8-K 1 a8-k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 16, 2000 ----------------- POWER-ONE, INC. ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 0-29454 77-0420182 ------------------------------------------------------------------------------ (State or other jurisdiction of (Commission (I.R.S. Employer incorporation or organization) File number) Identification No.) 740 CALLE PLANO, CAMARILLO, CA 93012 ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 987-8741 --------------- NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) ------------------------------------------------------------------------------ This report on Form 8-K provides additional information previously reported by Power-One, Inc. (the "Company"), on Form 10-Q for the first quarter of 2000 filed on May 17, 2000, relating to the purchase by the Company of all of the outstanding capital stock of Norwegian-based Powec A.S. This report contains the financial statements and pro forma financial information required to be provided under Item 7 of Form 8-K. Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits The following financial statements and pro forma financial information are filed as part of this report: (a) Financial statements of businesses acquired. Consolidated balance sheet of Powec AS at December 31, 1999 and related consolidated statements of operations and cash flows for the year ended December 31, 1999. Unaudited interim consolidated balance sheet of Powec AS at March 31, 2000 and related unaudited interim consolidated statements of operations and cash flows for the three months ended March 31, 2000. (b) Pro forma financial information. Pro forma consolidated balance sheets as of December 31, 1999 and March 31, 2000 and explanatory notes. Pro forma consolidated statements of operations for the year ended December 31, 1999 and for the three months ended March 31, 2000 and explanatory notes. (c) Exhibits The exhibits listed below are filed as part of, or incorporated by reference into, this report. EXHIBIT NO. DESCRIPTION ----------- ----------- Consent of Moller & Co with respect to the Consolidated 23 Financial Statements of Powec AS. 2 Independent Auditors' Report December 31, 1999 TO THE ANNUAL SHAREHOLDERS MEETING OF POWEC AS. We have audited the annual financial statements of Powec AS at 31 December 1999, showing a profit of NOK 23 501 000 for the group. We have also audited the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the appropriation of the profit. The financial statements comprise the balance sheet, the statements of income and cash flows, the accompanying notes and the group accounts. These financial statements are the responsibility of the Company's Board of Directors and Managing Director. Our responsibility is to express an opinion on these financial statements and on other information according to the requirements of the Norwegian Act on Auditing and Auditors, which are based on the requirements of US General Accepted Audit Standards. We conducted our audit in accordance with the Norwegian Act on Auditing and Auditors and good auditing practice based on the requirements of US General Accepted Audit Standards. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. To the extent required by law and good auditing practice an audit also comprises a review of the management of the Company's financial affairs and its accounting and internal control systems. We believe that our audit provides a reasonable basis for our opinion. In our opinion, - the financial statements have been prepared in accordance with law and regulations and present the financial position of the Company and of the Group as of 31 December 1999, and the results of its operations and its cash flows for the year then ended, in accordance with good accounting practice - the Company's management has fulfilled its obligation in respect of registration and documentation of accounting information as required by law and good accounting practice - the information in the Board of Directors' report concerning the financial statements, the going concern assumption, and the proposal for the appropriation of the profit is consistent with the financial statements and comply with law and regulations. Generally accepted auditing standards in Norway do not differ materially from generally accepted auditing standards in the United States. Generally accepted accounting principles in Norway vary in certain significant respects from generally accepted accounting principles in the United States. The application of generally accepted accounting principles in the United States would have affected net income for the year ended December 31 1999 and shareholders' equity as of December 31 1999 to the extent summarized in Note 12 to the consolidated financial statements. MOLLER & CO AS (in cooperation with Arthur Andersen) /s/ Torger Gjerde Torger Gjerde State Authorized Public Accountant (Norway) Tonsberg, June 20, 2000 F-1 Powec AS Consolidated Balance Sheets (in thousands of Norwegian Kroner)
