UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2008
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission file number:
000-52076
OMNITURE, INC.
(Exact name of registrant as
specified in its charter)
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Delaware
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87-0619936
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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550 East Timpanogos Circle
Orem, Utah 84097
(Address of principal
executive offices, including zip code)
801.722.7000
(Registrant’s Telephone
Number, including area code)
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 par value
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The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
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Securities registered pursuant to Section 12(b) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes
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No
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Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes
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No
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Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject
to such requirements for the past
90 days. Yes
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No
o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of the
Form 10-K
or any amendment to this
Form 10-K.
þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated
filer” and “smaller reporting company” in
Rule 12b-2
of the Exchange Act. (Check one):
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Large
accelerated
filer
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Accelerated
filer
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Non-accelerated
filer
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Smaller reporting
Company
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(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes
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No
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The aggregate market value of the voting and non-voting stock
held by non-affiliates of the Registrant, based on the closing
sale price of the Registrant’s common stock on
June 30, 2008, as reported on the Nasdaq Global Market, was
approximately $975 million. Shares of common stock held by
each executive officer and director and by each person who owns
5% or more of the outstanding common stock, based on filings
with the Securities and Exchange Commission, have been excluded
from this computation since such persons may be deemed
affiliates of the Registrant. The determination of affiliate
status for this purpose is not necessarily a conclusive
determination for other purposes. At June 30, 2008, the
Registrant had 72,492,475 shares of its common stock,
$0.001 par value, issued and outstanding.
There were 76,014,502 shares of the Registrant’s
common stock, $0.001 par value, outstanding on
February 23, 2009.
DOCUMENTS
INCORPORATED BY REFERENCE
The Registrant has incorporated by reference the information
required by Part III of this Annual Report on
Form 10-K
from its proxy statement relating to the 2009 Annual Meeting of
Stockholders of the Registrant, to be filed within 120 days
after the end of its fiscal year ended December 31, 2008.
OMNITURE,
INC.
ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
TABLE OF CONTENTS
2
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on
Form 10-K,
including the “Management’s Discussion and Analysis of
Financial Condition and Results of Operation” section in
Item 7 of this report, and other materials accompanying
this Annual Report on
Form 10-K
contain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933. These statements
relate to our, and in some cases our customers’ or
partners’, future plans, objectives, expectations,
intentions and financial performance and the assumptions that
underlie these statements. These forward-looking statements
include, but are not limited to, statements concerning the
following: our ability to achieve or maintain profitability; the
impact of quarterly fluctuations of revenue and operating
results; the acceptance of our pricing model; our business plan
and growth management; operating expenses including research and
development expenses, general and administrative expenses;
business expansion; expansion of our sales and marketing
capabilities; growth of the number of Internet users, Internet
commerce and the market for on-demand services and online
business optimization; changing technological developments;
expansion of product and service offerings, including the
development of new and improved services; scalability,
reliability, efficiency and performance of our platforms; our
ability to provide adequate service to customers; network and
systems integrity; retention of key employees; the release of
future versions of current services; levels and sources of
revenue; our ability to effectively integrate our recent
acquisitions; future acquisitions of or investments in
complementary companies, products, services or technologies;
acquisition of new customers; customer renewal rates; our
expectations concerning relationships with third parties,
including strategic partners, technology integration, channel
partners, resellers and key customers; our ability to compete
effectively in the market and the competitive factors that
impact the market; levels of capital expenditures; issuance of
common stock for acquisitions; changes in stock-based
compensation; future cash requirements and sufficiency of our
existing cash and credit line; fluctuations in interest rates
and foreign currency exchange rates; our ability to attain
certain economies of scale; expansion of our network
infrastructure; our ability to utilize our network hardware more
efficiently; legal proceedings; our future license payments
under our patent license agreement with NetRatings; adequacy of
our intellectual property; changes in U.S. and
international laws regarding privacy, private information, the
Internet and other areas; changes in accounting standards;
maintenance of adequate internal controls; utilization of net
operating loss and tax credit carryforwards to reduce our tax
payments in future periods; the trends of our costs and
expenses; staffing, direct sales force and expense levels;
expansion of our European and other international operations;
adequacy of our capital resources to fund operations and growth;
customer costs of ownership; expenditures related to equipment
operating leases; the current economic downtown and uncertainty
in the financial markets in the U.S. and internationally; and
ability to liquidate auction rate securities without loss.
You can identify these and other forward-looking statements
by the use of the words such as “may,”
“will,” “could,” “would,”
“should,” “expects,” “plans,”
“anticipates,” “estimates,”
“intends,” “potential,”
“projected,” “continue,” or the negative of
such terms, or other comparable terminology. Forward-looking
statements also include the assumptions underlying or relating
to any of the foregoing statements.
These statements are based on current expectations and
assumptions regarding future events and business performance and
involve known and unknown risks, uncertainties and other factors
that may cause industry trends or our actual results, level of
activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by these statements. These
factors include those set forth in the following discussion and
within Part I, Item 1A “Risk Factors” of
this annual report on
Form 10-K
and elsewhere within this report.
Although we believe that expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.
We will not and assume no obligation to update any of the
forward-looking statements after the date of this annual report
on
Form 10-K
to conform these statements to actual results or changes in our
expectations, except as required by law. You should not place
undue reliance on these forward-looking statements, which apply
only as of the date of this annual report on
Form 10-K.
You should carefully review the risk factors described in other
documents that we file from time to time with the
U.S. Securities and Exchange Commission, or the SEC.
Omniture SiteCatalyst, Omniture DataWarehouse, Omniture
Discover, Omniture Discover OnPremise, Omniture Genesis,
Omniture SearchCenter, Omniture Test&Target, Omniture
Test&Target 1:1, Omniture SiteSearch, Omniture
Merchandising, Omniture Publish and Omniture SiteCatalyst HBX
are among the trademarks or registered trademarks owned by or
licensed to Omniture, Inc.
3
PART I
Overview
We are a leading provider of online business optimization
products and services, which we deliver through the Omniture
Online Marketing Suite. Our customers use our products and
services to manage and enhance online, offline and multi-channel
business initiatives. The Omniture Online Marketing Suite, which
we host and deliver to our customers on-demand and provide as an
on-premise solution, consists of our Open Business Analytics
Platform and our integrated set of optimization applications for
online analytics, channel analytics, visitor acquisition and
conversion. Our Open Business Analytics Platform, the foundation
of the Omniture Online Marketing Suite, includes the Omniture
DataWarehouse, which contains the information captured by
Omniture SiteCatalyst, our core product offering, and our other
products and services. The platform also includes the Omniture
Genesis application programming interfaces, or APIs, to
integrate and augment this data with relevant data from Internet
and enterprise applications and data from a number of online and
offline channels to enable business optimization. Our online
analytics applications are Omniture SiteCatalyst and Omniture
Discover and our channel analytics applications are Omniture
Discover OnPremise and Omniture Discover OnPremise for Retail.
Our visitor acquisition application is Omniture SearchCenter and
conversion applications include: Omniture Test&Target,
Omniture Recommendations, Omniture SiteSearch, Omniture Survey
and Omniture Merchandising. These services, built on a scalable
and flexible computing architecture, enable our customers to
capture, store and analyze information generated by their Web
sites and other sources and to gain critical business insights
into the performance and efficiency of marketing and sales
initiatives and other business processes. This information is
also utilized to automate the delivery of content and marketing
offers on a Web site and test site design and navigational
elements to optimize the user experience and revenue
opportunities for our customers. Our services provide customers
with real-time access to online business information, the
ability to generate flexible reports using real-time and
historical data and the ability to measure, automate and
optimize critical online processes. Our services, accessed
primarily by a Web browser, reduce the need for our customers to
make upfront investments in technology, implementation services
or additional IT personnel, thereby increasing our
customers’ flexibility in allocating their IT capital
investments.
We market our products and services to sales, marketing and
business professionals responsible for online business across a
broad range of industries, including: automotive, financial
services, media, retail, technology and travel. We currently
have over 5,100 customers in 91 countries. Our customers include
America Online, British Telecom, Comcast, Disney, eBay, Expedia,
Ford Motor Company, Gannett, General Electric, Hewlett-Packard,
Microsoft, Nextel, Rakuten, Sony and Telstra. In 2008, our
services captured data from approximately 3.7 trillion
transactions for our customers.
We were founded in 1996, began offering our on-demand online
business optimization services in 1997 and incorporated in 1998
as SuperStats.com, Inc., a Utah corporation. In 1999, we changed
our name to MyComputer.com, Inc. and reincorporated in the State
of Delaware. We began selling our on-demand online business
optimization services to enterprises in 2001. In 2002, we
changed our name to Omniture, Inc.
Recent
Acquisitions
On January 17, 2008, we acquired all of the outstanding
voting stock of Visual Sciences, Inc., or Visual Sciences, a
provider of on-demand Web analytics applications. The
acquisition was accounted for under the purchase method of
accounting. We purchased Visual Sciences to acquire its existing
customer base, key personnel and technology.
On November 5, 2008, we acquired certain assets, including
intellectual property and other business assets, of Mercado
Software Ltd, or Mercado, a leading search and merchandising
solution provider.
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Industry
Background
Broad
Commercial Utilization of the Internet
The Internet has fundamentally altered the way businesses and
consumers purchase goods and services. The Internet has
redefined many business processes and has created opportunities
for new online businesses, as well as for existing offline
businesses seeking to capitalize on online initiatives.
Businesses are investing in innovative online initiatives to
increase sales, improve customer service, enhance brand
awareness, decrease
time-to-market
for their offerings, reduce fulfillment costs and increase
operational efficiency. In addition to generating online
business, these online initiatives are increasingly designed to
have, and have had, a direct impact on offline business as well.
We expect that the scope and scale of commercial Internet usage
will continue to increase. The roll-out of broadband networks
and mobile networks, particularly in emerging geographic
markets, will contribute to the growth of Internet usage.
Internet commerce should also continue to grow and the
proliferation of online marketing and customer response
channels — such as mobile, online video and social
networks — will continue to generate interactions that
need to be aggregated and analyzed across channels.
Need
to Measure and Automate Online Business
In order to make informed decisions about priorities and
investments in online marketing and other commercial
initiatives, businesses require timely and accurate measurement
of customer behavior. The proliferation of Internet usage and
the fact that nearly every user interaction on a Web site (or
other digital medium such as mobile phone applications, set-top
boxes, kiosks, point of sale systems or any IP connected device)
can be captured by the owner of the Web site or other digital
medium have resulted in the creation of an unprecedented amount
of data about how a business’ customers interact and
transact business with it. Businesses are increasingly realizing
the benefit of using information gained from online and other
digital customer interactions to improve functional areas, such
as sales, customer service, product development, marketing,
pricing, manufacturing and inventory management. The interactive
and measurable nature of Internet activity also enables
businesses to determine how customers arrived at their online
destinations, such as Web and mobile sites, and to what extent
the costs they incur to increase site traffic are generating
sales.
The increasing scale and dynamic nature of both online business
and offline business influenced by online interaction
necessitate that businesses automate the processes by which they
capture, analyze and act upon information generated by their
online interactions, including Web sites. The sheer volume of
online activity and the variability or spikes in traffic
generate a significant, and at times unpredictable, amount of
information. For a popular online business, the amount of
information generated can exceed multiple terabytes per month
and can vary substantially based on seasonality, promotions and
special events. For any unique visitor and transaction, over 100
different variables can be captured, such as page name,
language, currency, operating system, search engine, ad channel
and ad campaign, all of which need to be processed and stored
and made readily accessible for analysis. Businesses also need
solutions that can integrate with other internal and external
enterprise business systems to automate and drive critical
business processes. For example, many businesses still attempt
to understand the effectiveness of, and to implement their
bidding strategies for, tens of thousands of paid search
keywords using stand-alone spreadsheets and manual processing.
An automated solution that measures keyword bidding based upon a
variety of specific business objectives and also integrates with
third-party search sites and internal financial systems to alter
bids automatically based on keyword effectiveness can improve
online marketing initiatives. In addition, the ability to
leverage behavioral data, or data collected from an online
visitor interaction with a company’s Web site, to deliver
the most relevant content or marketing offer automatically in
real time would improve online user experiences and translate
into increased customer loyalty and revenue.
Opportunity
to Optimize Online Business
Measuring online behavior and automating the capture and
analysis of data are just the beginning of making more informed
business decisions. Businesses also need to leverage the data to
optimize the results of their online business activities. For
example, businesses have historically measured the success of
their online marketing programs by simple click-through rates or
conversion rates, the latter being the percentage of
click-through users
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who make a purchase or otherwise engage in the desired customer
action during the online session. However, the effectiveness of
online marketing can be optimized by analyzing and acting on
deeper information, such as repeat visits, transactions
generated, registrations, traffic pathways (various paths of
online visitor traffic flow), time spent and quality of
interaction (engagement), eventual conversion (desired customer
action taken in subsequent visits) or success over time
(lifetime value of customer) as well as comparing the relative
effectiveness of different marketing channels (attribution).
Business success metrics can also vary based on the industry or
vertical — for example, media companies optimize
subscriptions and online advertising revenue, whereas retailers
and ecommerce companies focus on registrations and online
purchases. Online businesses utilize a large and growing number
of complex and diverse communication channels to market to
customers, including display advertising, paid search
advertising,
e-mail,
affiliate marketing, blogs, podcasts, video, rich internet
applications and comparison shopping engines, as well as
traditional offline initiatives. The emergence of multi-channel
marketing initiatives, which combine traditional offline
marketing initiatives such as television, print, magazine,
newspapers, radio and catalog with online marketing initiatives,
makes the measurement and analysis of online behavior more
challenging, but presents additional opportunities to optimize
results. For example, businesses want to measure and understand
the impact of their advertising initiatives across all these
channels, not only to determine how much credit should be given
to a particular channel and to understand cross-promotional
effectiveness, but more importantly to make adjustments in the
way channels are utilized and the amount of resources that are
allocated to each of them.
Businesses have generally relied on a combination of manual
processes, point tools and proprietary approaches to manage
their online business initiatives. These approaches have a
number of critical limitations, including the following:
Disaggregated View of Customer Information.
To
measure and automate its Web site activity, a typical online
enterprise can use numerous different systems and tools, such as
ad servers, Web content management, Web analytics tools,
customer relationship management software, order management
systems, business intelligence systems, price optimization
tools, keyword bid management tools, internal search
optimization tools and site conversion optimization tools, as
well as custom and proprietary technologies. Because each of
these tools or systems is designed to address a specific channel
and customer behavior at a certain time and many of them use
their own underlying processing and storage capabilities, they
collectively have limited ability to measure customer behavior
across multiple channels and throughout the lifecycle of the
customer.
Limited Scalability.
Existing approaches for
data capture and analysis have difficulty scaling to address the
traffic volumes, amounts of data and unpredictability of online
businesses. Some online businesses, such as sports sites, media
sites and ticket sites, can experience significant periodic
traffic spikes. Few point solutions and manual processes are
designed to perform under these circumstances. To the extent
that a company integrates multiple disparate point tools, any
one tool can limit overall scalability. In order to process in
real time the significant volumes of data generated, businesses
must make significant investments in IT infrastructure,
including a flexible computing architecture that allows for the
easy addition of excess computing resources to handle spikes in
traffic.
Limited Integration with Enterprise
Systems.
Existing approaches generally have
limited ability to integrate with internal or external systems.
In order to realize the full value of online customer
information in an automated and efficient manner, information
needs to be disseminated across the business and integrated with
internal enterprise systems such as sales force automation, or
SFA, marketing, product development, customer service and
financial systems, as well as external systems such as ad
serving or
e-mail
services. Few point solutions available today integrate
automatically with broader enterprise systems, with the result
that business processes are limited and business insight cannot
be easily leveraged across the enterprise for improved decision
making.
Slow Implementation and Adoption.
Using custom
or proprietary approaches or integrating point tools to manage
online businesses has generally required lengthy and complicated
deployments and significant investments to manage the multiple
tools and technologies. These approaches generally require
custom programming, changes to existing business processes,
changes to a business’ Web site, installation of
third-party technologies and systems and ongoing investment in
computing resources. These approaches generally have complex
interfaces and are designed for IT professionals or require
significant training for others to use them effectively. As a
result, user adoption is limited, reducing the effectiveness of
these systems and limiting a business’ ability to meet its
objectives.
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We believe that businesses seeking to enhance their online
presence need an online business optimization platform with the
functionality, scalability and flexibility to manage and improve
the important aspects of their business activities.
Our
Online Marketing Suite
We are a leading provider of online business optimization
products and services, which we deliver through the Omniture
Online Marketing Suite. Our customers use our products and
services to manage and enhance online, offline and multi-channel
business initiatives. The Omniture Online Marketing Suite, which
we host and deliver to our customers on-demand and provide as an
on-premise solution, consists of our Open Business Analytics
Platform and our integrated set of optimization applications for
online analytics, channel analytics, visitor acquisition and
conversion. Our Open Business Analytics Platform, the foundation
of the Omniture Online Marketing Suite, includes the Omniture
DataWarehouse, which contains the information captured by
Omniture SiteCatalyst, our core product offering, and our other
products and services. The platform also includes the Omniture
Genesis APIs to integrate and augment this data with relevant
data from Internet and enterprise applications and data from a
number of online and offline channels to enable business
optimization. Our online analytics applications are Omniture
SiteCatalyst and Omniture Discover and our channel analytics
applications are Omniture Discover OnPremise and Omniture
Discover OnPremise for Retail. Our visitor acquisition
application is Omniture SearchCenter and conversion applications
include: Omniture Test&Target, Omniture Recommendations,
Omniture SiteSearch, Omniture Survey and Omniture Merchandising.
These services, built on a scalable and flexible computing
architecture, enable our customers to capture, store and analyze
information generated by their Web sites and other sources and
to gain critical business insights into the performance and
efficiency of marketing and sales initiatives and other business
processes. This information is also utilized to automate the
delivery of content and marketing offers on a Web site and test
site design and navigational elements to optimize the user
experience and revenue opportunities for our customers. Our
services provide customers with real-time access to online
business information, the ability to generate flexible reports
using real-time and historical data and the ability to measure,
automate and optimize critical online processes. Our services,
accessed primarily by a Web browser, reduce the need for our
customers to make upfront investments in technology, training,
implementation services or additional IT personnel, thereby
increasing our customers’ flexibility in allocating their
IT capital investments.
Key benefits of our suite include:
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Increased Sales and Profitability.
We believe
our services provide businesses of all sizes the ability to
increase sales and profits through more informed decision making
and delivery of automated content and marketing offers. Our
services enable customers to capture and measure user activity
on their Web sites and automate business processes, such as
online marketing, to increase conversion of Web site visitors to
customers and to enhance the efficiency of multi-channel
marketing and
e-commerce
initiatives. By utilizing our services, our customers are able
to identify trends in customer behavior in real time and to
direct business expenditures towards initiatives that they
believe will increase sales, maximize profitability and enhance
customer service and thereby gain a competitive advantage.
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Flexible Platform to Manage Online
Business.
Our services are based on a technology
platform that manages online business data from a centralized
information store. Our multi-tenant technology platform is based
upon a massively scalable computing architecture that allows us
to share common computing resources simultaneously across our
customer base while maintaining the integrity and security of
each customer’s data. Our technology is built on a
standards-based platform, which allows for interoperability with
other third-party and proprietary systems. Additionally,
customers can request data in flexible formats, such as
scheduled data and report pushes, real-time data querying and
retrieval,
e-mailed
reports and alerts, reports on their mobile devices, and custom
data feeds. Our customers can configure the interface to our
services to segment access privileges across their user base to
deliver the most relevant data for each user while, at the same
time, using permission-based policies to restrict the data
available to any given user.
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Enterprise Class Scalability, Performance, Security and
Support
. Our platform is designed to scale to meet the needs
of the largest and most sophisticated online operations in the
world. Our customers rely on us to capture and manage
significant volumes of data securely and accurately while
providing immediate
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application availability and flexible real-time reporting. In
2008, we captured data from approximately 3.7 trillion
transactions, and we currently manage over 3.25 petabytes of
data for our customers. Our massively scalable architecture
enables us to dynamically shift computing resources in our data
centers to maintain application availability during periods of
intense activity and spikes in traffic at any particular
customer’s Web site. We provide our customers with
comprehensive implementation, support services, best practices
consulting and training. To support the operations of
multi-national customers, Omniture SiteCatalyst, Omniture
SearchCenter, Omniture Discover and Omniture Genesis services
are available in Chinese, French, German, Japanese, Korean and
Spanish, support over one hundred global currencies and provide
automated conversion among these currencies based on current
exchange rates.
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Integration Partnerships.
We have designed our
platform and our suite to integrate with leading online
marketing applications. Through Omniture Genesis, we are able to
integrate our platform with third party applications via a
standards based architecture. We have over 200 application and
platform partners in our Omniture Genesis network that span over
30 technology categories, including: advertising networks, chat,
content management, client relationship management/sales force
automation, or CRM/SFA, display advertising, ecommerce platform,
e-mail
marketing, marketing automation, performance management, ratings
and reviews, rich media/video, search marketing, site auditing,
site search/information access, social media and survey/user
experience. By enabling our customers to integrate third-party
Internet, online marketing and enterprise applications with the
Omniture suite, we allow them to link previously disparate
technologies and data sources.
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Independent, Unaffiliated Service
Provider.
Our platform consolidates information
across multiple online and offline channels, enabling our
customers to achieve a more unified view of user behavior and
measure their multi-channel marketing initiatives more
effectively. However, we are unaffiliated with any particular
marketing channel or service provider and therefore can provide
reliable and secure information that is independent. As such, we
provide our customers with objective, unbiased insight into the
effectiveness of their multi-channel marketing expenditures
across multiple channels, Internet vendors and partners.
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Reduced Capital Investment through On-Demand Hosted
Model
. We deliver our services primarily through an
on-demand, hosted model. Our on-demand model enables our
customers to align their expenditures to their required level of
service. As a result, our customers are able to limit their
upfront investments in technology infrastructure, third-party
software and systems, and more effectively leverage their own IT
personnel. Our services can be deployed rapidly, as our solution
is designed to integrate seamlessly and securely with a
customer’s internal systems. All upgrades are implemented
by us on our servers, and, therefore, all of our customers can
benefit immediately from them.
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Our
Strategy
Our objective is to build upon our role as a leading provider of
on-demand online business optimization products and services and
to increase the value of our products and services for
businesses worldwide. We intend to pursue this strategy through
internal initiatives, selective acquisitions and strategic
relationships. Key elements of our strategy include:
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Rapidly Expand Our Customer Base.
We believe
the market for online business optimization services is in its
early stages, and we intend to continue to expand our customer
base rapidly by investing in our direct sales force, increasing
our marketing efforts and expanding our distribution channel
partnerships. In particular, we believe there is a growing need
for our services in international markets, and we intend to
continue to expand our presence aggressively in Europe, as
illustrated by our acquisitions of Instadia A/S, or Instadia,
Touch Clarity Limited, or Touch Clarity, Visual Sciences and
Mercado, and in the Asia-Pacific region.
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Extend Our Technology Leadership Position.
We
believe our highly scalable, enterprise-class technology
platform, which we built expressly for the purpose of online
business optimization, provides us with a significant technology
lead. Our technology is being used by many of the largest and
most complex online operations in the world. We intend to
continue to invest in improving the scalability, reliability and
performance of our platform and in extending the features and
functionality of our platform to meet the needs of rapidly
evolving channels such as mobile and video. This has been
illustrated by our ongoing
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internal product development, our acquisitions of Touch Clarity,
Offermatica Corporation, or Offermatica, Visual Sciences and
Mercado and the extension of the Omniture Genesis network.
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•
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Broaden Our Online Business Optimization Platform
Capabilities
. We believe our Open Business
Analytics Platform, built around data captured by Omniture
SiteCatalyst and other Omniture applications and stored in the
Omniture DataWarehouse, provides a foundation for offering
additional business optimization services to our customers. For
example, during 2006, we released Omniture SearchCenter, which
enables customers to automatically enhance the effectiveness of
their paid search keyword bids, and Omniture Genesis, which
enables customers to integrate their third-party marketing
applications into Omniture SiteCatalyst. In early 2007, we
released version 2.0 of Omniture Discover, an advanced data
segmentation tool, and acquired TouchClarity, now a part of
Omniture Test&Target, which utilizes behavioral data
collected from Omniture SiteCatalyst to automatically deliver
relevant content and marketing offers. In December 2007, we
acquired Offermatica, now a part of Omniture Test&Target,
which utilizes behavioral data collected from Omniture
SiteCatalyst to perform A/B and multivariate tests of site
content, design and navigational elements, and to present
marketing content based on customer segments. In January 2008,
we acquired Visual Sciences, which, in addition to extending the
opportunity for our platform to include Visual Sciences’
analytics customer base resulted in the addition of the
following products to our offerings: Omniture Discover
OnPremise, a sophisticated technology for performing deep
analysis on offline, multi-channel data and to combine that data
with online data captured through Omniture SiteCatalyst, and
which also enables us to continue to expand the capabilities of
the platform in areas such as multi-channel analytics; Omniture
SiteSearch, an intra-site search technology that enables our
customers to assist their site visitors in searching, finding
and accessing content, products and information; and Omniture
Publish, a Web content management solution. In November 2008, we
acquired certain assets of Mercado, including what is now
Omniture Merchandising. In addition, the platform provides
flexibility to customize services for specific industry
verticals, such as the retail and media industries. We expect to
continue to make acquisitions of, or investments in,
complementary services, technologies or businesses to address
the need to develop new products and enhance existing products.
We also expect to continue to explore additional opportunities
to help our customers leverage the value of their data,
including, segmentation and targeting.
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•
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Develop and Expand Strategic Relationships to Extend Our
Platform and Distribution Channels
. An important
element of our growth strategy is to continue developing
strategic relationships with third parties that can help us
broaden our online business optimization platform and continue
to develop new distribution channels for our services. We
believe our services are attractive to our technology partners
because they are able to leverage the information and
capabilities of our platform to enhance their solutions and then
offer their enhanced solutions to Omniture’s customer base.
We intend to continue establishing relationships with third
parties in order to provide broader and more integrated
functionality to our customers. In addition, we believe it is
important that we promote industry best practices for
implementing and using our products. While we have made
significant investments to hire and train our own personnel that
can consult with our customers, we believe there is a
significant opportunity to continue building relationships with
consulting agencies and systems integrators who specialize in
providing these services. We intend to expand our work with
these types of partners to train and certify their personnel to
directly sell, implement, and support Omniture solutions. We
believe this will increase adoption and satisfaction for our
products due to an increase in trained personnel and will
complement our direct selling efforts and extend our market
reach. For example, we recently established a strategic partner
relationship with WPP, one of the world’s largest
communications services companies, and we also expect to enter
into similar relationships with other companies.
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•
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Remain Intensely Focused on Our Customers’
Success.
We believe that our customers’
success is critical to our success. We intend to remain
intensely customer-centric as we develop new services and
improve existing services. Our close relationships with our
customers and responsiveness to their requests have been key
elements in our development efforts to date and will remain
central to our strategy in the future. For example, certain key
features of all of our products, and of Omniture SearchCenter,
Omniture Discover, Omniture Discover OnPremise and Omniture
Genesis in particular, were in direct response to feedback from
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customers and the need for the advanced optimization technology
acquired from Touch Clarity, Offermatica and Mercado was the
driving factor in our decision to pursue those acquisitions. In
addition, through programs such as Omniture Education and
Omniture Consulting Services, as well as our certified
consulting partners, we are committed to continuing to deliver
superior education, training and consulting services to our
customers to enable them to enhance the value of our services.
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Omniture
Online Business Optimization Services
The Omniture Online Marketing Suite consists of our Open
Business Analytics Platform and our integrated set of
optimization applications for online analytics, channel
analytics, visitor acquisition and conversion. Our Open Business
Analytics Platform, the foundation of the Omniture Online
Marketing Suite, includes the Omniture DataWarehouse, which
contains the information captured by Omniture SiteCatalyst, our
core product offering, and our other products and services. The
platform also contains the Omniture Genesis APIs to integrate
and augment this data with relevant data from Internet and
enterprise applications and data from a number of online and
offline channels to enable business optimization. Our Online
analytics applications are Omniture SiteCatalyst and Omniture
Discover. Omniture SiteCatalyst was responsible for 89%, 78% and
64% of our total revenue during 2006, 2007 and 2008,
respectively. Our channel analytics applications are Omniture
Discover OnPremise and Omniture Discover OnPremise for Retail.
Our visitor acquisition application is Omniture SearchCenter and
conversion applications include: Omniture Test&Target,
Omniture Recommendations, Omniture SiteSearch, Omniture Survey
and Omniture Merchandising.
Open
Business Analytics Platform
Omniture
DataWarehouse
Omniture DataWarehouse stores a comprehensive record of online
visitor events, transactions and interactions that occur on our
customers’ Web sites and through other channels. Our
customers can directly access Omniture DataWarehouse to design
reports and run queries according to their specific needs. Our
customers can also receive direct feeds of the data we have
collected on their behalf from the DataWarehouse to incorporate
into their offline systems.
Omniture
Genesis
Omniture Genesis simplifies the integration of third-party
marketing applications into Omniture SiteCatalyst. Using a
wizard-based interface, customers can select from a list of
application and platform partners, including leading companies
in display advertising,
e-mail
marketing, social media, rich media/video, content management,
CRM/SFA, ratings and reviews and search marketing, to integrate
these disparate applications into the Omniture Online Marketing
Suite. This integration enables customers to more effectively
manage their online businesses by providing a single platform to
access multiple marketing applications, which reduces the need
for customers to independently compile multiple data sets and
reporting systems to gain insights into their online initiatives
and to
10
make decisions on how to optimize business performance. There
are currently more than 200 partners in the Omniture Genesis
network spanning over 30 technology categories, including the
following:
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Technology Categories:
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Partners:
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Advertising Network
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Advertising.com, Dotomi
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Chat
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InstantService, LivePerson
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Content Management
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Clickability, SDL Tridion, Vignette
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CRM/SFA
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RightNow Technologies, salesforce.com, Inc.
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Display Advertising
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DoubleClick (Google), 24/7 RealMedia, EyeBlaster
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eCommerce Platform
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GSI Commerce, MarketLive, Novator
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E-mail
Marketing
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CheetahMail Inc., Epsilon Interactive, ExactTarget, Responsys
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Marketing Automation
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Aprimo, Eloqua, vTrenz (Silverpop)
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Performance Management
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ClickTale, Coradiant, TeaLeaf
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Ratings and Reviews
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Bazaarvoice Inc., Power Reviews
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Rich Media/Video
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Adobe, Allurent, Brightcove
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Search Marketing
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Ask.com, Google, Inc., MSN, Yahoo!
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Site Auditing/Site Hygiene
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ABC Interactive, Maxamine (Accenture), Verified Audit
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Site Search/Information Access
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Endeca Technologies Inc., FAST Search and Transfer ASA
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Social Media
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Collective Intellect, Lithium Technologies, Visible Technologies
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Survey/User Experience
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Foresee Results, Inc., iPerceptions, OpinionLab, Inc.
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Each Omniture Genesis accredited application partner must
complete a validation process designed to verify the quality of
a number of features of the partner’s integration to the
Omniture platform. A key part of Omniture Genesis is the Open
Transaction Framework Technology, which facilitates the
collection and integration of data. It is managed through a
single point, accesses business-specific customer attributes,
and utilizes our existing image and URL management algorithms
and code, which enables our customers to implement third-party
applications more quickly and cost-effectively.
Online
Analytics Applications
Omniture
SiteCatalyst
Omniture SiteCatalyst provides marketers with actionable,
real-time intelligence about online strategies and marketing
initiatives. SiteCatalyst helps marketers quickly identify the
most profitable paths through their Web site, determine where
visitors are navigating away from their site, and identify
critical success metrics for online marketing campaigns.
The core features of Omniture SiteCatalyst include:
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Pre-Built Reporting and
Analytics
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• Collection of
ready-to-use,
popular reports, including Page Summary, Next
Page Flow, Fallout/Form Abandonment, Geo-segmentation,
Conversion Funnel, Cross Sell
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• Custom reporting, which enables customers to measure
any event that occurs on a customer’s site
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• Bookmark and dashboard templates, pulling data from
any number of report suites and distributing via
e-mail
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• Easy access to other Omniture Online Marketing Suite
products from within SiteCatalyst
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Innovative Work Flow
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• Product search — find reports, features,
and Help from anywhere in the product
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• Reports organized into categories for improved
navigation and access to data
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• Publishing lists to easily manage recipients of
scheduled reports across thousands of report suites
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Video & Web 2.0 Optimization
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• ActionSource method for natively tracking Flash
applications used with the ActionScript programming language
(Adobe Flash and Flex)
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• Support for popular media players, including Windows
Media Player, QuickTime, and RealPlayer
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• Video engagement and milestone tracking built into
reports
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• Ability to find optimum ad placement through the
most viewed video sections
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Advanced Segmentation
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• Segment data from a report suite and create a new
suite to hold the data
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• Geo-segmentation reports to understand the
geographic dynamics of Web audience
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• Ability to create real-time segmentation of all
online data and define an unlimited number of visitor
segmentation rules
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Flexible Data Integration
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• Data Sources Manager to integrate multi-channel or
offline data with data collected on the Web site
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• SOAP-based open standards Web services API for
real-time reporting
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• Ability to integrate Web analytics data with
in-house reporting tools
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• Data Extract and Excel Client options enable
customer to export SiteCatalyst data into Excel
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Following our acquisition of Visual Sciences, HBX, Visual
Sciences’ Web analytics service, is now known as Omniture
SiteCatalyst HBX. While we do not intend to undertake any
additional development of Omniture SiteCatalyst HBX, we intend
to continue to support existing Omniture SiteCatalyst HBX Web
analytics customers as we integrate certain key features of the
HBX service into Omniture SiteCatalyst.
Omniture
Discover
Omniture Discover allows marketers to visually explore visitor
information to identify relevant visitor segments that reveal
deep insights about online behavior, uncovering new business
opportunities, acquisition strategies and revenue opportunities
for the company.
The core features of Omniture Discover include:
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1-Click Segmentation
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• Define marketing segmentation criteria
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• Create segments in real time
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• View how segments influence the analysis as criteria
are added to the segments
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N-Dimensional Analysis
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• Refine analyses by correlating the relationships
between any and all data elements, which we sometimes refer to
as data dimensions, with any other data elements
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Virtual Focus Group
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• Understand the Web site experience of individual
customers
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• Create focus group segments based on desired
attributes
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Advanced Fall-out Analysis
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• Dynamically build online processes
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• Analyze and refine online processes to improve
conversion
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Dynamic Path Flow
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• Explore paths customers follow through the Web site
to optimize campaign conversion, content placement and site
navigation
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Channel
Analytics Applications
Omniture
Discover OnPremise and Omniture Discover OnPremise for
Retail
Omniture Discover OnPremise and Omniture Discover OnPremise for
Retail enable organizations to analyze large volumes of rapidly
evolving data in real time. The visualizations provided by
Discover OnPremise and Discover OnPremise for Retail allow users
to infer meaning to make quick business decisions that improve
overall business performance. Discover OnPremise accepts data
from any source, including data warehouses and business
intelligence tools, and Discover OnPremise for Retail is
designed to analyze large volumes of rapidly evolving
point-of-sale
and kiosk data in real time.
The core features of Omniture Discover OnPremise and Omniture
Discover OnPremise for Retail include:
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Data Collection
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• Flexible data collection options from one or
multiple sources including delimited, XML and ODBC formats
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• Load integration meta-data about customers,
products, or campaigns
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• Collect data in real-time or batch mode
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Extract Transform and Load (ETL)
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• Extend the data schema for analysis
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• Automated system checkpoints for faster data
reprocessing and recovery
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• Extensive data transformation options include parse,
append, merge, and categorizing of data for processing and
extraction
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Rapid Performance
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• Parallel processing for greater performance and
scalability
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• “Whole dataset” processing on billions of
records at a time
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Visualization
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|
• Visualizations include line and bar charts, tables,
scatter plots, 2D and 3D process maps, path browsers, and
worksheets
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• Setup visual markers before or after any event to
track activities and trends over time
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• Visualize spatial data such as customer, store, ATM
or competitor locations on interactive global maps
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Dimensions and Metrics
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• Multiple pre-defined dimension types, including
simple,
many-to-many,
numeric and time based
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• Ext
e
nsive built-in metrics and dimensions
logic
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• Searchable dimensions to find specific elements
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Advanced Segmentation and
Filtering
|
|
• Create an unlimited number of real-time segments
based on any data in the data set
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• Filter Editor provides comprehensive logic to create
segments and subsets of an entire dataset
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• Segment Export to group customers and export on a
one-time or continuous basis to external systems
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Analytics
|
|
• N-dimensional analysis capabilities to automatically
correlate and cross-tab all data
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• Share dimensions, metrics and analysis workspaces to
collaborate with colleagues
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• Excel-like worksheets to build scenarios and key
performance indicator dashboards
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Reporting
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|
• Automated report distribution via
e-mail
or
reporting portal
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• High-quality reports can be printed or exported to
other Microsoft Office products
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• Ability to export both pre-processed and
post-processed data to other systems, such as a data warehouse
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Omniture Discover OnPremise for Retail also includes:
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|
Retail Channel Reporting,
Dimensions and Metrics
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|
• Automated report distribution via
e-mail
or
reporting portal
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• Retail channel specific reports and workspaces,
including: basket analysis, geographic summary, purchase
sequencing analysis, competitor location analysis, sales
summary, demographic analysis, store analysis
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• Retail channel specific dimensions and metrics,
including: demographic data, customer profitability, purchase
amount, number of transactions, total and average revenue, total
and average margin, revenue per customer and store name
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Visitor
Acquisition Application
Omniture
SearchCenter
Omniture SearchCenter provides a single interface that
consolidates and simplifies keyword marketing and automates the
time-consuming process of managing multiple paid search keyword
bids with leading search engines, such as Google, Yahoo!, MSN,
MIVA, Ask and others. Using customizable business rules,
Omniture SearchCenter helps customers automate keyword
strategies and processes, target keyword marketing by behavior
and lifetime value, improve keyword performance with integrated
analytics and improve cross-channel marketing results.
Features of Omniture SearchCenter include:
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Consolidated Management
Interface
|
|
• View multiple accounts, campaigns, ad groups or
keywords from a single application
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• View top-line success metrics at every grouping level
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• Use unified editor across all search engines
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One-click Account Management
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|
• Change bids, budgets, match types and publication
status
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• Import existing accounts from search engines
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• Create new accounts, edit ads and keywords
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|
Integrated Help &
Community
|
|
• In-product access to Omniture ClientCare and live
chat
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• Contextual help on every page
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• Training videos, case studies and white papers
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E-mail &
Account Alerts
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|
• Track cost per acquisition increases
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• Guard return on ad spend decreases
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• Control budget pacing
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Automated Bid Engine
Supports
|
|
• Rules-based bid management
|
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• Portfolio bid management
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• Day-parting and special events (holidays)
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|
Reporting and Analytics
|
|
• Prebuilt and user-definable metrics and reports that
include: return on advertising spend by keyword, conversion
funnel demonstrating which impressions and clicks contribute to
orders and revenue, customer loyalty displays revenue from new
customers versus returning customers, and search engine
detailing revenue performance by each search engine
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• User defined conversion metrics
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• Scheduled reports sent via
e-mail
and
download reports to Excel, PDF, CSV, RTF
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Content Network Optimization
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|
• Create campaigns for the Google, Yahoo! and M
content networks from a single interface
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• Measure cost per acquisition increases separate from
keyword search ads
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• Eliminate underperforming content network ads
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Conversion
Applications
Omniture
Test&Target
Omniture Test&Target is an integrated solution for A/B
testing, multivariate testing, campaign optimization and
behavioral targeting. This product automates the delivery of
relevant content and marketing offers based on user behavior and
utilizes behavioral data collected from Omniture SiteCatalyst to
perform A/B and multivariate tests of site content, design and
navigational elements, and to present marketing content based on
customer segments.
Features of Omniture Test&Target include:
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|
A/B, Multivariate Testing
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|
• Test content on site, in
e-mail
and
in display ads
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• A/B testing facilitates fast and accurate design
selection
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• Multivariate testing allows for testing many
elements and variations with smaller traffic requirements and
fewer combinations
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• “Push winner” functionality converts
winning test scenarios with a single click to standard content
for all audience segments
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Ad Testing
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|
• Track ad impressions and their impact on conversion
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• Optimize ad content and compare multiple creative
options, adjust to serve more of the winning creative option
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• Coordinate ad tests across multiple ad networks or
publishers
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• Combine ad testing with cost and revenue tracking to
see real-time revenue for a given ad
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Visual Application
Management
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|
• Design tests directly on the site just as site
visitors will experience them
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• Immediately visualize how site visitors experience a
test, giving real-time insight for increasing content relevance
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• Onsite testing capabilities work without any special
configuration or implementation
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|
Effective Targeting
|
|
• Target content to different groups of visitors based
on marketer-defined segments
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• Target audience segments based on URL, geography,
profile and visitor behavior
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• Maintain consistency of targeted offers from offsite
exposure (display ads,
e-mail)
through to onsite activity
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• Flexibility to market broadly to a segment of
visitors or to define parameters for stricter targeting to a
specific visitor set
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Automated Predictive
Learning
|
|
• Each site visitor and click is scored individually,
so targeted offers can be served based on a site visitor’s
unique interests
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• Create extensible site user profiles that include
offline data, such as product holdings, credit score, time on
file and other non-personally identifiable information
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• Import external customer profiles in real time for
heightened relevance
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Automated Campaign
Management
|
|
• Automatically direct site traffic in response to
site visitor behavior, factoring in variables such as time of
day,
e-mail
communications or product promotions
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• Self-optimizing campaigns provide that the most
effective targeting scenarios are shown more often, accounting
for environmental or seasonal changes
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• Automatically promote the best performing scenarios
to improve conversions for specific audience segments or across
the site
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Omniture
Recommendations
Omniture Recommendations enables businesses to promote products
and content online. Through flexible data and behavioral driven
algorithms, businesses can seek to increase conversions by
automatically presenting relevant choices to customers at the
relevant time. Recommendations can be presented to visitors via
any interaction channel, including Web, mobile or
e-mail.
Features of Omniture Recommendations include:
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Automated Product or Content
Recommendations
|
|
• Visitor data drives recommendations; no server-side
or offline integration required
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• Automatically “learns” about content
catalog from online visits — no API or catalog
integration required
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• Run different recommendation types on different
pages: for example, show top sellers on homepage and cross-sells
on a product page
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Marketer-Managed Algorithms
|
|
• Users can choose from a variety of popularity and
affinity algorithms to suit business needs based on viewing,
searching and buying activity of previous visitors or shoppers
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• Algorithms include “Most Viewed,”
“Top Sellers,” “People who bought or viewed this
also bought that,” “Site affinity” and Omniture
SiteSearch based recommendations”
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• Use metrics from Omniture SiteCatalyst and Omniture
DataWarehouse to power recommendations
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Integrated with the
Omniture Online Marketing Suite
|
|
• Integrates with Omniture Test&Target to run
sophisticated tests on recommendations and target them to
different visitor groups
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|
• Integrates with Omniture SiteSearch to run the
“Omniture SiteSearch Recommendation” on search results
pages
|
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|
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|
• Omniture Genesis enables integration with third
party vendors — such as
e-mail
application providers to deliver recommendations via
e-mail
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|
|
Built-in Testing and
Reporting
|
|
• Test recommendations against default content or
products to monitor conversion performance metrics
|
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|
|
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• Built-in reporting interface shows visits, clicks
and purchases with conversion lift data
|
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|
|
|
|
• Analyze reports to change business rules or to
determine winning promotions
|
Omniture
SiteSearch
Omniture SiteSearch enables organizations to improve return on
their Web site investments by enabling visitors to search, find
and access content, products and information. Leveraging Web
analytics, intuitive navigation, tailor-able presentations and
powerful and comprehensive indexing allows organizations to
provide their visitors with a relevant, accurate and intuitive
Web site experience.
Features of Omniture SiteSearch include:
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Analytics-driven Search
Results
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• Choose metrics from any Omniture SiteCatalyst report
suite to influence search results
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• Weight different metrics to influence results
rankings
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• Target ranking rules to different visitor segments
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• Combine offline data with analytics-based metrics to
influence search ranking business rules
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Guided Search
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• Automatically display dynamic refinement options
based on product attributes
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• Offer multiple refinement options for individual
products and product categories
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• Support for a broad range of file types, including
HTML, Adobe PDF and Microsoft Office formats
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Targeted Presentation
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• Template editor provides matching of search results
to a site’s look and feel
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• Categorize result sets to support multiple types of
structured and unstructured information — index
knowledgebase content, forums, user-generated content and more
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• Customizable search interface with controls for date
ranges, word or phrase matching and entity matching
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Content Spotlighting
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• Target promotional content for specific keywords in
the context of search results
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• Automatically present related products or content in
the context of search results
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• Automatically aggregate and spotlight top-performing
content for specific keywords
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• Integrate third-party content into search results
for specific keywords
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Keyword Reporting
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• Determine which search terms drive site conversion
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• Compare Web site search behavior to browsing
behavior to determine effective paths to conversion
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• Generate search term reports, by phrase or word, or
by day, week or month
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Omniture
Survey
Omniture Survey helps organizations design, create and implement
online surveys to measure audience sentiment. Surveys are used
to determine brand perception, customer satisfaction, employee
motivation and partner engagement. We believe better
understanding of audience sentiment helps lead to more engaging
customer interactions, focused product development and improved
brand perceptions.
Omniture
Merchandising
Omniture Merchandising enables retail and ecommerce companies to
execute online merchandising strategies that optimize product
placement effectiveness — which is designed to
increase conversions and average order value by improving
shoppers’ ability to find and select products, and
promoting certain products and services based on business goals
and metrics.
Features of Omniture Merchandising include:
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Intuitive Commerce
Merchandising Console
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• Publish merchandising zones featuring promotional
banners, up-sell and cross-sell offers
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• Virtual end-caps and impulse towers on homepage,
product pages and at checkout
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• Deploy dynamic merchandised landing pages to improve
search engine marketing and
e-mail
marketing conversion
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Metrics-Driven Merchandising
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• Integrate with Omniture SiteCatalyst and other Web
analytics for
up-to-date
and actionable metrics such as conversion rates
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• Automate merchandising decisions and actions based
on business factors, such as inventory levels, margin and
product freshness
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• Built-in reporting allows merchandising managers to
automatically tune merchandising as needed
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Customer-Centric Shopper
Experience
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• Shoppers can drill down through catalogs based on a
unique assortment of characteristics, such as brand, color,
price, size and gender refinements
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• More than 25 built-in and extensible
industry-specific merchandising thesauri
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• Product compare capability and intuitive product
selection features
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Social Merchandising
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• Retailers can incorporate customer-generated product
reviews, ratings and tags into their merchandising strategy
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• Augment traditional merchandising with customer
generated content
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• Use product ratings to help shoppers refine product
selections
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Professional
Services, Customer Service and Support
We offer a range of industry best practice professional services
that complements our online business optimization strategy.
These services include Omniture Consulting Services that
provides Implementation, Business and Outsourcing services,
Omniture ClientCare that provides 24x7 support to Omniture
customers, and Omniture Education that provides
on-site
and
e-learning
educational services and user training.
Omniture
Consulting Services — Implementation
Services
Omniture Consulting Services employs experienced technical
consultants, many of whom hold advanced degrees, to provide
implementation and setup services to our customers. Omniture
Consulting Services leverages a proprietary implementation
methodology designed to align customers’ deployments with
their key business objectives and requirements. Our Consulting
Services team also offers consulting services for customers who
have already deployed our services and are seeking to expand
their implementation.
Omniture
Consulting Services — Business & Outsourcing
Services
Omniture Consulting Services provides business and outsourcing
services as a premium service providing business optimization
consulting to customers. This consulting reflects the
customer’s strategic business objectives, and is often
tailored to particular industry vertical markets, such as
automotive, retail, financial services, travel, media and
technology. Projects can include overall marketing measurement
strategies, customer acquisition effectiveness, campaign
performance, search keyword profitability, content stickiness,
mobile and video measurement and Web site conversion success. By
working with Omniture Consulting Services, customers obtain
access to business optimization specialists that possess deep
expertise with Omniture’s Online Marketing Suite and
industry best practices. Omniture Consulting Services
engagements can range in time from one week to several months.
With our acquisitions of Offermatica, Visual Sciences and
Mercado, we have added service offerings for Omniture
Test&Target, Omniture SiteSearch, Omniture Publish and
Omniture Merchandising consulting services. These consulting
teams are united within Omniture Consulting Services to provide
an integrated approach to garner value from Omniture’s
Online Marketing Suite.
Omniture
Education
Omniture Education provides training to enhance our
customers’ use of our Omniture Online Marketing Suite.
Omniture Education offers a range of traditional, custom and
online training and certification options delivered by a team of
trained professionals. Omniture Education complements the
Omniture Online Marketing Suite by offering customers over
50 hours of free content and recorded training, weekly Web
conferences on specific topics, custom Web conferences and
customized onsite training at customer premises. We offer
Omniture SiteCatalyst certification training. Individuals that
successfully complete this training are designated as Omniture
Certified Professionals. To
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date, more than 10,000 individuals have been trained through
Omniture Education. We also rely on third parties to provide
certain Omniture Education services in some developing
geographic areas.
Omniture
ClientCare — 24x7 Global Technical
Support
We believe that superior customer technical support is critical
to retaining and expanding our customer base. As our customer
base has grown, we have added personnel to our global technical
support group. Our technical support program assists our
customers in the use of our services and identifies, analyzes
and solves problems or issues with our Omniture Online Marketing
Suite. The support program includes phone, chat or
e-mail
support along with an online KnowledgeBase repository of helpful
information about our services. Our technical support group is
available to customers by telephone, chat or
e-mail
or
through our Web site 24 hours per day, 7 days per week.
International
Support
First line support for our Omniture SiteCatalyst, Omniture
DataWarehouse, Omniture SearchCenter, Omniture Discover
OnPremise, Omniture Discover, Omniture Genesis, Omniture
Test&Target, Omniture SiteSearch, and Omniture
Merchandising services are available in Chinese, French, German,
Japanese, Spanish and Korean and additional languages can be
added relatively easily. We also support over 100 global
currencies and provide automated conversion between these
currencies based on current exchange rates.
Technology
and Research and Development
Technology
We deliver our services primarily through an on-demand, hosted
model. We believe that our on-demand platform enables us to
deliver software-based services to our customers much more
efficiently than traditional enterprise software vendors. Our
hosted software environment eliminates the need to develop
software compatible with a wide variety of hardware systems,
operating systems and databases in our customers’ various
technical environments. As a result, we do not need to allocate
technical resources to make our software compatible with these
various environments nor do we need to test our software in each
possible combination of hardware and software services that
would exist in each customer environment. Rather, we can focus
our resources on improving the functionality, usability and
overall value of our services to our customers.
We believe our on-demand approach provides customers with a
significantly lower total cost of ownership than would be
achieved if these customers deployed traditional enterprise
software. As an on-demand software company, we provide hardware
requisitioning and provisioning, application installation,
application configuration, server maintenance, server
co-location, data center maintenance, data backup and data
security. By consolidating and performing these services for all
customers, we believe we can provide our services at a lower
cost and a higher service level than individual customers would
be able to achieve on their own. Our ability to offer a service
that can be calibrated to varying levels of activity without
additional customer hardware allows us not only to scale
efficiently with our customers, but also to align the fees for
our services with the current level of service required by our
customers. By being able to continually realign to our
customers’ technical and business activities, we deliver
total cost of ownership for our customers that is lower than
traditional software installations.
We designed our services as multi-tenant, networked computing
applications that are divided into various components, including
load balancing, data collection servers and data analysis
servers. Each component is designed to perform a specific task
and serves a particular purpose in the overall application, and
each runs on a cluster of servers. The overall capacity of any
given component, and thus the capacity of the system as a whole,
can be increased by adding and configuring servers in each
cluster.
We wrote the majority of the software used in our services in
industry-standard software programming languages, such as C and
C++, to maximize performance. However, we have also used
programming approaches, such as Java, PHP and AJAX, which are
specifically designed for the development of Internet-based
applications.
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Our hardware consists primarily of Intel-based servers and a
variety of storage solutions from multiple vendors, networked
behind firewalls and load balancers in 26 different third-party
data centers, including certain of the data centers previously
utilized by the businesses we have acquired.
We designed our applications to be flexible. In particular, our
platform allows for the capture of online and offline data a
customer might find value in analyzing, and the generation of
real-time reports based on that data and the N-dimensional
analysis of that data to the extent it is stored in our Omniture
DataWarehouse. Additionally, customers can provide group and
meta information about the data they are collecting through our
classification system, augment the data set by uploading
additional data through our data sources tool, or directly
insert individual data records using our open-standards
application protocol interfaces that enable data exchange and
data insertion. Our customers are able to capture this
information without the need to interact directly with our
personnel. This flexibility not only allows customers to tailor
the tool to meet their needs, but also allows us to make
available additional products and components of our strategic
partners.
Customers interact with our services primarily through a Web
browser. We support recent versions of all the major Web
browsers on all major operating systems. We have implemented a
robust access control and permissioning system that allows our
customers to control which individuals have access to which sets
of information or perform which actions. While the primary
client to our application is a Web browser, we have also built
other clients to our application, including a Flash-based
dashboard player, a plug-in for Microsoft Excel and a Java-based
client for our Omniture Discover service. Additionally, the Web
client allows customers to automate delivery of reports on a
scheduled basis in a number of document formats.
In addition, our platform enables the collection of data from a
broad range of sources through industry-standard protocols
across a variety of channels of user interaction. We collect and
integrate data to enable detailed analysis across the following
primary sources of data: Internet sources; mobile sources; and
offline sources.
We offer data collection methods for current and emerging
Internet and media formats, including Web beacon tags, Web
servers, rich Internet applications, streaming media formats,
blogs, search engines and RSS, an XML format for sharing
content, such as news items, among Web sites. For example, our
ActionSource feature enables data collection for rich Internet
applications through its native support for ActionScript, the
programming language for Flash. In addition, our Web beacon tags
can capture information specific to our service implementation
as well as issue Web beacons for partner application data
collection through Omniture Genesis. We believe this capability
streamlines data collection, limits duplicate tagging efforts,
and improves the end user experience.
We provide data collection for mobile devices to provide insight
into metrics that businesses can use, for example, to optimize
mobile campaigns based on target markets, success of offers and
overall return on investment. To provide our customers with a
more complete view of customer interactions across channels, we
intend to offer data collection for offline data sources,
including interactive voice response and call center
applications, gaming consoles, enterprise data warehouses and
client software applications.
Research
and Development
Research and development expenses were $8.7 million in
2006, $17.3 million in 2007 and $37.0 million in 2008.
Our software engineering and product management teams are
engaged in efforts to enhance existing services. Our teams are
also working to extend our Omniture SiteCatalyst data collection
and reporting application to import information from
complementary products and services as well as to develop
additional products and services. Following our acquisitions of
Touch Clarity, Offermatica, Visual Sciences and Mercado, we now
have dedicated engineering teams for our Omniture
Test&Target, Omniture Discover OnPremise and Omniture
Merchandising product offerings.
Because we primarily host our services for our customers, our
personnel can fix bugs and provide software updates remotely
during scheduled maintenance windows. Enhancements to our
services benefit our entire customer base without any action
required on their part to install an upgrade or update.
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Operations
We currently service our customers from 26 third-party data
center facilities, 22 located in the United States, 3 located in
the United Kingdom, and 1 located in Australia. All
facilities are staffed by trained personnel, access controlled
and provide backup power, including generators, in case of power
failure.
We continually monitor the status of our services. For example,
we conduct over 18 million performance checks per day on
our servers and applications. Although we designed our
technology platform to be fault tolerant for many problems, we
staff our network operations center in Orem, Utah, 24 hours
per day, 7 days per week to respond to potential
disruptions in the system.
Customers
We currently have over 5,100 customers in 91 countries,
including America Online, British Telecom, Comcast, Disney,
eBay, Expedia, Ford Motor Company, Gannett, General Electric,
Hewlett-Packard, Microsoft, Nextel, Rakuten, Sony and Telstra.
America Online and certain of its affiliated entities,
collectively, accounted for 11% of our total revenues in 2006.
No other customer accounted for more than 10% of our total
revenues during 2006 and no customer accounted for more than 10%
of total revenues during 2007 and 2008. In 2008, our services
captured data from approximately 3.7 trillion transactions for
our customers.
Strategic
Relationships
An important element of our strategy is to establish
relationships with third parties whose products and services are
complementary to our Omniture Online Marketing Suite. To help
integrate our services with other third-party services and take
advantage of current and emerging technologies, we seek to enter
into strategic relationships with leading technology and
application providers, consulting providers and channel
distribution partners. We believe this approach enables us to
focus on our core competencies and expand our ability to both
sell products to customers and enhance those customers’
experience through increased levels of support.
Technology
and Application Providers
We have designed our Open Business Analytics Platform and Online
Marketing Suite to integrate with leading technology and
application providers. Through Omniture Genesis, we are able to
integrate our platform with third-party applications via a
standards based architecture. We have over 200 application and
platform partners in the Omniture Genesis network that span over
30 technology categories, including: advertising networks, chat,
content management, CRM/SFA, display advertising, ecommerce
platform,
e-mail
marketing, marketing automation, performance management, ratings
and reviews, rich media/video, search marketing, site auditing,
site search/information access, social media and survey/user
experience. By enabling our customers to integrate third-party
Internet, online marketing and enterprise applications with the
Omniture Online Marketing Suite, we allow them to bring together
these data sources. By making this combined data source
available to these applications, the applications are able to
deliver a more consistent and personalized user experience.
Consulting
Providers
An important element of our growth strategy is to continue
developing strategic relationships with third parties that can
provide implementation and best practices consulting. We believe
that leveraging strategic partners who have specialized in
building organizations to provide consulting and best practices
is the most effective and rapid way to increase the number of
professionals trained in the use of our services in the
marketplace. For example, we recently established a strategic
partner relationship with WPP, one of the world’s largest
communications services companies. WPP is a holding company for
dozens of advertising agencies such as G2, OgilvyOne, RMG,
Wunderman and Enfatico. These agencies provide advertising
related services to customers, many of whom are also Omniture
customers. Our strategic partner relationship with WPP gives
them access to our best practice playbooks, which define
effective ways, by solution and by vertical market, to use our
products and services to achieve successful results. These best
practice playbooks, which we have developed through our
consulting engagements, are a valuable component of our
intellectual property. WPP has agreed to train and certify 500
of their personnel on the use of our services during 2009. We
will also continue to work with other agencies and consulting
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groups to train and certify their personnel on the use of
Omniture services, including deep, product level training and
our best practice playbooks. These training and certification
programs, specific to strategic partners, are offered through
our Omniture Education program.
Channel
Distribution Partners
Channel distribution partners allow us to leverage our sales and
marketing teams. This category includes many partners who are
also consulting providers and technology and application
providers. In addition to integrating with the our platform and
providing support for our services, these partners also either
directly sell or refer business to us. This provides an
incremental revenue stream to the partner and helps us increase
our penetration into new opportunities. We have a network of
third parties that are authorized resellers and distributors of
our technology, as well as a network of third parties that refer
customer prospects to us and assist us in selling to those
prospects. These include more than 550 companies in the
following categories: service partners, such as agencies and
consultants; platform partners, such as
e-commerce,
hosting, mobile and application partners; and value-added
resellers. We have created certification programs for
implementation, support and sales. We also have allocated
resources to support our channel sales in marketing, operations,
client services and product management.
Sales and
Marketing
We sell our services through a combination of direct and
indirect sales channels, and we organize our sales and marketing
programs by geographic regions, including North America, EMEA
and the Asia-Pacific region. Our marketing strategy is to
generate qualified sales leads, build our brand and raise
awareness of Omniture as a leading provider of online business
optimization services.
Direct
Sales
We sell our services primarily through our direct sales force,
which is comprised of inside sales and field sales personnel.
Our account executives are responsible for initial sales to new
prospects, while our account managers concentrate on expanding
pre-existing relationships. We also have a group that is
responsible for generating leads and assisting in sales to large
enterprises. We have field sales representatives in more than 41
major cities worldwide.
Channel
Sales
We have a network of third parties that are authorized resellers
and distributors of our technology, as well as a network of
third parties that refer customer prospects to us and assist us
in selling to those prospects. These include more than
550 companies in the following categories: service partners
such as agencies and consultants; platform partners such as
e-commerce,
hosting, mobile and application partners; and value-added
resellers. We have created certification programs for
implementation, support and sales. We also have allocated
resources to support our channel sales in marketing, operations,
client services and product management.
International
Sales
Revenues from customers outside the United States have increased
from 17% of our total revenues in 2006 to 26% in 2007 and to 28%
in 2008. We have increased the size of our international direct
sales force through our acquisitions of Instadia, Touch Clarity,
Visual Sciences and Mercado. We currently have sales
representatives in most of the major world markets, including in
North America, EMEA and in the Asia-Pacific region. We currently
focus our international efforts on continuing to strengthen our
direct sales and marketing presence in Europe and the
Asia-Pacific region.
Marketing
Our marketing programs include a variety of advertising, events,
public relations activities and Web-based seminar campaigns
targeted at key executives and decision makers within businesses.
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Our principal marketing initiatives include:
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customer referral programs;
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direct
e-mail
and
online Web advertising campaigns;
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participation in, and sponsorship of, user conferences, trade
shows and industry events;
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cooperative marketing efforts with partners, including joint
press announcements, joint trade show activities, channel
marketing campaigns and joint seminars; and
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using our Web site to provide product and company information.
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Omniture
Summit
As part of our commitment to enhance the value that our
customers derive from our products and services, we annually
host Omniture Summit, a conference for our customers that
provides in-depth, hands-on training from our business
consultants and product marketers, as well as keynote addresses
and panel discussions. Omniture Summit has brought our
executives together with technologists, industry experts and
thousands of customer attendees for discussions on issues and
strategies that are critical to the success of any online
business optimization initiative. Each year, our customers are
actively involved in leading sessions and participating in panel
discussions about real-world techniques that have delivered
tangible returns on investment for their enterprises.
Competition
The markets in which we operate are rapidly evolving and highly
competitive. We compete primarily with vendors whose software is
provided on demand to customers, generally through a Web
browser. We also compete to a limited extent with vendors whose
software is installed by customers directly on their servers. In
addition, we compete at times with internally developed
applications.
Our current principal competitors include:
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companies, such as Coremetrics, Inc., Google Inc., Microsoft
Corporation, Nedstat Ltd., Yahoo! Inc. (which has acquired Tensa
Kft., more commonly known as IndexTools), Unica Corporation
(which acquired Sane Solutions, LLC) and WebTrends Inc. that
offer on-demand services;
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software vendors, such as Epiphany, Inc. (acquired by SSA
Global, which is now owned by Infor), Nielsen/NetRatings, a part
of the Nielsen Online Unit of the Nielsen Company, Unica and SAS
Institute, Inc.;
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online marketing service providers, such as aQuantive, Inc.
(acquired by Microsoft), DoubleClick Inc. (acquired by Google)
and 24/7 Real Media, Inc. (acquired by WPP);
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multivariate testing providers, such as Optimost LLC (acquired
by Interwoven, which has entered into an agreement to be
acquired by Autonomy Corporation plc), Memetrics (acquired by
Accenture), Kefta, Inc. (acquired by Acxiom Digital) and [x +
1], Inc.;
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intra-site search vendors, such as Autonomy Corporation plc,
Endeca Technologies Inc., FAST Search and Transfer ASA (acquired
by Microsoft) and Google;
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merchandising solutions providers such as Endeca (ThanxMedia),
Celebros Ltd, SLI Systems, Nextopia Software Corporation and
Fredhopper;
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channel analytics providers, such as Truviso, Inc., Clickfox,
Inc., Qliktech International AB and Aster Data Systems,
Inc.;
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product recommendations providers, such as Aggregate Knowledge,
Inc., Baynote, Inc., Certona Corporation, Rich Relevance, Inc.
and Amadesa, Inc.; and
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survey providers such as OpinionLab, Inc., iPerceptions Inc. and
Foresee Results, Inc.
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Many of the companies that offer Web analytics software offer
other products or services and as a result could also bundle
their products or services, which may result in these companies
effectively selling their products or services at or below
market prices.
Some of our current and potential competitors have longer
operating histories, greater name recognition, access to larger
customer bases and substantially greater resources, including
sales and marketing, financial and other resources. As a result,
these competitors may be able to:
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absorb costs associated with providing their products at a lower
price;
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devote more resources to new customer acquisitions;
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respond to evolving market needs more quickly than we
can; and
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finance more research and development activities to develop
better services.
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In addition, large software, Internet and database management
companies may enter the market or enhance their Web analytics
capabilities, either by developing competing services or by
acquiring existing competitors or strategic partners of ours,
and compete against us effectively as a result of their
significant resources and preexisting relationships with our
current and potential customers. For example, Google offers a
Web analytics service free of charge, and acquired DoubleClick,
one of our strategic partners, in March 2008. Also, Microsoft
offers a Web analytics service free of charge, and it acquired
aQuantive in August 2007. Further, Yahoo! also offers a Web
analytics service based on its 2008 acquisition of IndexTools.
We believe the principal competitive factors in our markets
include the following:
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the proven performance, security, scalability, flexibility and
reliability of services;
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strategic relationships and integration with third-party
applications;
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the intuitiveness and visual appeal of services’ user
interfaces;
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low total cost of ownership and demonstrable cost-effective
benefits to customers;
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the ability of services to provide N-dimensional segmentation of
information;
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pricing;
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the flexibility and adaptability of services to match changing
business demands;
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enterprise-level customer service and training;
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perceived market leadership;
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the usability of services, including services being easy to
learn and remember, efficient and visually compelling;
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the real-time availability of data and reporting;
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independence from portals and search engines;
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the ability to deploy the services globally and to provide
multi-currency,
multi-language
and multi-character support and to have a local presence in
international markets; and
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success in educating customers in how to utilize services
effectively.
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We believe that we compete favorably with our competitors on the
basis of these factors. However, if we are not able to compete
successfully against our current and future competitors, it will
be difficult to acquire and retain customers, and we may
experience revenue declines, reduced operating margins, loss of
market share and diminished value in our services.
25
Intellectual
Property
We rely on a combination of patent, trademark, copyright and
trade secret laws and contractual restrictions to protect our
intellectual property rights. We have 31 issued patents in the
United States, 2 issued patents in Australia, 1 issued patent in
China, and 1 issued patent in the United Kingdom. In addition,
we currently have 64 United States and 95 related international
patent applications pending. The claims under the issued patents
are generally directed to: data modeling and classification;
online messaging optimization; Web site traffic analytics and
predictive modeling; online behavior prediction and analysis;
real-time monitoring and aggregation of Web activity; Web
content management and optimization; and compilation of data
records relating to Web site visitation sessions. We have a
number of registered and unregistered trademarks. We maintain a
policy requiring our employees, consultants and other third
parties to enter into confidentiality and proprietary rights
agreements and to control access to software, documentation and
other proprietary information.
Notwithstanding the steps we have taken to protect our
intellectual property rights, third parties may infringe or
misappropriate our proprietary rights. Competitors may also
independently develop technologies that are substantially
equivalent or superior to the technologies we employ in our
services. The global nature of the Internet allows our corporate
Web site(s) to be viewed worldwide, but there may not be
adequate intellectual property protection in every jurisdiction.
Effective patent, trademark, service mark, copyright and trade
secret protection may not be available in every country in which
our services are available over the Internet. In addition, the
legal standards relating to the validity, enforceability and
scope of protection of intellectual property rights in
Internet-related industries are uncertain and continue to
evolve. Failure to protect our proprietary rights adequately
could significantly harm our competitive position and operating
results.
The Internet, software and technology industries are
characterized by the existence of a large number of patents,
copyrights, trademarks and trade secrets and by frequent
litigation based on allegations of infringement or other
violations of intellectual property rights. As we face
increasing competition, the possibility of intellectual property
rights claims against us grows. Our technologies may not be able
to withstand third-party claims or rights against their use.
Additionally, although we have licensed from other parties
proprietary technology covered by patents, we cannot be certain
that these patents will not be challenged, invalidated or
circumvented. Many of our service agreements require us to
indemnify our customers for third-party intellectual property
infringement claims, which would increase our costs as a result
of defending those claims and might require that we pay damages
if there were an adverse ruling in any such claims. We, and
certain of our customers, have in the past received
correspondence from third parties alleging that certain of our
services, or customers’ use of our services, violate these
third parties’ patent rights. For example, we are aware
that several of our customers have received letters from a third
party alleging, among other things, that these customers’
online activities, including the use of our services, infringe
its patents. Some of these customers have requested that we
indemnify them against these allegations. Other customers may
receive similar allegations of infringement and make similar
requests for indemnification under our service agreement with
them or third parties may make claims directly against us. These
types of correspondence and future claims could harm our
relationships with our customers and might deter future
customers from subscribing to our services. Any of these results
could harm our brand and operating results.
With respect to any intellectual property rights claim against
us or our customers, we may have to pay damages or stop using
technology found to be in violation of a third party’s
rights. We may have to seek a license for the technology, which
may not be available on reasonable terms, may significantly
increase our operating expenses or require us to restrict our
business activities in one or more respects. The technology also
may not be available for license at all. As a result, we may
also be required to develop alternative non-infringing
technology, which could require significant effort and expense.
Patent
License Agreement — NetRatings, Inc. and Omniture,
Inc.
In May 2005, we were sued in the United States District Court
for the District of Delaware by NetRatings, Inc. In the suit,
NetRatings alleged that our Omniture SiteCatalyst service
infringed on four patents in which NetRatings claims an
ownership interest. In February 2006, we entered into a
settlement and patent cross-license agreement with NetRatings,
pursuant to which each party licensed to the other party its
entire patent portfolio as of the date of the agreement and the
parties agreed to settle all pending legal claims.
26
The settlement and patent license agreement grants us certain
nonexclusive, worldwide rights to all of NetRatings’ issued
patents and pending patent applications. The license contains
customary requirements that we label our services, enables us to
grant sublicenses under certain circumstances and contains
exceptions for certain uses of NetRatings’ patents. The
agreement required us to make license payments of
$10.0 million, all of which has been paid. In addition, we
were required to make a license payment of $4.0 million
following the closing of our initial public offering of common
stock in July 2006. In the event that we acquire certain
specified companies, we may be required to make additional
license payments based on the Web analytics revenues of the
acquired company. The agreement also provides that if we acquire
other companies we may elect to make additional license payments
based on the Web analytics revenues of the acquired company to
ensure that the acquired company’s products, services or
technology are covered by the license. For example, in
connection with our acquisitions since the date of the
agreement, we have elected to make additional license payments
totaling $1.7 million, all of which was paid prior to
December 31, 2008.
