-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nx3SLIk5RDddRKJ3LlB+Ntml3Vz473aRcDU7Qp/kMtgS+a2rDQAGOk6+l/svh8dD CQ8YsYR+0j+iu6e6GXCiuA== 0000950153-00-000251.txt : 20000223 0000950153-00-000251.hdr.sgml : 20000223 ACCESSION NUMBER: 0000950153-00-000251 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991203 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CERPROBE CORP CENTRAL INDEX KEY: 0000725259 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 860312814 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-11370 FILM NUMBER: 549813 BUSINESS ADDRESS: STREET 1: 1150 NORTH FIESTA BLVD CITY: GILBERT STATE: AZ ZIP: 85233-2237 BUSINESS PHONE: 6029677885 MAIL ADDRESS: STREET 1: 600 S ROCKFORD DR CITY: TEMPE STATE: AZ ZIP: 85281 8-K/A 1 8-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) December 3, 1999 ------------------------------- CERPROBE CORPORATION (Exact name of Registrant as specified in its Charter) Delaware 0-11370 86-0312814 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.)
1150 North Fiesta Boulevard, Gilbert, Arizona 85233-2237 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (480) 333-1500 ------------------------------
2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On December 3, 1999 (the "Closing Date"), Cerprobe Corporation, a Delaware corporation (the "Registrant"), completed its purchase (the "Stock Purchase") of all of the capital stock of OZ Technologies, Inc., a California corporation ("OZ"), pursuant to that certain Stock Purchase Agreement dated as of December 3, 1999 (the "Stock Purchase Agreement") by and among the Registrant, OZ, and the following parties: Nasser Barabi, Iraj Barabi, Ali Bushehri, and Ahmad Barabi, as individuals, Ali Bushehri, as trustee for the Ali and Nassrin Bushehri Trust, a trust established under the laws of the state of California, and Ahmad Barabi, as trustee for the Ahmad and Zakieh Barabi Trust, a trust established under the laws of the state of California (Nasser Barabi, Iraj Barabi, the Ali and Nassrin Bushehri Trust and the Ahmad and Zakieh Barabi Trust are referred to herein as the "Selling Stockholders"). The purchase price paid by the Registrant under the Stock Purchase Agreement consisted of (i) $19,000,000 in cash, (ii) 1,500,000 shares of the Registrant's common stock valued at $11,338,000 (the "Registrant Common Stock"), (iii) a note from the Registrant issued to the agent of the Selling Stockholders in the amount of $2,830,000 (the "Subordinated Promissory Note"), and (iv) a note from the Registrant issued to the agent of the Selling Stockholders in the amount of $2,800,000 (the "Promissory Note"). The amount and nature of the purchase price was determined by arms-length negotiations among the parties. In connection with the Stock Purchase, Registrant and its domestic subsidiaries, Cerprobe Interconnect Solutions, Inc., OZ and OZ's domestic subsidiary, Triple S Engineering, Inc. (the "Borrowers"), entered into a three-year senior secured credit facility with Bank of America, N.A. (the "Loan and Security Agreement"). The Loan and Security Agreement includes a revolving credit facility in the amount of $15,000,000 subject to borrowing base requirements providing for advances of up to eighty-five (85%) of eligible accounts receivable. Initial advances on the revolving line of credit were approximately $1,800,000. Advances on the revolving credit facility bear interest at prime rate plus 0.50%. The facility also includes an inventory term loan in the amount of approximately $5,800,000 and a machinery and equipment term loan in the amount of $2,000,000, both of which bear interest at prime rate plus 2.00%. The inventory term shall be repaid based upon a 24-month amortization with a balloon payment of the outstanding principal balance at the end of 12 months. The machinery and equipment term loan shall be repaid based upon a 60-month amortization with a balloon payment of the outstanding principal balance at the end of 36 months. All loans, advances, and other obligations, liabilities, and indebtedness of Registrant and its domestic subsidiaries shall be secured by valid, perfected, and enforceable first priority liens upon and security interest in substantially all of the Borrower's present and future assets, including all accounts, contract rights, inventory instruments, documents, fixtures, chattel paper, general intangibles, patents, trademarks, copyrights, trade names, deposit accounts, vehicles, equipment, and pledge of stock of all domestic subsidiaries of Cerprobe and OZ and 65% of the stock of each wholly-owned foreign subsidiary of Cerprobe. The facility is also guaranteed by all wholly-owned subsidiaries of Cerprobe and OZ. The Loan and Security Agreement contains a number of covenants that, among other things, restrict the ability of the Borrowers to dispose of assets, incur additional indebtedness, incur guaranty obligations, prepay indebtedness except in accordance with relevant subordination provisions, pay dividends or make capital distribution (other than distributions in capital stock), create liens on assets, engage in mergers or consolidations (except that any Borrower may voluntarily merge into another Borrower), engage in certain transactions with subsidiaries and affiliates, make any change in accounting policies or reporting practices except as required or permitted by generally accepted accounting principles and otherwise restrict corporate activities. In addition, the Loan and Security Agreement 2 3 requires the Borrowers to comply with certain financial covenants, including the maintenance of a consolidated Tangible Net Worth (as defined in the Loan and Security Agreement). Borrowers do not expect that such covenants will materially impact the ability of Borrowers to operate their respective businesses. The Loan and Security Agreement contains customary events of default, including the failure to pay principal when due or any interest or other amount that becomes due, any representation or warranty being made by Borrowers that is incorrect in any material respect on or as of the date made, a default in the performance of any covenant which continues for more than thirty days, default in certain other indebtedness, certain insolvency events, certain ERISA events, and certain change of control events. In connection with the Stock Purchase, the Registrant agreed to prepare and file a registration statement (the "Registration Statement") on Form S-3 with the Securities and Exchange Commission no later than seven days after the Closing Date to register the resale of the Registrant Purchaser Shares. The Selling Stockholders have waived this provision of the Stock Purchase Agreement and the Registrant expects that it will file the Registration Statement within ninety days after the Closing Date. Under the Stock Purchase Agreement, the maximum number of shares of the Registrant Common Stock that the Selling Stockholders may sell (i) during the 180-day period beginning on the effective date of the Registration Statement is 554,089 shares and (ii) during each of the four consecutive 30-day periods that begin immediately following the end of such 180-day