Attached files
| file | filename |
|---|---|
| 8-K/A - DXP ENTERPRISES INC | dxpe121613-8ka.htm |
| EX-23.1 - DXP ENTERPRISES INC | dxpe121613-8ka_ex231.htm |
| EX-99.1 - DXP ENTERPRISES INC | dxpe121613-8ka_ex991.htm |
| EX-99.3 - DXP ENTERPRISES INC | dxpe121613-8ka_ex993.htm |
| EX-99.2 - DXP ENTERPRISES INC | dxpe121613-8ka_ex992.htm |
Exhibit 99.4
|
DXP ENTERPRISES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2013
(in thousands)(unaudited)
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|||||||
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DXP
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B27
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Pro Forma
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Pro Forma
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||||
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Historical
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Historical
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Adjustments
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Combined
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||||
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ASSETS
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|||||||
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Current Assets:
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|||||||
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Cash
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$ 8,271
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$ 9,986
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$ (9,986)
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(a) |
$ 8,271
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||
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Accounts receivable, net
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196,036
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13,784
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-
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209,820
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|||
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Inventories, net
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110,207
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7,377
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-
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117,584
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|||
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Prepaid expenses and other
current assets
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3,692
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21,846
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25,538
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||||
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Deferred income taxes
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7,158
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-
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-
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7,158
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|||
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Total current assets
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325,364
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52,993
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(9,986)
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368,371
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|||
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Property & equipment, net
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60,751
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14,401
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-
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75,152
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|||
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Goodwill
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186,847
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53,600
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(53,600)
209,856
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(a)
(d)
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396,703
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||
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Other intangible assets, net
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73,412
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13,112
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(13,112)
65,000
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(g)
(e)
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138,412
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||
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Other long-term assets
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5,127
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46
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2,000
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(b)
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7,173
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||
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Total assets
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$ 651,501
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$ 134,152
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$ 200,158
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$ 985,811
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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|||||||
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Current liabilities:
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|||||||
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Current maturities of long-term debt
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$ 23,776
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$ 9,833
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$ (9,833)
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(b)
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$ 23,776
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||
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Trade accounts payable
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91,918
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12,526
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-
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104,444
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|||
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Accrued expenses and other current liabilities
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43,983
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12,434
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1,300
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(c)
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57,717
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||
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Total current liabilities
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159,677
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34,793
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(8,533)
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185,937
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|||
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Long term debt, less current maturities
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212,375
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31,929
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(31,929)
283,600
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(b)
(b)
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495,975
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||
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Deferred income taxes
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22,492
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-
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22,750
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(e)
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45,242
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||
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(1,300)
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(c)
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||||||
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3,000
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(b)
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||||||
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Shareholders' equity
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256,957
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67,430
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(67,430)
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(f)
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258,657
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||
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Total liabilities & shareholders' equity
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$ 651,501
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$ 134,152
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$ 200,158
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$ 985,811
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|||
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The accompanying notes are an integral part to these pro forma condensed combined financial statements.
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DXP ENTERPRISES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Nine Months Ended September 30, 2013
(in thousands, except per share amounts) (unaudited)
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|||||||
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DXP
Historical
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B27
Historical
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Pro Forma
Adjustments
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Pro Forma
Combined
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||||
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Sales
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$ 927,758
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$ 123,224
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$ -
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$ 1,050,982
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|||
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Cost of sales
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650,015
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90,402
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-
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740,417
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|||
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Gross profit
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277,743
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32,822
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-
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310,565
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|||
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Selling, general and
administrative expense
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195,655
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14,640
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-
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210,295
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|||
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Intangible asset amortization
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9,221
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1,047
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(1,047)
3,483
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(a)
(h)
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12,704
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||
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Operating income
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72,867
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17,135
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(2,436)
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87,566
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|||
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Other expense (income)
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(16)
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(38)
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-
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(54)
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|||
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Interest expense
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4,930
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3,554
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4,353
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(i)
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12,837
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||
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Income before taxes
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67,953
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13,619
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(6,789)
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74,783
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|||
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Provision for income taxes
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24,620
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160
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2,572
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(j)
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27,352
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||
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Net income
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43,333
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13,459
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(9,361)
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47,431
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|||
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Preferred stock dividend
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68
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-
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-
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68
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Net income attributable to
common shareholders
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$ 43,265
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$ 13,459
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$ (9,361)
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$ 47,363
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|||
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Basic income per share
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$ 3.00
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$ 3.28
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Weighted average common
shares outstanding
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14,430
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30
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(b)
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14,460
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|||
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Diluted income per share
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$ 2.84
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$ 3.10
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|||||
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Weighted average common
and common equivalent
shares outstanding
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15,270
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30
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(b)
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15,300
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|||
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The accompanying notes are an integral part to these pro forma condensed combined financial statements.