In the event of a change of control of Omniture, the settlement
and patent license agreement may be assigned to the purchaser
upon written notice to NetRatings, subject to certain
limitations. The patent license from NetRatings would be limited
to (1) our commercially released services as of the date of
the change of control, (2) the elements of our services
that were under development as of the date of the change of
control if those services are released as standard services
within twelve months of the date of the change of control,
(3) future versions of our services commercially released
as of the date of the change of control or other services under
development as of the date of the change of control that contain
no more than patches to, bug fixes of, minor enhancements or
modifications of, or minor updates or upgrades of the original
versions (except for any new features or functionality added to
original versions which infringe a NetRatings patent that did
not already cover the original versions) and (4) future
versions of our services commercially released as of the date of
the change of control or other services under development as of
the date of the change of control that completely replace any
such services. The license will not cover the combination,
merger, bundling or incorporation of our services, or any
portion of them, with any of the purchaser’s Web analytics
products, services or technology, unless (1) the
purchaser’s Web analytics products, services or technology
represents less than 40% of the source code of the combined,
merged or bundled Web analytics product and (2) the
purchaser’s Web analytics products, services or technology
do not infringe on a patent of NetRatings (other than patents
that covered our products, services
and/or
technology prior to the change of control).
Pursuant to the terms of the agreement, the suit was dismissed
with prejudice. The parties mutually released each other from
claims regarding patents as of the date of the agreement, and we
agreed that we will not sue NetRatings for infringement of
certain of our patents, subject to certain limitations.
Patent
License Agreement — NetRatings, Inc. and Visual
Sciences, Inc.
As a result of our acquisition of Visual Sciences, Inc.
(formerly known as WebSideStory, Inc.), Visual Sciences, Inc.
became a wholly owned subsidiary of Omniture. On August 17,
2007, Visual Sciences, Inc. entered into a settlement and
patent-license agreement with NetRatings, pursuant to which
NetRatings licensed seven of its patents to Visual Sciences,
Inc. and Visual Sciences, Inc. licensed two of its patents to
NetRatings, and the parties agreed to settle all pending legal
claims. The settlement and patent license agreement granted
Visual Sciences, Inc. certain nonexclusive, worldwide rights to
such patents. The license contains customary requirements
requiring labeling licensed services and enabling the granting
of sublicenses under certain circumstances, and it contains
exceptions for certain uses of NetRatings’ patents. The
agreement required Visual Sciences, Inc. to make license
payments of $11.3 million, $2.0 million of which was
paid by Visual Sciences on or about the date of the agreement,
$4.3 million of which was paid by us following the closing
of our acquisition of Visual Sciences, Inc., and the remaining
$5.0 million of which must be paid by us in quarterly
installments beginning on March 31, 2008, of which
$2.0 million was paid during 2008. Pursuant to the terms of
the agreement, the suit was dismissed with prejudice. The
parties to the agreement mutually released each other from
claims regarding patents as of the date of the agreement, and
Visual Sciences, Inc. agreed that it will not sue NetRatings for
infringement of the licensed patents, subject to certain
limitations.
27
Patent
License Agreement — NetRatings, Inc. and Visual
Sciences, LLC (now known as Visual Sciences Technologies,
LLC)
Visual Sciences, LLC (now known as Visual Sciences Technologies,
LLC) is a wholly owned subsidiary of Visual Sciences, Inc., and
as a result of our acquisition of Visual Sciences, Inc.
(formerly known as WebSideStory, Inc.) became a subsidiary of
Omniture, Inc. On October 25, 2005, Visual Sciences, LLC
entered into a settlement and patent license agreement with
NetRatings, pursuant to which NetRatings licensed to Visual
Sciences, LLC its entire patent portfolio as of the date of the
agreement and the parties agreed to settle all pending legal
claims. The settlement and patent license agreement granted
Visual Sciences, Inc. certain nonexclusive, worldwide rights to
all of NetRatings’ issued patents and pending patent
applications. The license contains customary requirements
requiring labeling licensed services and enabling the granting
of sublicenses under certain circumstances, and it contains
exceptions for certain uses of NetRatings’ patents. The
agreement required Visual Sciences, LLC to make license payments
of $2.0 million, $1.3 million of which had been paid
at December 31, 2008 and the remaining $0.7 million of
which must be paid on a yearly basis calculated based on revenue
of Visual Sciences, LLC products for each year. Pursuant to the
terms of the agreement, the suit was dismissed with prejudice.
The parties to the agreement mutually released each other from
claims as of the date of the agreement.
United
States and Foreign Government Regulation
The Internet, and in particular, the regulation of commercial
enterprises on the Internet, has become a focus of state,
federal and foreign governments in recent years. Discussions
among policymakers and proposed regulation regarding the
Internet have focused on the protection of consumer privacy.
Various state legislatures have enacted legislation designed to
protect consumers’ privacy by prohibiting the distribution
of “spyware” over the Internet. Such anti-spyware laws
typically focus on restricting the proliferation of certain
kinds of downloadable software, or spyware, that, when installed
on an end user’s computer, are used to intentionally and
deceptively take control of the end user’s machine. We do
not believe that the data collection methods employed by our
technology constitute “spyware” or that our data
collection methods are prohibited by such legislation. Similar
legislation has been proposed federally. If the scope of this
legislation were drafted broadly and changed to include Web
analytics, such legislation could be deemed to apply to the
technology we use and could potentially restrict our information
collection methods. Any restriction or change to our information
collection methods would cause us to expend substantial
resources to make changes and could decrease the amount and
utility of the information that we collect.
Both existing and proposed laws regulate and restrict the
collection and use of information over the Internet that
personally identifies the Web site visitor. These laws continue
to change and vary among domestic and foreign jurisdictions, but
certain information such as names, addresses, telephone numbers,
credit card numbers and
e-mail
addresses are widely considered personally identifying. The
scope of information collected over the Internet that is
considered personally identifying may become more expansive, and
it is possible that current and future legislation may apply to
information that our customers currently collect without the
explicit consent of Web site visitors. If information that our
customers collect and use without explicit consent is considered
to be personally identifying, their ability to collect and use
this information may be restricted and they would have to change
their methods, which could lead to decreased use of our services.
Domestic and foreign governments are also considering
restricting the collection and use of Internet usage data
generally. Some privacy advocates argue that even anonymous
data, individually or when aggregated, may reveal too much
information about Web site visitors. If governmental authorities
were to follow privacy advocates’ recommendations and enact
laws that limit data collection practices, our customers would
likely have to obtain the express consent of visitors to its Web
sites before it could collect, share or use any of those
visitors’ information in connection with our services. Any
requirement that a customer must obtain consent from its Web
site visitors would reduce the amount and value of the
information that we provide to customers, which might cause some
existing customers to discontinue using our services. We would
also need to expend considerable effort and resources to develop
new information collection procedures to comply with an express
consent requirement. Even if our customers succeeded in
developing new procedures, they might be unable to convince
their Web site visitors to
28
agree to the collection and use of such visitors’
information. This could negatively impact our revenues, growth
and potential for expanding our business.
Employees
At December 31, 2008, we had 1,189 full-time
employees. None of our employees is represented by a labor
union. We consider our relationship with our employees to be
good.
Executive
Officers and Directors
The following table provides information regarding our executive
officers and directors as of February 23, 2009:
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Name
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Age
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Position
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Executive Officers and Directors:
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Joshua G. James
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35
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Co-Founder, President, Chief Executive Officer and Director
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Michael S. Herring
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40
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Chief Financial Officer and Executive Vice President
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Brett M. Error
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37
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Chief Technology Officer and Executive Vice President, Products
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Christopher C. Harrington
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39
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President, Worldwide Sales and Client Services
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John F. Mellor
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42
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Executive Vice President, Business Development and Corporate
Strategy
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D. Fraser Bullock
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53
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Director, Chairman of the Board
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Gregory S. Butterfield
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49
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Director
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Dana L. Evan
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49
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Director
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Mark P. Gorenberg
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54
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Director
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Rory T. O’Driscoll
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44
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Director
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John R. Pestana
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35
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Director
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Joshua G. James
is one of our founders and has served as
a director since 1998 and as our President and Chief Executive
Officer since 1996. From 1996 to 1998, Mr. James co-founded
and co-managed several entities that were our predecessors.
Mr. James also served on the Brigham Young University
eBusiness Advisory Board and is a Platinum Founder of the BYU
Center for Entrepreneurship. He has lectured for numerous
university classes and served on several other industry,
advisory and private company boards. Mr. James attended
Brigham Young University.
Michael S. Herring
has served as our Chief Financial
Officer and Executive Vice President since November 2004. From
November 2000 to August 2004, Mr. Herring served as Chief
Financial Officer of MyFamily.com, Inc., an online network.
Mr. Herring was also Vice President, Finance of Third
Age Media, Inc., an Internet content company, and the
Controller of Anergen, Inc., a biotechnology company.
Mr. Herring is a Certified Public Accountant and holds a
B.A. in Economics and Political Science from the University of
California at Los Angeles.
Brett M. Error
has served as our Chief Technology Officer
and Executive Vice President, Products since 1999. Prior to
joining us, Mr. Error worked for an Internet service
provider and Web development agency. Mr. Error holds a B.S.
in Biology from the University of Utah.
Christopher C. Harrington
has served as our President,
Worldwide Sales since January 2003. From November 2001 to
December 2002, Mr. Harrington was Vice President, Worldwide
Sales for Domain Systems, Inc., an enterprise software provider.
From 2000 to 2001, Mr. Harrington was Vice President,
Worldwide Sales of RichFX, Inc., an online visual merchandising
and marketing service provider. From 1997 to 2000,
Mr. Harrington was Vice President, Worldwide Sales of
Viewpoint Corporation (a Computer Associates company), a
provider of visual marketing technology and services. From 1994
to 1997, Mr. Harrington was National Sales Operations
Manager for The DIRECTV Group, Inc., a direct broadcast
satellite television provider. From 1988 to 1994,
Mr. Harrington was
29
Call Center Director for Convergys Corporation (a Cincinnati
Bell company), a provider of third-party call center solutions.
Mr. Harrington attended Southern Utah University.
John F. Mellor
has served as our Executive Vice
President, Business Development and Corporate Strategy since
January 2008. From March 2006 until January 2008,
Mr. Mellor served as our Senior Vice President, Business
Development and served in other positions with the Company from
2003 until March 2006. From 2002 to 2003, Mr. Mellor was
Senior Vice President of Marketing and Business Development for
Frontline Educational Products, LLC, a direct marketing company.
From 2000 to 2002, Mr. Mellor was Senior Vice President of
Corporate Development for RichFX, Inc., an online visual
merchandising and marketing service provider. Mr. Mellor
co-founded and also served as Senior Vice President of Strategy
and Business Development for Viewpoint Corporation (a Computer
Associates company), a provider of visual marketing technology
and services. Mr. Mellor holds a B.S. in Mechanical
Engineering and an M.B.A. from Brigham Young University.
D. Fraser Bullock
has served as a director since
November 2003 and as Chairman of our Board of Directors since
February 2008. Mr. Bullock is one of the co-founders of
Sorenson Capital, a private equity firm, and has served as
Managing Director of Sorenson Capital since 2003.
Mr. Bullock joined the Salt Lake Organizing Committee for
the Olympic Winter Games of 2002 in 1999 as its Chief Operating
Officer and in 2002 was appointed President and Chief Executive
Officer. From 1996 to 2002, Mr. Bullock served as Managing
Director of Alpine Consolidated, LLC, which specialized in
effecting business consolidations. Mr. Bullock has also
served as President of Visa Interactive, was one of the original
partners of Bain Capital and previously held various positions
at Bain & Company. He serves as a director of a number
of privately held companies. Mr. Bullock holds a B.A. in
Economics and a M.B.A. from Brigham Young University.
Gregory S. Butterfield
has served as a director since
December 2005. Mr. Butterfield has served as Managing
Partner of SageCreek Partners since July 2008. From April 2007
until June 2008, Mr. Butterfield served as the group
president of the Altiris and Server and Storage business units
of Symantec Corporation, an enterprise software company.
Mr. Butterfield served as the President and Chief Executive
Officer and a director of Altiris, Inc. from February 2000 until
Altiris was acquired by Symantec Corporation in April 2007.
Mr. Butterfield has also served as Vice President, Sales
for Legato Systems, Inc., a backup software company, Executive
Vice President of Worldwide Sales for Vinca, a fault tolerance
and high availability company, Regional Director of the Rocky
Mountain Region for Novell, Inc., a provider of infrastructure
software and services, and Vice President of North American
Sales for WordPerfect Corporation, a software company. He serves
as a director of a number of privately held companies.
Mr. Butterfield holds a B.S. in Business Finance from
Brigham Young University.
Dana L. Evan
has served as a director since May
2006. From January 2001 to July 2007, Ms. Evan
served as Executive Vice President of Finance and Administration
and Chief Financial Officer of VeriSign, Inc., a provider of
intelligent infrastructure services for the Internet and
telecommunications networks. From June 1996 until December 2000,
she served as Vice President of Finance and Administration and
Chief Financial Officer of VeriSign, Inc. From 1988 to June
1996, Ms. Evan worked as a financial consultant in the
capacity of chief financial officer, vice president of finance
or corporate controller for various public and private companies
and partnerships, including VeriSign, Inc. from November 1995 to
June 1996. Prior to 1988, she was employed by KPMG LLP, most
recently as a senior manager. Ms. Evan serves as a director
of a number of privately held companies. Ms. Evan is a
Certified Public Accountant and holds a B.S. in Commerce with a
concentration in Accounting and Finance from Santa Clara
University.
Mark P. Gorenberg
has served as a director since April
2004. Since 1990, Mr. Gorenberg has been a managing member
of Hummer Winblad Equity Partners II, L.P., Hummer Winblad
Equity Partners III, L.L.C., Hummer Winblad Equity Partners IV,
L.L.C., Hummer Winblad Equity Partners V, L.L.C., and
Hummer Winblad Equity Partners VI, L.L.C. Previously,
Mr. Gorenberg was a Senior Software Manager in advanced
product development at Sun Microsystems, Inc., a provider of
network computing products and services. Mr. Gorenberg
currently serves as a director of a number of privately held
companies. He is also a member of the Corporation of the
Massachusetts Institute of Technology. Mr. Gorenberg holds
a B.S. in Electrical Engineering from Massachusetts Institute of
Technology, an M.S. in Electrical Engineering from the
University of Minnesota and an M.S. in Engineering Management
from Stanford University.
30
Rory T. O’Driscoll
has served as a director since
June 2005. Mr. O’Driscoll is a Managing Member of
Scale Venture Management, LLC and Scale Venture Management II,
LLC. Mr. O’Driscoll joined BA Venture Partners, the
predecessor to Scale Venture Management LLC, in 1994. Prior to
joining BA Venture Partners, Mr. O’Driscoll worked in
Corporate Development at Bank of America and was a founder and
the Chief Executive Officer of Mercia Ltd., a manufacturing
company based in the United Kingdom. Mr. O’Driscoll
currently serves as a director of a number of privately held
companies. Mr. O’Driscoll holds a B. Sc. in Economics
with a specialization in accounting and finance from the London
School of Economics.
John R. Pestana
is one of our founders and served as
Chairman of our Board of Directors from 1998 to February 2008.
Mr. Pestana served as our Executive Vice President,
Customer Success from 2004 to November 2007. From 1998 to 2004,
Mr. Pestana served as our President, and from 1996 to 1998,
Mr. Pestana co-founded and co-managed several entities that
were our predecessors. Mr. Pestana is a Platinum Founder of
the BYU Center for Entrepreneurship. Mr. Pestana currently
serves as a director of a number of privately held companies.
Mr. Pestana attended Brigham Young University.
Available
Information
We make available free of charge through our investor relations
Web site,
www.omtr.com
, our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
proxy statements and all amendments to those reports filed or
furnished pursuant to Sections 13(a) and 15(d) of the
Securities Exchange Act of 1934, as amended, as soon as
reasonably practicable after such material is electronically
filed or furnished with the SEC. These reports may also be
obtained without charge by contacting Investor Relations,
Omniture, Inc., 550 East Timpanogos Circle, Orem, Utah 84097,
phone: 1-801-722-7000,
e-mail:
ir@omniture.com
. Our Internet Web site and the
information contained therein or incorporated therein are not
intended to be incorporated into this Annual Report on
Form 10-K.
In addition, the public may read and copy any materials we file
or furnish with the SEC at the SEC’s Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549 or
may obtain information on the operation of the Public Reference
Room by calling the SEC at
1-800-SEC-0330.
Moreover, the SEC maintains an Internet site that contains
reports, proxy and information statements, and other information
regarding reports that we file or furnish electronically with
them at
http://www.sec.gov
.
Factors
That Could Affect Future Results
Set forth below and elsewhere in this annual report on
Form 10-K,
and in other documents we file with the SEC are descriptions of
risks and uncertainties that could cause actual results to
differ materially from the results contemplated by the
forward-looking statements contained in this report. Because of
the following factors, as well as other variables affecting our
operating results, past financial performance should not be
considered a reliable indicator of future performance and
investors should not use historical trends to anticipate results
or trends in future periods. The risks and uncertainties
described below are not the only ones we face. Other events that
we do not currently anticipate or that we currently deem
immaterial also may affect our results of operations and
financial condition. The description below includes any material
changes to and supersedes the description of the risk factors
affecting our business previously disclosed in
“Part II, Item 1A. Risk Factors” of our
quarterly report on
Form 10-Q
for the quarterly period ended September 30, 2008.
Risks
Related to Our Business
We
have a history of significant net losses, may incur significant
net losses in the future and may not achieve or maintain
profitability.
We have incurred significant losses in recent periods, including
net losses of $7.7 million in 2006, $9.4 million in
2007 and $44.8 million in 2008, primarily as a result of
significant investments that we have made in our network
infrastructure and sales and marketing organization, as well as
stock-based compensation expense associated with the issuance of
stock awards and amortization of intangible assets acquired in
our acquisitions. At December 31, 2008, we had an
accumulated deficit of $93.0 million. We may not be able to
achieve or maintain profitability and we may continue to incur
significant losses in the future. In addition, we expect to
continue to increase operating
31
expenses as we implement initiatives to continue to grow our
business, which include, among other things, plans for continued
international expansion, increasing our sales force, expansion
of our infrastructure to manage our growth and increased
complexity of our business, investments to acquire and integrate
companies and technologies, the development of new services and
general and administrative expenses. If our revenues do not
increase to offset these expected increases in costs and
operating expenses, we will not be profitable. You should not
consider our revenue growth in recent periods as indicative of
our future performance. In fact, we expect our rate of revenue
growth to decline in future periods, and our revenues could also
decline. Accordingly, we cannot assure you that we will be able
to achieve or maintain profitability in the future.
Our
quarterly results of operations may fluctuate in the future. As
a result, we may fail to meet or exceed the expectations of
securities analysts or investors, which could cause our stock
price to decline.
Our quarterly results of operations may fluctuate as a result of
a variety of factors, many of which are outside of our control.
If our quarterly results of operations fall below the
expectations of securities analysts or investors, the price of
our common stock could decline substantially. Fluctuations in
our quarterly results of operations may result from a number of
factors, including, but not limited to, those listed below:
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our ability to increase sales to existing customers and attract
new customers;
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the addition or loss of large customers;
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the timing of implementation of new or additional services by
our customers;
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the amount and timing of operating costs and capital
expenditures related to the maintenance and expansion of our
business, operations and infrastructure;
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the timing and success of new product and service introductions
by us or our competitors or any other change in the competitive
dynamics of our industry, including consolidation among our
competitors or our strategic partners;
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our ability to integrate acquired products and services into our
online marketing suite or migrate existing customers of
companies we have acquired to our products and services;
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general economic conditions, including the current economic
downturn and uncertainty in the financial markets, which may
cause a decline in customer or consumer activity;
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seasonal variations in the demand for our services and the
implementation cycles for our new customers;
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levels of revenues from our larger customers, which have lower
per transaction pricing due to higher transaction commitments;
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changes in our pricing policies or those of our competitors;
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service outages or delays or security breaches;
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the extent to which any of our significant customers or the
significant customers of the companies that we have acquired
terminate their service agreements with us or reduce the number
of transactions from which we capture data pursuant to their
service agreements;
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the purchasing and budgeting cycles of our customers;
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limitations of the capacity of our network and systems;
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the timing of expenses associated with the addition of new
employees to support the growth in our business;
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the timing of expenses related to the development or acquisition
of technologies, services or businesses;
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potential goodwill and intangible asset impairment charges
associated with acquired businesses;
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potential foreign currency exchange losses associated with
transactions and balances denominated in foreign currencies,
including our foreign currency hedging transactions;
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expenses associated with the management or growth of our
increasingly international operations; and
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geopolitical events such as war, threat of war or terrorist
actions.
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We believe our quarterly revenues and results of operations may
vary significantly in the future and that
period-to-period
comparisons of our operating results may not be meaningful. You
should not rely on the results of one quarter as an indication
of future performance.
The
current economic downturn and uncertainty in the financial
markets in the U.S. and internationally may adversely affect our
business and our financial results.
The current economic downturn and uncertainty in the financial
markets in the U.S. and internationally may adversely
affect our business and our financial results. If economies in
the U.S. and internationally remain unstable or weaken, or
if businesses or consumers perceive that these economic
conditions may continue or weaken, we may experience declines in
the sales or renewals of our online business optimization
services, as customers delay or defer buying or renewal
decisions and as consumers curtail their level of online
spending activity. Moreover, these economic conditions and
uncertain financial markets have caused companies across many of
the industries we serve, particularly in the financial services,
automotive, and retail sectors, to experience downturns in their
businesses, which may cause our customers in these industries to
reduce the level of services they purchase from us or even to go
out of business. As a result, we cannot predict what impact the
current economic downturn and uncertainty of the financial
markets will have on our business, but expect that such events
may have an adverse effect on our business and our financial
results in the current quarter and future periods.
We
have derived a majority of our subscription revenues from sales
of our Omniture SiteCatalyst service. If our Omniture
SiteCatalyst service is not widely accepted by new customers,
our operating results will be harmed.
We derive a majority of our revenues from subscriptions to our
Omniture SiteCatalyst service, and we expect that we will
continue to derive a majority of our revenues from our Omniture
SiteCatalyst service in the future. Omniture SiteCatalyst was
responsible for 89%, 78% and 64% of our total revenue during
2006, 2007 and 2008, including revenues from Omniture
SiteCatalyst HBX, respectively. In 2007 and 2008, 22% and 36% of
our revenue, respectively, was derived from products and
services other than our Omniture SiteCatalyst service. As a
result, we expect that we will continue to be highly dependent
on the success of our Omniture SiteCatalyst service for the
foreseeable future. If our Omniture SiteCatalyst service is
unable to remain competitive and provide value to our customers,
our ability to achieve widespread acceptance of our Omniture
SiteCatalyst service may be hindered and our revenue growth and
business will be harmed. Further, if our Omniture SiteCatalyst
service experiences unanticipated pricing pressure, our revenues
and margins may be adversely affected.
If we
are unable to develop or acquire new services, or if the new
services that we develop or acquire do not achieve market
acceptance, our revenue growth will be harmed.
Our ability to attract new customers and increase revenues from
existing customers will depend in large part on our ability to
enhance and improve existing services and to introduce new or
acquired services in the future. The success of any enhancement
or new service depends on several factors, including the timely
completion, introduction and market acceptance of the
enhancement or service. Any new service we develop or acquire
may not be introduced in a timely or cost-effective manner and
may not achieve the broad market acceptance necessary to
generate significant revenues. For example, we have introduced
Omniture Genesis and Omniture Recommendations, but we have not
yet received significant revenues from these services. We
acquired Offermatica and Visual Sciences and certain of the
assets of Mercado in the last 18 months resulting in an
expansion of our product and service offerings; however, we may
experience difficulties in integrating those acquired products
and services into our online marketing suite, and we may not be
successful in selling the acquired or integrated products and
services into our customer base. Additionally, our existing and
prospective customers may develop their own competing
technologies, purchase competitive products or services or
engage third-party providers. If we are unable to successfully
develop or acquire new services or enhance our existing services
to meet customer
33
requirements, or if we are unsuccessful in increasing revenue
from sales of our new or acquired products and services, our
revenue growth will decline and our business and operating
results will be adversely affected.
Our
business depends substantially on customers renewing their
subscriptions for our online business optimization services. Any
decline in our customer renewals would harm our future operating
results.
We sell our online business optimization services pursuant to
service agreements that are generally one to three years in
length. Our customers have no obligation to renew their
subscriptions for our services after the expiration of their
initial subscription period and we cannot provide assurance that
these subscriptions will be renewed at the same or higher level
of service, if at all. In fact, some of our customers have
elected not to renew their agreements with us. Moreover, under
some circumstances, some of our customers have the right to
cancel their service agreements prior to the expiration of the
terms of their agreements. We cannot assure you that we will be
able to accurately predict future customer renewal rates. Our
customers’ renewal rates may decline or fluctuate as a
result of a number of factors, including their satisfaction or
dissatisfaction with our services, the prices of our services,
the prices of services offered by our competitors, mergers and
acquisitions affecting our customer base, reductions in our
customers’ spending levels, or declines in consumer
internet activity as a result of the current economic downturn
and uncertainty in the financial markets. If our customers do
not renew their subscriptions for our services or if they renew
on less favorable terms to us, our revenues may decline and our
business will suffer.
If we
do not successfully integrate our recent acquisitions, or if we
do not otherwise achieve the expected benefits of the
acquisitions, our growth rate may decline and our operating
results may be materially harmed.
During 2007, we completed acquisitions of Instadia, Touch
Clarity and Offermatica. We completed the acquisition of Visual
Sciences in the first quarter of 2008 and the acquisition of
certain of the assets of Mercado in the fourth quarter of 2008.
If we fail to successfully integrate the business and operations
of these acquired companies and assets, we may not realize the
potential benefits of those acquisitions. The integration of
these acquisitions, particularly the integration of the Visual
Sciences acquisition, will be a time-consuming and expensive
process, has resulted in the incurrence of significant ongoing
expenses, including the addition of a number of personnel to
manage and oversee our integration efforts, and may disrupt our
operations if it is not completed in a timely and efficient
manner. If our integration effort is not successful, our results
of operations could be harmed, employee morale could decline,
key employees could leave, and customers could cancel existing
orders or choose not to place new ones. In addition, we may not
achieve anticipated synergies or other benefits of these
acquisitions. We must operate as a combined organization
utilizing common information and communication systems,
operating procedures, financial controls and human resources
practices. We may encounter difficulties, costs and delays
involved in integrating these operations, including the
following:
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failure to successfully manage relationships with customers and
other important relationships;
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failure of customers to accept new services or to continue using
the products and services of the combined company, including
difficulties in migrating HBX customers to SiteCatalyst;
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difficulties in successfully integrating the management teams
and employees of the acquired companies;
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challenges encountered in managing larger, more geographically
dispersed operations;
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loss of key employees;
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diversion of the attention of management from other ongoing
business concerns;
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potential incompatibility of technologies and systems;
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potential impairment charges incurred to write down the carrying
amount of intangible assets generated as a result of the
acquisitions; and
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potential incompatibility of business cultures.
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34
If we do not meet the expectations of our existing customers or
those of the acquired companies, particularly those of Visual
Sciences, Offermatica or Mercado, then these customers may cease
doing business with us altogether, which would harm our results
of operations and financial condition.
We
intend to continue making acquisitions of, or investments in,
other companies and technologies, which could divert our
management’s attention, result in additional dilution to
our stockholders and otherwise disrupt our operations and harm
our operating results.
As part of our business strategy, we expect to continue to make
acquisitions of, or investments in, complementary services,
technologies or businesses to address the need to develop new
products and enhance existing products. We also may enter into
relationships with other businesses in order to expand our
service offerings, which could involve preferred or exclusive
licenses, additional channels of distribution or discount
pricing or investments in other companies.
Negotiating these transactions can be time-consuming, difficult
and expensive, and our ability to close these transactions may
often be subject to approvals, such as government regulation,
which are beyond our control. Consequently, we can make no
assurances that these transactions, once undertaken and
announced, will close.
Acquisitions may also disrupt our ongoing business, divert our
resources and require significant management attention that
would otherwise be available for ongoing development of our
business, as well as cause difficulties in completing projects
associated with in-process research and development.
Acquisitions also involve risks associated with difficulties in
entering markets in which we have no or limited direct prior
experience and where competitors in such markets have stronger
market positions. In addition, the revenue of an acquired
business may be insufficient to offset increased expenses
associated with the acquisition. Acquisitions can also lead to
large and immediate charges that can have an adverse effect on
our results of operations as a result of write-offs for items
such as impairment of in-process research and development,
acquired intangible assets and goodwill, the recording of
stock-based compensation and transaction-related costs and
restructuring charges associated with these acquisitions. In
addition, we may lack experience operating in the geographic
market of the businesses that we acquire. Further, international
acquisitions and acquisitions of companies with significant
international operations, such as our two recent European
acquisitions and our acquisition of Visual Sciences, as well as
our recent acquisition of certain assets, some of which are
located in Israel, from Mercado, increase our exposure to the
risks associated with international operations. Moreover, we
cannot assure you that the anticipated benefits of any future
acquisition, investment or business relationship would be
realized or that we would not be exposed to unknown liabilities.
In connection with one or more of those transactions, we may:
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issue additional equity securities that would dilute our
stockholders;
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use a substantial portion of our cash resources that we may need
in the future to operate our business;
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incur debt on terms unfavorable to us or that we are unable to
repay;
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assume or incur large charges or substantial liabilities,
including payments to NetRatings under our agreements with it;
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encounter difficulties retaining key employees of the acquired
company or integrating diverse business cultures;
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become subject to adverse accounting or tax consequences,
substantial depreciation, amortization, impairment or deferred
compensation charges;
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make severance payments and provide additional compensation to
executives and other personnel;
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incur charges related to the elimination of duplicative
facilities or resources;
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incur legal, accounting and financial advisory fees, regardless
of whether the transaction is completed; and
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become subject to intellectual property or other litigation.
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If we
are unable to attract new customers or to sell additional
services to our existing customers, our revenue growth will be
adversely affected.
To increase our revenues, we must regularly add new customers,
sell additional services to existing customers and encourage
existing customers to increase their minimum commitment levels.
If our existing and prospective customers do not perceive our
services to be of sufficiently high value and quality, we may
not be able to attract new customers or increase sales to
existing customers and our operating results will be adversely
affected. We have incurred significant expenses and made
investments in connection with the internal development and
acquisition of new products or services, such as Omniture
Genesis, Omniture Test&Target, Omniture Discover, Omniture
Discover OnPremise, Omniture Discover OnPremise for Retail,
Omniture Merchandising, Omniture SiteSearch, Omniture Survey and
Omniture Recommendations, that are integrated into our Omniture
Online Marketing Suite. Many of these products or services have
only recently been commercially introduced by us and may not
achieve broad commercial acceptance. In that event, our
operating results may be adversely affected and we may be unable
to grow our revenue or achieve or maintain profitability.
The
significant network equipment requirements of our business model
make it more difficult to achieve positive cash flow and
profitability if we continue to grow rapidly.
Our business model involves our making significant upfront and
ongoing capital expenditures and incurring lease expense for
network operations equipment, such as servers and other network
devices. Because the time frame for evaluating and implementing
our services, particularly for larger implementations, can be
lengthy, taking up to 90 days or longer, and because we
begin to invoice our customers only after the service
implementation is complete, generally we make these expenditures
well before we receive any cash from the customer. Consequently,
it takes a number of months or longer to achieve positive cash
flow for a customer. As a result, rapid growth in customers
would require substantial amounts of cash. In addition, because
of the lengthy implementation periods for new customers, we
experience a delay between the increase in our operating
expenses and the generation of corresponding revenues. We
depreciate our capital equipment over a period of approximately
four years and incur lease expense associated with equipment
acquired under operating leases over the lease term, which is
generally three years, with depreciation and lease expense being
included in our cost of subscription revenues beginning
immediately upon our receipt of the equipment. We recognize
revenue, at the earliest, only when we complete implementation
of our services and invoice the customer. Thus, it can take us a
number of months or longer to become profitable with respect to
any given new customer.
Our
growth depends upon our ability to add new and retain existing
large customers; however, to the extent we are successful in
doing so, our gross margins and ability to achieve profitability
and positive cash flow may be impaired.
Our success depends on our ability to sell our online business
optimization services to large customers and on those customers
continuing to renew their subscriptions with us in successive
years. We derive a significant percentage of our total revenues
from a relatively small number of large customers, and the loss
of any one or more of those customers could decrease our
revenues and harm our current and future operating results.
However, the addition of new large customers or increases in
minimum commitment levels by large existing customers requires
particularly large capital expenditures and long implementation
periods, resulting in longer than usual time periods to
profitability and positive cash flow with respect to these
customers. In addition, we generally sell our services to our
large customers at a price per transaction lower than we do for
other customers due to their larger transaction commitments.
Finally, some of our customers have in the past required us to
allocate dedicated personnel to provide our services as a
condition to entering into service agreements with us. As a
result, new large customers or increased usage of our services
by large customers may cause our gross margins to decline and
negatively impact our profitability and cash flows in the near
term.
Because
we recognize subscription revenue over the term of the
applicable agreement, the lack of subscription renewals or new
service agreements may not immediately be reflected in our
operating results.
The majority of our quarterly revenues represent revenues
attributable to service agreements entered into during previous
quarters. As a result, a decline in new or renewed service
agreements in any one quarter will not be
36
fully reflected in our revenues for the corresponding quarter
but will negatively affect our revenues in future quarters.
Additionally, the effect of significant downturns in sales and
market acceptance of our services in a particular quarter may
not be fully reflected in our results of operations until future
periods. Our business model would also make it difficult for any
rapid increase in new or renewed service agreements to increase
our revenues in any one period because revenues from new
customers must be recognized over the applicable service
agreement term.
We
have limited experience with respect to our pricing model and if
the prices we charge for our services are unacceptable to our
customers, our revenues and operating results may experience
volatility or be harmed.
We have limited experience with respect to determining the
appropriate prices for our services that our existing and
potential customers will find acceptable. As the market for our
services matures, or as new competitors introduce new products
or services that compete with ours, we may be unable to renew
our agreements with existing customers or attract new customers
at the same price or based on the same pricing model as we have
used historically. For example, we face competition from
businesses that offer their services at substantially lower
prices than our services or for free. In addition, we have only
recently commercially introduced certain of our services and
other services that we offer have only recently been acquired or
integrated into our online marketing suite. The price at which
our customers may be willing to purchase our recently introduced
or acquired services may be lower or different than we expect,
which may cause our revenue or operating results to be adversely
affected. As a result, in the future it is possible that
competitive dynamics in our market may require us to change our
pricing model or reduce our prices, which could have a material
adverse effect on our revenues, gross margin and operating
results.
The
market for on-demand services, in general, and for online
business optimization services, in particular, is at an early
stage of development, and if it does not develop or develops
more slowly than we expect, our business will be
harmed.
The market for on-demand services, in general, and for online
business optimization services, in particular, is at an early
stage of development, and it is uncertain whether these services
will achieve and sustain high levels of demand and market
acceptance. Our success will depend to a substantial extent on
the willingness of companies to increase their use of on-demand
services, in general, and for online business optimization
services, in particular. Many companies have invested
substantial personnel and financial resources to integrate
traditional enterprise software into their businesses, and
therefore may be reluctant or unwilling to migrate to on-demand
services. Other factors that may affect market acceptance
include:
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the security capabilities, reliability and availability of
on-demand services;
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customer concerns with entrusting a third party to store and
manage their data;
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public concern regarding privacy;
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the enactment of laws or regulations that restrict our ability
to provide existing or new services to customers in the
U.S. or internationally;
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the level of customization or configuration we offer;
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our ability to maintain high levels of customer satisfaction;
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our ability to provide reports in real time during periods of
intense activity on customer Web sites;
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the price, performance and availability of competing products
and services;
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the rate of continued growth in online commerce and online
advertising; and
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the current and possible future imposition by federal, state and
local agencies of taxes on goods and services that are provided
over the Internet.
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The market for these services may not develop further, or it may
develop more slowly than we expect, either of which would harm
our business.
37
We
operate in a highly competitive market, which could make it
difficult for us to acquire and retain customers.
We compete in a rapidly evolving and highly competitive market.
A significant portion of our business competes with third-party,
on-demand services, software vendors and online marketing
service providers.
Our current principal competitors include:
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companies, such as Coremetrics, Inc., Google Inc., Microsoft
Corporation, Nedstat Ltd., Yahoo! Inc. (which has acquired Tensa
Kft., more commonly known as IndexTools), Unica Corporation
(which acquired Save Solutions, LLC) and WebTrends Inc. that
offer on-demand services;
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software vendors, such as Epiphany, Inc. (acquired by SSA
Global, which is now owned by Infor), Nielsen/NetRatings, a part
of the Nielsen Online Unit of the Nielsen Company,
Unica and SAS Institute, Inc.;
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online marketing service providers, such as aQuantive, Inc.
(acquired by Microsoft), DoubleClick Inc. (acquired by Google)
and 24/7 Real Media, Inc. (acquired by WPP);
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multivariate testing providers, such as Optimost LLC (acquired
by Interwoven, which has entered into an agreement to be
acquired by Autonomy Corporation plc), Memetrics (acquired by
Accenture), Kefta, Inc. (acquired by Acxiom Digital) and [x +
1], Inc.;
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intra-site search vendors, such as Autonomy Corporation plc,
Endeca Technologies Inc., FAST Search and Transfer ASA (acquired
by Microsoft) and Google;
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merchandising solutions providers such as Endeca (ThanxMedia),
Celebros Ltd, SLI Systems, Nextopia Software Corporation and
Fredhopper;
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channel analytics providers, such as Truviso, Inc., Clickfox,
Inc., Qliktech International AB and Aster Data Systems, Inc.;
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product recommendations providers, such as Aggregate Knowledge,
Inc., Baynote, Inc., Certona Corporation, Rich Relevance, Inc.
and Amadesa, Inc.; and
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survey providers such as OpinionLab, Inc., iPerceptions Inc. and
Foresee Results, Inc.
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Many of the companies that offer Web analytics software offer
other products or services and as a result could also bundle
their products or services, which may result in these companies
effectively selling their products or services at or below
market prices.
Some of our current and potential competitors have longer
operating histories, greater name recognition, access to larger
customer bases and substantially greater resources, including
sales and marketing, financial and other resources. As a result,
these competitors may be able to:
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absorb costs associated with providing their products at a lower
price;
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devote more resources to new customer acquisitions;
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respond to evolving market needs more quickly than we
can; and
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finance more research and development activities to develop
better services.
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In addition, large software, Internet and database management
companies may enter the market or enhance their Web analytics
capabilities, either by developing competing services or by
acquiring existing competitors or strategic partners of ours,
and compete against us effectively as a result of their
significant resources and preexisting relationships with our
current and potential customers. For example, Google offers a
Web analytics service free of charge, and acquired DoubleClick,
one of our strategic partners, in March 2008. Also, Microsoft
offers a Web analytics service free of charge, and it acquired
aQuantive in August 2007. Further, Yahoo! also offers a Web
analytics service based on its 2008 acquisition of IndexTools.
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If our services achieve broader commercial acceptance and as we
introduce additional services, we expect that we will experience
competition from additional companies.
If we are not able to compete successfully against our current
and future competitors, it will be difficult to acquire and
retain customers, and we may experience limited revenue growth,
reduced revenues and operating margins and loss of market share.
We
rely on third-party service providers to host and deliver our
services, and any interruptions or delays in services from these
third parties could impair the delivery of our services and harm
our business.
We primarily host our services, and serve our customers from 26
third-party data center facilities located in the United States,
Europe and Australia. We do not control the operation of any of
these facilities, and depending on service level requirements,
we may not operate or maintain redundant data center facilities
for all of our services or for all of our customers’ data,
which increases our vulnerability. These facilities are
vulnerable to damage or interruption from earthquakes,
hurricanes, floods, fires, power loss, telecommunications
failures and similar events. They are also subject to break-ins,
computer viruses, sabotage, intentional acts of vandalism and
other misconduct. The occurrence of a natural disaster or an act
of terrorism, a decision to close the facilities without
adequate notice or other unanticipated problems could result in
lengthy interruptions in our services. Additionally, our data
center facility agreements are of limited durations, and our
data facilities have no obligation to renew their agreements
with us on commercially reasonable terms, or at all. Some of our
data center facility agreements require that we pay for a
variable component of power costs and provides for discretionary
increases, up to a maximum amount, to the price we pay for use
of the facility, thereby potentially subjecting us to variations
in the cost of power and hosting fees. In addition, data centers
suitable for the hosting of our services have become limited in
supply and availability and, in the future, it may be difficult
to obtain additional data center capacity and related hardware
to accommodate our growth or we may be required to incur
significant expenditures to acquire or develop capacity that
meets our future needs. If we are unable to renew our agreements
with the facilities on commercially reasonable terms, we may
experience delays in the provisioning of our services until an
agreement with another data center facility can be arranged or
may be required to incur significant expenditures, either of
which scenario would adversely impact our financial condition or
operating results.
We depend on access to the Internet through third-party
bandwidth providers to operate our business. If we lose the
services of one or more of our bandwidth providers for any
reason, we could experience disruption in our services or we
could be required to retain the services of a replacement
bandwidth provider.
Our operations rely heavily on the availability of electricity,
which also comes from third-party providers. If we or the
third-party data center facilities that we use to deliver our
services were to experience a major power outage or if the cost
of electricity increases significantly, our operations would be
harmed. If we or our third-party data centers were to experience
a major power outage, we would have to rely on
back-up
generators, which may not work properly, and their supply might
be inadequate during a major power outage. Such a power outage
could result in a disruption of our business.
Any errors, defects, interruptions, delays, disruptions or other
performance problems with our services could harm our reputation
and may damage our customers’ businesses. Interruptions in
our services might reduce our revenues, cause us to issue
credits to customers, cause customers to terminate their
subscriptions and adversely affect our renewal rates. Our
business would be harmed if our customers and potential
customers believe our services are unreliable.
If we
fail to respond to rapidly changing technological developments
or evolving industry standards, our services may become obsolete
or less competitive.
The market for our services is characterized by rapid
technological advances, changes in customer requirements,
changes in protocols and evolving industry standards. If we are
unable to develop enhancements to, and new features for, our
existing services or acceptable new services that keep pace with
rapid technological developments, our services may become
obsolete, less marketable and less competitive and our business
will be harmed.
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We
have experienced rapid growth in recent periods organically and
through acquisitions. If we fail to manage our growth
effectively, we may be unable to execute our business plan,
maintain high levels of service or address competitive
challenges adequately.
We have substantially expanded our overall business, customer
base, headcount and operations in recent periods both
domestically and internationally. Our total number of full-time
employees increased from 353 at December 31, 2006 to 1,189
at December 31, 2008. In addition, during this same period,
we made substantial investments in our network infrastructure
operations, research and development and sales and marketing as
a result of our growth, and have significantly expanded our
geographic presence with the acquisition of two European
companies and two companies based in the United States, one of
which in particular had significant international reach in its
operations, as well as certain of the assets of an additional
business, many of which were located in Israel. We will need to
continue to expand our business. We anticipate that this
expansion will require substantial management effort and
significant additional investment in our infrastructure. In
addition, we will be required to continue to improve our
operational, financial and management controls and our reporting
procedures, particularly in view of the complexities associated
with more geographically dispersed operations. As such, we may
be unable to manage our expenses effectively in the future,
which may negatively impact our gross margins or cause our
operating expenses to increase in any particular quarter. Our
historic expansion has resulted in increased responsibilities
and has placed, and our expected future growth will continue to
place, a significant strain on our managerial, administrative,
operational, financial and other resources and will result in
new and increased responsibilities for management personnel.
There can be no assurance that our management, personnel,
systems, procedures, and controls are, or will be, adequate to
support our existing and future operations or that we will
continue to grow. If we fail to recruit and retain sufficient
and qualified managerial, operational, or financial personnel or
to implement or maintain internal systems that enable us to
effectively manage our growing business and operations
worldwide, our financial results in any given period may be
adversely affected and our business and financial condition
could be materially harmed. If we are unable to otherwise manage
our growth successfully, we may experience unanticipated
business problems or service delays or interruptions, which may
damage our reputation or adversely affect the operating results
of our business.
Failure
to effectively expand our sales and marketing capabilities could
harm our ability to increase our customer base and achieve
broader market acceptance of our services.
Increasing our customer base and achieving broader market
acceptance of our services will depend to a significant extent
on our ability to expand our sales and marketing operations. We
expect to be substantially dependent on our direct sales force
to obtain new customers. We have recently significantly expanded
the size of our direct sales force and plan to continue to
expand our direct sales force both domestically and
internationally. We believe that there is significant
competition for direct sales personnel with the sales skills and
technical knowledge that we require. Our ability to achieve
significant growth in revenues in the future will depend, in
large part, on our success in recruiting, training and retaining
sufficient numbers of direct sales personnel. Moreover, new
hires require significant training and, in most cases, take a
significant period of time before they achieve full
productivity. Our recent hires, sales personnel added through
our recent business acquisitions and planned hires may not
become as productive as we would like, and we may be unable to
hire or retain sufficient numbers of qualified individuals in
the future in the markets where we do business. Our business
will be seriously harmed if these expansion efforts do not
generate a corresponding significant increase in revenues.
Our
growth depends in part on the success of our strategic
relationships with third parties, including technology
integration, channel partners and resellers of our
services.
We may not be able to develop or maintain strategic
relationships with third parties with respect to either
technology integration or channel development for a number of
reasons, including because of relationships with our competitors
or prospective competitors. For example, we launched Omniture
Genesis as part of our strategy to broaden our online marketing
suite. Further, we recently established a strategic partner
relationship with WPP, one of the world’s largest
communications services companies, and we also expect to enter
into similar relationships with other companies. If we are
unsuccessful in establishing or maintaining our strategic
relationships with these and other third parties, our ability to
compete in the marketplace or to grow our revenues would be
impaired and our
40
operating results would suffer. Further, if search engine or
other online marketing providers restrict access to their
networks or increase the currently nominal prices they charge
for the use of their application programming interfaces, our
ability to deliver services of sufficiently high value to our
customers at a profitable price will be negatively affected.
Even if we are successful in establishing and maintaining these
relationships, we cannot assure you that these will result in
increased customers or revenues.
Because
our long-term success depends, in part, on our ability to expand
the sales of our services to customers located outside of the
United States, our business will be susceptible to risks
associated with international operations.
We currently maintain offices outside of the United States and
currently have operations, sales personnel or independent
consultants in several countries. In the first quarter of 2007,
we acquired Instadia, which has its principal operations in
Copenhagen, Denmark, and Touch Clarity, which has its principal
operations in London, England, and we also acquired Offermatica
in the fourth quarter of 2007 and Visual Sciences, which has
significant international reach in its operations, in the first
quarter of 2008. In the fourth quarter of 2008, we acquired
certain of the assets of Mercado, some of which are located in
Israel, and we opened an office in Israel. These acquisitions
significantly increased the scope and complexity of our
international operations. We have limited experience operating
in foreign jurisdictions at such scale. Our inexperience in
operating our business outside of the United States increases
the risk that our current and any future international expansion
efforts will not be successful. In addition, conducting
international operations subjects us to new risks that we have
not generally faced in the United States. These include:
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fluctuations in currency exchange rates;
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unexpected changes in foreign regulatory requirements;
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longer accounts receivable payment cycles and difficulties in
collecting accounts receivable;
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difficulties in managing and staffing international operations;
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potentially adverse tax consequences, including the complexities
of foreign value added tax systems and restrictions on the
repatriation of earnings;
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general economic conditions in international markets, including
the current global economic downturn and uncertainty in the
global financial markets, which may cause a decline in customer
or consumer activity;
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localization of our services, including translation into foreign
languages and associated expenses;
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dependence on certain third parties to increase customer
subscriptions;
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the burdens of complying with a wide variety of foreign laws and
different legal standards, including laws and regulations
related to privacy;
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increased financial accounting and reporting burdens and
complexities;
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political instability abroad, terrorist attacks and security
concerns in general (particularly in Israel and the Middle
East); and
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reduced or varied protection for intellectual property rights in
some countries.
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The occurrence of any one of these risks could negatively affect
our international business and, consequently, our results of
operations generally.
Additionally, operating in international markets also requires
significant management attention and financial resources. We
cannot be certain that the investment and additional resources
required in establishing, acquiring or integrating operations in
other countries will produce desired levels of revenues or
profitability.
As we expand our international operations, we will be required
to recruit and retain experienced management, sales and
technical personnel in our international offices, and we expect
that the identification, recruitment, training and retention of
such personnel will require significant management time and
effort and resources. Competition for employees with the skills
required, particularly management, engineering and other
technical personnel, is intense,
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and there can be no assurance that we will be able to attract
and retain highly skilled employees in sufficient numbers to
sustain our current business or to support future growth. We may
need to pay recruiting or agency fees and offer additional
compensation or incentives to attract and retain these and other
employees, resulting in an increase to our operating expenses.
Because we conduct business internationally in several
countries, our results of operations and cash flows are subject
to fluctuations due to changes in currency exchange rates,
primarily related to the Australian dollar, British pound,
Canadian dollar, Danish krone, European Union euro, Japanese yen
and Swedish krona.
Our exposure to foreign exchange rate fluctuations arise in part
from: (1) translation of the financial results of foreign
subsidiaries into U.S. dollars in consolidation;
(2) the re-measurement of non-functional currency assets,
liabilities and intercompany balances into U.S. dollars for
financial reporting purposes; and
(3) non-U.S. dollar
denominated sales to foreign customers. The primary effect on
our results of operations from a strengthening U.S. dollar
is a decrease in revenue, partially offset by a decrease in
expenses. Conversely, the primary effect of foreign currency
transactions on our results of operations from a weakening
U.S. dollar is an increase in revenues, partially offset by
an increase in expenses. As a result, fluctuations in the value
of the United States dollar and foreign currencies may make our
services more expensive for international customers or increase
the cost of our international operations, which could harm our
business.
We may
be liable to our customers and may lose customers if we provide
poor service, if our services do not comply with our agreements
or if we are unable to collect customer data or otherwise lose
customer data.
Because of the large amount of data that we collect and manage
on behalf of our customers, it is possible that hardware
failures or errors in our systems could result in data loss or
corruption or cause the information that we collect to be
incomplete or contain inaccuracies that our customers regard as
significant. Furthermore, our ability to collect and report data
may be delayed or interrupted by a number of factors, including
our inability to access the Internet, the failure of our network
or software systems, security breaches or variability in visitor
traffic on customer Web sites. In addition, computer viruses may
harm our systems causing us to lose data, and the transmission
of computer viruses could expose us to litigation. We may also
find, on occasion, that we cannot deliver data and reports to
our customers in near real time because of a number of factors,
including significant spikes in consumer activity on their Web
sites or failures of our network or software. We may be liable
to our customers for damages they may incur resulting from these
events, such as loss of business, loss of future revenues,
breach of contract or for the loss of goodwill to their
business. In addition to potential liability, if we supply
inaccurate information or experience interruptions in our
ability to capture, store and supply information in near real
time or at all, our reputation could be harmed and we could lose
customers.
Our errors and omissions insurance may be inadequate or may not
be available in the future on acceptable terms, or at all. In
addition, our policy may not cover any claim against us for loss
of data or other indirect or consequential damages and defending
a suit, regardless of its merit, could be costly and divert
management’s attention.
A
rapid expansion of our network and systems could cause us to
lose customer data or cause our network or systems to
fail.
In the future, we may need to expand our network and systems at
a more rapid pace than we have in the past. For example, if we
secure a large customer or a group of customers with
extraordinary volumes of information to collect and process, we
may suddenly require additional bandwidth and our existing
systems may not be able to process the information. Our network
or systems may not be capable of meeting the demand for
increased capacity, or we may incur additional unanticipated
expenses to accommodate these capacity demands. In addition, we
may lose valuable data, be able to provide it only on a delayed
basis, or our network may temporarily shut down if we fail to
expand our network to meet future requirements. Many of these
risks are exacerbated as a result of our recent acquisitions,
which have and will continue to require us to integrate network
operations involving different operational procedures, security
applications and hardware configurations. Any lapse in our
ability to collect or transmit data will decrease the value of
the data, prevent us from providing the complete data that may
be requested
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by our customers and affect some of our customers’ Web
pages. Any disruption in our network processing or loss of data
may damage our reputation and result in the loss of customers.
A
security incident could subject us to liability and may result
in lost customers.
Because we hold large amounts of customer data and host them in
third-party facilities, a security incident may compromise the
integrity or availability of customer data, or customer data may
be exposed to unauthorized access. Security incidents may result
from failure to follow security policies or procedures;
inadequate security policies, procedures or controls; failure of
physical security controls by us or a third-party provider;
security vulnerability in our code, operating systems, firmware
or protocols; administrator error that exposes data or allows
for successful exploitation of an otherwise unavailable
vulnerability; malicious intent by an employee or a third party
with access to our systems; or vulnerabilities where the risk
was accepted by management.
Depending upon the nature of the security incident, the scope
and duration of the exposure of customer data may vary. This can
depend upon many factors, including the attack vector,
vulnerability exploited, our ability to detect the incident, and
the ability of the attacker. Incidents may be isolated to a
single customer, multiple customers at the same site or within a
product, or all customers.
Because our services include content that is served on behalf of
customers, code that delivers content that is malicious or
destructive in nature, or that is not in agreement with our
customer contracts, is possible. It is also possible that our
services could be misused to launch an attack against others,
either by exploiting a flaw in our system, or by using our
systems to directly attack others.
It is possible that unauthorized access to customer data may be
obtained through inadequate use of security controls by
customers. While strong password controls, IP restriction and
account controls are provided and supported, their use is
controlled by the customer. This could allow accounts to be
created with weak passwords, for example, which could result in
allowing an attacker to gain access to customer data.
Additionally, failure by customers to remove accounts of their
own employees, or granting of accounts by the customer in an
uncontrolled manner, may allow for access by former or
unauthorized customer employees.
We may be liable to our customers for damages they may incur
resulting from these events, such as loss of business, loss of
future revenues, breach of contract or for the loss of goodwill
to their business. In addition to potential liability, if we
expose customer data to unauthorized access or otherwise
experience a security incident, our reputation could be harmed
and we could lose customers.
Our errors and omissions insurance may be inadequate or may not
be available in the future on acceptable terms, or at all. In
addition, our policy may not cover any claim against us for
exposure of customer data or other indirect or consequential
damages and defending a suit, regardless of its merit, could be
costly and divert management’s attention.
If a
third party asserts that we are infringing its intellectual
property, whether successful or not, it could subject us to
costly and time-consuming litigation or expensive licenses, and
our business may be harmed.
The Internet, software and technology industries are
characterized by the existence of a large number of patents,
copyrights, trademarks and trade secrets and by frequent
litigation based on allegations of infringement or other
violations of intellectual property rights. As we face
increasing competition, the possibility of intellectual property
rights claims against us grows. Our technologies may not be able
to withstand any third-party claims or rights against their use.
Additionally, although we have licensed from other parties
proprietary technology covered by patents, we cannot be certain
that any such patents will not be challenged, invalidated or
circumvented. Many of our service agreements require us to
indemnify our customers for third-party intellectual property
infringements claims, which would increase our costs as a result
of defending such claims and may require that we pay damages if
there were an adverse ruling in any such claims. We, and certain
of our customers, have in the past received correspondence from
third parties alleging that certain of our services, or
customers’ use of our services, violate such third
parties’ patent rights. For example, we are aware that
several of our customers have received letters from a third
party alleging, among other things, that these customers’
online activities, including the use of our services, infringe
its patents. Some of these customers have requested that we
indemnify them against these allegations.
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Other customers may receive similar allegations of infringement
and make similar requests for indemnification under our service
agreement with them or third parties may make claims directly
against us. These types of correspondence and future claims
could harm our relationships with our customers and might deter
future customers from subscribing to our services or could
expose us to litigation with respect to these claims. Even if we
are not a party to any litigation between a customer and a third
party, an adverse outcome in any such litigation could make it
more difficult for us to defend our intellectual property in any
subsequent litigation in which we are a named party. Any of
these results could harm our brand and operating results.
Any intellectual property rights claim against us or our
customers, with or without merit, could be time consuming,
expensive to litigate or settle and could divert management
resources and attention. An adverse determination also could
prevent us from offering our services to our customers and may
require that we procure or develop substitute services that do
not infringe.
With respect to any intellectual property rights claim against
us or our customers, we may have to pay damages or stop using
technology found to be in violation of a third party’s
rights. We may have to seek a license for the technology, which
may not be available on reasonable terms, may significantly
increase our operating expenses or require us to restrict our
business activities in one or more respects. The technology also
may not be available for license at all. As a result, we may
also be required to develop alternative non-infringing
technology, which could require significant effort and expense.
For example, in February 2006, we entered into a settlement and
patent cross-license agreement with NetRatings, to resolve a
patent infringement lawsuit that NetRatings filed against us in
May 2005 and to obtain a non-exclusive, worldwide license to
NetRatings’ entire patent portfolio. Under the terms of the
agreement, we agreed to pay license fees to NetRatings.
Additionally, Visual Sciences, Inc. (formerly known as
WebSideStory, Inc.) and Visual Sciences, LLC (now known as
Visual Sciences Technologies, LLC) also entered into settlement
and license agreements with NetRatings, pursuant to which they
agreed to pay license fees to NetRatings in exchange for
non-exclusive, worldwide licenses to NetRatings’ patents.
Our exposure to risks associated with the use of intellectual
property may be increased as a result of acquisitions, as we
have a lower level of visibility into the development process
with respect to such technology or the care taken to safeguard
against infringement risks. In addition, third parties may make
infringement and similar or related claims after we have
acquired technology that had not been asserted prior to our
acquisition.
The
success of our business depends in large part on our ability to
protect and enforce our intellectual property
rights.
We rely on a combination of patent, copyright, service mark,
trademark and trade secret laws, as well as confidentiality
procedures and contractual restrictions, to establish and
protect our proprietary rights, all of which provide only
limited protection. We have 31 issued patents in the United
States, 2 issued patents in Australia, 1 issued patent in
China, and 1 issued patent in the United Kingdom. In addition,
we currently have 64 United States and 95 related international
patent applications pending. We cannot assure that any patents
will issue with respect to our current patent applications in a
manner that gives us the protection that we seek, if at all, or
that any future patents issued to us will not be challenged,
invalidated or circumvented. Our currently issued patents and
any patents that may issue in the future with respect to pending
or future patent applications may not provide sufficiently broad
protection or they may not prove to be enforceable in actions
against alleged infringers. Also, we cannot assure that any
future service mark registrations will be issued with respect to
pending or future applications or that any registered service
marks will be enforceable or provide adequate protection of our
proprietary rights.
We endeavor to enter into agreements with our employees and
contractors and agreements with parties with whom we do business
in order to limit access to and disclosure of our proprietary
information. We cannot be certain that the steps we have taken
will prevent unauthorized use of our technology or the reverse
engineering of our technology. Moreover, others may
independently develop technologies that are competitive to ours
or infringe our intellectual property. The enforcement of our
intellectual property rights also depends on our legal actions
against these infringers being successful, but we cannot be sure
these actions will be successful, even when our rights have been
infringed.
Furthermore, effective patent, trademark, service mark,
copyright and trade secret protection may not be available in
every country in which our services are available over the
Internet. In addition, the legal standards
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relating to the validity, enforceability and scope of protection
of intellectual property rights in Internet-related industries
are uncertain and still evolving.
We
rely on our management team and need additional personnel to
grow our business, and the loss of one or more of our key
employees or the inability to attract and retain qualified
personnel could harm our business.
Our success and future growth depends to a significant degree on
the skills and continued services of our management team. Our
future success also depends on our ability to attract and retain
and motivate highly skilled technical, managerial, marketing and
customer service personnel, including members of our management
team. Our employees work for us on an at-will basis, however,
the laws of some of the international jurisdictions where we
have employees may require us to make statutory severance
payments in the event of termination of employment. We plan to
hire additional personnel in all areas of our business,
particularly for our sales, marketing and technology development
areas, both domestically and internationally. Competition for
these types of personnel is intense, particularly in the
Internet and software industries. As a result, we may be unable
to successfully attract or retain qualified personnel. Our
inability to retain and attract the necessary personnel could
adversely affect our business.
Material
defects or errors in our software we use to deliver our services
could harm our reputation, result in significant costs to us and
impair our ability to sell our services.
The software applications underlying our services are inherently
complex and may contain material defects or errors. Any defects
that cause delays or interruptions to the availability of our
services could result in:
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lost or delayed market acceptance and sales of our services;
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sales credits or refunds to our customers;
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loss of customers;
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diversion of development resources;
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injury to our reputation; and
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increased warranty and insurance costs.
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The costs incurred in correcting any material defects or errors
in our services may be substantial and could adversely affect
our operating results. After the release of our services,
defects or errors may also be identified from time to time by
our internal team and by our customers. These defects or errors
may occur in the future.
Changes
in financial accounting standards or practices may cause
adverse, unexpected financial reporting fluctuations and affect
our reported results of operations.
A change in accounting standards or practices can have a
significant effect on our reported results and may even affect
our reporting of transactions completed before the change is
effective. New accounting pronouncements and varying
interpretations of accounting pronouncements have occurred and
are likely to occur in the future. Changes to existing rules or
the questioning of current practices may adversely affect our
reported financial results or the way we conduct our business.
For example, on December 16, 2004, FASB issued
SFAS No. 123R. SFAS No. 123R, which we
adopted on January 1, 2006, requires that employee
stock-based compensation be measured based on its fair value on
the grant date and treated as an expense that is reflected in
the financial statements over the related service period. As a
result of SFAS No. 123R, our results of operations in
2006, 2007 and 2008 reflect expenses that are not reflected in
prior periods, potentially making it more difficult for
investors to evaluate our 2006, 2007 and 2008 results of
operations relative to prior periods.
We
might require additional capital to support business growth,
which might not be available on acceptable terms, or at
all.
We intend to continue to make investments to support our
business growth and may require additional funds to respond to
business challenges, including the need to develop new services
or enhance our existing services, enhance our operating
infrastructure and acquire complementary businesses and
technologies. Accordingly, we
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may need to engage in equity or debt financings to secure
additional funds. If we raise additional funds through further
issuances of equity or convertible debt securities, our existing
stockholders could suffer significant dilution, and any new
equity securities we issue could have rights, preferences and
privileges superior to those of holders of our common stock. Our
credit agreement contains restrictive covenants relating to our
capital raising activities and other financial and operational
matters, including restrictions on the amount of capital
expenditures in any one year, which may make it more difficult
for us to obtain additional capital and to pursue business
opportunities, including potential acquisitions. In addition, we
may not be able to obtain additional financing on terms
favorable to us, if at all, particularly in view of the
uncertainty in the U.S. and global financial markets and
corresponding liquidity crisis, which may cause us to be unable
to access capital from the capital markets. If we are unable to
obtain adequate financing or financing on terms satisfactory to
us, when we require it, our ability to continue to support our
business growth and to respond to business challenges could be
significantly limited.
If we
fail to maintain proper and effective internal controls, our
ability to produce accurate financial statements could be
impaired, which could adversely affect our operating results,
our ability to operate our business and investors’ views of
us.
Under Section 404 of the Sarbanes-Oxley Act of 2002, or SOX
404, on an on-going basis both we and our external auditors are
required to assess the effectiveness of our internal control
over financial reporting. The requirements of SOX 404 first
became applicable to us on December 31, 2007. Our efforts
to comply with SOX 404 have resulted in, and are likely to
continue to result in, increased general and administrative
expenses and the commitment of significant financial and
personnel resources.
Although we believe that our efforts will enable us to remain
compliant under SOX 404, we can give no assurance that in the
future such efforts will be successful. Our business is complex
and involves significant judgments and estimates as described in
“Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Critical
Accounting Policies.” Any failure to adequately maintain
effective internal control over our financial reporting, or
consequently our inability to produce accurate financial
statements on a timely basis, could increase our operating costs
and could materially impair our ability to operate our business.
In addition, investors’ perceptions that our internal
controls are inadequate or that we are unable to produce
accurate financial statements may seriously affect our stock
price.
Our
investments in auction rate securities are subject to risks
which may adversely affect our liquidity and cause
losses.
At December 31, 2008, we held AAA-rated municipal note
investments with par values totaling $21.5 million with an
auction reset feature, or auction rate securities, the
underlying assets of which are generally student loans which are
substantially backed by the U.S. federal government.
Auction rate securities are generally long-term instruments that
are intended to provide liquidity through a Dutch auction
process that resets the applicable interest rate at
pre-determined calendar intervals, allowing holders of these
instruments to rollover their holdings and continue to own their
respective securities or liquidate their holdings by selling the
auction rate securities at par. Beginning in February 2008,
auctions failed for our holdings because sell orders for these
securities exceeded the amount of purchase orders. The funds
associated with these failed auctions will not be accessible
until the issuer calls the security, a successful auction
occurs, a buyer is found outside the auction process, or the
security matures. Consequently, because there is no assurance we
will be able to liquidate our positions in these securities
within the next 12 months, we have reclassified all of our
auction rate holdings to long-term investments on our
consolidated balance sheet. In addition, as there is currently
no active market for the securities we hold, we determined there
to be a temporary impairment in the value of these securities of
$3.4 million and, accordingly, have recorded an unrealized
loss on these securities which is included as a component of
other comprehensive loss within stockholders’ equity on our
balance sheet at December 31, 2008. At December 31,
2008, we determined the impairment to be temporary because we
believe these securities will ultimately be sold at their par
values, and at December 31, 2008, we believe we have the
ability and the intent to hold them until such time, which could
be the securities’ maturity dates. The maturity dates of
our auction rate holdings are between the years 2034 and 2040.
Until the issuers of our auction rate securities are able to
successfully close future auctions or if their credit ratings
deteriorate, we may in the future be required to record further
impairment charges on these investments, some or all of which we
may determine at some point in the future to be
other-than-temporary, and our liquidity would be
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adversely affected to the extent that the cash we would
otherwise receive upon liquidation of the investments would not
be available for use in the growth of our business and other
strategic opportunities.
Our
net operating loss carryforwards may expire unutilized, which
could prevent us from offsetting future taxable
income.
During 2008, we utilized $23.4 million in net operating
loss carryforwards to reduce our provision for income taxes for
the year. We may utilize additional net operating loss
carryforwards to reduce our 2009 provision for income taxes. At
December 31, 2008, we had approximately $102.9 million
in net operating loss carryforwards for federal income tax
purposes, which will begin to expire in 2020, and approximately
$2.5 million in federal tax credit carryforwards, which
will begin to expire in 2020. These carryforwards will be
subject to annual limitations that result in their expiration
before some portion of them has been fully utilized. For fiscal
years beginning on or after January 1, 2008 through years
ending on December 31, 2009, the state of California
suspended the utilization of net operating loss carryforwards by
taxpayers to reduce their state income taxes. Changes in
ownership have occurred that have resulted in limitations in our
net operating loss carryforwards under Section 382 of the
Internal Revenue Code. As a result of these Section 382
limitations, we can only utilize a portion of the net operating
loss carryforwards that were generated prior to the ownership
changes to offset future taxable income generated in
U.S. federal and state jurisdictions. At December 31,
2008, we also had approximately $25.0 million in net
operating loss carryforwards in the United Kingdom, part or all
of which may not be available to reduce our future taxable
income in the United Kingdom should there be a change in the
nature or conduct of our business in the United Kingdom within
the three years subsequent to the date of our acquisition of
Touch Clarity. In addition, the timing of when we achieve
profitability, if ever, and the dollar amount of such
profitability will impact our ability to utilize these net
operating loss carryforwards. We may not be able to achieve
sufficient profitability to utilize some or all of our net
operating loss carryforwards prior to their expiration.
If we
cannot maintain our corporate culture as we grow, we could lose
the innovation, teamwork and focus that we believe our culture
fosters, and our business may be harmed.
We believe that a critical contributor to our success has been
our corporate culture, which we believe fosters innovation and
teamwork. As we grow and change, including the changes resulting
from the integration of the employees and businesses acquired in
connection with our previous acquisitions and that may join us
in connection with future acquisitions, we may find it difficult
to maintain important aspects of our corporate culture, which
could negatively affect our ability to retain and recruit
personnel, and otherwise adversely affect our future success.
Risks
Related to Our Industry
Widespread
blocking or erasing of cookies or other limitations on our
ability to use cookies or other technologies that we employ may
impede our ability to collect information and reduce the value
of our services.
Our services currently use “cookies,” which are small
files of information placed on a Web site visitor’s
computer in connection with that visitor’s browsing
activity on one of our customer’s Web site(s), and
“clear GIFs” (also known as pixel tags or Web
beacons), which are small images placed on a Web page to
facilitate the collection of visitor browsing data on such
customer’s Web site(s). These technologies help us to
aggregate and analyze the Web site usage patterns of visitors to
our customers’ Web sites. The use of third-party cookies
may be construed as obscure in the eyes of the public or
governmental agencies, including
non-U.S. regulators.
We encourage our customers to send our cookies from their own
Web sites and, when they are unwilling to do so, we mark all
newly implemented third-party cookies with their dual origin to
indicate that they are both from our customer’s Web site
and from us. However, we cannot assure you that these measures
will succeed in reducing any risks relating to the use of
third-party cookies.
Most currently available Web browsers allow site visitors to
modify their settings to prevent or delete cookies.
Additionally, widely available software allows site visitors to
sweep all cookies from their computers at once. Similarly,
several software programs, sometimes marketed as ad-ware or
spyware detectors, may misclassify the cookies our customers are
using as objectionable and prompt site visitors to delete or
block them. Several of these
47
same software programs may target the use of clear GIFs. If a
large number of site visitors refuse, disable or delete their
cookies or clear GIFs or if we are otherwise unable to use
cookies or clear GIFs, and if alternative methods or
technologies are not developed in a timely manner, the quality
of the data we collect for our customers and the value of our
services based on that data may be substantially diminished.
We
interact with consumers through our customers, so we may be held
accountable for our customers’ handling of the
consumers’ personal information.
On behalf of our customers, we collect and use anonymous and
personal information and information derived from the activities
of Web site visitors. This enables us to provide our customers
with reports on aggregated anonymous or personal information
from and about the visitors to their Web sites in the manner
specifically directed by such customers. Federal, state and
foreign government bodies and agencies have adopted or are
considering adopting laws regarding the collection, use and
disclosure of this information. Therefore our compliance with
privacy laws and regulations and our reputation among the public
body of Web site visitors depend on our customers’
adherence to privacy laws and regulations and their use of our
services in ways consistent with consumers’ expectations.
We also rely on representations made to us by our customers that
their own use of our services and the information we provide to
them via our services do not violate any applicable privacy
laws, rules and regulations or their own privacy policies. Our
customers also represent to us that they provide their Web site
visitors the opportunity to “opt-out” of the
information collection associated with our services. We do not
regularly and formally audit our customers to confirm compliance
with these representations. If these representations are false
or if our customers do not otherwise comply with applicable
privacy laws, we could face potentially adverse publicity and
possible legal or other regulatory action.
Domestic
or foreign laws or regulations may limit our ability to collect
and use Web site visitor information, resulting in a decrease in
the value of our services and having an adverse impact on the
sales of our services.
