EX-99.4 6 c54395exv99w4.htm EX-99.4 exv99w4
Exhibit 99.4
RightNow Technologies, Inc.
Unaudited Pro Forma Condensed Combined Consolidated Financial Statements
The following unaudited pro forma condensed combined consolidated financial statements give effect to the acquisition of HiveLive, Inc. (HiveLive) by RightNow Technologies, Inc. (RightNow). These pro forma condensed combined consolidated statements are presented for illustrative purposes only. The pro forma adjustments described in the notes accompanying the statements are based upon available information and assumptions that we believe are reasonable. These unaudited pro forma condensed combined consolidated financial statements do not give effect to any potential cost savings or other operating efficiencies that could result from the acquisition. The pro forma condensed combined consolidated financial statements do not purport to represent what the consolidated results of operations of RightNow would actually have been if the acquisition had in fact occurred on the date we refer to below, nor do they purport to project the results of operations of RightNow for any future period or as of any historical dates.
Under the purchase method of accounting prescribed by Topic 805, Business Combinations, tangible and identifiable intangible assets acquired and liabilities assumed are recorded at their estimated fair market values. The excess of the purchase price over the net assets acquired is allocated to goodwill. The purchase price allocation is preliminary, subject to future adjustment and has been made solely for the purpose of providing the unaudited condensed combined consolidated financial information discussed below.
The unaudited pro forma condensed combined balance sheet as of June 30, 2009, was prepared by combining the historical consolidated balance sheet of RightNow and the historical balance sheet of HiveLive as of June 30, 2009, giving effect to the acquisition as if it occurred on June 30, 2009. The unaudited pro forma condensed combined consolidated statement of operations for the year ended December 31, 2008 and the six month period ended June 30, 2009 were prepared by combining the historical consolidated statement of operations of RightNow for the year ended December 31, 2008 and the six month period ended June 30, 2009 and the historical statement of operations of HiveLive for the respective periods, giving effect for the acquisition as if it had occurred on January 1, 2008.
The operating results of HiveLive are included in RightNow’s statement of operations beginning on the date of acquisition, September 15, 2009. The acquisition is being accounted for under the purchase method of accounting and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on management’s estimate of fair values. Our preliminary evaluation resulted in an allocation of $5.7 million to goodwill and identifiable intangible assets (See Note 1 for further details).
These unaudited pro forma condensed combined consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto of (a) RightNow Technologies, Inc. included on Form 10-Q as of and for the three and six month period ended June 30, 2009 (filed August 7, 2009), (b) RightNow Technologies, Inc. included in Form 10-K for the year ended December 31, 2008 (filed March 6, 2009), and (c) HiveLive, Inc. included elsewhere herein.

 


 

RightNow Technologies, Inc.
Unaudited Pro Forma Condensed Consolidated
Combined Balance Sheet
as of June 30, 2009

(In thousands)
                                 
    RightNow     HiveLive              
    June 30,     June 30,     Pro Forma     Pro Forma  
    2009     2009     Adjustments     Combined  
Assets
                               
Cash and cash equivalents
  $ 46,987     $ 1,251     $ (5,906 A   $ 42,332  
Short-term investments
    42,808                     42,808  
Accounts receivable
    31,670       255               31,925  
Term receivables, current
    4,107                     4,107  
Allowance for doubtful accounts
    (1,910 )                   (1,910 )
 
                         
Receivables, net
    33,867       255               34,122  
Deferred commissions
    5,663       139       (82 B     5,720  
Prepaid and other current assets
    2,152       40               2,192  
 
                       
Total current assets
    131,477       1,685       (5,988 )     127,174  
Long-term investments
    4,792                     4,792  
Property and equipment, net
    9,775       194               9,969  
Term receivables, non-current
    2,159                     2,159  
Intangible assets, net
    1,380             2,100   C      3,480  
Goodwill
    4,358             3,208   C      7,566  
Deferred commissions, non-current
    2,830       77       (45 B     2,862  
Other
    811       24               835  
 
                       
Total Assets
  $ 157,582     $ 1,980     $ (725 )   $ 158,837  
 
                       
 