December 31, March 31, 1999 2000 ------------ --------- (unaudited) ASSETS Current assets: Cash and cash equivalents 11,222 10,125 Trade accounts receivable, net 68,386 124,495 Other receivables 11,242 8,112 Inventories, net 57,198 55,045 ------- ------- Total current assets 148,048 197,777 ------- ------- Non-current assets: Fixed assets, net 76,200 94,445 Long-term receivables 1,470 1,681 Deferred income taxes 3,624 2,534 ------- ------- Total non-current assets 81,294 98,660 ------- ------- Total assets 229,342 296,437 ------- ------- ------- ------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank overdrafts 22,947 31,570 Accounts payable 34,904 72,020 Accrued payroll and related items 4,982 4,079 Taxes payable 7,962 10,574 Dividends payable 9,680 -- Other current liabilities 11,703 14,328 ------- ------- Total current liabilities 92,179 132,571 ------- ------- Non-current liabilities: Long-term debt 62,775 77,865 Deferred income taxes 1,335 0 Guarantee and service liabilities 3,696 4,683 Other long-term liabilities 4,461 4,461 ------- ------- Total non-current liabilities 72,267 87,009 ------- ------- Minority share 299 397 ------- ------- Shareholders' equity: Share capital 1,936 1,936 Additional paid-in capital 6,268 6,423 Retained earnings (accumulated deficit), including currency translation adjustments 56,393 68,101 ------- ------- Total shareholders' equity 64,597 76,460 ------- ------- Total liabilities and shareholders' equity 229,342 296,437 ------- ------- ------- -------
See accompanying notes to the consolidated financial statements F-2 Powec AS Consolidated Statements of Operations (in thousands of Norwegian Kroner)
For the Three For the Year Ended Months Ended December 31, March 31, 1999 2000 ------------- ------------- (unaudited) Net sales 436,855 146,657 Cost of goods sold 286,420 95,725 ------------- ------------- Gross profit 150,435 50,932 Personnel costs 73,700 20,869 General expenses 35,192 11,184 Depreciation of fixed assets 5,886 1,746 ------------- ------------- Income before interest, extraordinary items and income taxes 35,657 17,133 Financial expenses 4,171 1,690 Financial income (2,292) (2,233) Extraordinary expenses 0 2,391 ------------- ------------- Income before income taxes 33,778 15,285 Provision for income taxes 10,277 4,280 ------------- ------------- Net income 23,501 11,005 ------------- ------------- ------------- -------------
See accompanying notes to the consolidated financial statements F-3 Powec AS Consolidated Statements of Cash Flows (in thousands of Norwegian Kroner)
For the Three For the Year Ended Months Ended December 31, March 31 ----------------------------------------------------------------------------------------------------------------- 1999 2000 ----------------------------------------------------------------------------------------------------------------- CASH GENERATED/USED BY OPERATING ACTIVITIES Result for the year before income taxes 33,778 15,285 Income taxes payable (15,892) (2,583) Depreciation 3,640 1,746 Difference between paid and expensed pension 39 0 Change in inventory, acc. receivables and acc. payables 1,202 (14,848) Change in other short-term items 5,643 5,636 --------------------------------------- NET CASH INFLOW/OUTFLOW FROM OPERATING ACTIVITIES 28,410 5,236 --------------------------------------- CASH FLOW FROM INVESTMENTS Investment in tangible fixed assets (72,809) (19,991) Proceeds of sale of tangible fixed assets 136 0 Change in other investments (5,906) (776) --------------------------------------- NET CASH OUTFLOW FROM INVESTMENTS (78,579) (20,767) --------------------------------------- CASH FLOW FROM CAPITAL TRANSACTIONS New long-term loans included bank overdraft 62,294 24,114 Repayment of previous liabilities (3,983) 0 Dividends paid (2,208) (9,680) --------------------------------------- NET CASH FLOW FROM CAPITAL TRANSACTIONS 56,103 14,434 --------------------------------------- --------------------------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE YEAR 5,933 (1,097) --------------------------------------- CASH BALANCE AS OF 1.1. 5,289 11,222 CASH BALANCE AS OF 12.31 (3.31.2000) 11,222 10,125
