Attached files
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| 8-K - 8-K - SEQUENOM INC | d738303d8k.htm |
Exhibit 99.1
SEQUENOM, INC.
INTRODUCTION TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(Unaudited)
The accompanying unaudited pro forma condensed consolidated statement of operations for three months ended March 31, 2014 and the years ended December 31, 2013, 2012 and 2011 give effect to the disposition of certain assets related to the Company’s Bioscience business as if it had been consummated at the beginning of each period presented. The accompanying unaudited pro forma condensed consolidated balance sheet as of March 31, 2014 gives effect to the disposition of certain assets related to the Company’s Bioscience business as if it had been consummated as of March 31, 2014.
The historical financial information on which the pro forma statements are based is included in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 1, 2014 and the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2014. The pro forma consolidated financial statements and the notes thereto should be read in conjunction with these historical consolidated financial statements.
The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are subject to a number of assumptions which may not be indicative of the results of operations that would have occurred had the disposition been completed at the dates indicated or what the results will be for any future periods. The unaudited pro forma consolidated statements of operations do not include the gain or loss that the Company may recognize for the sale of certain assets related to the Company’s Bioscience business if the transaction was completed at the beginning of the periods presented.
SEQUENOM, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
| March 31, 2014 | ||||||||||||||
| As Reported |
Pro Forma Adjustments |
Pro Forma | ||||||||||||
| Assets |
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| Current assets: |
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| Cash and cash equivalents |
$ | 45,340 | $ | 27,660 | A | $ | 73,000 | |||||||
| Marketable securities |
10,988 | — | 10,988 | |||||||||||
| Accounts receivable, net |
10,231 | (6,807 | ) | B | 3,424 | |||||||||
| Inventories |
13,015 | (5,703 | ) | B | 7,312 | |||||||||
| Other current assets and prepaid expenses |
3,487 | 34 | C | 3,521 | ||||||||||
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| Total current assets |
83,061 | 15,184 | 98,245 | |||||||||||
| Property, equipment and leasehold improvements, net |
23,568 | (858 | ) | B | 22,710 | |||||||||
| Goodwill |
10,007 | — | 10,007 | |||||||||||
| Other assets |
6,215 | 866 | D | 7,081 | ||||||||||
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| Total assets |
$ | 122,851 | $ | 15,192 | $ | 138,043 | ||||||||
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| Liabilities and stockholders’ equity (deficit) |
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| Current liabilities: |
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| Accounts payable |
$ | 9,846 | $ | (1,137 | ) | B | $ | 8,709 | ||||||
| Accrued expenses |
20,159 | (3,532 | ) | B | 16,627 | |||||||||
| Long-term debt and obligations, current portion |
7,656 | — | 7,656 | |||||||||||
| Other current liabilities |
4,627 | (2,190 | ) | B | 2,437 | |||||||||
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| Total current liabilities |
42,288 | (6,859 | ) | 35,429 | ||||||||||
| Long-term debt and obligations, less current portion |
7,760 | — | 7,760 | |||||||||||
| 5.00% Convertible Senior Notes due 2017 |
130,000 | — | 130,000 | |||||||||||
| Other long-term liabilities |
1,442 | (560 | ) | B | 882 | |||||||||
| Commitments and contingencies |
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| Stockholders’ deficit: |
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| Common stock, par value $0.001; 185,000 shares authorized, 116,393 shares issued and outstanding at March 31, 2014 |
116 | — | 116 | |||||||||||
| Additional paid-in capital |
970,564 | — | E | 970,564 | ||||||||||
| Accumulated other comprehensive income |
664 | (517 | ) | F | 147 | |||||||||
| Accumulated deficit |
(1,029,983 | ) | 23,128 | G | (1,006,855 | ) | ||||||||
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| Total stockholders’ deficit |
(58,639 | ) | 22,611 | (36,028 | ) | |||||||||
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| Total liabilities and stockholders’ deficit |
$ | 122,851 | $ | 15,192 | $ | 138,043 | ||||||||
