Attached files
file | filename |
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8-K/A - 8-K/A - MOCON INC | a12-14819_18ka.htm |
EX-99.2 - EX-99.2 - MOCON INC | a12-14819_1ex99d2.htm |
EX-23.1 - EX-23.1 - MOCON INC | a12-14819_1ex23d1.htm |
EX-99.1 - EX-99.1 - MOCON INC | a12-14819_1ex99d1.htm |
EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On April 2, 2012, MOCON, Inc. (MOCON) acquired all of the outstanding common shares of PBI-Dansensor A/S (Dansensor) for a total purchase price of DKK 112,000,000, which totals approximately $20.1 million inclusive of cash acquired of $0.8 million. Approximately $13.6 million was paid in cash at closing and the remainder will be paid over four years pursuant to a secured note issued to PBI-Holding A/S by MOCON. On March 28, 2012, in connection with the closing of the acquisition of Dansensor, MOCON entered into a Credit Agreement (the Agreement) with Wells Fargo Bank NA. The Agreement provides for a four year, $5.0 million secured revolving line of credit, and a $3.5 million secured term loan that amortizes over four years. At March 31, 2012, MOCON drew $7.5 million against the loans for purposes of the acquisition.
Dansensor is a manufacturer of specialized instrumentation for Modified Atmosphere Packaging (MAP) of foods, beverages, pharmaceuticals and other perishable items. Dansensor designs quality control and assurance solutions for the food industry and other businesses that package their products in protective gas atmospheres. Dansensor is headquartered in Denmark but operates worldwide, and has wholly owned subsidiaries in France, Italy, Spain, Germany and the United States.
The unaudited pro forma condensed combined balance sheet as of March 31, 2012 is based on historical consolidated balance sheets of MOCON and Dansensor and was prepared as if the acquisition had occurred on that date. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2012 and the fiscal year ended December 31, 2011 have been prepared assuming the acquisition occurred at the beginning of the year ended December 31, 2011 and are based on historical consolidated statements of operations of MOCON and Dansensor.
The unaudited pro forma condensed combined financial statements are prepared for informational purposes only and are not indicative of the consolidated results of operations or financial position that MOCON would have reported had the acquisition occurred at the previous dates presented, nor do they project results of future operations as a consolidated entity. The unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and/or cost savings that MOCON may achieve with respect to the combined business operations.
Pursuant to Article 11 of Regulation S-X, the historical financial information has been adjusted in the unaudited pro forma condensed combined financial statements to reflect pro forma events that are (i) directly attributable to the acquisitions, (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined results of the businesses.
MOCON, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2011
|
|
MOCON |
|
Dansensor |
|
Pro Forma |
|
Pro Forma |
| ||||
|
|
Historical |
|
Historical (1) |
|
Adjustments |
|
Combined |
| ||||
Sales: |
|
|
|
|
|
|
|
|
| ||||
Products |
|
$ |
34,383,432 |
|
$ |
20,269,866 |
|
$ |
|
|
$ |
54,653,298 |
|
Consulting services |
|
2,977,435 |
|
|
|
|
|
2,977,435 |
| ||||
Total sales |
|
37,360,867 |
|
20,269,866 |
|
|
|
57,630,733 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cost of sales: |
|
|
|
|
|
|
|
|
| ||||
Products |
|
12,284,206 |
|
6,839,606 |
|
872,593 |
(I) |
19,996,405 |
| ||||
Consulting services |
|
1,608,364 |
|
|
|
|
|
1,608,364 |
| ||||
Total cost of sales |
|
13,892,570 |
|
6,839,606 |
|
872,593 |
|
21,604,769 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Gross profit |
|
23,468,297 |
|
13,430,260 |
|
(872,593 |
) |
36,025,964 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative expenses |
|
12,941,350 |
|
9,839,164 |
|
240,760 |
(I) |
23,021,274 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Research and development expenses |
|
2,402,566 |
|
1,427,916 |
|
594,155 |
(G) |
4,424,637 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
8,124,381 |
|
2,163,180 |
|
(1,707,508 |
) |
8,580,053 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income, net |
