<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 16, 2000
-----------------
POWER-ONE, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-29454 77-0420182
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File number) Identification No.)
740 CALLE PLANO, CAMARILLO, CA 93012
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(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (805) 987-8741
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NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since
last report)
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<PAGE>
This report on Form 8-K provides additional information previously
reported by Power-One, Inc. (the "Company"), on Form 10-Q for the first quarter
of 2000 filed on May 17, 2000, relating to the purchase by the Company of all of
the outstanding capital stock of Norwegian-based Powec A.S. This report contains
the financial statements and pro forma financial information required to be
provided under Item 7 of Form 8-K.
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits
The following financial statements and pro forma financial information are filed
as part of this report:
(a) Financial statements of businesses acquired.
Consolidated balance sheet of Powec AS at December 31, 1999 and related
consolidated statements of operations and cash flows for the year ended December
31, 1999.
Unaudited interim consolidated balance sheet of Powec AS at March 31, 2000
and related unaudited interim consolidated statements of operations and cash
flows for the three months ended March 31, 2000.
(b) Pro forma financial information.
Pro forma consolidated balance sheets as of December 31, 1999 and March 31,
2000 and explanatory notes.
Pro forma consolidated statements of operations for the year ended
December 31, 1999 and for the three months ended March 31, 2000 and
explanatory notes.
(c) Exhibits
The exhibits listed below are filed as part of, or incorporated by
reference into, this report.
EXHIBIT NO. DESCRIPTION
----------- -----------
Consent of Moller & Co with respect to the Consolidated
23 Financial Statements of Powec AS.
2
<PAGE>
Independent Auditors' Report December 31, 1999
TO THE ANNUAL SHAREHOLDERS MEETING OF
POWEC AS.
We have audited the annual financial statements of Powec AS at 31 December 1999,
showing a profit of NOK 23 501 000 for the group. We have also audited the
information in the Board of Directors' report concerning the financial
statements, the going concern assumption, and the proposal for the appropriation
of the profit. The financial statements comprise the balance sheet, the
statements of income and cash flows, the accompanying notes and the group
accounts. These financial statements are the responsibility of the Company's
Board of Directors and Managing Director. Our responsibility is to express an
opinion on these financial statements and on other information according to the
requirements of the Norwegian Act on Auditing and Auditors, which are based on
the requirements of US General Accepted Audit Standards.
We conducted our audit in accordance with the Norwegian Act on Auditing and
Auditors and good auditing practice based on the requirements of US General
Accepted Audit Standards. Good auditing practice requires 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. To the extent required by law and good
auditing practice an audit also comprises a review of the management of the
Company's financial affairs and its accounting and internal control systems. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion,
- the financial statements have been prepared in accordance with law and
regulations and present the financial position of the Company and of the
Group as of 31 December 1999, and the results of its operations and its cash
flows for the year then ended, in accordance with good accounting practice
- the Company's management has fulfilled its obligation in respect of
registration and documentation of accounting information as required by law
and good accounting practice
- the information in the Board of Directors' report concerning the financial
statements, the going concern assumption, and the proposal for the
appropriation of the profit is consistent with the financial statements and
comply with law and regulations.
Generally accepted auditing standards in Norway do not differ materially from
generally accepted auditing standards in the United States. Generally accepted
accounting principles in Norway vary in certain significant respects from
generally accepted accounting principles in the United States. The application
of generally accepted accounting principles in the United States would have
affected net income for the year ended December 31 1999 and shareholders' equity
as of December 31 1999 to the extent summarized in Note 12 to the consolidated
financial statements.