State attorneys general, governmental and non-governmental
entities and private persons may bring legal actions asserting
that our methods of collecting, using and distributing Web site
visitor information are illegal or improper, which could require
us to spend significant time and resources defending these
claims. The costs of compliance with, and the other burdens
imposed by, laws or regulatory actions may prevent us from
offering services or otherwise limit the growth of our services.
In addition, some companies have been the subject of
class-action
lawsuits and governmental investigations based on their
collection, use and distribution of Web site visitor
information. Any such legal action, even if unsuccessful, may
distract our management’s attention, divert our resources,
negatively affect our public image and harm our business.
Various state legislatures have enacted legislation designed to
protect consumers’ privacy by prohibiting the distribution
of “spyware” over the Internet. Such anti-spyware laws
typically focus on restricting the proliferation of certain
kinds of downloadable software, or spyware, that, when installed
on an end user’s computer, are used to intentionally and
deceptively take control of the end user’s machine. We do
not believe that the data collection methods employed by our
technology constitute “spyware” or that such methods
are prohibited by such legislation. Similar legislation has been
proposed federally. This legislation, if drafted broadly enough,
could be deemed to apply to the technology we use and could
potentially restrict our information collection methods. Any
restriction or change to our information collection methods
would cause us to expend substantial resources to make changes
and could decrease the amount and utility of the information
that we collect.
Both existing and proposed laws regulate and restrict the
collection and use of information over the Internet that
personally identifies the Web site visitor. These laws continue
to change and vary among domestic and foreign jurisdictions, but
certain information such as names, addresses, telephone numbers,
credit card numbers and
e-mail
addresses are widely considered personally identifying. The
scope of information collected over the Internet that is
considered personally identifying may become more expansive, and
it is possible that current and future legislation may apply to
information that our customers currently collect without the
explicit consent of Web site visitors. If information that our
customers collect and use without explicit consent is considered
to be personally identifying,
48
their ability to collect and use this information will be
restricted and they would have to change their methods, which
could lead to decreased use of our services.
Domestic and foreign governments are also considering
restricting the collection and use of Internet usage data
generally. Some privacy advocates argue that even anonymous
data, individually or when aggregated, may reveal too much
information about Web site visitors. If governmental authorities
were to enact laws that limit data collection practices, our
customers would likely have to obtain the express consent of a
visitor to its Web sites before it could collect, share or use
any of that visitor’s information in connection with our
services. Any requirement that a customer must obtain consent
from its Web site visitors would reduce the amount and value of
the information that we provide to customers, which might cause
some existing customers to discontinue using our services. We
would also need to expend considerable effort and resources to
develop new information collection procedures to comply with an
express consent requirement. Even if our customers succeeded in
developing new procedures, they might be unable to convince
their Web site visitors to agree to the collection and use of
such visitors’ information. This could negatively impact
our revenues, growth and potential for expanding our business.
We may
face liability for the unauthorized disclosure or theft of
private information, which could expose us to liabilities and
harm our stock price.
Unauthorized disclosure of personally identifiable information
regarding Web site visitors, whether through breach of our
secure network by an unauthorized party, employee theft or
misuse, or otherwise, could harm our business. If there were
even an inadvertent disclosure of personally identifiable
information, or if a third party were to gain unauthorized
access to the personally identifiable information we possess,
our operations could be seriously disrupted, our reputation
could be harmed and we could be subject to claims (including
claims for substantial liquidated damages) pursuant to our
agreements with our customers or other liabilities. In addition,
if a person penetrates our network security or otherwise
misappropriates data, we could be subject to liability. Such
perceived or actual unauthorized disclosure of the information
we collect or breach of our security could harm our business.
We may
face public relations problems as a result of violations of
privacy laws and perceived mistreatment of personal information,
and these public relations problems may harm our reputation and
thereby lead to a reduction in customers and lower
revenues.
Any perception of our practices as an invasion of privacy,
whether or not illegal, may subject us to public criticism.
Existing and potential future privacy laws and increasing
sensitivity of consumers to unauthorized disclosures and use of
personal information may create negative public reactions
related to our business practices. Public concerns regarding
data collection, privacy and security may cause some Web site
visitors to be less likely to visit Web sites that subscribe to
our services. If enough visitors choose not to visit our
customers’ Web sites, our ability to collect sufficient
amounts of information and provide our services effectively
would be adversely affected, and those Web sites could stop
using our services. This, in turn, could reduce the value of our
services and inhibit the growth of our business.
Internet-related
and other laws could adversely affect our
business.
Laws and regulations that apply to communications and commerce
over the Internet are becoming more prevalent. In particular,
the growth and development of the market for online commerce has
prompted calls for more stringent tax, consumer protection and
privacy laws, both in the United States and abroad, that may
impose additional burdens on companies conducting business
online. This could negatively affect the businesses of our
customers and reduce their demand for our services.
Internet-related laws, however, remain largely unsettled, even
in areas where there has been some legislative action. The
adoption or modification of laws or regulations relating to the
Internet or our operations, or interpretations of existing law,
could adversely affect our business.
49
Risks
Related to the Securities Markets and Ownership of Our Common
Stock
The
trading price of our common stock may be subject to significant
fluctuations and volatility, and our stockholders may be unable
to resell their shares at a profit.
The stock markets, in general, and the markets for high
technology stocks in particular, have experienced high levels of
volatility. The market for technology stocks has been extremely
volatile and frequently reaches levels that bear no relationship
to the past or present operating performance of those companies.
These broad market fluctuations have in the past and may in the
future adversely affect the trading price of our common stock.
In addition, the trading price of our common stock has been
subject to significant fluctuations and may continue to
fluctuate or decline. Since our initial public offering, which
was completed in July 2006, the price of our common stock has
ranged from an
intra-day
low of $5.60 to an
intra-day
high of $38.57 through February 23, 2009. Factors that
could cause fluctuations in the trading price of our common
stock include the following:
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•
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price and volume fluctuations in the overall stock market from
time to time;
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•
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significant volatility in the market price and trading volume of
technology companies in general, and companies in our industry;
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•
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macroeconomic trends and developments, including the current
economic downturn and uncertainty in the financial markets;
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•
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actual or anticipated changes in our results of operations or
fluctuations in our operating results;
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•
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actual or anticipated changes in the expectations of investors
or securities analysts, including changes in financial estimates
or investment recommendations by securities analysts who follow
our business;
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•
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speculation in the press or investment community;
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•
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technological advances or introduction of new products by us or
our competitors;
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•
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actual or anticipated developments in our competitors’
businesses or the competitive landscape generally;
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•
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litigation involving us, our industry or both;
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•
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regulatory developments in the United States, foreign countries
or both;
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•
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major catastrophic events;
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•
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our sale of common stock or other securities in the future;
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•
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the trading volume of our common stock, as well as sales of
large blocks of our stock; or
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•
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departures of key personnel.
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These factors, as well as the announcement of proposed and
completed acquisitions or other significant transactions, or any
difficulties associated with such transactions, by us or our
strategic partners, customers or our current competitors, may
materially adversely affect the market price of our common stock
in the future. In the past, following periods of volatility in
the market price of a company’s securities, securities
class action litigation has often been instituted against that
company. Such litigation could result in substantial cost and a
diversion of management’s attention and resources. In
addition, volatility, lack of positive performance in our stock
price or changes to our overall compensation program, including
our equity incentive program, may adversely affect our ability
to retain key employees.
If
securities analysts stop publishing research or reports about
our business, or if they downgrade our stock, the price of our
stock could decline.
The trading market for our common stock relies in part on the
research and reports that industry or financial analysts publish
about us. We do not control these analysts. If one or more of
the analysts who do cover us downgrade our stock, our stock
price would likely decline. Further, if one or more of these
analysts cease coverage of our company, we could lose visibility
in the market, which in turn could cause our stock price to
decline.
50
The
concentration of our capital stock ownership with insiders will
likely limit your ability to influence the outcome of key
transactions, including a change of control.
Our executive officers, directors, five percent or greater
stockholders and affiliated entities together beneficially own a
substantial amount of the outstanding shares of our common
stock. As a result, these stockholders, if acting together,
would be able to exert significant influence over most matters
requiring approval by our stockholders, including the election
of directors and the approval of significant corporate
transactions, even if other stockholders oppose them. This
concentration of ownership may have the effect of delaying,
preventing or deterring a change of control of our company that
other stockholders may view as beneficial, could deprive our
stockholders of an opportunity to receive a premium for their
common stock as part of a sale of our company and might
ultimately affect the market price of our common stock.
Provisions
in our certificate of incorporation and bylaws under Delaware
law might discourage, delay or prevent a change of control of
our company or changes in our management and, therefore, depress
the trading price of our common stock.
Our certificate of incorporation and bylaws contain provisions
that could depress the trading price of our common stock by
acting to discourage, delay or prevent a change of control of
our company or changes in our management that the stockholders
of our company may deem advantageous. These provisions:
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•
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establish a classified Board of Directors so that not all
members of our Board of Directors are elected at one time;
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•
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authorize the issuance of “blank check” preferred
stock that our Board of Directors could issue to increase the
number of outstanding shares to discourage a takeover attempt;
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•
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prohibit stockholder action by written consent, which requires
all stockholder actions to be taken at a meeting of our
stockholders;
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•
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prohibit stockholders from calling a special meeting of our
stockholders;
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•
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provide that our Board of Directors is expressly authorized to
make, alter or repeal our bylaws; and
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•
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establish advance notice requirements for nominations for
elections to our Board of Directors or for proposing matters
that can be acted upon by stockholders at stockholder meetings.
|
Additionally, we are subject to Section 203 of the Delaware
General Corporation Law, which generally prohibits a Delaware
corporation from engaging in any of a broad range of business
combinations with any “interested” stockholder for a
period of three years following the date on which the
stockholder became an “interested” stockholder and
which may discourage, delay or prevent a change of control of
our company.
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ITEM 1B
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Unresolved
Staff Comments
|
None.
Our executive offices and principal office for domestic
marketing, sales and development occupy approximately
135,000 square feet in Orem, Utah under leases that expire
in 2011. As a result of our acquisition of Visual Sciences, we
also lease approximately 61,000 square feet of office space
located in San Diego, California under a lease that expires
in January 2013, of which we currently occupy approximately
42,000 square feet for sales, development and professional
services personnel. We sublease the unused space at such
facility under a sublease which expires in January 2013. In
connection with our acquisitions of Offermatica and Visual
Sciences, we consolidated our combined Northern California
operations in office space in San Francisco, California for
sales, development and professional services personnel under a
lease for 35,000 square feet that expires in 2013. We also
lease office space in various other locations throughout the
United States for sales and professional services personnel. Our
foreign subsidiaries lease office space for their operations and
sales and professional services personnel. We consider our
facilities to be both suitable and adequate to provide for our
current and near-term
51
requirements. If we require additional space, we believe that we
will be able to obtain this space on commercially reasonable
terms.
We also operate third-party data centers in the United States,
Europe and Australia pursuant to various lease agreements and
co-location arrangements.
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ITEM 3.
|
Legal
Proceedings
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Generally, we are involved in various legal proceedings arising
from the normal course of business activities. In accordance
with SFAS No. 5,
Accounting Contingencies
, we
make a provision for liability when it is both probable that the
liability has been incurred and the amount of the loss can be
reasonably estimated. We conduct quarterly reviews of any legal
proceedings in which we are involved to determine the impacts of
negotiations, settlements, rulings, advice of legal counsel, and
other information and events pertaining to a particular case to
assess whether any provisions are required to reflect the
impacts. We do not believe that ultimate disposition of these
matters will have a material adverse impact on our consolidated
results of operations, cash flows or financial position.
However, litigation is inherently unpredictable, and depending
on the amount and timing, an unfavorable resolution of a matter
could materially affect our future results of operations, cash
flows or financial position in a particular period. See risk
factors “
If a third party asserts that we are infringing
its intellectual property, whether successful or not, it could
subject us to costly and time-consuming litigation or expensive
licenses, and our business may be harmed
” and
“
The success of our business depends in large part on
our ability to protect and enforce our intellectual property
rights
” in Item 1A of this annual report on
Form 10-K.
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ITEM 4.
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Submission
of Matters to a Vote of Security Holders
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None.
PART II
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ITEM 5.
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Market
for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
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Market
Information for Common Stock
Our common stock was listed on the Nasdaq Global Market under
the symbol “OMTR” from the date of our initial public
offering on June 28, 2006 until January 2, 2009. Since
January 2, 2009, our common stock has been listed on the
Nasdaq Global Select Market under the symbol “OMTR.”
Prior to June 28, 2006, there was no public market for our
common stock.
The following table sets forth for the indicated periods the
high and low sales prices of our common stock as reported by the
Nasdaq Global Market.
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High
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Low
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Fiscal year ended December 31, 2008:
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First quarter
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$
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33.92
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$
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19.07
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Second quarter
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26.85
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18.42
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Third quarter
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23.00
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16.30
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Fourth quarter
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18.30
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7.15
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Fiscal year ended December 31, 2007:
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First quarter
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$
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18.75
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$
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13.25
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Second quarter
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24.26
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15.50
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Third quarter
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31.43
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20.20
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Fourth quarter
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38.57
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25.54
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52
Dividends
We have never declared nor paid cash dividends on our common
stock. We currently expect to retain future earnings, if any, to
finance the operation and expansion of our business, and we do
not anticipate paying any cash dividends in the foreseeable
future. Any future determination related to our dividend policy
will be made at the discretion of our Board of Directors.
Stockholders
As of February 23, 2009, there were 76,014,502 shares
of our common stock outstanding held by approximately 310
stockholders of record, including the Depository
Trust Company, which holds shares of our common stock on
behalf of an indeterminate number of beneficial owners.
Stock
Performance Graph and Cumulative Total Return
Notwithstanding any statement to the contrary in any of our
previous or future filings with the SEC, the following
information relating to the price performance of our common
stock shall not be deemed to be “filed” with the SEC
or to be “soliciting material” under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, and it
shall not be deemed to be incorporated by reference into any of
our filings under the Securities Act or the Exchange Act, except
to the extent we specifically incorporate it by reference into
such filing.
The following graph shows a comparison from June 28, 2006
(the date our common stock commenced trading on the Nasdaq
Global Market) through December 31, 2008 of the cumulative
total return for our common stock, the Nasdaq Composite Index
and the Nasdaq Computer Index. Data for the Nasdaq Composite
Index and the Nasdaq Computer Index assume reinvestment of
dividends. The comparisons in this graph below are based on
historical data and are not intended to forecast or be
indicative of future performance of our common stock.
COMPARISON
OF 30 MONTH CUMULATIVE TOTAL RETURN*
among Omniture, Inc, The Nasdaq Composite Index
and The Nasdaq Computer Index
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*
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$100 invested on June 28, 2006
in stock or May 31, 2006 in index-including reinvestment of
dividends. Fiscal year ending December 31.
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The stock price performance included in this graph is not
necessarily indicative of future stock price performance.
53
Trading
Plans
Our Insider Trading Policy permits directors, officers and other
employees covered under the policy to establish, subject to
certain conditions and limitations set forth in the policy,
written trading plans which are intended to comply with
Rule 10b5-1
under the Securities Exchange Act, which permit automatic
trading of common stock of Omniture, Inc. or trading of common
stock by an independent person (such as a stockbroker) who is
not aware of material, nonpublic information at the time of the
trade. We are aware that certain of our directors and officers
have entered into written trading plans, and we believe our
directors and officers may establish such plans in the future.
Stock
Repurchases
During the three months ended December 31, 2008, we
repurchased the following shares of common stock in connection
with certain employee restricted stock awards issued under the
WebSideStory, Inc. 2004 Equity Incentive Award Plan that we
assumed in connection with our acquisition of Visual Sciences:
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Total
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Total Number of Shares
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Maximum Number of
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Number of
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Average
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Purchased as Part of
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Shares that May Yet
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Shares
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Price Paid
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Publicly Announced
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Be Purchased under
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Period
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Purchased
(1)
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per Share
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Plans or Programs
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the Plans or Programs
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October 1 - October 31, 2008
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—
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$
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—
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|
—
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—
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November 1 - November 30, 2008
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2,626
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4.44
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|
—
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—
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December 1 - December 31, 2008
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1,791
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|
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12.29
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|
|
—
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—
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Total
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4,417
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$
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7.62
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(1)
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The shares included in the table
above were repurchased either in connection with (i) our
exercise of the repurchase right afforded to us in connection
with certain employee restricted stock awards or (ii) the
forfeiture of shares by an employee as payment of the minimum
statutory withholding taxes due upon the vesting of certain
employee restricted stock awards.
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The shares repurchased in connection with our exercise of the
repurchase right afforded to us upon the cessation of employment
of employees holding unvested restricted stock awards were
repurchased at the original purchase price of $0.002 per share.
For the three months ended on December 31, 2008, these
shares consisted of 1,284 shares purchased in November.
There were no shares purchased from outstanding restricted stock
awards in October or December.
The shares we repurchased in connection with the payment of
minimum statutory withholding taxes due upon the vesting of
certain restricted stock awards were repurchased at the then
current fair market value of the shares. For the three months
ended December 31, 2008, these shares consisted of the
following:
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Total Number
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Average
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of Shares
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Price Paid
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Period
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Purchased
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per Share
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|
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October 1 - October 31, 2008
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|
—
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$
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—
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November 1 - November 30, 2008
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|
1,342
|
|
|
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8.69
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December 1 - December 31, 2008
|
|
|
1,791
|
|
|
|
12.29
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|
|
|
|
|
|
|
|
|
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Total
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3,133
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|
$
|
10.75
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For the majority of the restricted stock units that vested
during the three months ended on December 31, 2008, the
shares issued at the time of vesting were net of the shares
forfeited by the employee to cover the employee’s minimum
statutory withholding taxes due upon vesting. These forfeited
shares are not included within the tables above.
54
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ITEM 6.
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Selected
Financial Data
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We present below our selected consolidated financial data. The
selected consolidated statement of operations data for the years
ended December 31, 2006, 2007 and 2008 and the selected
consolidated balance sheet data at December 31, 2007 and
2008 have been derived from our audited consolidated financial
statements included elsewhere in this annual report on
Form 10-K.
The selected consolidated statement of operations data for the
years ended December 31, 2004 and 2005 and the selected
consolidated balance sheet data at December 31, 2004, 2005
and 2006 have been derived from our audited consolidated
financial statements not included in this annual report on
Form 10-K.
You should read this information together with
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our consolidated
financial statements and related notes, each included elsewhere
in this annual report on
Form 10-K.
Our historical results are not necessarily indicative of the
results to be expected in any future period.
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Year Ended December 31,
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2004
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2005
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2006
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2007
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2008
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(In thousands, except per share data)
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Total revenues
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$
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20,566
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$
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42,804
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$
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79,749
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$
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143,127
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$
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295,613
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Net loss
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(1,318
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)
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(17,441
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)
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(7,725
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)
(1)
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(9,429
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)
(1)
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(44,766
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)
(1)
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Net loss per share, diluted
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$
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(0.10
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$
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(1.27
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)
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$
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(0.25
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)
(1)
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$
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(0.18
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)
(1)
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$
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(0.63
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)
(1)
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Weighted-average number of shares
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13,094
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13,694
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30,332
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53,710
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71,458
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Cash, cash equivalents and short-term investments
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$
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8,927
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$
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22,196
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$
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68,287
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(2)
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$
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134,689
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(3)
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$
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77,017
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Working (deficit) capital
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(1,422
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)
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1,191
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52,028
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(2)
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120,033
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(3)
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41,860
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Total assets
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32,768
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73,051
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135,210
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(2)
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370,723
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(3)(4)
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842,200
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(5)
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Total long-term obligations, including current
portion
(6)
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9,028
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5,992
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10,191
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7,774
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15,374
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Convertible preferred stock
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22,770
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61,882
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—
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(7)
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—
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—
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Total stockholders’ (deficit) equity
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$
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(13,413
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)
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$
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(30,266
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)
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$
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86,425
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(2)
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$
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291,075
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(3)
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$
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657,568
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(5)
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(1)
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As a result of adopting SFAS No. 123R on
January 1, 2006, our net loss for 2006, 2007 and 2008 was
$1.8 million, $11.1 million and $19.5 million,
respectively, greater than if we had continued to account for
stock-based compensation under the previous accounting rules.
Our diluted net loss per share for 2006, 2007 and 2008 was
$0.06, $0.21 and $0.27, respectively, greater than if we had
continued to account for stock-based compensation under the
previous accounting rules. Because we adopted
SFAS No. 123R using the prospective transition method,
we applied its provisions only to stock awards granted,
modified, repurchased or cancelled on or after the effective
date.
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(2)
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Cash and cash equivalents, working capital, total assets and
total stockholders’ (deficit) equity increased in 2006
primarily due to the net cash proceeds of $59.2 million,
after deducting underwriting discounts, commissions and offering
expenses, from our initial public offering in July 2006.
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(3)
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Cash, cash equivalents and short-term investments, working
capital, total assets and stockholders’ equity increased in
2007 primarily due to the net cash proceeds of
$142.2 million, after deducting underwriting discounts,
commissions and offering expenses, from our common stock
offering in June 2007.
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(4)
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Total assets increased in 2007 primarily as a result of the
acquisitions of Instadia, Touch Clarity and Offermatica.
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(5)
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Total assets and stockholders’ equity increased in 2008
primarily as a result of the acquisition of Visual Sciences.
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(6)
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Total long-term obligations, including current portion consist
of notes payable and capital lease obligations.
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(7)
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In 2006, the entire balance of convertible preferred stock was
reclassified to stockholders’ (deficit) equity due to the
automatic conversion of the outstanding shares of convertible
preferred stock to common stock upon the closing of our initial
public offering in July 2006.
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55
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ITEM 7.
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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The following Management’s Discussion and Analysis of
Financial Condition and Results of Operations should be read in
conjunction with our Consolidated Financial Statements and
related Notes included in Part II. Item 8 of this
annual report on
Form 10-K.
This discussion contains forward-looking statements based on
current expectations that involve risks and uncertainties, such
as our plans, objectives, expectations and intentions, as set
forth under “Cautionary Note Regarding Forward-Looking
Statements.” Our actual results and the timing of events
could differ materially from those anticipated in these
forward-looking statements as a result of various factors,
including those set forth in the following discussion and in
Part I. Item 1A “Risk Factors” and elsewhere
in this annual report on
Form 10-K.
Unless otherwise indicated, all references to a year reflect our
fiscal year that ended on December 31, 2008.
Overview
We are a leading provider of online business optimization
products and services, which we deliver through the Omniture
Online Marketing Suite. Our customers use our products and
services to manage and enhance online, offline and multi-channel
business initiatives. The Omniture Online Marketing Suite, which
we host and deliver to our customers on-demand and provide as an
on-premise solution, consists of our Open Business Analytics
Platform and our integrated set of optimization applications for
online analytics, channel analytics, visitor acquisition and
conversion. Our Open Business Analytics Platform, the foundation
of the Omniture Online Marketing Suite, includes the Omniture
DataWarehouse, which contains the information captured by
Omniture SiteCatalyst, our core product offering, and our other
products and services. The platform also includes the Omniture
Genesis application programming interfaces, or APIs, to
integrate and augment this data with relevant data from Internet
and enterprise applications and data from a number of online and
offline channels to enable business optimization. Our online
analytics applications are Omniture SiteCatalyst and Omniture
Discover and our channel analytics applications are Omniture
Discover OnPremise and Omniture Discover OnPremise for Retail.
Our visitor acquisition application is Omniture SearchCenter and
conversion applications include: Omniture Test&Target,
Omniture Recommendations, Omniture SiteSearch, Omniture Survey
and Omniture Merchandising. These services, built on a scalable
and flexible computing architecture, enable our customers to
capture, store and analyze information generated by their Web
sites and other sources and to gain critical business insights
into the performance and efficiency of marketing and sales
initiatives and other business processes. This information is
also utilized to automate the delivery of content and marketing
offers on a Web site and test site design and navigational
elements to optimize the user experience and revenue
opportunities for our customers. Our services provide customers
with real-time access to online business information, the
ability to generate flexible reports using real-time and
historical data and the ability to measure, automate and
optimize critical online processes. Our services, accessed
primarily by a Web browser, reduce the need for our customers to
make upfront investments in technology, implementation services
or additional IT personnel, thereby increasing our
customers’ flexibility in allocating their IT capital
investments.
We were founded in 1996, began offering our on-demand online
business optimization services in 1997 and began offering these
services to large enterprise customers in 2001. We have
experienced significant growth over the past three years. Our
total revenues grew from $79.7 million in 2006, to
$143.1 million in 2007 and to $295.6 million in 2008.
Our total cost of revenues and total operating expenses
increased from $87.9 million in 2006, to
$156.4 million in 2007 and to $338.8 million in 2008.
Our net loss increased from $7.7 million in 2006, to
$9.4 million in 2007 and to $44.8 million in 2008. We
sell our products and services through direct sales efforts and
indirectly through resellers. Substantially all of our revenues
are derived from subscription, license and maintenance fees,
which represented approximately 94% of total revenues in 2006,
92% of total revenues in 2007 and 90% of total revenues in 2008.
We provide our online business optimization products and
services to businesses in 91 countries. During 2008, our
products and services captured approximately 3.7 trillion
transactions for over 5,100 customers worldwide compared to 2.2
trillion transactions for approximately 3,000 customers in 2007.
Our future revenue growth will depend on our ability to attract
new customers, to retain our customers over time and to sell
additional products and services to our installed Omniture
SiteCatalyst customer base. In addition to these factors that
will impact our revenue growth, our profitability will be
affected by our ability to realize
56
economies of scale as our business grows, the amount of
stock-based compensation expense we must record related to
future stock-based awards and the amount of amortization expense
associated with future intangible asset acquisitions. The
delivery of our services requires us to make significant upfront
capital expenditures to support the network infrastructure needs
of our services. We typically depreciate our network
infrastructure equipment over a period of approximately four
years, and we begin to include the depreciation amount in our
cost of subscription revenues promptly after making the
expenditures. During 2007, we began leasing a portion of our
network infrastructure equipment requirements under operating
leases, which require us to begin making lease payments and
begin recording lease expense immediately upon receipt of the
equipment. We generally recognize revenue from our customers
ratably over the contractual service period but only after we
begin to provide our services to them. As a result, any delays
we encounter in the implementation of our services to our
customers will impact our ability to start recognizing revenue
and to begin to offset the depreciation and lease costs
resulting from the upfront expenditures for capital equipment
and acquisitions under operating leases. These delays will also
defer the collection of cash necessary to begin offsetting the
expenditures.
Those few customers that contract for the measurement of the
highest numbers of transactions generally require us to make
more significant upfront capital expenditures and more prolonged
implementation cycles. In addition, we typically provide
customers that commit to a higher number of transactions with
lower per transaction pricing, which results in lower gross
margins for revenues from those customers. These factors
together further delay the profitability and positive cash-flow
realization from these large customers.
Historically, most of our revenues have resulted from the sale
of our services to companies located in the U.S. During 2007, we
acquired two European-based companies, in part due to our
strategy to expand our international sales operations by growing
our direct sales force abroad. Additionally, during 2008, we
acquired Visual Sciences and certain assets of Mercado, both of
which had significant European operations. We have also
utilized, and intend to continue utilizing, resellers and other
sales channel relationships with third parties, to expand our
international sales operations. As a result of these efforts,
our revenues from customers outside of the U.S. increased from
17% of total revenues in 2006, to 26% of total revenues in 2007
and to 28% of total 2008 revenues.
We experience seasonality in our contracting activity.
Historically, a significant percentage of our customers have
entered into or renewed subscription services agreements in the
fourth quarter. Also, a significant percentage of our customer
agreements within a given quarter are entered into during the
last month, weeks or days of the quarter.
Recent
Acquisition Activity
Acquisition
of Visual Sciences
On January 17, 2008, we acquired all of the outstanding
voting stock of Visual Sciences, a provider of on-demand Web
analytics applications. The acquisition was accounted for under
the purchase method of accounting. We purchased Visual Sciences
to acquire its existing customer base, key personnel and
technology. The results of operations of Visual Sciences are
included in our results of operations from the acquisition date.
Under the terms of the acquisition, each outstanding share of
Visual Sciences capital stock was converted into 0.49 of a share
of our common stock and $2.39 in cash. In connection with the
acquisition, options to purchase Visual Sciences common stock
outstanding at the time of closing were assumed by us and
converted into options to purchase shares of our common stock,
based on an option exchange ratio pursuant to the terms of the
definitive agreement.
The preliminary aggregate purchase price was approximately
$447.2 million, which consisted of (1) the issuance of
approximately 10.3 million shares of our common stock upon
closing of the acquisition, valued at approximately
$354.8 million, net of issuance costs, (2) cash
consideration of approximately $50.1 million, (3) the
fair value of assumed Visual Sciences stock options,
(4) acquisition-related costs, (5) restructuring costs
of approximately $7.4 million and (6) a license
payment of approximately $2.3 million to NetRatings in
accordance with a settlement and patent cross-license agreement
entered into by Visual Sciences with NetRatings in August 2007.
57
Mercado
Search and Merchandising Asset Acquisition
On November 5, 2008, we acquired certain assets, including
intellectual property and other business assets, of Mercado, a
leading search and merchandising solution provider, for
approximately $8.6 million, which consisted of
(1) cash consideration of approximately $6.6 million
paid upon closing of the acquisition, (2) restructuring
charges and (3) acquisition-related costs. The results of
operations of Mercado are included in our results of operations
beginning from the acquisition date.
How We
Generate Revenues
Our revenues are classified into two categories:
(1) subscription, license and maintenance revenues and
(2) professional services and other revenues. Subscription,
license and maintenance revenues accounted for 94% of total
revenues for 2006, 92% of total revenues for 2007 and 90% of
total 2008 revenues.
Subscription,
License and Maintenance Revenues
We derive subscription, license and maintenance revenues
primarily from customers that use our online business
optimization services. We generally bill for our Omniture
SiteCatalyst and Omniture Discover subscription fees based on a
committed minimum number of transactions from which we capture
data over a predetermined period. We generally consider a
transaction to be any electronic interaction, which could be
either online or offline, between our customer and its customer
that generates data which is incorporated into our optimization
suite. Most of our customer contracts provide for additional
fees for over-usage based on the number of transactions in
excess of the committed minimum numbers. In addition, we
generally charge an annual fee for Omniture Discover, based on
the number of users of these subscription services. We bill a
limited number of large customers based on actual transactions
from which we capture data during the billing period.
We generally bill customers for our Omniture SearchCenter
subscription services based on either a fixed percentage of our
customer’s monthly online advertising spending managed
through our Omniture SearchCenter services, or based on a
committed minimum number of bid reviews tracked on a monthly
basis. We generally consider a bid review to be each instance
where our Omniture SearchCenter services check or change a
customer’s bids on its keyword or product listing. Most of
our customer contracts provide for additional fees for bid
reviews in excess of a stated quantity during a month.
For our Omniture Test&Target subscription services, we
generally bill the targeting portion of these subscription fees
based on the number of campaign containers we manage for our
customers. We consider a campaign container to be any unique
location on a customer’s Web page for which the customer is
tracking data about a specific marketing campaign activity. We
generally bill the testing portion of our Omniture
Test&Target subscription services based on a committed
minimum number of daily visits to the customer’s Web page
that are tracked through our services. Most of our customer
contracts for Omniture Test&Target subscription services
provide for additional fees for transactions tracked in excess
of a specified quantity of transactions.
For our Omniture SiteSearch subscription services, we generally
bill based on the volume of indexed pages and server requests.
We consider an indexed page to be a customer’s Web page
included within a specific search and a server request to be any
call to our servers to carry out a search activity. Most of our
customer contracts for Omniture SiteSearch subscription services
allow us to charge additional fees for usage in excess of the
volume of server requests purchased.
We generally bill customers for our Omniture Merchandising
subscription services based on the number of queries and the
number of stock keeping units, or SKUs, managed on the
customer’s Web site. We consider a query to be any keyword
search, navigation action, or action resulting in a call to our
server and we consider a SKU to be the customer’s most
basic sellable unit. Most of our customer contracts for Omniture
Merchandising allow us to charge additional fees for usage in
excess of the purchased volume limit of queries.
We also derive subscription revenues from implementation fees
associated with the initial deployment of our services.
Implementation fees are generally billed as fixed fees per
service installation.
58
The volume of subscription revenues is driven primarily by the
number of customers and the number of transactions from which we
capture data. The terms of our service agreements are typically
from one to three years. We recognize subscription revenues
ratably over the term of the agreement, beginning on the
commencement of the service. Customers typically have the right
to terminate their contracts for cause if we fail to
substantially perform. Some of our customers also have the right
to cancel their service agreements by providing prior written
notice to us of their intent to cancel the remaining term of
their agreement. In the event that a customer cancels its
contract, it is not entitled to a refund for prior services
provided to it by us.
We invoice most customers monthly, quarterly or annually in
advance for subscription, license and maintenance fees and
implementation fees, while we invoice over-usage fees and actual
usage fees monthly in arrears. Amounts that have been invoiced
are recorded in accounts receivable and in deferred revenues, or
in revenues if all the revenue recognition criteria have been
met.
During 2008, we recognized approximately $2.2 million of
revenues from the sale of perpetual software licenses related to
our Omniture Discover OnPremise software, a software product
acquired in connection with our acquisition of Visual Sciences,
and our Omniture Merchandising software, a software product
acquired in connection with our acquisition of certain assets of
Mercado. Pricing of these perpetual software licenses is based
on a standard price list with volume and marketing related
discounts, and they are sold with the first year of
post-contract support services, installation and training. None
of our 2006 or 2007 revenues were derived from the sale of
software licenses.
Professional
Services and Other Revenues
Professional services and other revenues are primarily derived
from consulting and training services provided to our customers.
Depending on the nature of the engagement, consulting services
are billed either on a
time-and-materials
basis or as a single fee per engagement. We also offer a number
of training courses on implementing, using and administering our
services, which are generally billed at a standard rate per
attendee, per course.
Indirect
Sales
We sell our online business optimization services primarily
through direct sales efforts and through third parties that
resell our services to end users. We typically bill the reseller
directly for services we provide to end users, which is
generally a fixed percentage of the fee charged by the reseller
to the end user.
Cost of
Revenues and Operating Expenses
Cost
of Revenues
Cost of subscription, license and maintenance revenues consists
primarily of expenses related to operating our network
infrastructure, including depreciation expenses and operating
lease payments associated with computer equipment, data center
costs, salaries and related expenses of network operations,
implementation, account management and technical support
personnel, amortization of intangible assets and allocated
overhead. Cost of subscription, license and maintenance revenues
for 2008 included approximately $18.7 million in
amortization of intangible assets, comprised of existing and
core technology related to business acquisitions and certain
patent licenses. Absent any impairment, cost of subscription,
license and maintenance revenues will include $20.2 million
in annual amortization for 2009, with decreasing annual amounts
thereafter through March 31, 2014. We enter into contracts
with third parties for the use of their data center facilities,
and our data center costs largely consist of the amounts we pay
to these third parties for rack space, power and similar items.
Cost of professional services and other revenues consists
primarily of employee-related costs associated with these
services. We recognize costs related to professional services as
they are incurred. The cost of professional services and other
revenues is higher as a percentage of professional services and
other revenues than the cost of subscription revenues is as a
percentage of subscription revenues, due to the labor costs
associated with providing these services. We expect our cost of
professional services and other revenue to remain higher, as a
percentage of the related revenue, than the cost of subscription
revenues as a percentage of subscription revenues.
59
Operating
Expenses
Our operating expenses consist of sales and marketing expenses,
research and development expenses and general and administrative
expenses.
Sales and marketing expenses have historically been our largest
operating expense category. Sales and marketing expenses consist
primarily of salaries, benefits and related expenses for our
sales and marketing personnel, commissions, the costs of
marketing programs (including advertising, events, corporate
communications and other brand building and product marketing)
and allocated overhead. Sales and marketing expenses included
approximately $11.2 million in amortization of acquired
customer-related intangible assets for 2008 and will, absent any
impairment, also include approximately $11.7 million in
amortization of acquired customer-related intangible assets
annually for the years 2009 through 2012 and decreasing amounts
thereafter through March 31, 2017.
Research and development expenses consist primarily of salaries,
benefits and related expenses for our software engineering and
quality assurance personnel and allocated overhead.
General and administrative expenses consist primarily of
salaries, benefits and related expenses for our executive,
finance and accounting, legal, human resources and information
systems personnel, professional fees, other corporate expenses
and allocated overhead.
Allocated
Overhead Expenses
We allocate overhead such as rent and other occupancy costs,
telecommunications charges, enterprise systems costs and
non-network
related depreciation to all departments based on headcount. As a
result, general overhead expenses are reflected in each cost of
revenues and operating expense item.
Stock-based
Compensation Expenses
Our cost of revenues and operating expenses also include
stock-based compensation expenses related to the following:
(1) the fair value of stock-based awards issued to
employees and directors on or after January 1, 2006,
including unvested options and restricted stock awards, or RSAs,
assumed in connection with acquisitions; (2) stock options
issued to employees prior to 2006 in situations in which the
exercise price was less than the deemed fair value of our common
stock on the date of grant; and (3) stock options issued to
non-employees.
Trends in
Our Business
Our business has grown rapidly. Our total revenues
grew from $79.7 million in 2006, to $143.1 million in
2007 and to $295.6 million in 2008, representing an average
annual growth rate of approximately 91% over that time period.
This growth has been driven primarily by an expansion of our
customer base, including those customers obtained through the
various businesses we have acquired since the beginning of 2007,
coupled with increased subscription revenues from existing
customers. To date, we have derived a majority of our revenues
from subscription fees for Omniture SiteCatalyst and related
subscription services provided to customers in the United
States. We expect that revenues associated with our current and
future products and services other than Omniture SiteCatalyst
will continue to increase over time, both in absolute dollars
and as a percentage of our total revenues, due in part, to the
new technologies and services obtained through our acquisitions
of Touch Clarity, Offermatica and Visual Sciences, as well as
the acquisition of certain assets of Mercado. As a result, we
expect revenues generated by Omniture SiteCatalyst will continue
to decrease as a percentage of our total revenues.
We expect our total revenues to grow at a slower rate than our
average historical annual revenue growth rate. Due in part to
the current economic recession, some of our existing customers,
especially our smaller customers, have either reduced or
terminated their currently contracted services with us, or
notified us of their intent to do so upon expiration of their
current contract term. We expect that other of our existing
customers, especially our smaller customers, may either reduce
or terminate their currently contracted services with us upon
expiration of their current contract term, primarily due to the
uncertainty associated with the overall macroeconomic
environment in 2009. We also anticipate that our rate of new
business growth will slow in 2009 as some of our potential
customers decrease spending in an effort to reduce costs,
causing them to delay or defer purchasing decisions. A limited
60
number of our existing customers either ceased operations or
filed for bankruptcy during 2008, due to their inability to meet
their existing financial obligations. If the economy continues
to weaken, it could cause some of our customers to delay
payments for our services beyond the stated payment terms, and
in certain instances may require them to cease operations
altogether before paying for all of our services used by them.
We intend to continue to expand our international sales
operations and international distribution channels, and
accordingly, we expect that revenues from customers located
outside the United States will continue to increase as a
percentage of total revenues. Revenues from customers located
outside the United States have increased from 17% of total
revenues for 2006 to 26% of total revenues for 2007 and to 28%
of total 2008 revenues. We expect the percentage of total
revenues derived from our largest customers to further decrease
over time as a result of continued expansion of our customer
base. We also anticipate that the percentage of our total
revenues derived from indirect sales will continue to grow as a
percentage of our overall revenues, due to an increase in the
number of third parties reselling our services.
If our customer base continues to grow, it will be necessary for
us to continue to make significant upfront investments in the
network infrastructure equipment and implementation personnel
necessary to support this growth. The rate at which we add new
customers, along with the scale of new customer implementations,
will affect the level of these upfront investments. Our gross
margins increased from 60% for 2006 to 63% for 2007, primarily
due to more efficient utilization of our network hardware. Our
gross margins decreased to 57% for 2008, primarily due to the
adjustment to record the acquired Visual Sciences deferred
revenues at their fair value, increased amortization of acquired
intangible assets related to the Offermatica and Visual Sciences
acquisitions and increased stock-based compensation expense. The
negative effect on gross margins resulting from the adjustment
to the deferred revenue acquired from Visual Sciences will not
negatively impact gross margins after 2008.
During 2007, we began leasing a portion of our network
infrastructure equipment requirements under operating leases
provided by third-party financing sources. We leased equipment
under operating leases with total future minimum lease payments
of approximately $10.9 million during 2007 and
$7.7 million during 2008, and we expect to acquire
additional equipment under operating leases in the future.
Although we do not expect the use of operating leases to have a
significant impact on total cost of revenues, when compared to
the effect of purchasing this equipment, our capital
expenditures are reduced to the extent we utilize operating
leases.
The timing of additional capital expenditures and equipment
operating leases could materially affect our cost of revenues,
both in absolute dollars and as a percentage of revenues, in any
particular period. In addition, because we incur immediate
depreciation and lease expense from our significant upfront
network computer equipment requirements as new customers are
added, these customers are not immediately profitable. As a
result, our profitability can be significantly affected by the
timing of the addition of new customers, particularly customers
with large volume requirements. At least through March 31,
2014, our cost of revenues and our gross margin will also be
negatively affected by the amortization of the following
intangible assets: (1) the estimated fair value of the
patents licensed from NetRatings and (2) the intangible
assets directly related to our subscription service that were
acquired as part of our acquisitions of other businesses.
We have also experienced, and we expect to continue to
experience, increases in our operating expenses as we make
investments to support the anticipated growth of our customer
base. Our full-time employee headcount increased from 353 at
December 31, 2006, to 713 at December 31, 2007 and to
1,189 at December 31, 2008. We expect operating expenses to
continue to increase in absolute dollars, but to decline over
time as a percentage of total revenues, compared to the year
ended December 31, 2008, due to anticipated economies of
scale in our business support functions. We also expect our
future operating expenses to increase in absolute dollars due to
the incremental salaries, benefits and expenses related to the
addition of personnel from our acquisitions completed during
2008, along with any future acquisitions. We will continue to
assess our overall operating cost structure and employee
headcount growth in light of the changing macroeconomic
conditions, and as a result, we may choose to reduce the rate at
which we increase future operating expenses and headcount.
We currently plan to continue investing in sales and marketing
by increasing the number of direct sales personnel and the
number and type of indirect distribution channels, expanding our
domestic and international selling and marketing activities and
building brand awareness through advertising and sponsoring
additional marketing events. We will continue to assess the
level of our advertising and marketing programs during 2009 due
to
61
the changing macroeconomic environment, and as a result, may
choose to reduce the level of spending in these areas. We expect
that sales and marketing expenses will continue to increase in
absolute dollars and remain our largest operating expense
category. Generally, sales personnel are not immediately
productive and sales and marketing expenses do not immediately
result in revenues. This reduces short-term operating margins
until the salesperson becomes more fully utilized and revenues
can be recognized. We expect that at least through
March 31, 2017, sales and marketing expenses will be
negatively affected by the amortization of customer-related
intangible assets acquired as part of our acquisitions of other
businesses.
We expect research and development expenses to continue to
increase in absolute dollars as we continue to enhance our
existing products and services and to expand our available
product and service offerings. We also expect our future
research and development expenses to increase in absolute
dollars due to the incremental salaries, benefits and expenses
related to both the Visual Sciences acquisition, as well as the
acquisition of certain assets of Mercado.
We expect that general and administrative expenses will continue
to increase in absolute dollars as we add personnel and incur
additional expenses to support the growth of our business,
including our international expansion.
We expect stock-based compensation expenses to continue to
increase in absolute dollars primarily due to the stock-based
awards granted during 2008 and stock-based awards we expect to
grant in the future. Since the first quarter of 2006, we have
recorded stock-based compensation expense under the provisions
of Statement of Financial Accounting Standards, or SFAS,
No. 123R,
Share-Based Payment
, based on the fair
value of stock-based awards at the date of grant. The actual
amount of stock-based compensation expense we record in any
fiscal period will depend on a number of factors including: the
number of shares subject to the stock options issued, the fair
value of our common stock at the time of issuance and the
volatility of our stock price over time. At December 31,
2008, there was $54.3 million of total unrecognized
compensation cost related to unvested stock option awards
granted subsequent to the adoption of SFAS No. 123R
and $19.9 million of total unrecognized compensation cost
related to unvested restricted stock units, or RSUs, and RSAs.
These amounts of unrecognized compensation cost are equal to the
fair value of stock option awards and RSUs and RSAs expected to
vest. The unrecognized compensation cost related to unvested
stock option awards will be recognized over a weighted-average
period of 2.6 years and the unrecognized compensation cost
related to unvested RSUs and RSAs will be recognized over a
weighted-average period of 3.1 years.
In January 2008, we completed the acquisition of Visual Sciences
and in November 2008, we acquired certain assets of Mercado. In
the future, as part of our overall growth strategy, we expect to
acquire other businesses, products, services or technologies to
complement our Omniture Online Marketing Suite and accelerate
access to strategic markets. In January 2009, we entered into a
strategic partner relationship with WPP, under which both
companies will collaborate on technology development, on sharing
data and information and on consulting services. As part of our
overall growth strategy, we expect to enter into strategic
partner relationships with other companies.
During 2008, we utilized $23.4 million in net operating
loss carryforwards to reduce our provision for income taxes for
the year. We may utilize additional net operating loss
carryforwards to reduce our 2009 provision for income taxes. At
December 31, 2008, we had approximately $102.9 million
in net operating loss carryforwards for federal income tax
purposes, which will begin to expire in 2020, and approximately
$2.5 million in federal tax credit carryforwards, which
will begin to expire in 2020. These carryforwards will be
subject to annual limitations that result in their expiration
before some portion of them has been fully utilized. For fiscal
years beginning on or after January 1, 2008 through years
ending on December 31, 2009, the state of California
suspended the utilization of net operating loss carryforwards by
taxpayers to reduce their state income taxes. Despite the
potential availability of these net operating loss
carryforwards, we expect our income tax expense to increase in
absolute dollars, primarily due to income taxes in the foreign
jurisdictions in which we operate and because we will likely be
subject to alternative minimum tax for federal income tax
purposes.
62
Results
of Operations
The following table sets forth selected consolidated statement
of operations data as a percentage of total revenues for each of
the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription, license and maintenance
|
|
|
94
|
%
|
|
|
92
|
%
|
|
|
90
|
%
|
|
Professional services and other
|
|
|
6
|
|
|
|
8
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription, license and maintenance
|
|
|
36
|
|
|
|
32
|
|
|
|
38
|
|
|
Professional services and other
|
|
|
4
|
|
|
|
5
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
40
|
|
|
|
37
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
60
|
|
|
|
63
|
|
|
|
57
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
44
|
|
|
|
43
|
|
|
|
44
|
|
|
Research and development
|
|
|
11
|
|
|
|
12
|
|
|
|
12
|
|
|
General and administrative
|
|
|
15
|
|
|
|
17
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
70
|
|
|
|
72
|
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(10
|
)
|
|
|
(9
|
)
|
|
|
(15
|
)
|
|
Interest income
|
|
|
2
|
|
|
|
4
|
|
|
|
1
|
|
|
Interest expense
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Other expense, net
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(10
|
)
|
|
|
(6
|
)
|
|
|
(15
|
)
|
|
Provision for income taxes
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(10
|
)%
|
|
|
(7
|
)%
|
|
|
(15
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years
Ended December 31, 2006, 2007 and 2008
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
% Change
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2006 vs. 2007
|
|
|
2007 vs. 2008
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Subscription, license and maintenance
|
|
$
|
74,580
|
|
|
$
|
132,010
|
|
|
$
|
265,686
|
|
|
|
77
|
%
|
|
|
101
|
%
|
|
Professional services and other
|
|
|
5,169
|
|
|
|
11,117
|
|
|
|
29,927
|
|
|
|
115
|
|
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
79,749
|
|
|
$
|
143,127
|
|
|
$
|
295,613
|
|
|
|
79
|
|
|
|
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription, license and maintenance revenues increased
$133.7 million from 2007 to 2008 and $57.4 million
from 2006 to 2007, primarily due to the growth in the number of
customers for our subscription services, including the customers
acquired in connection with business acquisitions, as well as
greater revenues from existing customers as they increased the
number of transactions from which we captured data and the
number of services that they contracted to use. Professional
services and other revenues increased $18.8 million from
2007 to 2008 and $5.9 million from 2006 to 2007, primarily
due to the growth in our consulting and training services,
resulting from an increase in the number of customers for our
subscription services, including the customers acquired in
63
connection with business acquisitions, and additional staffing
available to provide consulting and training services to support
increased customer demand.
The following table sets forth revenues from customers within
and outside the U.S. (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Revenues from customers within the U.S.
|
|
$
|
66,468
|
|
|
$
|
106,258
|
|
|
$
|
213,212
|
|
|
Revenues from customers outside the U.S.
|
|
|
13,281
|
|
|
|
36,869
|
|
|
|
82,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
79,749
|
|
|
$
|
143,127
|
|
|
$
|
295,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from customers outside the U.S. as a percentage of
total revenues
|
|
|
17
|
%
|
|
|
26
|
%
|
|
|
28
|
%
|
Revenues from customers outside the U.S. grew from 17% of total
revenues in 2006 to 26% of total revenues in 2007 and to 28% of
total revenues in 2008, as a result of the international
customers acquired in connection with business acquisitions, our
ongoing efforts to expand the size of our sales force and to
increase the number of locations outside the U.S. where we
conduct business and to increase our international selling and
marketing activities. No single foreign country accounted for
more than 10% of total revenues in 2006, 2007 and 2008.
America Online and certain of its affiliated entities,
collectively, accounted for 11% of total revenues during 2006.
No other customer accounted for more than 10% of total revenues
during 2006 and no customer accounted for more than 10% of total
revenues during 2007 and 2008.
Cost
of Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
% Change
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2006 vs. 2007
|
|
|
2007 vs. 2008
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Subscription, license and maintenance
|
|
$
|
28,827
|
|
|
$
|
46,411
|
|
|
$
|
110,786
|
|
|
|
61
|
%
|
|
|
139
|
%
|
|
Professional services and other
|
|
|
2,999
|
|
|
|
6,953
|
|
|
|
15,154
|
|
|
|
132
|
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
$
|
31,826
|
|
|
$
|
53,364
|
|
|
$
|
125,940
|
|
|
|
68
|
|
|
|
136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth our cost of revenues as a percent
of related revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Subscription, license and maintenance
|
|
|
39
|
%
|
|
|
35
|
%
|
|
|
42
|
%
|
|
Professional services and other
|
|
|
58
|
|
|
|
63
|
|
|
|
51
|
|
Cost of subscription, license and maintenance revenues increased
$64.4 million from 2007 to 2008, primarily due to a
$16.6 million increase in employee salaries and benefits
and related costs principally resulting from increased staffing,
an $11.7 million increase in depreciation and operating
lease expense related to additional investment in our network
infrastructure hardware, a $12.2 million increase in
third-party data center costs associated with housing and
operating network hardware and a $1.8 million increase in
facility rent expenses, all necessary to support a larger
customer base and increases in the number of transactions from
which we capture data. The increased staffing was partly due to
the Touch Clarity, Offermatica, Visual Sciences and Mercado
acquisitions. The increase in cost of subscription, license and
maintenance revenue was also due to a $14.9 million
increase in amortization of the intangible assets acquired in
the Instadia, Touch Clarity, Offermatica, Visual Sciences and
Mercado acquisitions and a $2.7 million increase in
stock-based compensation.
Cost of subscription, license and maintenance revenues increased
$17.6 million from 2006 to 2007, primarily due to a
$5.6 million increase in employee salaries and benefits and
related costs, a $4.6 million increase in third-party data
center costs associated with housing and operating network
hardware and a $2.1 million increase in depreciation
related to additional investment in our network infrastructure
hardware, all necessary to support a larger customer base and
increases in the number of transactions from which we capture
data. The increase was also
64
partially due to $2.5 million in amortization of the
intangible assets acquired in the Instadia, Touch Clarity and
Offermatica acquisitions and a $1.3 million increase in
stock-based compensation.
Gross margin associated with subscription, license and
maintenance revenues was 61% in 2006, 65% in 2007, and 58% in
2008. The increase in gross margin for subscription, license and
maintenance revenues from 2006 to 2007 was primarily the result
of more efficient utilization of our network infrastructure. The
decline in gross margin associated with subscription, license
and maintenance revenues from 65% in 2007 to 58% in 2008 was
primarily due to the adjustment to record the acquired Visual
Sciences deferred revenues at their fair value, increased
amortization of acquired intangible assets related to the
Offermatica and Visual Sciences acquisitions and increased
stock-based compensation expense.
Cost of professional services and other revenues increased
$8.2 million from 2007 to 2008 and $4.0 million from
2006 to 2007, primarily due to increased headcount and related
costs to meet customer demand for consulting and training
services.
Gross margin associated with professional services increased
from 37% in 2007 to 49% in 2008, primarily due to higher
utilization of the professional services staff, as well as the
acquisition of Visual Sciences, as the Visual Sciences
professional services generally yield a higher gross margin than
we have attained historically. Gross margin associated with
professional services decreased from 42% in 2006 to 37% in 2007,
primarily due to the hiring of professional services personnel
to support the continued growth in our customer base that were
not immediately fully utilized and the timing of revenue
recognition on professional services engagements.
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
% Change
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2006 vs. 2007
|
|
|
2007 vs. 2008
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
$
|
35,227
|
|
|
$
|
61,610
|
|
|
$
|
129,814
|
|
|
|
75
|
%
|
|
|
111
|
%
|
|
Research and development
|
|
|
8,732
|
|
|
|
17,257
|
|
|
|
36,966
|
|
|
|
98
|
|
|
|
114
|
|
|
General and administrative
|
|
|
12,107
|
|
|
|
24,218
|
|
|
|
46,037
|
|
|
|
100
|
|
|
|
90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
56,066
|
|
|
$
|
103,085
|
|
|
$
|
212,817
|
|
|
|
84
|
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
Marketing
Sales and marketing expenses increased $68.2 million from
2007 to 2008, primarily due to a $28.3 million increase in
employee salaries and benefits and related costs, principally
resulting from increased staffing. The increased staffing was
partly due to the Touch Clarity, Offermatica, Visual Sciences
and Mercado acquisitions. The increase was also due to a
$10.1 million increase in amortization of the intangible
assets acquired in the Instadia, Touch Clarity, Offermatica and
Visual Sciences acquisitions, a $7.9 million increase in
commission costs due to increased staffing and revenues and a
$7.3 million increase in stock-based compensation expense.
The increase was also due to a $3.6 million increase in
travel-related costs, principally resulting from increased
staffing, a $3.3 million increase in marketing expenses
primarily associated with new product introductions, our online
marketing and annual customer summit events; and a
$2.7 million increase in office rent expenses.
Sales and marketing expenses increased $26.4 million from
2006 to 2007, primarily due to an $11.3 million increase in
employee salaries and benefits and related costs, a
$4.0 million increase in commission costs due to increased
staffing and revenues, a $4.0 million increase in
stock-based compensation expense, a $2.8 million increase
in marketing expenses primarily associated with new product
introductions, our online marketing and annual customer summit
events; and a $2.2 million increase in travel-related
costs, principally resulting from increased staffing.
Our sales and marketing employee headcount increased in 2006,
2007 and 2008 primarily because of the hiring of additional
sales personnel to focus on adding new customers and expanding
into new geographic regions. We also expanded our sales and
marketing employee headcount in 2007 and 2008 due to our
acquisitions completed during these periods.
65
Research
and Development
Research and development expenses increased $19.7 million
from 2007 to 2008 primarily due to increases in salaries and
benefits and related costs of $12.9 million resulting from
an increase in staffing, including the Touch Clarity,
Offermatica, Visual Sciences and Mercado acquisitions and a
$4.2 million increase in stock-based compensation.
Research and development expenses increased $8.5 million
from 2006 to 2007 primarily due to increases in salaries and
benefits and related costs of $5.5 million resulting from
an increase in staffing, including the Instadia and Touch
Clarity acquisitions and a $2.1 million increase in
stock-based compensation.
General
and Administrative
General and administrative expenses increased $21.8 million
from 2007 to 2008, primarily due to an $8.5 million
increase in employee salaries and benefits and related costs, a
$4.3 million increase in stock-based compensation expense
and a $3.4 million increase in outside professional
services costs. The increase was also due to a $2.4 million
increase in taxes, insurance, and other administrative expenses,
partly due to increased office rent expenses and continued
growth of our business, including our international expansion
and acquisitions.
General and administrative expenses increased $12.1 million
from 2006 to 2007, primarily due to a $4.8 million increase
in employee salaries and benefits and related costs and a
$0.7 million increase in recruiting expenses, principally
resulting from increased staffing. The increase was also due to
a $2.6 million increase in stock-based compensation expense
and a $1.9 million increase in outside professional
services costs to support the continued growth of our business,
including our international expansion.
We increased our general and administrative employee headcount
in 2006, 2007 and 2008 to support the continued growth of our
business, including our international expansion.
Stock-based
Compensation
Stock-based compensation expense was classified as follows in
the accompanying consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
(In thousands)
|
|
|
|
|
Cost of subscription, license and maintenance revenues
|
|
$
|
203
|
|
|
$
|
1,502
|
|
|
$
|
4,221
|
|
|
Cost of professional services and other revenues
|
|
|
54
|
|
|
|
430
|
|
|
|
968
|
|
|
Sales and marketing
|
|
|
993
|
|
|
|
4,982
|
|
|
|
12,268
|
|
|
Research and development
|
|
|
563
|
|
|
|
2,615
|
|
|
|
6,849
|
|
|
General and administrative
|
|
|
1,345
|
|
|
|
3,935
|
|
|
|
8,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,158
|
|
|
$
|
13,464
|
|
|
$
|
32,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense increased $19.1 million
from 2007 to 2008, primarily due to additional stock-based
compensation expense under SFAS No. 123R related to
additional grants of stock-based awards to our employees and
directors and additional stock-based compensation related to
stock-based awards assumed by us in connection with the Visual
Sciences acquisition. The increase was also due to
$3.6 million related to the acceleration of vesting of
certain former employees’ stock-based awards upon
termination of employment, pursuant to the terms of their
original awards. Stock-based compensation expense increased
$10.3 million from 2006 to 2007, primarily due to the
additional stock-based compensation expense under
SFAS No. 123R related to additional stock-based awards.
66
Interest
Income, Interest Expense and Other Expense, Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
(In thousands)
|
|
|
|
|
Interest income
|
|
$
|
2,117
|
|
|
$
|
5,816
|
|
|
$
|
1,869
|
|
|
Interest expense
|
|
|
(1,285
|
)
|
|
|
(835
|
)
|
|
|
(953
|
)
|
|
Other expense, net
|
|
|
(219
|
)
|
|
|
(554
|
)
|
|
|
(1,375
|
)
|
Interest income decreased $3.9 million from 2007 to 2008
primarily due to lower interest rate yields on our cash, cash
equivalents and investments and to a lesser extent lower average
balances. Interest income increased $3.7 million from 2006
to 2007, primarily as a result of an increase in cash, cash
equivalents and short-term investment balances.
Interest expense decreased $0.5 million from 2006 to 2007,
primarily due to the reduction of imputed interest expense
associated with the liability relating to the NetRatings
settlement.
Other expense, net, increased $0.8 million from 2007 to
2008, primarily due to net foreign currency-related losses.
Other expense, net increased $0.3 million from 2006 to
2007, primarily due to a $0.2 million realized loss on the
foreign currency forward contract entered into in connection
with the Instadia acquisition.
Liquidity
and Capital Resources
At December 31, 2008, our principal sources of liquidity
consisted of cash and cash equivalents of $67.0 million,
short-term investments of $10.0 million, accounts
receivable, net, of $106.8 million, amounts available under
our credit facility of $33.2 million and our equipment
lease agreements. In January 2009, we issued 2.9 million
shares of our common stock to WPP for aggregate cash
consideration of $25.0 million.
Historically, our primary sources of cash have been customer
payments for our subscription and professional services,
proceeds from the issuance of capital stock and proceeds from
the issuance of notes payable. Our principal uses of cash
historically have consisted of payroll and other operating
expenses, payments relating to purchases of property and
equipment primarily to support the network infrastructure needed
to provide our services to our customer base, repayments of
borrowings and acquisitions of businesses and intellectual
property.
Operating
Activities
Our cash flows from operating activities are significantly
influenced by the amount of cash we invest in personnel and
infrastructure to support the anticipated future growth in our
business, increases in the number of customers using our
subscription and professional services and the amount and timing
of payments by these customers.
A limited number of our existing customers either ceased
operations or filed for bankruptcy during 2008, due to their
inability to meet their existing financial obligations. If the
economy continues to weaken, then it could cause some of our
customers to delay payments for our services beyond the stated
payment terms, and in certain instances, may force them to cease
operations altogether before paying for all of our services used
by them.
We generated $68.3 million of net cash from operating
activities during 2008. Our net loss of $44.8 million was
adjusted for $89.2 million in non-cash depreciation,
amortization and stock-based compensation expenses. We also
generated cash from operating activities due to a
$57.1 million increase in payments received from customers
in advance of when we recognized revenues and a
$4.0 million increase in accrued and other liabilities.
This increase in operating cash was partially offset by a
$35.2 million increase in accounts receivable, net of
allowances, primarily resulting from the increase in our
customer base and increased sales to our existing customers.
Allowances for accounts receivable increased by
$5.2 million during 2008, including $3.9 million in
reserves recorded in conjunction with the Visual Sciences and
Mercado acquisitions. The increase in payments received from
customers in advance of when we recognized revenues was driven
by the overall growth in our business and an increase in the
number of customers paying in advance for a full year or more of
our services, when compared to the same period in 2007.
67
Investing
Activities
Historically, our primary investing activities consisted of
purchases of computer network equipment to accommodate the
increase in customer transactions, purchases of furniture and
equipment to support our operations and payments related to the
acquisition of businesses and intellectual property.
During 2007, we began leasing a portion of our network
infrastructure equipment requirements under operating leases
provided by third-party financing sources, and we expect to
acquire additional equipment under operating leases in the
future. Our capital expenditures are reduced to the extent we
utilize operating leases.
We intend to continue to make investments to support our
business growth and may require additional funds to respond to
business challenges, including the need to develop new services
or enhance our existing services, enhance our operating
infrastructure and acquire complementary businesses and
technologies. Accordingly, we may need to engage in equity or
debt financings to secure additional funds. If we raise
additional funds through further issuances of equity or
convertible debt securities, our existing stockholders could
suffer significant dilution, and any new equity securities we
issue could have rights, preferences and privileges superior to
those of holders of our common stock. Our Credit Agreement
contains restrictive covenants relating to our capital raising
activities and other financial and operational matters,
including restrictions on the amount of capital expenditures in
any one year, which may make it more difficult for us to obtain
additional capital and to pursue business opportunities,
including potential acquisitions. In addition, we may not be
able to obtain additional financing on terms favorable to us, if
at all, particularly in view of the uncertainty in the
U.S. and global financial markets and corresponding
liquidity crisis, which may cause us to be unable to access
capital from the capital markets. If we are unable to obtain
adequate financing or financing on terms satisfactory to us,
when we require it, our ability to continue to support our
business growth and to respond to business challenges could be
significantly limited.
We used $89.4 million of net cash in investing activities
during 2008. This use of cash primarily resulted from
$68.7 million paid related to the Visual Sciences, Mercado
and Offermatica acquisitions, net of cash acquired,
$45.3 million to purchase property and equipment,
$34.8 million to purchase investments and $4.0 million
to purchase intangible assets. This cash used in investing
activities was partially offset by sales and maturity of
investments of $62.0 million and net gains on foreign
currency forward contracts of $1.5 million.
Financing
Activities
We generated $10.9 million of net cash from financing
activities during 2008, primarily from $22.4 million in
proceeds from issuance of notes payable and $8.7 million in
proceeds from the exercise of stock options, partially offset by
$19.4 million of principal payments on notes payable and
capital lease obligations, including the repayment of
$4.0 million in notes payable assumed in the Visual
Sciences acquisition, and $1.0 million related to the
repurchase of vested restricted stock.
Other
Factors Affecting Liquidity and Capital Resources
In December 2008, we entered into a credit agreement, or the
Credit Agreement, that provided for a secured revolving credit
facility in an amount of up to $35.0 million that is
subject to a borrowing base formula and a secured term loan in
an amount of $15.0 million. The revolving credit facility
has sub limits for certain cash management services, interest
rate and foreign exchange hedging arrangements, and for the
issuance of letters of credit in a face amount up to
$7.5 million. Upon execution of the Credit Agreement, we
borrowed $15.0 million in term loans, of which
approximately $9.8 million was used to repay the
outstanding obligations under a then existing equipment and
revolving line of credit agreement, which was terminated upon
closing of the Credit Agreement. Letters of credit in the
aggregate face amount of approximately $1.8 million have
also been issued under the revolving credit facility.
At our option, revolving loans and the term loan accrue interest
at a per annum rate based on, either (1) the base rate plus
a margin of 3.00%; or (2) the London Interbank Offered
Rate, or LIBOR, plus a margin equal to 3.00%, but in no event
less than 5.5%, in each case for interest periods of one, two or
three months. The base rate is defined as the greatest of
(i) 3.50% per annum, (ii) the federal funds rate plus
a margin equal to 0.50% and (iii) the lender’s
68
prime rate. At December 31, 2008, the $15,000,000
outstanding under the term loan accrued interest at a variable
rate of 6.5%.
We are also obligated to pay other customary closing fees,
servicing fees, letter of credit fees and unused line fees for a
credit facility of this size and type.
Revolving loans may be borrowed, repaid and reborrowed until
December 24, 2012, at which time all amounts borrowed must
be repaid. The term loan is repaid in quarterly principal
payments in an amount equal to $375,000, with the remaining
outstanding principal balance and all accrued and unpaid
interest due on December 24, 2012. Accrued interest on the
revolving loans and term loans is paid monthly, or with respect
to revolving loans and term loans that are accruing interest
based on the LIBOR rate, then at the end of the applicable LIBOR
interest rate period.
The revolving loans and term loans are subject to mandatory
prepayments in the event that certain borrowing formulas are not
maintained. In addition the term loan is subject to certain
mandatory prepayments under certain circumstances, including in
connection with the receipt of net proceeds from certain asset
sales, casualty events, tax refunds, the incurrence of certain
types of indebtedness and the issuance of certain equity
securities. In the event that the revolving credit facility
commitment is terminated, in whole or part, prior to its
maturity date, then, under certain circumstances, a prepayment
fee will be due in an amount up to 2.00% of the principal amount
prepaid. In the event that the term loan is prepaid, then a
prepayment fee will be due in an amount up to 2.00% of the
principal amount prepaid.
During 2008, we borrowed a total of $8.0 million under the
equipment and revolving line of credit agreement that was
terminated during 2008.
In February 2006, we entered into a settlement and patent
license agreement with NetRatings. In the event that we acquire
certain specified companies, we may be required to make
additional license payments based on the Web analytics revenues
of the acquired company. The agreement also provides that, if we
acquire other companies, we may elect to make additional license
payments based on the Web analytics revenues of the acquired
company to ensure that the acquired company’s products,
services or technology are covered by the license. In connection
with our acquisition of Offermatica in December 2007, we elected
to make an additional license payment of $0.9 million
during the three months ended March 31, 2008.
In August 2007, Visual Sciences entered into a settlement and
patent license agreement with NetRatings. The agreement required
Visual Sciences to make license payments of $11.3 million,
$2.0 million of which was paid by Visual Sciences on or
about the date of the agreement, $4.3 million of which was
paid by us following the closing of our acquisition of Visual
Sciences, and the remaining $5.0 million of which must be
paid by us in quarterly installments of $0.5 million
beginning on March 31, 2008, of which $2.0 million was
paid during 2008.
On October 25, 2005, Visual Sciences, LLC (now known as
Visual Sciences Technologies, LLC), which is a wholly owned
subsidiary of Visual Sciences, entered into a settlement and
patent license agreement with NetRatings. The agreement required
Visual Sciences, LLC to make license payments of
$2.0 million, $1.3 million of which was paid as of
December 31, 2008 and the remaining $0.7 million of
which must be paid in annual installments, which are capped at
$0.2 million per year and calculated based on revenue of
Visual Sciences, LLC products for each year.
At December 31, 2008, we held AAA-rated municipal note
investments with par values totaling $21.5 million with an
auction reset feature, or auction rate securities, the
underlying assets of which are generally student loans which are
substantially backed by the U.S. federal government.
Auction rate securities are generally long-term instruments that
are intended to provide liquidity through a Dutch auction
process that resets the applicable interest rate at
pre-determined calendar intervals, allowing holders of these
instruments to rollover their holdings and continue to own their
respective securities or liquidate their holdings by selling the
auction rate securities at par. Beginning in February 2008,
auctions failed for our holdings because sell orders for these
securities exceeded the amount of purchase orders. The funds
associated with these failed auctions will not be accessible
until the issuer calls the security, a successful auction
occurs, a buyer is found outside the auction process, or the
security matures. Consequently, because there is no assurance we
will be able to liquidate our positions in these securities
within the next 12 months, we have reclassified all of our
auction rate holdings to long-term investments on our
consolidated
69
balance sheet. In addition, as there is currently no active
market for the securities we hold, we determined there to be a
temporary impairment in the value of these securities of
$3.4 million and, accordingly, have recorded an unrealized
loss on these securities, which is included as a component of
other comprehensive loss within stockholders’ equity on our
balance sheet at December 31, 2008. At December 31,
2008, we determined the impairment to be temporary, because we
believe these securities will ultimately be sold at their par
values, and at December 31, 2008, we believe we have the
ability and the intent to hold them until such time, which could
be the securities’ maturity dates. The maturity dates of
our auction rate holdings are between the years 2034 and 2040.
Until the issuers of our auction rate securities are able to
successfully close future auctions or if their credit ratings
deteriorate, we may in the future be required to record further
impairment charges on these investments, some or all of which we
may determine at some point in the future to be
other-than-temporary, and our liquidity would be adversely
affected to the extent that the cash we would otherwise receive
upon liquidation of the investments would not be available for
use in the growth of our business and other strategic
opportunities.
Acquisition
of Touch Clarity Limited
On March 1, 2007, we acquired all of the outstanding voting
stock of Touch Clarity, a provider of enterprise on-demand
automated onsite behavioral targeting and optimization
solutions, based in London, England. The terms of the
acquisition provided for the payment of up to $3.0 million
in additional consideration, contingent upon the achievement of
certain milestones during 2007. After determination of the
actual milestones achieved in accordance with the acquisition
agreement, we paid a total of $2.1 million in additional
consideration in February 2009. This additional consideration,
which was accrued by us at December 31, 2008, increased the
aggregate purchase price and goodwill. No further consideration
is owed by us under the acquisition agreement, after payment in
February 2009 of the $2.1 million in additional
consideration.
Acquisition
of Visual Sciences, Inc.
