<PAGE>
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): October 21, 1999
-----------------
SATCON TECHNOLOGY CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 001-11512 04-2857552
- --------------------------------------------------------------------------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
161 First Street, Cambridge, Massachusetts 02142
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 661-0540
-----------------
Not Applicable
--------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<CAPTION>
Page
----
<S> <C>
a) Financial Statements of Ling Electronics, Inc. and
its Subsidiary
Report of Independent Accountants 1
Financial Statements:
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statements of Shareholder's Deficit 4
Consolidated Statements of Cash Flow 5
Notes to Consolidated Financial Statements 6
b) Unaudited Pro Forma Combined Consolidated Financial Statements
Introduction to Unaudited Pro Forma Combined Consolidated Financial
Statements 14
Unaudited Pro Forma Combined Consolidated Financial Statements:
Unaudited Pro Forma Combined Consolidated Balance Sheet
as of September 30, 1999 15
Unaudited Pro Forma Combined Consolidated Statement of
Operations for the year ended September 30, 1999 16
Unaudited Pro Forma Combined Consolidated Statement of
Operations for the year ended September 30, 1998 17
Notes to Unaudited Pro Forma Combined Consolidated
Financial Statements 18
c) Exhibits
None.
d) Signatures 19
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholder
of Ling Electronics, Inc. and Subsidiary
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, shareholder's equity and cash flows
present fairly, in all material respects, the financial position of Ling
Electronics, Inc. and its subsidiary at September 30, 1999 and 1998, and the
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.
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 audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Albany, New York
December 3, 1999
1
<PAGE>
LING ELECTRONICS, INC AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 64 $ 44
Accounts receivable, less allowance of $113 in
1999 and $99 in 1998 2,377 3,698
Inventories, net 2,807 2,524
Prepaid expenses and other assets 122 106
------- -------
Total current assets 5,370 6,372
Property and equipment, net 394 392
------- -------
Total assets $ 5,764 $ 6,764
======= =======
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accounts payable $ 409 $ 1,423
Accrued liabilities 811 1,143
Advance due Parent Company 6,907 5,474
------- -------
Total liabilities 8,127 8,040
------- -------
Commitments and contingencies
Shareholder's deficit:
Common stock, par value $0.01, 5,000,000 shares
authorized, 32,398 shares issued -- --
Additional paid-in capital 1,636 1,636
Retained deficit (3,988) (2,901)
Accumulated other comprehensive loss (11) (11)
------- -------
Total shareholder's deficit (2,363) (1,276)
------- -------
Total liabilities and shareholder's deficit $ 5,764 $ 6,764
======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
2
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Net sales $ 8,372 $ 12,234
Cost of sales 6,213 8,986
-------- --------
Gross profit 2,159 3,248
Operating expenses:
Product development 188 99
Selling and commissions 1,427 1,772
General and administrative 1,631 1,812
-------- --------
Total operating expenses 3,246 3,683
-------- --------
Net loss $ (1,087) $ (435)
======== ========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
3
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S DEFICIT
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER TOTAL
COMMON STOCK PAID-IN RETAINED COMPREHENSIVE SHAREHOLDER'S
SHARES AMOUNT CAPITAL DEFICIT INCOME (LOSS) DEFICIT
-------- ---------- ------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances, September 30, 1997 32,398 $ - $ 1,636 $ (2,466) $ (19) $ (849)
Comprehensive income (loss):
Net loss (435) (435)
Foreign currency translation
adjustment 8 8
---------
Total comprehensive loss (427)
-------- --------- --------- ---------- ----- ---------
Balances, September 30, 1998 32,398 - 1,636 (2,901) (11) (1,276)
Comprehensivce income (loss):
Net loss (1,087) (1,087)
Foreign currency translation
adjustment - -
---------
Total comprehensive loss (1,087)
-------- --------- --------- ---------- ----- ---------
Balances, September 30, 1999 32,398 $ - $ 1,636 $ (3,988) $ (11) $ (2,363)
======== ========= ========= ========== ===== =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
4
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDARY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE YEAS ENDED SEPTEMBER 30, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,087) $ (435)