MOLLER & CO AS (in cooperation with Arthur Andersen)
/s/ Torger Gjerde
Torger Gjerde
State Authorized Public Accountant (Norway)
Tonsberg, June 20, 2000
F-1
<PAGE>
Powec AS
Consolidated Balance Sheets
(in thousands of Norwegian Kroner)
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
------------ ---------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 11,222 10,125
Trade accounts receivable, net 68,386 124,495
Other receivables 11,242 8,112
Inventories, net 57,198 55,045
------- -------
Total current assets 148,048 197,777
------- -------
Non-current assets:
Fixed assets, net 76,200 94,445
Long-term receivables 1,470 1,681
Deferred income taxes 3,624 2,534
------- -------
Total non-current assets 81,294 98,660
------- -------
Total assets 229,342 296,437
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdrafts 22,947 31,570
Accounts payable 34,904 72,020
Accrued payroll and related items 4,982 4,079
Taxes payable 7,962 10,574
Dividends payable 9,680 --
Other current liabilities 11,703 14,328
------- -------
Total current liabilities 92,179 132,571
------- -------
Non-current liabilities:
Long-term debt 62,775 77,865
Deferred income taxes 1,335 0
Guarantee and service liabilities 3,696 4,683
Other long-term liabilities 4,461 4,461
------- -------
Total non-current liabilities 72,267 87,009
------- -------
Minority share 299 397
------- -------
Shareholders' equity:
Share capital 1,936 1,936
Additional paid-in capital 6,268 6,423
Retained earnings (accumulated deficit), including
currency translation adjustments 56,393 68,101
------- -------
Total shareholders' equity 64,597 76,460
------- -------
Total liabilities and shareholders' equity 229,342 296,437
------- -------
------- -------
</TABLE>
See accompanying notes to the consolidated financial statements
F-2
<PAGE>
Powec AS
Consolidated Statements of Operations
(in thousands of Norwegian Kroner)
<TABLE>
<CAPTION>
For the Three
For the Year Ended Months Ended
December 31, March 31,
1999 2000
------------- -------------
(unaudited)
<S> <C> <C>
Net sales 436,855 146,657
Cost of goods sold 286,420 95,725
------------- -------------
Gross profit 150,435 50,932
Personnel costs 73,700 20,869
General expenses 35,192 11,184
Depreciation of fixed assets 5,886 1,746
------------- -------------
Income before interest, extraordinary
items and income taxes 35,657 17,133
Financial expenses 4,171 1,690
Financial income (2,292) (2,233)
Extraordinary expenses 0 2,391
------------- -------------
Income before income taxes 33,778 15,285
Provision for income taxes 10,277 4,280
------------- -------------
Net income 23,501 11,005
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to the consolidated financial statements
F-3
<PAGE>
Powec AS
Consolidated Statements of Cash Flows
(in thousands of Norwegian Kroner)
<TABLE>
<CAPTION>
For the Three
For the Year Ended Months Ended
December 31, March 31
-----------------------------------------------------------------------------------------------------------------
1999 2000
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH GENERATED/USED BY OPERATING ACTIVITIES
Result for the year before income taxes 33,778 15,285
Income taxes payable (15,892) (2,583)
Depreciation 3,640 1,746
Difference between paid and expensed pension 39 0
Change in inventory, acc. receivables and acc. payables 1,202 (14,848)
Change in other short-term items 5,643 5,636
---------------------------------------
NET CASH INFLOW/OUTFLOW FROM OPERATING ACTIVITIES 28,410 5,236
---------------------------------------
CASH FLOW FROM INVESTMENTS
Investment in tangible fixed assets (72,809) (19,991)
Proceeds of sale of tangible fixed assets 136 0
Change in other investments (5,906) (776)
---------------------------------------
NET CASH OUTFLOW FROM INVESTMENTS (78,579) (20,767)
---------------------------------------
CASH FLOW FROM CAPITAL TRANSACTIONS
New long-term loans included bank overdraft 62,294 24,114
Repayment of previous liabilities (3,983) 0
Dividends paid (2,208) (9,680)
---------------------------------------
NET CASH FLOW FROM CAPITAL TRANSACTIONS 56,103 14,434
---------------------------------------
---------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE YEAR 5,933 (1,097)
---------------------------------------
CASH BALANCE AS OF 1.1. 5,289 11,222
CASH BALANCE AS OF 12.31 (3.31.2000) 11,222 10,125
</TABLE>
F-4
<PAGE>
Powec AS
Notes to the Consolidated Financial Statements
(in thousands of Norwegian Kroner, except share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
DESCRIPTION OF THE BUSINESS
Powec AS and subsidiaries ("Powec" or the "Company") are primarily engaged in
the design and manufacture of DC/DC power conversion products which are
distributed throughout Europe and South East Asia. The Company's head office is
located in Kobbervikdalen, Drammen where development, production and assembly
facilities are located.