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SEQUENOM, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except per share information)
| March 31, 2014 | ||||||||||||||
| As Reported |
Pro Forma Adjustments |
Pro Forma | ||||||||||||
| Statements of Operations |
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| Revenues: |
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| Diagnostic services |
$ | 37,061 | $ | — | $ | 37,061 | ||||||||
| Bioscience product sales and services |
9,212 | (9,212 | ) | 1 | — | |||||||||
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| Total revenues |
46,273 | (9,212 | ) | 37,061 | ||||||||||
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| Cost of revenues: |
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| Cost of diagnostic services |
22,770 | — | 22,770 | |||||||||||
| Cost of bioscience product sales and services |
3,340 | (3,340 | ) | 1 | — | |||||||||
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| Total cost of revenues |
26,110 | (3,340 | ) | 22,770 | ||||||||||
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| Gross margin |
20,163 | (5,872 | ) | 14,291 | ||||||||||
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| Operating expenses: |
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| Selling and marketing |
11,769 | (3,210 | ) | 1 | 8,559 | |||||||||
| Research and development |
8,161 | (1,372 | ) | 1 | 6,789 | |||||||||
| General and administrative |
12,767 | (287 | ) | 1 | 12,480 | |||||||||
| Restructuring costs |
929 | (19 | ) | 1 | 910 | |||||||||
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| Total operating expenses |
33,626 | (4,888 | ) | 28,738 | ||||||||||
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| Income (loss) from operations |
(13,463 | ) | (984 | ) | (14,447 | ) | ||||||||
| Interest expense, net |
(2,077 | ) | — | (2,077 | ) | |||||||||
| Other income (expense), net |
50 | (72 | ) | 1 | (22 | ) | ||||||||
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| Income (loss) before income taxes |
(15,490 | ) | (1,056 | ) | (16,546 | ) | ||||||||
| Income tax expense |
(184 | ) | 60 | 1 | (124 | ) | ||||||||
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| Net loss from continuing operations |
$ | (15,674 | ) | $ | (996 | ) | $ | (16,670 | ) | |||||
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| Net loss per common share, basic and diluted: |
$ | (0.13 | ) | $ | (0.14 | ) | ||||||||
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| Weighted average number of shares outstanding, basic and diluted |
116,134 | 116,134 | ||||||||||||
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SEQUENOM, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except per share information)
| December 31, 2013 | ||||||||||||||
| As Reported |
Pro Forma Adjustments |
Pro Forma | ||||||||||||
| Statements of Operations |
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| Revenues: |
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| Diagnostic services |
$ | 119,556 | $ | — | $ | 119,556 | ||||||||
| Bioscience product sales and services |
42,870 | (42,870 | ) | 1 | — | |||||||||
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| Total revenues |
162,426 | (42,870 | ) | 119,556 | ||||||||||
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| Cost of revenues: |
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| Cost of diagnostic services |
87,302 | — | 87,302 | |||||||||||
| Cost of bioscience product sales and services |
15,436 | (15,436 | ) | 1 | — | |||||||||
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| Total cost of revenues |
102,738 | (15,436 | ) | 87,302 | ||||||||||
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| Gross margin |
59,688 | (27,434 | ) | 32,254 | ||||||||||
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| Operating expenses: |
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| Selling and marketing |
51,360 | (13,772 | ) | 1 | 37,588 | |||||||||
| Research and development |
46,532 | (7,797 | ) | 1 | 38,735 | |||||||||
| General and administrative |
54,166 | (1,621 | ) | 1 | 52,545 | |||||||||
| Restructuring costs |
6,037 | (284 | ) | 1 | 5,753 | |||||||||
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| Total operating expenses |
158,095 | (23,474 | ) | 134,621 | ||||||||||
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| Income (loss) from operations |
(98,407 | ) | (3,960 | ) | (102,367 | ) | ||||||||
| Interest expense, net |
(8,443 | ) | — | (8,443 | ) | |||||||||
| Other income (expense), net |
(255 | ) | 144 | 1 | (111 | ) | ||||||||
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| Income (loss) before income taxes |
