Attached files
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information has been prepared from the historical financial statements of Great Lakes Dredge & Dock Corporation (the “Company”) and L.W. Matteson, Inc. (“Matteson”), to give effect to the Company’s acquisition of the business and substantially all of the assets (the “Acquisition”) of Matteson. See Note 1 for further information. The unaudited pro forma condensed combined financial statements do not purport to represent, and are not necessarily indicative of, what the Company’s financial position or results of operations would have been had the Acquisition occurred on the dates indicated.
The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2009 and nine months ended September 30, 2010 are presented as if the Acquisition had occurred on January 1, 2009 and include all adjustments that (i) give effect to events that are directly attributable to the Acquisition, (ii) are expected to have a continuing impact, and (iii) are factually supportable. The historical consolidated statements of operations of the Company and Matteson for the year ended December 31, 2009 that were used in preparing the unaudited pro forma condensed combined statement of operations for the same period have been audited. The historical consolidated statements of operations of the Company and Matteson for the nine months ended September 30, 2010 that were used in preparing the unaudited pro forma condensed combined statement of operations for the same period have not been audited.
The unaudited pro forma condensed combined balance sheet as of September 30, 2010 is presented as if the Acquisition had occurred on September 30, 2010, and includes all adjustments that give effect to events that are directly attributable to the Acquisition and are factually supportable. The historical consolidated balance sheets of the Company and Matteson as of September 30, 2010 that were used in preparing the unaudited pro forma condensed combined balance sheet have not been audited.
The unaudited pro forma condensed combined financial statements should be read in conjunction with the Company’s historical consolidated financial statements, related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and the Matteson historical consolidated financial statements and related notes. The consolidated balance sheet of the Company as of December 31, 2010 and 2009, and the related consolidated statement of operations, cash flows and stockholders’ equity for each of the three years in the period ended December 31, 2010, along with the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are set forth in the Company’s Annual Report on Form 10-K filed March 14, 2011. The unaudited interim consolidated financial statements of the Company for the nine months ended September 30, 2010 are set forth in the Company’s Quarterly Report on Form 10-Q filed November 9, 2010. The balance sheet of Matteson as of December 31, 2009, and the related statement of income and cash flows for the year then ended, along with the related notes, are included as Exhibit 99.1 in this Form 8-K/A. The unaudited interim financial statements of Matteson for the nine months ended September 30, 2010 are included as Exhibit 99.2 in this Form 8-K/A.
GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 2010
(in thousands)
| Great Lakes Dredge & Dock Corporation (Historical) |
L.W. Matteson, Inc. (Historical) |
Pro Forma Adjustments |
Pro Forma Combined |
|||||||||||||
| ASSETS |
||||||||||||||||
| CURRENT ASSETS: |
||||||||||||||||
| Cash and cash equivalents |
$ | 79,031 | $ | 12,222 | $ | (50,091 | ) (A) | $ | 41,162 | |||||||
| Accounts receivable – net |
106,252 | 5,130 | (957 | ) (B) | 110,425 | |||||||||||
| Contract revenues in excess of billings |
17,662 | 958 | (610 | ) (B) | 18,010 | |||||||||||
| Inventories |
29,979 | — | 1,811 | (B) | 31,790 | |||||||||||
| Prepaid expenses |
3,049 | 259 | (68 | ) (B) | 3,240 | |||||||||||
| Other current assets |
14,568 | 3 | 1 | (B) | 14,572 | |||||||||||
| Total current assets |
250,541 | 18,572 | (49,914 | ) | 219,199 | |||||||||||