period is 100,000 shares. The Stock Purchase Agreement also provides that, to the extent that the Selling Stockholders sell shares of the Registrant Common Stock during the 180-day period beginning on the effective date of the Registration Statement, if the average proceeds per share to the Selling Stockholders from such sales after customary selling expenses are less than $7.58 per share, the product of (i) the difference between $7.58 per share and such average proceeds per share and (ii) the number of shares of the Registrant Common Stock sold during such 180-day period shall be added to the principal amount of the Subordinated Promissory Note. The principal amount of the Subordinated Promissory Note may be reduced by an amount up to $3,000,000 under the Stock Purchase Agreement in satisfaction of certain of the Selling Stockholders' indemnification obligations to the Registrant thereunder. The principal amount of the Subordinated Note also may be reduced under the Stock Purchase Agreement based on payments made by the Registrant to OZ's counter-party under two contracts OZ has with that counter-party, with the principal amount being so reduced as follows: (i) by 50% of all payments (other than payments for legal fees) made by the Registrant pursuant to or in settlement of those contracts after the Registrant's total for such payments exceeds $50,000 but is less than $250,000 and (ii) by 100% of all payments (other than payments for legal fees) made by the Registrant pursuant to or in settlement of those contracts after the Registrant's total for such payments exceeds $250,000. The Subordinated Promissory Note matures on the earlier of the Registrant's receiving at least $10,000,000 in gross proceeds from an underwritten public offering of its common stock or December 3, 2002, and accrues interest at the rate of 10% per annum. The Promissory Note accrues interest at a rate of 10% per annum and was to have matured on February 3, 2000. The selling stockholders have agreed to extend maturity on this note until June 30, 2000. The Registrant may satisfy the Promissory Note on June 30, 2000, by paying in cash all amounts then due under the Promissory Note or by transferring its real property located at 10365 Sanden Drive, Dallas, Texas (the "Real Property") to the Selling Stockholders' agent, unencumbered except for minor liens and any mortgage that is executed by the Registrant in favor of the Selling Stockholders with respect to the Real Property. In the event that the Registrant satisfies the Promissory Note by transferring the Real Property to the Selling Stockholders' agent on June 30, 2000, the Stock Purchase Agreement provides that the Registrant and the Selling Stockholders' agent shall assign a value (the "Appraised Value") to the Real Property equal to the appraised value for the Real Property as determined by a mutually agreed-upon real estate appraiser. 3 4 The Stock Purchase Agreement further provides that (i) to the extent the Appraised Value is less than $2,800,000 plus interest due under the Promissory Note, the amount of the difference shall be added to the principal amount of the Subordinated Promissory Note and (ii) to the extent the Appraised Value is more than $2,800,000 plus interest due under the Promissory Note, the amount of the difference may be applied to reduce the principal amount of the Subordinated Promissory Note if doing so does not cause the Registrant to violate any covenant in any loan document to which it is a party. In connection with the Stock Purchase, Nasser Barabi and Iraj Barabi have entered into employment agreements with OZ, which expire December 6, 2001. Under these employment agreements, Nasser Barabi will serve as OZ's Director of Engineering and Research and Development at a salary of $175,000 per year, and Iraj Barabi will serve as OZ's Director of Operations at a salary of $175,000 per year. In connection with the Stock Purchase, the Registrant entered into a consulting agreement with C-MA International, Ltd., the sole equity holder of which is Ali Bushehri, which expires March 6, 2001. Under this consulting agreement, C-MA International, Ltd. will perform certain financial and administrative consulting services for an amount equal to $100 per hour with a guaranteed 120 hours per month during the term of the agreement. In connection with the Stock Purchase, each of Nasser Barabi, Iraj Barabi, Ali Bushehri and Ahmad Barabi entered into a noncompetition agreement with the Registrant. Each of these agreements contains certain noncompetition provisions that expire on the third anniversary of the Closing Date. The acquisition was accounted for using the purchase method. Accordingly, the purchase price was allocated to assets acquired and liabilities assumed based upon their estimated fair values. The amount of in-process research and development in connection with the allocation is $8,815,000. The current state of the research and development products/processes is not yet at a technological feasible or commercially viable stage. The Registrant does not believe that the research and development products/processes have any future alternative use because if they are not finished and brought to ultimate product or process completion, they have no other value. Therefore, consistent with generally accepted accounting principles, the Registrant took a one-time charge for the in-process research and development in the fourth quarter ending December 31, 1999. OZ manufactures systems solutions for IC package test and is a leading designer and producer of high performance test sockets and contactors. OZ also designs and distributes ATE test boards and burn-in interfaces and systems. ITEM 7. FINANCIAL STATEMENTS, UNAUDITED PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS. (a) Consolidated Financial Statements of OZ Technologies, Inc. Independent Auditors' Report Consolidated Balance Sheet as of December 31, 1998 Consolidated Statement of Income and Retained Earnings for the Year Ended December 31, 1998 Consolidated Statement of Cash Flows for the Year Ended December 31, 1998 Notes to Consolidated Financial Statements 4 5 Independent Auditors' Report Consolidated Balance Sheet as of September 30, 1999 Consolidated Statement of Income and Retained Earnings for the Nine Months Ended September 30, 1999 Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 1999 Notes to Consolidated Financial Statements (b) Unaudited Pro Forma Financial Information Unaudited Pro Forma Combined Condensed Balance Sheet as of September 30, 1999 Unaudited Pro Forma Combined Condensed Statements of Operations for the Year Ended December 31, 1998 and Nine Months Ended September 30, 1999 Notes to Unaudited Pro Forma Combined Condensed Financial Statements (c) Exhibits Exhibit No. Description of Exhibit 1 Stock Purchase Agreement* 2 Subordinated Promissory Note $2,830,000* 3 Promissory Note $2,800,000* 4 Employment Agreement-Nasser Barabi* 5 Employment Agreement-Iraj Barabi* 6 Consulting Agreement-C-MA International, Ltd.* 7 Noncompetition Agreement-Nasser Barabi* 8 Noncompetition Agreement-Iraj Barabi* 9 Noncompetition Agreement-Ali Bushehr* 10 Noncompetition Agreement-Ahmad Barabi* 11 Loan and Security Agreement with Bank of America, N.A.