Exhibit 99.1
Pro-Forma Financial Statements
The following unaudited pro forma financial statements give effect to the
disposition of Airshow, Inc. to be accounted for as a discontinued operation in
accordance with FAS 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". On August 9, 2002, the Company consummated the sale of its
Airshow business for $152 million in cash, net of disposition proceeds of
approximately $8 million.
The pro forma financial statements also give effect to the Company's repurchase
of a portion of its outstanding Senior Subordinated Notes and a portion of its
outstanding Senior Secured Credit Facility term loan borrowings. The unaudited
pro forma condensed balance sheet assumes the disposition of Airshow, Inc. and
the repurchase of the Senior Subordinated Notes and Senior Credit Facility term
loan borrowings on June 30, 2002. Such pro forma information is based upon the
historical balance sheet data of Acterna Corporation as of that date. The
unaudited condensed statements of operations give effects to the disposition of
Airshow, Inc. and the repurchase of the Senior Subordinated Notes and Senior
Credit Facility term loan borrowings as if the transactions occurred on April 1,
1999. At the close of business on August 12, 2002, approximately $150 million
principal amount of the Senior Subordinated Notes had been validly tendered.
Approximately $106 million of the Notes will be retired.
These unaudited pro forma financial statements should be read in conjunction
with the historical consolidated financial statements and notes thereto of
Acterna Corporation for the year ended March 31, 2002.
Acterna Corporation
Pro-Forma Condensed Balance Sheet (Unaudited)
As of June 30, 2002
(Amounts in thousands)
Acterna Adjustments
Corporation Airshow Note 1 Pro Forma
----------- ------- ------ ---------
Assets:
Current Assets
Cash and cash equivalents $ 49,090 $ 49,090
Accounts receivable, net 113,825 113,825
Inventories, net 110,080 110,080
Deferred income taxes 17,642 17,642
Income tax receivable 28,045 $ (17,016)(g) 11,029
Other current assets 36,750 36,750
Current assets of disc ops held for sale 13,654 $ (13,654) 0
----------- --------- ---------- -------------
Total current assets 369,086 (13,654) (17,016) 338,416
Property, plant, and equipment, net 125,415 125,415
Other assets
Goodwill and other intangibles, net 411,984 411,984
Deferred debt issuance costs, net 25,292 (5,319)(e) 19,973
Other 20,729 20,729
Long-term assets of disc ops held for sale 26,078 (26,078) 0
----------- --------- ---------- -------------
Total Assets $ 978,584 $ (39,732) $ (22,335) $ 916,517
=========== ========= ========== ============
Liabilities and Stockholders' Deficit:
Current Liabilities
Notes payable $ 3,282 $ 3,282
Current portion of long term debt 33,486 33,486
Accounts payable 53,261 53,261
Accrued compensation and benefits 32,950 32,950
Deferred revenue 48,006 48,006
Accrued other expenses 77,769 $ (1,295)(f) 76,474
Accrued income taxes 32,608 19,984 (g) 52,592
Current liabilities of disc ops held for sale 10,539 $ (10,539) 0
----------- --------- ---------- ------------
Total current liabilities 291,901 (10,539) 18,689 300,051
Long term debt 715,608 (128,617)(a) 586,991
Senior subordinated notes 275,000 (106,285)(b) 168,715
Long term notes payable 76,875 76,875
Deferred income taxes 15,967 15,967
Other long term liabilities 70,583 70,583
Stockholders deficit:
Common stock and paid in capital
Acterna Corporation 788,459 788,459
Airshow - Equity (29,193) 29,193 (c) 0
Accumulated deficit (1,210,550) 164,685 (d) (1,045,865)
Other (45,259) (45,259)
----------- --------- ---------- ------------
Total stockholders' deficit (467,350) (29,193) 193,878 (302,665)
----------- --------- ---------- ------------
Total Liabilities and Stockholders' Deficit $ 978,584 $ (39,732) $ (22,335) $ 916,517
============ ========= ========== ============
Note 1: The pro forma condensed balance sheet gives effects to the disposition
of Airshow, Inc. for $152 million in cash, net of estimated disposition costs of
$8 million. The pro forma balance sheet also assumes immediate use of net
disposition proceeds of $152 million as follows: (1) retirement of $129 million
of Senior Secured Credit facility term loan borrowings and (2) $23 million, to
retire $106 million in principal amount of Senior Subordinated Notes and $1.3
million of accrued interest expense at a discounted cost of $220 per $1,000
note. Total nonrecurring after tax gains of $165 million on the sale of Airshow
and the retirement of the notes have been reflected in the balance sheet.
