Attached files
| file | filename |
|---|---|
| 8-K/A - PRO FORMA COMBINED AZZ NGA - AZZ INC | form8kaazzngacombined.htm |
| EX-23.1 - CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM - AZZ INC | ex231consent.htm |
| EX-15 - DELOITTE & TOUCHE LLP LETTER - AZZ INC | ex15deloittetouche.htm |
EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL INFORMATION
AZZ incorporated
Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings
For the Three Months Ended May 31, 2010
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Historical
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|||||||||||||||||
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Three Months Ended
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May 31, 2010
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March 31, 2010
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Pro Forma
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Pro Forma
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||||||||||||||
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In thousands, except per share amounts
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AZZ
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NAG
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Adjustments
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Combined
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|||||||||||||
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Net Sales
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$ | 77,474 | $ | 16,315 | - | $ | 93,789 | ||||||||||
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Costs and Expenses
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Cost of Sales
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53,911 | 10,491 | 1,268 | (1) | 65,670 | ||||||||||||
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Selling, General and Administrative
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12,274 | 2,705 | (2,362 | ) | (2) | 12,617 | |||||||||||
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Interest Expense
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1,691 | 298 | - | 1,989 | |||||||||||||
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Depreciation and Amortization
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967 | (967 | ) | (3) | - | ||||||||||||
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Net Gain On Sale Or Insurance Settlement of Property, Plant and Equipment
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(9 | ) | (717 | ) | - | (726 | ) | ||||||||||
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Other Expense (Income)
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(364 | ) | (8 | ) | - | (372 | ) | ||||||||||
| 67,503 | 13,736 | (2,061 | ) | 79,178 | |||||||||||||
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Income Before Income Taxes
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9,971 | 2,579 | 2,061 | 14,611 | |||||||||||||
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Income Tax Expense
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3,598 | 954 | 783 | (4) | 5,335 | ||||||||||||
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Net Income
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$ | 6,373 | $ | 1,625 | $ | 1,278 | $ | 9,276 | |||||||||
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Earnings Per Common Share:
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Basic Earnings Per Share
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$ | 0.51 | $ | 0.75 | |||||||||||||
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Diluted Earnings Per Share
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$ | 0.51 | $ | 0.74 | |||||||||||||
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Weighted Average Common Shares
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12,396,734 | 12,396,734 | |||||||||||||||
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Weighted Average Common Shares and Potentially Dilutive Common Shares
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12,548,708 | 12,548,708 | |||||||||||||||
1
AZZ incorporated
Unaudited Pro Forma Condensed Combined Consolidated Statement of Earnings
For the Year Ended February 28, 2010
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Historical
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For the year ended
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February 28, 2010
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December 31, 2009
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Pro Forma
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Pro Forma
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In thousands, except per share amounts
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AZZ
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NAG
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Adjustments
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Combined
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Net Sales
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$ | 357,030 | $ | 77,083 | - | $ | 434,113 | ||||||||||
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Costs and Expenses
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Cost of Sales
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247,384 | 49,092 | 5,072 | (1) | 301,548 | ||||||||||||
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Selling, General and Administrative
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43,417 | 9,336 | (4,655 | ) | (2) | 48,098 | |||||||||||
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Interest Expense
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6,838 | 425 | - | 7,263 | |||||||||||||
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Depreciation and Amortization
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3,713 | (3,713 | ) | (3) | - | ||||||||||||
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Net Gain On Sale Or Insurance Settlement of Property, Plant and Equipment
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(93 | ) | - | - | (93 | ) | |||||||||||
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Other Expense (Income)
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(899 | ) | (27 | ) | - | (926 | ) | ||||||||||
| 296,647 | 62,539 | (3,296 | ) | 355,890 | |||||||||||||
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Income Before Income Taxes
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60,383 | 14,544 | 3,296 | 78,223 | |||||||||||||
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Income Tax Expense
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22,655 | 4,887 | 1,252 | (4) | 28,794 | ||||||||||||