On January 17, 2008, we acquired all of the outstanding
voting stock of Visual Sciences, a provider of on-demand Web
analytics applications. Under the terms of the acquisition, each
outstanding share of Visual Sciences capital stock was converted
into 0.49 of a share of our common stock and $2.39 in cash. In
connection with the acquisition, options to purchase Visual
Sciences common stock outstanding at the time of closing were
assumed by us and converted into options to purchase shares of
our common stock, based on an option exchange ratio pursuant to
the terms of the definitive agreement.
The preliminary aggregate purchase price was approximately
$447.2 million, which consisted of (1) the issuance of
approximately 10.3 million shares of our common stock upon
closing of the acquisition, valued at approximately
$354.8 million, net of issuance costs, (2) cash
consideration of approximately $50.1 million, (3) the
fair value of assumed Visual Sciences stock options,
(4) acquisition-related costs, (5) restructuring costs
and (6) a license payment of approximately
$2.3 million to NetRatings in accordance with the
settlement and patent cross-license agreement entered into by
Visual Sciences with NetRatings in August 2007. We accounted for
the restructuring charges in accordance with EITF Issue
No. 95-3.
The restructuring costs are comprised of approximately
$4.5 million of severance payments and severance-related
benefits associated with employee terminations and $2.8 in
excess facilities costs resulting from the employee terminations
included in this restructuring, We expect to pay all
employee-related restructuring charges by March 31, 2009,
and to pay all excess facilities restructuring charges by
March 31, 2013.
We also issued approximately 0.1 million shares of our
common stock in exchange for unvested Visual Sciences RSAs that
remain subject to forfeiture based on the original vesting
schedule applicable to such awards. As of December 31,
2008, we will be required to pay up to an additional
$0.2 million in cash consideration as these RSAs vest.
Mercado
Search and Merchandising Asset Acquisition
On November 5, 2008, we acquired certain assets, including
intellectual property and other business assets, of Mercado, a
leading search and merchandising solution provider, for
approximately $8.6 million, which consisted of
(1) cash consideration of approximately $6.6 million
paid upon closing of the acquisition, (2) restructuring
charges
70
and (3) acquisition-related costs. We accounted for the
restructuring charges in accordance with EITF Issue
No. 95-3.
The restructuring costs are comprised of approximately
$0.3 million of severance payments and severance-related
benefits associated with employee terminations and
$1.3 million in excess facilities costs. We expect to pay
all employee-related restructuring charges by March 31,
2009, and to pay all excess facilities restructuring charges by
December 31, 2010.
WPP Stock
Sale
On January 27, 2009, we entered into a common stock
purchase agreement with WPP. In conjunction with this common
stock purchase agreement, we issued to WPP a total of
2.9 million shares of our common stock for aggregate cash
consideration of $25.0 million.
Off-balance
Sheet Arrangements
We do not have any special purpose entities, and we do not
engage in off-balance sheet financing arrangements other than
operating leases for office space and certain computer
equipment, which are described below.
We have entered into an operating lease related to our principal
offices in Orem, Utah, with a lease term through March 2011. We
have also entered into operating leases for office space
elsewhere in the U.S. and in various international
locations and for certain computer equipment.
Since 2007, we have entered into three master equipment lease
agreements with third-party financing sources. We have generally
accounted for the acquisition of equipment under these lease
agreements as operating leases, in accordance with
SFAS No. 13,
Accounting for Leases
. The rental
payments and rental terms associated with individual
acquisitions under the leases may vary depending on the nature
of the equipment acquired. As a condition of one of these lease
agreements, we must not allow our cash balance to fall below
$10.0 million as long as this agreement is in force.
Failure to maintain a minimum of $10.0 million in cash
would constitute an event of default, as defined in the lease
agreement.
Contractual
Obligations and Commitments
Our future contractual obligations at December 31, 2008 are
as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
Total
|
|
|
Less Than 1 Year
|
|
|
1-3 Years
|
|
|
3-5 Years
|
|
|
Thereafter
|
|
|
|
|
Operating lease obligations
|
|
$
|
49,235
|
|
|
$
|
16,408
|
|
|
$
|
30,539
|
|
|
$
|
2,288
|
|
|
$
|
—
|
|
|
Capital lease obligations
|
|
|
239
|
|
|
|
212
|
|
|
|
27
|
|
|
|
—
|
|
|
|
—
|
|
|
Notes payable
|
|
|
15,145
|
|
|
|
1,617
|
|
|
|
13,528
|
|
|
|
—
|
|
|
|
—
|
|
|
Interest on notes payable
|
|
|
2,883
|
|
|
|
695
|
|
|
|
2,188
|
|
|
|
—
|
|
|
|
—
|
|
|
Other
obligations
(1)
|
|
|
3,420
|
|
|
|
2,030
|
|
|
|
1,390
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations
|
|
$
|
70,922
|
|
|
$
|
20,962
|
|
|
$
|
47,672
|
|
|
$
|
2,288
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Primarily consists of the quarterly payments resulting from the
August 2007 settlement and patent license agreement with
NetRatings.
|
Our future cash requirements will depend on many factors,
including the expansion of our sales, support and marketing
activities, the timing and extent of spending to support
development efforts and expansion into new territories, the
extent to which we acquire new businesses and technologies and
the costs of these acquisitions, the building of infrastructure,
including our network equipment, to support our growth, the
timing of introduction of new services and enhancements to
existing services and the continued market acceptance of our
services.
We believe our existing cash and cash equivalents, short-term
investments, any cash provided from our operations and funds
available from our existing credit facilities and equipment
leasing arrangements will be sufficient to meet our currently
anticipated cash requirements for at least the next
12 months. Thereafter, we may need to raise additional
capital to meet the cash flow requirements of our business. An
element of our growth
71
strategy involves acquisitions. If we make additional
acquisitions or license products or technologies complementary
to our business, we may need to raise additional funds.
Additional financing may not be available on terms that are
favorable to us, or at all, particularly in view of the
uncertainty in the U.S. and global financial markets and
corresponding liquidity crisis, which may cause us to be unable
to access capital from the capital markets. If we are unable to
obtain adequate financing or financing on terms satisfactory to
us, when we require it, our ability to continue to support our
business growth and to respond to business challenges could be
significantly limited. If we raise additional capital through
the issuance of equity or convertible debt securities, the
percentage ownership of our stockholders would be reduced and
these securities might have rights, preferences and privileges
senior to those of our current stockholders. Our Credit
Agreement contains restrictive covenants relating to our capital
raising activities and other financial and operational matters,
including restrictions on the amount of capital expenditures in
any one year, which could make it more difficult for us to
obtain additional capital and to pursue future business
opportunities, including potential acquisitions.
Critical
Accounting Policies
Our consolidated financial statements are prepared in accordance
with U.S. generally accepted accounting principles. The
preparation of these consolidated financial statements requires
us to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues, costs and expenses and
related disclosures. We evaluate our estimates and assumptions
on an ongoing basis. Our estimates are based on historical
experience and various other assumptions that we believe to be
reasonable under the circumstances. Our actual results could
differ from these estimates.
We believe that the assumptions and estimates associated with
revenue recognition, allowances for accounts receivable,
business combinations and impairment of long-lived and
intangible assets, including goodwill; stock-based compensation
and income taxes have the greatest potential impact on our
consolidated financial statements. Therefore, we consider these
to be our critical accounting policies and estimates.
Revenue
Recognition
We generally provide our applications as services; accordingly,
we follow the provisions of SEC Staff Accounting Bulletin, or
SAB, No. 104,
Revenue Recognition
, and EITF Issue
No. 00-21,
Revenue Arrangements with Multiple Deliverables.
We
recognize revenue when all of the following conditions are met:
|
|
|
|
|
|
•
|
there is persuasive evidence of an arrangement;
|
|
|
|
|
•
|
the service has been provided to the customer;
|
|
|
|
|
•
|
the collection of the fees is reasonably assured; and
|
|
|
|
|
•
|
the amount of fees to be paid by the customer is fixed or
determinable.
|
For subscription fees that are based on a committed number of
transactions, we recognize subscription revenues, including
implementation and
set-up
fees,
ratably beginning on the date the customer commences use of our
services and continuing through the end of the contract term. We
recognize revenues for over-usage fees and for fees that we bill
based on the actual number of transactions from which we capture
data on a monthly basis as these fees are incurred. Amounts that
have been invoiced are recorded in accounts receivable and in
deferred revenues or revenues, depending on whether the revenue
recognition criteria have been met.
We generally recognize professional services revenues when sold
with subscription offerings (generally considered to be at the
time of, or within 45 days of, sale of the subscription
offering) over the term of the related subscription contract as
these services are considered to be inseparable from the
subscription service, and we have not yet established objective
and reliable evidence of fair value for the undelivered element.
We recognize revenues resulting from professional services sold
separately from subscription services as these services are
performed.
Although our subscription contracts are generally noncancelable,
a limited number of customers have the right to cancel their
contracts by providing prior written notice to us of their
intent to cancel the remainder of the contract
72
term. In the event that a customer cancels its contract, it is
not entitled to a refund for prior services provided to them by
us.
We derive our license revenue from selling perpetual and term
software licenses related to our Discover OnPremise and Omniture
Merchandising software products, which we obtained as part of
the Visual Sciences and Mercado acquisitions, respectively. We
do not provide custom software development services or create
tailored products to sell to specific customers. Pricing is
based on a standard price list with volume and marketing related
discounts. The software licenses are generally sold with the
first year of post-contract support services, installation and
training. As such, a combination of these products and services
represent a “multiple-element” arrangement for revenue
recognition purposes.
For perpetual software license contracts with multiple elements,
we recognize revenue using the residual method in accordance
with Statement of Position, or SOP,
97-2,
Software Revenue Recognition
and
SOP 98-9,
Modification of
SOP 97-2,
Software Revenue Recognition
. Under the residual method, the
fair value of the undelivered elements is deferred and the
remaining portion of the arrangement fee is allocated to the
delivered elements and recognized as revenue, assuming all other
revenue recognition criteria have been met. If evidence of fair
value for each undelivered element of the arrangement does not
exist, all revenue from the arrangement is recognized when
evidence of fair value is determined or when all elements of the
arrangement are delivered. For term software license contracts,
license revenue is recognized over the applicable license term.
Generally, perpetual software license agreements entered into by
us after the date we acquired Visual Sciences entitle the
customer to receive, at no additional cost, licenses to certain
software released after the date of their license agreement.
Revenues associated with these license agreements are recognized
over the period in which the customer is entitled to receive
these additional licenses free of charge, which is generally
three years.
We recognize revenue related to post-contract support services
over the applicable term of the support agreement.
Allowances
for Accounts Receivable
We record a sales allowance to provide for estimated future
adjustments to receivables, generally resulting from credits
issued to customers in conjunction with amendments or renewals
of subscription service arrangements. Specific provisions
primarily are made based on amendments or renewals associated
with specific subscription service arrangements that are
expected to result in the issuance of customer credits.
Non-specific provisions are also made based on actual credits
issued as a percentage of our historical revenues. We record
provisions for sales allowances as a reduction to revenues. We
evaluate the estimate of sales allowances on a regular basis and
adjust the amount reserved accordingly.
We make judgments as to our ability to collect outstanding
receivables and provide allowances when collection becomes
doubtful. Specific provisions are made based on an
account-by-account
analysis of collectability. Additionally, we make provisions for
non-customer-specific accounts based on our historical bad debt
experience and current economic trends. We record provisions in
operating expenses. We write off customer accounts receivable
balances to the allowance for doubtful accounts when it becomes
likely that we will not collect the receivable from the customer.
Business
Combinations and Impairment of Long-lived and Intangible Assets,
Including Goodwill
When we acquire businesses, we allocate the purchase price to
tangible assets and liabilities and identifiable intangible
assets acquired. Any residual purchase price is recorded as
goodwill. The allocation of the purchase price requires
management to make significant estimates in determining the fair
values of assets acquired and liabilities assumed, especially
with respect to intangible assets. These estimates are based on
the application of valuation models using historical experience
and information obtained from the management of the acquired
companies. These estimates can include, but are not limited to,
the cash flows that an asset is expected to generate in the
future, the appropriate weighted-average cost of capital and the
cost savings expected to be derived from acquiring an asset.
These estimates are inherently uncertain and unpredictable. In
addition, unanticipated events and circumstances may occur which
may affect the accuracy or validity of such estimates.
73
Periodically we assess potential impairment of our long-lived
assets, which include property, equipment and acquired
intangible assets, in accordance with the provisions of
SFAS No. 144,
Accounting for the Impairment and
Disposal of Long-Lived Assets.
We perform an impairment
review whenever events or changes in circumstances indicate that
the carrying value may not be recoverable. Factors we consider
important which could trigger an impairment review include, but
are not limited to, significant under-performance relative to
historical or projected future operating results, significant
changes in the manner of our use of the acquired assets or our
overall business strategy and significant industry or economic
trends. When we determine that the carrying value of a
long-lived asset may not be recoverable based upon the existence
of one or more of the above indicators, we determine the
recoverability by comparing the carrying amount of the asset to
net future undiscounted cash flows that the asset is expected to
generate. We recognize an impairment charge equal to the amount
by which the carrying amount exceeds the fair market value of
the asset.
We recorded goodwill in conjunction with all five of our
business acquisitions completed since the beginning of 2007. We
test goodwill for impairment at least annually, in accordance
with SFAS No. 142,
Goodwill and Other Intangible
Assets
based on a single reporting unit. We believe we
operate in a single reporting unit because our chief operating
decision maker as defined in SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information
, does not regularly review our operating results
other than at a consolidated level for purposes of decision
making regarding resource allocation and operating performance.
We performed our 2008 annual goodwill impairment test as of
October 1, 2008. For purposes of our impairment test, we
primarily relied upon the market valuation approach, which
utilizes the market value per share of our publicly traded
common stock, plus a control premium, multiplied by the total
number of common shares issued and outstanding. A control
premium is an amount that a buyer is usually willing to pay over
the current market price of a publicly traded company. This
market value is compared to our company’s net equity as of
the impairment test date. Due to the reduction in the price per
share of our common stock during the fourth quarter of 2008, we
updated our goodwill impairment test at December 31, 2008
and determined there was no impairment at that date.
We amortize intangible assets on a straight-line basis over
their estimated useful lives. We generally determine the
estimated useful life of intangible assets based on the
projected undiscounted cash flows associated with these
intangible assets.
Stock-based
Compensation
Prior to January 1, 2006, we accounted for employee stock
options using the intrinsic-value method in accordance with the
provisions of Accounting Principles Board, or APB, Opinion
No. 25,
Accounting for Stock Issued to Employees
,
Financial Accounting Standards Board, or FASB, Interpretation
No. 44,
Accounting for Certain Transactions Involving
Stock Compensation, an Interpretation of APB Opinion
No. 25
, and related interpretations, and we complied
with the disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation,
and
SFAS No. 148,
Accounting for Stock-Based
Compensation — Transition and Disclosure
. During
2005, we recorded deferred stock-based compensation of
$3.8 million, representing the amount by which the deemed
fair value of our common stock exceeded the exercise price of
employee stock options on the date of grant, for options granted
during 2005. We are amortizing this deferred stock-based
employee compensation over the period in which the options vest,
which is generally four years. We recorded stock-based
compensation expense related to this amortization of
$1.0 million in 2006, $1.0 million in 2007 and
$0.8 million during 2008.
We adopted SFAS No. 123R effective January 1,
2006, which requires us to measure the cost of employee services
received in exchange for an award of equity instruments, based
on the fair value of the award on the date of grant. That cost
must be recognized over the period during which the employee is
required to provide services in exchange for the award. We
adopted SFAS No. 123R using the prospective method,
which requires us to apply its provisions only to awards
granted, modified, repurchased or cancelled after the effective
date.
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We use a Black-Scholes-Merton option-pricing model to estimate
the fair value of our stock option awards. The calculation of
the fair value of the awards using the Black-Scholes-Merton
option-pricing model is affected by our stock price on the date
of grant as well as assumptions regarding the following:
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Estimated volatility is a measure of the amount by which our
stock price is expected to fluctuate each year during the
expected life of the award. Our estimated volatility through
December 31, 2007 was based on an average of the historical
volatility of peer entities whose stock prices were publicly
available. Effective January 1, 2008, we changed our
methodology for estimating our volatility and now use a
weighted-average volatility based on 50% of our actual
historical volatility since our initial public offering in 2006
and 50% of the average historical stock volatilities of similar
entities. Our calculation of estimated volatility is based in
part on historical stock prices of these peer entities over a
period equal to the expected life of the awards. We continue to
use the historical volatility of peer entities due to the lack
of sufficient historical data of our stock price since our
initial public offering in 2006. Our estimated volatility may
increase or decrease depending on the changes in our peer
entities’ historical stock prices, changes in the
composition of the peer entity group and changes to the expected
term of our stock option awards. An increase in the estimated
volatility would result in an increase to our stock-based
compensation expense. For example, a 10% increase in our
estimated volatility assumption from 53% to 63% would generally
increase the value of a stock-based award and the associated
stock-based compensation by approximately 16% if no other
factors were changed.
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The expected term represents the period of time that awards
granted are expected to be outstanding. Through
December 31, 2007, we calculated the expected term as the
average of the contractual term and the vesting period.
Effective January 1, 2008, we began calculating the
expected term based on several factors surrounding our stock
option awards, including the strike price in relation to the
current and expected stock price, the minimum vest period and
the remaining contractual period. An increase in the expected
term would result in an increase to our stock-based compensation
expense. For example, an increase of 1 year in the expected
term assumption would generally increase the value of a
stock-based award and the associated stock-based compensation by
approximately 11% if no other factors were changed.
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The risk-free interest rate is based on the yield curve of a
zero-coupon U.S. Treasury bond on the date the stock option
award is granted with a maturity equal to the expected term of
the stock option award. An increase in the risk-free interest
rate would result in an increase to our stock-based compensation
expense.
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At December 31, 2008, there was $54.3 million of total
unrecognized compensation cost related to unvested stock option
awards granted subsequent to the adoption of
SFAS No. 123R and $19.9 million of total
unrecognized compensation cost related to unvested RSUs and
RSAs. The unrecognized compensation cost related to unvested
stock option awards will be recognized over a weighted-average
period of 2.6 years and the unrecognized compensation cost
related to unvested RSUs and RSAs will be recognized over a
weighted-average period of 3.1 years.
Since January 1, 2006, our stock-based compensation has
been based on the balance of deferred stock-based compensation
for unvested awards at January 1, 2006, using the intrinsic
value as previously recorded under APB Opinion No. 25, and
the fair value of the awards on the date of grant for awards
granted on or after January 1, 2006. The adoption of
SFAS No. 123R has resulted, and will continue to
result, in higher amounts of stock-based compensation for awards
granted on or after January 1, 2006 than would have been
recorded if we had continued to apply the provisions of APB
Opinion No. 25.
Income
Taxes
In July 2006, the FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes — An
Interpretation of FASB Statement No. 109
, or
FIN 48. FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an entity’s
financial statements in accordance with SFAS No. 109,
Accounting for Income Taxes,
and prescribes a recognition
threshold and measurement attributes for financial statement
disclosure of tax positions taken or expected to be taken on a
tax return. Under FIN 48, the impact of an uncertain income
tax position on the income tax return must be recognized at the
largest amount that is more-likely-than-not to be sustained upon
audit by the relevant taxing authority. An uncertain income tax
position will not be recognized if it has less than a 50%
75
likelihood of being sustained. Additionally, FIN 48
provides guidance on de-recognition, classification, interest
and penalties, accounting in interim periods, disclosure and
transition.
Our adoption of the provisions of FIN 48 on January 1,
2007 did not have a material impact on our financial statements.
We adopted the accounting policy that interest recognized in
accordance with Paragraph 15 of FIN 48 and penalties
recognized in accordance with Paragraph 16 of FIN 48
are classified as a component of interest expense. We had an
unrecognized tax liability at December 31, 2007 for
research and development credits and upon the acquisition of
Visual Sciences, we assumed unrecognized tax liabilities of
$0.7 million, which Visual Sciences had previously recorded
upon its adoption of FIN 48 during the year ended
December 31, 2007. We have not incurred a material amount
of interest or penalties through December 31, 2008. We do
not anticipate any significant change within 12 months of
this reporting date of our uncertain tax positions. We also do
not anticipate any events which could cause a change to these
uncertainties. Any future adjustments to the unrecognized tax
benefit will have no impact on our effective tax rate due to the
valuation allowance which fully offsets these tax benefits. We
are subject to taxation in the U.S. and various state and
foreign jurisdictions. There are no ongoing examinations by
taxing authorities at this time. Our various tax years starting
with 2004 to 2008 remain open in various taxing jurisdictions.
Our effective tax rates are primarily affected by the amount of
our taxable income or losses in the various taxing jurisdictions
in which we operate, the amount of federal and state net
operating losses and tax credits, the extent to which we can
utilize these net operating loss carryforwards and tax credits
and certain benefits related to stock option activity.
Recently
Adopted Accounting Pronouncements
Effective January 1, 2008, we adopted
SFAS No. 157,
Fair Value Measurements
, which
establishes a framework for measuring fair value in generally
accepted accounting principles, clarifies the definition of fair
value within that framework and expands disclosures about the
use of fair value measurements. SFAS No. 157 is
effective for fiscal years beginning after November 15,
2007. However, in February 2008, the FASB issued FASB Staff
Position, or FSP,
No. 157-2,
Effective Date of FASB Statement No. 157
, which
deferred the effective date of SFAS No. 157 for one
year for non-financial assets and liabilities, except for
certain items, such as our cash and cash equivalents,
investments and foreign currency forward contracts that are
recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually). We are
currently evaluating the impact of SFAS No. 157 on our
consolidated financial statements for items within the scope of
FSP
No. 157-2,
which will become effective on January 1, 2009. In October
2008, the FASB issued FSP
No. 157-3
Determining the Fair Value of a Financial Asset When the
Market for That Asset Is Not Active
. FSP
No. 157-3
clarifies the application of SFAS No. 157 in a market
that is not active, and provides guidance on the key
considerations in determining the fair value of a financial
asset when the market for that financial asset is not active.
FSP
No. 157-3
is effective for all periods presented in accordance with
SFAS No. 157. We considered the additional guidance
with respect to the valuation of our financial assets and
liabilities and their corresponding designation within the fair
value hierarchy. The adoption did not have a material impact on
our consolidated results of operations or financial condition.
Effective January 1, 2008, we adopted
SFAS No. 159,
The Fair Value Option for Financial
Assets and Financial Liabilities
. SFAS No. 159
permits companies to elect to measure certain financial
instruments and certain other items at fair value. The standard
requires that unrealized gains and losses on items for which the
fair value option has been elected be reported in earnings. We
did not elect to measure any additional financial instruments at
fair value as a result of this statement. Therefore, the
adoption of SFAS No. 159 did not have a material
impact on our financial statements.
Recent
Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141R,
Business Combinations
. SFAS No. 141R requires
an acquirer to measure the identifiable assets acquired, the
liabilities assumed and any noncontrolling interest in the
acquiree at their fair values on the acquisition date, with
goodwill being the excess value over the net identifiable assets
acquired. SFAS No. 141R is effective for financial
statements issued for fiscal years beginning after
December 15, 2008. Early adoption is prohibited. We expect
the adoption of SFAS No. 141R to have a material
76
impact on our consolidated financial statements if and when we
complete a business acquisition on or after adoption of this
statement.
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements
. SFAS No. 160 clarifies that a
noncontrolling interest in a subsidiary should be reported as
equity in the consolidated financial statements. The calculation
of earnings per share will continue to be based on income
amounts attributable to the parent. SFAS No. 160 is
effective for financial statements issued for fiscal years
beginning after December 15, 2008. Early adoption is
prohibited. We do not expect the adoption of
SFAS No. 160 to have a material impact on our
consolidated financial statements.
In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging
Activities.
SFAS No. 161 requires additional
disclosures about the objectives of derivative instruments and
hedging activities, the method of accounting for such
instruments under SFAS No. 133 and its related
interpretations, and a tabular disclosure of the effects of such
instruments and related hedged items on financial position,
financial performance, and cash flows. SFAS No. 161 is
effective for financial statements issued for fiscal years
beginning after November 15, 2008. We are currently
evaluating the potential impact the adoption of
SFAS No. 161 may have on our consolidated financial
statements.
In April 2008, the FASB issued Staff Position
No. 142-3,
Determination of Useful Life of Intangible Assets
. FSP
No. 142-3
amends the factors that should be considered in developing the
renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under
SFAS No. 142,
Goodwill and Other Intangible
Assets
. FSP
No. 142-3
also requires expanded disclosure related to the determination
of intangible asset useful lives. FSP
No. 142-3
is effective for fiscal years beginning after December 15,
2008. Earlier adoption is prohibited. We are currently
evaluating the potential impact the adoption of FSP
No. 142-3
will have on our consolidated financial statements.
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ITEM 7A.
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Quantitative
and Qualitative Disclosure About Market Risk
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Foreign
Currency Exchange Risk
We conduct business internationally in several currencies,
primarily the Australian dollar, British pound, Canadian dollar,
Danish krone, European Union euro, Japanese yen and Swedish
krona. As such, our results of operations and cash flows are
subject to fluctuations due to changes in exchange rates.
Our exposure to foreign exchange rate fluctuations arise in part
from: (1) translation of the financial results of foreign
subsidiaries into U.S. dollars in consolidation;
(2) the re-measurement of non-functional currency assets,
liabilities and intercompany balances into U.S. dollars for
financial reporting purposes; and
(3) non-U.S. dollar
denominated sales to foreign customers. The primary effect on
our results of operations from a strengthening U.S. dollar
is a decrease in revenue, partially offset by a decrease in
expenses. Conversely, the primary effect of foreign currency
transactions on our results of operations from a weakening
U.S. dollar is an increase in revenues, partially offset by
an increase in expenses.
During 2008, we entered into foreign currency forward contracts
to limit our foreign currency transaction gains and losses
primarily related to cash and accounts receivable balances
denominated in certain foreign currencies. These forward
contracts were not designated as accounting hedges under
SFAS No. 133,
Accounting for Derivative Instruments
and Hedging Activities
. During 2008, we recognized
$1.5 million in realized gains and $0.7 million in
unrealized losses associated with these forward contracts. We
expect to continue utilizing foreign currency forward contracts
to limit our exposure to foreign currency fluctuations. Although
the use of foreign currency forward contracts generally reduces
the impact on our statement of operations from changes in
currency exchange rates, it does not entirely eliminate the
impact of such changes. In the future, we may also choose to
increase our use of foreign currency forward contracts to limit
foreign currency exposures associated with our revenues and
operating expenses denominated in currencies other than the
U.S. dollar.
Interest
Rate Sensitivity
We had unrestricted cash and cash equivalents totaling
$67.0 million and short-term investments totaling
$10.0 million at December 31, 2008. The cash and cash
equivalents were invested primarily in U.S. treasury bills,
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money market funds and high-quality commercial paper with
original maturities of less than 90 days. Our short-term
investments were invested in U.S. treasury bills and
high-quality commercial paper with original maturities greater
than 90 days. The unrestricted cash and cash equivalents
and short-term investments are held for general corporate
purposes. We do not enter into investments for trading or
speculative purposes. Due to the short-term nature of these
investments, we believe that we do not have any material
exposure to changes in the fair value of our investment
portfolio as a result of changes in interest rates. Declines in
interest rates, however, will reduce future investment income,
if any.
At December 31, 2008, we held AAA-rated municipal note
investments with par values totaling $21.5 million with an
auction reset feature, or auction rate securities, the
underlying assets of which are generally student loans which are
substantially backed by the U.S. federal government. Auction
rate securities are generally long-term instruments that are
intended to provide liquidity through a Dutch auction process
that resets the applicable interest rate at pre-determined
calendar intervals, allowing holders of these instruments to
rollover their holdings and continue to own their respective
securities or liquidate their holdings by selling the auction
rate securities at par. Beginning in February 2008, auctions
failed for our holdings because sell orders for these securities
exceeded the amount of purchase orders. The funds associated
with these failed auctions will not be accessible until the
issuer calls the security, a successful auction occurs, a buyer
is found outside the auction process, or the security matures.
Consequently, because there is no assurance we will be able to
liquidate our positions in these securities within the next
12 months, we have reclassified all of our auction rate
holdings to long-term investments on our consolidated balance
sheet. In addition, as there is currently no active market for
the securities we hold, we determined there to be a temporary
impairment in the value of these securities of $3.4 million
and, accordingly, have recorded an unrealized loss on these
securities, which is included as a component of other
comprehensive loss within stockholders’ equity on our
balance sheet at December 31, 2008. At December 31,
2008, we determined the impairment to be temporary, because we
believe these securities will ultimately be sold at their par
values, and at December 31, 2008, we believe we have the
ability and the intent to hold them until such time, which could
be the securities’ maturity dates. The maturity dates of
our auction rate holdings are between the years 2034 and 2040.
Until the issuers of our auction rate securities are able to
successfully close future auctions or if their credit ratings
deteriorate, we may in the future be required to record further
impairment charges on these investments, some or all of which we
may determine at some point in the future to be
other-than-temporary, and our liquidity would be adversely
affected to the extent that the cash we would otherwise receive
upon liquidation of the investments would not be available for
use in the growth of our business and other strategic
opportunities.
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ITEM 8.
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Financial
Statement and Supplementary Data
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The response to this item is submitted as a separate section of
this
Form 10-K
beginning on
page F-1.
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ITEM 9.
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Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
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None.
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ITEM 9A.
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Controls
and Procedures
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(a)
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Evaluation
of disclosure controls and procedures
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Our management evaluated, with the participation of our Chief
Executive Officer and our Chief Financial Officer, the
effectiveness of our disclosure controls and procedures, as such
term is defined in
Rules 13a-15(e)
or
15d-15(e)
promulgated under the Securities Exchange Act of 1934, as
amended, as of the end of the period covered by this annual
report on
Form 10-K,
or the Evaluation Date. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded as of
the Evaluation Date that our disclosure controls and procedures
were effective to provide reasonable assurance that the
information required to be disclosed by us in periodic SEC
reports is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding
required disclosure, and that such information is recorded,
processed, summarized and reported within the time periods
specified in SEC rules and forms.
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(b)
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Management’s
Report on Internal Control over Financial
Reporting
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Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term
is defined in Exchange Act
Rules 13a-15(f)
and
15d-15(f).
Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief
Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting
as of December 31, 2008, based on the guidelines
established in
Internal Control — Integrated
Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Our internal
control over financial reporting includes policies and
procedures that provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external reporting purposes in
accordance with U.S. generally accepted accounting
principles. Based on that evaluation, management believes that
our internal control over financial reporting was effective at
December 31, 2008.
Our management’s evaluation excluded Mercado, from which we
acquired certain assets on November 5, 2008. At
December 31, 2008, Mercado had $16.4 million and
$11.8 million of total assets and net assets, respectively.
For the year ended December 31, 2008, our statement of
operations included total revenues related to Mercado of
$0.9 million. In accordance with guidance issued by the
SEC, companies are allowed to exclude acquisitions from their
assessment of internal controls over financial reporting during
the first year subsequent to the acquisition while integrating
the acquired operations.
Ernst & Young LLP, an independent registered public
accounting firm which audits our consolidated financial
statements, has issued the following attestation report on the
effectiveness of our internal control over financial reporting.
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
Omniture, Inc.
We have audited Omniture, Inc.’s internal control over
financial reporting as of December 31, 2008, based on
criteria established in
Internal Control —
Integrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria).
Omniture, Inc.’s management is responsible for maintaining
effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over
financial reporting included in the accompanying
Management’s Report on Internal Control over Financial
Reporting. Our responsibility is to express an opinion on the
company’s internal control over financial reporting based
on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the
financial statements.
79
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
As indicated in the accompanying Management’s Report on
Internal Control over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal
control over financial reporting did not include the internal
controls of Mercado Software Ltd., which is included in the 2008
consolidated financial statements of Omniture, Inc. and
constituted $16.4 million and $11.8 million of total
and net assets, respectively, as of December 31, 2008 and
$0.9 million of revenues for the year then ended. Our audit
of internal control over financial reporting of Omniture, Inc.
also did not include an evaluation of the internal control over
financial reporting of Mercado Software Ltd.
In our opinion, Omniture, Inc. maintained, in all material
respects, effective internal control over financial reporting as
of December 31, 2008, based on the COSO criteria.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Omniture, Inc. as of
December 31, 2007 and 2008, and the related consolidated
statements of operations, convertible preferred stock and
stockholders’ (deficit) equity, and cash flows for each of
the three years in the period ended December 31, 2008, and
our report dated February 24, 2009 expressed an unqualified
opinion thereon.
/s/ Ernst & Young LLP
Salt Lake City, Utah
February 24, 2009
|
|
|
|
(c)
|
Changes
in internal control over financial reporting
|
Since the beginning of 2006, we have invested significant
resources to assess our system of internal controls. As part of
this assessment we identified areas of our internal controls
requiring improvement, and have designed and implemented
enhanced processes and controls to address issues identified
through this assessment. Areas for improvement included
streamlining our billing and collection processes, further
limiting internal access to certain data systems, enhancing the
review and approval of company expenditures and continuing to
improve coordination across the various business functions in
our company.
|
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(d)
|
Inherent
Limitations on Effectiveness of Controls
|
Our management, including our Chief Executive Officer and Chief
Financial Officer, do not expect that our disclosure controls or
our internal control over financial reporting will prevent all
errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefits
of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the
Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty,
and that breakdowns can occur because of a simple error or
mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more
people or by management override of the controls. The design of
any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions; over time,
controls may become inadequate because of changes in conditions,
or the degree of compliance with policies or procedures may
deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or
fraud may occur and not be detected.
80
|
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|
|
ITEM 9B.
|
Other
Information
|
None.
PART III
|
|
|
|
ITEM 10.
|
Directors,
Executive Officers and Corporate Governance
|
The information required by Item 10 of
Form 10-K
is incorporated by reference to our Proxy Statement for the 2009
Annual Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
December 31, 2008. Certain information required by this
item concerning our executive officers and directors is set
forth in Part I of this Annual Report on
Form 10-K
in “Business — Executive Officers and
Directors.”
|
|
|
|
ITEM 11.
|
Executive
Compensation
|
The information required by Item 11 of
Form 10-K
is incorporated by reference to our Proxy Statement for the 2009
Annual Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
December 31, 2008.
|
|
|
|
ITEM 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The information required by Item 12 of
Form 10-K
is incorporated by reference to our Proxy Statement for the 2009
Annual Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
December 31, 2008.
|
|
|
|
ITEM 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
The information required by Item 13 of
Form 10-K
is incorporated by reference to our Proxy Statement for the 2009
Annual Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
December 31, 2008.
|
|
|
|
ITEM 14.
|
Principal
Accounting Fees and Services
|
The information required by Item 14 of
Form 10-K
is incorporated by reference to our Proxy Statement for the 2009
Annual Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
December 31, 2008.
PART IV
|
|
|
|
ITEM 15.
|
Exhibits,
Financial Statement Schedules
|
(a) The following documents are filed as part of this
Annual Report on
Form 10-K:
1.
All Financial Statements
:
The following financial statements are filed as part of this
Annual Report on
Form 10-K
beginning on
page F-1:
Report of Independent Registered Public Accounting Firm;
Consolidated Balance Sheets as of December 31, 2007 and
2008;
Consolidated Statements of Operations for the years ended
December 31, 2006, 2007 and 2008;
Consolidated Statements of Convertible Preferred Stock and
Stockholders’ (Deficit) Equity for the years ended
December 31, 2006, 2007 and 2008;
81
Consolidated Statements of Cash Flows for the years ended
December 31, 2006, 2007 and 2008;
Notes to Consolidated Financial Statements
2.
Financial Statement Schedules
:
All other schedules are omitted as the required information is
either inapplicable or it is presented in the consolidated
financial statements and notes thereto.
3.
Exhibits
:
The exhibits required by Item 601 of
Regulation S-K
are listed in paragraph (b) below.
(b) Exhibits:
The following exhibits are filed or furnished herewith or are
incorporated by reference to exhibits previously filed with the
SEC:
|
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|
Incorporated by Reference
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Filed
|
|
Furnished
|
|
No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
No.
|
|
Filing Date
|
|
Herewith
|
|
Herewith
|
|
|
|
|
3
|
.1
|
|
Amended and Restated Certificate of Incorporation of Registrant
currently in effect
|
|
10-Q
|
|
|
000-52076
|
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|
|
3
|
.1
|
|
August 11, 2006
|
|
|
|
|
|
|
3
|
.2
|
|
Amended and Restated Bylaws of Registrant currently in effect
|
|
8-K
|
|
|
000-52076
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3
|
.1
|
|
December 16, 2008
|
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4
|
.1
|
|
Specimen Common Stock Certificate of Registrant
|
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S-1
|
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|
333-132987
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4
|
.1
|
|
June 22, 2006
|
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4
|
.2
|
|
Amended and Restated Registration Rights Agreement between
Registrant and certain Holders of Registrant’s Common Stock
Named therein, dated April 26, 2006
|
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S-1
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333-132987
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4
|
.2
|
|
June 9, 2006
|
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4
|
.3
|
|
Common Stock Purchase Agreement, dated as of January 27,
2009, by and among, the Registrant, WPP Luxembourg Gamma Three
Sarl and, solely with respect to Sections 5.2 and 8
thereof, WPP Group USA, Inc.
|
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8-K
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|
000-52076
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4
|
.1
|
|
January 29, 2009
|
|
|
|
|
|
|
10
|
.1*
|
|
Form of Indemnification Agreement entered into by and between
Registrant and its Directors and Officers
|
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S-1
|
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|
333-132987
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10
|
.1
|
|
May 24, 2006
|
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|
|
|
|
|
10
|
.2A*
|
|
1999 Equity Incentive Plan of Registrant, as amended
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.2A
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.2B*
|
|
Forms of Stock Option Agreement under the 1999 Equity Incentive
Plan
|
|
S-1
|
|
|
333-132987
|
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|
|
10
|
.2B
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.2C*
|
|
Form of Stock Option Agreement under the 1999 Equity Incentive
Plan used for Named Executive Officers and Non-Employee Directors
|
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S-1
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333-132987
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10
|
.2C
|
|
June 9, 2006
|
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|
|
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|
|
10
|
.3*
|
|
2006 Equity Incentive Plan of Registrant and related forms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.4A*
|
|
Employee Stock Purchase Plan of the Registrant
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.4A
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.4B*
|
|
Form of Subscription Agreement under Employee Stock Purchase Plan
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.4B
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.5
|
|
WebSideStory, Inc. Amended and Restated 2000 Equity Incentive
Plan
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.5
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.6A
|
|
WebSideStory, Inc. 2004 Equity Incentive Award Plan and Form of
Option Grant Agreement
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.6
|
|
February 29, 2008
|
|
|
|
|
82
|
|
|
|
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|
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|
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|
|
|
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|
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|
|
|
|
|
|
Incorporated by Reference
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Filed
|
|
Furnished
|
|
No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
No.
|
|
Filing Date
|
|
Herewith
|
|
Herewith
|
|
|
|
|
10
|
.6B
|
|
Form of Restricted Stock Award Grant Notice and Restricted Stock
Award Agreement under WebSideStory, Inc. 2004 Equity Incentive
Award Plan
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.6A
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.7
|
|
Avivo Corporation 1999 Equity Incentive Plan and Form of Option
Grant Agreement
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.7
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.8
|
|
WebSideStory, Inc. 2006 Employment Commencement Equity Incentive
Award Plan and Form of Option Grant Agreement
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.8
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.9
|
|
2007 Equity Incentive Plan of Registrant and related forms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.10
|
|
2008 Equity Incentive Plan of Registrant and related forms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.11
|
|
The Touch Clarity Limited Enterprise Management Incentives Share
Option Plan 2002
|
|
S-8
|
|
|
333-141352
|
|
|
|
99
|
.5
|
|
March 16, 2007
|
|
|
|
|
|
|
10
|
.12
|
|
Forms of Agreements under The Touch Clarity Limited Enterprise
Management Incentives Share Option Plan 2002
|
|
S-8
|
|
|
333-141352
|
|
|
|
99
|
.6
|
|
March 16, 2007
|
|
|
|
|
|
|
10
|
.13
|
|
Touch Clarity Limited 2006 U.S. Stock Plan
|
|
S-8
|
|
|
333-141352
|
|
|
|
99
|
.7
|
|
March 16, 2007
|
|
|
|
|
|
|
10
|
.14
|
|
Form of Stock Option Agreement under Touch Clarity Limited 2006
U.S. Stock Plan
|
|
S-8
|
|
|
333-141352
|
|
|
|
99
|
.8
|
|
March 16, 2007
|
|
|
|
|
|
|
10
|
.15*
|
|
Amended and Restated Employment Agreement between Registrant and
Joshua G. James, as amended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.16*
|
|
Separation Agreement entered into between Registrant and John R.
Pestana
|
|
10-Q
|
|
|
000-52076
|
|
|
|
10
|
.3
|
|
May 15, 2007
|
|
|
|
|
|
|
10
|
.17*
|
|
Offer Letter with Michael S. Herring, dated October 20, 2004
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.7
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18A
|
|
Basic Lease Information and Canyon Park Technology Center Office
Building Lease Agreement between the Registrant and TCU
Properties I, LLC
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8A
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18B
|
|
First Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated May 6, 2004
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8B
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18C
|
|
Second Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated
December 8, 2004
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8C
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18D
|
|
Third Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated April 30,
2005
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8D
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18E
|
|
Fourth Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated May 31,
2005
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8D
|
|
April 4, 2006
|
|
|
|
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Filed
|
|
Furnished
|
|
No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
No.
|
|
Filing Date
|
|
Herewith
|
|
Herewith
|
|
|
|
|
10
|
.18F
|
|
Fifth Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated
January 25, 2006
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8F
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18G
|
|
Sixth Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU-Canyon Park, LLC, successor in interest to
TCU Properties I, LLC, dated January 11, 2008
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.18G
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.18H
|
|
Seventh Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU-Canyon Park, LLC, successor in interest to
TCU Properties I, LLC, dated January 11, 2008
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.18H
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.19
|
|
Office Lease between Brannan Propco, LLC and Registrant, dated
January 8, 2008
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.19
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.20**
|
|
Settlement and Patent License Agreement by and between
NetRatings, Inc. and Registrant, dated February 28, 2006
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.9
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.21
|
|
NetObjects, Inc. Warrant to Purchase Stock, dated March 26,
2002
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.10
|
|
May 8, 2006
|
|
|
|
|
|
|
10
|
.22*
|
|
Change of Control Agreement between Registrant and Joshua G.
James, as amended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.23*
|
|
Form of Change of Control Agreement entered into between
Registrant and each of Brett M. Error and Christopher C.
Harrington and John Mellor, as amended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.24*
|
|
Change of Control Agreement between Registrant and Michael S.
Herring, as amended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.25
|
|
Master Finance Lease and Lease Covenant Agreement by and between
the Registrant and Zions Credit Corporation, dated March 2,
2007
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.1
|
|
March 7, 2007
|
|
|
|
|
|
|
10
|
.26**
|
|
Settlement and Patent Cross-License Agreement dated as of
August 17, 2007 by and between Visual Sciences, Inc.
(formerly known as WebSideStory, Inc.) and NetRatings, Inc.
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.26
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.27**
|
|
Patent Cross-License Agreement dated December 12, 2003 by
and between WebSideStory, Inc. and NetIQ Corporation
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.27
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.28A
|
|
Office Lease dated as of August 23, 1999 by and between
WebSideStory, Inc. and LNR Seaview, Inc.
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.28A
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.28B
|
|
First Amendment to Office Lease dated as of July 3, 2001 by
and between WebSideStory, Inc. and LNR Seaview, Inc.
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.28B
|
|
February 29, 2008
|
|
|
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Filed
|
|
Furnished
|
|
No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
No.
|
|
Filing Date
|
|
Herewith
|
|
Herewith
|
|
|
|
|
10
|
.28C
|
|
Second Amendment to Office Lease dated as of December 7,
2005 by and between WebSideStory, Inc. and Seaview PFG, LLC (as
assignee of LNR Seaview, Inc.)
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.28C
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.29
|
|
Sublease dated as of August 25, 2008 and Amendment to
Sublease dated as of October 31, 2008 between Registrant
and The Active Network, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.30***
|
|
Credit Agreement, dated as of December 24, 2008, by and
among, the Recipient, each of the lenders party thereto from
time to time and Wells Fargo Foothill, LLC, as Arranger and
Administrative Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.1
|
|
December 31, 2008
|
|
|
|
|
|
|
10
|
.31
|
|
General Continuing Guaranty, dated as of December 24, 2008,
executed by Visual Sciences, Inc. in favor of Wells Fargo
Foothill, LLC, as Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.2
|
|
December 31, 2008
|
|
|
|
|
|
|
10
|
.32
|
|
General Continuing Guaranty, dated as of December 24, 2008,
executed by Offermatica Corporation in favor of Wells Fargo
Foothill, LLC, as Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.3
|
|
December 31, 2008
|
|
|
|
|
|
|
10
|
.33
|
|
General Continuing Guaranty, dated as of December 24, 2008,
executed by Visual Sciences Technologies, LLC in favor of Wells
Fargo Foothill, LLC, as Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.4
|
|
December 31, 2008
|
|
|
|
|
|
|
10
|
.34
|
|
Security Agreement, dated as of December 24, 2008, by and
among, the Grantors party thereto from time to time and Wells
Fargo Foothill, LLC, as Administrative Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.5
|
|
December 31, 2008
|
|
|
|
|
|
|
21
|
.1
|
|
List of Subsidiaries of the Registrant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
23
|
.1
|
|
Consent of Ernst & Young LLP, Independent Registered
Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
24
|
.1
|
|
Power of Attorney (set forth on the signature page to this
Annual Report on
Form 10-K)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
31
|
.1
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
31
|
.2
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
32
|
.1
|
|
Section 1350 Certifications of Chief Executive Officer and
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
*
|
|
Indicates a management contract or
compensatory plan, contract or arrangement in which any director
or named executive officer of the Registrant participates.
|
|
|
|
**
|
|
The Securities and Exchange
Commission has granted confidential treatment with respect to
portions of this exhibit. A complete copy of this exhibit has
been filed separately with the Commission.
|
|
|
|
***
|
|
Confidential treatment has been
requested for certain portions of this exhibit. An unredacted
version of this exhibit has been filed separately with the
Securities and Exchange Commission.
|
85
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
OMNITURE, INC.
(Registrant)
Joshua G. James
President and Chief Executive Officer
Date: February 26, 2009
KNOW ALL PERSONS BY THESE PRESENTS
, that each person
whose signature appears below hereby constitutes and appoints
Joshua G. James, Michael S. Herring and Shawn J. Lindquist, and
each of them, as
his/her
true
and lawful attorney-in-fact and agent with full power of
substitution, for him/her in any and all capacities, to sign any
and all amendments to this annual report on
Form 10-K,
and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact
and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as
he/she
might
or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or his substitute, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacity and on the dates
indicated.
|
|
|
|
|
|
|
|
|
Name and Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
/s/
Joshua
G. James
Joshua
G. James
|
|
President and Chief Executive Officer and Director (Principal
Executive Officer)
|
|
February 26, 2009
|
|
|
|
|
|
|
|
/s/
Michael
S. Herring
Michael
S. Herring
|
|
Chief Financial Officer and Executive Vice President (Principal
Financial and Accounting Officer)
|
|
February 26, 2009
|
|
|
|
|
|
|
|
/s/
D.
Fraser Bullock
D.
Fraser Bullock
|
|
Director
|
|
February 26, 2009
|
|
|
|
|
|
|
|
/s/
Gregory
S. Butterfield
Gregory
S. Butterfield
|
|
Director
|
|
February 26, 2009
|
|
|
|
|
|
|
|
/s/
Dana
L. Evan
Dana
L. Evan
|
|
Director
|
|
February 26, 2009
|
|
|
|
|
|
|
|
/s/
Mark
P. Gorenberg
Mark
P. Gorenberg
|
|
Director
|
|
February 26, 2009
|
|
|
|
|
|
|
|
/s/
Rory
T. O’Driscoll
Rory
T. O’Driscoll
|
|
Director
|
|
February 26, 2009
|
|
|
|
|
|
|
|
/s/
John
R. Pestana
John
R. Pestana
|
|
Director
|
|
February 26, 2009
|
86
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of
Directors and Stockholders
Omniture, Inc.
We have audited the accompanying consolidated balance sheets of
Omniture, Inc. as of December 31, 2007 and 2008, and the
related consolidated statements of operations, convertible
preferred stock and stockholders’ (deficit) equity, and
cash flows for each of the three years in the period ended
December 31, 2008. These financial statements are the
responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Omniture, Inc. at December 31, 2007
and 2008, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended
December 31, 2008, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States),
Omniture, Inc.’s internal control over financial reporting
as of December 31, 2008, based on criteria established in
Internal Control-Integrated Framework
issued by the
Committee of Sponsoring Organizations of the Treadway Commission
and our report dated February 24, 2009 expressed an unqualified
opinion thereon.
/s/ Ernst & Young LLP
Salt Lake City, Utah
February 24, 2009
F-2
OMNITURE,
INC.
(In
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Assets:
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
77,765
|
|
|
$
|
67,020
|
|
|
Short-term investments
|
|
|
56,924
|
|
|
|
9,997
|
|
|
Accounts receivable, net of allowances of $4,730 and $9,884 at
December 31, 2007 and 2008, respectively
|
|
|
51,971
|
|
|
|
106,810
|
|
|
Prepaid expenses and other current assets
|
|
|
3,663
|
|
|
|
10,369
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
190,323
|
|
|
|
194,196
|
|
|
Property and equipment, net
|
|
|
31,214
|
|
|
|
61,482
|
|
|
Intangible assets, net
|
|
|
50,769
|
|
|
|
137,505
|
|
|
Goodwill
|
|
|
94,960
|
|
|
|
427,565
|
|
|
Long-term investments
|
|
|
—
|
|
|
|
18,136
|
|
|
Other assets
|
|
|
3,457
|
|
|
|
3,316
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
370,723
|
|
|
$
|
842,200
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity:
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
6,470
|
|
|
$
|
7,662
|
|
|
Accrued liabilities
|
|
|
17,126
|
|
|
|
41,179
|
|
|
Current portion of deferred revenues
|
|
|
42,041
|
|
|
|
101,728
|
|
|
Current portion of notes payable
|
|
|
4,407
|
|
|
|
1,617
|
|
|
Current portion of capital lease obligations
|
|
|
246
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
70,290
|
|
|
|
152,336
|
|
|
Deferred revenues, less current portion
|
|
|
1,815
|
|
|
|
10,222
|
|
|
Notes payable, less current portion
|
|
|
2,948
|
|
|
|
13,528
|
|
|
Capital lease obligations, less current portion
|
|
|
173
|
|
|
|
79
|
|
|
Other liabilities
|
|
|
4,422
|
|
|
|
8,467
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value; 10,000,000 shares
authorized; no shares issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $0.001 par value; 250,000,000 shares
authorized at December 31, 2007 and 2008; 60,636,685 and
72,891,372 shares issued and outstanding at
December 31, 2007 and 2008, respectively
|
|
|
61
|
|
|
|
73
|
|
|
Additional paid-in capital
|
|
|
340,424
|
|
|
|
754,151
|
|
|
Deferred stock-based compensation
|
|
|
(1,182
|
)
|
|
|
(366
|
)
|
|
Accumulated other comprehensive income (loss)
|
|
|
40
|
|
|
|
(3,256
|
)
|
|
Accumulated deficit
|
|
|
(48,268
|
)
|
|
|
(93,034
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
291,075
|
|
|
|
657,568
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
370,723
|
|
|
$
|
842,200
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial
statements.
F-3
OMNITURE,
INC.
Consolidated
Statements of Operations
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription, license and maintenance
|
|
$
|
74,580
|
|
|
$
|
132,010
|
|
|
$
|
265,686
|
|
|
Professional services and other
|
|
|
5,169
|
|
|
|
11,117
|
|
|
|
29,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
79,749
|
|
|
|
143,127
|
|
|
|
295,613
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription, license and maintenance
|
|
|
28,827
|
|
|
|
46,411
|
|
|
|
110,786
|
|
|
Professional services and other
|
|
|
2,999
|
|
|
|
6,953
|
|
|
|
15,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
31,826
|
|
|
|
53,364
|
|
|
|
125,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
47,923
|
|
|
|
89,763
|
|
|
|
169,673
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
35,227
|
|
|
|
61,610
|
|
|
|
129,814
|
|
|
Research and development
|
|
|
8,732
|
|
|
|
17,257
|
|
|
|
36,966
|
|
|
General and administrative
|
|
|
12,107
|
|
|
|
24,218
|
|
|
|
46,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
56,066
|
|
|
|
103,085
|
|
|
|
212,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(8,143
|
)
|
|
|
(13,322
|
)
|
|
|
(43,144
|
)
|
|
Interest income
|
|
|
2,117
|
|
|
|
5,816
|
|
|
|
1,869
|
|
|
Interest expense
|
|
|
(1,285
|
)
|
|
|
(835
|
)
|
|
|
(953
|
)
|
|
Other expense, net
|
|
|
(219
|
)
|
|
|
(554
|
)
|
|
|
(1,375
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(7,530
|
)
|
|
|
(8,895
|
)
|
|
|
(43,603
|
)
|
|
Provision for income taxes
|
|
|
195
|
|
|
|
534
|
|
|
|
1,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,725
|
)
|
|
$
|
(9,429
|
)
|
|
$
|
(44,766
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.25
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.63
|
)
|
|
Weighted-average number of shares, basic and diluted
|
|
|
30,332
|
|
|
|
53,710
|
|
|
|
71,458
|
|
See accompanying notes to the consolidated financial
statements.
F-4
OMNITURE, INC.
(Deficit) Equity
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ (Deficit) Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
Convertible
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Deferred
|
|
|
Other
|
|
|
|
|
|
Total
|
|
|
Stockholders’
|
|
|
|
|
Preferred Stock
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Stock-Based
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
(Deficit)
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Compensation
|
|
|
Income
|
|
|
Deficit
|
|
|
Loss
|
|
|
Equity
|
|
|
Balance at January 1, 2006
|
|
|
21,673,596
|
|
|
$
|
61,882
|
|
|
|
|
13,918,885
|
|
|
$
|
14
|
|
|
$
|
4,104
|
|
|
$
|
(3,270
|
)
|
|
$
|
—
|
|
|
$
|
(31,114
|
)
|
|
$
|
(31,114
|
)
|
|
$
|
(30,266
|
)
|
|
Amortization of deferred stock-based compensation, net of
forfeitures
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(114
|
)
|
|
|
1,098
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
984
|
|
|
Exercise of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
|
982,006
|
|
|
|
1
|
|
|
|
132
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
133
|
|
|
Vesting of common shares subject to repurchase
|
|
|
—
|
|
|
|
—
|
|
|
|
|
363,373
|
|
|
|
—
|
|
|
|
44
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,948
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,948
|
|
|
Accelerated vesting of employee stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
224
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
224
|
|
|
Issuance of common stock in exchange for services
|
|
|
—
|
|
|
|
—
|
|
|
|
|
250
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
Revaluation and cancellation of convertible preferred stock
warrants (134,939 shares)
|
|
|
—
|
|
|
|
(44
|
)
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercise of
Series B-2
convertible preferred stock warrants
|
|
|
142,791
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of common stock, net of issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10,305,000
|
|
|
|
10
|
|
|
|
59,224
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
59,234
|
|
|
Conversion of convertible preferred stock into common
|
|
|
(21,816,387
|
)
|
|
|
(61,838
|
)
|
|
|
|
21,816,387
|
|
|
|
22
|
|
|
|
61,816
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
61,838
|
|
|
Foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
|
9
|
|
|
|
9
|
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,725
|
)
|
|
|
(7,725
|
)
|
|
|
(7,725
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,716
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
—
|
|
|
|
—
|
|
|
|
|
47,385,901
|
|
|
|
47
|
|
|
|
127,380
|
|
|
|
(2,172
|
)
|
|
|
9
|
|
|
|
(38,839
|
)
|
|
|
(38,830
|
)
|
|
|
86,425
|
|
|
Amortization of deferred stock-based compensation, net of
forfeitures
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(38
|
)
|
|
|
990
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
952
|
|
|
Exercise of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,261,130
|
|
|
|
2
|
|
|
|
3,596
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,598
|
|
|
Vesting of common shares subject to repurchase
|
|
|
—
|
|
|
|
—
|
|
|
|
|
703,029
|
|
|
|
1
|
|
|
|
85
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
86
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,512
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,512
|
|
|
Purchases under employee stock purchase plan
|
|
|
—
|
|
|
|
—
|
|
|
|
|
11,014
|
|
|
|
—
|
|
|
|
194
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
194
|
|
|
Exercise of common stock warrants
|
|
|
—
|
|
|
|
—
|
|
|
|
|
41,671
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Issuance of common stock, net of issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
|
8,376,250
|
|
|
|
9
|
|
|
|
142,224
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
142,233
|
|
|
Issuance of common stock to former Touch Clarity shareholders,
net of issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
|
836,609
|
|
|
|
1
|
|
|
|
22,085
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22,086
|
|
|
Issuance of common stock to former Offermatica shareholders
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,021,081
|
|
|
|
1
|
|
|
|
24,770
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24,771
|
|
|
Estimated fair value of stock options substituted in connection
with the acquisition of Touch Clarity
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,322
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,322
|
|
|
Income tax benefit of stock option exercises
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
294
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
294
|
|
|
Foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40
|
|
|
|
—
|
|
|
|
40
|
|
|
|
40
|
|
|
Unrealized loss on available-for-sale securities
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
(9
|
)
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9,429
|
)
|
|
|
(9,429
|
)
|
|
|
(9,429
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9,398
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
—
|
|
|
|
—
|
|
|
|
|
60,636,685
|
|
|
|
61
|
|
|
|
340,424
|
|
|
|
(1,182
|
)
|
|
|
40
|
|
|
|
(48,268
|
)
|
|
|
(48,228
|
)
|
|
|
291,075
|
|
|
Amortization of deferred stock-based compensation, net of
forfeitures
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12
|
)
|
|
|
816
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
804
|
|
|
Exercise of stock options
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,563,092
|
|
|
|
2
|
|
|
|
8,628
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,630
|
|
|
Vesting of common shares subject to repurchase
|
|
|
—
|
|
|
|
—
|
|
|
|
|
331,709
|
|
|
|
—
|
|
|
|
164
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
164
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31,586
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31,586
|
|
|
Issuance of restricted stock awards and restricted stock units,
net of repurchases
|
|
|
—
|
|
|
|
—
|
|
|
|
|
77,366
|
|
|
|
—
|
|
|
|
(1,027
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,027
|
)
|
|
Purchases under employee stock purchase plan
|
|
|
—
|
|
|
|
—
|
|
|
|
|
17,071
|
|
|
|
—
|
|
|
|
330
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
330
|
|
|
Issuance of common stock to former Visual Sciences shareholders,
net of issuance costs
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10,265,449
|
|
|
|
10
|
|
|
|
354,836
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
354,846
|
|
|
Estimated fair value of stock options granted in connection with
the acquisition of Visual Sciences
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,251
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,251
|
|
|
Adjustment to the estimated fair value of common stock and
vested stock options substituted in connection with acquisitions
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,971
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,971
|
|
|
Foreign currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
54
|
|
|
|
—
|
|
|
|
54
|
|
|
|
54
|
|
|
Unrealized loss on available-for-sale securities
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,352
|
)
|
|
|
—
|
|
|
|
(3,352
|
)
|
|
|
(3,352
|
)
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
—
|
|
|
|
2
|
|
|
|
2
|
|
|
Comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(44,766
|
)
|
|
|
(44,766
|
)
|
|
|
(44,766
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(48,062
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
72,891,372
|
|
|
$
|
73
|
|
|
$
|
754,151
|
|
|
$
|
(366
|
)
|
|
$
|
(3,256
|
)
|
|
$
|
(93,034
|
)
|
|
$
|
(96,290
|
)
|
|
$
|
657,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial
statements.
F-5
OMNITURE,
INC.
(In
thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,725
|
)
|
|
$
|
(9,429
|
)
|
|
$
|
(44,766
|
)
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
13,032
|
|
|
|
20,386
|
|
|
|
56,576
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
3,158
|
|
|
|
13,464
|
|
|
|
32,588
|
|
|
|
|
|
|
Other non-cash transactions
|
|
|
—
|
|
|
|
(946
|
)
|
|
|
(328
|
)
|
|
|
|
|
|
Loss (gain) on foreign currency forward contracts, net
|
|
|
—
|
|
|
|
243
|
|
|
|
(738
|
)
|
|
|
|
|
|
Net changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net
|
|
|
(11,801
|
)
|
|
|
(23,121
|
)
|
|
|
(35,173
|
)
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
(1,010
|
)
|
|
|
(1,599
|
)
|
|
|
(1,001
|
)
|
|
|
|
|
|
Accounts payable
|
|
|
(1,495
|
)
|
|
|
2,145
|
|
|
|
82
|
|
|
|
|
|
|
Accrued and other liabilities
|
|
|
(1,228
|
)
|
|
|
617
|
|
|
|
3,992
|
|
|
|
|
|
|
Deferred revenues
|
|
|
10,804
|
|
|
|
16,245
|
|
|
|
57,095
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
3,735
|
|
|
|
18,005
|
|
|
|
68,327
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
—
|
|
|
|
(144,019
|
)
|
|
|
(34,788
|
)
|
|
|
|
|
|
Proceeds from sales of short-term investments
|
|
|
—
|
|
|
|
48,150
|
|
|
|
36,970
|
|
|
|
|
|
|
Proceeds from maturities of short-term investments
|
|
|
—
|
|
|
|
40,000
|
|
|
|
25,000
|
|
|
|
|
|
|
Purchases of property and equipment
|
|
|
(14,934
|
)
|
|
|
(11,975
|
)
|
|
|
(45,335
|
)
|
|
|
|
|
|
Purchases of intangible assets
|
|
|
(6,380
|
)
|
|
|
(4,545
|
)
|
|
|
(3,967
|
)
|
|
|
|
|
|
Foreign currency forward contracts
|
|
|
—
|
|
|
|
(337
|
)
|
|
|
1,454
|
|
|
|
|
|
|
Business acquisitions, net of cash acquired
|
|
|
—
|
|
|
|
(78,882
|
)
|
|
|
(68,687
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(21,314
|
)
|
|
|
(151,608
|
)
|
|
|
(89,353
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
237
|
|
|
|
3,606
|
|
|
|
8,715
|
|
|
|
|
|
|
Proceeds from employee stock purchase plan
|
|
|
—
|
|
|
|
194
|
|
|
|
330
|
|
|
|
|
|
|
Proceeds from issuance of common stock, net of issuance costs
|
|
|
59,234
|
|
|
|
142,233
|
|
|
|
—
|
|
|
|
|
|
|
Income tax benefit of stock option exercises
|
|
|
—
|
|
|
|
294
|
|
|
|
—
|
|
|
|
|
|
|
Repurchases of vested restricted stock
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,027
|
)
|
|
|
|
|
|
Proceeds from issuance of notes payable
|
|
|
9,608
|
|
|
|
2,761
|
|
|
|
22,350
|
|
|
|
|
|
|
Principal payments on notes payable and capital lease obligations
|
|
|
(5,409
|
)
|
|
|
(6,129
|
)
|
|
|
(19,424
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
63,670
|
|
|
|
142,959
|
|
|
|
10,944
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
—
|
|
|
|
122
|
|
|
|
(663
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
46,091
|
|
|
|
9,478
|
|
|
|
(10,745
|
)
|
|
|
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
22,196
|
|
|
|
68,287
|
|
|
|
77,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
68,287
|
|
|
$
|
77,765
|
|
|
$
|
67,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock and stock options for business
acquisitions
|
|
$
|
—
|
|
|
$
|
54,337
|
|
|
$
|
370,096
|
|
|
|
|
|
|
Conversion of convertible preferred stock into common
|
|
|
61,838
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
Assets acquired under capital leases
|
|
|
—
|
|
|
|
152
|
|
|
|
—
|
|
|
|
|
|
|
Revaluation and cancellation of convertible preferred stock
warrants
|
|
|
44
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
Vesting of common shares subject to repurchase
|
|
|
44
|
|
|
|
86
|
|
|
|
164
|
|
|
|
|
|
|
Acquisition of intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
378
|
|
|
|
|
|
|
Unpaid acquisition related expenses
|
|
|
—
|
|
|
|
1,798
|
|
|
|
478
|
|
|
|
|
|
|
Unpaid restructuring costs related to acquisitions
|
|
|
—
|
|
|
|
—
|
|
|
|
3,716
|
|
|
|
|
|
|
Unrealized loss on auction rate securities
|
|
|
—
|
|
|
|
—
|
|
|
|
3,364
|
|
|
|
|
|
|
Unrealized gain on short-term investments
|
|
|
—
|
|
|
|
(11
|
)
|
|
|
(4
|
)
|
|
|
|
|
See accompanying notes to the consolidated financial
statements.
F-6
Omniture,
Inc.
Notes to
Consolidated Financial Statements
|
|
|
|
1.
|
Description
of Business and Basis of Presentation
|
Description
of Business
Omniture, Inc. (the “Company”) was incorporated in
Delaware in August 1999 and has its principal offices located in
Orem, Utah. The Company began providing its enterprise on-demand
online business optimization services in February 2001. The
Company is a leading provider of online business optimization
products and services, which it delivers through the Omniture
Online Marketing Suite. The Company’s customers use its
products and services to manage and enhance online, offline and
multi-channel business initiatives. The Omniture Online
Marketing Suite, which is hosted and delivered to customers
on-demand and as an on-premise solution, consists of an open
business analytics platform and an integrated set of
optimization applications for online analytics, channel
analytics, visitor acquisition and conversion. The Omniture
Online Marketing Suite consists of Omniture SiteCatalyst, the
Company’s core product offering, Omniture DataWarehouse,
Omniture Discover, Omniture Genesis, Omniture SearchCenter,
Omniture Test&Target, Omniture SiteSearch, Omniture
Merchandising, Omniture Recommendations and Omniture Survey
services and Omniture Discover OnPremise and Omniture Discover
OnPremise for Retail software.
Principles
of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
the consolidated financial statements.
Acquisitions
As discussed in Note 2, the Company acquired Visual
Sciences, Inc. (“Visual Sciences”) and certain assets
of Mercado Software Ltd (“Mercado”) during the year
ended December 31, 2008. The Company also acquired Instadia
A/S (“Instadia”), Touch Clarity Limited (“Touch
Clarity”) and Offermatica Corporation
(“Offermatica”) during the year ended
December 31, 2007. The consolidated financial statements
include each of the acquired company’s results of
operations since its respective date of acquisition.
Segments
The Company operates its business in one reportable segment.
Use of
Estimates
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the amounts reported in the Company’s consolidated
financial statements and accompanying notes. Significant
estimates made by management include the determination of the
fair value of stock awards issued, allowances for accounts
receivable, the assessment for impairment of long-lived assets,
restructuring costs related to business acquisitions and income
taxes. The Company also uses estimates in determining the
remaining economic lives and fair values of purchased intangible
assets and property and equipment. Actual results could differ
from those estimates.
Revenue
Recognition
The Company derives its revenues from three primary sources:
(1) subscription fees from customers implementing and
utilizing the Company’s on-demand online business
optimization services; (2) license revenue from selling
software licenses; and (3) related professional and other
services, consisting primarily of consulting and training.
F-7
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The Company accounts for its subscription revenues and related
professional services revenues following the provisions of SEC
Staff Accounting Bulletin (“SAB”) No. 104,
Revenue Recognition
, and Emerging Issues Task Force
(“EITF”) Issue
No. 00-21,
Revenue Arrangements with Multiple Deliverables.
The
Company recognizes revenue when all of the following conditions
are met:
|
|
|
|
|
|
•
|
there is persuasive evidence of an arrangement;
|
|
|
|
|
•
|
the service has been provided to the customer;
|
|
|
|
|
•
|
the collection of the fees is reasonably assured; and
|
|
|
|
|
•
|
the amount of fees to be paid by the customer is fixed or
determinable.
|
The Company recognizes revenues for subscription fees that are
based on a committed number of transactions, including
implementation and
set-up
fees,
ratably beginning on the date the customer commences use of our
services and continuing through the end of the contract term.
Over-usage fees, and fees billed based on the actual number of
transactions from which the Company captures data, are billed on
a monthly basis as these fees are incurred. The Company records
amounts that have been invoiced in accounts receivable and in
deferred revenues or revenues, depending on whether the revenue
recognition criteria have been met.
The Company recognizes revenue resulting from professional
services sold with subscription offerings (generally considered
to be at the time of, or within 45 days of, sale of the
subscription offering) over the term of the related subscription
contract as these services are considered to be inseparable from
the subscription service, and the Company has not yet
established objective and reliable evidence of fair value for
the undelivered element. The Company recognizes revenues
resulting from professional services sold separately from the
subscription services as those professional services are
performed.
Although the Company’s subscription contracts are generally
noncancelable, a limited number of customers have the right to
cancel their contracts by providing prior written notice to the
Company of their intent to cancel the remainder of the contract
term. In the event a customer cancels its contract, it is not
entitled to a refund for prior services provided to it by the
Company.
The Company recognizes its license revenue in accordance with
Statement of Position (“SOP”)
97-2,
Software Revenue Recognition
and
SOP 98-9,
Modification of
SOP 97-2,
Software Revenue Recognition.
All software license
arrangements include post-contract support services for the
initial term, which are recognized ratably over the term of the
post-contract service period, typically one year. License
arrangements may also include installation and training services
as well. As such, a combination of these products and services
represent a “multiple-element” arrangement for revenue
recognition purposes.
For contracts with multiple elements, the Company recognizes
revenue using the residual method in accordance with
SOP 98-9.
Under the residual method, the fair value of the undelivered
elements is deferred and the remaining portion of the
arrangement fee is allocated to the delivered elements and
recognized as revenue, assuming all other revenue recognition
criteria have been met. If evidence of fair value for each
undelivered element of the arrangement does not exist, all
revenue from the arrangement is recognized when evidence of fair
value is determined or when all elements of the arrangement are
delivered. For term software license contracts, license revenue
is recognized over the applicable license term.
Generally, perpetual software license agreements entered into by
the Company after the date of the acquisitions of Visual
Sciences and Mercado entitle the customer to receive, at no
additional cost, licenses to certain software released after the
date of their license agreement. Revenues associated with these
license agreements are recognized over the period in which the
customer is entitled to receive these additional licenses free
of charge, which is generally three years.
F-8
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Post-contract support services provide customers with rights to,
when and if available, updates, maintenance releases and patches
released during the term of the support period. The Company does
not provide custom software development services or create
tailored products to sell to specific customers.
Deferred
Revenues
Deferred revenues consist of billings or payments received in
advance of revenue recognition for the Company’s products
and services described above and the Company recognizes them as
revenue only when the revenue recognition criteria are met.
