employee benefits | 262 | 379 | 274 | 339 | ||||||||||||||||
Contract labor | 113 | 3 | 3 | 36 | ||||||||||||||||
Occupancy costs | 195 | 515 | 298 | 278 | ||||||||||||||||
Bad debts | 31 | 34 | 1 | 23 | ||||||||||||||||
Travel and entertainment | 292 | 278 | 240 | 327 | ||||||||||||||||
Airplane lease expense | — | 109 | 78 | 12 | ||||||||||||||||
Trade shows | 71 | 94 | 58 | 78 | ||||||||||||||||
Insurance | 14 | 53 | 39 | 45 | ||||||||||||||||
Telephone and internet | 176 | 255 | 201 | 244 | ||||||||||||||||
Legal and accounting | 222 | 771 | 625 | 771 | ||||||||||||||||
Depreciation and amortization | 419 | 1,106 | 806 | 1,116 | ||||||||||||||||
Taxes and licenses | 54 | 132 | 109 | 97 | ||||||||||||||||
Other sales and marketing expenses | 283 | 227 | 141 | 136 | ||||||||||||||||
Computer expenses | 140 | 235 | 174 | 209 | ||||||||||||||||
Postage | 16 | 21 | 16 | 12 | ||||||||||||||||
Dues and subscriptions | 32 | 55 | 46 | 20 | ||||||||||||||||
Associate relations and retention | 104 | 159 | 113 | 122 | ||||||||||||||||
Bank fees and other service charges | 64 | 51 | 40 | 37 | ||||||||||||||||
Total operating expense | 4,876 | 7,466 | 5,680 | 6,598 | ||||||||||||||||
Operating income | 4,725 | 4,702 | 3,413 | 3,568 | ||||||||||||||||
(Loss) gain on disposal of property and equipment | (398 | ) | 16 | — | (87 | ) | ||||||||||||||
Miscellaneous income | 226 | 257 | 176 | 159 | ||||||||||||||||
Interest income | 8 | 7 | 3 | 4 | ||||||||||||||||
Interest expense | (181 | ) | (398 | ) | (289 | ) | (354 | ) | ||||||||||||
Net income | $ | 4,380 | $ | 4,584 | $ | 3,303 | $ | 3,290 | ||||||||||||
F-37
Table of Contents
Total | ||||
Members’ | ||||
(Deficit) | ||||
Equity | ||||
Balance as of December 31, 2007 | $ | 1,611 | ||
Distributions to members | (3,302 | ) | ||
Net income | 4,380 | |||
Balance as of December 31, 2008 | 2,689 | |||
Distributions to members | (2,900 | ) | ||
Net income | 4,584 | |||
Balance as of December 31, 2009 | 4,373 | |||
Distributions to members (unaudited) | (2,870 | ) | ||
Net income (unaudited) | 3,290 | |||
Balance as of September 30, 2010 (unaudited) | $ | 4,793 | ||
F-38
Table of Contents
Nine Months Ended | ||||||||||||||||
Year Ended December 31, | September 30, | |||||||||||||||
2008 | 2009 | 2009 | 2010 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 4,380 | $ | 4,584 | $ | 3,503 | $ | 3,290 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 419 | 1,106 | 806 | 1,116 | ||||||||||||
Loss (gain) on disposal of property and equipment | 398 | (16 | ) | — | 87 | |||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Accounts receivable | (625 | ) | 62 | 341 | 63 | |||||||||||
Prepaid expenses | 40 | (146 | ) | (25 | ) | (64 | ) | |||||||||
Due from members and employees | 15 | 4 | (12 | ) | 11 | |||||||||||
Due from affiliates | 413 | 84 | 16 | — | ||||||||||||
Accounts payable | 857 | (470 | ) | (745 | ) | (330 | ) | |||||||||
Accrued liabilities | 67 | (12 | ) | 104 | 247 | |||||||||||
Net cash provided by operating activities | 5,964 | 5,196 | 3,988 | 4,420 | ||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Proceeds from sale of property and equipment | 338 | 78 | — | 627 | ||||||||||||
Purchases of property and equipment | (7,823 | ) | (1,466 | ) | (814 | ) | (2,576 | ) | ||||||||
Net cash used for investing activities | (7,485 | ) | (1,388 | ) | (814 | ) | (1,949 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from notes payable | 5,565 | 5,399 | 5,272 | 1,842 | ||||||||||||
Payments on notes payable | (628 | ) | (5,682 | ) | (5,471 | ) | (937 | ) | ||||||||
Debt issuance costs | — | (9 | ) | (9 | ) | (5 | ) | |||||||||
Distributions to members | (3,302 | ) | (2,900 | ) | (2,451 | ) | (2,870 | ) | ||||||||
Net cash provided by (used for) financing activities | 1,635 | (3,192 | ) | (2,659 | ) | (1,970 | ) | |||||||||
Net increase in cash | 114 | 616 | 515 | 501 | ||||||||||||
Cash: | ||||||||||||||||
Beginning of period | 356 | 470 | 470 | 1,086 | ||||||||||||
End of period | $ | 470 | $ | 1,086 | $ | 985 | $ | 1,587 | ||||||||
Supplemental cash flow information: | ||||||||||||||||
Cash paid for interest | $ | 181 | $ | 398 | $ | 289 | $ | 354 | ||||||||
F-39
Table of Contents
1. | The Company |
2. | Summary of Significant Accounting Policies |
F-40
Table of Contents
Building and improvements | 39 years | |||
Furniture and fixtures | 7 years | |||
Computer equipment and software | 3 - 7 years | |||
Airplane | 5 years | |||
Vehicles | 5 years |
F-41
Table of Contents
3. | Property and Equipment |
December 31, | September 30, | |||||||||||
2008 | 2009 | 2010 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Computer equipment and software | $ | 1,038 | $ | 2,089 | $ | 2,268 | ||||||
Furniture and fixtures | 1,836 | 2,233 | 2,275 | |||||||||
Airplane | 846 | 846 | 2,058 | |||||||||
Vehicles | 144 | 163 | 163 | |||||||||
Building and improvements | 1,405 | 5,814 | 5,841 | |||||||||
5,269 | 11,145 | 12,605 | ||||||||||
Less: Accumulated depreciation | (564 | ) | (1,581 | ) | (2,466 | ) | ||||||
4,705 | 9,564 | 10,139 | ||||||||||
Land | 208 | 208 | 208 | |||||||||
Construction in progress | 4,554 | — | 173 | |||||||||
Property, equipment and software, net | $ | 9,467 | $ | 9,772 | $ | 10,520 | ||||||
F-42
Table of Contents
4. | Line of Credit |
5. | Debt |
December 31, | September 30, | |||||||||||
2008 | 2009 | 2010 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Note payable to a financial institution due in monthly installments of $17,500 including interest at 6.15% through April 2013; collateralized by equipment. | $ | 782 | $ | 616 | $ | 485 | ||||||
Note payable to a financial institution due in monthly installments of $6,120 including interest at 6.10% through September 2023; collateralized by an airplane and is guaranteed by the Company’s majority member. | 711 | 630 | — | |||||||||
Note payable to a financing company due in monthly installments of $14,868 including interest at 5.25% through January 2025; collateralized by an airplane. | — | — | 1,794 | |||||||||
Note payable to a financing company due in monthly installments of $1,676 including interest at 3.40% through January 2014; collateralized by a vehicle. | — | 74 | 60 | |||||||||
