Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - Willdan Group, Inc. | a15-7349_18ka.htm |
| EX-99.2 - EX-99.2 - Willdan Group, Inc. | a15-7349_1ex99d2.htm |
| EX-99.4 - EX-99.4 - Willdan Group, Inc. | a15-7349_1ex99d4.htm |
| EX-23.2 - EX-23.2 - Willdan Group, Inc. | a15-7349_1ex23d2.htm |
| EX-99.9 - EX-99.9 - Willdan Group, Inc. | a15-7349_1ex99d9.htm |
| EX-99.5 - EX-99.5 - Willdan Group, Inc. | a15-7349_1ex99d5.htm |
| EX-99.6 - EX-99.6 - Willdan Group, Inc. | a15-7349_1ex99d6.htm |
| EX-99.7 - EX-99.7 - Willdan Group, Inc. | a15-7349_1ex99d7.htm |
| EX-99.1 - EX-99.1 - Willdan Group, Inc. | a15-7349_1ex99d1.htm |
| EX-23.1 - EX-23.1 - Willdan Group, Inc. | a15-7349_1ex23d1.htm |
| EX-99.3 - EX-99.3 - Willdan Group, Inc. | a15-7349_1ex99d3.htm |
Exhibit 99.8
WILLDAN GROUP, INC. AND 360 ENERGY ENGINEERS, LLC
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On January 15, 2015, Willdan Group, Inc. (the “Company”) acquired substantially all of the assets of 360 Energy Engineers, LLC (“360 Energy”) pursuant to the terms of an Asset Purchase Agreement, dated as of January 15, 2015 (the “360 Energy Agreement”), by and among the Company, Willdan Energy Solutions (“WES”) and 360 Energy. The unaudited pro forma condensed combined financial statements presented herein are based on, and should be read in conjunction with:
· the Company’s historical financial statements and related notes thereto contained in its Annual Report on Form 10-K for the year ended December 27, 2013 filed with the SEC on March 25, 2014;
· the Company’s historical financial statements and related notes thereto contained in its Quarterly Report on Form 10-Q for the three and nine months ended September 26, 2014 filed with the SEC on November 6, 2014; and
· 360 Energy’s historical financial statements and related notes thereto for the years ended December 31, 2013 and 2012 and the nine months ended September 30, 2014 and 2013 attached to this Form 8-K as Exhibits 99.1, 99.2, 99.3 and 99.4.
The unaudited pro forma condensed consolidated financial statements are prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed combined balance sheet as of September 26, 2014 reflects the acquisition of 360 Energy as if the acquisition occurred on September 26, 2014. The pro forma condensed consolidated statements of operations for the nine months ended September 26, 2014 and the year ended December 27, 2013 are presented as if the acquisition of 360 Energy occurred on December 28, 2013 and December 29, 2012, respectively. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing of this report on Form 8-K/A.
We present the pro forma financial statements for informational purposes only. The pro forma financial statements are not necessarily indicative of what our financial position or results of operations would have been had we completed the acquisition as of the dates indicated. In addition, the pro forma financial statements do not purport to project the future financial position or operating results of the combined company.
We prepared the pro forma financial statements using the acquisition method of accounting. The total purchase price is $15,000,000, consisting of (i) $4,875,000 in cash paid at closing, (ii) 47,348 shares of Common Stock, par value $0.01 per share, of the Company (“Common Stock”) equaling $625,000 based on the volume-weighted average price of shares of Common Stock for the ten trading days immediately prior to, but not including, the closing date of the 360 Energy acquisition, (iii) $3,000,000 aggregate principal amount of a promissory note issued to 360 Energy and (iv) expected earn-out payments of $6,500,000 in cash, payable at the end of the Company’s and WES’s 2015, 2016 and 2017 fiscal years, if certain financial targets of WES’s division made up of the assets acquired from, and former employees of, 360 Energy are met during such fiscal years. The total purchase price is allocated to the net tangible and identifiable intangible assets of 360 Energy acquired, based on their respective fair values. The final purchase price is based on management’s current estimate of the expected earn-out payments and the purchase price allocation is dependent upon valuations and other studies that have not progressed to a stage where there is sufficient information to make a definitive allocation. The final purchase price and the purchase price allocation pro forma adjustments are preliminary and have been made using our best judgment given the information currently available solely for the purpose of providing the pro forma financial statements. The final purchase price allocation and its effect on results of operations may differ significantly from the pro forma amounts included in the pro forma financial statements. These amounts represent management’s best estimate as of the date of this Form 8-K/A.
