SUBJECT TO COMPLETION, DATED AUGUST 13, 2009MAY 11, 2010

 

 

11,000,000 Shares

 

 

Common Stock

 

This is an initial public offering of shares of common stock of Mirion Technologies, Inc.

We are selling 7,800,000 shares of common stock, and the selling stockholders named in this prospectus are selling 3,200,000 additional shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders.

Prior to this offering, there has been no public market for our common stock. We expect the initial public offering price to be between $$15.00 and $$17.00 per share. We will apply to list ourOur common stock has been approved for quotationlisting on theThe NASDAQ Global Market under the symbol “MION.”

The underwriters have granted the underwriters an option to purchase a maximum of 1,650,000 additional shares of common stock.stock from the selling stockholders. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

Delivery of the shares of common stock in book-entry form only will be made on or about          , 2009.2010.

 

 

 

 

“Mirion Technologies,” “Mirion,” “GDS,” “Global Dosimetry Solutions,” “HandFoot-Fibre,” “Imaging and Sensing Technology,” “IST,” “MGP Instruments,” “MGPI,” “SPIR Ident,” “Synodys,” “TwoStep-Exit” and any corresponding logos, are our common law and registered trademarks. Solely for convenience, we refer to our trademarks in this prospectus without the^tm and^® symbols, but such references are not intended to indicate that we will not assert our rights to our trademarks. Other service marks, trademarks and trade names referred to in this prospectus are the property of their owners.

References to “fiscal” before any year refer to our fiscal year ending on June 30th of the year referenced.

 

Our sales efforts for many of our products involve substantial discussion with customers regarding product customization and deployment. This process can be extremely lengthy and time consuming and typically involves a significant product evaluation process. The typical sales cycle for products whose procurement relates to the construction of new, or the refurbishment of existing, NPPs ranges from 12 to 36 months and has, in some cases, extended up to 60 months. In addition, these customers generally make a significant commitment of resources to test and evaluate our products prior to purchase. As a result, our sales process is often subject to delays associated with the lengthy approval processes that typically accompany the design, testing and adoption of new, technologically complex products. This results in our investing significant resources prior to orders being placed for our products, with no assurances that we will secure a sale.

In addition, a significant amount of time can pass before we recognize the revenue associated with an order once it has been placed. We may not recognize revenue for sales of certain of our products until the customer certifies the successful installation and operation of the product, which can be many months or, particularly with regard to our Sensing Systems and Radiation Monitoring Systems products, years following the receipt of a customer order. Additionally, under prevailing accounting guidance, we may be required to delay revenue recognition on products delivered to our customers until we have completed delivery of all products associated with our arrangement with the customer. The installation of our systems are also subject to construction or scheduled outage delays unrelated to our products, which can further defer the recognition of revenue.

Our long and uncertain sales cycle and the unpredictable period of time between the placement of an order and our ability to recognize the revenue associated with the order makes revenue predictions difficult, particularly on a quarterly basis, and can cause our operating results to fluctuate significantly.

 

Our business depends on the demand for our radiation detection, measurement, analysis and monitoring products and services in the nuclear, defense and medical end markets. In the past, the demand for our products in these markets has fluctuated due to a variety of factors, many of which are beyond our control. This has caused our financial performance to fluctuate. Among the factors affecting our performance are:

 

We were formed in 2005 as a merger of several companies acquired by ACAS but operated separately. Accordingly, we rely on the employees, goodwill, brand strength, product history and qualifications of our legacy acquired companies. In addition, some of our senior executive officers have a limited history with us and no prior experience in the industries in which we compete. Furthermore, although we havehad $0.3 million in net income for the nine month period ended March 31, 2010, we did not achievedachieve positive net income in any prior period and, as of March 31, 2009,2010, had an accumulated deficit of $102.9 million and negative working capital.$102.3 million. We cannot assure you as to whenthat we will achieve positive net income in any future period.