Note payable to a financing company due in monthly installments of $1,099 without interest through December 2013; collateralized by a vehicle. | — | 53 | 43 | |||||||||
Note payable to a financial institution due in monthly installments of $1,652 including interest at 6.99% through May 2012; collateralized by a vehicle. | 63 | — | — | |||||||||
Note payable to a financial institution due in monthly installments of $3,284 including interest at 7.85% through March 2010; collateralized by certain furniture, fixtures and equipment. | 47 | — | — | |||||||||
Note payable to a financial institution due in monthly installments of $1,080 including interest at 7.59% through September 2011; collateralized by a vehicle. | 33 | — | — | |||||||||
Note payable to a financial institution due in monthly installments of $501 plus interest at 8.95% through February 2009; collateralized by certain equipment and is guaranteed by the Company’s majority member. | 1 | — | — |
F-43
Table of Contents
December 31, | September 30, | |||||||||||
2008 | 2009 | 2010 | ||||||||||
(unaudited) | ||||||||||||
(in thousands) | ||||||||||||
Note payable to a financial institution due in monthly installments of $40,226 including interest at 6.50% through June 2014; collateralized by building and improvements. | — | 5,271 | 5,168 | |||||||||
Note payable to a financial institution due in monthly installments of $9,669 including interest at 7.50% through January 2012; collateralized by building and improvements. | 1,134 | — | — | |||||||||
Note payable to a financial institution due in monthly installments of $6,448 including interest at 7.50% through September 2012; collateralized by building and improvements. | 786 | — | — | |||||||||
Note payable to a financial institution; interest only payments due monthly at prime rate, principal due May 2009; collateralized by building and improvements. | 3,370 | — | — | |||||||||
$ | 6,927 | $ | 6,644 | $ | 7,550 | |||||||
(in thousands) | ||||
Year ending December 31, | ||||
2010 | $ | 383 | ||
2011 | 407 | |||
2012 | 432 | |||
2013 | 299 | |||
Thereafter | 5,123 |
6. | Members’ Equity |
7. | Retirement Plan |
8. | Related Party Transactions |
F-44
Table of Contents
9. | Commitments and Contingencies |
10. | Subsequent Events |
F-45
Table of Contents
F-46
Table of Contents
(in thousands, except per share data)
Pro Forma | ||||||||||||||||
IAS | Acquisition | |||||||||||||||
RealPage, Inc.(1) | Holdings, LLC(2) | Adjustments | Combined(3) | |||||||||||||
Revenue | $ | 140,902 | $ | 20,860 | — | $ | 161,762 | |||||||||
Cost of revenue | 58,513 | 8,692 | $ | 1,469 | (5) | 68,674 | ||||||||||
Product development | 27,446 | 2,716 | 2,481 | (4)(5) | 32,643 | |||||||||||
Sales and marketing | 27,804 | 2,751 | 7,620 | (4)(5) | 38,175 | |||||||||||
General and administrative | 20,210 | 1,999 | 270 | (4)(5) | 22,479 | |||||||||||
Interest expense and other, net | (4,528 | ) | (118 | ) | (803 | )(6) | (5,449 | ) | ||||||||
Income (loss) before income taxes | 2,401 | 4,584 | (12,643 | ) | (5,658 | ) | ||||||||||
Income tax (benefit) expense | (26,028 | ) | — | (3,223 | )(7) | (29,251 | ) | |||||||||
Net income (loss) | $ | 28,429 | $ | 4,584 | $ | (9,420 | ) | $ | 23,593 | |||||||
Net income available to common stockholders | $ | 10,611 | $ | 5,775 | ||||||||||||
Earnings per share available to common stockholders: | ||||||||||||||||
Basic | $ | 0.44 | $ | 0.24 | ||||||||||||
Diluted | $ | 0.42 | $ | 0.23 | ||||||||||||
Shares used in computation of per share amounts | ||||||||||||||||
Basic | 23,934 | 24,036 | ||||||||||||||
Diluted | 25,511 | 25,613 |
(1) | Derived from the audited consolidated statement of income for RealPage, Inc. for the year ended December 31, 2009. | |
(2) | Derived from the audited statement of operations for IAS Holdings, LLC for the year ended December 31, 2009. | |
(3) | We have presented our unaudited combined condensed pro forma statement of income for the year ended December 31, 2009 as if the asset acquisition of Level One, subsidiaries of IAS Holdings, LLC, had been completed on January 1, 2009. As this acquisition occurred in November 2010, there were no results from Level One reported in our consolidated statement of income for the year ended December 31, 2009. Adjustments have been made to the combined results to reflect the reduction of consolidated expenses of IAS Holdings, LLC for subsidiaries that were not included in the asset acquisition, as well as, additional operating expenses as discussed below. | |
(4) | Entry to record additional amortization expense for Level One acquired identifiable intangible assets for the period January 1, 2009 through December 31, 2009 (using an estimated useful life of three to nine years). | |
(5) | Adjustment represents an increase in rent expense for lease of a facility, not acquired in the asset acquisition and increases in compensation for former Level One partners that became executives of our company upon acquisition, including share based compensation. These increases were partially offset by an adjustment to remove costs associated with operating activities of the subsidiaries that were not included in the asset acquisition. | |
(6) | Adjustment represents additional interest expense for the borrowing of $30 million on our delayed draw term loans to facilitate the asset acquisition. This additional interest expense was partially offset by a reduction in interest expense related to notes payable of IAS Holdings, LLC that were not assumed in the asset acquisition. | |
(7) | Adjustment represents the tax effect of the net adjustments to the pro forma financial statements as discussed above based upon the Acquisition Adjustments and the historical results of operations of IAS Holdings, LLC, which was not subject to income tax, assuming an effective tax rate of 39.0%. |
F-47
Table of Contents
(in thousands, except per share data)
Pro Forma | ||||||||||||||||
IAS | Acquisition | |||||||||||||||
RealPage, Inc.(1) | Holdings, LLC(2) | Adjustments | Combined(3) | |||||||||||||
Revenue | $ | 134,215 | $ | 18,136 | — | $ | 152,351 | |||||||||
Cost of revenue | 56,595 | 7,970 | $ | 1,103 | (5) | 65,668 | ||||||||||
