EX-99.2 4 dex992.htm UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION Unaudited pro forma condensed combined financial information

Exhibit 99.2

RADIANT SYSTEMS, INC.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Basis of Presentation

This unaudited pro forma combined balance sheet has been prepared as if the acquisition of Quest had taken place on December 31, 2007. The unaudited pro forma combined statement of earnings for the year ended December 31, 2007, has been prepared as if the acquisition had taken place on January 1, 2007. Radiant Systems, Inc. (“Radiant”) has a fiscal year end of December 31.

The unaudited pro forma combined financial statements have been prepared by Radiant based upon certain assumptions as disclosed in the accompanying footnotes. The unaudited pro forma combined financial statements presented herein are shown for illustrative purposes only and are not necessarily indicative of the financial position or future results of operations of Radiant, or of the financial position or results of operations of Radiant that would have actually occurred had the acquisition been in effect as of the date or for the period presented. Furthermore, the allocation of the purchase price is preliminary and subject to further revision.

The unaudited pro forma combined financial statements should be read in conjunction with Radiant’s separate historical financial statements and notes, the historical financial statements and notes of the operations of Quest contained elsewhere in this filing, and in conjunction with the related notes to these unaudited pro forma combined financial statements. In management’s opinion, all adjustments necessary to reflect the effect of this transaction have been made.

RADIANT SYSTEMS, INC.

Unaudited Pro Forma Combined Balance Sheet

As of December 31, 2007

(In Thousands)

 

     Historical
Radiant
(1)
    Quest
(2)
   Pro Forma
Adjustments
(3)
    Pro Forma
Radiant
 
ASSETS          

CURRENT ASSETS

         

Cash and cash equivalents

   $ 29,940     $ 1,194      —       $ 31,134  

Accounts receivable, net of allowance for doubtful accounts

     43,057       —        —         43,057  

Inventories, net

     30,494       1,498      —         31,992  

Other current assets

     10,138       271      —         10,409  
                               

Total current assets

     113,629       2,963      —         116,592  

PROPERTY AND EQUIPMENT, net

     14,184       472      —         14,656  

SOFTWARE DEVELOPMENT COSTS, net

     7,231       —        —         7,231  

GOODWILL

     62,386       —        26,590 (c)     88,976  

INTANGIBLES, net

     20,650       —        28,300 (c)     48,950  

OTHER LONG-TERM ASSETS, net

     3,879       218      —         4,097  
                               
   $ 221,959     $ 3,653    $ 54,890     $ 280,502  
                               

LIABILITIES AND SHAREHOLDERS' EQUITY

         

CURRENT LIABILITIES

         

Current portion of long-term debt and capital lease payments

   $ 8,420     $ —      $ (2,672 )(d)   $ 5,748  

Accounts payable

     21,317       788      1,300  (a)     23,405  

Accrued liabilities

     18,427       273      —         18,700  

Client deposits and unearned revenue

     13,745       2,074      —         15,819  
                               

Total current liabilities

     61,909       3,135      (1,372 )     63,672  

LONG-TERM DEBT, LINE OF CREDIT AND CAPITAL LEASE PAYMENTS, net of current portion

     13,518       —        56,672       70,190  

OTHER LONG-TERM LIABILITIES

     4,576       108      —         4,684  
                               

Total liabilities

     80,003       3,243      55,300       138,546  
                               

SHAREHOLDERS' EQUITY

       —        —         —    

PREFERRED STOCK, no par value; 5,000 shares authorized, none issued

     —         —        —         —    

COMMON STOCK, no par value; 100,000 shares authorized, 31,930 shares issued and outstanding

     —         —        —         —    

ADDITIONAL PAID-IN CAPITAL

     150,924       —        —         150,924  

ACCUMULATED (DEFICIT) RETAINED EARNINGS

     (10,711 )     410      (410 )(b)     (10,711 )

ACCUMLATED OTHER COMPREHENSIVE INCOME

     1,743       —        —         1,743  
                               

Total sharholders' equity (deficit)

     141,956       410      (410 )     141,956  
                               
   $ 221,959     $ 3,653    $ 54,890     $ 280,502  
                               

 

Note 1. Unaudited Pro Forma Combined Balance Sheet: The unaudited pro forma combined balance sheet gives effect to the acquisition as if these events had occurred as of December 31, 2007.

 

  1. The amounts in this column are derived from the consolidated balance sheet of Radiant as of December 31, 2007 in the audited historical consolidated financial statements of Radiant Systems, Inc.
  2. The amounts in this column are derived from the consolidated balance sheet of Quest Retail Technology Pty Ltd and its subsidiaries as of December 31, 2007 as reported in the audited historical consolidated financial statements of Quest included herein. The presentation of the audited financial statements is in accordance with International Financial Reporting Standards. These amounts would not have been significantly different under United States Generally Accepted Accounting Standards. Additionally, the amounts from the audited financial statements have been translated into United States Dollars from Australian Dollars based on the spot rate on December 31, 2007. Accounts receivable of approximately $3.7 million has been removed from the Quest balance sheet as they were not included in the asset purchase agreement and are non-recourse in nature. Accumulated retained earnings have also been adjusted accordingly.
  3. Total consideration for the purchase of Quest was approximately $56 million and consisted of approximately $54 million in cash and the assumption of certain liabilities and direct expenses Radiant incurred related to the acquisition (a portion of which was capitalized on Radiant’s historical financial statements at December 31, 2007).

