Form: 8-K

Current report filing

September 7, 2010

Exhibit 99.2

 

Unaudited Pro Forma Condensed Combined Financial Information

 

On July 6, 2010, Clean Energy Fuels Corp, a Delaware corporation (the “Registrant” or the “Company”), announced that it had entered into an agreement to purchase the advanced natural gas fueling compressor and related equipment manufacturing and servicing business of I.M.W. Industries Ltd., a British Columbia corporation (“IMW”), pursuant to the terms of an asset purchase agreement (the “Purchase Agreement”). The acquisition contemplated by the Purchase Agreement closed on September 7, 2010.

 

The following unaudited pro forma condensed combined financial statements combine the historical consolidated balance sheets and statements of operations of the Registrant and IMW, giving effect to the acquisition of IMW using the purchase method of accounting.

 

The pro forma information presented, including allocation of the purchase price, is based on preliminary estimates of the fair values of assets acquired and liabilities assumed. The Company’s judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results from operations. The finalization of the Company’s purchase accounting assessment will result in changes in the valuation of assets and liabilities acquired which could be material. The Company will finalize the purchase price allocation as soon as practicable within the measurement period in accordance with applicable US GAAP accounting rules, but in no event later than one year following the closing of the acquisition. The purchase price allocation for the Company is preliminary in all respects. Certain historical balance sheet and income statement amounts of IMW have been reclassified to conform to the financial statement presentation of the Registrant.

 

The unaudited pro forma condensed combined balance sheet information as of June 30, 2010 gives effect to the acquisition of IMW as if it had occurred on June 30, 2010. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2010 and the year ended December 31, 2009 give effect to the acquisition as if the acquisition had occurred at the beginning of the respective periods.

 

The unaudited pro forma condensed combined financial information, including the notes thereto, does not give effect to any cost savings or other synergies that could result from the acquisition. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and are not necessarily indicative of the consolidated financial position or consolidated results of operations of the Registrant that would have been reported had the acquisition occurred on the dates indicated, nor do they represent a forecast of the consolidated financial position of the Registrant at any future date or the consolidated results of operations of the Registrant for any future period.

 

The unaudited pro forma condensed combined financial statements, including the notes thereto, should be read in conjunction with the historical consolidated financial statements, including the notes thereto, and other information of the Registrant included in its Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010, respectively, and the financial statements of IMW included in Exhibits 99.1of this Form 8-K.

 



 

Clean Energy Fuels Corp. and Subsidiaries

Unaudited Pro Forma Condensed Combined Balance Sheet

June 30, 2010

(In thousands)

 

 

 

Historical

 

Pro Forma

 

 

 

Clean
Energy

 

IMW

 

Adjustments

 

 

Combined

 

Assets

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,701

 

$

610

 

$

(14,738

)

(i(a))

$

41,573

 

Restricted cash

 

2,500

 

 

 

 

 

 

2,500

 

Accounts receivable, net of allowance for doubtful accounts

 

19,067

 

13,458

 

(946

)

(vi)

31,579

 

Other receivables

 

9,208

 

3,207

 

(356

)

(vi)

12,059

 

Inventory, net

 

7,880

 

8,817

 

150

 

(vi)

16,847

 

Prepaid expenses and other current assets

 

8,712

 

1,505

 

 

 

 

10,217

 

Total current assets

 

103,068

 

27,597

 

(15,890

)

 

114,775

 

Land, property and equipment, net

 

179,596

 

2,460

 

(456

)

(vi)

181,600

 

Deferred development costs

 

—

 

129

 

(129

)

(ii)

—

 

Capital lease receivables

 

1,175

 

—

 

 

 

 

1,175

 

Notes receivable and other long-term assets

 

11,287

 

145

 

 

 

 

11,432

 

Investments in other entities

 

11,075

 

—

 

 

 

 

11,075

 

Goodwill

 

21,572

 

—

 

44,773

 

(iii)

66,345

 

Intangible assets, net of accumulated amortization

 

32,905

 

—

 

81,400

 

(iv)

114,305

 

Total assets

 

$

360,678

 

$

30,331

 

$

109,698

 

 

$

500,707

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt and capital lease obligations

 

$

2,420

 

$

7,813

 

$

12,125

 

(i(b))

$

22,358

 

Accounts payable

 

12,998

 

10,178

 

(946

)

(vi)