| PROPERTY AND EQUIPMENT — Net |
282,012 | 11,676 | 24,497 | (B) | 318,185 | |||||||||||
| GOODWILL |
98,049 | — | — | 98,049 | ||||||||||||
| OTHER INTANGIBLE ASSETS — Net |
714 | — | 2,670 | (B) | 3,384 | |||||||||||
| INVENTORIES — Noncurrent |
26,029 | — | 2,826 | (B) | 28,855 | |||||||||||
| INVESTMENTS IN JOINT VENTURES |
7,171 | — | — | 7,171 | ||||||||||||
| OTHER |
6,682 | 216 | (216 | ) (B) | 6,682 | |||||||||||
| TOTAL |
$ | 671,198 | $ | 30,464 | $ | (20,137 | ) | $ | 681,525 | |||||||
| LIABILITIES AND EQUITY |
||||||||||||||||
| CURRENT LIABILITIES: |
||||||||||||||||
| Accounts payable |
$ | 77,100 | $ | 2,789 | (2,644 | ) (B) | $ | 77,245 | ||||||||
| Accrued expenses |
32,628 | 793 | (412 | ) (B) | ||||||||||||
| 398 | (E) | 33,407 | ||||||||||||||
| Billings in excess of contract revenues |
19,222 | 2,187 | (1,526 | ) (B) | 19,883 | |||||||||||
| Current portion of debt |
— | — | 3,047 | (C) | 3,047 | |||||||||||
| Current portion of equipment debt |
401 | — | — | 401 | ||||||||||||
| Total current liabilities |
129,351 | 5,769 | (1,137 | ) | 133,983 | |||||||||||
| REVOLVING CREDIT FACILITY |
— | — | — | — | ||||||||||||
| 7 3/4% SENIOR SUBORDINATED NOTES |
175,000 | — | — | 175,000 | ||||||||||||
| DEFERRED INCOME TAXES |
83,076 | — | — | 83,076 | ||||||||||||
| OTHER |
13,064 | — | 6,093 | (C) | 19,157 | |||||||||||
| Total liabilities |
400,491 | 5,769 | 4,956 | 411,216 | ||||||||||||
| COMMITMENTS AND CONTINGENCIES |
||||||||||||||||
| EQUITY: |
||||||||||||||||
| Common stock—$.0001 par value; 90,000,000 authorized, 58,721,624 and 58,542,038 shares issued and outstanding at September 30, 2010. |
6 | 38 | (38 | ) (D) | 6 | |||||||||||
| Additional paid-in capital |
265,783 | — | — | 265,783 | ||||||||||||
| Accumulated earnings (deficit) |
6,476 | 24,657 | (24,657 | ) (D) | ||||||||||||
| (398 | ) (E) | 6,078 | ||||||||||||||
| Accumulated other comprehensive income |
212 | — | — | 212 | ||||||||||||
| Total Great Lakes Dredge & Dock Corporation Equity |
272,477 | 24,695 | (25,093 | ) | 272,079 | |||||||||||
| NONCONTROLLING INTERESTS |
(1,770 | ) | — | — | (1,770 | ) | ||||||||||
| Total equity |
270,707 | 24,695 | (25,093 | ) | 270,309 | |||||||||||
| TOTAL |
$ | 671,198 | $ | 30,464 | $ | (20,137 | ) | $ | 681,525 | |||||||
GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF
OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(in thousands)
| Great Lakes Dredge & Dock Corporation (Historical) |
L.W. Matteson, Inc. (Historical) |
Pro
Forma Adjustments |
Pro Forma Combined |
|||||||||||||
| Contract revenues |
$ | 514,868 | $ | 29,484 | $ | — | $ | 544,352 | ||||||||
| Costs of contract revenues |
417,100 | 19,272 | 378 | (F) | 436,750 | |||||||||||
| Gross profit |
97,768 | 10,212 | (378 | ) | 107,602 | |||||||||||
| General and administrative expenses |
41,761 | 985 | 42,746 | |||||||||||||
| Amortization of intangible assets |
323 | — | 81 | (F) | 404 | |||||||||||
| Operating income |
55,684 | 9,227 | (459 | ) | 64,452 | |||||||||||
| Interest expense, net |
(9,517 | ) | (18 | ) | (225 | ) (G) | (9,760 | ) | ||||||||
| Equity in earnings (loss) of joint ventures |
(772 | ) | — | — | (772 | ) | ||||||||||
| Income before income taxes |
45,395 | 9,209 | (684 | ) | 53,920 | |||||||||||
| Income tax provision |
(18,107 | ) | — | (3,401 | ) (H) | (21,508 | ) | |||||||||
| Net income (loss) |
27,288 | 9,209 | (4,085 | ) | 32,412 | |||||||||||
| Net loss attributable to noncontrolling interests |
531 | — | — | 531 | ||||||||||||
| Net income attributable to Great Lakes Dredge & Dock Corporation |
$ | 27,819 | $ | 9,209 | $ | (4,085 | ) | $ | 32,943 | |||||||
| Basic earnings per share attributable to Great Lakes Dredge & Dock Corporation |
$ | 0.47 | $ | 0.56 | ||||||||||||
| Basic weighted average shares |
58,616 | 58,616 | ||||||||||||||
| Diluted earnings per share attributable to Great Lakes Dredge & Dock Corporation |
$ | 0.47 | $ | 0.56 | ||||||||||||
| Diluted weighted average shares |
58,818 | 58,818 | ||||||||||||||
GREAT LAKES DREDGE & DOCK CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF
OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2009
(in thousands)
| Great Lakes Dredge & Dock Corporation (Historical) |
L.W. Matteson, Inc. (Historical) |
Pro
Forma Adjustments |
Pro Forma Combined |
|||||||||||||
| Contract revenues |
$ | 622,244 | $ | 41,003 | $ | — | $ | 663,247 | ||||||||
| Costs of contract revenues |
534,000 | 28,196 | (2,424 | ) (F) | 559,772 | |||||||||||
| Gross profit |
88,244 | 12,807 | 2,424 | 103,475 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| General and administrative expenses |
45,220 | 5,244 | 398 | (E) | 50,862 | |||||||||||
| Amortization of intangible assets |
773 | — | 2,239 | (F) | 3,012 | |||||||||||
| Total operating income |
42,251 | 7,563 | (213 | ) | 49,601 | |||||||||||
| Other income (expense): |
||||||||||||||||
| Interest expense — net |
(16,150 | ) | 314 | (450 | ) (G) | (16,286 | ) | |||||||||
| Equity in earnings (loss) of joint ventures |
(384 | ) | — | — | (384 | ) | ||||||||||
| Total other expense |
(16,534 | ) | 314 | (450 | ) | (16,670 | ) | |||||||||
| Income before income taxes |
25,717 | 7,877 | (663 | ) | 32,931 | |||||||||||
| Income tax provision |
(10,983 | ) | — | (3,080 | ) (H) | (14,063 | ) | |||||||||
| Net income (loss) |
14,734 | 7,877 | (3,743 | ) | 18,868 | |||||||||||
| Net loss attributable to noncontrolling interests |
2,734 | — | — | 2,734 | ||||||||||||
| Net income available to common stockholders of Great Lakes Dredge & Dock Corporation |
$ | 17,468 | $ | 7,877 | $ | (3,743 | ) | $ | 21,602 | |||||||
| Basic earnings per share attributable to Great Lakes Dredge & Dock Corporation |
$ | 0.30 | $ | 0.37 | ||||||||||||
| Basic weighted-average shares |
58,507 | 58,507 | ||||||||||||||
| Diluted earnings per share attributable to Great Lakes Dredge & Dock Corporation |
$ | 0.30 | $ | 0.37 | ||||||||||||
| Diluted weighted-average shares |
58,612 | 58,612 | ||||||||||||||
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(dollar amounts in thousands)
1. Basis of Pro Forma Presentation
On December 31, 2010, Great Lakes Dredge & Dock Company LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (the "LLC"), entered into and consummated an Asset Purchase Agreement with L.W. Matteson, Inc., an Iowa corporation, and Lawrence W. Matteson and Larry W. Matteson pursuant to which the LLC purchased for a base purchase price of $45,000 (a) the business and substantially all of the assets of Seller and (b) certain assets owned by Lawrence W. Matteson and used by the Seller in its business. The purchase price totaled $47,009 and included an adjustment based upon the closing working capital balance, which resulted in the recognition of additional purchase price of $369 and is subject to further adjustment in accordance with the Asset Purchase Agreement. Furthermore, the seller may receive cash payments for any of the calendar years ended 2011, 2012, and 2013 if certain earnings-based criteria, defined per the purchase agreement, are met. The fair value of the recorded earnout liability was $1,640. The transaction was accounted for using the acquisition method and as such Matteson’s assets acquired and liabilities assumed have been recorded at their fair value. Great Lakes Dredge & Dock Company, LLC was determined to be the accounting acquirer for purposes of these unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined balance sheet as of September 30, 2010 gives effect to the acquisition as if it occurred on that date. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2010, and the year ended December 31, 2009 give effect to the acquisition as if it occurred on January 1, 2009.
The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and do not purport to present what the actual results of operations or financial position would have been had the transactions actually occurred on the dates indicated, nor do they purport to represent results of operations for any future period. These statements do not reflect any cost savings or other benefits that may be obtained through synergies among the operations of the Company.