|
79,599 |
|
(42,053 |
) |
(424,947 |
)(J) |
(387,401 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
|
8,203,980 |
|
2,121,127 |
|
(2,132,455 |
) |
8,192,652 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income taxes |
|
2,753,062 |
|
535,282 |
|
(538,140 |
)(H) |
2,750,204 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
$ |
5,450,918 |
|
$ |
1,585,845 |
|
$ |
(1,594,315 |
) |
$ |
5,442,448 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per common share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
1.02 |
|
|
|
|
|
$ |
1.02 |
| ||
Diluted |
|
0.98 |
|
|
|
|
|
0.98 |
| ||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
5,342,900 |
|
|
|
|
|
5,342,900 |
| ||||
Diluted |
|
5,572,646 |
|
|
|
|
|
5,572,646 |
|
(1) Converted from DKK to U.S. dollars at the average exchange rate for the year of 0.1869
See accompanying notes to unaudited pro forma condensed combined financial statements
MOCON, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
QUARTER ENDED MARCH 31, 2012
|
|
MOCON |
|
Dansensor |
|
Pro Forma |
|
Pro Forma |
| ||||
|
|
Historical |
|
Historical (1) |
|
Adjustments |
|
Combined |
| ||||
Sales: |
|
|
|
|
|
|
|
|
| ||||
Products |
|
$ |
8,516,337 |
|
$ |
4,873,637 |
|
$ |
|
|
$ |
13,389,974 |
|
Consulting services |
|
666,994 |
|
|
|
|
|
666,994 |
| ||||
Total sales |
|
9,183,331 |
|
4,873,637 |
|
|
|
14,056,968 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cost of sales: |
|
|
|
|
|
|
|
|
| ||||
Products |
|
2,994,877 |
|
2,558,818 |
|
218,148 |
(I) |
5,771,843 |
| ||||
Consulting services |
|
379,370 |
|
|
|
|
|
379,370 |
| ||||
Total cost of sales |
|
3,374,247 |
|
2,558,818 |
|
218,148 |
|
6,151,213 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Gross profit |
|
5,809,084 |
|
2,314,819 |
|
(218,148 |
) |
7,905,755 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative expenses |
|
3,777,673 |
|
1,513,888 |
|
60,190 |
(I) |
5,351,751 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Research and development expenses |
|
733,539 |
|
457,499 |
|
(156,026 |
)(G) |
1,035,012 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating income |
|
1,297,872 |
|
343,432 |
|
(122,312 |
) |
1,518,992 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income, net |
|
17,508 |
|
5,994 |
|
(106,237 |
)(J) |
(82,735 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
|
1,315,380 |
|
349,426 |
|
(228,549 |
) |
1,436,257 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income taxes |
|
494,707 |
|
104,899 |
|
(68,611 |
)(H) |
530,995 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net income |
|
$ |
820,673 |
|
$ |
244,527 |
|
$ |
(159,938 |
) |
$ |
905,262 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net income per common share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
0.15 |
|
|
|
|
|
$ |
0.17 |
| ||
Diluted |
|
0.14 |
|
|
|
|
|
0.16 |
| ||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
5,450,173 |
|
|
|
|
|
5,450,173 |
| ||||
Diluted |
|
5,691,783 |
|
|
|
|
|
5,691,783 |
|
(1) Converted from DKK to U.S. dollars at the average exchange rate for the quarter of 0.1763
See accompanying notes to unaudited pro forma condensed combined financial statements
MOCON, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 2012
|
|
MOCON |
|
Dansensor |
|
Pro Forma |
|
Pro Forma |
| ||||
|
|
Historical |
|
Historical (1) |
|
Adjustments |
|
Combined |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
| ||||
Current assets: |
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
|
$ |
15,982,890 |
|
$ |
832,669 |
|
$ |
(13,612,046 |
)(A) |
$ |
3,203,513 |
|
Marketable securities, current |
|
5,714,241 |
|
|
|
|
|
5,714,241 |
| ||||
Trade accounts receivable, net |
|
4,862,082 |
|
3,348,069 |
|
|
|
8,210,151 |
| ||||
Other receivables |
|
104,900 |
|
444,126 |
|
|
|
549,026 |
| ||||
Inventories |
|
4,608,666 |
|
2,045,992 |
|
897,863 |
(B) |
7,552,521 |
| ||||
Prepaid expenses |
|
862,420 |
|
|
|
|
|
862,420 |
| ||||
Deferred income taxes |
|
821,028 |
|
|
|
|
|
821,028 |
| ||||
Total current assets |
|
32,956,227 |
|
6,670,856 |
|
(12,714,183 |
) |
26,912,900 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Marketable securities, noncurrent |
|
3,281,284 |
|
|
|
|
|
3,281,284 |
| ||||
Property, plant and equipment, net |
|
3,691,983 |
