Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On June 13, 2007, Perma-Fix Environmental Services, Inc.
("Perma-Fix", "we," "our" or the "Company") purchased 100% of the voting shares
of Nuvotec USA, Inc. ("Nuvotec") and Nuvotec's wholly owned subsidiary, Pacific
EcoSolutions PecoS, Inc. ("PEcoS"). Nuvotec serves primarily as a holding
Company for its investment in PEcoS. PEcoS is a permitted hazardous, low level
radioactive and mixed waste treatment, storage and disposal facility located in
the Hanford U.S. Department of Energy site in the eastern part of the state of
Washington. We acquired Nuvotec/PEcoS for total consideration of approximately
$16.9 million which included 709,207 shares of our common stock (valued at $2.2
million, which was determined by the average closing price of the common stock
four days prior to and following the completion date of the acquisition), $2.3
million of cash, an installment note of $2.5 million payable over four years
which bears interest at 8.25%, assumption of total debt of $9.4 million, and
approximately $0.5 million of transaction costs. In addition, we may be required
to make earn-out payments up to $4.4 million in cash dependent on the
achievement of defined revenue targets. We expect that such earn-out payments,
if made, will be accounted for as additional consideration.
The following unaudited pro forma condensed combined balance sheet
as of March 31, 2007 and unaudited pro forma condensed combined statements of
operations for the year ended December 31, 2006 (September 30, 2006 in the case
of Nuvotec/PEcoS) and the three months ended March 31, 2007 (collectively, the
"Pro Forma Statements") are based on the historical consolidated financial
statements of Perma-Fix and Nuvotec/PEcoS. The Company's historical financial
statements referred to above as of and for the year ended December 31, 2006 are
included in our Annual Report on Form 10-K for the year ended December 31, 2006
and the historical financial statements as of and for the three months ended
March 31, 2007 are included in our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2007. The audited balance sheet of PEcoS as of September 30,
2006 and the related statements of income and changes in stockholder's equity
and cash flows for the year ended September 30, 2006 and the unaudited balance
sheet of PEcoS as of March 31, 2007 and the related unaudited statements of
income and stockholder's equity for the three and six months ended March 31,
2007 are included in this Current Report on Form 8-K as Exhibit 99.1. The Pro
Forma Statements were adjusted to give effect to the acquisition of PEcoS/Nuotec
pursuant to the Asset Purchase Agreement by and among Perma-Fix, Perma-Fix's
wholly owned subsidiary, Transitory, Nuvotec, and PEcoS, dated April 27, 2007,
which was subsequently amended on June 13, 2007. The acquisition was accounted
for in the Pro Forma Statements using the purchase method of accounting based on
the assumptions and adjustments in the accompanying Notes to the Unaudited Pro
Forma Combined Financial Statements. The estimated purchase price allocation is
preliminary and is subject to further revision. The unaudited pro forma
condensed combined balance sheet gives effect to the transaction as if it
occurred on March 31, 2007 and the unaudited pro forma condensed combined
statements of operations for the year ended December 31, 2006 and for the three
months ended March 31, 2007 give effect to the transaction as if it occurred on
January 1, 2006.
The pro forma adjustments are based upon available information and
certain assumptions that the Company believes are (1) directly attributable to
the transaction and (2) factually supportable. The Pro Forma Statements are
provided for informational purposes only and do not purport to represent what
our financial position and results of operations would actually have been had
the Nuvotec/PEcoS acquisition occurred on such dates or to project our financial
position or results of operations for any future period.
The Pro Forma Statements and the Notes thereto should be read in
conjunction with the historical Consolidated Financial Statements of Perma-Fix
and the Notes thereto included in our Annual Report on Form 10-K for the year
ended December 31, 2006, Quarterly Report on Form 10-Q for the quarter ended
March 31, 2007, and the historical Financial Statements of PEcoS and the Notes
thereto included in this Form 8-K.
