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8-K/A - FORM 8-K/A - Ultra Clean Holdings, Inc.dp60651_8ka.htm

  

Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION    

 

The following unaudited pro forma condensed combined balance sheets as of June 26, 2015 and the unaudited pro forma condensed combined statements of income for the six months and year ended June 26, 2015 and December 26, 2014, respectively, are based on the historical financial statements of UCT and Miconex after giving effect to UCT’s acquisition of Miconex using the acquisition method of accounting and applying the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information.     

 

The unaudited pro forma condensed combined balance sheet as of June 26, 2015 combines UCT’s historical condensed consolidated balance sheet as of June 26, 2015 and Miconex’s historical condensed consolidated balance sheet as of June 30, 2015 giving effect to the acquisition as if it had occurred on June 26, 2015. The unaudited pro forma condensed combined statements of income for the six month period ended June 26, 2015 combines UCT’s historical consolidated statement of income for the six month period ended June 26, 2015 with Miconex’s historical consolidated statement of income for the six month period ended June 30, 2015. The consolidated statement of income for the year ended December 26, 2014 combines UCT’s historical consolidated statement of income for the year ended December 26, 2014 with Miconex’s historical consolidated statement of income for the year ended December 31, 2014. The unaudited pro forma condensed combined statements of income give effect to the merger as if it had occurred on December 28, 2013.     

 

The acquisition has been accounted for under the acquisition method of accounting in accordance with Financial Accounting Standard ASC 805, Business Combinations. Under the acquisition method of accounting, the total estimated purchase price, calculated as described in Note 1 to the unaudited pro forma condensed combined financial information, is allocated to the net tangible and intangible assets of Miconex acquired in connection with the acquisition, based on their estimated fair values. Management has made a preliminary allocation of the estimated acquisition price to the net tangible and intangible assets acquired and liabilities assumed based on various preliminary estimates. These preliminary estimates and assumptions are subject to change during the measurement period (up to the time it takes to gather the necessary information and no longer than one year from the acquisition date). The final determination of the values of assets and liabilities and the integration costs may result in actual values, assets, liabilities and expenses that are different from those set forth in the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information has been prepared by management for illustrative purposes only and are not necessarily indicative of the condensed consolidated financial position or results of income in future periods or the results that actually would have been realized had UCT and Miconex been a combined company during the specified periods. The unaudited pro forma condensed combined financial information does not reflect any operating efficiencies and/or cost savings that we may achieve with respect to the combined companies, or any liabilities that may result from integration activities. The pro forma adjustments are based on the information available at the time of the preparation of this document. The unaudited pro forma condensed combined financial information, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, UCT’s historical consolidated financial statements included in its Annual Report on Form 10-K, for its year ended December 26, 2014, and Miconex’s historical consolidated financial statements for the year ended December 31, 2014, which are included as Exhibit 99.1 to this Form 8-K.

 

 

 

  

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

(In Thousands)

 

   June 26, 2015  June 30, 2015  June 30, 2015         
      Miconex        
   UCT 
(Reclassified,
CZK)
  Miconex
(in USD)
  Pro forma
Adjustments
     Pro forma
Combined
ASSETS                  
Current assets:                  
Cash  $76 614    7 292   $297   $-15 058   4a,5   $61 853 
Accounts receivable, net   57 513    88 435    3 601    -536   5    60 578 
Inventory   64 647    176 080    7 130    -932   5    70 845 
Deferred tax assets   3 777    755    31    165    5    3 973 
Prepaid expenses and other   8 634    5 878    239    -25   5    8 848 
Total current assets   211 185    278 440    11 298    -16 386        206 097 
                               
Equipment and leasehold improvements, net   14 850    12 812    543    -115   5    15 278 
Goodwill   74 298    15 393    698    9 499   1    84 495 
Purchased intangible, net   37 702    -    -    8 800    2    46 502 
Deferred tax assets   2 763    -    -    -         2 763 
Other non-current assets   754    -    -    -         754 
Total assets  $341 552    306 645   $12 539   $1 798       $355 889 
                               
LIABILITIES & STOCKHOLDERS ’ EQUITY                              
Current liabilities:                              
Bank borrowings  $6 514    99 567   $4 054   $-1 761   5   $8 807 
Accounts payable   46 476    93 316    3 799    -290   5    49 985 
Accrued compensation and related benefits   6 410    10 721    437    -5   5    6 842 
Deferred rent, current portion   503    -    -    -         503 
Other current liabilities   2 307    10 512    428    1 236    4c,5,6    3 971 
Total current liabilities   62 210    214 116    8 718    -820        70 108 
                               
Long-term debt   67 877    20 476    834    -100   5    68 611 
Deferred rent and other liabilities   2 815    2 694    110    2 060   4c,5    4 985 
Total liabilities   132 902    237 286    9 662    1 140        143 704 
Commitments and contingencies                              
Stockholders’ Equity:                              
Common stock   32    210    10    -9   3,4b    33 
Additional paid-in capital   169 857    -    -    3 817    4b    173 674 
Common shares held in treasury   -3 337   -    -    -         -3 337
Accumulated other comprehensive income   -    -    -518   518    3    - 
Retained earnings   42 098    69 149    3 385    -3 668    3,6    41 815 
Total stockholders' equity   208 650    69 359    2 877    658         212 185 
Total liabilities and stockholders' equity  $341 552    306 645   $12 539   $1 798       $355 889 

