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8-K - FORM 8-K - KEYW HOLDING CORPv323886_8k.htm
EX-99.2 - EXHIBIT 99.2 - KEYW HOLDING CORPv323886_ex-99x2.htm
EX-99.1 - EXHIBIT 99.1 - KEYW HOLDING CORPv323886_ex-99x1.htm
EX-23.1 - EXHIBIT 23.1 - KEYW HOLDING CORPv323886_ex23-1.htm
EX-23.2 - EXHIBIT 23.2 - KEYW HOLDING CORPv323886_ex23-2.htm

Exhibit 99.3

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following tables set forth: (1) summary statement of operations data for Poole & Associates Inc. (“Poole”) for the six months ended June 30, 2012, and the year ended March 31, 2012, (2) summary statement of operations data for Sensage, Inc. (“Sensage”) for the six months ended June 30, 2012, and the year ended December 31, 2011 and (3) the summary balance sheet data for each of Poole and Sensage as of June 30, 2012. The KEYW Holding Corporation (“KEYW”) entered into a definitive stock purchase agreement for the acquisition of Poole on September 10, 2012, and a definitive merger agreement for the acquisition of Sensage on September 13, 2012. The summary statement of operations data for Poole and Sensage presented in the tables below have been derived, respectively, from Poole’s and Sensage’s audited and unaudited financial statements and related notes.

The unaudited pro forma statement of operations data for the six months ended June 30, 2012, and the year ended December 31, 2011, in the tables below has been prepared to give pro forma effect to the acquisitions of Poole, Sensage and, for the year ended December 31, 2011, other acquisitions during 2011. The unaudited pro forma statement of operations gives effect to these transactions as if they had occurred at the beginning of the period presented. The unaudited pro forma balance sheet in the table below has been prepared to give pro forma effect to the acquisitions of Poole and Sensage as if they closed on June 30, 2012. This data is subject, and gives effect, to the assumptions and adjustments described in the notes accompanying the unaudited pro forma financial information below. The unaudited pro forma data is presented for informational purposes only and should not be considered indicative of actual results of operations that would have been achieved had the acquisitions been consummated on the dates indicated.

Pro Forma Statement of Operations Data

           
Year ended December 31, 2011(2)   KEYW
(audited)
  Poole
(audited)
  Sensage
(audited)
  2011
Acquisitions(1)
(unaudited)
  Pro Forma
Adjustments
(unaudited)
  Pro Forma
Combined
(unaudited)
     (in thousands, except per share data)
Revenue     190,587       40,587       11,858       24,566             267,598  
Cost of Revenues(3)     133,950       29,337       2,490       12,234       2,678 (4)      180,689  
Gross Profit     56,637       11,250       9,368       12,332       (2,678 )      86,909  
Operating Expenses     41,399       9,064       9,639       8,579       (2,678 )(4)      66,003  
Intangible Amortization     13,410                         14,815 (5)      28,225  
Operating Income (Loss)     1,828       2,186       (271 )      3,753       (14,815 )      (7,319 ) 
Non-Operating Expense     1,075                419       251       9,100 (6)      10,845  
Income (Loss) Before Taxes     753       2,186       (690 )      3,502       (23,915 )      (18,164 ) 
Tax Expense     218       866       2       2,257       (9,566 )      (6,223 ) 
Net Income (Loss)     535       1,320       (692 )      1,245       (14,349 )      (11,941 ) 
Basic Earnings (Loss) Per Share     0.02       n/a       n/a                n/a       (0.43 ) 
Fully Diluted Earnings (Loss)
Per Share
    0.02       n/a       n/a                n/a       n/a  
Weighted Average Common Shares Outstanding
                                                     
Basic     25,991,914       n/a       n/a                1,718,817 (7)      27,710,731  
Diluted     28,903,869       n/a       n/a                1,718,817       30,622,686  

(1) For a description of these acquisitions, see Note 2 to the financial statements contained in KEYW’s Annual Report on Form 10-K for the year ended December 31, 2011.
(2) Poole financials are for the year ended March 31, 2012.
(3) Cost of revenues excludes intangible amortization expense as shown separately below.
(4) Adjustment to Poole's cost of revenue and operating expense to include fringe benefit expense associated with direct labor in cost of revenue versus operating expense.

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(5) Intangible amortization that would have been recorded if the acquisitions of JKA Technologies, Inc. (JKA), Forbes Analytic Software, Inc. (FASI), Flight Landata, Inc. (FLD), Poole, and Sensage had been completed on January 1, 2011.
(6) Estimated interest expense for the acquisitions of JKA, FASI, FLD, Poole, and Sensage if they had been completed on January 1, 2011.
(7) Includes the shares issued for the acquisitions of JKA and FASI, and the estimated number of shares to be issued for the acquisitions of Poole, and Sensage as if they had been acquired as of January 1, 2011. This amount was adjusted for the shares outstanding that are already included in the KEYW average shares calculation. $7.5 million in stock consideration potentially issuable in connection with the Sensage acquisition was excluded because it is based on an earn out which Sensage may or may not achieve. The actual number of shares issued for the acquisitions of the Poole and Sensage will depend upon factors including future prices of our common stock.