Cash
and Cash Equivalents and Short-term Investments
Cash and cash equivalents consist of cash on deposit with banks,
money market funds and highly liquid debt securities with an
original maturity of 90 days or less. Short-term
investments include debt securities with an original maturity
greater than 90 days. The Company classifies its
investments in debt securities as available-for-sale and
realized gains and losses are included in income based on the
specific identification method. Unrealized gains and losses on
available-for-sale securities are recorded to other
comprehensive income, a component of stockholders’
(deficit) equity. Interest on securities classified as
available-for-sale is included as a component of interest income.
Concentrations
of Credit Risk and Significant Customers
The Company’s financial instruments that are exposed to
concentrations of credit risk consist primarily of cash and cash
equivalents, available-for-sale securities, foreign currency
forward contracts and trade accounts receivable. Although the
Company deposits its cash and cash equivalents with multiple
financial institutions, its deposits, at times, may exceed
federally insured limits. The Company’s available-for-sale
securities are investment grade and the Company’s
investment policy requires diversification of the portfolio in
order to limit the potential credit risk exposure. The Company
is exposed to credit risks in the event of default by the
issuers of the available-for-sale securities. Collateral is not
required for accounts receivable; however, the Company regularly
evaluates customers’ financial condition and
creditworthiness.
No customer accounted for 5% or greater of accounts receivable
at December 31, 2007 and 2008. America Online and certain
of its affiliated entities, collectively, accounted for 11% of
total revenues during the year ended December 31, 2006. No
other customer accounted for more than 10% of total revenues
during the year ended December 31, 2006 and no customer
accounted for more than 10% of total revenues during the years
ended December 31, 2007 and 2008.
Subscription revenues accounted for 94% of total revenues in
2006, 92% of total revenues in 2007 and 90% of total revenues in
2008.
At December 31, 2007 and 2008, tangible assets located
outside the United States were not material. No single foreign
country accounted for more than 10% of total revenues during the
years ended December 31, 2006, 2007 and 2008.
F-9
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The following table sets forth revenues from customers within
and outside the United States (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Revenues from customers within the United States
|
|
$
|
66,468
|
|
|
$
|
106,258
|
|
|
$
|
213,212
|
|
|
Revenues from customers outside the United States
|
|
|
13,281
|
|
|
|
36,869
|
|
|
|
82,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
$
|
79,749
|
|
|
$
|
143,127
|
|
|
$
|
295,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from customers outside the United States as a
percentage of total revenues
|
|
|
17
|
%
|
|
|
26
|
%
|
|
|
28
|
%
|
Service
Provider Concentration
All of the Company’s servers containing customer data are
located in various third-party data center facilities located
throughout the world, primarily in the United States and Europe.
The Company does not control the operation of these facilities
and is vulnerable to damage or interruption in the event any of
these third-party, data center facilities fail.
Accounts
Receivable
Accounts receivable are recorded at the invoiced amount and are
not interest bearing. The Company records a sales allowance to
provide for estimated future adjustments to accounts receivable,
generally resulting from credits issued to customers in
conjunction with amendments or renewals of subscription service
arrangements. Specific provisions primarily are made based on
amendments or renewals associated with specific subscription
service arrangements that are expected to result in the issuance
of customer credits. Non-specific provisions are also made based
on actual credits issued as a percentage of the Company’s
historical revenues. Provisions for sales allowances are
recorded as a reduction to revenues. The Company evaluates the
estimate of sales allowances on a regular basis and adjusts the
amount reserved accordingly.
The Company makes judgments as to its ability to collect
outstanding accounts receivable and provides allowances when
collection becomes doubtful. Specific provisions are made based
on an
account-by-account
analysis of collectability. Non-specific provisions are made for
non-customer-specific accounts based on the Company’s
historical bad debt experience and current economic trends.
Provisions are recorded in general and administrative expenses.
The Company writes off customer accounts receivable balances to
the allowance for doubtful accounts when it becomes likely that
they will not be collected.
The changes in the Company’s allowances for accounts
receivable were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Sales allowance
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
835
|
|
|
$
|
1,305
|
|
|
$
|
3,171
|
|
|
Provision
|
|
|
3,671
|
|
|
|
5,881
|
|
|
|
7,998
|
|
|
Write-offs
|
|
|
(3,201
|
)
|
|
|
(4,015
|
)
|
|
|
(6,700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
1,305
|
|
|
$
|
3,171
|
|
|
$
|
4,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-10
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Bad debt allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
127
|
|
|
$
|
734
|
|
|
$
|
1,559
|
|
|
Provision
|
|
|
650
|
|
|
|
1,102
|
|
|
|
6,829
|
|
|
Write-offs
|
|
|
(43
|
)
|
|
|
(277
|
)
|
|
|
(2,973
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
734
|
|
|
$
|
1,559
|
|
|
$
|
5,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and Equipment
Property and equipment are stated at cost. Depreciation and
amortization of property and equipment, including amortization
of leasehold improvements and assets under capital leases, are
generally calculated on a straight-line basis over the estimated
useful lives of those assets as follows:
|
|
|
|
|
Computers, equipment and software
|
|
3 to 4 years
|
|
Furniture and fixtures
|
|
7 years
|
|
Leasehold improvements
|
|
Shorter of the estimated useful life or the lease term
|
Long-lived
Assets, Including Goodwill
Periodically the Company assesses potential impairment of its
long-lived assets, which include property, equipment and
acquired intangible assets, in accordance with the provisions of
Statement of Financial Accounting Standards (“SFAS”)
No. 144,
Accounting for the Impairment and Disposal of
Long-Lived Assets
. The Company performs an impairment review
whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. Factors the Company
considers important that could trigger an impairment review
include, but are not limited to, significant under-performance
relative to historical or projected future operating results,
significant changes in the manner of its use of acquired assets
or the Company’s overall business strategy and significant
industry or economic trends. When the Company determines that
the carrying value of a long-lived asset may not be recoverable
based upon the existence of one or more of the above indicators,
it determines the recoverability by comparing the carrying
amount of the asset to net future undiscounted cash flows that
the asset is expected to generate. The Company recognizes an
impairment charge equal to the amount by which the carrying
amount exceeds the estimated fair value of the asset.
The Company recorded goodwill in conjunction with its
acquisitions of Instadia, Touch Clarity, Offermatica, Visual
Sciences and certain assets of Mercado (see Note 2). The
Company reviews goodwill for impairment, at least annually, in
accordance with SFAS No. 142,
Goodwill and Other
Intangible Assets,
based on a single reporting unit. The
Company believes it operates in a single reporting unit because
its chief operating decision maker, as defined in
SFAS No. 131,
Disclosures about Segments of an
Enterprise and Related Information
, does not regularly
review operating results other than at a consolidated level for
purposes of decision making regarding resource allocation and
operating performance. The Company generally performs its annual
goodwill impairment test on October 1, 2008.
Long-term
Investments
Long-term investments consist of auction rate securities that
the Company does not expect to liquidate within the next twelve
months due to the uncertainty related to the liquidity in the
auction rate security market (see Note 3). The Company
classifies its auction rate securities as available-for-sale.
F-11
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Foreign
Currency
The Company’s results of operations and cash flows are
subject to fluctuations due to changes in foreign currency
exchange rates, particularly changes in the Australian dollar,
British pound, Canadian dollar, Danish krone, European Union
euro, Hong Kong dollar, Japanese yen and Swedish krona.
The functional currency of the Company’s international
subsidiaries is generally the local currency. The financial
statements of these subsidiaries are translated into
U.S. dollars using period-end or historical rates of
exchange for assets and liabilities and average rates of
exchange for the period for revenues and expenses. Translation
gains and losses, including those related to intercompany
foreign currency balances that are of a long-term-investment
nature, are recorded in accumulated other comprehensive income
(loss) as a component of stockholders’ equity. Foreign
currency transaction losses, net are included in other expense,
net in the accompanying consolidated statements of operations
and were approximately $219,000, $480,000, and $1,387,000 for
the years ended December 31, 2006, 2007 and 2008,
respectively.
During the year ended December 31, 2008, the Company
entered into foreign currency forward contracts to offset
foreign currency transaction gains and losses primarily related
to cash and accounts receivable balances denominated in certain
foreign currencies. These forward contracts were not designated
as accounting hedges under SFAS No. 133,
Accounting
for Derivative Instruments and Hedging Activities
. The
Company recorded its outstanding foreign currency forward
contracts at their estimated fair value at December 31,
2008 based on quoted market prices. During the year ended
December 31, 2008, the Company recorded net realized gains
of $1,454,000 and unrealized losses of $716,000 associated with
these forward contracts in other expense, net in the
accompanying consolidated statements of operations.
Software
Development Costs
The Company follows the guidance of EITF Issue
No. 00-2,
Accounting for Web Site Development Costs,
and EITF Issue
No. 00-3,
Application of AICPA Statement of Position
97-2
to
Arrangements That Include the Right to Use Software Stored on
Another Entity’s Hardware.
EITF Issue
No. 00-2
sets forth the accounting for Web site development costs based
on the Web site development activity. EITF Issue
No. 00-3
sets forth the accounting for software in a hosting arrangement.
The Company follows the guidance set forth in
SOP No. 98-1,
Accounting for the Cost of Computer Software Developed or
Obtained for Internal Use,
in accounting for the development
of its on-demand online business optimization software, and
other software the Company develops for internal use.
SOP No. 98-1
requires companies to capitalize qualifying computer software
costs, which are incurred during the application development
stage, and amortize them over the software’s estimated
useful life.
Commissions
The Company records sales commissions when the commissions are
earned, which is generally when the corresponding revenue has
been recognized or at the time of collection of the customer
account receivable. Commissions paid to sales personnel are not
recoverable in the event the customer terminates service.
Commission expense was $8,241,000, $12,195,000 and $20,306,000
for the years ended December 31, 2006, 2007 and 2008,
respectively.
Leases
The Company leases its facilities and a portion of its network
infrastructure equipment under operating leases, and accounts
for those leases in accordance with SFAS No. 13,
Accounting for Leases.
For facility leases that contain
rent escalation or rent concession provisions, the Company
records the total rent payable during the lease term on a
straight-line basis over the term of the lease. The Company
records the difference between the rent paid and the
straight-line rent as a deferred rent liability in the
accompanying consolidated balance sheets.
F-12
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Advertising
The Company expenses advertising as incurred. Advertising
expense was $308,000, $1,969,000 and $3,150,000 for the years
ended December 31, 2006, 2007 and 2008, respectively.
Stock-based
Compensation
Prior to January 1, 2006, the Company measured stock-based
compensation expense as the difference, if any, between the
estimated fair value of the Company’s common stock on the
date of grant and the exercise price under the recognition and
measurement provisions of Accounting Principles Board
(“APB”) Opinion No. 25,
Accounting for Stock
Issued to Employees
, as permitted by SFAS No. 123,
Accounting for Stock-Based Compensation
.
Effective January 1, 2006, the Company adopted the fair
value recognition provisions of SFAS No. 123R,
Share-Based Payment
, using the prospective transition
method, which requires the Company to apply its provisions only
to awards granted, modified, repurchased or cancelled on or
after the effective date. Under this transition method, total
stock-based compensation expense recognized beginning
January 1, 2006 is based on the following: (1) the
grant-date fair value of stock-based awards granted or modified
on or after January 1, 2006; and (2) the balance of
deferred stock-based compensation related to stock option awards
granted prior to January 1, 2006, which was calculated
using the intrinsic-value method as previously permitted under
APB Opinion No. 25.
The Company accounts for stock option grants to non-employees in
accordance with SFAS No. 123R and EITF Issue
No. 96-18,
Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services
, which require that the fair value of
these instruments be recognized as an expense over the period in
which the related services are rendered.
Income
Taxes
The Company uses the liability method of accounting for income
taxes in accordance with SFAS No. 109,
Accounting
for Income Taxes.
Under this method, deferred tax assets and
liabilities are determined based on temporary differences
between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in
which the differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in the Company’s consolidated
statements of operations in the period that includes the
enactment date. Valuation allowances are established when
necessary to reduce deferred tax assets when it is determined
that it is more likely than not that some portion of the
deferred tax asset will not be realized. Changes in ownership
will limit the amount of net operating loss carryforwards that
can be utilized annually in the future to offset taxable income
(see Note 6).
In July 2006, the Financial Accounting Standards Board
(“FASB”), issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes — An
Interpretation of FASB Statement No. 109
(“FIN 48”). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in an
entity’s financial statements in accordance with
SFAS No. 109, and prescribes a recognition threshold
and measurement attributes for financial statement disclosure of
tax positions taken or expected to be taken on a tax return.
Under FIN 48, the impact of an uncertain income tax
position on the income tax return must be recognized at the
largest amount that is more-likely-than-not to be sustained upon
audit by the relevant taxing authority. An uncertain income tax
position will not be recognized if it has less than a 50%
likelihood of being sustained. Additionally, FIN 48
provides guidance on de-recognition, classification, interest
and penalties, accounting in interim periods, disclosure and
transition.
At December 31, 2007 and 2008, there were no material
unrecognized tax benefits except for certain research tax
credits and those acquired from Visual Sciences. Any future
adjustments to the unrecognized tax benefit will have no impact
on the Company’s effective tax rate due to the valuation
allowance which fully offsets these tax benefits. For the years
ended December 31, 2006, 2007 and 2008, the Company did not
recognize any material interest and penalties related to income
taxes.
F-13
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Net
Loss Per Share
The following table presents the numerator and a reconciliation
of the denominator used in the calculation of net loss per
share, basic and diluted (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,725
|
)
|
|
$
|
(9,429
|
)
|
|
$
|
(44,766
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
31,134
|
|
|
|
54,375
|
|
|
|
71,766
|
|
|
Weighted-average common shares outstanding subject to repurchase
|
|
|
(802
|
)
|
|
|
(665
|
)
|
|
|
(308
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for net loss per share, basic and diluted
|
|
|
30,332
|
|
|
|
53,710
|
|
|
|
71,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following weighted-average common stock equivalents (in
thousands) were excluded from the computation of diluted net
loss per share because they had an anti-dilutive impact:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Common shares outstanding subject to repurchase
|
|
|
784
|
|
|
|
657
|
|
|
|
298
|
|
|
Employee stock-based awards
|
|
|
5,110
|
|
|
|
5,589
|
|
|
|
3,678
|
|
|
Warrants
|
|
|
374
|
|
|
|
241
|
|
|
|
240
|
|
|
Unvested restricted stock awards and restricted stock units
|
|
|
—
|
|
|
|
—
|
|
|
|
13
|
|
|
Convertible preferred stock
|
|
|
11,016
|
|
|
|
—
|
|
|
|
—
|
|
Comprehensive
Loss
Comprehensive loss is equal to net loss plus other comprehensive
income (loss). Other comprehensive income (loss) includes
changes in stockholders’ equity that are not the result of
transactions with stockholders.
The components of accumulated other comprehensive income (loss)
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Net foreign currency translation gains
|
|
$
|
9
|
|
|
$
|
49
|
|
|
$
|
103
|
|
|
Unrealized loss on available-for-sale securities
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
(3,361
|
)
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated comprehensive income (loss)
|
|
$
|
9
|
|
|
$
|
40
|
|
|
$
|
(3,256
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recently
Adopted Accounting Pronouncements
Effective January 1, 2008, the Company adopted
SFAS No. 157,
Fair Value Measurements
, which
establishes a framework for measuring fair value in generally
accepted accounting principles, clarifies the definition of fair
value within that framework and expands disclosures about the
use of fair value measurements. SFAS No. 157 is
effective for fiscal years beginning after November 15,
2007. However, in February 2008, the Financial Accounting
Standards Board (“FASB”) issued FASB Staff Position
(“FSP”)
No. 157-2,
Effective Date of FASB Statement No. 157
, which
deferred the effective date of SFAS No. 157 for one
year for non-financial assets and liabilities, except for
certain items, such as the Company’s cash and cash
equivalents, investments and foreign currency
F-14
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
forward contracts that are recognized or disclosed at fair value
in the financial statements on a recurring basis (at least
annually) (see Note 3). The Company is currently evaluating
the impact of SFAS No. 157 on its consolidated
financial statements for items within the scope of FSP
No. 157-2,
which will become effective on January 1, 2009. In October
2008, the FASB issued FSP
No. 157-3
Determining the Fair Value of a Financial Asset When the
Market for That Asset Is Not Active
. FSP
No. 157-3
clarifies the application of SFAS No. 157 in a market
that is not active, and provides guidance on the key
considerations in determining the fair value of a financial
asset when the market for that financial asset is not active.
FSP
No. 157-3
is effective for all periods presented in accordance with
SFAS No. 157. The Company considered the additional
guidance with respect to the valuation of its financial assets
and liabilities and their corresponding designation within the
fair value hierarchy. The adoption did not have a material
impact on the Company’s consolidated results of operations
or financial condition.
Effective January 1, 2008, the Company adopted
SFAS No. 159,
The Fair Value Option for Financial
Assets and Financial Liabilities
. SFAS No. 159
permits companies to elect to measure certain financial
instruments and certain other items at fair value. The standard
requires that unrealized gains and losses on items for which the
fair value option has been elected be reported in earnings. The
Company did not elect to measure any additional financial
instruments at fair value as a result of this statement.
Therefore, the adoption of SFAS No. 159 did not have a
material impact on its consolidated financial statements.
Recent
Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141R,
Business Combinations.
SFAS No. 141R requires
an acquirer to measure the identifiable assets acquired, the
liabilities assumed and any noncontrolling interest in the
acquiree at their fair values on the acquisition date, with
goodwill being the excess value over the net identifiable assets
acquired. SFAS No. 141R is effective for financial
statements issued for fiscal years beginning after
December 15, 2008. The Company expects the adoption of
SFAS No. 141R to have a material impact on the
Company’s consolidated financial statements if and when the
Company completes a business acquisition on or after the
adoption date of this statement.
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements.
SFAS No. 160 clarifies that a
noncontrolling interest in a subsidiary should be reported as
equity in the consolidated financial statements. The calculation
of earnings per share will continue to be based on income
amounts attributable to the parent. SFAS No. 160 is
effective for financial statements issued for fiscal years
beginning after December 15, 2008. Early adoption is
prohibited. The Company does not expect the adoption of
SFAS No. 160 to have a material impact on its
consolidated financial statements.
In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging
Activities.
SFAS No. 161 requires additional
disclosures about the objectives of derivative instruments and
hedging activities, the method of accounting for such
instruments under SFAS No. 133 and its related
interpretations, and a tabular disclosure of the effects of such
instruments and related hedged items on financial position,
financial performance, and cash flows. SFAS No. 161 is
effective for financial statements issued for fiscal years
beginning after November 15, 2008. The Company is currently
evaluating the potential impact the adoption of
SFAS No. 161 may have on its consolidated financial
statements.
In April 2008, the FASB issued FSP
No. 142-3,
Determination of Useful Life of Intangible Assets
. FSP
No. 142-3
amends the factors that should be considered in developing the
renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under
SFAS No. 142,
Goodwill and Other Intangible
Assets
. FSP
No. 142-3
also requires expanded disclosure related to the determination
of intangible asset useful lives. FSP
No. 142-3
is effective for fiscal years beginning after December 15,
2008. Early adoption is prohibited. The Company is currently
evaluating the potential impact the adoption of FSP
No. 142-3
may have on its consolidated financial statements.
F-15
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Instadia
A/S
On January 18, 2007, the Company acquired all of the
outstanding voting stock of Instadia, a provider of enterprise,
on-demand Web analytics services based in Copenhagen, Denmark.
The Company purchased Instadia to acquire its existing customer
base, key personnel and technology. The aggregate purchase price
was approximately $14,349,000, which consisted of (1) total
cash consideration of $11,436,000, (2) restructuring
charges of $2,433,000, (3) acquisition-related costs and
(4) a license payment to NetRatings, Inc.
(“NetRatings”) related to the Instadia acquisition of
approximately $319,000, which the Company elected to make in
February 2007 in accordance with the terms of the settlement and
patent license agreement entered into with NetRatings in
February 2006.
The restructuring charges recorded in conjunction with the
acquisition related to severance payments and severance-related
benefits associated with the termination of nine former Instadia
employees, primarily in the research and development and
administrative functions, and the cost to terminate an existing
Instadia contractual obligation. These restructuring charges,
all of which were paid prior to December 31, 2007, were
accounted for in accordance with EITF Issue
No. 95-3,
Recognition of Liabilities in Connection with a Purchase
Business Combination
.
The following table summarizes the allocation of the aggregate
purchase price for Instadia and the estimated useful lives for
the acquired intangible assets (in thousands):
|
|
|
|
|
|
|
Current assets
|
|
$
|
2,033
|
|
|
Property and equipment
|
|
|
193
|
|
|
Other assets
|
|
|
73
|
|
|
Acquired intangibles:
|
|
|
|
|
|
Existing technology (four-year estimated useful life)
|
|
|
600
|
|
|
Customer contracts and related relationships (seven-year
estimated useful life)
|
|
|
4,400
|
|
|
Non-compete agreements (two-year estimated useful life)
|
|
|
600
|
|
|
Patent license (five-year estimated useful life)
|
|
|
148
|
|
|
Goodwill
|
|
|
10,836
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
18,883
|
|
|
Current liabilities
|
|
|
3,400
|
|
|
Long-term liabilities
|
|
|
1,134
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
4,534
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
14,349
|
|
|
|
|
|
|
|
Except for deferred revenues, the Instadia tangible assets and
liabilities assumed by the Company were valued at their
respective carrying amounts at the acquisition date, as the
Company believes these amounts approximated their current fair
value. Deferred revenues were reduced to their estimated fair
value, which represented an amount equivalent to the estimated
costs of fulfilling the remaining contractual obligations
associated with these deferred revenues. In total, the Instadia
acquired intangible assets had a weighted-average estimated
useful life of 6.1 years. The amount recorded as goodwill
is not deductible for income tax purposes.
Because the cash consideration associated with the acquisition
was denominated in Danish krone, in December 2006, the Company
entered into a foreign currency forward contract with a
financial institution to protect against currency exchange rate
risk associated with this transaction. Upon the settlement of
this foreign
F-16
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
currency forward contract, in January 2007, the Company
recognized a realized loss of $337,000 in its consolidated
statement of operations.
Touch
Clarity Limited
On March 1, 2007, the Company acquired all of the
outstanding voting stock of Touch Clarity, a provider of
enterprise on-demand automated onsite behavioral targeting and
optimization solutions, based in London, England. The Company
purchased Touch Clarity to acquire key personnel and technology.
The aggregate purchase price was approximately $62,887,000,
which consisted of (1) total cash consideration of
approximately $31,614,000, (2) the issuance of
836,609 shares of Omniture’s common stock valued at
approximately $22,086,000, net of issuance costs, (3) the
fair value of substituted options, (4) acquisition-related
costs and (5) a license payment to NetRatings related to
the Touch Clarity acquisition of approximately $453,000, which
Omniture elected to make in April 2007 in accordance with the
terms of the settlement and patent license agreement entered
into with NetRatings in February 2006. The fair value of the
836,609 shares of common stock was determined based on the
average closing price of the Company’s common stock during
the period two days before and two days after the terms of the
acquisition were agreed to and announced.
The terms of the acquisition provided for the payment of up to
$3,000,000 in additional consideration during 2008, contingent
upon the achievement of certain milestones during 2007. During
the year ended December 31, 2008, it was determined that
the actual milestones had been achieved in accordance with the
acquisition agreement. As a result, the Company accrued a total
of $2,124,000 in additional consideration at December 31,
2008, which increased the aggregate purchase price and goodwill.
In connection with the closing of the acquisition, the holders
of both vested and unvested options to purchase shares of Touch
Clarity common stock received replacement options to purchase
shares of Omniture common stock (the “Replacement
Options”), with effectively the same intrinsic value at the
acquisition date as the Touch Clarity options which were
replaced. The $6,749,000 fair value of the Replacement Options
included in the purchase price was estimated using the
Black-Scholes-Merton option pricing model. Option pricing models
require the use of highly subjective market assumptions,
including expected stock price volatility, which if changed can
materially affect fair value estimates. Significant assumptions
used in estimating the fair value of these stock options include
expected volatility of 60%, expected option term of between
4.0 years and 5.7 years based on the age of the
original award and a risk-free interest rate of 4.5%.
F-17
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The following table summarizes the allocation of the aggregate
purchase price for Touch Clarity and the estimated useful lives
for the acquired intangible assets (in thousands):
|
|
|
|
|
|
|
Current assets
|
|
$
|
2,356
|
|
|
Property and equipment
|
|
|
1,374
|
|
|
Other assets
|
|
|
127
|
|
|
Acquired intangibles:
|
|
|
|
|
|
Existing technology (seven-year estimated useful life)
|
|
|
14,300
|
|
|
Customer contracts and related relationships (eight-year
estimated useful life)
|
|
|
3,700
|
|
|
Core technology (six-year estimated useful life)
|
|
|
3,300
|
|
|
Patent license (five-year estimated useful life)
|
|
|
166
|
|
|
Goodwill
|
|
|
41,755
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
67,078
|
|
|
Current liabilities
|
|
|
3,869
|
|
|
Long-term liabilities
|
|
|
322
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
4,191
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
62,887
|
|
|
|
|
|
|
|
Except for deferred revenues, the Touch Clarity tangible assets
and liabilities assumed by Omniture were valued at their
respective carrying amounts at the acquisition date, as Omniture
believes these amounts approximated their current fair value.
Deferred revenues were reduced to their estimated fair value,
which represented an amount equivalent to the estimated costs of
fulfilling the remaining contractual obligations associated with
these deferred revenues. In total, the Touch Clarity acquired
intangible assets had a weighted-average estimated useful life
of 7.0 years. The amount recorded as goodwill is not
deductible for income tax purposes.
Offermatica
On December 13, 2007, Omniture acquired all of the
outstanding voting stock of Offermatica, an on-demand provider
of A/B and multivariate testing solutions that enable companies
to define and test the structure and other elements of their Web
sites. Omniture purchased Offermatica to acquire its existing
customer base, key personnel and technology. The results of
operations of Offermatica are included in Omniture’s
results of operations from the acquisition date.
The aggregate purchase price was approximately $64,985,000,
which consisted of (1) cash consideration of approximately
$33,235,000, (2) 1,021,081 shares of Omniture common
stock valued at approximately $29,315,000,
(3) acquisition-related costs and (4) a license
payment to NetRatings of approximately $879,000 related to the
Offermatica acquisition, which Omniture elected to make in
accordance with the terms of the settlement and patent license
agreement entered into with NetRatings in February 2006. The
fair value of the 1,021,081 shares of common stock was
determined based on the average closing price of the
Company’s common stock for the three days prior to the
closing of the acquisition.
F-18
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The following table summarizes the allocation of the aggregate
purchase price for Offermatica and the estimated useful lives
for the acquired intangible assets (in thousands):
|
|
|
|
|
|
|
Current assets
|
|
$
|
2,377
|
|
|
Property and equipment
|
|
|
1,074
|
|
|
Other assets
|
|
|
52
|
|
|
Acquired intangibles:
|
|
|
|
|
|
Existing technology (four-year estimated useful life)
|
|
|
10,700
|
|
|
Customer contracts and related relationships (six-year estimated
useful life)
|
|
|
5,200
|
|
|
Core technology (four-year estimated useful life)
|
|
|
2,200
|
|
|
Trade name / trademarks (eight-month estimated useful life)
|
|
|
100
|
|
|
Patent license (five-year estimated useful life)
|
|
|
486
|
|
|
Goodwill
|
|
|
47,261
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
69,450
|
|
|
Current liabilities
|
|
|
4,465
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
4,465
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
64,985
|
|
|
|
|
|
|
|
Except for deferred revenues, the Offermatica tangible assets
and liabilities assumed by Omniture were valued at their
respective carrying amounts at the acquisition date, as the
Company believes these amounts approximated their current fair
value. Deferred revenues were reduced to their estimated fair
value, which represented an amount equivalent to the estimated
costs of fulfilling the remaining contractual obligations
associated with these deferred revenues. In total, the
Offermatica acquired intangible assets had a weighted-average
estimated useful life of 4.6 years. The amount recorded as
goodwill is not deductible for income tax purposes.
Visual
Sciences, Inc.
On January 17, 2008, the Company acquired all of the
outstanding voting stock of Visual Sciences, a provider of
on-demand Web analytics applications. The Company purchased
Visual Sciences to acquire its existing customer base, key
personnel and technology.
The preliminary aggregate purchase price was approximately
$447,195,000, which consisted of (1) the issuance of
10,265,449 shares of the Company’s common stock upon
closing of the acquisition, valued at approximately
$354,846,000, net of issuance costs, (2) cash consideration
of approximately $50,069,000 paid upon closing of the
acquisition, (3) the fair value of assumed Visual Sciences
stock options of $15,251,000, (4) acquisition-related
costs, (5) restructuring charges and (6) a $2,250,000
license payment to NetRatings in accordance with a settlement
and patent cross-license agreement entered into by Visual
Sciences with NetRatings in August 2007. The fair value of the
10,265,449 shares of common stock was determined based on
the average closing price of the Company’s common stock
during the period two days before and two days after the terms
of the acquisition were agreed to and announced.
Under the terms of the acquisition, each outstanding share of
Visual Sciences capital stock was converted into 0.49 of a share
of the Company’s common stock and $2.39 in cash. In
connection with the acquisition, options to purchase Visual
Sciences common stock outstanding at the time of closing were
assumed by the Company and converted into options to purchase
shares of Omniture common stock based on an option exchange
ratio pursuant to the terms of the definitive agreement.
F-19
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The Company also issued approximately 118,478 shares of its
common stock in exchange for unvested Visual Sciences restricted
stock awards (“RSAs”) that remain subject to
forfeiture based on the original vesting schedule applicable to
such awards. During the year ended December 31, 2008, the
Company paid total cash of $154,000 related to shares that
vested from RSAs. At December 31, 2008, the Company was
required to pay the holders of the remaining unvested RSAs up to
$220,000 in cash as these RSAs vest.
The fair value of Visual Sciences stock options assumed was
estimated using the Black-Scholes-Merton option pricing model.
Option pricing models require the use of highly subjective
market assumptions, including expected stock price volatility,
which if changed can materially affect fair value estimates. The
more significant assumptions used in estimating the fair value
of these stock options include expected volatility of 52%,
expected option term of between 0.2 years and
4.0 years based on the age of the original award or
expected post-termination period and a risk-free interest rate
of between 3.8% and 4.1%.
Acquisition-related costs for the Visual Sciences acquisition
totaled $17,426,000, of which $87,000 were unpaid at
December 31, 2008.
The estimated restructuring charges recorded in conjunction with
the acquisition totaled $7,353,000 and related to
(1) severance payments and severance-related benefits
associated with the termination of approximately 70 Visual
Sciences employees from all functions within the business made
redundant by the acquisition and (2) estimated excess
facilities costs resulting from the employee terminations
included in this restructuring. These restructuring charges were
accounted for in accordance with EITF Issue
No. 95-3.
Future decreases to the estimates of executing the restructuring
plan will be recorded as an adjustment to goodwill indefinitely.
Increases to the estimates of the restructuring plan will be
recorded as an adjustment to goodwill during the purchase
accounting allocation period and as an adjustment to operating
expenses thereafter.
The following table summarizes the activity related to the
Visual Sciences restructuring (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and
|
|
|
Excess
|
|
|
|
|
|
|
|
Benefits
|
|
|
Facilities
|
|
|
Total
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Costs
accrued
(1)
|
|
|
4,539
|
|
|
|
2,814
|
|
|
|
7,353
|
|
|
Cash payments
|
|
|
(4,274
|
)
|
|
|
(650
|
)
|
|
|
(4,924
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
$
|
265
|
|
|
$
|
2,164
|
|
|
$
|
2,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Included as a component of the aggregate purchase price of the
Visual Sciences acquisition.
|
F-20
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The following table summarizes the allocation of the preliminary
aggregate purchase price for Visual Sciences and the estimated
useful lives for the acquired intangible assets (in thousands):
|
|
|
|
|
|
|
Current assets
|
|
$
|
37,211
|
|
|
Property and equipment
|
|
|
10,357
|
|
|
Other assets
|
|
|
157
|
|
|
Acquired intangibles:
|
|
|
|
|
|
Existing technology (3.8 year weighted-average estimated
useful life)
|
|
|
20,500
|
|
|
Customer contracts and related relationships (7.3 year
weighted-average estimated useful life)
|
|
|
68,500
|
|
|
Core technology (3.5 year weighted-average estimated useful
life)
|
|
|
9,500
|
|
|
Maintenance agreements and related relationships (7.0 year
weighted-average estimated useful life)
|
|
|
5,700
|
|
|
Patent license (6.6 year weighted-average estimated useful
life)
|
|
|
6,783
|
|
|
Goodwill
|
|
|
320,961
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
479,669
|
|
|
Current liabilities
|
|
|
21,775
|
|
|
Long-term liabilities
|
|
|
10,699
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
32,474
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
447,195
|
|
|
|
|
|
|
|
The Visual Sciences tangible assets and liabilities assumed by
the Company were valued at their respective carrying amounts at
the acquisition date, which approximated their respective
estimated fair values. Deferred revenues were reduced to their
estimated fair value, which represented an amount equivalent to
the estimated costs of fulfilling the remaining contractual
obligations associated with these deferred revenues. In total,
the Visual Sciences acquired intangible assets had a
weighted-average estimated useful life of 6.3 years. The
amount recorded as goodwill is not deductible for income tax
purposes.
In August 2007, Visual Sciences entered into a settlement and
patent-license agreement with NetRatings. The agreement required
Visual Sciences to make license payments of $11,250,000,
$2,000,000 of which was paid by Visual Sciences on or about the
date of the agreement, $4,250,000 of which was paid by the
Company following the closing of the acquisition of Visual
Sciences and the remaining $5,000,000 of which must be paid by
the Company in quarterly installments of $500,000 beginning on
March 31, 2008, of which $2,000,000 was paid during the
year ended December 31, 2008. As of the date of the
acquisition, the Company recorded a liability equal to the net
present value of the total remaining license payments based upon
the Company’s estimated incremental borrowing rate of 6.0%.
At December 31, 2008, the amount of unpaid license payments
of $3,000,000 related to this settlement and patent-license
agreement, discounted to its net present value was $2,849,000,
of which $1,871,000 was included in accrued liabilities and
$978,000 was included in other liabilities in the consolidated
balance sheet.
On October 25, 2005, Visual Sciences, LLC, which is a
wholly owned subsidiary of Visual Sciences, entered into a
settlement and patent license agreement with NetRatings. The
agreement required Visual Sciences, LLC to make license payments
of $2,000,000, $1,150,000 of which was paid by Visual Sciences
prior to the acquisition and $200,000 that was accrued by Visual
Sciences prior to the acquisition and subsequently paid by the
Company during the year ended December 31, 2008. The
remaining $650,000 unpaid balance as of December 31, 2008
must be paid in annual installments, which are capped at
$200,000 per year and calculated based on revenue of Visual
Sciences, LLC products for each year.
F-21
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The determination of the final purchase price is subject to
potential adjustments, primarily related to restructuring costs
and acquisition-related costs. The purchase price allocation
could differ from that reflected above after a final detailed
review of all assets and liabilities, including income taxes,
has been completed. The Company does not expect any changes to
the purchase price allocation to materially increase or decrease
operating and amortization expenses, but they may have a
material effect on the amount of recorded goodwill.
Mercado
Asset Acquisition
On November 5, 2008, the Company acquired certain assets,
including intellectual property and other business assets, of
Mercado, a leading search and merchandising solution provider,
primarily to acquire Mercado’s existing customer base and
technology.
The preliminary aggregate purchase price was approximately
$8,601,000, which consisted of (1) cash consideration of
approximately $6,643,000, (2) restructuring charges and
(3) acquisition-related costs.
The estimated restructuring charges recorded in conjunction with
the acquisition totaled $1,567,000 and related to
(1) severance payments and severance-related benefits
associated with the termination of Mercado employees from all
functions within the business made redundant by the acquisition
and (2) estimated excess facilities costs resulting from
the employee terminations included in this restructuring. These
restructuring charges were accounted for in accordance with EITF
Issue
No. 95-3.
Estimates associated with the Company’s restructuring
accrual primarily relate to lease loss assumptions associated
with excess facilities. Future decreases to the estimates of
executing the restructuring plan will be recorded as an
adjustment to goodwill indefinitely. Increases to the estimates
of the restructuring plan will be recorded as an adjustment to
goodwill during the purchase accounting allocation period and as
an adjustment to operating expenses thereafter.
The following table summarizes the activity related to the
Mercado restructuring (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance and
|
|
|
Excess
|
|
|
|
|
|
|
|
Benefits
|
|
|
Facilities
|
|
|
Total
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Costs
accrued
(1)
|
|
|
277
|
|
|
|
1,290
|
|
|
|
1,567
|
|
|
Cash payments
|
|
|
(198
|
)
|
|
|
(61
|
)
|
|
|
(259
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
$
|
79
|
|
|
$
|
1,229
|
|
|
$
|
1,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Included as a component of the aggregate purchase price of the
Mercado asset acquisition.
|
F-22
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The following table summarizes the allocation of the preliminary
aggregate purchase price for Mercado and the estimated useful
lives for the acquired intangible assets (in thousands):
|
|
|
|
|
|
|
Current assets
|
|
$
|
2,800
|
|
|
Property and equipment
|
|
|
580
|
|
|
Other assets
|
|
|
227
|
|
|
Acquired intangibles:
|
|
|
|
|
|
Existing technology (five-year estimated useful life)
|
|
|
3,900
|
|
|
Patents and core technology (five-year estimated useful life)
|
|
|
1,100
|
|
|
Service agreements and related customer relationships
(three-year estimated useful life)
|
|
|
400
|
|
|
Customer relationships (six-year estimated useful life)
|
|
|
600
|
|
|
Goodwill
|
|
|
6,752
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
|
16,359
|
|
|
Current liabilities
|
|
|
6,785
|
|
|
Long-term liabilities
|
|
|
973
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
7,758
|
|
|
|
|
|
|
|
|
Net assets acquired
|
|
$
|
8,601
|
|
|
|
|
|
|
|
Except for deferred revenues and certain fixed assets, the
Mercado tangible assets and liabilities assumed by Omniture were
valued at their respective carrying amounts at the acquisition
date, as the Company believes these amounts approximated their
current fair value. Deferred revenues were reduced to their
estimated fair value, which represented an amount equivalent to
the estimated costs of fulfilling the remaining contractual
obligations associated with these deferred revenues. In total,
the Mercado acquired intangible assets had a weighted-average
estimated useful life of 5.0 years. The amount recorded as
goodwill is deductible for income tax purposes.
The determination of the final purchase price is subject to
potential adjustments, including acquisition-related costs. The
Company does not expect any changes to the purchase price
allocation to materially increase or decrease operating and
amortization expenses, but they may have a material effect on
the amount of recorded goodwill.
Unaudited
Pro Forma Financial Information
The following unaudited pro forma financial information presents
the consolidated results of operations of the Company, Touch
Clarity, Offermatica, Visual Sciences and Mercado as if these
acquisitions had occurred on January 1, 2007 (in thousands,
except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Revenues
|
|
$
|
235,586
|
|
|
$
|
307,786
|
|
|
Loss from operations
|
|
|
(59,946
|
)
|
|
|
(56,274
|
)
|
|
Net loss
|
|
|
(62,349
|
)
|
|
|
(59,601
|
)
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.95
|
)
|
|
$
|
(0.83
|
)
|
|
|
|
|
3.
|
Fair
Value Measurements
|
The Company adopted the provisions of SFAS No. 157,
Fair Value Measurements
, as of January 1, 2008.
Under SFAS No. 157, fair value is based on the price
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants
at the measurement date. In order to increase
F-23
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
consistency and comparability in fair value measurements,
SFAS No. 157 establishes a fair value hierarchy that
prioritizes observable and unobservable inputs used to measure
fair value into three broad levels. These levels, in order of
highest priority to lowest priority, are described below:
Level 1: Quoted prices (unadjusted) in active markets that
are accessible at the measurement date for assets or liabilities.
Level 2: Observable prices that are based on inputs not
quoted on active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no
market data is available.
The following table summarizes the financial instruments of the
Company subject to SFAS No. 157 and the valuation
approach applied to each class of security (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2008 Using
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
Markets For
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
|
Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Total
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
$
|
2,081
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,081
|
|
|
U.S. Treasury Bills
|
|
|
20,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,000
|
|
|
Corporate debt securities
|
|
|
—
|
|
|
|
4,997
|
|
|
|
—
|
|
|
|
4,997
|
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Bills
|
|
|
5,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
|
Corporate debt securities
|
|
|
—
|
|
|
|
4,997
|
|
|
|
—
|
|
|
|
4,997
|
|
|
Long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction rate securities
|
|
|
—
|
|
|
|
—
|
|
|
|
18,136
|
|
|
|
18,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
27,081
|
|
|
$
|
9,994
|
|
|
$
|
18,136
|
|
|
$
|
55,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
$
|
—
|
|
|
$
|
716
|
|
|
$
|
—
|
|
|
$
|
716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
—
|
|
|
$
|
716
|
|
|
$
|
—
|
|
|
$
|
716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table is a reconciliation of financial assets
measured at fair value using significant unobservable inputs
(Level 3) during the year ended December 31, 2008
(in thousands):
|
|
|
|
|
|
|
|
|
Auction Rate
|
|
|
|
|
Securities
|
|
|
|
|
Beginning balance at January 1, 2008
|
|
$
|
—
|
|
|
Transfers in to Level 3
|
|
|
21,500
|
|
|
Unrealized losses included in other comprehensive loss
|
|
|
(3,364
|
)
|
|
|
|
|
|
|
|
Ending balance at December 31, 2008
|
|
$
|
18,136
|
|
|
|
|
|
|
|
|
Total unrealized losses for the period included in other
comprehensive loss attributable to the change in fair value
relating to assets still held at December 31, 2008
|
|
$
|
(3,364
|
)
|
F-24
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
At December 31, 2008, the Company held AAA-rated auction
rate securities with a total estimated fair value of
$18,136,000. Auction rate securities are collateralized
long-term debt instruments that are intended to provide
liquidity through a Dutch auction process that resets the
applicable interest rate at pre-determined intervals, typically
every 7 to 35 days. Beginning in February 2008, auctions
failed for the Company’s holdings because sell orders
exceeded buy orders. The funds associated with these failed
auctions will not be accessible until the issuer calls the
security, a successful auction occurs, a buyer is found outside
of the auction process or the security matures. The underlying
assets of the auction rate securities the Company holds,
including the securities for which auctions have failed, are
student loans which are guaranteed by the U.S. government
under the Federal Education Loan Program. The Company does not
believe the carrying values of these auction rate securities are
permanently impaired and believes the positions will be
liquidated without any significant loss.
Due to the lack of actively traded market data, the valuation of
these securities was based on Level 3 unobservable inputs.
These inputs include management’s assumptions of pricing by
market participants, including assumptions about risk. The
Company valued these securities using an internally developed
model of the expected future cash flows related to the
securities over a projected 10 year period, which is
reflective of the length of time the Company anticipates it
could take for the securities to become liquid. As a result of
the valuation, the Company recorded a temporary impairment for
these securities of $3,364,000. The Company determined the
impairment to be temporary at December 31, 2008, because it
believes these securities will ultimately be sold at their par
values, and at December 31, 2008, the Company believes it
has the ability and the intent to hold them until such time,
which could be the securities’ maturity dates. The maturity
dates of the Company’s auction rate holdings are between
the years 2034 and 2040. Due to the uncertainty related to the
liquidity in the auction rate security market and the
Company’s determination at December 31, 2008 that it
has the ability and intent to hold these investments until the
anticipated recovery in market value occurs, the Company has
classified these auction rate securities as long-term assets on
the consolidated balance sheet.
Fair
Value of Other Financial Instruments
The carrying amounts of the Company’s accounts receivable,
accounts payable, accrued liabilities and other liabilities
approximate their fair values due to their short maturities.
Based on borrowing rates currently available to the Company for
loans with similar terms, the carrying value of the
Company’s notes payable and capital lease obligations also
approximate fair value.
F-25
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
|
|
|
|
4.
|
Balance
Sheet Accounts
|
Cash,
Cash Equivalents and Investments
Cash, cash equivalents and investments were as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
5,483
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,483
|
|
|
Money market funds
|
|
|
17,434
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,434
|
|
|
Government-sponsored enterprise securities
|
|
|
29,972
|
|
|
|
5
|
|
|
|
—
|
|
|
|
29,977
|
|
|
Corporate debt securities
|
|
|
24,896
|
|
|
|
—
|
|
|
|
(25
|
)
|
|
|
24,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
$
|
77,785
|
|
|
$
|
5
|
|
|
$
|
(25
|
)
|
|
$
|
77,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction rate securities
|
|
$
|
42,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
42,000
|
|
|
Government-sponsored enterprise securities
|
|
|
5,018
|
|
|
|
18
|
|
|
|
—
|
|
|
|
5,036
|
|
|
Corporate debt securities
|
|
|
9,895
|
|
|
|
—
|
|
|
|
(7
|
)
|
|
|
9,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total short-term investments
|
|
$
|
56,913
|
|
|
$
|
18
|
|
|
$
|
(7
|
)
|
|
$
|
56,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
39,942
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,942
|
|
|
Money market funds
|
|
|
2,081
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,081
|
|
|
U.S. Government securities
|
|
|
20,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,000
|
|
|
Corporate debt securities
|
|
|
4,997
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
$
|
67,020
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government securities
|
|
$
|
4,996
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
5,000
|
|
|
Corporate debt securities
|
|
|
4,997
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total short-term investments
|
|
$
|
9,993
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
9,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Auction rate securities
|
|
$
|
21,500
|
|
|
$
|
—
|
|
|
$
|
(3,364
|
)
|
|
$
|
18,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term investments
|
|
$
|
21,500
|
|
|
$
|
—
|
|
|
$
|
(3,364
|
)
|
|
$
|
18,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains and losses on available-for-sale securities are
reported as a component of stockholders’ (deficit) equity
in the consolidated balance sheets.
F-26
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Gross realized gains and gross realized losses on
available-for-sale securities were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Gross realized gains
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48
|
|
|
Gross realized losses
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
At December 31, 2008, the estimated fair value of
available-for-sale securities by contractual maturity was as
follows (in thousands):
|
|
|
|
|
|
|
Due in less than one year
|
|
$
|
37,075
|
|
|
Due in 1 to 5 years
|
|
|
—
|
|
|
Due in 5 to 10 years
|
|
|
—
|
|
|
Due in greater than 10 years
|
|
|
18,136
|
|
|
|
|
|
|
|
|
|
|
$
|
55,211
|
|
|
|
|
|
|
|
Securities with contractual maturities in the above table due in
greater than 10 years are auction rate securities, which
the Company has classified as long-term investments in the
accompanying consolidated balance sheet at December 31,
2008.
Property
and Equipment
Property and equipment consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Computers, equipment and software
|
|
$
|
63,791
|
|
|
$
|
112,763
|
|
|
Furniture and fixtures
|
|
|
1,117
|
|
|
|
3,659
|
|
|
Leasehold improvements
|
|
|
1,723
|
|
|
|
5,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,631
|
|
|
|
122,135
|
|
|
Less: Accumulated depreciation and amortization
|
|
|
(35,417
|
)
|
|
|
(60,653
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
31,214
|
|
|
$
|
61,482
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense (including amortization of leasehold
improvements and assets under capital leases) was $11,323,000,
$14,709,000 and $25,776,000 for the years ended
December 31, 2006, 2007 and 2008, respectively.
Goodwill
and Intangible Assets
The changes in the carrying amount of goodwill during the year
ended December 31, 2008, were as follows (in thousands):
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
94,960
|
|
|
Goodwill acquired related to 2008 acquisitions
|
|
|
327,713
|
|
|
Adjustments related to 2007 acquisitions
|
|
|
4,892
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
$
|
427,565
|
|
|
|
|
|
|
|
For purposes of its goodwill impairment test performed at
October 1, 2008, the Company primarily relied upon the
market valuation approach, which utilizes the market value per
share of the Company’s publicly traded common
F-27
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
stock, plus a control premium, multiplied by the total number of
the Company’s common shares issued and outstanding. This
market value is compared to the Company’s net equity as of
the impairment test date. A control premium is an amount that a
buyer is usually willing to pay over the current market price of
a publicly traded company. In light of the reduction in the
price per share of its common stock subsequent to
October 1, 2008, the Company updated its goodwill
impairment test at December 31, 2008 and determined there
was no impairment at that date.
Intangible assets consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
|
|
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
|
|
Purchased technology
|
|
$
|
31,100
|
|
|
$
|
2,433
|
|
|
$
|
28,667
|
|
|
Customer contracts and related relationships
|
|
|
13,300
|
|
|
|
998
|
|
|
|
12,302
|
|
|
Patent licenses
|
|
|
11,824
|
|
|
|
2,969
|
|
|
|
8,855
|
|
|
Other
|
|
|
1,777
|
|
|
|
1,157
|
|
|
|
620
|
|
|
Non-compete agreements
|
|
|
600
|
|
|
|
275
|
|
|
|
325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
58,601
|
|
|
$
|
7,832
|
|
|
$
|
50,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
|
|
Purchased technology
|
|
$
|
66,100
|
|
|
$
|
17,972
|
|
|
$
|
48,128
|
|
|
Customer contracts and related relationships
|
|
|
82,400
|
|
|
|
12,009
|
|
|
|
70,391
|
|
|
Patent licenses
|
|
|
19,185
|
|
|
|
5,822
|
|
|
|
13,363
|
|
|
Maintenance agreements
|
|
|
6,100
|
|
|
|
798
|
|
|
|
5,302
|
|
|
Other
|
|
|
1,617
|
|
|
|
1,321
|
|
|
|
296
|
|
|
Non-compete agreements
|
|
|
600
|
|
|
|
575
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
176,002
|
|
|
$
|
38,497
|
|
|
$
|
137,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company is amortizing its intangible assets on a
straight-line basis over a period of two to eight years. The
weighted-average remaining amortization period of all intangible
assets was 5.3 years and 5.2 years at
December 31, 2007 and 2008, respectively. Amortization
expense related to intangible assets was $1,709,000, $5,677,000
and $30,800,000 during the years ended December 31, 2006,
2007 and 2008, respectively. The Company expects to recognize
amortization expense on intangible assets at December 31,
2008 as follows (in thousands):
|
|
|
|
|
|
|
Year Ending December 31,
|
|
|
|
|
|
|
2009
|
|
$
|
32,603
|
|
|
2010
|
|
|
26,125
|
|
|
2011
|
|
|
25,493
|
|
|
2012
|
|
|
22,044
|
|
|
2013
|
|
|
16,685
|
|
|
Thereafter
|
|
|
14,555
|
|
|
|
|
|
|
|
|
|
|
$
|
137,505
|
|
|
|
|
|
|
|
F-28
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Accrued
and Other Liabilities
Accrued liabilities consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Accrued bonuses and commissions
|
|
$
|
5,244
|
|
|
$
|
10,435
|
|
|
Other accrued liabilities
|
|
|
11,882
|
|
|
|
30,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,126
|
|
|
$
|
41,179
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Deferred tax liabilities
|
|
$
|
4,047
|
|
|
$
|
4,794
|
|
|
Other liabilities
|
|
|
375
|
|
|
|
3,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,422
|
|
|
$
|
8,467
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
Final Maturity
|
|
December 31,
|
|
|
|
|
Rate
|
|
Date
|
|
2007
|
|
|
2008
|
|
|
|
|
Term loan
|
|
variable rate
|
|
Dec. 2012
|
|
|
—
|
|
|
|
15,000
|
|
|
Draws on second equipment facility
|
|
7.55 to 8.79
|
|
Jan. to Jun. 2009
|
|
|
4,117
|
|
|
|
—
|
|
|
Draw on second equipment facility
|
|
variable rate
|
|
Dec. 2011
|
|
|
2,364
|
|
|
|
—
|
|
|
Draw on revolving line of credit
|
|
variable rate
|
|
Dec. 2008
|
|
|
500
|
|
|
|
—
|
|
|
Bank note payable
|
|
9.07
|
|
Apr. 2010
|
|
|
310
|
|
|
|
133
|
|
|
Other notes payable
|
|
variable rate
|
|
May 2009
|
|
|
64
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,355
|
|
|
|
15,145
|
|
|
Less: current portion
|
|
|
|
|
|
|
(4,407
|
)
|
|
|
(1,617
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable, excluding current portion
|
|
|
|
|
|
$
|
2,948
|
|
|
$
|
13,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company paid interest of approximately $1,245,000, $859,000
and $977,000 during the years ended December 31, 2006, 2007
and 2008, respectively.
In 2004, the Company entered into an equipment line of credit
agreement (the “Equipment Line of Credit”). In 2005,
the Company amended the Equipment Line of Credit (the “2005
Amendment”). The 2005 Amendment also provided for a
revolving line of credit of up to $10,000,000 (the
“Revolving Line”), under which the Company borrowed
$500,000. Interest on the revolving line of credit was payable
monthly.
In January 2006, the Company entered into a second amendment and
restatement (the “2006 Amendment”) of the Equipment
Line of Credit, which provided for a second equipment facility
of up to $10,000,000, and reduced the total amount available for
draw under the Revolving Line to $5,000,000.
In August 2007, the Company entered into a third amendment (the
“2007 Amendment”) of the Equipment Line of Credit,
which increased the total equipment facility to $20,000,000, of
which $9,608,000 was advanced prior to the 2007 Amendment, and
increased the Revolving Line to $10,000,000. At
December 31, 2007, the $500,000
F-29
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
outstanding under the Revolving Line and the $2,364,000
outstanding under the 2007 Amendment of the equipment facility
both accrued interest at a variable rate equal to the
lender’s prime interest rate of 7.25%. During the year
ended December 31, 2008, the Company borrowed a total of
$8,006,000 under the Equipment Line of Credit at a
weighted-average interest rate of 5.4%, all of which was repaid
at December 31, 2008.
During the year ended December 31, 2007, the Company
entered into an unsecured bank note in the amount of $397,000,
which is repayable in 36 monthly installments.
In December 2008, the Company entered into a credit agreement
(the “Credit Agreement”), that provides for a secured
revolving credit facility in an amount of up to $35,000,000 that
is subject to a borrowing base formula and a secured term loan
in an amount of $15,000,000. The revolving credit facility has
sub limits for certain cash management services, interest rate
and foreign exchange hedging arrangements, and for the issuance
of letters of credit in a face amount up to $7,500,000. The
Credit Agreement is secured by substantially all the assets
owned by Omniture, Inc. and its U.S. subsidiaries,
including intellectual property.
Upon execution of the Credit Agreement, the Company borrowed
$15,000,000 in term loans, of which approximately $9,774,000 was
used to repay the outstanding obligations under an existing
Equipment and Revolving Line of Credit (the “Existing Line
of Credit”) and the Existing Line of Credit was terminated.
Letters of credit in the aggregate face amount of approximately
$1,808,000 have been issued under the revolving credit facility.
At the option of the Company, revolving loans and the term loan
accrue interest at a per annum rate based on, either
(1) the base rate plus a margin of 3.00%; or (2) the
London Interbank Offered Rate (“LIBOR”) plus a margin
equal to 3.00%, but in no event less than 5.5%, in each case for
interest periods of one, two or three months. The base rate is
defined as the greatest of (i) 3.50% per annum,
(ii) the federal funds rate plus a margin equal to 0.50%
and (iii) the lender’s prime rate. The Company is also
obligated to pay other customary closing fees, servicing fees,
letter of credit fees and unused line fees for a credit facility
of this size and type. At December 31, 2008, the
$15,000,000 outstanding under the term loan accrued interest at
a variable rate of 6.5%. The total amount available for
borrowing under the Credit Facility at December 31, 2008
was $33,192,000.
Revolving loans may be borrowed, repaid and reborrowed until
December 24, 2012, at which time all amounts borrowed must
be repaid. The term loan will be repaid in quarterly principal
payments in an amount equal to $375,000, with the remaining
outstanding principal balance and all accrued and unpaid
interest due on December 24, 2012. Accrued interest on the
revolving loans and term loans will be paid monthly, or with
respect to revolving loans and term loans that are accruing
interest based on the LIBOR rate, then at the end of the
applicable LIBOR interest rate period.
The revolving loans and term loans are subject to mandatory
prepayments in the event that certain borrowing formulas are not
maintained. In addition, the term loan is subject to certain
mandatory prepayments under certain circumstances, including in
connection with the receipt of net proceeds from certain asset
sales, casualty events, tax refunds, the incurrence of certain
types of indebtedness and the issuance of certain equity
securities. In the event that the revolving credit facility
commitment is terminated by the Company, in whole or part, prior
to its maturity date, then, under certain circumstances, a
prepayment fee will be due in an amount up to 2.00% of the
reduced commitment amount. In the event that the term loan is
prepaid, then a prepayment fee will be due in an amount up to
2.00% of the principal amount prepaid.
F-30
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The aggregate maturities of notes payable at December 31,
2008 were as follows (in thousands):
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Year Ending December 31,
|
|
2008
|
|
|
|
|
2009
|
|
$
|
1,617
|
|
|
2010
|
|
|
1,528
|
|
|
2011
|
|
|
1,500
|
|
|
2012
|
|
|
10,500
|
|
|
2013
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
$
|
15,145
|
|
|
|
|
|
|
|
The domestic and foreign components of loss before income taxes
were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Domestic
|
|
$
|
(7,740
|
)
|
|
$
|
(5,114
|
)
|
|
$
|
(41,695
|
)
|
|
Foreign
|
|
|
210
|
|
|
|
(3,781
|
)
|
|
|
(1,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(7,530
|
)
|
|
$
|
(8,895
|
)
|
|
$
|
(43,603
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The provisions for income taxes were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Current taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
—
|
|
|
$
|
254
|
|
|
$
|
406
|
|
|
State
|
|
|
118
|
|
|
|
60
|
|
|
|
626
|
|
|
Foreign
|
|
|
77
|
|
|
|
220
|
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
195
|
|
|
$
|
534
|
|
|
$
|
1,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of income taxes at the statutory federal income
tax rate to the provision for income taxes included in the
accompanying consolidated statements of operations is as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Tax benefit at U.S. statutory rates
|
|
$
|
(2,559
|
)
|
|
$
|
(3,024
|
)
|
|
$
|
(14,825
|
)
|
|
State benefit, net of federal tax effect
|
|
|
(248
|
)
|
|
|
(109
|
)
|
|
|
(524
|
)
|
|
Alternative minimum taxes
|
|
|
—
|
|
|
|
254
|
|
|
|
406
|
|
|
Foreign taxes
|
|
|
—
|
|
|
|
684
|
|
|
|
131
|
|
|
Stock-based compensation
|
|
|
1,134
|
|
|
|
1,980
|
|
|
|
3,857
|
|
|
Meals and entertainment
|
|
|
134
|
|
|
|
173
|
|
|
|
325
|
|
|
Tax credits
|
|
|
(533
|
)
|
|
|
(378
|
)
|
|
|
(847
|
)
|
|
Change in valuation allowance
|
|
|
2,267
|
|
|
|
954
|
|
|
|
12,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
195
|
|
|
$
|
534
|
|
|
$
|
1,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-31
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of the assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. Significant components of the
Company’s deferred tax assets and liabilities were as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Accruals and allowances
|
|
$
|
3,323
|
|
|
$
|
7,307
|
|
|
Depreciation and amortization
|
|
|
—
|
|
|
|
3,333
|
|
|
Stock-based compensation
|
|
|
1,800
|
|
|
|
7,371
|
|
|
Deferred revenues
|
|
|
677
|
|
|
|
3,745
|
|
|
Tax credits
|
|
|
2,080
|
|
|
|
3,551
|
|
|
Net operating losses
|
|
|
34,779
|
|
|
|
27,110
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
42,659
|
|
|
|
52,417
|
|
|
Valuation allowance
|
|
|
(32,119
|
)
|
|
|
(17,270
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
10,540
|
|
|
|
35,147
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
|
Acquired intangible assets
|
|
|
(13,790
|
)
|
|
|
(35,735
|
)
|
|
Depreciation and amortization
|
|
|
(234
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities, net
|
|
$
|
(3,484
|
)
|
|
$
|
(588
|
)
|
|
|
|
|
|
|
|
|
|
|
Realization of the deferred tax assets is dependent on future
earnings, if any, the timing and amount of which are uncertain.
Due to these uncertainties, management does not believe it is
more likely than not that the full amount of deferred tax assets
will be realized. Accordingly, net deferred tax assets of
$32,119,000 and $17,270,000 at December 31, 2007 and 2008,
respectively, representing the portion of deferred tax assets
the Company does not expect to fully realize have been offset by
valuation allowances. The valuation allowance increased by
$2,267,000 and $17,366,000 for the years ended December 31,
2006 and 2007, respectively, and decreased by $14,849,000 for
the year ended December 31, 2008. The increase in the
valuation allowance during the year ended December 31, 2007
was primarily due to the tax benefit of stock-based compensation
and deferred tax assets obtained through acquisitions. The
decrease in the valuation allowance during the year ended
December 31, 2008 was primarily due to non-tax deductible
intangible assets from the acquisition of Visual Sciences.
In July 2006, the FASB issued FIN 48, which clarifies the
accounting for uncertainty in income taxes recognized in an
entity’s financial statements in accordance with
SFAS No. 109 and prescribes a recognition threshold
and measurement attributes for financial statement disclosure of
tax positions taken or expected to be taken on a tax return.
Under FIN 48, the impact of an uncertain income tax
position on the income tax return must be recognized at the
largest amount that is more-likely-than-not to be sustained upon
audit by the relevant taxing authority. An uncertain income tax
position will not be recognized if it has less than a 50%
likelihood of being sustained. Additionally, FIN 48
provides guidance on de-recognition, classification, interest
and penalties, accounting in interim periods, disclosure and
transition.
The Company’s adoption of the provisions of FIN 48 on
January 1, 2007 did not have a material impact on its
financial statements. The Company adopted the accounting policy
that interest and penalties are classified as a
F-32
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
component of interest expense. At December 31, 2008, the
Company had an accrued unrecognized tax liability as follows (in
thousands):
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
1,100
|
|
|
Additions based on tax positions related to the current year
|
|
|
—
|
|
|
Reductions based on tax positions related to the current year
|
|
|
—
|
|
|
Additions for tax positions of prior years
|
|
|
747
|
|
|
Reductions for tax positions of prior years
|
|
|
(115
|
)
|
|
Settlements
|
|
|
—
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
$
|
1,732
|
|
|
|
|
|
|
|
The unrecognized tax liability relates to the acquisition of
Visual Sciences and certain research tax credits. The Company
has not incurred a material amount of interest or penalties
through December 31, 2008. The Company does not anticipate
any significant change within 12 months of this reporting
date of its uncertain tax positions, and does not anticipate any
events which could cause a change to these uncertainties. Any
future adjustments to the unrecognized tax benefit will have no
impact on the Company’s effective tax rate due to the
valuation allowance which fully offsets these tax benefits. The
Company is subject to taxation in the U.S. and various
state and foreign jurisdictions. There are no ongoing
examinations by taxing authorities at this time. The
Company’s various tax years starting with 2004 to 2008
remain open in various taxing jurisdictions.
At December 31, 2008, the Company had net operating loss
carryforwards for federal income tax purposes of approximately
$102,900,000, of which $44,900,000 related to stock option
deductions associated with equity benefits, and $2,000,000
related to goodwill. The Company also has federal research and
development credits of approximately $2,537,000. The federal net
operating losses and tax credits begin to expire in 2020. At
December 31, 2008, the Company also had state net operating
loss carryforwards of approximately $71,900,000, of which
$33,900,000 related to stock option deductions associated with
equity benefits and $2,000,000 related to goodwill. The state
net operating losses begin to expire in 2015. The Company had
state research and development credits of approximately $954,000
at December 31, 2008, which will begin to expire in 2014.
Utilization of the Company’s net operating loss and tax
credit carryforwards are subject to annual limitations due to
the ownership change limitations provided by the Internal
Revenue Code and similar state provisions. These annual
limitations will result in the expiration of a portion of the
net operating loss and credit carryforwards before they are
fully utilized. At December 31, 2008, the Company also had
approximately $25,030,000 in net operating loss carryforwards in
the United Kingdom, part or all of which may not be available to
reduce the Company’s future taxable income in the United
Kingdom should there be a change in the nature or conduct of the
Company’s business in the United Kingdom within the three
years subsequent to the date of our acquisition of Touch Clarity.
The Company paid income taxes of $144,000, $101,000 and $317,000
during the years ended December 31, 2006, 2007 and 2008,
respectively.
The Company’s Board of Directors has the authority, without
further action by stockholders, to issue from time to time up to
10,000,000 shares of preferred stock in one or more series.
The Company’s Board of Directors may designate the rights,
preferences, privileges and restrictions of the preferred stock,
including dividend rights, conversion rights, voting rights,
terms of redemption, liquidation preference, sinking fund terms
and number of shares constituting any series or the designation
of any series. At December 31, 2008, no shares of preferred
stock were outstanding.
F-33
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
|
|
|
|
8.
|
Convertible
Preferred Stock and Stockholders’ (Deficit)
Equity
|
Common
Stock Offerings
In July 2006, the Company completed its initial public offering
(“IPO”) of common stock in which the Company sold and
issued 10,305,000 shares of its common stock, including
1,605,000 shares sold by the Company pursuant to the
underwriters’ full exercise of their over-allotment option,
at an issuance price of $6.50 per share. As a result of the IPO,
the Company raised approximately $59,234,000 in net proceeds
after deducting underwriting discounts, commissions and offering
expenses. Upon the initial closing of the IPO, all shares of
convertible preferred stock outstanding automatically converted
into 21,816,387 shares of common stock.
In June 2007, the Company completed a common stock offering (the
“June 2007 Offering”) in which the Company sold and
issued 8,376,250 shares of its common stock at an issuance
price of $18.15 per share. As a result of this stock offering,
the Company raised approximately $142,233,000 in net proceeds
after deducting underwriting discounts, commissions and offering
expenses.
Convertible
Preferred Stock
Prior to the IPO, the Company issued shares of convertible
preferred stock. Each outstanding share of convertible preferred
stock at the time of the Company’s IPO in July 2006 was
automatically converted into one share of common stock.
Equity
Incentive Plans
In connection with the acquisition of Offermatica, the
Company’s Board of Directors adopted the Omniture, Inc.
2007 Equity Incentive Plan (the “2007 Plan”) and in
connection with the acquisition of Visual Sciences, the
Company’s Board of Directors adopted the Omniture, Inc.
2008 Equity Incentive Plan (the “2008 Plan”). The 2007
Plan and the 2008 Plan provide for the grant of nonstatutory
stock options, restricted stock, restricted stock units
(“RSUs”), stock appreciation rights and performance
shares to the Company’s employees, consultants and
directors who were not employed or providing services to the
Company at the time of the consummation of the related
acquisition.
In connection with the acquisition of Visual Sciences, the
Company also assumed the WebSideStory, Inc. 2006 Employment
Commencement Equity Incentive Award Plan, the WebSideStory, Inc.
2004 Equity Incentive Award Plan, the WebSideStory, Inc. Amended
and Restated 2000 Equity Incentive Plan and the Avivo
Corporation 1999 Equity Incentive Plan. The Company assumed all
outstanding stock options and unvested RSAs granted under these
plans. These outstanding options and RSAs will continue to be
subject to the original terms and conditions in existence
immediately prior to the closing of the acquisition, except that
the number of shares and relative exercise prices were adjusted
pursuant to the option exchange ratio provided for in the Visual
Sciences merger agreement. These options typically vest in equal
monthly installments over a one-to-four year period from the
date of grant of the original option and expire seven or ten
years from the original grant date. The RSAs generally vest in
equal annual installments over a four-year period. The Company
will not grant additional stock options or RSAs under these
assumed plans.
In connection with the closing of the acquisition of Touch
Clarity, the Company assumed the Touch Clarity Limited
Enterprise Management Incentives Share Option Plan 2002 (the
“Touch Clarity UK Plan”) and the Touch Clarity Limited
2006 U.S. Plan (the “Touch Clarity
U.S. Plan”). Holders of outstanding stock options to
purchase Touch Clarity common stock received Replacement Options
to purchase a total of 746,234 shares of Omniture common
stock. The Replacement Options will continue to be subject to
the terms and conditions applicable to the Touch Clarity options
in existence immediately prior to the closing of the
acquisition, except that the number of shares subject to options
and relative exercise prices were adjusted pursuant to the
option exchange ratio provided for in the purchase agreement.
These options typically vest in equal monthly installments over
a one-to-four year
F-34
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
period from the date of grant of the original option and expire
ten years from the original grant date. The Company will not
grant additional stock options under these substituted plans.
In August 1999, the Company adopted the 1999 Equity Incentive
Plan (the “1999 Plan”). The 1999 Plan allows grants of
incentive and nonqualified options. Grants of incentive options
must be at a price that is not less than the fair market value
of the underlying common stock on the date of grant. The option
prices are determined by the Company’s Board of Directors.
Generally, the options expire ten years from the date of grant
and vest over a four-year period.
The 1999 Plan allows option holders to exercise unvested stock
options at any time; however, upon termination of employment,
the Company has the right to repurchase any unvested shares of
common stock at the original exercise price. The Company’s
right of repurchase lapses as the shares vest. The consideration
received from exercises of unvested stock options is recorded as
a liability and is reclassified into equity as the awards vest.
For purposes of determining the weighted-average common shares
outstanding used in the calculation of basic and diluted net
loss per share, shares issued upon the exercise of unvested
stock options are not considered outstanding shares of common
stock until these awards vest. During the years ended
December 31, 2006, 2007 and 2008, 363,373, 703,029 and
331,709, respectively, shares of common stock subject to
repurchase became vested. At December 31, 2008, this
liability was approximately $53,000 relating to 37,500 unvested
shares of common stock subject to repurchase. Shares subject to
repurchase by the Company were exercised at prices ranging from
$0.11 to $0.50 per share.
The Company’s Board of Directors adopted the 2006 Equity
Incentive Plan (the “2006 Plan”) in March 2006 and the
Company’s stockholders approved the plan in June 2006. The
2006 Plan provides for the grant of incentive stock options to
employees and subsidiary corporations’ employees, and for
the grant of nonqualified stock options, restricted stock, RSUs,
stock appreciation rights and performance shares to the
Company’s employees, directors and consultants and
subsidiary corporations’ employees and consultants.
The 2006 Plan provides for annual increases in the number of
shares available for issuance thereunder on the first day of
each year equal to the lesser of
|
|
|
|
|
|
•
|
5% of the outstanding shares of the Company’s common stock
on the last day of the preceding year; and
|
|
|
|
|
•
|
60,000,000 shares.
|
On January 1, 2008, the number of authorized shares of
common stock available for issuance under the 2006 Plan was
increased by 3,043,344 in accordance with the provisions of the
2006 Plan with respect to annual increases of the number of
shares of common stock available for issuance under the 2006
Plan.
At December 31, 2008, a total of 1,249,064 shares of
common stock were available for grant under the Company’s
equity incentive plans.
