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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/17/22 Chase Corp. 8-K/A:2,9 9/01/22 14:1.5M Toppan Merrill Bridge/FA |
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Exhibit 99.5
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
On September 1, 2022, Chase Corporation (“Chase” or the “Company”) completed the previously announced acquisition (the “Acquisition”) of NuCera Solutions, pursuant to which Chase purchased all of the outstanding capital stock of NuCera Holdings Inc. (“NuCera”). The Acquisition was made pursuant to a Stock Purchase Agreement (the “Purchase Agreement”), dated July 15, 2022, by and among Chase, NuCera, and NuCera Solutions Holdco LP, as seller.
The unaudited pro forma combined financial information has been derived from:
● | the audited consolidated financial statements and related notes of Chase as of and for the year ended August 31, 2022, as included in Chase’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on November 10, 2022; |
● | the audited combined consolidated financial statements and related notes of NuCera as of and for the year ended December 31, 2021, included as Exhibit 99.3 to the Form 8-K/A to which this unaudited pro forma financial information is attached; and |
● | the interim unaudited condensed combined consolidated financial statements and related notes of NuCera as of and for the six months ended June 30, 2022, included as Exhibit 99.4 to the Form 8-K/A to which this unaudited pro forma financial information is attached. |
The unaudited pro forma condensed combined financial information herein presents the combined historical financial position and results of operations of Chase and NuCera after giving effect to the transaction based on the assumptions, reclassifications and adjustments described in the accompanying notes to the unaudited pro forma financial information. The unaudited pro forma condensed combined balance sheet gives effect to the Acquisition as if it had been consummated on August 31, 2022. The unaudited pro forma condensed combined statement of operations gives effect to the Acquisition as if it had been consummated at September 1, 2021.
Chase’s fiscal year ends on August 31, while the fiscal year of NuCera ends on December 31. The unaudited pro forma condensed combined statement of operations combines the consolidated condensed statement of operations of Chase for the fiscal year ended August 31, 2022 with the unaudited statement of operations of NuCera for the twelve months ended June 30, 2022. The unaudited pro forma condensed combined balance sheet combines the consolidated condensed balance sheet of Chase as of August 31, 2022 with the unaudited balance sheet of NuCera as of June 30, 2022.
The unaudited pro forma condensed combined financial information should be read in conjunction with the historical financial statements of Chase and NuCera as well as the accompanying notes to the unaudited pro forma condensed combined financial information.
The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable. The unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent Chase’s actual consolidated financial position or results of operations had the Acquisition been completed as of the dates presented, nor should it be considered indicative of Chase’s future consolidated financial position or results of operations.
The unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined entity may achieve as a result of the acquisition or the costs necessary to achieve any such cost savings, operating synergies or revenue enhancements.
