Attached files
| file | filename |
|---|---|
| 8-K/A - AMENDMENT TO CURRENT REPORT - STRATASYS INC | stratasys_8ka.htm |
| EX-23.1 - CONSENT OF MOODY, FAMIGLIETTI & ANDRONICO, LLP - STRATASYS INC | exhibit23-1.htm |
| EX-99.2 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF SOLIDSCAPE, INC. - STRATASYS INC | exhibit99-2.htm |
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On May 3, 2011, Stratasys, Inc., a Delaware corporation (the “Company”), acquired Solidscape, Inc., a Delaware corporation (“Solidscape”), for a cash payment of $38.0 million. The ultimate purchase price remains subject to final balance sheet adjustments, which are expected to be finalized by the third quarter of 2011 and are not projected to be material.
Solidscape is a leading manufacturer of high-precision 3D printers, materials and software for rapid prototyping and manufacturing, able to print solid models that are designed using computer aided design (CAD). Solidscape printers incorporate innovative technology and materials that advance the computer-controlled fabrication of master patterns by providing high standards in surface finish, accuracy and material castability. Its printers are marketed worldwide and are used principally for lost wax investment casting and mold making applications; production of small parts and assemblies used in consumer electronics; biomedical products, orthopedics, dental prosthetics and orthodontic appliances; jewelry, toys and video games; and power generation.
There are more than 3,000 Solidscape systems installed in over 65 countries around the world, across diverse applications. Sales and support are conducted directly by Solidscape personnel and an established Value Added Reseller (“VAR”) network.
The unaudited pro forma condensed combined balance sheet as of March 31, 2011 was prepared as if the acquisition had occurred on that date and combines the historical consolidated balance sheets of the Company and Solidscape as of that date. The unaudited pro forma condensed combined statements of operations for the twelve months ended December 31, 2010 and the three months ended March 31, 2011 were prepared as if the acquisition had occurred at the beginning of each of those periods and combines the historical consolidated statements of operations of the Company and Solidscape for the twelve- and three-month periods then ended.
The unaudited pro forma condensed combined financial statements have been prepared for informational purposes only, to show the effect of the combination of the Company and Solidscape on a historical basis. These financial statements do not purport to be indicative of the financial position or results of operations that would have actually occurred had the business combination been in effect at those dates, nor do they project the results of operations or financial position for any future period or date.
The unaudited pro forma condensed combined financial statements do not reflect any adjustments for non-recurring items or anticipated synergies resulting from the acquisition. The purchase price allocation is preliminary, as the Company is still in the process of finalizing fair value estimates of assets acquired (including intangible assets) and liabilities assumed as of the date of this filing. Accordingly, the Company has prepared the pro forma adjustments based on assumptions that it believes are reasonable, but may change as additional information becomes available and the preliminary purchase price allocation is finalized.
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
March 31, 2011
| Historical | Historical | Pro Forma | Pro Forma | |||||||||||||||
| Stratasys | Solidscape | Adjustments | Combined | |||||||||||||||
| ASSETS | ||||||||||||||||||
| Current assets | ||||||||||||||||||
| Cash and cash equivalents | $ | 36,084,783 | $ | 623,401 | $ | (36,708,184 | ) | (A) | $ | - | ||||||||
| Short-term investments - held to maturity | 8,356,348 | - | (1,606,421 | ) | (A) | 6,749,927 | ||||||||||||
| Accounts receivable, less allowance | 21,879,418 | 565,747 | 22,445,165 | |||||||||||||||
| Inventories | 18,821,007 | 988,625 | 561,094 | (B) | 20,370,726 | |||||||||||||
| Net investment in sales-type leases, less allowance | 4,108,652 | - | 4,108,652 | |||||||||||||||
