Following the consummation of this offering, our authorized capital stock will consist of 78,500,000 shares of common stock, par value $0.001 per share and 1,500,000 shares of preferred stock, par value $0.001 per share, undesignated as to series. As of March 31,June 30, 2010, 10,863,49911,103,724 shares of common stock were issued and outstanding and held by nine stockholders of record and no shares of undesignated preferred shares were outstanding, assuming the conversion of all of our convertible preferred stock and the conversion of our Class A Voting Common Stock and Class BNon-Voting Common Stock on a one-for-one basis. In addition, as of March 31,June 30, 2010, there were 3,420,636 shares of common stock subject to outstanding warrants, which will become exercisable upon the consummation of this offering, and 962,944924,830 shares of common stock subject to outstanding options. The following summary description relating to our capital stock does not purport to be complete and is qualified in its entirety by the amended and restated Certificate of Incorporation and Bylaws that have been filed as an exhibit to the registration statement of which this prospectus forms a part.
The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our Board of Directors out of funds legally available therefor. See “Dividend Policy.” In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock, if any, then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and non-assessable, and the shares of common stock to be issued upon completion of this offering will be fully paid and non-assessable.
Our amended and restated Bylaws provide 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 amended and restated Bylaws 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%.
Our Board of Directors is authorized, without any action by our stockholders, to designate and issue shares of preferred stock in one or more series and to designate the powers, preferences and rights of each series, which may be greater than the rights of our common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of our common stock until our Board of Directors determines the specific rights of the holders of such preferred stock. However, the effects might include, among other things:
Upon the consummation of this offering, no shares of our preferred stock will be outstanding.
W. Antony Besso and certain other of our stockholders, under which these stockholders may require us to register their shares of common stock under the securities laws for sale.
Requested Registration
The agreement shall provide that, any time following 180 days (subject to extension in the event thelock-up agreement with the underwriters is extended) after the effective date of a registration statement for this offering, ACAS and any transferee receiving at least 25% of ACAS’s registrable securities held at the time of signing the agreement, so long as the requesting party holds at least 25% of the registrable securities held by all the parties holding requested registration rights at the time of the request for registration, may require us to effect a registration under the Securities Act of 1933 of all or a portion of our securities held by them.
We may decline to honor any of these requested registrations if more than four requested registrations have already been undertaken.
Form S-3 Registration
We are also obligated in certain circumstances under the registration rights agreement to use our best efforts to effect and maintain the effectiveness of a registration onForm S-3, if ACAS, a permitted transferee of ACAS or other stockholder under the agreement holding two percent or more of our common stock requests that we make such registration and the aggregate gross proceeds of such registration are reasonably anticipated to exceed $5,000,000. Upon such a request, all other eligible holders of our securities under the registration rights agreement may also elect to register their securities under such registration statement.
We may decline to honor a requested registration 30 days prior to or 90 days immediately following the effective date of another registration statement. Furthermore, we may postpone the filing of a requested registration onForm S-3, but not more than once in any 12-month period, for a reasonable period of time if filing the registration statement would have a material adverse effect on us, including if our Board of Directors determines that a registration would materially interfere with a significant acquisition or company reorganization, require premature disclosure of material nonpublic information or render us unable to comply with requirements under the Securities Act or the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Incidental Registration
In addition to our obligations with respect to requested registrations, if we propose to register any of our securities (other than a registration on FormS-8 orS-4 or successor forms to these forms and certain other limited exceptions), whether or not such registration is for our own account, ACAS, permitted transferees of ACAS and other stockholders party to the registration rights agreement will have the opportunity to participate in such registration.
If the incidental registration relates to an underwritten primary registration on our behalf and marketing factors require a limitation of the number of shares to be offered, first priority of inclusion shall be given to us and second priority will be given to ACAS and other stockholders participating in the incidental registration. If the incidental registration relates to an underwritten secondary registration on behalf of holders of our securities and marketing factors require a limitation of the number of shares to be offered, first priority of inclusion will be given to the original requesting stockholder, and second priority will be given to the remaining stockholders participating in the incidental registration.
Expenses of Registration
We will pay all expenses of registration, other than underwriting discounts and commissions, related to any requestedForm S-3 or incidental registration.
136
Indemnification
The agreement contains customary cross-indemnification provisions under which we are obligated to indemnify the selling stockholders in the event of material misstatements or omissions in the registration
132
statement attributable to us, and they are obligated to indemnify us for material misstatements or omissions attributable to them.
Anti-Takeover Effects of Delaware Law
Pursuant to our amended and restated Certificate of Incorporation, we have opted out of the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. Section 203 prohibits a publicly held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder (defined generally as a person owning 15% or more of the corporation’s voting stock) for a period of three years following the date the person became an interested stockholder unless:
| | |
| | • | prior to the date the person became an interested person, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
| |
| | • | upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or |
| |
| | • | at or subsequent to the date of the transaction, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock which is not owned by the interested stockholder. |
Listing
Our common stock has been approved for listing on The NASDAQ Global Market under the symbol “MION.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Computershare Trust Company, N.A.
137133
DESCRIPTION OF CERTAIN INDEBTEDNESS
We previously entered into a credit agreement with JPMorgan Chase Bank, National Association, J.P. Morgan Europe Limited, J.P. Morgan Securities LLC and Fifth Third Bank in connection with our anticipated new bank credit facilities, pursuant to which the lenders agreed to make loans, issue letters of credit and commit to future loans, to be effective upon the consummation of a public offering. Although the obligations and commitments of the lenders under this credit agreement terminated on June 7, 2010 in connection with the delay in our initial public offering, we expect to negotiate a new credit agreement on similar terms prior to the marketing of this offering. The following is a summary of ourthe anticipated terms of these new bank credit facilities with J.P. Morgan Securities Inc. as lead arranger and bookrunner.facilities. We expect the debt will have the following principal terms:
New Senior Secured Credit Facilities
In connection with the consummation of this offering, we expect to enter into new senior secured credit facilities. The new senior secured credit facilities will provide for an aggregate borrowing capacity of up to $55 million through a revolving credit facility, $35 million through a domestic term loan facility and the equivalent in euros of $35 million through a French term loan facility. The borrowers under the senior secured credit facilities will be Mirion Technologies, Inc., and our subsidiaries, Mirion Technologies (Synodys) SA and Mirion Technologies (IST France) SAS.
Revolving Credit Facility
Mirion Technologies, Inc. will be the borrower under the revolving credit facility, which will initially have an aggregate borrowing capacity of $30 million. We may elect to increase the revolving credit facility by an additional $25 million, so long as we are not in default under the terms of the credit agreement and subject to the consent of any increasing lenders. Up to $15 million of the revolving credit facility may be in the form of letters of credit, and up to $5 million of the revolving credit facility may be in the form of swingline loans. Any issuances of letters of credit and borrowing under the swingline loan will reduce availability for borrowing under the revolving credit facility. Loans under the revolving credit facility will be used to refinance our existing indebtedness to ACAS and for general corporate purposes, and will be so available for four years after entering into the new senior secured credit facilities.
Obligations of Mirion Technologies, Inc. under the revolving credit facility will be guaranteed by each of our existing and future wholly owned domestic subsidiaries, and such obligations will be secured by substantially all of the assets, including by blanket liens, of us and our domestic subsidiaries, limited, in the case of stock of our foreign subsidiaries to 65% of the capital stock of such subsidiaries.
Term Loan Facilities
Mirion Technologies, Inc. will be the domestic borrower of $35 million and Mirion Technologies (Synodys) SA and Mirion Technologies (IST France) SAS will be the French subsidiary borrowers of the equivalent in euros of $35 million under the term loan facilities of our senior secured credit facilities. The term loans will be made available in a single borrowing, and will mature four years after entering into the new senior secured credit facilities. The term loans will amortize in quarterly installments over the life of the loan, equal to 15% of the original principal balance in the first, second and third years after the closing date and 20% in the fourth year.
The term loans of Mirion Technologies, Inc. will be guaranteed by each of our existing and future wholly owned domestic subsidiaries. All obligations under term loans to Mirion Technologies, Inc. will be secured by substantially all of the assets, including by blanket liens, of us and our domestic subsidiaries, limited, in the case of stock of our foreign subsidiaries to 65% of the capital stock of such subsidiaries. The term loans of our French subsidiary borrowers will be guaranteed by us, our domestic subsidiaries and, to the extent that no material adverse tax consequences would result, our English, Canadian, French and German subsidiaries. All obligations under the term loans to our French subsidiary borrower will be secured by assets of us and several of our subsidiaries, including blanket liens on us and our domestic subsidiaries and pledges of assets or securities of our foreign subsidiaries.
138134
Other Terms
Borrowings under the senior secured credit facilities will bear interest at a rate based on the prime rate, LIBOR or EURIBOR, subject to certain adjustments based on our leverage ratio, and certain fees may accrue in conjunction with the revolving credit facility, as reflected in the following table:
| | | | | | | | | | | | | |
| | | | | | | Commitment
|
Leverage Ratio: | | ABR Spread | | Eurodollar Spread | | Fee Rate |
| |
| Less than 1.25 to 1.00 | | | 3.00% | | | | 4.00% | | | | 0.35% | |
| Equal to or greater than 1.25 to 1.00 but less than 1.75 to 1.00 | | | 3.25% | | | | 4.25% | | | | 0.40% | |
| Equal to or greater than 1.75 to 1.00 but less than 2.25 to 1.00 | | | 3.50% | | | | 4.50% | | | | 0.50% | |
| Equal to or greater than 2.25 to 1.00 | | | 4.00% | | | | 5.00% | | | | 0.50% | |
However, until we deliver a compliance certificate with respect to our fiscal quarter ending September 30, 2010, the initial adjustment (i) with respect to the ABR Spread shall be 3.50%, (ii) with respect to the Eurodollar Spread shall be 4.50% and (iii) with respect to the Commitment Fee Rate shall be 0.50%.
The senior secured credit facilities will contain, among other things, covenants restricting our ability and the ability of our subsidiaries to incur indebtedness, prepay or amend other indebtedness, create liens, guarantee obligations, make certain fundamental changes including mergers or dissolutions, pay dividends and other payments in respect of capital stock, make capital expenditures, make certain investments, sell assets, change our lines of business, enter into transactions with affiliates and other corporate actions. The senior secured credit facilities will also require us to maintain a fixed charge coverage ratio (defined as the ratio of Adjusted EBITDA minus capital expenditures to interest expense and scheduled principal payments of indebtedness) of 1.50-to-one, a minimum net worth of 80% of our consolidated stockholders’ equity as of April 30, 2010 after giving pro forma effect to this offering and the consummation on the effective date of the transactions contemplated under the senior secured credit facilities plus 50% of net income earned in each full fiscal quarter ending after March 31, 2010 and a maximum leverage ratio (defined as the ratio of total indebtedness to Adjusted EBITDA for four consecutive fiscal quarters) of 2.75-to-one, stepping down to 2.25-to-one as of January 1, 2011. The senior secured credit facilities also contain mandatory prepayment provisions, which require us in certain instances to prepay obligations owing under the senior secured credit facilities in connection with asset sales, excess cash flow and subordinated debt issuances.
Borrowings under the senior secured credit facilities will also be subject to certain conditions, including the absence of any event of default and any material adverse change.
The senior secured credit facilities will also include events of default typical of these types of credit facilities and transactions, including but not limited to the nonpayment of principal, interest, fees or other amounts owing under the senior secured credit facilities (in certain cases, subject to a grace period), the violation of covenants (subject, in certain cases, to a grace period), the inaccuracy of representations and warranties, cross defaults, bankruptcy events, certain ERISA events, material judgments and a change of control. The occurrence of an event of default could result in the lenders not being required to lend any additional amounts and the acceleration of obligations under the senior secured credit facilities, causing such obligations to be due and payable immediately, which could materially and adversely affect us.
Upon the terms as presently contemplated, we anticipate that J.P. Morgan Securities Inc.LLC as lead arranger and bookrunner of our new bank credit facilities will be paid one-time fees equal to $1,025,000 and annual administrative fees equal to $25,000. It, like all other lenders under the senior credit facilities, will earn interest on its share of outstanding loans, commitment fees on its share of any unused portion of the senior credit facilities and letter of credit fees on its share of outstanding letters of credit, in each case based upon our leverage ratio in effect from time to time. In addition, each bank, including JPMorgan Chase Bank, N.A., that issues letters of credit under the senior credit facilities will earn a fronting fee on the amount of each such letter of credit at rates to be separately negotiated between us and such bank, which, in the case of JPMorgan Chase Bank, N.A., is 0.125% per annum.
139135
SHARES ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of shares of our common stock in the public market could adversely affect prevailing market prices. Furthermore, since only a limited number of shares will be available for sale shortly after this offering because of contractual and legal restrictions on resale described below, sales of substantial amounts of common stock in the public market after the restrictions lapse could adversely affect the prevailing market price for our common stock, as well as our ability to raise equity capital in the future.
Based on the number of shares of common stock outstanding as of March 31,June 30, 2010, upon the completion of this offering, 18,663,499 shares of our common stock will be outstanding, assuming no exercise of any options or warrants outstanding. All 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 unless held by one of our affiliates, as that term is defined in Rule 144 under the Securities Act.
The remaining 7,663,499 shares of our common stock outstanding after this offering are restricted securities as such term is defined in Rule 144 under the Securities Act or are subject tolock-up agreements as described below. Following the expiration of thelock-up period, restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or 701 promulgated under the Securities Act, described in greater detail below. The 7,663,499 shares will generally become available for sale in the public market under Rule 144 or Rule 701 upon expiration oflock-up agreements 180 days after the date of this offering, provided that shares held by affiliates will be subject to the volume limitations described below.
Rule 144
In general, under Rule 144 as currently in effect, once we have been a reporting company subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act for 90 days, an affiliate who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of either of the following:
| | |
| | • | 1% of the number of shares of common stock then outstanding, which will equal 186,634 shares immediately after this offering; and |
| | |
| | • | the average weekly reported volume of trading of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
However, the six month holding period increases to one year in the event we have not been a reporting company for at least 90 days. In addition, any sales by affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and the availability of current public information about us.
The volume limitation, manner of sale and notice provisions described above will not apply to sales by non-affiliates. For purposes of Rule 144, a non-affiliate is any person or entity who is not our affiliate at the time of sale and has not been our affiliate during the preceding three months. Once we have been a reporting company for 90 days, a non-affiliate who has beneficially owned restricted shares of our common stock for six months may rely on Rule 144 provided that certain public information regarding us is available. The six month holding period increases to one year in the event we have not been a reporting company for at least 90 days. However, a non-affiliate who has beneficially owned the restricted shares proposed to be sold for at least one year will not be subject to any restrictions under Rule 144 regardless of how long we have been a reporting company.
We are unable to estimate the number of shares that will be sold under Rule 144 since this will depend on the market price for our common stock, the personal circumstances of the stockholder and other factors.
Rule 701
In general, our employees, directors, officers, consultants or advisors who purchase shares from us under Rule 701 in connection with a compensatory stock or option plan or other written agreement before the
140136
effective date of this offering are entitled to resell such shares 90 days after the effective date of this offering in reliance on Rule 144, without having to comply with the holding period requirements of Rule 144 described above, but subject to the lock-up agreements described below.
Registration Rights
Upon the consummation of this offering, we shall enter into a registration rights agreement with ACAS and certain of its affiliates, Thomas D. Logan, W. Antony Besso and certain other of our stockholders, under which these stockholders may require us to register their shares of common stock under the securities laws for sale. Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates.
Stock Options
As of March 31,June 30, 2010, options to purchase a total of 962,944924,830 shares of common stock were outstanding. AllWe expect that all of the shares subject to options arewill be subject tolock-up agreements. An additional 948,281986,395 shares of common stock were either reserved for issuance under our existing stock plan or to be reserved for issuance under our amended and restated stock plan.
Upon the consummation of this offering, we intend to file a registration statement under the Securities Act covering all shares of common stock subject to outstanding options or issuable pursuant to our equity plans. Shares registered under this registration statement will be available for sale in the open market, subject to Rule 144 volume limitations applicable to affiliates, vesting restrictions with us or the contractual restrictions described below.
Lock-up Agreements
Our
ACAS has agreed, and we expect that our officers, directors and all of our other stockholders have agreed,will agree, subject to customary exceptions, not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock for a period of 180 days after the date of this prospectus, without the prior written consent of each of Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.LLC. We do not anticipate that the lenders under the Pledge will enter into a lock-up agreement.
141137
MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FORNON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of the material U.S. federal income and estate tax consequences of the ownership and disposition of our common stock by a beneficial owner that is a“Non-U.S. Holder,” other than aNon-U.S. Holder that owns, or has owned, actually or constructively, more than 5% of our common stock. A“Non-U.S. Holder” is a person or entity that, for U.S. federal income tax purposes, is a:
| | |
| | • | nonresident alien individual, other than a former citizen or resident of the United States subject to tax as an expatriate; |
| |
| | • | foreign corporation; or |
| |
| | • | foreign estate or trust. |
A“Non-U.S. Holder” generally does not include a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of disposition of our common stock. Such an individual is urged to consult his or her own tax adviser regarding the U.S. federal income tax consequences of the sale, exchange or other disposition of our common stock.
If an entity that is classified as a partnership for U.S. federal income tax purposes holds our common stock, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding our common stock and partners in such partnerships are urged to consult their tax advisers as to the particular U.S. federal income tax consequences of holding and disposing of our common stock.
This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury Regulations, changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. This discussion does not address all aspects of U.S. federal income and estate taxation that may be relevant toNon-U.S. Holders in light of their particular circumstances and does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction. Prospective holders are urged to consult their tax advisers with respect to the particular tax consequences to them of owning and disposing of our common stock, including the consequences under the laws of any state, local or foreign jurisdiction.
Dividends
As discussed under “Dividend Policy” above, we do not currently expect to pay dividends. In the event that we do pay dividends, dividends paid to aNon-U.S. Holder of our common stock generally will be subject to withholding tax at a 30% rate or a reduced rate specified by an applicable income tax treaty. In order to obtain a reduced rate of withholding, aNon-U.S. Holder will be required to provide an Internal Revenue ServiceForm W-8BEN certifying its entitlement to benefits under a treaty.
If aNon-U.S. Holder is engaged in a trade or business in the United States, and if dividends paid to theNon-U.S. Holder are effectively connected with the conduct of this trade or business (and, if required by an applicable income tax treaty, are attributable to a U.S. permanent establishment), theNon-U.S. Holder, although exempt from the withholding tax discussed in the preceding paragraph, will generally be taxed in the same manner as a U.S. person. Such aNon-U.S. Holder will be required to provide a properly executed Internal Revenue ServiceForm W-8ECI in order to claim an exemption from withholding. Anon-U.S. corporation receiving effectively connected dividends may also be subject to an additional “branch profits tax” imposed at a rate of 30% (or a lower treaty rate).
Gain on Disposition of Common Stock
Subject to the backup withholding rules discussed below, aNon-U.S. Holder generally will not be subject to U.S. federal income tax on gain realized on a sale or other disposition of our common stock unless:
| | |
| | • | the gain is effectively connected with a trade or business of thenon-U.S. holder in the United States, or |
| |
| | • | we are or have been a U.S. real property holding corporation, as defined in the Code, at any time within the five-year period preceding the disposition or theNon-U.S. Holder’s holding period, whichever period is shorter, and our common stock has ceased to be traded on an established securities market prior to the beginning of the calendar year in which the sale or disposition occurs. |
142138
We believe that we are not, and do not anticipate becoming, a U.S. real property holding corporation.
If aNon-U.S. Holder is engaged in a trade or business in the United States and gain recognized by theNon-U.S. Holder on a sale or other disposition of our common stock is effectively connected with the conduct of such trade or business, theNon-U.S. Holder will generally be taxed in the same manner as a U.S. person, subject to an applicable income tax treaty providing otherwise.Non-U.S. Holders whose gain from dispositions of our common stock may be effectively connected with a conduct of a trade or business in the United States are urged to consult their own tax advisers with respect to the U.S. tax consequences of the ownership and disposition of our common stock, including the possible imposition of a branch profits tax.
Information Reporting Requirements and Backup Withholding
Information returns will be filed with the Internal Revenue Service in connection with payments of dividends on our common stock. Unless theNon-U.S. Holder complies with certification procedures to establish that it is not a U.S. person, information returns may be filed with the Internal Revenue Service in connection with the proceeds from a sale or other disposition of our common stock and theNon-U.S. Holder may be subject to backup withholding on dividend payments on our common stock or on the proceeds from a sale or other disposition of our common stock. The certification procedures required to claim a reduced rate of withholding under a treaty described above will satisfy the certification requirements necessary to avoid backup withholding as well. The amount of any backup withholding from a payment to aNon-U.S. Holder will be allowed as a credit against such holder’s U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the Internal Revenue Service.
Recent Legislation
Recent legislation generally imposes a withholding tax of 30% on payments to certain foreign entities (including financial intermediaries), after December 31, 2012, of dividends on and the gross proceeds of dispositions of U.S. common stock, unless various U.S. information reporting and due diligence requirements (that are in addition to, and potentially significantly more burdensome than, the beneficial owner certification requirements described above) have been satisfied. Non-U.S. Holders should consult their tax advisers regarding the possible implications of this legislation for their investment in our common stock.
Federal Estate Tax
IndividualNon-U.S. Holders and entities the property of which is potentially includible in such an individual’s gross estate for U.S. federal estate tax purposes (for example, a trust funded by such an individual and with respect to which the individual has retained certain interests or powers), should note that, absent an applicable treaty benefit, our common stock will be treated as U.S. situs property subject to U.S. federal estate tax.
143139
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting agreement dated , we and the selling stockholders have agreed to sell to the underwriters named below, for whom Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.LLC are acting as representatives, the following respective numbers of shares of common stock:
| | | | | |
| | | Number
| |
Underwriter | | of Shares | |
| |
| Credit Suisse Securities (USA) LLC | | | | |
Merrill Lynch, Pierce, Fenner & Smith
Incorporated | | | | |
J.P. Morgan Securities Inc.LLC | | | | |
| Robert W. Baird & Co. Incorporated | | | | |
| | | | | |
| Total | | | 11,000,000 | |
| | | | | |
The underwriting agreement provides that the underwriters are obligated to purchase all the shares of common stock offered by us and the selling stockholders if they purchase any shares, other than those shares covered by the over-allotment option described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or this offering may be terminated.
The selling stockholders have granted to the underwriters a30-day option to purchase on a pro rata basis up to 1,650,000 additional shares from the selling stockholders at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only to cover any over allotments of common stock.
The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of $ per share. The underwriters and selling group members may allow a discount of $ per share on sales to other broker/dealers. After the initial public offering the representatives may change the public offering price and concession and discount to broker/dealers.
The following table summarizes the compensation and estimated expenses we and the selling stockholders will pay:
| | | | | | | | | | | | | | | | | |
| | | Per Share | | | Total | |
| | | Without
| | | With
| | | Without
| | | With
| |
| | | Over-Allotment | | | Over-Allotment | | | Over-Allotment | | | Over-Allotment | |
| |
| Underwriting Discounts and Commissions paid by us | | $ | | | | $ | | | | $ | | | | $ | | |
| Expenses payable by us | | $ | | | | $ | | | | $ | | | | $ | | |
| Underwriting Discounts and Commissions paid by the selling stockholders | | $ | | | | $ | | | | $ | | | | $ | | |
We are paying all of the expenses of the selling stockholders in connection with this offering, other than underwriting discounts and commissions applicable to the shares sold by them.
The representatives have informed us and the selling stockholders that they do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5% of the shares of common stock being offered. The underwriters will not confirm sales to any accounts over which they exercise discretionary authority without first receiving a written consent from those accounts.
We have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act
144140
relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of each of Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.LLC for a period of 180 days after the date of this prospectus subject to customary exceptions, including a limited exception for the issuance of common stock in connection with future acquisitions or strategic investments. However, in the event that either (1) during the last 17 days of the“lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the“lock-up” period, we announce that we will release earnings results during the16-day period beginning on the last day of the“lock-up” period, then in either case the expiration of the“lock-up” will be extended until the expiration of the18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless each of Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc. waives, in writing, such an extension.
Our
ACAS has agreed, and we expect that our officers, directors the selling stockholders and all of our other stockholders have agreedwill agree, that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of each of Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.LLC for a period of 180 days after the date of this prospectus, in each case other than the shares of our common stock sold by the selling stockholders in this offering and subject to customary exceptions. In addition, ACAS is permitted to pledge its shares of our common stock or securities exercisable for shares of our common stock to itsWe do not anticipate that the lenders as long as such lenders also executeunder the Pledge will enter into a lockuplock-up agreement. However, in the event that either (1) during the last 17 days of the“lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the“lock-up” period, we announce that we will release earnings results during the16-day period beginning on the last day of the“lock-up” period, then in either case the expiration of the“lock-up” will be extended until the expiration of the18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless each of Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.LLC waives, in writing, such an extension.
We and the selling stockholders have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.
Our common stock has been approved for listing on The NASDAQ Global Market.
In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.
| | |
| | • | Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. |
| |
| | • | Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment optionand/or purchasing shares in the open market. |
145141
| | |
| | • | Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in this offering. |
| |
| | • | Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions. |
| |
| | • | In passive market making, market makers in the common stock who are underwriters or prospective underwriters may, subject to limitations, make bids for or purchases of our common stock until the time, if any, at which a stabilizing bid is made. |
These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions, if commenced, may be discontinued at any time.
A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.
In connection with the consummation of this offering, we expect to enter into new bank credit facilities with a group of lenders that will include some of the underwriters and affiliates of some of the underwriters, including J.P. Morgan Securities Inc.LLC. The underwriters may in the future perform investment banking, commercial banking and advising services for us and certain of our affiliates, including ACAS, from time to time for which they may in the future receive customary fees and expenses.
146142
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the shares in Canada is being made only on a private placement basis exempt from the requirement that we prepare and file a prospectus with the securities regulatory authorities in each province where trades of the shares are made. Any resale of the shares in Canada must be made under applicable securities laws which may vary depending on the relevant jurisdiction, and which will require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the shares.
Representations of Purchasers
By purchasing the shares in Canada and accepting delivery of a purchase confirmation a purchaser is representing to us, the selling stockholders and the dealer from whom the purchase confirmation is received that:
| | |
| | • | the purchaser is entitled under applicable provincial securities laws to purchase the Shares without the benefit of a prospectus qualified under those securities laws as it is an “accredited investor” as defined under National Instrument 45-106—Prospectus and Registration Exemptions, |
| |
| | • | the purchaser is a “permitted client” as defined in National Instrument 31-103—Registration Requirements and Exemptions, |
| |
| | • | where required by law, the purchaser is purchasing as principal and not as agent, |
| |
| | • | the purchaser has reviewed the text above under Resale Restrictions, and |
| |
| | • | the purchaser acknowledges and consents to the provision of specified information concerning the purchase of the shares to the regulatory authority that by law is entitled to collect the information, including certain personal information. For purchasers in Ontario, questions about such indirect collection of personal information should be directed to Administrative Support Clerk, Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8 or to (416) 593-3684. |
Rights of Action—Ontario Purchasers Only
Under Ontario securities legislation, certain purchasers who purchase a security offered by this document during the period of distribution will have a statutory right of action for damages, or while still the owner of the shares, for rescission against us and the selling stockholders in the event that this document contains a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the shares. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the shares. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us and the selling stockholders. In no case will the amount recoverable in any action exceed the price at which the shares were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we and the selling stockholders will have no liability. In the case of an action for damages, we and the selling stockholders will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the shares as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.
147143
Enforcement of Legal Rights
All of our directors and officers as well as the experts named herein and the selling stockholders may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.
Taxation and Eligibility for Investment
Canadian purchasers of the shares should consult their own legal and tax advisors with respect to the tax consequences of an investment in the shares in their particular circumstances and about the eligibility of the investment by the purchaser under relevant Canadian legislation.
148144
NOTICE TO RESIDENTS OF THE
EUROPEAN ECONOMIC AREA AND THE UNITED KINGDOM
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer to the public of the Shares which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of the Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;
(c) by the underwriters to fewer than 100 natural or legal persons (other than “qualified investors” as defined in the Prospectus Directive) subject to obtaining the prior consent of each of Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.LLC for any such offer; or
(d) in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of the Shares shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.
Any person making or intending to make any offer within the EEA of the Shares which are the subject of the offering contemplated in this prospectus should only do so in circumstances in which no obligation arises for us or any of the underwriters to produce a prospectus for such offer. Neither we nor the underwriters have authorised, nor do they authorise, the making of any offer of the Shares through any financial intermediary, other than offers made by underwriters which constitute the final offering of Shares contemplated in this prospectus.
For the purposes of this provision, and the buyer’s representation below, the expression an “offer to the public” in relation to the Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Shares to be offered so as to enable an investor to decide to purchase the Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
Buyer’s Representation
Each person in a Relevant Member State who receives any communication in respect of, or who acquires the Shares under, the offers contemplated in this prospectus will be deemed to have represented, warranted and agreed to and with each underwriter and us that:
(a) it is a qualified investor within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive; and
(b) in the case of the Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the Shares acquired by it in the offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than “qualified investors” as defined in the Prospectus Directive, or in circumstances in which the prior consent of each of Credit Suisse Securities (USA) LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc.LLC has been given to the offer or resale; or (ii) where the Shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of the Shares to it is not treated under the Prospectus Directive as having been made to such persons.
149145
NOTICE TO PROSPECTIVE INVESTORS IN SWITZERLAND
This document as well as any other material relating to the Shares which are the subject of the offering contemplated by this prospectus do not constitute an issue prospectus pursuant to Article 652a of the Swiss Code of Obligations. The Shares will not be listed on the SIX Swiss Exchange and, therefore, the documents relating to the Shares, including, but not limited to, this document, do not claim to comply with the disclosure standards of the listing rules of SIX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SIX Swiss Exchange.
The Shares are being offered in Switzerland by way of a private placement, i.e., to a small number of selected investors only, without any public offer and only to investors who do not purchase the Shares with the intention to distribute them to the public. The investors will be individually approached by the Issuer from time to time.
This document as well as any other material relating to the Shares is personal and confidential and do not constitute an offer to any other person. This document may only be used by those investors to whom it has been handed out in connection with the offering described herein and may neither directly nor indirectly be distributed or made available to other persons without express consent of the Issuer. It may not be used in connection with any other offer and shall in particular not be copiedand/or distributed to the public in (or from) Switzerland.
150146
NOTICE TO PROSPECTIVE INVESTORS IN THE DUBAI INTERNATIONAL FINANCIAL CENTRE
This document relates to an exempt offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This document is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with exempt offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it. The Shares which are the subject of the offering contemplated by this prospectus may be illiquidand/or subject to restrictions on their resale. Prospective purchasers of the Shares offered should conduct their own due diligence on the Shares. If you do not understand the contents of this document you should consult an authorised financial adviser.
151147
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered hereby will be passed upon for us by Davis Polk & Wardwell LLP, Menlo Park, California and by Latham & Watkins LLP, Menlo Park, California for the underwriters.
EXPERTS
The consolidated financial statements of Mirion Technologies, Inc. at June 30, 20092010 and 2008,2009, and for each of the three years in the period ended June 30, 2009,2010, appearing in this prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC, Washington, D.C. 20549, a Registration Statement onForm S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to the company and its common stock, reference is made to the Registration Statement and the exhibits and any schedules filed therewith. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference. A copy of the registration statement, including the exhibits and schedules thereto, may be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at1-800-SEC-0330. In addition, the SEC maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov. The registration statement, including the exhibits and schedules thereto, are also available for reading and copying at the offices of NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. 20006.
As a result of this offering, we will become subject to the full informational requirements of the Securities Exchange Act of 1934, as amended. We will fulfill our obligations with respect to such requirements by filing periodic reports and other information with the SEC. We intend to furnish our stockholders with annual reports containing consolidated financial statements certified by an independent public accounting firm. We also maintain an Internet site at www.mirion.com. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part.
152148
MIRION TECHNOLOGIES, INC. AND SUBSIDIARIES
| | | | | |
| | | Page |
| |
Mirion Technologies, Inc. Consolidated Financial Statements: | | | | |
| | | F-2 | |
| | | F-3 | |
| | | F-4 | |
| | | F-5 | |
| | | F-6 | |
| | | F-7 | |
F-1
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Mirion Technologies, Inc.
We have audited the accompanying consolidated balance sheets of Mirion Technologies, Inc. and subsidiaries (the Company) as of June 30, 20092010 and 2008,2009, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2009.2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Mirion Technologies, Inc. and subsidiaries at June 30, 20092010 and 2008,2009, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 2009,2010, in conformity with U.S. generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, effective July 1, 2009, the Company adoptedchanged its method of accounting for revenue recognition for arrangements with multiple elements with the provisionsadoption of Accounting Standards Update No. 2009-13, Multiple-Deliverable Revenue Arrangements, an amendment to Financial Accounting Standards Board Interpretation No. 48,Accounting for Uncertainty in Income Taxes — An Interpretation of FASB No. 109, effective July 1, 2007.Codification 605, Revenue Recognition.
/s/ Ernst & Young LLP
San Francisco, California
January 15,
September 3, 2010 except for Note 16 as to which the date is March 12, 2010
F-2
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Pro Forma
| | | | | | | | | Pro Forma
| |
| | | | | | | | | Pro Forma | | As Adjusted | | | | | | | | | Pro Forma | | As Adjusted | |
| | | June 30, | | March 31,
| | March 31,
| | March 31,
| | | | | June 30, | | June 30,
| | June 30,
| |
| | | 2008 | | 2009 | | 2010 | | 2010 | | 2010 | | | | | 2009 | | 2010 | | 2010 | | 2010 | |
| | | | | | | (unaudited) | | (unaudited) | | (unaudited) | | | | | | | | | (unaudited) | | (unaudited) | |
| |
ASSETS | ASSETS | ASSETS |
| Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 8,959 | | | $ | 5,390 | | | $ | 8,314 | | | $ | 8,314 | | | $ | 13,933 | | | | | | | $ | 5,390 | | | $ | 9,936 | | | $ | | | | $ | | |
| Restricted cash — current | | | 1,455 | | | | 1,515 | | | | 3,198 | | | | | | | | | | | | | | | | 1,515 | | | | 3,258 | | | | | | | | | |
| Accounts receivable — net of allowance for doubtful accounts | | | 36,710 | | | | 40,165 | | | | 34,335 | | | | | | | | | | | | | | | | 40,165 | | | | 37,059 | | | | | | | | | |
| Costs in excess of billings on uncompleted contracts | | | 17,515 | | | | 17,073 | | | | 19,413 | | | | | | | | | | | | | | | | 17,073 | | | | 19,474 | | | | | | | | | |
| Receivables pledged to creditors | | | 5,272 | | | | 2,364 | | | | 1,886 | | | | | | | | | | | | | | | | 2,364 | | | | 113 | | | | | | | | | |
| Inventories — net of provision for excess and obsolete inventory | | | 36,092 | | | | 33,728 | | | | 35,022 | | | | | | | | | | | | | | | | 33,728 | | | | 30,169 | | | | | | | | | |
| Prepaid expenses and other current assets | | | 3,859 | | | | 5,253 | | | | 12,014 | | | | 12,014 | | | | 3,420 | | | | | | | | 5,253 | | | | 17,347 | | | | | | | | | |
| Deferred cost of revenue | | | 24,522 | | | | 29,536 | | | | 21,166 | | | | | | | | | | | | | | | | 29,536 | | | | 17,072 | | | | | | | | | |
| Deferred income taxes — current | | | 5,691 | | | | 5,541 | | | | 6,787 | | | | | | | | | | | | | | | | 5,541 | | | | 2,154 | | | | | | | | | |
| | | | | | | | | | | | | |
| Total current assets | | | 140,075 | | | | 140,565 | | | | 142,135 | | | | | | | | | | | | | | | | 140,565 | | | | 136,582 | | | | | | | | | |
| Property, plant and equipment — net | | | 17,618 | | | | 18,080 | | | | 18,906 | | | | | | | | | | | | | | | | 18,080 | | | | 20,532 | | | | | | | | | |
| Goodwill | | | 147,678 | | | | 139,021 | | | | 136,100 | | | | | | | | | | | | | | | | 139,021 | | | | 129,275 | | | | | | | | | |
| Intangible assets — net | | | 33,171 | | | | 23,688 | | | | 18,430 | | | | | | | | | | | | | | | | 23,688 | | | | 16,406 | | | | | | | | | |
| Restricted cash | | | 3,909 | | | | 4,532 | | | | 3,383 | | | | | | | | | | | | | | | | 4,532 | | | | 3,304 | | | | | | | | | |
| Deferred income taxes | | | 230 | | | | 2,794 | | | | 3,155 | | | | | | | | | | | | | | | | 2,794 | | | | 65 | | | | | | | | | |
| Other assets | | | 1,696 | | | | 1,074 | | | | 1,097 | | | | 1,097 | | | | 3,518 | | | | | | | | 1,074 | | | | 1,199 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 344,377 | | | $ | 329,754 | | | $ | 323,206 | | | $ | 323,206 | | | $ | 322,652 | | | | | | | $ | 329,754 | | | $ | 307,363 | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Accounts payable | | $ | 25,323 | | | $ | 19,088 | | | $ | 17,621 | | | | | | | | | | | | | | | $ | 19,088 | | | $ | 17,183 | | | $ | | | | $ | | |
| Accrued expenses and other current liabilities | | | 34,802 | | | | 35,008 | | | | 28,445 | | | | | | | | | | | | | | | | 35,008 | | | | 29,660 | | | | | | | | | |
| Distribution payable to ACAS | | | — | | | | — | | | | — | | | $ | 191,633 | | | | — | | | | | | | | — | | | | — | | | | | | | | | |
| Income taxes payable | | | 2,840 | | | | 1,452 | | | | 3,027 | | | | | | | | | | | | | | | | 1,452 | | | | 93 | | | | | | | | | |
| Deferred contract revenue | | | 53,539 | | | | 62,031 | | | | 55,000 | | | | | | | | | | | | | | | | 62,031 | | | | 44,730 | | | | | | | | | |
| Deferred income tax liabilities — current | | | 1,831 | | | | 736 | | | | 850 | | | | | | | | | | | | | | |
| Deferred income taxes — current | | | | 736 | | | | 1,714 | | | | | | | | | |
| Notes payable — current | | | 9,033 | | | | 6,442 | | | | 2,236 | | | | 2,236 | | | | 12,894 | | | | | | | | 6,442 | | | | 648 | | | | | | | | | |
| Notes payable to ACAS — current | | | 520 | | | | 520 | | | | 520 | | | | — | | | | — | | | | | | | | 520 | | | | 420 | | | | | | | | | |
| | | | | | | | | | | | | |
| Total current liabilities | | | 127,888 | | | | 125,277 | | | | 107,699 | | | | | | | | | | | | | | | | 125,277 | | | | 94,448 | | | | | | | | | |
| Notes payable to ACAS | | | 172,666 | | | | 169,560 | | | | 183,113 | | | | — | | | | — | | | | | | | | 169,560 | | | | 182,832 | | | | | | | | | |
| Notes payable | | | 1,200 | | | | 762 | | | | 511 | | | | 511 | | | | 77,480 | | | | | | | | 762 | | | | 1,974 | | | | | | | | | |
| Deferred income taxes | | | 11,795 | | | | 14,339 | | | | 15,174 | | | | | | | | | | | | | | | | 14,339 | | | | 10,454 | | | | | | | | | |
| Other liabilities | | | 11,676 | | | | 12,969 | | | | 12,166 | | | | | | | | | | | | | | | | 12,969 | | | | 15,465 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total liabilities | | | 325,225 | | | | 322,907 | | | | 318,663 | | | | 326,663 | | | | 222,657 | | | | | | | | 322,907 | | | | 305,173 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Commitments and contingencies (Note 9) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| Stockholders’ equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Convertible Participating Preferred stock — $0.001 par value;Series A-1 authorized, 1,200,000 shares actual and pro forma (unaudited); issued and outstanding 678,804 shares at June 30, 2008 and 2009 and March 31, 2010 (unaudited); none issued and outstanding, pro forma (unaudited); none authorized, issued and outstanding, pro forma as adjusted (unaudited);Series A-2 authorized, 300,000 shares actual and pro forma (unaudited); issued and outstanding 70,000 shares at June 30, 2008 and 2009 and March 31, 2010 (unaudited); none issued and outstanding, pro forma (unaudited); none authorized, issued and outstanding, pro forma as adjusted (unaudited) | | | 1 | | | | 1 | | | | 1 | | | | — | | | | — | | | | | | |
Convertible Participating Preferred stock — $0.001 par value;Series A-1 authorized, 1,200,000 shares actual and pro forma (unaudited); issued and outstanding 678,804 shares at June 30, 2009 and 2010, liquidation preference of $110,352 at June 30, 2010; none issued and outstanding, pro forma (unaudited); none authorized, issued and outstanding, pro forma as adjusted (unaudited);Series A-2 authorized, 300,000 shares actual and pro forma (unaudited); issued and outstanding 70,000 shares at June 30, 2009 and 2010, liquidation preference of $15,506 at June 30, 2010; none issued and outstanding, pro forma (unaudited); none authorized, issued and outstanding, pro forma as adjusted (unaudited) | | | | 1 | | | | 1 | | | | | | | | | |
| Preferred stock — $0.001 par value; 1,500,000 shares authorized actual, pro forma (unaudited) and pro forma as adjusted (unaudited); none issued and outstanding, actual, pro forma (unaudited) and pro forma as adjusted (unaudited) | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | — | | | | — | | | | | | | | | |
| Common stock — $0.001 par value; Class A — authorized, 61,328,125 shares actual and pro forma (unaudited); issued and outstanding, 17,773 shares at June 30, 2008 and 2009 and March 31, 2010 (unaudited); none issued and outstanding, pro forma (unaudited); none authorized, issued and outstanding, pro forma as adjusted (unaudited); Class B — authorized, 17,171,875 shares actual and pro forma (unaudited); issued and outstanding 388,023 shares at June 30, 2008 and 2009 and March 31, 2010 (unaudited); none issued and outstanding, pro forma (unaudited); none authorized, issued and outstanding, pro forma as adjusted (unaudited) | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | |
| Common stock, $0.001 par value; 78,500,000 shares authorized, actual, pro forma (unaudited); and pro forma as adjusted (unaudited), none issued and outstanding actual 10,863,499 shares issued and outstanding, pro forma (unaudited); 18,663,499 shares issued and outstanding, pro forma as adjusted (unaudited) | | | — | | | | — | | | | — | | | | 1 | | | | 1 | | | | | | |
| Common stock — $0.001 par value; Class A — authorized, 61,328,125 shares actual and pro forma (unaudited); issued and outstanding, 17,773 shares at June 30, 2009 and 2010; none issued and outstanding, pro forma (unaudited); none authorized, issued and outstanding, pro forma as adjusted (unaudited); Class B — authorized, 17,171,875 shares actual and pro forma (unaudited); issued and outstanding 388,023 shares at June 30, 2009 and 2010; none issued and outstanding, pro forma (unaudited); none authorized, issued and outstanding, pro forma as adjusted (unaudited) | | | | — | | | | — | | | | | | | | | |
| Common stock, $0.001 par value; 78,500,000 shares authorized, actual, pro forma (unaudited); and pro forma as adjusted (unaudited), none issued and outstanding actual; 11,103,724 shares issued and outstanding, pro forma (unaudited); shares issued and outstanding, pro forma as adjusted (unaudited) | | | | — | | | | — | | | | | | | | | |
| Additional paid-in capital | | | 97,317 | | | | 98,478 | | | | 99,330 | | | | 99,330 | | | | 204.380 | | | | | | | | 98,478 | | | | 99,585 | | | | | | | | | |
| Accumulated deficit | | | (98,606 | ) | | | (102,561 | ) | | | (102,266 | ) | | | (110,266 | ) | | | (111,864 | ) | | | | | | | (102,561 | ) | | | (96,596 | ) | | | | | | | | |
| Accumulated other comprehensive income | | | 20,440 | | | | 10,929 | | | | 7,478 | | | | 7,478 | | | | 7,478 | | | | | | |
| Accumulated other comprehensive income (loss) | | | | 10,929 | | | | (800 | ) | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total stockholders’ equity (deficit) | | | 19,152 | | | | 6,847 | | | | 4,543 | | | | (3,457 | ) | | | 99,995 | | | | | | |
| Total stockholders’ equity | | | | 6,847 | | | | 2,190 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 344,377 | | | $ | 329,754 | | | $ | 323,206 | | | $ | 323,206 | | | $ | 322,652 | | | | | | | $ | 329,754 | | | $ | 307,363 | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | | | | | |
See notes to consolidated financial statements.