The above pro forma balance sheet gives effect to the following:
(a) To record retirement of Senior Secured Credit Facility term loan borrowings
using estimated net disposition proceeds of $129 million.
(b) To record retirement of $106 million in principal amount of Senior
Subordinated Notes at a discounted cost of $220 per $1,000 note for $23 million.
(c) To record sale of Airshow net assets of $29 million.
(d) To record the total nonrecurring after tax gains of $165 million on the sale
of Airshow and the retirement of the notes.
(e) To record $5 million decrease in deferred debt issuance costs related to
retired long term debt.
(f) To record the relief of $1.3 million of accrued interest payable on the
retired Senior Subordinated Notes.
(g) To record the estimated taxes on the total gains on the sale of Airshow and
the retirement of the notes.
Exhibit 99.1
Acterna Corporation
Pro-Forma Condensed Statement of Operations (Unaudited)
For the quarter ended June 30, 2002
(Amounts in thousands, except per share data)
Acterna Adjustments
Corporation Note 1 Pro Forma
---------------- --------------- ----------------
Net sales $ 170,345 $ 170,345
Cost of sales 86,436 86,436
---------------- --------------- ----------------
Gross profit 83,909 83,909
Selling, general, and administrative expense 81,117 81,117
Product development expense 30,614 30,614
Restructuring expense 6,156 6,156
Amortization of intangibles 263 263
---------------- ----------------
118,150 118,150
---------------- --------------- ----------------
Operating loss (34,241) (34,241)
Interest expense (22,296) $ 5,079 (a) (17,217)
Interest income 72 72
Other expense, net (1,475) (1,475)
---------------- --------------- ----------------
Loss from before income taxes (57,940) 5,079 (52,861)
Benefit for income taxes (16,917) 1,757 (b) (15,160)
---------------- --------------- ----------------
Net loss from continuing operations (41,023) 3,322 (37,701)
Income from discontinued operations 1,112 (1,112) 0
---------------- --------------- ----------------
Net loss $ (39,911) $ 2,210 $ (37,701)
================ =============== ================
Net income (loss) per common share - basic and diluted
Continuing operations $ (0.22) $ (0.20)
Discontinued operations 0.01 0.00
---------------- ----------------
Net loss per common share - basic and diluted $ (0.21) $ (0.20)
================ ================
Weighted average number of common shares
Basic and diluted 192,248 192,248
================ ================
Note 1. The pro forma statements of operations give effect to the disposition of
Airshow, Inc. and the retirement of a portion of Senior Secured Credit Facility
term loan borrowings and Senior Subordinated Notes as if the transactions
occurred on April 1, 1999. Total non-recurring after tax gains of $165 million
on the sale of Airshow Inc. and the retirement of the Senior Subordinated Notes
have not been included in the pro forma statements of operations but will be
reflected in the historical statement of operations in the period when the
transactions are consummated. The results of operations of Airshow, Inc. have
been removed from the pro forma statements of operations. The above pro forma
statements of operations give effect to the following pro forma adjustments
necessary to reflect the disposition and the repayment of debt from the proceeds
of the disposition:
(a) To reflect a reduction of $2.3 million in quarterly interest expense on $129
million of Senior Secured Credit Facility term loan borrowings, a reduction of
$2.6 million in quarterly interest expense on $106 million of Senior
Subordinated Notes, and a $.2 million reduction in amortization of deferred debt
issuance costs. Reduction in the quarterly interest expense on term loan
borrowings was calculated based on the annual weighted-average interest rate of
7.0%. The reduction in the annual interest expense on the Senior Notes was
calculated based on the actual interest rate of 9.75%.
(b) To reflect $1.8 million income tax expense adjustment relating to $5.1
million interest expense reduction.
