<PAGE>
PRO FORMA CONDENSED CONSOLIDATED Exhibit 99.03
FINANCIAL STATEMENTS
(UNAUDITED)
On August 28, 2000, Bottomline Technologies (de), Inc. (the Company) acquired
Checkpoint (Holdings) Limited ("Checkpoint"), a private company incorporated in
England and Wales. Checkpoint is a provider of electronic commerce and
electronic payment software and hardware for the United Kingdom. The
acquisition was completed pursuant to a Share Purchase Agreement dated August
28, 2000 between the Company and Checkpoint stockholders. The consideration for
the acquisition was approximately $60.1 million consisting of $4.7 million in
cash, $19.8 million in loan notes, 1,013,333 shares of the Company's common
stock (the Common Stock), warrants to purchase a total of 100,000 shares of
Common Stock at an exercise price of $50.00 per share and transaction costs. On
August 28, 2000, the Company also acquired Flashpoint, Inc. ("Flashpoint"), a
Massachusetts corporation and a developer of Web-based software. The acquisition
was completed pursuant to a Stock Purchase Agreement dated August 28, 2000 by
and among the Company, Flashpoint and the sole stockholder of Flashpoint. The
consideration for the acquisition was approximately $16.8 million consisting of
$4.5 million in cash, 242,199 shares of Common Stock, the assumption of all
outstanding stock options of Flashpoint and transaction costs.
The acquisitions were accounted for using the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16, "Business
Combinations" ("APB 16"). Under APB 16, purchase price allocations are made to
the assets acquired and the liabilities assumed based on their respective fair
values. The value of the Common Stock was recorded at the average of the last
reported sales price on The Nasdaq National Market during the last three
consecutive trading days ending on and including August 28, 2000. The fair
value of the warrants and stock options was recorded based on the Black-Scholes
valuation method.
The estimated fair value of the purchase price and net liabilities assumed in
the Checkpoint and Flashpoint acquisitions, as if occurring on April 30, 2000
and June 30, 2000 respectively, was as follows:
<TABLE>
<CAPTION>
Unaudited
----------------------------------------------------------------
Checkpoint Flashpoint Total
----------------------------------------------------------------
<S> <C> <C> <C>
Cash $ 4,728,000 $ 4,500,000 $ 9,228,000
Loan notes 19,777,000 - 19,777,000
Common Stock 31,474,000 7,523,000 38,997,000
Common Stock warrants 1,568,000 - 1,568,000
Replacement stock options - 4,286,000 4,286,000
Transaction costs 2,561,000 437,000 2,998,000
----------------------------------------------------------------
Total Estimated Purchase Price $60,108,000 $16,746,000 $76,854,000
Estimated Fair Value of
Net Liabilities Assumed 20,072,000 8,000 20,080,000
----------------------------------------------------------------
Estimated Fair Value of
Purchase Price and
Net Liabilities Assumed $80,180,000 $16,754,000 $96,934,000
================================================================
</TABLE>
The estimated fair value of the purchase price and net liabilities assumed
(total liabilities less total tangible assets) of $96.9 million has been
reflected in the unaudited pro forma condensed consolidated financial statements
based on a preliminary purchase price, based on August 28, 2000 financial
information, allocation. Finalization of the actual allocation of the purchase
price, based on August 28, 2000 financial information, to assets acquired and
liabilities assumed is subject to appraisals, valuations, evaluations and other
analyses of the fair value of assets acquired and liabilities assumed.
<PAGE>
The estimated fair value of the purchase price and net liabilities assumed has
been allocated on a preliminary basis as follows:
<TABLE>
<CAPTION>
Estimated Fair Values (unaudited)
----------------------------------------------------------------------------------
Checkpoint Flashpoint Total
------------------------ ----------------------- --------------------------
<S> <C> <C> <C>
Customer list $15,867,000 - $15,867,000
Assembled workforce 4,442,000 $ 1,509,000 5,951,000
Developed software 3,761,000 - 3,761,000
Trade name 1,543,000 - 1,543,000
Contract backlog - 435,000 435,000
Goodwill 54,567,000 14,810,000 69,377,000
------------------------------------------------- --------------------------
Total $80,180,000 $16,754,000 $96,934,000
================================================= ==========================
</TABLE>
The intangible assets will be amortized over their estimated useful lives, as
follows: customer list, assembled workforce, developed software, trade name and
goodwill - three years; contract backlog - ten months.