| Prepaid expenses and other current assets | 3,345,950 | 117,177 | 3,463,127 | |||||||||||||||
| Deferred income taxes | 3,447,000 | 238,000 | 3,685,000 | |||||||||||||||
| Total current assets | 96,043,158 | 2,532,950 | (37,753,511 | ) | 60,822,597 | |||||||||||||
| Property and equipment, net | 30,410,099 | 373,361 | 30,783,460 | |||||||||||||||
| Other assets | ||||||||||||||||||
| Identifiable Intangible assets, net | 7,563,006 | 6,619,679 | 12,880,321 | (C) | 27,063,006 | |||||||||||||
| Goodwill | 867,700 | 7,460,317 | 16,778,487 | (C) | 25,106,504 | |||||||||||||
| Net investment in sales-type leases | 2,960,428 | - | 2,960,428 | |||||||||||||||
| Long-term investments - available for sale | 1,160,250 | - | 1,160,250 | |||||||||||||||
| Long-term investments - held to maturity | 52,369,990 | - | 52,369,990 | |||||||||||||||
| Other non-current assets | 248,267 | 19,695 | 267,962 | |||||||||||||||
| Total other assets | 65,169,641 | 14,099,691 | 29,658,808 | 108,928,140 | ||||||||||||||
| Total assets | $ | 191,622,898 | $ | 17,006,002 | $ | (8,094,703 | ) | $ | 200,534,197 | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||
| Current liabilities | ||||||||||||||||||
| Accounts payable and other current liabilities | $ | 14,232,524 | $ | 1,368,085 | $ | (146,573 | ) | (D) | 15,454,036 | |||||||||
| Unearned revenues | 12,419,238 | 166,877 | 12,586,115 | |||||||||||||||
| Total current liabilities | 26,651,762 | 1,534,962 | (146,573 | ) | 28,040,151 | |||||||||||||
| Non-current liabilities | ||||||||||||||||||
| Notes payable | - | 6,250,000 | (6,250,000 | ) | (E) | - | ||||||||||||
| Series A-2 preferred stock | - | 6,000,000 | (6,000,000 | ) | (E) | - | ||||||||||||
| Deferred tax liabilities | 207,000 | 2,681,000 | 4,841,910 | (F) | 7,729,910 | |||||||||||||
| Total non-current liabilities | 207,000 | 14,931,000 | (7,408,090 | ) | 7,729,910 | |||||||||||||
| Total liabilities | 26,858,762 | 16,465,962 | (7,554,663 | ) | 35,770,061 | |||||||||||||
| Commitments and contingencies | ||||||||||||||||||
| Stockholders' equity | ||||||||||||||||||
| Common stock | 268,190 | 9,713 | (9,713 | ) | (G) | 268,190 | ||||||||||||
| Series A-1 preferred stock | - | 1,000 | (1,000 | ) | (G) | - | ||||||||||||
| Capital in excess of par value | 115,049,413 | 1,265,746 | (1,265,746 | ) | (G) | 115,049,413 | ||||||||||||
| Retained earnings (deficit) | 88,374,979 | (736,419 | ) | 736,419 | (G) | 88,374,979 | ||||||||||||
| Accumulated other comprehensive loss | 75,979 | - | 75,979 | |||||||||||||||
| Treasury stock at cost | (39,004,425 | ) | - | (39,004,425 | ) | |||||||||||||
| Total stockholders' equity | 164,764,136 | 540,040 | (540,040 | ) | 164,764,136 | |||||||||||||
| Total liabilities and stockholders' equity | $ | 191,622,898 | $ | 17,006,002 | $ | (8,094,703 | ) | $ | 200,534,197 | |||||||||
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2010
| Historical | Historical | Pro Forma | Pro Forma | |||||||||||||||
| Stratasys | Solidscape | Adjustments | Combined | |||||||||||||||
| Net sales | ||||||||||||||||||
| Products | $ | 96,722,415 | $ | 12,993,904 | $ | - | $ | 109,716,319 | ||||||||||
| Services | 25,364,673 | 416,283 | - | 25,780,956 | ||||||||||||||
| Fair value of warrant related to OEM agreement | (4,987,806 | ) | - | (4,987,806 | ) | |||||||||||||
| 117,099,282 | 13,410,187 | - | 130,509,469 | |||||||||||||||
| Cost of goods sold | ||||||||||||||||||
| Products | 49,613,957 | 4,768,129 | 1,744,048 | (H) | 56,126,134 | |||||||||||||
| Services | 11,399,356 | 114,986 | - | 11,514,342 | ||||||||||||||
| 61,013,313 | 4,883,115 | 1,744,048 | 67,640,476 | |||||||||||||||
| Gross profit | 56,085,969 | 8,527,072 | (1,744,048 | ) | 62,868,993 | |||||||||||||
| Operating expenses | ||||||||||||||||||
| Research and development | 9,755,169 | 3,293,759 | (1,604,901 | ) | (H) | 11,444,027 | ||||||||||||
| Selling, general and administrative | 32,863,462 | 3,714,942 | (562,900 | ) | (H), (I) | 36,015,504 | ||||||||||||
| 42,618,631 | 7,008,701 | (2,167,801 | ) | 47,459,531 | ||||||||||||||
| Operating income | 13,467,338 | 1,518,371 | 423,753 | 15,409,462 | ||||||||||||||
| Other income (expense) | ||||||||||||||||||
