Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Compass Diversified Holdings | camelbaksaleclosing8-k.htm |
| EX-99.2 - EXHIBIT 99.2 - Compass Diversified Holdings | cbakclosingrelease.htm |
Exhibit 99.1
Compass Diversified Holdings
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma condensed consolidated financial statements are presented to show the effect on the historical condensed consolidated financial statements of Compass Diversified Holdings (the “Company”) of the sale (the “CamelBak Disposition”) of the Company’s majority owned subsidiary, CBAC Holdings, LLC (“CamelBak”) for a total enterprise value of $412.5 million, and estimated net proceeds of approximately $268.5 million at closing after repayment of $99.3 million in inter-company loans. The CamelBak Disposition is further described in Item 2.01 of this Current Report on Form 8-K.
The following unaudited condensed consolidated pro forma statements of operations for the years ended December 31, 2012, 2013 and 2014, and for the six months ended June 30, 2015, are based on the assumption that the CamelBak Disposition was completed on January 1, 2012. The pro forma balance sheet as of June 30, 2015 is based on the assumption that the CamelBak Disposition was completed on June 30, 2015.
The “as reported” financial information for both Compass Diversified Holdings and CamelBak are derived from the audited financial statements of the Company for the years ended December 31, 2014, 2013 and 2012 as filed on Form 10-K dated March 2, 2015, March 11, 2014, and March 6, 2013, respectively, and the unaudited financial statements of the Company as of June 30, 2015 and for the six months ended June 30, 2015, as filed on Form 10-Q dated August 5, 2015.
The unaudited pro forma financial information is for informational purposes only and does not purport to present what our results would actually have been had this transaction actually occurred on the dates presented or to project our results of operations or financial position for any future period. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable. You should read these unaudited pro forma condensed consolidated financial statements in conjunction with the accompanying notes, the CamelBak Purchase Agreement filed on July 27, 2015 and incorporated by reference to this Form 8-K, and the consolidated financial statements for the Company, including the notes thereto as previously filed.
The unaudited pro forma financial information is prepared in accordance with Article 11 of Regulation S-X. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing of this Current Report on Form 8-K.
The pro forma adjustments to the statements of operations for all periods presented do not include the following:
Ÿ | The non-recurring gain on the CamelBak Disposition. The gain will be included in the Company’s results for the three and nine month periods ended September 30, 2015, and, | ||
Ÿ | Certain non-recurring transaction costs on closing of the sale estimated to be approximately $2.9 million. | ||
Compass Diversified Holdings
Condensed Consolidated Pro Forma Balance Sheet
at June 30, 2015
(unaudited)
CamelBak Disposition | ||||||||||||||||
(in thousands) | Compass Diversified Holdings as Reported | Less: CamelBak as Reported | CamelBak Pro Forma Adjustments | Pro Forma Consolidated Compass Diversified Holdings | ||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 25,379 | $ | (1,761 | ) | $ | 178,800 | (1a) | $ | 202,418 | ||||||
Accounts receivable, net | 161,015 | (27,946 | ) | — | 133,069 | |||||||||||
Inventories | 125,232 | (30,773 | ) | — | 94,459 | |||||||||||
Prepaid expenses and other current assets | 28,149 | (5,701 | ) | — | 22,448 | |||||||||||
Total current assets | 339,775 | (66,181 | ) | 178,800 | 452,394 | |||||||||||
Property, plant and equipment, net | 111,521 | (7,865 | ) | — | 103,656 | |||||||||||
Equity method investment | 242,948 | — | — | 242,948 | ||||||||||||
Goodwill | 350,958 | (5,546 | ) | — | 345,412 | |||||||||||
Intangible assets, net | 467,626 | (158,405 | ) | — | 309,221 | |||||||||||
Deferred debt issuance costs, net | 10,448 | — | — | 10,448 | ||||||||||||
Other non-current assets | 7,420 | (2,213 | ) | — | 5,207 | |||||||||||
Total assets | $ | 1,530,696 | $ | (240,210 | ) | $ | 178,800 | $ | 1,469,286 | |||||||
Liabilities and stockholders’ equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 73,439 | $ | (7,569 | ) | $ | — | $ | 65,870 | |||||||