Product development | 26,431 | 2,407 | $ | 1,861 | (4)(5) | 30,699 | ||||||||||
Sales and marketing | 25,793 | 2,349 | 5,710 | (4)(5) | 33,852 | |||||||||||
General and administrative | 20,230 | 1,842 | 461 | (4)(5) | 22,533 | |||||||||||
Interest expense and other, net | (4,749 | ) | (278 | ) | (459 | )(6) | (5,486 | ) | ||||||||
Income (loss) before income taxes | 417 | 3,290 | (9,594 | ) | (5,887 | ) | ||||||||||
Income tax expense | 164 | — | (2,522 | )(7) | (2,358 | ) | ||||||||||
Net income (loss) | $ | 253 | $ | 3,290 | $ | (7,073 | ) | $ | (3,530 | ) | ||||||
Net (loss) available to common stockholders | $ | (2,691 | ) | $ | (6,474 | ) | ||||||||||
(Loss) per share available to common stockholders: | ||||||||||||||||
Basic | $ | (0.08 | ) | $ | (0.20 | ) | ||||||||||
Diluted | $ | (0.08 | ) | $ | (0.20 | ) | ||||||||||
Shares used in computation of per share amounts | ||||||||||||||||
Basic | 31,878 | 31,980 | ||||||||||||||
Diluted | 31,878 | 31,980 |
(1) | Derived from the unaudited consolidated statement of income for RealPage, Inc. for the nine months ended September 30, 2010. | |
(2) | Derived from the unaudited statement of operations for IAS Holdings, LLC for the nine months ended September 30, 2010. |
(3) | We have presented our unaudited combined condensed pro forma statement of income for the nine months ended September 30, 2010 as if the asset acquisition of Level One, subsidiaries of IAS Holdings, LLC, had been completed on January 1, 2010. As this acquisition occurred in November 2010, there were no results from Level One reported in our consolidated statement of income for the nine months ended September 30, 2010. Adjustments have been made to the combined results to reflect the reduction of consolidated expenses of IAS Holdings, LLC for subsidiaries that were not included in the asset acquisition, as well as, additional operating expenses as discussed below. | |
(4) | Entry to record additional amortization expense for Level One acquired identifiable intangible assets for the period January 1, 2010 through September 30, 2010 (using an estimated useful life of three to nine years). | |
(5) | Adjustment represents an increase in rent expense for lease of a facility, not acquired in the asset acquisition and increases in compensation for former Level One partners that became executives of our company upon acquisition, including share based compensation. These increases were partially offset by an adjustment to remove costs associated with operating activities of the subsidiaries that were not included in the asset acquisition. | |
(6) | Adjustment represents additional interest expense for the borrowing of $30 million on our delayed draw term loans to facilitate the asset acquisition. This additional interest expense was partially offset by a reduction in interest expense related to notes payable of IAS Holdings, LLC that were not assumed in the asset acquisition. | |
(7) | Adjustment represents the tax effect of the net adjustments to the pro forma financial statements as discussed above based upon the Acquisition Adjustments and the historical results of operations of IAS Holdings, LLC, which was not subject to income tax, assuming an effective tax rate of 39.0%. |
F-48
Table of Contents
(in thousands, except share amounts)
Pro Forma | ||||||||||||||||
Acquisition | ||||||||||||||||
RealPage, Inc.(1) | IAS Holdings, LLC(2) | Adjustments(4) | Combined(3) | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 39,394 | $ | 1,587 | $ | (25,587 | ) | $ | 15,394 | |||||||
Restricted cash | 12,941 | — | 12,941 | |||||||||||||
Accounts receivable, net | 24,948 | 736 | 25,684 | |||||||||||||
Deferred Tax Asset, net of valuation | 1,799 | — | 1,799 | |||||||||||||
Other current assets | 6,595 | 330 | (56 | ) | 6,869 | |||||||||||
Total current assets | 85,677 | 2,653 | 25,643 | 62,687 | ||||||||||||
Net property and equipment | 21,048 | 10,520 | (5,699 | ) | 25,869 | |||||||||||
Goodwill | 37,380 | — | 35,158 | 72,538 | ||||||||||||
Identified intangible assets, net | 34,571 | — | 21,819 | 56,390 | ||||||||||||
Deferred Tax Asset, net of valuation allowance | 16,628 | — | 16,628 | |||||||||||||
Other assets | 2,398 | 33 | 22 | 2,462 | ||||||||||||
Total assets | $ | 197,702 | $ | 13,206 | $ | 25,657 | $ | 236,565 | ||||||||
Liabilities and stockholders’ (deficit) equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 6,523 | $ | 374 | $ | 6,897 | ||||||||||
Accrued expenses and other current liabilities | 11,449 | 490 | 11,939 | |||||||||||||
Current portion of deferred revenue | 43,459 | — | 43,459 | |||||||||||||
Long-term debt, less current portion | 6,281 | 427 | $ | (427 | ) | 6,281 | ||||||||||
Customer deposits held in restricted accounts | 12,857 | 0 | 12,857 | |||||||||||||
Total current liabilities | 80,569 | 1,291 | (427 | ) | 81,433 | |||||||||||
Deferred revenue | 7,493 | — | 7,493 | |||||||||||||
Long-term debt, less current portion | 34,493 | 7,122 | 22,878 | 64,493 | ||||||||||||
Other long term liabilities | 5,307 | — | 8,000 | 13,306 | ||||||||||||
Total noncurrent liabilities | 47,293 | 7,122 | 30,877 | 85,292 | ||||||||||||
Total liabilities | 127,862 | 8,413 | 30,450 | 166,725 | ||||||||||||
Common stock | 63 | 158 | (158 | ) | 63 | |||||||||||
Capital in excess of par value | 160,298 | 25 | (25 | ) | 160,298 | |||||||||||
Treasury stock | (958 | ) | — | (958 | ) | |||||||||||
Retained earnings | (89,544 | ) | 4,610 | (4,610 | ) | (89,544 | ) | |||||||||
Accumulated other comprehensive (loss) income | (19 | ) | — | (19 | ) | |||||||||||
Total stockholders’ equity | 69,840 | 4,793 | (4,793 | ) | 69,840 | |||||||||||
Total liabilities, redeemable convertible preferred stock and stockholders’ equity | $ | 197,702 | $ | 13,206 | $ | 25,657 | $ | 236,565 | ||||||||
(1) | Derived from the unaudited consolidated balance sheet for RealPage, Inc. at September 30, 2010. | |
(2) | Derived from the unaudited balance sheet for IAS Holdings, LLC at September 30, 2010. |