 

     In addition, on January 2, 2008, Radiant entered into a Credit Agreement (as described in the Form 8-K filed on January 8, 2008). Upon the entering of such agreement, Radiant obtained cash of $75 million under this facility. These monies were used to extinguish a portion of Radiant’s outstanding debt under other facilities in addition to utilizing the cash for the purchase of Quest.

 

     The pro forma adjustments in this column reflect the following:

 

  (a) Estimate of direct expenses incurred in connection with the acquisition of Quest by Radiant subsequent to December 31, 2007.
  (b) Adjustments to remove historical Quest stockholders’ equity.
  (c) Total consideration for the purchase of Quest was approximately $56 million and consisted of approximately $54 million in cash. The adjustment to goodwill represents a preliminary estimate of the excess of the purchase price over the fair value of the tangible and identifiable intangible assets of Quest. Based on preliminary information, the intangible assets acquired consist of reseller and direct customer relationships and contracts (ten year estimated useful life), developed technology (ten year estimated useful life) and trademarks (indefinite useful life). Radiant Systems, Inc. will complete a full valuation of the assets acquired. Upon completion of this valuation, the amounts ascribed to goodwill and intangible assets shown in the pro forma financial statements may change along with the estimated useful life of such intangible assets. Any such revision could have a significant impact on depreciation and amortization, interest expense and income taxes.
  (d) Credit agreement entered into by Radiant resulted in $75 million of cash. $19.2 million of this cash was utilized to payoff other debt facilities that were outstanding as of December 31, 2007. Total consideration for the purchase of Quest was approximately $56 million.


RADIANT SYSTEMS, INC.

Unaudited Pro Forma Combined Statement of Earnings

For the Year Ended December 31, 2007

(In Thousands)

 

     Historical
Radiant
(1)
    Quest
(2)
    Pro Forma
Adjustments
(3)
    Pro Forma
Radiant
 

REVENUES

        

System sales

   $ 145,322     $ 11,316     $ —       $ 156,638  

Client support, maintenance and services

     107,876       3,786       —         111,662  
                                

Total revenues

     253,198       15,102       —         268,300  
                                

COST OF REVENUES

        

System sales

     76,547       5,003       —         81,550  

Client support, maintenance and services

     64,514       2,103       —         66,617  
                                

Total cost of revenues

     141,061       7,106       —         148,167  
                                

Gross profit

     112,137       7,996       —         120,133  

OPERATING EXPENSES

        

Product development

     23,437       550       —         23,987  

Sales and marketing

     28,851       1,132       —         29,983  

Depreciation of fixed assets

     4,147       69       —         4,216  

Amortization of intangible assets

     4,301       —         2,090 (a)     6,391  

Other non-recurring gains and charges

     67       —         —         67  

General and administrative

     28,058       1,628       —         29,686  
                                

Total operating expenses

     88,861       3,379       2,090       94,330  
                                

Income from operations

     23,276       4,617       (2,090 )     25,803  

OTHER (EXPENSE) INCOME

     (2,611 )     171       (4,376 )(b)     (6,816 )
                                

INCOME FROM OPERATIONS BEFORE INCOME TAX PROVISION

     20,665       4,788       (6,466 )     18,987  

INCOME TAX (PROVISION) BENEFIT

     (8,822 )     (1,321 )     2,337       (7,806 )
                                

NET INCOME

   $ 11,843     $ 3,467     $ (4,129 )   $ 11,181  
                                

BASIC INCOME PER SHARE

   $ 0.38         $ 0.36  
                    

DILUTED INCOME PER SHARE

   $ 0.36         $ 0.34  
                    

WEIGHTED AVERAGE SHARES OUTSTANDING

        

Basic

     31,373           31,373  
                    

Diluted

     33,160           33,160  
                    

 

Note 2. Unaudited Pro Forma Combined Statement of Earnings: The unaudited pro forma combined statement of earnings gives effect to the acquisition as if these events had occurred as of January 1, 2007.

 

  1. The amounts in this column represent the consolidated results of operations of Radiant Systems, Inc. for the year ended December 31, 2007, as reported in the historical consolidated financial statements of Radiant Systems, Inc.
  2. The amounts in this column are derived from the consolidated statements of Quest Retail Technology Pty Ltd and its subsidiaries as of December 31, 2007 as reported in the audited historical consolidated financial statements of Quest and included herein. Certain reclassifications were made in order to conform to Radiant’s statement of earnings presentation. The presentation of the audited financial statements is in accordance with International Financial Reporting Standards. These amounts would not have been significantly different under United States Generally Accepted Accounting Standards. Additionally, the amounts from the audited financial statements have been translated into United States Dollars from Australian Dollars based on the average spot rate for the calendar year 2007.
  3. The pro forma adjustments in this column reflect the following:
  a. The pro forma adjustment for amortization of intangible assets estimated at $2.1 million for December 31, 2007 is calculated by estimating the amount of amortization for the period using the estimated fair values and estimated useful lives for the following intangible assets: reseller and direct customer relationships and contracts (ten year estimated useful life) and developed technology (ten year estimated useful life). Radiant will complete a full valuation of the assets acquired. Upon completion of this valuation, the amounts ascribed to goodwill and intangible assets shown in the pro forma financial statements may change along with the estimated useful life of such intangible assets. Any such revision could have a significant impact on depreciation and amortization, interest expense and income taxes.
  b. The increase in interest expense is attributable to the credit agreement that Radiant entered into on January 2, 2008. Loans under the credit agreement bear interest at the prime rate plus one half of one percent plus an additional rate of interest that varies between 0.25% and 1.00% depending upon Radiant’s consolidated leverage ratio.