1
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
In thousands, except share and per share amounts
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | ||||
| | August 31, | | June 30, | | | | | | | | ||||
| | 2022 | | 2022 | | | | | | | | 2022 | |||
| | Chase | | NuCera | | Transaction Accounting | | Note | | Pro Forma | |||||
|
| (Audited) |
| (Unaudited) |
| Adjustments |
| Reference |
| Combined | |||||
ASSETS | | | | | | | | | | | | | | | |
Current Assets | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 315,495 | | $ | 1,901 | | $ | (249,610) | | | (A) | | $ | 67,786 |
Accounts receivable, net | | | 51,540 | | | 13,728 | | | — | | | | | | 65,268 |
Inventory | | | 63,039 | | | 15,600 | | | 2,242 | | | (B) | | | 80,881 |
Prepaid expenses and other current assets | | | 4,374 | | | 1,907 | | | (726) | | | (C) | | | 5,555 |
Prepaid income taxes and refunds due | | | 2,329 | | | — | | | — | | | | | | 2,329 |
Total current assets | | | 436,777 | | | 33,136 | | | (248,094) | | | | | | 221,819 |
| | | | | | | | | | | | | | | |
Property, plant and equipment, net | | | 24,248 | | | 28,865 | | | 9,661 | | | (D) | | | 62,774 |
| | | | | | | | | | | | | | | |
Other Assets | | | | | | | | | | | | | | | |
Goodwill | | | 95,160 | | | 1,096 | | | 75,412 | | | (E) | | | 171,668 |
Intangible assets, net | | | 33,661 | | | 6,809 | | | 141,212 | | | (F) | | | 181,682 |
Cash surrender value of life insurance | | | 4,450 | | | — | | | — | | | | | | 4,450 |
Restricted investments | | | 2,367 | | | — | | | — | | | | | | 2,367 |
Deferred income taxes | | | 5,763 | | | 242 | | | (242) | | | (G) | | | 5,763 |
Operating lease right-of-use assets | | | 8,596 | | | 676 | | | — | | | | | | 9,272 |
Other assets | | | 558 | | | 216 | | | 3,803 | | | (H) | | | 4,577 |
Total assets | | $ | 611,580 | | $ | 71,040 | | $ | (18,248) | | | | | $ | 664,372 |
| | | | | | | | | | | | | | | |
LIABILITIES AND EQUITY | | | | | | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | | | | | |
Accounts payable | | $ | 20,122 | | $ | 5,024 | | $ | — | | | | | $ | 25,146 |
Accrued expenses | | | 14,652 | | | 4,547 | | | — | | | | | | 19,199 |
Income taxes payable | | | 554 | | | 313 | | | — | | | | | | 867 |
Short-term debt | | | — | | | 6,105 | | | (6,105) | | | (I) | | | — |
Total current liabilities | | | 35,328 | | | 15,989 | | | (6,105) | | | | | | 45,212 |
| | | | | | | | | | | | | | | |
Long-term debt | | | 180,000 | | | 45,431 | | | (45,431) | | | (J) | | | 180,000 |
Operating lease long-term liabilities | | | 6,618 | | | 558 | | | — | | | | | | 7,176 |
Deferred compensation | | | 2,375 | | | — | | | — | | | | | | 2,375 |
Accumulated pension obligation | | | 7,431 | | | — | | | — | | | | | | 7,431 |
Other liabilities | | | 2,897 | | | — | | | 3,803 | | | (H) | | | 6,700 |
Deferred income taxes | | | 2,282 | | | 1,239 | | | 37,209 | | | (K) | | | 40,730 |
Accrued income taxes | | | 1,820 | | | — | | | 99 | | | (L) | | | 1,919 |
Total liabilities | | $ | 238,751 | | $ | 63,217 | | $ | (10,425) | | | | | $ | 291,543 |
| | | | | | | | | | | | | | | |
Equity | | | | | | | | | | | | | | | |
Preferred Stock | | | — | | | — | | | — | | | | | | — |
Common stock | | | 947 | | | — | | | — | | | | | | 947 |
Additional paid-in capital | | | 21,409 | | | — | | | — | | | | | | 21,409 |
Accumulated other comprehensive loss | | | (20,367) | | | — | | | — | | | | | | (20,367) |
Retained earnings | | | 370,840 | | | — | | | | | | | | | 370,840 |
NuCera Holdings Inc. stockholder's equity | | | — | | | 7,823 | | | (7,823) | | | (M) | | | — |
Total equity | | | 372,829 | | | 7,823 | | | (7,823) | | | | | | 372,829 |
Total liabilities and equity | | $ | 611,580 | | $ | 71,040 | | $ | (18,248) | | | | | $ | 664,372 |
See accompanying notes to unaudited pro forma condensed combined financial statements.