Our independent registered public accounting firm reported to us that at each of June 30, 2008, June 30, 2009, September 30, 2009, December 31, 2009 and March 31, 2010, we had material weaknesses in our internal controls over financial reporting that have not been remediated as of the time of this filing. Under standards established by the Public Company Accounting Oversight Board, or workingPCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified were with respect to our controls in our financial accounting and reporting functions, which are necessary in order to produce U.S. generally accepted accounting principles (U.S. GAAP) compliant financial statements. These weaknesses related to a lack of sufficient accounting personnel and depth of knowledge, lack of formal policies and procedures to ensure that subsidiary financial information reflect accounting under U.S. GAAP, lack of account reconciliation procedures and untimely review and approval procedures. A significant number of audit adjustments were also required to appropriately reflect account balances in accordance with U.S. GAAP. As a result of these weaknesses, we were required to restate our consolidated financial statements for fiscal 2007, 2008 and 2009 to properly reflect a revenue restatement, the reclassification of paid-in-kind dividends on our Convertible Participating Preferred Stock as additional paid-in capital rather than accrued liabilities and the impact of recording a number of individually insignificant adjustments. We determined that revenue was improperly recognized on certain multiple element arrangements for which separation of elements was not appropriate at the time of recognition. We determined thatpaid-in-kind dividends payable should not have been classified as liabilities as they do not involve an obligation to make future sacrifices of assets. As we prepare for the completion of this offering, we are in the process of hiring additional finance personnel and documenting and enhancing formalized information technology policies and procedures, and the implementation of software upgrades throughout our operations. However, these and other remediation efforts may not enable us to remedy the material weaknesses or avoid other material weaknesses in the future. Because of these material weaknesses, there is heightened risk that a material misstatement of our annual or quarterly financial statements will not be prevented or detected. In the event that we have not adequately remedied these material weaknesses, and if we do so, whether wefail to maintain proper and effective internal controls in future periods, it could adversely affect our operating results, financial condition, ability to run our business effectively and our ability to timely meet our reporting requirements and could cause investors to lose confidence in our financial reporting. In addition, these and any other material weaknesses will continueneed to do so.be addressed as part of the evaluation of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and may impair our ability to comply with Section 404.

We use third-party manufacturers to produce certain non-core components for some of our products. From time to time demand for our products has grown faster than the supply capabilities of these vendors. In many cases, these manufacturers have no obligation to supply products to us for any specific period, in any specific quantity or at any specific price, except as set forth in a particular purchase order. Our requirements represent a small portion of the total production capacities for many of our manufacturers, and our manufacturers may reallocate capacity to other customers, even during periods of high demand for our products or services. We have in the past experienced, and may in the future experience, quality control issues and delivery delays with our manufacturers due to factors such as high industry demand or the inability of our manufacturers to consistently meet our quality or delivery requirements. In addition, third-party manufacturers may have financial difficulties and face the risk of bankruptcy, especially in light of the current worldwide economic downturn. If one of our suppliers was to cancel or materially change a commitment with us or fail to meet the quality or delivery requirements needed to satisfy customer orders for our products, we could lose time-sensitive customer orders, be unable to develop or sell our products or services cost effectively or on a timely basis, if at all, and have significantly decreased revenue, which would harm our business, financial condition and results of operations. We may qualify additional suppliers in the future which would require time and resources. If we do not qualify additional suppliers, we may be exposed to increased risk of capacity shortages due to our dependence on our current suppliers.

 

Some of our competitors are also our suppliers and customers. For example, Canberra, one of our chief competitors in the nuclear and defense end markets, supplies us with some of the detectors employed in the

Certain of our products and technologies for the defense end market may be eligible for designation or certification as “qualified anti-terrorism technologies” under the “SAFETY Act” provisions of The Homeland Security Act of 2002 and its implementing regulations. Under the SAFETY Act, the federal government provides for certain liability limitations and a presumption that the “government contractor” defense applies if the Department of Homeland Security “designates” or “certifies” technologies or products as “qualified anti-terrorism technologies,” and if certain other conditions apply. We may seek to qualify some or all of our products and technologies under the SAFETY Act’s provisions in order to obtain such liability protections, but there is no guarantee that the Department of Homeland Security will designate or certify our products and technologies as qualified anti-terrorism technology. To date, we have not sought such designation or certification, and our products have been sold without such qualification, and we may continue to sell our products and technologies without such qualification. To the extent we do so, we will not be entitled to the benefit of the SAFETY Act’s limitations on tort liability or to any U.S. government indemnification.