The foreign subsidiaries are primarily sales offices in their local markets.
However planning, production and assembly facilities have been planned for South
East Asia.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include all of the entities
owned/controlled by the Company. All significant inter-company transactions and
balances have been eliminated. The companies included in the consolidation are
listed below:
<TABLE>
<S> <C>
Powec AS Norway
Powec AB Sweden
Powec Ltd. England
Powec Asia Ltd. China
Powec Gmbh Germany
Powec OY Finland
Powec Singapore Singapore
Powec PTY Ltd. Hong Kong
Powec Eiendom AS Norway
</TABLE>
Powec AB and Powec Eiendom AS, are wholly owned by Powec AS. Powec Gmbh, Powec
OY, Powec Singapore and Powec PTY Ltd are 70% owned by Powec AS. Powec Asia Ltd.
is 99% owned by Powec AS and Powec Ltd. is 75% owned by Powec AS.
BASIS OF PRESENTATION
For purposes of consolidation, the accounts are prepared using uniform
accounting and valuation principles, and are summarized in the consolidated
financial statements according to the same consolidation rules. The consolidated
financial statements are prepared in conformity with the Norwegian Accounting
and Reporting Recommendations Committee guidelines ("Norwegian GAAP").
Accounting policies applied for valuing financial statement items have been
consistently applied. Assets are valued at historical cost. If the market value
of the assets is less than the book value, the lower value is used. Assets are
valued individually, and are subject to valuation adjustments as necessary.
CONVERSION OF FOREIGN CURRENCIES
The reporting currency for the consolidated financial statements of the Company
is the Norwegian Kroner. The assets and liabilities of companies whose
functional currency is other than the Norwegian Kroner are included in the
consolidation by translating the assets and liabilities at the exchange rates
applicable at the end of the reporting year. The statements of operations and
cash flows of such companies are translated at the average exchange rates during
the year.
F-5
<PAGE>
Translation gains or losses are accumulated as a separate component of
shareholders' equity.
FIXED ASSETS
Fixed assets are included in the consolidated balance sheet at historical
cost less accumulated depreciation. Depreciation is calculated using the
straight-line method over the useful life of the asset. Scheduled
depreciation periods are as follows:
<TABLE>
<S> <C>
Buildings and other property 40 years
Machinery and equipment 3 to 15 years
Investments in process improvements 3 years
</TABLE>
INVENTORIES
Of total cost of inventory in Powec AS at 31 December 1999, there is NOK 47 772
valued to cost, and NOK 3 618 is valued to net realizable value. For the group
there is NOK 55 433 valued to cost and NOK 3 618 is valued to net realizable
value. Outsourcing of production modules has increased through 1999.
RECEIVABLES
Trade accounts receivable are recorded at the nominal value, taking into account
necessary allowances for doubtful accounts. The amount of the allowance depends
on the term of the accounts receivable, and the customer or country-specific
risks.
TAXES
Taxes in the Profit and Loss account include payable income tax and changes in
deferred income tax. Deferred income tax is calculated in accordance with the
current Norwegian Standard on Tax, on the basis of the temporary differences
between accounting values and values for tax purposes and fiscal deficits for
presentation at the end of financial year. A nominal tax rate of 28% per cent is
used in the calculation. Positive and negative temporary differences are
assessed against each other within the same time interval.
UNAUDITED INTERIM FINANCIAL DATA
The unaudited interim consolidated financial statements included herein have
been prepared by the Company without audit in accordance with Norwegian GAAP. In
the opinion of the Company's management, the accompanying unaudited interim
consolidated financial statements have been prepared on a basis substantially
consistent with the audited consolidated financial statements and contain
adjustments, all of which are of a normal recurring nature, necessary to present
fairly its financial position as of March 31, 2000 and results of operations and
cash flows for the three months ended March 31, 2000. Interim results are not
necessarily indicative of results for the fiscal year.
2. SALES
Sales refer to net sales to third parties after intercompany profit elimination
and sales tax. Revenue is recognized when title to a product has transferred.
3. TRADE ACCOUNTS RECEIVABLE, NET
The allowance for doubtful accounts receivable totaled NOK 200 at December 31,
1999.