F-3
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Nine Months Ended
| |
| | | Years Ended June 30, | | | March 31, | |
| | | 2007 | | | 2008 | | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | (unaudited) | |
| |
| Revenue | | $ | 169,033 | | | $ | 191,769 | | | $ | 201,763 | | | $ | 141,686 | | | $ | 165,956 | |
| Cost of revenue | | | 94,321 | | | | 102,790 | | | | 105,954 | | | | 75,982 | | | | 94,461 | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross profit | | | 74,712 | | | | 88,979 | | | | 95,809 | | | | 65,704 | | | | 71,495 | |
| | | | | | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | | |
| Selling, general and administrative expenses | | | 59,449 | | | | 63,177 | | | | 65,649 | | | | 49,131 | | | | 48,785 | |
| Research and development | | | 11,875 | | | | 14,865 | | | | 11,282 | | | | 9,124 | | | | 5,988 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total operating expenses | | | 71,324 | | | | 78,042 | | | | 76,931 | | | | 58,255 | | | | 54,773 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from operations | | | 3,388 | | | | 10,937 | | | | 18,878 | | | | 7,449 | | | | 16,722 | |
| Interest income | | | (127 | ) | | | (143 | ) | | | (78 | ) | | | (57 | ) | | | (20 | ) |
| Interest expense | | | 19,280 | | | | 20,350 | | | | 17,789 | | | | 13,902 | | | | 11,335 | |
| Other income, net | | | (1,001 | ) | | | (1,759 | ) | | | (490 | ) | | | 489 | | | | (242 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| (Loss) Income before provision for income taxes | | | (14,764 | ) | | | (7,511 | ) | | | 1,657 | | | | (6,885 | ) | | | 5,649 | |
| Provision for income taxes | | | 4,937 | | | | 5,838 | | | | 5,612 | | | | 2,900 | | | | 5,354 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net (loss) income | | | (19,701 | ) | | | (13,349 | ) | | | (3,955 | ) | | | (9,785 | ) | | | 295 | |
| Paid-in-kind preferred dividends | | | (8,141 | ) | | | (8,993 | ) | | | (9,892 | ) | | | (7,333 | ) | | | (8,096 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss allocable to common stockholders | | $ | (27,842 | ) | | $ | (22,342 | ) | | $ | (13,847 | ) | | $ | (17,118 | ) | | $ | (7,801 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss per common share allocable to common stockholders per share — basic and diluted | | $ | (68.79 | ) | | $ | (55.14 | ) | | $ | (34.12 | ) | | $ | (42.18 | ) | | $ | (19.22 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average number of shares used in computing net loss allocable to common stockholders — basic and diluted | | | 404,717 | | | | 405,159 | | | | 405,796 | | | | 405,796 | | | | 405,796 | |
| | | | | | | | | | | | | | | | | | | | | |
| Pro forma net loss per share allocable to common stockholders before conversion of preferred shares — basic and diluted | | | | | | | | | | $ | (0.92 | ) | | | | | | $ | (0.51 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Pro forma net income per common share — basic | | | | | | | | | | $ | 0.13 | | | | | | | $ | 0.21 | |
| | | | | | | | | | | | | | | | | | | | | |
| Pro forma net income per common share — diluted | | | | | | | | | | $ | 0.11 | | | | | | | $ | 0.18 | |
| | | | | | | | | | | | | | | | | | | | | |
| Pro forma net income per common share — basic as adjusted | | | | | | | | | | $ | 0.29 | | | | | | | $ | 0.27 | |
| | | | | | | | | | | | | | | | | | | | | |
| Pro forma net income per common share — diluted as adjusted | | | | | | | | | | $ | 0.24 | | | | | | | $ | 0.22 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares used in computing pro forma net loss per share allocable to common stockholders before conversion of preferred stock — basic and diluted | | | | | | | | | | | 8,205,796 | | | | | | | | 8,205,796 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares used in computing pro forma net income per share — basic and basic as adjusted | | | | | | | | | | | 17,554,915 | | | | | | | | 18,319,405 | |
| | | | | | | | | | | | | | | | | | | | | |
| Shares used in computing pro forma net income per share — diluted and diluted as adjusted | | | | | | | | | | | 20,975,551 | | | | | | | | 21,810,710 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Years Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| Revenue | | $ | 191,769 | | | $ | 201,763 | | | $ | 228,124 | |
| Cost of revenue | | | 102,790 | | | | 105,954 | | | | 126,707 | |
| | | | | | | | | | | | | |
| Gross profit | | | 88,979 | | | | 95,809 | | | | 101,417 | |
| | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | |
| Selling, general and administrative expenses | | | 63,177 | | | | 65,649 | | | | 64,510 | |
| Research and development | | | 14,865 | | | | 11,282 | | | | 8,729 | |
| | | | | | | | | | | | | |
| Total operating expenses | | | 78,042 | | | | 76,931 | | | | 73,239 | |
| | | | | | | | | | | | | |
| Income from operations | | | 10,937 | | | | 18,878 | | | | 28,178 | |
| Interest income | | | (143 | ) | | | (78 | ) | | | (24 | ) |
| Interest expense | | | 20,350 | | | | 17,789 | | | | 15,144 | |
| Other income, net | | | (1,759 | ) | | | (490 | ) | | | (639 | ) |
| | | | | | | | | | | | | |
| (Loss) income before provision for income taxes | | | (7,511 | ) | | | 1,657 | | | | 13,697 | |
| Provision for income taxes | | | 5,838 | | | | 5,612 | | | | 7,732 | |
| | | | | | | | | | | | | |
| Net (loss) income | | | (13,349 | ) | | | (3,955 | ) | | | 5,965 | |
| Paid-in-kind preferred dividends | | | (8,993 | ) | | | (9,892 | ) | | | (10,923 | ) |
| | | | | | | | | | | | | |
| Net loss allocable to common stockholders | | $ | (22,342 | ) | | $ | (13,847 | ) | | $ | (4,958 | ) |
| | | | | | | | | | | | | |
| Net loss per common share allocable to common stockholders per share — basic and diluted | | $ | (55.14 | ) | | $ | (34.12 | ) | | $ | (12.22 | ) |
| | | | | | | | | | | | | |
| Weighted average number of shares used in computing net loss allocable to common stockholders — basic and diluted | | | 405,159 | | | | 405,796 | | | | 405,796 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Pro forma net loss per share allocable to common stockholders before conversion of preferred shares — basic and diluted (unaudited) | | | | | | | | | | $ | | |
| | | | | | | | | | | | | |
| Pro forma net income per common share — basic (unaudited) | | | | | | | | | | $ | | |
| | | | | | | | | | | | | |
| Pro forma net income per common share — diluted (unaudited) | | | | | | | | | | $ | | |
| | | | | | | | | | | | | |
| Pro forma net income per common share — basic as adjusted (unaudited) | | | | | | | | | | $ | | |
| | | | | | | | | | | | | |
| Pro forma net income per common share — diluted as adjusted (unaudited) | | | | | | | | | | $ | | |
| | | | | | | | | | | | | |
| Shares used in computing pro forma net loss per share allocable to common stockholders before conversion of preferred stock — basic and diluted (unaudited) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Shares used in computing pro forma net income per share — basic and basic as adjusted (unaudited) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Shares used in computing pro forma net income per share — diluted and diluted as adjusted (unaudited) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
See notes to consolidated financial statements.
F-4
MIRION TECHNOLOGIES, INC.
(in thousands, except share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Convertible
| | | | | | | | | | | | | | | Accumulated
| | | | |
| | | Participating
| | | | | | | | | Additional
| | | | | | Other
| | | Total
| |
| | | Preferred Stock | | | Common Stock | | | Paid-in
| | | Accumulated
| | | Comprehensive
| | | Stockholders’
| |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Income (Loss) | | | Equity | |
| BALANCE — June 30, 2006 | | | 748,804 | | | $ | 1 | | | | 404,912 | | | | — | | | $ | 96,864 | | | $ | (65,556 | ) | | $ | 4,110 | | | $ | 35,419 | |
| Stock issued for compensation | | | — | | | | — | | | | 9,384 | | | | — | | | | 130 | | | | — | | | | — | | | | 130 | |
| Stock-based compensation | | | — | | | | — | | | | — | | | | — | | | | 177 | | | | — | | | | — | | | | 177 | |
| Repurchase of common stock | | | — | | | | — | | | | (9,775 | ) | | | — | | | | (115 | ) | | | — | | | | — | | | | (115 | ) |
| Preferred stock dividend | | | — | | | | — | | | | — | | | | — | | | | (8,141 | ) | | | — | | | | — | | | | (8,141 | ) |
| Dividends distributable | | | — | | | | — | | | | — | | | | — | | | | 8,141 | | | | — | | | | — | | | | 8,141 | |
| Components of comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (19,701 | ) | | | — | | | | (19,701 | ) |
| Unrecognized actuarial gains and prior service benefit, net of tax of $34 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 248 | | | | 248 | |
| Foreign currency translation, net of tax of $0 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,105 | | | | 5,105 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (14,348 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BALANCE — June 30, 2007 | | | 748,804 | | | | 1 | | | | 404,521 | | | | — | | | | 97,056 | | | | (85,257 | ) | | | 9,463 | | | | 21,263 | |
| Exercise of stock options | | | — | | | | — | | | | 1,275 | | | | — | | | | 13 | | | | — | | | | — | | | | 13 | |
| Stock-based compensation | | | — | | | | — | | | | — | | | | — | | | | 248 | | | | — | | | | — | | | | 248 | |
| Preferred stock dividend | | | — | | | | — | | | | — | | | | — | | | | (8,993 | ) | | | — | | | | — | | | | (8,993 | ) |
| Dividends distributable | | | — | | | | — | | | | — | | | | — | | | | 8,993 | | | | — | | | | — | | | | 8,993 | |
| Components of comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (13,349 | ) | | | — | | | | (13,349 | ) |
| Unrecognized actuarial gains and prior service benefit, net of tax of $65 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 161 | | | | 161 | |
| Foreign currency translation, net of tax of $0 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,816 | | | | 10,816 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2,372 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BALANCE — June 30, 2008 | | | 748,804 | | | | 1 | | | | 405,796 | | | | — | | | | 97,317 | | | | (98,606 | ) | | | 20,440 | | | | 19,152 | |
| Stock-based compensation | | | — | | | | — | | | | — | | | | — | | | | 1,161 | | | | — | | | | — | | | | 1,161 | |
| Preferred stock dividend | | | — | | | | — | | | | — | | | | — | | | | (9,892 | ) | | | — | | | | — | | | | (9,892 | ) |
| Dividends distributable | | | — | | | | — | | | | — | | | | — | | | | 9,892 | | | | — | | | | — | | | | 9,892 | |
| Components of comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,955 | ) | | | — | | | | (3,955 | ) |
| Unrecognized actuarial losses and prior service benefit, net of tax of $22 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (192 | ) | | | (192 | ) |
| Foreign currency translation, net of tax of $0 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (9,319 | ) | | | (9,319 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (13,466 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BALANCE — June 30, 2009 | | | 748,804 | | | | 1 | | | | 405,796 | | | | — | | | | 98,478 | | | | (102,561 | ) | | | 10,929 | | | | 6,847 | |
| Stock-based compensation (unaudited) | | | — | | | | — | | | | — | | | | — | | | | 852 | | | | — | | | | — | | | | 852 | |
| Preferred stock dividend (unaudited) | | | — | | | | — | | | | — | | | | — | | | | (8,096 | ) | | | — | | | | — | | | | (8,096 | ) |
| Dividends distributable (unaudited) | | | — | | | | — | | | | — | | | | — | | | | 8,096 | | | | — | | | | — | | | | 8,096 | |
| Components of comprehensive income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income (unaudited) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 295 | | | | — | | | | 295 | |
| Foreign currency translation, net of tax of $0 (unaudited) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,451 | ) | | | (3,451 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive income (unaudited) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,156 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BALANCE — March 31, 2010 (unaudited) | | | 748,804 | | | $ | 1 | | | | 405,796 | | | $ | — | | | $ | 99,330 | | | $ | (102,266 | ) | | $ | 7,478 | | | $ | 4,543 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Convertible
| | | | | | | | | | | | | | | Accumulated
| | | | |
| | | Participating
| | | | | | | | | Additional
| | | | | | Other
| | | Total
| |
| | | Preferred Stock | | | Common Stock | | | Paid-in
| | | Accumulated
| | | Comprehensive
| | | Stockholders’
| |
| | | Shares | | | Amount | | | Shares | | | Amount | | | Capital | | | Deficit | | | Income (Loss) | | | Equity | |
| BALANCE — June 30, 2007 | | | 748,804 | | | $ | 1 | | | | 404,521 | | | $ | — | | | $ | 97,056 | | | $ | (85,257 | ) | | $ | 9,463 | | | $ | 21,263 | |
| Exercise of stock options | | | — | | | | — | | | | 1,275 | | | | — | | | | 13 | | | | — | | | | — | | | | 13 | |
| Stock-based compensation | | | — | | | | — | | | | — | | | | — | | | | 248 | | | | — | | | | — | | | | 248 | |
| Preferred stock dividend | | | — | | | | — | | | | — | | | | — | | | | (8,993 | ) | | | — | | | | — | | | | (8,993 | ) |
| Dividends distributable | | | — | | | | — | | | | — | | | | — | | | | 8,993 | | | | — | | | | — | | | | 8,993 | |
| Components of comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (13,349 | ) | | | — | | | | (13,349 | ) |
| Unrecognized actuarial gains and prior service benefit, net of tax of $65 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 161 | | | | 161 | |
| Foreign currency translation, net of tax of $0 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,816 | | | | 10,816 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2,372 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BALANCE — June 30, 2008 | | | 748,804 | | | | 1 | | | | 405,796 | | | | — | | | | 97,317 | | | | (98,606 | ) | | | 20,440 | | | | 19,152 | |
| Stock-based compensation | | | — | | | | — | | | | — | | | | — | | | | 1,161 | | | | — | | | | — | | | | 1,161 | |
| Preferred stock dividend | | | — | | | | — | | | | — | | | | — | | | | (9,892 | ) | | | — | | | | — | | | | (9,892 | ) |
| Dividends distributable | | | — | | | | — | | | | — | | | | — | | | | 9,892 | | | | — | | | | — | | | | 9,892 | |
| Components of comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (3,955 | ) | | | — | | | | (3,955 | ) |
| Unrecognized actuarial losses and prior service benefit, net of tax of $22 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (192 | ) | | | (192 | ) |
| Foreign currency translation, net of tax of $0 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (9,319 | ) | | | (9,319 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (13,466 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BALANCE — June 30, 2009 | | | 748,804 | | | | 1 | | | | 405,796 | | | | — | | | | 98,478 | | | | (102,561 | ) | | | 10,929 | | | | 6,847 | |
| Stock-based compensation | | | — | | | | — | | | | — | | | | — | | | | 1,107 | | | | — | | | | — | | | | 1,107 | |
| Preferred stock dividend | | | — | | | | — | | | | — | | | | — | | | | (10,923 | ) | | | — | | | | — | | | | (10,923 | ) |
| Dividends distributable | | | — | | | | — | | | | — | | | | — | | | | 10,923 | | | | — | | | | — | | | | 10,923 | |
| Components of comprehensive loss: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,965 | | | | — | | | | 5,965 | |
| Unrecognized actuarial losses and prior service benefit, net of tax of $54 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (424 | ) | | | (424 | ) |
| Foreign currency translation, net of tax of $0 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (11,305 | ) | | | (11,305 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5,764 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BALANCE — June 30, 2010 | | | 748,804 | | | $ | 1 | | | | 405,796 | | | $ | — | | | $ | 99,585 | | | $ | (96,596 | ) | | $ | (800 | ) | | $ | 2,190 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See notes to consolidated financial statements.
F-5
MIRION TECHNOLOGIES, INC.
(in thousands)
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Nine Months Ended
| |
| | | Year Ended June 30, | | | March 31, | |
| | | 2007 | | | 2008 | | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | (unaudited) | |
Operating activities: | | | | | | | | | | | | | | | | | | | | |
| Net (loss) income | | $ | (19,701 | ) | | $ | (13,349 | ) | | $ | (3,955 | ) | | $ | (9,785 | ) | | $ | 295 | |
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization | | | 16,302 | | | | 14,182 | | | | 12,479 | | | | 9,392 | | | | 9,250 | |
| Actuarial (gain) loss | | | (282 | ) | | | (226 | ) | | | 208 | | | | — | | | | — | |
Paid-in-kind interest expense | | | 1,810 | | | | 1,904 | | | | 1,992 | | | | 1,486 | | | | 1,560 | |
| Stock-based compensation | | | 307 | | | | 248 | | | | 1,161 | | | | 908 | | | | 852 | |
| Loss on disposal of property, plant and equipment | | | 81 | | | | 502 | | | | 592 | | | | 496 | | | | 638 | |
| Amortization of loan fees, debt discounts and preferred stock discounts | | | 568 | | | | 785 | | | | 522 | | | | 399 | | | | 361 | |
| Provision for doubtful accounts | | | 96 | | | | 30 | | | | 140 | | | | 97 | | | | (22 | ) |
| Provision for deferred income taxes | | | (1,010 | ) | | | (1,238 | ) | | | (1,013 | ) | | | (2,115 | ) | | | (761 | ) |
| Change in estimated fair value of derivative instruments | | | (14 | ) | | | 9 | | | | (11 | ) | | | 84 | | | | 76 | |
| Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | | | | | |
| Accounts receivable | | | 9,639 | | | | (3,712 | ) | | | (6,401 | ) | | | 243 | | | | 4,859 | |
| Receivables pledged to creditors | | | (2,235 | ) | | | (2,389 | ) | | | 2,273 | | | | 2,175 | | | | 404 | |
| Prepaid expenses and other current assets | | | 133 | | | | 1,928 | | | | (1,622 | ) | | | (3,628 | ) | | | (6,481 | ) |
| Inventories | | | (4,401 | ) | | | (2,236 | ) | | | (609 | ) | | | (2,915 | ) | | | (2,591 | ) |
| Other assets | | | 1,616 | | | | 350 | | | | 112 | | | | 28 | | | | (393 | ) |
| Deferred cost of revenue | | | 2,338 | | | | (6,215 | ) | | | (7,569 | ) | | | (5,163 | ) | | | 7,587 | |
| Costs in excess of billings on uncompleted contracts | | | (3,210 | ) | | | (9,532 | ) | | | 2,663 | | | | 5,286 | | | | (4,980 | ) |
| Accounts payable | | | (575 | ) | | | 4,029 | | | | (3,771 | ) | | | (5,501 | ) | | | (927 | ) |
| Accrued expenses and other current liabilities | | | 378 | | | | 1,809 | | | | 2,688 | | | | 7,831 | | | | (6,261 | ) |
| Income taxes payable | | | 2,596 | | | | (6,338 | ) | | | (1,103 | ) | | | (71 | ) | | | 1,627 | |
| Deferred contract revenue | | | (6,118 | ) | | | 6,671 | | | | 9,320 | | | | 5,106 | | | | (3,056 | ) |
| Other liabilities | | | (1,887 | ) | | | 6,076 | | | | 1,935 | | | | 416 | | | | (352 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net cash (used in) provided by operating activities | | | (3,569 | ) | | | (6,712 | ) | | | 10,031 | | | | 4,769 | | | | 1,685 | |
| | | | | | | | | | | | | | | | | | | | | |
Investing activities | | | | | | | | | | | | | | | | | | | | |
| Purchases of property, plant and equipment | | | (4,316 | ) | | | (4,953 | ) | | | (6,649 | ) | | | (4,176 | ) | | | (5,963 | ) |
| Return of escrow funds | | | — | | | | 2,750 | | | | — | | | | — | | | | — | |
| Change in restricted cash | | | (699 | ) | | | (1,093 | ) | | | (779 | ) | | | (598 | ) | | | (616 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net cash used in investing activities | | | (5,015 | ) | | | (3,296 | ) | | | (7,428 | ) | | | (4,774 | ) | | | (6,579 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Financing activities: | | | | | | | | | | | | | | | | | | | | |
| Borrowings from notes payable to ACAS | | | 15,259 | | | | 13,780 | | | | 6,600 | | | | 6,600 | | | | 12,682 | |
| Payments of notes payable to ACAS | | | (6,520 | ) | | | (3,520 | ) | | | (10,576 | ) | | | (390 | ) | | | (322 | ) |
| Net payments from notes payable to third parties | | | (282 | ) | | | (318 | ) | | | (298 | ) | | | (224 | ) | | | (233 | ) |
| Net borrowings (payments) under revolving credit facility | | | 1,532 | | | | 3,396 | | | | (1,556 | ) | | | (2,561 | ) | | | (4,184 | ) |
| Proceeds from (repurchases) issuance of common stock | | | (115 | ) | | | 13 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Net cash provided by (used in) financing activities | | | 9,874 | | | | 13,351 | | | | (5,830 | ) | | | 3,425 | | | | 7,943 | |
| | | | | | | | | | | | | | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | 413 | | | | (945 | ) | | | (342 | ) | | | (143 | ) | | | (125 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | 1,703 | | | | 2,398 | | | | (3,569 | ) | | | 3,277 | | | | 2,924 | |
| Cash and cash equivalents at beginning of period | | | 4,858 | | | | 6,561 | | | | 8,959 | | | | 8,959 | | | | 5,390 | |
| | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 6,561 | | | $ | 8,959 | | | $ | 5,390 | | | $ | 12,236 | | | $ | 8,314 | |
| | | | | | | | | | | | | | | | | | | | | |
Supplemental information: | | | | | | | | | | | | | | | | | | | | |
| Cash paid for interest | | $ | 16,032 | | | $ | 16,515 | | | $ | 15,505 | | | $ | 12,146 | | | $ | 9,511 | |
| | | | | | | | | | | | | | | | | | | | | |
| Cash paid for income taxes | | $ | 3,324 | | | $ | 7,179 | | | $ | 6,277 | | | $ | 5,543 | | | $ | 5,747 | |
| | | | | | | | | | | | | | | | | | | | | |
| Mirion common stock issued for compensation | | $ | 130 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | |
Paid-in-kind preferred dividends | | $ | 8,141 | | | $ | 8,993 | | | $ | 9,892 | | | $ | 7,333 | | | $ | 8,096 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
Operating activities: | | | | | | | | | | | | |
| Net (loss) income | | $ | (13,349 | ) | | $ | (3,955 | ) | | $ | 5,965 | |
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | | | | | | | | | | | | |
| Depreciation and amortization | | | 14,182 | | | | 12,479 | | | | 12,052 | |
| Actuarial (gain) loss | | | (226 | ) | | | 208 | | | | 530 | |
Paid-in-kind interest expense | | | 1,904 | | | | 1,992 | | | | 2,091 | |
| Stock-based compensation | | | 248 | | | | 1,161 | | | | 1,107 | |
| Loss on disposal of property, plant and equipment | | | 502 | | | | 592 | | | | 859 | |
| Amortization of loan fees, debt discounts and preferred stock discounts | | | 785 | | | | 522 | | | | 458 | |
| Provision for doubtful accounts | | | 30 | | | | 140 | | | | 138 | |
| Change in deferred income taxes | | | (1,238 | ) | | | (1,013 | ) | | | 3,062 | |
| Change in estimated fair value of derivative instruments | | | 9 | | | | (11 | ) | | | 76 | |
| Changes in operating assets and liabilities: | | | | | | | | | | | | |
| Accounts receivable | | | (3,712 | ) | | | (6,401 | ) | | | (911 | ) |
| Receivables pledged to creditors | | | (2,389 | ) | | | 2,273 | | | | 2,215 | |
| Prepaid expenses and other current assets | | | 1,928 | | | | (1,622 | ) | | | (12,398 | ) |
| Inventories | | | (2,236 | ) | | | (609 | ) | | | 484 | |
| Other assets | | | 350 | | | | 112 | | | | (672 | ) |
| Deferred cost of revenue | | | (6,215 | ) | | | (7,569 | ) | | | 9,859 | |
| Costs in excess of billings on uncompleted contracts | | | (9,532 | ) | | | 2,663 | | | | (6,365 | ) |
| Accounts payable | | | 4,029 | | | | (3,771 | ) | | | (90 | ) |
| Accrued expenses and other current liabilities | | | 1,809 | | | | 2,688 | | | | (3,211 | ) |
| Income taxes payable | | | (6,338 | ) | | | (1,103 | ) | | | (1,358 | ) |
| Deferred contract revenue | | | 6,671 | | | | 9,320 | | | | (9,929 | ) |
| Other liabilities | | | 6,076 | | | | 1,935 | | | | 4,240 | |
| | | | | | | | | | | | | |
| Net cash (used in) provided by operating activities | | | (6,712 | ) | | | 10,031 | | | | 8,202 | |
| | | | | | | | | | | | | |
Investing activities | | | | | | | | | | | | |
| Purchases of property, plant and equipment | | | (4,953 | ) | | | (6,649 | ) | | | (10,437 | ) |
| Return of escrow funds | | | 2,750 | | | | — | | | | — | |
| Change in restricted cash | | | (1,093 | ) | | | (779 | ) | | | (737 | ) |
| | | | | | | | | | | | | |
| Net cash used in investing activities | | | (3,296 | ) | | | (7,428 | ) | | | (11,174 | ) |
| | | | | | | | | | | | | |
Financing activities: | | | | | | | | | | | | |
| Borrowings from notes payable to ACAS | | | 13,780 | | | | 6,600 | | | | 12,717 | |
| Payments of notes payable to ACAS | | | (3,520 | ) | | | (10,576 | ) | | | (428 | ) |
| Net payments from notes payable to third parties | | | (318 | ) | | | (298 | ) | | | 1,712 | |
| Net borrowings (payments) under revolving credit facility | | | 3,396 | | | | (1,556 | ) | | | (5,861 | ) |
| Proceeds from issuance of common stock | | | 13 | | | | — | | | | — | |
| | | | | | | | | | | | | |
| Net cash provided by (used in) financing activities | | | 13,351 | | | | (5,830 | ) | | | 8,140 | |
| | | | | | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | (945 | ) | | | (342 | ) | | | (622 | ) |
| | | | | | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | 2,398 | | | | (3,569 | ) | | | 4,546 | |
| Cash and cash equivalents at beginning of period | | | 6,561 | | | | 8,959 | | | | 5,390 | |
| | | | | | | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 8,959 | | | $ | 5,390 | | | $ | 9,936 | |
| | | | | | | | | | | | | |
Supplemental information: | | | | | | | | | | | | |
| Cash paid for interest | | $ | 16,515 | | | $ | 15,505 | | | $ | 12,514 | |
| | | | | | | | | | | | | |
| Cash paid for income taxes | | $ | 7,179 | | | $ | 6,277 | | | $ | 6,965 | |
| | | | | | | | | | | | | |
Paid-in-kind preferred dividends | | $ | 8,993 | | | $ | 9,892 | | | $ | 10,923 | |
| | | | | | | | | | | | | |
See notes to consolidated financial statements.
F-6
MIRION TECHNOLOGIES, INC.
| |
| 1. | ORGANIZATION AND OPERATIONS OF THE COMPANY |
Mirion Technologies, Inc. (“Mirion” or the “Company”) is a global provider of radiation detection, measurement, analysis and monitoring products and services to the nuclear, defense and medical end markets. Mirion was incorporated in October 2005 as Global Monitoring Systems, Inc. in the state of Delaware and subsequently changed its name to Mirion Technologies, Inc. in January 2006.
Mirion was formed through the combination of three companies: Global Dosimetry Solutions, Inc. (“GDS”), Imaging and Sensing Technology Corporation (“IST”) and Synodys SA (“Synodys”), all owned by American Capital, Ltd. and affiliates (together “ACAS”). The combination ( “Reorganization”) was effective as of December 31, 2005. Because the three companies were under the common control of ACAS, the Reorganization was accounted for by combining the assets, liabilities and accumulated deficit of the three companies at each company’s historical basis. The accompanying financial statements and related notes present the combined financial performance of the three companies.
The Company is headquartered in San Ramon, California, and has operations in the United States, Canada, the United Kingdom, France, Germany, Finland and China.
Basis of Presentation — The accompanying annual consolidated financial statements of the Company include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and negative cash flows from operations since its inception. At June 30, 2009,2010, the Company had an accumulated deficit of $102.6$96.6 million, and approximately $170.1$183.3 million of debt obligations due to American Capital Financial Services (“ACFS”), a related party. The Company has negotiated extensions on the repayment of its debt obligations with ACFS. As more fully disclosed in Note 8, debt obligations due in 2010 to ACFS total $520,000, debt obligations due in 2011 to ACFS total approximately $9.7 million$420,000, and debt obligations due in 2012 to ACFS total approximately $159.8$182.8 million. The Company plans to continue to finance operations with a combination of operating cash flows and debt and equity issuances. There is no assurance that this additional funding will be adequate to support the Company’s long-term needs. If adequate long-term funding is not available, the Company may be required to modify its operational plan. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Unaudited Pro Forma Information — If a public offering is consummated, all of the currently outstanding shares of Convertible Participating Preferred Stock will convert into 10,457,70310,697,928 shares of common stock, and currently outstanding shares of Class A and Class B Common Stock will convert on a one-for-one basis to 405,796 shares of common stock based on the number of shares outstanding as of March 31,June 30, 2010. The accompanying consolidated balance sheets include unaudited pro forma balance sheet information to reflect the anticipated accrued distribution payable to its principal stockholder, ACAS, in addition to the conversion of the outstanding preferred and common stock. The accompanying consolidated balance sheets also include the unaudited pro forma balance sheet as adjusted to reflect the anticipated effects of the offering, the distribution payment to ACAS and new debt arrangements entered into concurrently with the offering.
F-7
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Unaudited pro forma balance sheet information has been included in the accompanying Consolidated Balance Sheets to give effect to the following adjustments:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Pro forma —
| |
| | | | | | | | | Pro forma | | | | | | As Adjusted | |
| | | March 31,
| | | Pro forma
| | | March 31,
| | | Additional
| | | March 31,
| |
Pro forma Balance Sheet Adjustments | | 2010 | | | Adjustments | | | 2010 | | | Adjustments | | | 2010 | |
| |
Assets: | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 8,314 | | | $ | — | | | $ | 8,314 | | | $ | 8,594 | (e) | | $ | 13,933 | |
| | | | | | | | | | | | | | | $ | 84,652 | (f) | | | | |
| | | | | | | | | | | | | | | $ | (87,627 | )(g) | | | | |
| Prepaid expenses and other current assets | | $ | 12,014 | | | $ | — | | | $ | 12,014 | | | $ | (8,594 | )(e) | | $ | 3,420 | |
| Other assets | | $ | 1,097 | | | $ | — | | | $ | 1,097 | | | $ | (554 | )(h) | | $ | 3,518 | |
| | | | | | | | | | | | | | | $ | 2,975 | (f) | | | | |
| Total assets | | $ | 323,206 | | | $ | — | | | $ | 323,206 | | | $ | (554 | ) | | $ | 322,652 | |
Liabilities and Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | | |
| Distribution payable to ACAS | | | | | | $ | 8,000 | (a) | | $ | 191,633 | | | $ | (8,000 | )(e) | | $ | — | |
| | | | | | | $ | 96,006 | (b) | | | | | | $ | (96,006 | )(e) | | | | |
| | | | | | | $ | 87,627 | (b) | | | | | | $ | (87,627 | )(g) | | | | |
| Notes payable — current | | $ | 2,236 | | | | | | | $ | 2,236 | | | $ | 10,658 | (f) | | $ | 12,894 | |
| Notes payable to ACAS — current | | $ | 520 | | | $ | (520 | )(b) | | $ | — | | | | | | | $ | — | |
| Notes payable to ACAS | | $ | 183,113 | | | $ | (183,113 | )(b) | | $ | — | | | | | | | $ | — | |
| Notes payable | | $ | 511 | | | | | | | $ | 511 | | | $ | 76,969 | (f) | | $ | 77,480 | |
| Total liabilities | | $ | 318,663 | | | $ | 8,000 | | | $ | 326,663 | | | $ | (104,006 | ) | | $ | 222,657 | |
| Preferred Stock | | $ | 1 | | | $ | (1 | )(c) | | $ | — | | | | | | | $ | — | |
| Common stock | | $ | — | | | $ | 1 | (c)(d) | | $ | 1 | | | | | | | $ | 1 | |
| Additional paid-in capital | | $ | 99,330 | | | | | | | $ | 99,330 | | | $ | 124,800 | (e) | | $ | 204,380 | |
| | | | | | | | | | | | | | | $ | (19,950 | )(e) | | | | |
| | | | | | | | | | | | | | | $ | 200 | (i) | | | | |
| Accumulated deficit | | $ | (102,266 | ) | | $ | (8,000 | )(a) | | $ | (110,266 | ) | | $ | (200 | )(i) | | $ | (111,864 | ) |
| | | | | | | | | | | | | | | $ | (844 | )(e) | | | | |
| | | | | | | | | | | | | | | $ | (554 | )(h) | | | | |
| Accumulated other comprehensive income | | $ | 7,478 | | | | | | | $ | 7,478 | | | | | | | $ | 7,478 | |
| Total stockholders’ equity (deficit) | | $ | 4,583 | | | $ | (8,000 | ) | | $ | (3,457 | ) | | $ | 103,452 | | | $ | 99,995 | |
| Total liabilities and stockholders’ equity (deficit) | | $ | 323,206 | | | $ | — | | | $ | 323,206 | | | $ | (554 | ) | | $ | 322,652 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Pro forma —
| |
| | | | | | | | | Pro forma | | | | | | As Adjusted | |
| | | June 30,
| | | Pro forma
| | | June 30,
| | | Additional
| | | June 30,
| |
Pro forma Balance Sheet Adjustments | | 2010 | | | Adjustments | | | 2010 | | | Adjustments | | | 2010 | |
| |
Assets: | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | | 9,936 | | | | | | | | | | | | (e | ) | | | | |
| | | | | | | | | | | | | | | | (f | ) | | | | |
| | | | | | | | | | | | | | | | (g | ) | | | | |
| Prepaid expenses and other current assets | | | 17,347 | | | | | | | | | | | | (e | ) | | | | |
| Other assets | | | 1,199 | | | | | | | | | | | | | | | | | |
| Total assets | | | 307,363 | | | | | | | | | | | | (f | ) | | | | |
Liabilities and Stockholders’ Equity: | | | | | | | | | | | | | | | | | | | | |
| Distribution payable to ACAS | | | — | | | | (a | ) | | | | | | | (e | ) | | | | |
| | | | | | | | (b | ) | | | | | | | (e | ) | | | | |
| | | | | | | | (b | ) | | | | | | | (g | ) | | | | |
| Notes payable — current | | | 648 | | | | | | | | | | | | (f | ) | | | | |
| Notes payable to ACAS — current | | | 420 | | | | (b | ) | | | | | | | | | | | | |
| Notes payable to ACAS | | | 182,832 | | | | (b | ) | | | | | | | | | | | | |
| Notes payable | | | 1,974 | | | | | | | | | | | | (f | ) | | | | |
| Total liabilities | | | 305,173 | | | | | | | | | | | | | | | | | |
| Preferred Stock | | | 1 | | | | (c | ) | | | | | | | | | | | | |
| Common stock | | | — | | | | (c | )(d) | | | | | | | | | | | | |
| Additional paid-in capital | | | 99,585 | | | | | | | | | | | | (e | ) | | | | |
| | | | | | | | | | | | | | | | (e | ) | | | | |
| | | | | | | | | | | | | | | | (h | ) | | | | |
| Accumulated deficit | | | (96,596 | ) | | | (a | ) | | | | | | | (h | ) | | | | |
| | | | | | | | | | | | | | | | (e | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Accumulated other comprehensive loss | | | (800 | ) | | | | | | | | | | | | | | | | |
| Total stockholders’ equity (deficit) | | | 2,190 | | | | | | | | | | | | | | | | | |
| Total liabilities and stockholders’ equity (deficit) | | | 307,363 | | | | | | | | | | | | | | | | | |
| | |
| (a) | | An $8.0 million increase in distribution payable to ACAS to reflect the accrual of an $8.0 million payment to ACAS to terminate an investment banking services agreement, with a corresponding increase in accumulated deficit. No tax benefit has been provided related to this expense because the Company is in a net operating loss position and has a full valuation allowance in the affected jurisdiction. |
| | |
| (b) | | A $183.6$183.3 million reduction in notes payable to ACAS to reflect the assumed distribution to ACAS in connection with this offering, with a corresponding increase in distribution payable to ACAS. Of this reduction, $96.0$ million will be paid using proceeds of the offering and $87.6$ million will be paid with proceeds from new third-party debt arrangements. |
| | |
| (c) | | The conversion of the outstanding shares of Series A Convertible Participating Preferred Stock into 10,457,70310,697,928 shares of common stock as of March 31,June 30, 2010, based upon a conversion rate of 9.6288 forSeries A-1 preferred stock and 8.8128 for Series A-2 preferred stock. |
| | |
| (d) | | The conversion of 17,773 outstanding shares of Class A Voting Common Stock and 388,023 outstanding shares of Class B Non-Voting Common Stock into 405,796 shares of common stock as of March 31,June 30, 2010. These shares will convert on a one-for-one basis. |
In addition, the pro forma balance sheet information reflects the effects of the adoption of our Fourth Amended and Restated Certificate of Incorporation prior to the effectiveness of this offering.