F-4 Powec AS Notes to the Consolidated Financial Statements (in thousands of Norwegian Kroner, except share data) 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES DESCRIPTION OF THE BUSINESS Powec AS and subsidiaries ("Powec" or the "Company") are primarily engaged in the design and manufacture of DC/DC power conversion products which are distributed throughout Europe and South East Asia. The Company's head office is located in Kobbervikdalen, Drammen where development, production and assembly facilities are located. The foreign subsidiaries are primarily sales offices in their local markets. However planning, production and assembly facilities have been planned for South East Asia. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include all of the entities owned/controlled by the Company. All significant inter-company transactions and balances have been eliminated. The companies included in the consolidation are listed below: Powec AS Norway Powec AB Sweden Powec Ltd. England Powec Asia Ltd. China Powec Gmbh Germany Powec OY Finland Powec Singapore Singapore Powec PTY Ltd. Hong Kong Powec Eiendom AS Norway
Powec AB and Powec Eiendom AS, are wholly owned by Powec AS. Powec Gmbh, Powec OY, Powec Singapore and Powec PTY Ltd are 70% owned by Powec AS. Powec Asia Ltd. is 99% owned by Powec AS and Powec Ltd. is 75% owned by Powec AS. BASIS OF PRESENTATION For purposes of consolidation, the accounts are prepared using uniform accounting and valuation principles, and are summarized in the consolidated financial statements according to the same consolidation rules. The consolidated financial statements are prepared in conformity with the Norwegian Accounting and Reporting Recommendations Committee guidelines ("Norwegian GAAP"). Accounting policies applied for valuing financial statement items have been consistently applied. Assets are valued at historical cost. If the market value of the assets is less than the book value, the lower value is used. Assets are valued individually, and are subject to valuation adjustments as necessary. CONVERSION OF FOREIGN CURRENCIES The reporting currency for the consolidated financial statements of the Company is the Norwegian Kroner. The assets and liabilities of companies whose functional currency is other than the Norwegian Kroner are included in the consolidation by translating the assets and liabilities at the exchange rates applicable at the end of the reporting year. The statements of operations and cash flows of such companies are translated at the average exchange rates during the year. F-5 Translation gains or losses are accumulated as a separate component of shareholders' equity. FIXED ASSETS Fixed assets are included in the consolidated balance sheet at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the useful life of the asset. Scheduled depreciation periods are as follows: Buildings and other property 40 years Machinery and equipment 3 to 15 years Investments in process improvements 3 years
INVENTORIES Of total cost of inventory in Powec AS at 31 December 1999, there is NOK 47 772 valued to cost, and NOK 3 618 is valued to net realizable value. For the group there is NOK 55 433 valued to cost and NOK 3 618 is valued to net realizable value. Outsourcing of production modules has increased through 1999. RECEIVABLES Trade accounts receivable are recorded at the nominal value, taking into account necessary allowances for doubtful accounts. The amount of the allowance depends on the term of the accounts receivable, and the customer or country-specific risks. TAXES Taxes in the Profit and Loss account include payable income tax and changes in deferred income tax. Deferred income tax is calculated in accordance with the current Norwegian Standard on Tax, on the basis of the temporary differences between accounting values and values for tax purposes and fiscal deficits for presentation at the end of financial year. A nominal tax rate of 28% per cent is used in the calculation. Positive and negative temporary differences are assessed against each other within the same time interval. UNAUDITED INTERIM FINANCIAL DATA The unaudited interim consolidated financial statements included herein have been prepared by the Company without audit in accordance with Norwegian GAAP. In the opinion of the Company's management, the accompanying unaudited interim consolidated financial statements have been prepared on a basis substantially consistent with the audited consolidated financial statements and contain adjustments, all of which are of a normal recurring nature, necessary to present fairly its financial position as of March 31, 2000 and results of operations and cash flows for the three months ended March 31, 2000. Interim results are not necessarily indicative of results for the fiscal year. 2. SALES Sales refer to net sales to third parties after intercompany profit elimination and sales tax. Revenue is recognized when title to a product has transferred. 3. TRADE ACCOUNTS RECEIVABLE, NET The allowance for doubtful accounts receivable totaled NOK 200 at December 31, 1999. F-6 4. INVENTORIES, NET Inventories consist of:
Year ended Three months ended December 31, March 31, 1999 2000 ------------------------------------------------------------------------------------------------------------- Inventory 59,051 58,432 Provision for obsolete parts (1,853) (3,387) ------------------------------------------------------------------------------------------------------------- Net booked value 57,198 55,045 -------------------------------------------------------------------------------------------------------------
5. FIXED ASSETS, NET Fixed assets consist of:
Buildings Machinery Investments and other Equipment process property EDP improvement Total --------------------------------------------------------------------------------------------------------------------- Cost as of January 1, 1999 0 14,920 4,443 19,363 Additions at cost 57,550 8,010 7,249 72,810 Retirements at cost 0 (396) 0 (396) --------------------------------------------------------------------------------------------------------------------- Cost as of December 31, 1999 57,550 22,534 11,692 91,777 Accumulated depreciations as of December 31, 1999 (30) (11,360) (3,791) (15,577) Depreciation retirements 0 (396) 0 0 --------------------------------------------------------------------------------------------------------------------- Net booked value as of December 31, 1999 57,520 10,778 7,901 76,200 --------------------------------------------------------------------------------------------------------------------- 1999 year's depreciation 30 3,610 2,246 5,886
The fixed assets economic useful life is based on: * Investments in process improvement 3 years * Buildings and other property 40 years * Machinery, equipment, EDP 3-15 years * Building site 0 years
F-7 6. SPECIFICATION OF INCOME TAXES
Year ended December 31, 1999 BASIS FOR TAXES PAYABLE Profit before taxes 33,779 Loss in group companies, deferred tax asset not considered 1,810 Permanent differences 1,899 Contribution to group companies 0 Change in temporary differences (359) --------------------------------------------------------------------------------- Basis for taxes payable 37,129 --------------------------------------------------------------------------------- TAX EXPENSE EFFECTIVE TAX PER CENT 28.37% Taxes payable 14,285 Advanced tax payment in subsidiaries 1999 (2,570) Allowance of credit from dividends group companies (3,752) --------------------------------------------------------------------------------- Balanced taxes payable 7,962 --------------------------------------------------------------------------------- Taxes payable from previous years 2,570 Taxes of contribution to group company 0 Deferred tax - net change (255) --------------------------------------------------------------------------------- Taxes 10,277 --------------------------------------------------------------------------------- TEMPORARY DIFFERENCES Fixed assets (191) Inventory (1,854) Accounts receivables (200) Guarantee and service liabilities (3,696) Pension liabilities (4,461) Eliminate internal profits (1,454) Temporary differences group companies 3,685 --------------------------------------------------------------------------------- Net temporary differences as of 31.12.99 (8,171) --------------------------------------------------------------------------------- Net booked deferred tax liability 1,335 -------------------------------------------------------------------------------- Net booked deferred tax asset 3,624 ---------------------------------------------------------------------------------
F-8 7. LONG-TERM DEBT Long-term liabilities due after 5 years consist of:
December 31, 1999 ------------- Liabilities to credit institution 62,597 Other long-term liabilities 178 ------------- Total 62,775
8. OTHER LONG-TERM LIABILITIES
September 30, 1997 ------------- Pension liabilities 4,461 ----- Total 4,461 ----- -----
