Attached files
file | filename |
---|---|
8-K/A - 8-K/A - ALLIED MOTION TECHNOLOGIES INC | a14-1132_18ka.htm |
EX-23.1 - EX-23.1 - ALLIED MOTION TECHNOLOGIES INC | a14-1132_1ex23d1.htm |
EX-99.1 - EX-99.1 - ALLIED MOTION TECHNOLOGIES INC | a14-1132_1ex99d1.htm |
Exhibit 99.2
UNAUDITED PROFORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
On August 22, 2013, Allied Motion Technologies Inc. (Allied Motion) entered into a Stock Purchase Agreement (the Purchase Agreement) to purchase all of the outstanding equity interests of Globe Motors, Inc., a Delaware corporation (Globe Motors) from Safran USA, Inc. (the Seller), for approximately $90 million in cash. The purchase price paid will be subject to adjustment to reflect, among other things, the working capital and cash on hand of Globe Motors at the time of closing. The acquisition of Globe Motors closed on October 18, 2013 and the post-closing adjustment of the purchase price is expected to be completed during the first quarter of 2014.
The unaudited pro forma combined consolidated balance sheet is presented to show how Allied Motion might have looked had the acquisition occurred as of that date. The unaudited pro forma combined consolidated statements of operations and comprehensive income for the year ended December 31, 2012 and the nine months ended September 30, 2013 are presented to show how Allied Motion might have looked had the acquisition occurred as of January 1, 2012, the beginning of the earliest period presented.
This pro forma information is based on, and should be read in conjunction with, the following:
· The historical audited financial statements of Allied Motion as of and for the fiscal year ended December 31, 2012, included in a Form 10-K filed on March 11, 2013;
· The historical unaudited financial statements of Allied Motion as of and for the nine months ended September 30, 2013, included in a Form 10-Q filed on November 14, 2013;
· The historical audited financial statements of Globe Motors as of and for the fiscal year ended December 31, 2012, included in this Form 8-K/A;
· The historical audited financial statements of Globe Motors for the nine months ended September 30, 2013, included in this Form 8-K/A.
The unaudited pro forma combined consolidated financial information was prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The unaudited pro forma adjustments reflecting the acquisition have been prepared in accordance with the business combination accounting guidance and reflect the preliminary allocation of the purchase price to the acquired assets and liabilities based upon the estimate of fair values, using the assumptions set forth in the notes to the unaudited pro forma combined consolidated financial information. The detailed assumptions used to prepare the unaudited pro forma combined consolidated financial information are contained in the notes hereto and such assumptions should be reviewed in their entirety.
The unaudited pro forma combined consolidated financial information is provided for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had been completed as of the dates set forth above, nor is it indicative of the future results or financial position of the combined company. In connection with the unaudited pro forma combined consolidated financial information, the total purchase consideration was allocated based on the best estimates of fair value. The allocation is dependent upon certain valuations and other analysis that are not yet final. Accordingly, the pro forma acquisition price adjustments are subject to further adjustments as additional information becomes available and as additional analyses are performed. There can be no assurances that the final valuations will not result in material changes to the estimated purchase price allocation. The unaudited pro forma combined financial information also does not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the transaction or any integration costs. Furthermore, the unaudited pro forma combined consolidated statements of operations and comprehensive income do not include certain nonrecurring charges which resulted directly from the acquisition as described in the accompanying notes.
