Exhibit 99.3
DISCREET LOGIC INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENTS
On December 2, 1997, Discreet Logic Inc. ("Discreet") entered into an Agreement
and Plan of Merger and Reorganization (the "Merger Agreement") with Lantern
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Discreet ("Merger Sub") and Lightscape Technologies, Inc., a Delaware
corporation ("Lightscape"). On December 30, 1997, pursuant to the Merger
Agreement, and upon the satisfaction of certain closing conditions, Merger Sub
merged (the "Merger") with and into Lightscape with Lightscape as the surviving
corporation and a wholly-owned subsidiary of Discreet. The aggregate purchase
price for Lightscape includes the assumption of approximately $5.7 million of
net liabilities (of which approximately $3.4 million was paid at closing), not
including costs associated with the transaction, and up to $6.8 million in
contingent consideration to be paid only if certain revenue objectives are
achieved by Lightscape in calendar 1998 and 1999. The acquisition has been
accounted for as a purchase.
The pro forma statements do not purport to be indicative of the results which
would actually have been reported if the acquisition had been effected at August
1, 1996 or which may be reported in the future. The following pro forma
financial statements reflect the impact of the acquisition on the previously
reported financial statements of Discreet, in accordance to the basis of
presentation disclosed in note 1 to the pro forma financial statements.
The accompanying notes are an integral part of these combined pro forma
statements.
DISCREET LOGIC INC. AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEET
AS AT SEPTEMBER 30, 1997
(All amounts in thousands of U.S. dollars, except for share data)
(unaudited)
Discreet Logic Lightscape as Note Pro forma Pro
-------------- ------------- ---- --------- ---
as reported reported Adjustments Forma
----------- -------- ----------- -----
ASSETS
Current Assets:
Cash and cash equivalents..................................... $ 16,522 $ 20 $ 16,542
Cash restricted for settlement of class action litigation..... 10,800 - 10,800
Accounts receivable (less reserves for doubtful accounts)..... 29,416 450 29,866
Inventories................................................... 14,558 - 14,558
Other current assets.......................................... 5,165 142 5,307
---------- ---------- --------
76,461 612 77,073
Property and equipment--less accumulated depreciation and
amortization.................................................... 9,134 588 9,722
Deferred income taxes............................................ 2,467 - 2,467
Purchased research and development............................... - - (1) 5,800 -
(2) (5,800) -
Other assets..................................................... 6,310 29 (1) 1,087 7,426
Assets held for resale........................................... 4,186 - 4,186
---------- ---------- --------
$ 98,558 $ 1,229 $100,874
========== ========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses......................... $ 50,712 $ 1,836 (1) 1,200 $ 53,748
Deferred revenue.............................................. 9,039 177 9,216
Income taxes payable.......................................... 4,945 - 4,945
Current portion of obligation under capital lease............. - 205 205
Customer deposits............................................. 429 - 429
Other liabilities............................................. - 3,005 (1) 1,377 4,382
---------- ---------- --------
65,125 5,223 72,925
---------- ---------- --------
Deferred income taxes......................................... 1,060 - 1,060
Obligations under capital lease............................... - 313 313
Other long-term liabilities................................... - 3 3
Shareholders' Equity:
Capital Stock................................................. 91,941 6,624 (1) (6,624) 91,941
Accumulated deficit........................................... (57,742) (10,934) (1) 10,934 (63,542)
(2) (5,800)
Cumulative translation adjustment............................. (1,826) - (1,826)
---------- ---------- --------
Total shareholders' equity................................. 32,373 (4,310) 26,573
---------- ---------- --------
$ 98,558 $ 1,229 $100,874
========== ========== ========
The accompanying notes are an integral part of these pro forma combined
financial statements.
DISCREET LOGIC INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
(All amounts in thousands of U.S. Dollars, except for per share data)
(Unaudited)
Discreet Lightscape Note Pro forma Pro
-------- ---------- ---- --------- ---
Logic as as reported adjustments Forma
-------- ----------- ----------- -----
reported
--------
Total revenues....................................... $ 101,924 $ 1,897 $ 103,821
Cost of revenues..................................... (47,571) (1,078) (48,649)
----------- ----------- ---------
Gross profit....................................... 54,353 819 55,172
----------- ----------- ---------
Operating expenses:
Research and development (net of tax credits)...... 9,708 1,903 (3) 256 11,867
Sales and marketing................................ 23,206 3,688 26,894
General and administrative......................... 6,396 739 7,135
Litigation and related settlement expenses......... 6,500 - 6,500
Write-off of purchased research and development.... 9,800 - (2) 5,800 15,600
----------- ----------- ---------
Total operating expenses........................ 55,610 6,330 67,996
----------- ----------- ---------
Operating income (loss)......................... (1,257) (5,511) (12,824)
Other income (expense), net.......................... 991 (464) 527
----------- ----------- ---------
Income before income taxes........................ (266) (5,975) (12,297)
Provision for income taxes........................... 6,489 2 6,491
----------- ----------- ---------
Net income (loss)................................. $ (6,755) $ (5,977) $ (18,788)
=========== =========== =========
Earnings (Loss) Per Share:
Basic............................................. $ (0.24) $ (0.67)
=========== =========
Weighted average common shares outstanding
Basic............................................. 27,948 27,948
=========== =========
The accompanying notes are an integral part of these pro forma combined
financial statements.