9. SHAREHOLDERS' EQUITY Equity as of 01.01 1999 (revised accordance to new Acc. Law) 52,361 Result for the year 23,501 Dividends distributed (11,889) Currency rate variances and other items booked to equity 923 ----------------------------------------------------------------------------------------------------------------------------------- Less minority share (299) ----------------------------------------------------------------------------------------------------------------------------------- Equity as of 31.12 1999 64,597 -----------------------------------------------------------------------------------------------------------------------------------
The share capital comprising 193 598 shares, that has a nominal value of NOK 10 each. All shares have similar voting rights. Dividends distributed include dividend paid to a minority shareholder of NOK 2 209 10. RESEARCH AND DEVELOPMENT EXPENSES Research and development costs are expensed as incurred. F-9 11. EXCHANGE RATES The following exchange rates were used:
Year ended December 31, Currency 1999 -------- ------------- 100 SEK 94.32 1 GBP 12.99 100 FIM 135.84 100 DEM 412.94 1 AUD 5.24 1 HKD 1.03
12. NORWEGIAN GAAP TO U.S. GAAP RECONCILIATION SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN NORWEGIAN GAAP AND U.S. GAAP The audited and unaudited interim consolidated financial statements have been prepared and are presented in accordance with Norwegian GAAP which differs in certain significant respects from generally accepted accounting principles in the United States (U.S. GAAP). The following is a summary of significant adjustments to consolidated net income and consolidated shareholders' equity for Powec AS and subsidiaries that would be required if U.S. GAAP were applied instead of Norwegian GAAP:
At December 31, At March 31, 1999 2000 ---- ---- (unaudited) Adjusted net income under Norwegian GAAP 23,501 11,005 Adjustments to conform with U.S. GAAP: Inventories movement 214 708 Tax effect of U.S. GAAP adjustments (60) (198) ------ ------ Consolidated net income under U.S. GAAP 23,655 11,515 ------ ------ ------ ------
F-10 12. NORWEGIAN GAAP TO U.S. GAAP RECONCILIATION - (CONTINUED)
At December 31, At March 31, 1999 2000 ---- ---- (unaudited) Consolidated shareholders' equity under Norwegian GAAP 64,597 76,460 Adjustments to conform with U.S. GAAP: Inventories 1,992 2,700 Income tax effect on U.S. GAAP adjustments (558) (756) ------ ------ Consolidated shareholders' equity under U.S. GAAP 66,031 78,404 ------ ------ ------ ------
INVENTORY In accordance with Norwegian GAAP, inventory costs include direct material, labor costs and an allocation of production overhead which are expensed as incurred. Under U.S. GAAP, inventory costs include appropriate production and other indirect overhead. Powec has not fully allocated indirect costs to inventory resulting in a difference from U.S. GAAP. OTHER Other differences consist of primarily miscellaneous valuation differences that are not individually or in total significant, including start-up costs, pensions, leases and other items. TOTAL COST METHOD As allowed under Norwegian GAAP, the Company has presented its statement of operations under the "total cost" method. Under U.S. GAAP, the statement of operations would be presented in a cost of sales format. Such difference in presentation has no effect on net income. USE OF ESTIMATES The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. F-11 POWER-ONE, INC. Pro Forma Financial Information: Pursuant to an Amended and Restated Stock Purchase Agreement, dated as of May 15, 2000, on May 16, 2000 the Company acquired Norwegian-based Powec AS ("Powec") for approximately $72.0 million in cash and 214,035 shares of the Company's common stock. Additionally, Powec had approximately $12 million of debt outstanding. Certain additional payments may be made to Powec stockholders based on attainment of defined operational performance through 2001. Powec is a leading supplier of power systems for major service providers and equipment manufacturers in the telecommunications industry. Powec's customers include Nokia, Vodafone, Ericsson, Eircom, Telia, Hong Kong Telecom, Telenor, Sonera and TeleDanmark. On May 16, 2000, the Company also acquired a telecommunications product line from a subsidiary of Crane Co. ("Eldec") for $14.0 million in cash. This product line includes the exclusive distribution rights for Powec's products in North, South and Central America and extensive relationships with telecommunication equipment manufacturers such as Motorola, Ericsson, and Nokia US. The Company did not assume any employees when it acquired the product line from Eldec and all third party sales, for the periods presented in the pro forma financial statements, are considered immaterial. The