Attached files
| file | filename |
|---|---|
| 8-K - SYMYX TECHNOLOGIES 8-K 3-1-2010 - SYMYX TECHNOLOGIES INC | form8k.htm |
Exhibit 99.1
SYMYX TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On March 1, 2010, Symyx Technologies, Inc. (“Symyx”) completed the sale of its tools operations and recently restructured contract research services operations from its High Productivity Research business unit (“HPR”), to FreeSlate, Inc. (formerly HPR Global, Inc., “FreeSlate”) for a $10.0 million promissory note and a 19.5% equity interest in FreeSlate (the “Transaction”). The HPR assets subject to the Transaction are located in Sunnyvale CA, where they will be owned and operated by FreeSlate.
In connection with the Transaction, the parties entered into an Asset Purchase Agreement, a Technology License Agreement, a Software License Services and Co-Marketing Agreement, a Promissory Note, a Sublease Agreement and a Transition Services Agreement (as well as a Stock Issuance Agreement and a Warrant with respect to Symyx’s equity interest in FreeSlate, Inc., and other ancillary agreements) (collectively, the “Agreements”). The Asset Purchase Agreement and the Technology License Agreement were executed on February 11, 2010, but they and all other Agreements became effective on the closing date of the Transaction, March 1, 2010.
Under the Agreements, Symyx transferred to FreeSlate a newly formed company led by John Senaldi, HPR’s former president, substantially all existing HPR physical assets and certain intellectual property assets, including a portion of Symyx’s patent portfolio and certain components of Symyx’s Lab Execution and Analysis software suite. As part of the divestiture, Symyx also provided $8.6 million of operating capital (consisting of approximately $6.6 million in cash, inventory and other assets and other liabilities) at closing, receiving in return a $10.0 million promissory note and common stock representing a 19.5% equity interest in FreeSlate. John Senaldi resigned from Symyx prior to the signing of the divestiture agreement to lead the acquisition of HPR assets as founder and chief executive officer of FreeSlate. Following the closing, FreeSlate employed substantially all Symyx employees previously in HPR. Symyx retained all existing rights to royalties and licensing fees previously included in HPR, as well as relevant patents underlying these entitlements.
The following unaudited pro forma consolidated financial statements and explanatory notes are based upon the historical financial statements of Symyx and are presented assuming the Transaction occurred as of December 31, 2009 with respect to the unaudited pro forma consolidated balance sheet and as of January 1, 2007 with respect to the unaudited pro forma consolidated statements of operations for the years ended December 31, 2009, 2008 and 2007.
The unaudited pro forma consolidated financial statements and accompanying notes should be read together with Symyx’s audited consolidated financial statements and accompanying notes as of and for the three years in the period ended December 31, 2009, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Symyx's Annual Report on Form 10-K for the year ended December 31, 2009.
1
Symyx Technologies, Inc.