 

We and our customers operate in a politically sensitive environment. The risks associated with radioactive materials and the public perception of those risks can affect our business. Opposition by third parties can delay or prevent the construction of new NPPs and can limit the operation of nuclear reactors. Adverse public reaction to developments in the use of nuclear power, including incidents involving the discharge of radioactive materials, could directly affect our customers and indirectly affect our business. In the past, adverse public reaction, increased regulatory scrutiny and litigation have contributed to extended construction periods for new nuclear reactors, sometimes delaying construction schedules by decades or more. For example, no new reactor has been ordered in the United States since the 1970s and anti-nuclear groups in Germany successfully lobbied for the adoption of the Nuclear Exit Law in 2002, which requires the shutdown of all German NPPs by 2021. Adverse public reaction could also lead to increased regulation or limitations on the activities of our customers, more onerous operating requirements or other conditions that could have a material adverse impact on our customers and our business.

Many emerging markets, including China and South Korea, impose localization requirements which favor locally based component manufacturers in the construction of NPPs and which require some degree of technology transfer to local manufacturers. Over time, such localization requirements could limit our ability to sell into such markets and could affect our ability to maintain our trade secrets. In the past, international development agencies have, as a condition of funding, imposed localization requirements that require the transfer of technology to local manufacturers, and this requirement has affected our ability to monitor and maintain control over our intellectual property. We may be subject to similar requirements as a condition of funding in the future.

 

We are required to comply with the United States Foreign Corrupt Practices Act, which generally prohibits U.S. companies and their intermediaries from engaging in bribery or making other prohibited payments to foreign officials for the purpose of obtaining or retaining business and/or other benefits. We operate in a number of jurisdictions that pose a high risk of potential FCPA violations, we have government customers and we utilize a number of third-party sales representatives. Although we have begun to inform our personnel and third-party sales representatives regarding the requirements of the FCPA and have developed and will continue to develop and implement systems for formalizing contracting processes, performing diligence on agents and improving our record-keeping and auditing practices, we cannot assure you that our employees, third-party sales representatives or other agents have not or will not engage in conduct for which we might be held responsible under the FCPA.

If our employees, third-party sales representatives or other agents are found to have engaged in such practices, we could suffer severe penalties, including criminal and civil penalties, disgorgement and other remedial measures (including further changes or enhancements to our procedures, policies and controls, as well as potential personnel changes and disciplinary actions), any of which could have an adverse impact on

Our inability to overcome problems encountered in connection with any acquisition could divert the attention of management, utilize scarce corporate resources and otherwise harm our business. In addition, we are unable to predict whether or when any prospective acquisition candidate will become available or the likelihood that any acquisition will be completed. Even if we do find suitable acquisition opportunities, we may not be able to consummate the acquisitions on commercially acceptable terms or realize the anticipated benefits of any acquisitions we do undertake.

 

We have experienced some constraints onneeded to increase our manufacturing capacity, particularly in our locations in Lamanon, France and Hamburg, Germany.Germany to support the fulfillment of certain large contracts and to put us in position to accommodate growth in our business. Accordingly, we have initiated an expansion of our manufacturing facilities in Lamanon and renovated and reorganized our facilities in Hamburg. The future growth of our business depends on our ability to successfully expand our manufacturing capacity. Expansion of our manufacturing capacity may require us to obtain regulatory approvals or additional financing. Delay in the expansion of our manufacturing capacity could constrain our ability to grow our business, which would adversely affect our business, financial condition and results of operations.

Similarly, we could have substantial difficulty in dealing with rapid growth in markets for new products that we may introduce. If demand for our new products increases rapidly, we will need to expand internal production capacity or implement additional outsourcing. Success in developing, manufacturing and supporting

We and our customers operate in a highly regulated environment. Many of our products and services must comply with various domestic and international standards that are used by regulatory and accreditation bodies for approving such services and products. Many of our products, particularly those offered by our Radiation Monitoring Systems and Sensing Systems divisions, are subject to an array of product testing under extreme temperature, pressure, radiation and seismic conditions, known collectively as a qualification, for any given nuclear reactor design. The qualification is typically owned by the party who pays for the testing and so, in certain cases, we license such qualifications from a third party. In addition, many of our products and services, particularly those offered by our Dosimetry Services division, must be certified by the National Voluntary Laboratory Accreditation Program in the United States and by other governmental agencies in international markets. The termination of any such accreditation or our failure to obtain and maintain required qualification or accreditation for our products and services may adversely affect our revenue and results of operations.

Changes in these standards and accreditation requirements may also result in our having to incur substantial costs to adapt our products. Such adaptations may introduce quality assurance issues during transition as new features and products may not perform as expected. Additionally, changes affecting radiation protection practices, including new understandings of the hazards of radiation exposure and corresponding changes in regulations, may impact how our services are used by our customers and may, in some circumstances, cause us to alter our products and services.