WILLDAN GROUP, INC. AND 360 ENERGY ENGINEERS, LLC
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
AS OF SEPTEMBER 26, 2014
|
|
|
Company |
|
Pro Forma |
|
Combined |
| |||
|
Assets |
|
|
|
|
|
|
| |||
|
Current assets: |
|
|
|
|
|
|
| |||
|
Cash and cash equivalents |
|
$ |
13,374,000 |
|
$ |
(2,875,000 |
)(a) |
$ |
10,499,000 |
|
|
Accounts receivable, net |
|
14,100,000 |
|
— |
|
14,100,000 |
| |||
|
Costs and estimated earnings in excess of billings on uncompleted contracts |
|
14,046,000 |
|
— |
|
14,046,000 |
| |||
|
Other receivables |
|
888,000 |
|
— |
|
888,000 |
| |||
|
Prepaid expenses and other current assets |
|
1,375,000 |
|
41,000 |
(b) |
1,416,000 |
| |||
|
Total current assets |
|
43,783,000 |
|
(2,834,000 |
) |
40,949,000 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Equipment and leasehold improvements, net |
|
1,015,000 |
|
153,000 |
(c) |
1,168,000 |
| |||
|
Goodwill |
|
— |
|
13,769,000 |
(d) |
13,769,000 |
| |||
|
Other intangible assets, net |
|
— |
|
1,037,000 |
(e) |
1,037,000 |
| |||
|
Other assets |
|
554,000 |
|
— |
|
554,000 |
| |||
|
Deferred income taxes, net of current portion |
|
4,968,000 |
|
— |
|
4,968,000 |
| |||
|
Total assets |
|
$ |
50,320,000 |
|
$ |
12,125,000 |
|
$ |
62,445,000 |
|
|
|
|
|
|
|
|
|
| |||
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
| |||
|
Current liabilities: |
|
|
|
|
|
|
| |||
|
Excess of outstanding checks over bank balance |
|
1,136,000 |
|
$ |
— |
|
$ |
1,136,000 |
| |
|
Borrowings under line of credit |
|
— |
|
2,000,000 |
(f) |
2,000,000 |
| |||
|
Accounts payable |
|
4,198,000 |
|
— |
|
4,198,000 |
| |||
|
Purchase price payable |
|
— |
|
756,000 |
(g) |
756,000 |
| |||
|
Accrued liabilities |
|
8,722,000 |
|
— |
|
8,722,000 |
| |||
|
Billings in excess of costs and estimated earnings on uncompleted contracts |
|
4,430,000 |
|
— |
|
4,430,000 |
| |||
|
Current portion of notes payable |
|
— |
|
1,000,000 |
(h) |
1,000,000 |
| |||
|
Current portion of capital lease obligations |
|
261,000 |
|
— |
|
261,000 |
| |||
|
Current portion of deferred income taxes |
|
3,205,000 |
|
— |
|
3,205,000 |
| |||
|
Total current liabilities |
|
21,952,000 |
|
3,756,000 |
|
25,708,000 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Purchase price payable, less current portion |
|
— |
|
5,744,000 |
(g) |
5,744,000 |
| |||
|
Notes payable, less current portion |
|
— |
|
2,000,000 |
(h) |
2,000,000 |
| |||
|
Capital lease obligations, less current portion |
|
222,000 |
|
— |
|
222,000 |
| |||
|
Deferred lease obligations |
|
34,000 |
|
— |
|
34,000 |
| |||
|
Total liabilities |
|
22,208,000 |
|
11,500,000 |
|
33,708,000 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Commitments and contingencies |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Stockholders’ equity: |
|
|
|
|
|
|
| |||
|
Preferred stock, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding |
|
— |
|
— |
|
— |
| |||
|
Common stock, $0.01 par value, 40,000,000 shares authorized; 7,634,000 and 7,375,000 shares issued and outstanding at January 2, 2015 and December 27, 2013, respectively |
|
75,000 |
|
|
|
75,000 |
| |||
|
Additional paid-in capital |
|
35,183,000 |
|
625,000 |
(i) |
35,808,000 |
| |||
|
Accumulated deficit |
|
(7,146,000 |
) |
— |
|
(7,146,000 |
) | |||
|
Total stockholders’ equity |
|
28,112,000 |
|
625,000 |
|
28,737,000 |
| |||
|
Total liabilities and stockholders’ equity |
|
$ |
50,320,000 |
|
$ |
12,125,000 |
|
$ |
62,445,000 |
|
Notes to Unaudited Pro Forma Condensed Combined Balance Sheets
The following are explanations of the amounts included in the accompanying pro forma condensed consolidated balance sheets:
(a) Reflects cash payable at closing offset by Willdan drawing $2.0 million on the delayed draw term loan.