Adjustments to reconcile net loss to net cash used
in operating activities:
Allowance for doubtful accounts 14 5
Reserve for obsolete inventory (41) (46)
Depreciation and amortization 135 139
Loss on sale of fixed asset 4 --
Foreign currency translation adjustment -- 8
Changes in operating assets and liabilities:
Accounts receivable 1,307 (468)
Inventories (242) (156)
Prepaid expenses and other assets (16) 5
Accounts payable (1,014) 198
Accrued liabilities (332) 261
------- -------
Net cash used in operating activities (1,272) (489)
------- -------
Cash flows from investing activities:
Purchases of property and equipment (141) (90)
------- -------
Net cash used in investing activities (141) (90)
------- -------
Cash flows from financing activities:
Advances from Parent Company 1,433 586
------- -------
Net cash provided by financing activities 1,433 586
------- -------
Increase in cash and cash equivalents 20 7
Cash and cash equivalents - beginning of year 44 37
------- -------
Cash and cash equivalents - end of year $ 64 $ 44
======= =======
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
5
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Ling Electronics, Inc. (the "Company"), of Anaheim California, designs,
manufacturers and markets electro-dynamic vibration test systems, high-intensity
sound transducers, power conversion equipment and power amplifiers used to
perform reliability testing and stress screening during product development and
quality control. This mode of testing is used by industry and the military to
reveal design and manufacturing flaws in a broad range of precision products,
from satelite parts to computer components.
On October 21, 1999, SatCon Technology Corporation ("SatCon") completed its
acquisition of the Company from Mechanical Technology, Incorporated. (the
"Parent Company") in connection with an additional investment by the Parent
Company of approximately $7,000 in SatCon. In consideration for the acquisition
of the Company and the Parent Company's investment, the Parent Company will
receive 1,800,000 shares of SatCon's common stock, $.01 par value per share, and
warrants to purchase an additional 100,000 shares of SatCon's common stock. The
Parent Company funded $2,570 of its investment in SatCon on October 21, 1999,
and will make the remaining investment by the end of January 2000. In addition,
SatCon will also receive warrants to purchase 100,000 shares of the Parent
Company's common stock. In connection with the acquisition, the advances due to
the Parent Company were contributed to capital by the Parent Company.
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of the Company and
its sister company (a wholly-owned subsidiary of the Parent Company) Ling
Electronics, Ltd., after eliminating intercompany accounts and transactions.
Use of Estimates
- ----------------
The preparation of the consolidated 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents consist of cash and highly liquid short-term
investments with maturities of less than three months. Cash and cash equivalents
are carried at cost, which approximates market.
Inventories
- -----------
Inventories are stated at the lower of cost (determined by the first-in, first-
out method) or market.
Property and Equipment
- ----------------------
Property and equipment are stated at cost and depreciated (or amortized in the
case of leasehold improvements) using primarily the straight-line method over
their estimated useful lives ranging from 3 to 10 years. Significant additions
or improvements extending assets' useful lives are capitalized; normal
maintenance and repair costs are expensed as incurred. The cost of fully
depreciated (or amortized) assets remaining in use are included in the
respective asset and accumulated depreciation (or amortization) accounts. When
items are sold or retired, related gains or losses are included in operations.
6
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
Assessments whether there has been a permanent impairment in the value of
property and equipment are periodically performed by considering factors such as
expected future operating income, trends and prospects, as well as the effects
of demand, competition and other economic factors. Management believes no
permanent impairment has incurred.
Revenue Recognition
- -------------------
Sales of products are recognized when products are shipped to customers. Sales
of products under long-term contracts are recognized under the percentage-of-
completion method. Percentage-of-completion is based on the ratio of incurred
costs to current estimated total costs at completion. Total contract losses are
charged to operations during the period such losses are estimable.