|
Unaudited Pro Forma Consolidated Balance Sheet
|
||||||||||||
|
As of December 31, 2009
|
||||||||||||
|
(In thousands)
|
||||||||||||
|
Historical
|
Pro Forma Adjustments (2)
|
Pro Forma
|
||||||||||
|
ASSETS
|
||||||||||||
|
Current assets:
|
||||||||||||
|
Cash and cash equivalents
|
$ | 81,777 | $ | (6,561 | )(a) | $ | 75,216 | |||||
|
Accounts receivable, net
|
12,793 | - | 12,793 | |||||||||
|
Inventories
|
1,956 | (1,956 | )(a) | - | ||||||||
|
Deferred tax assets, current
|
3,850 | (1,372 | )(a) | 2,478 | ||||||||
|
Income tax receivable
|
4,848 | - | 4,848 | |||||||||
|
Other current assets
|
5,586 | (165 | )(a) | 5,421 | ||||||||
|
Total current assets
|
110,810 | (10,054 | ) | 100,756 | ||||||||
|
Property, plant and equipment, net
|
17,032 | (1,440 | )(a) | 15,592 | ||||||||
|
Goodwill
|
39,640 | (449 | )(b) | 39,191 | ||||||||
|
Intangible assets, net
|
40,650 | (931 | )(a) | 39,719 | ||||||||
|
Long-term investments
|
15,147 | - | 15,147 | |||||||||
|
Note receivable and investment in FreeSlate
|
- | 10,098 | (a) | 10,098 | ||||||||
|
Deferred tax and other assets
|
3,529 | (71 | )(a) | 3,458 | ||||||||
|
Total assets
|
$ | 226,808 | $ | (2,847 | ) | $ | 223,961 | |||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||
|
Current liabilities:
|
||||||||||||
|
Accounts payable
|
$ | 2,479 | $ | - | $ | 2,479 | ||||||
|
Other accrued liabilities
|
7,408 | 51 | (a), (c) | 7,459 | ||||||||
|
Accrued compensation and employee benefits
|
9,379 | - | 9,379 | |||||||||
|
Accrued royalty
|
3,944 | - | 3,944 | |||||||||
|
Current deferred tax liabilities
|
107 | (66 | )(a) | 41 | ||||||||
|
Accrued restructuring costs
|
2,114 | - | 2,114 | |||||||||
|
Deferred revenue
|
27,988 | (2,433 | )(a) | 25,555 | ||||||||
|
Total current liabilities
|
53,419 | (2,448 | ) | 50,971 | ||||||||
|
Long-term payable
|
2,322 | - | 2,322 | |||||||||
|
Long-term deferred revenue
|
5,556 | (42 | )(a) | 5,514 | ||||||||
|
Noncurrent deferred tax liabilities
|
8,777 | 193 | (a) | 8,970 | ||||||||
|
Total noncurrent liabilities
|
16,655 | 151 | 16,806 | |||||||||
|
Stockholders' equity:
|
||||||||||||
|
Common stock
|
35 | - | 35 | |||||||||
|
Additional paid-in capital
|
213,493 | - | 213,493 | |||||||||
|
Accumulated other comprehensive gain
|
2,591 | - | 2,591 | |||||||||
|
Accumulated deficit
|
(59,385 | ) | (550 | )(a), (c), (d) | (59,935 | ) | ||||||
|
Total stockholders' equity
|
156,734 | (550 | ) | 156,184 | ||||||||
|
Total liabilities and stockholders’ equity
|
$ | 226,808 | $ | (2,847 | ) | $ | 223,961 | |||||
2
Symyx Technologies, Inc.
|
Unaudited Pro Forma Consolidated Statement of Operations
|
||||||||||||
|
For the Year Ended December 31, 2009
|
||||||||||||
|
(In thousands, except per share data)
|
||||||||||||
|
Historical
|
Pro Forma Adjustments (2)
|
Pro Forma
|
||||||||||
|
Revenue:
|
||||||||||||
|
Service
|
$ | 70,542 | $ | (8,988 | )(a) | $ | 61,554 | |||||
|
Product
|
23,888 | (23,888 | )(a) | - | ||||||||
|
License fees, content and royalties
|
56,016 | (1,245 | )(a) | 54,771 | ||||||||
|
Total revenue
|
150,446 | (34,121 | ) | 116,325 | ||||||||
