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8-K - FORM 8-K - SMART Modular Technologies (WWH), Inc. | f59537e8vk.htm |
Exhibit 99.1 Certain Information to Be Provided to Prospective Lenders on or About July 5,
2011
As used herein:
| SMART or the Company means SMART Modular Technologies (WWH), Inc., a Cayman Islands exempted company; and | ||
| Parent means Saleen Holdings, Inc., a Cayman Islands exempted company |
In connection with Parents financing for the contemplated merger (the Merger) pursuant to that
certain Agreement and Plan of Merger (the Merger Agreement), dated April 26, 2011, by and among
SMART, Parent and Saleen Acquisition, Inc., a Cayman Islands exempted company and wholly owned
subsidiary of Parent, SMART intends to disclose the information below that will be provided to
prospective lenders of such financing. This information contains financial data that was prepared
for specific analysis purposes and is based upon various assumptions and estimates. Management
reviewed and participated in the preparation of this information which was not necessarily prepared
in accordance with U.S. generally accepted accounting principles (GAAP). The non-GAAP analyses
and measures were provided to enable potential lenders to evaluate financial performance under
scenarios that are not necessarily part of the Companys currently existing reporting or operating
structure. The presentation of this additional information is not meant to be a substitute for the
corresponding financial measures prepared in accordance with GAAP. In addition, these measures may
not be used similarly by other companies and therefore may not be comparable between companies.
Business Units
In connection with such financing, certain materials to be presented to potential lenders have been
prepared to model SMARTs business as three business units Brazil, Specialty Modules &
Logistics, and Storage.
The group comprising borrowers (Borrowers) under the senior secured credit facilities
(Senior Secured Credit Facilities) sought by Parent, and the non-Borrower entities that
would guarantee the Senior Secured Credit Facilities (Guarantors) following the
contemplated Merger (the Borrowers and the Guarantors, collectively the Credit Group)
does not include entities that will constitute the contemplated Storage business unit.
Certain non-GAAP financial information for SMARTs business units for the last twelve months
(LTM) period ended May 27, 2011 is presented according to Exhibit 1.
Exhibit 1
($mm) | Brazil (a) | Specialty Modules (a) (1) & Logistics (a) | Storage | |||||||||||||
Net Revenue |
$ | 377 | $ | 299 | $ | 1,045/$40 | (2) | $ | 54 | |||||||
YoY Growth |
63 | % | 2 | % | 27%/3% | (2) | 163 | % | ||||||||
Gross Profit |
$ | 71 | $ | 43 | $ | 34 | $ | 9 | ||||||||
Adjusted EBITDA (3) |
$ | 67 | $ | 11 | $ | 29 | $ | (13 | ) |
(a) | In Credit Group | |
(1) | Specialty Modules in fiscal 2010 also included other products (e.g., Display, CPD , Business Critical Systems modules, and other products), which have been discontinued. | |
(2) | Logistics net revenue and YoY Growth shown on both a gross and net basis (gross / net). | |
(3) | See the Reconciliation of Pro Forma LTM Q3 FY 2011 Adjusted EBITDA tables below for more detail on Adjusted EBITDA and reconciliation of non-GAAP financial measures to comparable GAAP measures. |
Logistics Quarterly Revenue Trending
The Companys Logistics services, a subset of the contemplated Specialty Modules & Logistics
business unit, can be characterized as producing consistent quarterly net revenues with a
streamlined cost structure and stable cash flows. Exhibit 2 outlines the gross revenue and
net revenue associated with the Logistics offerings for the last ten fiscal quarters.
Exhibit 2
($mm) | Gross Revenue | Net Revenue | ||||||
Q2 FY09 |
$ | 153 | $ | 9 | ||||
Q3 FY09 |
$ | 144 | $ | 8 | ||||
Q4 FY09 |
$ | 167 | $ | 8 | ||||
Q1 FY10 |
$ | 162 | $ | 8 | ||||
Q2 FY10 |
$ | 221 | $ | 10 | ||||
Q3 FY10 |
$ | 270 | $ | 11 | ||||
Q4 FY10 |
$ | 269 | $ | 12 | ||||
Q1 FY11 |
$ | 239 | $ | 10 | ||||
Q2 FY11 |
$ | 263 | $ | 10 | ||||
Q3 FY11 |
$ | 275 | $ | 8 |
Non-GAAP Summary Financials Credit Group Only (Excludes Storage)
Financial results for the Credit Group for the LTM period ended May 27, 2011 are presented in
Exhibit 3. Also included is managements estimate for the Credit Group for the fiscal year
ending August 26, 2011.