Foreign Currency Translation
- ----------------------------
The assets and liabilities of the Company's foreign subsidiary are translated at
year-end rates of exchange, and revenues and expenses are translated at the
average rates of exchange prevailing for the year. The effects of unrealized
exchange rate fluctuations on translating foreign currency assets and
liabilities into U.S. dollars are accumulated in shareholder's equity.
Income Taxes
- ------------
The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred income taxes are recognized for the tax consequences in
future years of differences between the tax bases of assets and liabilities and
their financial reporting amounts at each year-end based on the enacted tax laws
and statutory rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.
The provision for income taxes represents the taxes payable for the period and
the change during the period in deferred tax assets and liabilities.
The Company will be included in the consolidated federal tax return filed by the
Parent Company through October 21, 1999, the date the Company was sold to SatCon
Technology Corporation. The Company's tax provision has been computed using the
separate return method for the allocation of federal income taxes. Deferred
taxes are recorded on the separate company financial statements until the
underlying temporary differences giving rise to the deferred taxes turn and the
taxes become currently payable/receivable.
Comprehensive Income
- --------------------
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130, "Reporting Comprehensive Income," which established standards for the
reporting and display of comprehensive income. The Company has adopted SFAS
No. 130 effective October 1, 1997. Comprehensive income includes such items as
foreign currency translation adjustments, etc. These amounts are presented as a
component of shareholder's deficit, consistent with the Company's previous
practice. SFAS No. 130 does not affect current principles of measurement of
revenues and expenses and accordingly, the adoption of SFAS No. 130 had no
effect on the Company's results of operations or financial position.
7
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
2. BASIS OF PRESENTATION
The Company's consolidated financial statements have been presented on the basis
that it will continue as a going-concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business.
The Company reported net losses of $1,087 and $435 for the years ended
September 30, 1999 and 1998, respectively, and had a deficit in equity of $2,363
at September 30, 1999.
However, as discussed in Note 1, the Company was acquired on October 21, 1999 by
SatCon. Therefore, these financial statements do not consider whether the
Company will continue as a going concern. Continuation will be dependent on
business decision made by the management of SatCon, funding provided by SatCon
and the Company's results of operations.
3. INVENTORIES
Inventories at September 30, consist of the following:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Finished goods $ - $ 32
Work in progress 794 685
Raw materials, components and assemblies 2,312 2,147
------ -------
3,106 2,864
Less, provision for obsolete inventory (299) (340)
------ ------
$2,807 $2,524
====== ======
</TABLE>
8
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
4. PROPERTY AND EQUIPMENT
Property and equipment at September 30, consists of the following:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Leasehold improvements $ 453 $ 446
Machinery and equipment 1,783 1,776
Furniture and fixtures 560 561
Computer equipment and software 374 359
Jigs, dies and molds 201 191
Construction in progress 78 -
Vehicles 36 36
------- -------
3,485 3,369
Less, accumulated depreciation and
amortization (3,091) (2,977)
------- -------
$ 394 $ 392
======= =======
</TABLE>
Depreciation and amortization expense was $135 and $139 for the years ended
September 30, 1999 and 1998, respectively. Repairs and maintenance expense was
$103 and $122 for the years ended September 30, 1999 and 1998, respectively.
5. COMMITMENTS AND CONTINGENCIES
Litigation
- ----------
During October 1998, a legal action brought by a group of investors against the
Parent Company related to a stock purchase agreement and side letter agreements
for the sale of the stock of the Company was determined in favor of the Parent
Company.
In February 1995, the Company made a voluntary disclosure to the United States
Department of Commerce regarding unlicensed exports of certain products shipped
in the first four months of fiscal 1995. The Company has fully cooperated with
the Office of Export Enforcement, which has not taken any action to-date.
