Exhibit 99.2
Technitrol, Inc. and Subsidiaries
Unaudited Pro Forma Financial Information
The following unaudited pro forma consolidated statements of operations
for the nine months ended September 30, 2005 and for the year ended December 31,
2004 give the effect of LK Products Oy ("LK') as if such acquisition had
occurred on January 1, 2004. The unaudited pro forma condensed balance sheet as
of September 30, 2005 is not provided as the acquisition occurred before
September 30, 2005 and the consolidated balance sheet, including LK, was filed
with our quarterly report as of September 30, 2005 on Form 10-Q on November 9,
2005.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable under the circumstances. The
pro forma adjustments were applied to the respective historical financial
statements to reflect and account for the acquisition using the purchase method
of accounting. The pro forma financial information is not necessarily indicative
of the operating results that would have been achieved had the acquisition been
consummated on January 1, 2004 and should not be construed as a representation
of future operating results. The purchase price was allocated to intangible
assets acquired based on their respective fair values as determined in a
valuation study performed by a third party and management's evaluation of the
assets and liabilities. The purchase price allocation among the intangible
assets acquired and the assignment of lives of these intangible assets is
preliminary and subject to change based upon further evaluation.
The unaudited pro forma consolidated financial information should be read
in conjunction with our Consolidated Financial Statements and Notes thereto,
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in our Annual Report on Form 10-K for the year ended
December 31, 2004 and the quarterly report on Form 10-Q for the quarter ended
September 30, 2005.
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Technitrol, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements of Operations
For the nine months ended September 30, 2005
In thousands, except earnings per share
Technitrol, LK Products Pro Forma
Inc. OY Adjustments Pro Forma
---- -- ----------- ---------
Net sales $431,913 $ 63,087 $ -- $495,000
Costs and expenses:
Cost of sales 331,399 46,982 -- 378,381
Selling, general and administrative expenses (1) 77,688 13,793 (757) 90,724
Severance and asset impairment expense 50,641 -- -- 50,641
-------- -------- -------- --------
Total costs and expenses applicable to sales 459,728 60,775 (757) 519,746
-------- -------- -------- --------
Operating (loss) profit (27,815) 2,312 757 (24,746)
Other income (expense) (2) 64 (707) (1,095) (1,738)
-------- -------- -------- --------
Earnings (loss) from continuing operations before taxes and
minority interest (27,751) 1,605 (338) (26,484)
Income taxes (3) 4,025 (54) 239 4,210
Minority interest 1,045 -- -- 1,045
-------- -------- -------- --------
Net earnings (loss) from continuing operations $(32,821) $ 1,659 $ (577) $(31,739)
Net (loss) from discontinued operations, net
of taxes (395) -- -- (395)
-------- -------- -------- --------
Net earnings (loss) $(33,216) $ 1,659 $ (577) $(32,134)
======== ======== ======== ========
Basic and diluted (loss) per share from
continuing operations $ (0.81) $ (0.79)
======== ========
Basic and diluted (loss) per share from discontinued
operations $ (0.01) $ (0.01)
======== ========
Basic and diluted (loss) per share $ (0.82) $ (0.80)
======== ========
Weighted average common shares outstanding -
basic and diluted (4) 40,286 40,286
See accompanying notes to Unaudited Proforma Consolidated Statements of
Operations, which are an integral part of these statements
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Technitrol, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements of Operations
For the twelve months ended December 31, 2004
In thousands, except earnings per share
Technitrol, LK Products Pro Forma
Inc. OY Adjustments Pro Forma
---- -- ----------- ---------
Net sales $561,298 $ 92,025 $ -- $653,323
Costs and expenses:
Cost of sales 415,967 64,396 -- 480,363
Selling, general and administrative expenses (1) 108,617 19,088 (993) 126,712
Severance and asset impairment expense 27,851 -- -- 27,851
-------- -------- -------- --------
Total costs and expenses applicable to sales 552,435 83,484 (993) 634,926
-------- -------- -------- --------
Operating profit 8,863 8,541 993 18,397
Other income (expense) (2) 2,523 (50) (829) 1,644
-------- -------- -------- --------
Earnings from continuing operations before taxes and
minority interest 11,386 8,491 164 20,041
Income taxes (3) 3,562 (807) 978 3,733
Minority interest 655 -- -- 655
-------- -------- -------- --------
Net earnings (loss) from continuing operations $ 7,169 $ 9,298 $ (814) $ 15,653
Net (loss) from discontinued operations, net
of taxes (242) -- -- (242)
-------- -------- -------- --------
Net earnings (loss) $ 6,927 $ 9,298 $ (814) $ 15,411
======== ======== ======== ========
Basic and diluted earnings per share from
continuing operations $ 0.18 $ 0.39
========
Basic and diluted (loss) per share from discontinued
operations $ (0.01) $ (0.01)
-------- ========
Basic and diluted earnings per share $ 0.17 $ 0.38
======== ========
Weighted average common shares outstanding -
basic (4) 40,178 40,178
Weighted average common shares outstanding -
diluted (4) 40,411 40,411
See accompanying notes to Unaudited Proforma Consolidated Statements of
Operations, which are an integral part of these statements
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Technitrol, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Consolidated Statements of Operations
The purchase price was approximately $82.7 million, net of cash acquired
of $0.4 million. The purchase price was funded with cash on hand. The purchase
agreement also includes a revenue-based earnout provision whereby we will pay
the seller one euro for each euro of revenue in excess of (euro)85.0 million
achieved by LK during the 12 months ended May 31, 2006. We will record this
contingent consideration as goodwill, when and if paid. The preliminary fair
value of the net tangible assets acquired approximated $24.7 million. The
following table summarizes the preliminary fair values of the assets acquired
and liabilities assumed at the date of acquisition (dollars in millions):
Current assets $26.6
Property, plant and equipment 15.8
Intangible assets 23.7
Goodwill 34.7
----
Total assets acquired 100.8
Current liabilities 17.4
Long-term liabilities 0.3
---
Total liabilities assumed 17.7
Net assets acquired $83.1
====
(1) Represents the amortization of intangible assets acquired in
connection with the acquisition based on the preliminary purchase
price allocation over their estimated useful lives.
For the nine months For the year ended
ended September 30, December 31,
Fair Value of Estimated 2005 2004
Intangibles Life Amortization Amortization
Intangible (in millions) (in years) (in millions) (in millions)
---------- ------------- ---------- ------------- -------------
Trademarks $ 7.1 Indefinite Not applicable Not applicable
Customer relationship 15.3 10 $1.1 $1.5
Technology 1.3 5 0.2 0.3
----- ---- ----
Total $23.7 $1.3 $1.8
===== ==== ====
Selling, general and administrative expenses were also adjusted by
$2.1 million and $2.8 million, respectively, to remove the effect of
the historical intangible asset amortization related to a prior
acquisition.
(2) Represents the elimination of the interest income resulting from the
use of $82.7 million of cash to finance the acquisition of LK.
(3) Represents the related income tax effect of the intangible asset
amortization in (1) above and the elimination of interest income in
(2) above.
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Technitrol, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Consolidated Statements of Operations - Continued
(4) The transaction was financed by cash. As no common stock was issued,
there is no pro forma impact on the weighted average shares
outstanding or the earnings (loss) per share.
Certain prior year amounts of Technitrol, Inc. have been reclassified to
conform with the current year presentation.
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