 

See notes to unaudited pro forma condensed combined financial information

 

 

  

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

(In Thousands)

 

   For the Six Months Ended         
   June 26,  June 30,  June 30,         
   2015  2015  2015         
      Miconex        
   UCT  (Reclassified, CZK)  Miconex
(in USD)
  Pro forma
Adjustments
     Pro forma
Combined
                   
Sales  $242 867    372 373   $15 098   $-        $257 965 
Cost of goods sold   204 126    307 920    12 552    -         216 678 
Gross profit   38 741    64 453    2 546    -         41 287 
                               
Operating expenses:                              
Research and development   4 967    3 375    137    -         5 104 
Sales and marketing   5 650    -    -    -         5 650 
General and administrative   22 048    30 541    1 238    429    7,8,9    23 715 
Total operating expenses   32 665    33 916    1 375    429         34 469 
Income from operations   6 076    30 537    1 171    -429        6 818 
                               
Interest and other income (expense), net   -1 315   10 263    347    -         -968
                               
Income before income taxes   4 761    40 800    1 518    -429        5 850 
                               
Income tax provision   1 381    8 006    324    -82    10    1 623 
                               
Net income  $3 380    32 794   $1 194   $-347       $4 227 
                               
Net income per share:                              
Basic  $0.11                       $0.13 
Diluted  $0.11                       $0.13 
                               
Shares used in computing net income per share:                              
Basic   31 042    -    -    500         31 542 
Diluted   31 358    -    -    500         31 858 

 

See notes to unaudited pro forma condensed combined financial information

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

(In Thousands)

 

   For the Year Ended         
   December 26,  December 31,  December 31,         
   2014  2014  2014         
      Miconex        
   UCT  (Reclassified, CZK)  Miconex
(in USD)
  Pro forma
Adjustments
     Pro forma
Combined
                   
Sales  $513 957    724 523   $34 953   $-        $548 910 
Cost of goods sold   440 824    587 054    28 321    -         469 145 
Gross profit   73 133    137 469    6 632    -         79 765 
                               
Operating expenses:                              
Research and development   7 067    5 242    253    -         7 320 
Sales and marketing   10 432    -    -    -         10 432 
General and administrative   37 450    63 612    3 069    1 101    7,8    41 620 
Total operating expenses   54 949    68 854    3 322    1 101         59 372 
Income from operations   18 184    68 615    3 310    -1 101        20 393 
                               
Interest and other income (expense), net   -1 854   11 139    584    -         -1 270
                               
Income before income taxes   16 330    79 754    3 894    -1 101        19 123 
                               
Income tax provision   4 973    16 674    804    -209    10     5 568 
                               
Net income  $11 357    63 080   $3 090   $-892       $13 555 
                               
Net income per share:                              
Basic  $0.39    -    -    -        $0.45 
Diluted  $0.38   -    -    -        $0.45 
                               
Shares used in computing net income per share:                              
Basic   29 301    -    -    500         29 801 
Diluted   29 936    -    -    500         30 436 

 

See notes to unaudited pro forma condensed combined financial information

 

 

 

NOTES TO UNAUDITED PRO FORMA

 CONDENSED COMBINED FINANCIAL INFORMATION

 

1.Acquisition of MICONEX s.r.o.

  

On July 31, 2015, the Company completed the acquisition of MICONEX s.r.o. ("Miconex") a limited liability company incorporated under the laws of the Czech Republic and a provider of advanced precision fabrication of plastics, primarily for the semiconductor industry. Pursuant to the purchase agreement relating to the acquisition, the Company (i) paid $15.0 million in cash, subject to certain adjustments as provided in the Purchase Agreement and (ii) issued 500,000 shares of the Company's common stock, to the former owners of Miconex. In addition, the former owners of Miconex are entitled to up to $4.0 million of potential cash "earn-out" payments over a two-year period following closing, based on Miconex's achievement of specified performance targets based on EBIT (earnings before interest and taxes). The preliminary estimated acquisition price of Miconex for purposes of the Company's preliminary purchase price allocation was determined to be $20.1 million, which amount values the stock consideration at $3.8 million (based on the average of the high and low trading prices per share of the Company's common stock on July 31, 2015 of approximately $7.64), and values the potential earn-out payments at their estimated fair value as of July 31, 2015 of approximately $1.3 million.

