EX-99.2 38 ex99-2.htm UNAUDITED PRO FORMA FINANCIAL STATEMENTS
 
 
Exhibit 99.2

PERMA-FIX ENVIRONMENTAL SERVICES, INC.
UNAUDITED PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS

INTRODUCTION

The Company has prepared unaudited pro forma financial information to present the impact of the following recently completed sales transactions:

·
Sale of substantially all of the assets of the Company’s wholly owned subsidiary, Perma-Fix Treatment Services, Inc. This sale was made to A Clean Environmental Company, Inc. (“ACE”) on May 30, 2008, for a sales price of $1,503,000 cash plus or minus a working capital adjustment. We received cash of approximately $1,468,000, net of certain closing/settlement costs.

·
Sale of substantially all of the assets of the Company’s wholly owned subsidiary, Perma-Fix of Dayton, Inc. As previously disclosed, this sale was made to OGM, Ltd. on March 14, 2008, for a sales price of $2,143,000 cash plus or minus a working capital adjustment. We received cash of approximately $2,139,000, net of certain closing/settlement costs.

·
Sale of substantially all of the assets of the Company’s wholly owned subsidiary, Perma-Fix of Maryland, Inc. As previously disclosed, this sale was made to a wholly owned subsidiary of Triumvirate Environmental, Inc. on January 8, 2008, for a sales price of $3,825,000 cash plus or minus a working capital adjustment. We received cash of $3,811,000, net of certain closing/settlement costs.

These unaudited pro forma financial statements should be read in conjunction with the Company’s historical consolidated financial statements and the related notes that are included in its Form 10-K/A for the year ended December 31, 2007 and its Quarterly Report on Form 10-Q for the three months ended March 31, 2008.

The following unaudited pro forma balance sheet as of March 31, 2008 gives effect to the sales transaction with ACE summarized above as if the receipt of the sales proceeds (net of certain closing/settlement costs) and related payments of long-term debt and other accrued obligations had occurred on that date.

The following unaudited pro forma statements of operations for the three months ended March 31, 2008 and for the year ended December 31, 2007 gives effect to all of the sales transactions summarized above as if the receipts of the sales proceeds (net of certain closing/settlement costs) and related payments of long-term debt and other accrued obligations had occurred as of the beginning of each period.

The following unaudited pro forma financial statements are presented for illustrative purposes only and do not necessarily indicate the financial results of the Company had the receipts of the sales proceeds (net of certain closing/settlement costs) and related payments of long-term debt and other accrued obligations actually occurred as of the dates indicated.


This financial information has been derived from and should be read together with the historical consolidated financial statements and the related notes of the Company incorporated by reference in this Form 8-K. In addition, the allocations of the sales prices reflected in the unaudited pro forma financial statements have not been finalized and are subject to adjustment and may vary from the actual sales price allocations that will be recorded as of the effective date of the transactions.


PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 
   
Historical
  
Completed
Disposition
       
Adjusted
  
   
Perma-Fix
  
Perma-Fix Treatment
  
Pro-Forma
  
March 31,
  
(Amounts in Thousands, Except for Share Amounts)
March 31, 2008 (c)
  
Services, Inc.
  
Adjustments
  
2008
  
                       
ASSETS
                      
Current assets:
                      
Cash
  
$
63
 
$
—
 
$
1,468
(1,468
  (b)
) (b)
$
63
 
Restricted cash
    
35
   
—
   
—
 
  
35
 
Account receivable, net of allowance for
         
—
   
—
   
—
 
doubtful accounts of $79
    
13,284
   
—
   
—
   
13,284
 
Unbilled receivables
    
8,738
   
—
   
—
   
8,738
 
Inventories
    
206
   
—
   
—
   
206
 
Prepaid expenses and other assets
    
3,136
   
—
   
—
   
3,136
 
Current assets of discontinued operations
    
2,804
   
748
   
—
   
2,056
 
Total current assets
    
28,266
   
748
   
—
   
27,518
 
                           
Property and equipment:
                          
Buildings and land
    
21,207
   
—
   
—
   
21,207
 
Equipment
    
31,735
   
—
   
—
   
31,735
 
Vehicles
    
141
   
—
   
—
   
141
 
Leasehold improvements
    
11,458
   
—
   
—
   
11,458
 
Office furniture and equipment
    
2,281
   
—
   
—
   
2,281
 
Construction-in-progress
    
1,091
   
—
   
—
   
1,091
 
     
67,913
   
—
   
—
   
67,913
 
Less accumulated depreciation and amortization
    
(21,204
)
  
—
   
—
   
(21,204
)
Net property and equipment
    
46,709
   
—
   
—
   
46,709
 
                           
Property and equipment related to discontinued operations
    
4,232
   
647
   
—
   
3,585
 
                           
Intangibles and other assets:
                          
Permits
    
15,697
   
—
   
—
   
15,697
 
Goodwill
    
9,058
   
—
   
—
   
9,058
 
Unbilled receivables - non-current
    
3,454
   
—
   
—
   
3,454
 
Finite risk sinking fund
    
8,192
   
—
   
—
   
8,192
 
Other assets
    
2,363
   
—
   
—
   
2,363
 
Intangible and other assets related to
                         
discontinued operations
    
1,598
   
408
   
—
   
1,190
 
Total assets
  
$
119,569
  
$
1,803
 
$
—
 
$
117,766
  



PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 
   
Historical
 
Completed
Disposition
           
Adjusted
  
   
Perma-Fix
  
Perma-Fix Treatment
Pro-Forma
      
March 31,
  
(Amounts in Thousands, Except for Share Amounts)
  
March 31, 2008 (c)
  
Services, Inc.
  