For purposes of these unaudited pro forma condensed combined financial statements, the estimated purchase price paid by the LLC has been allocated to Matteson’s assets and liabilities based on their fair values as of December 31, 2010 as follows (in thousands):
| Property, plant and equipment |
$ | 36,173 | ||
| Inventories |
4,637 | |||
| Accounts receivable - net |
4,173 | |||
| Intangible assets |
2,670 | |||
| Other assets and liabilities - net |
(644 | ) | ||
| Total |
$ | 47,009 | ||
2. Pro Forma Adjustments
Adjustments included in the column under the heading "Pro Forma Adjustments" in the unaudited pro forma condensed combined financial statements correspond to the following descriptions:
Notes to the Unaudited Pro Forma Condensed Combined Balance Sheet
(A) Reflect the adjustment to cash and cash equivalents for the Acquisition. See reconciliation below.
| Cash paid for Matteson |
$ | (37,869 | ) | |
| Less Matteson cash |
(12,222 | ) | ||
| Cash adjustment |
$ | (50,091 | ) | |
(B) To record the allocation of purchase price and assets and liabilities at their fair values. See reconciliation below.
| Matteson at September 30, 2010 |
Fair Value of Assets Purchased / Liabilities Assumed |
Pro
Forma Adjustment |
||||||||||
| Accounts receivable - net |
$ | 5,130 | $ | 4,173 | $ | (957 | ) | |||||
| Contract revenues in excess of billings |
958 | 348 | (610 | ) | ||||||||
| Inventories - current |
— | 1,811 | 1,811 | |||||||||
| Prepaid expenses |
259 | 191 | (68 | ) | ||||||||
| Other current assets |
3 | 4 | 1 | |||||||||
| Property and equipment |
11,676 | 36,173 | 24,497 | |||||||||
| Other intangible assets - net |
2,670 | 2,670 | ||||||||||
| Inventories - non current |
2,826 | 2,826 | ||||||||||
| Other |
216 | — | (216 | ) | ||||||||
| Accounts payable |
(2,789 | ) | (145 | ) | 2,644 | |||||||
| Accrued expenses |
(793 | ) | (381 | ) | 412 | |||||||
| Billings in excess of contract revenues |
(2,187 | ) | (661 | ) | 1,526 | |||||||
| Total purchase price |
$ | 47,009 | ||||||||||
Pro-forma adjustments represent Matteson liabilities not assumed, asset fair valuation adjustments recorded in purchase accounting, and differences between the September 30, 2010 and December 31, 2010 balances of the assets and liabilities of Matteson acquired by the Company.
(C) To record the issuance of a seller note as a part of the Acquisitions price and the fair value of the earnout.
| Seller Note - current |
$ | 2,500 | ||
| Earn out - current |
547 | |||
| Current Portion of Debt |
$ | 3,047 | ||
| Seller Note - non current |
$ | 5,000 | ||
| Earnout - non current |
1,093 | |||
| Other |
$ | 6,093 | ||
(D) To record the elimination of L.W. Matteson’s Common stock and Accumulated earnings.
(E) To record impact of acquisition costs that has not yet been reflected in the historical financial statements.
Notes to the Unaudited Pro Forma Condensed Combined Statement of Operations
(F) Reflects the elimination of Matteson depreciation and recognition of depreciation and amortization on the Matteson Assets after the acquisition.
| Pro Forma
Depreciation Expense |
||||||||
| For the Nine Months Ended September 30, 2010 |
For the Twelve Months Ended December 31, 2009 |
|||||||
| Matteson depreciation pre-sale |
(2,329 | ) | (2,889 | ) | ||||
| Expense incurred by Matteson for items capitalized by Great Lakes |
(891 | ) | (1,934 | ) | ||||
| Depreciation after sale |
3,598 | 2,399 | ||||||
| Total Adjustment |
378 | (2,424 | ) | |||||
The inventory and fixed assets purchased had remaining useful lives of 3 years and 5-30 years, respectively.
| Pro Forma
Amortization Expense |
||||||||||||||||
| Fair Value |
Useful life at purchase |
For the Nine Months Ended September 30, 2010 |
For the Twelve Months Ended December 31, 2009 |
|||||||||||||
| Intangible Assets Backlog |
$ | 2,131 | 1 year | $ | — | $ | 2,131 | |||||||||
| Non-Compete |
539 | 5 years | 81 | 108 | ||||||||||||
| $ | 2,670 | $ | 81 | $ | 2,239 | |||||||||||
(G) The seller note accrues interest at a rate of 6% per year. The Company would have recorded $450 of interest expense for the twelve months ended December 31, 2009 and $225 of interest for the nine months ended September 30, 2010.
(H) Reflects the tax impact of the pro forma adjustments as well as Matteson’s net income, at the Great Lakes effective tax rate of 39.9% and 42.7% at September 30, 2010 and December 31, 2009, respectively.