Exhibit 99.1
Acterna Corporation
Pro-Forma Condensed Statement of Operations (Unaudited)
For the quarter ended June 30, 2001
(Amounts in thousands, except per share data)
Acterna Adjustments
Corporation Note 1 Pro Forma
-------------- --------------- --------------
<s> <c> <c> <c>
Net sales $ 338,920 $ 338,920
Cost of sales 147,520 147,520
-------------- --------------- --------------
Gross profit 191,400 191,400
Selling, general, and administrative expense 124,819 124,819
Product development expense 41,317 41,317
Amortization of intangibles 11,552 11,552
-------------- --------------
177,688 177,688
-------------- --------------- --------------
Operating income 13,712 13,712
Interest expense (26,277) $ 5,980 (a) (20,297)
Interest income 486 486
Other expense, net (1,832) (1,832)
-------------- --------------- --------------
Loss from before income taxes (13,911) 5,980 (7,931)
Benefit for income taxes (4,721) 2,112 (b) (2,609)
-------------- --------------- --------------
Net loss from continuing operations (9,190) 3,868 (5,322)
Income from discontinued operations 3,040 (3,040) 0
-------------- --------------- --------------
Net loss $ (6,150) $ 828 $ (5,322)
============== =============== ==============
Net income (loss) per common share - basic and diluted
Continuing operations $ (0.05) $ (0.03)
Discontinued operations 0.02 0.00
-------------- --------------
Net loss per common share - basic and diluted $ (0.03) $ (0.03)
============== ==============
Weighted average number of common shares
Basic and diluted 191,186 191,186
============== ==============
Note 1. The pro forma statements of operations give effect to the disposition of
Airshow, Inc. and the retirement of a portion of Senior Secured Credit Facility
term loan borrowings and Senior Subordinated Notes as if the transactions
occurred on April 1, 1999. Total non-recurring after tax gains of $165 million
on the sale of Airshow Inc. and the retirement of the Senior Subordinated Notes
have not been included in the pro forma statements of operations but will be
reflected in the historical statement of operations in the period when the
transactions are consummated. The results of operations of Airshow, Inc. have
been removed from the pro forma statements of operations. The above pro forma
statements of operations give effect to the following pro forma adjustments
necessary to reflect the disposition and the repayment of debt from the proceeds
of the disposition:
(a) To reflect a reduction of $3.2 million in quarterly interest expense on $129
million of Senior Secured Credit Facility term loan borrowings, a reduction of
$2.6 million in quarterly annual interest expense on $106 million of Senior
Subordinated Notes, and a $.2 million reduction in amortization of deferred debt
issuance costs. Reduction in the quarterly interest expense on term loan
borrowings was calculated based on the annual weighted-average interest rate of
9.8%. The reduction in the quarterly interest expense on the Senior Notes was
calculated based on the actual interest rate of 9.75%.
(b) To reflect $2.1 million income tax expense adjustment relating to $6.0
million interest expense reduction.
Exhibit 99.1
Acterna Corporation
Pro-Forma Condensed Statement of Operations (Unaudited)
For the year ended March 31, 2002
(Amounts in thousands, except per share data)
Acterna Adjustments
Corporation Airshow Note 1 Pro Forma
----------- --------- ----------- ----------
Net sales $ 1,132,661 $ (65,024) $1,067,637
Cost of sales 540,048 (28,774) 511,274
----------- --------- ----------- ----------
Gross profit 592,613 (36,250) 556,363
Selling, general, and administrative expense 444,387 (15,881) 428,506
Product development expense 160,219 (10,497) 149,722
Amortization of intangibles 42,271 (250) 42,021
Restructuring expense 33,989 (1,952) 32,037
Impairment of net assets held for sale 17,918 17,918
Goodwill impairment 3,947 3,947
Impairment of acquired intangible assets 151,322 151,322
----------- --------- ----------- ----------
854,053 (28,580) 825,473
----------- --------- ----------- ----------
Operating income (loss) (261,440) (7,670) (269,110)
Interest expense (96,625) 3 $ 19,931 (a) (76,691)
Interest income 1,625 1,625
Other expense, net (7,615) 20 (7,595)
----------- --------- ----------- ----------
Income (loss) from continuing operations before
income taxes (364,055) (7,647) 19,931 (351,771)
Provision for income taxes 799 - (b) 799
----------- --------- ----------- ----------
Income (loss) from continuing operations (364,854) (7,647) 19,931 (352,570)
Loss from discontinued operations (10,039) (10,039)
----------- --------- ----------- ----------
Net income (loss) $ (374,893) $ (7,647) $ 19,931 $ (362,609)
=========== ========= =========== ==========
Net income (loss) per common share - basic and diluted
Continuing operations $ (1.90) $ (1.84)
Discontinued operations (0.05) (0.05)
----------- ----------
$ (1.95) $ (1.89)
=========== ==========
Weighted average number of common shares
Basic 191,868 191,868
Diluted 191,868 191,868
Note 1. The pro forma statements of operations give effect to the disposition of
Airshow, Inc. and the retirement of a portion of Senior Secured Credit Facility
term loan borrowings and Senior Subordinated Notes as if the transactions
occurred on April 1, 1999.
