Attached files

file filename
8-K/A - FORM 8-K/A - IRIS INTERNATIONAL INCc06812e8vkza.htm
EX-99.1 - EXHIBIT 99.1 - IRIS INTERNATIONAL INCc06812exv99w1.htm
EX-23.1 - EXHIBIT 23.1 - IRIS INTERNATIONAL INCc06812exv23w1.htm
Exhibit 99.2
IRIS INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED COMBINED CONSOLIDATED
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed combined consolidated balance sheet as of June 30, 2010 gives effect to the acquisition of AlliedPath, Inc. (“AlliedPath”) by IRIS International, Inc. (the “Company”) effective July 28, 2010, as if it had occurred on June 30, 2010. The following unaudited pro forma condensed combined consolidated statements of operations for the year ended December 31, 2009 and the six months ended June 30, 2010 give effect to the acquisition of AlliedPath by the Company as if it had occurred on January 1, 2009. The Company’s condensed consolidated statement of operations information for the year ended December 31, 2009 was derived from the consolidated statement of operations included in its 2009 Annual Report on Form 10-K. The Company’s condensed consolidated statement of operations information for the six months ended June 30, 2010 was derived from its Quarterly Report on Form 10-Q for the six months ended June 30, 2010. AlliedPath’s statement of operations information for the year ended December 31, 2009 was derived from the audited statement of operations of AlliedPath included in Exhibit 99.1 to this Current Report on Form 8-K. AlliedPath’s statements of operations information for the six months ended June 30, 2010 were derived from the unaudited statement of operations of AlliedPath included in Exhibit 99.1 to this Current Report on Form 8-K.
The unaudited pro forma condensed combined consolidated financial information has been prepared by the Company’s management for illustrative purposes only and is not necessarily indicative of the condensed consolidated financial position or the results of operations in future periods or the results that actually would have been realized had the Company and Allied Path been a combined company during the specified periods. The pro forma adjustments are based upon assumptions that the Company’s management believes are reasonable. The pro forma adjustments are based on the information available at the time of the preparation of the unaudited pro forma condensed combined consolidated financial statements. These statements, including any notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Report on Form 10-Q for the six months ended June 30, 2010 filed with the Securities and Exchange Commission.

 

 


 

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)
As of June 30, 2010
                                 
    Historical     Historical     Pro Forma     Pro Forma  
    IRIS     Allied Path     Adjustments     Combined  
Assets
                               
Current assets:
                               
Cash and cash equivalents
  $ 37,026     $ 172     $ (4,178 ) (a)   $ 33,020  
Account Receivable, net
    18,127       14               18,141  
Inventories, net
    13,107                       13,107  
Prepaid expenses and other current assets
    1,807       35       (2 ) (a)     1,840  
Investment in sales-type leases, current portion
    3,499                       3,499  
Note receivable
    450               (450 )     0  
Deferred tax asset
    4,238               46 (d)     4,284  
 
                       
Total Current Assets
    78,254       221       (4,584 )     73,891  
Property and equipment, at cost, net
    9,357       532               9,889  
Goodwill
    2,450               1,176 (d)     3,626  
Core Technology, net
    1,410               3,090 (d)     4,500  
License
                    1,604 (d)     1,604  
Covenant not to compete
                    100 (d)     100  
Software development costs, net
    2,587                       2,587  
Deferred tax asset
    1,898               1,220 (d)     3,118  
Investment in sales-type leases, non-current
    8,886                       8,886  
Other assets
    884       32       6 (d)     922  
 
                       
Total Assets
  $ 105,726     $ 785     $ 2,612     $ 109,123  
 
                       
Liabilities and Stockholders’ Equity (Deficit)
                               
Current Liabilities:
                               
Accounts payable
  $ 7,516     $ 332     $ (186 ) (a)   $ 7,662  
Accrued expenses
    6,468       630       (565 ) (a)     6,533  
Deferred service contract revenues, current portion
    3,027                       3,027  
Loans payable
            796       (796 ) (a)     (0 )
Deferred tax liability
                    88 (d)     88  
 
                       
Total current liabilities
    17,011       1,758       (1,459 )     17,310  
Deferred service contact revenues, non-current
    47                       47  
Capital lease obligations
            126               126  
Other long term liabilities
            61               61  
Earnout liability
                    1,210 (b)     1,210  
Deferred tax liability
                    1,701 (d)     1,701  
 
                       
Total liabilities
    17,058       1,945       1,452       20,455  
Commitments and contingencies
                               
Stockholders’ equity (deficit):
                               
Common Stock
    182       1       (1 ) (a)     182  
Preferred stock
            1       (1 ) (a)     0  
Additional paid-in-capital
    89,747       2,658       (2,658 ) (a)     89,747  
Other comprehensive income
    284                       284  
Accumulated deficit
    (1,545 )     (3,820 )     3,820 (c)     (1,545 )
 
                       
Total Stockholders’ equity (deficit)
    88,668       (1,160 )     1,160       88,668  
Total liabilities and stockholders’ equity (deficit)
  $ 105,726     $ 785     $ 2,612     $ 109,123  
 
                       
See accompanying notes to unaudited pro forma condensed combined financial statements.