| Interest income, net | 921,088 | (1,542,826 | ) | 1,162,826 | (J), (K) | 541,088 | ||||||||||||
| Foreign currency transaction gains (losses), net | (617,174 | ) | (617,174 | ) | ||||||||||||||
| Other, net | 64,086 | 64,086 | ||||||||||||||||
| 368,000 | (1,542,826 | ) | 1,162,826 | (12,000 | ) | |||||||||||||
| Income (loss) before income taxes | 13,835,338 | (24,455 | ) | 1,586,579 | 15,397,462 | |||||||||||||
| Income taxes | 4,465,794 | 193,122 | 535,211 | (L) | 5,194,127 | |||||||||||||
| Net income | $ | 9,369,544 | $ | (217,577 | ) | $ | 1,051,368 | $ | 10,203,335 | |||||||||
| Net income per common share | ||||||||||||||||||
| Basic | $ | 0.46 | $ | 0.50 | ||||||||||||||
| Diluted | 0.44 | 0.48 | ||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||
| Basic | 20,579,412 | 20,579,412 | ||||||||||||||||
| Diluted | 21,129,533 | 21,129,533 | ||||||||||||||||
See accompanying notes
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
QUARTER ENDED MARCH 31, 2011
| Historical | Historical | Pro Forma | Pro Forma | ||||||||||||||
| Stratasys | Solidscape | Adjustments | Combined | ||||||||||||||
| Net sales | |||||||||||||||||
| Products | $ | 27,837,165 | $ | 3,186,046 | $ | - | $ | 31,023,211 | |||||||||
| Services | 6,481,924 | 101,209 | - | 6,583,133 | |||||||||||||
| 34,319,089 | 3,287,255 | - | 37,606,344 | ||||||||||||||
| Cost of goods sold | |||||||||||||||||
| Products | 13,226,225 | 1,144,800 | 436,012 | (H) | 14,807,037 | ||||||||||||
| Services | 2,842,412 | 27,832 | - | 2,870,244 | |||||||||||||
| 16,068,637 | 1,172,632 | 436,012 | 17,677,281 | ||||||||||||||
| Gross profit | 18,250,452 | 2,114,623 | (436,012 | ) | 19,929,063 | ||||||||||||
| Operating expenses | |||||||||||||||||
| Research and development | 3,348,093 | 811,603 | (401,225 | ) | (H) | 3,758,471 | |||||||||||
| Selling, general and administrative | 8,736,231 | 851,060 | (141,196 | ) | (H), (I) | 9,446,095 | |||||||||||
| 12,084,324 | 1,662,663 | (542,421 | ) | 13,204,566 | |||||||||||||
| Operating income | 6,166,128 | 451,960 | 106,409 | 6,724,497 | |||||||||||||
| Other income (expense) | |||||||||||||||||
| Interest income, net | 205,781 | (368,693 | ) | 273,693 | (J), (K) | 110,781 | |||||||||||
| Foreign currency transaction gains (losses), net | (131,115 | ) | (131,115 | ) | |||||||||||||
| Other, net | 1,396,606 | 1,396,606 | |||||||||||||||
| 1,471,272 | (368,693 | ) | 273,693 | 1,376,272 | |||||||||||||
| Income before income taxes | 7,637,400 | 83,267 | 380,102 | 8,100,769 | |||||||||||||
| Income taxes | 2,647,905 | 70,119 | 133,813 | (L) | 2,851,837 | ||||||||||||
| Net income | $ | 4,989,495 | $ | 13,148 | $ | 246,289 | $ | 5,248,932 | |||||||||
| Net income per common share | |||||||||||||||||
| Basic | $ | 0.24 | $ | 0.25 | |||||||||||||
| Diluted | 0.23 | 0.24 | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||
| Basic | 21,009,871 | 21,009,871 | |||||||||||||||
| Diluted | 21,647,691 | 21,647,691 | |||||||||||||||
See accompanying notes
4
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Pro Forma Adjustments:
The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet:
| (A) | To record cash paid by the Company as purchase consideration to the selling stockholders and creditors of Solidscape. The purchase consideration of $38.2 million was derived from the base purchase price of $38 million plus the current estimated working capital adjustment of $200,000 measured as of the acquisition date and as defined in the merger agreement. As described in Note E below, a portion of the purchase price went towards the payment of principal and accrued interest on long-term debt and redeemable preferred stock. The final purchase price is subject to final balance sheet adjustments, which are expected to be complete by the third quarter of 2011 and are not projected to be material. | |
| (B) | To reflect fair value adjustments for acquired finished goods inventory. | |
| (C) | To adjust the value of acquired intangible assets to fair value as follows: | |
| Assessed | Previous | Fair Value | |||||||||
| Intangible asset | Fair Value | Carrying Value | Adjustment | ||||||||
| Trademarks | $ | 1,150,000 | $ | 3,283,400 | $ | (2,133,400 | ) | ||||
| Developed technology | 11,750,000 | 2,429,408 | 9,320,592 | ||||||||