Possible administrative sanctions include: no action; a warning letter; denial
of export privileges; and/or imposition of civil penalties. Foreign sales
represent a significant portion of the Company's total revenue. The final
outcome of this matter is not presently determinable and, therefore, no
provision for any liability that may result has been recorded in the Company's
financial statements.
9
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
5. COMMITMENTS AND CONTINGENCIES, CONTINUED
Lease Commitments
- -----------------
Future minimum rental payments required under noncancelable operating leases
are: $409 in 2000; $424 in 2001; $440 in 2002; and $344 in 2003. Rent expense
under all leases was $372 for the years ended September 30, 1999 and 1998,
respectively.
Future minimum rental income under non-cancelable operating sub-leases are:
$160 in 2000; and $92 in 2001. Rental income under all sub-leases was $164 for
the year ended September 30, 1999. There was no rental income for the year
ended September 30, 1998.
Employee Savings Plan
- ---------------------
The Parent Company maintains a voluntary savings and retirement plan (Internal
Revenue Code Section 401(k) Plan) covering substantially all employees. The plan
allows eligible employees to contribute a percentage of their pretax
compensation and allows the Parent Company's management to make discretionary
matching contributions. The investment of contributions to the plan is self-
directed by the participants in the plan.
6. INCOME TAXES
Deferred tax assets and liabilities are determined based on the temporary
differences between the financial statement and tax bases of assets and
liabilities as measured by the enacted tax rates.
There was no income tax expense or benefit for the years ended September 30,
1999 or 1998.
The significant components of deferred income tax expense (benefit) for the
years ended September 30, are as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Deferred tax (benefit) expense $ (21) $ 62
Net operating loss carryforward - federal (274) (132)
Net operating loss carryforward - state (36) (18)
Net operating loss carryforward - foreign (46) (60)
----- ----
(377) (148)
Change in valuation allowance 377 148
----- ----
$ - $ -
===== ====
</TABLE>
10
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
6. INCOME TAXES, CONTINUED
The Company's effective income tax rate from continuing operations differed from
the federal statutory rate as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Federal statutory tax rate -34% -34%
State taxes, net of federal tax effect 0% 0%
Change in valuation allowances 35% 34%
Other, net -1% 0%
---- ----
0% 0%
==== ====
</TABLE>
The deferred tax assets and liabilities as of September 30, consist of the
following tax effects relating to temporary differences and carryforwards:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Current deferred tax assets:
Bad debt reserve $ 45 $ 30
Inventory valuation 119 154
Inventory capitalization 23 18
Vacation pay 29 40
Warranty and other sale obligations 68 12
Other reserves and accruals 8 3
------- -------
292 257
Valuation allowance (292) (257)
Net current deferred tax assets $ - $ -
======= =======
<CAPTION>
1999 1998
<S> <C> <C>
Noncurrent deferred tax assets:
Net operating loss - federal $ 1,048 $ 774
Net operating loss - state 159 123
Net operating loss - foreign 183 137
Property, plant and equipment 12 26
------- -------
1,402 1,060
Valuation allowance (1,402) (1,060)
------- -------
Net noncurrent deferred tax assets $ - $ -
======= =======
</TABLE>
11
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
6. INCOME TAXES, CONTINUED
The valuation allowance is $1,694 and $1,317 at September 30, 1999 and 1998,
respectively. During the year ended September 30, 1999, the valuation allowance
increased by $377.
At September 30, 1999, the Company has unused federal net operating loss
carryforwards of approximately $3,083. The federal net operating loss
carryforwards, if unused, will begin to expire in 2009. The use of $1,887 of
these carryforwards is limited on an annual basis, pursuant to the Internal
Revenue Code, due to certain changes in ownership and equity transactions.
At September 30, 1999, the Company has unused state net operating loss
carryforwards of approximately $1,766. The state net operating loss
carryforwards, if unused, will begin to expire in 2000. The use of $1,163 of
these carryforwards is limited on an annual basis. At September 30, 1999, the
Company has unused foreign net operating losses of approximately $592. The
acquisition of the Company in October 1999 by SatCon will further limit the
availability of the loss carryforward.
