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This excerpt taken from the WBMD 8-K filed Nov 23, 2009. CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share data)
The unaudited pro forma condensed consolidated financial
statements are based on the historical financial statements of
WebMD and HLTH after giving effect to the Merger, which is being
accounted for as a reverse merger. WebMD is the legal acquirer
in the Merger as it issued its equity to effect the Merger and
it survived as the publicly listed company after completion of
the Merger. However, because HLTH controlled WebMD prior to the
Merger and because HLTH’s shareholders as a group owned the
majority of the voting rights of WebMD immediately following the
Merger, it is accounted for as a merger of entities under common
control, whereby, for accounting purposes, HLTH is treated as
the acquirer and WebMD is treated as the acquired company.
Accordingly, following the completion of the Merger,
WebMD’s historical financial statements for periods prior
to the completion of the Merger will reflect the historical
financial information of HLTH.
Authoritative guidance requires that changes in a parent’s
ownership interest while the parent retains its controlling
financial interest in its subsidiary shall be accounted for as
equity transactions. Although the non-HLTH stockholders of WebMD
did not exchange their shares in the Merger, the common control
merger accounting requires the transaction to be presented as if
HLTH acquired the noncontrolling interest in WebMD. Accordingly,
the deemed acquisition by HLTH of the portion of WebMD it does
not currently own (the noncontrolling interest) will be
accounted for as an equity transaction.
The pro forma adjustments related to the unaudited pro forma
condensed consolidated balance sheet as of September 30,
2009 assume the Merger took place on September 30, 2009 and
are as follows:
(a) Reflects the elimination of the noncontrolling interest
in WebMD.
(b) Reflects the accrual of estimated transaction expenses,
primarily representing costs of financial and legal advisors.
These costs will be charged to equity, consistent with the
acquisition of the noncontrolling interest.
The pro forma adjustments to the unaudited pro forma condensed
consolidated statements of operations for the nine months ended
September 30, 2009 assume the Merger took place on
January 1, 2009 and are as follows:
(c) Reflects the elimination of net income attributable to
the noncontrolling interest in WebMD.
The unaudited pro forma condensed consolidated financial
statements exclude any adjustments to reflect anticipated
reductions in corporate expenses following the Merger.
The weighted average number of shares used to calculate pro
forma basic and diluted income per share is based on the
weighted average number of basic and diluted shares of WebMD
Common Stock outstanding during the pro forma period, adjusted
for (i) the retirement of the 48,100 shares of
WebMD’s Class B Common Stock held by HLTH and
(ii) the issuance of new WebMD shares equal to the weighted
average number of basic and diluted shares of HLTH Common Stock
outstanding during the pro forma period,
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