         
Six months ended June 30, 2012   KEYW
(unaudited)
  Poole
(unaudited)
  Sensage
(unaudited)
  Pro Forma
Adjustments
(unaudited)
  Pro Forma
Combined
(unaudited)
     (in thousands, except per share data)
Revenue     111,931       24,272       4,369             140,572  
Cost of Revenues(1)     74,069       17,840       1,413       1,530 (2)      94,852  
Gross Profit     37,862       6,432       2,956       (1,530 )      45,720  
Operating Expenses     26,501       5,441       4,398       (1,530 )(2)      34,810  
Intangible Amortization     9,738                      4,500 (3)      14,238  
Operating Income (Loss)     1,623       991       (1,442 )      (4,500 )      (3,328 ) 
Non-Operating Expense     864                204       4,550 (4)      5,618  
Income (Loss) Before Taxes     759       991       (1,647 )      (9,050 )      (8,947 ) 
Tax Expense     266       411       2       (3,620 )      (2,941 ) 
Net Income (Loss)     493       580       (1,648 )      (5,430 )      (6,005 ) 
Basic Earnings (Loss) Per Share     0.02       n/a       n/a       n/a       (0.22 ) 
Fully Diluted Earnings (Loss) Per Share     0.02       n/a       n/a       n/a       n/a  
Weighted Average Common Shares Outstanding
                                            
Basic     25,679,720       n/a       n/a       1,583,333 (5)      27,263,053  
Diluted     28,085,331       n/a       n/a       1,583,333       29,668,664  

(1) Cost of revenues excludes intangible amortization expense as shown separately below.
(2) Adjustment to Poole's cost of revenue and operating expense to include fringe benefit expense associated with direct labor in cost of revenue versus operating expense.
(3) Intangible amortization that would have been recorded if the acquisitions of Poole and Sensage had been completed on January 1, 2012.
(4) Estimated interest expense for the acquisitions of Poole and Sensage if they had been completed on January 1, 2012.
(5) Includes the estimated number of shares to be issued for the acquisitions of Poole and Sensage as if they had been acquired as of January 1, 2012. This amount was adjusted for the shares outstanding that are already included in the KEYW average shares calculation. $7.5 million in stock consideration potentially issuable in connection with the Sensage acquisition was excluded because it is based on an earn out which Sensage may or may not achieve. The actual number of shares issued for the acquisitions of Poole and Sensage will depend upon factors including future prices of our common stock.

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Pro Forma Balance Sheet

         
As of June 30, 2012   KEYW
(audited)
  Poole
(audited)
  Sensage
(audited)
  Pro Forma
Adjustments
(unaudited)
  Pro Forma
Combined
(unaudited)
Assets
                                            
Current Assets
                                            
Cash and Cash Equivalents     234       185       2,549                2,968  
Receivables     51,196       6,620       2,658                60,474  
Inventories, Net     8,676                                  8,676  
Prepaid Expenses     2,973       32       205                3,210  
Income Tax Receivable     27                                  27  
Deferred Tax Asset, Current     1,193       75                         1,268  
Total current assets     64,299       6,912       5,412       0       76,623  
Property and Equipment, Net     14,759       834       95                15,688  
Goodwill     164,466                         109,414 (1)      273,880  
Other Intangibles, Net     29,264                         37,000 (1)      66,264  
Deferred Tax Asset     2,348                                  2,348  
Other Assets     212       35       165                412  
Total Assets     275,348       7,781       5,672       146,414       435,215  
Liabilities and Stockholders’ Equity
                                            
Current Liabilities:
                                            
Accounts Payable     4,706       1,870       1,266                7,842  
Accrued Expenses     4,611       1,407                         6,018  
Accrued Salaries & Wages     12,640       684                         13,324  
Revolver     52,200                         131,000 (1)      183,200  
Income Tax Payable              401                         401  
Current Portion of Notes Payable                       1,300       (1,300 )(2)      0  
Current Maturities of Long-Term Debt                       921       (921 )(2)      0  
Deferred Income Taxes     1,591                                  1,591  
Deferred Revenue                       4,083                4,083  
Total Current Liabilities     75,748       4,362       7,570       128,779       216,459  
Long-Term Liabilities
                                            
Non-Current Deferred Tax Liability     15,977       156                         16,133  
Other Non-Current Liabilities     3,851                                  3,851  
Long-Term Debt, Net of Current Maturities                       956       (956 )(2)      0  
Total Liabilities     95,576       4,518       8,526       127,823       236,443  
Commitments and Contingencies
                                            
Stockholders' Equity
                                            
Acquiree's Equity              3,263       (2,854 )      (409 )(3)(4)      0  
Common Stock     26                         1 (1)      27  
Additional Paid-In Capital     171,991                         18,999 (1)      190,990  
Retained Earnings (Accumulated Deficit)     7,755                                  7,755  
Total Stockholders’ Equity (Deficit)     179,772       3,263       (2,854 )      18,591       198,772  
Total Liabilities and Stockholders’ Equity     275,348       7,781       5,672       146,414       435,215  

(1) These amounts represent the recording of the purchase price for both Poole and Sensage.
(2) This represents the elimination of the outstanding debt as Sensage will be acquired debt free.
(3) This amount represents the elimination of the existing equity of the acquired companies against goodwill.
(4) Excludes KEYW shares that could be earned by Sensage as a result of achieving certain performance targets.

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