(3) | We have presented our unaudited combined condensed pro forma balance sheet as of September 30, 2010 as if the asset acquisition of Level One, LLC, and LI Technology, LLC (collectively “Level One”), subsidiaries of IAS Holdings, LLC, had been completed on September 30, 2010. We have estimated the initial purchase price allocation in consideration of these proforma financial statements as the final purchase price allocation has not been completed as of this filing. |
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(4) | Entries to record the purchase of certain of the assets of Level One, including cash paid at acquisition, net of cash not acquired, and interest payments on additional borrowing; property and equipment not acquired; intangible assets acquired, net of amortization for the nine months ended September 30, 2010; goodwill acquired; additional borrowing of $30 million on our delayed draw term loans to facilitate the acquisition, net of notes payable by IAS Holdings, LLC that were not assumed in the asset acquisition. |
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Item 13. | Other Expenses of Issuance and Distribution |
SEC Registration fee | $ | 20,508 | ||
FINRA filing fee | 29,263 | |||
Printing and engraving expenses | 75,000 | |||
Legal fees and expenses | 500,000 | |||
Accounting fees and expenses | 250,000 | |||
Blue sky fees and expenses | 25,000 | |||
Custodian and transfer agent fees | 10,000 | |||
Miscellaneous fees and expenses | 50,000 | |||
Total | $ | 959,771 | ||
Item 14. | Indemnification of Directors and Officers |
• | The registrant shall indemnify its directors and officers for serving the registrant in those capacities or for serving other business enterprises at the registrant’s request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful. | |
• | The registrant may, in its discretion, indemnify employees and agents in those circumstances in which indemnification is not required by law. | |
• | The registrant will be required to advance expenses, as incurred, to its directors and officers in connection with defending a proceeding, except that such director or officer shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification. | |
• | The registrant will not be obligated pursuant to the bylaws to indemnify a person with respect to proceedings initiated by that person, except with respect to proceedings authorized by the registrant’s board of directors. The rights conferred in the bylaws are not exclusive, and the registrant is authorized to enter into indemnification agreements with its directors, officers, employees and agents and to obtain insurance to indemnify such persons. | |
• | The registrant may not retroactively amend the bylaw provisions to reduce its indemnification obligations to directors, officers, employees and agents. |
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Item 15. | Recent Sales of Unregistered Securities |
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Item 16. | Exhibits and Financial Statement Schedules |
(a) | Exhibits |
Exhibit | ||||
Number | Description | |||
1 | .1* | Form of Underwriting Agreement | ||
2 | .1(1) | Asset Purchase Agreement among the Registrant, RP Newco LLC, IAS Holdings, LLC, Level One, LLC, L1 Technology, LLC, L1 Land, LLC, L1 Holdings, Inc., Todd W. Baldree, Calvin D. Long, II and Benjamin Holbrook, dated November 3, 2010 | ||
3 | .1(2) | Amended and Restated Certificate of Incorporation of the Registrant | ||
3 | .2(3) | Amended and Restated Bylaws of the Registrant | ||
4 | .1(4) | Form of Common Stock certificate of the Registrant | ||
4 | .2(5) | Shareholders’ Agreement among the Registrant and certain stockholders, dated December 1, 1998, as amended July 16, 1999 and November 3, 2000 | ||
4 | .3(5) | Second Amended and Restated Registration Rights Agreement among the Registrant and certain stockholders, dated February 22, 2008 | ||
4 | .4(1) | Registration Rights Agreement among the Registrant and certain stockholders, dated November 3, 2010 | ||
5 | .1* | Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation | ||
10 | .1(5) | Form of Indemnification Agreement entered into between the Registrant and each of its directors and officers | ||
10 | .2+(5) | Amended and Restated 1998 Stock Incentive Plan | ||
10 | .2A+(5) | Form of Notice of Stock Option Grant | ||
10 | .2B+(5) | Form of Notice of Grant of Restricted Shares | ||
10 | .2C+(5) | Form of Non-Qualified Stock Option Agreement (Second Series) |
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Exhibit | ||||
Number | Description | |||
10 | .2D+(5) | Form of Non-Qualified Stock Option Agreement | ||
10 | .2E+(6) | Form of Notice of Stock Option Grant (May 2010) | ||
10 | .2F+(6) | Form of Notice of Stock Option Grant (May 2010 — California) | ||
10 | .2G+(6) | Amended and Restated 1998 Stock Incentive Plan (June 2010) | ||
10 | .2H+(6) | Form of Notice of Stock Option Grant (Accelerated Vesting) | ||
10 | .3+(5) | Form of Director’s Nonqualified Stock Option Agreement | ||
10 | .4+(4) | 2010 Equity Incentive Plan | ||
10 | .4A+(7) | Forms of Stock Option Award Agreements and Restricted Stock Award Agreements approved for use under the 2010 Equity Incentive Plan | ||
10 | .5+(5) | Form of 2009 Management Incentive Plan | ||
10 | .6+(5) | Form of 2010 Management Incentive Plan | ||
10 | .6A+(6) | Form of 2010 Management Incentive Plan (as revised May 2010) | ||
10 | .7+(5) | Stand-Alone Stock Option Agreement between the Registrant and Peter Gyenes, dated February 25, 2010 | ||
10 | .8+(5) | Non-Qualified Stock Option Agreement (Second Series) under the Amended and Restated 1998 Stock Incentive Plan between the Registrant and Timothy J. Barker dated October 27, 2005 | ||
10 | .9+(5) | Non-Qualified Stock Option Agreement (Second Series) under the Amended and Restated 1998 Stock Incentive Plan between the Registrant and Timothy J. Barker dated February 26, 2009 | ||
10 | .10+(5) | Notice of Stock Option Grant under the Amended and Restated 1998 Stock Incentive Plan between the Registrant and Timothy J. Barker dated February 25, 2010 | ||
10 | .11+(5) | Employment Agreement between the Registrant and Stephen T. Winn, dated December 30, 2003 | ||
10 | .12+(5) | Employment Agreement between the Registrant and Timothy J. Barker, dated October 31, 2005 | ||