* 12 Consent of Independent Auditors 13 Consent of Independent Auditors * Previously filed 5 6 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigning hereunto duly authorized. CERPROBE CORPORATION By:/s/ Randal L. Buness ------------------------------------------- Randal L. Buness Senior Vice President, Chief Financial Officer, Secretary, and Treasurer Dated as of February 18, 2000 6 7 OZ TECHNOLOGIES, INC. CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 8 Oz Technologies, Inc. Hayward, California INDEPENDENT AUDITORS' REPORT We have audited the accompanying consolidated balance sheet of Oz Technologies, Inc. as of December 31, 1998, and the related consolidated statements of income and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our report dated March 11, 1999, our opinion on the 1998 consolidated financial statements was qualified because we did not observe the physical inventory taken as of December 31, 1997, since that date was prior to our engagement as auditors and we were unable to satisfy ourselves about inventory quantities and pricing of inventories by means of other auditing procedures within the boundaries of our audit arrangement. As discussed in Note 6, all of the outstanding common stock of Oz Technologies, Inc. was acquired by Cerprobe Corporation. As a result, we were engaged to perform and did perform the necessary audit procedures to satisfy ourselves about inventory quantities and pricing as of December 31, 1997. Accordingly, our present opinion on the 1998 consolidated financial statements, as presented herein, is different from that expressed in our previous report. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oz Technologies, Inc. as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Frank, Rimerman & Co. LLP San Jose, California March 11, 1999, except for Note 6 and the performance of the audit procedures discussed in the third paragraph of this report, as to which the date is February 15, 2000. 9 OZ TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEET - --------------------------------------------------------------------------------
ASSETS December 31, 1998 Current Assets Cash and cash equivalents $ 706,168 Trade accounts receivable 2,763,446 Inventories 3,508,882 Prepaid expenses and other current assets 155,040 Deferred income tax asset 396,500 -------------- Total current assets 7,530,036 Property and Equipment, net 1,240,035 Note Receivable from Related Party 225,508 Deferred Income Tax Asset 363,500 Other Assets, net 327,688 -------------- $ 9,686,767 ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 1,398,630 Accrued expenses 1,387,999 Income taxes payable 1,928,715 -------------- Total current liabilities 4,715,344 Commitments (Note 5) Stockholders' Equity Common stock, no par value, 1,000,000 shares authorized; 100,000 shares issued and outstanding 47,326 Retained earnings 4,924,097 -------------- Total stockholders' equity 4,971,423 -------------- $ 9,686,767 ==============
See Notes to Consolidated Financial Statements 10 OZ TECHNOLOGIES, INC. CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS - --------------------------------------------------------------------------------
Year Ended December 31, 1998 Sales $ 20,875,083 Cost of Goods Sold 12,265,528 -------------- Gross Profit 8,609,555 Operating Expenses Selling 1,393,949 General and administrative 3,131,214 Research and development 718,882 -------------- 5,244,045 -------------- Income from Operations 3,365,510 Interest and Other Income, net 125,703 -------------- Income before Income Taxes 3,491,213 Income Taxes 1,309,000 Net Income 2,182,213 Retained Earnings - December 31, 1997 2,741,884 -------------- Retained Earnings - December 31, 1998 $ 4,924,097 ==============
See Notes to Consolidated Financial Statements 11 OZ TECHNOLOGIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS - --------------------------------------------------------------------------------
Year Ended December 31, 1998 ---- Cash Flows from Operating Activities Net income $ 2,182,213 Adjustments to reconcile net income to net cash used in operating activities Depreciation and amortization 284,089 Change in operating assets and liabilities Accounts receivable 44,439 Inventories (1,245,162) Prepaid expenses and other current assets (149,113) Deferred income tax assets (88,000) Other assets 10,834 Accounts payable 306,286 Accrued expenses 209,134 Income taxes payable (26,185) ------------- Net cash provided by operating activities 1,528,535 ------------- Cash Flows from Investing Activities Purchase of property and equipment (1,054,210) ------------- Net cash used in investing activities (1,054,210) ------------- Net increase in cash and cash equivalents 474,325 Cash and Cash Equivalents - December 31, 1997 231,843 ------------- Cash and Cash Equivalents - December 31, 1998 $ 706,168 =============
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Supplemental Disclosure of Cash Flow Information Income Taxes Paid $ 1,429,000 ============= Interest Paid $ 3,000 =============
See Notes to Consolidated Financial Statements 12 OZ TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Nature of Business and Significant Accounting Policies NATURE OF BUSINESS Oz Technologies, Inc. (the "Company") was incorporated in 1988. The Company designs, manufactures and sells integrated circuit ("IC") test interfaces and related products and services for use in the semi-conductor manufacturing industry. IC test interfaces are specially designed electro-mechanical devices that connect IC's to printed circuit boards. The Company's core expertise is in the complex, highly customized IC tester interface design and manufacturing processes. The Company has ongoing relationships with major chip manufacturing companies worldwide. Basis of Presentation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Triple S Engineering, Inc. (TSE). All significant intercompany transactions and balances have been eliminated. SIGNIFICANT ACCOUNTING PRINCIPLES Revenue Recognition: Sales and related costs are recognized by the Company upon shipment of products. The Company provides return privileges on product it sells. Return costs historically have not been material. Major Customers: The Company had sales of $15,337,000 to three customers in 1998 (74% of total sales). Accounts receivable due from these major customers at December 31, 1998 totaled $2,023,000 (73% of total accounts receivable). Inventories: Inventories are stated at the lower of cost (using the first in, first out method) or market and consist of the following:
Raw materials $ 2,021,237 Work in progress 1,487,645 ------------ $ 3,508,882 ============
13 OZ TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Nature of Business and Significant Accounting Policies (continued) Property and Equipment: Property and equipment is recorded at cost and depreciated using the straight-line method over the useful life of the asset, ranging from three to five years. Leasehold improvements are amortized over the lesser of the remaining lease term or their estimated useful lives.