F-8
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
In addition, the pro forma balance sheet information reflects the effects of the adoption of our Second Amended and Restated Certificate of Incorporation prior to the effectiveness of this offering.
Unaudited pro forma as adjusted balance sheet information has been included in the accompanying Consolidated Balance Sheets to give effect to the following factors in addition to those described above:
| | |
| (e) | | The issuance and sale of 7,800,000 shares of common stock in this offering, at an assumed initial public offering price of $16.00$ for gross proceeds of $124.8$ million, and the receipt of the net proceeds of $104.8$ million after deducting $20.0$ million of underwriting discounts and commissions and estimated offering expenses paid or payable by the Company. Of the $20.0$ million total offering costs paid or payable by the Company, $8.6$ million were previously paid by the Company and have been included in prepaid expenses and other current assets. The pro forma as adjusted amounts include a decrease in prepaid expenses and other current assets to reflect the reclassification of these amounts to equity at the completion of the offering and the corresponding increase in cash and cash equivalents representing the amount of the net proceeds retained by the Company to offset offering costs already paid. The net proceeds from this offering were used to make payments to ACAS of $8.0 million and $96.0$ million resulting in a reduction in the distribution payable to ACAS. The net proceeds from this offering were also used to make bonus payments of $0.8 million, with a corresponding increase in accumulated deficit. No tax benefit has been provided related to this expense as the Company is in a net operating loss position and has a full valuation allowance in the affected jurisdictions. |
| | |
| (f) | | A $77.0$ million increase in notes payable and a $10.7$ million increase in the current portion of notes payable, representing principal payments due within twelve months of executing the new notes, to reflect new debt arrangements entered into concurrently with the completion of this offering and the receipt of $84.7$ million of cash, net of $3.0$ million of loan origination fees incurred in connection with the new debt arrangements. These fees have been reflected as an increase in other assets. |
| | |
| (g) | | A $87.6$ million decrease in cash and cash equivalents and distribution payable to ACAS to reflect the distribution to ACAS made to repay debt obligations that were refinanced with a third party. |
| | |
| (h) | | A $0.6 million decrease in other assets to reflect the expensing of loan origination fees previously capitalized in connection with the ACAS debt arrangements, with a corresponding increase in accumulated deficit. No tax benefit has been provided related to this expense because the Company is in a net operating loss position and has a full valuation allowance in the affected jurisdictions. |
|
(i) | | A $0.2$ million increase in additional paid-in capital and accumulated deficit to reflect the compensation expense associated with certain employee stock options that will vest upon this offering. No tax benefit has been provided related to this expense because the Company is in a net operating loss position and has a full valuation allowance in the affected jurisdictions. The compensation expense relates to unrecognized compensation expense associated with 54,111 unvested employee stock options granted in August 2008 that, under the original terms of the grant, vest ratably over four years from the date of grant, with accelerated vesting of any unvested shares upon consummation of an initial public offering. We estimated the value of these options on the date of grant using the Black-Scholes model and based on the valuation assumptions detailed in Note 13 to the consolidated financial statements. The pro forma as adjusted balance sheet has not been adjusted to reflect the compensation expense associated with 128,273124,448 stock options that are expected to be granted to our employees and outside directors immediately following the pricing of this offering. These options are expected to have a four year vesting term, and the compensation expense assuming the offering occurred at the end of fiscal 20092010 will be recognized ratably over the following four years. Additionally, the pro forma as adjusted balance sheet has not been adjusted to reflect the compensation expense associated with performance-based call options with market conditions held by the Company’s Chief Executive Officer because the compensation expense associated with these options assuming the offering occurred at the end of fiscal 20092010 will be recognized in subsequent periods based on the implied requisite service period for the |
F-9
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | |
| | market conditions (30 days subsequent to the offering for one-half of the shares, and 24 months subsequent to the offering for one-half of the shares). |
In addition the pro forma as adjusted balance sheet information reflects the effects of the adoption of our ThirdFifth Amended and Restated Certificate of Incorporation prior to the consummation of this offering solely to eliminate the designations of our Series A convertible participating Preferred Stock and our Class A Voting Common Stock and Class B Voting Common Stock.
The following table sets forth the computation of basic and diluted pro forma net (loss) income per common share and the pro forma net income per common share-as adjusted for the periods indicated (in thousands, except share and per share amounts):
| | | | | | | | | |
| | | Year Ended
| | | Nine Months Ended
| |
| | | June 30,
| | | March 31,
| |
| | | 2009 | | | 2010 | |
| | | (unaudited) | |
| |
Numerator: | | | | | | | | |
| Net loss allocable to common stockholders | | $ | (13,847 | ) | | $ | (7,801 | ) |
| Interest expense from paydown of ACAS debt using proceeds of offering(1) | | | 6,268 | | | | 3,625 | |
| | | | | | | | | |
| Pro forma net loss allocable to common stockholders before conversion of preferred shares | | | (7,579 | ) | | | (4,176 | ) |
| Effect of preferred stock dividends(2) | | | 9,892 | | | | 8,096 | |
| | | | | | | | | |
| Pro forma net income allocable to common stockholders | | | 2,313 | | | | 3,920 | |
| Interest expense reduction from refinancing of ACAS debt(3) | | | 4,564 | | | | 2,558 | |
| Compensation expense from employee stock options and call options(4) | | | (1,779 | ) | | | (1,592 | ) |
| | | | | | | | | |
| Pro forma net income allocable to common stockholders — as adjusted | | $ | 5,098 | | | $ | 4,886 | |
| | | | | | | | | |
| | | | | | | | | |
| | | Year Ended
| | | Nine Months Ended
| |
| | | June 30, 2009 | | | March 31, 2010 | |
| | | (unaudited) | |
| |
Denominator: | | | | | | | | |
| Weighted average shares outstanding from conversion of Class A and B Voting Common Stock(5) | | | 405,796 | | | | 405,796 | |
| Common shares issued in offering(6) | | | 7,800,000 | | | | 7,800,000 | |
| | | | | | | | | |
| Shares used in computing pro forma net loss per common share before conversion of preferred shares — basic and diluted(9) | | | 8,205,796 | | | | 8,205,796 | |
| Weighted average shares outstanding from conversion of convertible preferred stock(7) | | | 9,349,119 | | | | 10,113,609 | |
| | | | | | | | | |
| Shares used in computing pro forma net income per common share — basic and basic as adjusted | | | 17,554,915 | | | | 18,319,405 | |
| Weighted average common shares outstanding from exercise of warrants(8) | | | 3,420,636 | | | | 3,420,636 | |
| Weighted average common share equivalents of stock option(9) | | | — | | | | 70,669 | |
| | | | | | | | | |
| Shares used in computing pro forma net income per common share — diluted and diluted as adjusted | | | 20,975,551 | | | | 21,810,710 | |
| | | | | | | | | |
F-10F-9
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The following table sets forth the computation of unaudited basic and diluted pro forma net loss per common share and the unaudited pro forma net income per common share-as adjusted for the periods indicated (in thousands, except share and per share amounts):
| | | | | |
| | | Year Ended
| |
| | | June 30,
| |
| | | 2010 | |
| | | (unaudited) | |
| |
Numerator: | | | | |
| Net loss allocable to common stockholders | | $ | (4,958 | ) |
| Interest expense from paydown of ACAS debt using proceeds of offering(1) | | | | |
| Pro forma net loss allocable to common stockholders before conversion of preferred shares | | | | |
| Effect of preferred stock dividends(2) | | | 10,923 | |
| Pro forma net income allocable to common stockholders | | | | |
| Interest expense reduction from refinancing of ACAS debt(3) | | | | |
| Compensation expense from employee stock options and call options(4) | | | | |
| Pro forma net income allocable to common stockholders — as adjusted | | | | |
| | | | |
| | Year Ended
| |
| | June 30, 2010 | |
| | (unaudited) | |
|
Denominator: | | | | |
| Weighted average shares outstanding from conversion of Class A and B Voting Common Stock(5) | | | 405,796 | |
| Common shares issued in offering(6) | | | | |
| | | | |
| Shares used in computing pro forma net loss per common share before conversion of preferred shares — basic and diluted(9) | | | | |
| Weighted average shares outstanding from conversion of convertible preferred stock(7) | | | 10,233,721 | |
| | | | |
| Shares used in computing pro forma net income per common share — basic and basic as adjusted | | | | |
| Weighted average common shares outstanding from exercise of warrants(8) | | | 3,420,636 | |
| Weighted average common share equivalents of stock option(9) | | | 73,879 | |
| | | | |
| Shares used in computing pro forma net income per common share — diluted and diluted as adjusted | | | | |
| | | | |
Footnotes:
| | |
| (1) | | The pro forma reduction in interest expense assumes the repayment of $96.0$ million of ACAS debt using the net proceeds from this offering, giving effect to the elimination of the related interest expense as of the beginning of the period presented. The amount of interest expense eliminated by this adjustment is calculated from actual interest expense of $6.3 million and $3.6$ million recorded in fiscal 2009 and for the nine months ended March 31, 2010 in connection with the specific debt arrangements that will be repaid with a portion of the net proceeds of this offering. No tax expense has been provided related to this reduction in interest expense because the Company is in a net operating loss position and has a full valuation allowance in the affected jurisdiction. |
| | |
| (2) | | The effect of preferred stock dividends is added back as a reduction to net loss allocable to common stockholders, assuming that all preferred stock has been converted into common shares as of the beginning of the period presented. |
| | |
| (3) | | All ACAS debt not assumed to be repaid from the net proceeds from this offering is assumed to be refinanced with a loan from a third-party bank, at interest rates averaging approximately 6%% lower than existing |
F-10
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | |
| | average interest rates with ACAS giving effect to the elimination of the related interest expense as of the beginning of the period presented. The amount of interest expense eliminated by this adjustment is calculated by taking the difference between the actual interest expense of $10.5 million and $6.3$ million recorded in fiscal 2009 and for the nine months ended March 31, 2010 in connection with the specific debt arrangements that will be repaid with the net proceeds of the new debt arrangements entered into concurrently with the completion of this offering and the interest expense on the new debt arrangements, calculated as the total of the new debt arrangements of $87.6$ million multiplied by the average interest rate on those arrangements of approximately 6.5% and 6.0%% for fiscal 2009 and the nine months ended March 31, 2010. No tax expense has been provided related to this reduction in interest expense because the Company is in a net operating loss position and has a full valuation allowance in the affected jurisdictions. |
| | |
| (4) | | The pro forma increase in compensation expense associated with employee stock options and call options reflects: |
| | |
| | • | A compensation charge associated with 128,273124,448 stock options that are expected to be granted to the Company’s employees and outside directors immediately following the pricing of this offering at an exercise price equal to the initial public offering price. The value of these options was estimated to be $0.9$ million using the Black-Scholes option pricing model and key assumptions are as follows: expected option term of 7 years, risk-free interest rate will be updated at the date of grant but is currently estimated to be 3.1%,%, dividend yield of 0%, volatility will be updated at the date of grant but is currently estimated to be 38.7%% and an exercise price and fair value of $16.00$ per share (the midpoint of the price range set forth on the cover page of this prospectus). Compensation expense will be recognized on these options over an expected four year vesting term, and as such, the compensation expense for fiscal 20092010 was assumed to be 25% of the total value, or $0.2 million. Compensation expense for the nine months ended March 31, 2010 was assumed to be 18.8% of the total value, or $0.2$ million. |
| | |
| | • | A compensation charge associated with 463,794 performance-based call options with market conditions held by Thomas D. Logan, the Company’s Chief Executive Officer. These options contain vesting provisions based upon successful completion of an initial public offering or change in control and achievement by ACAS of certain internal rates of return or returns on investment. The value of these options was estimated to be $2.1 million using a Monte Carlo simulation model and key assumptions are as follows: at the January 1, 2006 modification, expected option term of 4.5 years, risk-free interest rate of 4.3%, dividend yield of 0%, volatility of 41.8%, exercise price of $10.45 per share and fair value of $2.22 per share; at the December 7, 2007 modification, expected option term of 2.6 years, risk-free interest rate of 3.1%, dividend yield of 0%, volatility of 39.8%, exercise price of $10.45 per share and fair value of $4.44 per share. The compensation expense associated with these options for fiscal 2009 |
F-11
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | |
| | and the nine months ended March 31, 2010 was estimated to be $1.5 million, and $1.4 million, respectively, based on the implied requisite service period for the market conditions (30 days for one-half of the shares, and 24 months for one-half of the shares). |
| | |
| (5) | | The weighted average common shares outstanding from the conversion of common stock assumes the conversion of all outstanding shares of Class A Voting Common Stock and Class B Non-Voting Common Stock on a one-for-one basis into 405,796 shares of common stock. |
| | |
| (6) | | Includes 7,800,000 shares of the Company’s common stock to be sold in connection with this offering. Because distributions to ACAS, the Company’s principal stockholder, consisting of obligations under existing debt arrangements of $183.6$183.3 million and amounts due of $8.0 million to terminate an existing investment banking services agreement, exceed the Company’s earnings plus gross proceeds from this offering of $124.8$ million, all common shares are included in the calculation under existing rules on pro |
F-11
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | |
| | forma calculations. Following is a calculation of the deemed dividend in excess of proceeds from this offering (in thousands): |
| | | | | | | | | |
| | | For the Twelve
| | | For the Twelve
| |
| | | Months Ended
| | | Months Ended
| |
| | | June 30, 2009 | | | March 31, 2010 | |
| |
| Gross proceeds from offering | | $ | 124,800 | | | $ | 124,800 | |
| Distributions to ACAS: | | | | | | | | |
| Termination of investment banking services agreement | | | (8,000 | ) | | | (8,000 | ) |
| Repayment of notes payable to ACAS from proceeds of offering | | | (96,006 | ) | | | (96,006 | ) |
| Repayment of notes payable to ACAS from new debt arrangements | | | (87,627 | ) | | | (87,627 | ) |
| | | | | | | | | |
| Total distribution to ACAS | | | (191,633 | ) | | | (191,633 | ) |
| Last twelve months earnings* | | | — | | | | 6,125 | |
| | | | | | | | | |
| Excess of dividend to be paid over proceeds from offering | | $ | (66,833 | ) | | $ | (60,708 | ) |
| | | | | | | | | |
| | | | |
| | For the Twelve
| |
| | Months Ended
| |
| | June 30, 2010 | |
|
| Gross proceeds from offering | | $ | | |
| Distributions to ACAS: | | | | |
| Termination of investment banking services agreement | | | | |
| Repayment of notes payable to ACAS from proceeds of offering | | | | |
| Repayment of notes payable to ACAS from new debt arrangements | | | | |
| | | | |
| Total distribution to ACAS | | | | |
| Last twelve months earnings | | | | |
| | | | |
| Excess of dividend to be paid over proceeds from offering | | $ | | |
| | | | |
| | |
* | | The Company has generated losses for the twelve months ended June 30, 2009 and therefore, there is no impact to this calculation for this period. |
| | |
| (7) | | The weighted average common shares outstanding from the conversion of preferred stock assumes the conversion of all outstanding convertible preferred stock into common stock, including the conversion into common stock of all accrued and unpaidpaid-in-kind dividends on convertible preferred stock. The 9,349,119 weighted average at June 30, 20092010 is comprised of 864,307936,573A-1 preferred shares, which includes 185,503257,769 accrued but unpaidpaid-in-kind dividends, which are convertible at a rate of 9.6288 and 116,522137,941A-2 preferred shares, which includes 46,522 accrued but unpaidpaid-in-kind dividends, which are convertible at a rate of 8.8128. The 10,113,609 weighted average at March 31, 2010 is comprised of 926,919A-1 preferred shares, which includes 248,115 accrued but unpaidpaid-in-kind dividends, which are convertible at a rate of 9.6288 and 134,860A-2 preferred shares, which includes 64,86067,941 accrued but unpaidpaid-in-kind dividends, which are convertible at a rate of 8.8128. The increase in number of preferred shares between periods is due to the monthly accrual of preferred dividends which are paid in the form of additional shares of convertible preferred stock. |
| | |
| (8) | | These warrants only become exercisable upon a sale, liquidation or dissolution of the Company or approval by the Company’s Board of Directors. Our Board of Directors has resolved that all of these warrants will become exercisable upon the consummation of this offering. |
| | |
| (9) | | The shares used in computing pro forma net loss per common share before conversion of preferred shares — diluted for the year ended June 30, 2009 and the nine months ended March 31, 2010 exclude options to purchase 962,944924,830 shares of common stock because the Company recorded a pro forma net loss allocable to common stockholders before conversion of preferred shares, and therefore the impact of such shares would be anti-dilutive. The shares used in computing pro forma net income per common share — diluted and diluted as adjusted for the year ended June 30, 2009 and the nine months ended March 31, |
F-12
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | |
| | 2010 exclude options to purchase 962,944 and 700,467662,353 shares of common stock respectively, because the effect would be anti-dilutive. 962,944 and 514,955476,841 of these shares were excluded for the year ended June 30, 2009 and the nine months ended March 31, 2010, respectively, because the option exercise prices exceeded the average market value of the Company’sour common stock during the period. 185,512 of these shares were excluded for the nine months ended March 31, 2010 because after applying the treasury stock method of calculating earnings per share, the impact would be anti-dilutive. The shares used in computing pro forma net loss per common share before conversion of preferred shares — basic and diluted and pro forma net income per common share — diluted and diluted as adjusted for the year ended June 30, 2009 and the nine months ended March 31, 2010 also exclude options to purchase 128,273124,448 shares of common stock which are expected to be granted immediately following the pricing of this offering because their impact would be anti-dilutive, either because the Company generated a net loss or because after applying the treasury stock method of calculating earnings per share, the impact would be anti-dilutive. |
Unaudited Interim Financial Information — The accompanying unaudited interim consolidated balance sheet as of March 31, 2010, the consolidated statements of operations and cash flows for the nine month periods ended March 31, 2009 and 2010, and the consolidated statement of changes in stockholders’ equity and comprehensive income for the nine months ended March 31, 2010 are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments consisting of normal recurring accruals considered necessary to present fairly the company’s financial position at March 31, 2010, and the results of operations and cash flows for the nine months ended March 31, 2009 and 2010. The results of operations for the nine months ended March 31, 2010 are not necessarily indicative of the results that may be expected for the year ending June 30, 2010.
F-13F-12
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| |
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Use of Estimates — The Company’s consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles as set forth in the Financial Accounting Standards Board Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission. These accounting principles require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Specific areas, among others, requiring the application of management’s estimates and judgment include assumptions pertaining to the valuation of fixed assets, including depreciable lives assigned, the estimated earnings on contracts in progress, accruals, stock-based compensation costs, pension and post-employment benefit costs, fair value of derivatives, future cash flows associated with impairment testing of goodwill and other long-lived assets, credit worthiness of customers, uncertain tax positions, tax valuation allowances and legal, environmental and insurance matters. Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates.
Cash and Cash Equivalents — The Company considers all cash on deposit, money market accounts and highly liquid debt instruments purchased with original maturities of three months or fewer to be cash and cash equivalents. Cash equivalents primarily consist of amounts held in interest-bearing money market accounts that are readily convertible to cash.
The Company invests its excess cash with high credit quality financial institutions. The Company reviews its investments in money market accounts or other instruments for potential impairment on a regular basis. As part of the evaluation process, the Company considers the credit ratings of these securities and its intent and ability to hold the investment for a period of time sufficient to allow for any anticipated improvement in financial condition.
Restricted Cash — The Company maintains restricted cash and cash equivalent accounts held with financial institutions to support performance bonds with irrevocable letters of credit for contractual obligations to certain customers.
Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances and current economic conditions that may affect a customer’s ability to pay. The Company has an allowance for doubtful accounts of $223,000, $135,000 and $63,000 (unaudited)$151,000 as of June 30, 2008 and 2009 and March 31, 2010.
Accounts Receivable Securitization —The Company sold certain of its European-based accounts receivable without recourse to an unrelated third-party financial institution. The securitization agreement allowed the operating subsidiaries participating in the securitization program to receive a cash payment for sold receivables, less a fee paid of 5%. In accordance with the Financial Accounting Standards Board (“FASB”) issued authoritative guidance on accounting for transfers and servicing of financial assets and extinguishments of liabilities, the accounts receivable balances that were sold were determined to not have been legally isolated from the transferor. The uncollected balances of $864,000, $0 and $0 (unaudited) are therefore included in accounts receivable and notes payables as of June 30, 2008 and 2009 and March 31, 2010. Fees incurred in connection with the factoring arrangement were recorded as part of selling, general and administrative expenses and totaled $154,000, $158,000, $1,000, $1,000 (unaudited) and $1,000 (unaudited) in fiscal 2007, 2008 and 2009 and the nine months ended March 31, 2009 and 2010.
The Company also has arrangements with several French financial institutions for borrowings which are effectively secured by the Company’s French subsidiary’s accounts receivables. Borrowings outstanding at June 30, 2008 and 2009 and March 31, 2010 were $5.3 million, $2.4 million and $1.9$0.1 million, (unaudited), which were equal to the accounts receivables pledged. As the financial institutions have the right to sell or repledge the collateral, the Company records these accounts receivables to “Receivables pledged to creditors” in the consolidated balance sheets in accordance with FASB-issued authoritative guidance on accounting for transfer of servicing of financial assets and extinguishments of liabilities.sheets.
Inventories — Inventories are stated at the lower of cost or market. Cost is computed using actual costs or standard costs that approximate actual cost, determined on afirst-in, first-out basis. The Company records inventory provisions for excess and obsolete inventories, as determined by either future demand forecasts or historical demand trends.
Deferred Cost of Revenue — Deferred cost of revenue consists of completed products shipped to customers for which the related revenue has been deferred pending completion of services or determination that all customer-specific acceptance criteria have been met. The deferred costs are recognized in cost of
F-14F-13
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
that all customer-specific acceptance criteria have been met. The deferred costs are recognized in cost of revenue in the same period that the related revenues are recognized. The Company evaluates the carrying value of deferred cost of revenue on a lower of cost or market basis, consistent with its evaluation of the carrying value of the related products.
Property, Plant and Equipment — Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization. Property, plant and equipment acquired through the acquisition of a business are recorded at their estimated fair value at the date of acquisition.
Depreciation is computed when assets are placed into service using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on the straight-line method over the shorter of the related lease term or estimated useful life of the improvements. Repair and maintenance costs are expensed as incurred.
Estimated useful lives of property, plant and equipment are as follows:
| | | | | |
| Buildings and leasehold improvements | | | 3–39 years | |
| Machinery and equipment | | | 5–15 years | |
| Furniture, fixtures, computer equipment and software | | | 3–10 years | |
Goodwill and Purchased Intangible Assets — Goodwill is recorded as the excess of the acquisition purchase price over the fair value of net tangible and identifiable intangible assets acquired. In accordance with FASB-issued authoritative guidance on goodwill and other intangible assets, goodwillGoodwill is not amortized but is tested for impairment on an annual basis or more frequently if indicators of potential impairment arise. The Company has tested goodwill for impairment based on an evaluation of the Company’s five operating segments, which are also reporting units. Based on the impairment tests performed, there was no impairment of goodwill in fiscal 2007, 2008, 2009, or 2009 and no impairment indicators have been identified through March 31, 2010 (unaudited).2010. Purchased intangible assets other than goodwill are amortized using a straight-line or an accelerated method over their estimated useful lives, which range from three to seventeen years. Remaining useful lives of definite-lived intangible assets are evaluated on a periodic basis to determine whether events or circumstances warrant a revision to the remaining estimated amortization period.
Impairment of Long-Lived Assets — The Company reviews long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Determination of recoverability of long-lived assets is based on an estimate of undiscounted future cash flows resulting from the use of the asset as compared to its carrying value. If an asset is determined to be impaired, the Company measures the amount of any impairment as the difference between the carrying amount and the fair value of the impaired asset. No impairment indicators have been identified through June 30, 2009 and March 31, 2010 (unaudited).2010.
Facility and Equipment Decommissioning Liabilities —The Company accounts for asset retirement obligations (primarily equipment and facility decommissioning costs) in accordance with FASB-issued authoritative guidance on accounting for asset retirement obligations.ASC 410, Asset Retirement and Environmental Obligations. This guidance requires that the estimated fair value of liabilities for asset retirement obligations (“ARO”) be recognized in the period in which they are incurred. A corresponding increase to the carrying value of the related asset is recorded and depreciated over the useful life of the asset. The estimates are based principally on legal and regulatory requirements. The amount of the liability is subject to remeasurement at each reporting period. The Company’s estimates of its ultimate asset retirement obligation could change as a result of changes in regulations, the extent of environmental remediation required, the means of reclamation, cost estimates, or time period estimates. Changes in estimates are accounted for prospectively from the period in which the estimate is revised.
As of June 30, 2008 and 2009 and March 31, 2010, the Company’s ARO liabilities totaled $423,000, $422,000 and $434,000 (unaudited)$414,000 and were included in other long-term liabilities. Accretion expense related to these liabilities was $30,000, $31,000 and $24,000, in fiscal 2008, 2009 and 2010.
F-15F-14
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
to these liabilities was $26,000, $30,000, $31,000, $29,000 (unaudited) and $26,000 (unaudited) in fiscal 2007, 2008 and 2009 and for the nine months ended March 31, 2009 and 2010.
Revenue Recognition — The Company recognizes revenue from sales contracts in accordance withFASB-issued authoritative guidance on revenue recognition. Under this guidance, revenue is recognized when there is persuasive evidence of an arrangement, product delivery has occurred or services have been provided, the sales price is fixed or determinable and collectability is reasonably assured. For sales contracts that contain customer-specific acceptance provisions, revenue and the related costs are deferred until the customer has indicated successful completion of site acceptance tests or the Company has otherwise determined that all customer-specific acceptance criteria have been met. In the Health Physics and Radiation Monitoring Systems segments, the Company performs detailed factory acceptance testing on completed products which in some instances is sufficiently extensive and reliable to demonstrate that its products meet all of the customer-specified objective acceptance criteria set forth in its sales arrangements. In such instances, the Company’s policy is to recognize revenue based on the product’s delivery terms and prior to the receipt of notification of formal acceptance from the customer. For
The Company enters into sales contractsarrangements that containmay consist of multiple deliverables such as equipmentof its product and service offerings due to the requirements of its customers. For example, a customer may purchase a radiation monitoring systems solution and commissioning services. This arrangement would consist of multiple elements, with the products delivered across multiple reporting periods as well as the commissioning services. Another customer may purchase dosimeters, contamination and clearance monitorsand/or detection and identification devices along with commissioning services, in which all the elements are delivered within the same reporting period.
In October 2009, the FASB amended the accounting standard for multiple-deliverable revenue arrangements. The new standard changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable to be based on the relative selling price. The Company adopted this standard during fiscal 2010 retroactive to the beginning of the fiscal year for new and materially modified arrangements originating on or after July 1, 2009. The adoption of the new standard was not material to consolidated revenue in fiscal 2010 primarily because the Company’s multiple element sales arrangements tend to have long lead times, and the majority of revenue from such orders will not be recognized until fiscal 2011 or later. The Company is not able to reasonably estimate the effect of adopting this standard on future financial periods as the impact will vary based on the nature and volume of new or materially modified deals in any given period.
For new and materially modified arrangements originating in fiscal 2010 and future periods, when a sales arrangement contains multiple elements, the Company allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor-specific objective evidence (“VSOE”) if available, third party evidence (“TPE”) if VSOE is not available, or estimated selling price if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its policies for product and service revenue recognition. The Company is not typically able to determine VSOE or TPE and therefore uses estimated selling prices to allocate revenue between the relatedelements of the arrangement. The Company establishes its best estimate of selling price considering multiple factors including but not limited to pricing practices in different geographies and through different sales channels, costs and margin objectives, competitive pricing strategies and general market conditions.
The Company limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services or future performance obligations or subject to customer specific cancellation rights. The Company evaluates each deliverable in an arrangement to determine whether they represent separate units of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by the Company. The Company considers a deliverable to have standalone value if the product or service is sold separately by the Company or another vendor or could be resold by the customer. Further, the revenue arrangements generally do not include a general right of return
F-15
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
relative to the delivered products. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. The Company allocates the total arrangement consideration to each separable element of an arrangement based upon the relative selling price of each element. Allocation of the consideration is determined at arrangement inception on the basis of each unit’s relative selling price.
For arrangements entered into prior to fiscal 2010, revenue for arrangements with multiple elements is recognized as each element is delivered or completed based upon its relative fair value. In instances where the Company has not established fair value for any undelivered element, revenue for all elements is deferred until delivery of the final element is complete and all recognition criteria are met. All
For all arrangements, amounts billed to a customer related to shipping and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as cost of revenue. Provisions and allowances for discounts to customers, estimated sales returns, service cancellations and other adjustments are provided for in the same period that the related revenue is recorded.
Certain of the Company’s products are sold through distributors and third-party sales representatives under standard agreements whereby distributors purchase products from the Company and resell them to customers. These agreements give distributors the right to sell the Company’s products within certain territories and establishes minimum order requirements. These arrangements do not provide stock rotation or price protection rights. Rights of return are limited to repair or replacement of delivered products that are defective or fail to meet the Company’s published specifications. Provisions for these warranty costs are provided for in the same period that the related sale is recorded.
Revenue from certain fixed price contracts in the Sensing Systems and Imaging Systems divisions that involve customization of equipment to customer specifications is recognized in accordance withFASB-issued authoritative guidance on accounting ASC 640-35-25 Accounting for performancePerformance of construction-typeConstruction-Type and certain production-type contracts,Certain Production-Type Contracts, using thepercentage-of-completion method measured by thecost-to-cost method. Thecost-to-cost method is used because management considers incurred costs to be the best available measure of progress on these contracts. Contract costs include all direct materials and labor costs, as well as indirect costs related to contract performance. Changes in job performance, job conditions and estimated profitability result in revisions to costs and revenue and are recognized in the period in which the revisions are determined. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined. Revenue earned in excess of billings on contracts in progress (underbillings) is classified as a current asset. Amounts billed in excess of revenue earned (advance billings) are classified as a current liability and included in deferred contract revenue.
Revenue from the Company’s Dosimetry Services division is of a subscription nature, with passive dosimetry and analytical services provided to customers on anagreed-upon recurring monthly, quarterly or annual basis. Services are provided principally through film and thermo luminescent dosimeter badges that are worn by the customer’s personnel and returned to the Company for analysis. The Company believes that badge production, badge wearing, badge analysis and report preparation are all integral to the benefit that the Company provides to its customers, and therefore, the service period is defined as the period over which all of these services are provided. Revenue and the related costs are recognized on a straight-line basis over the service period as the service is continuous, and no other discernible pattern of recognition is evident. Many
F-16
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
customers pay for these measuring and monitoring services in advance. The amounts are recorded as deferred contract revenue in the balance sheets and represent customer deposits invoiced in advance for services to be rendered over the service period, net of a reserve for estimated cancellations.
DerivativeUse of Estimates — The Company’s consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles as set forth in the Financial Accounting Standards Board Accounting Standards Codification (ASC) and Hedging Activitiesconsider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission. These accounting principles require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Specific areas, among others, requiring the application of management’s estimates and judgment include assumptions pertaining to the valuation of fixed assets, including depreciable lives assigned, the estimated earnings on contracts in progress, accruals, stock-based compensation costs, pension and post-employment benefit costs, fair value of derivatives, future cash flows associated with impairment testing of goodwill and other long-lived assets, credit worthiness of customers, uncertain tax positions, tax valuation allowances and legal, environmental and insurance matters. Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates.
Cash and Cash Equivalents — The Company uses certain derivative financialconsiders all cash on deposit, money market accounts and highly liquid debt instruments purchased with original maturities of three months or fewer to help manage its risk or exposurebe cash and cash equivalents. Cash equivalents primarily consist of amounts held in interest-bearing money market accounts that are readily convertible to changes in interest rates in relation to variable rate debt and foreign currency exchange rate fluctuations. cash.
The Company recordsinvests its excess cash with high credit quality financial institutions. The Company reviews its investments in money market accounts or other instruments for potential impairment on a regular basis. As part of the evaluation process, the Company considers the credit ratings of these derivativessecurities and its intent and ability to hold the investment for a period of time sufficient to allow for any anticipated improvement in financial condition.
Restricted Cash — The Company maintains restricted cash and cash equivalent accounts held with financial institutions to support performance bonds with irrevocable letters of credit for contractual obligations to certain customers.
Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable are recorded at fair value in the balance sheets as either an asset or a liability as required byFASB-issued authoritative guidanceinvoiced amount and do not bear interest. The allowance for doubtful accounts is based on the accounting for derivative instruments and hedging activities.Company’s assessment of the collectability of customer accounts. The Company did not meetregularly reviews the hedge criteriaallowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances and current economic conditions that may affect a customer’s ability to pay. The Company has an allowance for these existing derivatives, so any changes in fair value are recognized in earningsdoubtful accounts of $135,000 and $151,000 as incurred. As of June 30, 2008 and 2009 and March 31, 2010, the Company has recorded other assets (liabilities) of $73,000, $(21,000) and $(3,000) (unaudited) to reflect the fair value of the Company’s interest rate swap. 2010.
Accounts Receivable Securitization —The Company has recorded gains (losses) of $14,000, $(9,000), $(83,000), $(84,000) (unaudited) and $22,000 (unaudited) in other income, netarrangements with several French financial institutions for fiscal 2007, 2008 and 2009 andborrowings which are effectively secured by the nine months ended March 31, 2009 and 2010. The swap had an initial notional value of $1.8 million that declines through expiration in November 2012. The notional amount was $1.1 million and $0.8 million (unaudited)Company’s French subsidiary’s accounts receivables. Borrowings outstanding at June 30, 2009 and March 31, 2010.
On January 1, 20092010 were $2.4 million and $0.1 million, which were equal to the accounts receivables pledged. As the financial institutions have the right to sell or repledge the collateral, the Company executed a series of foreign currency window contractsrecords these accounts receivables to mitigate currency exposure on sales contracts due“Receivables pledged to fluctuationscreditors” in the euro/U.S. dollar exchange rate. Each window is an agreement to sell the U.S. dollar and purchase euros. There were a total of 17 contracts to sell $5.8 million and purchase €4.2 million from February 2, 2009 through September 18, 2009. As of June 30, 2009, the Company has recorded other assets of $94,000 to reflect the fair value of the Company’s foreign currency window contracts. The Company recognized in earnings a total net gain of $94,000 and a total net loss of $94,000 (unaudited) on foreign currency window forward contracts not designated as hedging instruments in accordance with FASB issued authoritative guidance on accounting for derivative instruments and hedging activities, during the year ended June 30, 2009 and the nine months ended March 31, 2010.consolidated balance sheets.
Stock-Based PaymentInventories — Inventories are stated at the lower of cost or market. Cost is computed using actual costs or standard costs that approximate actual cost, determined on afirst-in, first-out basis. The Company recognizes compensation expenserecords inventory provisions for the fair value of all stock-based awards granted to employeesexcess and directors in exchange for services over the requisite service period, which is typically the vesting period. The fair value of stock options with time and performance-based vesting criteria is estimated using the Black-Scholes-Merton option valuation model. The fair value of stock options with market-based vesting criteria is estimated using a Monte Carlo simulation model. This model requires the input of subjective assumptions, including estimated stock volatility, risk-free interest rate and the expected life of each award. Furthermore, this guidance requires the Company to estimate forfeitures of each award. The Company amortizes the fair value using the straight-line method over the requisite service period.obsolete inventories, as determined by either future demand forecasts or historical demand trends.