(b) Reflects estimated prepaids and other assets acquired.
(c) Reflects estimated equipment and leasehold improvements acquired.
(d) Reflects estimated goodwill resulting from the acquisition.
(e) Reflects estimated identifiable intangible assets acquired, which include backlog and non-compete agreements.
(f) Reflects current debt incurred as a result of the acquisition.
(g) Reflects estimated current and non-current portions of contingent consideration.
(h) Reflects the current and non-current portions of the seller’s notes entered into as part of the acquisition.
(i) Reflects the stock issued in connection with the acquisition.
WILLDAN GROUP, INC. AND 360 ENERGY ENGINEERS, LLC
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATION
FOR THE FISCAL YEAR ENDED DECEMBER 27, 2013 AND THE NINE MONTHS ENDED SEPTEMBER 26, 2014
|
|
|
Fiscal Year ended December 27, 2013 |
|
Fiscal Nine Months ended September 26, 2014 |
| ||||||||||||||
|
|
|
Company |
|
Pro Forma |
|
Combined |
|
Company |
|
Pro Forma |
|
Combined |
| ||||||
|
|
|
Historical |
|
Adjustments |
|
Pro forma |
|
Historical |
|
Adjustments |
|
Pro forma |
| ||||||
|
|
|
(A) |
|
(B) |
|
|
|
(A) |
|
(B) |
|
|
| ||||||
|
Contract revenue |
|
$ |
85,510,000 |
|
$ |
7,360,000 |
|
$ |
92,870,000 |
|
$ |
77,843,000 |
|
$ |
9,949,000 |
|
$ |
87,792,000 |
|
|
Direct costs of contract revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Salaries and wages |
|
24,098,000 |
|
421,000 |
|
24,519,000 |
|
20,495,000 |
|
466,000 |
|
20,961,000 |
| ||||||
|
Subconsultant services and other direct costs |
|
24,831,000 |
|
4,795,000 |
|
29,626,000 |
|
25,471,000 |
|
5,781,000 |
|
31,252,000 |
| ||||||
|
Total direct costs of contract revenue |
|
48,929,000 |
|
5,216,000 |
|
54,145,000 |
|
45,966,000 |
|
6,247,000 |
|
52,213,000 |
| ||||||
|
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Salaries and wages, payroll taxes and employee benefits |
|
20,555,000 |
|
688,000 |
|
21,243,000 |
|
15,376,000 |
|
698,000 |
|
16,074,000 |
| ||||||
|
Facilities and facility related |
|
4,654,000 |
|
47,000 |
|
4,701,000 |
|
3,271,000 |
|
44,000 |
|
3,315,000 |
| ||||||
|
Stock-based compensation |
|
150,000 |
|
— |
|
150,000 |
|
174,000 |
|
— |
|
174,000 |
| ||||||
|