| In-process R&D | 1,150,000 | - | 1,150,000 | ||||||||
| Customer related assets | 5,100,000 | 809,915 | 4,290,085 | ||||||||
| Non-compete agreements | 350,000 | 96,956 | 253,044 | ||||||||
| Total Identifiable Intangible Assets | $ | 19,500,000 | $ | 6,619,679 | $ | 12,880,321 | |||||
| Goodwill | 24,238,804 | 7,460,317 | 16,778,487 | ||||||||
| Total Intangible Assets | $ | 43,738,804 | $ | 14,079,996 | $ | 29,658,808 | |||||
| The valuation of the acquired intangible assets is preliminary and may change in the final purchase price allocation. | ||
| (D) | To adjust accrued liabilities for the following items: | |
| Payroll tax liabilities associated with the repurchase of employee | $ | 28,309 | ||
| stock options of Solidscape, Inc. which took place upon closing | ||||
| Payroll tax liabilities associated with bonus payments to Solidscape | 27,618 | |||
| employees which were paid at closing | ||||
| Remove accrued interest related to long-term debt and redeemable | (202,500 | ) | ||
| preferred stock | ||||
| Total | $ | (146,573 | ) |
| (E) | To reflect the settlement of long-term debt and redeemable preferred stock that was paid at closing as discussed in Note A above. | |
| (F) | To record the adjustment for deferred tax liabilities arising from the acquisition. The deferred tax liability adjustment relates to the fair value adjustment of inventory and the addition of identifiable intangible and assets that will be amortized for financial reporting purposes but will not be deductible for tax purposes. | |
| (G) | To record the elimination of the historical stockholders’ equity of Solidscape. | |
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1. Pro Forma Adjustments: (Continued)
The following pro forma adjustments are included in the unaudited pro forma condensed combined statements of operations:
| (H) | To record adjustments to amortization expense related to intangible assets arising from the acquisition of Solidscape, Inc. Amortization of intangible assets that arose from a previous acquisition in 2006 had previously been recorded as operating expenses but based upon our evaluation of the nature of the acquired identifiable intangible assets, certain assets were considered to be related to the cost of producing products. For purposes of the pro forma adjustments presented, we have used the following estimated asset lives and cost classifications: |
| Cost | |||||
| Intangible asset | Asset Life | Classification | |||
| Tradenames | 15 years | General and Administrative | |||
| Technology - 3D Printers | 7 years | Cost of Goods Sold | |||
| Technology - Consumable Materials | 6 years | Cost of Goods Sold | |||
| In-process R&D | 11 years | Research and Development | |||
| Customer related assets | 15 years | Selling |
| The valuation of the acquired intangible assets is preliminary, and such estimated asset lives are may change in the final purchase price allocation. Further, pro forma amortization expense has been calculated using the straight line method. Upon completion of the valuation process, the Company may conclude that the intangible assets should be amortized on a basis other than straight line. | ||
| (I) | To remove $214,350 and $54,059 of management fee expenses for the 12 months ended December 31, 2010 and three months ended March 31, 2011, respectively, that were paid to certain selling stockholders of Solidscape, Inc. | |
| (J) | To remove $1,542,826 and $368,693 of interest expenses for the 12 months ended December 31, 2010 and three months ended March 31, 2011, respectively, related to the principal balance of long-term debt and series A-2 redeemable preferred stock that were fully paid at closing. | |
| (K) | To reduce interest income by $380,000 and $95,000 for the 12 months ended December 31, 2010 and three months ended March 31, 2011, respectively, as a result of the cash consideration paid by the Company. The pro forma impact on interest income is an estimate based primarily on the interest income yield experienced by the Company during the periods presented. | |
| (L) | To record the estimated tax impact of the pro forma adjustments at the effective tax rates (federal and state) for the historical periods presented. | |
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