Employee
Stock Purchase Plan
The Company’s Board of Directors adopted the 2006 Employee
Stock Purchase Plan (the “2006 ESPP”) in March 2006
and the Company’s stockholders approved the plan in June
2006. The 2006 ESPP is intended to qualify under
Section 423 of the Internal Revenue Code of 1986, as
amended, and provides for consecutive, non-overlapping six-month
offering periods. At the end of each six-month offering period,
qualified employees are entitled to purchase shares of the
Company’s common stock at 95% of the fair market value of
the common stock at the exercise date, which is the first
trading date on or after February 15 and August 15 of each year.
During the year ended December 31, 2008, the Board of
Directors of the Company approved an increase in the number of
authorized shares of common stock available for issuance under
the 2006 ESPP by 608,668 in accordance with the provisions of
the 2006 ESPP. The Company issued 17,071 shares of common
stock under the 2006 ESPP during the year ended
F-35
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
December 31, 2008. At December 31, 2008, a total of
1,563,622 shares of common stock were reserved for future
issuance under this plan.
The 2006 ESPP provides for annual increases in the number of
shares available for issuance on the first day of each year
equal to the lesser of
|
|
|
|
|
|
•
|
1% of the outstanding shares of the Company’s common stock
on the first day of the year;
|
|
|
|
|
•
|
12,000,000 shares; and
|
|
|
|
|
•
|
such other amount as may be determined by the Company’s
Board of Directors or a committee thereof
|
Stock
Options
In connection with the adoption of SFAS No. 123R, the
Company estimates the fair value of stock option awards granted
beginning January 1, 2006 using the Black-Scholes-Merton
option-pricing formula and a single option award approach. The
Company then amortizes the fair value of awards expected to vest
on a straight-line basis over the requisite service periods of
the awards, which is generally the period from the grant date to
the end of the vesting period.
The expected option term for options granted through
December 31, 2007 was calculated using the simplified
method described in SAB No. 107,
Share-Based
Payment
. The simplified method defines the expected term as
the average of the contractual term and the vesting period.
Effective January 1, 2008, the Company no longer uses the
simplified method and instead derives its expected term from an
analysis of its historical exercise data combined with expected
future exercise patterns based on several factors including the
strike price in relation to the current and expected stock
price, the minimum vest period and the remaining contractual
period. As a result of this change in estimate, the
Company’s net loss per share decreased by $0.01 for the
year ended December 31, 2008. The Company’s loss from
operations, loss before income taxes and net loss for the year
ended December 31, 2008 were each lower than they would
have been using the previous assumptions by approximately
$1,040,000. The total estimated fair value of stock options
granted during the year ended December 31, 2008 was
approximately $8,310,000 or 25% lower than if the Company had
continued to use the simplified method.
Estimated volatility for options granted through
December 31, 2007 also reflected the application of
SAB No. 107 interpretive guidance and, accordingly,
was derived solely from historical volatility of similar
entities whose share prices were publicly available. Effective
January 1, 2008, the Company changed its methodology for
estimating its volatility and now uses a weighted-average
volatility based on 50% of the Company’s actual historical
volatility since its initial public offering in 2006 and 50% of
the average historical stock volatilities of similar entities.
The risk-free interest rate was based on the yield curve of a
zero-coupon U.S. Treasury bond on the date the stock option
award was granted with a maturity equal to the expected term of
the stock option award. The Company used historical data to
estimate the number of future stock option forfeitures.
During the years ended December 31, 2006, 2007 and 2008,
the Company recorded compensation expense related to these stock
option awards totaling $1,948,000 $12,512,000 and $23,277,000,
respectively. At December 31, 2008, there was $54,307,000
of total unrecognized compensation cost related to unvested
stock option awards granted subsequent to the adoption of
SFAS No. 123R. This unrecognized compensation cost is
equal to the fair value of awards expected to vest and will be
recognized over a weighted-average period of 2.6 years.
F-36
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
The fair value of stock option awards granted during the years
ended December 31, 2006, 2007 and 2008 was estimated at the
date of grant using the Black-Scholes-Merton valuation method
with the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Expected volatility
|
|
|
62%-64%
|
|
|
|
43%-60%
|
|
|
|
52%-53%
|
|
|
Expected term (in years)
|
|
|
5.8-7.0
|
|
|
|
4.0-6.1
|
|
|
|
3.8
|
|
|
Risk-free interest rate
|
|
|
4.5%-5.1%
|
|
|
|
3.5%-4.9%
|
|
|
|
1.3%-3.2%
|
|
|
Expected dividends
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
The following table summarizes stock option activity under the
Company’s equity incentive plans for the year ended
December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
Weighted-Average
|
|
|
Remaining
|
|
|
|
|
|
|
|
Subject to
|
|
|
Exercise Price Per
|
|
|
Contractual Term
|
|
|
Aggregate Intrinsic
|
|
|
|
|
Outstanding Options
|
|
|
Share
|
|
|
(in Years)
|
|
|
Value
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
Outstanding at January 1, 2008
|
|
|
10,130,803
|
|
|
$
|
10.51
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
3,769,465
|
|
|
|
21.59
|
|
|
|
|
|
|
|
|
|
|
Substituted in connection with the acquisition of Visual Sciences
|
|
|
1,749,500
|
|
|
|
23.91
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(1,782,853
|
)
|
|
|
6.39
|
|
|
|
|
|
|
|
|
|
|
Canceled
|
|
|
(1,657,805
|
)
|
|
|
22.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
12,209,110
|
|
|
|
14.80
|
|
|
|
7.7
|
|
|
$
|
29,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest at December 31,
2008
(1)
|
|
|
8,727,497
|
|
|
|
18.04
|
|
|
|
6.6
|
|
|
$
|
6,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2008
|
|
|
4,438,810
|
|
|
|
11.43
|
|
|
|
6.3
|
|
|
$
|
17,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes only options granted on or after January 1, 2006,
which are subject to the provisions of SFAS No. 123R.
|
|
|
|
(2)
|
|
The aggregate intrinsic value is calculated as the difference
between the exercise price of the underlying stock option awards
and the closing market price of the Company’s common stock
at December 31, 2008.
|
F-37
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Additional information related to stock option activity under
the Company’s equity incentive plans was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Weighted-average, grant-date fair value of stock options granted
|
|
$
|
6.51
|
|
|
$
|
12.08
|
(1)
|
|
$
|
9.91
|
(2)
|
|
|
|
|
|
Weighted-average exercise price of stock options granted
|
|
$
|
10.09
|
|
|
$
|
17.77
|
(1)
|
|
$
|
22.33
|
(2)
|
|
|
|
|
|
Aggregate intrinsic value of stock options exercised (in
thousands)
(3)
|
|
$
|
10,428
|
|
|
$
|
48,887
|
|
|
$
|
41,136
|
|
|
|
|
|
|
Weighted-average, grant-date fair value of stock options
forfeited
(4)
|
|
$
|
5.49
|
|
|
$
|
11.57
|
|
|
$
|
11.17
|
|
|
|
|
|
|
Number of stock options
forfeited
(4)
|
|
|
63,701
|
|
|
|
458,998
|
|
|
|
1,132,319
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes the stock options substituted in connection with the
acquisition of Touch Clarity that had a weighted-average fair
value of $12.02 and a weighted-average exercise price of $0.79.
|
|
|
|
(2)
|
|
Includes stock options assumed in connection with the
acquisition of Visual Sciences that had a weighted-average fair
value of $11.93 and a weighted-average exercise price of $23.91.
|
|
|
|
(3)
|
|
The aggregate intrinsic value of stock option awards exercised
is measured as the difference between the exercise price and the
closing market price of the Company’s common stock at the
date of exercise.
|
|
|
|
(4)
|
|
Includes only stock options granted on or after January 1,
2006, which are subject to the provisions of
SFAS No. 123R.
|
During the year ended December 31, 2006, the Company
recorded stock-based compensation expense of $224,000 due to the
modification and acceleration of the vesting of an
employee’s stock options, initially granted prior to the
adoption of SFAS No. 123R, upon termination of
employment. During the year ended December 31, 2008, the
Company recorded $3,630,000 in stock-based compensation related
to the acceleration of vesting of certain former employees’
stock-based awards upon termination of employment.
In February 2006, the Company issued 250 shares of common
stock to a consultant for services rendered. In connection with
this issuance, the Company recorded $2,000 of stock-based
compensation expense. In 2002, the Company granted a
non-employee consultant vested options to purchase a total of
133,333 shares of common stock that were not under the
Plan. The exercise price of these options was $0.04. At
December 31, 2007 and 2008, the entire 133,333 options to
purchase common stock were outstanding and exercisable.
F-38
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
RSUs
and RSAs
During the year ended December 31, 2007, the Company began
granting RSUs. RSUs and RSAs generally vest over a four-year
period. The following table summarizes activity during the year
ended December 31, 2008 related to RSUs and RSAs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
|
|
|
|
Grant- Date Fair
|
|
|
|
|
Number of Shares
|
|
|
Value
|
|
|
|
|
Unvested RSUs at December 31, 2007
|
|
|
225,000
|
|
|
$
|
33.29
|
|
|
Granted
|
|
|
935,724
|
|
|
|
23.76
|
|
|
Unvested RSAs assumed in the Visual Sciences acquisition
|
|
|
118,478
|
|
|
|
24.09
|
|
|
Vested
|
|
|
(124,912
|
)
|
|
|
30.28
|
|
|
Forfeited
|
|
|
(169,293
|
)
|
|
|
27.92
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested RSUs and RSAs at December 31, 2008
|
|
|
984,997
|
|
|
$
|
24.44
|
|
|
|
|
|
|
|
|
|
|
|
During the year ended December 31, 2008, the Company
recorded stock-based compensation expense related to RSUs and
RSAs of $8,506,000, including $2,770,000 related to the
acceleration of vesting upon the termination date of
11 employees, pursuant to the original terms of their
awards. The total fair value of shares vested during the year
ended December 31, 2008 related to RSUs and RSAs was
$3,783,000. There were no shares that vested during the year
ended December 31, 2007. At December 31, 2008, total
unrecognized compensation cost related to unvested RSUs and RSAs
was $19,914,000. This unrecognized compensation cost is equal to
the fair value of RSUs expected to vest and will be recognized
over a weighted-average period of 3.1 years.
The grant date fair value of RSUs and RSAs is equal to the
closing price of the Company’s common stock on the date the
award was granted or assumed.
Repurchases
of Vested Restricted Stock
The Company’s equity incentive plans provide that employees
can elect to forfeit vested shares of restricted stock to pay
for the minimum statutory tax withholding obligations related to
the vesting of RSAs and RSUs. The Company is then required to
remit the amount of taxes owed by the employee to the
appropriate taxing authority. As a result of such elections by
the Company’s employees, during the year ended
December 31, 2008, the Company effectively repurchased a
total of 43,871 shares of common stock. The Company has
recorded $1,027,000 as a financing activity for these
repurchases in the consolidated statement of cash flows for the
year ended December 31, 2008. There were no repurchases of
vested restricted stock during the year ended December 31,
2007.
Deferred
Stock-based Compensation
Prior to January 1, 2006, the Company recorded deferred
stock-based compensation in the amount by which the exercise
price of a stock option was less than the deemed fair value of
the Company’s common stock at the date of grant. The
Company recorded stock-based compensation expense related to
these stock options of $984,000, $952,000 and $804,000 for the
years ended December 31, 2006, 2007 and 2008, respectively.
The Company reversed deferred stock-based compensation related
to the cancellation of unvested options for terminated employees
in the amount of $114,000, $38,000 and $8,000 for the years
ended December 31, 2006, 2007 and 2008, respectively. At
December 31, 2008, $366,000 of deferred stock-based
compensation remained on the accompanying consolidated balance
sheet.
F-39
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Total stock-based compensation expense was classified as follows
in the accompanying consolidated statements of operations (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Cost of subscription, license and maintenance revenues
|
|
$
|
203
|
|
|
$
|
1,502
|
|
|
$
|
4,221
|
|
|
Cost of professional services and other revenues
|
|
|
54
|
|
|
|
430
|
|
|
|
968
|
|
|
Sales and marketing
|
|
|
993
|
|
|
|
4,982
|
|
|
|
12,268
|
|
|
Research and development
|
|
|
563
|
|
|
|
2,615
|
|
|
|
6,849
|
|
|
General and administrative
|
|
|
1,345
|
|
|
|
3,935
|
|
|
|
8,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,158
|
|
|
$
|
13,464
|
|
|
$
|
32,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
In November 2004, the Company entered into a co-marketing and
reseller agreement with a third party to co-market the
Company’s SiteCatalyst application. In consideration for
the agreement, the Company paid cash of $500,000 and issued
warrants to purchase 504,054 shares of the Company’s
Series B-2
convertible preferred stock to the third party. The $500,000
cash consideration and the value of the outstanding warrants, as
determined by the Company’s management, are being amortized
over the expected life of the agreement with the third party. In
March 2006, the Company amended the warrant agreement which
reduced to 202,407 the total number of shares of
Series B-2
convertible preferred stock the holder was entitled to purchase
under the warrant, with immediate vesting of all shares subject
to the warrant. In June 2006, the third party exercised all of
its warrants under cashless exercise provisions of the
underlying warrant agreement resulting in the Company issuing
142,791 shares of
Series B-2
convertible preferred stock.
In January 2007, a third party exercised in full a warrant to
purchase 42,000 shares of common stock under cashless
exercise provisions of the underlying warrant agreement
resulting in the Company issuing 41,671 shares of common
stock to such party.
During 2002, the Company entered into a settlement agreement
related to outstanding notes payable that required the Company
to issue warrants to purchase 245,495 shares of the
Company’s common stock. The warrants became exercisable on
March 31, 2004. The fair value of the warrants of $14,730
was calculated using the Black-Scholes-Merton valuation method
with the following assumptions: risk-free interest rate of
5.02%; expected volatility of 0.7%; no dividend yield; and an
expected life of the warrants of ten years. The warrants have an
exercise price of $0.40 per share and expire on
February 26, 2012. At December 31, 2008, these warrants to
purchase 245,495 shares of the Company’s common stock were
outstanding.
|
|
|
|
9.
|
Commitments
and Contingencies
|
Litigation
Settlement
In February 2006, the Company entered into a settlement and
patent license agreement with NetRatings. In the event the
Company acquires certain specified companies, it may be required
to make additional license payments based on the Web analytics
revenues of the acquired company. The agreement also provides
that if the Company acquires other companies, it may elect to
make additional license payments based on the Web analytics
revenues of the acquired company to ensure that the acquired
company’s products, services or technology are covered by
the license. In connection with its acquisitions completed
through December 31, 2008, the Company has elected to make
additional license payments to NetRatings totaling $1,651,000,
all of which were paid prior to December 31, 2008. In the
event it acquires certain specified companies, the Company may
be required to make additional license payments to NetRatings
based on the Web analytics revenues of the acquired company.
F-40
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Leases
The Company leases certain equipment under capital leases. These
capital leases generally contain a discounted buyout option at
the end of the initial lease terms, which range between 36 and
60 months and mature at various dates through 2010.
Amortization expense is computed using the straight-line method
over the shorter of the estimated useful life or term of each
lease and is allocated between cost of revenues, research and
development, sales and marketing and general and administrative
expense in the consolidated statements of operations.
Accumulated amortization is included in property and equipment,
net, on the consolidated balance sheets.
Property and equipment capitalized under capital lease
obligations were as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2007
|
|
|
2008
|
|
|
|
|
Gross
|
|
$
|
925
|
|
|
$
|
907
|
|
|
Less accumulated amortization
|
|
|
(389
|
)
|
|
|
(574
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net carrying amount
|
|
$
|
536
|
|
|
$
|
333
|
|
|
|
|
|
|
|
|
|
|
|
The future minimum lease payments under non-cancellable capital
and operating leases and future minimum payments to be received
under non-cancellable subleases at December 31, 2008 were
as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
|
|
|
Operating
|
|
|
Year ending December 31,
|
|
Leases
|
|
|
Leases
|
|
|
|
|
2009
|
|
$
|
212
|
|
|
$
|
16,408
|
|
|
2010
|
|
|
27
|
|
|
|
14,391
|
|
|
2011
|
|
|
—
|
|
|
|
9,247
|
|
|
2012
|
|
|
—
|
|
|
|
6,901
|
|
|
2013
|
|
|
—
|
|
|
|
2,288
|
|
|
Thereafter
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: minimum payments to be received from non-cancelable
subleases
|
|
|
—
|
|
|
|
(2,264
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total minimum lease payments, net
|
|
|
239
|
|
|
$
|
46,971
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: imputed interest
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present value of minimum lease payments
|
|
|
229
|
|
|
|
|
|
|
Less: current portion
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligations, less current portion
|
|
$
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent expense for the years ended December 31, 2006, 2007
and 2008 was $1,742,000, $2,760,000 and $8,751,000, respectively.
Operating lease payments primarily relate to the Company’s
leases of office space in various domestic and international
locations and leases of computer equipment under operating
leases.
During the year ended December 31, 2007 and 2008, the
Company leased equipment under operating leases with total
future minimum lease payments of $10,946,000 and $7,650,000,
respectively. Each lease of computer equipment has a thirty-six
month initial term. At the end of the initial lease term, the
Company generally has the option to either: (1) return the
equipment to the lessor, (2) purchase the equipment for its
fair market value at that date or (3) renew the lease for a
stated number of months. As a condition of one of these lease
agreements, the
F-41
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
Company must not allow its cash balance to fall below
$10,000,000 as long as this agreement is in force. Failure to
maintain a minimum of $10,000,000 in cash would constitute an
event of default as defined in the lease agreement.
Indemnification
The Company has also agreed to indemnify its directors and
executive officers for costs associated with any fees, expenses,
judgments, fines and settlement amounts incurred by them in any
action or proceeding to which any of them is, or is threatened
to be, made a party by reason of his or her service as a
director or officer, including any action by the Company,
arising out of his or her services as the Company’s
director or officer or his or her services provided to any other
company or enterprise at the Company’s request.
Historically, the Company has not been required to make payments
under these obligations and the Company has recorded no
liabilities for these obligations in its consolidated balance
sheets.
Warranties
The Company typically warrants its on-demand online business
optimization services to perform in a manner consistent with
general industry standards that are reasonably applicable under
normal use and circumstances. Historically, the Company has not
been required to make payments under these obligations, and the
Company has recorded no liabilities for these obligations in its
consolidated balance sheets.
The Company’s warranty arrangements generally include
certain provisions for indemnifying customers against
liabilities if its services infringe a third party’s
intellectual property rights.
The Company has entered into service level agreements with a
small number of its customers warranting certain levels of
uptime reliability and permitting those customers to receive
credits or terminate their agreements in the event that the
Company fails to meet those levels. To date, amounts credited to
customers pursuant to these agreements have been immaterial and
the Company has recorded no liabilities for these obligations in
its consolidated balance sheets.
Other
Legal Matters
The Company is and may become involved in various other legal
proceedings arising from the normal course of its business
activities. Management does not believe the ultimate disposition
of these matters to have a material adverse impact on the
Company’s consolidated results of operations, cash flows or
financial position. However, litigation is inherently
unpredictable, and depending on the nature and timing of these
proceedings, an unfavorable resolution could materially affect
the Company’s future consolidated results of operations,
cash flows or financial position in a particular period.
The Company offers a 401(k) plan to its
employees.
The Company matches 50% of each
employee’s contributions up to a maximum of 3% per paycheck
of the employee’s base salary, bonuses and commissions. The
Company made matching contributions of $460,000, $1,173,000 and
$1,740,000 during the years ended December 31, 2006, 2007
and 2008, respectively.
On January 27, 2009, the Company entered into a Common
Stock Purchase Agreement (the “Purchase Agreement”)
with WPP Luxembourg Gamma Three Sarl (“WPP”) and WPP
Group USA, Inc. (“WPP USA”), pursuant to which the
Company issued to WPP a total of 2,852,578 unregistered shares
of its common stock, at a cash purchase price equal to $8.76 per
share, which price was equal to the arithmetic average of the
closing prices of the Company’s common stock for the five
consecutive trading days ending on January 26, 2009, for
aggregate
F-42
Omniture,
Inc.
Notes to
Consolidated Financial
Statements — (Continued)
consideration of $25,000,000. In addition, WPP, WPP USA and any
of their respective affiliates are bound by certain standstill
and market standoff provisions for a period of 18 months, which
restrict their ability to liquidate any portion of their common
stock holdings during that period of time.
Concurrent with the execution of the Purchase Agreement the
Company and WPP USA also entered into an Enterprise Channel
Partner Agreement (the “Enterprise Agreement”). In the
event WPP USA achieves certain performance milestones under the
Enterprise Agreement, the Company will issue to WPP a warrant
(the “Warrant”) to purchase a number of shares of the
Company’s common stock to be determined by dividing an
amount ranging from $0 to $10,000,000, with the exact amount to
be based on WPP USA’s achievement of certain performance
milestones under the Enterprise Agreement, by the exercise price
per share of the Warrant. The exercise price of the Warrant
equals the arithmetic average of the daily volume weighted
average prices of the Company’s common stock for the five
consecutive trading days immediately prior to April 15,
2010. The Enterprise Agreement contemplates that if the
performance milestones are met, the Warrant will be issued on or
around April 15, 2010, and will be subject to periodic
vesting over a period of 21months following its issuance, so
long as the Enterprise Agreement remains in effect, subject to
certain exceptions.
|
|
|
|
12.
|
Quarterly
Results of Operations (Unaudited)
|
Selected summarized quarterly financial information for fiscal
2007 and 2008 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
Mar. 31,
|
|
|
June 30,
|
|
|
Sept. 30,
|
|
|
Dec. 31,
|
|
|
Mar. 31,
|
|
|
June 30,
|
|
|
Sept. 30,
|
|
|
Dec. 31,
|
|
|
|
|
2007
(1)
|
|
|
2007
|
|
|
2007
|
|
|
2007
(3)
|
|
|
2008
(4)
|
|
|
2008
|
|
|
2008
|
|
|
2008
|
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
Total revenues
|
|
$
|
29,153
|
|
|
$
|
33,479
|
|
|
$
|
37,382
|
|
|
$
|
43,113
|
|
|
$
|
63,213
|
|
|
$
|
71,620
|
|
|
$
|
77,781
|
|
|
$
|
82,999
|
|
|
Gross profit
|
|
|
18,415
|
|
|
|
20,730
|
|
|
|
23,549
|
|
|
|
27,069
|
|
|
|
36,286
|
|
|
|
40,922
|
|
|
|
44,865
|
|
|
|
47,600
|
|
|
Net loss
|
|
|
(2,446
|
)
|
|
|
(4,056
|
)
|
|
|
(1,100
|
)
|
|
|
(1,827
|
)
|
|
|
(12,942
|
)
|
|
|
(6,461
|
)
|
|
|
(17,280
|
)
|
|
|
(8,083
|
)
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.05
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(0.11
|
)
|
|
Weighted-average number of shares, basic and diluted
|
|
|
47,753
|
|
|
|
49,791
|
|
|
|
57,874
|
(2)
|
|
|
59,421
|
|
|
|
69,180
|
(5)
|
|
|
71,720
|
|
|
|
72,202
|
|
|
|
72,731
|
|
|
|
|
|
|
(1)
|
|
The quarterly financial information beginning with the first
quarter of 2007 includes the results of operations of Instadia
and Touch Clarity from the date of each acquisition.
|
|
|
|
(2)
|
|
The weighted-average number of shares increased in the third
quarter of 2007, primarily due to the Company’s completion
of the June 2007 Offering in which the Company sold and issued
8,376,250 shares of its common stock at an issuance price
of $18.15 per share.
|
|
|
|
(3)
|
|
The quarterly financial information beginning with the fourth
quarter of 2007 includes the results of operations of
Offermatica from the date of acquisition.
|
|
|
|
(4)
|
|
The quarterly financial information beginning with the first
quarter of 2008 includes the results of operations of Visual
Sciences from the date of acquisition.
|
|
|
|
(5)
|
|
The weighted-average number of shares increased in the first
quarter of 2008, primarily due to the issuance of
10,265,449 shares of the Company’s common stock upon
the closing of the Visual Sciences acquisition.
|
F-43
INDEX TO
EXHIBITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Filed
|
|
Furnished
|
|
No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
No.
|
|
Filing Date
|
|
Herewith
|
|
Herewith
|
|
|
|
|
3
|
.1
|
|
Amended and Restated Certificate of Incorporation of Registrant
currently in effect
|
|
10-Q
|
|
|
000-52076
|
|
|
|
3
|
.1
|
|
August 11, 2006
|
|
|
|
|
|
|
3
|
.2
|
|
Amended and Restated Bylaws of Registrant currently in effect
|
|
8-K
|
|
|
000-52076
|
|
|
|
3
|
.1
|
|
December 16, 2008
|
|
|
|
|
|
|
4
|
.1
|
|
Specimen Common Stock Certificate of Registrant
|
|
S-1
|
|
|
333-132987
|
|
|
|
4
|
.1
|
|
June 22, 2006
|
|
|
|
|
|
|
4
|
.2
|
|
Amended and Restated Registration Rights Agreement between
Registrant and certain Holders of Registrant’s Common Stock
Named therein, dated April 26, 2006
|
|
S-1
|
|
|
333-132987
|
|
|
|
4
|
.2
|
|
June 9, 2006
|
|
|
|
|
|
|
4
|
.3
|
|
Common Stock Purchase Agreement, dated as of January 27,
2009, by and among, the Registrant, WPP Luxembourg Gamma Three
Sarl and, solely with respect to Sections 5.2 and 8
thereof, WPP Group USA, Inc.
|
|
8-K
|
|
|
000-52076
|
|
|
|
4
|
.1
|
|
January 29, 2009
|
|
|
|
|
|
|
10
|
.1*
|
|
Form of Indemnification Agreement entered into by and between
Registrant and its Directors and Officers
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.1
|
|
May 24, 2006
|
|
|
|
|
|
|
10
|
.2A*
|
|
1999 Equity Incentive Plan of Registrant, as amended
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.2A
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.2B*
|
|
Forms of Stock Option Agreement under the 1999 Equity Incentive
Plan
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.2B
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.2C*
|
|
Form of Stock Option Agreement under the 1999 Equity Incentive
Plan used for Named Executive Officers and Non-Employee Directors
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.2C
|
|
June 9, 2006
|
|
|
|
|
|
|
10
|
.3*
|
|
2006 Equity Incentive Plan of Registrant and related forms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.4A*
|
|
Employee Stock Purchase Plan of the Registrant
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.4A
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.4B*
|
|
Form of Subscription Agreement under Employee Stock Purchase Plan
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.4B
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.5
|
|
WebSideStory, Inc. Amended and Restated 2000 Equity Incentive
Plan
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.5
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.6A
|
|
WebSideStory, Inc. 2004 Equity Incentive Award Plan and Form of
Option Grant Agreement
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.6
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.6B
|
|
Form of Restricted Stock Award Grant Notice and Restricted Stock
Award Agreement under WebSideStory, Inc. 2004 Equity Incentive
Award Plan
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.6A
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.7
|
|
Avivo Corporation 1999 Equity Incentive Plan and Form of Option
Grant Agreement
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.7
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.8
|
|
WebSideStory, Inc. 2006 Employment Commencement Equity Incentive
Award Plan and Form of Option Grant Agreement
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.8
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.9
|
|
2007 Equity Incentive Plan of Registrant and related forms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.10
|
|
2008 Equity Incentive Plan of Registrant and related forms
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Filed
|
|
Furnished
|
|
No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
No.
|
|
Filing Date
|
|
Herewith
|
|
Herewith
|
|
|
|
|
10
|
.11
|
|
The Touch Clarity Limited Enterprise Management Incentives Share
Option Plan 2002
|
|
S-8
|
|
|
333-141352
|
|
|
|
99
|
.5
|
|
March 16, 2007
|
|
|
|
|
|
|
10
|
.12
|
|
Forms of Agreements under The Touch Clarity Limited Enterprise
Management Incentives Share Option Plan 2002
|
|
S-8
|
|
|
333-141352
|
|
|
|
99
|
.6
|
|
March 16, 2007
|
|
|
|
|
|
|
10
|
.13
|
|
Touch Clarity Limited 2006 U.S. Stock Plan
|
|
S-8
|
|
|
333-141352
|
|
|
|
99
|
.7
|
|
March 16, 2007
|
|
|
|
|
|
|
10
|
.14
|
|
Form of Stock Option Agreement under Touch Clarity Limited 2006
U.S. Stock Plan
|
|
S-8
|
|
|
333-141352
|
|
|
|
99
|
.8
|
|
March 16, 2007
|
|
|
|
|
|
|
10
|
.15*
|
|
Amended and Restated Employment Agreement between Registrant and
Joshua G. James, as amended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.16*
|
|
Separation Agreement entered into between Registrant and John R.
Pestana
|
|
10-Q
|
|
|
000-52076
|
|
|
|
10
|
.3
|
|
May 15, 2007
|
|
|
|
|
|
|
10
|
.17*
|
|
Offer Letter with Michael S. Herring, dated October 20, 2004
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.7
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18A
|
|
Basic Lease Information and Canyon Park Technology Center Office
Building Lease Agreement between the Registrant and TCU
Properties I, LLC
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8A
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18B
|
|
First Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated May 6, 2004
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8B
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18C
|
|
Second Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated
December 8, 2004
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8C
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18D
|
|
Third Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated April 30,
2005
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8D
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18E
|
|
Fourth Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated May 31,
2005
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8D
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18F
|
|
Fifth Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU Properties I, LLC, dated
January 25, 2006
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.8F
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.18G
|
|
Sixth Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU-Canyon Park, LLC, successor in interest to
TCU Properties I, LLC, dated January 11, 2008
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.18G
|
|
February 29, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Filed
|
|
Furnished
|
|
No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
No.
|
|
Filing Date
|
|
Herewith
|
|
Herewith
|
|
|
|
|
10
|
.18H
|
|
Seventh Amendment to Basic Lease Information and Canyon Park
Technology Center Office Building Lease Agreement between
Registrant and TCU-Canyon Park, LLC, successor in interest to
TCU Properties I, LLC, dated January 11, 2008
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.18H
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.19
|
|
Office Lease between Brannan Propco, LLC and Registrant, dated
January 8, 2008
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.19
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.20**
|
|
Settlement and Patent License Agreement by and between
NetRatings, Inc. and Registrant, dated February 28, 2006
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.9
|
|
April 4, 2006
|
|
|
|
|
|
|
10
|
.21
|
|
NetObjects, Inc. Warrant to Purchase Stock, dated March 26,
2002
|
|
S-1
|
|
|
333-132987
|
|
|
|
10
|
.10
|
|
May 8, 2006
|
|
|
|
|
|
|
10
|
.22*
|
|
Change of Control Agreement between Registrant and Joshua G.
James, as amended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.23*
|
|
Form of Change of Control Agreement entered into between
Registrant and each of Brett M. Error and Christopher C.
Harrington and John Mellor, as amended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.24*
|
|
Change of Control Agreement between Registrant and Michael S.
Herring, as amended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.25
|
|
Master Finance Lease and Lease Covenant Agreement by and between
the Registrant and Zions Credit Corporation, dated March 2,
2007
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.1
|
|
March 7, 2007
|
|
|
|
|
|
|
10
|
.26**
|
|
Settlement and Patent Cross-License Agreement dated as of
August 17, 2007 by and between Visual Sciences, Inc.
(formerly known as WebSideStory, Inc.) and NetRatings, Inc.
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.26
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.27**
|
|
Patent Cross-License Agreement dated December 12, 2003 by
and between WebSideStory, Inc. and NetIQ Corporation
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.27
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.28A
|
|
Office Lease dated as of August 23, 1999 by and between
WebSideStory, Inc. and LNR Seaview, Inc.
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.28A
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.28B
|
|
First Amendment to Office Lease dated as of July 3, 2001 by
and between WebSideStory, Inc. and LNR Seaview, Inc.
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.28B
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.28C
|
|
Second Amendment to Office Lease dated as of December 7,
2005 by and between WebSideStory, Inc. and Seaview PFG, LLC (as
assignee of LNR Seaview, Inc.)
|
|
10-K
|
|
|
000-52076
|
|
|
|
10
|
.28C
|
|
February 29, 2008
|
|
|
|
|
|
|
10
|
.29
|
|
Sublease dated as of August 25, 2008 and Amendment to
Sublease dated as of October 31, 2008 between Registrant
and The Active Network, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
10
|
.30***
|
|
Credit Agreement, dated as of December 24, 2008, by and
among, the Recipient, each of the lenders party thereto from
time to time and Wells Fargo Foothill, LLC, as Arranger and
Administrative Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.1
|
|
December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|
|
Exhibit
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Filed
|
|
Furnished
|
|
No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
No.
|
|
Filing Date
|
|
Herewith
|
|
Herewith
|
|
|
|
|
10
|
.31
|
|
General Continuing Guaranty, dated as of December 24, 2008,
executed by Visual Sciences, Inc. in favor of Wells Fargo
Foothill, LLC, as Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.2
|
|
December 31, 2008
|
|
|
|
|
|
|
10
|
.32
|
|
General Continuing Guaranty, dated as of December 24, 2008,
executed by Offermatica Corporation in favor of Wells Fargo
Foothill, LLC, as Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.3
|
|
December 31, 2008
|
|
|
|
|
|
|
10
|
.33
|
|
General Continuing Guaranty, dated as of December 24, 2008,
executed by Visual Sciences Technologies, LLC in favor of Wells
Fargo Foothill, LLC, as Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.4
|
|
December 31, 2008
|
|
|
|
|
|
|
10
|
.34
|
|
Security Agreement, dated as of December 24, 2008, by and
among, the Grantors party thereto from time to time and Wells
Fargo Foothill, LLC, as Administrative Agent
|
|
8-K
|
|
|
000-52076
|
|
|
|
10
|
.5
|
|
December 31, 2008
|
|
|
|
|
|
|
21
|
.1
|
|
List of Subsidiaries of the Registrant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
23
|
.1
|
|
Consent of Ernst & Young LLP, Independent Registered
Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
24
|
.1
|
|
Power of Attorney (set forth on the signature page to this
Annual Report on
Form 10-K)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
31
|
.1
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
31
|
.2
|
|
Rule 13a-14(a)/15d-14(a)
Certification of Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
32
|
.1
|
|
Section 1350 Certifications of Chief Executive Officer and
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
*
|
|
Indicates a management contract or
compensatory plan, contract or arrangement in which any director
or named executive officer of the Registrant participates.
|
|
|
|
**
|
|
The Securities and Exchange
Commission has granted confidential treatment with respect to
portions of this exhibit. A complete copy of this exhibit has
been filed separately with the Commission.
|
|
|
|
***
|
|
Confidential treatment has been
requested for certain portions of this exhibit. An unredacted
version of this exhibit has been filed separately with the
Securities and Exchange Commission.
|
Exhibit 10.3
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
(Amended and Restated February 26, 2009)
1.
Purposes of the Plan
. The purposes of this Plan are:
|
|
•
|
|
to attract and retain the best available personnel for positions of
substantial responsibility,
|
|
|
|
|
•
|
|
to provide additional incentive to Employees, Directors and Consultants, and
|
|
|
|
|
•
|
|
to promote the success of the Company’s business.
|
The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted
Stock, Restricted Stock Units, Stock Appreciation Rights and Performance Shares.
2.
Definitions
. As used herein, the following definitions will apply:
(a) “
Administrator
” means the Board or any of its Committees as will be administering
the Plan, in accordance with Section 4 of the Plan.
(b) “
Applicable Laws
” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.
(c) “
Award
” means, individually or collectively, a grant under the Plan of Options,
SARs, Restricted Stock, Restricted Stock Units or Performance Shares.
(d) “
Award Agreement
” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan. The Award Agreement is
subject to the terms and conditions of the Plan.
(e) “
Board
” means the Board of Directors of the Company.
(f) “
Change in Control
” Before the February 26, 2009 amendment and restatement of the
Plan, Change in Control means the occurrence of any of the following events:
(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company’s then outstanding voting
securities; or
(ii) The consummation of the sale or disposition by the Company of all or substantially all of
the Company’s assets; or
(iii) A change in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”
means directors who either (A) are Directors as of the effective date of the Plan, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of at least a majority
of the Incumbent Directors at the time of such election or nomination (but will not include an
individual whose election or nomination is in connection with an actual or threatened proxy contest
relating to the election of directors to the Company); or
(iv) The consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power represented by the voting securities of the Company or such
surviving entity or its parent outstanding immediately after such merger or consolidation
On or after the February 26, 2009 amendment and restatement of the Plan, Change in Control
means the occurrence of any of the following events:
(i) A change in the ownership of the Company which occurs on the date that any one person, or
more than one person acting as a group, (“Person”) acquires ownership of the stock of the Company
that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the
total voting power of the stock of the Company; provided, however, that for purposes of this
subsection (i), the acquisition of additional stock by any one Person, who is considered to own
more than fifty percent (50%) of the total voting power of the stock of the Company will not be
considered a Change in Control; or
(ii) A change in the effective control of the Company which occurs on the date that a majority
of members of the Board is replaced during any twelve (12) month period by Directors whose
appointment or election is not endorsed by a majority of the members of the Board prior to the date
of the appointment or election. For purposes of this clause (ii), if any Person is considered to
effectively control the Company, the acquisition of additional control of the Company by the same
Person will not be considered a Change in Control; or
(iii) A change in the ownership of a substantial portion of the Company’s assets which occurs
on the date that any Person acquires (or has acquired during the twelve (12) month period ending on
the date of the most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than fifty percent (50%) of the total gross
fair market value of all of the assets of the Company immediately prior to such acquisition or
acquisitions; provided, however, that for purposes of this subsection (iii), the following will not
constitute a change in the ownership of a substantial
-2-
portion of the Company’s assets: (A) a transfer to an entity that is controlled by the
Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company
to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or
with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value
or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns,
directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the
outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value
or voting power of which is owned, directly or indirectly, by a Person described in this subsection
(iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the
assets of the Company, or the value of the assets being disposed of, determined without regard to
any liabilities associated with such assets.
For purposes of this Section 2(f), Persons will be considered to be acting as a group if they
are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of
stock, or similar business transaction with the Company.
Notwithstanding the foregoing provisions of this definition, a transaction shall not be deemed
a Change in Control unless the transaction qualifies as a change in control event within the
meaning of Code Section 409A.
(g) “
Code
” means the Internal Revenue Code of 1986, as amended. Any reference to a
section of the Code herein will be a reference to any successor or amended section of the Code.
(h) “
Committee
” means a committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4 hereof.
(i) “
Common Stock
” means the common stock of the Company.
(j) “
Company
” means Omniture, Inc., a Delaware corporation, or any successor thereto.
(k) “
Consultant
” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.
(l) “
Director
” means a member of the Board.
(m) “
Disability
” means total and permanent disability as defined in Section 22(e)(3)
of the Code, provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the Administrator from time to
time.
(n) “
Employee
” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a
director’s fee by the Company will be sufficient to constitute “employment” by the Company.
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(o) “
Exchange Act
” means the Securities Exchange Act of 1934, as amended.
(p) “
Exchange Program
” means a program under which (i) outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise
prices and different terms), Awards of a different type, and/or cash, and/or (ii) the exercise
price of an outstanding Award is reduced. The Administrator will determine the terms and
conditions of any Exchange Program in its sole discretion.
(q) “
Fair Market Value
” means, as of any date, the value of Common Stock determined as
follows:
(i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of
The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system on the day of
determination, as reported in
The Wall Street Journal
or such other source as the Administrator
deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and
low asked prices for the Common Stock on the day of determination, as reported in
The Wall Street
Journal
or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock, the Fair Market Value will
be determined in good faith by the Administrator.
(r) “
Fiscal Year
” means the fiscal year of the Company.
(s) “
Incentive Stock Option
” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(t) “
Nonstatutory Stock Option
” means an Option that by its terms does not qualify or
is not intended to qualify as an Incentive Stock Option.
(u) “
Officer
” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(v) “
Option
” means a stock option granted pursuant to the Plan.
(w) “
Optioned Stock
” means the Common Stock subject to an Award.
(x) “
Parent
” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
(y) “
Participant
” means the holder of an outstanding Award.
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(z) “Performance Share” means an Award denominated in Shares which may be earned in whole or
in part upon attainment of performance goals or other vesting criteria as the Administrator may
determine pursuant to Section 10.
(aa) “
Period of Restriction
” means the period during which the transfer of Shares of
Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial
risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of
target levels of performance, or the occurrence of other events as determined by the Administrator.
(bb) “
Plan
” means this 2006 Equity Incentive Plan.
(cc) “
Registration Date
” means the effective date of the first registration statement
that is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act,
with respect to any class of the Company’s securities.
(dd) “
Restricted Stock
” means Shares issued pursuant to a Restricted Stock award under
Section 7 of the Plan, or issued pursuant to the early exercise of an Option.
(ee) “
Restricted Stock Unit
” means a bookkeeping entry representing an amount equal to
the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit
represents an unfunded and unsecured obligation of the Company.
(ff) “
Rule 16b-3
” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,
as in effect when discretion is being exercised with respect to the Plan.
(gg)
“Section 16(b)”
means Section 16(b) of the Exchange Act.
(hh)
“Service Provider”
means an Employee, Director or Consultant.
(ii) “
Share
” means a share of the Common Stock, as adjusted in accordance with Section
13 of the Plan.
(jj) “
Stock Appreciation Right
” or “
SAR
” means an Award, granted alone or in
connection with an Option, that pursuant to Section 9 is designated as a SAR.
(kk) “
Subsidiary
” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.
3.
Stock Subject to the Plan
.
(a)
Stock Subject to the Plan
. Subject to the provisions of Section 13 of the Plan,
the maximum aggregate number of Shares that may be optioned and sold under the Plan is 2,255,296
Shares,
plus
(i) the number of Shares which have been reserved but not issued under the Company’s
1999 Stock Plan (the “1999 Plan”) as of the Registration Date, up to a maximum of 287,581 Shares,
(ii) any Shares returned to the 1999 Plan as a result of termination of options or repurchase of
Shares issued under such plan, up to a maximum of 8,485,579 Shares, and (iii) an annual increase to
be added on the first day of the Company’s fiscal year beginning with
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the Company’s 2007 fiscal year, equal to the lesser of (A) 60,000,000 Shares, or (B) five percent
(5%) of the outstanding Shares on the last day of the immediately preceding Company fiscal year.
The Shares may be authorized, but unissued, or reacquired Common Stock.
(b)
Lapsed Awards
. If an Award expires or becomes unexercisable without having been
exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted
Stock, Restricted Stock Units or Performance Shares, is forfeited to or repurchased by the Company
due to failure to vest, the unpurchased Shares (or for Awards other than Options or SARs the
forfeited or repurchased Shares) which were subject thereto will become available for future grant
or sale under the Plan (unless the Plan has terminated). With respect to SARs, only Shares
actually issued pursuant to an SAR will cease to be available under the Plan; all remaining Shares
under SARs will remain available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan under any Award will not be
returned to the Plan and will not become available for future distribution under the Plan;
provided, however, that if Shares of Restricted Stock or Performance Shares are repurchased by the
Company or are forfeited to the Company due to their failure to vest, such Shares will become
available for future grant under the Plan. Shares used to pay the exercise price of an Award or to
satisfy the minimum statutory withholding obligations related to an Award will become available for
future grant or sale under the Plan. Notwithstanding the foregoing and, subject to adjustment as
provided in Section 13, the maximum number of Shares that may be issued upon the exercise of
Incentive Stock Options shall equal the aggregate Share number stated in Section 3(a), plus, to the
extent allowable under Section 422 of the Code, any Shares that become available for issuance under
the Plan under this Section 3(b).
(c)
Share Reserve
. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as will be sufficient to satisfy the requirements
of the Plan.
4.
Administration of the Plan
.
(a)
Procedure
.
(i)
Multiple Administrative Bodies
. Different Committees with respect to different
groups of Service Providers may administer the Plan.
(ii)
Section 162(m)
. To the extent that the Administrator determines it to be
desirable to qualify Options granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code.
(iii)
Rule 16b-3
. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.
(iv)
Other Administration
. Other than as provided above, the Plan will be
administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy
Applicable Laws.
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(b)
Powers of the Administrator
. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator will have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Awards may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation
regarding any Award or the Shares relating thereto, based in each case on such factors as the
Administrator will determine;
(vi) to institute an Exchange Program;
(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including
rules and regulations relating to sub-plans established for the purpose of satisfying applicable
foreign laws;
(ix) to modify or amend each Award (subject to Section 18(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Awards longer than
is otherwise provided for in the Plan (subject to compliance with Code Section 409A);
(x) to allow Participants to satisfy withholding tax obligations in such manner as prescribed
in Section 14;
(xi) to authorize any person to execute on behalf of the Company any instrument required to
effect the grant of an Award previously granted by the Administrator;
(xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under an Award
(xiii) to make all other determinations deemed necessary or advisable for administering the
Plan.
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(c)
Effect of Administrator’s Decision
. The Administrator’s decisions, determinations
and interpretations will be final and binding on all Participants and any other holders of Awards.
5.
Eligibility
. Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights and Performance Shares may be granted to Service Providers. Incentive
Stock Options may be granted only to Employees.
6.
Stock Options
.
(a)
Limitations
. Each Option will be designated in the Award Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation,
to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by the Participant during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be
treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options
will be taken into account in the order in which they were granted. The Fair Market Value of the
Shares will be determined as of the time the Option with respect to such Shares is granted.
(b)
Term of Option
. The term of each Option will be stated in the Award Agreement.
In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or
such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive
Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be
five (5) years from the date of grant or such shorter term as may be provided in the Award
Agreement.
(c)
Option Exercise Price and Consideration
.
(i)
Exercise Price
. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option will be determined by the Administrator, subject to the following:
(1) In the case of an Incentive Stock Option
a) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price will be no less than 110% of the Fair
Market Value per Share on the date of grant.
b) granted to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on
the date of grant.
c) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share
exercise price of less than 100% of the Fair Market
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Value per Share on the date of grant pursuant to a transaction described in, and in a manner
consistent with, Section 424(a) of the Code.
(2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less
than 100% of the Fair Market Value per Share on the date of grant.
(ii)
Waiting Period and Exercise Dates
. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and will determine any
conditions that must be satisfied before the Option may be exercised.
(iii)
Form of Consideration
. The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator will determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) other
Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which such Option will be exercised and provided
further that accepting such Shares will not result in any adverse accounting consequences to the
Company, as the Administrator determines in its sole discretion; (4) consideration received by the
Company under a cashless exercise program (whether through a broker or otherwise) implemented by
the Company in connection with the Plan; (5) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws; or (6) any combination of the
foregoing methods of payment.
(d)
Exercise of Option
.
(i)
Procedure for Exercise; Rights as a Stockholder
. Any Option granted hereunder
will be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Award Agreement. An Option may not be
exercised for a fraction of a Share.
An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such
form as the Administrator specify from time to time) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect to which the Option is exercised
(together with applicable withholding taxes). Full payment may consist of any consideration and
method of payment authorized by the Administrator and permitted by the Award Agreement and the
Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or,
if requested by the Participant, in the name of the Participant and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends or any other
rights as a stockholder will exist with respect to the Optioned Stock, notwithstanding the exercise
of the Option. The Company will issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right for which the record
date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan.
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Exercising an Option in any manner will decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.
(ii)
Termination of Relationship as a Service Provider
. If a Participant ceases to be
a Service Provider, other than upon the Participant’s death or Disability, the Participant may
exercise his or her Option within such period of time as is specified in the Award Agreement to the
extent that the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for three (3) months
following the Participant’s termination. Unless otherwise provided by the Administrator, if on the
date of termination the Participant is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time specified by the Administrator, the
Option will terminate, and the Shares covered by such Option will revert to the Plan.
(iii)
Disability of Participant
. If a Participant ceases to be a Service Provider as
a result of the Participant’s Disability, the Participant may exercise his or her Option within
such period of time as is specified in the Award Agreement to the extent the Option is vested on
the date of termination (but in no event later than the expiration of the term of such Option as
set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the
Option will remain exercisable for twelve (12) months following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination the Participant is
not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will revert to the Plan. If after termination the Participant does not exercise his or her Option
within the time specified herein, the Option will terminate, and the Shares covered by such Option
will revert to the Plan.
(iv)
Death of Participant
. If a Participant dies while a Service Provider, the Option
may be exercised following the Participant’s death within such period of time as is specified in
the Award Agreement to the extent that the Option is vested on the date of death (but in no event
may the option be exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has
been designated prior to Participant’s death in a form acceptable to the Administrator. If no such
beneficiary has been designated by the Participant, then such Option may be exercised by the
personal representative of the Participant’s estate or by the person(s) to whom the Option is
transferred pursuant to the Participant’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve (12) months following Participant’s death. Unless otherwise provided by the
Administrator, if at the time of death Participant is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If
the Option is not so exercised within the time specified herein, the Option will terminate, and the
Shares covered by such Option will revert to the Plan.
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7.
Restricted Stock
.
(a)
Grant of Restricted Stock
. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service
Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b)
Restricted Stock Agreement
. Each Award of Restricted Stock will be evidenced by
an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and
such other terms and conditions as the Administrator, in its sole discretion, will determine.
Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of
Restricted Stock until the restrictions on such Shares have lapsed.
(c)
Transferability
. Except as provided in this Section 7, Shares of Restricted Stock
may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction.
(d)
Other Restrictions
. The Administrator, in its sole discretion, may impose such
other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.
(e)
Removal of Restrictions
. Except as otherwise provided in this Section 7, Shares
of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released
from escrow as soon as practicable after the last day of the Period of Restriction or at such other
time as the Administrator may determine. The Administrator, in its discretion, may accelerate the
time at which any restrictions will lapse or be removed.
(f)
Voting Rights
. During the Period of Restriction, Service Providers holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares,
unless the Administrator determines otherwise.
(g)
Dividends and Other Distributions
. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided in the Award Agreement.
If any such dividends or distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect
to which they were paid.
(h)
Return of Restricted Stock to Company
. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company
and again will become available for grant under the Plan.
8.
Restricted Stock Units
.
(a)
Grant
. Restricted Stock Units may be granted at any time and from time to time as
determined by the Administrator. After the Administrator determines that it will grant Restricted
Stock Units under the Plan, it shall advise the Participant in an Award Agreement of the terms,
conditions, and restrictions related to the grant, including the number of Restricted Stock Units.
(b)
Vesting Criteria and Other Terms
. The Administrator shall set vesting criteria in
its discretion, which, depending on the extent to which the criteria are met, will
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determine the number of Restricted Stock Units that will be paid out to the Participant. The
Administrator may set vesting criteria based upon the achievement of Company-wide, business unit,
or individual goals (including, but not limited to, continued employment), or any other basis
determined by the Administrator in its discretion.
(c)
Earning Restricted Stock Units
. Upon meeting the applicable vesting criteria, the
Participant shall be entitled to receive a payout as specified in the Restricted Stock Unit Award
Agreement. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units,
the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be
met to receive a payout.
(d)
Form and Timing of Payment
. Payment of earned Restricted Stock Units shall be
made as soon as practicable after the date(s) set forth in the Restricted Stock Unit Award
Agreement. The Administrator may only settle earned Restricted Stock Units in Shares.
(e)
Cancellation
. On the date set forth in the Restricted Stock Unit Award Agreement,
all unearned Restricted Stock Units shall be forfeited to the Company.
9.
Stock Appreciation Rights
.
(a)
Grant of SARs
. Subject to the terms and conditions of the Plan, a SAR may be
granted to Service Providers at any time and from time to time as will be determined by the
Administrator, in its sole discretion.
(b)
Number of Shares
. The Administrator will have complete discretion to determine
the number of SARs granted to any Service Provider.
(c)
Exercise Price and Other Terms
. The per share exercise price for the Shares to be
issued pursuant to exercise of an SAR shall be determined by the Administrator and shall be no less
than 100% of the Fair Market Value per share on the date of grant. Otherwise, subject to Section
6(a) of the Plan, the Administrator, subject to the provisions of the Plan, shall have complete
discretion to determine the terms and conditions of SARs granted under the Plan; provided, however,
that no SAR may have a term of more than ten (10) years from the date of grant.
(d)
SAR Agreement
. Each SAR grant will be evidenced by an Award Agreement that will
specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms
and conditions as the Administrator, in its sole discretion, will determine.
(e)
Expiration of SARs
. An SAR granted under the Plan will expire upon the date
determined by the Administrator, in its sole discretion, and set forth in the Award Agreement.
Notwithstanding the foregoing, the rules of Section 6(d) also will apply to SARs.
(f)
Payment of SAR Amount
. Upon exercise of an SAR, a Participant will be entitled to
receive payment from the Company in an amount determined by multiplying:
(i) The difference between the Fair Market Value of a Share on the date of exercise over the
exercise price; times
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(ii) The number of Shares with respect to which the SAR is exercised.
The payment upon SAR exercise may only be in Shares of equivalent value (rounded down to the
nearest whole Share).
10.
Performance Shares
.
(a)
Grant of Performance Shares
. Subject to the terms and conditions of the Plan,
Performance Shares may be granted to Participants at any time as shall be determined by the
Administrator, in its sole discretion. The Administrator shall have complete discretion to
determine (i) the number of Shares subject to a Performance Share award granted to any Participant,
and (ii) the conditions that must be satisfied, which typically will be based principally or solely
on achievement of performance milestones but may include a service-based component, upon which is
conditioned the grant or vesting of Performance Shares. Performance Shares shall be granted in the
form of units to acquire Shares. Each such unit shall be the equivalent of one Share for purposes
of determining the number of Shares subject to an Award. Until the Shares are issued, no right to
vote or receive dividends or any other rights as a stockholder shall exist with respect to the
units to acquire Shares.
(b)
Other Terms
. The Administrator, subject to the provisions of the Plan, shall have
complete discretion to determine the terms and conditions of Performance Shares granted under the
Plan. Performance Share grants shall be subject to the terms, conditions, and restrictions
determined by the Administrator at the time the stock is awarded, which may include such
performance-based milestones as are determined appropriate by the Administrator. The Administrator
may require the recipient to sign a Performance Shares Award Agreement as a condition of the award.
Any certificates representing the Shares of stock awarded shall bear such legends as shall be
determined by the Administrator.
(c)
Performance Share Award Agreement
. Each Performance Share grant shall be
evidenced by an Award Agreement that shall specify such other terms and conditions as the
Administrator, in its sole discretion, shall determine.
11.
Leaves of Absence
. Unless the Administrator provides otherwise, vesting of Awards
granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will
not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent, or any Subsidiary.
For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6)
months and one (1) day following the commencement of such leave any Incentive Stock Option held by
the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option.
12.
Transferability of Awards
. Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Participant, only by the Participant. If the Administrator makes an Award
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transferable, such Award will contain such additional terms and conditions as the
Administrator deems appropriate.
13.
Adjustments; Dissolution or Liquidation; Merger or Change in Control.
(a)
Adjustments
. In the event that any dividend or other distribution (whether in the
form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, or other change in the corporate structure
of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available under the Plan,
shall adjust the number and class of Shares that may be delivered under the Plan and/or the number,
class, and price of Shares covered by each outstanding Award, and the numerical Share limits in
Section 3 of the Plan.
(b)
Dissolution or Liquidation
. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation of such proposed action.
(c)
Change in Control
. In the event of a merger or Change in Control, each
outstanding Award will be treated as the Administrator determines, including, without limitation,
that each Award be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. The Administrator shall not be
required to treat all Awards similarly in the transaction.
In the event that the successor corporation does not assume or substitute for the Award, the
Participant will fully vest in and have the right to exercise all of his or her outstanding Options
and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be
vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse,
and, with respect to Awards with performance-based vesting, all performance goals or other vesting
criteria will be deemed achieved at 100% on-target levels and all other terms and conditions met.
In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of
a Change in Control, the Administrator will notify the Participant in writing or electronically
that the Option or Stock Appreciation Right will be exercisable for a period of time determined by
the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate
upon the expiration of such period.
For the purposes of this subsection (c), an Award will be considered assumed if, following the
Change in Control, the Award confers the right to purchase or receive, for each Share subject to
the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or
other securities or property) received in the Change in Control by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Change in Control is not
solely common stock of the successor corporation or its
-14-
Parent, the Administrator may, with the consent of the successor corporation, provide for the
consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the
payout of a Restricted Stock Unit or Performance Share, for each Share subject to such Award, to be
solely common stock of the successor corporation or its Parent equal in fair market value to the
per share consideration received by holders of Common Stock in the Change in Control.
Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned
or paid-out upon the satisfaction of one or more performance goals will not be considered assumed
if the Company or its successor modifies any of such performance goals without the Participant’s
consent; provided, however, a modification to such performance goals only to reflect the successor
corporation’s post-Change in Control corporate structure will not be deemed to invalidate an
otherwise valid Award assumption.
14.
Tax Withholding
.
(a)
Withholding Requirements
. Prior to the delivery of any Shares or cash pursuant to
an Award (or exercise thereof), the Company will have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, local, foreign or other taxes (including the Participant’s FICA obligation)
required to be withheld with respect to such Award (or exercise thereof).
(b)
Withholding Arrangements
. The Administrator, in its sole discretion and pursuant
to such procedures as it may specify from time to time, may permit a Participant to satisfy such
tax withholding obligation, in whole or in part by (i) paying cash, (ii) electing to have the
Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the
minimum statutory amount required to be withheld, (iii) delivering to the Company already-owned
Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, or
(iv) selling a sufficient number of Shares otherwise deliverable to the Participant through such
means as the Administrator may determine in its sole discretion (whether through a broker or
otherwise) equal to the amount required to be withheld. The Fair Market Value of the Shares to be
withheld or delivered will be determined as of the date that the taxes are required to be withheld.
15.
No Effect on Employment or Service
. Neither the Plan nor any Award will confer
upon a Participant any right with respect to continuing the Participant’s relationship as a Service
Provider with the Company, nor will they interfere in any way with the Participant’s right or the
Company’s right to terminate such relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.
16.
Date of Grant
. The date of grant of an Award will be, for all purposes, the date
on which the Administrator makes the determination granting such Award, or such other later date as
is determined by the Administrator. Notice of the determination will be provided to each
Participant within a reasonable time after the date of such grant.
-15-
17.
Term of Plan
. Subject to Section 21 of the Plan, the Plan will become effective
upon its adoption by the Board. It will continue in effect for a term of ten (10) years unless
terminated earlier under Section 18 of the Plan.
18.
Amendment and Termination of the Plan
.
(a)
Amendment and Termination
. The Board may at any time amend, alter, suspend or
terminate the Plan.
(b)
Stockholder Approval
. The Company will obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.
(c)
Effect of Amendment or Termination
. No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise
between the Participant and the Administrator, which agreement must be in writing and signed by the
Participant and the Company. Termination of the Plan will not affect the Administrator’s ability
to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior
to the date of such termination.
19.
Conditions Upon Issuance of Shares
.
(a)
Legal Compliance
. Shares will not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares will comply with
Applicable Laws and will be further subject to the approval of counsel for the Company with respect
to such compliance.
(b)
Investment Representations
. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
20.
Inability to Obtain Authority
. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority will not have been obtained.
21.
Stockholder Approval
. The Plan will be subject to approval by the stockholders of
the Company within twelve (12) months after the date the Plan is adopted. Such stockholder
approval will be obtained in the manner and to the degree required under Applicable Laws.
-16-
THE UK SUB-PLAN OF THE
OMNITURE, INC. 2006 EQUITY INCENTIVE PLAN
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1.
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The purpose of the UK Sub-Plan (the “
Sub-Plan
”) of the Omniture, Inc. 2006
Equity Incentive Plan is to provide incentives for UK tax residents who are present and
future employees of Omniture, Inc. through the grant of options over Common Stock.
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2.
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This Sub-Plan is governed by the Omniture, Inc. 2006 Equity Incentive Plan (the
“
Plan
”) and all of the provisions of this Sub-Plan shall be identical to those of the
Plan
SAVE THAT
(a) “Sub-Plan” shall be substituted for “Plan,” and (b) the following
provisions shall be stated in this Sub-Plan in order to accommodate the specific
requirements of UK law.
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3.
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The Sub-Plan shall become effective on the date of its adoption by the Board.
The Sub-Plan shall terminate automatically on the date on which the Plan terminates in
accordance with Section 17 of the Plan. The Sub-Plan may be terminated by the Board of
Directors on any earlier date.
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4.
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References to Incentive Stock Options and Nonstatutory Stock Options in the
Plan shall not apply to Options granted under the Sub-Plan.
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5.
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Options granted under the Sub-Plan shall be known as UK Unapproved Options.
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6.
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Section 5 — Eligibility
of the Plan shall be substituted by the
following:
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“Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance
Shares and UK Unapproved Options may be granted only to Employees.”
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Omniture, Inc. 2006 Equity Incentive Plan — French Sub-Plan
Rules of the Omniture, Inc.
2006 Equity Incentive Plan for the
Grant of Options to Participants in France
1.
Introduction
The Board of Directors (the “
Board
”) of Omniture, Inc. (the “
Company
”) has established the
Omniture, Inc. 2006 Equity Incentive Plan (the “
U.S. Plan
”) for the benefit of certain eligible
individuals, including employees of the Company and its Subsidiaries, including its Subsidiary(ies)
in France (each a “French Subsidiary”), of which the Company holds directly or indirectly at least
10% of the share capital.
Section 4 of the U.S. Plan authorizes the Board or any committee appointed by it to administer
the U.S. Plan (the “
Administrator
”) to do all things necessary or advisable in connection with the
administration of the U.S. Plan. Specifically, Section 4(b)(viii) of the U.S. Plan authorizes the
Administrator to establish sub-plans for the purpose of satisfying applicable foreign laws. The
Administrator has determined that it is advisable to establish a sub-plan for the purpose of
permitting options granted to employees of a French Subsidiary to qualify for favorable tax and
social security treatment in France. The Administrator, therefore, intends with this document to
establish a sub-plan of the U.S. Plan for the purpose of granting options which qualify for the
favorable tax and social security treatment in France applicable to options granted under Sections
L. 225-177 to L. 225-186 of the French Commercial Code, as amended, to qualifying employees of a
French Subsidiary who are residents in France for French tax purposes and/or subject to the French
social security regime (the “
French Participants
”).
The terms of the U.S. Plan applicable to options, as set out in
Appendix 1
hereto,
shall, subject to the modifications in these Rules of the Omniture, Inc. 2006 Equity Incentive Plan
for the Grant of Options to Participants in France (the “
French Plan
”), constitute the terms
applicable to the grant of French-qualified Options to French Participants.
Under the French Plan, qualifying French Participants selected at the Administrator’s
discretion will be granted Options only as defined in Section 2 hereunder.
2.
Definitions
Capitalized terms not otherwise defined herein shall have the same meanings as set forth in
the U.S. Plan. The terms set out below will have the following meaning:
(a)
The term “
Closed Period
” shall mean a closed period as set forth in Section L.225-197-1 of
the French Commercial Code, as amended, which is as follows:
(i)
ten (10) quotation days preceding and following the disclosure to the public of the
consolidated financial statements or the annual statements of the Company; or
(ii)
any period during which the corporate management of the Company (
i.e.
, those involved in
the governance of the Company, such as the Board, a Committee, supervisory directorate, etc.)
possess confidential information which could, if disclosed to the public, significantly impact the
trading price of the Common Stock, until ten (10) quotation days after the day such information is
disclosed to the public.
If, after adoption of the French Plan, the French Commercial Code is amended to modify the
definition and/or applicability of the Closed Periods to French-qualified Options, such amendments
shall become applicable to any French-qualified Options granted under this French Plan, to the
extent permitted or required under French law.
(b)
The term “
Disability
” shall mean disability as determined in categories 2 and 3 under
Section L. 341-4 of the French Social Security Code, as amended, and subject to the fulfillment of
related conditions.
(c)
The term “
Forced Retirement
” shall mean forced retirement as determined under Section L.
122-14-13 of the French Labor Code, as amended, and subject to the fulfillment of related
conditions.
(d)
The term “
Grant Date
” shall be the date on which the Administrator both (i) designates the
French Participants, and (ii) specifies the main terms and conditions of the French-qualified
Options, such as the number of Shares subject to the French-qualified Options.
(e)
The term “
Option
” shall include both:
(i)
purchase stock options (rights to acquire Shares repurchased by the Company prior to the
date on which the Option becomes exercisable); and
(ii)
subscription stock options (rights to subscribe for newly issued Shares).
3.
Eligibility
(a)
Subject to Section 3(c) below, any individual who, on the Grant Date of the
French-qualified Option, and to the extent required under French law, is employed under the terms
and conditions of an employment contract (“
contrat de travail
”) by a French Subsidiary or who is a
corporate officer of a French Subsidiary (subject to Section 3(b) below) shall be eligible to
receive, at the discretion of the Administrator, French-qualified Options under this French Plan,
provided he or she also satisfies the eligibility conditions of Section 5 of the U.S. Plan.
(b)
French-qualified Options may not be issued to a corporate officer of a French Subsidiary,
other than the managing corporate officers (
Président du Conseil d’Administration, Directeur
Général, Directeur Général Délégué, Membre du Directoire, Gérant de Sociétés par actions
), unless
the corporate officer is employed under the terms and conditions of an employment contract
(“
contrat de travail
”) by a French Subsidiary, as defined by French law.
-2-
(c)
French-qualified Options may not be issued under the French Plan to French Participants
owning more than ten percent (10%) of the Company’s share capital or to individuals other than
employees and corporate executives of a French Subsidiary, as set forth in this Section 3.
4.
Non-Transferability
Notwithstanding any provision in the U.S. Plan and except in the case of death,
French-qualified Options may not be transferred to any third party. The French-qualified Options
are exercisable only by the French Participant during his or her lifetime, subject to Sections 10
(c) and 11 below.
5.
Disqualification of French-qualified Options
In the event changes are made to the terms and conditions of the French-qualified Options due
to any requirements under Applicable Laws, or by decision of the Company’s stockholders, the Board
or the Administrator, the Options may no longer qualify as French-qualified Options. The Company
does not undertake nor is it required to maintain the French-qualified status of the Options, and
by accepting any Award under this French Plan, the French Participants understand, acknowledge and
agree that it will be their responsibility to bear any additional taxes or social security
contributions that may be payable as a result of the disqualification of the French-qualified
Options.
If the Options no longer qualify as French-qualified Options, the Administrator may, in its
sole discretion, determine to lift, shorten or terminate certain restrictions applicable to the
vesting or exercisability of the Options or the sale of the Shares underlying the Options which
have been imposed under this French Plan or in the applicable Award Agreement delivered to the
French Participant, in order to achieve the favorable tax and social security treatment applicable
to French-qualified Options.
6.
Employment Rights
The adoption of this French Plan shall not confer upon the French Participants, or any
employees of the French Subsidiary, any employment rights and shall not be construed as a part of
any employment contracts that the French Subsidiary has with its employees.
7.
Amendments
Subject to the terms of the U.S. Plan, the Administrator reserves the right to amend or
terminate this French Plan at any time in accordance with applicable French law.
8.
Closed Period
French-qualified Options may not be granted during a Closed Period so long as and to the
extent such Closed Periods are applicable to Options granted by the Company.
-3-
9.
Conditions of French-qualified Options
(a)
The exercise price and number of underlying Shares shall not be modified after the Grant
Date, except as provided in Section 12 of this French Plan, or as otherwise authorized by French
law. Any other modification permitted under the U.S. Plan may result in the Option no longer
qualifying as a French-qualified Option.
(b)
The French-qualified Options will vest and become exercisable pursuant to the terms and
conditions set forth in the U.S. Plan, this French Plan and the applicable Award Agreement
delivered to each French Participant.
(c)
The exercise price for French-qualified Options granted under this French Plan shall be
fixed by the Administrator on the Grant Date. In no event shall the exercise price be less than
the greatest of the following:
(i)
with respect to purchase stock options: the higher of either 80% of the average of the
quotation price of the Shares during the 20 trading days immediately preceding the Grant Date or
80% of the average of the purchase price paid for such Shares by the Company;
(ii)
with respect to subscription stock options: 80% of the average of the quotation price of
such Shares during the 20 trading days immediately preceding the Grant Date; and
(iii)
the minimum exercise price permitted under the U.S. Plan.
10.
Exercise of French-qualified Options
(a)
At the time French-qualified Options are granted, the Administrator shall fix the period
within which the French-qualified Options vest and may be exercised and shall determine any
conditions that must be satisfied before the French-qualified Options may be exercised.
Specifically, the Administrator may provide for a period measured from the Grant Date for the
vesting or exercise of the French-qualified Options or for the sale of Shares acquired pursuant to
the exercise of French-qualified Options, designed to obtain the favorable tax and social security
treatment pursuant to Section 163 bis C of the French Tax Code, as amended. Such period for the
vesting or exercise of French-qualified Options or holding period before the sale of Shares shall
be set forth in the applicable Award Agreement or notice of grant. The holding period of the
Shares shall not exceed three years as from the effective exercise date of the French-qualified
Options or such other period as may be required to comply with French law.
(b)
Upon exercise of French-qualified Options, the full exercise price and any required
withholding tax and/or social security contributions shall be paid by the French Participant as set
forth in the applicable Award Agreement. Pursuant to a cashless exercise payment, the French
Participant may give irrevocable direction to a stockbroker to properly deliver the exercise price
to the Company. No delivery, surrendering or attesting to the ownership of previously owned Shares
having a Fair Market Value on the date of delivery equal to the aggregate exercise price of the
Shares may be used to pay the exercise price.
-4-
(c)
In the event of the death of a French Participant, his or her French-qualified Options
shall thereafter be immediately vested and exercisable in full under the conditions set forth by
Section 11 of this French Plan.
(d)
If a French Participant is terminated or ceases to be employed by the Company or a French
Subsidiary, his or her Options will be exercisable according to the provisions of the applicable
Award Agreement.
(e)
If a French Participant is terminated or ceases to be employed by the Company or a French
Subsidiary by reason of Disability (as defined in this French Plan), his or her French-qualified
Options may benefit from the favorable tax and social security treatment, even if the date of sale
of the Shares subject to the French-qualified Options occurs prior to the expiration of the minimum
holding period of the Shares, as provided for by Section 163 bis C of the French Tax Code, as
amended.
(f)
If a French Participant ceases to be employed by the Company or a French Subsidiary by
reason of his or her Forced Retirement (as defined in this French Plan) or dismissal as defined by
Section 91-ter of Exhibit II to the French Tax Code, as amended, and as construed by the French tax
circulars and subject to the fulfillment of related conditions, his or her French-qualified Options
may benefit from the favorable tax and social security treatment, irrespective of the date of sale
of the Shares, provided the exercise of the French-qualified Options was authorized under the
applicable Award Agreement prior to the time of Forced Retirement or dismissal and the
French-qualified Options are exercised at least three (3) months (or such other period as may be
required by French law) prior to the effective date of the Forced Retirement or at least three (3)
months (or such other period as may be required by French law) prior to the receipt of the notice
of dismissal by the French Participant as defined by French law and as construed by French tax and
social security guidelines.