(107,105 | ) | (3,816 | ) | (110,921 | ) | ||||||||
| Income tax expense |
(301 | ) | 100 | 1 | (201 | ) | ||||||||
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| Net loss from continuing operations |
$ | (107,406 | ) | $ | (3,716 | ) | $ | (111,122 | ) | |||||
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| Net loss per common share, basic and diluted: |
$ | (0.93 | ) | $ | (0.96 | ) | ||||||||
| Weighted average number of shares outstanding, basic and diluted |
115,378 | 115,378 | ||||||||||||
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SEQUENOM, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except per share information)
| December 31, 2012 | ||||||||||||||
| As Reported |
Pro Forma Adjustments |
Pro Forma | ||||||||||||
| Statements of Operations |
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| Revenues: |
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| Diagnostic services |
$ | 46,457 | $ | — | $ | 46,457 | ||||||||
| Bioscience product sales and services |
43,240 | (43,240 | ) | 1 | — | |||||||||
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| Total revenues |
89,697 | (43,240 | ) | 46,457 | ||||||||||
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| Cost of revenues: |
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| Cost of diagnostic services |
47,283 | — | 47,283 | |||||||||||
| Cost of bioscience product sales and services |
15,025 | (15,025 | ) | 1 | — | |||||||||
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| Total cost of revenues |
62,308 | (15,025 | ) | 47,283 | ||||||||||
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| Gross margin |
27,389 | (28,215 | ) | (826 | ) | |||||||||
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| Operating expenses: |
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| Selling and marketing |
48,587 | (14,792 | ) | 1 | 33,795 | |||||||||
| Research and development |
50,525 | (10,283 | ) | 1 | 40,242 | |||||||||
| General and administrative |
41,090 | (1,308 | ) | 1 | 39,782 | |||||||||
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| Total operating expenses |
140,202 | (26,383 | ) | 113,819 | ||||||||||
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| Income (loss) from operations |
(112,813 | ) | (1,832 | ) | (114,645 | ) | ||||||||
| Interest expense, net |
(3,318 | ) | — | (3,318 | ) | |||||||||
| Other income (expense), net |
(1,167 | ) | 1,155 | 1 | (12 | ) | ||||||||
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| Income (loss) before income taxes |
(117,298 | ) | (677 | ) | (117,975 | ) | ||||||||
| Income tax (expense) benefit |
269 | 150 | 1 | 419 | ||||||||||
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| Net loss from continuing operations |
$ | (117,029 | ) | $ | (527 | ) | $ | (117,556 | ) | |||||
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| Net loss per common share, basic and diluted: |
$ | (1.03 | ) | $ | (1.03 | ) | ||||||||
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| Weighted average number of shares outstanding, basic and diluted |
113,646 | 113,646 | ||||||||||||
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SEQUENOM, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except per share information)
| December 31, 2011 | ||||||||||||||
| As Reported |
Pro Forma Adjustments |
Pro Forma | ||||||||||||
| Statements of Operations |
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| Revenues: |
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| Diagnostic services |
$ | 8,319 | $ | — | $ | 8,319 | ||||||||
| Bioscience product sales and services |
47,588 | (47,588 | ) | 1 | — | |||||||||
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| Total revenues |
55,907 | (47,588 | ) | 8,319 | ||||||||||
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| Cost of revenues: |
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| Cost of diagnostic services |
10,031 | — | 10,031 | |||||||||||
| Cost of bioscience product sales and services |
16,360 | (16,360 | ) | 1 | — | |||||||||
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| Total cost of revenues |
26,391 | (16,360 | ) | 10,031 | ||||||||||
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| Gross margin |
29,516 | (31,228 | ) | (1,712 | ) | |||||||||
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| Operating expenses: |
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| Selling and marketing |
28,224 | (14,510 | ) | 1 | 13,714 | |||||||||
| Research and development |
53,313 | (9,271 | ) | 1 | 44,042 | |||||||||
