MASONITE INTERNATIONAL CORP - FORM 10-Q - EX-99.1 - EXHIBIT 99.1 - August 6, 2015

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Exhibit 99.1

MASONITE INTERNATIONAL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On July 31, 2015, we completed the sale of all of the capital stock of Premdor S.A.S. ("Premdor"), Masonite's French door business, to an investment fund managed by Perceva S.A.S., a Paris-based independent investment firm (the "Buyer"). Pursuant to a stock purchase agreement dated July 16, 2015, the Buyer acquired all of Masonite's French door manufacturing and distribution business for nominal consideration. Masonite will continue to sell door facings to Premdor and will provide certain transition services to the business after closing. The following unaudited pro forma condensed consolidated financial statements are presented to show the effects of the divestiture on our consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America.
The unaudited pro forma condensed consolidated balance sheet as of June 28, 2015, has been prepared as if the divestiture occurred on that date. The unaudited pro forma condensed consolidated statements of operations for the three and six months ended June 28, 2015, and June 29, 2014, and for the year ended December 28, 2014, have been prepared as if the divestiture occurred on December 30, 2013, the first day of fiscal year 2014.
The unaudited pro forma condensed consolidated financial statements are presented based on currently available information, are presented for illustrative purposes only and are not necessarily indicative of the results of operations or financial condition that would have been achieved had the divestiture been completed on the dates assumed. Furthermore, they are not necessarily indicative of our future results of operations or financial condition.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with (i) the accompanying notes to the unaudited pro forma condensed consolidated financial statements, (ii) the audited consolidated financial statements and notes thereto as of and for the year ended December 28, 2014, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K filed with the SEC on February 27, 2015, and (iii) the unaudited condensed consolidated financial statements and the notes thereto as of and for the three and six months ended June 28, 2015, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this Quarterly Report on Form 10-Q.


MASONITE INTERNATIONAL CORPORATION
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of June 28, 2015
(In thousands of U.S. dollars, except share amounts)
ASSETS
 
Masonite Historical
 
Pro Forma Adjustments (1)
 
Masonite Pro Forma
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
136,305

 
$
9,782

 
$
126,523

Restricted cash
 
17,045

 
3,866

 
13,179

Accounts receivable, net
 
247,145

 
888

 
246,257

Inventories, net
 
243,514

 
12,114

 
231,400

Prepaid expenses
 
26,554

 
4,540

 
22,014

Income taxes receivable
 
1,936

 
702

 
1,234

Current deferred income taxes
 
23,215

 
—

 
23,215

Total current assets
 
695,714

 
31,892

 
663,822

Property, plant and equipment, net
 
553,665

 
15,914

 
537,751

Investment in equity investees
 
7,982

 
—

 
7,982

Goodwill
 
99,217

 
—

 
99,217

Intangible assets, net
 
192,852

 
819

 
192,033

Long-term deferred income taxes
 
15,991

 
—

 
15,991

Other assets, net
 
17,205

 
233

 
16,972

Total assets
 
$
1,582,626

 
$
48,858

 
$
1,533,768

 
 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Accounts payable
 
$
106,686

 
$
7,997

 
$
98,689

Accrued expenses
 
137,216

 
12,908

 
124,308

Income taxes payable
 
2,137

 
—

 
2,137

Total current liabilities
 
246,039

 
20,905

 
225,134

Long-term debt
 
468,173

 
—

 
468,173

Long-term deferred income taxes
 
118,887

 
3,230

 
115,657

Other liabilities
 
51,628

 
1,661

 
49,967

Total liabilities
 
884,727

 
25,796

 
858,931

Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity:
 
 
 
 
 
 
Share capital: unlimited shares authorized, no par value, 30,143,534 shares issued and outstanding
 
661,364

 
—

 
661,364

Additional paid-in capital
 
227,023

 
—

 
227,023

Accumulated deficit
(5)
(115,127
)
 
31,201

 
(146,328
)
Accumulated other comprehensive income (loss)
 
(101,359
)
 
(8,139
)
 
(93,220
)
Total equity attributable to Masonite
 
671,901

 
23,062

 
648,839

Equity attributable to non-controlling interests
 
25,998

 
—

 
25,998

Total equity
 
697,899

 
23,062

 
674,837

Total liabilities and equity
 
$
1,582,626

 
$
48,858

 
$
1,533,768


See accompanying notes to the pro forma condensed consolidated financial statements.