The Company made cash payments, net of refunds, for income taxes of $3 and $2
for the years ended September 30, 1999 and 1998, respectively.
7. SEGMENT AND CONCENTRATION INFORMATION
The Company operates in a single industry segment and sells its products on a
worldwide basis with its principal markets listed in the table below:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Geographic
United States $5,849 $ 8,120
Europe 1,015 1,142
Japan 531 1,514
Pacific Rim 543 847
China 278 466
Canada 97 54
Rest World 59 91
------ -------
Total sales $8,372 $12,234
====== =======
</TABLE>
Sales concentrations to individual customers consisted primarily of sales
to one and two customers, which were approximately $834 and $2,736 and
represented approximately 10% and 22% of consolidated sales for the years ended
September 30, 1999 and 1998, respectively. No other customer accounted for more
than 10% of consolidated sales for the years ended September 30, 1999 or 1998.
12
<PAGE>
LING ELECTRONICS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998 (DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
7. SEGMENT AND CONCENTRATION INFORMATION, CONTINUED
Financial instruments which subject the Company to concentrations of credit risk
consist principally of accounts receivable. Accounts receivable for one and
three customers were approximately $739 and $772 and represented approximately
31% and 21% of consolidated accounts receivable at September 30, 1999 and 1998,
respectively. No other customer accounted for more than 10% of consolidated
accounts receivable at September 30, 1999 or 1998.
8. RELATED PARTY TRANSACTIONS
The Parent Company periodically advances cash to the Company to fund working
capital requirements. The Parent Company advanced the Company $1,433 and $586
for the years ended September 30, 1999 and 1998, respectively. These cash
advances have been accumulated and recorded as advances due Parent Company, do
not bear interest and are payable at the discretion of the Parent Company.
The Parent Company assesses the Company an annual charge to absorb
administrative overhead costs incurred at the Parent Company. This charge was
$524 and $484 for the years ended September 30, 1999 and 1998, and has been
recorded as a component of general and administrative expenses.
13
<PAGE>
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
On October 21, 1999, SatCon Technology Corporation ("SatCon") completed its
acquisition of Ling Electronics, Inc. and Ling Electronics, Ltd. (collectively,
"Ling") from Mechanical Technology Incorporated ("MTI"). In consideration for
the acquisition of Ling, MTI received $70,000 and 770,000 shares of SatCon's
common stock, $0.01 par value per share.
The following unaudited pro forma combined consolidated balance sheets as of
September 30, 1999 and the unaudited pro forma combined consolidated statements
of operations for the years ended September 30, 1999 and 1998 give effect to the
acquisition described above accounted for under the purchase method of
accounting. The unaudited pro forma combined consolidated financial statements
are based on historical consolidated financial statements of SatCon and Ling
under the assumptions and adjustments set forth in the accompanying notes to the
unaudited pro forma combined consolidated financial statements.
The unaudited pro forma combined consolidated balance sheet assumes that the
acquisition was consummated on September 30, 1999 and the unaudited pro forma
combined consolidated statements of operations for the years ended September 30,
1999 and 1998 assumes the acquisition was consummated on October 1, 1998 and
October 1, 1997, respectively.
For purposes of presenting the unaudited pro forma combined consolidated
balance sheet, Ling's assets and liabilities have been recorded at their
estimated fair values and the excess purchase price has been assigned to
goodwill. These fair values are based on preliminary estimates. Upon
completion of a detailed review of assets and liabilities, including
intangibles, certain adjustments may be required to finalize the purchase
accounting that could be material to SatCon's financial statements.
The unaudited pro forma combined consolidated financial statements may not be
indicative of the results that actually would have occurred if the acquisition
had been consummated on the dates indicated or which may be obtained in the
future. The unaudited pro forma combined consolidated financial statements
should be read in conjuction with the historical consolidated financial
statements of SatCon and Ling.