Unaudited Pro Forma Combined Consolidated Balance Sheet
As of September 30, 2013
(In thousands, except per share data)
|
|
Historical Results |
|
|
|
|
|
|
|
|
| |||||||
|
|
Allied Motion |
|
Globe Motors, |
|
Combined |
|
Pro Forma |
|
|
|
Unaudited |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
|
$ |
11,654 |
|
$ |
648 |
|
$ |
12,302 |
|
$ |
(775 |
) |
A, B |
|
$ |
11,527 |
|
Due from affiliates |
|
|
|
3,364 |
|
3,364 |
|
(3,364 |
) |
H |
|
|
| |||||
Trade receivables, net of allowance for doubtful accounts |
|
13,429 |
|
19,490 |
|
32,919 |
|
|
|
|
|
32,919 |
| |||||
Inventories, net |
|
15,167 |
|
9,703 |
|
24,870 |
|
500 |
|
C |
|
25,370 |
| |||||
Deferred income taxes |
|
731 |
|
1,581 |
|
2,312 |
|
(1,581 |
) |
B |
|
731 |
| |||||
Prepaid expenses and other assets |
|
1,431 |
|
2,333 |
|
3,764 |
|
|
|
|
|
3,764 |
| |||||
Total Current Assets |
|
42,412 |
|
37,119 |
|
79,531 |
|
(5,220 |
) |
|
|
74,311 |
| |||||
Property, plant and equipment, net |
|
9,649 |
|
17,128 |
|
26,777 |
|
13,176 |
|
E, F |
|
39,953 |
| |||||
Deferred income taxes |
|
4,115 |
|
1,698 |
|
5,813 |
|
|
|
|
|
5,813 |
| |||||
Intangible assets, net |
|
2,227 |
|
|
|
2,227 |
|
34,000 |
|
G |
|
36,227 |
| |||||
Other long-term assets, net |
|
2,672 |
|
|
|
2,672 |
|
1,921 |
|
D |
|
4,593 |
| |||||
Goodwill |
|
5,916 |
|
44,692 |
|
50,608 |
|
(34,619 |
) |
B, E, F, G, H |
|
15,989 |
| |||||
Total Assets |
|
$ |
66,991 |
|
$ |
100,637 |
|
$ |
167,628 |
|
$ |
9,258 |
|
|
|
$ |
176,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities and Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Line of credit |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
9,225 |
|
A |
|
$ |
9,225 |
|
Current maturities of long-term debt |
|
1,141 |
|
|
|
1,141 |
|
|
|
|
|
1,141 |
| |||||
Accounts payable |
|
7,628 |
|
11,562 |
|
19,190 |
|
|
|
|
|
19,190 |
| |||||
Accrued liabilities |
|
5,485 |
|
4,230 |
|
9,715 |
|
961 |
|
D |
|
10,676 |
| |||||
Total Current Liabilities |
|
14,254 |
|
15,792 |
|
30,046 |
|
10,186 |
|
|
|
40,232 |
| |||||
Long-term debt |
|
|
|
|
|
|
|
80,000 |
|
A |
|
80,000 |
| |||||
Deferred income taxes |
|
885 |
|
653 |
|
1,538 |
|
2,304 |
|
E |
|
3,842 |
| |||||
Deferred compensation arrangements |
|
2,692 |
|
|
|
2,692 |
|
|
|
|
|
2,692 |
| |||||
Pension and post-retirement obligations |
|
3,694 |
|
|
|
3,694 |
|
|
|
|
|
3,694 |
| |||||
Total Liabilities |
|
21,525 |
|
16,445 |
|
37,970 |
|
92,490 |
|
|
|
130,460 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Stockholders Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Common stock, no par value |
|
23,543 |
|
1 |
|
23,544 |
|
(1 |
) |
H |
|
23,543 |
| |||||
Preferred stock, par value $1.00 per share |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Additional paid-in capital |
|
|
|
66,397 |
|
66,397 |
|
(66,397 |
) |
H |
|
|
| |||||
Retained earnings |
|
22,494 |
|
13,396 |
|
35,890 |
|
(12,436 |
) |
D, H |
|
23,454 |
| |||||
Accumulated other comprehensive (loss) income |
|
(571 |
) |
4,398 |
|
3,827 |
|
(4,398 |
) |
H |
|
(571 |
) | |||||
Total Stockholders Equity |
|
45,466 |
|
84,192 |
|
129,658 |
|
(83,232 |
) |
|
|
46,426 |
| |||||
Total Liabilities and Stockholders Equity |
|
$ |
66,991 |
|
$ |
100,637 |
|
$ |
167,628 |
|
$ |
9,258 |
|
|
|
$ |
176,886 |
|
The accompanying notes are an integral part of these unaudited pro forma combined consolidated financial statements.
The pro forma adjustments are explained in Notes 3 and 4.