F-6
<PAGE>
4. INVENTORIES, NET
Inventories consist of:
<TABLE>
<CAPTION>
Year ended Three months ended
December 31, March 31,
1999 2000
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Inventory 59,051 58,432
Provision for obsolete parts (1,853) (3,387)
-------------------------------------------------------------------------------------------------------------
Net booked value 57,198 55,045
-------------------------------------------------------------------------------------------------------------
</TABLE>
5. FIXED ASSETS, NET
Fixed assets consist of:
<TABLE>
<CAPTION>
Buildings Machinery Investments
and other Equipment process
property EDP improvement Total
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cost as of January 1, 1999 0 14,920 4,443 19,363
Additions at cost 57,550 8,010 7,249 72,810
Retirements at cost 0 (396) 0 (396)
---------------------------------------------------------------------------------------------------------------------
Cost as of December 31, 1999 57,550 22,534 11,692 91,777
Accumulated depreciations as of December 31, 1999 (30) (11,360) (3,791) (15,577)
Depreciation retirements 0 (396) 0 0
---------------------------------------------------------------------------------------------------------------------
Net booked value as of December 31, 1999 57,520 10,778 7,901 76,200
---------------------------------------------------------------------------------------------------------------------
1999 year's depreciation 30 3,610 2,246 5,886
</TABLE>
The fixed assets economic useful life is based on:
<TABLE>
<S> <C>
* Investments in process improvement 3 years
* Buildings and other property 40 years
* Machinery, equipment, EDP 3-15 years
* Building site 0 years
</TABLE>
F-7
<PAGE>
6. SPECIFICATION OF INCOME TAXES
<TABLE>
<CAPTION>
Year ended
December 31,
1999
<S> <C>
BASIS FOR TAXES PAYABLE
Profit before taxes 33,779
Loss in group companies, deferred tax asset not considered 1,810
Permanent differences 1,899
Contribution to group companies 0
Change in temporary differences (359)
---------------------------------------------------------------------------------
Basis for taxes payable 37,129
---------------------------------------------------------------------------------
TAX EXPENSE
EFFECTIVE TAX PER CENT 28.37%
Taxes payable 14,285
Advanced tax payment in subsidiaries 1999 (2,570)
Allowance of credit from dividends group companies (3,752)
---------------------------------------------------------------------------------
Balanced taxes payable 7,962
---------------------------------------------------------------------------------
Taxes payable from previous years 2,570
Taxes of contribution to group company 0
Deferred tax - net change (255)
---------------------------------------------------------------------------------
Taxes 10,277
---------------------------------------------------------------------------------
TEMPORARY DIFFERENCES
Fixed assets (191)
Inventory (1,854)
Accounts receivables (200)
Guarantee and service liabilities (3,696)
Pension liabilities (4,461)
Eliminate internal profits (1,454)
Temporary differences group companies 3,685
---------------------------------------------------------------------------------
Net temporary differences as of 31.12.99 (8,171)
---------------------------------------------------------------------------------
Net booked deferred tax liability 1,335
--------------------------------------------------------------------------------
Net booked deferred tax asset 3,624
---------------------------------------------------------------------------------
</TABLE>
F-8
<PAGE>
7. LONG-TERM DEBT
Long-term liabilities due after 5 years consist of:
<TABLE>
<CAPTION>
December 31,
1999
-------------
<S> <C>
Liabilities to credit institution 62,597
Other long-term liabilities 178
-------------
Total 62,775
</TABLE>
8. OTHER LONG-TERM LIABILITIES
<TABLE>
<CAPTION>
September 30,
1997
-------------
<S> <C>
Pension liabilities 4,461
-----
Total 4,461
-----
-----
</TABLE>
9. SHAREHOLDERS' EQUITY
<TABLE>
<S> <C>
Equity as of 01.01 1999 (revised accordance to new Acc. Law) 52,361
Result for the year 23,501
Dividends distributed (11,889)
Currency rate variances and other items booked to equity 923
-----------------------------------------------------------------------------------------------------------------------------------
Less minority share (299)
-----------------------------------------------------------------------------------------------------------------------------------
Equity as of 31.12 1999 64,597
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The share capital comprising 193 598 shares, that has a nominal value of NOK 10
each. All shares have similar voting rights. Dividends distributed include
dividend paid to a minority shareholder of NOK 2 209
10. RESEARCH AND DEVELOPMENT EXPENSES
Research and development costs are expensed as incurred.