In addition, our customers are required to obtain, and to comply with, national,federal, state, local and localforeign government licenses, permits and approvals with respect to either their facilities.facilities or possession and use of radioactive sources or other radioactive materials. Any of these licenses, permits or approvals may be subject to denial, revocation or modification under various circumstances. Failure to obtain or comply with the

Furthermore, if new environmental legislation or regulations are enacted or existing laws or regulations are amended or are interpreted or enforced differently, our customers may be required to obtain additional operating licenses, permits or approvals. Regulatory issues experienced by our customers may lead to delay or cancellation of their orders for our products and services or the discontinuance of future orders. We cannot assure you that we or our customers will be able to meet all potential regulatory challenges.

Our operations and properties are subject to a variety of U.S.federal, state, local and foreign environmental laws and regulations governing, among other things, air emissions, wastewater discharges, management and disposal of hazardous and non-hazardous materials and waste and remediation of releases of hazardous materials. Our

The laws of foreign countries also may not adequately protect our intellectual property rights. Many U.S. companies have encountered substantial infringement problems in foreign countries. Because we conduct a substantial portion of our operations and a majority of our sales have been outside of the United States, we have significant exposure to foreign intellectual property risks.

Others have in the past attempted, and may in the future attempt, to copy or otherwise obtain and use our intellectual property without our consent. Monitoring the unauthorized use of our intellectual property is difficult. There is a risk that our customers or their end users’ customers may attempt to copy or otherwise obtain and use our intellectual property without our consent. It may be necessary, from time to time, to initiate litigation against one or more third parties, including our customers or companies with whom we have manufacturing relationships, to preserve our intellectual property rights or to challenge the validity and scope of proprietary rights asserted by others, and we could face counterclaims. Legal disputes with our customers or companies with whom we have manufacturing relationships could substantially harm our relationships and sales. Litigation is expensive and time consuming, and an adverse outcome could subject us to significant liability for damages or invalidate our proprietary rights.

From time to time, third parties may claim that we have infringed upon, misappropriated or misused other parties’ proprietary rights, and we may already be infringing without knowing it. Any of these events or claims could result in litigation. Such litigation, whether as plaintiff or defendant, could result in significant expense to us and divert the efforts of our technical and management personnel, whether or not such litigation is ultimately determined in our favor. In the event of an adverse result in such litigation, we could be required to pay substantial damages, cease the manufacture, use and sale of certain products, expend significant resources to develop or acquire non-infringing technology, discontinue the use of certain processes, obtain licenses to use the infringed technology, or indemnify our customers. Product development or license

Furthermore, in the event that ACAS were to sell fewer shares than contemplated hereby such that following the consummation of this offering ACAS and its affiliated funds could continue to hold shares representing more than a majority of our outstanding shares, ACAS will receive the benefit of a provision of the Bylaws that we will adopt prior toupon the consummation of this offering will providethat provides that at least one of the directors designated by ACAS must be part of the majority in any action taken by our Board of Directors so long as ACAS and its affiliated funds hold at least 50.1% of our outstanding common stock, other than on matters in which ACAS has a conflict of interest (as it would if it appointed a majority of our directors). Our Bylaws will also provide that ACAS will have the right to designate three of our seven directors so long as ACAS and its affiliated funds hold at least 50.1% of our outstanding common stock, two directors so long as they hold at least 25% but less than 50.1% and one director so long as they hold at least 10% but less than 25%.

ACAS will also be able to take actions that have the effect of delaying or preventing a change in control of us or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them. In addition, this significant concentration of stock ownership may adversely affect the trading price for our common stock because investors often perceive disadvantages in owning stock in companies with controlling stockholders. This concentration of control could be disadvantageous to other stockholders with interests different from those of our principal stockholder and the trading price of our common stock could be adversely affected. See “Principal and Selling Stockholders” for a more detailed description of the ownership of our common stock.

 

Three persons designated by ACAS will serve on our Board of Directors upon completionthe consummation of this offering. ACAS and its affiliates may invest in entities that directly or indirectly compete with us, or companies in which they currently invest may begin competing with us. As a result of these relationships, when conflicts between the interests of ACAS and the interests of our other stockholders arise, these directors may not be disinterested.