PriorDeferred Cost of Revenue — Deferred cost of revenue consists of completed products shipped to July 1, 2005,customers for which the Company measured compensation expense for its employee stock-based compensation plans using the intrinsic value method. As the exercise pricerelated revenue has been deferred pending completion of all options granted under this plan was atservices or above the estimated market price of the underlying common stock on the date of grant, no stock-based compensation cost was recognized in the consolidated statements of operations.
The Company adopted updatedFASB-issued authoritative guidance on July 1, 2005 on stock based payment using the modified prospective transition method. This method requires the recognition of compensation cost for allstock-based payments that are unvested as of July 1, 2005. The cost related to stock-based compensation included in the determination of consolidated net loss for the twelve months ended June 30, 2007, 2008 and 2009 includes all awards outstanding that are vesting during those periods. In connection with the Reorganization, on January 1, 2006 stock options of the three predecessor companies were exchanged for stock options in Mirion. UnderFASB-issued authoritative guidance onstock-based payment, the exchange was deemed a modification, resulting in incremental compensation expense of $749,000 recorded at January 1, 2006 for those options that were vested as of January 1, 2006. For the unvested options at January 1, 2006, incremental compensation expense of $618,000 is being expensed over the remaining vesting period of approximately two years.
F-17F-13
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
that all customer-specific acceptance criteria have been met. The deferred costs are recognized in cost of revenue in the same period that the related revenues are recognized. The Company evaluates the carrying value of deferred cost of revenue on a lower of cost or market basis, consistent with its evaluation of the carrying value of the related products.
Advertising CostsProperty, Plant and Equipment — Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization. Property, plant and equipment acquired through the acquisition of a business are recorded at their estimated fair value at the date of acquisition.
Depreciation is computed when assets are placed into service using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on the straight-line method over the shorter of the related lease term or estimated useful life of the improvements. Repair and maintenance costs are expensed as incurred.
Estimated useful lives of property, plant and equipment are as follows:
| | | | |
| Buildings and leasehold improvements | | | 3–39 years | |
| Machinery and equipment | | | 5–15 years | |
| Furniture, fixtures, computer equipment and software | | | 3–10 years | |
Goodwill and Purchased Intangible Assets — Goodwill is recorded as the excess of the acquisition purchase price over the fair value of net tangible and identifiable intangible assets acquired. Goodwill is not amortized but is tested for impairment on an annual basis or more frequently if indicators of potential impairment arise. The Company has tested goodwill for impairment based on an evaluation of the Company’s five operating segments, which are also reporting units. Based on the impairment tests performed, there was no impairment of goodwill in fiscal 2008, 2009, or 2010. Purchased intangible assets other than goodwill are amortized using a straight-line or an accelerated method over their estimated useful lives, which range from three to seventeen years. Remaining useful lives of definite-lived intangible assets are evaluated on a periodic basis to determine whether events or circumstances warrant a revision to the remaining estimated amortization period.
Impairment of Long-Lived Assets — The Company expenses advertising costsreviews long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Determination of recoverability of long-lived assets is based on an estimate of undiscounted future cash flows resulting from the use of the asset as compared to its carrying value. If an asset is determined to be impaired, the Company measures the amount of any impairment as the difference between the carrying amount and the fair value of the impaired asset. No impairment indicators have been identified through June 30, 2010.
Facility and Equipment Decommissioning Liabilities —The Company accounts for asset retirement obligations (primarily equipment and facility decommissioning costs) in accordance with ASC 410, Asset Retirement and Environmental Obligations. This guidance requires that the estimated fair value of liabilities for asset retirement obligations (“ARO”) be recognized in the period in which they are incurred.
Accounting for Income Taxes — The determination A corresponding increase to the carrying value of the Company’s tax provisionrelated asset is recorded and depreciated over the useful life of the asset. The estimates are based principally on legal and regulatory requirements. The amount of the liability is subject to judgments andremeasurement at each reporting period. The Company’s estimates due toof its ultimate asset retirement obligation could change as a result of changes in regulations, the complexityextent of environmental remediation required, the tax law that the Company is subject tomeans of reclamation, cost estimates, or time period estimates. Changes in several tax jurisdictions. Earnings derivedestimates are accounted for prospectively from the Company’s international business are generally taxed at rates that are different than U.S. rates, resulting in an effective tax rate different than the U.S. statutory tax rate of 34%. The ability to maintain the Company’s current effective tax rate is contingent on existing tax laws in both the United States and the respective countriesperiod in which the Company’s international subsidiaries are located. In addition, a decrease in the percentage of the Company’s total earnings from international business or a change in the mix of international business among particular tax jurisdictions could alter the Company’s overall effective tax rate.estimate is revised.
Income taxes are accounted for under the asset and liability method in accordance withFASB-issued authoritative guidance on accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the tax bases of assets and liabilities and their financial statement carrying amounts, and consideration is given to operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The FASB issued authoritative guidance on accounting for income taxes also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax asset will not be realized. The Company has provided a valuation allowance of $27.6 million as of June 30, 2008 and $31.4 million asAs of June 30, 2009 primarily on its U.S. jurisdiction deferred tax assets.and 2010, the Company’s ARO liabilities totaled $422,000 and $414,000 and were included in other long-term liabilities. Accretion expense related to these liabilities was $30,000, $31,000 and $24,000, in fiscal 2008, 2009 and 2010.
On July 1, 2007, the Company adoptedFASB-issued authoritative guidance on accounting for uncertainty in income taxes. This guidance clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result of the implementation of this guidance, the Company recognizes the tax liability for uncertain income tax positions on the income tax return based on the two-step process prescribed in the interpretation. The first step is to determine whether it is more likely than not that each income tax position would be sustained upon audit. The second step is to estimate and measure the tax benefit as the amount that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. Estimating these amounts requires the Company to determine the probability of various possible outcomes. The Company evaluates these uncertain tax positions on a quarterly basis. This evaluation is based on the consideration of several factors, including changes in facts or circumstances, changes in applicable tax law, settlement of issues under audit, and new exposures. If the Company later determines that its exposure is lower or that the liability is not sufficient to cover its revised expectations, the Company adjusts the liability and effects a related change in its tax provision during the period in which it makes such determination.
Defined Benefit Pension Plans and Other Employee Benefits — The Company has defined benefit pension plans that cover the majority of its employees in France and Germany. The Company also has a postretirement plan that provides for the reimbursement of a portion of medical and life insurance premiums for certain retirees and eligible dependents. The accounting for these plans is subject to the guidance provided inFASB-issued authoritative guidance on employers’ accounting for defined benefit pension and other postretirement plans.
Plan liabilities are revalued annually based on assumptions relating to the long-term rate of return on plan assets, discount rates used to measure future obligations and expenses, salary-scale inflation rates, health care cost trend rates, mortality and other assumptions. The selection of assumptions is based on historical trends and known economic and market conditions at the time of valuation; however, actual results may differ
F-18F-14
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Revenue Recognition — The Company recognizes revenue from sales contracts when there is persuasive evidence of an arrangement, product delivery has occurred or services have been provided, the sales price is fixed or determinable and collectability is reasonably assured. For sales contracts that contain customer-specific acceptance provisions, revenue and the related costs are deferred until the customer has indicated successful completion of site acceptance tests or the Company has otherwise determined that all customer-specific acceptance criteria have been met. In the Health Physics and Radiation Monitoring Systems segments, the Company performs detailed factory acceptance testing on completed products which in some instances is sufficiently extensive and reliable to demonstrate that its products meet all of the customer-specified objective acceptance criteria set forth in its sales arrangements. In such instances, the Company’s policy is to recognize revenue based on the product’s delivery terms and prior to the receipt of notification of formal acceptance from the customer.
The Company enters into sales arrangements that may consist of multiple deliverables of its product and service offerings due to the requirements of its customers. For example, a customer may purchase a radiation monitoring systems solution and commissioning services. This arrangement would consist of multiple elements, with the products delivered across multiple reporting periods as well as the commissioning services. Another customer may purchase dosimeters, contamination and clearance monitorsand/or detection and identification devices along with commissioning services, in which all the elements are delivered within the same reporting period.
In October 2009, the FASB amended the accounting standard for multiple-deliverable revenue arrangements. The new standard changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable to be based on the relative selling price. The Company adopted this standard during fiscal 2010 retroactive to the beginning of the fiscal year for new and materially modified arrangements originating on or after July 1, 2009. The adoption of the new standard was not material to consolidated revenue in fiscal 2010 primarily because the Company’s multiple element sales arrangements tend to have long lead times, and the majority of revenue from such orders will not be recognized until fiscal 2011 or later. The Company is not able to reasonably estimate the effect of adopting this standard on future financial periods as the impact will vary based on the nature and volume of new or materially modified deals in any given period.
For new and materially modified arrangements originating in fiscal 2010 and future periods, when a sales arrangement contains multiple elements, the Company allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor-specific objective evidence (“VSOE”) if available, third party evidence (“TPE”) if VSOE is not available, or estimated selling price if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its policies for product and service revenue recognition. The Company is not typically able to determine VSOE or TPE and therefore uses estimated selling prices to allocate revenue between the elements of the arrangement. The Company establishes its best estimate of selling price considering multiple factors including but not limited to pricing practices in different geographies and through different sales channels, costs and margin objectives, competitive pricing strategies and general market conditions.
The Company limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services or future performance obligations or subject to customer specific cancellation rights. The Company evaluates each deliverable in an arrangement to determine whether they represent separate units of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by the Company. The Company considers a deliverable to have standalone value if the product or service is sold separately by the Company or another vendor or could be resold by the customer. Further, the revenue arrangements generally do not include a general right of return
F-15
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
relative to the delivered products. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. The Company allocates the total arrangement consideration to each separable element of an arrangement based upon the relative selling price of each element. Allocation of the consideration is determined at arrangement inception on the basis of each unit’s relative selling price.
For arrangements entered into prior to fiscal 2010, revenue for arrangements with multiple elements is recognized as each element is delivered or completed based upon its relative fair value. In instances where the Company has not established fair value for any undelivered element, revenue for all elements is deferred until delivery of the final element is complete and all recognition criteria are met.
For all arrangements, amounts billed to a customer related to shipping and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as cost of revenue. Provisions and allowances for discounts to customers, estimated sales returns, service cancellations and other adjustments are provided for in the same period that the related revenue is recorded.
Certain of the Company’s products are sold through distributors and third-party sales representatives under standard agreements whereby distributors purchase products from the Company and resell them to customers. These agreements give distributors the right to sell the Company’s products within certain territories and establishes minimum order requirements. These arrangements do not provide stock rotation or price protection rights. Rights of return are limited to repair or replacement of delivered products that are defective or fail to meet the Company’s published specifications. Provisions for these warranty costs are provided for in the same period that the related sale is recorded.
Revenue from certain fixed price contracts in the Sensing Systems and Imaging Systems divisions that involve customization of equipment to customer specifications is recognized in accordance with ASC 640-35-25 Accounting for Performance of Construction-Type and Certain Production-Type Contracts, using thepercentage-of-completion method measured by thecost-to-cost method. Thecost-to-cost method is used because management considers incurred costs to be the best available measure of progress on these contracts. Contract costs include all direct materials and labor costs, as well as indirect costs related to contract performance. Changes in job performance, job conditions and estimated profitability result in revisions to costs and revenue and are recognized in the period in which the revisions are determined. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined. Revenue earned in excess of billings on contracts in progress (underbillings) is classified as a current asset. Amounts billed in excess of revenue earned (advance billings) are classified as a current liability and included in deferred contract revenue.
Revenue from the Company’s estimates. For pension plans, accumulated gainsDosimetry Services division is of a subscription nature, with passive dosimetry and lossesanalytical services provided to customers on anagreed-upon recurring monthly, quarterly or annual basis. Services are provided principally through film and priorthermo luminescent dosimeter badges that are worn by the customer’s personnel and returned to the Company for analysis. The Company believes that badge production, badge wearing, badge analysis and report preparation are all integral to the benefit that the Company provides to its customers, and therefore, the service period is defined as the period over which all of these services are provided. Revenue and the related costs are recognized on a straight-line basis over the service period as the service is continuous, and no other discernible pattern of recognition is evident. Many customers pay for these measuring and monitoring services in income when incurred.advance. The amounts are recorded as deferred contract revenue in the balance sheets and represent customer deposits invoiced in advance for services to be rendered over the service period, net of a reserve for estimated cancellations.
Use of Estimates — The Company’s consolidated financial statements are prepared in conformity with U.S. generally accepted accounting principles whichas set forth in the Financial Accounting Standards Board Accounting Standards Codification (ASC) and consider the various staff accounting bulletins and other applicable guidance issued by the U.S. Securities and Exchange Commission. These accounting principles require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Specific areas, among others, requiring the application of management’s estimates and judgment include assumptions pertaining to the valuation of fixed assets, including depreciable lives assigned, the estimated earnings on contracts in progress, accruals, stock-based compensation costs, pension and post-employment benefit costs, fair value of derivatives, future cash flows associated with impairment testing of goodwill and other long-lived assets, credit worthiness of customers, uncertain tax positions, tax valuation allowances and legal, environmental and insurance matters. Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates.
Cash and Cash Equivalents — The Company considers all cash on deposit, money market accounts and highly liquid debt instruments purchased with original maturities of three months or fewer to be cash and cash equivalents. Cash equivalents primarily consist of amounts held in interest-bearing money market accounts that are readily convertible to cash.
The Company invests its excess cash with high credit quality financial institutions. The Company reviews its investments in money market accounts or other instruments for potential impairment on a regular basis. As part of the evaluation process, the Company considers the credit ratings of these securities and its intent and ability to hold the investment for a period of time sufficient to allow for any anticipated improvement in financial condition.
Restricted Cash — The Company maintains restricted cash and cash equivalent accounts held with financial institutions to support performance bonds with irrevocable letters of credit for contractual obligations to certain customers.
Accounts Receivable and Allowance for Doubtful Accounts — Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the accounts receivable balances and current economic conditions that may affect a customer’s ability to pay. The Company has an allowance for doubtful accounts of $135,000 and $151,000 as of June 30, 2009 and 2010.
Accounts Receivable Securitization —The Company has arrangements with several French financial institutions for borrowings which are effectively secured by the Company’s French subsidiary’s accounts receivables. Borrowings outstanding at June 30, 2009 and 2010 were $2.4 million and $0.1 million, which were equal to the accounts receivables pledged. As the financial institutions have the right to sell or repledge the collateral, the Company records these accounts receivables to “Receivables pledged to creditors” in the consolidated balance sheets.
Inventories — Inventories are stated at the lower of cost or market. Cost is computed using actual costs or standard costs that approximate actual cost, determined on afirst-in, first-out basis. The Company records inventory provisions for excess and obsolete inventories, as determined by either future demand forecasts or historical demand trends.
Deferred Cost of Revenue — Deferred cost of revenue consists of completed products shipped to customers for which the related revenue has been deferred pending completion of services or determination
F-13
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
that all customer-specific acceptance criteria have been met. The deferred costs are recognized in cost of revenue in the same period that the related revenues are recognized. The Company evaluates the carrying value of deferred cost of revenue on a lower of cost or market basis, consistent with its evaluation of the carrying value of the related products.
Property, Plant and Equipment — Property, plant and equipment are stated at cost, net of accumulated depreciation and amortization. Property, plant and equipment acquired through the acquisition of a business are recorded at their estimated fair value at the date of acquisition.
Depreciation is computed when assets are placed into service using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on the straight-line method over the shorter of the related lease term or estimated useful life of the improvements. Repair and maintenance costs are expensed as incurred.
Estimated useful lives of property, plant and equipment are as follows:
| | | | |
| Buildings and leasehold improvements | | | 3–39 years | |
| Machinery and equipment | | | 5–15 years | |
| Furniture, fixtures, computer equipment and software | | | 3–10 years | |
Goodwill and Purchased Intangible Assets — Goodwill is recorded as the excess of the acquisition purchase price over the fair value of net tangible and identifiable intangible assets acquired. Goodwill is not amortized but is tested for impairment on an annual basis or more frequently if indicators of potential impairment arise. The Company has tested goodwill for impairment based on an evaluation of the Company’s five operating segments, which are also reporting units. Based on the impairment tests performed, there was no impairment of goodwill in fiscal 2008, 2009, or 2010. Purchased intangible assets other than goodwill are amortized using a straight-line or an accelerated method over their estimated useful lives, which range from three to seventeen years. Remaining useful lives of definite-lived intangible assets are evaluated on a periodic basis to determine whether events or circumstances warrant a revision to the remaining estimated amortization period.
Impairment of Long-Lived Assets — The Company reviews long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Determination of recoverability of long-lived assets is based on an estimate of undiscounted future cash flows resulting from the use of the asset as compared to its carrying value. If an asset is determined to be impaired, the Company measures the amount of any impairment as the difference between the carrying amount and the fair value of the impaired asset. No impairment indicators have been identified through June 30, 2010.
Facility and Equipment Decommissioning Liabilities —The Company accounts for asset retirement obligations (primarily equipment and facility decommissioning costs) in accordance with ASC 410, Asset Retirement and Environmental Obligations. This guidance requires that the estimated fair value of liabilities for asset retirement obligations (“ARO”) be recognized in the period in which they are incurred. A corresponding increase to the carrying value of the related asset is recorded and depreciated over the useful life of the asset. The estimates are based principally on legal and regulatory requirements. The amount of the liability is subject to remeasurement at each reporting period. The Company’s estimates of its ultimate asset retirement obligation could change as a result of changes in regulations, the extent of environmental remediation required, the means of reclamation, cost estimates, or time period estimates. Changes in estimates are accounted for prospectively from the period in which the estimate is revised.
As of June 30, 2009 and 2010, the Company’s ARO liabilities totaled $422,000 and $414,000 and were included in other long-term liabilities. Accretion expense related to these liabilities was $30,000, $31,000 and $24,000, in fiscal 2008, 2009 and 2010.
F-14
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Revenue Recognition — The Company recognizes revenue from sales contracts when there is persuasive evidence of an arrangement, product delivery has occurred or services have been provided, the sales price is fixed or determinable and collectability is reasonably assured. For sales contracts that contain customer-specific acceptance provisions, revenue and the related costs are deferred until the customer has indicated successful completion of site acceptance tests or the Company has otherwise determined that all customer-specific acceptance criteria have been met. In the Health Physics and Radiation Monitoring Systems segments, the Company performs detailed factory acceptance testing on completed products which in some instances is sufficiently extensive and reliable to demonstrate that its products meet all of the customer-specified objective acceptance criteria set forth in its sales arrangements. In such instances, the Company’s policy is to recognize revenue based on the product’s delivery terms and prior to the receipt of notification of formal acceptance from the customer.
The Company enters into sales arrangements that may consist of multiple deliverables of its product and service offerings due to the requirements of its customers. For example, a customer may purchase a radiation monitoring systems solution and commissioning services. This arrangement would consist of multiple elements, with the products delivered across multiple reporting periods as well as the commissioning services. Another customer may purchase dosimeters, contamination and clearance monitorsand/or detection and identification devices along with commissioning services, in which all the elements are delivered within the same reporting period.
In October 2009, the FASB amended the accounting standard for multiple-deliverable revenue arrangements. The new standard changes the requirements for establishing separate units of accounting in a multiple element arrangement and requires the allocation of arrangement consideration to each deliverable to be based on the relative selling price. The Company adopted this standard during fiscal 2010 retroactive to the beginning of the fiscal year for new and materially modified arrangements originating on or after July 1, 2009. The adoption of the new standard was not material to consolidated revenue in fiscal 2010 primarily because the Company’s multiple element sales arrangements tend to have long lead times, and the majority of revenue from such orders will not be recognized until fiscal 2011 or later. The Company is not able to reasonably estimate the effect of adopting this standard on future financial periods as the impact will vary based on the nature and volume of new or materially modified deals in any given period.
For new and materially modified arrangements originating in fiscal 2010 and future periods, when a sales arrangement contains multiple elements, the Company allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor-specific objective evidence (“VSOE”) if available, third party evidence (“TPE”) if VSOE is not available, or estimated selling price if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its policies for product and service revenue recognition. The Company is not typically able to determine VSOE or TPE and therefore uses estimated selling prices to allocate revenue between the elements of the arrangement. The Company establishes its best estimate of selling price considering multiple factors including but not limited to pricing practices in different geographies and through different sales channels, costs and margin objectives, competitive pricing strategies and general market conditions.
The Company limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services or future performance obligations or subject to customer specific cancellation rights. The Company evaluates each deliverable in an arrangement to determine whether they represent separate units of accounting. A deliverable constitutes a separate unit of accounting when it has stand-alone value and for an arrangement that includes a general right of return relative to the delivered products or services, delivery or performance of the undelivered product or service is considered probable and is substantially controlled by the Company. The Company considers a deliverable to have standalone value if the product or service is sold separately by the Company or another vendor or could be resold by the customer. Further, the revenue arrangements generally do not include a general right of return
F-15
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
relative to the delivered products. Where the aforementioned criteria for a separate unit of accounting are not met, the deliverable is combined with the undelivered element(s) and treated as a single unit of accounting for the purposes of allocation of the arrangement consideration and revenue recognition. The Company allocates the total arrangement consideration to each separable element of an arrangement based upon the relative selling price of each element. Allocation of the consideration is determined at arrangement inception on the basis of each unit’s relative selling price.
For arrangements entered into prior to fiscal 2010, revenue for arrangements with multiple elements is recognized as each element is delivered or completed based upon its relative fair value. In instances where the Company has not established fair value for any undelivered element, revenue for all elements is deferred until delivery of the final element is complete and all recognition criteria are met.
For all arrangements, amounts billed to a customer related to shipping and handling are classified as revenue, while all costs incurred by the Company for shipping and handling are classified as cost of revenue. Provisions and allowances for discounts to customers, estimated sales returns, service cancellations and other adjustments are provided for in the same period that the related revenue is recorded.
Certain of the Company’s products are sold through distributors and third-party sales representatives under standard agreements whereby distributors purchase products from the Company and resell them to customers. These agreements give distributors the right to sell the Company’s products within certain territories and establishes minimum order requirements. These arrangements do not provide stock rotation or price protection rights. Rights of return are limited to repair or replacement of delivered products that are defective or fail to meet the Company’s published specifications. Provisions for these warranty costs are provided for in the same period that the related sale is recorded.
Revenue from certain fixed price contracts in the Sensing Systems and Imaging Systems divisions that involve customization of equipment to customer specifications is recognized in accordance with ASC 640-35-25 Accounting for Performance of Construction-Type and Certain Production-Type Contracts, using thepercentage-of-completion method measured by thecost-to-cost method. Thecost-to-cost method is used because management considers incurred costs to be the best available measure of progress on these contracts. Contract costs include all direct materials and labor costs, as well as indirect costs related to contract performance. Changes in job performance, job conditions and estimated profitability result in revisions to costs and revenue and are recognized in the period in which the revisions are determined. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are first determined. Revenue earned in excess of billings on contracts in progress (underbillings) is classified as a current asset. Amounts billed in excess of revenue earned (advance billings) are classified as a current liability and included in deferred contract revenue.
Revenue from the Company’s Dosimetry Services division is of a subscription nature, with passive dosimetry and analytical services provided to customers on anagreed-upon recurring monthly, quarterly or annual basis. Services are provided principally through film and thermo luminescent dosimeter badges that are worn by the customer’s personnel and returned to the Company for analysis. The Company believes that badge production, badge wearing, badge analysis and report preparation are all integral to the benefit that the Company provides to its customers, and therefore, the service period is defined as the period over which all of these services are provided. Revenue and the related costs are recognized on a straight-line basis over the service period as the service is continuous, and no other discernible pattern of recognition is evident. Many customers pay for these measuring and monitoring services in advance. The amounts are recorded as deferred contract revenue in the balance sheets and represent customer deposits invoiced in advance for services to be rendered over the service period, net of a reserve for estimated cancellations.
Derivative and Hedging Activities — The Company uses certain derivative financial instruments to help manage its risk or exposure to changes in interest rates in relation to variable rate debt and foreign currency exchange rate fluctuations. The Company records these derivatives at fair value in the balance sheets as either
F-16
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
an asset or a liability in accordance with ASC 815, Derivatives and Hedging. The Company did not meet the hedge criteria for these existing derivatives, so any changes in fair value are recognized in earnings as incurred. As of June 30, 2009 and 2010, the Company has recorded other liabilities of $21,000 and $3,000 to reflect the fair value of the Company’s interest rate swap. The Company has recorded losses of $9,000, $83,000 and $18,000 in other income, net for fiscal 2008, 2009 and 2010. The swap had an initial notional value of $1.8 million that declines through expiration in November 2012. The notional amount was $0.7 million at June 30, 2010.
On January 1, 2009 the Company executed a series of foreign currency window contracts to mitigate currency exposure on sales contracts due to fluctuations in the euro/U.S. dollar exchange rate. Each window is an agreement to sell the U.S. dollar and purchase euros. There were a total of 17 contracts to sell $5.8 million and purchase €4.2 million from February 2, 2009 through September 18, 2009. At June 30, 2009, the Company recorded other assets of $98,000 which represented the fair value of the contracts at that date. These currency window forward contracts were not designated as hedging instruments, so the corresponding net gain of $94,000 was recognized in earnings in fiscal 2009. As of June 30, 2010, all contracts had expired and the Company recognized a net loss of $98,000 in other income, net, for fiscal 2010.
Stock-Based Payment — The Company recognizes compensation expense for the fair value of all stock-based awards granted to employees and directors in exchange for services over the requisite service period, which is typically the vesting period. The fair value of stock options with time and performance-based vesting criteria is estimated using the Black-Scholes-Merton option valuation model. The fair value of stock options with market-based vesting criteria is estimated using a Monte Carlo simulation model. This model requires the input of subjective assumptions, including estimated stock volatility, risk-free interest rate and the expected life of each award. Furthermore, this guidance requires the Company to estimate forfeitures of each award. The Company amortizes the fair value using the straight-line method over the requisite service period.
The Company adopted ASC 718, Compensation-Stock Compensation on July 1, 2005 using the modified prospective transition method. This method required the recognition of compensation cost for allstock-based payments that were unvested as of July 1, 2005. In connection with the Reorganization, on January 1, 2006 stock options of the three predecessor companies were exchanged for stock options in Mirion. The exchange was deemed a modification, resulting in incremental compensation expense of $749,000 recorded at January 1, 2006 for those options that were vested as of January 1, 2006. For the unvested options at January 1, 2006, incremental compensation expense of $618,000 was expensed over the remaining vesting period of approximately two years.
Advertising Costs — The Company expenses advertising costs in the period incurred.
Accounting for Income Taxes — The determination of the Company’s tax provision is subject to judgments and estimates due to the complexity of the tax law that the Company is subject to in several tax jurisdictions. Earnings derived from the Company’s international business are generally taxed at rates that are different than U.S. rates, resulting in an effective tax rate different than the U.S. statutory tax rate of 34%. The ability to maintain the Company’s current effective tax rate is contingent on existing tax laws in both the United States and the respective countries in which the Company’s international subsidiaries are located. In addition, a decrease in the percentage of the Company’s total earnings from international business or a change in the mix of international business among particular tax jurisdictions could alter the Company’s overall effective tax rate.
Income taxes are accounted for under the asset and liability method in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the tax bases of assets and liabilities and their financial statement carrying amounts, and consideration is given to operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The
F-17
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Company records a valuation allowance to reduce deferred tax assets to the amount of the future tax benefit that is more likely than not to be realized.
The Company accounts for uncertainty in its tax positions using a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company evaluates these uncertain tax positions on a quarterly basis. This evaluation is based on the consideration of several factors, including changes in facts or circumstances, changes in applicable tax law, settlement of issues under audit, and new exposures. If the Company later determines that its exposure is lower that the liability is not sufficient to cover its revised expectations, the Company adjusts the liability and recognizes the related change in its tax provision during the period in which it makes such determination.
Defined Benefit Pension Plans and Other Employee Benefits — The Company has defined benefit pension plans that cover the majority of its employees in France and Germany. The Company also has a postretirement plan that provides for the reimbursement of a portion of medical and life insurance premiums for certain retirees and eligible dependents. Plan liabilities are revalued annually based on assumptions relating to the long-term rate of return on plan assets, discount rates used to measure future obligations and expenses, salary-scale inflation rates, health care cost trend rates, mortality and other assumptions. The selection of assumptions is based on historical trends and known economic and market conditions at the time of valuation; however, actual results may differ substantially from the Company’s estimates. For pension plans, accumulated gains and losses and prior service costs are recognized in income when incurred.
Fair Value of Financial Instruments — The Company has evaluatedapplies the estimatedprovisions of ASC 820 Fair Value Measurements and Disclosures, to the financial instruments that are required to be carried at fair value of financial instruments using available market information and management estimates. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.pursuant to other accounting standards. The fair value of the Company’s cash, cash equivalents, short-term investments, accounts receivable and other current and noncurrent liabilities approximate their carrying amounts due to the relatively short maturity of these items. The fair values of the debt instruments are estimated using a discounted cash flow analysis with an interest rate similar to that of current market borrowing arrangements. The estimated fair value of the Company’s debt instruments is $181.0$162.8 million and $162.8$184.5 million as of June 30, 2008 and 2009 and was approximately equal to carrying value as of March 31, 2010.
Fair Value Measurement — — Effective July 1, 2008, theThe Company adopted the provisions of FASB issued authoritative guidance onperforms fair value measurements whichin accordance with the guidance provided by ASC 820,Fair Value Measurements and Disclosures. ASC 820 defines fair value establishesas the price that would be received from selling an asset or paid to transfer a framework for measuring fair valueliability in an orderly transaction between market participants at the measurement date, with consideration given to the assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and expands disclosurerisk of fair value measurements. The fair value criteria are primarily applied prospectively upon adoption of this guidance. FASB-issued authoritative guidance on fair value measurements was effective for fiscal years beginning November 15, 2007. In February 2008, the FASB issued further guidance on fair value measurements, delaying the effective date of this guidance for non financial assets and non financial liabilities, except for items that are recognized or disclosed at fair value on a recurring basis. The delayed portions of this guidance will be adopted by the Company beginning in the first quarter of its fiscal year ending June 30, 2010 and the Company does not expect the adoption of those delayed portions to have a material impact on the Company’s consolidated financial statements. The adoption of FASB-issued authoritative guidance on fair value measurements for financial assets and liabilities did not have a material impact on the Company’s consolidated financial statements.
FASB-issued authoritative guidance on fair value measurementsnonperformance. ASC 820 establishes a fair value hierarchy that prioritizesrequires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to valuation techniquesthe fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quotedvalue:
Level 1 —Quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under this guidance are described below:liabilities:
Level 1 — Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2 — — Observable pricesInputs other than Level 1 that are based on inputs notobservable, either directly or indirectly, such as quoted onprices in active markets butfor similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.data for substantially the full term of the assets or liabilities; or
Level 3 : — Unobservable inputs that are used whensupported by little or no market data is available. Theactivity and that are significant to the fair value hierarchy givesvalues of the lowest priority to Level 3 inputs.assets and liabilities.
F-19F-18
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The following table summarizes the financial assets and liabilities(liabilities) of the Company that are measured at fair value on a recurring basis in accordance with FASB-issued authoritative guidance on fair value measurements (in thousands):
| | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | |
| | | as of
| | Fair Value Measurements at
|
| | | June 30,
| | June 30, 2009 Using |
| | | 2009 | | Level 1 | | Level 2 | | Level 3 |
| |
| Assets (Long Term Liabilities): | | | | | | | | | | | | | | | | |
| FX forward rate contracts | | $ | 94 | | | | — | | | $ | 94 | | | | — | |
| Interest rate swaps | | $ | (21 | ) | | | — | | | $ | (21 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Fair Value Measurements at
| | Fair Value Measurements at
|
| | | June 30, 2009 Using | | June 30, 2010 Using |
| | | Level 1 | | Level 2 | | Total | | Level 1 | | Level 2 | | Total |
| |
| Assets (Long Term Liabilities): | | | | | | | | | | | | | | | | | | | | | | | | |
| FX forward rate contracts | | | — | | | $ | 94 | | | $ | 94 | | | | — | | | | — | | | | — | |
| Interest rate swaps | | | — | | | $ | (21 | ) | | $ | (21 | ) | | | — | | | $ | (3 | ) | | $ | (3 | ) |
| | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | |
| | | as of
| | Fair Value Measurements at
|
| | | March 31,
| | March 31, 2010 Using |
| | | 2010 | | Level 1 | | Level 2 | | Level 3 |
| | | | | (unaudited) |
| |
| Liabilities: | | | | | | | | | | | | | | | | |
| Interest rate swaps | | $ | (3 | ) | | | — | | | $ | (3 | ) | | | — | |
The FX forward rate contracts are measured at fair value using information quoted by foreign exchange dealers. The interest rate swaps are measured at fair value using a pricing model, such as a discounted cash flow technique, with significant inputs derived from observable market data.
Foreign Currency Translation — Local currencies are the functional currencies for substantially all of the Company’s foreign operations. When the transactional currency is different than the functional currency, transaction gains and losses are included as a component of other income, net. Assets and liabilities of foreign operations are translated into U.S. dollars using the exchange rates in effect at the balance sheet reporting date. Incomedate, while income and expenses are translated at the average monthly exchange rates during the year. Gains and losses onThe effects of the foreign currency translations are reported as a component of accumulated other comprehensive income.income in the accompanying consolidated balance sheets. Deferred taxes are not provided on cumulative translation adjustments where the Company expects earnings of a foreign subsidiary to be indefinitely reinvested. The income tax effect of currency translation adjustments related to foreign subsidiaries from certain subsidiaries and joint ventures that are not considered indefinitely reinvested is recorded as a component of deferred taxes with an offset to other comprehensive income.
Foreign currency transaction gains and losses, arising when the transactional currency is different from the functional currency, are included as a component of other income, net in the consolidated statements of operations.
Concentrations of Risk — Financial instruments that are potentially subject to concentration of credit risk consist primarily of cash and cash equivalents and trade receivables. The Company maintains cash in bank deposit accounts that, at times, may exceed the insured limits of the local country. The Company has not experienced any losses in such accounts.accounts and Management believes that the Company is not exposed to significant credit risk related to cash.
The Company sells its products and services mainly to large private and governmental organizations in the Americas, Europe, Middle East and Asia Pacific regions. The Company performs ongoing evaluations of its customers’ financial conditions and limits the amount of credit extended when deemed necessary. The Company generally does not require its customers to provide collateral or other security to support accounts receivable.
No single customer represented more than 10% of consolidated revenue for fiscal 2007, 2008, 2009 or 2009, nor for the nine months ended March 31, 2009 (unaudited) or 2010 (unaudited).2010.
Net Loss Per Common Share — The Company calculates net loss per common share in accordance with FASB-issued authoritative guidance on the computation of earnings per share. Under this guidance, basicBasic loss per common share is calculated by dividing net loss allocable to common stockholders by the weighted-average number of common shares outstanding for the period using the two-class method. Under the two-class method, net income is allocated between common stock and convertible preferred stock as it is deemed to be a participating security based on its participation rights. Diluted loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted average number of common and potential dilutive securities outstanding during the period if the effect is dilutive. The numerator of diluted
F-20
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
earnings per share is calculated by starting with income allocable to common stock under the two-class method and adding back income allocable to preferred stock to the extent they are dilutive. Potential common shares consist of incremental shares of common stock issuable upon the exercise of the stock options and warrants and upon conversion of preferred stock.
F-19
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated (in thousands, except share and per share amounts):
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Nine Months Ended
| |
| | | Year Ended June 30, | | | March 31, | |
| | | 2007 | | | 2008 | | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | (unaudited) | |
| |
Numerator: | | | | | | | | | | | | | | | | | | | | |
| Net (loss) income | | $ | (19,701 | ) | | $ | (13,349 | ) | | $ | (3,955 | ) | | $ | (9,785 | ) | | $ | 295 | |
| Effect of preferred stock dividends | | | (8,141 | ) | | | (8,993 | ) | | | (9,892 | ) | | | (7,333 | ) | | | (8,096 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss allocable to common stockholders | | $ | (27,842 | ) | | $ | (22,342 | ) | | $ | (13,847 | ) | | $ | (17,118 | ) | | $ | (7,801 | ) |
| | | | | | | | | | | | | | | | | | | | | |
Denominator: | | | | | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding (basic) | | | 404,717 | | | | 405,159 | | | | 405,796 | | | | 405,796 | | | | 405,796 | |
| Effect of dilutive securities | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding (diluted) | | | 404,717 | | | | 405,159 | | | | 405,796 | | | | 405,796 | | | | 405,796 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net loss per share: | | | | | | | | | | | | | | | | | | | | |
| Basic and Diluted | | $ | (68.79 | ) | | $ | (55.14 | ) | | $ | (34.12 | ) | | $ | (42.18 | ) | | $ | (19.22 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
Numerator: | | | | | | | | | | | | |
| Net (loss) income | | $ | (13,349 | ) | | $ | (3,955 | ) | | $ | 5,965 | |
| Effect of preferred stock dividends | | | (8,993 | ) | | | (9,892 | ) | | | (10,923 | ) |
| | | | | | | | | | | | | |
| Net loss allocable to common stockholders | | $ | (22,342 | ) | | $ | (13,847 | ) | | $ | (4,958 | ) |
| | | | | | | | | | | | | |
Denominator: | | | | | | | | | | | | |
| Weighted average common shares outstanding (basic) | | | 405,159 | | | | 405,796 | | | | 405,796 | |
| Effect of dilutive securities | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | |
| Weighted average common shares outstanding (diluted) | | | 405,159 | | | | 405,796 | | | | 405,796 | |
| | | | | | | | | | | | | |
Net loss per share: | | | | | | | | | | | | |
| Basic and Diluted | | $ | (55.14 | ) | | $ | (34.12 | ) | | $ | (12.22 | ) |
| | | | | | | | | | | | | |
The computation of basic loss per share excludes the conversion of Convertible Participating Preferred Stock as the Company has net losses and therefore the effect of applying the two-class method is anti-dilutive. The computation of dilutive shares outstanding excludes the common equivalent shares related topaid-in-kind dividends, conversion of the Convertible Participating Preferred Stock, stock options and warrants as the Company had net losses and the effect would be anti-dilutive.
The following table shows the weighted-average common equivalent shares related topaid-in-kind dividends, the conversion of Convertible Participating Preferred Stock, stock options and warrants that would have been included in diluted earnings per share had the Company recorded net income as of the respective dates:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Nine Months Ended
| |
| | | Year Ended June 30, | | | March 31, | |
| | | 2007 | | | 2008 | | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | (unaudited) | |
| |
| Weighted Average Common Share Equivalents of Potentially Dilutive Securities: | | | | | | | | | | | | | | | | | | | | |
Convertible preferred stock, includingpaid-in-kind dividends | | | 7,818,351 | | | | 8,546,536 | | | | 9,349,119 | | | | 9,240,395 | | | | 10,113,609 | |
| Stock options | | | 3,493 | | | | 16,056 | | | | — | | | | — | | | | 70,669 | |
| Warrants | | | 3,420,636 | | | | 3,420,636 | | | | 3,420,636 | | | | 3,420,636 | | | | 3,420,636 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | | 11,242,480 | | | | 11,983,228 | | | | 12,769,755 | | | | 12,661,031 | | | | 13,604,914 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| Weighted Average Common Share Equivalents of Potentially Dilutive Securities: | | | | | | | | | | | | |
Convertible preferred stock, includingpaid-in-kind dividends | | | 8,546,536 | | | | 9,349,119 | | | | 10,233,721 | |
| Stock options | | | 16,056 | | | | — | | | | 73,879 | |
| Warrants | | | 3,420,636 | | | | 3,420,636 | | | | 3,420,636 | |
| | | | | | | | | | | | | |
| Total | | | 11,983,228 | | | | 12,769,755 | | | | 13,728,236 | |
| | | | | | | | | | | | | |
New Accounting PronouncementsReclassifications — The Company has reclassified certain prior year balances within these notes to consolidated financial statements to conform to current year presentation.