10 | .13+(5) | Amendment to Employment Agreement between the Registrant and Timothy J. Barker, dated January 1, 2010 | ||
10 | .14+(5) | Employment Agreement between the Registrant and William E. Van Valkenberg, dated September 24, 2009 | ||
10 | .15+(5) | Master Agreement for Consulting Services between the Registrant and William E. Van Valkenberg, dated June 28, 2009 | ||
10 | .16+(5) | Employment Agreement between the Registrant and Ashley Chaffin Glover, dated March 3, 2005 | ||
10 | .17+(5) | Employment Agreement between Multifamily Internet Ventures, LLC and Dirk D. Wakeham, dated April 12, 2007 and amended April 12, 2007 | ||
10 | .18(5) | Credit Agreement among the Registrant, Wells Fargo Foothill, LLC and Comerica Bank dated, September 3, 2009 | ||
10 | .19(5) | Security Agreement among the Registrant, OpsTechnology, Inc., Multifamily Internet Ventures, LLC, Starfire Media, Inc., RealPage India Holdings, Inc. and Wells Fargo Foothill, LLC, dated September 3, 2009 | ||
10 | .20(5) | General Continuing Guaranty among OpsTechnology, Inc., Multifamily Internet Ventures, LLC, Starfire Media, Inc., RealPage India Holdings, Inc. and Wells Fargo Foothill, LLC, dated September 3, 2009 | ||
10 | .21(5) | Waiver and First Amendment to Credit Agreement among the Registrant, Wells Fargo Foothill, LLC and Comerica Bank, dated September 16, 2009 | ||
10 | .22(5) | General Continuing Guaranty between A.L. Wizard, Inc. and Wells Fargo Foothill, LLC, dated September 25, 2009 | ||
10 | .23(5) | Waiver and Second Amendment to Credit Agreement among the Registrant, Wells Fargo Foothill, LLC and Comerica bank, dated October 15, 2009 | ||
10 | .24(5) | General Continuing Guarantee between Propertyware, Inc. and Wells Fargo Foothill, LLC, dated November 6, 2009 | ||
10 | .25(5) | Supplement No. 2 to Security Agreement between Propertyware, Inc. and Wells Fargo Foothill, LLC, dated November 6, 2009 | ||
10 | .26(5) | Consent and Third Amendment to Credit Agreement among the Registrant, Wells Fargo Foothill, LLC, and Comerica Bank dated December 23, 2009 | ||
10 | .27(5) | Waiver, Consent and Fourth Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank dated February 10, 2010 | ||
10 | .28(5) | General Security Agreement between 43642 Yukon, Inc. and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated February 10, 2010 |
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Exhibit | ||||
Number | Description | |||
10 | .29(5) | Guarantee between 43642 Yukon, Inc. and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated February 10, 2010 | ||
10 | .30(5) | Share Pledge between the Registrant and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated February 10, 2010 | ||
10 | .31(5) | Note Purchase Agreement between the Registrant and HV Capital Investors, L.L.C., dated August 1, 2008 | ||
10 | .32(5) | Security Agreement between the Registrant and HV Capital Investors, L.L.C., dated August 1, 2008 | ||
10 | .33(5) | Form of Secured Promissory Note issued by the Registrant to HV Capital Investors, L.L.C. on August 1, 2008 and September 19, 2008 | ||
10 | .34(5) | First Amendment to Note Purchase Agreement between the Registrant and HV Capital Investors, L.L.C., dated January 20, 2009 and effective as of December 31, 2008 | ||
10 | .35(5) | Form of Unsecured Subordinated Promissory Note (Series A and Series A1) | ||
10 | .35A(5) | Schedule of Holders of Unsecured Subordinated Promissory Notes (Series A and Series A1) | ||
10 | .36(5) | Form of Unsecured Subordinated Promissory Note (Series B and Series C) | ||
10 | .36A(5) | Schedule of Holders of Unsecured Subordinated Promissory Notes (Series B and Series C) | ||
10 | .37(5) | Form of Unsecured Subordinated Promissory Note (April 2010) | ||
10 | .37A(5) | Schedule of Holders of Unsecured Subordinated Promissory Notes (April 2010) | ||
10 | .38(5) | Amendment No. 1 to Unsecured Subordinated Promissory Notes among the Registrant and certain holders of its Unsecured Subordinated Promissory Notes | ||
10 | .39(5) | Lease Agreement between the Registrant and CB Parkway Business Center V, Ltd., dated July 23, 1999 | ||
10 | .40(5) | First Amendment to Lease Agreement between the Registrant and CB Parkway Business Center V, Ltd., dated November 29, 1999 | ||
10 | .41(5) | Second Amendment to Lease Agreement between the Registrant and CB Parkway Business Center V, Ltd., dated January 30, 2006 | ||
10 | .42(5) | Third Amendment to Lease Agreement between the Registrant and CB Parkway Business Center V, Ltd., dated August 28, 2006 | ||
10 | .43(5) | Fourth Amendment to Lease Agreement between the Registrant and ARI-Commercial Properties, Inc., dated November 2007 | ||
10 | .44(5) | Fifth Amendment to Lease Agreement between the Registrant and ARI-Commercial Properties, Inc., dated February 4, 2009 | ||
10 | .45(5) | Sixth Amendment to Lease Agreement between the Registrant and ARI-Commercial Properties, Inc., dated March 30, 2009 | ||
10 | .46(5) | Lease Agreement between the Registrant and Savoy IBP 8, Ltd., dated August 28, 2006 | ||
10 | .47(5) | First Amendment to Lease Agreement among the Registrant, ARI-International Business Park, LLC, ARI - IBP 1, LLC, ARI - IBP 2, LLC, ARI - IBP 3, LLC, ARI - IBP 4, LLC, ARI - IBP 5, LLC, ARI - IBP 6, LLC, ARI - IBP 7, LLC, ARI - IBP 8, LLC, ARI - IBP 9, LLC, ARI - IBP 11, LLC and ARI - IBP 12, LLC, dated December 28, 2009 | ||
10 | .48†(8) | Master Services Agreement between the Registrant and DataBank Holdings Ltd., dated May 31, 2007 | ||
10 | .49+(6) | Form of Notice of Grant of Restricted Shares (Outside Directors) | ||
10 | .50+(6) | Employment Agreement between the Registrant and Jason Lindwall, dated January 8, 2008 | ||
10 | .51+(6) | Employment Agreement between the Registrant and Margot Lebenberg, dated May 12, 2010 | ||
10 | .52+(6) | Notice of Stock Option Grant under the Amended and Restated 1998 Stock Incentive Plan between the Registrant and Margot Lebenberg, dated May 12, 2010 | ||
10 | .53+(8) | Employment Release Agreement between the Registrant and William Van Valkenberg, dated June 8, 2010 | ||
10 | .54(8) | Consent and Fifth Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank, dated June 22, 2010 | ||