Although our directors and officers will have a duty of loyalty to us under Delaware law and the Certificate of Incorporation that we will adopt prior to the consummation of this offering, transactions that we enter into in which a director or officer has a conflict of interest are generally permissible so long as the material facts relating to the director’s or officer’s relationship or interest as to the transaction are disclosed to our Board of Directors and a majority of our disinterested directors, or a committee consisting solely of disinterested directors, approves the transaction.

 

Under the Certificate of Incorporation that we will adopt prior toupon the consummation of this offering, none of ACAS or its affiliates and investment funds, or any other ACAS entity, nor any director, officer,

 

If ACAS owns, and will continuewere to own immediately after the completion ofsell fewer shares in this offering than currently contemplated, such that following the offering ACAS owned common stock representing more than a majority of the voting power in the election of our directors. As a result,directors, we arewould elect to be considered a “controlled company” within the meaning of the corporate governance standards of the NASDAQ MarketplaceStock Market Rules. Under these rules, a “controlled company” may elect not to comply with certain corporate governance requirements, including the requirement that a majority of its board of directors consist of independent directors, the requirement that it have a nominating/corporate governance committee that is composed entirely of independent directors for the purposes of director nominations and the requirement that it have a compensation committee that is composed entirely of independent directors. We have elected to be treated as a controlled company and will rely on these exemptions.directors for the purposes of approving executive compensation. As a result, we do not have a majority of our directors would not be independent directors and our compensation and nominating and corporate governance committees dowould not consist entirely of independent directors. Furthermore, until one year following thethis offering, as permitted by applicable rules, we dowould not anticipate having an audit committee consisting solely of independent directors. Accordingly, you dowould not have the same protection afforded to stockholders of companies that are subject to all of the NASDAQ MarketplaceStock Market corporate governance requirements.

Upon the consummation of this offering, ACAS, our principal stockholder, will beneficially own 10,820,037 shares of our common stock (approximately 49.4% of our outstanding common stock), which includes shares of our common stock underlying warrants held by ACAS, or 9,170,037 shares of our common stock (approximately 41.9% of our common stock) if the underwriters exercise in full their over-allotment option to purchase additional shares of common stock from the selling stockholders. As a result, we do not expect to be a “controlled company.” However, under the applicable rules of The Nasdaq Stock Market, we will have a one year phase-in period to comply with those corporate governance requirements of The Nasdaq Stock Market from which we would have been exempt had we continued to remain a controlled company. Accordingly, for at least one year following the consummation of this offering, you may not have the same protection afforded to stockholders of companies that are subject to all of The Nasdaq Stock Market corporate governance requirements.

 

The market price of our common stock may be subject to wide fluctuations due to a number of factors. We may experience significant period-to-period fluctuations in our backlog, revenue and operating results in the future and any such variations may cause our stock price to fluctuate. It is likely that in some future period our operating results will be below the expectations of securities analysts or investors. If this occurs, our stock price could drop significantly. A number of factors, in addition to those cited in other risk factors applicable to our business, may contribute to fluctuations in our backlog, salesrevenue and operating results, including:

Broad market and industry factors may also adversely affect the market price of our common stock, regardless of our actual operating performance. Market and industry factors that could cause fluctuations in our stock price may include, among other things:

 

If our existing stockholders sell substantial amounts of our common stock in the public market following this offering, the market price of our common stock could decline. Based on 10,863,499 shares outstanding as of March 31, 2009,2010, upon completion of this offering we will have outstanding approximately 18,663,499 shares of common stock. Of these shares, only the 11,000,000 (plus up to 1,650,000 additional shares if the over-allotment option is exercised in full) shares of common stock sold in this offering will be freely tradable, without restriction, in the public market. After thelock-up agreements pertaining to this offering expire, our existing stockholders will be able to sell their remaining shares in the public market, subject to legal restrictions on transfer. Prior toUpon the consummation of this offering, we will enter into a registration rights agreement that provides for registration rights with respect to the up to 11,507,596 shares of our common stock that will be held by ACAS and its affiliates, Thomas D. Logan, W. Antony Besso and certain other stockholders following this offering. Registration of the sale of the common stock would permit their sale into the market immediately.