14
<PAGE>
SATCON TECHNOLOGY CORPORATION
UNAUDITED PRO FORMA COMBINED
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
---------------------------------------------------
SATCON LING PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................................ 2,533 64 (70)(1) 2,527
Accounts receivable, net ............................................. 2,799 2,377 5,176
Unbilled contract costs and fees, net ................................ 1,462 1,462
Inventory ............................................................ 3,698 2,807 6,505
Prepaid expenses and other current assets ............................ 347 122 (18)(3) 451
Amounts due from related party ....................................... 2 2
-------- ------- -------- --------
Total current assets .......................................... 10,841 5,370 (88) 16,123
Property and equipment, net ............................................... 3,261 394 (244)(2) 3,411
Intangibles, net ........................................................... 3,194 3,450 (3) 6,644
Other long-term assets ..................................................... 104 104
-------- ------- -------- --------
Total assets .................................................. $ 17,400 $ 5,764 $ 3,118 $ 26,282
======== ======= ======== ========
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ..................................................... 1,563 409 1,972
Accrued payroll and payroll related expenses ......................... 480 309 789
Deferred revenue ..................................................... 113 14 127
Accrued losses from investment in Beacon Power Corporation ........... 203 203
Other accrued expenses ............................................... 621 488 82 (3) 1,191
Advance due Parent Company ........................................... 0 6,907 (6,907)(4) -
Current portion of long-term debt .................................... 16 16
-------- ------- -------- --------
Total current liabilities ..................................... 2,996 8,127 (6,825) 4,298
-------- ------- -------- --------
Long term liabilities:
Long term debt ....................................................... 34 34
Other long-term liabilities .......................................... 30 30
-------- ------- -------- --------
Total long term liabilities ................................... 64 64
-------- ------- -------- --------
Redeemable convertible preferred stock ..................................... 4,894 4,894
Commitments
STOCKHOLDERS' EQUITY
Preferred stock ............................................................ - -
Common stock ............................................................... 96 8 (5) 104
Additional paid-in capital ................................................. 37,074 1,636 5,936 (4),(5) 44,646
Common stock held in escrow ................................................ (428) (428)
Amounts receivable from exercise of stock options .......................... (1,817) (1,817)
Accumulated deficit ........................................................ (25,229) (3,988) 3,988 (5) (25,229)
Accumulated other comprehensive loss ....................................... (11) 11 (5) -
Treasury stock, at cost .................................................... (250) (250)
-------- ------- -------- --------
Total stockholders' equity .................................... 9,446 (2,363) 9,943 17,026
-------- ------- -------- --------
Total liabilities, redeemable convertible preferred stock
and stockholders' equity ......................... $ 17,400 $ 5,764 $ 3,118 $ 26,282
======== ======= ======== ========
</TABLE>
15
<PAGE>
SATCON TECHNOLOGY CORPORATION
UNAUDITED PRO FORMA COMBINED
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30, 1999
-----------------------------------------------------------
SATCON LING PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Revenue .................................................... $ 15,478 $ 8,372 $ 23,850
--------- ----------- -------- ---------
Cost of revenue ............................................ 15,339 6,213 (105)(1) 21,447
Selling, general and administrative expenses ............... 8,819 3,058 11,877
Research and development expenses .......................... 726 188 914
Goodwill amortization ...................................... 371 493 (2) 864
--------- ----------- -------- ---------
Total operating expenses ................................... 25,255 9,459 388 35,102
--------- ----------- -------- ---------
Operating loss ............................................. (9,777) (1,087) (388) (11,252)
Loss from investment in Beacon Power Corporation ........... (2,358) (2,358)
Other losses ............................................... (150) (150)
Interest income ............................................ 42 42
Interest expense ........................................... (116) (116)
