Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
The following summary selected unaudited pro forma condensed combined
statements of operations were prepared using the purchase method of accounting
with Clinical Data treated as the acquirer. The unaudited pro forma condensed
combined statements of operations data combine the historical statements of
income data for Clinical Data and the statements of operations for Genaissance,
and Icoria, giving effect to the mergers as if they had occurred at the
beginning of the period presented.
The data is presented for informational purposes only and is not intended
to represent or be indicative of the results of operations of Clinical Data that
would have been reported had the merger been completed as of the dates
presented, and should not be taken as representative of future results of
operations of Clinical Data.
This selected unaudited pro forma condensed combined financial data should
be read in conjunction with the summary selected historical financial data and
accompanying notes contained in Clinical Data's proxy statement/prospectus filed
with the SEC on October 27, 2005 and the separate historical financial
statements and accompanying notes of Clinical Data, Genaissance and those of
Icoria incorporated by reference into the proxy statement/prospectus.
We have adjusted the historical financial information to give effect to the
impact of the consideration issued in connection with the mergers. The Unaudited
Pro Forma Condensed Combined Statements of Operations also include certain
purchase accounting adjustments, expected to have a continuing impact on the
combined results, such as increased depreciation and amortization expense on
acquired tangible and intangible assets.
The Unaudited Pro Forma Condensed Combined Statements of Operations do not
include the impacts of any revenue, cost or other operating synergies that may
result from the mergers.
The Unaudited Pro Forma Condensed Combined Financial Statements do not
reflect the impact of financing, liquidity or other balance sheet repositioning
that may be undertaken in connection with or subsequent to the mergers.
The Unaudited Pro Forma Condensed Combined Statements of Operations do not
reflect nonrecurring charges resulting from the merger. The substantial majority
of nonrecurring charges resulting from the merger were comprised of employee
termination costs and other exit costs related to the Icoria business that were
recognized in the opening balance sheet in accordance with EITF Issue No 95-3,
"Recognition of Liabilities in Connection with a Purchase Business Combination."
Other merger-related charges incurred that do not meet the criteria in EITF
Issue No 95-3, including employee termination and exit costs related to the
Clinical Data business, other integration-related costs, in-process research and
development costs, and the impacts of potential divestitures, if any, that may
be required by governmental authorities.
Conforming Year Ends
Clinical Data has a fiscal year end of March 31 whereas Genaissance and
Icoria had a December 31 calendar year end. In order to prepare the Unaudited
Pro Forma Condensed Combined Statement of Income for the year ended March 31,
2005 and for the nine months ended December 31, 2005, Genaissance's and Icoria's
operating results were first conformed to Clinical Data's year-end. This was
done utilizing Genaissance's and Icoria's historical financial statements as of
and for the year ended December 31, 2004, their historical unaudited financial
statements as of and for the three-month periods ended March 31, 2005 and 2004
and their historical unaudited financial statements as of and for the periods
ended through their respective acquisition dates of October 6, 2005 and December
20, 2005. The operations of Genaissance and Icoria subsequent to the respective
acquisitions are included in the historical Clinical Data column.
CLINICAL DATA, INC. & SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Nine Months Ended December 31, 2005
Historical
Clinical Historical Pro Forma Pro Forma Historical Pro Forma Pro Forma
Data (a) Genaissance (a) Adjustments Combined Icoria(a) Adjustments Combined
---------- --------------- ----------- --------- ---------- ----------- ---------
(In thousands, except per share data)
Revenues $ 45,562 $ 10,696 $ (275)(j) $ 55,983 $12,096 $ 68,079
Cost of sales / services 28,342 7,149 35,491 12,634 48,125
Operating Expenses:
Research and development 3,838 2,752 6,590 6,590
Selling, general and 14,083 11,382 (748)(b) 25,351 7,172 292 (b) 31,364
administrative 2,340 (c) (1,451)(c)
(1,706)(h)
Write down of Purchased Research 40,100 0 (36,700)(i) 3,400 0 (3,400)(i) --
Gain on sale of selected
agricultural assets -- -- -- -- 753 -- 753
---------------------------------------------------------------------------------------
Income from continuing
operations (40,801) (10,587) 34,833 (16,555) (6,957) 4,559 (18,953)
Interest expense (389) (737) 186 (d) (940) (1,250) -- (2,190)
Other income (expense), net 173 114 (15)(d) 272 (361) -- (89)
---------------------------------------------------------------------------------------
Income from continuing operations (41,017) (11,210) 35,004 (17,223) (8,568) 4,559 (21,232)
Income tax benefit (provision) (905) (6) (936)(b) (1,633) -- 580 (b) (1,169)
(744)(d) (117)(b)
299 (b)
659 (e)
Minority interest (12) -- -- (12) -- -- (12)
---------------------------------------------------------------------------------------
Net income (loss) from
continuing operations (41,934) (11,216) 34,282 (18,868) (8,568) 5,023 (22,413)
Preferred stock dividends and
accretion (52) 221 (335)(f) (166) -- (f) (166)
---------------------------------------------------------------------------------------
Net income (loss) from
continuing operations applicable
to common shareholders $(41,986) $(10,995) $ 33,947 $(19,033) $(8,568) $5,023 $(22,579)
========================================================================================
Basic net
(loss) per common share $ (3.12)
Diluted net
(loss) per common share $ (3.12)
Weighted average shares
outstanding (g)
Basic 5,214 2,302 (g) (819) 549 (g) 7,246
diluted 5,214 2,178 (g) (695) 549 (g) 7,246
Notes to Unaudited Pro Forma Condensed Combined Statements of Operations for the
nine months ended December 31, 2005
(a) Certain items of the historical presentation of Clinical Data have been
combined to conform to the presentation used in the Unaudited Pro Forma
Condensed Combined Statements of Operations.
