VIDLER WATER RESOURCES, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 6, 2015

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8-K - FORM 8-K - VIDLER WATER RESOURCES, INC.a8-k2015pnhsaleagreementcl.htm
EX-99.3 - EXHIBIT 99.3 - VIDLER WATER RESOURCES, INC.exhibit993guaranteemadebyp.htm
EX-99.2 - EXHIBIT 99.2 - VIDLER WATER RESOURCES, INC.exhibit992pnhsaleagreement.htm
EX-99.4 - EXHIBIT 99.4 - VIDLER WATER RESOURCES, INC.exhibit994restrictivecoven.htm
PICO Holdings, Inc. and Subsidiaries
Introduction to Pro Forma Consolidated Financial Information
(Unaudited)

PICO Holdings, Inc. (the "Company") conducted its agribusiness operations through PICO Northstar Hallock, LLC ("Northstar"), which was an 87.7% owned subsidiary. On July 31, 2015, the Company closed on the sale of substantially all of the certain assets and liabilities of Northstar.

The accompanying unaudited pro forma consolidated statement of operations and comprehensive loss for three months ended March 31, 2015 and the years ended December 31, 2014, 2013 and 2012 give effect to the disposition of certain assets and liabilities of Northstar as if the sale had been consummated at the beginning of each period presented. The accompanying unaudited pro forma condensed consolidated balance sheet as of March 31, 2015 gives effect to the disposition of certain assets and liabilities of Northstar as if it had been consummated as of March 31, 2015.

The historical financial information on which the pro forma financial statements are based is included in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2015 and the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2015. The pro forma consolidated financial statements and the notes thereto should be read in conjunction with these historical consolidated financial statements.

The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are subject to a number of assumptions which may not be indicative of the results of operations that would have occurred had the disposition been completed at the dates indicated or what the results will be for any future periods. The unaudited pro forma consolidated statements of operations and comprehensive loss do not include transaction costs or the loss that the Company expects to recognize on the sale of certain assets and liabilities.




PICO Holdings, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheets - Unaudited
(In thousands, except par value)
 
March 31, 2015
 
As Reported
 
Pro Forma Adjustments
 
Pro Forma As Adjusted
Assets
 
 
 
 
 
Cash and cash equivalents
$
47,971

 
$
18,151

(A)
$
66,122

Investments ($24,155 measured at fair value at March 31, 2015)
50,973

 
 
 
50,973

Real estate and tangible water assets, net
397,718

 
(3,539
)
(B)
394,179

Property, plant and equipment, net
118,802

 
(114,454
)
(B)
4,348

Intangible assets
128,139

 
 
 
128,139

Other assets
38,916

 
(19,998
)
(B)
18,918

Total assets
$
782,519

 
$
(119,840
)
 
$
662,679

 
 
 
 
 
 
Liabilities and shareholders’ equity
 
 
 
 
 
Debt
$
223,328

 
$
(81,195
)
(C)
$
142,133

Accounts payable and accrued expenses
25,094

 
(3,924
)
(B)
21,170

Deferred compensation
24,954

 
 
 
24,954

Other liabilities
16,355

 
(2,500
)
(B)
13,855

Total liabilities
289,731

 
(87,619
)
 
202,112

 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.001 par value; authorized 100,000 shares, 23,083 issued and 23,005 outstanding at March 31, 2015
23

 
 
 
23

Additional paid-in capital
492,495

 
 
 
492,495

Accumulated deficit
(86,333
)
 
(31,537
)
(D)
(117,870
)
Accumulated other comprehensive income
4,675

 
 
 
4,675

Treasury stock, at cost (common shares: 78 at March 31, 2015)
(1,413
)
 
 
 
(1,413
)
Total PICO Holdings, Inc. shareholders’ equity
409,447

 
(31,537
)
 
377,910

Noncontrolling interest in subsidiaries
83,341

 
(684
)
(E)
82,657

Total equity
492,788

 
(32,221
)
 
460,567

Total liabilities and equity
$
782,519

 
$
(119,840
)
 
$
662,679





PICO Holdings, Inc. and Subsidiaries
Pro Forma Condensed Consolidated Statements of Operations and Comprehensive Loss - Unaudited
(In thousands, except per share data)
 
Three Months Ended March 31, 2015
 
As Reported
 
Pro Forma Adjustments
 
Pro Forma As Adjusted
Revenues and other income:
 
 
 
 
 
Sale of real estate and water assets
$
43,610

 
 