F-9
<PAGE>
11. EXCHANGE RATES
The following exchange rates were used:
<TABLE>
<CAPTION>
Year ended
December 31,
Currency 1999
-------- -------------
<S> <C>
100 SEK 94.32
1 GBP 12.99
100 FIM 135.84
100 DEM 412.94
1 AUD 5.24
1 HKD 1.03
</TABLE>
12. NORWEGIAN GAAP TO U.S. GAAP RECONCILIATION
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN NORWEGIAN GAAP AND U.S. GAAP
The audited and unaudited interim consolidated financial statements have been
prepared and are presented in accordance with Norwegian GAAP which differs in
certain significant respects from generally accepted accounting principles in
the United States (U.S. GAAP).
The following is a summary of significant adjustments to consolidated net income
and consolidated shareholders' equity for Powec AS and subsidiaries that would
be required if U.S. GAAP were applied instead of Norwegian GAAP:
<TABLE>
<CAPTION>
At December 31, At March 31,
1999 2000
---- ----
(unaudited)
<S> <C> <C>
Adjusted net income under Norwegian GAAP 23,501 11,005
Adjustments to conform with U.S. GAAP:
Inventories movement 214 708
Tax effect of U.S. GAAP adjustments (60) (198)
------ ------
Consolidated net income under U.S. GAAP 23,655 11,515
------ ------
------ ------
</TABLE>
F-10
<PAGE>
12. NORWEGIAN GAAP TO U.S. GAAP RECONCILIATION - (CONTINUED)
<TABLE>
<CAPTION>
At December 31, At March 31,
1999 2000
---- ----
(unaudited)
<S> <C> <C>
Consolidated shareholders' equity under
Norwegian GAAP 64,597 76,460
Adjustments to conform with U.S. GAAP:
Inventories 1,992 2,700
Income tax effect on U.S. GAAP adjustments (558) (756)
------ ------
Consolidated shareholders' equity under U.S. GAAP 66,031 78,404
------ ------
------ ------
</TABLE>
INVENTORY
In accordance with Norwegian GAAP, inventory costs include direct material,
labor costs and an allocation of production overhead which are expensed as
incurred. Under U.S. GAAP, inventory costs include appropriate
production and other indirect overhead. Powec has not fully allocated indirect
costs to inventory resulting in a difference from U.S. GAAP.
OTHER
Other differences consist of primarily miscellaneous valuation differences
that are not individually or in total significant, including start-up costs,
pensions, leases and other items.
TOTAL COST METHOD
As allowed under Norwegian GAAP, the Company has presented its statement of
operations under the "total cost" method. Under U.S. GAAP, the statement of
operations would be presented in a cost of sales format. Such difference in
presentation has no effect on net income.
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, as
well as 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 may differ from those estimates.
F-11
<PAGE>
POWER-ONE, INC.
Pro Forma Financial Information:
Pursuant to an Amended and Restated Stock Purchase Agreement, dated as
of May 15, 2000, on May 16, 2000 the Company acquired Norwegian-based Powec AS
("Powec") for approximately $72.0 million in cash and 214,035 shares of the
Company's common stock. Additionally, Powec had approximately $12 million of
debt outstanding. Certain additional payments may be made to Powec stockholders
based on attainment of defined operational performance through 2001.
Powec is a leading supplier of power systems for major service
providers and equipment manufacturers in the telecommunications industry.
Powec's customers include Nokia, Vodafone, Ericsson, Eircom, Telia, Hong Kong
Telecom, Telenor, Sonera and TeleDanmark.
On May 16, 2000, the Company also acquired a telecommunications product
line from a subsidiary of Crane Co. ("Eldec") for $14.0 million in cash. This
product line includes the exclusive distribution rights for Powec's products in
North, South and Central America and extensive relationships with
telecommunication equipment manufacturers such as Motorola, Ericsson, and Nokia
US. The Company did not assume any employees when it acquired the product
line from Eldec and all third party sales, for the periods presented in the
pro forma financial statements, are considered immaterial.