2

MASONITE INTERNATIONAL CORPORATION
Unaudited Pro Forma Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share amounts)
 
 
Three months ended June 28, 2015
 
Three months ended June 29, 2014
 
 
Masonite Historical
 
Pro Forma Adjustments (2)
 
Masonite Pro Forma
 
Masonite Historical
 
Pro Forma Adjustments (2)
 
Masonite Pro Forma
Net sales
 
$
476,428

 
$
25,444

 
$
450,984

 
$
490,176

 
$
34,701

 
$
455,475

Cost of goods sold
 
381,394

 
21,916

 
359,478

 
411,569

 
30,626

 
380,943

Gross profit
 
95,034

 
3,528

 
91,506

 
78,607

 
4,075

 
74,532

Selling, general and administration expenses
 
58,818

 
3,671

 
55,147

 
58,519

 
4,740

 
53,779

Restructuring costs
 
988

 
455

 
533

 
560

 
—

 
560

Operating income (loss)
 
35,228

 
(598
)
 
35,826

 
19,528

 
(665
)
 
20,193

Interest expense (income), net
(3
)
6,787

 
316

 
6,471

 
10,594

 
799

 
9,795

Other expense (income), net
(4
)
(635
)
 
285

 
(920
)
 
1,306

 
510

 
796

Income (loss) from continuing operations before income tax expense (benefit)
 
29,076

 
(1,199
)
 
30,275

 
7,628

 
(1,974
)
 
9,602

Income tax expense (benefit)
 
15,013

 
135

 
14,878

 
1,379

 
(625
)
 
2,004

Income (loss) from continuing operations
 
14,063

 
(1,334
)
 
15,397

 
6,249

 
(1,349
)
 
7,598

Less: net income (loss) attributable to non-controlling interest
 
381

 
—

 
381

 
499

 
—

 
499

Income (loss) from continuing operations attributable to Masonite
 
$
13,682

 
$
(1,334
)
 
$
15,016

 
$
5,750

 
$
(1,349
)
 
$
7,099

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share from continuing operations attributable to Masonite:
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.45

 
 
 
$
0.50

 
$
0.20

 
 
 
$
0.24

Diluted
 
$
0.43

 
 
 
$
0.47

 
$
0.19

 
 
 
$
0.23

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 28, 2015
 
Six months ended June 29, 2014
Net sales
 
$
910,893

 
$
51,690

 
$
859,203

 
$
912,636

 
$
69,173

 
$
843,463

Cost of goods sold
 
742,550

 
44,828

 
697,722

 
781,043

 
61,650

 
719,393

Gross profit
 
168,343

 
6,862

 
161,481

 
131,593

 
7,523

 
124,070

Selling, general and administration expenses
 
116,979

 
7,614

 
109,365

 
116,294

 
9,097

 
107,197

Restructuring costs
 
3,344

 
1,615

 
1,729

 
1,281

 
—

 
1,281

Operating income (loss)
 
48,020

 
(2,367
)
 
50,387

 
14,018

 
(1,574
)
 
15,592

Interest expense (income), net
(3
)
18,540

 
862

 
17,678

 
20,587

 
1,554

 
19,033

Loss on extinguishment of debt
 
28,046

 
—

 
28,046

 
—

 
—

 
—

Other expense (income), net
(4
)
(1,819
)
 
306

 
(2,125
)
 
1,487

 
510

 
977

Income (loss) from continuing operations before income tax expense (benefit)
 
3,253

 
(3,535
)
 