22,230

 

Accrued liabilities

 

16,625

 

5,310

 

2,228

 

(i(c))

24,178

 

 

 

 

 

 

 

288

 

(i(a))

 

 

 

 

 

 

 

 

(273

)

(vi)

 

 

Deferred revenue

 

2,468

 

2,230

 

—

 

 

4,698

 

Total current liabilities

 

34,511

 

25,531

 

13,422

 

 

73,464

 

Long-term debt and capital lease obligations, less current portion

 

9,525

 

219

 

31,375

 

(i(b))

41,119

 

Preferred shares

 

—

 

423

 

(423

)

(v)

—

 

Other long-term liabilities

 

38,068

 

2,136

 

(1,915

)

(vi)

45,361

 

 

 

 

 

 

 

7,072

 

(i(c))

 

 

Total liabilities

 

82,104

 

28,309

 

49,531

 

 

159,944

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

278,574

 

2,022

 

(2,022

)

(v)

340,763

 

 

 

 

 

 

 

62,189

 

(i(a))

 

 

Total liabilities and equity

 

$

360,678

 

$

30,331

 

$

109,698

 

 

$

500,707

 

 

See accompanying notes to unaudited pro forma condensed combined financial statements.

 



 

Clean Energy Fuels Corp.

Notes to the Unaudited Pro Forma Condensed Combined Balance Sheets

(In thousands, except share information)

 

Note 1 — Basis of Presentation

 

The unaudited pro forma condensed combined financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulation of the Securities and Exchange Commission. The Company believes that the disclosures are adequate to make the information not misleading. The Company remeasured IMW’s balance sheet at June 30, 2010, utilizing the closing spot US dollar to Canadian dollar exchange rate on that day.

 

Note 2 — Pro Forma Adjustments

 

(i) Purchase Consideration

 

The estimated total purchase consideration of the acquisition is based on the estimated fair values of the following purchase considerations:

 

Upfront consideration (a)

 

$

76,927

 

Anniversary payments (b)

 

43,500

 

Contingent consideration (c)

 

9,300

 

Acquisition holdback payment (d)

 

288

 

Total purchase consideration

 

$

130,015

 

 

(a) payment at closing of $15.6 million in cash, inclusive of $0.2 million of non-recurring acquisition related costs and $0.6 million related to a working capital adjustment (which will be allocated to the appropriate working capital items), and the issuance of 4.0 million shares of the Registrant’s common stock totaling $62.2 million in common stock based on its closing stock price as of September 3, 2010; (b) the estimated fair value of the anniversary payments of $43.5 million, consisting of payments on each of January 31, 2011, 2012, 2013, 2014 of $12.5 million (each payment consisting of $5.0 million in cash and $7.5 million in cash and/or shares of common stock, with the exact number of cash and/or common stock to be determined at the Company’s option; (c) the estimated fair value of an earn-out arrangement based on IMW achieving certain minimum amounts of adjusted gross profit (capped at $40 million); (d) amount represents a holdback payment that will be released to the Sellers once the Chinese regulatory authorities approve the transfer of IMW Compressors (Shanghai) Co., Ltd. to the Company.

 

(ii)  Deferred Development Costs

 

U.S. generally accepted accounting principles requires development costs to be charged to expense as incurred. Under Canadian generally accepted accounting principles, development costs are deferred when certain criteria are met, and are amortized over the estimated period of production. This amount represents the adjustment required to conform to US generally accepted accounting principles.

 

(iii) Goodwill

 

The estimated total purchase price of the acquisition is based on the price of $130.0 million for the net assets of IMW. The total transaction value was allocated to IMW’s assets and liabilities on a fair value basis and resulted in goodwill of approximately $44.8 million.

 

(iv) Identifiable Intangible Assets

 

Amount represents the pro forma adjustments to record the estimated fair values of IMW’s identifiable intangible assets relating to technology, trade names, certain customer relationships, or other intangible assets acquired as a result of the acquisition based on preliminary estimates. The fair values and asset lives of these assets are subject to adjustments upon completion of the Company’s valuations.

 



 

(v) Total Stockholders’ Equity

 

Amount represents the pro forma adjustments to eliminate the historical stockholders’ equity of IMW.

 

(vi) Assets & Liabilities Not Purchased and Elimination of Intercompany Transactions

 

Amounts represent adjustments to assets & liabilities not purchased by the Company and elimination of intercompany sales transactions.