 
$
43,610

Sale of canola oil and meal
39,432

 
(39,432
)
(E)
—

Other income
1,608

 
106

(E)
1,714

Total revenues and other income
84,650

 
(39,326
)
 
45,324

 
 
 
 
 
 
Cost of sales:
 
 
 
 
 
Cost of real estate and water assets sold
36,333

 
 
 
36,333

Cost of canola oil and meal sold
42,893

 
(42,893
)
(E)
—

Total cost of sales
79,226

 
(42,893
)
 
36,333

 
 
 
 
 
 
Expenses:
 
 
 
 
 
Operating and other costs
20,049

 
(3,532
)
(E)
16,517

Impairment loss on intangible and long-lived assets
2,964

 
 
 
2,964

Interest
1,439

 
(1,439
)
(E)
—

Depreciation and amortization
537

 
(46
)
(E)
491

Total costs and expenses
104,215

 
(47,910
)
 
56,305

Loss before income taxes and equity in loss of unconsolidated affiliates
(19,565
)
 
8,584

 
(10,981
)
Benefit for federal, foreign, and state income taxes
(239
)
 
 
 
(239
)
Equity in loss of unconsolidated affiliate
(483
)
 
 
 
(483
)
Net loss
(19,809
)
 
8,584

 
(11,225
)
Net loss attributable to noncontrolling interests
2,984

 
(1,062
)
(E)
1,922

Net loss attributable to PICO Holdings, Inc.
$
(16,825
)
 
$
7,522

 
$
(9,303
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
Net loss
$
(19,809
)
 
$
8,584

 
$
(11,225
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
Unrealized loss on securities, net of deferred income tax and reclassification adjustments
(51
)
 
 
 
(51
)
Foreign currency translation
9

 
 
 
9

Total other comprehensive loss, net of tax
(42
)
 
—

 
(42
)
Comprehensive loss
(19,851
)
 
8,584

 
(11,267
)
Comprehensive loss attributable to noncontrolling interests
2,984

 
(1,062
)
(E)
1,922

Comprehensive loss attributable to PICO Holdings, Inc.
$
(16,867
)
 
$
7,522

 
$
(9,345
)
 
 
 
 
 
 
Net loss per common share – basic and diluted:
 
 
 
 
 
Net loss per common share
$
(0.73
)
 
$
0.33

 
$
(0.40
)
Weighted average shares outstanding
23,005

 
23,005

 
23,005





PICO Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Operations and Comprehensive Loss - Unaudited
(In thousands, except per share data)
 
December 31, 2014
 
As Reported
 
Pro Forma Adjustments
 
Pro Forma As Adjusted
Revenues and other income:
 
 
 
 
 
Sale of real estate and water assets
$
192,368

 
 
 
$
192,368

Sale of canola oil and meal
163,855

 
(163,855
)
(E)
—

Other income (loss), net
(1,327
)
 
1,447

(E)
120

Total revenues and other income
354,896

 
(162,408
)
 
192,488

 
 
 
 
 
 
Cost of sales:
 
 
 
 
 
Cost of real estate and water assets sold
158,200

 
 
 
158,200

Cost of canola oil and meal sold
156,668

 
(156,668
)
(E)
—

Total cost of sales
314,868

 
(156,668
)
 
158,200

 
 
 
 
 
 
Expenses:
 
 
 
 
 
Operating and other costs
78,990

 
(13,861
)
(E)
65,129

Impairment loss on intangible and long-lived assets
13,084

 
 
 
13,084

Interest
5,764

 
(5,536
)
(E)
228

Depreciation and amortization
3,233

 
(179
)
(E)
3,054

Total costs and expenses
415,939

 
(176,244
)
 
239,695

Loss before income taxes and equity in loss of unconsolidated affiliates
(61,043
)
 
13,836

 
(47,207
)
Benefit for federal, foreign, and state income taxes
(3,514
)
 
 
 
(3,514
)
Equity in loss of unconsolidated affiliate
(2,076
)
 
 
 
(2,076
)
Net loss
(59,605
)
 
13,836

 
(45,769
)
Net loss attributable to noncontrolling interests
7,180

 
(1,718
)
(E)
5,462

Net loss attributable to PICO Holdings, Inc.
$
(52,425
)
 
$
12,118

 
$
(40,307
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
Net loss
$
(59,605
)
 
$
13,836

 
$
(45,769
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
Unrealized loss on securities, net of deferred income tax and reclassification adjustments
(2,093
)
 