                               
Liabilities and Stockholders’ Equity
                               
Accounts payable
  $ 5,952     $ 65             $ 6,017  
Commissions and bonuses payable
    4,958                     4,958  
Other accrued liabilities
    11,895                     11,895  
Current portion of long-term debt
    45       989               1,034  
Current portion of deferred revenue
    75,972       490       (289 B     76,173  
 
                       
Total current liabilities
    98,822       1,544       (289 )     100,077  
Long-term debt, less current portion
                         
Deferred revenue, net of current portion
    28,112                     28,112  
Stockholders’ equity:
                               
Preferred Series A Stock
          2,172       (2,172 A      
Preferred Series B Stock
          5,527       (5,527 A      
Common Stock
    34       12       (12 A     34  
Additional paid-in capital
    107,282       51       (51 D     107,282  
Treasury stock
    (15,007 )                   (15,007 )
Accumulated other comprehensive income
    1,260                     1,260  
Accumulated deficit
    (62,921 )     (7,326 )     7,326   D     (62,921 )
 
                       
Total Stockholders’ Equity
    30,648       436       (436 )     30,648  
 
                       
Total Liabilities and Stockholders’ Equity
  $ 157,582     $ 1,980     $ (725 )   $ 158,837  
 
                       
See accompanying notes to unaudited pro forma condensed combined consolidated financial statements

 


 

RightNow Technologies, Inc.
Unaudited Pro Forma Condensed Consolidated
Combined Statement of Operations
for the six months ended June 30, 2009

(In thousands)
                                 
    RightNow     HiveLive              
    Six Months     Six Months              
    Ended     Ended              
    June 30,     June 30,     Pro Forma     Pro Forma  
    2009     2009     Adjustments     Combined  
Revenue:
                               
Software, hosting and support
  $ 53,469     $ 553          B   $ 54,022  
Professional services
    18,908                     18,908  
 
                         
Total revenue
    72,377       553               72,930  
Cost of revenue:
                               
Software, hosting and support
    9,903             225  A     10,128  
Professional services
    13,354                     13,354  
 
                         
Total cost of revenue
    23,257             225       23,482  
 
                         
Gross Profit
  $ 49,120     $ 553       (225 )   $ 49,448  
Operating Expenses:
                               
Sales and marketing
    30,871       1,300               32,171  
Direct costs and expenses
          73               73  
Research and development
    9,807       524               10,331  
General and administrative
    7,653       648               8,301  
Amortization of intangible assets
                50  A     50  
 
                       
Total operating expenses
    48,331       2,545       50       50,926  
 
                       
Income (loss) from operations
    789       (1,992 )     (275 )     (1,478 )
Interest and other income, net
    752       (7 )             745  
 
                         
Income (loss) before income taxes
    1,541       (1,999 )     (275 )     (733 )
(Provision) benefit for income taxes
    (242 )                   (242 )
 
                       
Net income (loss)
  $ 1,299     $ (1,999 )   $ (275 )   $ (975 )
 
                       
Net income (loss) per share
                               
Basic
  $ 0.04                     $ (0.03 )
Diluted
  $ 0.04                     $ (0.03 )
Shares used in the computation:
                               
Basic
    31,730                       31,730  
Diluted
    32,207                       31,730  
See accompanying notes to unaudited pro forma condensed combined consolidated financial statements

 


 

RightNow Technologies, Inc.
Unaudited Pro Forma Condensed Consolidated
Combined Statement of Operations
for the year ended December 31, 2008

(In thousands)
                                 
    RightNow     HiveLive              
    Year Ended     Year Ended              
    December     December     Pro Forma     Pro Forma  
    31, 2008     31, 2008     Adjustments     Combined  
Revenue:
                               
Software, hosting and support
  $ 102,576     $ 364          B   $ 102,940  
Professional services
    37,859                     37,859  
 
                         
Total revenue
    140,435       364               140,799  
Cost of revenue:
                               
Software, hosting and support
    20,397             450  A     20,847  
Professional services
    30,440                     30,440  
 
                       
Total cost of revenue
    50,837             450       51,287  
 
                       
Gross Profit
  $ 89,598     $ 364       (450   $ 89,512  
Operating Expenses:
                               