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Net Income
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$ | 37,728 | $ | 9,657 | $ | 2,044 | $ | 49,429 | |||||||||
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Earnings Per Common Share:
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Basic Earnings Per Share
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$ | 3.07 | $ | 4.02 | |||||||||||||
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Diluted Earnings Per Share
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$ | 3.02 | $ | 3.96 | |||||||||||||
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Weighted Average Common Shares
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12,283,167 | 12,283,167 | |||||||||||||||
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Weighted Average Common Shares and Potentially Dilutive Common Shares
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12,475,817 | 12,475,817 | |||||||||||||||
2
AZZ incorporated
Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet
As of May 31, 2010
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Historical
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May 31, 2010
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March 31, 2010
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Pro Forma
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Pro Forma
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In thousands
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AZZ
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NAG
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Adjustments
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Combined
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Assets
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Current Assets:
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Cash and Cash Equivalents
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$ | 110,166 | $ | 25,693 | (132,369 | ) | (5) | $ | 3,490 | ||||||||
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Accounts Receivable
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39,498 | 9,000 | - | 48,498 | |||||||||||||
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Inventory
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44,036 | 6,003 | 644 | (6) | 50,683 | ||||||||||||
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Costs and Estimated Earnings In Excess of Billings On Uncompleted Contracts
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11,374 | - | - | 11,374 | |||||||||||||
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Deferred Income Taxes
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5,723 | 495 | 4,150 | (7) | 10,368 | ||||||||||||
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Prepaid Expenses and Other
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3,641 | 802 | 5,177 | (8) | 9,620 | ||||||||||||
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Total Current Assets
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214,438 | 41,993 | (122,398 | ) | 134,033 | ||||||||||||
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Property, Plant and Equipment, Net
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85,428 | 26,157 | 14,204 | (9) | 125,789 | ||||||||||||
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Goodwill
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69,491 | 3,448 | 41,556 | (10) | 114,495 | ||||||||||||
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Intangibles and Other Assets
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17,382 | 1,327 | 28,000 | (11) | 46,709 | ||||||||||||
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Total Assets
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$ | 386,739 | $ | 72,925 | (38,638 | ) | $ | 421,026 | |||||||||
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Liabilities and Equity
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Current Liabilities:
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Accounts Payable
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$ | 15,627 | $ | 3,068 | - | $ | 18,695 | ||||||||||
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Income Tax Payable
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3,168 | 279 | - | 3,447 | |||||||||||||
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Accrued Salaries and Wages
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3,394 | 1,146 | 531 | (12) | 5,071 | ||||||||||||
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Other Accrued Liabilities
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11,956 | 1,560 | 670 | (8) | 14,186 | ||||||||||||
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Customer Advance Payment
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7,533 | 565 | - | 8,098 | |||||||||||||
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Billings In Excess of Costs and Estimated Earnings On Uncompleted Contracts
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1,821 | - | - | 1,821 | |||||||||||||
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Total Current Liabilities
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43,499 | 6,618 | 1,201 | 51,318 | |||||||||||||
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Long-Term Debt Due After One Year
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100,000 | 4,443 | 2,857 | (14) | 107,300 | ||||||||||||
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Deferred Income Taxes
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10,031 | 739 | 18,429 | (7) | 29,199 | ||||||||||||
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Shareholders' Equity
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233,209 | 61,125 | (61,125 | ) | (13) | 233,209 | |||||||||||
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Noncontrolling Interest
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- | ||||||||||||||||
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Total Shareholders’ Equity
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233,209 | 61,125 | (61,125 | ) | 233,209 | ||||||||||||
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Total Liabilities and Shareholders’Equity
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$ | 386,739 | $ | 72,925 | (38,638 | ) | $ | 421,026 | |||||||||
3
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Pro Forma Presentation
On August 3, 2010 AZZ completed its acquisition of NGA resulting in NGA becoming an indirect wholly-owned subsidiary of AZZ for an estimated cash purchase price of $132 million, net of cash acquired on hand at NGA of $28 million, of $104 million.