 
 
(2,093
)
Foreign currency translation
6,578

 
 
 
6,578

Total other comprehensive loss, net of tax
4,485

 
—

 
4,485

Comprehensive loss
(55,120
)
 
13,836

 
(41,284
)
Comprehensive loss attributable to noncontrolling interests
7,180

 
(1,718
)
(E)
5,462

Comprehensive loss attributable to PICO Holdings, Inc.
$
(47,940
)
 
$
12,118

 
$
(35,822
)
 
 
 
 
 
 
Net loss per common share – basic and diluted:
 
 
 
 
 
Net loss per common share
$
(2.30
)
 
$
0.53

 
$
(1.77
)
Weighted average shares outstanding
22,802

 
22,802

 
22,802






PICO Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Operations and Comprehensive Loss - Unaudited
(In thousands, except per share data)
 
December 31, 2013
 
As Reported
 
Pro Forma Adjustments
 
Pro Forma As Adjusted
Revenues and other income:
 
 
 
 
 
Sale of real estate and water assets
$
116,776

 
 
 
$
116,776

Sale of canola oil and meal
184,139

 
(184,139
)
(E)
—

Sale of software
13,649

 
 
 
13,649

Other income
30,265

 
(509
)
(E)
29,756

Total revenues and other income
344,829

 
(184,648
)
 
160,181

 
 
 
 
 
 
Cost of sales:
 
 
 
 
 
Cost of real estate and water assets sold
87,457

 
 
 
87,457

Cost of canola oil and meal sold
190,700

 
(190,700
)
(E)
—

Cost of software sold
3,033

 
 
 
3,033

Total cost of sales
281,190

 
(190,700
)
 
90,490

 
 
 
 
 
 
Expenses:
 
 
 
 
 
Operating and other costs
78,015

 
(10,967
)
(E)
67,048

Impairment loss on intangible and long-lived assets
1,410

 
 
 
1,410

Interest
6,881

 
(5,746
)
(E)
1,135

Depreciation and amortization
2,765

 
(146
)
(E)
2,619

Total costs and expenses
370,261

 
(207,559
)
 
162,702

Loss before income taxes and equity in loss of unconsolidated affiliates
(25,432
)
 
22,911

 
(2,521
)
Provision for federal, foreign, and state income taxes
3,197

 
 
 
3,197

Equity in loss of unconsolidated affiliate
(565
)
 
 
 
(565
)
Net loss
(29,194
)
 
22,911

 
(6,283
)
Net loss attributable to noncontrolling interests
6,896

 
(2,905
)
(E)
3,991

Net loss attributable to PICO Holdings, Inc.
$
(22,298
)
 
$
20,006

 
$
(2,292
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
Net loss
$
(29,194
)
 
$
22,911

 
$
(6,283
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
Unrealized gain on securities, net of deferred income tax and reclassification adjustments
2,411

 
 
 
2,411

Foreign currency translation
(165
)
 
 
 
(165
)
Total other comprehensive loss, net of tax
2,246

 
—

 
2,246

Comprehensive loss
(26,948
)
 
22,911

 
(4,037
)
Comprehensive loss attributable to noncontrolling interests
6,896

 
(2,905
)
(E)
3,991

Comprehensive (income) loss attributable to PICO Holdings, Inc.
$
(20,052
)
 
$
20,006

 
$
(46
)
 
 
 
 
 
 
Net loss per common share – basic and diluted:
 
 
 
 
 
Net loss per common share
$
(0.98
)
 
$
0.88

 
$
(0.10
)
Weighted average shares outstanding
22,742

 
22,742

 
22,742






PICO Holdings, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Operations and Comprehensive Loss - Unaudited
(In thousands, except per share data)
 
December 31, 2012
 
As Reported
 
Pro Forma Adjustments
 
Pro Forma As Adjusted
Revenues and other income:
 
 
 
 
 
Sale of real estate and water assets
$
59,020

 
 
 
$
59,020

Sale of canola oil and meal
85,255

 
(85,255
)
(E)
—

Other income
5,806

 
(50
)
(E)
5,756

Total revenues and other income
150,081

 
(85,305
)
 
64,776

 
 
 
 
 
 
Cost of sales:
 
 
 
 
 
Cost of real estate and water assets sold
42,142

 
 
 
42,142

Cost of canola oil and meal sold
84,831

 
(84,831
)
(E)
—

Total cost of sales
126,973

 
(84,831
)
 