 



 

Clean Energy Fuels Corp. and Subsidiaries

Unaudited Pro Forma Condensed Statement of Operations

For the Six Months Ended June 30, 2010

(In thousands, except share and per share amounts)

 

 

 

Historical

 

Pro Forma

 

 

 

Clean
Energy

 

IMW

 

Adjustments

 

 

Combined

 

Revenue:

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

73,706

 

$

20,877

 

$

(529

)

(v)

$

94,054

 

Service revenues

 

9,317

 

5,157

 

—

 

 

14,474

 

Total revenues

 

83,023

 

26,034

 

(529

)

 

108,528

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

Product cost of sales

 

54,188

 

19,005

 

(275

)

(v)

72,918

 

Service cost of sales

 

3,986

 

3,779

 

—

 

 

7,765

 

Selling, general and administrative

 

28,527

 

4,119

 

(504

)

(ii)

32,142

 

Depreciation and amortization

 

10,061

 

347

 

2,763

 

(i)

13,171

 

Derivative loss on Series I warrant valuation

 

1,989

 

—

 

—

 

 

1,989

 

Total operating expenses

 

98,751

 

27,250

 

1,984

 

 

127,985

 

Operating loss

 

(15,728

)

(1,216

)

(2,513

)

 

(19,457

)

Interest income (expense), net

 

87

 

(147

)

(78

)

(iii)

(138

)

Other income, net

 

5

 

325

 

—

 

 

330

 

Income from equity method investments

 

105

 

—

 

—

 

 

105

 

Loss before income taxes

 

(15,531

)

(1,038

)

(2,591

)

 

(19,160

)

Income tax benefit (expense)

 

1,127

 

119

 

882

 

(iv)

2,128

 

Net loss

 

(14,404

)

(919

)

(1,709

)

 

(17,032

)

Income attributable to noncontrolling interest

 

(67

)

—

 

—

 

 

(67

)

Net loss

 

$

(14,471

)

$

(919

)

$

(1,709

)

 

$

(17,099

)

 

 

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.24

)

 

 

 

 

(vi)

$

(0.27

)

Diluted

 

$

(0.24

)

 

 

 

 

(vi)

$

(0.27

)

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

60,494,148

 

 

 

 

 

(vi)

64,511,557

 

Diluted

 

60,494,148

 

 

 

 

 

(vi)

64,511,557

 

 

See accompanying notes to unaudited pro forma condensed combined financial statements.

 



 

Clean Energy Fuels Corp. and Subsidiaries

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Twelve Months Ended December 31, 2009

(In thousands, except share and per share amounts)

 

 

 

Historical

 

Pro Forma

 

 

 

Clean
Energy

 

IMW

 

Adjustments

 

 

Combined

 

Revenue:

 

 

 

 

 

 

 

 

 

 

Product revenues

 

$

116,635

 

$

28,145

 

$

(868

)

(v)

$

143,912

 

Service revenues

 

14,868

 

8,177

 

—

 

 

23,045

 

Total revenues

 

131,503

 

36,322

 

(868

)

 

166,957

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

Product cost of sales

 

76,766

 

25,774

 

(605

)

(v)

101,935

 

Service cost of sales

 

6,155

 

5,410

 

—

 

 

11,565

 

Selling, general and administrative

 

47,509

 

6,589

 

(152

)

(ii)

53,946

 

Depreciation and amortization

 

16,992

 

559

 

5,617

 

(i)

23,168

 

Derivative loss on Series I warrant valuation

 

17,367

 

—

 

—

 

 

17,367

 

Total operating expenses

 

164,789

 

38,332

 

4,860

 

 

207,981

 

Operating loss

 

(33,286

)

(2,010

)

(5,728

)

 

(41,024

)

Interest expense, net

 

(32

)

(293

)

(156

)

(iii)

(481

)

Other income (expense), net

 

(310

)

1,794

 

—

 

 

1,484

 

Income from equity method investments

 

244

 

—

 

—

 

 

244

 

Loss before income taxes

 

(33,384

)

(509

)

(5,884

)

 

(39,777

)

Income tax benefit (expense)

 

(304

)

75

 

1,734

 

(iv)

1,505

 

Net loss

 

(33,688

)

(434

)

(4,150

)

 

(38,272

)

Loss attributable to noncontrolling interest

 

439

 

—

 

—

 

 

439

 

Net loss

 

$

(33,249

)

$

(434

)

$

(4,150

)

 

$

(37,833

)

 

 

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.60

)

 

 

 

 

(vi)

$

(0.64

)

Diluted

 

$

(0.60

)

 

 

 

 

(vi)

$

(0.64

)

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

Basic

 

55,021,961

 

 

 

 

 

(vi)

59,039,370

 

Diluted

 

55,021,961

 

 

 

 

 

(vi)

59,039,370

 

 

See accompanying notes to unaudited pro forma condensed combined financial statements.