Sales and marketing
    67,628       2,184               69,812  
Direct costs and expenses
          93               93  
Research and development
    18,292       870               19,162  
General and administrative
    13,615       924               14,539  
Amortization of intangible assets
                100  A     100  
 
                       
Total operating expenses
    99,535       4,071       100       103,706  
 
                       
Income (loss) from operations
    (9,937 )     (3,707 )     (550 )     (14,194 )
Interest and other income, net
    2,696       31               2,727  
 
                       
Income (loss) before income taxes
    (7,241 )     (3,676 )     (550 )     (11,467 )
(Provision) benefit for income taxes
    (42 )                   (42 )
 
                       
Net income (loss)
  $ (7,283 )   $ (3,676 )   $ (550 )   $ (11,509 )
 
                       
Net income (loss) per share
                               
Basic and diluted
  $ (0.22 )                   $ (0.34 )
Shares used in the computation:
                               
Basic and diluted
    33,362                       33,362  
See accompanying notes to unaudited pro forma condensed combined consolidated financial statements

 


 

Note 1: ACQUISITION
     On September 15, 2009, the Company acquired the outstanding common and preferred stock of HiveLive, Inc. (“HiveLive”), for $5.9 million in net cash paid at closing.  HiveLive is an enterprise-class social platform provider with an innovative platform for customer support, engagement and loyalty, and ideation communities to help organizations maximize every opportunity to deliver great customer experiences.
     The acquisition is being accounted for under the purchase method of accounting and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on management’s estimate of fair values. The excess of purchase price over the fair value of net assets acquired reflects the expected benefits from expansion of market opportunities and customer relationships. Our estimates and assumptions are subject to change. Certain items may impact the final purchase price allocation. Our preliminary evaluation is based on the following as estimated on the date of acquisition:
                 
Purchase price:
               
Cash consideration
          $ 5,906  
 
             
Total consideration
            5,906  
 
               
Allocated to:
               
Fair value of net assets acquired
            189  
 
               
Allocated to:
               
Identifiable intangibles assets:
               
Developed technology
    1,800          
Customer relationships
    200          
Trade name and Trademarks
    100       2,100  
 
             
Excess purchase price allocated to goodwill
          $ 3,617  
NOTE 2: PRO FORMA ADJUSTMENTS TO THE CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
The following adjustments have been reflected in the unaudited pro forma condensed combined consolidated balance sheet as of June 30, 2009 as if the acquisition occurred on June 30 2009:
  (A)   Adjustment to record the purchase of all of the outstanding stock of HiveLive.
 
  (B)   Adjustment to record the fair value of deferred commissions and deferred revenue of HiveLive. The fair value of deferred revenue represents an amount equivalent to the estimated cost to fulfill the service obligation assumed plus an appropriate profit margin.
 
  (C)   Adjustment to record the goodwill and estimated fair value of identifiable intangible assets acquired. Identifiable intangible assets consist of developed technology, customer relationships, and trade name and trademarks, which will be amortizable over their useful lives of four, four, and two years, respectively. The fair value and useful life estimates of these assets is preliminary and subject to change.

 


 

  (D)   Adjustment to record the elimination of HiveLive’s equity.
Income Taxes
     Both RightNow and HiveLive have substantial gross deferred tax assets primarily associated with net operating loss carryforwards, which both companies have historically offset by a full valuation allowance. The pro forma condensed combined financial statements were prepared with an assumption that the combined entity would maintain a full valuation allowance. Accordingly, no adjustments are reflected for pro forma net deferred tax assets or liabilities in the pro forma condensed combined balance sheet.
NOTE 3: PRO FORMA ADJUSTMENTS TO COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
     The following adjustments have been reflected in the pro forma combined condensed consolidated statement of operations for the year ended December 31, 2008 and the six month period ended June 30, 2009 as if the acquisition had occurred on January 1, 2008.
(A)   Adjustment to record the amortization expense related to the identifiable assets acquired. Identifiable intangible assets consist of developed technology, customer relationships, and trade name and trademarks, which will be amortizable over their useful lives of four, four, and two years, respectively. The fair value and useful life estimates of these assets is preliminary and subject to change.
(B)   There are no adjustments to revenue recognized as the Company had no significant amounts of deferred revenue as of January 1, 2008.