Based upon these estimates, the pro forma impact of amortization expense for the
succeeding three years is $32.6 million, $32.2 million and $32.2 million,
respectively. These estimates of amortization expense are highly dependent upon
the allocation of the fair value of the purchase price and net liabilities
assumed to the various intangible asset categories. Management anticipates that
the purchase price allocation will be finalized no later than June 30, 2001.
The accompanying unaudited pro forma condensed consolidated statement of
operations for the Company's fiscal year ended June 30, 2000 has been prepared
to give effect to the acquisitions of Checkpoint and Flashpoint by the Company.
The unaudited pro forma information does not include nonrecurring charges which
may result from the transactions and the integration of Checkpoint and
Flashpoint into the Company.
The unaudited pro forma information has been prepared assuming that the
acquisition occurred at the beginning of the Company's most recently completed
fiscal year, which began July 1, 1999, for the pro forma condensed consolidated
statement of operations and at June 30, 2000 for the pro forma condensed
consolidated balance sheet. The pro forma information is based on the historical
financial statements of the Company and Flashpoint for the twelve months ended
June 30, 2000, and the adjusted historical financial statements of Checkpoint
for the twelve months ended April 30, 2000, giving effect to the transactions
under the purchase method of accounting and the assumptions and adjustments
described in the accompanying notes to the condensed consolidated pro forma
financial statements. The adjusted historical financial statements of
Checkpoint, which are unaudited, reflect adjustments necessary to conform the
historical financial information of Checkpoint to that which would have been
presented under U.S. Generally Accepted Accounting Principles ("US GAAP"). The
adjusted historical financial statements of Checkpoint also give effect to the
disposal of certain subsidiaries and business lines during the twelve month
period ended April 30, 2000 and during the period subsequent to April 30, 2000
but prior to the acquisition of Checkpoint by the Company. The adjusted
historical financial statements of Checkpoint, as of and for the twelve month
period ending April 30, 2000, are included as part of this Form 8-K/A.
The pro forma information is unaudited and does not purport to be indicative of
the financial position or results of operations that would have been attained
had the combinations been in effect on the dates indicated, nor of future
results of operations of the combined Company. The unaudited pro forma financial
statements should be read in conjunction with the separate audited financial
statements and notes thereto of Bottomline Technologies (de), Inc., included in
its Annual Report on Form 10-K for the year ended June 30, 2000, the audited
financial statements and notes thereto of Checkpoint for the three years ended
April 30, 2000, the audited financial statements and notes thereto of Flashpoint
for the year ended December 31, 1999, and the unaudited Flashpoint financial
statements for the six months ended June 30, 2000, included as part of this Form
8-K/A.