10 | .55(9) | Sixth Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank, dated June 22, 2010 | ||
10 | .56(10) | Seventh Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank, dated September 30, 2010 | ||
10 | .57(11) | Consent and Eighth Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank, dated November 3, 2010 | ||
10 | .58(12) | Employment Agreement 409A Addendum between the Registrant and Stephen T. Winn, dated November 5, 2010 |
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Exhibit | ||||
Number | Description | |||
10 | .59(13) | Employment Agreement 409A Addendum between the Registrant and Timothy J. Barker, dated November 5, 2010 | ||
10 | .60(14) | Employment Agreement 409A Addendum between the Registrant and Ashley Chaffin Glover, dated November 5, 2010 | ||
10 | .61(15) | Employment Agreement 409A Addendum between the Registrant and Dirk Wakeham, dated November 5, 2010 | ||
10 | .62(16) | Employment Agreement 409A Addendum between the Registrant and Margot Lebenberg, dated November 5, 2010 | ||
10 | .63(17) | Employment Agreement 409A Addendum between the Registrant and Jason Lindwall, dated November 5, 2010 | ||
21 | .1 | Subsidiaries of the Registrant | ||
23 | .1 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm | ||
23 | .2 | Consent of Elliott Davis, LLC, Independent Registered Public Accounting Firm | ||
23 | .3* | Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (contained in Exhibit 5.1) | ||
24 | .1 | Power of Attorney (contained in the signature page to this registration statement) |
+ | Indicates management contract or compensatory plan or arrangement. | |
* | To be filed by amendment. | |
† | Confidential treatment was granted by the Securities and Exchange Commission for portions of this exhibit. These portions have been omitted from the Registration Statement and submitted separately to the Securities and Exchange Commission. | |
(1) | Incorporated by reference to the same numbered exhibit to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(2) | Incorporated by reference to Exhibit 3.2 to Amendment No. 3 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 26, 2010. | |
(3) | Incorporated by reference to Exhibit 3.4 to Amendment No. 3 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 26, 2010. | |
(4) | Incorporated by reference to the same numbered exhibit to Amendment No. 3 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 26, 2010. | |
(5) | Incorporated by reference to the same numbered exhibit to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on April 29, 2010. | |
(6) | Incorporated by reference to the same numbered exhibit to Amendment No. 1 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on June 7, 2010. | |
(7) | Incorporated by reference to Exhibits 4.6, 4.7, 4.8 and 4.9 to the Registrant’s Registration Statement onForm S-8 (SEC FileNo. 333-168878) filed on August 17, 2010. | |
(8) | Incorporated by reference to the same numbered exhibit to Amendment No. 2 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 2, 2010. | |
(9) | Incorporated by reference to the same numbered exhibit to Amendment No. 4 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 28, 2010. | |
(10) | Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(11) | Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(12) | Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(13) | Incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. |
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(14) | Incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(15) | Incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(16) | Incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(17) | Incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. |
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(b) | Financial Statement Schedules |
REALPAGE, INC.
December 31, 2009
(in thousands)
Allowance for Doubtful Accounts
Additions | ||||||||||||||||||||
Balance at | Charged to | Additions | Balance at | |||||||||||||||||
Beginning | Costs and | Due to | End of | |||||||||||||||||
Description | of Year | Expenses | Acquisitions | Deduction(1) | Year | |||||||||||||||
Year ended December 31: | ||||||||||||||||||||
2007 | $ | 923 | $ | 1,490 | — | — | $ | 2,413 | ||||||||||||
2008 | 2,413 | 301 | $ | 181 | — | 2,895 | ||||||||||||||
2009 | 2,895 | 441 | 175 | $ | (1,289 | ) | 2,222 |
(1) | Uncollectible accounts written off, net of recoveries. |
Item 17. | Undertakings |
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By: | /s/ Stephen T. Winn |
Signature | Title | Date | ||||
/s/ Stephen T. Winn Stephen T. Winn | Chairman of the Board, Chief Executive Officer, and Director (Principal Executive Officer) | November 17, 2010 | ||||
/s/ Timothy J. Barker Timothy J. Barker | Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | November 17, 2010 | ||||
/s/ Alfred R. Berkeley, III Alfred R. Berkeley, III | Director | November 17, 2010 | ||||
/s/ Richard M. Berkeley Richard M. Berkeley | Director | November 17, 2010 | ||||
/s/ Peter Gyenes Peter Gyenes | Director | November 17, 2010 | ||||
/s/ Jeffrey T. Leeds Jeffrey T. Leeds | Director | November 17, 2010 | ||||
/s/ Jason A. Wright Jason A. Wright | Director | November 17, 2010 |
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Exhibit | ||||
Number | Description | |||
1 | .1* | Form of Underwriting Agreement | ||
2 | .1(1) | Asset Purchase Agreement among the Registrant, RP Newco LLC, IAS Holdings, LLC, Level One, LLC, L1 Technology, LLC, L1 Land, LLC, L1 Holdings, Inc., Todd W. Baldree, Calvin D. Long, II and Benjamin Holbrook, dated November 3, 2010 | ||
3 | .1(2) | Amended and Restated Certificate of Incorporation of the Registrant | ||
3 | .2(3) | Amended and Restated Bylaws of the Registrant | ||
4 | .1(4) | Form of Common Stock certificate of the Registrant | ||
4 | .2(5) | Shareholders’ Agreement among the Registrant and certain stockholders, dated December 1, 1998, as amended July 16, 1999 and November 3, 2000 | ||
4 | .3(5) | Second Amended and Restated Registration Rights Agreement among the Registrant and certain stockholders, dated February 22, 2008 | ||
