Exhibit 99.2
ENDWAVE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
On April 30, 2009, Endwave Corporation (the “Company”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Microsemi Corporation (“Microsemi”), pursuant to which Microsemi purchased Endwave’s defense and security business (the “Business”), including all of the outstanding capital stock of Endwave Defense Systems, Inc. (“EDSI”). As consideration, Microsemi assumed certain liabilities associated exclusively with the Business and paid $28 million in cash.
The unaudited pro forma condensed consolidated balance sheet information gives effect to the sale of the Business as if the sale of the assets and liabilities of the Business occurred on December 31, 2008 and is based upon the historical balance sheet data of the Company and its subsidiaries as of December 31, 2008. The unaudited pro forma condensed consolidated statement of operations information gives effect to the sale of the Business as if the sale of the assets and liabilities of the Business occurred on January 1, 2008 and is based upon the historical statement of operations data of the Company and its subsidiaries for the year ended December 31, 2008.
The unaudited pro forma condensed financial information presented herein is shown for illustrative purposes only and is not necessarily indicative of the results that might have been achieved by the Company if the sale had been consummated as of the indicated dates, nor is it necessarily indicative of future operating results or financial position of the Company. The unaudited pro forma condensed consolidated financial information is based on and should be read in conjunction with the historical audited consolidated financial statements of the Company as of and for the year ended December 31, 2008, together with the related notes thereto, which were filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.
The unaudited pro forma condensed consolidated financial statements have been prepared by the Company based upon available information and certain assumptions that management believes are reasonable in the circumstances.
ENDWAVE CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Effective April 30, 2009, Endwave Corporation (the “Company”) sold certain assets and liabilities relating to its defense and security business (the “Business”) for a purchase price of $28 million. The assets included the accounts receivable, inventory, fixed assets and other assets, customer agreements and employees related to the operation of the Business and the liabilities included accounts payable, warranty obligations and other liabilities. Based on their current net book value, the disposition of these assets resulted in a gain of approximately $18.2 million.
2. Pro Forma Adjustments
(A) | To reflect the cash received from the sale of the Business and the sale of the assets and liabilities of the Business, as if the transaction had occurred December 31, 2008. | ||
(B) | To reflect the elimination of the revenues, costs and expenses relating to the Business, as if the transaction had occurred on January 1, 2008. The statement of operations does not include the gain on disposal or the costs related to the transaction. |
ENDWAVE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2008
(In thousands)
DECEMBER 31, 2008
(In thousands)
Historical | Pro Forma | |||||||||||
Endwave | Pro Forma | Endwave | ||||||||||
Corporation | Adjustments | Corporation | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 33,998 | $ | 26,268 | (A) | $ | 60,266 | |||||
Short-term investments | 11,350 | $ | 11,350 | |||||||||
Accounts receivable, net | 4,762 | (2,215 | )(A) | $ | 2,547 | |||||||
Inventories | 14,454 | (5,024 | )(A) | $ | 9,430 | |||||||
Other current assets | 738 | (63 | )(A) | 675 | ||||||||
Total current assets | 65,302 | 18,966 | 84,268 | |||||||||
Property, plant and equipment | 4,220 | (2,084 | )(A) | $ | 2,136 | |||||||
Other assets, net | 218 | (62 | )(A) | $ | 156 | |||||||
Restricted cash | 600 | — | 600 | |||||||||
Total assets | $ | 70,340 | $ | 16,820 | $ | 87,160 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 2,263 | $ | (1,224 | )(A) | $ | 1,039 | |||||
Accrued warranty | 2,439 | (646 | )(A) | $ | 1,793 | |||||||
Accrued compensation | 2,811 | $ | 2,811 | |||||||||
Other current liabilities | 713 | (139 | )(A) | 574 | ||||||||
Total current liabilities | 8,226 | (2,009 | ) | 6,217 | ||||||||
Other long-term liabilities | 73 | (18 | )(A) | 55 | ||||||||
Total liabilities | 8,299 | (2,027 | ) | 6,272 | ||||||||
Stockholders’ equity: | ||||||||||||
Common stock | 9 | $ | 9 | |||||||||
Additional paid-in capital | 349,855 | $ | 349,855 | |||||||||
Accumulated other comprehensive loss | 42 | $ | 42 | |||||||||
Accumulated deficit | (287,865 | ) | 18,847 | (A) | (269,018 | ) | ||||||
Total stockholders’ equity | 62,041 | 18,847 | 80,888 | |||||||||
Total liabilities and stockholders’ equity | $ | 70,340 | $ | 16,820 | $ | 87,160 | ||||||
ENDWAVE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2008
(In thousands, except per share amounts)
YEAR ENDED DECEMBER 31, 2008
(In thousands, except per share amounts)
Historical | Pro Forma | |||||||||||
Endwave | Pro Forma | Endwave | ||||||||||
Corporation | Adjustments | Corporation | ||||||||||
Revenues: | ||||||||||||
Product revenues | $ | 57,559 | $ | (18,964 | )(B) | $ | 38,595 | |||||
Development fees | 696 | (638 | )(B) | 58 | ||||||||
Total revenues | 58,255 | (19,602 | ) | 38,653 | ||||||||
Costs and expenses: | ||||||||||||
Cost of product revenues | 41,495 | (16,090 | )(B) | 25,405 | ||||||||
Cost of product revenues, amortization of intangible assets | 596 | — | 596 | |||||||||
Research and development | 11,878 | (4,845 | )(B) | 7,033 | ||||||||
Selling, general and administrative | 13,474 | (3,558 | )(B) | 9,916 | ||||||||
Amortization of intangible assets | 716 | — | 716 | |||||||||
Impairment of goodwill and intangible assets | 6,161 | — | 6,161 | |||||||||
Total costs and expenses | 74,320 | (24,493 | ) | 49,827 | ||||||||
Loss from operations | (16,065 | ) | 4,891 | (11,174 | ) | |||||||
Interest and other income, net | 1,248 | — | 1,248 | |||||||||
Loss before income tax benefit | (14,817 | ) | 4,891 | (9,926 | ) | |||||||
Income tax benefit | (66 | ) | — | (66 | ) | |||||||
Net loss | $ | (14,751 | ) | $ | 4,891 | $ | (9,860 | ) | ||||
Basic and diluted net loss per share | $ | (1.60 | ) | $ | (1.07 | ) | ||||||
Shares used in computing per share amounts | 9,211 | 9,211 | ||||||||||