6,788

 
(8,056
)
 
(3,638
)
 
(4,418
)
Income tax expense (benefit)
 
18,277

 
225

 
18,052

 
1,398

 
(634
)
 
2,032

Income (loss) from continuing operations
 
(15,024
)
 
(3,760
)
 
(11,264
)
 
(9,454
)
 
(3,004
)
 
(6,450
)
Less: net income (loss) attributable to non-controlling interest
 
2,117

 
—

 
2,117

 
1,240

 
—

 
1,240

Income (loss) from continuing operations attributable to Masonite
 
$
(17,141
)
 
$
(3,760
)
 
$
(13,381
)
 
$
(10,694
)
 
$
(3,004
)
 
$
(7,690
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common share from continuing operations attributable to Masonite:
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.57
)
 
 
 
$
(0.44
)
 
$
(0.36
)
 
 
 
$
(0.26
)
See accompanying notes to the pro forma condensed consolidated financial statements.

3

MASONITE INTERNATIONAL CORPORATION
Unaudited Pro Forma Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share amounts)
 
 
Year ended December 28, 2014
 
 
Masonite Historical
 
Pro Forma Adjustments (2)
 
Masonite Pro Forma
Net sales
 
$
1,837,700

 
$
127,475

 
$
1,710,225

Cost of goods sold
 
1,572,301

 
115,526

 
1,456,775

Gross profit
 
265,399

 
11,949

 
253,450

Selling, general and administration expenses
 
224,077

 
18,098

 
205,979

Restructuring costs
 
11,137

 
45

 
11,092

Asset impairment
 
18,202

 
14,020

 
4,182

Operating income (loss)
 
11,983

 
(20,214
)
 
32,197

Interest expense (income), net
(3
)
41,525

 
2,519

 
39,006

Other expense (income), net
(4
)
(587
)
 
609

 
(1,196
)
Income (loss) from continuing operations before income tax expense (benefit)
 
(28,955
)
 
(23,342
)
 
(5,613
)
Income tax expense (benefit)
 
4,533

 
(4,094
)
 
8,627

Income (loss) from continuing operations
 
(33,488
)
 
(19,248
)
 
(14,240
)
Less: net income (loss) attributable to non-controlling interest
 
3,222

 
—

 
3,222

Income (loss) from continuing operations attributable to Masonite
 
$
(36,710
)
 
$
(19,248
)
 
$
(17,462
)
 
 
 
 
 
 
 
Earnings (loss) per common share from continuing operations attributable to Masonite, basic and diluted
 
$
(1.24
)
 
 
 
$
(0.59
)

See accompanying notes to the pro forma condensed consolidated financial statements.

4

MASONITE INTERNATIONAL CORPORATION
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The unaudited pro forma condensed consolidated financial statements give effect to the sale of the Premdor business divested through sale of 100% of the then outstanding equity in Premdor. The unaudited pro forma condensed consolidated statements of operations for the three and six months ended June 28, 2015, and June 29, 2014, and for the year ended December 28, 2014, are presented as if the sale occurred on December 30, 2013, the first day of fiscal year 2014. The anticipated after-tax loss on the sale is not reflected in the pro forma condensed consolidated statements of operations. The unaudited pro forma condensed consolidated balance sheet as of June 28, 2015, is presented as if the sale occurred on that date, including the after-tax loss on sale calculated as of that date.
The pro forma adjustments include the following:
(1)
The elimination of the historical assets and liabilities of the Premdor business,
(2)
The elimination of the historical results of operations of the Premdor business,
(3)
A systematic allocation of consolidated interest expense related to our senior unsecured borrowings based on percentage of net assets,
(4)
Corporate allocations of shared costs consisting of certain costs of human resources, legal, finance and information technology, and
(5)
The estimated after-tax loss on sale based upon events that are factually supportable and directly attributable to the sale of Premdor of approximately $31 million, calculated as if the sale had occurred on June 28, 2015.


5

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