|
1,348,157 |
|
|
|
5,040,140 |
| ||||
Goodwill |
|
3,172,493 |
|
|
|
5,408,335 |
(C) |
8,580,828 |
| ||||
Investment in affiliated company |
|
3,334,500 |
|
|
|
|
|
3,334,500 |
| ||||
Technology rights and other intangibles, net |
|
998,274 |
|
1,915,462 |
|
10,580,996 |
(C), (F) |
13,494,732 |
| ||||
Deferred income taxes |
|
16,718 |
|
|
|
|
|
16,718 |
| ||||
Other assets |
|
87,543 |
|
117,442 |
|
|
|
204,985 |
| ||||
TOTAL ASSETS |
|
$ |
47,539,022 |
|
$ |
10,051,917 |
|
$ |
3,275,148 |
|
$ |
60,866,087 |
|
|
|
|
|
|
|
|
|
|
| ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
| ||||
Current liabilities: |
|
|
|
|
|
|
|
|
| ||||
Current maturities of long-term debt |
|
$ |
875,004 |
|
$ |
|
|
1,617,388 |
(A) |
$ |
2,492,392 |
| |
Revolving line of credit |
|
4,000,000 |
|
|
|
|
|
4,000,000 |
| ||||
Accounts payable |
|
2,254,929 |
|
744,634 |
|
|
|
2,999,563 |
| ||||
Compensation and other accrued expenses |
|
2,179,373 |
|
2,766,584 |
|
|
|
4,945,957 |
| ||||
Dividends payable |
|
574,654 |
|
|
|
|
|
574,654 |
| ||||
Deferred income taxes |
|
|
|
|
|
224,466 |
(D) |
224,466 |
| ||||
Deferred revenue |
|
492,653 |
|
|
|
|
|
492,653 |
| ||||
Total current liabilities |
|
10,376,613 |
|
3,511,218 |
|
1,841,854 |
|
15,729,685 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Term note payable |
|
2,624,996 |
|
|
|
|
|
2,624,996 |
| ||||
Seller financed note payable |
|
|
|
|
|
4,852,165 |
(A) |
4,852,165 |
| ||||
Deferred income taxes and other provisions |
|
48,155 |
|
476,579 |
|
2,645,249 |
(D), (F) |
3,169,983 |
| ||||
Accrued income taxes |
|
294,790 |
|
|
|
|
|
294,790 |
| ||||
Total liabilities |
|
13,344,554 |
|
3,987,797 |
|
9,339,268 |
|
26,671,619 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Commitments and contingencies |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Stockholders equity |
|
|
|
|
|
|
|
|
| ||||
Capital stock - undesignated |
|
|
|
|
|
|
|
|
| ||||
Common stock - $0.10 par value |
|
547,290 |
|
3,586,000 |
|
(3,586,000 |
)(E) |
547,290 |
| ||||
Additional paid-in capital |
|
3,193,810 |
|
|
|
|
|
3,193,810 |
| ||||
Retained earnings |
|
30,769,150 |
|
2,478,120 |
|
(2,478,120 |
)(E), (F) |
30,769,150 |
| ||||
Accumulated other comprehensive loss |
|
(315,782 |
) |
|
|
|
|
(315,782 |
) | ||||
Total stockholders equity |
|
34,194,468 |
|
6,064,120 |
|
(6,064,120 |
) |
34,194,468 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
|
$ |
47,539,022 |
|
$ |
10,051,917 |
|
$ |
3,275,148 |
|
$ |
60,866,087 |
|
(1) Converted from DKK to U.S. dollars at the ending exchange rate for the quarter of 0.1793
See accompanying notes to unaudited pro forma condensed combined financial statements
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Preliminary Estimated Purchase Price Allocation
The total preliminary estimated purchase price was allocated to the net assets acquired based upon their preliminary estimated fair values as of the close of business on April 2, 2012 as set forth below. The excess of the preliminary purchase price over the preliminary net assets was recorded as goodwill. The preliminary allocation of the purchase price was based upon a preliminary valuation and the estimates and assumptions are subject to change. The preliminary estimated purchase price allocation for the acquisition is as follows (based upon a 0.1793 exchange rate as of April 2, 2012):
Cash and cash equivalents |
|
$ |
832,669 |
|
Trade accounts receivable, net |
|
3,348,069 |
| |
Other receivables |
|
444,126 |
| |
Inventories |
|
2,943,855 |
| |
Property, plant and equipment |
|
1,348,157 |
| |
Other assets |
|
117,442 |
| |
Intangible assets |
|
12,496,458 |
| |
Total identifiable assets acquired |
|
21,530,776 |
| |
|
|
|
| |
Accounts payable |
|
744,633 |
| |
Other accrued expenses |
|
2,766,584 |
| |
Deferred income tax-current |
|
224,466 |
| |
Deferred income tax-long-term |
|
3,121,828 |
| |
Total liabilities assumed |
|
6,857,511 |
| |
|
|
|
| |
Net identifiable assets acquired |
|
14,673,265 |
| |
Goodwill |
|
5,408,335 |
| |
Total purchase price |
|
$ |
20,081,600 |
|
The Company incurred transaction costs of approximately $400,000 relating to the acquisition which are included in the Companys first quarter 2012 statement of operations. These costs have not been backed-out on a pro forma basis.