Exhibit 3
LTM Q3 FY 11 | FY 2011 | |||||||
($mm) | Actual | Estimate | ||||||
Net Sales |
$ | 716 | $ | 659 | ||||
% growth |
27 | % | (1 | %) | ||||
Gross Profit |
148 | 132 | ||||||
% margin |
21 | % | 20 | % | ||||
Adjusted EBITDA (1) |
107 | 88 | ||||||
% margin |
15 | % | 13 | % | ||||
Adj. EBITDA Capex |
83 | 63 | ||||||
% margin |
12 | % | 10 | % |
(1) | See the Reconciliation of Pro Forma LTM Q3 FY 2011 Adjusted EBITDA tables below for more detail on Adjusted EBITDA and reconciliation of non-GAAP financial measures to comparable GAAP measures. | |
Note: | Financial results for the Credit Group are based on pro forma cost allocations estimated for the purpose of discussions in connection with the financing of the proposed acquisition. |
Adjusted EBITDA Calculation Credit Group Only (Excludes Storage)
Exhibit 4
LTM | ||||
($mm) | Q3 FY 11 | |||
EBITDA |
$ | 93 | ||
Adjustments to EBITDA: |
||||
Stock based compensation |
8 | |||
Restructuring charges |
3 | |||
Acquisition Costs |
4 | |||
Gain from insurance settlement |
(1 | ) | ||
14 | ||||
Adjusted EBITDA |
$ | 107 | ||
Note: | EBITDA calculations for the Credit Group are based on pro forma cost allocations estimated for the purpose of discussions in connection with the financing of the proposed acquisition. |
Pro Forma Credit Group Balance Sheet Q3 FY 2011
Exhibit 5
($mm) | Credit Group(1) | |||
Assets |
||||
Cash & Equivalents |
$ | 50 | ||
Other Current Assets |
277 | |||
Total Current Assets |
327 | |||
Fixed Assets, Net |
50 | |||
Goodwill & Intangibles |
295 | |||
Other Assets, Total |
56 | |||
Total Assets |
$ | 728 | ||
Liabilities |
||||
Current Liabilities |
$ | 106 | ||
Long Term Debt, Total |
300 | |||
Other Long Term Liabilities, Total |
7 | |||
Total Liabilities |
$ | 413 | ||
Net Assets |
$ | 314 | ||
(1) | Amounts do not represent full and complete pro forma financials based on SEC regulation S-X Article 11. Pro forma balance sheet (i) excludes the contemplated Storage business unit which is estimated to have $35mm in net assets and (ii) includes transaction related adjustments, including $82mm of excess cash used to finance the transaction, an increase of $306mm in goodwill related to the transaction, deferred financing costs of $23mm related to the financing of the transaction, and an increase of $245mm in debt due to the $300mm term loan B financing and pay down of $55mm of secured notes |
Note: Numbers may not foot due to rounding.
Reconciliation of Pro Forma LTM Q3 FY 2011 Adjusted EBITDA to GAAP Consolidated Net
Income
Adjusted EBITDA by Business Unit | LTM | |||
($mm) | Q3 FY 11 | |||
Brazil |
$ | 67 | ||
Specialty Modules |
11 | |||
Logistics |
29 | |||
Credit Group Adjusted EBITDA |
107 | |||
Storage |
(13 | ) | ||
Adjusted EBITDA |
$ | 94 | ||
LTM | ||||
($mm) | Q3 FY 11 | |||
Net Income |
$ | 27 | ||
Interest expense, net |
2 | |||
Income taxes |
22 | |||
Depreciation and amortization |
22 | |||
EBITDA |
$ | 73 | ||
Adjustments: |
||||
Stock-based compensation |
8 | |||
Acquisition costs |
4 | |||
Restructuring charges |
3 | |||
Technology access charge |
8 | |||
Gain from insurance settlement |
(1 | ) | ||
Adjusted EBITDA |
$ | 94 | ||
Note: Numbers may not foot due to rounding.
Additional Information and Where to Find It
All parties desiring details regarding the transaction are urged to review the definitive
Merger Agreement on the Companys website at http://www.smartm.com, and on the SECs
website at http://www.sec.gov. In connection with the proposed transaction, SMART has filed
with the SEC a preliminary proxy statement and other documents relating to the transaction and will
file with the SEC a definitive proxy statement, and may file with the SEC other documents regarding
the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT
AND OTHER FILED DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Shareholders will be able to obtain a free-of-charge
copy of the proxy statement and other relevant documents (when available) filed with the SEC from
the SECs website at http://www.sec.gov. Shareholders will also be able to obtain a free-of
charge copy of the proxy statement and other relevant documents (when available) by directing a
request by mail or telephone to The Blueshirt Group, Attention: Suzanne Craig or from SMARTs
website, http://www.smartm.com. SMART and certain of its directors, executive officers and
other members of management and employees may, under the rules of the SEC, be deemed to be
participants in the solicitation of proxies from shareholders of SMART in favor of the proposed
merger. Information regarding SMARTs directors and executive officers is contained in SMARTs
definitive proxy statement filed with the SEC on December 3, 2010 (the Annual General Meeting
Proxy Statement). Additional information regarding the interests of such potential participants
will be included in the proxy statement and the other relevant documents filed and to be filed with
the SEC (when available).