DISCREET LOGIC INC. AND SUBSIDIARIES
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
(All amounts in thousands of U.S. Dollars, except for per share data)
(Unaudited)
Discreet Lightscape Note Pro forma Pro
-------- ---------- ---- --------- ---
Logic as as reported adjustments Forma
-------- ----------- ----------- -----
reported
--------
Total revenues....................................... $ 38,405 $ 658 $ 39,063
Cost of revenues..................................... (17,280) (377) (17,657)
----------- ----------- ---------
Gross profit....................................... 21,125 281 21,406
----------- ----------- ---------
Operating expenses:
Research and development (net of tax credits)...... 3,512 313 (3) 64 3,889
Sales and marketing................................ 7,433 426 7,859
General and administrative......................... 1,884 217 2,101
Write-off of purchased research and development.... 21,000 - 21,000
----------- ----------- ---------
Total operating expenses........................ 33,829 956 34,849
----------- ----------- ---------
Operating income (loss)......................... (12,704) (675) (13,443)
Other income (expense), net.......................... 377 (84) 293
----------- ----------- ---------
Income before income taxes........................ (12,327) (759) (13,150)
Provision for income taxes........................... 2,775 - 2,775
----------- ----------- ---------
Net income (loss)................................. $ (15,102) $ (759) $ (15,925)
=========== =========== =========
Earnings (Loss) Per Share:
Basic............................................. $ (0.53) $ (0.56)
=========== =========
Weighted average common shares outstanding
Basic............................................. 28,659 28,659
=========== =========
The accompanying notes are an integral part of these pro forma combined
financial statements.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
On December 2, 1997, Discreet Logic Inc. ("Discreet") entered into an Agreement
and Plan of Merger and Reorganization (the "Merger Agreement") with Lantern
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Discreet ("Merger Sub") and Lightscape Technologies, Inc., a Delaware
corporation("Lightscape"). On December 30, 1997, pursuant to the Merger
Agreement, and upon the satisfaction of certain closing conditions, Merger Sub
merged (the "Merger") with and into Lightscape with Lightscape as the surviving
corporation and a wholly-owned subsidiary of Discreet. The aggregate purchase
price for Lightscape includes the assumption of approximately $5.7 million of
net liabilities (of which approximately $3.4 million was paid at closing), not
including costs associated with the transaction, and up to $6.8 million in
contingent consideration to be paid only if certain revenue objectives are
achieved by Lightscape in calendar 1998 and 1999. The acquisition has been
accounted for as a purchase.
The unaudited pro forma combined balance sheet as at September 30, 1997 has been
prepared as if Discreet had acquired all of the outstanding shares of Lightscape
on September 30, 1997. The pro forma combined statements of operations for the
fiscal year ended June 30, 1997 and for the three months ended September 30,
1997 are prepared as if Discreet had acquired all of the outstanding shares of
Lightscape on August 1, 1996.
On January 9, 1997, the Board of Directors of Discreet Logic approved the change
of Discreet Logic's year end from July 31 to June 30. Consequently, the fiscal
year ended June 30, 1997 comprised eleven months.
(2) Adjustments
The following adjustments were made to the unaudited pro forma combined balance
sheet and statement of operations:
1. To record the purchase of Lightscape, together with related costs,
as of the dates specified in note 1.
2. To expense purchased in-process research and development.
3. To record amortization of acquired technology and goodwill.
(3) Amortization of goodwill and acquired technology
Acquired technology and the goodwill resulting from the acquisition are
amortized using the straight-line method over 5 and 3 years respectively.
(4) Contingent consideration
In accordance with the Merger Agreement, up to $6.8 million in additional
consideration is to be paid by Discreet Logic Inc. if certain revenue objectives
are achieved by Lightscape in calendar 1998 and 1999.