In February 2007, the FASB issued authoritative guidance on the fair value option for financial assets and financial liabilities. This guidance provides the option to measure, at fair value, eligible financial instrument items using fair value, which are not otherwise required to be measured at fair value. The irrevocable decision
F-21F-20
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
to measure items at fair value is made at specified election dates on aninstrument-by-instrument basis. Changes in that instrument’s fair value must be recognized in current earnings in subsequent reporting periods. If elected, the first measurement to fair value is reported as a cumulative-effect adjustment to the opening balance of retained earnings in the year of adoption. The Company did not elect to measure eligible assets at fair value. The guidance was effective for the Company beginning in its fiscal year ending June 30, 2009.
In December 2007, the FASB issued authoritative guidance on business combinations. This guidance will significantly change the accounting for future business combinations after adoption. FASB-issued authoritative guidance on business combinations establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed (including contingent liabilities) and any non controlling interest in the acquired business. This guidance also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FASB-issued authoritative guidance on business combinations is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. This statement was effective for the Company beginning in its fiscal year ending June 30, 2010. Adoption of this guidance did not have a material impact on the consolidated financial statements.
In June 2008 the FASB issued authoritative guidance on determining whether instruments granted in stock-based payment transactions are participating securities. This guidance states that unvested stock-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FASB-issued authoritative guidance on determining whether instruments granted in stock-based payment transactions are participating securities is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years. Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform with the provisions in this guidance. Earlier adoption is prohibited. This guidance was adopted by the Company beginning in its fiscal year ending June 30, 2010, as required. Adoption of this guidance did not have a material impact on the consolidated financial statements.
In October 2008, the FASB issued authoritative guidance on determining the fair value of a financial asset when the market for that asset is not active. This guidance clarified the application of, and demonstrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. This guidance was effective upon issuance, including prior periods for which financial statements had not been issued. The implementation of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.
In December 2008, the FASB issued authoritative guidance on employers’ disclosures about postretirement benefit plan assets, which is effective for fiscal years ending after December 15, 2009. This guidance requires additional disclosures such as: the investment allocation decision making process; the fair value of each major category of plan assets; inputs and valuation techniques used to measure the fair value of plan assets; and significant concentrations of risk within plan assets. This guidance was adopted by the Company beginning in its fiscal year ending June 30, 2010, as required. Adoption of this guidance did not have a material impact on the consolidated financial statements.
In April 2009, the FASB issued authoritative guidance on determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. This guidance provides additional guidance for estimating fair value when the market activity for an asset or liability has declined significantly. This guidance is effective for interim and annual periods ending after June 15, 2009 and will be applied prospectively. The implementation of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.
F-22
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
In March 2008, the FASB issued authoritative guidance on disclosures about derivative instruments and hedging activities. This guidance requires disclosure of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. This guidance is effective for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. This guidance was adopted by the Company at the beginning of the third quarter of its fiscal year ending June 30, 2009, as required.
In April 2009, the FASB issued authoritative guidance on recognition and presentation ofother-than-temporary impairments. This guidance establishes a new method for recognizing and reportingother-than-temporary impairment of debt securities and also contains additional disclosure requirements for both debt and equity securities. This guidance is effective for interim and annual periods ending after June 15, 2009. The implementation of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.
In April 2009, the FASB issued authoritative guidance on interim disclosures about fair value of financial instruments. This guidance amends previous guidance on, disclosures about fair value of financial instruments, to require an entity to provide disclosures about the fair value of financial instruments in interim financial information. This guidance also amends FASB-issued authoritative guidance on interim financial reporting, to require those disclosures in summarized financial information at interim reporting periods. This guidance is effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. This guidance was adopted by the Company beginning in its first quarter of fiscal year 2010. Adoption of this guidance did not have a material impact on the consolidated financial statements.
In May 2009, the FASB issued authoritative guidance on subsequent events. This guidance is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date — that is, whether that date represents the date the financial statements were issued or were available to be issued. This guidance is effective for interim and annual periods ended after June 15, 2009 and should be applied prospectively. The adoption of FASB-issued authoritative guidance on subsequent events on July 1, 2008 did not have an impact on the Company’s financial position or results of operations. The Company determined that the basis for the date through which the entity has evaluated subsequent events represents the date the financial statements were issued: October 15, 2009. Details of subsequent events can be found in Notes 8 and 16 to these consolidated financial statements.
In June 2009, FASB issued authoritative guidance on the FASB accounting standards codification and the hierarchy of generally accepted accounting principles. This guidance establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States (U.S. GAAP). This statement was effective for the Company’s first quarter of fiscal 2010. As the Codification is not intended to change or alter existing U.S. GAAP, implementation of this guidance did not impact on its consolidated financial statements.
In October 2009, the FASB issued guidance on multiple-deliverable revenue arrangements. This new guidance modifies the fair value requirements of the existing guidance by allowing the use of the “best estimate of selling price” in addition to vendor-specific objective evidence and third-party evidence for determining the selling price of a deliverable. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence, (b) third-party evidence, or (c) estimates. In addition, the residual method of allocating arrangement consideration is no longer permitted. The new guidance also requires expanded quantitative and qualitative disclosures about revenue from arrangements with multiple deliverables. This guidance is effective for the
F-23
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Company beginning in its fiscal year ending June 30, 2011 with early adoption permitted. Adoption of the guidance can be applied retrospectively to all revenue arrangements entered into or materially modified after the date of adoption or retrospectively to all revenue arrangements for all periods presented. If an entity elects to adopt the guidance prospectively in a period that is not the first reporting period in its fiscal year, the guidance must be applied as of the beginning of the entity’s fiscal year. The Company plans to adopt the guidance in the fourth quarter with retroactive adjustment of revenue effective July 1, 2009, and is currently evaluating the impact of the adoption on its fiscal 2010 consolidated financial statements.
Reclassifications — The Company has reclassified certain prior year balances to conform to current year presentation.
Costs and billings on uncompleted construction-type contracts consist of the following (in thousands):
| | | | | | | | | | | | | |
| | | As of June 30, | | | As of March 31,
| |
| | | 2008 | | | 2009 | | | 2010 | |
| | | | | | | | | (unaudited) | |
| |
| Costs incurred | | $ | 26,151 | | | $ | 34,602 | | | $ | 32,451 | |
| Estimated earnings | | | 16,448 | | | | 26,329 | | | | 23,848 | |
| | | | | | | | | | | | | |
| Contracts in progress | | | 42,599 | | | | 60,931 | | | | 56,299 | |
| Progress billings on contracts in progress | | | (27,382 | ) | | | (49,132 | ) | | | (39,728 | ) |
| | | | | | | | | | | | | |
| | | $ | 15,217 | | | $ | 11,799 | | | $ | 16,571 | |
| | | | | | | | | | | | | |
| Costs and estimated earnings in excess of billings on uncompleted contracts | | $ | 17,515 | | | $ | 17,073 | | | $ | 19,413 | |
| Billings in excess of costs and estimated earnings on uncompleted contracts(1) | | | (2,298 | ) | | | (5,274 | ) | | | (2,842 | ) |
| | | | | | | | | | | | | |
| | | $ | 15,217 | | | $ | 11,799 | | | $ | 16,571 | |
| | | | | | | | | | | | | |
| | | | | | | | | |
| | | As of June 30, | |
| | | 2009 | | | 2010 | |
| |
| Costs incurred | | $ | 34,602 | | | $ | 35,773 | |
| Estimated earnings | | | 26,329 | | | | 25,528 | |
| | | | | | | | | |
| Contracts in progress | | | 60,931 | | | | 61,301 | |
| Progress billings on contracts in progress | | | (49,132 | ) | | | (43,847 | ) |
| | | | | | | | | |
| | | $ | 11,799 | | | $ | 17,454 | |
| | | | | | | | | |
| Costs and estimated earnings in excess of billings on uncompleted contracts | | $ | 17,073 | | | $ | 19,474 | |
| Billings in excess of costs and estimated earnings on uncompleted contracts(1) | | | (5,274 | ) | | | (2,020 | ) |
| | | | | | | | | |
| | | $ | 11,799 | | | $ | 17,454 | |
| | | | | | | | | |
| | |
| (1) | | Included in deferred contract revenue within the consolidated balance sheets. |
The components of inventories consist of the following (in thousands):
| | | | | | | | | | | | | |
| | | As of June 30, | | | As of March 31,
| |
| | | 2008 | | | 2009 | | | 2010 | |
| | | | | | | | | (unaudited) | |
| |
| Raw materials | | $ | 12,398 | | | $ | 10,234 | | | $ | 10,722 | |
| Work in progress | | | 10,126 | | | | 9,889 | | | | 13,133 | |
| Finished goods | | | 13,568 | | | | 13,605 | | | | 11,167 | |
| | | | | | | | | | | | | |
| Net inventories | | $ | 36,092 | | | $ | 33,728 | | | $ | 35,022 | |
| | | | | | | | | | | | | |
| | | | | | | | | |
| | | As of June 30, | |
| | | 2009 | | | 2010 | |
| |
| Raw materials | | $ | 10,234 | | | $ | 8,237 | |
| Work in progress | | | 9,889 | | | | 10,255 | |
| Finished goods | | | 13,605 | | | | 11,677 | |
| | | | | | | | | |
| Net inventories | | $ | 33,728 | | | $ | 30,169 | |
| | | | | | | | | |
As of June 30, 2008 and 2009 and March 31, 2010, inventory reserves were approximately $4.5 million, $4.3 million and $3.8 million (unaudited).
F-24
MIRION TECHNOLOGIES, INC.
$3.4 million.
Notes to Consolidated Financial Statements — (Continued)
| |
| 5. | PROPERTY, PLANT AND EQUIPMENT |
Property, plant and equipment consist of the following (in thousands):
| | | | | | | | | | | | | |
| | | As of June 30, | | | As of March 31,
| |
| | | 2008 | | | 2009 | | | 2010 | |
| | | | | | | | | (unaudited) | |
| |
| Land, buildings and leasehold improvements | | $ | 12,178 | | | $ | 11,352 | | | $ | 11,560 | |
| Machinery and equipment | | | 23,476 | | | | 24,108 | | | | 25,223 | |
| Furniture, fixtures, computer equipment and software | | | 14,269 | | | | 16,951 | | | | 17,139 | |
| Construction in progress | | | 1,526 | | | | 840 | | | | 2,765 | |
| | | | | | | | | | | | | |
| | | | 51,449 | | | | 53,251 | | | | 56,687 | |
| Less accumulated depreciation and amortization | | | (33,831 | ) | | | (35,171 | ) | | | (37,781 | ) |
| | | | | | | | | | | | | |
| | | $ | 17,618 | | | $ | 18,080 | | | $ | 18,906 | |
| | | | | | | | | | | | | |
| | | | | | | | | |
| | | As of June 30, | |
| | | 2009 | | | 2010 | |
| |
| Land, buildings and leasehold improvements | | $ | 11,352 | | | $ | 10,682 | |
| Machinery and equipment | | | 24,108 | | | | 22,931 | |
| Furniture, fixtures, computer equipment and software | | | 16,951 | | | | 16,295 | |
| Construction in progress | | | 840 | | | | 4,708 | |
| | | | | | | | | |
| | | | 53,251 | | | | 54,616 | |
| Less accumulated depreciation and amortization | | | (35,171 | ) | | | (34,084 | ) |
| | | | | | | | | |
| | | $ | 18,080 | | | $ | 20,532 | |
| | | | | | | | | |
Total depreciation and amortization of property, plant and equipment was $4.1 million, $4.0 million, $4.4 million, $3.1$5.6 million (unaudited) and $4.0 million (unaudited) for fiscal 2007, 2008, and 2009 and the nine months ended March 31, 2009 and 2010.
F-21
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| |
| 6. | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
Accrued expenses and other current liabilities consist of the following (in thousands):
| | | | | | | | | | | | | |
| | | As of June 30, | | | As of March 31,
| |
| | | 2008 | | | 2009 | | | 2010 | |
| | | | | | | | | (unaudited) | |
| |
| Compensation and related benefit costs | | $ | 13,654 | | | $ | 14,151 | | | $ | 12,533 | |
| Customer deposits | | | 4,564 | | | | 9,525 | | | | 7,528 | |
| Accrued warranty | | | 1,620 | | | | 1,409 | | | | 1,076 | |
| Accrued legal, accounting and professional fees | | | 8,149 | | | | 4,071 | | | | 3,354 | |
| Other accrued expenses | | | 6,815 | | | | 5,852 | | | | 3,954 | |
| | | | | | | | | | | | | |
| | | $ | 34,802 | | | $ | 35,008 | | | $ | 28,445 | |
| | | | | | | | | | | | | |
| | | | | | | | | |
| | | As of June 30, | |
| | | 2009 | | | 2010 | |
| |
| Compensation and related benefit costs | | $ | 14,151 | | | $ | 13,380 | |
| Customer deposits | | | 9,525 | | | | 6,136 | |
| Accrued warranty | | | 1,409 | | | | 744 | |
| Accrued legal, accounting and professional fees | | | 4,071 | | | | 4,366 | |
| Other accrued expenses | | | 5,852 | | | | 5,034 | |
| | | | | | | | | |
| | | $ | 35,008 | | | $ | 29,660 | |
| | | | | | | | | |
| |
| 7. | GOODWILL AND INTANGIBLE ASSETS |
Goodwill and intangible assets were recorded in connection with the acquisitions of GDS, IST and Synodys by ACAS as well as other subsequent acquisitions by Mirion. GDS was acquired by ACAS in October 2003 for cash of $60.8 million. IST was acquired by ACAS in May 2004 for cash of $53.5 million. Synodys was acquired by ACAS in June 2004 for cash and equity of $75.1 million. The three acquisitions by ACAS were accounted for using the purchase method of accounting which resulted in goodwill of approximately $123.9 million (including the recognition of deferred tax assets of $18.4 million associated with the acquisitions) and intangible assets of approximately $72.3 million (valued using exchange rates in effect on the date of each acquisition). The Company completed three other acquisitions during fiscal 2005 and 2006 that resulted in goodwill of approximately $8.3 million and intangible assets of approximately $12.5 million. In fiscal 2008, the Company received $2.8 million from the return of escrow funds associated with the IST acquisition. This payment was treated as a reduction in the IST purchase price, with a corresponding reduction in goodwill.
The changes in the carrying amount of goodwill allocated to the Company’s reportable segments are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Radiation
| | | | | | | | | | | | | |
| | | Health
| | | Monitoring
| | | Sensing
| | | Dosimetry
| | | Imaging
| | | | |
| | | Physics | | | Systems | | | Systems | | | Services | | | Systems | | | Total | |
| |
| Balance — June 30, 2007 | | $ | 46,235 | | | $ | 19,312 | | | $ | 11,001 | | | $ | 52,413 | | | $ | 9,965 | | | $ | 138,926 | |
| Return of escrow funds | | | — | | | | — | | | | (1,367 | ) | | | — | | | | (1,383 | ) | | | (2,750 | ) |
| Translation adjustment | | | 7,972 | | | | 3,330 | | | | 200 | | | | — | | | | — | | | | 11,502 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance — June 30, 2008 | | | 54,207 | | | | 22,642 | | | | 9,834 | | | | 52,413 | | | | 8,582 | | | | 147,678 | |
| Translation adjustment | | | (6,000 | ) | | | (2,507 | ) | | | (150 | ) | | | — | | | | — | | | | (8,657 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance — June 30, 2009 | | | 48,207 | | | | 20,135 | | | | 9,684 | | | | 52,413 | | | | 8,582 | | | | 139,021 | |
| Translation adjustment | | | (6,313 | ) | | | (2,637 | ) | | | (158 | ) | | | — | | | | (638 | ) | | | (9,746 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance — June 30, 2010 | | $ | 41,894 | | | $ | 17,498 | | | $ | 9,526 | | | $ | 52,413 | | | $ | 7,944 | | | $ | 129,275 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
F-25F-22
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The changes in the carrying amount of goodwill allocated to the Company’s reportable segments are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Radiation
| | | | | | | | | | | | | |
| | | Health
| | | Monitoring
| | | Sensing
| | | Dosimetry
| | | Imaging
| | | | |
| | | Physics | | | Systems | | | Systems | | | Services | | | Systems | | | Total | |
| |
| Balance — June 30, 2007 | | $ | 46,235 | | | $ | 19,312 | | | $ | 11,001 | | | $ | 52,413 | | | $ | 9,965 | | | $ | 138,926 | |
| Return of escrow funds | | | — | | | | — | | | | (1,367 | ) | | | — | | | | (1,383 | ) | | | (2,750 | ) |
| Translation adjustment | | | 7,972 | | | | 3,330 | | | | 200 | | | | — | | | | — | | | | 11,502 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance — June 30, 2008 | | | 54,207 | | | | 22,642 | | | | 9,834 | | | | 52,413 | | | | 8,582 | | | | 147,678 | |
| Translation adjustment | | | (6,000 | ) | | | (2,507 | ) | | | (150 | ) | | | — | | | | — | | | | (8,657 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance — June 30, 2009 | | | 48,207 | | | | 20,135 | | | | 9,684 | | | | 52,413 | | | | 8,582 | | | | 139,021 | |
| Translation adjustment (unaudited) | | | (2,026 | ) | | | (845 | ) | | | (50 | ) | | | — | | | | — | | | | (2,921 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance — March 31, 2010 (unaudited) | | $ | 46,181 | | | $ | 19,290 | | | $ | 9,634 | | | $ | 52,413 | | | $ | 8,582 | | | $ | 136,100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Intangible assets consist of the following (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | As of June 30, 2008 | | | As of June 30, 2009 | | | As of March 31, 2010 (unaudited) | |
| | | Weighted
| | Gross
| | | | | | Net
| | | Gross
| | | | | | Net
| | | Gross
| | | | | | Net
| |
| | | Average Life
| | Carrying
| | | Accumulated
| | | Book
| | | Carrying
| | | Accumulated
| | | Book
| | | Carrying
| | | Accumulated
| | | Book
| |
| | | in Years | | Amount | | | Amortization | | | Value | | | Amount | | | Amortization | | | Value | | | Amount | | | Amortization | | | Value | |
| |
| Customer relationships | | | 11 | | | $ | 64,360 | | | $ | (39,826 | ) | | $ | 24,534 | | | $ | 61,714 | | | $ | (44,069 | ) | | $ | 17,645 | | | $ | 60,826 | | | $ | (47,014 | ) | | $ | 13,812 | |
| Trade names | | | 11 | | | | 9,128 | | | | (3,597 | ) | | | 5,531 | | | | 8,605 | | | | (4,153 | ) | | | 4,452 | | | | 8,428 | | | | (4,628 | ) | | | 3,800 | |
| Backlog | | | 2 | | | | 9,190 | | | | (9,190 | ) | | | — | | | | 8,659 | | | | (8,659 | ) | | | — | | | | 8,481 | | | | (8,481 | ) | | | — | |
| Enterprise software | | | 5 | | | | 2,500 | | | | (2,375 | ) | | | 125 | | | | 2,500 | | | | (2,500 | ) | | | — | | | | 2,500 | | | | (2,500 | ) | | | — | |
| Qualifications | | | 6 | | | | 1,600 | | | | (1,094 | ) | | | 506 | | | | 1,600 | | | | (1,360 | ) | | | 240 | | | | 1,600 | | | | (1,560 | ) | | | 40 | |
| Complete technology | | | 8 | | | | 3,500 | | | | (1,957 | ) | | | 1,543 | | | | 3,500 | | | | (2,394 | ) | | | 1,106 | | | | 3,500 | | | | (2,722 | ) | | | 778 | |
| Territorial rights | | | 5 | | | | 2,852 | | | | (2,025 | ) | | | 827 | | | | 2,537 | | | | (2,292 | ) | | | 245 | | | | 2,430 | | | | (2,430 | ) | | | — | |
| Other | | | 3 | | | | 279 | | | | (174 | ) | | | 105 | | | | 89 | | | | (89 | ) | | | — | | | | 84 | | | | (84 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | $ | 93,409 | | | $ | (60,238 | ) | | $ | 33,171 | | | $ | 89,204 | | | $ | (65,516 | ) | | $ | 23,688 | | | $ | 87,849 | | | $ | (69,419 | ) | | $ | 18,430 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | As of June 30, 2009 | | | As of June 30, 2010 | |
| | | Weighted
| | Gross
| | | | | | Net
| | | Gross
| | | | | | Net
| |
| | | Average Life
| | Carrying
| | | Accumulated
| | | Book
| | | Carrying
| | | Accumulated
| | | Book
| |
| | | in Years | | Amount | | | Amortization | | | Value | | | Amount | | | Amortization | | | Value | |
| |
| Customer relationships | | | 11 | | | $ | 61,714 | | | $ | (44,069 | ) | | $ | 17,645 | | | $ | 58,346 | | | $ | (45,985 | ) | | $ | 12,361 | |
| Trade names | | | 11 | | | | 8,605 | | | | (4,153 | ) | | | 4,452 | | | | 7,895 | | | | (4,489 | ) | | | 3,406 | |
| Qualifications | | | 6 | | | | 1,600 | | | | (1,360 | ) | | | 240 | | | | 1,600 | | | | (1,600 | ) | | | — | |
| Complete technology | | | 8 | | | | 3,500 | | | | (2,394 | ) | | | 1,106 | | | | 3,378 | | | | (2,739 | ) | | | 639 | |
| Territorial rights | | | 5 | | | | 2,537 | | | | (2,292 | ) | | | 245 | | | | 2,204 | | | | (2,204 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | $ | 89,204 | | | $ | (65,516 | ) | | $ | 23,688 | | | $ | 83,949 | | | $ | (67,543 | ) | | $ | 16,406 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Aggregate amortization expense for intangible assets was $12.2 million, $10.1 million, $8.1 million and $8.1$6.4 million for fiscal 2007, 2008, and 2009 and $6.3 million (unaudited) and $5.2 million (unaudited) for the nine months ended March 31, 2009, and 2010. Future annual amortization expense at the current foreign exchange rate is as follows (in thousands):
| | | | | |
| | | Annual
| |
Years Ending
| | Amortization
| |
June 30, | | Expense | |
| |
| 2010 | | $ | 6,484 | |
| 2011 | | | 4,760 | |
| 2012 | | | 3,709 | |
| 2013 | | | 2,749 | |
| 2014 | | | 1,622 | |
| 2015 and thereafter | | | 4,364 | |
| | | | | |
| Total | | $ | 23,688 | |
| | | | | |
| | | | | |
| | | Annual
| |
Years Ending
| | Amortization
| |
June 30, | | Expense | |
| |
| 2011 | | $ | 4,446 | |
| 2012 | | | 3,465 | |
| 2013 | | | 2,588 | |
| 2014 | | | 1,584 | |
| 2015 | | | 1,348 | |
| 2016 and thereafter | | | 2,975 | |
| | | | | |
| Total | | $ | 16,406 | |
| | | | | |
F-26F-23
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Notes Payable to ACAS — The Company has entered into several Note and Equity Purchase Agreements (“NEPAs”) with ACFS, a subsidiary of ACAS, which contain revolving credit facilities, senior term notes payable and subordinated note agreements. The interest rates on the revolving credit facilities and notes payable are based on a fixed stated rate or a variable LIBOR or EURIBOR based rate plus additional basis points. The one-month LIBOR rates were 2.5%, 0.3% and 0.2% (unaudited)0.4%, the one-month EURIBOR rates were 4.4%, 0.8% and 0.4% (unaudited) and the three-month EURIBOR rates were 4.9%, 1.1% and 0.7% (unaudited) as of June 30, 2008 and 2009 and March 31, 2010.
Notes payable to ACAS consist of the following (in thousands):
| | | | | | | | | | | | | | | | | |
| | | | | Contractual
| | As of June 30, | | | March 31, | |
| | | Due | | Interest Rate | | 2008 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | | (unaudited) | |
| |
| Revolving Credit Facilities: | | | | | | | | | | | | | | | | |
| $20.25 million | | July 2011 | | LIBOR + 4.5% | | $ | 13,750 | | | $ | 11,000 | | | $ | 20,250 | |
| $14.0 million | | July 2011 | | LIBOR + 5% | | | 10,197 | | | | 13,997 | | | | 13,997 | |
| $8.2 million | | July 2011 | | EURIBOR + 2% | | | 8,205 | | | | 3,631 | | | | 7,130 | |
| Senior Term Notes: | | | | | | | | | | | | | | | | |
| $24.9 million Senior Term B | | July 2011 | | EURIBOR + 3% | | | 24,944 | | | | 24,944 | | | | 24,944 | |
| $7.5 million Senior Term B | | July 2011 | | LIBOR + 8% | | | 5,135 | | | | 5,062 | | | | 5,008 | |
| $2.0 million Senior Term B | | July 2011 | | LIBOR + 8% | | | 1,965 | | | | 1,938 | | | | 1,917 | |
| $4.0 million Senior Term C | | October 2011 | | LIBOR + 9% | | | 4,000 | | | | 4,000 | | | | 4,000 | |
| $4.0 million Senior Term C | | November 2011 | | LIBOR + 8.25% | | | 4,000 | | | | 4,000 | | | | 4,000 | |
| $27.0 million Senior Term D | | October 2011 | | LIBOR + 6.5% | | | 26,258 | | | | 26,056 | | | | 25,852 | |
| $15.0 million Senior Term D | | October 2011 | | LIBOR + 6.5% | | | 14,588 | | | | 14,437 | | | | 14,325 | |
| Senior Subordinated Notes: | | | | | | | | | | | | | | | | |
$7.5 millionpaid-in-kind | | July 2011 | | 14% | | | 8,150 | | | | 8,317 | | | | 8,445 | |
$8.6 millionpaid-in-kind | | July 2011 | | 15% | | | 9,446 | | | | 9,650 | | | | 9,799 | |
$12.2 millionpaid-in-kind | | July 2011 | | EURIBOR + 11% | | | 14,710 | | | | 15,552 | | | | 16,215 | |
| Junior Subordinated Notes: | | | | | | | | | | | | | | | | |
$4.3 millionpaid-in-kind | | July 2011 | | 17% | | | 4,951 | | | | 5,112 | | | | 5,230 | |
$4.3 millionpaid-in-kind | | July 2011 | | 17% | | | 4,951 | | | | 5,112 | | | | 5,230 | |
$1.25 millionpaid-in-kind | | May 2012 | | 14% | | | 1,358 | | | | 1,386 | | | | 1,407 | |
$4.9 millionpaid-in-kind | | July 2011 | | EURIBOR + 12% | | | 6,211 | | | | 6,666 | | | | 7,030 | |
| Stockholder Loan: | | | | Three-month | | | | | | | | | | | | |
| $8.0 million | | June 2011 | | EURIBOR + 2% | | | 10,367 | | | | 9,220 | | | | 8,854 | |
| | | | | | | | | | | | | | | | | |
| Total notes payable to ACAS | | | | | | | 173,186 | | | | 170,080 | | | | 183,633 | |
| Less current portion | | | | | | | (520 | ) | | | (520 | ) | | | (520 | ) |
| | | | | | | | | | | | | | | | | |
| Notes payable to ACAS — long term | | | | | | $ | 172,666 | | | $ | 169,560 | | | $ | 183,113 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | Contractual
| | As of June 30, | |
| | | Due | | Interest Rate | | 2009 | | | 2010 | |
| |
| Revolving Credit Facilities: | | | | | | | | | | | | |
| $20.25 million | | July 2011 | | LIBOR + 4.5% | | $ | 11,000 | | | $ | 20,250 | |
| $14.0 million | | July 2011 | | LIBOR + 5% | | | 13,997 | | | | 13,997 | |
| $8.2 million | | July 2011 | | EURIBOR + 2% | | | 3,631 | | | | 7,130 | |
| Senior Term Notes: | | | | | | | | | | | | |
| $24.9 million Senior Term B | | July 2011 | | EURIBOR + 3% | | | 24,944 | | | | 24,944 | |
| $7.5 million Senior Term B | | July 2011 | | LIBOR + 8% | | | 5,062 | | | | 5,008 | |
| $2.0 million Senior Term B | | July 2011 | | LIBOR + 8% | | | 1,938 | | | | 1,917 | |
| $4.0 million Senior Term C | | October 2011 | | LIBOR + 9% | | | 4,000 | | | | 4,000 | |
| $4.0 million Senior Term C | | November 2011 | | LIBOR + 8.25% | | | 4,000 | | | | 4,000 | |
| $27.0 million Senior Term D | | October 2011 | | LIBOR + 6.5% | | | 26,056 | | | | 25,785 | |
| $15.0 million Senior Term D | | October 2011 | | LIBOR + 6.5% | | | 14,437 | | | | 14,288 | |
| Senior Subordinated Notes: | | | | | | | | | | | | |
$7.5 millionpaid-in-kind | | July 2011 | | 14% | | | 8,317 | | | | 8,487 | |
$8.6 millionpaid-in-kind | | July 2011 | | 15% | | | 9,650 | | | | 9,862 | |
$12.2 millionpaid-in-kind | | July 2011 | | EURIBOR + 11% | | | 15,552 | | | | 16,441 | |
| Junior Subordinated Notes: | | | | | | | | | | | | |
$4.3 millionpaid-in-kind | | July 2011 | | 17% | | | 5,112 | | | | 5,280 | |
$4.3 millionpaid-in-kind | | July 2011 | | 17% | | | 5,112 | | | | 5,280 | |
$1.25 millionpaid-in-kind | | May 2012 | | 14% | | | 1,386 | | | | 1,415 | |
$4.9 millionpaid-in-kind | | July 2011 | | EURIBOR + 12% | | | 6,666 | | | | 7,155 | |
| Stockholder Loan: | | | | Three-month | | | | | | | | |
| $8.0 million | | July 2011 | | EURIBOR + 2% | | | 9,220 | | | | 8,013 | |
| | | | | | | | | | | | | |
| Total notes payable to ACAS | | | | | | | 170,080 | | | | 183,252 | |
| Less current portion | | | | | | | (520 | ) | | | (420 | ) |
| | | | | | | | | | | | | |
| Notes payable to ACAS — long term | | | | | | $ | 169,560 | | | $ | 182,832 | |
| | | | | | | | | | | | | |
The revolving credit facilities and notes issued under the NEPAs require the Company to maintain certain financial ratios and contain financial covenants and non-financial restrictive and affirmative covenants. As of June 30, 20082009 and 2009,2010, the Company was not in compliance with certain non-financial covenants that were in effect prior to the formation of Mirion. These non-financial covenants were negotiated with the predecessor companies (GDS, IST and Synodys) and were not amended at the time of the formation of Mirion. The non-financial covenants relate to matters such as changing the fiscal years or names of subsidiaries, amending the charter documents and by-laws of subsidiaries and the provision of audited financial statements to ACFS. InACFS.The
F-27F-24
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
September 2009, the
Company has obtained waivers from ACFS for breaches of any non-financial covenants that may occur through July 1, 2010.2011. A description of the debt agreements payable to ACAS is as follows:
Revolving Credit Facilities — The Company has entered into three separate credit facilities with ACFS, each represented by a revolving credit note. The Revolving Credit Facilities contain various financial covenants and a first security position on all Company assets. The Company is required to pay an annual non-usage fee of 0.7% of the average annual unused balance on the Revolving Credit Facilities.
Senior Term Notes — The $24.9 million Senior Term B Note and the Senior Term C Notes provide for monthly interest only payments. The notes are secured by assets of the Company and are subordinated to the Revolving Credit Facilities and Senior Term Notes B and D. The $7.5 million and $2.0 million Senior Term B Notes provide for quarterly principal payments totaling $25,000 plus monthly payments of interest. The notes are secured by assets of the Company and are subordinated to the Revolving Credit Facilities and the Senior Term D Notes. The Senior Term D Notes provide for quarterly principal payments of $105,000 plus monthly payments of interest. The notes are secured by assets of the Company and are subordinated to the Revolving Credit Facilities.
Senior Subordinated Notes — The outstanding balances on Senior Subordinated Notes include the principal amount outstanding plus a compoundingpaid-in-kind (“PIK”) interest component calculated at rates between 2% and 5.5% per annum. The Company is required to make monthly payments of stated interest only. The notes are secured by assets of the Company and are subordinated to the Revolving Credit Facilities and Senior Term B, C and D Notes.
Junior Subordinated Notes — The outstanding balances on Junior Subordinated Notes include the principal amount outstanding plus a compounding PIK interest component calculated at rates between 2% and 7% per annum. The Company is required to make monthly payments of stated interest only. The notes are secured by assets of the Company and are subordinated to the Revolving Credit Facilities and Senior Term B, C and D Notes and Senior Subordinated Notes.
Stockholder Loan — The stockholder loan provides for quarterly interest-only payments. The loan is secured by the assets of the Company and is subordinated to all other debt.
During 2007, the NEPAs were amended to (i) increase the $20.25 million revolving credit facility from an original commitment of $5.25 million to $10.25 million, (ii) increase the $14 million revolving credit facility from a commitment of $6 million to $14 million, (iii) extend the due date on the stockholder loan from September 13, 2006 to September 23, 2008 and (iv) issue an additional $2.0 million of Senior Term B Notes on March 20, 2007 with an interest rate of LIBOR + 8% and aan original due date of May 24, 2010.
During 2008, the NEPAs were further amended to (i) increase the $20.25 million revolving credit facility from a commitment amount of $10.25 million to $20.25 million and extend the due date from May 24, 2008 to October 14, 2010, (ii) extend the due date on the $8.2 million revolving credit facility from June 23, 2008 to October 14, 2010 and (iii) extend the due date on the stockholder loan from September 23, 2008 to October 14, 2010.
The modifications made during 2007 and 2008 were analyzed in accordance with FASB-issued authoritative guidance on debtor’s accounting for changes inline-of-credit orrevolving-debt arrangements and were not determined to be significant to the financial statements. There were no unamortized loan fees expensed in 2007 or 2008 as a result of the amendments.
In August 2009,During 2010, the Note and Equity Purchase Agreements with ACFSNEPAs were further amended to extend the due dates on the (i) Senior Term B Notes to July 1, 2011, (ii) Senior Subordinated Notes to July 1, 2011, (iii) Junior Subordinated Notes to July 1, 2011 except $1.25 million Junior Subordinated Notes which due date remainsremained unchanged, (iv) Stockholder loan to June 30, 2011 and (v) Revolving Credit Facilities to July 2011. In August 2010, the stockholder loan was further amended to extend the due date to July 1, 2011.
F-28F-25
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Third-Party Borrowings
The Company has notes payable and other borrowings to third parties as follows (in thousands):
| | | | | | | | | | | | | | | |
| | | | | As of June 30, | | | March 31,
| |
| | | Due | | 2008 | | | 2009 | | | 2010 | |
| | | | | | | | | | | (unaudited) | |
| |
| Term loan | | November 2012 | | $ | 1,543 | | | $ | 1,067 | | | $ | 803 | |
| Revolving line of credit | | On demand | | | 5,272 | | | | 2,364 | | | | 1,886 | |
| Bank lines of credit | | On demand | | | 2,554 | | | | 3,773 | | | | 58 | |
| Factoring financing | | As collected | | | 864 | | | | — | | | | — | |
| | | | | | | | | | | | | | | |
| Total third-party borrowings | | | | | 10,233 | | | | 7,204 | | | | 2,747 | |
| Less current portion | | | | | (9,033 | ) | | | (6,442 | ) | | | (2,236 | ) |
| | | | | | | | | | | | | | | |
| Third-party borrowings-long term | | | | $ | 1,200 | | | $ | 762 | | | $ | 511 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | As of June 30, | |
| | | Due | | 2009 | | | 2010 | |
| |
| Term loan | | November 2012 | | $ | 1,067 | | | $ | 662 | |
| Term loans | | March 2017 | | | — | | | | 1,766 | |
| Revolving line of credit | | On demand | | | 2,364 | | | | 113 | |
| Bank lines of credit | | On demand | | | 3,773 | | | | 81 | |
| | | | | | | | | | | |
| Total third-party borrowings | | | | | 7,204 | | | | 2,622 | |
| Less current portion | | | | | (6,442 | ) | | | (648 | ) |
| | | | | | | | | | | |
| Third-party borrowings-long term | | | | $ | 762 | | | $ | 1,974 | |
| | | | | | | | | | | |
The Company has a term loan with a French financial institution with an initial balance of €1.4 million as of May 2006 ($1.8 million), which is due November 2012. The note bears annual interest at the three-month EURIBOR + 1% with quarterly payments of €54,000. The amount due under this term loan at June 30, 20092010 was €760,000€543,000 ($0.7 million).
The Company entered into two new term loans with two French financial institutions, as of March 2010, with a maximum borrowing under these arrangements of €3.8 million ($4.6 million). The notes bear annual interest at 4.15% and 4.17% respectively with quarterly payments of €52,000 beginning in December 2010. The amount due under these term loans at June 30, 2010 was €1.4 million ($1.8 million).
The Company has overdraft facilities of €0.9 million ($1.1 million). with certain German financial institutions. There were no amounts outstanding under these facilities at June 30, 2010.
As described in Note 2, the Company has pledged certain accounts receivable balances to several French institutions to secure a revolving line of credit. The line of credit bears interest at EURIBOR + 1%. Amounts outstanding under these arrangements are due when the related receivable is collected or upon demand. The Company also has a factoring arrangement which allows it to sell certain receivables without recourse for a 5% fee. Amounts outstanding under this arrangement are repaid as the related receivables are collected.
The Company has entered into various line of credit arrangements with local banks in France and Germany. In Germany, these arrangements provide for short-term bank overdrafts, U.S. dollar advances and the issuance of documentary and standby letters of credit of up to €3.5 million. As of June 30, 2009, €2.0 million of the lines had been utilized to guarantee documentary and standby letters of credit, with interest rates ranging from 1.25% to 1.35%. In France, these arrangements provide for short-term bank overdrafts that are due on demand and bear interest at EURIBOR + 1%. Additionally, during fiscal 2008, the Company obtained a credit line with French financial institution to borrow up to €2.0 million bearing interest at EURIBOR + 1%. Amounts outstanding on the credit line are due on demand or at the termination of the credit line in June 2015.