Property and equipment consist of the following: Computer equipment and software $ 849,889 Furniture and fixtures 230,328 Production equipment 201,994 Automobiles 95,173 Leasehold improvements 402,974 ------------ 1,780,358 Less accumulated depreciation 540,323 ------------ $ 1,240,035 ============
Goodwill: Goodwill, representing the excess of the purchase price paid for TSE over net assets acquired, is stated at cost and is amortized on a straight-line basis over fifteen years, the estimated future period to be benefited. Goodwill of $325,000, reflected net of $175,000 of accumulated amortization, is included in other assets. Income Taxes: Income taxes are accounted for under Statement of Financial Accounting Standards No. 109 (SFAS No. 109), Accounting for Income Taxes. SFAS No. 109 provides for an asset and liability approach to accounting for income taxes. Deferred income taxes reflect the expected effect on future income taxes of the temporary differences between the amounts at which assets and liabilities are recorded for financial reporting purposes and the amounts recorded for income tax purposes. Deferred income taxes are provided based upon enacted tax rates applicable to the periods in which taxes become payable or tax benefits are expected to be realized. Research and Development Costs: Research and development costs are expensed as incurred. 14 OZ TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. Nature of Business and Significant Accounting Policies (continued) Advertising Costs: Advertising costs are expensed as incurred. Cash and Cash Equivalents: For purposes of the statement of cash flows, the Company considers all highly-liquid investments, with an original maturity of three months or less which are not subject to withdrawal restrictions or penalties, to be cash equivalents. Concentration of Credit Risk: Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and accounts receivable. The Company maintains its cash and cash equivalents with one commercial bank. These deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. The Company sells its products to companies on a worldwide basis. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for potential credit losses and such losses have been within management expectations. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and reported amounts of revenues and expenses in the financial statement and accompanying notes. Actual results could differ from those estimates. 2. Bank Borrowings The Company has a revolving bank line of credit agreement which provides for borrowings of up to $2,000,000. Borrowings are at the bank's base lending rate plus 1.5% (8.25% at December 31, 1998) and are guaranteed by certain stockholders. The agreement requires the Company to meet certain financial covenants including stated levels of working capital and tangible net worth, and to maintain profitable operations. There were no outstanding borrowings during 1998. 15 OZ TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 3. Note Receivable from Related Party The Company has an unsecured note receivable from a partnership ("Partnership") in which the Company's stockholders are partners. The note receivable earns interest at 8% and is due on December 31, 2001. The balance of $225,508 includes accrued interest income of $70,008, of which $12,100 was earned in 1998. 4. Income Taxes Income taxes are as follow:
Current Federal $ 1,152,900 State 244,100 ------------- 1,397,000 ------------- Deferred Federal (104,000) State 16,000 ------------- (88,000) ------------- $ 1,309,000 =============
Deferred income taxes result primarily from expenses included in the financial statements which will be deductible for tax purposes in future years, including state income taxes which are deductible in the year subsequent to payment and amortization of intangible assets whose lives are different for income tax purposes. Deferred income tax assets are as follows:
Current Federal $ 335,500 State 61,000 ------------ Total 396,500 ------------ Long-Term Federal 310,500 State 53,000 ------------ Total 363,500 ------------ $ 760,000 ============
16 OZ TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 5. Lease Commitments Facilities: The Company leases its main operating facility under a non-cancelable operating lease expiring February 2002. In September 1998, the partnership purchased the facility from an unrelated landlord and entered into a new lease agreement with the Company. The lease requires the Company to pay certain occupancy expenses. The Company may renew the lease for up to an additional 23 years under three renewal options. Rent expense for the facility was $180,000, of which $35,000 was paid to the Partnership. Future minimum lease payments to the Partnership are as follows:
1999 $ 159,000 2000 169,000 2001 172,000 2002 29,000 ----------- $ 529,000 ===========
The Company rents another manufacturing facility under a non-cancelable operating lease which expires October 31, 2000. The Company may extend the lease for an additional year. Rent expense for this facility was $6,000. Future minimum lease payments are $32,000 in 1999 and $27,000 in 2000. Equipment and Automobiles: The Company leases production equipment and automobiles under non-cancelable operating lease agreements. Rent expense related to these leases was $450,000. Future minimum lease payments under these equipment and automobile leases are as follows:
1999 $ 423,000 2000 377,000 2001 299,000 2002 164,000 2003 83,000 ----------- $ 1,346,000 ===========
17 OZ TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 6. Subsequent Event On December 3, 1999, Cerprobe Corporation (Cerprobe), acquired all of the Company's outstanding common stock. As a result, the Company became a wholly-owned subsidiary of Cerprobe. 18 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Consolidated Financial Statements September 30, 1999 (With Independent Auditors' Report Thereon) 19 INDEPENDENT AUDITORS' REPORT The Board of Directors Oz Technologies, Inc.: We have audited the accompanying consolidated balance sheet of Oz Technologies, Inc. and subsidiary, as of September 30, 1999, and the related statement of income and retained earnings, and cash flows for the nine months then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oz Technologies, Inc. and subsidiary as of September 30, 1999, and the results of their income and retained earnings, and their cash flows for the nine months then ended, in conformity with generally accepted accounting principles. February 4, 2000 20 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Consolidated Balance Sheet September 30, 1999 ASSETS Current assets: Cash and cash equivalents $ 306,759 Trade accounts receivable, net of allowance of $130,000 4,179,825 Inventory 3,898,110 Prepaid expenses and other current assets 175,435 Income tax receivable 508,264 Deferred income tax asset 391,392 ----------- Total current assets 9,459,785 Property and equipment, net 1,995,895 Note receivable from related party 345,497 Other assets, net 358,114 ----------- $12,159,291 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,050,933 Accrued expenses 1,282,062 Lines of Credit 2,121,233 ----------- Total current liabilities 4,454,228 ----------- Deferred tax liability 76,510 Commitments and contingencies Stockholders' equity: Common stock, no par value, 1,000,000 shares authorized; 100,000 shares issued and outstanding 47,326 Retained earnings 7,581,227 ----------- Total stockholders' equity 7,628,553 ----------- Total liabilities and stockholders' equity $12,159,291 ===========