|
Costs of revenue:
|
||||||||||||
|
Cost of service
|
26,012 | (1,871 | )(a) | 24,141 | ||||||||
|
Cost of products
|
10,806 | (10,806 | )(a) | - | ||||||||
|
Cost of license fees, content and royalties
|
5,649 | - | 5,649 | |||||||||
|
Amortization of intangible assets
|
5,909 | (281 | )(a) | 5,628 | ||||||||
|
Total costs of revenue
|
48,376 | (12,958 | ) | 35,418 | ||||||||
|
Gross profit
|
102,070 | (21,163 | ) | 80,907 | ||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development
|
52,350 | (5,427 | )(a) | 46,923 | ||||||||
|
Sales, general and administrative
|
45,071 | (9,852 | )(a), (e) | 35,219 | ||||||||
|
Restructuring charges
|
2,578 | (891 | )(a) | 1,687 | ||||||||
|
Impairment to goodwill, intangibles and other long-lived assets
|
327 | - | 327 | |||||||||
|
Amortization of intangible assets
|
5,791 | (167 | )(a) | 5,624 | ||||||||
|
Total operating expenses
|
106,117 | (16,337 | ) | 89,780 | ||||||||
|
Loss from operations
|
(4,047 | ) | (4,826 | ) | (8,873 | ) | ||||||
|
Loss from sale of IntegrityBio business
|
(2,009 | ) | - | (2,009 | ) | |||||||
|
Interest and other income (expense), net
|
(229 | ) | 1,380 | (a), (b), (c) | 1,151 | |||||||
|
Loss before income tax benefit
|
(6,285 | ) | (3,446 | ) | (9,731 | ) | ||||||
|
Income tax benefit
|
5,147 | 1,379 | (d) | 6,526 | ||||||||
|
Net loss
|
$ | (1,138 | ) | $ | (2,067 | ) | $ | (3,205 | ) | |||
|
Basic and diluted net loss per share
|
$ | (0.03 | ) | $ | (0.09 | ) | ||||||
|
Shares used in computing basic and diluted net loss per share
|
34,321 | 34,321 | ||||||||||
3
Symyx Technologies, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2008
(In thousands, except per share data)
|
Historical
|
Pro Forma Adjustments
|
Pro Forma
|
||||||||||
|
Revenue:
|
||||||||||||
|
Service
|
$ | 74,892 | $ | (6,534 | )(a) | $ | 68,358 | |||||
|
Product
|
25,033 | (25,033 | )(a) | - | ||||||||
|
License fees, content and royalties
|
59,120 | (3,526 | )(a) | 55,594 | ||||||||
|
Total revenue
|
159,045 | (35,093 | ) | 123,952 | ||||||||
|
Costs of revenue:
|
||||||||||||
|
Cost of service
|
21,094 | (152 | )(a) | 20,942 | ||||||||
|
Cost of products
|
10,444 | (10,444 | )(a) | - | ||||||||
|
Cost of license fees, content and royalties
|
5,876 | - | 5,876 | |||||||||
|
Amortization of intangible assets
|
7,355 | (477 | )(a) | 6,878 | ||||||||
|
Total costs of revenue
|
44,769 | (11,073 | ) | 33,696 | ||||||||
|
Gross profit
|
114,276 | (24,020 | ) | 90,256 | ||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development
|
75,365 | (10,210 | )(a) | 65,155 | ||||||||
|
Sales, general and administrative
|
54,589 | (10,952 | )(a) | 43,637 | ||||||||
|
Restructuring charges
|
4,952 | (799 | )(a) | 4,153 | ||||||||
|
Impairment to goodwill, intangibles and other long-lived assets
|
90,330 | (1,360 | )(a) | 88,970 | ||||||||
|
Amortization of intangible assets
|
5,903 | (273 | )(a) | 5,630 | ||||||||
|
Total operating expenses
|
231,139 | (23,594 | ) | 207,545 | ||||||||
|
Loss from operations
|
(116,863 | ) | (426 | ) | (117,289 | ) | ||||||
|
Gain from sale of equity interest in Ilypsa, Inc.
