Attached files
file | filename |
---|---|
8-K/A - FORM 8-K/A - EDAC TECHNOLOGIES CORP | c54811e8vkza.htm |
EX-99.1 - EX-99.1 - EDAC TECHNOLOGIES CORP | c54811exv99w1.htm |
EX-23.1 - EX-23.1 - EDAC TECHNOLOGIES CORP | c54811exv23w1.htm |
Exhibit 99.2
EDAC TECHNOLOGIES CORPORATION
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT of OPERATIONS
For the Fiscal Year Ended January 3, 2009
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT of OPERATIONS
For the Fiscal Year Ended January 3, 2009
Introduction
On
May 27, 2009, EDAC Technologies Corporation (EDAC) acquired certain assets
and assumed certain liabilities of the MTU Aero North America, Inc. Manufacturing Business Unit.
The purchase price of $9.5 million was funded by a 5-year term note in the amount of $4,360,000
and a 10-year mortgage in the amount of $2,640,000. EDAC fixed the interest rates at 5.8% and 6.1%
for the term note and mortgage, respectively. EDAC also issued a $2.5 million secured promissory
note to the seller, due on May 27, 2012, with interest payable quarterly at 5% per annum.
EDAC determined the purchase to be a bargain purchase as defined within Statement of
Financial Accounting Standards No. 141(R), Business Combinations, as the net fair
value of the assets acquired and liabilities assumed exceeded the purchase price.
As a result, based on the preliminary information available,
EDAC has recognized a gain of $11.7 million, after acquisition expenses, as a
result of the bargain purchase.
The
unaudited pro forma consolidated financial statements include all material pro forma
adjustments necessary for their preparation, as required by Article
11 of Regulation S-X and, accordingly, do not assume any benefits from
cost savings or synergies of operations of the combined company.
The
pro forma adjustments are based upon available information and
certain assumptions that management believes are reasonable. The
unaudited pro forma financial statements do not purport to represent
what EDACs financial condition or results of operations would
actually have been had these transactions in fact occurred as of the
dates indicated above or to project EDACs results of operations
for the period indicated or for any other period.
FISCAL YEAR | ||||||||||||||||
EDAC | AERO | Pro-Forma | ||||||||||||||
2008 | 2008 | Adjustments | Pro Forma | |||||||||||||
Sales |
$ | 44,676,668 | $ | 20,617,257 | $ (1) | (186,283 | ) | $ | 65,107,642 | |||||||
(1) | (186,283 | ) | ||||||||||||||
Cost of Sales |
38,804,956 | 22,991,503 | (2) | (1,157,280 | ) | 60,452,896 | ||||||||||
Gross Profit |
5,871,712 | (2,374,246 | ) | 1,157,280 | 4,654,746 | |||||||||||
Selling, General and Administrative Expenses |
3,491,820 | 3,156,301 | 6,648,121 | |||||||||||||
Income (Loss) from Operations |
2,379,892 | (5,530,547 | ) | 1,157,280 | (1,993,375 | ) | ||||||||||
Non-Operating Income (Expense): |
||||||||||||||||
Interest Expense |
(630,913 | ) | (525,389 | ) | (3) | (529,000 | ) | (1,685,302 | ) | |||||||
Other |
72,665 | 334,620 | 407,285 | |||||||||||||
Income (Loss) before Provision For (Benefit from) Income Taxes |
1,821,644 | (5,721,316 | ) | 628,280 | (3,271,392 | ) | ||||||||||
Provision (Benefit) for Income Taxes |
683,286 | | (4) | (1,910,058 | ) | (1,226,772 | ) | |||||||||
Net Income (Loss) |
$ | 1,138,358 | $ | (5,721,316 | ) | $ | 2,538,338 | $ | (2,044,620 | ) | ||||||
Basic Income (Loss) Per Common Share: |
$ | 0.24 | $ | (0.43 | ) | |||||||||||
Diluted Income (Loss) Per Common Share: |
$ | 0.23 | $ | (0.43 | ) | |||||||||||
EDAC TECHNOLOGIES CORPORATION
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT of OPERATIONS
For the Three Months Ended April 4, 2009
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT of OPERATIONS
For the Three Months Ended April 4, 2009
Historical | Adjustments | Total | ||||||||||||||
AERO | Pro-Forma | Pro-Forma | ||||||||||||||
EDAC | ACTUAL | Adjustments | Total | |||||||||||||
Sales |
$ | 9,583,775 | $ | 5,854,429 | (1) | $ | (26,856 | ) | $ | 15,411,348 | ||||||
Cost of Sales |
8,503,339 | 5,191,409 | (1) | (26,856 | ) | 13,667,892 | ||||||||||
Gross Profit |
1,080,436 | 663,020 | | 1,743,456 | ||||||||||||
Selling, General, and Administrative Expenses |
861,256 | 588,226 | 1,449,482 | |||||||||||||
Income from Operations |
