Attached files
Exhibit
99.3
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On
September 14, 2009, the Company completed the purchase of substantially all of
the assets and related operations of PayMode from Bank of America (the
“Bank”). PayMode facilitates the electronic exchange of payments and
invoices between organizations and their suppliers, and is operated as a
Software as a Service (SaaS) offering. There are currently in excess
of 90,000 vendors participating in the PayMode network. As a result
of the acquisition, the Company acquired the PayMode electronic payments
business, including the vendor network, application software, intellectual
property rights and other assets, properties and rights used exclusively or
primarily in the PayMode business. As purchase consideration, the Company
paid the Bank cash of $17.0 million and issued the Bank a warrant to purchase
1,000,000 shares of common stock of the Company at an exercise price of $8.50
per share.
The
unaudited pro forma condensed combined balance sheet as of June 30, 2009 was
prepared as if the acquisition had occurred on that date and combines the
historical consolidated balance sheet of the Company with the unaudited
statement of assets sold of PayMode as of June 30, 2009. The
unaudited pro forma condensed combined statement of operations for the twelve
months ended June 30, 2009 was prepared as if the acquisition had occurred
at the beginning of that annual period and combines the historical consolidated
statements of operations of the Company with the unaudited historical
consolidated statements of revenues and direct expenses of PayMode for the
twelve months ended June 30, 2009.
The
unaudited pro forma condensed combined financial statements have been prepared
for informational purposes only, to show the effect of the combination of the
Company and PayMode on a historical basis. These financial statements do not
purport to be indicative of the financial position or results of operations that
would have actually occurred had the business combination been in effect at
those dates, in particular because the historical financial statements of
PayMode exclude certain operating expenses, nor do they project the expected
results of operations or financial position for any future period or
date.
The
unaudited pro forma condensed combined financial statements do not reflect any
adjustments for non-recurring items or anticipated synergies resulting from the
acquisition. The purchase price allocation is not finalized, as the Company is
still in the process of finalizing its estimates of fair value for property,
equipment and intangible assets acquired. Accordingly, the Company has prepared
the pro forma adjustments based on assumptions that it believes are reasonable
but that are subject to change as additional information becomes available and
the preliminary purchase price allocation is finalized.
UNAUDITED
PRO FORMA CONDENSED COMBINED BALANCE SHEET
June
30, 2009
(in
thousands)
|
Historical
Bottomline
|
Historical
PayMode
|
Pro
Forma
Adjustments
|
Pro
Forma
Combined
|
||||||||||||||
|
Assets
|
|||||||||||||||||
|
Current
Assets:
|
|||||||||||||||||
|
Cash
and marketable securities
|
$ | 50,303 | $ | (17,000 | ) |
(A)
|
$ | 33,303 | |||||||||
|
Accounts
receivable, net
|
23,118 | 23,118 | |||||||||||||||
|
Other
current assets
|
5,531 | $ | 36 | 1,352 |
(B)
|
6,919 | |||||||||||
|
Total
current assets
|
78,952 | 36 | (15,648 | ) | 63,340 | ||||||||||||
|
Property
and equipment, net
|
10,106 | 523 | 4,602 |
(B)
|
15,231 | ||||||||||||
|
Intangible
assets, net
|
89,589 | 21,040 |
(C)
|
110,629 | |||||||||||||
|
Other
assets
|
4,504 | 4,504 | |||||||||||||||
|
Total
assets
|
