Attached files
| file | filename |
|---|---|
| EX-10.2 - EX-10.2 - Jefferies Financial Group Inc. | d603991dex102.htm |
| EX-10.1 - EX-10.1 - Jefferies Financial Group Inc. | d603991dex101.htm |
| 8-K - FORM 8-K - Jefferies Financial Group Inc. | d603991d8k.htm |
Exhibit 99
Jefferies Financial Group Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
On June 5, 2018, Jefferies Financial Group Inc. (“Jefferies” or the “Company”) completed the previously announced sale of 48% of National Beef Packing Company, LLC (“National Beef”) to Marfrig Global Foods S.A. for a purchase price of $907.7 million. Effective June 5, 2018, National Beef is no longer consolidated in our financial statements and our 31% retained interest in National Beef is accounted for as an equity method investment.
The Unaudited Pro Forma Condensed Consolidated Statement of Financial Condition is presented as if the transaction had occurred as of the most recently filed Consolidated Statement of Financial Condition (as of March 31, 2018). The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and the years ended December 31, 2017, 2016 and 2015 are presented as if the transaction had occurred immediately prior to the first day of the earliest period presented (prior to January 1, 2015).
This unaudited pro forma condensed consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the Company’s Annual Report on Form 10–K for the year ended December 31, 2017 (“2017 10-K”) and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018 (“2018 Q1 10-Q”), as filed with the Securities and Exchange Commission.
The following unaudited pro forma condensed consolidated financial information is derived from the Company’s historical consolidated financial statements. Historical financial information for the years ended December 31, 2017, 2016 and 2015 has been derived from audited historical consolidated financial statements included in the Company’s 2017 10-K. Historical financial information for the Company as of and for the three months ended March 31, 2018 has been derived from unaudited historical consolidated financial statements included in the Company’s 2018 Q1 10-Q.
The unaudited pro forma condensed consolidated financial statements are based upon available information and certain assumptions considered reasonable by the Company. This unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed dates, nor is it necessarily indicative of our future operating results.
JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Financial Condition
March 31, 2018
(Dollars in thousands, except par value)
| Jefferies Historical |
Pro Forma Adjustments |
Pro Forma | ||||||||||||
| ASSETS |
||||||||||||||
| Cash and cash equivalents |
$ | 5,144,625 | $ | 870,752 | (a) |
$ | 6,015,377 | |||||||
| Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository organizations |
802,693 | — | 802,693 | |||||||||||
| Financial instruments owned, including securities pledged of $10,861,294: |
||||||||||||||
| Trading assets, at fair value |
17,346,648 | (3,264) | (b) |
17,343,384 | ||||||||||
| Available for sale securities |
690,745 | — | 690,745 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Total financial instruments owned |
18,037,393 | (3,264) | 18,034,129 | |||||||||||
| Loans to and investments in associated companies |
2,233,070 | 592,258 | (c) |
2,825,328 | ||||||||||
| Securities borrowed |
7,300,171 | — | 7,300,171 | |||||||||||
| Securities purchased under agreements to resell |
2,983,945 | — | 2,983,945 | |||||||||||
| Receivables |
6,710,631 | (195,780) | (b) |
6,514,851 | ||||||||||
| Property, equipment and leasehold improvements, net |
754,668 | (403,847) | (b) |
350,821 | ||||||||||
| Intangible assets, net and goodwill |
2,450,957 | (543,228) | (b) |
1,907,729 | ||||||||||
| Deferred tax asset, net |
777,138 | (159,655) | (d) |
617,483 | ||||||||||
| Other assets |
1,806,203 | (284,991) | (b) |
1,521,212 | ||||||||||
|
|
|
|
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|