Maturities on all notes payable as of June 30, 20092010 are as follows (in thousands):
| | | | | |
Years Ending
| | | |
June 30, | | Amount | |
| |
| 2010 | | $ | 6,962 | |
| 2011 | | | 10,044 | |
| 2012 | | | 160,126 | |
| 2013 | | | 152 | |
| 2014 and thereafter | | | — | |
| | | | | |
| Total | | $ | 177,284 | |
| | | | | |
F-29
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | | | | |
Years Ending
| | | |
June 30, | | Amount | |
| |
| 2011 | | $ | 1,068 | |
| 2012 | | | 183,350 | |
| 2013 | | | 384 | |
| 2014 | | | 252 | |
| 2015 | | | 252 | |
| Thereafter | | | 568 | |
| | | | | |
| Total | | $ | 185,874 | |
| | | | | |
| |
| 9. | COMMITMENTS AND CONTINGENCIES |
Leases and Other Contractual Obligations — In the normal course of business, the Company enters into contractual arrangements with third parties for noncancelable operating lease agreements for its offices and vehicles. Under these agreements, the Company commits to provide specified payments to a lessor, based upon contractual arrangements.
F-26
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The total future minimum commitments for these and other contractual arrangements in place as of June 30, 2009,2010, are scheduled to be paid as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2010 | | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | Thereafter | | | Total | |
| |
| Minimum future operating lease payments | | $ | 4,377 | | | $ | 3,929 | | | $ | 3,310 | | | $ | 2,875 | | | $ | 1,719 | | | $ | 946 | | | $ | 17,156 | |
| Less income from subleases | | | (170 | ) | | | (170 | ) | | | (170 | ) | | | (170 | ) | | | (170 | ) | | | — | | | | (850 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net minimum operating lease payments | | $ | 4,207 | | | $ | 3,759 | | | $ | 3,140 | | | $ | 2,705 | | | $ | 1,549 | | | $ | 946 | | | $ | 16,306 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2011 | | | 2012 | | | 2013 | | | 2014 | | | 2015 | | | Thereafter | | | Total | |
| |
| Minimum future operating lease payments | | $ | 3,504 | | | $ | 3,135 | | | $ | 2,654 | | | $ | 2,390 | | | $ | 1,329 | | | $ | 3,532 | | | $ | 16,544 | |
| Less income from subleases | | | (26 | ) | | | (26 | ) | | | (2 | ) | | | — | | | | — | | | | — | | | | (54 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net minimum operating lease payments | | $ | 3,478 | | | $ | 3,109 | | | $ | 2,652 | | | $ | 2,390 | | | $ | 1,329 | | | $ | 3,532 | | | $ | 16,490 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total rent expense for fiscal 2007, 2008, 2009, and 20092010 was $2.8 million, $2.9 million, $3.2 million $2.3and $3.2 million.
Unconditional Purchase Obligations — The Company has entered into certain long-term unconditional purchase obligations with suppliers. These agreements are non-cancellable and specify terms including fixed or minimum quantities to be purchased, fixed or variable price provisions, and the approximate timing of payment. As of June 30, 2010, unconditional purchase obligations were $4.9 million (unaudited)for fiscal 2011, $1.2 million for fiscal 2012, $1.2 million for fiscal 2013, $1.2 million for fiscal 2014 and $2.4$1.1 million (unaudited) for fiscal 2015. Routine arrangements for other materials and goods that are entered into in the nine months ended March 31, 2009 and 2010.ordinary course of business are not included in these amounts.
Legal Proceedings — The Company is subject to claims and legal proceedings for matters that have arisen through the ordinary course of business. Management believes any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, operating results and cash flows.
Performance Bonds and Letters ofOther Credit Facilities — The Company has entered into various line of credit arrangements with local banks in France and Germany. These arrangements provide for the issuance of documentary and standby letters of credit of up to €14.2 million ($17.3 million), subject to certain local restrictions. As of June 30, 2010, €12.3 million ($15.0 million) of the lines had been utilized to guarantee documentary and standby letters of credit, with interest rates ranging from 0.5% to 1.35%. In addition, the Company posts performance bonds with irrevocable letters of credit to support certain contractual obligations to customers for equipment delivery. These letters of credit are supported by restricted cash accounts, which totaled $5.4 million, $6.0 million and $6.6 million (unaudited) as of June 30, 2008 and 2009 and March 31, 2010.
F-30F-27
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The Company’s (loss) income before income taxes and the details of the income tax provision consist of the following (in thousands):
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2007 | | | 2008 | | | 2009 | |
| |
| (Loss) income before income taxes | | | | | | | | | | | | |
| Domestic | | $ | (19,881 | ) | | $ | (14,346 | ) | | $ | (11,366 | ) |
| Foreign | | | 5,117 | | | | 6,835 | | | | 13,023 | |
| | | | | | | | | | | | | |
| Total (loss) income before income taxes | | $ | (14,764 | ) | | $ | (7,511 | ) | | $ | 1,657 | |
| | | | | | | | | | | | | |
| Income tax provision | | | | | | | | | | | | |
| Current | | | | | | | | | | | | |
| Federal | | $ | 170 | | | $ | 101 | | | $ | 24 | |
| State | | | 10 | | | | 17 | | | | 17 | |
| Foreign | | | 4,905 | | | | 5,861 | | | | 5,295 | |
| | | | | | | | | | | | | |
| Total current | | | 5,085 | | | | 5,979 | | | | 5,336 | |
| Deferred | | | | | | | | | | | | |
| Federal | | | 1,188 | | | | 1,205 | | | | 1,141 | |
| State | | | 113 | | | | (119 | ) | | | 66 | |
| Foreign | | | (1,449 | ) | | | (1,227 | ) | | | (931 | ) |
| | | | | | | | | | | | | |
| Total deferred | | | (148 | ) | | | (141 | ) | | | 276 | |
| | | | | | | | | | | | | |
| Income tax provision | | $ | 4,937 | | | $ | 5,838 | | | $ | 5,612 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| (Loss) income before income taxes | | | | | | | | | | | | |
| Domestic | | $ | (14,346 | ) | | $ | (11,366 | ) | | $ | (6,240 | ) |
| Foreign | | | 6,835 | | | | 13,023 | | | | 19,937 | |
| | | | | | | | | | | | | |
| Total (loss) income before income taxes | | $ | (7,511 | ) | | $ | 1,657 | | | | 13,697 | |
| | | | | | | | | | | | | |
| Income tax provision | | | | | | | | | | | | |
| Current | | | | | | | | | | | | |
| Federal | | $ | 101 | | | $ | 24 | | | $ | 39 | |
| State | | | 17 | | | | 17 | | | | 11 | |
| Foreign | | | 5,861 | | | | 5,295 | | | | 4,620 | |
| | | | | | | | | | | | | |
| Total current provision | | | 5,979 | | | | 5,336 | | | | 4,670 | |
| Deferred | | | | | | | | | | | | |
| Federal | | | 1,205 | | | | 1,141 | | | | 1,188 | |
| State | | | (119 | ) | | | 66 | | | | 67 | |
| Foreign | | | (1,227 | ) | | | (931 | ) | | | 1,807 | |
| | | | | | | | | | | | | |
| Total deferred provision | | | (141 | ) | | | 276 | | | | 3,062 | |
| | | | | | | | | | | | | |
| Total income tax provision | | $ | 5,838 | | | $ | 5,612 | | | $ | 7,732 | |
| | | | | | | | | | | | | |
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to (loss) income before income taxes as follows (in thousands):
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2007 | | | 2008 | | | 2009 | |
| |
| (Loss) income before provision for income taxes | | $ | (14,764 | ) | | $ | (7,511 | ) | | $ | 1,657 | |
| | | | | | | | | | | | | |
| Federal income tax at statutory rate | | | (5,020 | ) | | | (2,554 | ) | | | 563 | |
| State income tax (net of federal benefit) | | | (521 | ) | | | (517 | ) | | | (598 | ) |
| Foreign income taxed at different rates | | | 4,144 | | | | 3,625 | | | | 2,212 | |
| Change in valuation allowance(1) | | | 5,718 | | | | 5,011 | | | | 3,171 | |
| Change in tax rates | | | 112 | | | | 181 | | | | 0 | |
| Other non-deductible expenses | | | 688 | | | | 664 | | | | 629 | |
| Benefit of tax credits | | | — | | | | (939 | ) | | | (536 | ) |
| Other | | | (184 | ) | | | 367 | | | | 171 | |
| | | | | | | | | | | | | |
| Total income tax provision | | $ | 4,937 | | | $ | 5,838 | | | $ | 5,612 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| (Loss) income before provision for income taxes | | $ | (7,511 | ) | | $ | 1,657 | | | $ | 13,697 | |
| | | | | | | | | | | | | |
| Federal income tax at statutory rate | | | (2,554 | ) | | | 563 | | | | 4,657 | |
| State income tax (net of federal benefit) | | | (517 | ) | | | (598 | ) | | | (187 | ) |
| Foreign income taxed at different rates | | | 3,625 | | | | 2,212 | | | | (126 | ) |
| Change in valuation allowance(1) | | | 5,011 | | | | 3,171 | | | | 3,546 | |
| Change in tax rates | | | 181 | | | | — | | | | — | |
| Other non-deductible expenses | | | 664 | | | | 629 | | | | 161 | |
| Benefit of tax credits | | | (939 | ) | | | (536 | ) | | | (343 | ) |
| Other | | | 367 | | | | 171 | | | | 24 | |
| | | | | | | | | | | | | |
| Total income tax provision | | $ | 5,838 | | | $ | 5,612 | | | $ | 7,732 | |
| | | | | | | | | | | | | |
| | |
| (1) | | Affecting the provision for income taxes. |
F-31F-28
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The components of the Company’s net deferred tax assets and liabilities consisted of the following (in thousands):
| | | | | | | | | |
| | | 2008 | | | 2009 | |
| |
| Deferred tax assets: | | | | | | | | |
| Net operating losses | | $ | 19,452 | | | $ | 16,398 | |
| Tax credits | | | 6,006 | | | | 7,430 | |
| Other reserves and accrued expenses | | | 15,461 | | | | 16,026 | |
| | | | | | | | | |
| Total deferred tax assets | | | 40,919 | | | | 39,854 | |
| Deferred tax liabilities: | | | | | | | | |
| Amortization | | | (3,287 | ) | | | (2,317 | ) |
| Depreciation | | | (436 | ) | | | (236 | ) |
| Other liabilities | | | (3,887 | ) | | | (10 | ) |
| Purchased technology, goodwill, & other intangibles | | | (13,413 | ) | | | (12,638 | ) |
| | | | | | | | | |
| Total deferred tax liabilities | | | (21,023 | ) | | | (15,201 | ) |
| Less: Valuation allowance | | | (27,601 | ) | | | (31,393 | ) |
| | | | | | | | | |
| Net deferred tax liabilities | | $ | (7,705 | ) | | $ | (6,740 | ) |
| | | | | | | | | |
| | | | | | | | | |
| | | 2009 | | | 2010 | |
| |
| Deferred tax assets: | | | | | | | | |
| Net operating losses | | $ | 16,398 | | | $ | 16,141 | |
| Tax credits | | | 7,430 | | | | 9,917 | |
| Amortization | | | 4,151 | | | | 4,237 | |
| Other reserves and accrued expenses | | | 9,027 | | | | 4,334 | |
| | | | | | | | | |
| Total deferred tax assets | | | 37,006 | | | | 34,629 | |
| Deferred tax liabilities: | | | | | | | | |
| Purchased technologies and other intangibles | | | (12,107 | ) | | | (11,770 | ) |
| Depreciation | | | (236 | ) | | | (523 | ) |
| Other liabilities | | | (10 | ) | | | (219 | ) |
| | | | | | | | | |
| Total deferred tax liabilities | | | (12,353 | ) | | | (12,512 | ) |
| Less: Valuation allowance | | | (31,393 | ) | | | (32,067 | ) |
| | | | | | | | | |
| Net deferred tax liabilities | | $ | (6,740 | ) | | $ | (9,950 | ) |
| | | | | | | | | |
The provision for income taxes for the first nine months of fiscal 2010 was approximately $5.4 million (unaudited), with an estimated effective tax rate of 94.8% (unaudited). The effective tax rate for the nine months differs from the US statutory rate of 34% primarily due to tax liabilities in foreign jurisdictions. The fiscal 2010 effective tax rate for the first nine months of fiscal 2010 is also impacted by losses generated in the U.S. where no benefit is recorded due to the valuation allowance.
Management regularly evaluates the recoverability of deferred tax assets and recognizes the tax benefit only if reassessment demonstrates that they are realizable. At such time, if it is determined that it is more likely than not that the deferred tax assets are realizable, the valuation allowance will be adjusted. As of June 30, 2008 and 2009 and March 31, 2010, the Company has provided a valuation allowance for certain U.S. and foreign deferred tax assets that it believes are more likely than not unrealizable.
As of June 30, 2009,2010, the Company had federal and state net operating loss carryforwards of approximately $59.1$57.8 million and $73.4$82.2 million. The federal net operating losses will begin to expire in 2023. The state net operating losses will begin to expire in 2013. As of June 30, 2009,2010, the Company had tax credit carryforwards of approximately $7.7$9.8 million, available to offset foreign taxes paid for federal income tax purposes. Federal tax credit carryforwards will begin to expire in fiscal 2010.2015.
The Company has not provided U.S. income tax on certain foreign earnings that are deemed to be indefinitely invested outside the U.S. For fiscal 2007, 2008, 2009 and 2009,2010, the amount of accumulated unremitted earnings from the Company’s foreign subsidiaries underFASB-issued authoritative guidance on accounting for income taxes is approximately $17.0 million, $13.2 million, $17.3 million and $17.3$21.3 million. Determination of the amount of unrecognized deferred U.S. income tax liability is not practical due to the complexities associated with its hypothetical calculation.
On July 1, 2007, the
The Company adopted the provisions ofFASB-issued authoritative guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurements of a tax position taken or expected to be taken in a tax return. This guidance also provides guidance on derecognition ofclassifies unrecognized tax benefits classification onas a non-current liability in the accompanying consolidated balance sheet, interestsheets. A reconciliation of the beginning and penalties, accounting in interim periods, disclosure and transition.ending amount of unrecognized tax benefits is as follows:
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| Balance at beginning of period | | $ | 7,383 | | | $ | 11,851 | | | $ | 13,222 | |
| Additions based on tax positions taken related to prior years | | | — | | | | 451 | | | | 190 | |
| Additions based on tax positions taken related to current year | | | 3,367 | | | | 2,247 | | | | — | |
| Reductions based on settlements | | | — | | | | — | | | | — | |
| Reductions for tax positions of prior years | | | — | | | | — | | | | (197 | ) |
| Foreign currency translation adjustments | | | 1,101 | | | | (1,327 | ) | | | (679 | ) |
| | | | | | | | | | | | | |
| Balance at end of period | | $ | 11,851 | | | $ | 13,222 | | | $ | 12,536 | |
| | | | | | | | | | | | | |
F-32F-29
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| | | | | |
| | | Year Ended
| |
| | | June 30, 2009 | |
| |
| Balance at beginning of period | | $ | 13,460 | |
| | | | | |
| Additions based on tax positions taken related to prior years | | | 451 | |
| Additions based on tax positions taken related to current year | | | 2,247 | |
| Reductions based on settlements | | | — | |
| Reductions for tax positions of prior years | | | — | |
| Foreign currency translation adjustments | | | (1,205 | ) |
| | | | | |
| Balance at end of period | | $ | 14,953 | |
| | | | | |
As of June 30, 2009,2010, the Company had approximately $15.0$12.5 million of unrecognized tax benefits related to uncertain tax positions, of which $9.6$7.2 million would affect its effective tax rate if recognized. The Company anticipates a decrease to its unrecognized tax benefits in the amount of approximately $1.7 million during the next 12 months primarily due to amended tax filings. The Company does not believe the remaining amount of unrecognized tax benefits as of June 30, 2009 and March 31, 2010 will materially change in the next 12 months.
During the nine months ended March 31, 2010, the Company’s unrecognized tax benefits decreased by approximately $0.7 million due to the settlement of certain reserve items.
The Company recognizes interest and penalties associated with uncertain tax positions in income tax expense.expense and incurred accrued interest and penalties of $0.3 million, $0.2 million and $0.5 million for fiscal 2008, 2009 and 2010. As of June 30, 20082009 and June 30, 2009,2010, the provision for interest and penalties was $1.0$1.2 million and $1.2$1.7 million. The ultimate amount and timing of any future cash settlements cannot be predicted with reasonable certainty.
The Company conducts business globally and as a result, one or more of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as the United Kingdom, France, Germany and the United States. With a few insignificant jurisdictions, the Company is no longer subject to U.S. federal, state and local, ornon-U.S. income tax examinations for years prior to fiscal 2001.
In many cases, the Company’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes open tax years by major tax jurisdictions as of June 30, 2009:2010:
| | | | | |
| | | Years Open | |
| |
| Jurisdiction: | | | | |
| United Kingdom | | | 2007–20092008–2010 | |
| France | | | 2005–20092010 | |
| Germany | | | 2003–20092005–2010 | |
| United States | | | 2005–20092010 | |
F-33
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| |
| 11. | EMPLOYEE BENEFIT PLANS |
Defined Benefit Pension Plans — The Company maintains contributory and noncontributory defined benefit plans for certain employees in France and Germany.
In France, the Company contributes to the national pension system, and its obligation to employees in terms of pensions is restricted to a lump-sum length of service award payable at the date that the employee reaches retirement age, such award being determined for each individual based upon years of service provided and projected final salary. The benefit obligation is unfunded. Accordingly, the fair value of plan assets is zero for the periods presented.
In Germany, plan benefits are generally based on an employee’s years of service and final salary. The benefit obligations of the German entities are unfunded. Accordingly, the fair value of plan assets is zero for the periods presented.
F-30
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The components of the pension plan benefit obligations are as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | |
| | | France | | | Germany | | | France | | | Germany | |
| |
| Change in projected benefit obligations: | | | | | | | | | | | | | | | | |
| Projected benefit obligation — at beginning of period/year | | $ | 1,147 | | | $ | 1,132 | | | $ | 1,375 | | | $ | 1,163 | |
| Foreign currency translation | | | 197 | | | | 197 | | | | (152 | ) | | | (128 | ) |
| Service cost | | | 91 | | | | 35 | | | | 84 | | | | 28 | |
| Interest cost | | | 67 | | | | 63 | | | | 70 | | | | 68 | |
| Benefit paid | | | (128 | ) | | | (51 | ) | | | (134 | ) | | | (21 | ) |
| Assumptions changes | | | (15 | ) | | | — | | | | (10 | ) | | | 9 | |
| Net actuarial loss (gain) | | | 16 | | | | (213 | ) | | | 51 | | | | 88 | |
| | | | | | | | | | | | | | | | | |
| Projected benefit obligation — at end of year | | $ | 1,375 | | | $ | 1,163 | | | $ | 1,284 | | | $ | 1,207 | |
| | | | | | | | | | | | | | | | | |
| Accumulated benefit obligation | | $ | 1,375 | | | $ | 1,157 | | | $ | 1,284 | | | $ | 1,189 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2009 | | | 2010 | |
| | | France | | | Germany | | | France | | | Germany | |
| |
| Change in projected benefit obligations: | | | | | | | | | | | | | | | | |
| Projected benefit obligation — at beginning of period/year | | $ | 1,375 | | | $ | 1,163 | | | $ | 1,284 | | | $ | 1,207 | |
| Foreign currency translation | | | (152 | ) | | | (128 | ) | | | (53 | ) | | | (195 | ) |
| Service cost | | | 84 | | | | 28 | | | | 99 | | | | 31 | |
| Interest cost | | | 70 | | | | 68 | | | | 79 | | | | 72 | |
| Benefit paid | | | (134 | ) | | | (21 | ) | | | (32 | ) | | | (19 | ) |
| Assumptions changes | | | (10 | ) | | | 9 | | | | 2 | | | | 13 | |
| Net actuarial loss | | | 51 | | | | 88 | | | | 267 | | | | 186 | |
| | | | | | | | | | | | | | | | | |
| Projected benefit obligation — at end of year | | $ | 1,284 | | | $ | 1,207 | | | $ | 1,646 | | | $ | 1,295 | |
| | | | | | | | | | | | | | | | | |
| Accumulated benefit obligation | | $ | 1,284 | | | $ | 1,189 | | | $ | 1,646 | | | $ | 1,295 | |
| | | | | | | | | | | | | | | | | |
Amounts recognized in the Consolidated Balance Sheets consist of (in thousands):
| | | | | | | | | | | | | | | | | |
| | | As of June 30, | |
| | | 2008 | | | 2009 | |
| | | France | | | Germany | | | France | | | Germany | |
| |
| Current liabilities | | $ | (132 | ) | | $ | (26 | ) | | $ | (53 | ) | | $ | (26 | ) |
| Other liabilities — non current | | | (1,243 | ) | | | (1,137 | ) | | | (1,231 | ) | | | (1,163 | ) |
| | | | | | | | | | | | | | | | | |
| Total | | $ | (1,375 | ) | | $ | (1,163 | ) | | $ | (1,284 | ) | | $ | (1,189 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | As of June 30, | |
| | | 2009 | | | 2010 | |
| | | France | | | Germany | | | France | | | Germany | |
| |
| Current liabilities | | $ | (53 | ) | | $ | (26 | ) | | $ | (64 | ) | | $ | (39 | ) |
| Other liabilities — non current | | | (1,231 | ) | | | (1,163 | ) | | | (1,582 | ) | | | (1,256 | ) |
| | | | | | | | | | | | | | | | | |
| Total | | $ | (1,284 | ) | | $ | (1,189 | ) | | $ | (1,646 | ) | | $ | (1,295 | ) |
| | | | | | | | | | | | | | | | | |
Amounts recognized in Accumulated Other Comprehensive Income consist of (in thousands):
| | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | |
| | | France | | | Germany | | | France | | | Germany | |
| |
| Unrecognized actuarial loss (gain) | | $ | 26 | | | $ | (306 | ) | | $ | 76 | | | $ | (217 | ) |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2009 | | | 2010 | |
| | | France | | | Germany | | | France | | | Germany | |
| |
| Unrecognized actuarial loss (gain) | | $ | 76 | | | $ | (217 | ) | | $ | 267 | | | $ | (36 | ) |
| | | | | | | | | | | | | | | | | |
Unrecognized gains and losses are recognized over the average remaining service period of active plan participants. The estimated gains and losses that will be amortized from accumulated other comprehensive income into benefits expense over the next fiscal year is not significant.
Net periodic pension costs for the defined benefit plans consisted of the following elements (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | June 30, 2008 | | | June 30, 2009 | | | June 30, 2010 | |
| | | France | | | Germany | | | France | | | Germany | | | France | | | Germany | |
| |
| Annual service cost | | $ | 91 | | | $ | 35 | | | $ | 84 | | | $ | 28 | | | $ | 99 | | | $ | 31 | |
| Interest accrued on pension obligations | | | 67 | | | | 63 | | | | 70 | | | | 68 | | | | 79 | | | | 72 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total period pension cost | | $ | 158 | | | $ | 98 | | | $ | 154 | | | $ | 96 | | | $ | 178 | | | $ | 103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
F-34F-31
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Net periodic pension costs for the defined benefit plans consisted of the following elements (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended
| | | Year Ended
| | | Year Ended
| |
| | | June 30, 2007 | | | June 30, 2008 | | | June 30, 2009 | |
| | | France | | | Germany | | | France | | | Germany | | | France | | | Germany | |
| |
| Annual service cost | | $ | 67 | | | $ | 39 | | | $ | 91 | | | $ | 35 | | | $ | 84 | | | $ | 28 | |
| Interest accrued on pension obligations | | | 54 | | | | 51 | | | | 67 | | | | 63 | | | | 70 | | | | 68 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total period pension cost | | $ | 121 | | | $ | 90 | | | $ | 158 | | | $ | 98 | | | $ | 154 | | | $ | 96 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
The weighted-average rates used for each plan were as follows:
| | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | |
| | | France | | | Germany | | | France | | | Germany | |
| |
| Projected benefit obligation: | | | | | | | | | | | | | | | | |
| Discount rate | | | 6.00 | % | | | 6.30 | % | | | 5.75 | % | | | 6.15 | % |
| Expected rate of return on plan assets | | | — | | | | — | | | | — | | | | — | |
| Assumed rate of compensation increase | | | 3.00 | % | | | 2.50 | % | | | 3.00 | % | | | 2.30 | % |
| Assumed rate of inflation | | | 2.00 | % | | | 2.20 | % | | | 2.00 | % | | | 2.00 | % |
| | | | | | | | | | | | | | | | | |
| Net periodic pension cost: | | | | | | | | | | | | | | | | |
| Discount rate | | | 5.25 | % | | | 4.75 | % | | | 6.00 | % | | | 6.30 | % |
| Assumed rate of compensation increase | | | 3.00 | % | | | 2.50 | % | | | 3.00 | % | | | 2.50 | % |
| Assumed rate of inflation | | | 2.00 | % | | | 1.80 | % | | | 2.00 | % | | | 2.20 | % |
| | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2009 | | | 2010 | |
| | | France | | | Germany | | | France | | | Germany | |
| |
| Projected benefit obligation: | | | | | | | | | | | | | | | | |
| Discount rate | | | 5.75 | % | | | 6.15 | % | | | 4.50 | % | | | 4.90 | % |
| Expected rate of return on plan assets | | | — | | | | — | | | | — | | | | — | |
| Assumed rate of compensation increase | | | 3.00 | % | | | 2.30 | % | | | 3.00 | % | | | 1.90 | % |
| Assumed rate of inflation | | | 2.00 | % | | | 2.00 | % | | | 2.00 | % | | | 2.00 | % |
| | | | | | | | | | | | | | | | | |
| Net periodic pension cost: | | | | | | | | | | | | | | | | |
| Discount rate | | | 6.00 | % | | | 6.30 | % | | | 5.75 | % | | | 6.15 | % |
| Assumed rate of compensation increase | | | 3.00 | % | | | 2.50 | % | | | 3.00 | % | | | 2.30 | % |
| Assumed rate of inflation | | | 2.00 | % | | | 2.20 | % | | | 2.00 | % | | | 2.00 | % |
Estimated future benefit payments are as follows (in thousands):
| | | | | | | | | | | | | |
| | | Amount | |
Years Ending June 30, | | France | | | Germany | | | Total | |
| |
| 2010 | | $ | 53 | | | $ | 26 | | | $ | 79 | |
| 2011 | | | 25 | | | | 48 | | | | 73 | |
| 2012 | | | 68 | | | | 66 | | | | 134 | |
| 2013 | | | 13 | | | | 69 | | | | 82 | |
| 2014 | | | 145 | | | | 72 | | | | 217 | |
| Thereafter | | | 803 | | | | 414 | | | | 1,217 | |
| | | | | | | | | | | | | |
| | | $ | 1,107 | | | $ | 695 | | | $ | 1,802 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Amount | |
Years Ending June 30, | | France | | | Germany | | | Total | |
| |
| 2011 | | $ | 183 | | | $ | 39 | | | $ | 222 | |
| 2012 | | | 68 | | | | 57 | | | | 125 | |
| 2013 | | | 5 | | | | 60 | | | | 65 | |
| 2014 | | | 120 | | | | 62 | | | | 182 | |
| 2015 | | | 75 | | | | 65 | | | | 140 | |
| 2016-2020 | | | 930 | | | | 376 | | | | 1,306 | |
| | | | | | | | | | | | | |
| | | $ | 1,381 | | | $ | 659 | | | $ | 2,040 | |
| | | | | | | | | | | | | |
Defined Contribution Plans — The Company maintains voluntary noncontributory defined contribution retirement plans for certain eligible employees. Under each plan, eligible employees may make voluntary contributions, while the Company makes contributions as defined by each plan agreement. Employee contributions in each plan are fully vested. Company contributions vest in accordance with the provision of each plan agreement. The following summarizes the features of each plan:
Retirement Plans — The Company maintains twothree retirement plans. Under the provisions of the plans, the Company is required to contribute a percentage of each eligible employee’s compensation. Total expense relating to these plans for fiscal 2007, 2008, and 2009 was $327,000, $325,000 and $256,000 and $341,000 (unaudited) and $353,000 (unaudited) for the nine months ended March 31, 2009 and 2010.
F-35
MIRION TECHNOLOGIES, INC.
2010 was $325,000, $288,000 and $281,000.
Notes to Consolidated Financial Statements — (Continued)
401(k) Savings Plan and Other Investment Savings Plans — The Company’sCompany also maintains several 401(k) savings and other investment savings plans. Under these plans, cover certain of the Company’s eligible employees. Bothboth the employee and the Company make contributions to the plans.plans and the Company contributions are based on the level of employee contributions. Certain subsidiaries of the Company offer retirement plans in lieu of participation in the Company’s 401(k) savings plans. Company contributions to these plans are based on formulas determined by the Company.
The amount expensed for 401(k) savings plans and other defined contributioninvestment savings plans amounted to $395,000, $439,000, $613,000 and $375,000$794,000 for fiscal 2007, 2008, and 2009 and $385,000 (unaudited) and $497,000 (unaudited) for the nine months ended March 31, 2009 and 2010.
Deferred Compensation Plan — The Company had a deferred compensation program for directors and key employees of the Company. The program allowed eligible participants to defer a portion of their compensation and bonuses. The deferred compensation together with certain discretionary Company contributions were invested in a trust account with three participant-directed investment options. Funds could be distributed to participants upon retirement or for certain instances of unforeseen financial hardship. There was no expense associated with the deferred compensation plan for fiscal 2007, 2008 and 2009 and for the nine months ended March 31, 2009 and 2010.
The Company projects its contributions for all of the above defined contributionemployee benefit plans to be $662,000$1.4 million for the year ending June 30, 2010.2011.
Other Postretirement Benefit Plans — The Company maintains a postretirement benefit plan for certain eligible employees. Under the provisions of the plan, certain retired employees will secure their own health insurance coverage, and the Company will reimburse the retired employee an amount specified in the plan. The premium reimbursement is only available to retirees who carried the Company’s health
F-32
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
insurance at the date of retirement. This benefit obligation is unfunded and, accordingly, the fair value of plan assets is zero.
Coverage under the plan ends when the participant is eligible for Medicare benefits, which is assumed to be age 65. It is assumed that 70% of retirees eligible for coverage will select the family plan. Benefits are assumed to be available upon completion of 30 years of service and attainment of age 58 using a weighted-average discount rate of 6.1%5.0%.
The components of the Company’s postretirement benefit plan as of June 30, 20082009 and 20092010 are as follows (in thousands):
| | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | |
| |
| Change in projected benefit obligations: | | | | | | | | |
| Projected benefit obligation — at beginning of year | | $ | 513 | | | $ | 523 | |
| Service cost | | | 25 | | | | 23 | |
| Interest cost | | | 30 | | | | 39 | |
| Benefit paid | | | (17 | ) | | | (12 | ) |
| Assumptions changes | | | 1 | | | | (22 | ) |
| Actuarial loss (gain) | | | (29 | ) | | | 75 | |
| | | | | | | | | |
| Projected benefit obligation — at end of year | | $ | 523 | | | $ | 626 | |
| | | | | | | | | |
| | | | | | | | | |
| | | As of June 30, | |
| | | 2008 | | | 2009 | |
| |
| Accumulated benefit obligation | | $ | 523 | | | $ | 626 | |
| | | | | | | | | |
F-36
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2009 | | | 2010 | |
| |
| Change in projected benefit obligations: | | | | | | | | |
| Projected benefit obligation — at beginning of year | | $ | 523 | | | $ | 626 | |
| Service cost | | | 23 | | | | 28 | |
| Interest cost | | | 39 | | | | 38 | |
| Benefit paid | | | (12 | ) | | | (9 | ) |
| Assumptions changes | | | (22 | ) | | | (9 | ) |
| Actuarial loss | | | 75 | | | | 77 | |
| | | | | | | | | |
| Projected benefit obligation — at end of year | | $ | 626 | | | $ | 751 | |
| | | | | | | | | |
| Accumulated benefit obligation | | $ | 626 | | | $ | 751 | |
| | | | | | | | | |
Amounts recognized in the Consolidated Balance Sheets as of June 30, 20082009 and 20092010 consist of (in thousands):
| | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | |
| |
| Other liabilities-non current | | $ | (523 | ) | | $ | (626 | ) |
| | | | | | | | | |
| | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2009 | | | 2010 | |
| |
| Other liabilities-non current | | $ | (626 | ) | | $ | (751 | ) |
| | | | | | | | | |
Amounts recognized in Accumulated Other Comprehensive Income for fiscal 20082009 and 20092010 consist of (in thousands):
| | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | |
| |
| Unrecognized actuarial gain | | $ | (262 | ) | | $ | (240 | ) |
| Unrecognized service cost | | | 34 | | | | 87 | |
| | | | | | | | | |
| | | $ | (228 | ) | | $ | (153 | ) |
| | | | | | | | | |
| | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2009 | | | 2010 | |
| |
| Unrecognized actuarial gain | | $ | (240 | ) | | $ | (152 | ) |
| Unrecognized service cost | | | 87 | | | | 76 | |
| | | | | | | | | |
| | | $ | (153 | ) | | $ | (76 | ) |
| | | | | | | | | |
Unrecognized gains and losses are recognized over the average remaining service period of active plan participants. The estimated gains and losses, net that will be amortized from accumulated other comprehensive income into benefits expense over the next fiscal year is not significant.
F-33
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Estimated future benefit payments are as follows (in thousands):
| | | | | |
Years
| | | |
Ending June 30, | | Amount | |
| |
| 2010 | | $ | 46 | |
| 2011 | | | 41 | |
| 2012 | | | 41 | |
| 2013 | | | 37 | |
| 2014 | | | 51 | |
| Thereafter | | | 328 | |
| | | | | |
| Total | | $ | 544 | |
| | | | | |
| | | | | |
Years
| | | |
Ending June 30, | | Amount | |
| |
| 2011 | | $ | 58 | |
| 2012 | | | 46 | |
| 2013 | | | 66 | |
| 2014 | | | 62 | |
| 2015 | | | 46 | |
| Thereafter | | | 279 | |
| | | | | |
| Total | | $ | 557 | |
| | | | | |
Mirion was formed through the exchange of the capital stock of GDS, IST and Synodys on December 22, 2005, with the combination effective as of December 31, 2005. This transaction was considered a reorganization of entities under common control since GDS, IST and Synodys were under the common control of ACAS prior to the Reorganization. In order to effect the Reorganization, ACAS established a wholly-owned subsidiary, Global Monitoring Systems, Inc., on October 24, 2005, which was renamed Mirion Technologies, Inc. on January 4, 2006. Prior to the Reorganization, ACAS owned 90.5% of GDS, 92.5% of IST and 93.5% of Synodys. After the Reorganization, ACAS held 93.6% of Mirion. In accordance withFASB-issued authoritative guidance on exchanges of ownership interests between entities under common control andFASB-issued guidance on business combinations, the issuance of Mirion stock through the reorganization is accounted for in a manner similar to a pooling of interests which means that the historical basis of the net assets of GDS, IST and Synodys are combined for all periods prior to January 1, 2006.
F-37
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Mirion Convertible Participating Preferred Stock
Mirion has 678,804 shares ofSeries A-1 Convertible Participating Preferred Stock outstanding and 70,000 shares ofSeries A-2 Convertible Participating Preferred Stock outstanding for all periods presented. The significant rights and obligations of the Mirion’s Convertible Participating Preferred stock are as follows:
Liquidation Rights — In the event of any liquidation, dissolution orwinding-up of the Company, whether voluntary or involuntary, the available funds and assets that may be legally distributed to the Company’s stockholders shall be distributed in preference to the Series A Convertible Participating Preferred Stockholders. The holders of shares of Series A Convertible Participating Preferred Stock will be entitled to receive an amount per share equal to the greater of (a) $113.28 per share in the case of theSeries A-1 Convertible Participating Preferred Stock and $103.68 per share in the case of theSeries A-2 Convertible Participating Preferred Stock as adjusted for stock splits, stock dividends or combinations plus any accrued or declared but unpaid dividends or (b) the amount the holders of Series A Convertible Participating Preferred Stock would be entitled to receive on an as-converted basis, according to the number of shares of common stock into which such shares could then be converted. If upon any liquidation, dissolution orwinding-up of the Company, the available funds and assets shall be insufficient to permit the payment to holders of the Series A Convertible Participating Preferred Stock of their full preferential amount, then the entire available funds and assets should be distributed on a pro rata basis among the holders of the outstanding Series A Convertible Participating Preferred Stock. If any assets of the Company distributed to stockholders in connection with any liquidation, dissolution orwinding-up of the Company are in a form other than cash, then the value of such assets shall be their fair market value.
F-34
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Upon completion of the distributions to the Series A Convertible Participating Preferred stockholders and the payment of all debts and liabilities of the Company, all of the remaining assets of the Company available for distribution will be distributed on a pro rata basis among the holders of common stock.
A liquidation, dissolution orwinding-up of the Company shall include the acquisition of the Company by another entity by means of a transaction or series of related transactions including without limitation any reorganization, merger or consolidation that results in the transfer of 50% or more of the outstanding voting power of the Company or the sale of all or substantially all assets of the Company.
Dividends Rights — The holders of shares ofSeries A-1 andA-2 Convertible Participating Preferred Stock, in preference to the holders of shares of any common stock, are entitled to receive cumulative dividends, at a rate of 8% and 17% per annum, payable on the first business day of each quarter commencing on January 1, 2006, by validly issuing fully paid and nonassessable shares ofSeries A-1 and A-2 Convertible Participating Preferred Stock with an aggregate liquidation preference equal to the amount of the dividends to be paid. Cumulative dividends have not been settled to date.date and at June 30, 2010, these cumulative dividends amounted to 295,352 shares for the holders of Series A-1 Convertible Participating Preferred Stock and 79,552 shares for the holders of Series A-2 Convertible Participating Preferred Stock. All undeclared dividends and declared but unpaid dividends including unissued additional shares ofSeries A-1 Convertible Participating Preferred Stock shall compound on a quarterly basis at theSeries A-l dividend rate, without any duplication when and if the dividends are actually paid.
No dividends should be paid on any share of common stock unless a dividend is paid with respect to all outstanding shares of Series A Convertible Participating Preferred Stock in an amount for each such share equal to or greater than the aggregate amount of such dividends for all shares of common stock into which such share of Series A Convertible Participating Preferred Stock could then be converted.
Conversion Rights — Each share of Series A Convertible Participating Preferred Stock is convertible at any time, at the option of the holder, into the number of fully paid and nonassessable shares of Class A Voting Common Stock that results from dividing the applicable original issue price per share by the split adjusted conversion price of $11.77.$11.77, at a rate of 9.6288 for Series A-1 Convertible Participating Preferred Stock and a rate of 8.8128 for Series A-2 Convertible Participating Preferred Stock. The conversion price is subject to adjustments upon the occurrence of certain triggering events related to anti-dilution protection rights.
F-38
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Each share of Convertible Participating Preferred Stock shall automatically convert into Class A Voting Common Stock at the conversion price at the time in effect, upon the vote or written consent of the holders of not less than a majority of the then-outstanding shares of Series A Convertible Participating Preferred Stock.
Anti-Dilution Provisions — No adjustment in the number of shares of Class A Voting Common Stock into which the shares of any Series A Convertible Participating Preferred Stock is convertible should be made, unless the effective price of additional shares of common stock is less than the conversion price in effect on the date of the issue of such additional shares of common stock.