acquisitions were accounted for using the purchase method of accounting. The net purchase price, plus transaction costs, was allocated to tangible assets and intangible assets. The excess of the aggregate purchase price over the estimated fair market values of the net assets acquired was recognized as goodwill and other identifiable intangible assets, and is being amortized over periods ranging from three to 15 years. The allocation of the purchase price is based on preliminary data and could change when final valuation information is obtained. The following unaudited pro forma statements of operations give effect to the acquisitions of both Powec and the telecommunication product line as if they had occurred at the beginning of the period presented and include adjustments which give effect to events that are directly attributable to the transactions that are expected to have a continuing impact and that are factually supportable. The unaudited pro forma balance sheets give effect to the acquisitions as if they occurred as of December 31, 1999 and March 31, 2000 and include adjustments which give effect to events that are directly attributable to the transactions and factually supportable regardless of whether they have a continuing impact or are nonrecurring. The notes to the pro forma financial information describe the pro forma amounts and adjustments presented below. The pro forma financial information does not necessarily reflect the operating results that would have occurred had the acquisition been consummated as of the above dates, nor is such information indicative of future operating results. All share and per share amounts have been retroactively restated to give effect to the Company's 3-for-2 stock split that occurred on June 2, 2000. F-12 POWER-ONE, INC. PRO FORMA FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEET DECEMBER 31, 1999 (UNAUDITED) (IN THOUSANDS)
POWER-ONE POWEC ELDEC ADJS REF PRO FORMA ASSETS Cash and cash equivalents $ 63,769 $ 1,402 $ - $(20,000) (B) $ 45,171 Accounts receivable trade, net 45,805 8,543 1,210 - 55,558 Other receivables 1,914 1,404 - - 3,318 Inventories 61,834 7,394 1,080 2,040 (B, C) 72,348 Deferred income tax asset-current 1,916 - - - 1,916 Other current assets 1,825 - - - 1,825 ----------------------------------------------- ------------- Total current assets 177,063 18,743 2,290 (17,960) 180,136 Property & Equipment, net 55,608 9,519 - - 65,127 Intangible Assets, net 59,217 - - 89,598 (B, D) 148,815 Other Assets 3,216 637 - - 3,853 ----------------------------------------------- ------------- TOTAL ASSETS $295,104 $28,899 $2,290 $ 71,638 $397,931 =============================================== ============= LIABILITIES & STOCKHOLDERS' EQUITY Credit facilities $ 7,579 $ 2,867 $ - $ 65,970 (B) $ 76,416 Current portion of long-term debt and capital leases 4,899 - - - 4,899 Bank overdraft 5,804 - - - 5,804 Accounts payable 13,107 4,360 419 - 17,886 Accrued expenses and other current liabilities 19,394 4,750 - 2,482 (D) 26,626 Deferred income tax liability-current - - - 571 (E) 571 ----------------------------------------------- ------------- Total current liabilities 50,783 11,977 419 69,023 132,202 Long-term debt and capital leases, less current portion 4,221 7,842 - - 12,063 Deferred income tax liability-noncurrent 2,757 236 - - 2,993 Other liabilities 112 595 - - 707 STOCKHOLDERS' EQUITY Common Stock 24 242 - (242) (B) 24 Additional Paid-in Capital 212,196 783 1,871 10,081 (B) 224,931 Accumulated other comprehensive loss (3,476) - - - (3,476) Retained earnings 28,487 7,224 - (7,224) (B) 28,487 ----------------------------------------------- ------------- Total stockholders' equity 237,231 8,249 1,871 2,615 249,966 ----------------------------------------------- ------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $295,104 $28,899 $2,290 $ 71,638 $397,931 =============================================== =============
F-13 POWER-ONE, INC. PRO FORMA FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEET MARCH 31, 2000 (UNAUDITED) (IN THOUSANDS)