|
|||||||||
| Total assets |
$ | 49,001,494 | $ | (127,755) | $ | 48,873,739 | ||||||||
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|
|
|||||||||
| LIABILITIES |
||||||||||||||
| Short-term borrowings |
$ | 468,046 | $ | — | $ | 468,046 | ||||||||
| Trading liabilities, at fair value |
9,992,014 | (5,522) | (b) |
9,986,492 | ||||||||||
| Securities loaned |
2,372,473 | — | 2,372,473 | |||||||||||
| Securities sold under agreements to repurchase |
8,250,339 | — | 8,250,339 | |||||||||||
| Other secured financings |
1,254,893 | — | 1,254,893 | |||||||||||
| Payables, expense accruals and other liabilities |
7,336,062 | (227,591) | (b) |
7,108,471 | ||||||||||
| Long-term debt |
8,499,724 | (222,714) | (b) |
8,277,010 | ||||||||||
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|||||||||
| Total liabilities |
38,173,551 | (455,827) | 37,717,724 | |||||||||||
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|||||||||
| Commitments and contingencies |
||||||||||||||
| MEZZANINE EQUITY |
||||||||||||||
| Redeemable noncontrolling interests |
414,815 | (399,992) | (b) |
14,823 | ||||||||||
| Mandatorily redeemable convertible preferred shares |
125,000 | — | 125,000 | |||||||||||
| EQUITY |
||||||||||||||
| Common shares, par value $1 per share, authorized 600,000,000 shares; 357,215,901 shares issued and outstanding, after deducting 59,577,117 shares held in treasury |
357,216 | — | 357,216 | |||||||||||
| Additional paid-in capital |
4,711,218 | 199,198 | (e) |
4,910,416 | ||||||||||
| Accumulated other comprehensive income (loss) |
357,317 | 58 | (b) |
357,375 | ||||||||||
| Retained earnings |
4,833,329 | 528,808 | (f) |
5,362,137 | ||||||||||
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|||||||||
| Total Jefferies Financial Group Inc. shareholders’ equity |
10,259,080 | 728,064 | 10,987,144 | |||||||||||
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|||||||||
| Noncontrolling interests |
29,048 | — | 29,048 | |||||||||||
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|||||||||
| Total equity |
10,288,128 | 728,064 | 11,016,192 | |||||||||||
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|||||||||
| Total |
$ | 49,001,494 | $ | (127,755) | $ | 48,873,739 | ||||||||
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See accompanying notes to unaudited pro forma condensed consolidated financial statements.
JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the three months ended March 31, 2018
(In thousands, except per share amounts)
| Pro Forma Adjustments | ||||||||||||||||||
| Jefferies Historical |
National Beef Historical (b) |
National Beef Equity Pickup |
Pro Forma | |||||||||||||||
| Revenues: |
||||||||||||||||||
| Beef processing services |
$ | 1,781,920 | $ | (1,781,920) | $ | — | $ | — | ||||||||||
| Commissions and other fees |
147,902 | — | — | 147,902 | ||||||||||||||
| Principal transactions |
145,663 | — | — | 145,663 | ||||||||||||||
| Investment banking |
439,991 | — | — | 439,991 | ||||||||||||||
| Interest income |
275,290 | (68) | — | 275,222 | ||||||||||||||
| Other |
155,703 | (3,370) | — | 152,333 | ||||||||||||||
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|
|||||||||||
| Total revenues |
2,946,469 | (1,785,358) | — | 1,161,111 | ||||||||||||||
| Interest expense of Jefferies Group LLC |
265,676 | — | — | 265,676 | ||||||||||||||
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|||||||||||
| Net revenues |
2,680,793 | (1,785,358) | — | 895,435 | ||||||||||||||
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|
|
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|
|||||||||||
| Expenses: |
||||||||||||||||||
| Cost of sales |
1,752,711 | (1,670,776) | — | 81,935 | ||||||||||||||
| Compensation and benefits |
499,866 | (10,207) | — | 489,659 | ||||||||||||||
| Floor brokerage and clearing fees |
42,176 | — | — | 42,176 | ||||||||||||||
| Interest expense |
23,607 | (2,109) | — | 21,498 | ||||||||||||||
| Depreciation and amortization |