1. Pro Forma Adjustments:
The following pro forma and U.S. GAAP conversion adjustments are included in the unaudited pro forma condensed combined balance sheets:
(A) To record cash paid by the Company as partial purchase consideration to the selling shareholders of Dansensor. The total purchase price of DKK 112 million (approximately $20,000,000) was paid partially by a cash payment of $13,612,046 at closing, partially financed by a Credit Agreement with Wells Fargo Bank,with the remainder to be paid over four years via a seller financed note of approximately $6,470,000 which commenced on April 2, 2012, the date of closing.
(B) To reflect the preliminary fair value adjustments for acquired work-in-process and finished goods inventory.
(C) To reflect the preliminary estimated fair values of the intangible assets and goodwill acquired as follows:
Intangible asset |
|
Assessed Fair Value |
| |
Trademark/Trade name |
|
$ |
3,819,090 |
|
Developed technology |
|
7,853,340 |
| |
Customer relationships and other |
|
824,028 |
| |
|
|
$ |
12,496,458 |
|
The valuation of the acquired intangible assets is preliminary and may change in the final purchase price allocation.
(D) To record the adjustment for deferred tax liabilities arising from the acquisition. The deferred tax liability adjustment relates to the fair value adjustment of inventory and the addition of identifiable intangible assets that will be amortized for financial reporting purposes but will not be deductible for tax purposes.
(E) To record the elimination of the historical stockholders equity of Dansensor.
(F) To transition the Dansensor research and development expenses accounting treatment from Danish GAAP to U.S. GAAP. The cumulative effect on the balance sheet at March 31, 2012: $1,915,462 reduction of technology rights and other intangibles, net, reduction of deferred tax liabilities ($478,866) and reduction of retained earnings ($1,436,596).
The following pro forma and U.S. GAAP conversion adjustments are included in the unaudited pro forma condensed combined statements of operations:
(G) To transition the Dansensor research and development expenses accounting treatment from Danish GAAP to U.S. GAAP. Effects of this adjustment on net income are as follows:
a. Fiscal 2011: ($594,155)
b. Three months ended March 31, 2012: $156,026
In fiscal 2011, the development costs that were capitalized for Danish GAAP purposes exceeded the amount of amortization expense recorded for the year. Therefore, the net amount of $594,155 was recorded in these pro forma financial statements as additional expense to properly reflect U.S. GAAP reporting. For the three months ended March 31, 2012, the amount of amortization expense exceeded the amount of development costs that were capitalized. Therefore, the net amount of $156,026 was shown as a reduction of R&D expense to conform to U.S. GAAP.
(H) To record the estimated tax impact of the adjustments for research and development expenses, amortization of intangibles, and interest expense at the effective rates for the historical periods presented.
(I) To record adjustments to amortization expense related to intangible assets arising from the acquisition. For purposes of the pro forma adjustments presented, we have used the following estimated asset lives:
Intangible asset |
|
Asset Life |
|
Trademark/Trade name |
|
20 years |
|
Developed technology |
|
9 years |
|
Customer relationships |
|
9 years |
|
|
|
|
|
The estimated asset lives are preliminary and may change in the final purchase price allocation. Further, pro forma amortization expense has been calculated using the straight line method.
Upon completion of the valuation process, the Company may conclude that the intangible assets should be amortized on a basis other than straight line.
(J) To record interest expense on the $4,000,000 secured revolving line of credit, the $3,500,000 secured term loan, and the $6,469,553 secured note issued to the seller.