$ | 183,151 | $ | 559 | $ | 9,994 | $ | 193,704 | |||||||||
|
Liabilities
and Stockholders' Equity
|
|||||||||||||||||
|
Current
Liabilities:
|
|||||||||||||||||
|
Accounts
payable
|
$ | 5,955 | $ | 5,955 | |||||||||||||
|
Accrued
expenses
|
9,290 | $ | 436 |
(D)
|
9,726 | ||||||||||||
|
Deferred
revenue
|
33,029 | 33,029 | |||||||||||||||
|
Total
current liabilities
|
48,274 | 436 | 48,710 | ||||||||||||||
|
Deferred
revenue, non current
|
10,213 | 10,213 | |||||||||||||||
|
Deferred
income taxes
|
2,263 | 2,263 | |||||||||||||||
|
Other
liabilities
|
1,852 | 1,852 | |||||||||||||||
|
Total
liabilities
|
62,602 | 436 | 63,038 | ||||||||||||||
|
Stockholders'
equity:
|
|||||||||||||||||
|
Common
stock
|
27 | 27 | |||||||||||||||
|
Additional
paid-in-capital
|
287,082 | 10,520 |
(E)
|
297,602 | |||||||||||||
|
Accumulated
other comprehensive loss
|
(4,920 | ) | (4,920 | ) | |||||||||||||
|
Treasury
stock
|
(24,360 | ) | (24,360 | ) | |||||||||||||
|
Accumulated
deficit
|
(137,280 | ) | (403 | ) |
(D)
|
(137,683 | ) | ||||||||||
|
Other
equity
|
$ | 559 | (559 | ) |
(F)
|
---- | |||||||||||
|
Total
stockholders' equity
|
120,549 | 559 | 9,558 | 130,666 | |||||||||||||
|
Total
liabilities and stockholders' equity
|
$ | 183,151 | $ | 559 | $ | 9,994 | $ | 193,704 | |||||||||
See accompanying
notes
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR
ENDED JUNE 30, 2009
(in
thousands except per share amounts)
|
Historical
Bottomline
|
Historical
PayMode
|
Pro
Forma
Adjustments
|
Pro
Forma
Combined
|
|||||||||||||||
|
Revenues:
|
||||||||||||||||||
|
Software
licenses
|
$ | 13,309 | $ | 13,309 | ||||||||||||||
|
Subscriptions
and transactions
|
31,196 | $ | 12,718 | $ | (6,954 | ) |
(G)
|
36,960 | ||||||||||
|
Service
and maintenance
|
84,220 | 84,220 | ||||||||||||||||
|
Equipment
and supplies
|
9,289 | 9,289 | ||||||||||||||||
|
Total
revenues
|
138,014 | 12,718 | (6,954 | ) | 143,778 | |||||||||||||
|
Cost
of revenues:
|
||||||||||||||||||
|
Software
licenses
|
821 | 821 | ||||||||||||||||
|
Subscriptions
and transactions
|
15,045 | 8,617 | 1,485 |
(H)
|
25,147 | |||||||||||||
|
Service
and maintenance
|
38,100 | 38,100 | ||||||||||||||||
|
Equipment
and supplies
|
6,875 | 6,875 | ||||||||||||||||
|
Total
cost of revenues
|
60,841 | 8,617 | 1,485 | 70,943 | ||||||||||||||
|
Operating
expenses:
|
||||||||||||||||||
|
Selling,
general and administrative
|
53,432 | 975 | 150 |
(H)
|
54,557 | |||||||||||||
|
Product
development and engineering
|
20,096 | 51 |
(H)
|
20,147 | ||||||||||||||
|
Amortization
of intangible assets
|
15,563 | 1,869 |
(I)
|
17,432 | ||||||||||||||
|
Total
operating expenses
|
89,091 | 975 | 2,070 | 92,136 | ||||||||||||||
|
Income
(loss) from operations
|
(11,918 | ) | 3,126 | (10,509 | ) | (19,301 | ) | |||||||||||
|
Other,
net
|
443 | (291 | ) |
(J)
|
152 | |||||||||||||
|
Income
(loss) before provision (benefit) for income taxes
|
(11,475 | ) | 3,126 | (10,800 | ) | (19,149 | ) | |||||||||||
|
Provision
(benefit) for income taxes
|
813 | (382 | ) |
(K)
|
431 | |||||||||||||
|
Net
income (loss)
|
$ | (12,288 | ) | $ | 3,126 | $ | (10,418 | ) | $ | (19,580 | ) | |||||||
|
Basic
and diluted net loss per common share
|
$ | (0.51 | ) | $ | (0.81 | ) | ||||||||||||
|
Shares
used in computing basic and diluted net loss per share
|
24,044 | 24,044 |
(L)
|
|||||||||||||||
See accompanying
notes
NOTES
TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
|
1.
|
Pro
Forma Adjustments (dollar amounts in
thousands):
|
The
following pro forma adjustments are included in the unaudited pro forma
condensed combined balance sheet:
|
(A)
|
To
record cash paid by the Company to Bank of America as purchase
consideration for PayMode.