Accrued expenses | 54,251 | (7,517 | ) | — | 46,734 | |||||||||||
Due to related party | 6,124 | — | — | 6,124 | ||||||||||||
Current portion, long-term debt | 3,250 | — | — | 3,250 | ||||||||||||
Other current liabilities | 3,894 | (843 | ) | 846 | (1b) | 3,897 | ||||||||||
Total current liabilities | 140,958 | (15,929 | ) | 846 | 125,875 | |||||||||||
Deferred income taxes | 96,820 | (7,397 | ) | — | 89,423 | |||||||||||
Long-term debt, less original issue discount | 503,532 | — | (189,000 | ) | (1c) | 314,532 | ||||||||||
Other non-current liabilities | 15,775 | (669 | ) | 830 | (1b) | 15,936 | ||||||||||
Total liabilities | 757,085 | (23,995 | ) | (187,324 | ) | 545,766 | ||||||||||
Stockholders’ equity | — | |||||||||||||||
Stockholders’ equity | 728,592 | — | 165,838 | (1d) | 894,430 | |||||||||||
Noncontrolling interest | 45,019 | (15,929 | ) | — | 29,090 | |||||||||||
Total stockholders’ equity | 773,611 | (15,929 | ) | 165,838 | 923,520 | |||||||||||
Total liabilities and stockholders’ equity | $ | 1,530,696 | $ | (39,924 | ) | $ | (21,486 | ) | $ | 1,469,286 | ||||||
Compass Diversified Holdings
Condensed Consolidated Pro Forma Statement of Operations
for the year ended December 31, 2012
(unaudited)
CamelBak Disposition | ||||||||||||||||
(in thousands, except per share data) | Compass Diversified Holdings as Reported | Less: CamelBak as Reported | CamelBak Pro Forma Adjustments | Pro Forma Consolidated Compass Diversified Holdings | ||||||||||||
Net sales | $ | 884,721 | $ | (157,633 | ) | $ | — | $ | 727,088 | |||||||
Cost of sales | 605,867 | (85,424 | ) | — | 520,443 | |||||||||||
Gross profit | 278,854 | (72,209 | ) | — | 206,645 | |||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expense | 161,141 | (36,829 | ) | — | 124,312 | |||||||||||
Supplemental put expense | 15,995 | — | — | 15,995 | ||||||||||||
Management fees | 17,633 | — | 2,113 | (1e) | 19,746 | |||||||||||
Amortization expense | 30,268 | (9,378 | ) | — | 20,890 | |||||||||||
Impairment expense | — | — | — | — | ||||||||||||
Operating income | 53,817 | (26,002 | ) | (2,113 | ) | 25,702 | ||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (25,001 | ) | 22 | 420 | (1f) | (24,559 | ) | |||||||||
Amortization of debt issuance costs | (1,811 | ) | — | — | (1,811 | ) | ||||||||||
Other income, net | (183 | ) | (111 | ) | — | (294 | ) | |||||||||
Income (loss) before income taxes | 26,822 | (26,091 | ) | (1,693 | ) | (962 | ) | |||||||||
Provision for income taxes | 21,069 | (5,138 | ) | — | 15,931 | |||||||||||
Net income (loss) | 5,753 | (20,953 | ) | (1,693 | ) | (16,893 | ) | |||||||||
Less: Net income attributable to noncontrolling interest | 8,508 | (692 | ) | — | 7,816 | |||||||||||
Net loss attributable to Holdings | $ | (2,755 | ) | $ | (20,261 | ) | $ | (1,693 | ) | $ | (24,709 | ) | ||||
Basic and fully diluted loss per share attributable to Holdings | $ | (0.06 | ) | $ | (0.51 | ) | ||||||||||
Compass Diversified Holdings
Condensed Consolidated Pro Forma Statement of Operations
for the year ended December 31, 2013
(unaudited)
CamelBak Disposition | ||||||||||||||||
(in thousands, except per share data) | Compass Diversified Holdings as Reported | Less: CamelBak as Reported | CamelBak Pro Forma Adjustments | Pro Forma Consolidated Compass Diversified Holdings | ||||||||||||
Net sales | $ | 985,539 | $ | (139,943 | ) | $ | — | $ | 845,596 | |||||||
Cost of sales | 679,708 | (78,588 | ) | — | 601,120 | |||||||||||
Gross profit | 305,831 | (61,355 | ) | — | 244,476 | |||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expense | 167,738 | (33,958 | ) | — | 133,780 | |||||||||||
Supplemental put expense (reversal) | (45,995 | ) | — | — | (45,995 | ) | ||||||||||
Management fees | 18,632 | — | 2,120 | (1e) | 20,752 | |||||||||||
Amortization expense | 29,632 | (8,978 | ) | — | 20,654 | |||||||||||
Impairment expense | 12,918 | — | — | 12,918 | ||||||||||||
Operating income | 122,906 | (18,419 | ) | (2,120 | ) | 102,367 | ||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (19,376 | ) | (4 | ) | 510 | (1f) | (18,870 | ) | ||||||||
Amortization of debt issuance costs | (2,123 | ) | — | — | (2,123 | ) | ||||||||||
Loss on debt extinguishment | (1,785 | ) | — | — | (1,785 | ) | ||||||||||
Other income, net | (77 | ) | (30 | ) | — | (107 | ) | |||||||||
Income before income taxes | 99,545 | (18,453 | ) | (1,610 | ) | 79,482 | ||||||||||
Provision for income taxes | 20,729 | (2,198 | ) | — | 18,531 | |||||||||||