See accompanying notes to the consolidated financial statements. 21 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Consolidated Statement of Income and Retained Earnings Nine months ended September 30, 1999 Sales $21,123,123 Cost of goods sold 12,170,236 ----------- Gross profit 8,952,887 Operating expenses: Selling 1,669,999 General and administrative 3,802,671 Research and development 435,149 ----------- 5,907,819 ----------- Income from operations 3,045,068 Interest and other income, net 53,846 ----------- Income before income taxes 2,991,222 Income taxes 334,092 ----------- Net income 2,657,130 Retained earnings-- December 31, 1998 4,924,097 ----------- Retained earnings-- September 30, 1999 $ 7,581,227 ===========
See accompanying notes to the consolidated financial statements. 22 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Consolidated Statement of Cash Flows Nine months ended September 30, 1999 Cash flows from operating activities: Net income $ 2,657,130 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 371,794 Increase in allowance for doubtful accounts 130,000 Deferred tax provision 445,118 Change in operating assets and liabilities: Accounts receivable (1,546,379) Inventories (389,228) Income taxes receivable (508,264) Prepaid expenses and other current assets (20,395) Notes receivable from related parties (119,989) Other assets (52,926) Accounts payable (347,697) Accrued expenses (2,034,652) ----------- Net cash used in operating activities (1,415,488) ----------- Cash flows from investing activities: Purchase of property and equipment (1,105,154) ----------- Net cash used in investing activities (1,105,154) ----------- Cash flows from financing activities: Net proceeds from lines of credit 2,121,233 ----------- Net cash provided by financing activities 2,121,233 ----------- Net decrease in cash and cash equivalents (399,409) Cash and cash equivalents-- December 31, 1998 706,168 ----------- Cash and cash equivalents-- September 30, 1999 $ 306,759 =========== Supplemental disclosure of cash flow information: Income taxes paid $ 2,845,000 =========== Interest paid $ 92,168 ===========
See accompanying notes to the consolidated financial statements. 23 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements September 30, 1999 (1) NATURE OF BUSINESS Oz Technologies, Inc. (the "Company") was incorporated in 1988. The Company designs, manufactures, and sells integrated circuit ("IC") test interfaces and related products and services for use in the semi-conductor manufacturing industry. IC test interfaces are specially designed electro-mechanical devices that connect IC's to printed circuit boards. The Company's core expertise is in the complex, highly customized IC tester interface design and manufacturing processes. The Company has ongoing relationships with major chip manufacturing companies worldwide. (2) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (a) USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (b) CASH EQUIVALENTS The Company considers all highly-liquid investments, with original maturities of three months or less to be cash equivalents. (c) PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Triple S Engineering, Inc. (TSE). All significant intercompany transactions and balances have been eliminated. (d) SIGNIFICANT CUSTOMERS Three customers accounted for 53%, 12% and 11%, respectively, of total revenues for the nine months ended September 31, 1999. Two customers accounted for 48% and 10% of the total accounts receivable balance at September 30, 1999. (e) PROPERTY AND EQUIPMENT Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets which range from three to five years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or the lease terms. (f) REVENUE RECOGNITION Sales and related costs are recognized by the Company upon shipment of products. The Company provides return privileges on product it sells. Return costs historically have not been significant. (Continued) 24 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements September 30, 1999 (g) INVENTORIES Inventories are stated at the lower of cost (using the first-in, first-out method) or market and consist of the following: Raw Materials $2,728,395 Work-in-process 1,169,715 ---------- $3,898,110 ==========
(h) GOODWILL Goodwill, representing the excess of the purchase price paid for TSE over net assets acquired, is stated at cost and is amortized on a straight-line basis over fifteen years, the estimated future period to be benefited. Goodwill of $450,000, less $150,000 of accumulated amortization, is included in other assets. (i) INCOME TAXES Income taxes are accounted for under Statement of Financial Accounting Standards No. 109 (SFAS No. 109), Accounting for Income Taxes. SFAS No. 109 provides for an asset and liability approach to accounting for income taxes. Deferred income taxes reflect the expected effect on future income taxes of the temporary differences between the amounts at which assets and liabilities are recorded for financial reporting purposes and the amounts recorded for income tax purposes. Deferred income taxes are provided based upon enacted tax rates applicable to the periods in which taxes become payable or tax benefits are expected to be realized. (j) RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred. (k) CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and accounts receivable. The Company maintains its cash and cash equivalents with one commercial bank. These deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. The Company sells its products to companies on a worldwide basis. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for potential credit losses and such losses have been within management expectations. (Continued) 25 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements September 30, 1999 (3) PROPERTY AND EQUIPMENT Property and equipment consist of the following:
