EX-99.4 4 a03-5634_1ex99d4.htm EX-99.4

Exhibit 99.4

 

AEROFLEX INCORPORATED AND SUBSIDIARIES

PRO FORMA BALANCE SHEET (Unaudited)

 

The following pro forma balance sheet (unaudited) adjusts the historical consolidated balance sheet of Aeroflex Incorporated and subsidiaries as of June 30, 2003 for the effects of the acquisition of MCE Technologies, Inc.  The acquisition has been accounted for under the purchase method of accounting.

 

The pro forma balance sheet gives effect to the acquisition described in Item 2 of the Form 8-K filed on September 3, 2003, as if it had occurred on June 30, 2003.  The balance sheet should be read in conjunction with the notes to the pro forma financial statements.

 

 

AEROFLEX INCORPORATED AND SUBSIDIARIES

PRO FORMA BALANCE SHEET (UNAUDITED)

REFLECTING THE ACQUISITION OF MCE TECHNOLOGIES, INC.

JUNE 30, 2003

(In thousands, except per share amounts)

 

 

 

Historical

 

Acquisition
of MCE(1)

 

Pro Forma
Adjustments(2)

 

Pro Forma
Results

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

51,307

 

$

250

 

$

(3,800

)

$

47,757

 

Accounts receivable, net

 

65,243

 

8,056

 

 

 

73,299

 

Inventories

 

74,738

 

8,485

 

 

 

83,223

 

Deferred income taxes

 

14,394

 

1,284

 

 

 

15,678

 

Prepaid expenses and other current assets

 

5,556

 

835

 

 

 

6,391

 

Total current assets

 

211,238

 

18,910

 

(3,800

)

226,348

 

Property, plant and equipment, net

 

69,080

 

10,148

 

—

 

79,228

 

Intangible assets with definite lives, net

 

15,111

 

6,263

 

6,207

 

27,581

 

Goodwill

 

22,449

 

12,102

 

33,685

 

68,236

 

Deferred incomes taxes

 

1,002

 

—

 

(1,002

)

—

 

Other assets

 

11,736

 

35

 

 

 

11,771

 

Total assets

 

$

330,616

 

$

47,458

 

$

35,090

 

$

413,164

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

1,879

 

$

1,800

 

$

(1,535

)

$

2,144

 

Accounts payable

 

19,694

 

2,726

 

 

 

22,420

 

Advance payments by customers

 

2,826

 

2,958

 

 

 

5,784

 

Accrued expenses and other current liabilities

 

25,283

 

4,234

 

1,350

 

30,867

 

Total current liabilities

 

49,682

 

11,718

 

(185

)

61,215

 

Long-term debt

 

10,956

 

16,702

 

3,310

 

30,968

 

Other long-term liabilities

 

11,563

 

5,053

 

406

 

17,022

 

Warrants

 

—

 

8,195

 

(8,195

)

—

 

Redeemable preferred stock

 

—

 

4,326

 

(4,326

)

—

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

MCE equity

 

—

 

1,464

 

(1,464

)

—

 

Common stock, par value $.10 per share; authorized 110,000 shares; issued 60,122,000 shares

 

6,012

 

—

 

582

 

6,594

 

Additional paid-in capital

 

222,943

 

—

 

45,382

 

268,325

 

Accumulated other comprehensive income

 

3,816

 

—

 

 

 

3,816

 

Retained earnings

 

25,658

 

—

 

(420

)

25,238

 

Less:  Treasury stock, at cost (4 shares)

 

(14

)

—

 

 

 

(14

)

 

 

258,415

 

1,464

 

44,080

 

303,959

 

Total liabilities and stockholders’ equity

 

$

330,616

 

$

47,458

 

$

35,090

 

$

413,164

 

 

(1)  (2) See notes to pro forma financial statements.

 

 

AEROFLEX INCORPORATED AND SUBSIDIARIES

PRO FORMA STATEMENTS OF OPERATIONS (Unaudited)

 

The following pro forma statements of operations (unaudited) adjust the historical consolidated statements of operations of Aeroflex Incorporated and subsidiaries for the years ended June 30, 2003 and 2002 for the effects of the acquisition of MCE Technologies, Inc. (“MCE”) on September 3, 2003.  The acquisition of MCE was accounted for under the purchase method of accounting.  The pro forma statements of operations give effect to the acquisition described in Item 2 of the Form 8-K filed on September 3, 2003, as if it had occurred on July 1, 2001.

 

The pro forma statements of operations do not purport to be indicative of the operating results that would have been achieved had the acquisition been effected on the dates indicated, are not necessarily indicative of future operating results and should not be used as a forecast of future operations.  These statements should be read in conjunction with the notes to the pro forma financial statements.

 

 

AEROFLEX INCORPORATED AND SUBSIDIARIES

PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED)

REFLECTING THE ACQUISITION OF MCE TECHNOLOGIES, INC.

