EX-99.1 2 b65881mfexv99w1.htm EX-99.1 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS exv99w1
 

Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
MOLDFLOW CORPORATION
     The unaudited pro forma condensed consolidated financial statements listed below reflect the estimated pro forma effect of Moldflow Corporation’s (the “Company”) sale of substantially all of the assets of its Manufacturing Solutions (“MS”) division, as follows:
  •   Unaudited pro forma condensed consolidated balance sheet as of March 31, 2007, giving effect to the sale of MS as if it occurred on March 31, 2007,
 
  •   Unaudited pro forma condensed consolidated statement of operations for the nine months ended March 31, 2007, giving effect to the sale of MS as if it occurred on July 1, 2005, and
 
  •   Unaudited pro forma condensed consolidated statement of operations for the fiscal year ended June 30, 2006, giving effect to the sale of MS as if it occurred on July 1, 2005.
     These unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of the Company after giving effect to specific assumptions and adjustments related to the sale of the MS division. These specific assumptions and adjustments underlying the pro forma adjustments are described in the accompanying notes. The unaudited pro forma condensed consolidated financial statements, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its Quarterly Reports on Form 10-Q for the periods ended September 30, 2006, December 31, 2006 and March 31, 2007 and its Annual Report on Form 10-K for the year ended June 30, 2006.
     The unaudited pro forma condensed consolidated financial statements listed above are for informational purposes only and are not necessarily indicative of the operating results or financial position that would have been achieved had the sale of the MS division been consummated on the dates indicated or of the Company’s results of operations or financial position in the future. The unaudited pro forma condensed balance sheet includes an estimated loss on the sale of the MS division of $959,000 net of taxes.
     In its Form 10-Q for the period ending March 31, 2007, the Company reported the results of operations and financial position of the MS division as discontinued operations within its unaudited condensed consolidated financial statements. Subsequently, the Company decided to retain its Moldflow Plastics Xpert (“MPX”) product line and its related assets, which had been included in the amounts previously reported as discontinued operations. Ultimately, as the product line was software-focused and more closely aligned with the Company’s Design Analysis Solutions business, the Company opted to retain the software assets of the MPX product line, including the rights to software maintenance contract renewals and thus, all associated assets, liabilities, revenues and expenses are excluded from the Purchased Assets and reported as part of the Company’s continuing operations.

 

 

Moldflow Corporation
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(In thousands)
As of March 31, 2007
                                 
                           
    As reported     Pro Forma
Adjustments		     Notes     Pro Forma
As Adjusted		  
ASSETS
                                
 
                                
Current assets:
                                
Cash and cash equivalents
   $ 54,143     $ 5,535       1     $ 59,678  
Marketable securities
     11,092       —               11,092  
Accounts receivable, net
     12,769       313       2       13,082  
Prepaid expenses
     6,543       —               6,543  
Other current assets
     3,040       86       3       3,126  
Current portion of assets held for sale
     5,617       (5,617 )     4       —  
 
                          
Total current assets
     93,204       317               93,521  
Fixed assets, net
     3,005       46       5       3,051  
Goodwill
     6,465       —               6,465  
Other assets (including restricted cash)
     1,888       929       6,7       2,817  
Assets held for sale, net of current portion
     3,826       (3,826 )     8       —  
 
                          
Total assets
   $ 108,388     $ (2,534 )           $ 105,854  
 
                          
 
                                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                
 
                                
Current liabilities:
                                
Accounts payable
   $ 616     $ —             $ 616  
Accrued expenses
     11,065       236       9, 10       11,301  
Deferred revenue
     13,192       (185 )     11       13,007  
Current portion of liabilities held for sale
     1,990       (1,990 )     12       —  
 
                          
Total current liabilities
     26,863       (1,939 )             24,924  
Deferred revenue
     1,556       —               1,556  
Other long-term liabilities
     307       —               307  
Liabilities held for sale, net of current portion
     453       (453 )     13       —  
 
                          
Total liabilities
     29,179       (2,392 )             26,787  
 
                          
 
                                
Stockholders’ equity:
                                
Common stock
     118       —               118  
Treasury stock, at cost
     (8,018 )     —               (8,018 )
Additional paid-in capital
     79,436       817       14       80,253  
Retained earnings
     1,936       (64 )      15       977  
 
             (895 )     16          
Accumulated other comprehensive income
     5,737       —               5,737  
 
                          
Total stockholders’ equity
     79,209       (142 )              79,067  
 
                            
Total liabilities and stockholders’ equity
   $ 108,388     $ (2,534 )           $ 105,854  
 
