EXHIBIT 99.3
TSI International Software, Ltd. and Novera Software, Inc. Unaudited Pro Forma
Condensed Consolidated Statements of Operations
December 31, 1998 Pro forma Information TSI Pro Forma as Pro forma (2)
adjusted for Braid Novera (1) Adjustments Consolidated
------------------ ----------- -------------- ------------
Total revenues $ 65,940,700 $ 2,457,000 $ - $ 68,397,700
Total cost of revenues 14,363,400 670,800 - 15,034,200
------------------ ----------- --------------- -------------
Gross profit 51,577,300 1,786,200 - 53,363,500
Operating expenses 46,208,900 5,823,300 - 52,032,200
Amortization of intangibles 25,621,000 - 17,785,800 43,406,800
------------------ ----------- --------------- -------------
Total operating expenses 71,829,900 5,823,300 17,785,800 95,439,000
------------------ ----------- --------------- -------------
Operating loss (20,252,600) (4,037,100) (17,785,800) (42,075,500)
Borrowing expenses (10,900) (44,500) 44,500 (10,900)
Investment income 275,400 32,200 (81,100) 226,500
------------------ ----------- --------------- -------------
Loss before income taxes (19,988,100) (4,049,400) (17,822,400) (41,859,900)
Provision for (benefit from) income taxes (3,400,100) - (1,538,800) (4,938,900)
------------------ ----------- --------------- -------------
Net Loss $ (16,588,000) $(4,049,400) $ ($16,283,600) $ (36,921,000)
================== =========== =============== =============
Net loss per share
Basic $ (0.74) $ (1.52)
Diluted $ (0.74) $ (1.52)
Average shares outstanding
Basic 22,506,264 24,296,180
Diluted 22,506,264 24,296,180
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
1
December 31, 1998 Pro Forma Information Pro Forma (3) Pro Forma
TSI Historical Braid (1) Adjustments as Adjusted
-------------- ----- ----------- -----------
Total revenues $45,316,100 $20,624,600 $ - $ 65,940,700
Total cost of revenues 6,889,100 7,474,300 - 14,363,400
----------- ----------- ---------------- -----------------
Gross profit 38,427,000 13,150,300 - 51,577,300
Operating expenses 33,660,600 13,385,600 (837,300) 6,208,900
Amortization of intangibles 303,000 - 25,318,000 25,621,000
----------- ----------- ---------------- -----------------
Total operating expenses 33,963,600 13,385,600 24,480,700 71,829,900
----------- ----------- ---------------- -----------------
Operating income (loss) 4,463,400 (235,300) (24,480,700) (20,252,600)
Borrowing expenses (10,900) - - (10,900)
Investment income 2,025,400 - (1,750,000) 275,400
----------- ----------- ---------------- -----------------
Income (loss) before income taxes 6,477,900 (235,300) (26,230,700) (19,988,100)
Provision for (benefit from) income taxes (678,900) 343,500 (3,064,700) (3,400,100)
----------- ----------- ----------------
Net income (loss) $ 7,156,800 $ (578,800) $ (23,166,000) (16,588,000)
=========== =========== ================ =================
Net Income (loss) per share
Basic $ 0.35 $ (0.74)
Diluted $ 0.30 $ (0.74)
Average shares outstanding
Basic 20,299,006 22,506,264
Diluted 23,815,608 22,506,264
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
2
September 30, 1999 Pro forma Information TSI Pro Forma Novera (1) Pro forma (2) Consolidated
as adjusted ------ Adjustments ------------
----------- -----------
Total revenues $ 72,067,800 $ 1,448,000 $ $ 73,515,800
Total cost of revenues 17,655,100 1,414,200 19,069,300
------------- -------------- --------------- -------------
Gross profit 54,412,700 33,800 54,446,500
Operating expenses 47,057,400 5,468,200 52,525,600
Amortization of intangibles 20,772,100 13,339,300 34,111,400
------------- -------------- --------------- -------------
Total operating expenses 67,829,500 5,468,200 13,339,300 86,637,000
------------- -------------- --------------- -------------
Operating loss (13,416,800) (5,434,400) (13,339,300) (32,190,500)
Borrowing expenses - (31,400) 31,400 -
Investment income $ 569,100 90,400 (60,800) 598,700
------------- -------------- --------------- -------------
Loss before income taxes (12,847,700) (5,375,400) (13,368,700) (31,591,800)
Provision for (benefit from) income taxes (345,500) - (2,042,600) (2,388,100)
------------- -------------- --------------- -------------
Net loss $ (12,502,200) $ (5,375,400) $ (11,326,100) $ (29,203,700)
============= ============== =============== =============
Net loss per share
Basic $ (0.51) $ (1.11)
Diluted $ (0.51) $ (1.11)
Average shares outstanding
Basic 24,612,447 26,402,363
Diluted 24,612,447 26,402,363
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
3
September 30 1999 Pro forma Information TSI Historical Braid (1) Pro forma (3) TSI Pro Forma as
-------------- ----- Adjustments adjusted for Braid
----------- ------------------
Total revenues $ 67,611,500 $ 4,456,300 $ - $ 72,067,800
Total cost of revenues 15,963,700 1,691,400 - 17,655,100
-------------- -------------- --------------- ------------------
Gross profit 51,647,800 2,764,900 - 54,412,700
Operating expenses 44,182,100 3,601,500 (726,200) 47,057,400
Amortization of intangibles 16,305,600 - 4,466,500 20,772,100