Total non-recurring after tax gains of $165 million on the sale of Airshow Inc.
and the retirement of the Senior Subordinated Notes have not been included in
the pro forma statements of operations but will be reflected in the historical
statement of operations in the period when the transactions are consummated. The
results of operations of Airshow, Inc. have been removed from the pro forma
statements of operations. The above pro forma statements of operations give
effect to the following pro forma adjustments necessary to reflect the
disposition and the repayment of debt from the proceeds of the disposition:
(a) To reflect a reduction of $8.6 million in annual interest expense on $129
million of Senior Secured Credit Facility term loan borrowings, a reduction of
$10.4 million in annual interest expense on $106 million of Senior Subordinated
Notes, and a $.9 million reduction in amortization of deferred debt issuance
costs. Reduction in the annual interest expense on term loan borrowings was
calculated based on the annual weighted-average interest rate of 6.7%. The
reduction in the annual interest expense on the Senior Notes was calculated
based on the actual interest rate of 9.75%.
(b) No income tax adjustment is required.
Exhibit 99.1
Acterna Corporation
Pro-Forma Condensed Statement of Operations (Unaudited)
For the year ended March 31, 2001
(Amounts in thousands, except per share data) Acterna Adjustments
Corporation Airshow Note 1 Pro Forma
----------- ------- ------ ---------
Net sales $ 1,366,257 $ (78,886) $ 1,287,371
Cost of sales 606,860 (32,648) 574,212
------------ ---------- -------- -----------
Gross profit 759,397 (46,238) 713,159
Selling, general, and administrative expense 486,598 (19,622) 466,976
Product development expense 168,117 (10,367) 157,750
Amortization of intangibles 120,151 (926) 119,225
Recapitalization and other related costs 9,194 9,194
Purchased incomplete technology 56,000 56,000
--------
------------ ---------- -----------
840,060 (30,915) 809,145
------------ ---------- -------- -----------
Operating income (loss) (80,663) (15,323) (95,986)
Interest expense (102,158) $ 23,918 (a) (78,240)
Interest income 3,322 3,322
Other expense, net (4,491) (4,491)
------------ ---------- -------- -----------
Income (loss) from continuing operations before
income taxes and extraordinary item (183,990) (15,323) 23,918 (175,395)
Provision (benefit) for income taxes (12,793) (6,079) 8,929 (b) (9,943)
------------ ---------- -------- -----------
Income (loss) from continuing operations before
extraordinary item (171,197) (9,244) 14,989 (165,452)
Income from discontinued operations 10,039 10,039
------------ ---------- -------- -----------
Income (loss) before extraordinary item (161,158) (9,244) 14,989 (155,413)
Extraordinary item, net of income tax benefit of $6,603 (10,659) (10,659)
------------ ---------- -------- -----------
Net income (loss) $ (171,817) $ (9,244) $ 14,989 $ (166,072)
============ ========== ======== ===========
Net income (loss) per common share - basic and diluted
Continuing operations $ (0.93) $ (0.90)
Discontinued operations 0.06 0.06
Extraordinary loss (0.06) (0.06)
------------ -----------
$ (0.93) $ (0.90)
============ ===========
Weighted average number of common shares
Basic 183,881 183,881
Diluted 183,881 183,881
Note 1. The pro forma statements of operations give effect to the disposition of
Airshow, Inc. and the retirement of a portion of Senior Secured Credit Facility
term loan borrowings and Senior Subordinated Notes as if the transactions
occurred on April 1, 1999. Total non-recurring after tax gains of $165 million
on the sale of Airshow Inc. and the retirement of the Senior Subordinated Notes
have not been included in the pro forma statements of operations but will be
reflected in the historical statement of operations in the period when the
transactions are consummated. The results of operations of Airshow, Inc. have
been removed from the pro forma statements of operations. The above pro forma
statements of operations give effect to the following pro forma adjustments
necessary to reflect the disposition and the repayment of debt from the proceeds
of the disposition:
(a) To reflect a reduction of $12.6 million in annual interest expense on $129
million of Senior Secured Credit Facility term loan borrowings, a reduction of
$10.4 million in annual interest expense on $106 million of Senior Subordinated
Notes, and a $.9 million reduction in amortization of deferred debt issuance
costs. Reduction in the annual interest expense on term loan borrowings was
calculated based on the annual weighted-average interest rate of 9.8%. The
reduction in the annual interest expense on the Senior Subordinated Notes was
calculated based on the actual interest rate of 9.75%.