--------- ----------- -------- ---------
Net loss before income taxes ............................... (12,359) (1,087) (388) (13,834)
Provision for income taxes ................................. -- --
--------- ----------- -------- ---------
Net loss ................................................... $ (12,359) $ (1,087) $ (388) $ (13,834)
--------- ----------- -------- ---------
Accretion of redeemable convertible preferred
stock discount ............................................ $ (51) $ $ $ (51)
--------- ----------- -------- ---------
Net loss attributable to common stockholders ............... $ (12,410) $ (1,087) $ (388) $ (13,885)
========= =========== ======== =========
Net loss per share, basic and diluted ...................... $ (1.35) $ (1.40)
========= =========
Weighted average number of common shares, basic and diluted 9,176,041 9,946,041
========= =========
</TABLE>
16
<PAGE>
SATCON TECHNOLOGY CORPORATION
UNAUDITED PRO FORMA COMBINED
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30, 1998
----------------------------------------------------------
SATCON LING PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS COMBINED
---------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Revenue .................................................... $ 15,486 $ 12,234 $ 27,720
--------- ----------- -------- ---------
Cost of revenue ............................................ 10,991 8,986 (109)(1) 19,868
Selling, general and administrative expenses ............... 4,787 3,584 8,371
Research and development expenses .......................... 346 99 445
Goodwill amortization ...................................... 291 493 (2) 784
--------- ----------- -------- ---------
Total operating expenses ................................... 16,415 12,669 384 29,468
--------- ----------- -------- ---------
Operating loss ............................................. (929) (435) (384) (1,748)
Loss from investment in Beacon Power Corporation ........... (3,542) (3,542)
Interest income ............................................ 180 180
Interest expense ........................................... (10) (10)
--------- ----------- -------- ---------
Net loss before income taxes ............................... (4,301) (435) (384) (5,120)
Provision for income taxes ................................. 4 4
--------- ----------- -------- ---------
Net loss ................................................... $ (4,305) $ (435) $ (384) $ (5,124)
========= =========== ======== =========
Net loss per share, basic and diluted ...................... $ (0.48) $ (0.53)
========= =========
Weighted average number of common shares, basic and diluted 8,956,671 9,726,671
========= =========
</TABLE>
17
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma combined consolidated balance sheet gives effect to
the acquisition, which was accounted for under the purchase method of
accounting, as if it had been consummated on September 30, 1999.
The following is a summary of adjustments reflected in the unaudited pro
forma combined consolidated balance sheet:
(1) Represents $70,000 of cash paid pursuant to the stock purchase agreement.
(2) Represents the adjustments to reflect the fair value of Ling's property,
plant and equipment.
(3) Represents the purchase price of approximately $7,750,000, including direct
acquisition costs of $100,000 of which approximately $18,000 had been
incurred as of September 30, 1999, in excess of the fair value of the net
assets acquired of approximately $4,300,000.
(4) Represents the contribution of the advance due the parent company of Ling
to the equity of Ling prior to the acquisition.
(5) Represents the elimination of Ling's historical equity and the recording of
the purchase price.
The unaudited pro forma combined consolidated statements of operations have
been prepared to reflect the acquisition as if it occurred on October 1, 1997.
The excess of the purchase price over the fair value of the net assets acquired
is being amortized on a straight-line basis over a 7-year period. Pro forma net
loss per share has been computed using the weighted average shares of common
stock outstanding adjusted for the issuance of 770,000 shares in connection with
the acquisition.
The following is a summary of adjustments reflected in the unaudited pro
forma combined consolidated statements of operations:
(1) Represents the adjustment to depreciation expense to reflect the fair value
of Ling's property, plant and equipment.
(2) Represents the amortization of goodwill associated with the acquisition of
Ling.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
SATCON TECHNOLOGY CORPORATION
Date: January 4, 2000 By: /s/ David B. Eisenhaure
-----------------------------------------------
David B. Eisenhaure
President, Chief Executive Officer and
Chairman of the Board
19