42,142

 
 
 
 
 
 
Expenses:
 
 
 
 
 
Operating and other costs
46,566

 
(9,705
)
(E)
36,861

Interest
4,153

 
(2,654
)
(E)
1,499

Depreciation and amortization
1,967

 
(284
)
(E)
1,683

Total costs and expenses
179,659

 
(97,474
)
 
82,185

Loss from continuing operations before income taxes
(29,578
)
 
12,169

 
(17,409
)
Benefit for federal, foreign, and state income taxes
(1,069
)
 
 
 
(1,069
)
Loss from continuing operations
(28,509
)
 
12,169

 
(16,340
)
Loss from discontinued operations, net of income taxes
(3,143
)
 
 
 
(3,143
)
Net loss
(31,652
)
 
12,169

 
(19,483
)
Net loss attributable to noncontrolling interests
2,579

 
(1,664
)
(E)
915

Net loss attributable to PICO Holdings, Inc.
$
(29,073
)
 
$
10,505

 
$
(18,568
)
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss:
 
 
 
 
 
Net loss
$
(31,652
)
 
$
12,169

 
$
(19,483
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
Unrealized loss on securities, net of deferred income tax and reclassification adjustments
(226
)
 
 
 
(226
)
Foreign currency translation
(829
)
 
 
 
(829
)
Total other comprehensive loss, net of tax
(1,055
)
 
—

 
(1,055
)
Comprehensive loss
(32,707
)
 
12,169

 
(20,538
)
Comprehensive loss attributable to noncontrolling interests
2,579

 
(1,664
)
(E)
915

Comprehensive loss attributable to PICO Holdings, Inc.
$
(30,128
)
 
$
10,505

 
$
(19,623
)
 
 
 
 
 
 
Net loss per common share – basic and diluted:
 
 
 
 
 
Loss from continuing operations
$
(1.14
)
 
$
0.46

 
$
(0.68
)
Loss from discontinued operations
(0.14
)
 
—

 
(0.14
)
Net loss per common share
$
(1.28
)
 
$
0.46

 
$
(0.82
)
Weighted average shares outstanding
22,802

 
22,802

 
22,802





PICO Holdings, Inc. and Subsidiaries
Notes to the Pro Forma Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation

The preparation of the unaudited pro forma condensed consolidated financial information is based on financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The pro forma adjustments reflected in the accompanying unaudited pro forma consolidated financial information reflects estimates and assumptions that the Company’s management believes to be reasonable. Actual results may differ from those estimates. Pro forma adjustments related to the unaudited pro forma financial information presented below assume the sale of substantially all of the certain assets and liabilities of Northstar was consummated on the date of the most recent period presented for the consolidated balance and at the beginning of the fiscal year presented for the consolidated statement of operations and comprehensive loss. The financial statements include adjustments which give effect to events that are (i) directly attributable to the sale, (ii) expected to have a continuing impact on the Company, and (iii) factually supportable. In addition, the consolidated balance sheet includes adjustments that are nonrecurring, such as transaction costs and the loss on the transaction.

The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what the actual results of operations would have been had the transactions occurred on the respective dates assumed, nor is it necessarily indicative of the Company’s future operating results. This unaudited pro forma consolidated financial information and the accompanying unaudited notes should be read in conjunction with the Company’s condensed consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2015 and the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2015.

2. Unaudited Pro Forma Condensed Consolidated Balance Sheet

The unaudited pro forma condensed consolidated balance sheet at March 31, 2015 reflects the following pro forma adjustments:

(A) Reflects the pro forma impact of the receipt of net cash proceeds from the sale equal to $127 million primarily less the following: (i) a $22 million working capital balance adjustment, (ii) $5.9 million in selling and transaction costs, and (ii) repayment of $81.2 million in debt associated with Northstar's assets.

(B) Adjustment to reflect the assets and liabilities sold.

(C) Adjustment reflects the repayment of $81.2 million in debt in conjunction with the sale of Northstar's assets.

(D) Represents the estimated after tax-loss from the sale as if the transaction closed on the balance sheet date.

3. Unaudited Pro Forma Condensed Consolidated Statements of Operations and Comprehensive Loss

The unaudited pro forma condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2015 and the years ended December 31, 2014, 2013 and 2012 reflect the following pro forma adjustments:

(E) Amount eliminates the revenues, other income or loss, cost of goods sold, operating expenses and noncontrolling interest of Northstar.


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