|
4,939 | - | 4,939 | |||||||||
|
Interest and other income, net
|
135 | 1,364 | (a), (b), (c) | 1,499 | ||||||||
|
Income (loss) before income tax expense
|
(111,789 | ) | 938 | (110,851 | ) | |||||||
|
Income tax benefit (expense)
|
5,173 | (375 | )(d) | 4,798 | ||||||||
|
Net loss
|
$ | (106,616 | ) | $ | 563 | $ | (106,053 | ) | ||||
|
Basic and diluted net loss per share
|
$ | (3.16 | ) | $ | (3.14 | ) | ||||||
|
Shares used in computing basic and diluted net loss per share
|
33,747 | 33,747 | ||||||||||
4
Symyx Technologies, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2007
(In thousands, except per share data)
|
Historical
|
Pro Forma Adjustments
|
Pro Forma
|
||||||||||
|
Revenue:
|
||||||||||||
|
Service
|
$ | 59,034 | $ | (5,297 | )(a) | $ | 53,737 | |||||
|
Product
|
34,898 | (34,898 | )(a) | - | ||||||||
|
License fees, content and royalties
|
31,140 | (1,546 | )(a) | 29,594 | ||||||||
|
Total revenue
|
125,072 | (41,741 | ) | 83,331 | ||||||||
|
Costs of revenue:
|
||||||||||||
|
Cost of service
|
8,995 | (205 | )(a) | 8,790 | ||||||||
|
Cost of products
|
14,281 | (14,281 | )(a) | - | ||||||||
|
Cost of license fees, content and royalties
|
1,773 | - | 1,773 | |||||||||
|
Amortization of intangible assets
|
3,873 | (424 | )(a) | 3,449 | ||||||||
|
Total costs of revenue
|
28,922 | (14,910 | ) | 14,012 | ||||||||
|
Gross profit
|
96,150 | (26,831 | ) | 69,319 | ||||||||
|
Operating expenses:
|
||||||||||||
|
Research and development
|
66,186 | (8,485 | )(a) | 57,701 | ||||||||
|
Sales, general and administrative
|
41,935 | (5,813 | )(a) | 36,122 | ||||||||
|
Acquired in process research and development
|
2,500 | - | 2,500 | |||||||||
|
Amortization of intangible assets
|
2,253 | (251 | )(a) | 2,002 | ||||||||
|
Total operating expenses
|
112,874 | (14,549 | ) | 98,325 | ||||||||
|
Loss from operations
|
(16,724 | ) | (12,282 | ) | (29,006 | ) | ||||||
|
Gain from sales of business assets
|
40,826 | 40,826 | ||||||||||
|
Interest and other income, net
|
5,694 | 1,504 | (a), (b), (c) | 7,198 | ||||||||
|
Income before income tax benefit (expense) and equity loss
|
29,796 | (10,778 | ) | 19,018 | ||||||||
|
Income tax expense
|
(10,698 | ) | 4,311 | (d) | (6,387 | ) | ||||||
|
Equity in loss from investment in Visyx Technologies Inc.
|
(314 | ) | - | (314 | ) | |||||||
|
Net income
|
$ | 18,784 | $ | (6,467 | ) | $ | 12,317 | |||||
|
Basic and diluted net income per share
|
$ | 0.57 | $ | 0.37 | ||||||||
|
Shares used in computing basic and diluted net income per share
|
33,199 | 33,199 | ||||||||||
5
SYMYX TECHNOLOGIES, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
|
1.
|
Basis of Presentation
|
The accompanying unaudited pro forma consolidated financial statements and explanatory notes present the financial statements of Symyx Technologies, Inc. (“Symyx”) assuming the Transaction, as described in the introduction to these pro forma financial statements, occurred as of December 31, 2009 with respect to the unaudited pro forma consolidated balance sheet and as of January 1, 2007 with respect to the unaudited pro forma consolidated statements of operations for the years ended December 31, 2009, 2008 and 2007.
The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and do not purport to represent what the financial position or results of operations of Symyx would have been had the Transaction occurred on the dates noted above, or to project the financial position or results of operations of Symyx for any future periods. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable. The pro forma adjustments are directly attributable to the Transaction and are expected to have a continuing impact on the results of operations of Symyx. The unaudited pro forma consolidated financial statements do not include the effects of the Software License, Services and Co-Marketing Agreement for royalties to be either earned or paid on the future LEA software license and maintenance sales as these amounts are not factually supportable.
Symyx and FreeSlate entered into Transition Service Agreement for certain transitional services to be provided by Symyx to FreeSlate relating to finance, information technology, facilities, legal and human resources and other services. Additionally under the terms of the Transition Services Agreement, FreeSlate will provide to Symyx storage and rights to use certain assets transferred to HPR. The transition services are to be billed based on agreed upon methods that include actual costs, hourly rates plus a mark up, or other monthly rates dependent on the service provided and are not expected to be provided for more than three to four months in accordance with the terms of the Agreement. No pro forma adjustment has been made to include these revenues and costs in the pro forma income statements as these services are not factually supportable and are not expected to have a continuing impact on operations.