Adjustments
      
2008
  
                           
LIABILITIES AND STOCKHOLDERS’ EQUITY
                          
Current liabilities:
                          
Accounts payable
  
$
6,519
 
$
764
 
$
50
   
(a)
 
$
5,805
 
Current environmental accrual
    
209
   
—
   
—
         
209
 
Accrued expenses
    
8,562
   
—
   
—
         
8,562
 
Disposal/transportation accrual
    
6,611
   
—
   
—
         
6,611
 
Unearned revenue
    
5,131
   
—
   
—
         
5,131
 
Current liabilities related to discontinued operations
    
4,834
   
868
   
788
   
(a)
 
  
4,754
 
Current portion of long-term debt
    
3,478
   
—
   
(553
)
  
(b)
 
  
2,925
 
Total current liabilities
    
35,344
   
1,632
   
285
         
33,997
 
                                 
Environmental accruals
    
225
   
30
   
30
   
(a)
 
  
225
 
Accrued closure costs
    
8,773
   
—
   
—
         
8,773
 
Other long-term liabilities
    
940
   
—
   
—
   
 
    
940
 
Long-term liabilities related to discontinued operations
    
3,093
   
391
   
391
   
(a)
 
  
3,093
 
Long-term debt, less current portion
    
9,957
   
—
   
(915
)
  
(b)
 
  
9,042
 
Total long-term liabilities
    
22,988
   
421
   
(494
)
        
22,073
 
 
                                
Total liabilities
    
58,332
   
2,053
   
(209
)
        
56,070
 
                                 
Commitments and Contingencies
    
—
   
—
               
—
 
                                 
Preferred Stock of subsidiary, $1.00 par value;
   
1,285
   
—
   
—
         
1,285
 
1,467396 shares authorized, 1,284,780 shares
                                
issued and outstanding, liquidation value
                                
$1.00 per share
                                
 
                                
Stockholders’ equity:
                                
Preferred Stock, $.001 par value; 2,000,000
                                
shares authorized, no shares issued
    
—
   
—
   
—
         
—
 
and outstanding
                                
Common Stock, $.001 par value; 75,000,000
                                
shares authorized, 53,704,516 issued
                                
and outstanding
    
54
   
—
   
—
         
54
 
Additional paid-in capital
    
96,549
   
—
   
—
         
96,549
 
Stock subscription receivable
    
(10
)
  
—
   
—
         
(10
)
Accumulated deficit
    
(36,641
)
  
(250
)
  
(1,259
1,468
)
(a)
(b)
 
  
(36,182
)
Total stockholders' equity
    
59,952
   
(250
)
  
209
         
60,411
 
Total liabilities and stockholders' equity
  
$
119,569
    
1,803
 
$
—
       
$
117,766
  
                                 
 
 

 
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PRO-FORMA CONSOLIDATED BALANCE SHEET

Notes to Pro-Forma Consolidated Balance Sheet:

(a)
Represents retained liabilities associated with Perma-Fix Treatment Services, Inc.

(b)
Represents cash received at closing for Perma-Fix Treatment Services, Inc. of $1,468,000, which is used to pay down our term note with the remaining balance used to pay down our revolver. This amount includes the Company’s estimate of working capital adjustments, as provided in the Asset Purchase Agreement, dated May 14, 2008, as amended on May 30, 2008, which is subject to post closing confirmation.

(c)
Represents the Consolidated Balance Sheet included in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2008.


 
 
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PRO-FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2008
(UNAUDITED)
 
   
Historical
                          
 
  
   
Perma-Fix
  
Completed Dispositions    
           
Pro-Forma
  
   
Three Months
  
 
    
Perma-Fix
  
 
      
Threee Months
  
 
Ended
  
Perma-Fix of
  
Perma-Fix of
  
Treatment
  
 
      
Ended
  
(Amounts in Thousands, Except for per
  
March 31,
  
Dayton,
  
Maryland,
  
Services,
  
Pro-Forma
      
March
  
Share Amounts)
  
2008 (c)
  
Inc. (d)
  
Inc. (d)
  
Inc. (d)
  
Adjustments
      
2008
  
                                           
Net revenues
  
$
14,883
  
$
—
  
$
—
 
$
—
 
$
—
     
$
14,883
 
Cost of goods sold
    
11,074
   
—
   
—
   
—
   
—
       
11,074
 
Gross profit
    
3,809
   
—
   
—
   
—
   
—
       
3,809
 
                                           
Selling, general and administrative expenses
    
3,807
   
—
   
—
   
—
   
—
       
3,807
 
Income from operations
    
2
   
—
   
—
   
—
   
—
       
2
 
                                           
Other income (expense):
                                          
