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 HLTHs 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, WebMDs 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 parents 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 WebMDs 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,