SEPTEMBER 30, 1999 ------------------ Computer equipment and software $ 1,162,232 Furniture and fixtures 538,075 Production equipment 604,235 Automobiles 95,173 Leasehold improvements 485,797 -------------- 2,885,512 Less accumulated depreciation 889,617 -------------- $ 1,995,895 ==============
(4) NOTES RECEIVABLE FROM RELATED PARTY The Company has an unsecured notes receivable from a partnership ("Partnership") in which the Company's stockholders are partners. In addition, the Company has various notes receivable from stockholders and employees. The notes bear interest ranging from 8% to 10%. The notes are due at various dates through December 31, 2001. (5) LINES OF CREDIT The Company has a line of credit with a bank totaling $5,000,000. The line of credit bears interest at the bank's base lending rate plus 1.5% (8.25% on September 30, 1999) and expires in May 2000. The line is secured by substantially all of the property and assets of the Company. The agreement requires the Company to meet certain financial covenants and to maintain profitable operations. At September 30, 1999, $2,106,133 was outstanding under this line of credit. The Company has a line of credit with a bank totaling $2,000,000. The line of credit bears interest at the bank's base lending rate plus 1.5% (8.25% on September 30, 1999) and expires in May 2000. The line is secured by substantially all of the property and assets of the Company. The agreement requires the Company to meet certain financial covenants and to maintain profitable operations. At September 30, there were no borrowings outstanding under this line of credit. The Company has a line of credit with a bank totaling $1,000,000. The line of credit bears interest at the bank's base lending rate plus 1.5% (8.25% on September 30, 1999) and expires in August 2000. The line is secured by substantially all of the property and assets of the Company. The agreement requires the Company to meet certain financial covenants and to maintain profitable operations. At September 30, 1999, $15,000 was outstanding under this line of credit. The Company is in compliance with such financial covenants at September 30, 1999. (Continued) 26 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements September 30, 1999 (6) INCOME TAXES The provision for income taxes is as follows:
NINE MONTHS ENDED SEPTEMBER 30, 1999 -------------------- Current expense (benefit): Federal $ (83,269) State (27,757) --------- (111,026) --------- Deferred expense (benefit): Federal 400,996 State 44,122 --------- 445,118 --------- Total income taxes $ 334,092 =========
The provision for income taxes differs from the amount computed by applying the statutory federal and state corporate income tax rate of 34% to income before income taxes. The sources and tax effects of the differences are as follows:
SEPTEMBER 30, 1999 -------------------- Computed expected income tax expense (benefit) $ 1,017,015 Nondeductible permanent differences 13,115 State income taxes, net of federal benefit 208,664 Change in tax accrual no longer deemed necessary (1,180,744) Adjustment to research and development credit 107,500 Other 168,542 ----------- $ 334,092 ===========
(Continued) 27 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements September 30, 1999 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
SEPTEMBER 30, 1999 ------------------ Deferred tax assets: Bad debts $ 51,785 Intangibles 235,686 Accrued liabilities 77,488 Workers compensation 26,433 --------- Gross deferred tax assets 391,392 --------- Deferred tax liabilities: Property, plant and equipment, principally due to differences in depreciation (76,510) --------- Gross deferred tax liability (76,510) --------- Net deferred tax asset $ 314,882 =========
Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets; therefore, no valuation allowance has been established as of September 30, 1999. Subsequent to September 30, 1999, the Company agreed to a settlement with the Internal Revenue Service which resulted in an adjustment to Research and development credits which were previously claimed and a reduction in the estimated amount of taxes to be paid. (7) LEASE COMMITMENTS FACILITIES The Company leases its main operating facility under a non-cancelable operating lease expiring February 2009. In September 1998, the Partnership purchased the facility from an unrelated landlord and entered into a new lease agreement with the Company. The lease requires the Company to pay certain occupancy expenses. The Company may renew the lease for up to an additional 16 years under three renewal options. Rent expense for the facility was $118,130 for the nine months ended September 30, 1999. (Continued) 28 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements September 30, 1999 The Company rents another manufacturing facilities under non-cancelable operating leases which expire October 31, 2000. The Company may extend the lease for an additional year. Rent expense for this facility was $25,142 for the nine months ended September 30, 1999. Future minimum lease payments to the Partnership are as follows: 2000 $ 166,846 2001 171,102 2002 258,932 2003 330,572 2004 347,101 Thereafter 1,750,203 ---------- $3,024,756 ==========
EQUIPMENT AND AUTOMOBILES The Company leases production equipment and automobiles under non-cancelable operating lease agreements. Rent expense related to these leases was $430,682. Future minimum lease payments under these equipment and automobile leases are as follows: 2000 $ 122,065 2001 458,322 2002 380,978 2003 251,831 2004 135,832 Thereafter 15,322 ----------- $ 1,364,350 ===========
(8) RETIREMENT PLAN The Company maintains a qualified 401(k) salary deferral plan (defined contribution plan). The plan covers all employees, excluding union employees and non-resident aliens, who have completed one year of service. Subject to limits imposed by Internal Revenue Service regulations and other options retained by the Company affecting participant contributions, participants may voluntarily contribute between 1% and 15% of their annual wages not to exceed limits established by the Tax Reform Act of 1986. The Company may make a year-end discretionary matching contribution. Participants are immediately vested in the amount of their contributions. Participants vest over a six-year period with respect to employer contributions. The Company had not made any matching contributions for the period ending September 30, 1999. (Continued) 29 OZ TECHNOLOGIES, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements September 30, 1999 (9) COMMITMENTS The Company is involved in litigation and claims arising in the normal course of operations. In the opinion of management, based on consultation with legal counsel, losses, if any, from this litigation are immaterial; therefore, no provision has been made in the accompanying consolidated financial statements for losses, if any, that might result from the ultimate outcome of these matters. (10) Subsequent Events (unaudited) On December 3, 1999, Cerprobe Corporation (Cerprobe), acquired all of the Company's outstanding common stock. As a result, the Company became a wholly-owned subsidiary of Cerprobe. Subsequent to September 30, 1999 all amounts outstanding under the lines of credit were paid in full. 30 CERPROBE CORPORATION PRO FORMA COMBINED CONDENSED BALANCE SHEET SEPTEMBER 30, 1999 UNAUDITED (IN THOUSANDS)
