<PAGE> 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)
<TABLE>
<S> <C> <C>
Delaware 0-11370 86-0312814
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
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
------------------------------
</TABLE>
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 7
OZ TECHNOLOGIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE> 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.
<PAGE> 9
OZ TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
December 31,
1998
<S> <C>
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
==============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 10
OZ TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 31,
1998
<S> <C>
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
==============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 11
OZ TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 31,
1998
----
<S> <C>
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
=============
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Supplemental Disclosure of Cash Flow Information
Income Taxes Paid $ 1,429,000
=============
Interest Paid $ 3,000
=============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 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:
<TABLE>
<CAPTION>
<S> <C>
Raw materials $ 2,021,237
Work in progress 1,487,645
------------
$ 3,508,882
============
</TABLE>
<PAGE> 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.
<TABLE>
<CAPTION>
Property and equipment consist of the following:
<S> <C>
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
============
</TABLE>
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.
<PAGE> 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.
<PAGE> 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:
<TABLE>
<CAPTION>
<S> <C>
Current
Federal $ 1,152,900
State 244,100
-------------
1,397,000
-------------
Deferred
Federal (104,000)
State 16,000
-------------
(88,000)
-------------
$ 1,309,000
=============
</TABLE>
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:
<TABLE>
<CAPTION>
<S> <C>
Current
Federal $ 335,500
State 61,000
------------
Total 396,500
------------
Long-Term
Federal 310,500
State 53,000
------------
Total 363,500
------------
$ 760,000
============
</TABLE>
<PAGE> 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:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 159,000
2000 169,000
2001 172,000
2002 29,000
-----------
$ 529,000
===========
</TABLE>
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:
<TABLE>
<CAPTION>
<S> <C>
1999 $ 423,000
2000 377,000
2001 299,000
2002 164,000
2003 83,000
-----------
$ 1,346,000
===========
</TABLE>
<PAGE> 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.
<PAGE> 18
OZ TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Financial Statements
September 30, 1999
(With Independent Auditors' Report Thereon)
<PAGE> 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
<PAGE> 20
OZ TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Balance Sheet
September 30, 1999
<TABLE>
<S> <C>
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
===========
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 21
OZ TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Statement of Income and Retained Earnings
Nine months ended September 30, 1999
<TABLE>
<S> <C>
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
===========
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 22
OZ TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
Nine months ended September 30, 1999
<TABLE>
<S> <C>
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
===========
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 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)
<PAGE> 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:
<TABLE>
<S> <C>
Raw Materials $2,728,395
Work-in-process 1,169,715
----------
$3,898,110
==========
</TABLE>
(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)
<PAGE> 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:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------
<S> <C>
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
==============
</TABLE>
(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)
<PAGE> 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:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1999
--------------------
<S> <C>
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
=========
</TABLE>
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:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
--------------------
<S> <C>
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
===========
</TABLE>
(Continued)
<PAGE> 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:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------
<S> <C>
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
=========
</TABLE>
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)
<PAGE> 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:
<TABLE>
<S> <C>
2000 $ 166,846
2001 171,102
2002 258,932
2003 330,572
2004 347,101
Thereafter 1,750,203
----------
$3,024,756
==========
</TABLE>
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:
<TABLE>
<S> <C>
2000 $ 122,065
2001 458,322
2002 380,978
2003 251,831
2004 135,832
Thereafter 15,322
-----------
$ 1,364,350
===========
</TABLE>
(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)
<PAGE> 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.
<PAGE> 30
CERPROBE CORPORATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
CERPROBE OZ ADJUSTMENTS COMBINED
----------- --------- ------------- -----------
ASSETS
<S> <C> <C> <C> <C>
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
========== ========= ============= ===========
</TABLE>
See accompanying notes to pro forma combined condensed financial statements.
<PAGE> 31
CERPROBE CORPORATION
PRO FORMA COMBINED CONDENSED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
CERPROBE OZ ADJUSTMENTS COMBINED
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE> 32
CERPROBE CORPORATION
PRO FORMA COMBINED CONDENSED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
CERPROBE OZ ADJUSTMENTS COMBINED
---------- -------- ---------- ----------
<S> <C> <C> <C> <C>
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
</TABLE>
<PAGE> 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):
<TABLE>
<S> <C>
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
===========
</TABLE>
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
<TABLE>
<CAPTION>
<S> <C> <C>
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
</TABLE>
<PAGE> 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.
<PAGE> 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
<PAGE> 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