-------------- -------------- --------------- ------------------
Total operating expenses 60,487,700 3,601,500 3,740,300 67,829,500
-------------- -------------- --------------- ------------------
Operating loss (8,839,900) (836,600) (3,740,300) (13,416,800)
Investment income 860,800 - (291,700) 569,100
-------------- -------------- --------------- ------------------
Loss before income taxes (7,979,100) (836,600) (4,032,000) (12,847,700)
Provision for (benefit from) income taxes 244,000 32,100 (621,600) (345,500)
-------------- -------------- --------------- ------------------
Net loss $ ( 8,223,100) $ (868,700) $ (3,410,400) $ (12,502,200)
============== ============== =============== ==================
Net loss per share
Basic $ (0.33) $ (0.51)
Diluted $ (0.33) $ (0.51)
Average shares outstanding 24,612,447 24,612,447
Basic 24,612,447 24,612,447
Diluted
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated
Financial Information.
4
TSI International Software Ltd. and Novera Software, Inc.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
1. The unaudited pro forma condensed consolidated statements of operations
have been prepared by combining the historical consolidated financial
statements of TSI International Software Ltd. ("TSI" or the "Company"),
with the historical financial information of Braid Group Limited ("Braid")
and Novera Software, Inc. ("Novera"). The unaudited pro forma condensed
consolidated statement of operations for the year ended December 31, 1998
has been prepared by combining the unaudited statement of operations of TSI
for the year ended December 31, 1998 with the unaudited statement of
operations for Braid for the year ended January 31, 1999 and the audited
statement of operations of Novera for the year ended December 31, 1998. The
unaudited pro forma condensed consolidated statement of operations as of
and for the nine months ended September 30, 1999 has been prepared by
combining the unaudited historical financial information of TSI as of and
for the nine months ended September 30, 1999, the unaudited financial
information for Braid for two months ended February 28, 1999 and the
unaudited financial information of Novera as of and for the nine months
ended September 30, 1999.
2. The Novera acquisition is being accounted for using the purchase method of
accounting. For purposes of the pro forma condensed consolidated financial
statements, the estimated excess of acquisition costs over the fair value
of net assets acquired is $53.4 million which is assumed to be amortized on
a straight line basis over 3 years. The $53.4 million consists of the cost
of the issuance of stock at a market value of $46.6 million, options valued
at $9.6 million and the estimated costs of the acquisition of $2.1 million,
less net assets acquired of $4.9 million. The pro forma statements of
operations have been adjusted to reflect amortization of intangibles of
$17.8 million for the year ended December 31, 1998 and $13.3 million for
the nine months ended September 30, 1999 assuming the purchase was made on
January 1, 1998.
The pro forma statements of operations for TSI and Novera include the following
adjustments:
(a) To reflect the increase in amortization expense due to the amortization of
intangibles on a straight-line basis over 3 years.
(b) To reflect the decrease in interest expense and decrease in interest income
resulting from the payment of bank borrowings.
(c) To reflect the decrease in income tax expense resulting from the release of
a portion of the Novera valuation allowance.
5
(d) Earnings per share is computed by dividing the net loss by the average
number of common shares outstanding. The calculation assumes shares of the
Company's common stock for the acquisition were outstanding for the entire
period. Diluted earnings per share is the same as basic earnings per share
as the potential common stock equivalents are anti-dilutive.
3. The pro forma statements of operations for TSI adjusted for Braid include
the following adjustments:
(a) To reflect the increase in amortization expense due to the amortization of
goodwill and other identifiable intangible assets, and the tax benefit
related to other identifiable assets.
(b) To reflect the decrease in interest income resulting from the payment to
Braid of $30.0 million and approximately $4.5 million in closing costs, and
the related tax benefit, where applicable.
(c) To eliminate the compensation costs related to options issued by Braid
which were exchanged for TSI options at the date of purchase, whose fair
value is included in the purchase price and therefore included in the
related goodwill amortization.
(d) Earnings per share is computed by dividing the net loss by the weighted
average number of common shares outstanding. The calculation assumes that
the 2,207,258 shares of the Company's common stock issued in its
acquisition were outstanding for the entire period. Diluted earnings per
share is the same as basic earnings per shares as the potential common
stock equivalents are anti-dilutive.
6