2
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
In thousands, except share and per share amounts
| | | | | | | | | | | | | | | |
| | Twelve Months Ended | | | | | | | | Twelve Months Ended | |||||
| | August 31, | | June 30, | | | | | | | | ||||
| | 2022 | | 2022 | | | | | | | | 2022 | |||
| | Chase | | NuCera | | Transaction Accounting | | Note | | Pro Forma | |||||
| | (Audited) |
| (Unaudited) |
| Adjustments |
| Reference |
| Combined | |||||
| | | | | | | | | | | | | | | |
Revenue | | | | | | | | | | | | | | | |
Sales | | $ | 322,462 | | $ | 87,968 | | $ | — | | | | | $ | 410,430 |
Royalties and commissions | | | 3,198 | | | — | | | — | | | | | | 3,198 |
| | | 325,660 | | | 87,968 | | | — | | | | | | 413,628 |
Costs and Expenses | | | | | | | | | | | | | | | |
Cost of products and services sold | | | 202,708 | | | 59,825 | | | — | | | | | | 262,533 |
Selling, general and administrative expenses | | | 54,438 | | | 11,128 | | | 13,135 | | | (A) | | | 78,701 |
Research and products development costs | | | 4,415 | | | 1,882 | | | — | | | | | | 6,297 |
Operations optimization costs | | | 842 | | | — | | | — | | | | | | 842 |
Acquisition-related costs | | | 4,000 | | | — | | | — | | | | | | 4,000 |
Loss on contingent consideration | | | 432 | | | — | | | — | | | | | | 432 |
Insurance proceeds | | | — | | | (3,995) | | | — | | | | | | (3,995) |
Purchase accounting adjustments | | | — | | | — | | | 2,975 | | | (B) | | | 2,975 |
| | | | | | | | | | | | | | | |
Operating income | | | 58,825 | | | 19,128 | | | (16,110) | | | | | | 61,843 |
| | | | | | | | | | | | | | | |
Interest expense | | | (425) | | | (2,826) | | | (7,212) | | | (C) | | | (10,463) |
Other income (expense) | | | 198 | | | 308 | | | — | | | | | | 506 |
| | | | | | | | | | | | | | | |
Income before income taxes | | | 58,598 | | | 16,610 | | | (23,322) | | | | | | 51,886 |
| | | | | | | | | | | | | | | |
Income taxes expense (benefit) | | | 13,927 | | | 2,673 | | | (5,606) | | | (D) | | | 10,994 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Net income | | $ | 44,671 | | $ | 13,937 | | $ | (17,716) | | | | | $ | 40,892 |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Net income available to common shareholders, per common and common equivalent share | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Basic | | $ | 4.72 | | | | | | | | | | | $ | 4.32 |
| | | | | | | | | | | | | | | |
Diluted | | $ | 4.70 | | | | | | | | | | | $ | 4.31 |
| | | | | | | | | | | | | | | |
Weighted average shares outstanding | | | | | | | | | | | | | | | |
Basic | | | 9,399,085 | | | | | | | | | | | | 9,399,085 |
Diluted | | | 9,434,341 | | | | | | | | | | | | 9,434,341 |
| | | | | | | | | | | | | | | |
Annual cash dividend per share | | $ | 1.00 | | | | | | | | | | | $ | 1.00 |
See accompanying notes to unaudited pro forma condensed combined financial statements.
3
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 — Basis of Presentation
The unaudited pro forma condensed combined financial information and related notes have been prepared in accordance with Article 11 of Regulation S-X as amended and are based on historical consolidated financial statements of Chase and the historical combined financial statements of NuCera as adjusted to give effect to the Acquisition. The unaudited pro forma condensed combined balance sheet gives effect to the Acquisition as if it had been consummated on August 31, 2022. The unaudited pro forma condensed combined statement of operations gives effect to the Acquisition as if it had been consummated at September 1, 2021.
Chase’s fiscal year ends on August 31, while the fiscal year of NuCera ends on December 31. The unaudited pro forma condensed combined statement of operations combines the consolidated condensed statement of operations of Chase for the fiscal year ended August 31, 2022 with the unaudited statement of operations of NuCera for the twelve months ended June 30, 2022. The unaudited pro forma condensed combined balance sheet combines the consolidated condensed balance sheet of Chase as of August 31, 2022 with the unaudited balance sheet of NuCera as of June 30, 2022.