99.2-1
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2007
Historical Historical Incremental Pro Forma
(Amounts in Thousands, Except for Share Amounts) Perma-Fix PEcoS Nuvotec Adjustments Pro Forma
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 1,312 $ 249 $ (1,561)(a) $ --
Investment 77 77
Restricted cash 35 35
Net receivables 22,416 1,554 23,970
Inventories 309 309
Prepaid and other expenses 2,554 623 3,177
Current assets included in assets for sale,
net of allowance for doubtful accounts 6,514 6,514
--------- ---------- ----------- ----------- -----------
Total current assets $ 33,140 $ 2,426 $ 77 $ (1,561) $ 34,082
Property and equipment:
Property and equipment, net of accumulated
depreciation 33,910 4,883 34 9,061 (c) 47,888
Property and equipment included in assets
for sale, net of accumulated depreciation 13,417 13,417
Intangibles and other assets:
Goodwill 11,075 3,705 453 7,225 (d) 22,458
Permit 1,330 1,330
Unbilled receivable - non-current 3,821 3,821
Finite Risk Sinking Fund 5,566 5,566
Other assets 1,825 2,189 (2,189)(b) 1,825
Intangibles and other assets included in --
asset held for sale 2,369 2,369
--------- ---------- ----------- ----------- -----------
Total assets $ 106,453 $ 11,014 $ 2,753 $ 12,536 $ 132,756
========= ========== =========== =========== ===========
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
99.2-2
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2007
Historical Historical Incremental Pro Forma
(Amounts in Thousands, Except for Share Amounts) Perma-Fix PEcoS Nuvotec Adjustments Pro Forma
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,879 $ 500 $ 3,379
Current environmental accrual 461 461
Accrued expenses 9,996 1,785 167 4,110 (f) 16,058
Unearned revenue 3,637 49 573 (f) 4,259
Current liabilities related to assets held for sale 4,984 4,984
Current portion of long-term debt 2,124 198 1,802 (g) 4,124
--------- --------- --------- --------- ---------
Total current liabilities 24,081 2,532 167 6,485 33,265
Environmental accruals 328 328
Accrued closure costs 4,861 776 2,992 (f) 8,629
Other long-term liabilities 3,128 1,073 (1,073)(b) 3,128
Long-term liabilities related to assets held for sale 3,901 3,901
Long-term debt, less current portion 5,339 3,467 5,418 2,300 (e) 16,524
--------- --------- --------- --------- ---------
Total long-term liabilities 17,557 5,316 5,418 4,219 32,510
--------- --------- --------- --------- ---------
Total liabilities 41,638 7,848 5,585 10,704 65,775
Preferred Stock of subsidiary 1,285 1,285
Stockholders' equity:
Common Stock 52 52
Additional paid-in capital 93,128 1,327 838 (h) 95,293
Stock subscription receivable (66) (66)
Accumulated deficit (29,584) 1,839 (2,832) 994 (h) (29,583)
--------- --------- --------- --------- ---------
Total stockholders' equity 63,530 3,166 (2,832) 1,832 65,696
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 106,453 $ 11,014 $ 2,753 $ 12,536 $ 132,756
--------- ========= ========= ========= =========
See Notes to Unaudited Pro Forma Condensed Combined Fiancial Statements
99.2-3
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2007
Historical Historical
Perma-Fix PEcoS
Three Months Three Months
Ended Ended Pro Forma
(Amounts in Thousands, Except for Per Share Amounts) March 31, 2007 March 31, 2007 Adjustments ProForma
- ----------------------------------------------------------------------------------------------------------------------------
Net revenues $ 12,921 $ 2,895 $ $ 15,816
Cost of goods sold 8,321 2,073 273 (k) 10,667
-------- -------- --------- ---------
Gross profit 4,600 822 (273) 5,149
Selling, general and administrative expenses 3,715 687 (165)(k) 4,237
Loss on disposal of property and equipment -- -- --
-------- -------- --------- ---------
Income from operations 885 135 (108) 912
Other income (expense):
Interest income 88 -- 88
Interest expense (201) (79) (203)(i),(j) (483)
Interest expense-financing fees (48) -- (48)
Other (15) -- (15)
-------- -------- --------- ---------
Income from continuing operations before taxes 709 56 (311) 454
Income tax expense 126 19 (19)(l) 126
-------- -------- --------- ---------
Income from continuing operations $ 583 $ 37 $ (292) $ 328
======== ======== ========= =========
Net income per common share - basic
Continuing operations $ .01 $ .01
======== =========
Net income per common share - diluted
Continuing operations $ .01 $ .01
======== =========
Number of common shares used in computing net
income (loss) per share:
Basic 52,063 709 52,772
Diluted 52,063 709 52,772
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
99.2-4
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2006
Historical Historical
Perma-Fix PEcoS
Year Ended Year Ended
December 31, 2006 September 30, 2006 Pro Forma
(Amounts in Thousands, Except for Per Share Amounts) Perma-Fix PEcoS Adjustments ProForma
- ------------------------------------------------------------------------------------------------------------------------------
Net revenues $ 52,781 $ 13,039 $ $ 65,820
Cost of goods sold 31,054 8,478 1,092 (k) 40,624
-------- -------- -------- ---------
Gross profit 21,727 4,561 (1,092) 25,196
Selling, general and administrative expenses 14,321 3,243 (553)(k) 17,011
Loss on disposal of property and equipment 48 -- 48
-------- -------- -------- ---------
Income from operations 7,358 1,318 (539) 8,137
Other income (expense):
Interest income 280 -- 280
Interest expense (1,241) (339) (812)(i),(j) (2,392)
Interest expense-financing fees (192) -- (192)
Other (54) 41 (13)
-------- -------- -------- ---------
Income from continuing operations before taxes 6,151 1,020 (1,351) 5,820
Income tax expense 507 392 (392)(l) 507
-------- -------- -------- ---------
Income from continuing operations $ 5,644 $ 628 $ (959) $ 5,313
======== ======== ======== =========
Net income (loss) per common share - basic
Continuing operations $ .12 $ .11
======== =========
Net income (loss) per common share - diluted
Continuing operations $ .12 $ .11
======== =========
Number of common shares used in computing net
income (loss) per share:
Basic 48,157 709 48,866
Diluted 48,768 709 49,477
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements
99.2-5
PERMA-FIX ENVIRONMENTAL SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
On June 13, 2007, Perma-Fix Environmental Services, Inc. ("Perma-Fix",
"we," "our" or the "Company") purchased 100% of the voting shares of Nuvotec
USA, Inc. ("Nuvotec") and Nuvotec's wholly owned subsidiary, Pacific
EcoSolutions, Inc. ("PEcoS"). Nuvotec serves primarily as a holding Company for
its investment in PEcoS. PEcoS is a permitted hazardous, low level radioactive
and mixed waste treatment, storage and disposal facility located in the Hanford
U.S. Department of Energy site in the eastern part of the state of Washington.
