EX-99.2
Published on 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 Companys 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 Companys results from operations. The finalization of the Companys 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 |
|
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 IMWs 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 Registrants 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 Companys 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 IMWs 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 IMWs 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 Companys 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)
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 |
|
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 IMWs 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 IMWs 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 IMWs Canadian Federal and Provincial statutory rates of 29.5%.
Tax expense related to the Companys 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 |
) |