2
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Adjusted
Historical Historical Historical Pro Forma Pro Forma
Bottomline Checkpoint (1) Flashpoint Adjustments Consolidated
----------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
-----------------------------------------
CURRENT ASSETS
Cash and equivalents $27,292 $ 2,102 $(19,500) (3) $ 9,894
Short-term investments 11,222 11,222
Accounts receivable, net 14,571 5,487 $ 688 20,746
Inventories, net 168 1,300 1,468
Prepaid and other current assets 1,592 1,896 38 (201) (4) 3,325
------- ------- ------ ------------ --------
Total current assets 54,845 10,785 726 (19,701) 46,655
Depreciable assets, net 5,172 2,673 282 8,127
Intangible assets, net 8,416 14,627 81,697 (5) 104,740
Other assets 2,847 129 25 3,001
------- ------- ------ ------------ --------
Total assets $71,280 $28,214 $1,033 $ 61,996 $162,523
======= ======= ====== ============ ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------
CURRENT LIABILITIES
Borrowings due within one year $ 1,834 $ 252 $ (1,834) (6) $ 252
Accounts payable $ 2,004 1,322 103 3,429
Accrued expenses 4,930 2,792 277 2,998 (7) 10,997
Other current liabilities 901 353 20,356 (8) 21,610
Deferred revenue and deposits 6,034 6,706 378 (811) (4) 12,307
------- ------- ------ ------------ --------
Total current liabilities 13,869 13,007 1,010 20,709 48,595
Long-term liabilities 283 20,652 31 (19,474) (6) 1,492
------- ------- ------ ------------ --------
Total liabilities 14,152 33,659 1,041 1,235 50,087
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 11 345 1 (344) (9) 13
Additional paid-in-capital 64,914 3,330 53,319 (10) 121,563
Deferred stock compensation (1,343) (11) (1,343)
Accumulated other comprehensive loss (8) (8)
Retained earnings (deficit) (7,789) (9,120) (9) 9,129 (12) (7,789)
------- ------- ------ ------------ --------
Total stockholders' equity
(deficit) 57,128 (5,445) (8) 60,761 112,436
------- ------- ------ ------------ --------
Total liabilities and stockholders'
equity (deficit) $71,280 $28,214 $1,033 $ 61,996 $162,523
======= ======= ====== ============ ========
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements
3
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Adjusted
Historical Historical Historical Pro Forma Pro Forma
Bottomline Checkpoint (2) Flashpoint Adjustments Consolidated
----------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net revenue $ 49,134 $28,279 $4,138 $81,551
Costs and expenses
Cost of revenues 17,546 14,796 2,284 34,626
Selling, general and administrative 34,292 11,159 2,037 47,488
Amortization of intangibles - acquisition 2,311 3,331 29,270 (13) 34,912
Research and development 8,580 2,537 11,117
Acquired in-process research and development 3,900 3,900
Stock compensation expense 442 (14) 442
-------- ------- ------ ----------- ---------
Total costs and expenses 66,629 31,823 4,321 29,712 132,485
-------- ------- ------ ----------- ---------
Operating loss (17,495) (3,544) (183) (29,712) (50,934)
Other income (expense), net 1,830 (2,304) (35) (3,223) (15) (3,732)
-------- ------- ------ ----------- ---------
Loss from operations (15,665) (5,848) (218) (32,935) (54,666)
Benefit for income taxes (1,400) (32) (2) (1,434)
-------- ------- ------ ----------- ---------
Net loss $(14,265) $(5,816) $ (216) ($32,935) ($53,232)
======== ======= ====== =========== =========
Loss per share:
Basic $(1.33) $(4.32)
Diluted $(1.33) $(4.32)
Shares used to compute per share amounts
Basic 10,744 1,592 (16) 12,336
Diluted 10,744 1,592 (16) 12,336
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements
4
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(dollars in thousands except share data)
(1) Adjusted historical balance sheet amounts for Checkpoint are presented in
accordance with U.S. generally accepted accounting principles and have been
converted from British Sterling to U.S. Dollars using the exchange rate in
effect at April 30, 2000. Such amounts reflect the impact of the disposal
of the electromechanical business line by Checkpoint, which occurred
subsequent to April 30, 2000 but prior to the Company's acquisition of
Checkpoint. The adjustments made to the historical Checkpoint balance sheet
to arrive at the adjusted historical amounts are shown at Exhibit 99.04.
(2) Adjusted historical amounts reported in the statement of operations for
Checkpoint are presented in accordance with U.S. generally accepted
accounting principles and have been converted from British Sterling to U.S.
Dollars using the average exchange rate for the year ended April 30, 2000.
Such amounts exclude the operating results of two subsidiaries that were
disposed of during the year ended April 30, 2000, and the results of the
electromechanical business line that was disposed of subsequent to April
30, 2000 but prior to the Company's acquisition of Checkpoint. The
adjustments made to the historical checkpoint statement of operations to
arrive at the adjusted historical amounts are shown at Exhibit 99.04.