Voting Rights — The holders of shares of Series A Convertible Participating Preferred Stock do not have voting rights of any kind. The Company cannot amend, alter or repeal any provision of the certificate of incorporation of the Company so as to adversely affect the preferences, rights, privileges or powers of the Series A Convertible Participating Preferred Stock without the consent of the holders of a majority of the outstanding shares of Series A Convertible Participating Preferred Stock. However, each holder of Series A Convertible Participating Preferred Stock would need to approve an amendment to the certificate of incorporation that reduces the dividend payable on or the liquidation preference of the Series A Convertible Participating Preferred Stock. Also, the Company cannot create, authorize or issue any securities senior to the Series A Convertible Participating Preferred Stock as to dividends and distributions upon the liquidation,winding-up and dissolution of the Company.
F-35
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Mirion Common Stock
Mirion has authorized 61,328,125 shares of Class A Voting Common Stock and 17,171,875 shares of Class B Non-Voting Common Stock. The rights and privileges of Class A and Class B common stock are the same except for voting rights. Common stock reserved for future issuance as of March 31,June 30, 2010, was as follows:
| | | | | |
| | | Number of
| |
| | | Shares | |
| | (unaudited) | |
| |
| 2006 Stock Plan: | | | | |
| Shares authorized under the 2006 plan | | | 1,010,140 | |
| Less: Options exercised | | | 1,275 | |
Outstanding stock options | | | 962,944 | |
Reserved for future option grants | | | 45,921 | |
| | | | | |
| Total common stock reserved for stock options | | | 1,008,865 | |
| Less: outstanding stock options | | | 924,830 | |
| | | | |
| Reserved for future option grants | | | 84,035 | |
| | | | |
| | | | |
| Common stock reserved for stock options | | | 1,008,865 | |
| Warrants to purchase common stock | | | 3,420,636 | |
| Convertible preferred stock, including paid-in-kind dividends (as converted) | | | 10,457,70310,697,928 | |
| | | | | |
| Total common stock reserved for future issuances | | | 14,887,20415,127,429 | |
| | | | | |
Detachable Warrants
On January 1, 2006, Mirion issued warrants granting the holders the right to purchase Class A Voting Common Stock of the Company. These warrants only become exercisable upon a sale, liquidation or dissolution of the Company or approval by the Board of Directors or upon liquidation of the Company. On February 26, 2010, the Board of Directors resolved that all of these warrants will become exercisable upon the consummation of an initial public offering. The warrants expire on December 22, 2015. As of June 30, 20082009 and 2009,2010, there were 3,420,636 shares of common stock issuable upon the exercise of outstanding detachable warrants, of which 196,910 have an exercise price of $0.00118 and 3,223,726 have an exercise price of $0.00012.
F-39
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| |
| 13. | STOCK-BASED COMPENSATION |
The Board of Directors approved the Mirion 2006 Stock Plan, effective as of December 22, 2005. The plan approves the granting of awards in the form of nonqualified stock options to directors, employees or consultants. The total number of shares available for distribution under the plan is 1,010,140. Under the terms of the plan, the exercise price for awards issued under the plan is determined at the sole discretion of the Board of Directors.
Following is the stock-based compensation expense (in thousands) included in the consolidated statement of operations for options granted through the Mirion 2006 Stock Plan as well as those granted by ACAS to the Company’s Chief Executive Officer and Chairman of the Board. Expense from the options granted by ACAS was $151,000 and $121,000 in fiscal years 2007 and 2008, respectively.year 2008. See Note 14.
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Nine Months Ended
| |
| | | Year Ended June 30, | | | March 31, | |
| | | 2007 | | | 2008 | | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | (unaudited) | |
| |
| Selling, general and administrative expenses | | $ | 177 | | | $ | 223 | | | $ | 1,128 | | | $ | 882 | | | $ | 827 | |
| Research and development expense | | | — | | | | 25 | | | | 33 | | | | 24 | | | | 25 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total stock-based compensation expense | | $ | 177 | | | $ | 248 | | | $ | 1,161 | | | $ | 906 | | | $ | 852 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| Selling, general and administrative expenses | | $ | 223 | | | $ | 1,128 | | | $ | 1,075 | |
| Research and development expense | | | 25 | | | | 33 | | | | 32 | |
| | | | | | | | | | | | | |
| Total stock-based compensation expense | | $ | 248 | | | $ | 1,161 | | | $ | 1,107 | |
| | | | | | | | | | | | | |
F-36
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The stock awards under the Mirion 2006 stock plan include stock awards with performance and market-based vesting (“PSA”) and time-based vesting (“TSA”). Under the terms of the PSA agreements, Mirion grants employee stock option awards whose vesting is contingent upon meeting company-wide performance goals including earnings before interest, taxes and depreciation targets or market conditions, including internal rate of return targets. The TSAs include stock options granted by the Company whose vesting occurs over a period of five to 60 months.
UnderFASB-issued authoritative guidance on stock-based payment, the
The Company estimates the value of the employee stock options on the date of grant using the Black-Scholes model for TSAs and using a Monte Carlo simulation for PSAs containing market conditions. The key assumptions used in the model for valuation of options granted under the Mirion 2006 Stock Plan are provided below:
| | | | | | | | | | | | | | | | | |
| | | Performance-Based Vested Awards | | | Nine Months Ended
| |
| | | Year Ended June 30, | | | March 31, | |
| | | 2007 | | 2008 | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | (unaudited) | |
| |
| Expected term (in years) | | 3.8–3.9 | | 2.7–2.8 | | | N/A | | | | N/A | | | | N/A | |
| Risk-free interest rate | | 4.6%–4.9% | | 3.7%–4.1% | | | N/A | | | | N/A | | | | N/A | |
| Volatility | | 36% | | 35% | | | N/A | | | | N/A | | | | N/A | |
| Dividend yield | | 0% | | 0% | | | N/A | | | | N/A | | | | N/A | |
| Weighted-average fair value at grant date | | $3.04 | | $2.53 | | | N/A | | | | N/A | | | | N/A | |
| | | | | | | |
| | | Performance-Based Vested Awards |
| | | Year Ended June 30, |
| | | 2008 | | 2009 | | 2010 |
| |
| Expected term (in years) | | 2.7–2.8 | | N/A | | N/A |
| Risk-free interest rate | | 3.7%–4.1% | | N/A | | N/A |
| Volatility | | 35% | | N/A | | N/A |
| Dividend yield | | 0% | | N/A | | N/A |
| Weighted-average fair value at grant date | | $2.53 | | N/A | | N/A |
F-40
| | | | | | | |
| | | Time-Based Vested Awards |
| | | Year Ended June 30, |
| | | 2008 | | 2009 | | 2010 |
| |
| Expected term (in years) | | 8.0–10.0 | | 10 | | N/A |
| Risk-free interest rate | | 2.9%–4.5% | | 2.7%–4.1% | | N/A |
| Volatility | | 46% | | 46%–47% | | N/A |
| Dividend yield | | 0% | | 0% | | N/A |
| Weighted-average fair value at grant date | | $5.31 | | $5.81 | | N/A |
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | | | | | | | | | | | | |
| | | Time-Based Vested Awards | | Nine Months Ended
| |
| | | Year Ended June 30, | | March 31, | |
| | | 2007 | | 2008 | | 2009 | | 2009 | | 2010 | |
| | | | | | | | | (unaudited) | |
| |
| Expected term (in years) | | 9.8 | | 8.0–10.0 | | 10 | | 10 | | | N/A | |
| Risk-free interest rate | | 4.6%–4.8% | | 2.9%–4.5% | | 2.7%–4.1% | | 2.7%–4.1% | | | N/A | |
| Volatility | | 46% | | 46% | | 46%–47% | | 46%-47% | | | N/A | |
| Dividend yield | | 0% | | 0% | | 0% | | 0% | | | N/A | |
| Weighted-average fair value at grant date | | $5.48 | | $5.31 | | $5.81 | | $5.81 | | | N/A | |
The expected term of the option is determined based on factors including vesting period, life of option, strike price and fair market value of the Company’s stock on the date of grant. The fair market value of the Company’s stock on the date of grant was determined in a retrospective valuation. The risk-free rate of interest over the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Since the Company’s stock is not publicly traded, volatility has been determined based on the volatility of stocks of comparable companies within the Company’s industry. No dividends on the Company’s common stock have been declared in the past, and the Company does not expect to do so in the foreseeable future.
F-37
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Share option activity for the Mirion 2006 Stock Plan is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2007 | | | 2008 | | | 2009 | |
| | | | | | Weighted-
| | | | | | Weighted-
| | | | | | Weighted-
| |
| | | | | | Average
| | | | | | Average
| | | | | | Average
| |
| | | | | | Exercise
| | | | | | Exercise
| | | | | | Exercise
| |
| | | Shares | | | Price | | | Shares | | | Price | | | Shares | | | Price | |
| |
| Outstanding — beginning of year | | | 413,485 | | | $ | 10.45 | | | | 383,677 | | | $ | 10.81 | | | | 736,989 | | | $ | 13.62 | |
| Granted | | | 221,246 | | | | 13.84 | | | | 504,262 | | | | 15.08 | | | | 390,030 | | | | 16.86 | |
| Exercised | | | — | | | | 0.00 | | | | (1,275 | ) | | | 10.45 | | | | — | | | | 0.00 | |
| Forfeited or expired | | | (251,054 | ) | | | 12.89 | | | | (149,675 | ) | | | 11.37 | | | | (164,075 | ) | | | 16.46 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Outstanding — end of year | | | 383,677 | | | $ | 10.80 | | | | 736,989 | | | $ | 13.62 | | | | 962,944 | | | $ | 14.45 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Vested or expected to vest — end of year | | | 383,677 | | | | 10.80 | | | | 736,989 | | | | 13.62 | | | | 962,944 | | | | 14.45 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Exercisable — end of year | | | 239,780 | | | $ | 10.45 | | | | 210,162 | | | $ | 11.18 | | | | 412,470 | | | $ | 13.51 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| | | | | | Weighted-
| | | | | | Weighted-
| | | | | | Weighted-
| |
| | | | | | Average
| | | | | | Average
| | | | | | Average
| |
| | | | | | Exercise
| | | | | | Exercise
| | | | | | Exercise
| |
| | | Shares | | | Price | | | Shares | | | Price | | | Shares | | | Price | |
| |
| Outstanding — beginning of year | | | 383,677 | | | $ | 10.81 | | | | 736,989 | | | $ | 13.62 | | | | 962,944 | | | $ | 14.45 | |
| Granted | | | 504,262 | | | | 15.08 | | | | 390,030 | | | | 16.86 | | | | — | | | | — | |
| Exercised | | | (1,275 | ) | | | 10.45 | | | | — | | | | — | | | | — | | | | — | |
| Forfeited or expired | | | (149,675 | ) | | | 11.37 | | | | (164,075 | ) | | | 16.46 | | | | (38,114 | ) | | | 16.35 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Outstanding — end of year | | | 736,989 | | | $ | 13.62 | | | | 962,944 | | | $ | 14.45 | | | | 924,830 | | | $ | 14.37 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Vested or expected to vest — end of year | | | 736,989 | | | | 13.62 | | | | 962,944 | | | | 14.45 | | | | 924,830 | | | $ | 14.37 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Exercisable — end of year | | | 210,162 | | | $ | 11.18 | | | | 412,470 | | | $ | 13.51 | | | | 597,970 | | | $ | 14.22 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Options grant activity for the year ended June 30, 2009 is as follow:
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Intrinsic
| |
| | | | | | | | | Fair Value of
| | | Value of
| |
| | | # Options
| | | Exercise Price
| | | Options on
| | | Options on
| |
Grant Date | | Granted | | | per Share | | | Grant Date | | | Grant Date | |
| |
| July 28, 2008(1) | | | 102,000 | | | $ | 16.31 | | | $ | 6.67 | | | $ | 0.00 | |
| August 5, 2008 | | | 279,530 | | | $ | 17.06 | | | $ | 5.69 | | | $ | 0.00 | |
| December 9, 2008 | | | 8,500 | | | $ | 16.97 | | | $ | 1.85 | | | $ | 0.00 | |
| | | | | | | | | | | | | | | | | |
| Total | | | 390,030 | | | | | | | | | | | $ | 0.00 | |
| | | | | | | | | | | | | | | | | |
| | |
| (1) | | The 102,000 options granted July 28, 2008 were a modification of 127,500 options granted on November 5, 2007. The 102,000 options, which have time-based vesting, replaced the 127,500 options, which had performance-based vesting. The stock option modification was accounted for in accordance withFASB-issued authoritative guidance onstock-based payment, such that the total |
F-41
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | |
| | compensation cost measured at the date of modification was determined to be the grant-date fair value of the original award plus the incremental fair value resulting from the modification, in which vesting of both the original and modified awards were considered to be probable.modification. The incremental fair value resulting from the modification was calculated using the Black-Scholes model and was determined to be $496,000. |
In order to determine the
The fair value of options granted, the fair value of the underlying stock must first be determined. Valuations of Mirion’s common stock as of the grant date of all options issued werehas been determined in accordance with the AICPA Practice Aid “Valuation of Privately-Held Company Equity Securities Issued as Compensation.”
The following table shows the weighted-average remaining contractual term and aggregate intrinsic value for options outstanding, vested and exercisable at June 30, 2009:2010:
| | | | | | | | | |
| | | Weighted-
| | | | |
| | | Average
| | | | |
| | | Remaining
| | | Aggregate
| |
| | | Contractual
| | | Intrinsic
| |
| | | Term | | | Value(1) | |
| | | (in years) | | | (in thousands) | |
| |
| Outstanding | | | 8.2 | | | $ | 466 | |
| Vested and exercisable | | | 7.8 | | | | 354 | |
| | | | | | | | | |
| | | Weighted-
| | | | |
| | | Average
| | | | |
| | | Remaining
| | | Aggregate
| |
| | | Contractual
| | | Intrinsic
| |
| | | Term | | | Value(1) | |
| | | (in years) | | | (in thousands) | |
| |
| Outstanding | | | 6.6 | | | $ | 1,915 | |
| Vested and exercisable | | | 6.2 | | | | 1,317 | |
| | |
| (1) | | Excludes options with a strike price greater than the market value of the underlying stock. |
F-38
MIRION TECHNOLOGIES, INC.
The total intrinsic value of stock options exercised during the years ended June 30, 2008, 2009 and nine months ended March 31, 2010 was $2,070, $0 and $0 (unaudited). Notes to Consolidated Financial Statements — (Continued)
The aggregate intrinsic value of the share options shown in the table above was calculated using the estimated market price of common stock at June 30, 2009,2010, which was $12.45$16.16 per share. As of June 30, 2009,2010, there was $2.9$1.2 million of unrecognized compensation cost related to nonvested stock-based compensation arrangements granted under the Mirion 2006 Stock Plan; that cost is expected to be recognized over a weighted-average period of 2.31.6 years. This excludes 85,798 nonvested outstanding performance-based stock options whose fair value could be recognized upon a sale of the Company. These performance-based stock options will only vest in the event of a sale transaction, which does not include a public offering.
A summary of the activity is presented below:
| | | | | | | | | |
| | | | | | Weighted-
| |
| | | | | | Average
| |
| | | | | | Grant-Date
| |
Nonvested Shares | | Shares | | | Fair Value | |
| |
| Nonvested — July 1, 2008 | | | 526,820 | | | $ | 4.42 | |
| Granted | | | 390,030 | | | | 5.81 | |
| Vested | | | (206,454 | ) | | | 5.67 | |
| Forfeited | | | (159,927 | ) | | | 3.02 | |
| | | | | | | | | |
| Nonvested — June 30, 2009 | | | 550,469 | | | $ | 5.34 | |
| | | | | | | | | |
No tax benefit was realized for tax deductions from stock-based arrangements, including from the exercise of stock options, during fiscal 2007, 2008, 2009 and 2009.2010. The Company did not use any cash to settle equity instruments granted under its stock-based payment arrangements for fiscal 2007, 2008, and 2009 and for the nine months ended March 31, 2009 (unaudited) and 2010 (unaudited).2010. There was no compensation cost capitalized as part of inventory or property, plant and equipment during fiscal 2007, 2008, and 2009 and for the nine months ended March 31, 2009 (unaudited) and 2010 (unaudited).
F-42
MIRION TECHNOLOGIES, INC.
2010.
Notes to Consolidated Financial Statements — (Continued)
| |
| 14. | RELATED-PARTY TRANSACTIONS |
The Company has NEPAs with its primary investor ACAS and its subsidiary ACFS (see Note 8). The terms of the NEPAs require the Company to pay ACFS annual management fees aggregating $1.6 million per year. In return, ACFS provides various investment banking services relating to financing arrangements, mergers and acquisitions, financial analysis and other services. The NEPAs are not cancelable by the Company as long as ACFS has an investment in the Company’s debt or equity securities. Such transactions were not consummated on terms equivalent to those that prevail in arm’s length transactions.
Amounts paid to ACFS were as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended June 30, | | | Nine Months Ended March 31, | |
| | | 2007 | | | 2008 | | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | (unaudited) | |
| |
| Expense invoices | | $ | 166 | | | $ | 111 | | | $ | 114 | | | $ | 86 | | | $ | 18 | |
| Loan fees | | | 260 | | | | 201 | | | | — | | | | — | | | | — | |
| Management fees | | | 1,625 | | | | 1,625 | | | | 1,625 | | | | 1,219 | | | | 1,219 | |
| Interest on debt | | | 16,517 | | | | 17,211 | | | | 14,760 | | | | 11,611 | | | | 9,326 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | $ | 18,568 | | | $ | 19,148 | | | $ | 16,499 | | | $ | 12,916 | | | $ | 10,563 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| Expense invoices | | $ | 111 | | | $ | 114 | | | $ | 18 | |
| Loan fees | | | 201 | | | | — | | | | — | |
| Management fees | | | 1,625 | | | | 1,625 | | | | 1,625 | |
| Interest on debt | | | 17,211 | | | | 14,760 | | | | 12,356 | |
| | | | | | | | | | | | | |
| | | $ | 19,148 | | | $ | 16,499 | | | $ | 13,999 | |
| | | | | | | | | | | | | |
The Company’s President, Chief Executive Officer and Chairman of the Board, Thomas D. Logan, entered into a Call Option Agreement on April 19, 2004 with ACAS and certain of its affiliates, in which ACAS granted time and performance-based options with market conditions to Mr. Logan to purchase shares of the common stock of two of Mirion’s predecessors in connection with his services as an officer and director. The options contain vesting provisions based upon successful completion of an initial public offering or change in control, and achievement by ACAS of certain internal rates of return as described further below. Modification of these options occurred in substance on January 1, 2006, in connection with the formation of Mirion in December 2005. As a result of the modification, Mr. Logan was granted performance-based options with market conditions to purchase 463,794 shares of Mirion’s Class A Common Stock held by ACAS. These options were further modified on December 7, 2007 to modify the vesting criteria of the performance based options to include, in addition to existing vesting provisions, vesting upon the achievement of certain returns on investment, as discussed in detail below. The exercise price of these options is $10.45 per share, and the total incremental value resulting from the option modification is $2.1 million and incorporates the impact of the options’ market-based conditions in the original grant date and modification date fair values. The original grant date fair value of these options was negligible. The Company will recognize expense on these options in the period and to the extent that it satisfies the performance-based vesting conditions, which require completion of an effective offering in the public markets or a qualifying sale of the Company.
F-39
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The performance-based options are divided into three tranches, each of which will either vest or be cancelled in two halves upon an initial public offering (“IPO”) or change in control, depending on whether ACAS achieves certain market-based conditions, internal rates of return or returns on investment in such an event. Upon completion of an IPO, vesting of the performance-based options will occur in two stages. The first stage occurs 30 days after the effective time of the IPO at which time 50% of the options in each tranche will vest if ACAS achieves certain minimum internal rates of return, ranging between 25–40% or certain minimum returns on investment ranging between 2.0–2.7x. If neither goal is met, the options in this tranche will be cancelled. The second stage occurs on the earlier of two years after the effective time of an IPO or upon the sale by ACAS of its investments in the Company, at which time the remaining 50% of the options in each tranche will vest if ACAS achieves certain minimum internal rates of return ranging between 25–40% or certain minimum returns on investment of 2.0–2.7x. If neither goal is met, the options in this tranche will be cancelled. The Company will record stock compensation expense in connection with these options in the event
F-43
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
it completes an effective offering in the public markets or a qualifying sale of the Company, regardless of whether ACAS achieves the related market-based conditions.
The modifications of the performance-based stock options were accounted for under FASB-issued authoritative guidance on stock-based payments, such that the total compensation cost measured at the date of modification was determined to be the grant-date fair value of the original award plus the incremental cost resulting from the modification, in which vesting of both the original and modified awards were considered to be probable.modification. Because these options contain market-based vesting criteria, the Company used a Monte Carlo simulation model, as opposed to a Black-Scholes model, to value such options. In the Monte Carlo simulation model, weekly stock prices were simulated until the liquidity event time using a geometric Brownian motion model. Based on the simulated stock price at the liquidity event and the vesting requirements, the number of vested shares was determined. The stock price at liquidity and the options’ exercise price were used to determine the intrinsic value per share of the options at the liquidity event. The intrinsic value was then discounted to the present at the risk free rate to determine the option fair value for each simulation. Fifty thousand simulations were run for each valuation date, and the sum value of those simulations was averaged to determine the value of the options. Key valuation assumptions as of the January 1, 2006 modification are an expected term of 4.5 years, volatility of 41.8%, a risk-free rate of interest of 4.3%, and a dividend yield of 0%. Key valuation assumptions as of the December 7, 2007 modification are an expected term of 2.6 years, volatility of 39.8%, a risk-free rate of interest of 3.1%, and a dividend yield of 0%.
The Call Option Agreement also provides Mr. Logan with an option to purchase 150,875 shares of the Company’s common stock held by ACAS that vest on a monthly schedule. The exercise price of these options is $10.45 per share and the total incremental fair value resulting from the option modification is $592,000. All such options vested as of June 30, 2008.
The modification of the time-based stock options were accounted for under FASB-issued authoritative guidance on stock-based payments, such that the total compensation cost measured at the date of modification was determined to be the grant-date fair value of the original award plus the incremental cost resulting from the modification, in which vesting of both the original and modified awards were considered to be probable. These options were valued using the Black-Scholes model. Key valuation assumptions as of the January 1, 2006 modification are an expected term of 4.5 years, volatility of 41.8%, a risk-free rate of interest of 4.3%, and a dividend yield of 0%.
All options granted by ACAS and its affiliates to Mr. Logan pursuant to the Call Option Agreement are to be reduced on an economically equivalent basis in the event the Company grants Mr. Logan options to purchase shares of Mirion common stock after the date of the Call Option Agreement, provided such options are no less favorable to Mr. Logan.
These 463,794 and 150,875 options were granted by ACAS and are supported by the Company’s stock held by ACAS. They are not part of the Mirion 2006 stock plan and are therefore not included in the “Share options activity” table presented in Note 13.
| |
| 15. | SEGMENT AND GEOGRAPHIC INFORMATION |
The Company manages its business operations through five strategic business units. Based upon the information reported to the chief operating decision maker, who is the Chief Executive Officer, the Company
F-40
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
has the following reportable segments: Health Physics, Radiation Monitoring Systems, Sensing Systems, Dosimetry Services and Imaging Systems.
| | |
| | • | The Health Physics segment sells dosimeters, detection equipment and contamination & clearance monitors to power and utility companies, military organizations and governmental agencies. In the Health Physics segment, the active dosimetry product line represented 12%11%, 11% and 11%8% of consolidated revenue for fiscal 2007, 2008, and 2009 and 11% (unaudited) and 9% (unaudited) of |
F-44
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
| | |
| | consolidated revenue for the nine months ended March 31, 2009 and 2010. The contamination and clearance monitors product line represented 8%, 8%10% and 10%13% of consolidated revenue for fiscal 2007, 2008, and 2009 and 7% (unaudited) and 13% (unaudited) of consolidated revenue for the nine months ended March 31, 2009 and 2010. |
| | |
| | • | The Radiation Monitoring Systems segment sells radiation monitoring systems to the nuclear end market. The Radiation Monitoring Systems segment consists of a single product line and represents 20%23%, 23%20% and 20%27% of consolidated revenue for fiscal 2007, 2008, and 2009 and 19% (unaudited) and 24% (unaudited) of consolidated revenue for the nine months ended March 31, 2009 and 2010. |
| | |
| | • | The Sensing Systems segment supplies electrical penetration and reactor control equipment to the builders and operators of nuclear reactors. No single product line in the Sensing Systems segment represented more than 10% of consolidated revenue for fiscal 2007, 2008, and 2009 and no single product line in the Sensing Systems segment represented more than 10% (unaudited) of consolidated revenue for the nine months ended March 31, 2009 and 2010. |
| | |
| | • | The Dosimetry Services segment provides dosimetry services to employers of radiation workers in the nuclear and medical end markets. The Dosimetry Services segment consists of a single product line and represents 16%15%, 15% and 15%13% of consolidated revenue for fiscal 2007, 2008, and 2009 and 16% (unaudited) and 13% (unaudited) of consolidated revenue for the nine months ended March 31, 2009 and 2010. |
| | |
| | • | The Imaging Systems segment sells specialized cameras for use in difficult and hazardous environments. No single product line in the Imaging Systems segment represented more than 10% of consolidated revenue in fiscal 2007, 2008, and 2009 and no single product line in the Imaging Systems segment represented more than 10% (unaudited) of consolidated revenue for the nine months ended March 31, 2009 and 2010. |
F-45F-41
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Summarized financial information by reporting segment was as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Nine Months Ended
| |
| | | Year Ended June 30, | | | March 31, | |
| | | 2007 | | | 2008 | | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | (unaudited) | |
| |
| Revenue: | | | | | | | | | | | | | | | | | | | | |
| Health Physics | | $ | 58,020 | | | $ | 58,691 | | | $ | 69,109 | | | $ | 48,267 | | | $ | 55,754 | |
| Radiation Monitoring Systems | | | 33,521 | | | | 43,201 | | | | 41,116 | | | | 26,982 | | | | 40,451 | |
| Sensing Systems | | | 29,049 | | | | 39,866 | | | | 44,979 | | | | 31,084 | | | | 35,066 | |
| Dosimetry Services | | | 27,785 | | | | 28,824 | | | | 29,457 | | | | 22,179 | | | | 21,727 | |
| Imaging Systems | | | 20,658 | | | | 21,187 | | | | 17,102 | | | | 13,174 | | | | 12,958 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 169,033 | | | $ | 191,769 | | | $ | 201,763 | | | $ | 141,686 | | | $ | 165,956 | |
| | | | | | | | | | | | | | | | | | | | | |
| (Loss) income from operations: | | | | | | | | | | | | | | | | | | | | |
| Health Physics | | $ | (993 | ) | | $ | (912 | ) | | $ | 6,317 | | | $ | 1,537 | | | $ | 4,054 | |
| Radiation Monitoring Systems | | | 1,775 | | | | 1,085 | | | | 4,109 | | | | (61 | ) | | | 4,675 | |
| Sensing Systems | | | 3,881 | | | | 10,234 | | | | 14,973 | | | | 10,323 | | | | 12,512 | |
| Dosimetry Services | | | 5,879 | | | | 7,746 | | | | 7,968 | | | | 6,122 | | | | 5,670 | |
| Imaging Systems | | | 200 | | | | 1,339 | | | | 1,064 | | | | 1,007 | | | | 1,467 | |
| Unallocated corporate items | | | (7,354 | ) | | | (8,555 | ) | | | (15,553 | ) | | | (11,479 | ) | | | (11,656 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 3,388 | | | $ | 10,937 | | | $ | 18,878 | | | $ | 7,449 | | | $ | 16,722 | |
| | | | | | | | | | | | | | | | | | | | | |
| Depreciation and amortization: | | | | | | | | | | | | | | | | | | | | |
| Health Physics | | $ | 3,167 | | | $ | 3,225 | | | $ | 2,780 | | | $ | 2,163 | | | $ | 1,702 | |
| Radiation Monitoring Systems | | | 2,188 | | | | 2,268 | | | | 1,927 | | | | 1,437 | | | | 1,598 | |
| Sensing Systems | | | 3,321 | | | | 2,172 | | | | 1,806 | | | | 1,417 | | | | 1,313 | |
| Dosimetry Services | | | 5,773 | | | | 5,025 | | | | 4,283 | | | | 3,204 | | | | 3,194 | |
| Imaging Systems | | | 1,849 | | | | 1,467 | | | | 1,410 | | | | 1,031 | | | | 928 | |
| Unallocated corporate items | | | 4 | | | | 25 | | | | 273 | | | | 140 | | | | 515 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 16,302 | | | $ | 14,182 | | | $ | 12,479 | | | $ | 9,392 | | | $ | 9,250 | |
| | | | | | | | | | | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | | | | | | | | | | | |
| Health Physics | | $ | 2,932 | | | $ | 3,326 | | | $ | 3,019 | | | $ | 2,467 | | | $ | 1,595 | |
| Radiation Monitoring Systems | | | 2,932 | | | | 3,326 | | | | 3,019 | | | | 2,467 | | | | 1,608 | |
| Sensing Systems | | | 2,871 | | | | 2,971 | | | | 2,408 | | | | 1,830 | | | | 1,656 | |
| Dosimetry Services | | | 7,674 | | | | 7,756 | | | | 6,935 | | | | 5,318 | | | | 4,820 | |
| Imaging Systems | | | 2,871 | | | | 2,971 | | | | 2,408 | | | | 1,820 | | | | 1,656 | |
| Unallocated corporate items | | | — | | | | — | | | | — | | | | 0 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 19,280 | | | $ | 20,350 | | | $ | 17,789 | | | $ | 13,902 | | | $ | 11,335 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| Revenue: | | | | | | | | | | | | |
| Health Physics | | $ | 58,691 | | | $ | 69,109 | | | $ | 72,992 | |
| Radiation Monitoring Systems | | | 43,201 | | | | 41,116 | | | | 60,729 | |
| Sensing Systems | | | 39,866 | | | | 44,979 | | | | 47,255 | |
| Dosimetry Services | | | 28,824 | | | | 29,457 | | | | 29,206 | |
| Imaging Systems | | | 21,187 | | | | 17,102 | | | | 17,942 | |
| | | | | | | | | | | | | |
| Total | | $ | 191,769 | | | $ | 201,763 | | | $ | 228,124 | |
| | | | | | | | | | | | | |
| (Loss) income from operations: | | | | | | | | | | | | |
| Health Physics | | $ | (912 | ) | | $ | 6,317 | | | $ | 5,058 | |
| Radiation Monitoring Systems | | | 1,085 | | | | 4,109 | | | | 12,102 | |
| Sensing Systems | | | 10,234 | | | | 14,973 | | | | 16,587 | |
| Dosimetry Services | | | 7,746 | | | | 7,968 | | | | 7,936 | |
| Imaging Systems | | | 1,339 | | | | 1,064 | | | | 2,080 | |
| Unallocated corporate items | | | (8,555 | ) | | | (15,553 | ) | | | (15,585 | ) |
| | | | | | | | | | | | | |
| Total | | $ | 10,937 | | | $ | 18,878 | | | $ | 28,178 | |
| | | | | | | | | | | | | |
| Depreciation and amortization: | | | | | | | | | | | | |
| Health Physics | | $ | 3,225 | | | $ | 2,780 | | | | 2,269 | |
| Radiation Monitoring Systems | | | 2,268 | | | | 1,927 | | | | 2,075 | |
| Sensing Systems | | | 2,172 | | | | 1,806 | | | | 1,668 | |
| Dosimetry Services | | | 5,025 | | | | 4,283 | | | | 4,130 | |
| Imaging Systems | | | 1,467 | | | | 1,410 | | | | 1,214 | |
| Unallocated corporate items | | | 25 | | | | 273 | | | | 696 | |
| | | | | | | | | | | | | |
| Total | | $ | 14,182 | | | $ | 12,479 | | | $ | 12,052 | |
| | | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | | | |
| Health Physics | | $ | 3,326 | | | $ | 3,019 | | | | 2,111 | |
| Radiation Monitoring Systems | | | 3,326 | | | | 3,019 | | | | 2,137 | |
| Sensing Systems | | | 2,971 | | | | 2,408 | | | | 2,216 | |
| Dosimetry Services | | | 7,756 | | | | 6,935 | | | | 6,464 | |
| Imaging Systems | | | 2,971 | | | | 2,408 | | | | 2,216 | |
| | | | | | | | | | | | | |
| Total | | $ | 20,350 | | | $ | 17,789 | | | $ | 15,144 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | As of June 30, | | | As of March 31,
| |
| | | 2008 | | | 2009 | | | 2010 | |
| | | | | | | | | (unaudited) | |
| |
| Total assets: | | | | | | | | | | | | |
| Health Physics | | $ | 112,324 | | | $ | 94,883 | | | $ | 92,558 | |
| Radiation Monitoring Systems | | | 76,634 | | | | 85,915 | | | | 69,363 | |
| Sensing Systems | | | 52,713 | | | | 47,641 | | | | 52,808 | |
| Dosimetry Services | | | 74,219 | | | | 71,690 | | | | 70,622 | |
| Imaging Systems | | | 28,033 | | | | 24,829 | | | | 27,094 | |
| Unallocated corporate items | | | 454 | | | | 4,796 | | | | 10,761 | |
| | | | | | | | | | | | | |
| Total | | $ | 344,377 | | | $ | 329,754 | | | $ | 323,206 | |
| | | | | | | | | | | | | |
| | | | | | | | | |
| | | As of June 30, | |
| | | 2009 | | | 2010 | |
| |
| Total assets: | | | | | | | | |
| Health Physics | | $ | 94,883 | | | $ | 82,216 | |
| Radiation Monitoring Systems | | | 85,915 | | | | 67,769 | |
| Sensing Systems | | | 47,641 | | | | 50,763 | |
| Dosimetry Services | | | 71,690 | | | | 69,686 | |
| Imaging Systems | | | 24,829 | | | | 24,198 | |
| Unallocated corporate items | | | 4,796 | | | | 12,731 | |
| | | | | | | | | |
| Total | | $ | 329,754 | | | $ | 307,363 | |
| | | | | | | | | |
F-46F-42
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
The Company conducts its operations throughout the world. Revenue is attributed to each geographic location based on the locations of end customers. Assets and Long-lived assets are attributed based on where the assets are located. Revenue, assets and long-lived assets by geographic location were as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Nine Months Ended
| |
| | | Year Ended June 30, | | | March 31, | |
| | | 2007 | | | 2008 | | | 2009 | | | 2009 | | | 2010 | |
| | | | | | | | | | | | (unaudited) | |
| |
| Revenue: | | | | | | | | | | | | | | | | | | | | |
| North American markets(1) | | $ | 65,356 | | | $ | 68,840 | | | $ | 77,435 | | | $ | 64,027 | | | $ | 75,467 | |
| European markets | | | 82,117 | | | | 90,189 | | | | 93,977 | | | | 55,917 | | | | 60,315 | |
| Asia Pacific markets | | | 21,560 | | | | 32,740 | | | | 30,351 | | | | 21,742 | | | | 30,174 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 169,033 | | | $ | 191,769 | | | $ | 201,763 | | | $ | 141,686 | | | $ | 165,956 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Year Ended June 30, | |
| | | 2008 | | | 2009 | | | 2010 | |
| |
| Revenue: | | | | | | | | | | | | |
| North American markets(1) | | $ | 68,840 | | | $ | 77,435 | | | $ | 79,593 | |
| European markets | | | 90,189 | | | | 93,977 | | | | 106,211 | |
| Asia Pacific markets | | | 32,740 | | | | 30,351 | | | | 42,320 | |
| | | | | | | | | | | | | |
| Total | | $ | 191,769 | | | $ | 201,763 | | | | 228,124 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | As of June 30, | | | As of March 31,
| |
| | | 2008 | | | 2009 | | | 2010 | |
| | | | | | | | | (unaudited) | |
| |
| Assets: | | | | | | | | | | | | |
| North America | | $ | 140,520 | | | $ | 140,927 | | | $ | 150,316 | |
| Europe | | | 203,784 | | | | 188,626 | | | | 172,700 | |
| Asia Pacific/Japan | | | 73 | | | | 201 | | | | 190 | |
| | | | | | | | | | | | | |
| Total Assets | | $ | 344,377 | | | $ | 329,754 | | | $ | 323,206 | |
| | | | | | | | | | | | | |
| Long-lived assets: | | | | | | | | | | | | |
| North America | | $ | 7,506 | | | $ | 8,593 | | | $ | 8,790 | |
| Europe | | | 10,111 | | | | 9,486 | | | | 10,116 | |
| Asia Pacific/Japan | | | 1 | | | | 1 | | | | — | |
| | | | | | | | | | | | | |
| Total | | $ | 17,618 | | | $ | 18,080 | | | $ | 18,906 | |
| | | | | | | | | | | | | |
| | | | | | | | | |
| | | As of June 30, | |
| | | 2009 | | | 2010 | |
| |
| Assets: | | | | | | | | |
| North America | | $ | 140,927 | | | $ | 143,255 | |
| Europe | | | 188,626 | | | | 163,897 | |
| Asia Pacific | | | 201 | | | | 211 | |
| | | | | | | | | |
| Total Assets | | $ | 329,754 | | | | 307,363 | |
| | | | | | | | | |
| Long-lived assets: | | | | | | | | |
| North America | | $ | 8,593 | | | | 9,171 | |
| Europe | | | 9,486 | | | | 11,360 | |
| Asia Pacific | | | 1 | | | | 1 | |
| | | | | | | | | |
| Total | | $ | 18,080 | | | | 20,532 | |
| | | | | | | | | |
| | |
| (1) | | North American markets include all products marketed in the United States and Canada. |
On February 26, 2010, the Board of Directors resolved that 3,420,636 outstanding warrants become exercisable upon the consummation of an initial public offering.
On March 12, 2010, the Board of Directors resolved the following:
| | |
| • | Increased the number of authorized shares of all classes of stock to 80,000,000: (i) 78,500,000 shares of common stock, consisting of 61,328,125 shares of Class A Voting Common Stock and 17,171,875 shares of Class BNon-Voting Common stock, and (ii) 1,500,000 shares of Preferred Stock, consisting of 1,200,000 shares ofSeries A-1 Convertible Participating Preferred Stock and 300,000 shares ofSeries A-2 Convertible Participating Preferred Stock. |
|
| • | Declared an8.5-for-1 stock split of the Company’s outstanding common stock. The accompanying consolidated financial statements and notes to the consolidated financial statements give retroactive effect to the stock split for all periods presented. |
Unaudited: On March 16, 2010, the Board of Directors resolved to approve the terms of senior credit facilities for the Company and certain of its European subsidiaries, which provides for an aggregate borrowing capacity of up to $90 million and the equivalent in euros of $35 million.
F-47
MIRION TECHNOLOGIES, INC.