The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805, Business Combinations, (“ASC 805”). For purposes of the unaudited pro forma condensed combined balance sheet, the purchase price consideration has been allocated to the assets acquired and liabilities assumed of NuCera based upon preliminary estimate of their fair values as of the acquisition date. Accordingly, the purchase price allocation and related adjustments reflected in the unaudited pro forma condensed combined financial information are preliminary and subject to revision as further analyses are completed and additional information becomes available. The purchase price consideration as well as the estimated fair values of the assets acquired and liabilities assumed will be finalized as soon as practicable, but no later than one year from the closing of the Acquisition.
Management believes that the assumptions used provide a reasonable basis for presenting the significant effects of the Acquisition, and that the pro forma adjustments in the unaudited pro forma condensed financial information give appropriate effect to those assumptions.
4
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
In thousands, except share and per share amounts
Note 2 — Preliminary Purchase Price Allocation
The following table summarizes the components of the preliminary estimated purchase price and related allocation as of the Acquisition date (in thousands):
| | | |
Preliminary Purchase Price Allocation |
| Amount | |
Cash consideration | | $ | 249,610 |
Total fair value of consideration transferred | | | 249,610 |
| | | |
Assets acquired: | | | |
Cash and cash equivalents | | $ | 498 |
Accounts receivable | | | 10,475 |
Inventory | | | 17,109 |
Prepaid and other current assets | | | 1,401 |
Property, plant & equipment | | | 38,332 |
Operating lease right-of-use assets | | | 653 |
Goodwill | | | 80,454 |
Intangible assets | | | 148,021 |
Other assets | | | 4,014 |
Total assets acquired | | | 300,957 |
| | | |
Liabilities assumed: | | | |
Accounts payable | | $ | 4,333 |
Accrued liabilities | | | 2,654 |
Operating lease liabilities | | | 730 |
Income taxes payable | | | 1,280 |
Other liabilities | | | 3,803 |
Deferred tax liabilities | | | 38,448 |
Accrued Income Taxes | | | 99 |
Total liabilities assumed | | | 51,347 |
Net Assets acquired | | $ | 249,610 |
5
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
Note 3 — Transaction Accounting Adjustments
The following describes the transaction accounting adjustments related to the Acquisition that are necessary to account for the adjustment and have been included in the unaudited pro forma condensed combined financial information. The pro forma adjustments are based on preliminary estimates and valuations that could change significantly as additional information is obtained.
Balance Sheet Adjustments
A. | Represents the cash consideration transferred at the closing of the Acquisition. |
B. | Represents the adjustments to reflect the preliminary fair value of inventory acquired. |
C. | Represents the adjustment to write-off NuCera deferred financing expense. |
D. | Represents the adjustments to reflect the preliminary fair value of property and equipment acquired, consisting of the following (in thousands): |
| | | | | | |
|
| | |
| Preliminary Fair Value | |
Total preliminary fair value of acquired property and equipment | | | | | $ | 38,332 |
Less: historical property and equipment of NuCera | | | | | | (28,671) |
Transaction accounting adjustment | | | | | $ | 9,661 |
E. | Represents the preliminary fair value of goodwill acquired, consisting of the following (in thousands): |
| | | | | | |
|
| |
| Preliminary Estimated Amount | ||
Increase in goodwill from purchase accounting | | | | | $ | 76,508 |
Less: historical goodwill of NuCera | | | | | | (1,096) |
Transaction accounting adjustment | | | | | $ | 75,412 |
F. | Represents the preliminary fair value of intangible assets acquired, consisting of the following (in thousands): |