Depreciation and amortization |
|
517,000 |
|
342,000 |
|
859,000 |
|
329,000 |
|
305,000 |
|
634,000 |
| ||||||
|
Lease abandonment (recovery), net |
|
30,000 |
|
— |
|
30,000 |
|
— |
|
— |
|
— |
| ||||||
|
Other |
|
8,067,000 |
|
217,000 |
|
8,284,000 |
|
6,823,000 |
|
235,000 |
|
7,058,000 |
| ||||||
|
Total general and administrative expenses |
|
33,973,000 |
|
1,294,000 |
|
35,267,000 |
|
25,973,000 |
|
1,282,000 |
|
27,255,000 |
| ||||||
|
Income from operations |
|
2,608,000 |
|
850,000 |
|
3,458,000 |
|
5,904,000 |
|
2,420,000 |
|
8,324,000 |
| ||||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Interest income |
|
10,000 |
|
— |
|
10,000 |
|
4,000 |
|
— |
|
4,000 |
| ||||||
|
Interest expense |
|
(94,000 |
) |
(153,000 |
) |
(247,000 |
) |
(11,000 |
) |
(117,000 |
) |
(128,000 |
) | ||||||
|
Other, net |
|
238,000 |
|
— |
|
238,000 |
|
116,000 |
|
31,000 |
|
147,000 |
| ||||||
|
Total other income (expense) |
|
154,000 |
|
(153,000 |
) |
1,000 |
|
109,000 |
|
(86,000 |
) |
23,000 |
| ||||||
|
Income before income taxes |
|
2,762,000 |
|
697,000 |
|
3,459,000 |
|
6,013,000 |
|
2,334,000 |
|
8,347,000 |
| ||||||
|
Income tax expense (benefit) |
|
132,000 |
|
279,000 |
|
411,000 |
|
(1,356,000 |
) |
995,000 |
|
(421,000 |
) | ||||||
|
Net income |
|
$ |
2,630,000 |
|
$ |
418,000 |
|
$ |
3,048,000 |
|
$ |
7,369,000 |
|
$ |
1,399,000 |
|
$ |
8,768,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Basic |
|
$ |
0.36 |
|
|
|
$ |
0.41 |
|
$ |
0.99 |
|
|
|
$ |
1.17 |
| ||
|
Diluted |
|
$ |
0.35 |
|
|
|
$ |
0.40 |
|
$ |
0.96 |
|
|
|
$ |
1.13 |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Weighted-average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Basic |
|
7,355,000 |
|
47,000 |
|
7,402,000 |
|
7,440,000 |
|
47,000 |
|
7,487,000 |
| ||||||
|
Diluted |
|
7,495,000 |
|
47,000 |
|
7,542,000 |
|
7,700,000 |
|
47,000 |
|
7,747,000 |
| ||||||
Notes to Unaudited Pro Forma Condensed Combined Statements of Operations
The following are explanations of the amounts included in the accompanying pro forma condensed consolidated statements of operations:
(A) Company Historical
Reflects our historical condensed consolidated statements of operations for the months ended September 26, 2014 and the year ended December 27, 2013.