                          
The accompanying notes to these unaudited pro forma condensed consolidated financial statements
are an integral part of these financial statements

 

 

                     
Balance Sheet Account   Note   Adjustment   Amount  
                ( in thousands)  
Cash and cash equivalents
    1     Reflects cash proceeds received at closing of $6.0 million, less $465,000 in estimated closing costs paid at the time of closing. Total closing costs for the transaction are estimated to be $587,000 of which $60,000 were already paid and $62,000 were included as accrued expenses as of March 31, 2007.   $ 5,535  
Accounts receivable, net
    2     Reflects the impact of the Company’s decision to retain its Moldflow Plastics Xpert (“MPX”) product line and other revisions in assets previously reported as held for sale as of March 31, 2007.     313  
Other current assets
    3     Results from a revision in the amount previously reported as held for sale as of March 31, 2007.     86  
Current portion of assets held for sale
    4     Reflects the elimination of amounts previously reported as held for sale as of March 31, 2007.     (5,617 )
Fixed assets, net
    5     Reflects the impact of the Company’s decision to retain its MPX product line.     46  
Other assets
    6     Results from a revision in the amount previously reported as held for sale as of March 31, 2007.     (71 )
Other assets
    7     Reflects $1.0 million of the purchase price being held in escrow pursuant to the Purchase Agreement.     1,000  
 
Assets held for sale, net of current portion
    8     Reflects the elimination of amounts previously reported as held for sale as of March 31, 2007.     (3,826 )
 
Accrued expenses
    9     Reflects the impact of the Company’s decision to retain its MPX product line and other accrued transaction costs.     158  
Accrued expenses
    10     Reflects accrued tax expense related to sale of the Purchased Assets.     78  
 
Deferred revenue
    11     Results from a revision in the amount previously reported as held for sale as of March 31, 2007.     (185 )
Current portion of liabilities held for sale
    12     Reflects the elimination of amounts previously reported as held for sale as of March 31, 2007.     (1,990 )
Liabilities held for sale, net of current portion
    13     Reflects the elimination of amounts previously reported as held for sale as of March 31, 2007.     (453 )
Additional paid in capital
    14     Reflects the use of Additional Paid-in-Capital Net Operating Losses (“APIC NOLs”) to offset the pre-tax taxable gain on the sale of the Purchased Assets. APIC NOLs are recorded in additional paid-in-capital on the balance sheet for GAAP purposes and have the effect of reducing income taxes payable.     817  
Retained earnings
    15     Pro-Forma adjustment reflects the pretax loss on the sale of the MS division. The pre-tax loss was calculated using cash received of $6.5 million less net assets of $6.5 million.     (64 ) 
Retained earnings
    16     For tax purposes, the sale of Purchased Assets would generate an estimated $2.8 million of taxable income, resulting in $895,000 of tax expense at an average tax rate of 32%. The tax rate represents an estimated blended statutory rate for the jurisdictions most significantly involved in the sale of the MS division.     (895 )

 

 

Moldflow Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(In thousands, except share data)
For the nine months ended March 31, 2007
                                 
                           
                           
          Pro Forma             Pro Forma  
    As Reported     Adjustments     Notes     As Adjusted  
Revenue:
                                
Product
   $ 20,324     $ 522       1     $ 20,846  
Services
     19,984       —               19,984  
 
                          
Total revenue
     40,308       522               40,830  
 
                          
Costs and operating expenses:
                                
Cost of product revenue
     1,094       —               1,094  
Cost of services revenue
     3,360       —               3,360  
Research and development
     5,576       259       2       5,835  
Selling and marketing
     14,432       329       3       14,761  
General and administrative
     10,468       —               10,468  
 
                          
Total costs and operating expenses
     34,930       588               35,518  
 
                          
 
                                
Income (loss) from continuing operations
     5,378       (66 )             5,312  
Interest income, net
     2,357       —               2,357  
Other income, net
     15       —               15  
 
                          
Income (loss) from continuing operations before income taxes
     7,750       (66 )             7,684  
Provision for income taxes
     1,112       —               1,112  
 
                          
Net income (loss) from continuing operations
   $ 6,638     $ (66 )     4     $ 6,572  
 
                          
 
                                
Basic net income per common share from continuing operations
   $ 0.59                     $ 0.59  
Diluted net income per common share from continuing operations
   $ 0.57                     $ 0.56  
 