 

 


 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                 
    For the Year Ended December 31, 2009  
    Historical     Historical     Pro Forma     Pro Forma  
    IRIS     Allied Path     Adjustments     Combined  
Revenues
  $ 92,566     $ 4             $ 92,570  
Cost of goods
    43,901       94               43,995  
Gross profit (loss)
    48,665       (90 )             48,575  
Operating expenses
    40,854       2,185     $ 241 (e)     43,280  
 
                       
Operating income (loss)
    7,811       (2,275 )     (241 )     5,295  
Other income(expense)
    894       (3 )     (38 ) (f)     858  
 
                    5 (g)        
 
                       
Income (loss) before provision of income taxes
    8,705       (2,278 )     (274 )     (6,153 )
Provision for income taxes
    2,454               (104 )(h)     2,350  
 
                       
Net income (loss)
  $ 6,251     $ (2,278 )   $ (170 )   $ 3,803  
 
                       
Net income per share-basic
  $ 0.35                     $ 0.21  
Net income per share-diluted
  $ 0.35                     $ 0.21  
Weighted average common shares outstanding-basic
    17,727                       17,727  
Weighted average common shares outstanding-diluted
    17,874                       17,874  
See accompanying notes to unaudited pro forma condensed combined financial statements
                                 
    For the Six Months Ended June 30, 2010  
    Historical     Historical     Pro Forma     Pro Forma  
    IRIS     Allied Path     Adjustments     Combined  
Revenues
  $ 52,668     $ 25             $ 52,693  
Cost of goods
    24,919       257               25,176  
 
                       
Gross profit (loss)
    27,749       (232 )             27,517  
Operating expenses
    25,089       987     $ 120 (e)     26,196  
 
                       
Operating income (loss)
    2,660       (1,219 )     (120 )     1,321  
Other income(expense)
    (162 )     (40 )     (19 ) (f)     (183 )
 
                    38 (g)        
 
                       
Income (loss) before provision of income taxes
    2,498       (1,259 )     (101 )     1,138  
Provision for income taxes
    832               (38 ) (h)     794  
 
                       
Net income (loss)
  $ 1,666     $ (1,259 )     (63 )   $ 344  
 
                       
Net income per share-basic
  $ 0.09                     $ 0.02  
Net income per share-diluted
  $ 0.09                     $ 0.02  
Weighted average common shares outstanding-basic
    17,959                       17,959  
Weighted average common shares outstanding-diluted
    18,079                       18,079  
See accompanying notes to unaudited pro forma condensed combined financial statements.

 

 


 

IRIS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED COMBINED CONSOLIDATED PRO FORMA
FINANCIAL INFORMATION (UNAUDITED)
1. Transaction
On July 28, 2010, we acquired AlliedPath, Inc. (“AlliedPath”), a molecular diagnostics company. Pursuant to the terms of a Merger Agreement dated July 26, 2010 we acquired all the issued and outstanding stock of AlliedPath for an amount in cash equal to $4.7 million less certain indebtedness existing at the closing, with an additional earn-out of up to $1.3 million subject to the achievement of specific sales and earnings targets through December 2013. We did not assume any outstanding options or warrants of AlliedPath in connection with the acquisition.
The allocation of the purchase price to the fair values of the assets acquired and liabilities assumed as if the transaction had occurred as of June 30, 2010 is presented below (in thousands). The purchase price allocations and pro forma adjustments below are based on preliminary estimates, available information and certain assumptions, and maybe revised as additional information becomes available.
         
Current assets
  $ 221  
Fixed assets
    532  
Existing technology
    3,090  
CLIA License
    1,604  
Customer relationships
    6  
Non-compete agreements
    100  
Goodwill
    1,062  
Other assets
    32  
Current liabilities
    (156 )
Lease obligations
    (178 )
Other liabilities
    (63 )
Deferred tax liability, net
    (410 )
 
     
 
       
Total purchase price
  $ 5,840  
 
     
Acquired property and equipment are being depreciated on a straight-line basis with estimated remaining lives ranging from 1 year to 5 years. Intangible assets except the CLIA license are being amortized on a straight-line basis with estimated remaining lives ranging from 3 to 15 years reflecting the expected future value. The CLIA license is considered to have an indefinite life. The purchase was structured as a stock purchase therefore the value assigned to the existing technology, CLIA license, customers relationships, non-compete agreements and goodwill is not deductible for tax purposes.
2. Pro Forma Adjustments
The pro forma adjustments included in the unaudited pro forma condensed combined consolidated financial statements are as follows:
  (a)  
To reflect payment of cash portion of purchase price.
 
  (b)  
To reflect fair value of the earn out portion of the purchase price
 
  (c)  
To eliminate stockholder deficit of AlliedPath
 
  (d)  
To record adjustments for fair value of assets and liabilities acquired
 
  (e)  
To record amortization of intangible assets acquired
 
  (f)  
To record accretion of discount on earnout portion of purchase price
 
  (g)  
To eliminate interest expense on notes paid off
 
  (h)  
To record income tax effect of pro forma adjustments using company’s effective combined federal and state tax rate