Appendix D
1) Cost Synergy: Saba has offices in 7 locations all over the world of which 5 offices are overlap a. Rent Expense per office per year b. Rent Saving in closing 5 offices per year c. General Administrative Expense per office per year d. Saving on Administrative expense per year PV of Total Saving on closing Extra offices(Discounted with the cost of of Debt of 6.7% as it is a Certain Cost Synergy) Sales and Marketing expense of Saba is currently 44% of its Revenue. There will be minimum 5%(similar M&A result) reduction in S&M expense as a result of Post M&A Integration Revenue of Saba(4% growth rate first 2 years and 10% after that) Yearly Savings on Sales and Marketing Expense PV of Total Savings on S&M Integration( Discounted by using the WACC - 9% of Saba as it is not certain Cost synergy) 2) Revenue Synergy Saba has a Profit Margin of 63% and Salesforce has a profit margin of 77%. Saledforce can have same Profit margin from Saba because of its premium brand name. Increase in Revenue due to premium pricing PV of Total increasein Revenue(Discounted with the rate of equity -10% of Saba as the risk of revenue synergy is more than cost synergy) 3) Base Synergy Acquiring Saba gives Salesforce to make a entry in Cloud services related to e-learning and Talent Management. Salesforce with its expertice in cloud services and with Saba's expertise on Talent Management can new features in Talent managemnt cloud services Revenue of Saba would grow by Average growth rate of Saleforce of 8 % due to product exposure to 104000 of salesforce current customers, New product development by Salesforce) Acquisition Plan JAKKS
2013
2014
2015
2016
2017
2,857 11,129
2,857 11,129
2,857 11,129
2,857 11,129
2,857 11,129
57,811
11,809.55
46,001.17
126,175.92 6,308.80
131,222.96 6,561.15
144,345.25 7,217.26
158,779.78 7,938.99
174,657.76 8,732.89
28,183
28,183.28
(Thousands)
2013
2014
2015
2016
2017
17,664.63
18,371.21
20,208.34
22,229.17
24,452.09
76,790
76,790.04
(Thousands)
2013
2014
2015
2016
2017
141,720.79 1 of 5
155,892.87
171,482.16 6/26/2013
Appendix D
514,446.48
837,940
837,939.51
30501.95 18850.2051
30501.95 18850.2051
30501.95 18850.2051 0
34,234
34,234.10
1,035
2 of 5
6/26/2013
Appendix D
3 of 5
6/26/2013
Saba 2011 Revenues: Subscription License Professional services Total revenues Cost of revenues: Subscription License Professional services Amortization of acquired developed technology Total cost of revenues Gross profit Operating expenses: Research and development Sales and marketing General and administrative Restructuring Amortization of purchased intangible assets Total operating expenses Income (loss) from operations Interest and other income (expense), net Interest expense Income (loss) before provision for income taxes Provision for income taxes Net income (loss) $ $ 64,539 18,189 33,929 116,657 16,089 946 25,186 798 43,019 73,638 18,494 43,705 14,982 2,508 79,689 (6,051) (454) (5) $ $ $ $
Saba Estimate 2012 67,121 18,917 35,286 121,323 16,732.56 983.84 26,193.44 829.92 44,739.76 76,583.52 19,233.76 52,810.21 15,581.28
-14,109.05 0 -14,109.05
Note: 1. Income statement for Saba Softwares Inc on 2012 has been estimated using the analyst report from Alpha street research and company's press release on revenue.
3,050,195
494,187 189,392
683,579.00 2,366,616.00
429,479 1,614,026 433,821
0.529155021
0.44
2,477,326.00 -110,710.00
19,562
(5,698) (30,948)