| General and administrative |
22,185 | (1,667 | ) | 1 | 20,518 | |||||||||
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| Total operating expenses |
103,722 | (25,448 | ) | 78,274 | ||||||||||
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| Income (loss) from operations |
(74,206 | ) | (5,780 | ) | (79,986 | ) | ||||||||
| Interest expense, net |
(330 | ) | — | (330 | ) | |||||||||
| Other income, net |
497 | (31 | ) | 1 | 466 | |||||||||
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| Income (loss) before income taxes |
(74,039 | ) | (5,811 | ) | (79,850 | ) | ||||||||
| Income tax benefit (expense) |
(95 | ) | 130 | 1 | 35 | |||||||||
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| Net loss from continuing operations |
$ | (74,134 | ) | $ | (5,681 | ) | $ | (79,815 | ) | |||||
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| Net loss per common share, basic and diluted: |
$ | (0.75 | ) | $ | (0.81 | ) | ||||||||
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| Net loss per common share, diluted: |
99,143 | 99,143 | ||||||||||||
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SEQUENOM, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1— BASIS OF PRESENTATION
The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The pro forma adjustments reflected in the accompanying unaudited pro forma condensed consolidated financial information reflects estimates and assumptions that the Company’s management believes to be reasonable. Actual results may differ from those estimates. Pro forma adjustments related to the unaudited pro forma financial information presented below were computed assuming the sale of the Bioscience segment was consummated on the dates indicated on the financial statement and include adjustments which give effect to events that are (i) directly attributable to the segment sale, (ii) expected to have a continuing impact on the Company, and (iii) factually supportable.
The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual results of operations would have been had the transactions occurred on the respective dates assumed, nor is it necessarily indicative of the Company’s future operating results. This unaudited pro forma condensed consolidated financial information and the accompanying unaudited notes should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 1, 2014 and the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2014.
NOTE 2— UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The unaudited pro forma condensed consolidated balance sheet at March 31, 2014 reflects the following pro forma adjustments:
| (A) | Reflects the pro forma impact of the cash proceeds of the Bioscience segment sale of $31.8 million less the following: (i) $1.8 million in estimated transaction costs, and; (ii) $840,000 purchase price adjustment based on estimated reduction in working capital at May 30, 2014 and; (iii) $1.5 million deposited in escrow to secure the Company’s indemnification obligations and any working capital adjustment. The escrow funds are presented in this pro forma in other current assets and prepaid expenses ($500,000) and in other assets ($1 million). The pro forma adjustment of cash proceeds does not reflect potential future milestone payments from the purchaser. |
| (B) | Adjustment to reflect the assets and liabilities sold in the Bioscience segment sale. |
| (C) | Adjustment to reflect the assets sold in the Bioscience segment sale net of $500,000 allocated to other current assets and prepaid expenses as part of the purchase proceeds deposited in escrow to secure the Company’s indemnification obligations and any future working capital adjustments. |
| (D) | Adjustment to reflect the assets sold in the Bioscience segment sale net of $1 million allocated to other assets as part of the purchase proceeds deposited in escrow to secure the Company’s indemnification obligations and any future working capital adjustments. |
| (E) | The pro forma adjustments do not account for stock based compensation that may be attributable to the Bioscience segment. |
| (F) | Represents the accumulated translation adjustment associated with the divested Bioscience segment. |
| (G) | Represents the estimated after tax-gain from the Bioscience segment sale as if the transaction closed on the balance sheet date. |
NOTE 3— UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2014 and the years ended December 31, 2013, 2012 and 2011 reflect the following pro forma adjustments:
| (1) | Amount eliminates the revenues, cost of sales, operating and tax expenses of the Bioscience segment being sold. |