(g)
Any Shares acquired upon exercise of the French-qualified Options prior to the expiration
of the minimum holding period of the Shares, as provided by Section 163 bis C of the French Tax
Code, as amended, shall be recorded in an account in the name of the French Participant and must be
held with the Company or a broker or in such manner as the Company may determine in order to ensure
compliance with Applicable Laws including any necessary holding periods applicable to
French-qualified Options.
(h)
To the extent applicable to French-qualified Options granted by the Company, a specific
holding period for the Shares or a restriction on exercise of the French-qualified Options shall be
imposed in the applicable Award Agreement for any French Participant who qualifies as a managing
director under French law (“
mandataires sociaux
”), as defined in Section 3(b) above.
11.
Death
In the event of the death of a French Participant while he or she is actively employed, all
French-qualified Options shall become immediately vested and exercisable and may be exercised in
full by the French Participant’s heirs for the six (6) month period following the date of the
French Participant’s death (or such other period as may be required by French law). In the event
-5-
of the death of a French Participant after termination of active employment, the treatment of
the French-qualified Options shall be as set forth in the applicable Award Agreement. Any
French-qualified Option that remains unexercised shall expire six (6) months (or such other period
as may be required by French law) following the date of the French Participant’s death. The six
(6) month exercise period (or such other period as may be required by French law) will apply
without regard to the term of the French-qualified Option as described in Section 13 of this French
Plan. Any Shares acquired upon exercise of the French-qualified Options by the French
Participant’s heirs after the French Participant’s death may benefit from the favorable tax and
social security treatment, even if the date of sale of the Shares occurs prior to the expiration of
the minimum holding period of the Shares as provided for by Section 163 bis C of the French Tax
Code, as amended.
12.
Adjustments and Change in Control
Adjustments of the French-qualified Options issued hereunder shall be made to preclude the
dilution or enlargement of benefits under the French-qualified Options in the event of a
transaction by the Company as listed under Section L. 225-181 of the French Commercial Code, as
amended, and in case of a repurchase of Shares by the Company at a price higher than the stock
quotation price in the open market, and according to the provisions of Section L. 228-99 of the
French Commercial Code, as amended, as well as according to specific decrees. Nevertheless, the
Administrator, at its discretion, may determine to make adjustments in the case of a transaction
for which adjustments are not authorized under French law and as permitted under Section 14(a) of
the U.S. Plan, in which case the Options may no longer qualify as French-qualified Options.
In the event of an adjustment upon a Change in Control as set forth in Section 13 (c) of the
U.S. Plan, adjustments to the terms and conditions of the French-qualified Options or underlying
Shares may be made only in accordance with the U.S. Plan and pursuant to applicable French legal
and tax rules. Nevertheless, the Administrator, at its discretion, may determine to make
adjustments in the case of a transaction for which adjustments are not authorized under French law,
in which case the Options may no longer qualify as French-qualified Options.
In the event of an acceleration of vesting and/or exercise due to a Change in Control, the
French Participant could be prohibited from exercising the French-qualified Options or selling the
Shares acquired upon exercise of the French-qualified Option until the expiration of the compulsory
holding period specified for favorable tax and social security treatment pursuant to French law.
Nevertheless, the holding period of the Shares, if imposed, shall not exceed three years as from
the effective exercise date of the French-qualified Options.
13.
Term of French-qualified Options
French-qualified Options granted pursuant to this French Plan will expire no later than nine
(9) years and (6) six months after the Grant Date, unless otherwise specified in the applicable
Award Agreement. The Option term will be extended only in the event of the death of a French
Participant, but in no event will any French-qualified Option be exercisable beyond six (6) months
following the date of death of the French Participant.
-6-
14.
Interpretation
It is intended that Options granted under this French Plan shall qualify for the favorable tax
and social security treatment applicable to options granted under Sections L. 225-177 to L. 225-186
of the French Commercial Code, as amended, and in accordance with the relevant provisions set forth
by French tax law and the French tax administration, but no undertaking is made to maintain such
status. The terms of this French Plan shall be interpreted accordingly and in accordance with the
relevant provisions set forth by French tax and social security laws and relevant guidelines
published by the French tax and social security administrations and subject to the fulfillment of
legal, tax and reporting obligations, if applicable.
In the event of any conflict between the provisions of this French Plan and the U.S. Plan, the
provisions of this French Plan shall control for any grants of Options made thereunder to French
Participants.
15.
Adoption
The French Plan, in its entirety, was adopted by the Administrator on September 10, 2008.
-7-
[FORM OF U.S. STOCK OPTION AWARD AGREEMENT]
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
Unless otherwise defined herein, the terms defined in the Omniture, Inc. 2006 Equity Incentive
Plan (the “
Plan
”) will have the same defined meanings in this Stock Option Award Agreement (the
“
Award Agreement
”).
I.
NOTICE OF STOCK OPTION GRANT
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Participant’s Name:
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[INSERT NAME]
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Participant’s Address:
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[INSERT ADDRESS]
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You have been granted an option to purchase Common Stock of the Company, subject to the terms
and conditions of the Plan and this Award Agreement, as follows:
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Grant Number:
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[INSERT GRANT NO.]
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Date of Grant:
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[INSERT GRANT DATE]
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Vesting Commencement Date:
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[INSERT VCD]
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Exercise Price per Share:
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$[INSERT PRICE/SHARE]
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Total Number of Shares Granted:
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[INSERT SHARES]
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Total Exercise Price:
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$[INSERT X PRICE]
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Type of Option:
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Incentive Stock Option (ISO)
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þ
Nonstatutory Stock Option (NSO)
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Term/Expiration Date:
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[INSERT TERM DATE]
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Vesting Schedule
:
Subject to accelerated vesting as set forth below or in the Plan, this Option may be
exercised, in whole or in part, in accordance with the following vesting schedule:
[INSERT VESTING SCHEDULE]
Termination Period
:
This Option shall be exercisable for three (3) months after Participant ceases to be a Service
Provider, unless such termination is due to Participant’s death or Disability, in which case this
Option shall be
exercisable for one (1) year after Participant ceases to be Service Provider.
Notwithstanding the foregoing, in
no event may this Option be exercised after the Term/Expiration Date as provided above and may
be subject to earlier termination as provided in Section 13(c) of the Plan.
II.
AGREEMENT
A.
Grant of Option
.
The Administrator hereby grants to the individual named in the Notice of Grant attached as
Part I of this Agreement (the “
Participant
”) an option (the “
Option
”) to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the “
Exercise Price
”), subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 18(c) of the Plan, in the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of this Award Agreement,
the terms and conditions of the Plan will prevail.
If designated in the Notice of Grant as an Incentive Stock Option (“
ISO
”), this Option is
intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this
Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule
of Code Section 422(d) it will be treated as a Nonstatutory Stock Option (“
NSO
”). Further, if for
any reason this Option (or portion thereof) shall not qualify as an ISO, then, to the extent of
such nonqualification, such Option (or portion thereof) shall be regarded as a NSO granted under
the Plan. In no event shall the Administrator, the Company or any Parent or Subsidiary or any of
their respective employees or directors have any liability to Participant (or any other person) due
to the failure of the Option to qualify for any reason as an ISO.
B.
Exercise of Option
.
1.
Right to Exercise
. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Award Agreement.
2.
Method of Exercise
. This Option is exercisable by delivery of an exercise notice,
in the form attached as
Exhibit A
(the “
Exercise Notice
”) or in such other form and manner
and pursuant to such procedures as determined by the Administrator, which will state the election
to exercise the Option, the number of Shares in respect of which the Option is being exercised (the
"
Exercised Shares
”), and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice will be completed by
Participant and delivered to the Company. The Exercise Notice will be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares together with any applicable tax
withholding. This Option will be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price, together with any applicable
tax withholding.
No Shares will be issued pursuant to the exercise of this Option unless such issuance and
exercise comply with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares will be considered transferred to Participant on the date the Option is
exercised with respect to such Exercised Shares.
-2-
C.
Method of Payment
.
Payment of the aggregate Exercise Price will be by any of the following, or a combination
thereof:
1. cash;
2. check;
3. consideration received by the Company under a formal cashless exercise program adopted by
the Company in connection with the Plan; or
4. surrender of other Shares which (a) shall be valued at its Fair Market Value on the date of
exercise, and (b) must be owned free and clear of any liens, claims, encumbrances or security
interests, if accepting such Shares, in the sole discretion of the Administrator, shall not result
in any adverse accounting consequences to the Company.
D.
Non-Transferability of Option
.
This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Participant only by
Participant. The terms of the Plan and this Award Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of Participant.
E.
Term of Option
.
This Option may be exercised only within the term set out in the Notice of Grant, and may be
exercised during such term only in accordance with the Plan and the terms of this Award Agreement.
F.
Tax Obligations
.
1.
Tax Withholding
. Participant agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining Participant) for the satisfaction of
all Federal, state, local, and foreign income and employment tax withholding requirements
applicable to the Option exercise. Participant acknowledges and agrees that the Company may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at
the time of exercise.
2.
Notice of Disqualifying Disposition of ISO Shares
. If the Option granted to
Participant herein is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two years after the Grant Date,
or (b) the date one year after the date of exercise, Participant will immediately notify the
Company in writing of such disposition. Participant agrees that Participant may be subject to
income tax withholding by the Company on the compensation income recognized by Participant.
3.
Code Section 409A
. Under Code Section 409A, an option that vests after December
31, 2004 that was granted with a per share exercise price that is determined by the U.S. Internal
Revenue Service (the “
IRS
”) to be less than the fair market value of a Share on the date of grant
(a “
discounted option
”) may be considered “
deferred compensation
.” An option that is a “discounted
option” may result in (a) income recognition by Participant (if they are a U.S. taxpayer) prior to
the exercise of the option, (b) an
-3-
additional twenty percent (20%) tax, and (c) potential penalty
and interest charges. The “discounted option”
may also result in additional state income, penalty and interest tax to the Participant.
Participant acknowledges that the Company cannot and has not guaranteed that the IRS will agree
that the per Share exercise price of this Option equals or exceeds the Fair Market Value of a Share
on the Date of Grant in a later examination. Participant agrees that if the IRS determines that
the Option was granted with a per share exercise price that was less than the Fair Market Value of
a Share on the Date of Grant, Participant will be solely responsible for Participant’s costs
related to such a determination.
The Board reserves the right, to the extent it deems necessary or advisable in its sole
discretion, to unilaterally alter or modify this Award Agreement to ensure that all Options
provided to Participants who are U.S. taxpayers are made in such a manner that either qualifies for
exemption from or complies with Section 409A of the Code; provided, however, that the Company makes
no representation that the Options will be exempt from or comply with Section 409A of the Code and
makes no undertaking to preclude Section 409A of the Code from applying to the Options.
G.
Entire Agreement; Governing Law
.
The Plan is incorporated herein by reference. The Plan and this Award Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and Participant with respect to
the subject matter hereof, and may not be modified adversely to Participant’s interest except by
means of a writing signed by the Company and Participant. This Award Agreement is governed by the
internal substantive laws, but not the choice of law rules, of Utah. For purposes of litigating
any dispute that arises directly or indirectly from the relationship of the parties evidenced by
this grant or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction
of the State of Utah and agree that such litigation shall be conducted only in the courts of Utah,
Fourth District, or the federal courts for the United States for the 10
th
Circuit, and
no other courts, where this grant is made and/or to be performed.
H.
NO GUARANTEE OF CONTINUED SERVICE
.
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR
THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED THIS OPTION OR PURCHASING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES
AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN
ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING
OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY
TIME, WITH OR WITHOUT CAUSE.
I.
Data Privacy
.
Participant hereby explicitly and unambiguously consents to the collection, use and transfer,
in electronic or other form, of Participant’s personal data as described in this Award Agreement
and any other Option grant materials by and among, as applicable, the Employer, the Company and its
Parents, Subsidiaries and affiliates for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.
-4-
Participant understands that the Company and the Employer may hold certain personal
information about Participant, including, but not limited to, Participant’s name, home address and
telephone number, date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the Company, details of all
Options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested
or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and
managing the Plan (“Data”).
Participant understands that Data will be transferred to E*TRADE FINANCIAL, or such other
stock plan service provider as may be selected by the Company in the future, which is assisting the
Company with the implementation, administration and management of the Plan. Participant
understands that the recipients of the Data may be located in the United States or elsewhere, and
that the recipients’ country (e.g., the United States) may have different data privacy laws and
protections than Participant’s country. Participant understands that Participant may request a
list with the names and addresses of any potential recipients of the Data by contacting
Participant’s local human resources representative. Participant authorizes the Company, E*TRADE
FINANCIAL and any other possible recipients which may assist the Company (presently or in the
future) with implementing, administering and managing the Plan to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of implementing, administering
and managing Participant’s participation in the Plan. Participant understands that Data will be
held only as long as is necessary to implement, administer and manage Participant’s participation
in the Plan. Participant understands that Participant may, at any time, view Data, request
additional information about the storage and processing of Data, require any necessary amendments
to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in
writing Participant’s local human resources representative. Participant understands, however, that
refusing or withdrawing consent may affect Participant’s ability to participate in the Plan. For
more information on the consequences of Participant’s refusal to consent or withdrawal of consent,
Participant understands that Participant may contact Participant’s local human resources
representative.
J.
Electronic Delivery
.
The Company may, in its sole discretion, decide to deliver any documents related to the
Participant’s participation in the Plan by electronic means or to request Participant’s consent to
participate in the Plan by electronic means. Participant hereby consents to receive such documents
by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or a third party designated by the
Company.
K.
Severability
.
The provisions of this Award Agreement are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions
shall nevertheless be binding and enforceable.
[Remainder of Page Intentionally Left Blank]
-5-
By Participant’s signature and the signature of the Company’s representative below,
Participant and the Company agree that this Option is granted under and governed by the terms and
conditions of the Plan and this Award Agreement. Participant has reviewed the Plan and this Award
Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Award Agreement and fully understands all provisions of the Plan and Award
Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan and Award Agreement.
Participant further agrees to notify the Company upon any change in the residence address indicated
below.
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PARTICIPANT:
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OMNITURE, INC.
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[name]
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Residence Address:
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[name of officer]
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[title of officer]
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[address 1]
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[city state zip]
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-6-
EXHIBIT A
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Omniture, Inc.
550 East Timpanogos Circle
Orem, Utah 84097
Attention: Stock Plan Administration
1.
Exercise of Option
. Effective as of today,
,
, the
undersigned (“
Purchaser
”) hereby elects to exercise Purchaser’s option (the “
Option
”) to purchase
shares (the “
Shares
”) of the Common Stock of Omniture, Inc. (the “
Company
”) under
and pursuant to the 2006 Equity Incentive Plan (the “
Plan
”) and the Award Agreement dated
,
(the “
Award Agreement
”). The Exercise Price for the Shares will be
$
.
, as required by the Award Agreement.
2.
Delivery of Payment
. Purchaser herewith delivers to the Company the full Exercise
Price for the Shares and any required withholding taxes to be paid in connection with the exercise
of the Option.
3.
Representations of Purchaser
. Purchaser acknowledges that Purchaser has received,
read and understood the Plan and the Award Agreement and agrees to abide by and be bound by their
terms and conditions.
4.
Rights as Stockholder
. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares,
no right to vote or receive dividends or any other rights as a stockholder will exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired will be
issued to Purchaser as soon as practicable after exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the date of issuance,
except as provided in Section 13 of the Plan.
5.
Tax Consultation
. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser
represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.
6.
Entire Agreement; Governing Law
. The Plan and Award Agreement are incorporated
herein by reference. This Exercise Notice, the Plan and the Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and Purchaser with respect to the subject
matter hereof, and may not be modified adversely to the Purchaser’s interest except by means of a
writing signed by the Company and Purchaser. The terms of this Exercise Notice are governed by,
and construed in accordance with, the internal substantive
laws, but not the choice of law rules,
of Utah. For purposes of litigating any dispute that arises directly or indirectly from the
relationship of the parties evidenced by the Option or the terms of the Award Agreement,
the parties hereby submit to and consent to the exclusive jurisdiction of the State of Utah
and agree that such litigation shall be conducted only in the courts of Utah, Fourth District, or
the federal courts for the United States for the 10
th
Circuit, and no other courts,
where this Option grant is made and/or to be performed.
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Submitted by:
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Accepted by:
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PURCHASER:
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OMNITURE, INC.
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By
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Print Name
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Its
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Address
:
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Address
:
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Omniture, Inc.
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550 East Timpanogos Circle
Orem, Utah 84097
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Attention: Stock Plan Administration
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Date Received
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-2-
[FORM OF NON-U.S. STOCK OPTION AWARD AGREEMENT]
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
NON-U.S. PARTICIPANTS
Unless otherwise defined herein, the terms defined in the Omniture, Inc. 2006 Equity Incentive
Plan (the “
Plan
”) will have the same defined meanings in this Stock Option Award Agreement (the
“
Award Agreement
”).
I.
NOTICE OF STOCK OPTION GRANT
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Participant’s Name:
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[INSERT NAME]
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Participant’s Address:
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[INSERT ADDRESS]
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You have been granted an option to purchase Shares of the Company, subject to the terms and
conditions of the Plan and this Award Agreement, including
Exhibit B
for Participant’s
country (if any) as follows:
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Grant Number:
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[INSERT GRANT NO.]
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Date of Grant:
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[INSERT GRANT DATE]
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Vesting Commencement Date:
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[INSERT VCD]
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Exercise Price per Share:
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$[INSERT PRICE/SHARE]
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Total Number of Shares Granted:
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[INSERT SHARES]
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Total Exercise Price:
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$[INSERT TOTAL X PRICE]
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Type of Option:
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Nonstatutory Stock Option (NSO)
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Term/Expiration Date:
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[INSERT TERM DATE]
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Vesting Schedule
:
Subject to accelerated vesting as set forth below or in the Plan, this Option may be
exercised, in whole or in part, in accordance with the following vesting schedule:
[INSERT VESTING SCHEDULE]
Termination Period
:
This Option shall be exercisable for three (3) months after Participant’s active service as a
Service Provider ceases, unless such termination is due to Participant’s death or Disability, in
which case this Option shall be exercisable for one (1) year after Participant’s active service as
a Service Provider ceases. Notwithstanding the foregoing, in no event may this Option be exercised
after the Term/Expiration Date as provided above and may be subject to earlier termination as
provided in Section 13(c) of the Plan.
II.
AWARD AGREEMENT
A. Grant of Option.
The Administrator hereby grants to the individual named in the Notice of Grant attached as
Part I of this Award Agreement (the “
Participant
”) an option (the “
Option
”) to purchase the number
of Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the “
Exercise Price
”), subject to the terms and conditions of the Plan and
Exhibit B
for Participant’s country (if any), which are incorporated herein by reference.
Subject to Section 19(c) of the Plan, in the event of a conflict between the terms and conditions
of the Plan and the terms and conditions of this Award Agreement (including any terms in
Exhibit B
applying to Participant’s country), the terms and conditions of the Plan will
prevail.
B. Exercise of Option.
1.
Right to Exercise
. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Award Agreement, including
Exhibit B
for Participant’s country (if any).
2.
Method of Exercise
. This Option is exercisable by delivery of an exercise notice,
in the form attached as
Exhibit A
(the “
Exercise Notice
”) or in such other form and manner
and pursuant to such procedures as determined by the Administrator, which will state the election
to exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“
Exercised Shares
”), and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice will be completed by
Participant and delivered to the Company. The Exercise Notice will be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares together with any applicable tax
withholding as set forth in Section F of this Award Agreement. This Option will be deemed to be
exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such
aggregate Exercise Price, together with any applicable tax withholding.
No Shares will be issued pursuant to the exercise of this Option unless such issuance and
exercise comply with Applicable Laws.
C. Method of Payment.
Payment of the aggregate Exercise Price will be by any of the following, or a combination
thereof, at the election of Participant:
1. cash;
2. check; or
-2-
3. consideration received by the Company under a formal cashless exercise program adopted by
the Company in connection with the Plan.
D. Non-Transferability of Option.
This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Participant only by
Participant. The terms of the Plan and this Award Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of Participant.
E. Term of Option.
This Option may be exercised only within the term set out in the Notice of Grant, and may be
exercised during such term only in accordance with the Plan and the terms of this Award Agreement
(including any terms in
Exhibit B
applying to Participant’s country).
F. Tax Obligations.
1.
Tax Withholding
. Regardless of any action the Company or the Parent or Subsidiary
employing or retaining Participant (the “
Employer
”) takes with respect to any or all income tax,
social insurance, payroll tax, payment on account or other tax-related withholding (“
Tax-Related
Items
”), Participant acknowledges that the ultimate liability for all Tax-Related Items legally due
by Participant is and remains Participant’s responsibility and that the Company and/or the Employer
(a) make no representations or undertakings regarding the treatment of any Tax-Related Items in
connection with any aspect of the Option, including, but not limited to, the grant, vesting or
exercise of the Option, the subsequent sale of Shares acquired pursuant to such exercise and the
receipt of dividends, if any; and (b) do not commit to structure the terms of the grant or any
aspect of the Option to reduce or eliminate Participant’s liability for Tax-Related Items.
Prior to the relevant taxable event, Participant agrees to make adequate arrangements
satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account
obligations of the Company and/or the Employer. In this regard, if permissible under local law,
Participant authorizes the Company and/or the Employer, at their discretion, to satisfy the
obligations with regard to all Tax-Related Items legally payable by Participant by one or a
combination of the following:
(i) withholding from Participant’s wages or other cash compensation paid to Participant by
the Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired upon exercise of the Option; or
(iii) arranging for the sale of Shares acquired upon exercise of the Option (on Participant’s
behalf and at Participant’s direction pursuant to this authorization); or
(iv) withholding in Shares, provided that the Company only withholds the amount of Shares
necessary to satisfy the minimum withholding amount. If the Company satisfies the obligation for
Tax-Related Items by withholding a number of Shares as described herein, Participant shall be
deemed to have been issued the full number of Shares subject to the Option, notwithstanding that a
number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a
result of the exercise of the Option.
Finally, Participant shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold as a result of Participant’s
-3-
participation in the Plan or Participant’s purchase of Shares that cannot be satisfied by the
means previously described. Participant acknowledges and agrees that the Company may refuse to
honor the exercise and refuse to deliver Shares if Participant fails to comply with Participant’s
obligations in connection with the Tax-Related Items as described in this section.
2.
Code Section 409A
. Under Code Section 409A, an option that vests after December
31, 2004 that was granted with a per share exercise price that is determined by the U.S. Internal
Revenue Service (the “
IRS
”) to be less than the fair market value of a Share on the date of grant
(a “
discounted option
”) may be considered “
deferred compensation
.” An option that is a “discounted
option” may result in (a) income recognition by Participant (if they are a U.S. taxpayer) prior to
the exercise of the option, (b) an additional twenty percent (20%) tax, and (c) potential penalty
and interest charges. The “discounted option” may also result in additional state income, penalty
and interest tax to Participant. Participant acknowledges that the Company cannot and has not
guaranteed that the IRS will agree that the per Share exercise price of this Option equals or
exceeds the Fair Market Value of a Share on the Date of Grant in a later examination. Participant
agrees that if the IRS determines that the Option was granted with a per share exercise price that
was less than the Fair Market Value of a Share on the Date of Grant, Participant will be solely
responsible for Participant’s costs related to such a determination.
The Board reserves the right, to the extent it deems necessary or advisable in its sole
discretion, to unilaterally alter or modify this Award Agreement to ensure that all Options
provided to Participants who are U.S. taxpayers are made in such a manner that either qualifies for
exemption from or complies with Section 409A of the Code; provided, however, that the Company makes
no representation that the Options will be exempt from or comply with Section 409A of the Code and
makes no undertaking to preclude Section 409A of the Code from applying to the Options.
G. Entire Agreement; Governing Law.
The Plan is incorporated herein by reference. The Plan and this Award Agreement (including
any terms in
Exhibit B
applying to Participant’s country), constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with respect to the subject matter
hereof, and may not be modified adversely to Participant’s interest except by means of a writing
signed by the Company and Participant. This grant of Options and the provisions of the Award
Agreement (including any terms in
Exhibit B
applying to Participant’s country), are
governed by, and construed in accordance with the internal substantive laws, but not the choice of
law rules, of Utah. For purposes of litigating any dispute that arises directly or indirectly from
the relationship of the parties evidenced by this grant or the Award Agreement (including any terms
in
Exhibit B
applying to Participant’s country), the parties hereby submit to and consent
to the exclusive jurisdiction of the State of Utah and agree that such litigation shall be
conducted only in the courts of Utah, Fourth District, or the federal courts for the United States
for the 10
th
Circuit, and no other courts, where this grant is made and/or to be
performed.
H. NO GUARANTEE OF CONTINUED SERVICE.
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR
THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES
AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN
ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF
-4-
THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE
PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
I. Nature of Grant.
In accepting the grant, Participant acknowledges that:
1. the Plan is established voluntarily by the Company, it is discretionary in nature and it
may be modified, amended, suspended or terminated by the Company at any time, unless otherwise
provided in the Plan and this Award Agreement;
2. the grant of the Option is voluntary and occasional and does not create any contractual or
other right to receive future grants of Options, or benefits in lieu of Options, even if Options
have been granted repeatedly in the past;
3. all decisions with respect to future Option grants, if any, will be at the sole discretion
of the Company;
4. Participant is voluntarily participating in the Plan;
5. the Option is an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or the Employer, and which is outside the scope of
Participant’s employment contract, if any;
6. the Option is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation, termination, redundancy, end
of service payments, bonuses, long-service awards, pension or retirement benefits or similar
payments and in no event should be considered as compensation for, or relating in any way to, past
services for the Company or the Employer;
7. in the event that Participant is not an employee of the Company, the Option grant and
Participant’s participation in the Plan will not be interpreted to form an employment contract or
relationship with the Company; and furthermore, the Option grant will not be interpreted to form an
employment contract with any Parent, Subsidiary or affiliate of the Company;
8. the future value of the underlying Shares is unknown and cannot be predicted with
certainty;
9. if the underlying Shares do not increase in value, the Option will have no value;
10. if Participant exercises the Option and obtains Shares, the value of those Shares acquired
upon exercise may increase or decrease in value, even below the Exercise Price;
11. in consideration of the grant of the Option, no claim or entitlement to compensation or
damages shall arise from termination of the Option or diminution in value of the Option or Shares
purchased through exercise of the Option resulting from termination of Participant’s status as a
Service Provider by the Company or the Employer (for any reason whatsoever and whether or not in
breach of local labor laws) and Participant irrevocably releases the Company and the Employer from
any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a
court of competent jurisdiction to have arisen, then, by signing this Award Agreement, Participant
shall be deemed irrevocably to have waived any entitlement to pursue such claim;
-5-
12. in the event of termination of Participant’s status as a Service Provider (whether or not
in breach of local labor laws), Participant’s right to vest in the Option under the Plan, if any,
will terminate effective as of the date that Participant is no longer actively a Service Provider
and will not be extended by any notice period mandated under local law (
e.g.
, active service would
not include a period of “garden leave” or similar period pursuant to local law); furthermore, in
the event of termination of active service as a Service Provider (whether or not in breach of local
labor laws), Participant’s right to exercise the Option after termination of service, if any, will
be measured by the date of termination of Participant’s active service and will not be extended by
any notice period mandated under local law; the Administrator shall have the exclusive discretion
to determine when Participant is no longer actively a Service Provider for purposes of the
Participant’s Option grant;
13. the Company is not providing any tax, legal or financial advice, nor is the Company making
any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition
or sale of the underlying Shares; and
14. Participant is hereby advised to consult with Participant’s own personal tax, legal and
financial advisors regarding Participant’s participation in the Plan before taking any action
related to the Plan.
J.
Data Privacy
.
Participant hereby explicitly and unambiguously consents to the collection, use and transfer,
in electronic or other form, of Participant’s personal data as described in this Award Agreement
and any other Option grant materials by and among, as applicable, the Employer, the Company and its
Parents, Subsidiaries and affiliates for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.
Participant understands that the Company and the Employer may hold certain personal
information about Participant, including, but not limited to, Participant’s name, home address and
telephone number, date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the Company, details of all
Options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested
or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and
managing the Plan (“Data”).
Participant understands that Data will be transferred to E*TRADE FINANCIAL, or such other
stock plan service provider as may be selected by the Company in the future, which is assisting the
Company with the implementation, administration and management of the Plan. Participant
understands that the recipients of the Data may be located in the United States or elsewhere, and
that the recipients’ country (e.g., the United States) may have different data privacy laws and
protections than Participant’s country. Participant understands that Participant may request a
list with the names and addresses of any potential recipients of the Data by contacting
Participant’s local human resources representative. Participant authorizes the Company, E*TRADE
FINANCIAL and any other possible recipients which may assist the Company (presently or in the
future) with implementing, administering and managing the Plan to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of implementing, administering
and managing Participant’s participation in the Plan. Participant understands that Data will be
held only as long as is necessary to implement, administer and manage Participants participation in
the Plan. Participant understands that Participant may, at any time, view Data, request additional
information about the storage and processing of Data, require any necessary amendments to Data or
refuse or withdraw the consents herein, in any case without cost, by contacting in writing
Participant’s local human resources representative. Participant understands, however, that
refusing or withdrawing consent may affect Participant’s ability to participate in the Plan. For
more information on the consequences of Participant’s refusal to consent or withdrawal of consent,
Participant understands that Participant may contact Participant’s local human resources
representative.
-6-
K. Language.
If Participant has received this Award Agreement or any other document related to the Plan
translated into a language other than English and if the translated version is different than the
English version, the English version will control, unless otherwise prescribed by local law.
L.
Electronic Delivery
.
The Company may, in its sole discretion, decide to deliver any documents related to the
Participant’s participation in the Plan by electronic means or to request Participant’s consent to
participate in the Plan by electronic means. Participant hereby consents to receive such documents
by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or a third party designated by the
Company.
M.
Severability
.
The provisions of this Award Agreement are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions
shall nevertheless be binding and enforceable.
[Remainder of Page Intentionally Left Blank]
-7-
By Participant’s signature and the signature of the Company’s representative below,
Participant and the Company agree that this Option is granted under and governed by the terms and
conditions of the Plan and this Award Agreement (including any terms in
Exhibit B
applying
to Participant’s country). Participant has reviewed the Plan and this Award Agreement (including
any terms in
Exhibit B
applying to Participant’s country) in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Award Agreement and fully
understands all provisions of the Plan and Award Agreement (including any terms in
Exhibit
B
applying to Participant’s country). Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon any questions
relating to the Plan and Award Agreement (including any terms in
Exhibit B
applying to
Participant’s country). Participant further agrees to notify the Company upon any change in the
residence address indicated below.
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PARTICIPANT:
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OMNITURE, INC.
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[name]
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Residence Address:
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Print Name
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[city state zip]
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Title
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-8-
EXHIBIT A
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Omniture, Inc.
550 East Timpanogos Circle
Orem, Utah 84097
Attention: Stock Plan Administration
1.
Exercise of Option
. Effective as of today,
,
, the
undersigned (“Purchaser”) hereby elects to exercise Purchaser’s option (the “Option”) to purchase
shares (the “Shares”) of the Common Stock of Omniture, Inc. (the “Company”) under
and pursuant to the 2006 Equity Incentive Plan (the “Plan”) and the Award Agreement dated
,
(the “Award Agreement”) including any terms in Exhibit B applying to
Participant’s country. The Exercise Price for the Shares will be $
.
, as required by
the Award Agreement.
2.
Delivery of Payment
. Purchaser herewith delivers to the Company the full Exercise
Price for the Shares and any applicable Tax-Related Items as set forth in Section F of the Award
Agreement.
3.
Representations of Purchaser
. Purchaser acknowledges that Purchaser has received,
read and understood the Plan and the Award Agreement (including any terms in
Exhibit B
applying to Participant’s country) and agrees to abide by and be bound by their terms and
conditions.
4.
Rights as Stockholder
. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares,
no right to vote or receive dividends or any other rights as a stockholder will exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired will be
issued to Purchaser as soon as practicable after exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the date of issuance,
except as provided in Section 14 of the Plan.
5.
Tax Consultation
. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser
represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.
6.
Entire Agreement; Governing Law
. The Plan and Award Agreement (including any terms
in
Exhibit B
applying to Participant’s country) are incorporated herein by reference. This
Exercise Notice, the Plan and the Award Agreement (including any terms in
Exhibit B
applying to Participant’s country) constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings and agreements of
the Company and Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser’s interest except by means of a writing signed by the
Company and
Purchaser. The terms of this Exercise Notice are governed by, and construed in accordance with,
the internal substantive laws, but not the choice of law rules, of Utah. For purposes of
litigating any
dispute that arises directly or indirectly from the relationship of the parties evidenced by
the Option grant or the terms of the Award Agreement, the parties hereby submit to and consent to
the exclusive jurisdiction of the State of Utah and agree that such litigation shall be conducted
only in the courts of Utah, Fourth District, or the federal courts for the United States for the
10
th
Circuit, and no other courts, where this Option grant is made and/or to be
performed.
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Submitted by:
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Accepted by:
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PURCHASER:
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OMNITURE, INC.
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Print Name
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Address
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Address
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Omniture, Inc.
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550 East Timpanogos Circle
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Orem, Utah 84097
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Attention: Stock Plan Administration
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Date Received
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-2-
EXHIBIT B
OMNITURE, INC. 2006 EQUITY INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
SPECIAL TERMS FOR PARTICIPANTS OUTSIDE THE U.S.
This
Exhibit B
includes special terms and conditions applicable to Participants in the
countries below. These terms and conditions are in addition to those set forth in the Award
Agreement. Capitalized terms used, but not defined herein, shall have the same meanings assigned
to them in the Plan and the Award Agreement.
This
Exhibit B
may also include information regarding exchange controls and certain other
issues of which Participant should be aware with respect to Participant’s participation in the
Plan. The information is based on the securities, exchange control and other laws in effect in the
respective countries as of April 2008. Such laws are often complex and change frequently. As a
result, the Company strongly recommends that Participant not rely on the information noted herein
as the only source of information relating to the consequences of Participant’s participation in
the Plan because the information may be out of date at the time Participant exercises the Options
or sells Shares he/she acquires under the Plan.
In addition, the information is general in nature and may not apply to Participant’s particular
situation, and the Company is not in a position to assure Participant of any particular result.
Accordingly, Participant is strongly advised to seek appropriate professional advice as to how the
relevant laws in Participant’s country apply to his or her specific situation
.
If Participant is a citizen or resident of another country, or is considered a resident of another
country for local law purposes, the information contained in this Appendix may not be applicable to
him or her.
Argentina
Securities Law Disclaimer
The offering of Options and any Shares issued upon exercise is a private transaction. This offer
is not subject to the supervision of Argentine governmental authorities. The Options and Shares
are being awarded by the Company on behalf of the Employer. The Options will not be granted on a
regular or monthly basis.
Exchange Control Reporting
Page 1
Participant acknowledges and understands that under regulations adopted by the Argentine Monetary
and Banking Authority (“BCRA”), he or she may purchase and remit foreign currency with a value of
up to US$2,000,000 per month for the purpose of acquiring foreign securities, including Shares of
the Company, without prior approval from the BCRA. However, Participant must execute and submit an
affidavit to the BCRA, at the time the foreign currency is purchased, confirming that he or she has
not purchased and remitted in excess of US$2,000,000 during the relevant month. Participant should
consult with his or her legal advisor regarding any approval or reporting obligations that he or
she may have with respect to the exercise of Options, the ownership of Shares and/or the receipt of
cash payments from abroad.
Australia
Securities Law Disclaimer
Participant acknowledges and understands that if Participant acquires Shares upon exercise of the
Option and Participant offers the Shares for sale to a person or entity resident in Australia, the
offer may be subject to disclosure requirements under Australian law. Participant acknowledges and
understands that Participant should obtain legal advice on the disclosure obligations prior to
making any such offer.
Belgium
Share Account Reporting
If Participant is a Belgian resident, Participant acknowledges and understands that Participant is
required to report any security or bank account (including brokerage accounts) maintained outside
of Belgium on his or her annual tax return.
Brazil
Exchange Control Reporting
Participant acknowledges and understands that if he or she is resident or domiciled in Brazil that
he or she must submit a declaration of assets and rights held outside of Brazil to the Central Bank
annually, if the aggregate value of Participant’s assets and rights exceeds US$100,000. Assets and
rights that must be reported include: (i) bank deposits; (ii) loans; (iii) financing transactions;
(iv) leases; (v) direct investments; (vi) portfolio investments, including Shares of the Company;
(vii) financial derivative investments; and (viii) other investments such as real estate.
Intent to Comply with Law
By accepting the Options, Participant agrees that he or she will comply with Brazilian law when the
Shares acquired upon exercise of the Options are sold. Participant also agrees to report and pay
any and
Page 2
all taxes associated with the exercise of the Options and sale of any Shares issued when the
Options are exercised.
Canada
Resale of Shares
Participant is permitted to sell Shares acquired upon exercise of the Options through a designated
broker provided the resale of Shares takes place outside of Canada through the stock exchange on
which the Shares are listed. Currently, the Company’s Shares are listed on the Nasdaq Global
Market.
Consent to Receive Information in English for Quebec Participants
The parties acknowledge that it is their express wish that the present agreement, as well as all
documents, notices and legal proceedings entered into, given or instituted pursuant hereto or
relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que
de tous documents exécutés, avis donnés et proćedures judiciares intentées, directement ou
indirectement, relativement á ou suite á la présente convention.
China
Form of Payment
Due to legal restrictions in China, Participant acknowledges and understands that payment of the
Exercise Price may be made solely by delivery (on a form approved by the Administrator) of an
irrevocable direction to a securities broker approved by the Company to sell all of the Shares
issued upon exercise of the Option and to deliver to the Company from the sale proceeds an amount
sufficient to pay the Exercise Price and any Tax-Related Items, unless the Company decides that a
cashless sell-all exercise restriction is not required. The balance of the sale proceeds, if any,
will be delivered to Participant. All cashless exercises of the Option shall be made through a
broker approved by the Company to handle such transactions.
Exchange Control Information
Participant understands and agrees that, due to exchange control laws in China, Participant may be
required to immediately repatriate the cash sale proceeds from the exercise of the Option to China.
Participant further understands that such repatriation of the proceeds may need to be effected
through a special exchange control account established by the Company or a Parent, Subsidiary or
affiliate and Participant hereby consents and agrees that the proceeds from the Option exercise may
be transferred to such special account prior to being delivered to Participant’s personal account.
Page 3
Denmark
Share Account Reporting
Participants may hold Shares acquired through the Plan in a safety-deposit account (
e.g.
, a
brokerage account) with either a Danish bank or with an approved foreign broker or bank. If the
Shares are held with a foreign broker or bank, Participant is responsible for informing the Danish
Tax Administration about the safety-deposit account. For this purpose, Participant must file a
Form V (Erklaering V) with the Danish Tax Administration.
In addition, if Participant opens a brokerage account (or a deposit account with a U.S. bank), the
brokerage account (or bank account, as applicable) will be treated as a deposit account because
cash can be held in the account. Therefore, Participant must also file a Form K (Erklaering K)
with the Danish Tax Administration.
If Participant uses the cashless sell-all method of exercise (whereby all Shares to which
Participant is entitled are sold immediately upon exercise of the Options), Participant is not
required to file a Form V because Participant will not hold any Shares. However if Participant
opens a deposit account with a foreign broker or bank to hold the cash proceeds, Participant is
required to file a Form K as described above.
Labor Law Acknowledgment
By accepting this Option, Participant acknowledges that he or she understands and agrees that this
grant relates to future services to be performed and is not a bonus or compensation for past
services.
Estonia
No country-specific terms apply.
Finland
No country-specific terms apply.
France
Language Consent
By clicking on the “I accept” button or by signing and returning this document providing for the
terms and conditions of this grant, Participant confirms having read and understood the documents
relating to this grant (the Notice of Grant, the Plan and this Award Agreement) which were provided
to Participant in the English language. Participant accepts the terms of those documents
accordingly.
Page 4
En cliquant sur le bouton “J’accepte” ou en signant et renvoyant le présent document décrivant les
termes et conditions de cette attribution, Participant confirme avoir lu et compris les documents
relatifs à cette attribution (le Formulaire d’Attribution, le Plan et ce Contrat d’Attribution) qui
ont été communiqués au Participant en langue anglaise. Participant en accepte les termes en
connaissance de cause.
Exchange Control Reporting
Participant acknowledges and understands that if he or she receives Shares upon exercise, he or she
may only hold those Shares outside of France if he or she declares all foreign accounts, whether
open, current, or closed, in his or her income tax return. Participant must also declare to the
customs and excise authorities any cash or securities Participant imports or exports without the
use of a financial institution when the value of the cash or securities is equal to or exceeds
€
7,600.
Germany
Exchange Control Reporting
Participant acknowledges and understands that cross-border payments in excess of
€
12,500 must be
reported monthly. If Participant uses a German bank to transfer a cross-border payment in excess
of
€
12,500 in connection with the purchase or sale of Shares, the bank will make the report. In
addition, Participant must report any receivables or payables or debts in foreign currency
exceeding an amount of
€
5,000,000 on a monthly basis. Finally, Participant must also report his or
her holdings annually in the unlikely event that Participant holds Shares representing 10% or more
of the total or voting capital of the Company.
Hong Kong
Securities Law Disclaimer
The contents of the Award Agreement have not been reviewed by any regulatory authority in Hong
Kong. Participant is advised to exercise caution in relation to the offer. If Participant has any
doubt about any of the contents of the Award Agreement or the Plan, Participant should obtain
independent professional advice.
This offer of the Option and the Shares underlying the Option is not a public offer of securities
and is available only for Employees, Directors and Consultants of the Company or any of its Parents
and Subsidiaries participating in the Plan.
Page 5
India
Fringe Benefit Tax
In accepting the Option, Participant consents and agrees to assume any and all liability for fringe
benefit tax that may be payable by the Company and/or the Employer in connection with the Option.
Participant further understands that the Option is contingent upon Participant’s agreement to
assume liability for any fringe benefit tax payable on the Option.
In accepting the Option, Participant agrees that the Company and/or the Employer may collect the
fringe benefit tax from Participant by any of the means set forth in section F of the Award
Agreement or by any other reasonable method established by the Company and/or the Employer.
Participant also agrees to execute any other consents or elections required to accomplish the
foregoing, promptly upon request by the Company and/or the Employer.
Exchange Control Reporting
Participant understands that he or she must repatriate to India any proceeds from the sale of
Shares acquired under the Plan and any dividends received in relation to the Shares and convert the
funds into local currency within ninety (90) days of receipt. Participant must obtain a foreign
inward remittance certificate (“FIRC”) from the bank where the foreign currency is deposited and
maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India
or the Employer requests proof of repatriation.
Italy
Form of Payment
Due to legal restrictions in Italy, Participant acknowledges and understands that payment of the
Exercise Price may be made solely by delivery (on a form approved by the Administrator) of an
irrevocable direction to a securities broker approved by the Company to sell all of the Shares
issued upon exercise of the Option and to deliver to the Company from the sale proceeds an amount
sufficient to pay the Exercise Price and any Tax-Related Items, unless the Company decides that a
cashless sell-all exercise restriction is not required. The balance of the sale proceeds, if any,
will be delivered to Participant. All cashless exercises of the Option shall be made through a
broker approved by the Company to handle such transactions.
Data Privacy
Notwithstanding any provision of the Award Agreement, this paragraph in the Exhibit B applies in
regards to data privacy in Italy.
Participant hereby explicitly and unambiguously consents to the collection, use, processing
and transfer, in electronic or other form, of personal data as described in the Award Agreement and
in this paragraph of the Exhibit B by and among, as applicable, the Employer, the Company and its
Parents, Subsidiaries and affiliates for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.
Page 6
Participant understands that the Company and the Employer may hold certain personal
information about Participant, including, but not limited to, Participant’s name, home address and
telephone number, date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the Company, details of all
Options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested
or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and
managing the Plan (“Data”).
Participant also understands that providing the Company with Participant’s Data is necessary
for the performance of the Plan and that Participant’s denial to provide such Data would make it
impossible for the Company to perform its contractual obligations and may affect Participant’s
ability to participate in the Plan. The Controller of personal data processing is Omniture, Inc.,
with registered offices at 550 East Timpanogos Circle, Building G, Orem, Utah 84097, United States
of America, and, pursuant to Legislative Decree no. 196/2003, it has a representative in Italy.
Participant understands that Participant’s Data will not be publicized, but it may be transferred
to E*TRADE FINANCIAL, banks, other financial institutions or brokers and/or their agents involved
in the management and administration of the Plan. Participant further understands that the Company
and/or any Parent, Subsidiary or affiliate will transfer Data amongst themselves as necessary for
the purpose of implementation, administration and management of Participant’s participation in the
Plan, and that the Company and/or any Parent, Subsidiary or affiliate may each further transfer
Data to third parties assisting the Company in the implementation, administration and management of
the Plan, including any requisite transfer to E*TRADE FINANCIAL or another third party with whom
Participant may elect to deposit any Shares acquired under the Plan. Such recipients may receive,
possess, use, retain and transfer the Data in electronic or other form, for the purposes of
implementing, administering and managing Participant’s participation in the Plan. Participant
understands that these recipients may be located in the European Economic Area, or elsewhere, such
as the United States. Should the Company exercise its discretion in suspending all necessary legal
obligations connected with the management and administration of the Plan, it will delete
Participant’s Data as soon as it has accomplished all the necessary legal obligations connected
with the management and administration of the Plan.
Participant understands that Data processing related to the purposes specified above shall take
place under automated or non-automated conditions, anonymously when possible, that comply with the
purposes for which Data is collected and with confidentiality and security provisions as set forth
by Applicable Laws and regulations, with specific reference to Legislative Decree no. 196/2003.
The processing activity, including communication, the transfer of Participant’s Data abroad,
including outside of the European Economic Area, as herein specified and pursuant to Applicable
Laws and regulations, does not require Participant’s consent thereto as the processing is necessary
to performance of contractual obligations related to implementation, administration and management
of the Plan. Participant understands that, pursuant to Section 7 of the Legislative Decree no.
196/2003, Participant has the right to, including but not limited to, access, delete, update, ask
for rectification of Participant’s Data and stop, for legitimate reason, the Data processing.
Furthermore, Participant is aware that Participant’s Data will not be used for direct marketing
purposes. In addition, the Data provided can be reviewed and questions or complaints can be
addressed by contacting Participant’s local human resources representative.
Page 7
Plan Document Acknowledgement
In accepting the Option, Participant acknowledges that he or she has received a copy of the Plan
and the Award Agreement and has reviewed the Plan and the Award Agreement, including this Exhibit
B, in their entirety and fully understands and accepts all provisions of the Plan and the Award
Agreement, including this Exhibit B.
Participant further acknowledges that he or she has read and specifically and expressly approves
the following paragraphs of the Award Agreement: Tax Obligations; Entire Agreement; Governing Law;
No Guarantee of Continued Service; Nature of Grant; Language; and the Data Privacy paragraph
included in this Exhibit B.
Japan
Exchange Control Reporting
If Participant acquires Shares valued at more than ¥100,000,000 in a single transaction,
Participant must file a Securities Acquisition Report with the Ministry of Finance through the Bank
of Japan within 20 days of the purchase of the Shares.
In addition, if Participant pays more than ¥30,000,000 in a single transaction for the purchase of
Shares when Participant exercises the Option, he or she must file a Payment Report with the
Ministry of Finance through the Bank of Japan by the 20th day of the month following the month in
which the payment was made. The precise reporting requirements vary depending on whether or not
the relevant payment is made through a bank in Japan.
A Payment Report is required independently from a Securities Acquisition Report. Therefore, if the
total amount that Participant pays upon a one-time transaction for exercising the Option and
purchasing Shares exceeds ¥100,000,000, then Participant must file both a Payment Report and a
Securities Acquisition Report.
Korea
Exchange Control Reporting
If Participant realizes US$500,000 or more from the sale of Shares, he or she must repatriate the
proceeds to Korea within eighteen months of the sale.
In addition, if Participant remits funds to purchase Shares, the remittance has to be “confirmed”
by a foreign exchange bank in Korea. This is an automatic procedure (
i.e.
, the bank does not need
to “approve” the remittance), and it should take no more than a single day to process. To receive
the confirmation, Participant should submit (i) a prescribed form application, (ii) the Notice of
Grant, the Award Agreement and any other Plan documents Participant received, and (iii)
certificates of
Page 8
employment with his or her local employer. Participant should check with the bank to determine
whether there are any additional requirements. This confirmation is not necessary for cashless
sell-all exercises since there is no remittance out of Korea.
Mexico
Labor Law Acknowledgment
By accepting the Option, Participant acknowledges, understands and agrees that: (i) the Option is
not related to the salary and other contractual benefits granted to Participant by the Employer;
(ii) any modification of the Plan or its termination shall not constitute a change or impairment of
the terms and conditions of Participant’s employment; and (iii) any benefit realized under the Plan
is a fringe benefit.
Policy Statement
The invitation the Company is making under the Plan is unilateral and discretionary and, therefore,
the Company reserves the absolute right to amend it and discontinue it at any time without any
liability to Participant.
This invitation and the acquisition of Shares do not, in any way, establish a labor relationship
between Participant and the Company, and it does not establish any rights between Participant and
the Employer.
La invitación que the Company hace en relación con el Plan es unilateral y discrecional, por lo
tanto, the Company se reserva el derecho absoluto para modificar o terminar el mismo, sin ninguna
responsabilidad para usted.
Esta invitación y, en su caso, la adquisición de acciones, de ninguna manera establecen relación
laboral alguna entre usted y the Company y tampoco establece derecho alguno entre usted y su
empleador.
The Netherlands
Labor Law Acknowledgement
By accepting this Option, Participant acknowledges that: (i) the grant is intended as an incentive
for Participant to remain employed with his or her current Employer and is not intended as
remuneration for labor performed; (ii) the grant is not intended to replace any pension rights or
compensation; and (iii) in the case of a merger, take-over or transfer of liability, the benefits
granted under the Plan will not transfer automatically to another company.
Prohibition Against Insider Trading
Participants that are residents of the Netherlands should be aware of the Dutch insider trading
rules, which may impact the sale of any Shares issued upon exercise of the Options. In particular,
Participant
Page 9
may be prohibited from effecting certain Share transactions if he or she has insider information
regarding the Company. Below is a discussion of the applicable restrictions. Participant is
advised to read the discussion carefully to determine whether the insider rules could apply to him
or her. If it is uncertain whether the insider rules apply, the Company recommends that
Participant consult with his or her legal advisor. Please note that the Company cannot be held
liable if a Participant violates the Dutch insider trading rules. Participant is responsible for
ensuring his or her compliance with these rules.
Dutch securities laws prohibit insider trading. Under Article 46 of the Act on the Supervision of
the Securities Trade 1995, anyone who has “inside information” related to the Company is prohibited
from effectuating a transaction in securities in or from the Netherlands. “Inside information” is
knowledge of a detail concerning the issuer to which the securities relate that is not public and
which, if published, would reasonably be expected to affect the stock price, regardless of the
development of the price. The insider could be any Participant of the Company or its Dutch Parent
or Subsidiary who has inside information as described above.
Given the broad scope of the definition of inside information, certain Participants of the Company
working at its Dutch Parent or Subsidiary may have inside information and, thus, would be
prohibited from effectuating a transaction in securities in the Netherlands at a time when they had
such inside information. By entering into the Award Agreement and participating in the Plan,
Participant acknowledges having read and understood the paragraphs above and acknowledges that it
is his or her responsibility to comply with the Dutch insider trading rules, as discussed herein.
Poland
Exchange Control Reporting
By accepting this Option, Participant acknowledges that he or she is required to transfer funds
through a bank account if the transfer amount exceeds
€
15,000. In addition, if Participant is a
resident of Poland, Participant acknowledges that he or she is responsible for complying with
exchange control laws in Poland and is required to report any Shares held upon exercise of the
Option to the National Bank of Poland.
Russia
Securities Law Disclaimer
The Award Agreement, this Exhibit B, the Plan and all other materials Participant receives
regarding his or her participation in the Plan do not constitute advertising or an offering of
securities in Russia. The issuance of securities pursuant to the Plan has not and will not be
registered in Russia and therefore, the securities described in any Plan-related documents may not
be used for offering or public circulation in Russia.
Exchange Control Reporting
Upon the sale of Shares acquired under the Plan, Participant must repatriate the proceeds back to
Russia within a reasonably short time after receipt of the proceeds. Russian currency control
restrictions
Page 10
concerning the use of special bank accounts and reserving of funds with the Russian Central Bank
were effectively repealed on July 1, 2006. However, Participant is encouraged to contact his or
her personal advisor before remitting the sale proceeds to Russia.
Participant acknowledges that he or she is not permitted to sell Shares directly to other Russian
legal entities or residents.
Singapore
Securities Law Disclaimer
The grant of the Award is being made on a private basis and is, therefore, exempt from registration
in Singapore.
Director Notification
Participant understands and acknowledges that if Participant is a director, associate director or
shadow director of a Singapore Parent or Subsidiary of the Company, Participant is subject to
certain notification requirements under the Singapore Companies Act, regardless of whether
Participant is a Singapore resident or employed in Singapore. Among these requirements is an
obligation to notify the Singapore Parent or Subsidiary in writing when Participant receives an
interest (
e.g
., Options or Shares) in the Company. In addition, Participant must notify the
Singapore Parent or Subsidiary when Participant sells Shares of the Company (including when
Participant sells Shares acquired under the Plan). These notifications must be made within two
days of acquiring or disposing of any interest in the Company. In addition, a notification must be
made of Participant’s interests in the Company within two days of becoming a director, associate
director or shadow director.
Spain
Nature of Grant
This provision supplements section I of the Award Agreement. In accepting the grant, Participant
acknowledges that he or she consents to participation in the Plan and has received a copy of the
Plan.
Participant understands that the Company, in its sole discretion, has unilaterally and gratuitously
decided to grant Options under the Plan to individuals who may be Employees of the Company or a
Parent, Subsidiary or affiliate throughout the world. The decision is a limited decision that is
entered into upon the express assumption and condition that any grant will not economically or
otherwise bind the Company or a Parent, Subsidiary or affiliate on an ongoing basis. Consequently,
Participant understands that the Option is granted on the assumption and condition that the Option
and the Shares issued upon exercise of the Option shall not become a part of any employment
contract (either with the Company or a Parent, Subsidiary or affiliate) and shall not be considered
a mandatory benefit, salary for any purposes (including severance compensation) or any other right
whatsoever. In addition, Participant understands that the grant of the Option would not be made to
Participant but for the assumptions and conditions referred to above; thus, Participant
acknowledges and freely accepts that should any or all of
Page 11
the assumptions be mistaken or should any of the conditions not be met for any reason, then any
Option grant shall be null and void.
Exchange Control Reporting
When receiving foreign currency payments derived from the ownership of Shares (
i.e.
, as a result of
the sale of the Shares), Participant must inform the financial institution receiving the payment,
the basis upon which such payment is made. Participant will need to provide the institution with
the following information: (i) his or her name, address, and fiscal identification number; (ii)
the name and corporate domicile of Company; (iii) the amount of the payment; (iv) the currency
used; (v) the country of origin; (vi) the reasons for the payment; and (vii) additional information
that may be required.
If Participant wishes to import the ownership title of the Shares (
i.e
., share certificates) into
Spain, he or she must declare the importation of such securities to the
Dirección General de
Política Comercial e Inversiones Exteriores.
To participate in the Plan, Participant must comply with exchange control regulations in Spain that
require that the purchase of Shares be declared for statistical purposes. If a Spanish financial
institution executes the transaction, the institution will automatically make the declaration on
Participant’s behalf; otherwise, it is Participant’s responsibility to make the declaration. In
addition, Participant must file a declaration of ownership of foreign securities each January.
Sweden
No country-specific terms apply.
Taiwan
Exchange Control Reporting
If Participant is a resident of Taiwan (including an expatriate holding an Alien Resident
Certificate), Participant may acquire foreign currency to purchase Shares and remit the same out of
or into Taiwan up to US$5,000,000 per year without justification. If Participant is an expatriate
employee who does not have an Alien Resident Certificate, Participant may remit into Taiwan and
convert to local currency up to US$100,000 at each remittance with no annual limitation.
Remittance of funds for the purchase of Shares must be made through an authorized foreign exchange
bank. If the transaction amount is TWD500,000 or more in a single transaction, Participant must
submit a Foreign Exchange Transaction Form to the remitting bank. If the transaction amount is
US$500,000 or more in a single transaction, Participant must also provide supporting documentation
to the satisfaction of the remitting bank.
United Arab Emirates/Dubai
Securities Law Disclaimer
The Plan is being offered only to qualified employees and is in the nature of providing equity
incentives to Employees of the Company’s affiliate in the U.A.E.
Page 12
[FORM
OF FRENCH STOCK OPTION AWARD AGREEMENT]
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
PARTICIPANTS IN FRANCE
Unless otherwise defined herein, the terms defined in the Omniture, Inc. 2006 Equity Incentive
Plan (the “
U.S. Plan
”) and the Rules of the Omniture, Inc. 2006 Equity Incentive Plan for the Grant
of Options to Participants in France (the “
French Plan,
” together with the U.S. Plan, the “
Plan
”)
will have the same defined meanings in this Award Agreement.
I.
NOTICE OF STOCK OPTION GRANT
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Participant’s Name:
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[INSERT NAME]
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Participant’s Address:
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You have been granted an option to purchase Shares of the Company, subject to the terms and
conditions of the Plan and this Award Agreement, as follows:
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Grant Number:
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[INSERT GRANT NO.]
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Grant Date:
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[INSERT GRANT DATE]
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Vesting Commencement Date:
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[INSERT VCD]
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Exercise Price per Share: $
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[INSERT PRICE/SHARE]
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Total Number of Shares Granted:
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[INSERT SHARES]
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Total Exercise Price: $
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[INSERT TOTAL X PRICE]
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Type of Option:
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Nonstatutory Stock Option (NSO)
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Term/Expiration Date:
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[INSERT TERM DATE]
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Vesting Schedule
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Subject to accelerated vesting as set forth below or in the Plan, this Option may be
exercised, in whole or in part, in accordance with the following vesting schedule:
[INSERT VESTING SCHEDULE]
Termination Period
:
This Option shall be exercisable for three (3) months after Participant’s active service as a
Service Provider ceases, unless such termination is due to Participant’s (i) Disability (as defined
in the French Plan), in which case this Option shall be exercisable for one (1) year after
Participant’s active service as a Service Provider ceases or (ii) death, in which case this Option
shall be exercisable for six (6) months after the Participant’s death. Notwithstanding the
foregoing and except in the event of the Participant’s death, in no event may this Option be
exercised after the Term/Expiration Date as provided above and may be subject to earlier
termination as provided in Section 14(c) of the U.S. Plan.
II.
AWARD AGREEMENT
A. Grant of Option.
The Administrator hereby grants to individual named in the Notice of Grant attached as Part I
of this Award Agreement (the “
Participant
”) an option (the “
Option
”) to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the “
Exercise Price
”), subject to the terms and conditions of the Plan, which are
incorporated herein by reference. Subject to Section 19(c) of the U.S. Plan, in the event of a
conflict between the terms and conditions of the Plan and the terms and conditions of this Award
Agreement, the terms and conditions of the U.S. Plan or French Plan, as applicable, will prevail.
B. Exercise of Option.
1.
Right to Exercise
. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Award Agreement.
2.
Method of Exercise
. This Option is exercisable by delivery of an exercise notice,
in the form attached as
Exhibit A
(the “
Exercise Notice
”) or in such other form and manner
as determined by the Administrator, which will state the election to exercise the Option, the
number of Shares in respect of which the Option is being exercised (the “
Exercised Shares
”), and
such other representations and agreements as may be required by the Company pursuant to the
provisions of the Plan. The Exercise Notice will be completed by Participant and delivered to the
Company. The Exercise Notice will be accompanied by payment of the aggregate Exercise Price as to
all Exercised Shares together with any applicable withholding taxes as set forth in Section H of
this Award Agreement. This Option will be deemed to be exercised upon receipt by the Company of
such fully executed Exercise Notice accompanied by such aggregate Exercise Price.
No Shares will be issued pursuant to the exercise of this Option unless such issuance and
exercise comply with Applicable Laws.
C. Method of Payment.
Payment of the aggregate Exercise Price will be by any of the following, or a combination
thereof, at the election of Participant:
1. cash;
-2-
2. check; or
3. consideration received by the Company under a formal cashless exercise program adopted by
the Company in connection with the Plan.
D. Non-Transferability of Option.
This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Participant only by
Participant.
E. Term of Option.
This Option may be exercised only within the term set out in the Notice of Grant, and may be
exercised during such term only in accordance with the Plan and the terms of this Award Agreement.
F. Restrictions on Sale of Shares. Notwithstanding any provisions of the U.S. Plan or this
Award Agreement to the contrary, in the event Participant vests in and exercises the Option prior
to the fourth anniversary of the Grant Date, after issuance of the Shares to Participant upon
exercise of the Option, Participant will not be permitted to sell, transfer, pledge, hypothecate or
assign such Shares until the fourth anniversary of the Grant Date or such other date as is required
to comply with the applicable holding period for French-qualified Options set forth by Section 163
bis C of the French Tax Code, as amended. If the holding period applicable to Shares underlying
the French-qualified Options is not met, this Option may not receive favorable tax and social
security treatment under French law. This restriction does not apply in the event of Participant’s
death and Disability (as defined in the French Plan). In the event of Forced Retirement or
dismissal as defined by Section 91 — ter of Exhibit II of the French Tax Code, as amended, and as
construed by the French Tax Circulars and subject to fulfillment of selected conditions for
French-qualified Options, this holding period restriction does not apply for Options that have been
exercised at least three (3) months prior to the effective date of the Forced Retirement or at
least three (3) months prior to the receipt of the notice of dismissal by Participant.
G. Specific Restriction for Managing Directors. Notwithstanding any provision in this Award
Agreement, if Participant is a managing director under French law (“mandataires sociaux,”
i.e.,
Président du Conseil d’Administration, Directeur Général, Directeur Général Délégué, Membre du
Directoire, Gérant de Sociétés par actions
), the Administrator, in its sole discretion, may (i)
prohibit Participant from exercising all or a portion of the Option or (ii) require Participant to
hold a certain percentage of the Shares acquired upon exercise of the Option in a brokerage account
designated by the Company, until such time as Participant ceases to serve as a managing director.
The Administrator shall exercise its discretion under this Section G only to the extent that it is
a requirement for French-qualified Options to impose such restrictions on managing directors.
H. Tax Obligations.
1.
Withholding Taxes
. Regardless of any action the Company or the Parent or
Subsidiary employing or retaining Participant (the “Employer”) takes with respect to any or all
income tax, social security, payroll tax, payment on account or other tax-related withholding
(“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related
Items legally due by Participant is and remains Participant’s responsibility and that the Company
and/or the Employer (a) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the
grant, vesting or exercise of the Option, the subsequent sale of Shares acquired pursuant to such
exercise and the receipt of dividends, if any; and (b) do not commit to continue to structure the
terms of the grant or any aspect of the Option to reduce or eliminate Participant’s liability for
Tax-Related Items.
-3-
Prior to the relevant taxable event, Participant agrees to make adequate arrangements
satisfactory to the Company and/or the Employer to satisfy all withholding and payment on account
obligations of the Company and/or the Employer. In this regard, if permissible under local law,
Participant authorizes the Company and/or the Employer, at their discretion, to satisfy the
obligations with regard to all Tax-Related Items legally payable by Participant by one or a
combination of the following:
(i) withholding from Participant’s wages or other cash compensation paid to Participant by the
Company and/or the Employer; or
(ii) withholding from proceeds of the sale of Shares acquired upon exercise of the Option; or
(iii) arranging for the sale of Shares acquired upon exercise of the Option (on Participant’s
behalf and at Participant’s direction pursuant to this authorization); or
(iv) withholding in Shares, provided that the Company only withholds the amount of Shares
necessary to satisfy the minimum withholding amount or such other amount as may be necessary to
avoid adverse accounting treatment. If the Company satisfies the obligation for Tax-Related Items
by withholding a number of Shares as described herein, Participant shall be deemed, for tax
purposes only, to have been issued the full number of Shares subject to the exercised portion of
the Option, notwithstanding that a number of the Shares are held back solely for the purpose of
paying the Tax-Related Items due as a result of the exercise of the Option.
Finally, Participant shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold as a result of Participant’s
participation in the Plan or Participant’s purchase of Shares that cannot be satisfied by the means
previously described. Participant acknowledges and agrees that the Company may refuse to honor the
exercise and refuse to deliver Shares if Participant fails to comply with Participant’s obligations
in connection with the Tax-Related Items as described in this section.
2.
Code Section 409A
. Under Code Section 409A, an option that vests after December
31, 2004 that was granted with a per share exercise price that is determined by the U.S. Internal
Revenue Service (the “
IRS
”) to be less than the fair market value of a Share on the date of grant
(a “
discounted option
”) may be considered “
deferred compensation
.” An option that is a “discounted
option” may result in (a) income recognition by Participant (if they are a U.S. taxpayer) prior to
the exercise of the option, (b) an additional twenty percent (20%) tax, and (c) potential penalty
and interest charges. Participant acknowledges that the Company cannot and has not guaranteed that
the IRS will agree that the per share exercise price of this Option equals or exceeds the fair
market value of a Share on the Date of Grant in a later examination. Participant agrees that if
the IRS determines that the Option was granted with a per share exercise price that was less than
the fair market value of a Share on the Date of Grant, Participant will be solely responsible for
Participant’s costs related to such a determination.
The Board reserves the right, to the extent it deems necessary or advisable in its sole
discretion, to unilaterally alter or modify this Award Agreement to ensure that all Options
provided to Participants who are U.S. taxpayers are made in such a manner that either qualifies for
exemption from or complies with Section 409A of the Code; provided, however, that the Company makes
no representation that the Options will be exempt from or comply with Section 409A of the Code and
makes no undertaking to preclude Section 409A of the Code from applying to the Options.
-4-
I. Entire Agreement; Governing Law.
The Plan is incorporated herein by reference. The Plan and this Award Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and Participant with respect to
the subject matter hereof, and may not be modified adversely to Participant’s interest except by
means of a writing signed by the Company and Participant. This grant of Options and the provisions
of the Award Agreement are governed by, and construed in accordance with the internal substantive
laws, but not the choice of law rules, of Utah. For purposes of litigating any dispute that arises
directly or indirectly from the relationship of the parties evidenced by this grant or the Award
Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of
Utah and agree that such litigation shall be conducted only in the courts of Utah, Fourth District,
or the federal courts for the United States for the 10
th
Circuit, and no other courts,
where this grant is made and/or to be performed.
J. NO GUARANTEE OF CONTINUED SERVICE.
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE, CONSULTANT OR NON-EMPLOYEE DIRECTOR AT
THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR
PURCHASING SHARES HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, CONSULTANT OR
NON-EMPLOYEE DIRECTOR FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE
WITH PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE PARTICIPANT’S RELATIONSHIP AS AN
EMPLOYEE, CONSULTANT OR NON-EMPLOYEE DIRECTOR AT ANY TIME.
K. Nature of Grant.
In accepting the grant, Participant acknowledges that:
1. the Plan is established voluntarily by the Company, it is discretionary in nature and it
may be modified, amended, suspended or terminated by the Company at any time, unless otherwise
provided in the Plan and this Award Agreement;
2. the grant of the Option is voluntary and occasional and does not create any contractual or
other right to receive future grants of Options, or benefits in lieu of Options, even if Options
have been granted repeatedly in the past;
3. all decisions with respect to future Option grants, if any, will be at the sole discretion
of the Company;
4. Participant is voluntarily participating in the Plan;
5. the Option is an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or the Employer, and which is outside the scope of
Participant’s employment contract, if any;
6. the Option is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation, termination, redundancy, end
of service
-5-
payments, bonuses, long-service awards, pension or retirement benefits or similar payments and
in no event should be considered as compensation for, or relating in any way to, past services for
the Company or the Employer;
7. in the event that Participant is not an employee of the Company, the Option grant and
Participant’s participation in the Plan will not be interpreted to form an employment contract or
relationship with the Company; and furthermore, the Option grant will not be interpreted to form an
employment contract with any Parent, Subsidiary or affiliate of the Company;
8. the future value of the underlying Shares is unknown and cannot be predicted with
certainty;
9. if the underlying Shares do not increase in value, the Option will have no value;
10. if Participant exercises the Option and obtains Shares, the value of those Shares acquired
upon exercise may increase or decrease in value, even below the Exercise Price;
11. in consideration of the grant of the Option, no claim or entitlement to compensation or
damages shall arise from termination of the Option or diminution in value of the Option or Shares
purchased through exercise of the Option resulting from termination of Participant’s status as a
Service Provider by the Company or the Employer (for any reason whatsoever and whether or not in
breach of local labor laws) and Participant irrevocably releases the Company and the Employer from
any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a
court of competent jurisdiction to have arisen, then, by signing this Award Agreement, Participant
shall be deemed irrevocably to have waived any entitlement to pursue such claim;
12. in the event of termination of Participant’s status as a Service Provider (whether or not
in breach of local labor laws), Participant’s right to vest in the Option under the Plan, if any,
will terminate effective as of the date that Participant is no longer actively a Service Provider
and will not be extended by any notice period mandated under local law (
e.g.
, active service would
not include a period of “garden leave” or similar period pursuant to local law); furthermore, in
the event of termination of active service as a Service Provider (whether or not in breach of local
labor laws), Participant’s right to exercise the Option after termination of service, if any, will
be measured by the date of termination of Participant’s active service and will not be extended by
any notice period mandated under local law; the Administrator shall have the exclusive discretion
to determine when Participant is no longer actively a Service Provider for purposes of the
Participant’s Option grant;
13. the Company is not providing any tax, legal or financial advice, nor is the Company making
any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition
or sale of the underlying Shares; and
14 Participant is hereby advised to consult with Participant’s own personal tax, legal and
financial advisors regarding Participant’s participation in the Plan before taking any action
related to the Plan.
L. Data Privacy.
Participant hereby explicitly and unambiguously consents to the collection, use and transfer,
in electronic or other form, of Participant’s personal data as described in this Award Agreement
and any other Option grant materials by and among, as applicable, the Employer, the Company and its
Parents, Subsidiaries and affiliates for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.
-6-
Participant understands that the Company and the Employer may hold certain personal
information about Participant, including, but not limited to, Participant’s name, home address and
telephone number, date of birth, or other identification number, salary, nationality, job title,
any shares of stock or directorships held in the Company, details of all Options or any other
entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in
Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan
(“Data”).
