EX-99.3 4 dex993.htm UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF THE COMPANY Unaudited Pro Forma Condensed Combined Financial Information of the Company

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On April 1, 2011, Bottomline Technologies, Inc. (the “Company” or “Bottomline”) acquired LAS Holdings, Inc. a Delaware corporation doing business as Allegient Systems, Inc. (“Allegient”) for a cash payment of $49.6 million, which consisted of a base purchase price of $48 million plus the impact of certain balance sheet adjustments as stipulated in the merger agreement. The ultimate purchase price remains subject to final balance sheet adjustments which are expected to be finalized by June 30, 2011 and are not projected to be material. Allegient is a provider of advanced capabilities for legal e-billing, bill review and analytics. Allegient’s proprietary Software as a Service (“SaaS”) platform and value-added turnkey solutions will complement and extend the Company’s Legal eXchange portfolio, offering the combined customer base of more than 100 leading insurers enhanced capabilities to effectively manage their legal expenses.

The unaudited pro forma condensed combined balance sheet as of March 31, 2011 was prepared as if the acquisition had occurred on that date and combines the historical consolidated balance sheets of the Company and Allegient as of that date. The unaudited pro forma condensed combined statements of operations for the twelve months ended June 30, 2010 and the nine months ended March 31, 2011 were prepared as if the acquisition had occurred at the beginning of each of those periods and combines the historical consolidated statements of operations of the Company and Allegient for the twelve and nine month periods then ended.

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 Allegient 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, nor do they project the 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 was still in the process of obtaining fair value estimates of assets acquired (including intangible assets) and liabilities assumed as of the date of this filing. Accordingly, the Company has prepared the pro forma adjustments based on assumptions that it believes are reasonable but that are likely to change as additional information becomes available and the preliminary purchase price allocation is finalized.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

March 31, 2011

(in thousands)

 

     Historical
Bottomline
    Historical
Allegient
    Pro Forma
Adjustments
    Pro
Forma
Combined
 
Assets         

Current Assets:

        

Cash and marketable securities

   $ 147,441      $ 4,508      $ (49,617 )(A)    $ 102,332   

Accounts receivable, net

     36,625        2,536          39,161   

Other current assets

     8,566        274          8,840   
                                

Total current assets

     192,632        7,318        (49,617     150,333   

Property and equipment, net

     13,996        1,336        (26 )(B)      15,306   

Goodwill

     77,046          22,154 (C)      99,200   

Intangible assets, net

     38,881          38,000 (C)      76,881   

Other assets

     623        880          1,503   
                                

Total assets

   $ 323,178      $ 9,534      $ 10,511      $ 343,223   
                                
Liabilities and Stockholders’ Equity         

Current Liabilities:

        

Accounts payable

   $ 8,622      $ 286        $ 8,908   

Accrued expenses

     14,732        1,869        2,429 (D)      19,030   

Accrued management fees

     —          1,583        (1,583 )(E)      —     

Deferred revenue and deposits

     40,506            40,506   
                                

Total current liabilities

     63,860        3,738        846        68,444   

Deferred revenue, non current

     2,970            2,970   

Deferred income taxes

     4,473          15,200 (F)      19,673   

Other liabilities

     2,000        251        10 (G)      2,261   
                                

Total liabilities

     73,303        3,989        16,056        93,348   

Stockholders’ equity:

        

Preferred stock

     —          5,929        (5,929 )(H)      —     

Common stock

     34        6        (6 )(H)      34   

Additional paid-in-capital

     402,573        8,821        (8,821 )(H)      402,573   

Accumulated other comprehensive loss

     (4,462     —          —          (4,462

Treasury stock

     (20,779     —          —   (H)      (20,779

Accumulated deficit

     (127,491     (9,211     9,211 (H)      (127,491
                                

Total stockholders’ equity

     249,875        5,545        (5,545     249,875   
                                

Total liabilities and stockholders’ equity

   $ 323,178      $ 9,534      $ 10,511      $ 343,223   
                                

See accompanying notes

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

YEAR ENDED JUNE 30, 2010

(in thousands except per share amounts)

 

     Historical
Bottomline
    Historical
Allegient
     Pro Forma
Adjustments
    Pro
Forma
Combined
 

Revenues:

         

Software licenses

   $ 13,607           $ 13,607   

Subscriptions and transactions

     41,421        13,138           54,559   

Service and maintenance

     94,379             94,379   

Equipment and supplies

     8,583             8,583   
                                 

Total revenues

     157,990        13,138           171,128   

Cost of revenues:

         

Software licenses

     1,082             1,082   

Subscriptions and transactions

     20,552        4,707           25,259   

Service and maintenance

     40,772             40,772   

Equipment and supplies

     6,515             6,515   
                                 

Total cost of revenues

     68,921        4,707           73,628   

Gross profit

     89,069        8,431           97,500   

Operating expenses:

         