If for any reason ACAS voluntarily or involuntarily sells a large number of shares, including any shares that it may pledge to its lenders or otherwise following a default by ACAS under its credit facilities, the market price of our common stock could decline, as these sales may, among other things, be viewed by the public as an indication of an upcoming or recently occurring shortfall in the financial performance of our company. Moreover, the perception in the public market that these investors might sell our common stock could depress the market price of the common stock. See “Shares Eligible for Future Sale” for more detailed information. Additionally, we may sell or issue additional shares of common stock in subsequent public offerings or in connection with acquisitions, which will result in additional dilution and may adversely affect market prices for our common stock.acquisitions.

The Certificate of Incorporation and Bylaws that we will adopt prior toupon the consummation of this offering will provide for, among other things:

These provisions may discourage, delay or prevent a transaction involving a change in control of our company that is in the best interest of our minority stockholders. Even in the absence of a takeover attempt, the existence of these provisions may adversely affect the prevailing market price of our common stock if they are viewed as discouraging future takeover attempts.

 

We currently intend to retain our future earnings, if any, for the foreseeable future, to repay indebtedness and to fund the development and growth of our business. We do not intend to pay any dividends to holders of our common stock and the agreements governing our debt significantly restrict our ability to pay dividends. As a result, capital appreciation in the price of our common stock, if any, will be your only source of gain on an investment in our common stock. See “Dividend Policy.”

 

The initial public offering price of our common stock will be substantially higher than the pro forma as adjusted net tangible book value per share of the outstanding common stock immediately after thethis offering. Based on an assumed initial public offering price of $$16.00 per share (the midpoint of the price range set forth on the cover of this prospectus) and our net tangible book value as of March 31, 2009,2010, if you purchase our common stock in this offering, you will suffer immediate dilution in pro forma as adjusted net tangible book value per share of approximately $$19.08 per share. See “Dilution.”

This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “should,” “can have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

The forward-looking statements contained in this prospectus are based on assumptions that we have made in light of our industry experience and on our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this prospectus, you should understand that these statements are not guarantees of performance or results. They involve assumptions as well as risks and uncertainties, some of which are beyond our control. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. We believe these factors include, but are not limited to, those described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.

Any forward-looking statement made by us in this prospectus speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses will be approximately $$104.8 million, assuming the shares are offered at $$16.00 per share (the midpoint of the price range set forth on the cover page of this prospectus). We intend to use $$96.0 million of the net proceeds from this offering to repay certain borrowings from ACAS and its affiliates. We also intend to use net proceeds from this offering to make a one-time payment of $8.0 million to ACFS, a subsidiary of ACAS, to terminate an investment banking services agreement between us and ACFS. See “Certain Relationships and Related Party Transactions.” We willalso intend to use the balance$0.8 million of the net proceeds for working capitalfrom this offering to make bonus payments upon completion of this offering to certain of our employees, including an aggregate of $0.6 million to certain of our executive officers. See “Executive Compensation — Compensation Discussion and general corporate purposes.Analysis — Elements of Compensation.” We may also use a portionwill not receive any proceeds from the sale of shares of common stock by selling stockholders. A $1.00 increase (decrease) in the assumed initial public offering price of $16.00 per share would increase (decrease) the net proceeds to make strategic acquisitionsus from this offering by $7.3 million, assuming the number of other companies or businesses, although no agreements or understandings existshares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated expenses payable by us. In addition, we have entered into a letter agreement with respecteach holder of our convertible preferred stock, including ACAS and its affiliates and Thomas Logan, our President, Chief Executive Officer and Chairman of the Board, that in lieu of dividends otherwise payable in the form of additional shares of convertible preferred stock, for the period from April 1, 2010 through the closing of this offering, we will pay cash dividends on shares of our outstanding preferred stock at a rate equal to any such acquisitions. Pending their application we intend to invest the net proceedsnumber of shares of common stock they would have received upon conversion of the preferred stock they would have received in short-term interest-bearing obligations.dividends during that period multiplied by the initial public offering price. Assuming an initial public offering price of $16.00 per share, the aggregate dividend payment would equal approximately $42,238 per day from April 1, 2010 until the closing of this offering. We will pay this amount out of our existing cash.

We intend to enter into arrangements to refinance, prior to the consummation of this offering, or to repay with a portion of the net proceeds offrom this offering the following outstanding debt of our subsidiaries that is held by our principal stockholder, ACAS, or its affiliates. For purposes of this section, EURIBOR means the Euro Interbank Offered Rate and LIBOR means the London Interbank Offered Rate. All amounts are as of March 31, 2009, but reflect amendments to extend maturity that were entered into subsequent to that date.