4 | .4(1) | Registration Rights Agreement among the Registrant and certain stockholders, dated November 3, 2010 | ||
5 | .1* | Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation | ||
10 | .1(5) | Form of Indemnification Agreement entered into between the Registrant and each of its directors and officers | ||
10 | .2+(5) | Amended and Restated 1998 Stock Incentive Plan | ||
10 | .2A+(5) | Form of Notice of Stock Option Grant | ||
10 | .2B+(5) | Form of Notice of Grant of Restricted Shares | ||
10 | .2C+(5) | Form of Non-Qualified Stock Option Agreement (Second Series) | ||
10 | .2D+(5) | Form of Non-Qualified Stock Option Agreement | ||
10 | .2E+(6) | Form of Notice of Stock Option Grant (May 2010) | ||
10 | .2F+(6) | Form of Notice of Stock Option Grant (May 2010 — California) | ||
10 | .2G+(6) | Amended and Restated 1998 Stock Incentive Plan (June 2010) | ||
10 | .2H+(6) | Form of Notice of Stock Option Grant (Accelerated Vesting) | ||
10 | .3+(5) | Form of Director’s Nonqualified Stock Option Agreement | ||
10 | .4+(4) | 2010 Equity Incentive Plan | ||
10 | .4A+(7) | Forms of Stock Option Award Agreements and Restricted Stock Award Agreements approved for use under the 2010 Equity Incentive Plan | ||
10 | .5+(5) | Form of 2009 Management Incentive Plan | ||
10 | .6+(5) | Form of 2010 Management Incentive Plan | ||
10 | .6A+(6) | Form of 2010 Management Incentive Plan (as revised May 2010) | ||
10 | .7+(5) | Stand-Alone Stock Option Agreement between the Registrant and Peter Gyenes, dated February 25, 2010 | ||
10 | .8+(5) | Non-Qualified Stock Option Agreement (Second Series) under the Amended and Restated 1998 Stock Incentive Plan between the Registrant and Timothy J. Barker dated October 27, 2005 | ||
10 | .9+(5) | Non-Qualified Stock Option Agreement (Second Series) under the Amended and Restated 1998 Stock Incentive Plan between the Registrant and Timothy J. Barker dated February 26, 2009 | ||
10 | .10+(5) | Notice of Stock Option Grant under the Amended and Restated 1998 Stock Incentive Plan between the Registrant and Timothy J. Barker dated February 25, 2010 | ||
10 | .11+(5) | Employment Agreement between the Registrant and Stephen T. Winn, dated December 30, 2003 | ||
10 | .12+(5) | Employment Agreement between the Registrant and Timothy J. Barker, dated October 31, 2005 | ||
10 | .13+(5) | Amendment to Employment Agreement between the Registrant and Timothy J. Barker, dated January 1, 2010 | ||
10 | .14+(5) | Employment Agreement between the Registrant and William E. Van Valkenberg, dated September 24, 2009 | ||
10 | .15+(5) | Master Agreement for Consulting Services between the Registrant and William E. Van Valkenberg, dated June 28, 2009 | ||
10 | .16+(5) | Employment Agreement between the Registrant and Ashley Chaffin Glover, dated March 3, 2005 |
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Exhibit | ||||
Number | Description | |||
10 | .17+(5) | Employment Agreement between Multifamily Internet Ventures, LLC and Dirk D. Wakeham, dated April 12, 2007 and amended April 12, 2007 | ||
10 | .18(5) | Credit Agreement among the Registrant, Wells Fargo Foothill, LLC and Comerica Bank dated, September 3, 2009 | ||
10 | .19(5) | Security Agreement among the Registrant, OpsTechnology, Inc., Multifamily Internet Ventures, LLC, Starfire Media, Inc., RealPage India Holdings, Inc. and Wells Fargo Foothill, LLC, dated September 3, 2009 | ||
10 | .20(5) | General Continuing Guaranty among OpsTechnology, Inc., Multifamily Internet Ventures, LLC, Starfire Media, Inc., RealPage India Holdings, Inc. and Wells Fargo Foothill, LLC, dated September 3, 2009 | ||
10 | .21(5) | Waiver and First Amendment to Credit Agreement among the Registrant, Wells Fargo Foothill, LLC and Comerica Bank, dated September 16, 2009 | ||
10 | .22(5) | General Continuing Guaranty between A.L. Wizard, Inc. and Wells Fargo Foothill, LLC, dated September 25, 2009 | ||
10 | .23(5) | Waiver and Second Amendment to Credit Agreement among the Registrant, Wells Fargo Foothill, LLC and Comerica bank, dated October 15, 2009 | ||
10 | .24(5) | General Continuing Guarantee between Propertyware, Inc. and Wells Fargo Foothill, LLC, dated November 6, 2009 | ||
10 | .25(5) | Supplement No. 2 to Security Agreement between Propertyware, Inc. and Wells Fargo Foothill, LLC, dated November 6, 2009 | ||
10 | .26(5) | Consent and Third Amendment to Credit Agreement among the Registrant, Wells Fargo Foothill, LLC, and Comerica Bank dated December 23, 2009 | ||
10 | .27(5) | Waiver, Consent and Fourth Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank dated February 10, 2010 | ||
10 | .28(5) | General Security Agreement between 43642 Yukon, Inc. and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated February 10, 2010 | ||
10 | .29(5) | Guarantee between 43642 Yukon, Inc. and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated February 10, 2010 | ||
10 | .30(5) | Share Pledge between the Registrant and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated February 10, 2010 | ||
10 | .31(5) | Note Purchase Agreement between the Registrant and HV Capital Investors, L.L.C., dated August 1, 2008 | ||
10 | .32(5) | Security Agreement between the Registrant and HV Capital Investors, L.L.C., dated August 1, 2008 | ||
10 | .33(5) | Form of Secured Promissory Note issued by the Registrant to HV Capital Investors, L.L.C. on August 1, 2008 and September 19, 2008 | ||
10 | .34(5) | First Amendment to Note Purchase Agreement between the Registrant and HV Capital Investors, L.L.C., dated January 20, 2009 and effective as of December 31, 2008 | ||
10 | .35(5) | Form of Unsecured Subordinated Promissory Note (Series A and Series A1) | ||
10 | .35A(5) | Schedule of Holders of Unsecured Subordinated Promissory Notes (Series A and Series A1) | ||
10 | .36(5) | Form of Unsecured Subordinated Promissory Note (Series B and Series C) | ||
10 | .36A(5) | Schedule of Holders of Unsecured Subordinated Promissory Notes (Series B and Series C) | ||
10 | .37(5) | Form of Unsecured Subordinated Promissory Note (April 2010) | ||
10 | .37A(5) | Schedule of Holders of Unsecured Subordinated Promissory Notes (April 2010) | ||