(b) To reflect $8.9 million income tax expense adjustment relating to $23.9
million interest expense reduction.
Exhibit 99.1
Acterna Corporation
Pro-Forma Condensed Statement of Operations (Unaudited)
For the year ended March 31, 2000
(Amounts in thousands, except per share data)
Acterna Adjustments
Corporation Airshow Note 1 Pro Forma
----------- --------- ----------- ---------
Net sales $ 656,601 $ (70,960) $ 585,641
Cost of sales 285,531 (22,026) 263,505
----------- --------- ----------- ---------
Gross profit 371,070 (48,934) 322,136
Selling, general, and administrative expense 192,286 (19,859) 172,427
Product development expense 75,398 (8,303) 67,095
Amortization of intangibles 12,326 (812) 11,514
Recapitalization and other related costs 27,942 (736) 27,206
----------- --------- ----------- ---------
307,952 (29,710) 278,242
----------- --------- ----------- ---------
Operating income 63,118 (19,224) 43,894
Interest expense (51,949) 7 $ 21,410 (a) (30,532)
Interest income 2,373 (15) 2,358
Other expense, net (720) (720)
----------- --------- ----------- ---------
Income from continuing operations before
income taxes 12,822 (19,232) 21,410 15,000
Provision for income taxes 6,810 (7,540) 7,989 (b) 7,259
----------- --------- ----------- ---------
Net income $ 6,012 $ (11,692) $ 13,421 $ 7,741
=========== ========= =========== =========
Net income per common share
Basic and diluted $ 0.04 $ 0.05
=========== =========
Weighted average number of common shares
Basic 148,312 148,312
Diluted 162,273 162,273
Note 1. The pro forma statements of operations give effect to the disposition of
Airshow, Inc. and the retirement of a portion of Senior Secured Credit Facility
term loan borrowings and Senior Subordinated Notes as if the transactions
occurred on April 1, 1999.
Total non-recurring after tax gains of $165 million on the sale of Airshow Inc.
and the retirement of the Senior Subordinated Notes have not been included in
the pro forma statements of operations but will be reflected in the historical
statement of operations in the period when the transactions are consummated. The
results of operations of Airshow, Inc. have been removed from the pro forma
statements of operations. The above pro forma statements of operations give
effect to the following pro forma adjustments necessary to reflect the
disposition and the repayment of debt from the proceeds of the disposition:
(a) To reflect a reduction of $10.1 million in annual interest expense on $129
million of Senior Secured Credit Facility term loan borrowings, a reduction of
$10.4 million in annual interest expense on $106 million of Senior Subordinated
Notes, and a $.9 million reduction in amortization of deferred debt issuance
costs. Reduction in the annual interest expense on term loan borrowings was
calculated based on the annual weighted-average interest rate of 7.85%. The
reduction in the annual interest expense on the Senior Subordinated Notes was
calculated based on the actual interest rate of 9.75%.
(b) To reflect $8.0 million income tax expense adjustment relating to $21.4
million interest expense reduction.