|
|
(B)
|
To
record the preliminary fair value adjustments to certain assets acquired
in connection with the PayMode acquisition. The Company has not
finalized its estimates of fair value for certain property, equipment and
software acquired. Accordingly, these values are subject to
change in the final purchase price
allocation.
|
|
(C)
|
To
reflect the estimated net increase in intangible assets arising in the
PayMode acquisition, as follows:
|
|
Customer
related intangible assets
|
$ | 9,349 | ||
|
Core
technology
|
7,648 | |||
|
Tradename
|
1,038 | |||
|
Below
market lease
|
624 | |||
|
Goodwill
|
2,381 | |||
| $ | 21,040 | |||
The
Company has not finalized its estimates of fair value for intangible assets,
accordingly these values are subject to change in the final purchase price
allocation.
|
(D)
|
To
record adjustment for acquisition related costs ($403) which relate
principally to accounting and legal fees and to record the fair value of
certain accrued vacation liabilities ($33) assumed by the Company in the
acquisition. The acquisition related costs are expensed as
incurred and as such, for purposes of this pro-forma presentation,
increase the Company’s accumulated deficit as of June 30,
2009.
|
|
(E)
|
To
record the value of the warrant to purchase 1,000,000 shares of the
Company’s common stock at an exercise price of $8.50 per
share. The warrant was issued to Bank of America as purchase
consideration for PayMode and was exercisable upon
issuance. The warrants were valued using a Black-Scholes
valuation model that used the following
inputs:
|
|
Dividend
yield
|
0%
|
|
Expected
term
|
10
years
|
|
Risk
free interest rate
|
3.42%
|
|
Volatility
|
78%
|
The
expected term of ten years equates to the contractual life of the
warrants. Volatility was based on the Company’s actual stock price
over a ten year historical period.
|
(F)
|
To
eliminate historical equity of
PayMode.
|
The
following pro-forma adjustments are included in the unaudited pro-forma
condensed combined statement of operations:
|
(G)
|
To
eliminate revenue earned by PayMode from interest income allocated to
PayMode through Bank of America’s intercompany fund transfer process
since, in general terms, the Company will not be eligible to earn revenues
in this manner.
|
|
(H)
|
To
record depreciation and amortization expense associated with equipment and
software acquired in the PayMode acquisition. These amounts are
based on the Company’s preliminary estimates of fair value of the assets
acquired, which are not finalized and may change in the final purchase
price allocation.
|
|
(I)
|
To
record amortization expense related to intangible assets arising in the
PayMode acquisition, the valuations for which are not finalized and may
change in the final purchase price allocation. For purposes of
the pro-forma adjustments presented, the Company has used the following
estimated lives (in years):
|
|
Customer
related intangible assets
|
17
|
|
Core
technology
|
7
|
|
Tradename
|
17
|
|
Below
market lease
|
10
|
Estimated
amortization expense for subsequent fiscal years ending June 30, based on these
preliminary intangible asset values, is as follows:
|
(in thousands)
|
||||
|
2010
|
$ | 2,036 | ||
|
2011
|
2,023 | |||
|
2012
|
1,993 | |||
|
2013
|
1,672 | |||
|
2014
|
1,551 | |||
|
2015
and thereafter
|
7,515 | |||
|
(J)
|
To
record a reduction in interest income as a result of cash paid by the
Company to acquire PayMode. The pro-forma impact on interest
income assumes a 1.71% interest yield, which was the Company’s yield on
interest bearing cash accounts during fiscal
2009.
|
|
(K)
|
To
record the estimated tax impact of the historical PayMode operations and
the pro-forma adjustments. The overall reduction in tax expense
arises from a decrease in the utilization of certain of the Company’s
acquired net operating losses (the utilization of which had been
previously charged to income tax expense) and a reduction in alternative
minimum tax, offset in part by tax expense associated with PayMode
goodwill that is deductible for tax purposes but not expensed for
financial reporting purposes. The entry is based on the actual
effective tax rate for the Company’s US operations for fiscal year
2009.
|
|
(L)
|
The
warrants issued as purchase consideration for PayMode were excluded from
the shares used in calculating diluted earnings per share since their
effect would have been
anti-dilutive.
|