 

2.Preliminary Acquisition Price Allocation

 

Under the acquisition method of accounting, the total estimated acquisition price as shown in the table below is allocated to Miconex’s net tangible and intangible assets based on their preliminary estimated fair values as of July 31, 2015, the closing date. The preliminary estimated acquisition price was based on various factors as described in the introduction to the unaudited pro forma condensed combined financial information. The allocation of the purchase price is preliminary pending the completion of various analyses and the finalization of estimates. The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair values of certain tangible assets acquired, the valuation of intangible assets acquired, including amortization methodology, and residual goodwill. During the measurement period, we expect to continue to obtain information to assist us in determining the final fair value of the assets acquired at the acquisition date during the measurement period. Our preliminary purchase price allocation for Miconex is as follows (in thousands):

 

      Preliminary
      Estimated
      Useful Life
Net tangible assets acquired  $ 1 100      
Identifiable intangible assets:          
Customer relationships   8 800    7.5 years 
Goodwill   10 197    - 
Total preliminary estimated acquisition price  $20 097      

 

A preliminary estimate of $1.1 million has been allocated to net tangible assets acquired. This estimate reflects adjustments of acquired assets and liabilities to fair value. A preliminary estimate of approximately $8.8 million has been allocated to amortizable intangible assets acquired. The amortization related to the amortizable intangible assets is reflected as pro forma adjustments to the unaudited pro forma condensed combined statements of income. For purposes of this Form 8-K/A, a straight line amortization was used for the identifiable intangible asset. The Company is still in the process of assessing the appropriate methodology to use.

 

Identifiable intangible assets. Acquired customer contracts and relationships represent existing contracts that relate to underlying customer relationships.

 

Goodwill. Approximately $10.2 million has been allocated to goodwill. Goodwill represents the excess of the acquisition price over the fair value of the underlying net tangible and intangible assets. In accordance with the ASC 350, Goodwill and Other Intangible Assets, goodwill will be tested for impairment at least annually (more frequently if indicators are present). In the event that the management of the combined company determines that the value of goodwill has become impaired, the combined company will incur an accounting charge for the amount of impairment during the fiscal quarter in which the determination is made.

 

 

 
3.Foreign Currency, US GAAP Conversion Adjustments and reclassifications

 

Foreign Currency

 

The historical information of Miconex was prepared in accordance with Czech Accounting Regulations and is presented in Czech Koruna. The historical financial information was remeasured from Czech Koruna to the Euro (functional currency) and was translated from Euro to US dollars (reporting currency) using the following historical rates:

 

  CZK to Euro
Average exchange rate for the year ended December 31, 2014 0.0363
Average exchange rate for the six month period ended June 30, 2015 0.0363
Period end exchange rate as of December 31, 2014 0.0361
Period end exchange rate as of June 30, 2015 0.0367
Nonmonetary assets and liabilities Exchange rate at transaction date.
   
  Euro to USD
Average exchange rate for the year ended December 31, 2014 1.3290
Average exchange rate for the six month period ended June 30, 2015 1.1170
Period end exchange rate as of December 31, 2014 1.2155
Period end exchange rate as of June 30, 2015 1.1094

 

US GAAP Conversion Adjustment and Reclassifications

  

There are no significant differences between the Czech accounting rules and US GAAP as they pertain to the financial statements of Miconex. The historical financial statements of Miconex, as presented, have been reclassified to conform to UCT’s accounting policies.

   

4.Preliminary Pro Forma Adjustments

 

The pro forma adjustments included in the unaudited pro forma condensed combined financial information are as follows:

 

1 To eliminate the pre-existing goodwill of Miconex of $0.7 million and to record preliminary goodwill related from the acquisition of $10.2 million.
2 To record the fair value of UCT’s new identifiable intangible assets of $8.8 million.
3 To eliminate equity of Miconex.
4 To record the purchase price of $20.1 million, which includes the following: a) $15.0 million paid in cash; b) $3.8 million stock consideration; and c) $1.3 million fair value of the potential earn out payments.
5 To reflect the working capital adjustments based on the purchase price allocation of the acquisition date as shown in Note 2.
6 To record preliminary acquisition related accruals.
7 To record the preliminary estimated net intangible amortization expense associated with the acquired intangible assets over the preliminary estimated useful life.
8 To eliminate the amortization of pre-existing goodwill recorded by Miconex for the six-month period ended June 30, 2015 and twelve-month period ended December 26, 2014.
9 To eliminate the nonrecurring transactions costs incurred during the six-month period ended June 26, 2015 of $0.1 million that are directly related to the acquisition of Miconex.
10 To record income tax expense, based on Czech statutory tax rate of 19%.

 

 

 
5.Pro Forma Net Income Per Share

 

The pro forma basic and diluted net income per share are based on the number of UCT shares used in computing basic and diluted net income per share.  These amounts have been adjusted to reflect the common stock of UCT issued in connection with the acquisition of Miconex as if the stock had been issued at the beginning of the period presented.

 

   Weighted Average Common Shares
   Outstanding (in thousands)
   Six Months Ended  Year Ended
   June 26, 2015  December 26, 2014
Basic weighted average common shares outstanding, as reported   31 042    29 301 
Estimated dilutive effect of common stock issued in connection with the acquisition of Miconex   500    500 
    31 542    29 801 
           
Diluted weighted average common shares outstanding, as reported   31 358    29 936 
Estimated dilutive effect of common stock issued in connection with the acquisition of Miconex   500    500 
    31 858    30 436