Unaudited Pro Forma Combined Consolidated Statement of Operations and Comprehensive Income
For the Nine Months Ended September 30, 2013
(In thousands, except per share data)
|
|
Historical Results |
|
|
|
|
|
|
|
|
| |||||||
|
|
Allied Motion |
|
Globe Motors, |
|
Combined |
|
Pro Forma |
|
|
|
Unaudited |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
$ |
75,371 |
|
$ |
89,260 |
|
$ |
164,631 |
|
$ |
|
|
|
|
$ |
164,631 |
|
Cost of products sold |
|
53,075 |
|
66,803 |
|
119,878 |
|
|
|
|
|
119,878 |
| |||||
Gross margin |
|
22,296 |
|
22,457 |
|
44,753 |
|
|
|
|
|
44,753 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Selling |
|
3,640 |
|
2,661 |
|
6,301 |
|
|
|
|
|
6,301 |
| |||||
General and administrative |
|
8,098 |
|
8,759 |
|
16,857 |
|
(2,789 |
) |
J, K, O, P |
|
14,068 |
| |||||
Engineering and development |
|
5,123 |
|
4,476 |
|
9,599 |
|
|
|
|
|
9,599 |
| |||||
Business development costs |
|
1,235 |
|
|
|
1,235 |
|
(1,235 |
) |
I |
|
|
| |||||
Relocation costs |
|
234 |
|
|
|
234 |
|
|
|
|
|
234 |
| |||||
Amortization of intangible assets |
|
252 |
|
|
|
252 |
|
1,800 |
|
M |
|
2,052 |
| |||||
Total operating costs and expenses |
|
18,582 |
|
15,896 |
|
34,478 |
|
(2,224 |
) |
|
|
32,254 |
| |||||
Operating income |
|
3,714 |
|
6,561 |
|
10,275 |
|
2,224 |
|
|
|
12,499 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense |
|
(30 |
) |
(238 |
) |
(268 |
) |
(4,698 |
) |
L, N |
|
(4,966 |
) | |||||
Other income (expense) |
|
58 |
|
623 |
|
681 |
|
|
|
|
|
681 |
| |||||
Total other income (expense), net |
|
28 |
|
385 |
|
413 |
|
(4,698 |
) |
|
|
(4,285 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income before income taxes |
|
3,742 |
|
6,946 |
|
10,688 |
|
(2,474 |
) |
|
|
8,214 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Provision for income taxes |
|
1,130 |
|
2,588 |
|
3,718 |
|
(965 |
) |
Q |
|
2,753 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
$ |
2,612 |
|
$ |
4,358 |
|
$ |
6,970 |
|
$ |
(1,509 |
) |
|
|
$ |
5,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation adjustment |
|
352 |
|
164 |
|
516 |
|
|
|
|
|
516 |
| |||||
Comprehensive income |
|
$ |
2,964 |
|
$ |
4,522 |
|
$ |
7,425 |
|
$ |
(1,509 |
) |
|
|
$ |
5,916 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Basic net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income per share |
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
$ |
0.60 |
| |||
Basic weighted average common shares |
|
8,778 |
|
|
|
|
|
|
|
|
|
9,026 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income per share |
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
$ |
0.60 |
| |||
Diluted weighted average common shares |
|
8,778 |
|
|
|
|
|
|
|
|
|
9,026 |
|
The accompanying notes are an integral part of these unaudited pro forma combined consolidated financial statements.
The pro forma adjustments are explained in Notes 3 and 4.