219,180 | 74,794 | | 293,974 | ||||||||||||
Non-Operating Income/(Expense): |
||||||||||||||||
Interest Expense |
(139,842 | ) | (92,113) | (3) | (135,250 | ) | (367,205 | ) | ||||||||
Other |
6,875 | 292,081 | 298,956 | |||||||||||||
Income Loss before Provision
For (Benefit from) Income taxes |
86,213 | 274,762 | (135,250 | ) | 225,725 | |||||||||||
Provision
for (benefit from) income taxes |
29,800 | | (4) | 46,043 | 75,843 | |||||||||||
Net Income
(Loss) |
$ | 56,413 | $ | 274,762 | $ | (181,293 | ) | $ | 149,882 | |||||||
Basic Income per Common Share: |
$ | 0.01 | $ | 0.03 | ||||||||||||
Diluted Income per Common share: |
$ | 0.01 | $ | 0.03 |
EDAC TECHNOLOGIES CORPORATION
Unaudited Pro-Forma Consolidated Balance Sheet
As of April 4, 2009
Unaudited Pro-Forma Consolidated Balance Sheet
As of April 4, 2009
Historical | Consolidated | |||||||||||||||
EDAC | AERO | Adjustments | Pro-Forma | |||||||||||||
ASSETS |
||||||||||||||||
CURRENT ASSETS: |
||||||||||||||||
Cash |
$ | 657,791 | $ | 220,507 | (7) | $ | (220,507 | ) | $ | 657,791 | ||||||
Accounts receivable (net of allowance for
for doubtful accounts) |
7,107,831 | 3,688,061 | (5) | (26,856 | ) | 10,769,036 | ||||||||||
Inventories, net |
9,130,132 | 9,641,949 | 18,772,081 | |||||||||||||
Prepaid expenses and other current
assets |
227,200 | 292,446 | 519,646 | |||||||||||||
Refundable income taxes |
161,708 | 161,708 | ||||||||||||||
Deferred income taxes |
983,298 | 983,298 | ||||||||||||||
Total current assets |
18,267,960 | 13,842,963 | (247,363 | ) | 31,863,560 | |||||||||||
PROPERTY, PLANT AND EQUIPMENT, at cost: |
35,423,794 | 29,130,922 | (6) | (17,237,636 | ) | 47,317,080 | ||||||||||
Less: accumulated depreciation |
24,329,100 | 19,687,328 | (6) | (19,687,328 | ) | 24,329,100 | ||||||||||
11,094,694 | 9,443,594 | (6) | 2,449,692 | 22,987,980 | ||||||||||||
DEFERRED INCOME TAXES |
95,971 | 95,971 | ||||||||||||||
OTHER ASSETS: |
||||||||||||||||
Other |
37,127 | 37,127 | ||||||||||||||
Deposits on machinery |
1,754,800 | 1,754,800 | ||||||||||||||
1,791,927 | | | 1,791,927 | |||||||||||||
TOTAL ASSETS |
$ | 31,250,552 | $ | 23,286,557 | $ | 2,202,329 | $ | 56,739,438 | ||||||||
LIABILITIES AND EQUITY |
||||||||||||||||
CURRENT LIABILITIES: |
||||||||||||||||
Equipment line of credit |
$ | 2,448,490 | $ | $ | $ | 2,448,490 | ||||||||||
Current portion of long-term debt |
2,110,318 | 2,110,318 | ||||||||||||||
Trade accounts payable |
2,816,566 | 2,621,088 | (5) | (26,856 | ) | 5,410,798 | ||||||||||
Employee compensation and amounts
withheld |
1,264,594 | 1,264,594 | ||||||||||||||
Accrued expenses |
341,646 | 2,767,089 | 3,108,735 | |||||||||||||
Customer advances |
289,747 | 461,120 | 750,867 | |||||||||||||
Due to MTU Munich |
| 17,420,373 | (7) | (17,420,373 | ) | | ||||||||||
Total current liabilities |
9,271,361 | 23,269,670 | (17,447,229 | ) | 15,093,802 | |||||||||||
LONG-TERM DEBT, less current portion |
4,503,139 | (8) | 9,500,000 | 14,003,139 | ||||||||||||
OTHER LIABILITIES |
1,698,233 | 1,698,233 | ||||||||||||||
COMMITMENTS AND CONTINGENCIES |
| | | |||||||||||||
SHAREHOLDERS EQUITY: |
||||||||||||||||
Common Stock |
12,063 | 12,063 | ||||||||||||||
Additional paid-in capital |
10,989,549 | 10,989,549 | ||||||||||||||
Retained earnings |
7,215,013 | 16,887 | (9) | 10,149,558 | 17,381,458 | |||||||||||
18,216,625 | 16,887 | 10,149,558 | 28,383,070 | |||||||||||||
Less: accumulated other comprehensive loss |
2,438,806 | 2,438,806 | ||||||||||||||
Total shareholders equity |
15,777,819 | 16,887 | 10,149,558 | 25,944,264 | ||||||||||||
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |
$ | 31,250,552 | $ | 23,286,557 | $ | 2,202,329 | $ | 56,739,438 | ||||||||
EDAC Technologies Corporation
Notes to Unaudited Pro-Forma Consolidated Financial Statements
Notes to Unaudited Pro-Forma Consolidated Financial Statements
The
following numbered notes are referenced on the Unaudited Pro-Forma
Consolidated
Balance Sheet and Consolidated Statements
of Operations. These unaudited pro-forma consolidated statements include historical balances for EDAC as of and for the
fiscal quarter ended April 4, 2009 and for the fiscal year ended
January 3, 2009 and the historical balances
for AERO as of and for the quarter ended March 31, 2009 and the year ended December 31, 2008.