(B) Pro Forma Adjustments
The pro forma condensed consolidated statements of operations for the nine months ended September 26, 2014 and the year ended December 27, 2013 are presented as if the acquisition of 360 Energy occurred on December 28, 2013 and December 29, 2012, respectively. The pro forma adjustments to the historical financial statements of 360 Energy are computed as follows:
|
|
|
Fiscal Year Ended December 27, 2013 |
|
Fiscal Nine Months Ended September 26, 2014 |
| ||||||||||||||
|
|
|
360 Energy |
|
|
|
Pro Forma |
|
360 Energy |
|
|
|
Pro Forma |
| ||||||
|
|
|
Historical |
|
Adjustments |
|
Adjustments |
|
Historical |
|
Adjustments |
|
Adjustments |
| ||||||
|
|
|
(1) |
|
|
|
|
|
(1) |
|
|
|
|
| ||||||
|
Contract revenue |
|
$ |
7,360,000 |
|
$ |
— |
|
$ |
7,360,000 |
|
$ |
9,949,000 |
|
$ |
— |
|
$ |
9,949,000 |
|
|
Direct costs of contract revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Salaries and wages |
|
421,000 |
|
— |
|
421,000 |
|
466,000 |
|
— |
|
466,000 |
| ||||||
|
Subconsultant services and other direct costs |
|
4,795,000 |
|
— |
|
4,795,000 |
|
5,781,000 |
|
— |
|
5,781,000 |
| ||||||
|
Total direct costs of contract revenues |
|
5,216,000 |
|
— |
|
5,216,000 |
|
6,247,000 |
|
— |
|
6,247,000 |
| ||||||
|
General and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Salaries and wages, payroll taxes and employee benefits |
|
688,000 |
|
— |
|
688,000 |
|
698,000 |
|
— |
|
698,000 |
| ||||||
|
Facilities and facilities related |
|
47,000 |
|
— |
|
47,000 |
|
44,000 |
|
— |
|
44,000 |
| ||||||
|
Stock-based compensation |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
| ||||||
|
Depreciation and amortization |
|
8,000 |
|
334,000 |
(2) |
342,000 |
|
16,000 |
|
289,000 |
(2) |
305,000 |
| ||||||
|
Lease abandonment (recovery), net |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
| ||||||
|
Other |
|
217,000 |
|
— |
|
217,000 |
|
235,000 |
|
— |
|
235,000 |
| ||||||
|
Total general and administrative expenses |
|
960,000 |
|
334,000 |
|
1,294,000 |
|
993,000 |
|
289,000 |
|
1,282,000 |
| ||||||
|
Income (loss) from operations |
|
1,184,000 |
|
(334,000 |
) |
850,000 |
|
2,709,000 |
|
(289,000 |
) |
2,420,000 |
| ||||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Interest income |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
| ||||||
|
Interest expense |
|
— |
|
(153,000 |
)(3) |
(153,000 |
) |
— |
|
(117,000 |
)(3) |
(117,000 |
) | ||||||
|
Other, net |
|
— |
|
— |
|
— |
|
31,000 |
|
— |
|
31,000 |
| ||||||
|
Total other income (expense) |
|
— |
|
(153,000 |
) |
(153,000 |
) |
31,000 |
|
(117,000 |
) |
(86,000 |
) | ||||||
|
Income (loss) before income taxes |
|
1,184,000 |
|
(487,000 |
) |
697,000 |
|
2,740,000 |
|
(406,000 |
) |
2,334,000 |
| ||||||
|
Income tax expense (benefit) |
|
— |
|
279,000 |
(4) |
279,000 |
|
— |
|
935,000 |
(4) |
935,000 |
| ||||||
|
Net income (loss) |
|
$ |
1,184,000 |
|
$ |
(766,000 |
) |
$ |
418,000 |
|
$ |
2,740,000 |
|
$ |
(1,341,000 |
) |
$ |
1,399,000 |
|
(1) Reflects 360 Energy’s condensed statement of operations for the nine months ended September 26, 2014 and the year ended December 27, 2013.
(2) Reflects amortization of the preliminary estimated fair values of intangible assets related to the value of 360 Energy’s existing contracts and non-competes. The amount is comprised of amortization for the twelve and nine months, respectively.
(3) Reflects increased interest expense resulting from the borrowing of $2.0 million based on the current interest rate of 2.75% under the Company’s revolving credit facility. Loans made under the Company’s revolving line of credit accrue interest at either (i) a floating rate equal to 0.75% above the base rate in effect from time to time or (ii) a floating rate of 1.75% above LIBOR, with the interest rate to be selected by the Company. Also included in interest expense is the interest expense related to the seller note.
(4) Reflects increased income tax expense resulting from 360 Energy no longer qualifying as an S Corporation due to the acquisition of Abacus by the Company, partially offset by decreased income tax expense for the Company as a result of increased interest expense discussed in (3) above. The pro forma income tax expense adjustment also reflects the income tax expense on the effect of deducting the amortization discussion in (2) above.