Notes to Consolidated Financial Statements — (Continued)
Unaudited: On March 18, 2010, the Board of Directors resolved the following:
| | |
| • | Approved a form of letter agreement providing for the payment of cash dividends in lieu of stock dividends, during the period from March 1, 2010 through the consummation of this offering, on shares of the Company’s outstanding convertible preferred stock at a rate equal to the number of shares of common stock that holders would have otherwise received in stock dividends upon conversion of the convertible preferred stock during that period multiplied by the initial public offering price (provided, however, that such letter agreement automatically terminates if the Company’s preferred stock has not converted into shares of common stock on or before April 30, 2010). |
| | |
| • | Adopted the Company’s amended and restated stock plan, to be effective at the pricing of the Company’s common stock to be sold in this offering. |
| | |
| • | Approved the grant of options to purchase 128,273 shares of the Company’s common stock under the Company’s amended and restated stock plan, subject to and as of the date of pricing of the Company’s common stock to be sold in this offering, with an exercise price per share equal to 100% of the fair market value of the Company’s common stock as of the grant date. |
|
| • | Approved the termination of an investment banking services agreement with ACFS, subject to the consummation of this offering. |
Unaudited: On May 4, 2010, following the termination of substantially identical letter agreements in accordance with their terms on April 30, 2010 under which no cash dividends became payable, the Board of Directors resolved to approve a form of new letter agreement providing for the payment of cash dividends in lieu of stock dividends, during the period from April 1, 2010 through the consummation of this offering, on shares of the Company’s outstanding convertible preferred stock at a rate equal to the number of shares of common stock that holders would have otherwise received in stock dividends upon conversion of the convertible preferred stock during that period multiplied by the initial public offering price (provided, however, that such letter agreement automatically terminates if the Company’s preferred stock has not converted into shares of common stock on or before June 1, 2010).
Unaudited: On May 24, 2010, the Board of Directors approved the adoption of the Company’s Second Amended and Restated Certificate of Incorporation that authorizes 160,000,000 shares of stock, consisting of (1) 78,500,000 shares of Common Stock, par value $0.001 per share, (2) 1,500,000 shares of Preferred Stock, par value $0.001 per share, (3) 61,328,125 shares of Class A Voting Common Stock, par value $0.001 per share, (4) 17,171,875 shares of Class B Non-Voting Stock, par value $0.001 per share, (5) 1,200,000 shares of Series A-1 Preferred Stock, par value $0.001 per share, and (6) 300,000 shares of Series A-2 Preferred Stock, par value $0.001 per share. The Board of Directors also approved the adoption of the Company’s Third Amended and Restated Certificate of Incorporation to be adopted prior to consummation of this offering, soley to eliminate the designations of our Series A-1 Preferred Stock, Series A-2 Preferred Stock, Class A Common Stock and Class B Common Stock.
F-48F-43
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
| |
| Item 13. | Other Expenses of Issuance and Distribution. |
The following table sets forth expenses to be paid by the registrant in connection with the offering described in this Registration Statement. Each of the amounts set forth below, other than the Registration fee and the FINRA filing fee, is an estimate.
| | | | |
| | | Amount |
| |
| Registration fee | | $ | 13,784 |
| FINRA filing fee | | | 22,005 |
| NASDAQ listing fee | | | 125,000 |
| Transfer agent’s fees | | | * |
| Printing and engraving expenses | | | * |
| Legal fees and expenses | | | * |
| Accounting fees and expenses | | | * |
| Miscellaneous | | | * |
| | | | |
| Total | | $ | |
| | | | |
| | | |
| * | | Amount |
|
Registration fee | | $ | 13,784 |
FINRA filing fee | | | 22,005 |
NASDAQ listing fee | | | 125,000 |
Transfer agent’s fees | | | 10,000 |
Printing and engraving expenses | | | 650,000 |
Legal fees and expenses | | | 2,299,119 |
Accounting fees and expenses | | | 7,563,666 |
Miscellaneous | | | 530,833 |
| | | |
Total | | $ | 11,214,407 |
| | | To be filed by amendment |
Item 4. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to the Registrant. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise. The amended and restated Bylaws of the Registrant provide for indemnification by the Registrant of its directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. The Registrant’s amended and restated Certificate of Incorporation provides for such limitation of liability.
The Registrant maintains standard policies of insurance under which coverage is provided (a) to its directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act, and (b) to the Registrant with respect to payments which may be made by the Registrant to such officers and directors pursuant to the above indemnification provision or otherwise as a matter of law.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement will provide for indemnification of the Registrant and its directors and certain officers by the underwriters of this offering. The Registration Rights Agreement filed as Exhibit 4.2 to this Registration Statement will provide for indemnification of the Registrant and its directors and certain officers against certain liabilities related to the offering of the common stock thereunder.
II-1
| |
| Item 15. | Recent Sales of Unregistered Securities. |
(a) Since September 30, 2006, the Registrant issued the following unregistered securities:
On October 3, 2006, the Registrant issued 357,271 shares of Class B Non-Voting Common Stock to ACAS and certain of its affiliates upon cancellation of a prior issuance of 357,271 shares of Class B Non-Voting Common Stock held by ACAS.
On October 3, 2006, the Registrant issued 677,426 shares ofSeries A-1 Convertible Participating Preferred Stock to ACAS and certain of its affiliates upon cancellation of a prior issuance of 677,426 shares ofSeries A-1 Convertible Participating Preferred Stock to ACAS.
On October 3, 2006, the Registrant issued 70,000 shares ofSeries A-2 Convertible Participating Preferred Stock to ACAS and certain of its affiliates upon cancellation of a prior issuance of 70,000 shares ofSeries A-2 Convertible Participating Preferred Stock to ACAS.
On October 3, 2006, the Registrant issued warrants to purchase 3,223,726 shares of common stock at an exercise price of $0.00018 per share to ACAS and certain of its affiliates upon cancellation of a prior issuance of warrants to purchase 3,223,726 shares of common stock at an exercise price of $0.00118 per share to ACAS.
On October 3, 2007, the Registrant issued 250,086 shares of Class B Non-Voting Common Stock to ACAS and certain of its affiliates upon cancellation of a prior issuance of 250,086 shares of Class B Non-Voting Common Stock to ACAS.
On October 3, 2007, the Registrant issued 474,198 shares ofSeries A-1 Convertible Participating Preferred Stock to ACAS and certain of its affiliates upon cancellation of a prior issuance of 474,198 shares ofSeries A-1 Convertible Participating Preferred Stock to ACAS.
On October 3, 2007, the Registrant issued 49,000 shares ofSeries A-2 Convertible Participating Preferred Stock to ACAS and certain of its affiliates upon cancellation of a prior issuance of 49,000 shares ofSeries A-2 Convertible Participating Preferred Stock to ACAS.
On October 3, 2007, the Registrant issued warrants to purchase 2,241,509 shares of common stock at an exercise price of $0.00012 per share to ACAS and certain of its affiliates upon cancellation of a prior issuance of warrants to purchase 2,241,509 shares of common stock at an exercise price of $0.00012 per share to ACAS.
On May 1, 2008, the Registrant issued and sold 1,275 shares of Class B Non-Voting Common Stock to a former employee upon an exercise of stock options vested under the Registrant’s 2006 Stock Plan at an exercise price of $10.45 per share, for aggregate consideration of $13,312.50.
II-2
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the registrant believes that each transaction was exempt from the registration requirements of the Securities Act pursuant to Section 4(2), with respect to items (1) through (8) above, as transactions by an issuer not involving a public offering, and Rule 701 promulgated thereunder, with respect to item (9) above, as a transaction pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701. The recipients of securities in such transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions.
(b) Since September 30, 2006, the Registrant granted the following stock options to purchase common stock to employees, directors and consultants:
1. On October 2, 2006, the Registrant issued stock options covering an aggregate of 40,409 shares of its common stock at an exercise price of $13.84 per share and an aggregate price of $558,975 under the Registrant’s 2006 Stock Plan.
2. On September 6, 2007, the Registrant issued stock options covering an aggregate of 62,262 shares of its common stock at an exercise price of $14.27 per share and an aggregate price of $888,083 under the Registrant’s 2006 Stock Plan.
3. On November 5, 2007, the Registrant issued stock options covering an aggregate of 127,500 shares of its common stock at an exercise price of $16.31 per share and an aggregate price of $1,662,960 under the Registrant’s 2006 Stock Plan, 25,500 of which were cancelled in July 2008.
4. On January 7, 2008, the Registrant issued stock options covering an aggregate of 68,000 shares of its common stock at an exercise price of $16.31 per share and an aggregate price of $1,108,640 under the Registrant’s 2006 Stock Plan.
5. On January 8, 2008, the Registrant issued stock options covering an aggregate of 12,750 shares of its common stock at an exercise price of $16.31 per share and an aggregate price of $207,870 under the Registrant’s 2006 Stock Plan.
6. On January 22, 2008, the Registrant issued stock options covering an aggregate of 4,250 shares of its common stock at an exercise price of $16.31 per share and an aggregate price of $69,290 under the Registrant’s 2006 Stock Plan.
7. On January 28, 2008, the Registrant issued stock options covering an aggregate of 76,500 shares of its common stock at an exercise price of $16.31 per share and an aggregate price of $1,247,220 under the Registrant’s 2006 Stock Plan.
8. On March 28, 2008, the Registrant issued stock options covering an aggregate of 17,000 shares of its common stock at an exercise price of $13.10 per share and an aggregate price of $222,600 under the Registrant’s 2006 Stock Plan.
9. On March 31, 2008, the Registrant issued stock options covering an aggregate of 136,000 shares of its common stock at an exercise price of $13.10 per share and an aggregate price of $1,780,800 under the Registrant’s 2006 Stock Plan.
10. On August 5, 2008, the Registrant issued stock options covering an aggregate of 262,530 shares of its common stock at an exercise price of $17.06 per share and an aggregate price of $4,476,926 under the Registrant’s 2006 Stock Plan.
11. On August 5, 2008, the Registrant issued stock options covering an aggregate of 17,000 shares of its common stock at an exercise price of $17.06 per share and an aggregate price of $289,900 under the Registrant’s 2006 Stock Plan.
II-3
12. On December 9, 2008, the Registrant issued stock options covering an aggregate of 8,500 shares of its common stock at an exercise price of $16.97 per share and an aggregate price of $144,240 under the Registrant’s 2006 Stock Plan.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering, and the registrant believes each transaction was exempt from the registration requirements of the Securities Act in reliance on Rule 701 promulgated thereunder, with respect to items (1), (2), (3), (5), (7), (8), (10) and (12) above, as transactions pursuant to compensatory benefit plans and contracts relating to compensation as provided under such Rule 701, and Section 4(2) thereof and Regulation D promulgated thereunder, with respect to items (4), (9) and (11) above, as transactions by an issuer not involving a public offering. The recipients of securities in such transactions represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in such transactions.
| |
| Item 16. | Exhibits and Financial Statement Schedules. |
| | | | | |
Exhibit No. | | Document |
| |
| | 1.1 | ** | | Form of Underwriting Agreement |
| | 3.1.1 | | | SecondForm of Fourth Amended and Restated Certificate of Incorporation to be adopted prior to the effectiveness of this offering |
| | 3.1.2 | | | Form of ThirdFifth Amended and Restated Certificate of Incorporation to be adopted prior to the consummation of this offering |
| | 3.2 | ** | | Form of Amended and Restated Bylaws |
| | 4.1 | ** | | Specimen Common Stock Certificate of the Registrant |
| | 4.2 | ** | | Form of Registration Rights Agreement |
| | 5.1 | * | | Opinion of Davis Polk & Wardwell LLP |
| | 10.1 | ** | | Shareholder Loan Agreement dated September 23, 2005 between Dosimetry Acquisitions (France) and ACAS |
| | 10.1.1 | ** | | Amendment 1 dated November 14, 2005 to Shareholder Loan Agreement |
| | 10.1.2 | ** | | Amendment No. 2 dated September 13, 2006 to Shareholder Loan Agreement |
| | 10.1.3 | ** | | Third Amendment dated May 14, 2008 to Shareholder Loan Agreement |
| | 10.1.4 | ** | | Fourth Amendment dated July 20, 2009 to Shareholder Loan Agreement |
| 10.1.5 | | | Fifth Amendment dated July 29, 2010 to Shareholder Loan Agreement |
| | 10.2 | ** | | Note and Equity Purchase Agreement dated June 23, 2004 by and among MGP Instruments, Inc., Dosimetry Acquisitions (U.S.), Inc. and American Capital Financial Services, Inc. and various purchasers |
| | 10.2.1 | ** | | Amendment No. 1 to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated October 22, 2004 |
| | 10.2.2 | ** | | Amendment No. 2 to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated November 1, 2005 |
| | 10.2.3 | ** | | Amendment No. 2 and Consent to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated December 22, 2005 |
| | 10.2.4 | ** | | Amendment No. 3 to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated June 30, 2006 |
| | 10.2.5 | ** | | Amendment No. 4 and Waiver to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated December 22, 2006 |
| | 10.2.6 | ** | | Amendment No. 4 to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated May 14, 2008 |
| | 10.2.7 | ** | | Cross Guaranty of the Registrant, MGP Instruments, Inc. and Dosimetry Acquisitions (U.S.), Inc. |
| | 10.2.8 | ** | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (MGPI), Inc. (fka MGP Instruments, Inc.) dated June 15, 2009 |
II-4
| | | | |
Exhibit No. | | Document |
|
| | 10.2.9 | ** | | Waiver and Amendment Agreement to Note and Equity Purchase Agreement of Mirion Technologies (MGPI), Inc. dated July 31, 2009 |
II-4
| | | | |
Exhibit No.
| | Document |
|
| | 10.2.10 | ** | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (MGPI), Inc. dated September 17, 2009 |
| | 10.2.11 | ** | | Senior Subordinated Note dated June 23, 2004 between MGP Instruments, Inc. and American Capital Strategies, Ltd. |
| | 10.2.12 | ** | | Junior Subordinated Note dated June 23, 2004 between MGP Instruments, Inc. and American Capital Strategies, Ltd. |
| | 10.2.13 | ** | | Revolving Note dated June 23, 2004 between MGP Instruments, Inc. and American Capital Strategies, Ltd. |
| | 10.2.14 | ** | | Form of Senior Term B Note |
| | 10.2.15 | ** | | Schedule of Senior Term B Notes substantially identical in all material respects to the Form of Senior Term B Note |
| 10.2.16 | | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (MGPI), Inc. dated March 11, 2010 |
| | 10.3 | ** | | Amended and Restated Note and Equity Purchase Agreement dated October 29, 2004 by and among IST Acquisitions, Inc., Imaging and Sensing Technology Corporation and subsidiaries and American Capital Financial Services, Inc. and various purchasers |
| | 10.3.1 | ** | | Amendment No. 1 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated May 24, 2005 |
| | 10.3.2 | ** | | Amendment No. 1 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated October 21, 2005 |
| | 10.3.3 | ** | | Amendment No. 2 and Consent to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated December 22, 2005 |
| | 10.3.4 | ** | | Amendment No. 3 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated May 16, 2006 |
| | 10.3.5 | ** | | Amendment No. 3 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated September 13, 2006 |
| | 10.3.6 | ** | | Amendment No. 4 and Waiver to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated December 22, 2006 |
| | 10.3.7 | ** | | Amendment No. 4 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated July 20, 2007 |
| | 10.3.8 | ** | | Amendment No. 5 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated May 14, 2008 |
| | 10.3.9 | ** | | Cross Guaranty of the Registrant and Imaging and Sensing Technology Corporation dated January 1, 2006 |
| | 10.3.10 | ** | | Waiver Agreement to Amended and Restated Note and Equity Purchase Agreement of Mirion Technologies (IST) Corporation (fka Imaging and Sensing Technology Corporation) dated June 15, 2009 |
| | 10.3.11 | ** | | Waiver and Amendment Agreement to Amended and Restated Note and Equity Purchase Agreement of Mirion Technologies (IST) Corporation dated August 4, 2009 |
| | 10.3.12 | ** | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (IST) Corporation dated September 17, 2009 |
| | 10.3.13 | ** | | Senior Term C Note dated October 29, 2004 between IST Acquisitions, Inc., Imaging and Sensing Technology Corporation, I.S. Technology de Puerto Rico, Inc., IST Instruments, Inc., Imaging and Sensing Technology International Corp., IST Conax Nuclear, Inc., Quadtek, Inc. and American Capital Strategies, Ltd. |
| | 10.3.14 | ** | | Stockholders Agreement dated May 24, 2004 between IST Acquisitions, Inc. and American Capital Strategies, Ltd. |
| | 10.3.15 | | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (IST) Corporation dated August 17, 2010 |
II-5
| | | | |
Exhibit No. | | Document |
|
| 10.4 | ** | | Amended and Restated Note and Equity Purchase Agreement dated November 10, 2004 by and among Global Dosimetry Solutions, Inc. and American Capital Financial Services, Inc. and various purchasers |
| | 10.4.1 | ** | | Amendment No. 1 to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated October 14, 2005 |
| | 10.4.2 | ** | | Consent to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated December 22, 2005 |
II-5
| | | | |
Exhibit No.
| | Document |
|
| | 10.4.3 | ** | | Amendment No. 2 to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated February 1, 2006 |
| | 10.4.4 | ** | | Amendment No. 3 to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated March 28, 2006 |
| | 10.4.5 | ** | | Amendment No. 4 to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated December 15, 2006 |
| | 10.4.6 | ** | | Amendment No. 5 and Waiver to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated December 22, 2006 |
| | 10.4.7 | ** | | Cross Guaranty of the Registrant and Global Dosimetry Solutions, Inc. dated January 1, 2006 |
| | 10.4.8 | ** | | Waiver Agreement to Amended and Restated Note and Equity Purchase Agreement of Mirion Technologies (GDS), Inc. (fka Global Dosimetry Solutions, Inc.) dated June 15, 2009 |
| | 10.4.9 | ** | | Waiver and Amendment Agreement to Amended and Restated Note and Equity Purchase Agreement of Mirion Technologies (GDS), Inc. dated July 31, 2009 |
| | 10.4.10 | ** | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (GDS), Inc. dated September 17, 2009 |
| 10.4.11 | | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (GDS), Inc. dated August 17, 2010 |
| | 10.5 | ** | | First Lien Pledge and Security Agreement made by the Registrant in favor of American Financial Services, Inc. dated January 1, 2006 |
| | 10.6.1 | ** | | Form of Indemnification Agreement for ACAS designees |
| | 10.6.2 | ** | | Form of Indemnification Agreement for other directors and officers |
| | 10.7 | ** | | Investment Banking Services Agreement dated December 25, 2005 between the Registrant and American Capital Financial Services, Inc. |
| | 10.8 | ** | | Lease Agreement dated December 28, 2005 between the Registrant and Alexander Properties Company |
| | 10.8.1 | ** | | Addendum 1 dated August 29, 2007 to Lease Agreement dated December 28, 2005 between the Registrant and Alexander Properties Company |
| | 10.8.2 | ** | | Addendum 2 dated June 10, 2008 to Lease Agreement dated December 22, 2005 between the Registrant and Alexander Properties Company |
| | 10.9 | ** | | Lease Agreement dated December 1, 1999 between the Registrant and Sonwil Development Group, L.L.C. |
| | 10.10 | ** | | Lease Agreement dated January 29, 2004 between the Registrant and The Irvine Company |
| | 10.11 | ** | | 2006 Stock Plan |
| | 10.11.1 | ** | | First Amendment to 2006 Stock Plan |
| | 10.11.2 | ** | | Amendment to 2006 Stock Plan |
| | 10.12 | ** | | Form of Stock Option Agreement under 2006 Stock Plan |
| | 10.13 | ** | | Form of Amended and Restated 2006 Stock Plan |
| | 10.14 | ** | | Form of Stock Option Agreement under Amended and Restated 2006 Stock Plan |
| | 10.15 | ** | | Second Amended and Restated Call Option Agreement among Thomas D. Logan and ACAS |
| | 10.16 | ** | | Employment Agreement dated August 15, 2006 between the Registrant and Thomas D. Logan |
| | 10.16.1 | ** | | Section 409A Amendment dated December 22, 2008 to Employment Agreement of Thomas D. Logan |
| | 10.16.2 | ** | | Amendment 2 dated January 1, 2009 to the Employment Agreement dated August 15, 2006 between the Registrant and Thomas D. Logan |
II-6
| | | | |
Exhibit No. | | Document |
|
| 10.16.3 | | | Amendment 3 dated June 16, 2010 to the Employment Agreement dated August 15, 2006 between the Registrant and Thomas D. Logan |
| | 10.17 | ** | | Employment Agreement dated March 28, 2008 between the Registrant and Jack Pacheco |
| | 10.17.1 | ** | | Section 409A Amendment dated December 18, 2008 to Employment Agreement of Jack Pacheco |
| | 10.18 | ** | | Employment Agreement dated January 7, 2008 between the Registrant and Seth Rosen |
| | 10.18.1 | ** | | Section 409A Amendment dated December 18, 2008 to Employment Agreement of Seth Rosen |
| | 10.19 | ** | | Employment Agreement dated March 2, 2006 between the Registrant and W. Antony Besso |
| | 10.19.1 | ** | | Addendum dated November 26, 2007 to Employment Agreement of W. Antony Besso |
| | 10.19.2 | ** | | Bonus Agreement dated December 13, 2008 between the Registrant and W. Antony Besso |
| | 10.20 | ** | | Executive Bonus Plan |
| | 10.21 | ** | | Form of Warrant |
II-6
| | | | |
Exhibit No.
| | Document |
|
| | 10.22 | ** | | Schedule of warrants substantially identical in all material respects to the Form of Warrant |
| | 10.23 | ** | | Stockholders Agreement entered into as of December 22, 2005, by and among Global Monitoring Systems, Inc., American Capital Strategies, Ltd., and various stockholders |
| | 10.23.1 | ** | | First Amendment to Stockholders Agreement of Mirion Technologies, Inc. (f/k/a Global Monitoring Systems, Inc.) dated February 15, 2006 |
| | 10.23.2 | ** | | Second Amendment to Stockholders Agreement of Mirion Technologies, Inc. (f/k/a Global Monitoring Systems, Inc.) dated July 13, 2006 |
| | 10.23.3 | ** | | Third Amendment to Stockholders Agreement of Mirion Technologies, Inc. (f/k/a Global Monitoring Systems, Inc.) dated October 31, 2007 |
| | 10.23.4 | ** | | Fourth Amendment to Stockholders Agreement of Mirion Technologies, Inc. (f/k/a Global Monitoring Systems, Inc.) dated June 30, 2009 |
| | 10.24 | ** | | Form of Credit Agreement among Mirion Technologies, Inc., Mirion Technologies (Synodys) SA, Mirion Technologies (IST France) SAS, JPMorgan Chase Bank, National Association, J.P. Morgan Europe Limited, J.P. Morgan Securities Inc.LLC and Fifth Third Bank |
| | 10.25 | ** | | Form of Letter Agreement between Mirion Technologies, Inc. and each of the Preferred Stockholders |
| | 10.25.1 | ** | | Schedule of Letter Agreements substantially identical in all material respects to Form of Letter Agreement |
| | 10.26 | ** | | Form of New Letter Agreement between Mirion Technologies, Inc. and each of the Preferred Stockholders |
| | 10.26.1 | ** | | Schedule of New Letter Agreements substantially identical in all material respects to Form of New Letter Agreement |
| | 21.1 | ** | | Subsidiaries of the Registrant |
| | 23.1 | | | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm |
| | 23.2 | * | | Consent of Davis Polk & Wardwell LLP (included in Exhibit 5.1) |
| | 24.1 | ** | | Power of Attorney (included on signature page) |
| | 99.1 | ** | | Consent of Dustin G. Smith to being named as a director nominee |
| | 99.2 | ** | | Consent of Brian S. Graff to being named as a director nominee |
| | 99.3 | ** | | Consent of Michael T. Everett to being named as a director nominee |
| | 99.4 | ** | | Consent of Earl R. Lewis to being named as a director nominee |
| | 99.5 | ** | | Consent of Alfred E. Barry, Jr. to being named as a director nominee |
| | |
| * | | To be filed by amendment. |
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
II-7
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this Registration Statement, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
II-7
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof.
(3) For the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a Registration Statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the Registration Statement as of the date it is first used after effectiveness.Provided, however,that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the Registration Statement or prospectus that is part of the Registration Statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the Registration Statement or made in any such document immediately prior to such date of first use.
(4) For the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of securities, in a primary offering of securities of the registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the registrant will be a seller to the purchaser and will be considered to offer or sell such securities to the purchaser:
(i) any preliminary prospectus or prospectus of the registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus relating to the offering prepared by or on behalf of the registrant or used or referred to by the registrant;
(iii) the portion of any other free writing prospectus relating to the offering containing material information about the registrant or its securities provided by or on behalf of the registrant; and
(iv) any other communication that is an offer in the offering made by the registrant to the purchaser.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this amendment number ten11 to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Ramon, State of California, on May 24,September 3, 2010.
MIRION TECHNOLOGIES, INC.
Name: Thomas D. Logan
| | |
| | Title: | President, Chief Executive Officer and Chairman of the Board |
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | | | | |
Signature | | Title | | Date |
| |
| | | | | |
/s/ Thomas D. Logan
Thomas D. Logan
(Principal Executive Officer) | | President, Chief Executive Officer
and Chairman of the Board | | May 24,September 3, 2010 |
| | | | | |
/s/ Jack A. Pacheco
Jack A. Pacheco
(Principal Financial and Accounting Officer) | | Vice President and Chief Financial Officer | | May 24,September 3, 2010 |
| | | | | |
*
Robert J. Klein | | Director | | May 24,September 3, 2010 |
| | | | | | | |
| *By: | | /s/ Thomas D. Logan
Thomas D. Logan
Attorney-in-fact | | | | |
II-9
EXHIBIT INDEX
| | | | | |
Exhibit No. | | Document |
| |
| | 1.1 | ** | | Form of Underwriting Agreement |
| | 3.1.1 | | | SecondForm of Fourth Amended and Restated Certificate of Incorporation to be adopted prior to the effectiveness of this offering |
| | 3.1.2 | | | Form of ThirdFifth Amended and Restated Certificate of Incorporation to be adopted prior to the consummation of this offering |
| | 3.2 | ** | | Form of Amended and Restated Bylaws |
| | 4.1 | ** | | Specimen Common Stock Certificate of the Registrant |
| | 4.2 | ** | | Form of Registration Rights Agreement |
| | 5.1 | * | | Opinion of Davis Polk & Wardwell LLP |
| | 10.1 | ** | | Shareholder Loan Agreement dated September 23, 2005 between Dosimetry Acquisitions (France) and ACAS |
| | 10.1.1 | ** | | Amendment 1 dated November 14, 2005 to Shareholder Loan Agreement |
| | 10.1.2 | ** | | Amendment No. 2 dated September 13, 2006 to Shareholder Loan Agreement |
| | 10.1.3 | ** | | Third Amendment dated May 14, 2008 to Shareholder Loan Agreement |
| | 10.1.4 | ** | | Fourth Amendment dated July 20, 2009 to Shareholder Loan Agreement |
| 10.1.5 | | | Fifth Amendment dated July 29, 2010 to Shareholder Loan Agreement |
| | 10.2 | ** | | Note and Equity Purchase Agreement dated June 23, 2004 by and among MGP Instruments, Inc., Dosimetry Acquisitions (U.S.), Inc. and American Capital Financial Services, Inc. and various purchasers |
| | 10.2.1 | ** | | Amendment No. 1 to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated October 22, 2004 |
| | 10.2.2 | ** | | Amendment No. 2 to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated November 1, 2005 |
| | 10.2.3 | ** | | Amendment No. 2 and Consent to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated December 22, 2005 |
| | 10.2.4 | ** | | Amendment No. 3 to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated June 30, 2006 |
| | 10.2.5 | ** | | Amendment No. 4 and Waiver to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated December 22, 2006 |
| | 10.2.6 | ** | | Amendment No. 4 to Note and Equity Purchase Agreement of MGP Instruments, Inc. dated May 14, 2008 |
| | 10.2.7 | ** | | Cross Guaranty of the Registrant, MGP Instruments, Inc. and Dosimetry Acquisitions (U.S.), Inc. |
| | 10.2.8 | ** | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (MGPI), Inc. (fka MGP Instruments, Inc.) dated June 15, 2009 |
| | 10.2.9 | ** | | Waiver and Amendment Agreement to Note and Equity Purchase Agreement of Mirion Technologies (MGPI), Inc. dated July 31, 2009 |
| | 10.2.10 | ** | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (MGPI), Inc. dated September 17, 2009 |
| | 10.2.11 | ** | | Senior Subordinated Note dated June 23, 2004 between MGP Instruments, Inc. and American Capital Strategies, Ltd. |
| | 10.2.12 | ** | | Junior Subordinated Note dated June 23, 2004 between MGP Instruments, Inc. and American Capital Strategies, Ltd. |
| | 10.2.13 | ** | | Revolving Note dated June 23, 2004 between MGP Instruments, Inc. and American Capital Strategies, Ltd. |
| | 10.2.14 | ** | | Form of Senior Term B Note |
| | 10.2.15 | ** | | Schedule of Senior Term B Notes substantially identical in all material respects to the Form of Senior Term B Note |
| | 10.2.16 | | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (MGPI), Inc. dated March 11, 2010 |
| | | | |
Exhibit No. | | Document |
|
| 10.3 | ** | | Amended and Restated Note and Equity Purchase Agreement dated October 29, 2004 by and among IST Acquisitions, Inc., Imaging and Sensing Technology Corporation and subsidiaries and American Capital Financial Services, Inc. and various purchasers |
| | | | |
Exhibit No.
| | Document |
|
| | 10.3.1 | ** | | Amendment No. 1 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated May 24, 2005 |
| | 10.3.2 | ** | | Amendment No. 1 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated October 21, 2005 |
| | 10.3.3 | ** | | Amendment No. 2 and Consent to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated December 22, 2005 |
| | 10.3.4 | ** | | Amendment No. 3 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated May 16, 2006 |
| | 10.3.5 | ** | | Amendment No. 3 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated September 13, 2006 |
| | 10.3.6 | ** | | Amendment No. 4 and Waiver to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated December 22, 2006 |
| | 10.3.7 | ** | | Amendment No. 4 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated July 20, 2007 |
| | 10.3.8 | ** | | Amendment No. 5 to Amended and Restated Note and Equity Purchase Agreement of Imaging and Sensing Technology Corporation dated May 14, 2008 |
| | 10.3.9 | ** | | Cross Guaranty of the Registrant and Imaging and Sensing Technology Corporation dated January 1, 2006 |
| | 10.3.10 | ** | | Waiver Agreement to Amended and Restated Note and Equity Purchase Agreement of Mirion Technologies (IST) Corporation (fka Imaging and Sensing Technology Corporation) dated June 15, 2009 |
| | 10.3.11 | ** | | Waiver and Amendment Agreement to Amended and Restated Note and Equity Purchase Agreement of Mirion Technologies (IST) Corporation dated August 4, 2009 |
| | 10.3.12 | ** | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (IST) Corporation dated September 17, 2009 |
| | 10.3.13 | ** | | Senior Term C Note dated October 29, 2004 between IST Acquisitions, Inc., Imaging and Sensing Technology Corporation, I.S. Technology de Puerto Rico, Inc., IST Instruments, Inc., Imaging and Sensing Technology International Corp., IST Conax Nuclear, Inc., Quadtek, Inc. and American Capital Strategies, Ltd. |
| | 10.3.14 | ** | | Stockholders Agreement dated May 24, 2004 between IST Acquisitions, Inc. and American Capital Strategies, Ltd. |
| | 10.3.15 | | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (IST) Corporation dated August 17, 2010 |
| 10.4 | ** | | Amended and Restated Note and Equity Purchase Agreement dated November 10, 2004 by and among Global Dosimetry Solutions, Inc. and American Capital Financial Services, Inc. and various purchasers |
| | 10.4.1 | ** | | Amendment No. 1 to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated October 14, 2005 |
| | 10.4.2 | ** | | Consent to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated December 22, 2005 |
| | 10.4.3 | ** | | Amendment No. 2 to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated February 1, 2006 |
| | 10.4.4 | ** | | Amendment No. 3 to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated March 28, 2006 |
| | 10.4.5 | ** | | Amendment No. 4 to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated December 15, 2006 |
| | 10.4.6 | ** | | Amendment No. 5 and Waiver to Amended and Restated Note and Equity Purchase Agreement of Global Dosimetry Solutions, Inc. dated December 22, 2006 |
| | 10.4.7 | ** | | Cross Guaranty of the Registrant and Global Dosimetry Solutions, Inc. dated January 1, 2006 |
| | | | |
Exhibit No. | | Document |
|
| | 10.4.8 | ** | | Waiver Agreement to Amended and Restated Note and Equity Purchase Agreement of Mirion Technologies (GDS), Inc. (fka Global Dosimetry Solutions, Inc.) dated June 15, 2009 |
| | 10.4.9 | ** | | Waiver and Amendment Agreement to Amended and Restated Note and Equity Purchase Agreement of Mirion Technologies (GDS), Inc. dated July 31, 2009 |
| | | | |
Exhibit No.
| | Document |
|
| | 10.4.10 | ** | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (GDS), Inc. dated September 17, 2009 |
| 10.4.11 | | | Waiver Agreement to Note and Equity Purchase Agreement of Mirion Technologies (GDS), Inc. dated August 17, 2010 |
| | 10.5 | ** | | First Lien Pledge and Security Agreement made by the Registrant in favor of American Financial Services, Inc. dated January 1, 2006 |
| | 10.6.1 | ** | | Form of Indemnification Agreement for ACAS designees |
| | 10.6.2 | ** | | Form of Indemnification Agreement for other directors and officers |
| | 10.7 | ** | | Investment Banking Services Agreement dated December 25, 2005 between the Registrant and American Capital Financial Services, Inc. |
| | 10.8 | ** | | Lease Agreement dated December 28, 2005 between the Registrant and Alexander Properties Company |
| | 10.8.1 | ** | | Addendum 1 dated August 29, 2007 to Lease Agreement dated December 28, 2005 between the Registrant and Alexander Properties Company |
| | 10.8.2 | ** | | Addendum 2 dated June 10, 2008 to Lease Agreement dated December 22, 2005 between the Registrant and Alexander Properties Company |
| | 10.9 | ** | | Lease Agreement dated December 1, 1999 between the Registrant and Sonwil Development Group, L.L.C. |
| | 10.10 | ** | | Lease Agreement dated January 29, 2004 between the Registrant and The Irvine Company |
| | 10.11 | ** | | 2006 Stock Plan |
| | 10.11.1 | ** | | First Amendment to 2006 Stock Plan |
| | 10.11.2 | ** | | Amendment to 2006 Stock Plan |
| | 10.12 | ** | | Form of Stock Option Agreement under 2006 Stock Plan |
| | 10.13 | ** | | Form of Amended and Restated 2006 Stock Plan |
| | 10.14 | ** | | Form of Stock Option Agreement under Amended and Restated 2006 Stock Plan |
| | 10.15 | ** | | Second Amended and Restated Call Option Agreement among Thomas D. Logan and ACAS |
| | 10.16 | ** | | Employment Agreement dated August 15, 2006 between the Registrant and Thomas D. Logan |
| | 10.16.1 | ** | | Section 409A Amendment dated December 22, 2008 to Employment Agreement of Thomas D. Logan |
| | 10.16.2 | ** | | Amendment 2 dated January 1, 2009 to the Employment Agreement dated August 15, 2006 between the Registrant and Thomas D. Logan |
| | 10.16.3 | | | Amendment 3 dated June 16, 2010 to the Employment Agreement dated August 15, 2006 between the Registrant and Thomas D. Logan |
| 10.17 | ** | | Employment Agreement dated March 28, 2008 between the Registrant and Jack Pacheco |
| | 10.17.1 | ** | | Section 409A Amendment dated December 18, 2008 to Employment Agreement of Jack Pacheco |
| | 10.18 | ** | | Employment Agreement dated January 7, 2008 between the Registrant and Seth Rosen |
| | 10.18.1 | ** | | Section 409A Amendment dated December 18, 2008 to Employment Agreement of Seth Rosen |
| | 10.19 | ** | | Employment Agreement dated March 2, 2006 between the Registrant and W. Antony Besso |
| | 10.19.1 | ** | | Addendum dated November 26, 2007 to Employment Agreement of W. Antony Besso |
| | 10.19.2 | ** | | Bonus Agreement dated December 13, 2008 between the Registrant and W. Antony Besso |
| | 10.20 | ** | | Executive Bonus Plan |
| | 10.21 | ** | | Form of Warrant |
| | 10.22 | ** | | Schedule of warrants substantially identical in all material respects to the Form of Warrant |
| | 10.23 | ** | | Stockholders Agreement entered into as of December 22, 2005, by and among Global Monitoring Systems, Inc., American Capital Strategies, Ltd., and various stockholders |
| | | | |
Exhibit No. | | Document |
|
| | 10.23.1 | ** | | First Amendment to Stockholders Agreement of Mirion Technologies, Inc. (f/k/a Global Monitoring Systems, Inc.) dated February 15, 2006 |
| | 10.23.2 | ** | | Second Amendment to Stockholders Agreement of Mirion Technologies, Inc. (f/k/a Global Monitoring Systems, Inc.) dated July 13, 2006 |
| | 10.23.3 | ** | | Third Amendment to Stockholders Agreement of Mirion Technologies, Inc. (f/k/a Global Monitoring Systems, Inc.) dated October 31, 2007 |
| | 10.23.4 | ** | | Fourth Amendment to Stockholders Agreement of Mirion Technologies, Inc. (f/k/a Global Monitoring Systems, Inc.) dated June 30, 2009 |
| | | | |
Exhibit No.
| | Document |
|
| | 10.24 | ** | | Form of Credit Agreement among Mirion Technologies, Inc., Mirion Technologies (Synodys) SA, Mirion Technologies (IST France) SAS, JPMorgan Chase Bank, National Association, J.P. Morgan Europe Limited, J.P. Morgan Securities Inc.LLC and Fifth Third Bank |
| | 10.25 | ** | | Form of Letter Agreement between Mirion Technologies, Inc. and each of the Preferred Stockholders |
| | 10.25.1 | ** | | Schedule of Letter Agreements substantially identical in all material respects to Form of Letter Agreement |
| | 10.26 | ** | | Form of New Letter Agreement between Mirion Technologies, Inc. and each of the Preferred Stockholders |
| | 10.26.1 | ** | | Schedule of New Letter Agreements substantially identical in all material respects to Form of New Letter Agreement |
| | 21.1 | ** | | Subsidiaries of the Registrant |
| | 23.1 | | | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm |
| | 23.2 | * | | Consent of Davis Polk & Wardwell LLP (included in Exhibit 5.1) |
| | 24.1 | ** | | Power of Attorney (included on signature page) |
| | 99.1 | ** | | Consent of Dustin G. Smith to being named as a director nominee |
| | 99.2 | ** | | Consent of Brian S. Graff to being named as a director nominee |
| | 99.3 | ** | | Consent of Michael T. Everett to being named as a director nominee |
| | 99.4 | ** | | Consent of Earl R. Lewis to being named as a director nominee |
| | 99.5 | ** | | Consent of Alfred E. Barry, Jr. to being named as a director nominee |
| | |
| * | | To be filed by amendment. |