POWER-ONE POWEC ELDEC ADJS REF PRO FORMA ASSETS Cash and cash equivalents $ 47,603 $ 1,200 $ - $(20,000) (B) $ 28,803 Accounts receivable trade, net 54,164 14,749 1,210 - 70,123 Other receivables 2,054 961 - - 3,015 Inventories 67,935 6,841 1,080 2,040 (B, C) 77,896 Deferred income tax asset-current 2,365 - - - 2,365 Other current assets 2,245 - - - 2,245 ----------------------------------------------- ------------- Total current assets 176,366 23,751 2,290 (17,960) 184,447 Property & Equipment, net 56,062 11,189 - - 67,251 Intangible Assets, net 57,076 - - 88,559 (B, D) 145,635 Other Assets 5,066 410 - - 5,476 ----------------------------------------------- ------------- TOTAL ASSETS $294,570 $35,350 $2,290 $ 70,599 $402,809 =============================================== ============= LIABILITIES & STOCKHOLDERS' EQUITY Credit facilities $ 4,523 $ 3,740 $ - $ 65,970 (B) $ 74,233 Current portion of long-term debt and capital leases 3,526 - - - 3,526 Bank overdraft 1,972 - - - 1,972 Accounts payable 15,621 8,532 419 - 24,572 Accrued expenses and other current liabilities 14,863 3,989 - 2,482 (D) 21,334 Deferred income tax liability-current - - - 571 (E) 571 ----------------------------------------------- ------------- Total current liabilities 40,505 16,261 419 69,023 126,208 Long-term debt and capital leases, less current portion 3,689 9,225 - - 12,914 Deferred income tax liability-noncurrent 2,726 - - - 2,726 Other liabilities 109 576 - - 685 STOCKHOLDERS' EQUITY Common Stock 24 229 - (229) (B) 24 Additional Paid-in Capital 226,337 761 1,871 10,103 (B) 239,072 Accumulated other comprehensive loss (4,953) - - - (4,953) Retained earnings 26,133 8,298 - (8,298) (B) 26,133 ----------------------------------------------- ------------- Total stockholders' equity 247,541 9,288 1,871 1,576 260,276 ----------------------------------------------- ------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $294,570 $35,350 $2,290 $ 70,599 $402,809 =============================================== =============
F-14 POWER-ONE, INC. PRO FORMA FINANCIAL INFORMATION CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1999 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
-------------------------------------------------------------------- POWER-ONE POWEC ADJ REF PRO FORMA -------------------------------------------------------------------- Net Sales $237,157 $56,007 $ - $293,164 Cost of goods sold 142,818 36,373 - 179,191 ------------------------------------------- ---------------- Gross profit 94,339 19,634 - 113,973 Expenses: Selling 24,992 6,092 - 31,084 General and administrative 18,218 3,561 - 21,779 Engineering 17,086 3,223 - 20,309 Quality assurance 4,422 1,839 - 6,261 Amortization of intangible assets 6,212 - 7,463 (A) 13,675 In process research and development 3,300 - - 3,300 ------------------------------------------- ---------------- Total expenses 74,230 14,715 7,463 96,408 Income (loss) from operations 20,109 4,919 (7,463) 17,565 Other Income (Expense) Interest income 807 233 - 1,040 Interest expense (3,211) (803) (6,851) (B) (10,865) Other income, net 307 10 - 317 ------------------------------------------- ---------------- Total other income (expense) (2,097) (560) (6,851) (9,508) Income (loss) before taxes 18,012 4,359 (14,314) 8,057 Income tax expense (benefit) 6,458 1,325 (3,063) (D) 4,720 ------------------------------------------- ---------------- Net income (loss) $ 11,554 $ 3,034 $(11,251) $ 3,337 =========================================== ================ Basic earnings (loss) per common share $ 0.38 $ 0.11 =========================================== ================ Diluted earnings (loss) per common share $ 0.37 $ 0.11 =========================================== ================ Basic shares outstanding 30,299 214 30,513 =========================================== ================ Diluted shares outstanding 31,235 214 31,449 =========================================== ================
F-15 POWER-ONE, INC. PRO FORMA FINANCIAL INFORMATION CONSOLIDATED STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2000 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------- POWER-ONE POWEC ADJ REF PRO FORMA --------------------------------------------------------------- Net Sales $77,012 $17,954 $ - $94,966 Cost of goods sold 44,956 12,857 - 57,813 -------------------------------------- --------------- Gross profit 32,056 5,097 - 37,153 Expenses: Selling 6,605 1,886 - 8,491 General and administrative 17,299 550 - 17,849 Engineering 9,371 498 - 9,869 Quality assurance 1,239 284 - 1,523 Amortization of intangible assets 1,322 - 1,848 (A) 3,170 -------------------------------------- --------------- Total expenses 35,836 3,218 1,848 40,902 Income (loss) from operations (3,780) 1,879 (1,848) (3,749) Other Income (Expense) Interest income 748 79 (285) (C) 542 Interest expense (312) (206) (1,325) (B) (1,843) Other income, net 135 193 - 328 -------------------------------------- --------------- Total other income (expense) 571 66 (1,610) (973) Income (loss) before taxes (3,209) 1,945 (3,458) (4,722) Income tax expense (benefit) (1,720) 544 (725) (D) (1,901) -------------------------------------- --------------- Net income (loss) $(1,489) $ 1,401 $(2,733) $ (2,821) ====================================== =============== Basic earnings (loss) per common share $ (0.04) $ (0.08) ====================================== =============== Diluted earnings (loss) per common share $ (0.04) $ (0.08) ====================================== =============== Basic shares outstanding 36,162 214 36,376 ====================================== =============== Diluted shares outstanding 36,162 214 36,376 ====================================== ===============