PRO FORMA PRO FORMA CERPROBE OZ ADJUSTMENTS COMBINED ----------- --------- ------------- ----------- ASSETS Current Assets Cash $ 6,875 $ 307 $ (5,179)(a) $ 2,003 Short-term investment securities 8,834 - (8,834)(a) - Accounts receivables, net 9,122 4,180 13,302 Inventories 6,718 3,898 10,616 Other current assets 6,150 1,075 7,225 ---------- --------- ------------- ----------- Total current assets 37,699 9,460 (14,013) 33,146 Property and equipment, net 23,301 1,996 25,297 Intangible assets, net - - 22,193 (a) 22,193 Other assets 3,799 703 (1,074)(a),(c) 3,428 ---------- --------- ------------- ----------- $ 64,799 $ 12,159 $ 7,106 $ 84,064 ========== ========= ============= =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 3,017 $ 1,051 $ $ 4,068 Accrued liabilities 3,157 1,282 726 (a) 5,165 Current portion of long-term debt 1,650 2,121 9,404 (a) 13,175 Net liabilities of discontinued operations 429 - 429 ---------- --------- ------------- ----------- Total current liabilities 8,253 4,454 10,130 22,837 Long-term debt, less current portion 3,938 - 2,081 (a) 6,019 Deferred tax liability - 77 77 ---------- --------- ------------- ----------- Total liabilities 12,191 4,531 12,211 28,933 Minority interest 846 - 846 Stockholders' equity Preferred stock - - - Common stock 418 47 28 (a),(c) 493 Additional paid-in capital 56,659 - 11,263 (a) 67,922 Retained earnings (deficit) 1,114 7,581 (16,396)(a),(c) (7,701) Cumulative translation adjustment (314) - (314) ---------- --------- ------------- ----------- 57,877 7,628 (5,105) 60,400 Treasury stock (5,274) - - (5,274) Notes receivable from officers and directors (841) (841) ---------- --------- ------------- ----------- Total stockholders' equity 51,762 7,628 (5,105) 54,285 ---------- --------- ------------- ----------- Total liabilities and stockholders' equity $ 64,799 $ 12,159 $ 7,106 $ 84,064 ========== ========= ============= ===========
See accompanying notes to pro forma combined condensed financial statements. 31 CERPROBE CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998 UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA PRO FORMA CERPROBE OZ ADJUSTMENTS COMBINED ---------- ---------- ---------- ---------- Net sales $ 76,207 $ 20,875 $ -- $ 97,082 Costs of goods sold 45,052 12,266 -- 57,318 ---------- ---------- ---------- ---------- Gross margin 31,155 8,609 -- 39,764 Expenses: Selling, general and administrative 18,317 4,525 22,842 Engineering and product development 3,101 719 3,820 In process research and development 1,568 -- 1,566 Goodwill amortization 461 -- 3,279(b) 3,740 ---------- ---------- ---------- ---------- Total expenses 23,447 5,244 3,279 31,970 ---------- ---------- ---------- ---------- Operating Income 7,708 3,365 (3,279) 7,794 Other income (expense): Interest income 1,324 126 1,450 Interest expense (269) -- (1,284)(d) (1,553) Other income, net 543 -- 543 ---------- ---------- ---------- ---------- Total other income (expense): 1,598 126 (1,284) 440 ---------- ---------- ---------- ---------- Income from continuing operations before income taxes and minority interest 9,306 3,491 (4,563) 8,234 Minority interest (384) -- (384) ---------- ---------- ---------- ---------- Income from continuing operations before income taxes 8,922 3,491 (4,563) 7,850 Income taxes (3,685) (1,309) 514 (4,480) ---------- ---------- ---------- ---------- Income from continuing operations 5,237 2,182 (4,049) 3,370 Discontinued operations: Loss from operations of SVTR, Inc., net of taxes (1,925) (1,925) Loss on disposal of SVTR, Inc., net of taxes (3,808) (3,808) ---------- ---------- ---------- ---------- Loss from discontinued operations (5,733) -- -- (5,733) ---------- ---------- ---------- ---------- Net income (loss) $ (496) $ 2,182 $ (4,049) $ (2,363) ========== ========== ========== ========== Net loss per common share Basic and diluted (0.06) (0.24) Weighted average number of common shares outstanding 8,251,373 9,751,373
32 CERPROBE CORPORATION PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1999 UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA PRO FORMA CERPROBE OZ ADJUSTMENTS COMBINED ---------- -------- ---------- ---------- Net sales $ 44,641 $ 21,123 $ -- $ 65,764 Costs of goods sold 29,645 12,170 -- 41,815 ---------- -------- ---------- ---------- Gross margin 14,996 8,953 -- 23,949 Expenses: Selling, general and administrative 14,648 5,473 20,121 Engineering and product development 3,248 435 3,683 In process research and development -- -- Goodwill amortization 391 -- 2,459(b) 2,850 ---------- -------- ---------- ---------- Total expenses 18,287 5,908 2,459 26,654 ---------- -------- ---------- ---------- Operating Income (3,291) 3,045 (2,459) (2,705) Other income (expense): Interest income 623 24 647 Interest expense (309) (92) 963(d) (1,364) Other income, net (81) 14 (67) ---------- -------- ---------- ---------- Total other income (expense): 233 (54) 963 (784) ---------- -------- ---------- ---------- Income (loss) from continuing operations before income taxes and minority interest (3,058) 2,991 (3,422) (3,489) Minority interest (273) -- (273) ---------- -------- ---------- ---------- Income (loss) from continuing operations before income taxes (3,331) 2,991 (3,422) (3,762) Income taxes 944 (334) 385 995 ---------- -------- ---------- ---------- Income (loss) from continuing operations (2,387) 2,657 (3,037) (2,767) Discontinued operations: Loss from operations of SVTR, Inc., net of taxes (5) (5) Loss on disposal of SVTR, Inc., net of taxes -- -- ---------- -------- ---------- ---------- Loss from discontinued operations (5) -- -- (5) ---------- -------- ---------- ---------- Net income (loss) $ (2,392) $ 2,657 $ (3,027) $ (2,772) ========== ======== ========== ========== Net loss per common share Basic and diluted (0.31) (0.30) Weighted average number of shares outstanding 7,740,136 9,240,136