10 | .38(5) | Amendment No. 1 to Unsecured Subordinated Promissory Notes among the Registrant and certain holders of its Unsecured Subordinated Promissory Notes | ||
10 | .39(5) | Lease Agreement between the Registrant and CB Parkway Business Center V, Ltd., dated July 23, 1999 | ||
10 | .40(5) | First Amendment to Lease Agreement between the Registrant and CB Parkway Business Center V, Ltd., dated November 29, 1999 | ||
10 | .41(5) | Second Amendment to Lease Agreement between the Registrant and CB Parkway Business Center V, Ltd., dated January 30, 2006 | ||
10 | .42(5) | Third Amendment to Lease Agreement between the Registrant and CB Parkway Business Center V, Ltd., dated August 28, 2006 |
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .43(5) | Fourth Amendment to Lease Agreement between the Registrant and ARI-Commercial Properties, Inc., dated November 2007 | ||
10 | .44(5) | Fifth Amendment to Lease Agreement between the Registrant and ARI-Commercial Properties, Inc., dated February 4, 2009 | ||
10 | .45(5) | Sixth Amendment to Lease Agreement between the Registrant and ARI-Commercial Properties, Inc., dated March 30, 2009 | ||
10 | .46(5) | Lease Agreement between the Registrant and Savoy IBP 8, Ltd., dated August 28, 2006 | ||
10 | .47(5) | First Amendment to Lease Agreement among the Registrant, ARI-International Business Park, LLC, ARI - IBP 1, LLC, ARI - IBP 2, LLC, ARI - IBP 3, LLC, ARI - IBP 4, LLC, ARI - IBP 5, LLC, ARI - IBP 6, LLC, ARI - IBP 7, LLC, ARI - IBP 8, LLC, ARI - IBP 9, LLC, ARI - IBP 11, LLC and ARI - IBP 12, LLC, dated December 28, 2009 | ||
10 | .48†(8) | Master Services Agreement between the Registrant and DataBank Holdings Ltd., dated May 31, 2007 | ||
10 | .49+(6) | Form of Notice of Grant of Restricted Shares (Outside Directors) | ||
10 | .50+(6) | Employment Agreement between the Registrant and Jason Lindwall, dated January 8, 2008 | ||
10 | .51+(6) | Employment Agreement between the Registrant and Margot Lebenberg, dated May 12, 2010 | ||
10 | .52+(6) | Notice of Stock Option Grant under the Amended and Restated 1998 Stock Incentive Plan between the Registrant and Margot Lebenberg, dated May 12, 2010 | ||
10 | .53+(8) | Employment Release Agreement between the Registrant and William Van Valkenberg, dated June 8, 2010 | ||
10 | .54(8) | Consent and Fifth Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank, dated June 22, 2010 | ||
10 | .55(9) | Sixth Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank, dated June 22, 2010 | ||
10 | .56(10) | Seventh Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank, dated September 30, 2010 | ||
10 | .57(11) | Consent and Eighth Amendment to Credit Agreement among the Registrant, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC) and Comerica Bank, dated November 3, 2010 | ||
10 | .58(12) | Employment Agreement 409A Addendum between the Registrant and Stephen T. Winn, dated November 5, 2010 | ||
10 | .59(13) | Employment Agreement 409A Addendum between the Registrant and Timothy J. Barker, dated November 5, 2010 | ||
10 | .60(14) | Employment Agreement 409A Addendum between the Registrant and Ashley Chaffin Glover, dated November 5, 2010 | ||
10 | .61(15) | Employment Agreement 409A Addendum between the Registrant and Dirk Wakeham, dated November 5, 2010 | ||
10 | .62(16) | Employment Agreement 409A Addendum between the Registrant and Margot Lebenberg, dated November 5, 2010 | ||
10 | .63(17) | Employment Agreement 409A Addendum between the Registrant and Jason Lindwall, dated November 5, 2010 | ||
21 | .1 | Subsidiaries of the Registrant | ||
23 | .1 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm | ||
23 | .2 | Consent of Elliott Davis, LLC, Independent Registered Public Accounting Firm | ||
23 | .3* | Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (contained in Exhibit 5.1) | ||
24 | .1 | Power of Attorney (contained in the signature page to this registration statement) |
+ | Indicates management contract or compensatory plan or arrangement. | |
* | To be filed by amendment. | |
† | Confidential treatment was granted by the Securities and Exchange Commission for portions of this exhibit. These portions have been omitted from the Registration Statement and submitted separately to the Securities and Exchange Commission. |
Table of Contents
(1) | Incorporated by reference to the same numbered exhibit to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(2) | Incorporated by reference to Exhibit 3.2 to Amendment No. 3 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 26, 2010. | |
(3) | Incorporated by reference to Exhibit 3.4 to Amendment No. 3 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 26, 2010. | |
(4) | Incorporated by reference to the same numbered exhibit to Amendment No. 3 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 26, 2010. | |
(5) | Incorporated by reference to the same numbered exhibit to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on April 29, 2010. | |
(6) | Incorporated by reference to the same numbered exhibit to Amendment No. 1 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on June 7, 2010. | |
(7) | Incorporated by reference to Exhibits 4.6, 4.7, 4.8 and 4.9 to the Registrant’s Registration Statement onForm S-8 (SEC FileNo. 333-168878) filed on August 17, 2010. | |
(8) | Incorporated by reference to the same numbered exhibit to Amendment No. 2 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 2, 2010. | |
(9) | Incorporated by reference to the same numbered exhibit to Amendment No. 4 to the Registrant’s Registration Statement onForm S-1 (SEC FileNo. 333-166397) filed on July 28, 2010. | |
(10) | Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(11) | Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(12) | Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(13) | Incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(14) | Incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(15) | Incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(16) | Incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. | |
(17) | Incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report onForm 10-Q (FileNo. 001-34846) filed on November 5, 2010. |