F-16 Notes to Pro Forma Consolidated Balance Sheets: A) The allocation of the purchase price is based on preliminary data and could change when final valuation information is obtained. B) Record the purchase of all of the outstanding capital stock of Powec AS and the purchase of the telecommunications product line from Eldec. The purchase price of Powec AS, before acquisition costs, was approximately $72.0 million plus 214,035 shares of the Company's common stock. The market value of the Company's common stock on the date of acquisition was $59.50 per share resulting in a total purchase price valued at approximately $84.7 million for Powec AS on the date of acquisition. The product line was purchased from Eldec for $14.0 million. In addition to the shares issued, the purchases were financed with $20.0 million of the Company's cash and approximately $66.0 million of advances under the Company's credit facility. C) Record the fair market value of inventory acquired from Powec AS and Eldec, based on the preliminary estimates made by management. These amounts are subject to reclassification and adjustments. D) Record liabilities for estimated professional fees and expenses related to the acquisitions totaling approximately $2.5 million. The acquisition costs were financed from additional borrowings under the Company's credit facility. E) Record the change in deferred taxes based on preliminary tax values of the assets acquired and liabilities assumed. Notes to Pro Forma Consolidated Statements of Operations: A) Record amortization of goodwill and other identified intangible assets, for the period presented, relating to the Powec AS acquisition and the product line acquired from Eldec, assuming amortization periods from 3 to 15 years. The useful lives are based on periods of economic benefit. B) Record interest expense related to the assumed additional borrowing to finance the acquisitions. For the year ended December 31, 1999, the acquisitions, including acquisition costs, are assumed to be financed entirely from the 214,035 shares issued and advances under the Company's credit facility. The Company did not have adequate cash for the purchases until after the Company's secondary stock offering at the end of the third quarter of 1999. Interest expense for 1999 was based on credit facility advances of approximately $88.5 million and an assumed interest rate of 7.7%. For the three months ended March 31, 2000, the acquisitions are assumed to have been financed as described in note (B) to the pro forma balance sheets. Interest expense for the three months ended March 31, 2000 was based on credit facility advances of approximately $68.5 million, including financing acquisition costs, and an assumed interest rate of 7.7%. C) Record a decrease in interest income earned on cash and short-term investments in the three months ended March 31, 2000, assuming an interest rate of 5.7%. Cash was available at the end of the third quarter of 1999 subsequent to the Company's secondary stock offering. D) Record the income tax benefit related to the above adjustments. Goodwill related to the Powec AS purchase is nondeductible for tax purposes, whereas, goodwill related to the Eldec product line purchase is deductible for tax purposes. E) The unaudited pro forma statements of operations exclude non-recurring items totaling $1.5 million, which consist of the inventory fair market value write-up of $2.1 million, net of related income tax benefit of $0.6 million. F) Additional sales and cost savings benefits from synergies derived from the acquisition are expected but are not reflected in the pro forma statements of operations. F-17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: July 17, 2000 Power-One, Inc. By: /s/ STEVEN J. GOLDMAN ------------------------------ Steven J. Goldman Chairman of the Board and Chief Executive Officer By: /s/ EDDIE K. SCHNOPP ------------------------------ Eddie K. Schnopp Sr. Vice President, Finance, Chief Financial Officer and Secretary