Sales and marketing

     34,013        2,627           36,640   

Product development and engineering

     18,858        880           19,738   

General and administrative

     16,383        2,048           18,431   

Depreciation

     —          221           221   

Amortization of intangible assets

     13,214        179         3,732 (I)      17,125   
                                 

Total operating expenses

     82,468        5,955         3,732        92,155   
                                 

Income from operations

     6,601        2,476         (3,732     5,345   

Other (expense) income, net

     (93     4         (234 )(J)      (323
                                 

Income before provision for income taxes

     6,508        2,480         (3,966     5,022   

Provision for income taxes

     2,554        410         (1,586 )(K)      1,378   
                                 

Net income

   $ 3,954      $ 2,070       $ (2,380   $ 3,644   
                                 

Basic and diluted net income per common share

   $ 0.15           $ 0.14   

Shares used in computing basic net income per share

     25,552        —           —          25,552   

Shares used in computing diluted net income per share

     26,696        —           —          26,696   

See accompanying notes

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

NINE MONTHS ENDED MARCH 31, 2011

(in thousands except per share amounts)

 

     Historical
Bottomline
     Historical
Allegient
     Pro Forma
Adjustments
    Pro
Forma
Combined
 

Revenues:

          

Software licenses

   $ 11,702            $ 11,702   

Subscriptions and transactions

     38,051         11,796           49,847   

Service and maintenance

     79,124              79,124   

Equipment and supplies

     6,255              6,255   
                                  

Total revenues

     135,132         11,796           146,928   

Cost of revenues:

          

Software licenses

     873              873   

Subscriptions and transactions

     20,789         4,227           25,016   

Service and maintenance

     34,249              34,249   

Equipment and supplies

     4,820              4,820   
                                  

Total cost of revenues

     60,731         4,227           64,958   

Gross profit

     74,401         7,569           81,970   

Operating expenses:

          

Sales and marketing

     28,251         2,234           30,485   

Product development and engineering

     16,655         937           17,592   

General and administrative

     14,408         1,709           16,117   

Depreciation

     —           203           203   

Amortization of intangible assets

     8,572         198         2,799 (I)      11,569   
                                  

Total operating expenses

     67,886         5,281         2,799        75,966   
                                  

Income from operations

     6,515         2,288         (2,799     6,004   

Other income, net

     448         8         (175 )(J)      281   
                                  

Income before provision for income taxes

     6,963         2,296         (2,974     6,285   

Provision for income taxes

     1,128         834         (1,190 )(K)      772   
                                  

Net income

   $ 5,835       $ 1,462       $ (1,784   $ 5,513   
                                  

Basic net income per common share

   $ 0.19            $ 0.18   

Diluted net income per common share

   $ 0.18            $ 0.17   
        —           —          —     

Shares used in computing basic net income per share

     31,367         —           —          31,367   

Shares used in computing diluted net income per share

     33,127              33,127   

See accompanying notes

 

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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 Bottomline as purchase consideration to the selling stockholders of Allegient. The purchase consideration of $49.6 million was derived from the base purchase price of $48 million, adjusted for Allegient’s cash position (an increase to the base purchase price), debt position (a decrease to the base purchase price) and a working capital adjustment (a decrease to the base purchase price) in each case measured as of the acquisition date and as defined in the merger agreement. The ultimate purchase price is subject to final balance sheet adjustments which are expected to be finalized by June 30, 2011 and are not projected to be material.

 

(B) To reflect fair value adjustments for acquired property, plant and equipment.

 

(C) To reflect intangible assets arising from the acquisition, as follows:

 

Tradename

   $ 242   

Technology

     8,487   

Customer related assets

     29,271   

Goodwill

     22,154   
        
   $ 60,154   

The valuation of the acquired intangible assets has not been finalized by Bottomline and these intangible asset values are likely to change in the final purchase price allocation.

 

(D) To record payroll tax liabilities associated with the exercise and sale of employee stock options and the sale of employee-held shares of Allegient common stock, at acquisition closing.

 

(E) To reflect settlement of accrued management fees due to principal selling stockholders of Allegient, at acquisition closing.

 

(F) To record the adjustment for deferred tax liabilities arising in the acquisition. The deferred tax liabilities relate to intangible assets that will be amortized for financial reporting purposes but that will not be deductible for tax return purposes.

 

(G) To reflect fair value adjustments for capital lease obligations assumed in the acquisition.

 

(H) To record the elimination of the historical stockholders equity of Allegient.

The following pro forma adjustments are included in the unaudited pro forma condensed combined statement of operations:

 

(I) To record additional amortization expense related to intangible assets arising in the Allegient acquisition. The valuation of the acquired intangible assets has not been finalized by Bottomline and the asset values and the estimated asset lives are likely to change in the final purchase price allocation. Further, pro forma amortization expense has been calculated herein using the straight line method. Upon completion of the valuation process, the Company may conclude that the intangible assets should be amortized on a basis other than straight line. For purposes of the pro forma adjustments presented, we have used the following estimated asset lives:

 

Tradename

     3 years   

Technology

     7 years   

Customer related assets

     12 years   

 

(J) To record a reduction in interest income as a result of the cash consideration paid by Bottomline. The pro forma impact on interest income is based on the actual interest income yield experienced by Bottomline during fiscal 2010.

 

(K) To record the estimated tax impact of the pro forma adjustments at the statutory tax rates (federal and state) in effect for the historical periods presented.

 

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