Participant understands that Data will be transferred to E*TRADE FINANCIAL, or such other
stock plan service provider as may be selected by the Company in the future, which is assisting the
Company with the implementation, administration and management of the Plan. Participant
understands that the recipients of the Data may be located in the United States or elsewhere, and
that the recipients’ country (e.g., the United States) may have different data privacy laws and
protections than France. Participant understands that Participant may request a list with the
names and addresses of any potential recipients of the Data by contacting Participant’s local human
resources representative. Participant authorizes the Company, E*TRADE FINANCIAL and any other
possible recipients which may assist the Company (presently or in the future) with implementing,
administering and managing the Plan to receive, possess, use, retain and transfer the Data, in
electronic or other form, for the sole purpose of implementing, administering and managing
Participant’s participation in the Plan. Participant understands that Data will be held only as
long as is necessary to implement, administer and manage Participants participation in the Plan.
Participant understands that Participant may, at any time, view Data, request additional
information about the storage and processing of Data, require any necessary amendments to Data or
refuse or withdraw the consents herein, in any case without cost, by contacting in writing
Participant’s local human resources representative. Participant understands, however, that
refusing or withdrawing consent may affect Participant’s ability to participate in the Plan. For
more information on the consequences of Participant’s refusal to consent or withdrawal of consent,
Participant understands that Participant may contact Participant’s local human resources
representative.
M. Language.
If Participant has received this Award Agreement or any other document related to the Plan
translated into a language other than English and if the meaning of the translated version is
different than the English version, the English version will control, unless otherwise prescribed
by local law.
N. Electronic Delivery and Acceptance.
The Company may, in its sole discretion, decide to deliver any documents related to the
Participant’s participation in the Plan by electronic means or request Participant’s consent to
participate in the Plan by electronic means. Participant hereby consents to receive such documents
by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or
electronic system established and maintained by the Company or a third party designated by the
Company.
O. Disqualification of French-qualified Options. If the French-qualified Options are
otherwise modified or adjusted in a manner in keeping with the U.S. Plan or as mandated as a matter
of law and the modification or adjustment is contrary to the terms and conditions of the French
Plan or French laws, the Options may no longer qualify as French-qualified Options. If the Options
no longer qualify as French-qualified Options, the Administrator may, provided it is authorized to
do so under the Plan, determine to lift, shorten or terminate certain restrictions applicable to
the exercise of the Options or the sale of Shares which may have been imposed under the French Plan
and this Award Agreement.
-7-
P. Severability.
The provisions of this Award Agreement are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions
shall nevertheless be binding and enforceable.
[Remainder of Page Intentionally Left Blank]
-8-
By Participant’s signature and the signature of the Company’s representative below,
Participant and the Company agree that this Option is granted under and governed by the terms and
conditions of the Plan and this Award Agreement. Participant has reviewed the Plan and this Award
Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Award Agreement and fully understands all provisions of the Plan and Award
Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan and Award Agreement.
Participant further agrees to notify the Company upon any change in the residence address indicated
below.
By clicking on the “I accept” button or by signing and returning this document providing for
the terms and conditions of the grant, Participant confirms having read and understood the
documents relating to this grant (the Notice of Grant, the U.S. Plan as amended by the French Plan
and this Award Agreement) which were provided to Participant in the English language. Participant
accepts the terms of those documents accordingly.
En cliquant sur le bouton “J’accepte” ou en signant et renvoyant le présent document décrivant
les termes et conditions de cette attribution, le Participant confirme avoir lu et compris les
documents relatifs à cette attribution (le Formulaire d’Attribution, le Plan U.S. tel qu’amendé par
le Plan pour la France et ce Contrat d’Attribution) qui ont été communiqués au Participant en
langue anglaise. Le Participant en accepte les termes en connaissance de cause.
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PARTICIPANT:
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OMNITURE, INC.
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By
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Print Name
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Print Name
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Residence Address
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Title
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-9-
EXHIBIT A
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Omniture, Inc.
550 East Timpanogos Circle
Orem, Utah 84097
Attention: Stock Plan Administration
1.
Exercise of Option
. Effective as of today, _________, ______, the
undersigned (“Purchaser”) hereby elects to purchase
____________ shares (the “Shares”) of the
Common Stock of Omniture, Inc. (the “Company”) under and pursuant to the 2006 Equity Incentive Plan
(the “U.S. Plan”), the Rules of the Omniture, Inc. 2006 Equity Incentive Plan for the Grant of
Options to Participants in France (the “French Plan,” together with the U.S. Plan, the “Plan”) and
the Award Agreement dated
_________, ______ (the “Award Agreement”). The Exercise Price
for the Shares will be $_________. ______, as required by the Award Agreement.
2.
Delivery of Payment
. Purchaser herewith delivers to the Company the full Exercise
Price for the Shares and any applicable Tax-Related Items as set forth in Section H of the Award
Agreement.
3.
Representations of Purchaser
. Purchaser acknowledges that Purchaser has received,
read and understood the Plan and the Award Agreement and agrees to abide by and be bound by their
terms and conditions.
4.
Rights as Stockholder
. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares,
no right to vote or receive dividends or any other rights as a stockholder will exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired will be
issued to Purchaser as soon as practicable after exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the date of issuance,
except as provided in Section 14 of the U.S. Plan.
5.
Tax Consultation
. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser
represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax or social security advice.
6.
Entire Agreement; Governing Law
. The Plan and Award Agreement are incorporated
herein by reference. This Exercise Notice, the Plan and the Award Agreement (constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and Purchaser with respect to the subject
matter hereof, and may not be modified adversely to the Purchaser’s interest except by means of a
writing signed by the Company and Purchaser. The terms of this Exercise Notice are governed by,
and construed in accordance with, the internal substantive laws, but not the choice of law rules,
of Utah. For purposes of litigating any dispute that arises directly or indirectly from the
relationship of the parties evidenced by the Option grant or the terms of the Award
Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State
of Utah and agree that such litigation shall be conducted only in the courts of Utah, Fourth
District, or the federal courts for the United States for the 10
th
Circuit, and no other
courts, where this Option grant is made and/or to be performed.
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Submitted by:
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Accepted by:
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PURCHASER:
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OMNITURE, INC.
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By
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Print Name
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Its
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Address:
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Address:
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Omniture, Inc.
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550 East Timpanogos Circle
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Orem, Utah 84097
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Attention: Stock Plan Administration
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Date Received
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-2-
[FORM OF UK STOCK OPTION AWARD AGREEMENT]
UK SUB-PLAN OF THE
OMNITURE, INC. 2006 EQUITY INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
UK PARTICIPANTS
Unless otherwise defined herein, the terms defined in the UK Sub-plan of the Omniture, Inc.
2006 Equity Incentive Plan (the “
Plan
”) will have the same defined meanings in this Stock Option
Award Agreement (the “
Award Agreement
”).
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I.
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NOTICE OF STOCK OPTION GRANT
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Participant’s Name:
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[INSERT NAME]
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Participant’s Address:
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[INSERT ADDRESS]
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You have been granted an option to purchase Shares of the Company, subject to the terms and
conditions of the Plan, the Joint Election and this Award Agreement, as follows:
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Grant Number:
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[INSERT GRANT NO.]
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Date of Grant:
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[INSERT GRANT DATE]
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Vesting Commencement Date:
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[INSERT VCD]
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Exercise Price per Share:
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$[INSERT PRICE/SHARE] USD
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Total Number of Shares Granted:
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[INSERT SHARES]
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Total Exercise Price:
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$[INSERT TOTAL X PRICE]
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Type of Option:
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UK Unapproved Option
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Term/Expiration Date:
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[INSERT TERM DATE]
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Vesting Schedule
:
Subject to accelerated vesting as set forth below or in the Plan, this Option may be
exercised, in whole or in part, in accordance with the following vesting schedule:
[INSERT VESTING SCHEDULE]
Termination Period
:
This Option shall be exercisable for three (3) months after Participant ceases to be an
Employee, unless such termination is due to Participant’s death or Disability, in which case this
Option shall be exercisable for one (1) year after Participant ceases to be an Employee.
Notwithstanding the foregoing, in no event may this Option be exercised after the Term/Expiration
Date as provided above and may be subject to earlier termination as provided in Section 13(c) of
the Plan.
A. Grant of Option.
The Administrator hereby grants to the individual named in the Notice of Grant attached as
Part I of this Award Agreement (the “
Participant
”) an option (the “
Option
”) to purchase the number
of Shares, as set forth in the Notice of Stock Option Grant above, at the exercise price per share
set forth in the Notice of Grant (the “
Exercise Price
”), subject to the Joint Election (as defined
in Section H of this Award Agreement), the terms and conditions of the UK Sub-Plan of the Omniture,
Inc. 2006 Equity Incentive Plan (the “
Plan
”), which is incorporated herein by reference. Subject
to Section 18(c) of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Award Agreement, the terms and conditions of the Plan
will prevail
SAVE THAT
in respect of (i) any payment or other matter relating to the Option Tax
Liability (as defined in paragraph Section G(b) of this Award Agreement), the terms of this Award
Agreement shall prevail; and (ii) in respect of any employer’s NICs (as defined by Section H of
this Award Agreement), the terms of the Joint Election will prevail.
B. Exercise of Option.
1.
Right to Exercise
. This Option is exercisable during its term in accordance with
the Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and
this Award Agreement.
2.
Method of Exercise
. This Option is exercisable by delivery of an exercise notice,
in the form attached as
Exhibit A
(the “
Exercise Notice
”) or in such other form and manner
and pursuant to such procedures as determined by the Administrator, which will state the election
to exercise the Option, the number of Shares in respect of which the Option is being exercised (the
“
Exercised Shares
”), and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice will be completed by
Participant and delivered to the Company. The Exercise Notice will be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares payment of the Option Tax Liability and
payment of any liability arising under the terms of the Joint Election and confirmation that a
Section 431 Election has been completed (in the format set out in
Exhibit B
or in such
other form as determined by HM Revenue & Customs from time to time). This Option will be deemed to
be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the
aggregate Exercise Price, such payments and the Section 431 confirmation.
No Shares will be issued pursuant to the exercise of this Option unless such issuance and
exercise comply with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares will be considered transferred to Participant on the date the Option is
exercised with respect to such Exercised Shares.
-2-
C. Method of Payment.
Payment of the aggregate Exercise Price will be by any of the following, or a combination
thereof, at the election of Participant:
1. cash;
2. cheque;
3. consideration received by the Company under a formal cashless exercise program adopted by
the Company in connection with the Plan; or
4. surrender of other Shares which (a) shall be valued at its Fair Market Value on the date of
exercise and (b) must be owned free and clear of any liens, claims, encumbrances or security
interests, if accepting such Shares, in the sole discretion of the Administrator, shall not result
in any adverse accounting consequences to the Company.
D. Non-Transferability of Option.
This Option may not be transferred in any manner other than to the personal representatives on
the death of the Participant. The Option may be exercised during the lifetime of Participant only
by Participant. The terms of the Plan and this Award Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Participant.
E. Term of Option.
This Option may be exercised only within the term set out in the Notice of Grant, and may be
exercised during such term only in accordance with the Plan and the terms of this Award Agreement.
F. Tax Obligations.
1.
Tax Withholding
. In the event that the Company determines that it is required to
withhold any tax as a result of the exercise of this option, the Participant, as a condition to the
exercise of this option, must pay or provide for any Option Tax Liability. Payment of any
liability arising under the terms of the Joint Election shall be payable in accordance with the
terms of the Joint Election.
2.
Taxation Consequences
. The Participant should obtain advice from an appropriate
independent professional adviser in relation to the United Kingdom taxation implications of the
grant, exercise, assignment, release, cancellation or any other disposal of this Option (the
"
Trigger Event
”) pursuant to the Plan and on any subsequent sale of the Option Shares. The
Participant should also take advice in respect of the United Kingdom taxation indemnity provisions
comprising Sections G.1. and G.2. below.
G. Participants Taxation Indemnity.
1. To the extent permitted by law, the Participant hereby agrees to indemnify and keep
indemnified the Company and the Company as trustee for and on behalf of any related corporation, in
respect of any liability or obligation of the Company and/or any related corporation to account for
income tax (under PAYE) or any other taxation provisions and primary Class 1 National Insurance
Contributions (“
NICs
”) in the United Kingdom to the extent arising from a Trigger Event or arising
out of the acquisition, retention and disposal of the Shares acquired pursuant to this Option.
2. The Company shall not be obliged to allot and issue any Shares or any interest in Shares
pursuant to the exercise of an Option unless and until the Participant has paid to the Company such
sum as is, in the opinion of the Company, sufficient to indemnify the Company in full against any
liability the
-3-
Company has to account to HM Revenue & Customs for any amount of, or representing, income tax
and/or primary NICs (the “
Option Tax Liability
”), or the Participant has made such other
arrangement as in the opinion of the Company will ensure that the full amount of any Option Tax
Liability will be recovered from the Participant within such period as the Company may then
determine.
3. In the absence of any such other arrangement being made, the Company shall have the right
to retain out of the aggregate number of shares to which the Participant would have otherwise been
entitled upon the exercise of this option, such number of Shares as, in the opinion of the Company,
will enable the Company to sell as agent for the Participant (at the best price which can
reasonably expect to be obtained at the time of the sale) and to pay over to the Company sufficient
monies out of the net proceeds of sale, after deduction of all fees, commissions and expenses
incurred in relation to such sale, to satisfy the Participant’s liability under such indemnity.
H. Employer’s NICs. As consideration of the grant of an Option under the Plan the Participant
has joined with the Company, or if and to the extent that there is a change in the law, any other
company or person who is or becomes a secondary contributor for NIC purposes in respect of this
Option (the “
Secondary Contributor
”) in making an election (in such terms and such form as provided
in paragraphs 3A and 3B of Schedule 1 to the Social Security Contributions and Benefits Act 1992)
which has been approved by HM Revenue & Customs (the “
Joint Election
”), for the transfer of the
whole or any liability of the Secondary Contributor to Employer’s Class 1 NICs to be transferred to
the Participant.
I. Data Protection.
1. In order to facilitate the administration of the Plan, it will be necessary for the Company
(or its payroll administrators) to collect, hold and process certain personal information about the
Participant and to transfer this data to the Company and to certain third parties such as brokers
with whom the Participant may elect to deposit any share capital under the Plan, including E*TRADE
FINANCIAL. The Participant consents to the Company (or its payroll administrators) collecting,
holding and processing its personal data and transferring this data to any other third parties
insofar as is reasonably necessary to implement, administer and manage the Plan.
2. Where the transfer is to be to a destination outside the European Economic Area, the
Company shall take reasonable steps to ensure that the Participant’s personal data continues to be
adequately protected and securely held.
3. The Participant understands that the Participant may, at any time, view its personal data,
require any necessary corrections to it or withdraw the consents herein in writing by contacting
the Human Resources Department of the Company (but acknowledges that without the use of such data
it may not be practicable for the Company to administer the Participant’s involvement in the Plan
in a timely fashion or at all and this may be detrimental to the Participant).
J. Entire Agreement; Governing Law.
The Plan is incorporated herein by reference. The Plan and this Award Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and Participant with respect to
the subject matter hereof, and may not be modified adversely to Participant’s interest except by
means of a writing signed by the Company and Participant. This grant of Options and the provisions
of this Award Agreement are governed by and construed in accordance with the internal substantive
laws, but not the choice of law rules, of the State of Utah. For purposes of litigating any
dispute that arises directly or indirectly from the relationship of the parties evidenced by this
grant or the Award Agreement, the parties hereby submit to and consent to the
-4-
exclusive jurisdiction of the State of Utah and agree that such litigation shall be conducted
only in the courts of Utah, Fourth District, or the federal courts for the United States for the
10
th
Circuit, and no other courts, where this grant is made and/or to be performed.
K. NO GUARANTEE OF CONTINUED SERVICE.
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE OF THE COMPANY (OR THE PARENT OR
SUBSIDIARY EMPLOYING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION
OR PURCHASING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE WITH PARTICIPANT’S RIGHT OR THE RIGHT OF
THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING PARTICIPANT) TO TERMINATE PARTICIPANT’S
RELATIONSHIP AS AN EMPLOYEE AT ANY TIME, WITH OR WITHOUT CAUSE.
L. Nature of Grant.
In accepting the grant, Participant acknowledges that:
1. the Plan is established voluntarily by the Company, it is discretionary in nature and it
may be modified, amended, suspended or terminated by the Company at any time, unless otherwise
provided in the Plan and this Award Agreement;
2. the grant of the Option is voluntary and occasional and does not create any contractual or
other right to receive future grants of Options, or benefits in lieu of Options, even if Options
have been granted repeatedly in the past;
3. all decisions with respect to future Option grants, if any, will be at the sole discretion
of the Company;
4. Participant is voluntarily participating in the Plan;
5. the Option is an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or the Employer, and which is outside the scope of
Participant’s employment contract, if any;
6. the Option is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculating any severance, resignation, termination, redundancy, end
of service payments, bonuses, long-service awards, pension or retirement benefits or similar
payments and in no event should be considered as compensation for, or relating in any way to, past
services for the Company or the Employer;
7. in the event that Participant is not an employee of the Company, the Option grant and
Participant’s participation in the Plan will not be interpreted to form an employment contract or
relationship with the Company; and furthermore, the Option grant will not be interpreted to form an
employment contract with any Parent, Subsidiary or affiliate of the Company;
-5-
8. the future value of the underlying Shares is unknown and cannot be predicted with
certainty;
9. if the underlying Shares do not increase in value, the Option will have no value;
10. if Participant exercises the Option and obtains Shares, the value of those Shares acquired
upon exercise may increase or decrease in value, even below the Exercise Price;
11. in consideration of the grant of the Option, no claim or entitlement to compensation or
damages shall arise from termination of the Option or diminution in value of the Option or Shares
purchased through exercise of the Option resulting from termination of Participant’s status as a
Service Provider by the Company or the Employer (for any reason whatsoever and whether or not in
breach of local labor laws) and Participant irrevocably releases the Company and the Employer from
any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a
court of competent jurisdiction to have arisen, then, by signing this Award Agreement, Participant
shall be deemed irrevocably to have waived any entitlement to pursue such claim;
12. in the event of termination of Participant’s status as a Service Provider (whether or not
in breach of local labor laws), Participant’s right to vest in the Option under the Plan, if any,
will terminate effective as of the date that Participant is no longer actively a Service Provider
and will not be extended by any notice period mandated under local law (
e.g.
, active service would
not include a period of “garden leave” or similar period pursuant to local law); furthermore, in
the event of termination of active service as a Service Provider (whether or not in breach of local
labor laws), Participant’s right to exercise the Option after termination of service, if any, will
be measured by the date of termination of Participant’s active service and will not be extended by
any notice period mandated under local law; the Administrator shall have the exclusive discretion
to determine when Participant is no longer actively a Service Provider for purposes of the
Participant’s Option grant;
13. the Company is not providing any tax, legal or financial advice, nor is the Company making
any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition
or sale of the underlying Shares; and
14. Participant is hereby advised to consult with Participant’s own personal tax, legal and
financial advisors regarding Participant’s participation in the Plan before taking any action
related to the Plan.
M. Language.
If Participant has received this Award Agreement or any other document related to the Plan
translated into a language other than English and if the translated version is different than the
English version, the English version will control, unless otherwise prescribed by local law.
N.
Electronic Delivery
.
The Company may, in its sole discretion, decide to deliver any documents related to the
Participant’s participation in the Plan by electronic means or to request Participant’s consent to
participate in the Plan by electronic means. Participant hereby consents to receive such documents
by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or
electronic system established and maintained by the Company or a third party designated by the
Company.
-6-
O.
Severability
.
The provisions of this Award Agreement are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions
shall nevertheless be binding and enforceable.
[Remainder of Page Intentionally Left Blank]
-7-
By Participant’s signature and the signature of the Company’s representative below,
Participant and the Company agree that this Option is granted under and governed by the terms and
conditions of the Plan, this Award Agreement and the Joint Election. Participant has reviewed the
Plan, this Award Agreement and the Joint Election in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Award Agreement and the Joint Election and
fully understands all provisions of the Plan, this Award Agreement and the Joint Election.
Participant hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan, Award Agreement and
the Joint Election. Participant further agrees to notify the Company upon any change in the
residence address indicated below.
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PARTICIPANT:
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OMNITURE, INC.
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[name]
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[Officer name]
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[Title]
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Residence Address:
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[address 1]
[city state zip]
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-8-
EXHIBIT A
UK SUB-PLAN OF THE
OMNITURE, INC. 2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Omniture, Inc.
550 East Timpanogos Circle
Orem, Utah 84097
United States of America
Attention: Stock Plan Administration
1.
Exercise of Option
. Effective as of today, _________, ______, the
undersigned (“
Purchaser
”) hereby elects to exercise Purchaser’s option (the ‘
Option
”) to purchase
_________ shares (the “
Shares
”) of the Common Stock of Omniture, Inc. (the “
Company
”) under
and pursuant to the UK Sub-plan of the Omniture, Inc. 2006 Equity Incentive Plan (the “
Plan
”) and
the Award Agreement dated
_________ (the “
Award Agreement
”) and the Joint Election dated
_________. The Exercise Price for the Shares will be $_________.______, as required by the Award
Agreement.
2.
Delivery of Payment
. Purchaser herewith delivers to the Company:
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(a)
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the full Exercise Price for the Shares;
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(b)
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payment in respect of the Option Tax Liability (as defined in the
Award Agreement); and
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(c)
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confirmation that the Purchaser has delivered to the Secondary
Contributor (as defined in the Award Agreement) the liability pursuant to the
Joint Election and the Section 431 Election as set forth in the Award
Agreement.
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3.
Representations of Purchaser
. Purchaser acknowledges that Purchaser has received,
read and understood the Plan and the Award Agreement and agrees to abide by and be bound by their
terms and conditions.
4.
Rights as Stockholder
. Until the issuance (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares,
no right to vote or receive dividends or any other rights as a stockholder will exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired will be
issued to Purchaser as soon as practicable after exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the date of issuance,
except as provided in Section 13 of the Plan.
5.
Tax Consultation
. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser
represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in
connection with the purchase or disposition of the Shares and that Purchaser is not relying on the
Company for any tax advice.
6.
Entire Agreement; Governing Law
. The Plan, the Award Agreement and the Joint
Election are incorporated herein by reference. This Exercise Notice, the Plan, the Award Agreement
and the Joint Election constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and agreements of the Company
and Purchaser with respect to the subject matter hereof, and may not be modified adversely to the
Purchaser’s interest except by means of a writing signed by the Company and Purchaser. The terms of
this Exercise Notice are governed by, and construed in accordance with, the internal substantive
laws, but not the choice of law rules, of the State of Utah. For purposes of litigating any
dispute that arises directly or indirectly from the relationship of the parties evidenced by the
Option grant or the terms of the Award Agreement, the parties hereby submit to and consent to the
exclusive jurisdiction of the State of Utah and agree that such litigation shall be conducted only
in the courts of Utah, Fourth District, or the federal courts for the United States for the
10
th
Circuit, and no other courts, where this Option grant is made and/or to be
performed.
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Submitted by:
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Accepted by:
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PURCHASER:
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OMNITURE, INC.:
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Signature:
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By:
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Name:
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Name:
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(please print)
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Title:
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Residence Address:
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Address:
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Omniture, Inc.
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550 East Timpanogos Circle
Orem, Utah 84097
United States of America
Attention: Stock Plan Administration
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-2-
EXHIBIT B
Joint
Election under s431 ITEPA 2003 for full or partial disapplication of
Chapter 2 Income Tax (Earnings and Pensions) Act 2003
One Part Election
1. Between
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the Employee:
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[insert name of employee]
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whose National Insurance Number is:
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[insert NINO]
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and
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the Company (who is the Employee’s employer):
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Omniture Limited
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of Company Registration Number:
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[Co Reg. No.]
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2. Purpose of Election
This joint election is made pursuant to section 431(1) or 431(2) Income Tax (Earnings and
Pensions) Act 2003 (ITEPA) and applies where employment-related securities, which are restricted
securities by reason of section 423 ITEPA, are acquired.
The effect of an election under section 431(1) is that, for the relevant Income Tax and NIC
purposes, the employment-related securities and their market value will be treated as if they were
not restricted securities and that sections 425 to 430 ITEPA do not apply. An election under
section 431(2) will ignore one or more of the restrictions in computing the charge on acquisition.
Additional Income Tax will be payable (with PAYE and NIC where the securities are Readily
Convertible Assets).
Should the value of the securities fall following the acquisition, it is possible that Income
Tax/NIC that would have arisen because of any future chargeable event (in the absence of an
election) would have been less than the Income Tax/NIC due by reason of this election. Should this
be the case, there is no Income Tax/NIC relief available under Part 7 of ITEPA 2003; nor is it
available if the securities acquired are subsequently transferred, forfeited or revert to the
original owner.
3. Application
This joint election is made not later than 14 days after the date of acquisition of the
securities by the employee and applies to:
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Number of securities:
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[
insert number]
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Description of securities:
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Common Stock of Omniture, Inc.
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Name of issuer of securities:
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Omniture, Inc
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To be acquired by the Employee after _________, ______, under the terms of the UK
Sub-Plan of the Omniture, Inc. 2006 Equity Incentive Plan.
4. Extent of Application
This election disapplies S.431(1) ITEPA: All restrictions attaching to the securities.
5. Declaration
This election will become irrevocable upon the later of its signing or the acquisition (and
each subsequent acquisition) of employment-related securities to which this election applies.
In signing this joint election, we agree to be bound by its terms as stated above.
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/ /
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Signature (Employee)
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Date
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/ /
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Signature (for and on behalf of the company)
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Date
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Position in company
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-2-
OMNITURE INC.
- and -
OMNITURE LIMITED
- and -
PARTICIPANT
JOINT ELECTION
RELATING TO THE UK SUB-PLAN OF
THE OMNITURE, INC. 2006 EQUITY INCENTIVE PLAN
TAYLOR WESSING LLP
Carmelite
50 Victoria Embankment
Blackfriars
London EC4Y 0DX
Tel: +44 (0)20 7300 7000
Fax: +44 (0)20 7300 7100
DX 41 London
Ref: DNK/AXC
JOINT ELECTION
BETWEEN
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(1)
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OMNITURE INC.
whose office is located at 550 East Timpanogos Circle, Orem, Utah 84097,
United States of America (the “Company”);
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(2)
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OMNITURE LIMITED
(company registration number 05149955) whose registered office is located at
Whitefriars, Lewins Mead, Bristol BS21 2NT (the “Employer”); and
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(3)
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[Insert Name of Participant]
of
[insert address of Participant]
(the “Participant” which
shall include his executors or administrators in the case of his death).
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INTRODUCTION
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(A)
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The Participant may be granted, from time to time, equity awards (each one an “Award”) to
acquire shares of common stock of the Company (the “Shares”) on terms to be set out in Award
Agreements to be issued pursuant to the UK Sub-Plan of the Omniture Inc. 2006 Equity Incentive
Plan (the “Plan”).
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(B)
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This joint election (the “Joint Election”) is in an approved format. The grant, exercise,
cancellation, release, assignment or other disposal of an Award is subject to the Participant
entering into this Joint Election.
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(C)
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The Participant is currently an employee of the Company.
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(D)
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The exercise, release, cancellation, assignment or other disposal of an Award (a “Trigger
Event”) (whether in whole or in part), may result in the Company or, if and to the extent that
there is a change in law, any other company or person who becomes the secondary contributor
for National Insurance contributions (“NIC”) purposes at the time of such Trigger Event having
a liability to pay employer’s (secondary) Class I NICs (or any tax or social security premiums
which may be introduced in substitution or in addition thereto) in respect of such Trigger
Event.
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(E)
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Where the context so admits, any reference in this Joint Election:
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(i)
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to the singular number shall be construed as if it referred also to the
plural number and vice versa;
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(ii)
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to the masculine gender shall be construed as though it referred also to the
feminine gender;
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(iii)
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to a statute or statutory provision shall be construed as if it referred
also to that statute or provision as for the time being amended or re-enacted; and
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(iv)
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Shares means shares of common stock of the Company.
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2
AGREED TERMS
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1.
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Joint Election
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1.1
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It is a condition of the exercise, cancellation, release, assignment or other disposal of an
Award that the Participant has entered into this Joint Election with the Company.
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1.2
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The Participant and the Company elect to transfer the liability (the “Liability”) for all of
the employer’s (Secondary) Class I NICs referred to in (D) above and charged on payments or
other benefits arising on a Trigger Event and treated as remuneration and earnings pursuant to
section 4(4)(a) of the Social Security Contributions and Benefit Act 1992 (“SSCBA”) to the
Participant. This Joint Election is made pursuant to an arrangement authorised by paragraph
3B, Schedule 1 of the SSCBA.
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1.3
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This Joint Election does not apply in relation to any liability, or any part of any
liability, arising as a result of regulations being given retrospective effect by virtue of
section 4B(2) of the Social Security Contributions and Benefits Act 1992 or the Social
Security Contributions and Benefits (Northern Ireland) Act 1992.
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2.
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Restriction on registration until liability paid by Participant
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The Participant hereby agrees that no Shares shall be registered in his name until he has
met the Liability as a result of a Trigger Event in accordance with this Joint Election.
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3.
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Payment
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3.1
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Where, in relation to an Award, the Participant is liable, or is in accordance with current
practice at the date of the Trigger Event believed by the Company to be liable (where it is
believed that the shares under option are readily convertible assets), to account to the HM
Revenue & Customs for the Liability, the Participant and the Company agree that, upon receipt
of the funds to meet the Liability from the Participant, such funds to meet the Liability
shall be paid to the Collector of Taxes or other relevant taxation authority by the Company on
the Participant’s behalf within 14 days of the end of the income tax month in which the gain
on the Option was made (“the 14 day period”) and for the purposes of securing payment of the
Liability the Participant will on the occurrence of a Trigger Event:
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(a)
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pay to the Company a cash amount equal to the Liability; and/or
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(b)
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suffer a deduction from salary or other remuneration due to the Participant
such deduction being in an amount not exceeding the Liability; and/or
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(c)
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at the request of the Company enter into such arrangement or arrangements
necessary or expedient with such person or persons (including the appointment of a
nominee on behalf of the Participant) to effect the sale of Shares acquired through
the exercise of the Option to cover all or any part of
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3
the Liability and use the proceeds to pay the Company a cash amount equal to the
Liability.
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3.2
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The Participant hereby irrevocably appoints the Company as his attorney with full power in
his name to execute or sign any document and do any other thing which the Company may consider
desirable for the purpose of giving effect to the Participant satisfying the Liability under
clause 3.1 and satisfying any penalties and interest under clause 3.4, save that this power of
attorney shall be limited as set out below. The Participant further agrees to ratify and
confirm whatever the Company may lawfully do as his attorney. The power of attorney granted
in this clause shall be limited to the grant of a right for the Company to enter into such an
arrangement (as envisaged by clause 3.1(c)) on the Participant’s behalf to sell sufficient of
the Shares issued or transferred to the Participant on the exercise of the Option to meet the
Liability pursuant to clause 3.1 and any penalty or interest arising under clause 3.4.
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3.3
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The Company shall pass all monies it has collected from the Participant in respect of the
Liability to the Collector of Taxes by no later than 14 days after the end of the income tax
month in which the Trigger Event occurred. The Company shall be responsible for any penalties
or interest that may arise in respect of the Liability from any failure on its part after it
has collected any monies from the Participant to pass the Liability to the Collector of Taxes
within the said 14 days period.
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3.4
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If the Participant has failed to pay all or part of the Liability to the Company within the
14 day period the Participant hereby indemnifies the Company against such penalties or
interest that the Company would have to pay in respect of the late payment of all or part of
the Liability to the Collector of Taxes.
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4.
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Termination of Joint Election
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4.1
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This Joint Election shall cease to have effect on the occurrence of any of the following:
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(a)
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if the terms of this Joint Election are satisfied in the reasonable opinion
of the Company and the Participant;
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(b)
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if the Company and the Participant jointly agree in writing to revoke this
Joint Election;
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(c)
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if the HM Revenue & Customs withdraws approval of this Joint Election so far
as it relates to share options covered by the Joint Election but not yet granted;
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(d)
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if the Options lapse or no Option is otherwise capable of being exercised
pursuant to the UK Sub-Plan of the Plan; and/or
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(e)
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if the Company serves notice on the Participant that the Joint Election is to
cease to have effect.
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4
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5.
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Further assurance
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5.1
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The Company and the Participant shall do all such things and execute all such documents as
may be necessary or desirable to ensure that this Joint Election complies with all relevant
legislation and/or HM Revenue & Customs requirements.
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5.2
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The Participant shall notify the Company in writing of any Trigger Event which occurs in
relation to an Award within three (3) days of such Trigger Event.
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6.
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Secondary Contributor
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The Company enters into this Joint Election on its own behalf, or, if and to the extent
that there is a change in law, any other company or person who is or becomes a secondary
contributor for NIC purposes in respect of an Award. It is agreed that the Company can
enforce the terms of this Joint Election against the Participant on behalf of any such
company.
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7.
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Binding Effect
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7.1
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The Participant agrees to be bound by the terms of this Joint Election and for the avoidance
of doubt the Participant shall continue to be bound by the terms of this Joint Election
regardless of which country the Participant is working in when the Liability arises and
regardless of whether the Participant is an employee of the Company when the Liability arises.
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7.2
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The Company agrees to be bound by the terms of this Joint Election and for the avoidance of
doubt the Company shall continue to be bound by the terms of this Joint Election regardless of
which country the Participant is working in when the Liability arises and regardless of
whether the Participant is an employee of the Company when the Liability arises.
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8.
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Governing Law
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This Joint Election shall be governed by and construed in accordance with English law and
the parties irrevocably submit to the non-exclusive jurisdiction of the English Courts to
settle any claims, disputes or issues which may arise out of this deed.This Joint Election
has been executed and delivered as a deed on the date written above.
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5
SIGNED as a Deed by [Insert Name of Participant]:
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in the presence of:
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Witness signature:
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Name:
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Address:
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Occupation:
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SIGNED as a DEED
by OMNITURE INC.
acting by the under-mentioned
person(s) acting on the authority
of the Company in accordance
with the laws of the territory of
its incorporation:
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Authorised signatory
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Authorised signatory
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SIGNED as a DEED
by OMNITURE LIMITED
acting by:
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Director
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Director / Secretary
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6
[FORM OF U.S. RESTRICTED STOCK UNIT AWARD]
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
Unless otherwise defined herein, the terms defined in the 2006 Equity Incentive Plan (the
“
Plan
”) will have the same defined meanings in this Restricted Stock Unit Award Agreement (the
“
Award Agreement
”).
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I.
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NOTICE OF RESTRICTED STOCK UNIT GRANT
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Participant’s Name:
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[INSERT NAME]
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Participant’s Address:
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[INSERT ADDRESS]
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You have been granted the right to receive an Award of Restricted Stock Units, subject to the
terms and conditions of the Plan and this Award Agreement, as follows:
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Grant Number:
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[INSERT GRANT NUMBER]
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Date of Grant:
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[INSERT GRANT DATE]
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Vesting Commencement Date:
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[INSERT VCD]
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Number of Restricted Stock Units:
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[INSERT NUMBER OF SHARES]
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Vesting Schedule
:
Subject to any acceleration provisions contained in the Plan or set forth below, the
Restricted Stock Unit will vest in accordance with the following schedule:
[INSERT VESTING SCHEDULE]
In the event Participant ceases to be a Service Provider for any or no reason before
Participant vests in the Restricted Stock Unit, the Restricted Stock Unit and Participant’s right
to acquire any Shares hereunder will immediately terminate.
A.
Grant of Restricted Stock Unit
.
The Administrator hereby grants to the individual named in the Notice of Grant attached as
Part I of this Award Agreement (the “
Participant
”) under the Plan an Award of Restricted Stock
Units, subject to all of the terms and conditions in this Award Agreement and the Plan, which is
incorporated herein by reference. Subject to Section 18(c) of the Plan, in the event of a conflict
between the terms and
-1-
conditions of the Plan and the terms and conditions of this Award Agreement, the terms and
conditions of the Plan will prevail.
B.
Company’s Obligation to Pay
.
Each Restricted Stock Unit represents the right to receive a Share on the date it vests.
Unless and until the Restricted Stock Units will have vested in the manner set forth in Section C,
Participant will have no right to payment of any such Restricted Stock Units. Prior to actual
payment of any vested Restricted Stock Units, such Restricted Stock Unit will represent an
unsecured obligation of the Company, payable (if at all) only from the general assets of the
Company. Any Restricted Stock Units that vest in accordance with Sections C or D will be paid to
Participant (or in the event of Participant’s death, to his or her estate) in whole Shares, subject
to Participant satisfying any applicable tax withholding obligations as set forth in Section G.
Subject to the provisions of Section D, such vested Restricted Stock Units shall be paid in Shares
as soon as practicable after vesting, but in each such case within the period ending no later than
the date that is two and one half (2
1
/
2
) months from the end of the Company’s tax year that includes
the vesting date.
C.
Vesting Schedule
.
Except as provided in Section D, and subject to Section E, the Restricted Stock Units awarded
by this Award Agreement will vest in accordance with the vesting provisions set forth in the Notice
of Grant attached as Part I of this Award Agreement. Restricted Stock Units scheduled to vest on a
certain date or upon the occurrence of a certain condition will not vest in Participant in
accordance with any of the provisions of this Award Agreement, unless Participant will have been
continuously a Service Provider from the Date of Grant until the date such vesting occurs.
D.
Administrator Discretion
.
The Administrator, in its discretion, may accelerate the vesting of the balance, or some
lesser portion of the balance, of the unvested Restricted Stock Units at any time, subject to the
terms of the Plan. If so accelerated, such Restricted Stock Units will be considered as having
vested as of the date specified by the Administrator.
Notwithstanding anything in the Plan or this Award Agreement to the contrary, if the vesting
of the balance, or some lesser portion of the balance, of the Restricted Stock Units is accelerated
in connection with Participant’s termination as a Service Provider (provided that such termination
is a “separation from service” within the meaning of Section 409A, as determined by the Company),
other than due to death
,
and if (x) Participant is a “specified employee” within the meaning of
Section 409A at the time of such termination as a Service Provider and (y) the payment of such
accelerated Restricted Stock Units will result in the imposition of additional tax under Section
409A if paid to Participant on or within the six (6) month period following Participant’s
termination as a Service Provider, then the payment of such accelerated Restricted Stock Units will
not be made until the date six (6) months and one (1) day following the date of Participant’s
termination as a Service Provider, unless the Participant dies following his or her termination as
a Service Provider, in which case, the Restricted Stock Units will be paid in Shares to the
Participant’s estate as soon as practicable following his or her death. It is the intent of this
Award Agreement to comply with the requirements of Section 409A so that none of the Restricted
Stock Units provided under this Award Agreement or Shares issuable thereunder will be subject to
the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so
comply. For purposes of this Award Agreement, “Section 409A” means Section 409A of the Code, and
any
-2-
proposed, temporary or final Treasury Regulations and Internal Revenue Service guidance
thereunder, as each may be amended from time to time.
E.
Forfeiture upon Termination of Status as a Service Provider
.
Notwithstanding any contrary provision of this Award Agreement, the balance of the Restricted
Stock Units that have not vested as of the time of Participant’s termination as a Service Provider
for any or no reason and Participant’s right to acquire any Shares hereunder will immediately
terminate.
F.
Death of Participant
.
Any distribution or delivery to be made to Participant under this Award Agreement will, if
Participant is then deceased, be made to Participant’s designated beneficiary, or if no beneficiary
survives Participant, the administrator or executor of Participant’s estate. Any such transferee
must furnish the Company with (a) written notice of his or her status as transferee, and (b)
evidence satisfactory to the Company to establish the validity of the transfer and compliance with
any laws or regulations pertaining to said transfer.
G.
Withholding of Taxes
.
Notwithstanding any contrary provision of this Award Agreement, no certificate representing
the Shares will be issued to Participant, unless and until satisfactory arrangements (as determined
by the Administrator) will have been made by Participant with respect to the payment of income,
employment and other taxes which the Company determines must be withheld with respect to such
Shares. The Administrator, in its sole discretion and pursuant to such procedures as it may
specify from time to time, may permit Participant to satisfy such tax withholding obligation, in
whole or in part (without limitation) by (a) paying cash, (b) electing to have the Company withhold
otherwise deliverable cash or Shares having a Fair Market Value equal to the minimum amount
required to be withheld, or (c) delivering to the Company already-owned Shares having a Fair Market
Value equal to the amount required to be withheld. To the extent determined appropriate by the
Company in its discretion, it shall have the right (but not the obligation) to satisfy any tax
withholding obligations by reducing the number of Shares otherwise deliverable to Participant. If
Participant fails to make satisfactory arrangements for the payment of any required tax withholding
obligations hereunder at the time any applicable Restricted Stock Units otherwise are scheduled to
vest pursuant to Sections C or D, Participant will permanently forfeit such Restricted Stock Units
and any right to receive Shares thereunder and the Restricted Stock Units will be returned to the
Company at no cost to the Company.
H.
Entire Agreement; Governing Law
.
The Plan is incorporated herein by reference. The Plan and this Award Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and Participant with respect to
the subject matter hereof, and may not be modified adversely to Participant’s interest except by
means of a writing signed by the Company and Participant. Notwithstanding anything to the contrary
in the Plan or this Award Agreement, the Company reserves the right to revise this Award Agreement
as it deems necessary or advisable, in its sole discretion and without the consent of Participant,
to comply with Section 409A or to otherwise avoid imposition of any additional tax or income
recognition under Section 409A in connection to this Award of Restricted Stock Units. This Award
Agreement is governed by the internal substantive laws, but not the choice of law rules, of Utah.
For purposes of litigating any dispute
-3-
that arises directly or indirectly from the relationship of the parties evidenced by this
grant or the Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of
the State of Utah and agree that such litigation shall be conducted only in the courts of Utah,
Fourth District, or the federal courts for the United States for the 10
th
Circuit, and
no other courts, where this grant is made and/or to be performed.
I.
Rights as Stockholder
.
Neither Participant nor any person claiming under or through Participant will have any of the
rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder
unless and until certificates representing such Shares will have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to Participant. After
such issuance, recordation and delivery, Participant will have all the rights of a stockholder of
the Company with respect to voting such Shares and receipt of dividends and distributions on such
Shares.
J.
NO GUARANTEE OF CONTINUED SERVICE
.
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE RESTRICTED STOCK UNITS PURSUANT TO
THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE
COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THIS AWARD OF RESTRICTED STOCK UNITS OR ACQUIRING SHARES HEREUNDER.
PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE
COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
K.
Data Privacy
.
Participant hereby explicitly and unambiguously consents to the collection, use and transfer,
in electronic or other form, of Participant’s personal data as described in this Award Agreement
and any other Award grant materials by and among, as applicable, the employer, the Company and its
Parents, Subsidiaries and affiliates for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.
Participant understands that the Company and the employer may hold certain personal
information about Participant, including, but not limited to, Participant’s name, home address and
telephone number, date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the Company, details of all
Awards or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested
or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and
managing the Plan (“Data”).
-4-
Participant understands that Data will be transferred to E*TRADE FINANCIAL, or such other
stock plan service provider as may be selected by the Company in the future, which is assisting the
Company with the implementation, administration and management of the Plan. Participant
understands that the recipients of the Data may be located in the United States or elsewhere, and
that the recipients’ country (e.g., the United States) may have different data privacy laws and
protections than Participant’s country. Participant understands that Participant may request a
list with the names and addresses of any potential recipients of the Data by contacting
Participant’s local human resources representative. Participant authorizes the Company, E*TRADE
FINANCIAL and any other possible recipients which may assist the Company (presently or in the
future) with implementing, administering and managing the Plan to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of implementing, administering
and managing Participant’s participation in the Plan. Participant understands that Data will be
held only as long as is necessary to implement, administer and manage Participant’s participation
in the Plan. Participant understands that Participant may, at any time, view Data, request
additional information about the storage and processing of Data, require any necessary amendments
to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in
writing Participant’s local human resources representative. Participant understands, however, that
refusing or withdrawing consent may affect Participant’s ability to participate in the Plan. For
more information on the consequences of Participant’s refusal to consent or withdrawal of consent,
Participant understands that Participant may contact Participant’s local human resources
representative.
L.
Address for Notices
.
Any notice to be given to the Company under the terms of this Award Agreement will be
addressed to the Company at Ominture, Inc., 550 East Timpanagos Circle Building G, Orem, UT 84097,
or at such other address as the Company may hereafter designate in writing.
M.
Grant is Not Transferable
.
Except to the limited extent provided in Section F, this grant and the rights and privileges
conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and will not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
this grant, or any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this grant and the rights and privileges conferred hereby
immediately will become null and void.
N.
Binding Agreement
.
Subject to the limitation on the transferability of this grant contained herein, this Award
Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of the parties hereto.
O.
Additional Conditions to Issuance of Stock
.
If at any time the Company will determine, in its discretion, that the listing, registration
or qualification of the Shares upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory authority is necessary or desirable as a
condition to the issuance of Shares to Participant (or his or her estate), such issuance will not
occur unless and until such listing, registration, qualification, consent or approval will have
been effected or obtained free of any
-5-
conditions not acceptable to the Company. Where the Company determines that the delivery of
the payment of any Shares will violate federal securities laws or other applicable laws, the
Company will defer delivery until the earliest date at which the Company reasonably anticipates
that the delivery of Shares will no longer cause such violation. The Company will make all
reasonable efforts to meet the requirements of any such state or federal law or securities exchange
and to obtain any such consent or approval of any such governmental authority.
P.
Administrator Authority
.
The Administrator will have the power to interpret the Plan and this Award Agreement and to
adopt such rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules (including, but not limited to, the
determination of whether or not any Restricted Stock Units have vested). All actions taken and all
interpretations and determinations made by the Administrator in good faith will be final and
binding upon Participant, the Company and all other interested persons. No member of the
Administrator will be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Award Agreement.
Q.
Electronic Delivery
.
The Company may, in its sole discretion, decide to deliver any documents related to Restricted
Stock Units awarded under the Plan or future Restricted Stock Units that may be awarded under the
Plan by electronic means or request Participant’s consent to participate in the Plan by electronic
means. Participant hereby consents to receive such documents by electronic delivery and, if
requested, to agree to participate in the Plan through an on-line or electronic system established
and maintained by the Company or a third party designated by the Company.
R.
Captions
.
Captions provided herein are for convenience only and are not to serve as a basis for
interpretation or construction of this Award Agreement.
S.
Severability
.
The provisions of this Award Agreement are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions
shall nevertheless be binding and enforceable.
T.
Amendment, Suspension or Termination of the Plan
.
By accepting this Award, Participant expressly warrants that he or she has received an Award
of Restricted Stock Units under the Plan, and has received, read and understood a description of
the Plan. Participant understands that the Plan is discretionary in nature and may be amended,
suspended or terminated by the Company at any time.
By Participant’s signature and the signature of the Company’s representative below,
Participant and the Company agree that this Award of Restricted Stock Units is granted under and
governed by the terms and conditions of the Plan and this Award Agreement. Participant has
reviewed the Plan and this Award Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Award Agreement and fully understands all provisions of
the Plan and
-6-
Award Agreement. Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions relating to the Plan and Award
Agreement. Participant further agrees to notify the Company upon any change in the residence
address indicated below.
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PARTICIPANT:
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OMNITURE, INC.
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Signature
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By
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Print Name
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Title
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Residence Address
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-7-
[FORM OF N0N-U.S. RESTRICTED STOCK UNIT AWARD AGREEMENT]
OMNITURE, INC.
2006 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
NON-U.S. PARTICIPANTS
Unless otherwise defined herein, the terms defined in the 2006 Equity Incentive Plan (the
“
Plan
”) will have the same defined meanings in this Restricted Stock Unit Award Agreement (the
“
Award Agreement
”).
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I.
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NOTICE OF RESTRICTED STOCK UNIT GRANT
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Participant’s Name:
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[INSERT NAME]
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Participant’s Address:
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[INSERT ADDRESS]
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You have been granted the right to receive an Award of Restricted Stock Units, subject to the
terms and conditions of the Plan and this Award Agreement, as follows:
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Grant Number:
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[INSERT GRANT NUMBER]
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Date of Grant:
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[INSERT GRANT DATE]
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Vesting Commencement Date:
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[INSERT VCD]
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Number of Restricted Stock Units:
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[INSERT NUMBER OF SHARES]
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Vesting Schedule
:
Subject to any acceleration provisions contained in the Plan or set forth below, the
Restricted Stock Unit will vest in accordance with the following vesting schedule:
[INSERT VESTING SCHEDULE]
In the event Participant ceases to be a Service Provider for any or no reason before
Participant vests in the Restricted Stock Units, the Restricted Stock Units and Participant’s right
to acquire any Shares hereunder will immediately terminate.
A.
Grant of Restricted Stock Unit
.
The Administrator hereby grants to the individual named in the Notice of Grant attached as
Part I of this Award Agreement (“
Participant
”) under the Plan an Award of Restricted Stock Units,
subject to all of the terms and conditions in this Award Agreement and the Plan, which is
incorporated herein by reference. Subject to Section 18(c) of the Plan, in the event of a conflict
between the terms and
conditions of the Plan and the terms and conditions of this Award Agreement, the terms and
conditions of the Plan will prevail.
B.
Company’s Obligation to Pay
.
Each Restricted Stock Unit represents the right to receive a Share on the date it vests.
Unless and until the Restricted Stock Units will have vested in the manner set forth in Section C,
Participant will have no right to payment of any such Restricted Stock Units. Prior to actual
payment of any vested Restricted Stock Units, such Restricted Stock Unit will represent an
unsecured obligation of the Company, payable (if at all) only from the general assets of the
Company. Any Restricted Stock Units that vest in accordance with Sections C or D will be paid to
Participant (or in the event of Participant’s death, to his or her estate) in whole Shares, subject
to Participant satisfying any applicable tax withholding obligations as set forth in Section G.
Subject to the provisions of Section D, such vested Restricted Stock Units shall be paid in Shares
as soon as practicable after vesting, but in each such case within the period ending no later than
the date that is two and one half (2
1
/
2
) months from the end of the Company’s tax year that includes
the vesting date.
C.
Vesting Schedule
.
Except as provided in Section D, and subject to Section E, the Restricted Stock Units awarded
by this Award Agreement will vest in accordance with the vesting provisions set forth in the Notice
of Grant attached as Part I of this Award Agreement. Restricted Stock Units scheduled to vest on a
certain date or upon the occurrence of a certain condition will not vest in Participant in
accordance with any of the provisions of this Award Agreement, unless Participant will have been
continuously a Service Provider from the Date of Grant until the date such vesting occurs.
D.
Administrator Discretion
.
The Administrator, in its discretion, may accelerate the vesting of the balance, or some
lesser portion of the balance, of the unvested Restricted Stock Units at any time, subject to the
terms of the Plan. If so accelerated, such Restricted Stock Units will be considered as having
vested as of the date specified by the Administrator.
Notwithstanding anything in the Plan or this Award Agreement to the contrary, if the vesting
of the balance, or some lesser portion of the balance, of the Restricted Stock Units is accelerated
in connection with Participant’s termination as a Service Provider (provided that such termination
is a “
separation from service
” within the meaning of Section 409A, as determined by the Company),
other than due to death
,
and if (x) Participant is a “
specified employee
” within the meaning of
Section 409A at the time of such termination as a Service Provider and (y) the payment of such
accelerated Restricted Stock Units will result in the imposition of additional tax under Section
409A if paid to Participant on or within the six (6) month period following Participant’s
termination as a Service Provider, then the payment of such accelerated Restricted Stock Units will
not be made until the date six (6) months and one (1) day following the date of Participant’s
termination as a Service Provider, unless the Participant dies following his or her termination as
a Service Provider, in which case, the Restricted Stock Units will be paid in Shares to the
Participant’s estate as soon as practicable following his or her death. It is the intent of this
Award Agreement to comply with the requirements of Section 409A so that none of the Restricted
Stock Units provided under this Award Agreement or Shares issuable thereunder will be subject to
the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so
comply. For purposes of this Award Agreement, “
Section 409A
” means Section 409A of the Code, and
any
-2-
proposed, temporary or final Treasury Regulations and Internal Revenue Service guidance
thereunder, as each may be amended from time to time.
E.
Forfeiture upon Termination of Status as a Service Provider
.
Notwithstanding any contrary provision of this Award Agreement, the balance of the Restricted
Stock Units that have not vested as of the time of Participant’s termination as a Service Provider
for any or no reason and Participant’s right to acquire any Shares hereunder will immediately
terminate.
F.
Death of Participant
.
Any distribution or delivery to be made to Participant under this Award Agreement will, if
Participant is then deceased, be made to Participant’s designated beneficiary, or if no beneficiary
survives Participant, the administrator or executor of Participant’s estate. Any such transferee
must furnish the Company with (a) written notice of his or her status as transferee, and (b)
evidence satisfactory to the Company to establish the validity of the transfer and compliance with
any laws or regulations pertaining to said transfer.
G.
Withholding of Taxes
.
Regardless of any action the Company or the Parent or Subsidiary employing or retaining
Participant (the “
Employer
”) takes with respect to any or all income tax (including U.S. federal,
state and local tax and/or non-U.S. tax), social insurance, payroll tax, payment on account or
other tax-related withholding (“
Tax-Related Items
”), Participant acknowledges that the ultimate
liability for all Tax-Related Items legally due by Participant is and remains Participant’s
responsibility and that the Company and/or the Employer (i) make no representations or undertakings
regarding the treatment of any Tax-Related Items in connection with any aspect of the Award,
including the grant or vesting of the Restricted Stock Units, the subsequent sale of any Shares
acquired upon vesting and the receipt of any dividends or dividend equivalents; and (ii) do not
commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate
Participant’s liability for Tax-Related Items.
Prior to the relevant taxable event, Participant shall pay or make arrangements satisfactory
to the Company and/or the Employer to satisfy all withholding and payment on account obligations of
the Company and/or the Employer. In this regard, if permissible under local law, Participant
authorizes the Company and/or the Employer, at its discretion, to satisfy the obligations with
regard to all Tax-Related Items legally payable by Participant by one or a combination of the
following:
1. withholding from Participant’s wages or other cash compensation paid to Participant by the
Company and/or the Employer; or
2. withholding from the proceeds of the sale of Shares acquired upon vesting of the Award; or
3. arranging for the sale of Shares otherwise deliverable to Participant (on Participant’s
behalf and at Participant’s direction pursuant to this authorization); or
4. withholding otherwise deliverable Shares, provided that the Company only withholds the
amount of Shares necessary to satisfy the minimum withholding amount or such other amount as may be
necessary to avoid adverse accounting treatment. If the Company satisfies the
-3-
obligation for Tax-Related Items by withholding a number of Shares as described herein,
Participant shall be deemed, for tax purposes only, to have been issued the full number of Shares
subject to the vested portion of the Award, notwithstanding that a number of the Shares are held
back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the
Award.
Finally, Participant shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold as a result of Participant’s
participation in the Plan that cannot be satisfied by the means previously described. Participant
acknowledges and agrees that the Company may refuse to deliver Shares if Participant fails to
comply with Participant’s obligations in connection with the Tax-Related Items as described in this
section.
H.
Entire Agreement; Governing Law
.
The Plan is incorporated herein by reference. The Plan and this Award Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company and Participant with respect to
the subject matter hereof, and may not be modified adversely to Participant’s interest except by
means of a writing signed by the Company and Participant. Notwithstanding anything to the contrary
in the Plan or this Award Agreement, the Company reserves the right to revise this Award Agreement
as it deems necessary or advisable, in its sole discretion and without the consent of Participant,
to comply with Section 409A or to otherwise avoid imposition of any additional tax or income
recognition under Section 409A in connection to this Award of Restricted Stock Units. This Award
Agreement is governed by the internal substantive laws, but not the choice of law rules, of Utah.
For purposes of litigating any dispute that arises directly or indirectly from the relationship of
the parties evidenced by this grant or the Agreement, the parties hereby submit to and consent to
the exclusive jurisdiction of the State of Utah and agree that such litigation shall be conducted
only in the courts of Utah, Fourth District, or the federal courts for the United States for the
10
th
Circuit, and no other courts, where this grant is made and/or to be performed.
I.
Rights as Stockholder
.
Neither Participant nor any person claiming under or through Participant will have any of the
rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder
unless and until certificates representing such Shares will have been issued, recorded on the
records of the Company or its transfer agents or registrars, and delivered to Participant. After
such issuance, recordation and delivery, Participant will have all the rights of a stockholder of
the Company with respect to voting such Shares and receipt of dividends and distributions on such
Shares.
J.
NO GUARANTEE OF CONTINUED SERVICE
.
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE RESTRICTED STOCK UNITS PURSUANT TO
THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE
COMPANY (OR THE EMPLOYER) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS AWARD OF
RESTRICTED STOCK UNITS OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES
THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE
PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH
PARTICIPANT’S RIGHT OR THE
-4-
RIGHT OF THE COMPANY (OR THE EMPLOYER) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME.
K.
Nature of Grant
. In accepting the grant, Participant acknowledges that:
1. the Plan is established voluntarily by the Company, it is discretionary in nature and it
may be modified, amended, suspended or terminated by the Company at any time, unless otherwise
provided in the Plan and this Award Agreement;
2. the Award is voluntary and occasional and does not create any contractual or other right to
receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units,
even if Restricted Stock Units have been granted repeatedly in the past;
3. all decisions with respect to future Awards, if any, will be at the sole discretion of the
Company;
4. Participant is voluntarily participating in the Plan;
5. the Award is an extraordinary item that does not constitute compensation of any kind for
services of any kind rendered to the Company or the Employer, and which is outside the scope of
Participant’s employment or service contract, if any;
6. the Award is not part of normal or expected compensation or salary for any purposes,
including, but not limited to, calculation of any severance, resignation, termination, redundancy,
end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or
similar payments and in no event should be considered as compensation for, or relating in any way
to, past services for the Company or the Employer;
7. in the event that Participant is not an Employee of the Company or any Parent, Subsidiary
or affiliate of the Company, the Award and Participant’s participation in the Plan will not be
interpreted to form an employment or service contract or relationship with the Company or any
Parent, Subsidiary or affiliate of the Company;
8. the future value of the underlying Shares is unknown and cannot be predicted with
certainty;
9. in consideration of the Award, no claim or entitlement to compensation or damages shall
arise from termination of the Award or from any diminution in value of the Award or Shares acquired
upon vesting of the Award resulting from termination of Participant’s status as a Service Provider
by the Company or the Employer (for any reason whatsoever and whether or not in breach of local
labor laws) and Participant irrevocably releases the Company and the Employer from any such claim
that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent
jurisdiction to have arisen, then, by signing this Award Agreement, Participant shall be deemed
irrevocably to have waived his or her entitlement to pursue such claim;
10. in the event of termination of Participant’s status as a Service Provider (whether or not
in breach of local labor laws), Participant’s right to receive an Award and vest in an Award under
the Plan, if any, will terminate effective as of the date that Participant is no longer actively a
Service
-5-
Provider and will not be extended by any notice period mandated under local law (
e.g
., active
employment will not include a period of “
garden leave
” or similar period pursuant to local law);
the Administrator shall have the exclusive discretion to determine when Participant is no longer
actively a Service Provider for purposes of the Award;
11. the Company is not providing any tax, legal or financial advice, nor is the Company making
any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition
or sale of the underlying Shares; and
12. Participant is hereby advised to consult with Participant’s own personal tax, legal and
financial advisors regarding Participant’s participation in the Plan before taking any action
related to the Plan.
L.
Data Privacy
.
Participant hereby explicitly and unambiguously consents to the collection, use and transfer,
in electronic or other form, of Participant’s personal data as described in this Award Agreement
and any other Award grant materials by and among, as applicable, the Employer, the Company and its
Parents, Subsidiaries and affiliates for the exclusive purpose of implementing, administering and
managing Participant’s participation in the Plan.
Participant understands that the Company and the Employer may hold certain personal
information about Participant, including, but not limited to, Participant’s name, home address and
telephone number, date of birth, social insurance number or other identification number, salary,
nationality, job title, any shares of stock or directorships held in the Company, details of all
Awards or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested
or outstanding in Participant’s favor, for the exclusive purpose of implementing, administering and
managing the Plan (“Data”).
Participant understands that Data will be transferred to E*TRADE FINANCIAL, or such other
stock plan service provider as may be selected by the Company in the future, which is assisting the
Company with the implementation, administration and management of the Plan. Participant
understands that the recipients of the Data may be located in the United States or elsewhere, and
that the recipients’ country (e.g., the United States) may have different data privacy laws and
protections than Participant’s country. Participant understands that Participant may request a
list with the names and addresses of any potential recipients of the Data by contacting
Participant’s local human resources representative. Participant authorizes the Company, E*TRADE
FINANCIAL and any other possible recipients which may assist the Company (presently or in the
future) with implementing, administering and managing the Plan to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the sole purpose of implementing, administering
and managing Participant’s participation in the Plan. Participant understands that Data will be
held only as long as is necessary to implement, administer and manage Participant’s participation
in the Plan. Participant understands that Participant may, at any time, view Data, request
additional information about the storage and processing of Data, require any necessary amendments
to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in
writing Participant’s local human resources representative. Participant understands, however, that
refusing or withdrawing consent may affect Participant’s ability to participate in the Plan. For
more information on the consequences of Participant’s refusal to consent or withdrawal of consent,
Participant understands that Participant may contact Participant’s local human resources
representative.
-6-
M.
Address for Notices
.
Any notice to be given to the Company under the terms of this Award Agreement will be
addressed to the Company at Omniture, Inc., 550 East Timpanagos Circle Building G, Orem, UT 84097,
or at such other address as the Company may hereafter designate in writing.
N.
Grant is Not Transferable
.
Except to the limited extent provided in Section F, this grant and the rights and privileges
conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and will not be subject to sale under execution, attachment or
similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of
this grant, or any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this grant and the rights and privileges conferred hereby
immediately will become null and void.
O.
Binding Agreement
.
Subject to the limitation on the transferability of this grant contained herein, this Award
Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal
representatives, successors and assigns of the parties hereto.
P.
Additional Conditions to Issuance of Stock
.
If at any time the Company will determine, in its discretion, that the listing, registration
or qualification of the Shares upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory authority is necessary or desirable as a
condition to the issuance of Shares to Participant (or his or her estate), such issuance will not
occur unless and until such listing, registration, qualification, consent or approval will have
been effected or obtained free of any conditions not acceptable to the Company. Where the Company
determines that the delivery of the payment of any Shares will violate federal securities laws or
other applicable laws, the Company will defer delivery until the earliest date at which the Company
reasonably anticipates that the delivery of Shares will no longer cause such violation. The
Company will make all reasonable efforts to meet the requirements of any such state or federal law
or securities exchange and to obtain any such consent or approval of any such governmental
authority.
Q.
Administrator Authority
.
The Administrator will have the power to interpret the Plan and this Award Agreement and to
adopt such rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret or revoke any such rules (including, but not limited to, the
determination of whether or not any Restricted Stock Units have vested). All actions taken and all
interpretations and determinations made by the Administrator in good faith will be final and
binding upon Participant, the Company and all other interested persons. No member of the
Administrator will be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Award Agreement.
-7-
R.
Language
.
If Participant has received this Award Agreement or any other document related to the Plan
translated into a language other than English and if the meaning of the translated version is
different than the English version, the English version will control, unless otherwise prescribed
by local law.
S.
Electronic Delivery
.
The Company may, in its sole discretion, decide to deliver any documents related to Restricted
Stock Units awarded under the Plan or future Restricted Stock Units that may be awarded under the
Plan by electronic means or request Participant’s consent to participate in the Plan by electronic
means. Participant hereby consents to receive such documents by electronic delivery and, if
requested, to agree to participate in the Plan through an on-line or electronic system established
and maintained by the Company or a third party designated by the Company.
T.
Captions
.
Captions provided herein are for convenience only and are not to serve as a basis for
interpretation or construction of this Award Agreement.
U.
Severability
.
The provisions of this Award Agreement are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions
shall nevertheless be binding and enforceable.
V.
Exhibit
.
Notwithstanding any provision herein, Participant’s participation in the Plan shall be subject
to any special terms and conditions as set forth in
Exhibit A
for Participant’s country of
residence, if any.
Exhibit A
constitutes part of this Award Agreement.
-8-
By Participant’s signature and the signature of the Company’s representative below,
Participant and the Company agree that this Award of Restricted Stock Units is granted under and
governed by the terms and conditions of the Plan and this Award Agreement. Participant has
reviewed the Plan and this Award Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Award Agreement and fully understands all provisions of
the Plan and Award Agreement. Participant hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions relating to the Plan and
Award Agreement. Participant further agrees to notify the Company upon any change in the residence
address indicated below.
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PARTICIPANT:
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OMNITURE, INC.
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-9-
EXHIBIT A
OMNITURE, INC. 2006 EQUITY INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
SPECIAL TERMS FOR PARTICIPANTS OUTSIDE THE U.S.
This
Exhibit A
includes special terms and conditions that govern the Restricted Stock Units
granted to Participant if Participant resides in the countries contained herein. Capitalized terms
used but not defined herein shall have the meanings assigned to them in the Award Agreement (of
which this
Exhibit A
is a part) and the Plan.
This
Exhibit A
may also include information regarding exchange controls and certain other
issues of which Participant should be aware with respect to Participant’s participation in the
Plan. The information is based on the securities, exchange control and other laws in effect in the
respective countries as of January 2008. Such laws are often complex and change frequently. As a
result, the Company strongly recommends that Participant not rely on the information noted herein
as the only source of information relating to the consequences of Participant’s participation in
the Plan because the information may be out of date at the time Participant acquires Shares or
sells Shares he/she acquires under the Plan.
In addition, the information is general in nature and may not apply to Participant’s particular
situation, and the Company is not in a position to assure Participant of any particular result.
Accordingly, Participant is strongly advised to seek appropriate professional advice as to how the
relevant laws in Participant’s country apply to his or her specific situation.
If Participant is a citizen or resident of another country, or is considered a resident of another
country for local law purposes, the information contained in this Appendix may not be applicable to
him or her
.
Australia
Securities Law Disclaimer
Participant acknowledges and understands that if Participant acquires Shares upon vesting of the
Award and Participant offers Shares for sale to a person or entity resident in Australia, the offer
may be subject to disclosure requirements under Australian law. Participant acknowledges and
understands that Participant should obtain legal advice on the disclosure obligations prior to
making any such offer.
Restricted Stock Units Payable Only in Shares
Notwithstanding any discretion in the Plan or anything to the contrary in the Award Agreement, the
grant of Restricted Stock Units does not provide any right for Participant to receive a cash
payment and the Restricted Stock Units are payable in newly-issued Shares only (
i.e
., treasury
shares will not be used to settle vested Restricted Stock Units).
Japan
No country-specific terms apply.
Page 1
United Kingdom
Eligibility
Notwithstanding the provisions of Section 4(b) of the Plan, Restricted Stock Units may only be
granted to employees of the Company, or any Parent or Subsidiary or affiliate. Such term shall not
include common law employees, non-employee executive officers or non-employee directors.
Withholding
The paragraphs below replace in its entirety Section II.G of the Award Agreement:
Regardless of any action the Company or the Parent or Subsidiary employing or retaining Participant
(the “Employer”) takes with respect to any or all income tax, primary and secondary Class 1
National Insurance contributions, payroll tax or other tax-related withholding attributable to or
payable in connection with or pursuant to the grant, vesting, release or assignment of any Award
(“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related
Items legally due by Participant is and remains Participant’s responsibility and that the Company
and/or the Employer (i) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the Award, including the grant or vesting of the
Restricted Stock Units, the subsequent sale of any Shares acquired upon vesting and the receipt of
any dividends or dividend equivalents; and (ii) do not commit to structure the terms of the grant
or any aspect of the Award to reduce or eliminate Participant’s liability for Tax-Related Items.
As a condition of the issuance of Shares upon vesting of the Restricted Stock Units, the Company
and/or the Employer shall be entitled to withhold and Participant agrees to pay, or make adequate
arrangements satisfactory to the Company and/or the Employer to satisfy, all obligations of the
Company and/or the Employer to account to HM Revenue & Customs (“HMRC”) for any Tax-Related Items.
In this regard, if permissible under local law, Participant authorizes the Company and/or the
Employer, at its discretion, to satisfy the obligations with regard to all Tax-Related Items
legally payable by Participant by one or a combination of the following:
(i) withholding from Participant’s wages or other cash compensation paid to Participant by the
Company and/or the Employer; or
(ii) withholding from the proceeds of the sale of Shares acquired upon vesting of the Award;
or
(iii) arranging for the sale of Shares otherwise deliverable to Participant (on Participant’s
behalf and at Participant’s direction pursuant to this authorization); or
(iv) withholding otherwise deliverable Shares. If the Company satisfies the obligation for
Tax-Related Items by withholding a number of Shares as described herein, Participant shall be
deemed to have been issued the full number of Shares subject to the vested portion of the Award,
notwithstanding that a number of the Shares are held back solely for the purpose of paying the
Tax-Related Items due as a result of any aspect of the Award.
Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the
Company or the Employer may be required to account to HMRC with respect to the event giving rise to
the Tax-Related Items (the “Chargeable Event”) that cannot be satisfied by the means previously
described. If payment or withholding is not made within 90 days of the Chargeable Event or such
other period as required under U.K. law (the “Due Date”), Participant agrees that the amount of any
uncollected Tax-Related Items shall (assuming Participant is not a
Page 2
director or executive officer of the Company (within the meaning of Section 13(k) of the U.S.
Securities and Exchange Act of 1934, as amended)), constitute a loan owed by Participant to the
Employer, effective on the Due Date. Participant agrees that the loan will bear interest at the
then-current HMRC Official Rate and it will be immediately due and repayable, and the Company
and/or the Employer may recover it at any time thereafter by any of the means referred to above.
If any of the foregoing methods of collection are not allowed under Applicable Laws or if
Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items
as described in this section, the Company may refuse to deliver the Shares acquired under the Plan.
Joint Election
As a condition of Participant’s participation in the Plan and the UK Sub-Plan of the Omniture Inc.
2006 Equity Incentive Plan (the “UK Sub-Plan”) and the vesting of the Restricted Stock Units,
Participant agrees to accept any liability for secondary Class 1 National Insurance contributions
(the “Employer’s Liability”) which may be payable by the Company and/or the Employer in connection
with the Restricted Stock Units and any event giving rise to Tax-Related Items. To accomplish the
foregoing, Participant agrees to execute a joint election with the Company (the “Election”), the
form of such Election being formally approved by HMRC, and any other consent or elections required
to accomplish the transfer of the Employer’s Liability to Participant. Participant further agrees
to execute such other joint elections as may be required between Participant and any successor to
the Company and/or the Employer. If Participant does not enter into the Election when Participant
accepts the Award Agreement or when otherwise requested by the Company and/or Employer, or if the
Election is revoked at any time by HMRC, the Restricted Stock Units will cease vesting and become
null and void, and no Shares will be acquired under the Plan without any liability to the Company
or any Parent or Subsidiary, unless Participant agrees to pay an amount equal to the Employer’s
Liability to the Company, the Employer and/or any Parent, Subsidiary or affiliate. Participant
further agrees that the Company and/or the Employer may collect the Employer’s Liability by any of
the means set forth in the Withholding section of this Award Agreement.
Page 3