                                
Shares used in computing net income per common share from continuing operations
                                
Basic
     11,181                       11,181  
Diluted
     11,668                       11,668  
The accompanying notes to these unaudited pro forma condensed consolidated financial statements
are an integral part of these financial statements

 

 

                     
Statement of Operations Account   Note   Adjustment   Amount
(in thousands)
                 
Product revenue
    1     Reflects MPX revenue retained by the Company.   $ 522
Research and development
    2     Reflects research and development expenses related to the MPX product line.     259
Selling and marketing
    3     Reflects selling and marketing expenses related to the MPX product line.     329
General note
    4     In accordance with the provisions of Rule 11-02(b)(5) of Article 11 of Regulation S-X, the unaudited pro forma condensed consolidated Statement of Operations only presents financial information of the continuing operations of the Company, net of taxes. As a result, these financial statements do not reflect any gain or loss on the sale of the MS division.     —

 

 

Moldflow Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(In thousands, except share data)
For the year ended June 30, 2006
                                 
          Pro Forma             Pro Forma  
    As Reported     Adjustments     Notes     As Adjusted  
Revenue:
                                
Product
   $ 38,215     $ (13,781 )     1     $ 24,434  
Services
     27,343       (2,821 )     2       24,522  
 
                          
Total revenue
     65,558       (16,602 )             48,956  
 
                          
Costs and operating expenses:
                                
Cost of product revenue
     10,066       (8,555 )     3       1,511  
Cost of services revenue
     6,841       (2,535 )     4       4,306  
Research and development
     9,568       (2,176 )     5       7,392  
Selling and marketing
     23,305       (5,608 )     6       17,697  
General and administrative
     12,733       (840 )     7       11,893  
Restructuring charges
     2,666       (1,419 )     8       1,247  
Amortization of acquired intangible assets
     196       (196 )     9       —  
 
                          
Total costs and operating expenses
     65,375       (21,329 )             44,046  
 
                          
Income from continuing operations
     183       4,727               4,910  
Interest income
     2,582       —               2,582  
Interest Expense
     (11 )     —               (11 )
Other income (loss), net
     162       —               162  
 
                          
Income from continuing operations before income taxes
     2,916       4,727               7,643  
Provision for (benefit from) income taxes
     1,915       (424 )     10       1,491  
 
                          
Net income from continuing operations
   $ 1,001     $ 5,151       11     $ 6,152  
 
                        
 
                                
Basic net income per common share from continuing operations
   $ 0.09                     $ 0.55  
Diluted net Income per common share from continuing operations
   $ 0.08                     $ 0.52  
 
                                
Shares used in computing net income per common share from continuing operations
                                
Basic
     11,114                       11,114  
Diluted
     11,817                       11,817  
The accompanying notes to these unaudited pro forma condensed consolidated financial statements are an
integral part of these financial statements

 

 

                     
                Amount
Statement of Operations Account   Note   Adjustment   (in thousands)
Product revenue
    1     Reflects $14.2 million of historical product revenue related to the MS division, net of $474,000 in MPX product revenue, which will be retained by the Company.   $ (13,781 )
Services revenue
    2     Reflects $2.8 million of historical services revenue, related to the MS division.     (2,821 )
Cost of product revenue
    3     Reflects $8.6 million of historical cost of product revenue, related to the MS division.     (8,555 )
Cost of services revenue
    4     Reflects $2.5 million of historical cost of services revenue, related to the MS division.     (2,535 )
Research and development
    5     Reflects $2.3 million of historical research and development expenses related to the MS division, net of $81,000 of expenses related to MPX, which will be retained by the Company.     (2,176 )
Selling and marketing
    6     Reflects $6.0 million of historical selling and marketing expenses related to the MS division, net of $349,000 of expenses related to MPX, which will be retained by the Company.     (5,608 )
General and administrative
    7     Reflects $840,000 of historical general and administrative expenses related to the MS division.     (840 )
Restructuring charges
    8     Reflects $1.4 million of historical restructuring charges related to the MS division.     (1,419 )
Amortization of acquired intangible assets
    9     Reflects $196,000 of historical amortization of acquired intangible assets related to the MS division.     (196 )
Provision for (benefit
from) income taxes
    10     Reflects $424,000 of the historical tax provision related to the MS division.     (424 )
General note
    11     In accordance with the provisions of Rule 11-02(b)(5) of Article 11 of Regulation S-X, the unaudited pro forma condensed consolidated Statement of Operations only presents financial information of the continuing operations of the Company, net of taxes. As a result, these financial statements do not reflect any gain or loss on the sale of the MS division.     —