The acquisitions were accounted for using the purchase method of
accounting. The net purchase price, plus transaction costs, was allocated to
tangible assets and intangible assets. The excess of the aggregate purchase
price over the estimated fair market values of the net assets acquired was
recognized as goodwill and other identifiable intangible assets, and is being
amortized over periods ranging from three to 15 years. The allocation of the
purchase price is based on preliminary data and could change when final
valuation information is obtained.
The following unaudited pro forma statements of operations give
effect to the acquisitions of both Powec and the telecommunication product
line as if they had occurred at the beginning of the period presented and
include adjustments which give effect to events that are directly
attributable to the transactions that are expected to have a continuing
impact and that are factually supportable. The unaudited pro forma balance
sheets give effect to the acquisitions as if they occurred as of December 31,
1999 and March 31, 2000 and include adjustments which give effect to events
that are directly attributable to the transactions and factually supportable
regardless of whether they have a continuing impact or are nonrecurring. The
notes to the pro forma financial information describe the pro forma amounts
and adjustments presented below. The pro forma financial information does not
necessarily reflect the operating results that would have occurred had the
acquisition been consummated as of the above dates, nor is such information
indicative of future operating results.
All share and per share amounts have been retroactively restated to
give effect to the Company's 3-for-2 stock split that occurred on June 2, 2000.
F-12
<PAGE>
POWER-ONE, INC.
PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
POWER-ONE POWEC ELDEC ADJS REF PRO FORMA
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 63,769 $ 1,402 $ - $(20,000) (B) $ 45,171
Accounts receivable trade, net 45,805 8,543 1,210 - 55,558
Other receivables 1,914 1,404 - - 3,318
Inventories 61,834 7,394 1,080 2,040 (B, C) 72,348
Deferred income tax asset-current 1,916 - - - 1,916
Other current assets 1,825 - - - 1,825
----------------------------------------------- -------------
Total current assets 177,063 18,743 2,290 (17,960) 180,136
Property & Equipment, net 55,608 9,519 - - 65,127
Intangible Assets, net 59,217 - - 89,598 (B, D) 148,815
Other Assets 3,216 637 - - 3,853
----------------------------------------------- -------------
TOTAL ASSETS $295,104 $28,899 $2,290 $ 71,638 $397,931
=============================================== =============
LIABILITIES & STOCKHOLDERS' EQUITY
Credit facilities $ 7,579 $ 2,867 $ - $ 65,970 (B) $ 76,416
Current portion of long-term debt
and capital leases 4,899 - - - 4,899
Bank overdraft 5,804 - - - 5,804
Accounts payable 13,107 4,360 419 - 17,886
Accrued expenses and other
current liabilities 19,394 4,750 - 2,482 (D) 26,626
Deferred income tax liability-current - - - 571 (E) 571
----------------------------------------------- -------------
Total current liabilities 50,783 11,977 419 69,023 132,202
Long-term debt and capital leases,
less current portion 4,221 7,842 - - 12,063
Deferred income tax liability-noncurrent 2,757 236 - - 2,993
Other liabilities 112 595 - - 707
STOCKHOLDERS' EQUITY
Common Stock 24 242 - (242) (B) 24
Additional Paid-in Capital 212,196 783 1,871 10,081 (B) 224,931
Accumulated other comprehensive loss (3,476) - - - (3,476)
Retained earnings 28,487 7,224 - (7,224) (B) 28,487
----------------------------------------------- -------------
Total stockholders' equity 237,231 8,249 1,871 2,615 249,966
----------------------------------------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $295,104 $28,899 $2,290 $ 71,638 $397,931
=============================================== =============
</TABLE>
F-13
<PAGE>
POWER-ONE, INC.
PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
POWER-ONE POWEC ELDEC ADJS REF PRO FORMA
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 47,603 $ 1,200 $ - $(20,000) (B) $ 28,803
Accounts receivable trade, net 54,164 14,749 1,210 - 70,123
Other receivables 2,054 961 - - 3,015
Inventories 67,935 6,841 1,080 2,040 (B, C) 77,896
Deferred income tax asset-current 2,365 - - - 2,365
Other current assets 2,245 - - - 2,245
----------------------------------------------- -------------
Total current assets 176,366 23,751 2,290 (17,960) 184,447
Property & Equipment, net 56,062 11,189 - - 67,251
Intangible Assets, net 57,076 - - 88,559 (B, D) 145,635
Other Assets 5,066 410 - - 5,476
----------------------------------------------- -------------
TOTAL ASSETS $294,570 $35,350 $2,290 $ 70,599 $402,809
=============================================== =============
LIABILITIES & STOCKHOLDERS' EQUITY
Credit facilities $ 4,523 $ 3,740 $ - $ 65,970 (B) $ 74,233
Current portion of long-term debt
and capital leases 3,526 - - - 3,526
Bank overdraft 1,972 - - - 1,972
Accounts payable 15,621 8,532 419 - 24,572
Accrued expenses and other
current liabilities 14,863 3,989 - 2,482 (D) 21,334
Deferred income tax liability-current - - - 571 (E) 571
----------------------------------------------- -------------
Total current liabilities 40,505 16,261 419 69,023 126,208
Long-term debt and capital leases,
less current portion 3,689 9,225 - - 12,914
Deferred income tax liability-noncurrent 2,726 - - - 2,726
Other liabilities 109 576 - - 685
STOCKHOLDERS' EQUITY
Common Stock 24 229 - (229) (B) 24
Additional Paid-in Capital 226,337 761 1,871 10,103 (B) 239,072
Accumulated other comprehensive loss (4,953) - - - (4,953)
Retained earnings 26,133 8,298 - (8,298) (B) 26,133
----------------------------------------------- -------------
Total stockholders' equity 247,541 9,288 1,871 1,576 260,276
----------------------------------------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $294,570 $35,350 $2,290 $ 70,599 $402,809
=============================================== =============
</TABLE>
F-14
<PAGE>
POWER-ONE, INC.
PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
--------------------------------------------------------------------
POWER-ONE POWEC ADJ REF PRO FORMA
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $237,157 $56,007 $ - $293,164
Cost of goods sold 142,818 36,373 - 179,191
------------------------------------------- ----------------
Gross profit 94,339 19,634 - 113,973
Expenses:
Selling 24,992 6,092 - 31,084
General and administrative 18,218 3,561 - 21,779
Engineering 17,086 3,223 - 20,309
Quality assurance 4,422 1,839 - 6,261
Amortization of intangible assets 6,212 - 7,463 (A) 13,675
In process research and development 3,300 - - 3,300
------------------------------------------- ----------------
Total expenses 74,230 14,715 7,463 96,408
Income (loss) from operations 20,109 4,919 (7,463) 17,565
Other Income (Expense)
Interest income 807 233 - 1,040
Interest expense (3,211) (803) (6,851) (B) (10,865)
Other income, net 307 10 - 317
------------------------------------------- ----------------
Total other income (expense) (2,097) (560) (6,851) (9,508)
Income (loss) before taxes 18,012 4,359 (14,314) 8,057
Income tax expense (benefit) 6,458 1,325 (3,063) (D) 4,720
------------------------------------------- ----------------
Net income (loss) $ 11,554 $ 3,034 $(11,251) $ 3,337
=========================================== ================
Basic earnings (loss) per common share $ 0.38 $ 0.11
=========================================== ================
Diluted earnings (loss) per common share $ 0.37 $ 0.11
=========================================== ================
Basic shares outstanding 30,299 214 30,513
=========================================== ================
Diluted shares outstanding 31,235 214 31,449
=========================================== ================
</TABLE>
F-15
<PAGE>
POWER-ONE, INC.
PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
---------------------------------------------------------------
POWER-ONE POWEC ADJ REF PRO FORMA
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $77,012 $17,954 $ - $94,966
Cost of goods sold 44,956 12,857 - 57,813
-------------------------------------- ---------------
Gross profit 32,056 5,097 - 37,153
Expenses:
Selling 6,605 1,886 - 8,491
General and administrative 17,299 550 - 17,849
Engineering 9,371 498 - 9,869
Quality assurance 1,239 284 - 1,523
Amortization of intangible assets 1,322 - 1,848 (A) 3,170
-------------------------------------- ---------------
Total expenses 35,836 3,218 1,848 40,902
Income (loss) from operations (3,780) 1,879 (1,848) (3,749)
Other Income (Expense)
Interest income 748 79 (285) (C) 542
Interest expense (312) (206) (1,325) (B) (1,843)
Other income, net 135 193 - 328
-------------------------------------- ---------------
Total other income (expense) 571 66 (1,610) (973)
Income (loss) before taxes (3,209) 1,945 (3,458) (4,722)
Income tax expense (benefit) (1,720) 544 (725) (D) (1,901)
-------------------------------------- ---------------
Net income (loss) $(1,489) $ 1,401 $(2,733) $ (2,821)
====================================== ===============
Basic earnings (loss) per common share $ (0.04) $ (0.08)
====================================== ===============
Diluted earnings (loss) per common share $ (0.04) $ (0.08)
====================================== ===============
Basic shares outstanding 36,162 214 36,376
====================================== ===============
Diluted shares outstanding 36,162 214 36,376
====================================== ===============
</TABLE>
F-16
<PAGE>
Notes to Pro Forma Consolidated Balance Sheets:
A) The allocation of the purchase price is based on preliminary data and
could change when final valuation information is obtained.
B) Record the purchase of all of the outstanding capital stock of Powec AS
and the purchase of the telecommunications product line from Eldec. The
purchase price of Powec AS, before acquisition costs, was approximately
$72.0 million plus 214,035 shares of the Company's common stock. The
market value of the Company's common stock on the date of acquisition
was $59.50 per share resulting in a total purchase price valued at
approximately $84.7 million for Powec AS on the date of acquisition. The
product line was purchased from Eldec for $14.0 million. In addition to
the shares issued, the purchases were financed with $20.0 million of the
Company's cash and approximately $66.0 million of advances under the
Company's credit facility.
C) Record the fair market value of inventory acquired from Powec AS and
Eldec, based on the preliminary estimates made by management. These
amounts are subject to reclassification and adjustments.
D) Record liabilities for estimated professional fees and expenses related
to the acquisitions totaling approximately $2.5 million. The acquisition
costs were financed from additional borrowings under the Company's
credit facility.
E) Record the change in deferred taxes based on preliminary tax values of
the assets acquired and liabilities assumed.
Notes to Pro Forma Consolidated Statements of Operations:
A) Record amortization of goodwill and other identified intangible assets,
for the period presented, relating to the Powec AS acquisition and the
product line acquired from Eldec, assuming amortization periods from 3
to 15 years. The useful lives are based on periods of economic benefit.
B) Record interest expense related to the assumed additional borrowing to
finance the acquisitions. For the year ended December 31, 1999, the
acquisitions, including acquisition costs, are assumed to be financed
entirely from the 214,035 shares issued and advances under the Company's
credit facility. The Company did not have adequate cash for the
purchases until after the Company's secondary stock offering at the end
of the third quarter of 1999. Interest expense for 1999 was based on
credit facility advances of approximately $88.5 million and an assumed
interest rate of 7.7%.
For the three months ended March 31, 2000, the acquisitions are assumed
to have been financed as described in note (B) to the pro forma balance
sheets. Interest expense for the three months ended March 31, 2000 was
based on credit facility advances of approximately $68.5 million,
including financing acquisition costs, and an assumed interest rate of
7.7%.
C) Record a decrease in interest income earned on cash and short-term
investments in the three months ended March 31, 2000, assuming an
interest rate of 5.7%. Cash was available at the end of the third
quarter of 1999 subsequent to the Company's secondary stock offering.
D) Record the income tax benefit related to the above adjustments. Goodwill
related to the Powec AS purchase is nondeductible for tax purposes,
whereas, goodwill related to the Eldec product line purchase is
deductible for tax purposes.
E) The unaudited pro forma statements of operations exclude non-recurring
items totaling $1.5 million, which consist of the inventory fair
market value write-up of $2.1 million, net of related income tax benefit
of $0.6 million.
F) Additional sales and cost savings benefits from synergies derived from
the acquisition are expected but are not reflected in the pro forma
statements of operations.
F-17
<PAGE>
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
undersigned hereunto duly authorized.
Dated: July 17, 2000 Power-One, Inc.
By: /s/ STEVEN J. GOLDMAN
------------------------------
Steven J. Goldman
Chairman of the Board and Chief Executive
Officer
By: /s/ EDDIE K. SCHNOPP
------------------------------
Eddie K. Schnopp
Sr. Vice President, Finance,
Chief Financial Officer and Secretary