YEAR ENDED JUNE 30, 2003

(In thousands, except per share amounts)

 

 

 

Historical

 

Acquisition
of MCE

 

Pro Forma
Adjustments(3)

 

Pro Forma
Results After
Acquisition

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

291,780

 

$

59,196

 

$

(673

)

$

350,303

 

Cost of sales

 

178,524

 

37,410

 

(673

)

215,261

 

Gross profit

 

113,256

 

21,786

 

—

 

135,042

 

Selling, general and administrative costs

 

68,459

 

15,177

 

800

 

84,436

 

Research and development costs

 

31,102

 

5,306

 

 

 

36,408

 

Operating income

 

13,695

 

1,303

 

(800

)

14,198

 

 

 

 

 

 

 

 

 

 

 

Other expense (income)

 

 

 

 

 

 

 

 

 

Interest expense

 

1,389

 

2,109

 

(1,130

)

2,368

 

Other income, net

 

(577

)

(3,414

)

3,491

 

(500

)

 

 

 

 

 

 

 

 

 

 

Total other expense (income)

 

812

 

(1,305

)

2,361

 

1,868

 

Income from continuing operations before income taxes

 

12,883

 

2,608

 

(3,161

)

12,330

 

Provision for income taxes

 

4,350

 

16

 

86

 

4,452

 

Income from continuing operations

 

$

8,533

 

$

2,592

 

$

(3,247

)

$

7,878

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per common share

 

 

 

 

 

 

 

 

 

Basic

 

$

.14

 

 

 

 

 

 

$

.12

 

Diluted

 

$

.14

 

 

 

 

 

 

$

.12

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

60,193

 

 

 

 

 

66,015

 

Diluted

 

60,753

 

 

 

 

 

66,666

 

 

(3)  See notes to pro forma financial statements.

 

 

AEROFLEX INCORPORATED AND SUBSIDIARIES

PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED)

REFLECTING THE ACQUISITION OF MCE TECHNOLOGIES, INC.

YEAR ENDED JUNE 30, 2002

(In thousands, except per share amounts)

 

 

 

Historical

 

Acquisition
of MCE

 

Pro Forma
Adjustments(3)

 

Pro Forma
Results

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

202,129

 

$

72,136

 

$

(730

)

$

273,535

 

Cost of sales

 

128,352

 

40,803

 

(730

)

168,425

 

Gross profit

 

73,777

 

31,333

 

—

 

105,110

 

Selling, general and administrative costs

 

49,375

 

16,304

 

40

 

65,719

 

Research and development costs

 

23,140

 

7,030

 

 

 

30,170

 

Acquired in-process R&D

 

1,100

 

—

 

—

 

1,100

 

Operating income

 

162

 

7,999

 

(40

)

8,121

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

Interest expense

 

(1,263

)

(2,501

)

1,208

 

(2,556

)

Interest and other income (expense)

 

1,475

 

5,300

 

(5,479

)

1,296

 

Total other income (expense)

 

212

 

2,799

 

(4,271

)

(1,260

)

Income from continuing operations before income taxes

 

374

 

10,798

 

(4,311

)

6,861

 

Provision for income taxes

 

50

 

1,680

 

335

 

2,065

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

324

 

$

9,118

 

$

(4,646

)

$

4,796

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per common share

 

 

 

 

 

 

 

 

 

Basic

 

$

.01

 

 

 

 

 

$

.07

 

Diluted

 

$

.01

 

 

 

 

 

$

.07

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

59,973

 

 

 

 

 

65,795

 

Diluted

 

62,012

 

 

 

 

 

67,960

 

 

(3)                                                          See notes to pro forma financial statements.

 

 

AEROFLEX INCORPORATED AND SUBSIDIARIES

NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)

 

A.                                                                                   BASIS OF PRESENTATION

 

The accompanying pro forma financial statements (unaudited) present the financial position and results of operations of Aeroflex Incorporated and subsidiaries (“ARX”) giving effect to the acquisition of MCE Technologies, Inc.  (“MCE”).   The acquisition of MCE by ARX was accounted for as a purchase and accordingly, the purchase price was allocated to the assets and liabilities of MCE based on their fair values at September 3, 2003 (the date of acquisition).

 

For the purpose of the pro forma balance sheet and the pro forma statements of operations, it is assumed that the acquisition occurred on June 30, 2003 and July 1, 2001, respectively.  In order to provide comparability to the respective historical periods, the pro forma statements of operations for the years ended June 30, 2003 and 2002 do not include a one-time charge of $420,000 which was recorded upon acquisition to reflect the write-off of the purchase price allocated to acquired in-process research and development.

 

B.                                                                                     PRO FORMA ADJUSTMENTS AND ASSUMPTIONS

 

The pro forma financial statements of ARX give effect to the following pro forma adjustments and assumptions:

 

1.

 

To record the acquisition of MCE stock by ARX as described in Item 2 on Form 8-K filed on September 3, 2003.

 

 

 

2.

 

To record the a) purchase price of $70 million consisting of (i) $46 million of ARX stock and options paid for the acquisition of MCE stock, (ii) $22.8 million to used pay off MCE’s indebtedness and warrants and redeem MCE’s preferred stock and (iii) $1.4 million of acquisition costs, from ARX’s revolving credit borrowings and available cash and cash equivalents, b) elimination of MCE’s equity accounts, c) allocation of the purchase price to the fair value of the assets acquired and liabilities assumed, including, for purposes of the pro forma balance sheet, the aforementioned $420,000 write-off of the fair value of the acquired in-process research and development and d) current and deferred tax liabilities related to c) above.

 

 

 

3.

 

To record a) elimination of intercompany sales and cost of sales b) amortization based on estimated average remaining lives of assets (8 years for intangibles) and adjustment to fair value of assets acquired, c) reversal of MCE interest expense, d) interest expense on ARX debt incurred and interest income forgone due to the use of available cash and cash equivalents to discharge MCE’s obligations e) elimination of warrant expense (income) for the change in fair value of warrants that were retired in the acquistion, and (f) the tax effect of b), c), (d), and (e).