The unaudited pro-forma consolidated financial statements are based upon the EDAC historical financial
statements that were filed with the SEC in the EDAC Form 10-K on
March 11, 2009, the EDAC Form 10-Q filed with the SEC on
April 30, 2009, and the historical financial statements for AERO filed with the SEC in Form 8-K/A on August 12, 2009,
adjusted to give effect to the following items:
1. Elimination of sales transactions between EDAC and AERO.
Fiscal year-ended January 3, 2009 |
Three-months ended April 4, 2009 |
||||||
Sales from EDAC to AERO | $ | 11,217 | $ | 2,406 | |||
Sales from AERO to EDAC | 175,066 | 24,450 | |||||
Total |
$ | 186,283 | $ | 26,856 |
2. For the fiscal year 2008
depreciation expense for AERO was
$2,124,049. Much of the machinery and equipment was nearing the end
of their depreciable lives due to MTUs acquisition of the
Company in 2001, causing the depreciation expense to remain high and
causing the Net Plant, Property and Equipment to be below current
appraisal value. Reflecting the purchase by EDAC, the pro-forma book
value of the fixed assets as of the fiscal year ended 2008 was increased to reflect appraisal values
as shown in the table below. This and EDACs use of 10 year
lives for machinery and equipment and 25 years for buildings, which
in many instances is longer than the life used by AERO, resulted in depreciation expense of
$966,769, a reduction of $1,157,380.
For the
three month unaudited period ended
April 4, 2009, the required
depreciation adjustment was a reduction of $289,320 and was combined
with an adjustment to the depreciation
expense in the amount of an additional $407,228 included in the unaudited Historical Cost of Sales and
included in that Historical column, since the depreciation
expense on certain assets that had inappropriately been written off,
but subsequently adjusted for as part of the audit, had not been recorded by MTU.
3. Interest expense on the debt
used to acquire AERO. EDAC borrowed $9.5 million in total, $7 million from their bank
and $2.5 million from MTU. Interest was $529,000 and $135,250 for the fiscal
year-ended January 3, 2009 and the three-month period ended April 4,
2009, respectively.
4. Consideration for income taxes utilizing the tax rate that was applicable to EDAC for each
period presented. The rates used were 37.5% and 33.6% for the fiscal
year-ended January 3, 2009 and the three-month period ended April 4,
2009. The tax
expense (benefit) was $(1,910,058) and $46,043 for the fiscal
year-ended January 3, 2009 and the three-month period ended April 4,
2009, respectively.
5. The
elimination of
accounts receivable and accounts payable on EDACs and Aeros books
of $26,856 as of April 4, 2009.
6. Net Property and Equipment in the Pro-Forma Balance sheet
adjusted as if the transaction had occurred as of the April 4, 2009
Balance Sheet date, were adjusted to reflect appraisal values as shown in the following table:
Aero Historical | Aero proforma | Adjustment | ||||||||
Plant, property and equipment | $ | 29,130,922 | $ | 11,893,286 | $ | (17,237,636 | ) | |||
Accumulated depreciation | 19,687,328 | -0- | (19,687,328 | ) | ||||||
Net plant, property and equipment | $ | 9,443,594 | $ | 11,893,286 | $ | 2,449,692 |
7. The amounts Due to MTU Munich of $17,420,373 and Cash of $220,507 were eliminated as of April 4, 2009.
8. The debt ($9.5 million)
taken on by EDAC for the purchase of AERO was added.
9. Fair value of assets and liabilities acquired and calculation of the gain on the bargain
purchase as if the transaction had occurred on the pro-forma balance sheet date, are as follows:
Accounts receivable |
$ | 3,661,205 | ||
Inventories |
9,641,949 | |||
Prepaid expenses |
292,446 | |||
Property, plant and equipment |
11,893,286 | |||
Accounts payable |
(2,594,232 | ) | ||
Accrued expenses |
(3,228,209 | ) | ||
Total fair value |
19,666,445 | |||
Purchase price |
9,500,000 | |||
Gain on bargain purchase |
$ | 10,166,445 | ||
The $10,166,445 gain on purchase price is reflected in the April 4, 2009 Balance Sheet as an
adjustment of $10,149,558 to the retained earnings amount of $16,887.
The gain reflected on the pro-forma balance sheet is calculated as if the transaction had occurred as of the pro-forma balance sheet date and therefore, is different than the $11.7 million gain that was realized by the Company.
The unaudited pro-forma
consolidated balance sheet as of April 4, 2009 gives effect to the
transactions described above as if they occurred as of that date and
the unaudited consolidated statements of operations for the fiscal year ended January 3, 2009 and the three months ended April 4, 2009 give effect to the transactions
described above as if they occurred at the beginning of the respective periods.