Unaudited Pro Forma Combined Consolidated Statement of Operations and Comprehensive Income
For the Year Ended December 31, 2012
(In thousands, except per share data)
|
|
Audited Historical Results |
|
|
|
|
|
|
|
|
| |||||||
|
|
Allied Motion |
|
Globe Motors, |
|
Combined |
|
Pro Forma |
|
|
|
Unaudited |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Revenues |
|
$ |
101,968 |
|
$ |
106,479 |
|
$ |
208,447 |
|
$ |
|
|
|
|
$ |
208,447 |
|
Cost of products sold |
|
72,328 |
|
77, 436 |
|
149,764 |
|
|
|
|
|
149,764 |
| |||||
Gross margin |
|
29,640 |
|
29,043 |
|
58,683 |
|
|
|
|
|
58,683 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Selling |
|
5,093 |
|
3,491 |
|
8,584 |
|
|
|
|
|
8,584 |
| |||||
General and administrative |
|
10,811 |
|
8,352 |
|
19,163 |
|
(390 |
) |
I, J, K, O, P |
|
18,773 |
| |||||
Engineering and development |
|
6,060 |
|
5,904 |
|
11,964 |
|
|
|
|
|
11,964 |
| |||||
Business development costs |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Relocation costs |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Amortization of intangible assets |
|
548 |
|
|
|
548 |
|
2,400 |
|
M |
|
2,948 |
| |||||
Total operating costs and expenses |
|
22,512 |
|
17,747 |
|
40,259 |
|
2,010 |
|
|
|
42,269 |
| |||||
Operating income |
|
7,128 |
|
11,296 |
|
18,424 |
|
(2,010 |
) |
|
|
16,414 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense |
|
(13 |
) |
(147 |
) |
(160 |
) |
(6,503 |
) |
L, N |
|
(6,663 |
) | |||||
Other income |
|
383 |
|
1,467 |
|
1,850 |
|
|
|
|
|
1,850 |
| |||||
Total other income, net |
|
370 |
|
1,320 |
|
1,690 |
|
(6,503 |
) |
|
|
(4,813 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income before income taxes |
|
7,498 |
|
12,616 |
|
20,114 |
|
(8,513 |
) |
|
|
11,601 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Provision for income taxes |
|
2,101 |
|
4,409 |
|
6,510 |
|
(3,320 |
) |
Q |
|
3,190 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income |
|
$ |
5,397 |
|
$ |
8,207 |
|
$ |
13,604 |
|
$ |
(5,193 |
) |
|
|
$ |
8,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Foreign currency translation adjustment |
|
624 |
|
63 |
|
687 |
|
|
|
|
|
687 |
| |||||
Pension adjustment |
|
(331 |
) |
|
|
(331 |
) |
|
|
|
|
(331 |
) | |||||
Comprehensive income |
|
$ |
5,690 |
|
$ |
8,270 |
|
$ |
13,960 |
|
$ |
(5,193 |
) |
|
|
$ |
8,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Basic net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income per share |
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
$ |
0.95 |
| |||
Basic weighted average common shares |
|
8,616 |
|
|
|
|
|
|
|
|
|
8,864 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Diluted net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net income per share |
|
$ |
0.63 |
|
|
|
|
|
|
|
|
|
$ |
0.95 |
| |||
Diluted weighted average common shares |
|
8,616 |
|
|
|
|
|
|
|
|
|
8,864 |
|
The accompanying notes are an integral part of these unaudited pro forma combined consolidated financial statements.
The pro forma adjustments are explained in Notes 3 and 4.
ALLIED MOTION TECHNOLOGIES INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRO FORMA PRESENTATION
On August 22, 2013, Allied Motion Technologies Inc. (Allied Motion) entered into a Stock Purchase Agreement (the Purchase Agreement) to purchase all of the outstanding equity interests of Globe Motors, Inc., a Delaware corporation (Globe Motors) from Safran USA, Inc. (the Seller), for approximately $90 million in cash. The purchase price paid will be subject to adjustment to reflect, among other things, the working capital and cash on hand of Globe Motors at the time of closing. The acquisition of Globe Motors closed on October 18, 2013 and the post-closing adjustment of the purchase price is expected to be completed during the first quarter of 2014.
The unaudited pro forma combined consolidated balance sheet as of September 30, 2013 is based on historical financial statements of Allied Motion and the historical financial statements of Globe Motors after giving effect to the acquisition adjustments. The unaudited pro forma combined consolidated balance sheet as of September 30, 2013 is presented as if the acquisition had occurred on September 30, 2013.
The unaudited pro forma combined consolidated statements of operations and comprehensive income for the year ended December 31, 2012 and for the nine months ended September 30, 2013 is based on the historical financial statements of Allied Motion and Globe Motors for the respective periods then ended after giving effect to the acquisition adjustments. The unaudited pro forma combined consolidated statements of operations and comprehensive income are presented as if the acquisition had occurred on January 1, 2012.