Under the acquisition method of accounting the total purchase price will be allocated to NGA’s net tangible and intangible assets based on their estimated fair values as of June 14, 2010, the date on which AZZ acquired control of NGA through the purchase of approximately 83% of NGA’s outstanding shares of common stock by means of a public tender offer. The excess of the purchase price over the net tangible and intangible assets will be recorded as goodwill. AZZ has made a preliminary allocation of the estimated purchase price using estimates as described in the introduction to these unaudited pro forma condensed combined consolidated financial statements as follows (in thousands):
Purchase Price Allocation
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Current Assets
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$ | 59,272 | ||
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Property and Equipment
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40,680 | |||
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Intangible Assets
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28,000 | |||
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Goodwill
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43,205 | |||
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Other Assets
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412 | |||
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Total Assets Acquired
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171,569 | |||
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Current Liabilities
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(31,900 | ) | ||
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Long Term Liabilities
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(7,300 | ) | ||
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New Assets Acquired
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$ | 132,369 |
Note 2. Reclassifications
Certain reclassifications have been made to conform NGA’s historical amounts to AZZ’s presentation. These reclassifications relate primarily to reclassifying NGA’s depreciation and amortization expense which are included in a line item on NGA’s historical statement of earnings to the appropriate line items as presented on AZZ’s historical statement of earnings. The reclassification is included below as pro forma adjustment No. 3.
Note 3. Pro Forma Adjustments
The pro forma adjustments included in the unaudited pro forma condensed combined consolidated financial statements are as follows:
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(1)
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Reclassification of depreciation and amortization expense to cost of sales of $967,000 for the quarter ended May 31, 2010 and $3,713,000 for the year ended February 28, 2010 and increased depreciation and amortization expense in the amount of $301,000 for the quarter and $1,359,000 for the year resulting in the step up in value of intangibles and property, plant and equipment.
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4
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(2)
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Selling, general and administrative costs were reduced to reflect elimination of redundant expenses that are certain in nature that will be sustained in future operations, such as executive salaries and wages, employee benefits and other public company corporate expenses. In addition for the three month period acquisition cost in the amount of $1,192,000 was eliminated.
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(3)
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Reclassifications of depreciation and amortization expense to conform to AZZ’s presentation. (See Note 2).
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(4)
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Income taxes were increased to reflect pro forma income adjustments of the acquisition ($2,061,000 at effective tax rate of 38% for the quarter and $3,296,000 at the same tax rate for the year).
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(5)
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Cash required to acquire NGA.
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(6)
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Inventory adjusted to fair value.
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(7)
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Income tax adjustments as a result of purchase price accounting.
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(8)
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Increased for insurance claim receivable and liabilities as a result of the pending St. Louis fire claim. Reference NGA 10K filed on 2/23/10 or 8K filed 11/23/09.
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(9)
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Property, plant and equipment adjusted to fair value per independent appraisal. Excluding land, the estimated weighted average life for the fixed assets is 11.3. Expected life of acquired assets ranged from one to twenty five years.
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(10)
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Goodwill recorded as a result of the acquisition. Goodwill differs from the purchase price allocation due to changes in working capital from the date of the pro forma balance sheet to the acquisition date.
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(11)
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Other assets include intangibles for trademark, and customer relations in the amounts of $1.2 million, and $26.8 million respectively. The straight line amortization period for the trademark and customer list is six years and thirteen years respectively.
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(12)
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Increase due primarily to an accrual for employee benefits that was set up to conform with AZZ policies, which allowed for vesting of earned vacations.
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(13)
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Elimination of shareholders’ equity accounts of NGA.
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(14)
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Adjust subordinated debt to fair value.
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Note 4. Pro Forma Earnings Per Share
Pro forma earnings per share reflects NGA earnings per share using AZZ weighted and diluted shares.
5