Net income | 78,816 | (16,255 | ) | (1,610 | ) | 60,951 | ||||||||||
Less: Net income attributable to noncontrolling interest | 10,752 | (406 | ) | — | 10,346 | |||||||||||
Net income (loss) attributable to Holdings | $ | 68,064 | $ | (15,849 | ) | $ | (1,610 | ) | $ | 50,605 | ||||||
Earnings per share - Basic and Fully Diluted | ||||||||||||||||
Net income attributable to Holdings | $ | 68,064 | $ | 50,605 | ||||||||||||
Less: Profit Allocation paid to Holders | 15,990 | 15,990 | ||||||||||||||
Less: Effect of contribution based profit - Holding Event | 1,480 | 1,480 | ||||||||||||||
Net income from Holdings attributable to Trust shares | 50,594 | 33,135 | ||||||||||||||
Basic and diluted weighted average shares outstanding | 48,300 | 48,300 | ||||||||||||||
Basic and fully diluted income per share attributable to Holdings | $ | 1.05 | $ | 0.69 | ||||||||||||
Compass Diversified Holdings
Condensed Consolidated Pro Forma Statement of Operations
for the year ended December 31, 2014
(unaudited)
CamelBak Disposition | ||||||||||||||||
(in thousands, except per share data) | Compass Diversified Holdings as Reported | Less: CamelBak as Reported | CamelBak Pro Forma Adjustments | Pro Forma Consolidated Compass Diversified Holdings | ||||||||||||
Net sales | $ | 982,300 | $ | (148,675 | ) | $ | — | $ | 833,625 | |||||||
Cost of sales | 688,631 | (86,003 | ) | — | 602,628 | |||||||||||
Gross profit | 293,669 | (62,672 | ) | — | 230,997 | |||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expense | 181,683 | (35,547 | ) | 146,136 | ||||||||||||
Management fees | 22,722 | — | 825 | (1e) | 23,547 | |||||||||||
Amortization expense | 33,606 | (8,712 | ) | — | 24,894 | |||||||||||
Operating income | 55,658 | (18,413 | ) | (825 | ) | 36,420 | ||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (27,068 | ) | 7 | 2,334 | (1f) | (24,727 | ) | |||||||||
Amortization of debt issuance costs | (2,243 | ) | — | — | (2,243 | ) | ||||||||||
Gain (loss) on equity method investment | 11,029 | — | — | 11,029 | ||||||||||||
Gain on deconsolidation of subsidiary | 264,325 | — | — | 264,325 | ||||||||||||
Loss on debt extinguishment | (2,143 | ) | — | — | (2,143 | ) | ||||||||||
Other income (expense), net | (139 | ) | (360 | ) | — | (499 | ) | |||||||||
Income before income taxes | 299,419 | (18,766 | ) | 1,509 | 282,162 | |||||||||||
Provision for income taxes | 8,264 | (3,144 | ) | — | 5,120 | |||||||||||
Net income | 291,155 | (15,622 | ) | 1,509 | 277,042 | |||||||||||
Less: Net income attributable to noncontrolling interest | 12,320 | (467 | ) | — | 11,853 | |||||||||||
Net income attributable to Holdings | $ | 278,835 | $ | (15,155 | ) | $ | 1,509 | $ | 265,189 | |||||||
Earnings per share - Basic and Fully Diluted | ||||||||||||||||
Net income attributable to Holdings | $ | 278,835 | $ | 265,189 | ||||||||||||
Less: Profit Allocation paid to Holders | 11,870 | 11,870 | ||||||||||||||
Less: Effect of contribution based profit - Holding Event | 2,805 | 2,805 | ||||||||||||||
Net income from Holdings attributable to Trust shares | 264,160 | 250,514 | ||||||||||||||
Basic and diluted weighted average shares outstanding | 49,089 | 49,089 | ||||||||||||||
Basic and fully diluted income per share attributable to Holdings | $ | 5.38 | $ | 5.10 | ||||||||||||
Compass Diversified Holdings
Condensed Consolidated Pro Forma Statement of Operations
for the six months ended June 30, 2015
(unaudited)
CamelBak Disposition | ||||||||||||||||
(in thousands, except per share data) | Compass Diversified Holdings as Reported | Less: CamelBak as Reported | CamelBak Pro Forma Adjustments | Pro Forma Consolidated Compass Diversified Holdings | ||||||||||||
Net sales | $ | 541,998 | $ | (79,496 | ) | $ | — | $ | 462,502 | |||||||
Cost of sales | 384,121 | (45,364 | ) | — | 338,757 | |||||||||||
Gross profit | 157,877 | (34,132 | ) | — | 123,745 | |||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expense | 89,568 | (17,892 | ) | — | 71,676 | |||||||||||
Management fees | 13,649 | — | (532 | ) | (1e) | 13,117 | ||||||||||
Amortization expense | 19,428 | (4,356 | ) | — | 15,072 | |||||||||||
Impairment expense | 9,165 | — | — | 9,165 | ||||||||||||
Operating income | 26,067 | (11,884 | ) | 532 | 14,715 | |||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (12,843 | ) | 1 | 1,009 | (1f) | (11,833 | ) | |||||||||
Amortization of debt issuance costs | (1,090 | ) | — | — | (1,090 | ) | ||||||||||
Gain (loss) on equity method investment | (2,266 | ) | — | — | (2,266 | ) | ||||||||||
