Metasolv (MSLV) 8-K/A Acquisition or disposition of assets

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On December 9, 2002, through its wholly owned subsidiary MetaSolv Holdings (UK) Limited, MetaSolv, Inc. (“MetaSolv”) announced a cash offer of £0.06 per share for all of the outstanding common shares of Orchestream Holdings plc (“Orchestream”). The offer valued Orchestream at approximately $12.7 million, based on exchange rates as of December 31, 2002. The offer was declared unconditional on January 17, 2003. As of March 10, 2003, MetaSolv had acquired over 90% of Orchestream’s outstanding common shares, and on that date commenced the compulsory acquisition procedures pursuant to the U.K. Companies Act, under which MetaSolv will control 100% of the outstanding Orchestream common shares.

We accounted for the Acquisition as a business combination using the purchase method of accounting, as required by Statements of Financial Accounting Standards No. 141, “Business Combinations,” and No. 142 “Goodwill and Other Intangible Assets.”

The total purchase price is being allocated to Orchestream’s tangible assets and liabilities based on their respective estimated fair values as of the closing date of the transaction. We allocated the excess of the purchase price over the fair value of the net tangible assets acquired to identifiable intangible assets, including the core technology related to Orchestream’s products, and in-process research and development costs, with the remainder being allocated to goodwill.

The allocation of the excess purchase price over net tangible assets has been determined based on a preliminary evaluation and based on certain estimates and assumptions. A final determination will be made following the completion of the evaluation, and therefore the actual results may differ from our current assumptions.

The following unaudited pro forma condensed combined financial statements give effect to the acquisition by MetaSolv of all of the outstanding common shares of Orchestream Holdings plc (“the Acquisition”).

The unaudited condensed combined balance sheet as of December 31, 2002 gives effect to the Acquisition as if it had occurred on that date.

The unaudited pro forma condensed combined statement of operations gives effect to the Acquisition as if it had occurred on January 1, 2002.

The unaudited pro forma condensed combined financial statements are based upon, and should be read in conjunction with, our historical audited financial statements filed on Form 10-K for the year ended December 31, 2002, and the historical audited financial statements of Orchestream for the year ended December 31, 2002.

The pro forma financial results are not intended to be a projection of future results and are not necessarily indicative of the results that would have occurred if the Acquisition had been in effect on the dates presented.

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UNAUDITED PRO FORMA CONDENSED COMBINED

BALANCE SHEET

AS OF DECEMBER 31, 2002

(in thousands, except per share data)

(in US dollars)

	MetaSolv Historical			Orchstream Historical (See Note 2)			Pro Forma Adjustments (See Note 3)			Pro Forma Combined
Assets
Current assets:
Cash	$	28,113		$	12,947			(13,500	)(a)	$	27,560
Restricted cash		12,666									12,666
Marketable securities		30,001									30,001
Accounts receivable, net		18,763			2,347						21,110
Prepaid expenses		5,119			549						5,668
Deferred tax assets		5,943									5,943
Other current assets		4,666			1,222						5,888
Total current assets		105,271			17,065			(13,500	)		108,836
Property and equipment, net		16,185			2,113						18,298
Goodwill								918	(a)		918
Other intangible assets		6,127						4,725	(a)		10,852
Other assets		10,786									10,786
Total assets	$	138,369		$	19,178		$	(7,857	)	$	149,690
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	7,251		$	2,601					$	9,852
Accrued expenses		22,780			9,353						32,133
Deferred revenue		9,317			1,626			(407	)(a)		10,536
Total current liabilities		39,348			13,580			(407	)		52,521
Deferred income taxes
Stockholders’ equity:
Common stock		190			21,195			(21,195	)(a)		190
Additional paid-in capital		144,388			116,466			(116,466	)(a)		144,388
Deferred compensation		(66	)								(66	)
Accumulated other comprehensive income		38			3,106			(3,106	)(a)		38
Accumulated deficit		(45,529	)		(135,169	)		133,317	(a)		(47,381	)
Total stockholders’ equity		99,021			5,598			(7,450	)		97,169
Total liabilities and stockholders’ equity	$	138,369		$	19,178		$	(7,857	)	$	149,690

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UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENTS OF OPERATIONS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002

(in thousands, except per share data)

(in US dollars)

	MetaSolv Historical			Orchstream Historical (See Note 2)			Pro Forma Adjustments (See Note 3)			Pro Forma Combined
Revenues:
License	$	30,880		$	6,369		$			$	37,249
Service		60,324			4,847						65,171
Total revenues		91,204			11,216						102,420
Cost of revenues
License		4,446			219						4,665
Amortization of intangibles		15,837						1,685	(b)		17,522
Service		32,115			3,635						35,750
Total cost of revenues		52,398			3,854			1,685			57,937
Gross profit		38,806			7,362			(1,685	)		44,483
Operating expenses:
Research and development		33,262			8,070						41,332
Sales and marketing		28,096			10,061						38,157
General and administrative		15,038			8,640						23,678
Restructuring and other costs		12,126			8,018						20,144
Goodwill impairment and write down of intangibles		28,742			9,476						38,218
In process R&D write-off		4,060									4,060
Total expenses		121,324			44,265						165,589
Operating loss		(82,518	)		(36,903	)		(1,685	)		(121,106	)
Foreign exchange loss					(3,863	)					(3,863	)
Interest and other income, net		1,679			568						2,247
Loss before income taxes		(80,839	)		(40,198	)		(1,685	)		(122,722	)
Income tax benefit		(14,045	)								(14,045	)
Net loss	$	(66,794	)	$	(40,198	)	$	(1,685	)	$	(108,677	)
Loss per share
Basic	$	(1.77	)							$	(2.89	)
Diluted	$	(1.77	)							$	(2.89	)
Weighted average shares outstanding
Basic		37,658									37,658
Diluted		37,658									37,658

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002

(in thousands, except per share data)

(in US dollars)

(1) The unaudited pro forma condensed combined statements of operations for the twelve months ended December 31, 2002 gives effect to the Acquisition as if it had occurred on January 1, 2002. The unaudited pro forma condensed combined balance sheet as of December 31, 2001 gives effect to the Acquisition as if it had occurred on that date.

The purchase price for 100% of the common shares of Orchestream will be approximately $13.5 million, consisting of cash consideration to shareholders of $12.7 million, and acquisition related expenses of $800,000, consisting primarily of fees paid to financial and legal advisors.

A summary of the purchase price allocation is as follows:

In-process research and development	$	1,852
Net tangible assets acquired		6,005
Intangible assets:
Core technology		3,825
Customer relationships		900
Goodwill		918
	$	13,500

The amount of $1,852 allocated to in-process research and development costs was charged to expense upon closing. Under FAS 142, goodwill recorded as a result of the acquisition will not be amortized, but will be tested annually for impairment and whenever events or circumstances occur indicating that goodwill might be impaired. The core technology and customer relationships will be amortized over their useful lives which range from one to five years.

(2) Orchestream's financial statements were prepared under UK generally accepted accounting principles. Certain adjustments are required to conform the accounting principles of Orchestream and MetaSolv.

The historical financial statements of Orchestream have been translated to US dollars using the following exchange rates:

December 31, 2002	$	1.6095
Twelve months ended December 31, 2002	$	1.5025

(3) Pro Forma Adjustments:

(a) To eliminate the stockholders’ equity accounts of Orchestream and to allocate the purchase price based on the fair value of the assets and liabilities assuming the acquisition occurred on December 31, 2002.

(b) To record the amortization of the intangible assets over their estimated useful lives of one to five years.

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