33 \ Notes to Unaudited Pro Forma Combined Condensed Financial Statements Note 1. General Information The Unaudited Pro Forma Combined Condensed Balance is presented assuming the merger occurred September 30, 1999. The Unaudited Pro Forma Combined Condensed Statements of Operations are presented as if the merger occurred on January 1, 1998. The Unaudited Pro Forma Combined Condensed Financial Statements reflect the payment of (i) $19,000,000 in cash, (ii) 1,500,000 shares of the Registrant's common stock is valued at $11,338,000, (iii) a subordinated promissory note in the amount of $2,830,000, and (iv) a promissory note in the amount of $2,800,000. The acquisition has been recorded as a purchase transaction in accordance with generally accepted accounting principles and accordingly, OZ's assets and liabilities are recorded at their estimated fair values at the date of the merger. Certain reclassifications of OZ balances have been made to conform to the Cerprobe reporting format. Note 2. Pro Forma Adjustments a) The purchase price has been allocated to the assets acquired and liabilities assumed as follows (in thousands): Purchase price: Cash consideration $ 19,000 Common stock 75 Additional paid in capital 11,263 Acquisition costs 1,900 Notes Payable 5,630 ----------- Total $ 37,868 =========== Assets acquired and liabilities assumed: Current Assets $ 8,945 Fixed assets 1,823 Other assets 87 Goodwill/assembled workforce 22,193 Purchased research and development 8,815 Liabilities assumed (3,995) ----------- Total $ 37,868 ===========
The Company performed a valuation analysis of all research and development projects in process that had not yet been completed or for which the resulting product was not yet commercialized. The nine (9) projects that were identified could be utilized in future production. The Company estimated what the Note 3. Adjustments to Pro Forma Combined Condensed Financial Statements
a Cash 10,166 Short-term investment securities 8,834 Investment in OZ 6,860 In-process R & D (retained earnings) 8,815 Goodwill/assembled workforce 22,193 Common stock 75 Additional paid in capital 11,263 Notes payable 5,630 Accrued acquisition related costs 1,900 Record purchase of OZ by issuance of $19 million in cash, 1.5 million shares of stock, notes payable to seller, in-process research and development and goodwill/assembled workforce Cash 4,987 Notes receivable from OZ related parties 306 Notes payable 5,855 Accrued acquisition related costs 1,174 Record payments and issuance of notes payable, payment of notes receivable from related parties and payment of acquisition related costs. b Goodwill amortization 2,459 Record amortization of goodwill for the nine months ended September 30, 1999 Goodwill amortization 3,279 Record amortization of goodwill for the year ended December 31, 1998 c Common stock 47 Retained earnings 7,581 Investment in OZ 7,628 Eliminate equity in OZ at September 30, 1999 d Interest expense 963 Record interest expense for the nine months ended September 30, 1999 Interest expense 1,284 Record interest expense for the year ended December 31, 1998 Tax expense 385 Record tax effect of interest expense for the nine months ended September 30, 1999 Tax expense 514 Record tax effect of interest expense for the year ended December 31, 1998
34 cost to complete the products would be, and once completed, what the expected revenues as well as direct costs of production would be to ascertain the incremental profit margin of the products if and when they were completed. The cash flow was discounted with a present value factor of 20%. The valuation of these potential products is $8,815,000. The Company believes that these products do not have any future alternative use because if they are not finished and brought to ultimate completion, they have no other value. However, based upon their current state which is not yet at technological feasibility or commercially viable stage, they do have a value in assessing the overall valuation of OZ. Since the products are not currently deriving revenue and not until the products are completed would they derive revenue, the Company believes that these products have no separate economic value and therefore, should be written off as research and development costs immediately upon the acquisition of OZ. Accordingly, these costs have been charge to operations as of the date of consummation of the merger. Note 3. Unaudited Pro Forma Net Income Per Share The Unaudited Pro Forma Combined Condensed Statement of Operations for Cerprobe and OZ have been prepared as if the merger was completed on January 1, 1998. The unaudited pro forma combined net income per common and common equivalent share is based on the weighted average number of common and common equivalent shares of Cerprobe common stock after giving effect to the issuance of 1,500,000 shares to former OZ shareholders in connection with the merger. EX-23.1 2 EX-23.1 1 Exhibit 23.1 The Board of Directors Cerprobe Corporation CONSENT OF INDEPENDENT AUDITORS We consent to incorporation by reference in the registration statements (No. 33-8348, No. 33-65200 and No. 333-03015) filed on Form S-8 and No. 33-34493 on Form S-3 of Cerprobe Corporation of our report dated March 11, 1999, except for Note 6 and the performance of the audit procedures discussed in the third paragraph of our report, as to which the date is February 15, 2000, relating to the consolidated balance sheet of Oz Technologies, Inc. as of December 31, 1998, and the related consolidated statements of income and retained earnings, and cash flows for the year then ended, which report appears in Form 8-K/A of Cerprobe Corporation dated February 18, 2000. /s/ Frank, Rimerman & Co. LLP --------------------------------- Frank, Rimerman & Co. LLP San Jose, California February 18, 2000 EX-23.2 3 EX-23.2 1 [KPMG LOGO] Exhibit 23.2 CONSENT OF INDEPENDENT AUDITORS The Board of Directors Cerprobe Corporation: We consent to incorporation by reference in the registration statements (No. 33-8348, No. 33-65200, No. 333-03015, No. 333-34979 and No. 333-43469) filed on Form S-8 and No. 33-61805 on Form S-3 of Cerprobe Corporation of our report dated February 4, 2000, relating to the consolidated balance sheets of Oz Technologies, Inc. and subsidiary as of September 30, 1999, and the related consolidated statements of income and retained earnings, and cash flow for the nine-month period ended September 30, 1999, which report appears in Form 8-K/A of Cerprobe Corporation dated February 18, 2000. KPMG LLP Phoenix, Arizona February 18, 2000 -----END PRIVACY-ENHANCED MESSAGE-----