| | | | | | |
|
| Preliminary Estimated Amount |
| Preliminary Estimated Useful Life | ||
Increase in intangibles assets from purchase accounting: | | | | | | |
Backlog | | | 2,821 | | | 3 Months |
Trade Name | | | 6,100 | | | 10 Years |
Developed Technology | | | 13,400 | | | 10 Years |
Customer Relationships | | | 125,700 | | | 15 Years |
Less: historical intangible assets of NuCera | | | (6,809) | | | |
Transaction accounting adjustment | | $ | 141,212 | | | |
G. | Represents the write-off of NuCera deferred tax asset. |
H. | Represents the preliminary tax receivable and tax liability recorded as part of the Acquisition. |
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
I. | Represents the repayment of NuCera short-term debt at the closing of the Acquisition. |
J. | Represents the repayment of NuCera long-term debt at the closing of the Acquisition. |
K. | Represents the write-off of NuCera deferred tax liability and recording of the new deferred tax liability as a result of purchase accounting, consisting of the following (in thousands): |
| | | | | | |
|
| |
| Preliminary Estimated Amount | ||
Adjustment to record Chase tax impact from purchase accounting | | | | | | 38,448 |
Less: Adjustment of NuCera tax impact from purchase accounting | | | | | | (1,239) |
Transaction accounting adjustment | | | | | $ | 37,209 |
L. | Represents the assumed tax liability as a result of purchase accounting. |
M. | Represents the NuCera equity write-off as part of purchase accounting. |
Statement of Operations Adjustments
A. | Represents amortization of the new intangible assets acquired by Chase adjusted by the old amortization recorded by NuCera and adjustment for additional compensation to retain key employees, consisting of the following (in thousands): |
| | | | | | |
|
| |
| Preliminary Estimated Amount | ||
Amortization of new intangible assets acquired by Chase from purchase accounting | | | | | $ | 13,151 |
Adjustment for additional compensation to retain NuCera key employees | | | | | | 663 |
Less: historical intangible amortization recorded by NuCera | | | | | | (679) |
Transaction accounting adjustment | | | | | $ | 13,135 |
B. | Represents the adjustment for the inventory step-up and property plant, and equipment (“PP&E”) step-up recorded as part of the acquisition to record inventory at fair value. |
| | | | | | |
|
| | |
| Preliminary Fair Value | |
Adjustment for inventory purchase accounting step-up | | | | | $ | 2,242 |
Adjustment to record additional depreciation related to the PP&E fair value adjustment | | | | | | 733 |
Transaction accounting adjustment | | | | | $ | 2,975 |
C. | Represents the adjustment to record the Chase interest expense adjusted by the NuCera interest expense, consisting of the following (in thousands): |
| | | | | | |
|
| |
| Preliminary Estimated Amount | ||
Adjustment to record Chase interest expense from purchase accounting | | | | | $ | (10,038) |
Less: historical NuCera interest expense | | | | | | 2,826 |
Transaction accounting adjustment | | | | | $ | (7,212) |
7
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
D. | Represents the adjustment to record the tax impact of the pro forma adjustments using the statutory rate, consisting of the following (in thousands): |
| | | | | | |
|
| |
| Preliminary Estimated Amount | ||
Adjustment to record Chase tax impact from purchase accounting | | | | | | (6,447) |
Less: Adjustment of NuCera tax impact from purchase accounting | | | | | | 841 |
Transaction accounting adjustment | | | | | $ | (5,606) |
8
This ‘8-K/A’ Filing | Date | Other Filings | ||
---|---|---|---|---|
Filed on: | 11/17/22 | 4 | ||
11/10/22 | 10-K, 4, 8-K | |||
For Period end: | 9/1/22 | 4, 8-K | ||
8/31/22 | 10-K, 4 | |||
7/15/22 | 8-K | |||
6/30/22 | ||||
12/31/21 | SD | |||
9/1/21 | 4 | |||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 9/06/22 Chase Corp. 8-K:2,7,9 9/01/22 11:186K Toppan Merrill Bridge/FA |