Other income, net | 633 | (659 | ) | — | (26 | ) | ||||||||||
Income before income taxes | 10,501 | (12,542 | ) | 1,541 | (500 | ) | ||||||||||
Provision for income taxes | 9,213 | (3,656 | ) | — | 5,557 | |||||||||||
Net income | 1,288 | (8,886 | ) | 1,541 | (6,057 | ) | ||||||||||
Less: Net income attributable to noncontrolling interest | 1,733 | (539 | ) | — | 1,194 | |||||||||||
Net income (loss) attributable to Holdings | $ | (445 | ) | $ | (8,347 | ) | $ | 1,541 | $ | (7,251 | ) | |||||
Earnings per share - Basic and Fully Diluted | ||||||||||||||||
Net loss attributable to Holdings | $ | (445 | ) | $ | (7,251 | ) | ||||||||||
Less: Profit Allocation paid to Holders | — | |||||||||||||||
Less: Effect of contribution based profit - Holding Event | 2,779 | (335 | ) | (1g) | 2,444 | |||||||||||
Net loss from Holdings attributable to Trust shares | (3,224 | ) | (9,695 | ) | ||||||||||||
Basic and diluted weighted average shares outstanding | 54,300 | 54,300 | ||||||||||||||
Basic and fully diluted loss per share attributable to Holdings | $ | (0.06 | ) | $ | (0.18 | ) | ||||||||||
Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
Pro forma information is intended to reflect the impact of the CamelBak Disposition on the Company's historical financial position and results of operations through adjustments that are directly attributable to the transaction, that are factually supportable and, with respect to the pro forma statements of operations, that are expected to have a continuing impact. In order to accomplish this, the Company eliminated the historical results of CamelBak from the Company's historical financial position and results of operations. CamelBak's historical operations, for the current and prior period, including the gain on sale, will be presented as discontinued operations for financial reporting purposes beginning with the Company's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2015.
The information in Note 1 provides a description of the pro forma adjustments from each line item in the pro forma condensed financial statements together with information explaining how the amounts were derived or calculated.
Note 1 - Pro Forma Adjustments
Balance Sheet
The following adjustments correspond to those included in the unaudited condensed consolidated pro forma balance sheet as of June 30, 2015:
(1a) This adjustment reflects the cash proceeds from the CamelBak Disposition, net of the assumed debt payoff as discussed in footnote (1c) below.
(1b) This adjustment represents current and long-term payables to noncontrolling interest holders. The current amount is due approximately 60 days after the close of the CamelBak Disposition, and the long-term amount is due approximately one year after the close of the CamleBak Disposition.
(1c) This adjustment represents the payoff of all debt outstanding under our revolving credit facility. The Company did not reflect the payoff of term debt.
(1d) This adjustment reflects the estimated gain on the CamelBak Disposition as if the sale had occurred on June 30, 2015. This gain may not be representative of what will actually be recorded during the three and nine months ended September 30, 2015.
Statement of Operations
(1e) This adjustment reflects the effect of the CamelBak disposition and repayment of the revolving credit facility on the Management fee paid to our Manager during each of the periods presented.
(1f) This adjustment reflects the payoff of the average revolver debt outstanding during the respective periods using proceeds from the CamelBak Disposition. The effect of paying off all revolver debt was to reduce interest expense on the revolver debt for the periods presented and increase commitment (unused) fees associated with the revolver debt for the periods presented.
Earnings per Share
(1g) The Company uses the two-class method to compute basic and fully diluted earnings per share, effective July 1, 2013. The two-class method requires companies to allocate participating securities that have rights to earnings that otherwise would have been available only to common shareholders as a separate class of securities in calculating earnings per share. During the six months ending June 30, 2015, the effect of CamelBak Contribution Based Profit from a Holding Event is reflected as an adjustment to the calculation of earnings per share. CamelBak Contribution Based Profit from a Holding Event did not effect any of the other periods presented.