The historical financial information has been adjusted to give pro forma effect to events that are (i) directly attributable to the transaction, (ii) factually supportable, and (iii) with respect to the unaudited pro forma combined consolidated statements of operations and comprehensive income, expected to have a continuing impact on the combined results. The pro forma adjustments are preliminary and based on estimated of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the transaction and certain other adjustments.
Under the acquisition method, acquisition-related transaction costs (e.g. advisory, legal, valuation and other professional fees) are not included as consideration transferred but are accounted for as expenses in the periods in which the costs are incurred. These costs are not presented in the unaudited pro forma combined consolidated statements of operations and comprehensive income because they will not have a continuing impact on the combined results.
2. PURCHASE PRICE ALLOCATION
The purchase price was approximately $90 million in cash payments.
The allocation of the purchase price paid for Globe Motors is based on estimated fair values of the assets acquired and liabilities assumed of Globe Motors as of September 30, 2013. The allocation of the purchase price is preliminary as the valuation of both the tangible and identifiable intangible assets is being finalized. While the final amounts allocated to assets and liabilities could change from the information presented in the unaudited pro forma combined condensed financial statements, the Company does not expect changes to be material. Cost and fees incurred by Allied Motion associated with the acquisition of Globe Motors are estimated to be approximately $4.1 million.
The preliminary allocation of purchase price based on estimated fair values (in thousands):
Net tangible assets |
|
|
|
|
| ||
Working capital |
|
$ |
18,580 |
|
|
| |
Property, plant and equipment |
|
30,304 |
|
|
| ||
Deferred income tax liabilities |
|
(2,957 |
) |
$ |
45,927 |
| |
Identifiable purchased intangible assets: |
|
|
|
|
| ||
Trade name |
|
4,000 |
|
|
| ||
Customer relationships |
|
30,000 |
|
34,000 |
| ||
Goodwill |
|
|
|
10,073 |
| ||
Total purchase price |
|
|
|
$ |
90,000 |
| |
Intangible assets
The fair value of identifiable intangible assets of $34.0 million has been allocated to the following asset categories (in thousands):
|
|
Preliminary |
|
First 12 |
|
Amortization |
|
Estimated |
| ||
Trade name |
|
$ |
4,000 |
|
$ |
400 |
|
Straight Line |
|
10 Years |
|
Customer relationships |
|
30,000 |
|
2,000 |
|
Straight Line |
|
15 Years |
| ||
|
|
$ |
34,000 |
|
$ |
2,400 |
|
|
|
|
|
3. UNAUDITED PRO FORMA ADJUSTMENTS
The unaudited pro forma combined consolidated balance sheet as of September 30, 2013 and unaudited pro forma combined consolidated statements of operations and comprehensive income for the nine months ended September 30, 2013 and for the year ended December 31, 2012 gives effect to the following adjustments (in thousands):
A- To reflect the issuance of both term loan and senior subordinated notes, and borrowings on revolving line of credit facility, related to the acquisition.
B- To reflect the fair value of the purchased cash, intangible assets and goodwill resulting from the acquisition and the related deferred taxes.
C- To reflect the estimated purchase accounting adjustment for capitalization of estimated manufacturing profit in inventory acquired. (Note: The unaudited pro forma combined consolidated statement of operations and comprehensive income does not reflect the impact of the one-time adjustment to costs of products sold during the periods when this inventory will be sold.)
D- To reflect accrued transaction costs and debt issuance costs related to the acquisition and the incurrence of related debt. This adjustment reflects the accrual of expected transaction costs as of September 30, 2013.
E- To reflect the fair value of property, plant and equipment acquired in business combination and the related deferred taxes attributed to the difference in the tax and book basis for the foreign assets.
F- To reflect the removal of Globe Motors intangible assets ($100) and goodwill ($44,692) at the date of purchase.
G- To reflect the fair value of the purchased intangible assets and goodwill resulting from the acquisition and the related deferred taxes attributed to the difference in the tax and book basis for the foreign assets.