(3) To reflect payment ($9,228) of consideration in connection with
acquisitions of Checkpoint and Flashpoint and to reflect the payment, at
closing, of certain liabilities assumed ($10,272).
(4) To record a reduction in deferred revenue ($811) and associated deferred
cost of revenue ($201) based upon the assessment of fair value of certain
acquired deferred revenue of Checkpoint, in accordance with APB 16. The net
difference between the deferred revenue adjustment and the deferred cost of
revenue adjustment has been recorded as a pro forma adjustment to
intangible assets ($610).
(5) To record goodwill and other intangible assets arising from the acquisition
of Checkpoint and Flashpoint ($96,934), to eliminate the pre-existing
goodwill of Checkpoint ($14,627) and to record the net reduction in the
acquired Checkpoint deferred revenue, based on an assessment of its fair
value, in accordance with APB 16 ($610).
(6) To record the payment (in stock and cash), at closing, of certain
liabilities assumed in connection with the Checkpoint acquisition ($20,729)
and to record the conversion of certain assumed liabilities of Checkpoint
to a loan note arrangement ($579).
(7) To record accrual for direct acquisition costs incurred by the Company
resulting from the acquisitions. The actual amounts ultimately incurred
could differ from the estimated amounts.
(8) To record the loan notes issued in connection with the Checkpoint
acquisition ($19,777) and to record the conversion of certain assumed
liabilities of Checkpoint to a loan note arrangement ($579).
(9) To record the par value of the issuance of 1,592,199 shares of the
Company's $.001 par value common stock ($2), 1,255,532 shares of which were
issued as consideration in connection with the acquisitions of Checkpoint
and Flashpoint and 336,667 shares of which were issued as payment, at
closing, of certain liabilities assumed in the Checkpoint acquisition and
to eliminate the common stock par value of Checkpoint ($345) and Flashpoint
($1).
(10) To record the issuance of 1,592,199 shares of common stock ($49,452),
1,255,532 shares of which were issued as consideration in connection with
the acquisitions of Checkpoint and Flashpoint and 336,667 shares of which
were issued as payment, at closing, of certain liabilities assumed in the
Checkpoint acquisition, to record the issuance of common stock warrants in
connection with Checkpoint acquisition ($1,568), to record the fair value
of replacement common stock options issued in connection with Flashpoint
acquisition ($4,286), to record the intrinsic value of unvested common
stock options issued in connection with the Flashpoint acquisition
($1,343), and to eliminate the pre-existing capital in excess of par amount
of Checkpoint ($3,330).
(11) To record deferred stock compensation equal to the intrinsic value of the
unvested common stock options issued in connection with the Flashpoint
acquisition.
(12) To eliminate Checkpoint ($9,120) and Flashpoint ($9) retained deficit
balances.
(13) To record amortization expense for the intangible assets, represented by
the estimated fair value of the purchase price and the net liabilities
assumed ($32,601) and to eliminate the pre-existing goodwill amortization
expense recorded by Checkpoint ($3,331).
5
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(dollars in thousands except share data)
(14) To record amortization of deferred compensation expense associated with the
unvested stock options in the Company's common stock issued in connection
with the Flashpoint acquisition.
(15) To record interest expense ($2,443) on the loan notes, assuming an average
outstanding balance of $20,356, calculated at an average annual interest
rate of 12%, and to record a reduction in interest income ($780) calculated
at an average annual rate of 4% as a result of the disbursement of $9,228
of purchase price consideration and the disbursement of $10,272 for the
payment, at closing, of certain liabilities assumed.
(16) Pro forma adjustments to common shares used in the computation of basic and
diluted net loss per share consist of the issuance of 1,592,199 shares of
common stock, 1,255,532 shares of which were issued as consideration in
connection with the acquisitions of Checkpoint and Flashpoint and 336,667
shares of which were issued as payment, at closing, of certain liabilities
assumed in the Checkpoint acquisition. For purposes of the pro forma net
loss per share calculation, these share amounts have been treated as if
they were outstanding since July 1, 1999.
6