(b) To adjust deferred compensation expense for the result of the conversion of
Genaissance and Icoria's restricted stock and unvested options to Clinical
Data shares and options, respectively.
(c) To adjust amortization expense for the result of purchased intangibles
based on the preliminary allocation of the purchase price to intangible
assets. The unaudited pro forma condensed combined financial statements
reflect a preliminary allocation to tangible assets, liabilities, goodwill
and other intangible assets. The final purchase price allocation may result
in a different allocation for tangible and intangible assets than that
presented in these unaudited pro forma condensed combined financial
statements. The purchased intangibles are amortized on a straight line
basis over their respective useful lives.
(d) To adjust interest expense and interest income to reflect the pro forma
results. Genaissance had a debt obligation that would be in default due to
the acquisition, and the outstanding balance would be repaid, therefore the
Company would not incur interest expense and related costs for the periods
presented. In addition, the cash used to pay the outstanding debt would not
be available to earn interest income.
(e) Income tax impacts as a result of purchase accounting adjustments are
estimated at Clinical Data effective tax rate for the periods presented,
which reflects our best estimate of Clinical Data statutory income tax
rates for all tax jurisdictions. In addition, it is assumed that the
current U.S. domestic losses of Genaissance would be available to offset
the U.S. domestic income realized by Clinical Data.
(f) Represents an adjustment to result in the dividends payable to the
stockholders of the newly issued Clinical Data preferred stock in relation
to the Genaissance acquisition.
(g) The pro forma combined per share amounts and weighted average common shares
reflect the combined weighted average Clinical Data common shares for each
period presented and the Icoria common shares, adjusted to reflect the
exchange ratio of 0.065 shares of Clinical Data common stock for each share
of Genaissance and 0.01552 shares of Clinical Data common stock for each
share of Icoria. No stock options or warrants were included in the diluted
earnings per share calculation because they would be anti-dilutive.
(h) Represents the removal of Genaissance's non-recurring expense item of
$1,706 in closing costs pertaining to its merger with Clinical Data.
(i) Represents the reversal of the write-down of purchased research costs since
these are non-recurring costs.
(j) To adjust revenues to reflect the pro forma results. At the time of the
acquisition Genaissance had deferred revenue on the books which was
adjusted in purchase accounting.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended March 31, 2005
Historical
Clinical Historical Pro Forma Pro Forma Historical Pro Forma Pro Forma
Data(a) Genaissance Adjustments Combined Icoria Adjustments Combined
---------- ----------- ----------- --------- ---------- ----------- ---------
(In thousands, except per share data)
Revenues $56,400 $ 22,777 $ -- $ 79,177 $27,490 $ -- $106,667
Cost of sales/ services 36,047 8,356 (109)(b) 44,294 -- -- 44,294
Operating expenses:
Research and development 2,687 18,120 (76)(b) 20,731 27,460 -- 48,191
Selling, general and
administrative 12,102 14,173 (445)(b) 12,865 (90)(b)
2,346(c) 28,176 173(c) 41,124
Gain on sale of selected
agricultural assets -- -- -- 0 1,901 -- 3,948
---------------------------------------------------------------------------------
Operating income (loss) 5,564 (17,872) (1,716) (14,024) (8,887) (83) (22,994)
Interest expense, net (208) (657) 327(d) (538) (920) 0 (1,458)
Other income (expense), net 173 41 (30)(d) 184 168 -- 352
Write-down of investment in affiliate 0 (1,003) -- (1,003) -- -- (1,003)
---------------------------------------------------------------------------------
Income (loss) before (provision)
benefit for income taxes, equity
in loss of affiliate, and minority
interest 5,529 (19,491) (1,419) (15,381) (9,639) (83) (25,103)
Income tax (provision) benefit (2,118) 9 1,226(e) (883) -- 33(e) (850)
Equity in loss of affiliate, net of tax -- (300) -- (300) -- -- (300)
Minority interest (16) -- -- (16) -- -- (16)
---------------------------------------------------------------------------------
NET INCOME (LOSS) 3,395 (19,782) (193) (16,580) (9,639) (50) (26,269)
Warrant issuance expense -- (833) -- (833) 0 -- (833)
Preferred stock dividends and accretion -- (516) 295(f) (221) -- -- (221)
Beneficial conversion feature of
preferred stock and warrant -- (40) -- (40) -- -- (40)
---------------------------------------------------------------------------------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCKHOLDERS $ 3,395 $(21,171) $ 102 $(17,674) $(9,639) $(50) $(27,363)
=================================================================================
BASIC NET EARNINGS (LOSS) PER COMMON
SHARE $ 0.77 $ (3.78)
DILUTED NET EARNINGS (LOSS) PER COMMON
SHARE(g) $ 0.75 $ (3.78)
Weighted Average Shares Outstanding(g):
Basic 4,389 2,297(g) 552(g) 7,238
Diluted 4,507 2,179(g) 552(g) 7,238
* The historical Genaissance results of operations are from April 1 through
October 6, 2005 and the historical Icoria results of operations are from
April 1 through December 20, 2005.