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DXP ENTERPRISES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For Year Ended December 31, 2012
(in thousands, except per share amounts)(unaudited)
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|||||||
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DXP
Historical
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B27
Historical
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Pro Forma
Adjustments
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Pro Forma
Combined
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||||
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Sales
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$ 1,097,110
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$ 141,896
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$ -
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$ 1,239,006
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|||
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Cost of sales
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778,019
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104,782
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-
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882,801
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|||
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Gross profit
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319,091
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37,114
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-
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356,205
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|||
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Selling, general and
administrative expense
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217,683
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18,183
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1,300
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(c)
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237,166
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||
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Intangible asset amortization
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10,886
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1,395
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(1,395)
4,644
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(a)
(h)
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15,530
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||
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Operating income
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90,522
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17,536
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(4,549)
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103,509
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|||
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Other (income) expense
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(47)
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76
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-
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29
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|||
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Interest expense
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5,560
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3,963
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6,283
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(i)
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15,806
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||
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Income before taxes
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85,009
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13,497
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(10,832)
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87,674
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|||
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Provision for income taxes
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34,024
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339
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727
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(j)
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35,090
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||
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Net income
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50,985
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13,158
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(11,559)
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52,584
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|||
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Preferred stock dividend
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90
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-
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-
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90
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|||
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Net income attributable to
common shareholders
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$ 50,895
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$ 13,158
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$ (11,559)
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$ 52,494
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|||
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Basic income per share
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$ 3.54
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$ 3.64
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Weighted average common
shares outstanding
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14,374
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30
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(b)
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14,404
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|||
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Diluted income per share
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$ 3.35
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$ 3.45
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|||||
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Weighted average common
and common equivalent
shares outstanding
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15,214
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30
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(b)
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15,244
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|||
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The accompanying notes are an integral part to these pro forma condensed combined financial statements.
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DXP ENTERPRISES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION
On December 9, 2013, DXP Enterprises, Inc. (“DXP”) entered into a Purchase Agreement, dated as of December 9, 2013, (the "Purchase Agreement") with B27, LLC (“B27”) pursuant to which DXP agreed to acquire all of the equity securities and units of B27 for approximately $285 million. Approximately $1.3 million in transaction costs are expected to be incurred by DXP in connection with this transaction. The purchase price will be financed with borrowings under DXP’s new $600 million credit facility described below and approximately $3.0 million of DXP common stock. Consummation of the transaction remains subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, along with the satisfaction of other customary closing conditions.
The unaudited pro forma condensed combined balance sheet has been prepared assuming the acquisition occurred as of September 30, 2013. The unaudited pro forma condensed consolidated statements of income have been prepared assuming the acquisition occurred as of January 1, 2012.
For the unaudited pro forma condensed combined balance sheet, the approximate $285 million purchase price, has been allocated based on management’s preliminary estimate of the fair values of assets acquired and liabilities assumed as of September 30, 2013. The purchase price allocation, which excludes transaction costs, is considered preliminary, particularly as it relates to the final valuation of certain identifiable intangible assets and property and equipment. There could be significant adjustments when the valuation is finalized. The preliminary estimate of the purchase price allocation is as follows (in thousands):
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Total current assets
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$ 43,053
|
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Intangible assets
|
65,000
|
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Goodwill
|
209,856
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|
Property and equipment
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14,401
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Total liabilities
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(47,710)
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Total purchase price
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$ 284,600
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The acquired intangible assets consist primarily of customer relationships and non-compete agreements. These intangible are made up of customer relationships and are estimated to be amortized over approximately 14years using the straight-line method.
The unaudited pro forma statements are prepared in accordance with Regulation S-X and the accounting policies used in the preparation of the pro forma statements are in accordance with generally accepted accounting principles in the United States ("USGAAP"), which are consistent with those used in DXP's audited consolidated financial statements as of and for the year ended December 31, 2012 and unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2013 and 2012.
The unaudited pro forma condensed combined financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had B27 been consolidated with DXP during the periods shown. The pro forma adjustments are based on information available at the time of the preparation of these unaudited pro forma condensed combined financial statements.
The accompanying unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of DXP and B27, including DXP’s annual report on Form 10-K for the year ended December 31, 2012 and DXP’s quarterly reports on Form 10-Q for the period ended September 30, 2013.
Description of Pro Forma Adjustments:
|
a.
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This adjustment is made to eliminate B27 historical amounts.
|
|
b.
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DXP will borrow approximately $285 million under its Amended and Restated credit facility to fund the cash portion of the purchase price plus $2.0 million of debt issuance costs. The estimated transaction costs are accrued in pro forma adjustment (c). In addition, DXP will issue approximately $3.0 million in stock, as a portion of the approximate $285 million purchase price. The estimated number of shares to be issued is approximately 30,000 shares. All existing B27 long-term debt will be paid off simultaneous with the completion of the acquisition.
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c.
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This adjustment is made to accrue and expense DXP acquisition related costs.
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d.
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This adjustment is made to reflect goodwill arising from the acquisition of B27 based upon the preliminary estimated purchase allocation, including estimated transaction costs.
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e.
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This adjustment is made to reflect the estimated fair value of intangibles at the acquisition date including the effect of deferred taxes. The estimated intangibles are made up of customer relationships which are amortized on a straight-line basis over an estimated 14 years.
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f.
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This adjustment is made to eliminate B27’s historical shareholders’ equity.
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g.
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To eliminate historical B27 identifiable intangible asset amounts. Identifiable intangibles that arise from the acquisition of B27 are estimated and adjusted in (e) above.
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h.
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This adjustment records the estimated amortization of estimated intangible assets primarily related to customer relationships over an estimated 14 year life on a straight-line basis.
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i.
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This adjustment is made to record incremental interest expense associated with the approximately $285 million borrowing discussed in (b) that will be used to acquire B27 and the effect of the increased interest rates on existing debt of DXP resulting from the new credit facility, as if the acquisition had been completed as of the beginning of the period presented. This amount also includes amortization of debt issuance costs discussed in (b) over the life of the facility on a straight-line basis.
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j.
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This adjustment is made to record estimated income tax expense for the effect of the pro forma acquisition of B27 using the estimated incremental tax rate.
|