 



 

Clean Energy Fuels Corp.

Notes to the Unaudited Pro Forma Condensed Combined Statements of Operations

(In thousands)

 

Note 1 — Basis of Presentation

 

The unaudited pro forma condensed combined financial statements included herein have been prepared by the Registrant, without audit, pursuant to the rules and regulation of the Securities and Exchange Commission. The Registrant believes that the disclosures are adequate to make the information not misleading. The Registrant remeasured IMW’s statements of operations for the six months ended June 30, 2010 and the year ended December 31, 2009 at the average exchange rates over the respective periods.

 

Note 2 — Pro Forma Adjustments

 

(i)  Amortization and Development Costs

 

To reflect the pro forma effect on amortization expense of IMW’s identifiable intangible assets to their estimated fair values at the date of the acquisition. The amount of this adjustment may change as the values and asset lives of the underlying asset valuations are finalized.

 

U.S. generally accepted accounting principles requires development costs to be charged to expense as incurred. Under Canadian generally accepted accounting principles, development costs are deferred when certain criteria are met, and are amortized over the estimated period of production. This amount represents the adjustment required to conform to US generally accepted accounting principles for the respective periods presented.

 

(ii) Selling General and Administrative

 

Amounts adjust for related party management fees, non recurring acquisition related costs and deferred development costs for the six month period ended June 30, 2010.

 

Amounts adjust for related party management fees and deferred development costs for the twelve month period ended December 31, 2009.

 

(iii)  Interest Income (Expense), Net

 

Adjustment to record reduction in estimated interest income earned for the six months ended June 30, 2010 and the year ended December 31, 2009 on cash and cash equivalents as a result of paying the upfront cash consideration at closing of the acquisition.

 

(iv) Income Tax Provision

 

To record the income tax benefit of the net pro forma adjustments at IMW’s Canadian Federal and Provincial statutory rates of 29.5%.

 

Tax expense related to the Company’s net pro forma adjustments for US tax purposes was not recorded as the Company is in a taxable loss position for US tax purposes and the Company has provided a full valuation allowance against its net US deferred tax assets.

 

(v)  Intercompany Transactions

 

Amounts represent intercompany transactions eliminated for the respective periods presented.

 

(vi)  Earnings per Share

 

The following table summarizes the computation of the unaudited pro forma combined weighted-average basic shares outstanding and weighted-average dilutive shares outstanding.  These two amounts are used in the calculation of loss per share.

 

 

 

Six Months Ended

 

 

 

June 30, 2010

 

Historical Registrant weighted-average basic and dilutive shares outstanding

 

60,494

 

Shares issued at closing of acquisition

 

4,017

 

Weighted-average basic and dilutive shares outstanding

 

64,511

 

 

 

 

Year Ended

 

 

 

December 31, 2009

 

Historical Registrant weighted-average basic and dilutive shares outstanding

 

55,022

 

Shares issued at closing of acquisition

 

4,017

 

Weighted-average basic and dilutive shares outstanding

 

59,039

 

 

The following table recalculates basic and diluted loss per share.

 

 

 

Six Months Ended

 

 

 

June 30, 2010

 

Numerator

 

 

 

Net loss

 

$

(17,099

)

Denominator

 

 

 

Weighted-average basic and dilutive shares outstanding

 

64,511

 

Loss per share:

 

 

 

Basic

 

$

(0.27

)

Diluted

 

$

(0.27

)

 

 

 

Year Ended

 

 

 

December 31, 2009

 

Numerator

 

 

 

Net loss

 

$

(37,833

)

Denominator

 

 

 

Weighted-average basic and dilutive shares outstanding

 

59,039

 

Loss per share:

 

 

 

Basic

 

$

(0.64

)

Diluted

 

$

(0.64

)