Notes to Unaudited Pro Forma Condensed Combined Statements of Operations for the
year ended March 31, 2005.
(a) Certain items of the historical presentation of Clinical Data have been
combined to conform to the presentation used in the Unaudited Pro Forma
Condensed Combined Statements of Operations.
(b) To adjust deferred compensation expense for the result of the conversion of
Genaissance and Icoria's restricted stock and unvested options to Clinical
Data shares and options, respectively.
(c) To adjust amortization expense for the result of purchased intangibles
based on the preliminary allocation of the purchase price to intangible
assets. The unaudited pro forma condensed combined financial statements
reflect a preliminary allocation to tangible assets, liabilities, goodwill
and other intangible assets. The final purchase price allocation may result
in a different allocation for tangible and intangible assets than that
presented in these unaudited pro forma condensed combined financial
statements. The purchased intangibles are amortized on a straight line
basis over their respective useful lives.
(d) To adjust interest expense and interest income to reflect the pro forma
results. Genaissance had a debt obligation that would be in default due to
the acquisition, and the outstanding balance would be repaid, therefore the
Company would not incur interest expense and related costs for the periods
presented. In addition, the cash used to pay the outstanding debt would not
be available to earn interest income.
(e) Income tax impacts as a result of purchase accounting adjustments are
estimated at Clinical Data effective tax rate for the periods presented,
which reflects our best estimate of Clinical Data statutory income tax
rates for all tax jurisdictions. In addition, it is assumed that the
current U.S. domestic losses of Genaissance would be available to offset
the U.S. domestic income realized by Clinical Data.
(f) Represents an adjustment to result in the dividends payable to the
stockholders of the newly issued Clinical Data preferred stock in relation
to the Genaissance acquisition.
(g) The pro forma combined per share amounts and weighted average common shares
reflect the combined weighted average Clinical Data common shares for each
period presented and the Icoria common shares, adjusted to reflect the
exchange ratio of 0.065 shares of Clinical Data common stock for each share
of Genaissance and 0.01552 shares of Clinical Data common stock for each
share of Icoria. No stock options or warrants were included in the diluted
earnings per share calculation because they would be anti-dilutive.
(h) Represents the removal of Genaissance's non-recurring expense item of $625
in closing costs pertaining to its merger with Clinical Data.
Items Not Adjusted
The Unaudited Pro Forma Combined Condensed Statements of Operations present
operations before non-recurring charges or credits directly attributable to the
transaction. Therefore, certain non-recurring items have been excluded from the
statements of operations including in-process research and development expense
for Genaissance and Icoria. Genaissance's and Icoria's closing costs related to
the respective transactions and operating efficiencies and cost savings that may
be achieved with respect to the combined entity. A preliminary assessment has
estimated the in-process research and development expense as approximately
$30,400 and $1,368, at Genaissance and Icoria, respectively. Genaissance has
estimated its closing costs related to the merger to be approximately $1,792 and
Icoria estimates its closing costs to be approximately $1,500.
Common Shares Outstanding
The number of pro forma common shares outstanding after giving effect to
the merger for purposes of the pro forma statements of operations is:
As of As of
March 31, 2005 December 31, 2005
-------------- -----------------
Clinical Data's common shares
outstanding 4,389 5,214
Increase in common shares attributable
to conversion of Genaissance stock 2,297 2,302
Increase in common shares attributable
to conversion of Icoria stock 552 549
Effect of mergers in Clinical Data's
Common shares outstanding (819)
----- -----
Total pro forma common shares
outstanding 7,238 7,246
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