Interest income
    
68
   
—
   
—
   
—
   
—
       
68
 
Interest expense
    
(352
)
  
—
   
—
   
—
   
76
 
(a)
 
  
(276
)
Interest expense – financing fees
    
(52
)
  
—
   
—
   
—
   
—
       
(52
)
Other
    
6
   
—
   
—
   
—
   
—
       
6
 
Loss from continuing operations
                                          
before income taxes
    
(328
)
  
—
   
—
   
—
   
76
       
(252
)
Income tax expense
    
—
   
—
   
—
   
—
   
—
       
—
 
Loss from continuing operations
  
$
(328
)
$
—
 
$
—
 
$
—
   
76
     
$
(252
)
                                           
Net loss per common share – basic:
                                          
Continuing operations
  
$
(.01
)
                            
$
–
 
                                           
Net loss per common share – diluted:
                                          
Continuing operations
  
$
(.01
)
                            
$
–
 
                                           
Number of shares used in computing
                                         
net loss per share:
                                          
Basic
    
53,704
                                
53,704
  
Diluted
    
53,704
                                
53,704
  
 
 
 
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PRO-FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2007
(AUDITED)
 
   
Historical
 
  
                     
 
  
   
Perma-Fix
             
Pro-Forma
  
   
Twleve
  
Completed Dispositions
          
Twelve
  
   
Months
          
Perma-Fix
          
Months
  
   
Ended
  
Perma-Fix of
  
Perma-Fix of
  
Treatment
  
 
      
Ended
  
(Amounts in Thousands, Except for per
  
 December
  
Dayton,
  
Maryland,
  
Services,
  
Pro-Forma
      
December
  
 Share Amounts)
  
2007 (c)
  
 Inc.(d)
  
Inc.(d)
  
 Inc.(d)
  
Adjusmtnents
      
2007
  
                                           
Net revenues
  
$
54,102
  
$
—
  
$
—
 
$
—
 
$
—
     
$
54,102
 
Cost of goods sold
    
36,837
   
—
   
—
   
—
   
—
       
36,837
 
Gross profit
    
17,265
   
—
   
—
   
—
   
—
       
17,265
 
                                           
Selling, general and administrative expenses
    
15,406
   
—
   
—
   
—
   
—
       
15,406
 
Loss on disposal of fixed assets
    
71
   
—
   
—
   
—
   
—
       
71
 
Income from operations
    
1,788
   
—
   
—
   
—
   
—
       
1,788
 
                                           
Other income (expense):
                                          
Interest income
    
312
   
—
   
—
   
—
   
—
       
312
 
Interest expense
    
(1,302
)
  
—
   
—
   
—
   
650
 
(b)
 
  
(652
)
Interest expense – financing fees
    
(196
)
  
—
   
—
   
—
   
—
       
(196
)
Other
    
(85
)
  
—
   
—
   
—
   
—
       
(85
)
Income from continuing operations before income taxes
    
517
   
—
   
—
   
—
   
650
       
1,167
 
Income tax expense
    
—
   
—
   
—
   
—
   
—
       
—
 
Income from continuing operations
  
$
517
  
$
—
 
$
—
 
$
—
 
$
650
     
$
1,167
 
                                           
Net income per common share – basic:
                                          
Continuing operations
  
$
.01
                              
$
.02
 
                                           
                                           
Net income per common share – diluted:
                                          
Continuing operations
  
$
.01
                              
$
.02
 
                                           
Number of shares used in computing net
                                         
income per share:
                                        
Basic
    
52,549
                               
52,549
 
Diluted
    
53,294
                               
53,294
 
 

 
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
PRO-FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

Notes to Pro-Forma Consolidated Statements of Operations:

(a)
Amount represents a reduction in interest expense resulting from the net proceeds ($7,418,000) from the sale of Perma-Fix Treatment Services, Inc., Perma-Fix of Dayton, Inc., and Perma-Fix of Maryland, Inc. to pay down the term note and revolver had the proceeds been received on January 1, 2008. Interest is calculated at the term note and/or revolver interest rates applicable during the period.

(b)
Amount represents a reduction in interest expense resulting from the net proceeds ($7,418,000) from the sale of Perma-Fix of Maryland, Inc., Perma-Fix of Dayton, Inc., and Perma-Fix Treatment Services, Inc. to pay down the term note had the proceeds been received on January 1, 2007. This amount is calculated by multiplying the balance of the net proceeds ($7,418,000) times the monthly effective prime rate plus 1% (the effective interest rate paid on this debt).

(c)
Represents the Company’s historical Consolidated Statements of Operations included in the Company’s Form 10-Q for the period ended March 31, 2008 and Form 10-K/A for the years ended December 31, 2007.

(d)
As the results of operations of Perma-Fix of Dayton, Inc., Perma-Fix of Maryland, Inc., and Perma-Fix Treatment Services, Inc. were included in discontinued operations during these periods, there were no amounts to eliminate from the Company’s operating results. Additionally, there are no expected income tax consequences from these dispositions.