We acquired Nuvotec/PEcoS for total consideration of approximately $16.9 million
which consisted of 709,207 shares of our common stock (valued at $2.2 million,
which was determined by the average closing price of the common stock four days
prior to and following the completion date of the acquisition), $2.3 million of
cash, an installment note of $2.5 million payable over four years which bears
interest at 8.25%, assumed debt of $9.4 million, and approximately $0.5 million
of transaction costs. In addition, we may be required to make earn-out payments
up to $4.4 million in cash dependent on the achievement of defined revenue
targets. We expect that such earn-out payments, if made, will be accounted for
as additional consideration.
2. PRELIMINARY PURCHASE PRICE ALLOCATION
This acquisition will be recorded using the purchase method of accounting,
which includes an evaluation of the existence of any identifiable intangibles at
the date of acquisition, such as permits and customer relationships. Due to the
strategic nature of the acquisition goodwill of approximately $11.4 million is
expected to be recorded in connection with the acquisition. However, final
allocation of purchase price has not been finalized. See pro forma adjustment
(d). The following table summarizes the preliminary purchase price allocation of
the fair values of the assets acquired and liabilities assumed, as though the
acquisition had occurred on March 31, 2007:
(Amounts in thousands)
- ---------------------------------------------------------
Current assets $ 2,503
Property, plant and equipment 13,978
Goodwill/intangibles 11,383
--------
Total assets acquired 27,864
Current liabilities (7,185)
Non-current liabilities (3,768)
--------
Total liabilities assumed (10,953)
--------
Total Consideration $ 16,911
========
3. PRO FORMA ADJUSTMENTS
(a) Reflects cash outlay at closing of $8.2 million, consisting of $2.3
million cash portion of the purchase price, $5.4 million of assumed debt
paid/refinanced at closing, and estimated acquisition costs of $0.5
million. The cash outlay was funded from cash on hand of $1.6 million and
borrowings of $6.6 million (see (e) below).
99.2-6
(b) Reflects the decrease of net deferred tax assets to reflect amount more
likely than not to be recognized.
(c) Reflects increase to record property and equipment to estimated fair value
of $14.0 million.
(d) Reflects the estimated goodwill of $11.4 million resulting from the
business combination. See Note 2. The Company has not yet finalized the
allocation of purchase price; thus this is subject to revision. However,
it is not expected that any further revision will result in a material
allocation to finite-lived intangibles.
(e) Reflects long-term portion of borrowings by the Company as follows: $6.6
million borrowed on the revolver including interest accrued to acquisition
date of June 13, 2007 of $0.4 million; $2.0 million of long-term debt from
Key Bank; $2.5 million shareholder loan; net of $8.8 million of debt
assumed.
(f) Reflects adjustment to reflect assumed liabilities for disposal of waste
on-hand, deferred revenue, and facility closure on a basis constant with
the Company's policy.
(g) Reflect current portion by the Company for the refinancing of $2.0
million, offset by the payment of existing short-term debt of $0.2
million.
(h) Reflects the elimination of Nuvotec/PEcoS equity accounts. Also, this
reflects the issuance of 709,207 shares of our Common Stock, valued at
approximately $2.2 million based on the closing price of our Common Stock
for four trading days preceding through the four trading days following
the completion date of the acquisition.
(i) Reflects interest expense on the reduced cash balance of $1.6 million at
an assumed interest rate of 3.5% and on incremental borrowing under the
line of credit of $6.6 million at an assumed interest rate of 8.75%.
(j) Reflects interest expense on the note to the seller at a rate of 8.25% per
year. The note requires three equal payments of $833,333 commencing June
30, 2009.
(k) Reflects reclassification of depreciation and amortization to cost of good
sold to be consistent with Perma-Fix's historical presentation. Also
reflects adjustment to increase depreciation on fixed assets which have
been increased to fair value. The increase amounted to $108,000 for the
three months ended March 31, 2007 and $539,000 for the year ended December
31, 2006 based on a assumed average life of ten years on incremental
depreciable assets of $9.1 million.
(l) Reflects the expectation that there would have been no incremental income
tax expense should this transaction have taken place on January 1, 2006.
99.2-7