The actual effect of the sale could differ from the pro forma adjustments projected here. However, in the opinion of management, all adjustments necessary to present fairly the unaudited pro forma financial statements have been made. The following are descriptions of the columns included in the accompanying unaudited pro forma consolidated financial statements:
Historical - represents the historical consolidated balance sheet of Symyx as of December 31, 2009 and the historical consolidated statements of operations of Symyx for the years ended December 31, 2009, 2008 and 2007.
Pro Forma Adjustments - Represents the adjustments to the historical consolidated financial statements required to derive the pro forma financial position of Symyx as of December 31, 2009 and the pro forma results of operations of Symyx for the years ended December 31, 2009, 2008 and 2007.
|
2.
|
Pro Forma Adjustments
|
Unaudited Pro Forma Consolidated Balance Sheet
|
(a)
|
To eliminate the assets and liabilities of the HPR operations transferred to FreeSlate in exchange for a promissory note with a face value of $10.0 million, a 19.5% ownership investment in FreeSlate with an estimated value of approximately $0.1 million and approximately $6.6 million cash payment to FreeSlate. The valuation of the investment in FreeSlate is preliminary and based on valuations and assumptions by management and the Board of Directors of FreeSlate. While management believes that its preliminary estimates are reasonable, different estimates and assumptions could result in a different value assigned to the investment.
|
6
|
(b)
|
To eliminate the goodwill recorded from a prior acquisition and allocated to the Tools reporting unit, that was included as part of the HPR business operations sold.
|
|
(c)
|
To accrue estimated transaction costs of $0.9 million, expected to be paid, in connection with the Transaction. Additionally, included in Symyx’s historical balance sheet are prepaid transaction costs of $0.1 million.
|
|
(d)
|
To calculate the loss on sale of assets, as if the transaction had consummated on December 31, 2009. The actual loss on sale calculated as of the Transaction date may differ from the loss presented in these unaudited pro forma financial statements. No pro forma adjustment to the income statement has been recorded as this is a non recurring charge:
|
|
(in thousands)
|
||||
|
Promissory note received
|
$ | 10,000 | ||
|
Investment in FreeSlate
|
98 | |||
|
Cash transferred to FreeSlate
|
(6,561 | ) | ||
|
Inventories sold to FreeSlate
|
(1,956 | ) | ||
|
Fixed assets and held for sale assets
|
(1,661 | ) | ||
|
Intangible assets and Goodwill
|
(1,380 | ) | ||
|
Deferred taxes
|
(1,349 | ) | ||
|
Other assets and liabilities, net
|
684 | |||
|
Deferred revenue
|
2,475 | |||
|
Transaction costs
|
(1,100 | ) | ||
|
Loss on sale of assets
|
$ | (750 | ) | |
Unaudited Pro Forma Consolidated Statements of Operations
|
(a)
|
To eliminate the revenues, costs of revenues and direct operating expenses associated with the HPR business operations sold.
|
|
(b)
|
To record the interest income of $0.8 million to be earned on the $10.0 million promissory note issued by FreeSlate to Symyx upon the sale of the HPR assets. The note will bear interest at a fixed rate of 8.0% per year, without compounding, with a maturity of March 1, 2020. The first principal payment is not due until the fourth anniversary of the note.
|
|
(c)
|
To record lease income of $0.6 million to be earned by Symyx on the Sublease Agreement with FreeSlate for the use of certain facilities. The monthly rent amount is fixed and the lease will continue through October 31, 2015.
|
|
(d)
|
To adjust income tax expense for the effects of the pro forma adjustments at the statutory rate of 40%.
|
|
(e)
|
To eliminate transaction costs of approximately $0.1 million included in the historical statement of operations for the year ended December 31, 2009 as they are directly related to the disposal and are nonrecurring charges.
|
7