H- To reflect the removal of Globe Motors historical equity ($36,036) at the date of purchase and the due from affiliates ($3,364) that is not being assumed as part of the Purchase Agreement.
I- To reflect the removal of Allied Motions transaction costs ($1,235 and $24, respectively) incurred that were directly attributable to the acquisition.
J- To reflect the removal of Globe Motors litigation costs ($2,429 and $986, respectively) for which Allied Motion is being indemnified by the Seller.
K- To reflect the removal of Globe Motors corporate allocation charges from the Seller ($1,107 and $402, respectively) that will not be replaced and the removal of contributions to a supplemental retirement plan for employees ($424 and $539, respectively) which plan will be terminated in connection with the acquisition. .
L- To reflect the interest expense ($4,410 and $6,119, respectively) on the new acquisition debt calculated using the following interest rates: (1) $50 million five-year term loan - $25 million using a floating Libor based interest rate of 2.67% and $25 million using a fixed hedged interest rate of 3.62%; (2) Senior Subordinated Notes at the stated interest rate of 14.50%; (3) revolving line of credit - 60% using a Libor based floating interest rate of 2.7% and 40% using a Prime based floating interest rate of 4.75%. The effect on income of a 1/8 % increase or decrease in the floating interest rates would result in an increase or decrease in interest expense for the nine months ended September 30, 2013 and year ended December 31, 2012 of $23 and $37, respectively.
M- To reflect the amortization expense of finite lived purchased intangible assets, which lives are ten years for trade names and fifteen years for customer relationships.
N- To reflect the amortization of new debt issuance costs as interest expense ($288 and $384, respectively), which amortization period is five years.
O- To reflect the depreciation expense ($864 and $1,152, respectively) of purchased property, plant and equipment, which depreciable lives are ten years for machinery and equipment and thirty years for real property.
P- To reflect the stock based compensation expense ($307 and $409, respectively) for 248 thousand restricted stock awards issued in relation to the acquisition of Globe Motors.
Q- To reflect the recognition of income taxes at a 39% effective rate, on the combined income before income taxes as adjusted for the income statement pro forma adjustments.
4. UNAUDITED PRO FORMA COMBINED CONSOLIDATED NET INCOME PER SHARE
The pro forma basic and diluted net income per share amounts presented are based upon the weighted average number of common shares outstanding during the periods presented. The basic and diluted earnings per share and the information of the number of shares used to compute basic and diluted earnings per share.
5. VARIABLE RATE DEBT
Revolving Credit Facility and Term Loan
In connection with the funding of the acquisition of Globe Motors, Allied Motion entered into a Credit Agreement (the Credit Agreement) dated as of October 18, 2013. The Credit Agreement provides for a $15 million five-year revolving credit facility (the Revolver) and a $50 million five-year term loan (the Term Loan and together with the Revolver, the Senior Credit Facilities).
Borrowings under the Senior Credit Facilities will bear interest at the Base Rate (as defined in the Credit Agreement) plus a margin of 0.25% to 2.00% or the Eurocurrency Rate (as defined in the Credit Agreement) plus a margin of 1.25% to 3.00%, in each case depending on Allied Motions ratio of total funded indebtedness (as defined in the Credit Agreement) to Consolidated EBITDA (the Total Leverage Ratio). The Senior Credit Facility initially bears interest at 4.75% at October 18, 2013. Subsequently, the interest rates changed to a floating rate based on both the Prime and Libor rates and a hedged fixed rate on a portion of the term debt as more fully described under item L in Footnote 3 Unaudited Pro Forma Adjustments. In addition, Allied Motion is required to pay a commitment fee of between 0.125% and 0.30% quarterly (currently 0.25%) on the unused portion of the Revolver, also based on Allied Motions Total Leverage Ratio. Principal installments are payable on the Term Loan in varying percentages quarterly through September 30, 2018 with a balloon payment at maturity and with mandatory prepayments being required in certain circumstances. The Senior Credit Facilities are secured by substantially all of Allied Motions assets and are fully and unconditionally guaranteed by certain of the Allied Motions subsidiaries.