53,679 | (25,519) | — | 28,160 | ||||||||||||||
| Selling, general and other expenses |
234,200 | (7,856) | — | 226,344 | ||||||||||||||
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|||||||||||
| Total expenses |
2,606,239 | (1,716,467) | — | 889,772 | ||||||||||||||
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|||||||||||
| Income before income taxes and income related to associated companies |
74,554 | (68,891) | — | 5,663 | ||||||||||||||
| Income related to associated companies |
32,100 | — | 16,780 | (g) | 48,880 | |||||||||||||
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|
|||||||||||
| Income before income taxes |
106,654 | (68,891) | 16,780 | 54,543 | ||||||||||||||
| Income tax provision (benefit) |
(32,495) | (12,639) | 3,891 | (h) | (41,243) | |||||||||||||
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| Net income |
139,149 | (56,252) | 12,889 | 95,786 | ||||||||||||||
| Net loss attributable to the noncontrolling interests |
1,344 | — | — | 1,344 | ||||||||||||||
| Net (income) attributable to the redeemable noncontrolling interests |
(14,796) | 14,450 | — | (346) | ||||||||||||||
| Preferred stock dividends |
(1,172) | — | — | (1,172) | ||||||||||||||
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| Net income attributable to Jefferies Financial Group Inc. common shareholders |
$ | 124,525 | $ | (41,802) | $ | 12,889 | $ | 95,612 | ||||||||||
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| Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders: |
||||||||||||||||||
| Net income |
$ | 0.34 | $ | 0.26 | ||||||||||||||
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| Number of shares used in calculation |
366,427 | 366,427 | ||||||||||||||||
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| Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders: |
||||||||||||||||||
| Net income |
$ | 0.34 | $ | 0.26 | ||||||||||||||
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| Number of shares used in calculation |
373,461 | (i) | 369,299 | |||||||||||||||
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See accompanying notes to unaudited pro forma condensed consolidated financial statements.
JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2017
(In thousands, except per share amounts)
| Pro Forma Adjustments | ||||||||||||||||||
| Jefferies Historical |
National Beef Historical (b) |
National Beef Equity Pickup |
Pro Forma | |||||||||||||||
| Revenues: |
||||||||||||||||||
| Beef processing services |
$ | 7,353,663 | $ | (7,353,663) | $ | — | $ | — | ||||||||||
| Commissions and other fees |
593,257 | — | — | 593,257 | ||||||||||||||
| Principal transactions |
931,576 | — | — | 931,576 | ||||||||||||||
| Investment banking |
1,764,285 | — | — | 1,764,285 | ||||||||||||||
| Interest income |
993,537 | (339) | — | 993,198 | ||||||||||||||
| Net realized securities gains |
23,028 | — | — | 23,028 | ||||||||||||||
| Other |
748,508 | (4,946) | — | 743,562 | ||||||||||||||
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| Total revenues |
12,407,854 | (7,358,948) | — | 5,048,906 | ||||||||||||||
| Interest expense of Jefferies Group LLC |
971,461 | — | — | 971,461 | ||||||||||||||
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| Net revenues |
11,436,393 | (7,358,948) | — | 4,077,445 | ||||||||||||||
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| Expenses: |
||||||||||||||||||
| Cost of sales |
7,045,007 | (6,764,055) | — | 280,952 | ||||||||||||||
| Compensation and benefits |
1,993,776 | (39,884) | — | 1,953,892 | ||||||||||||||
| Floor brokerage and clearing fees |
174,506 | — | — | 174,506 | ||||||||||||||
| Interest expense |
107,859 | (6,657) | — | 101,202 | ||||||||||||||
| Depreciation and amortization |
208,910 | (98,515) | — | 110,395 | ||||||||||||||
| Selling, general and other expenses |
817,620 | (42,525) | — | 775,095 | ||||||||||||||
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| Total expenses |
10,347,678 | (6,951,636) | — | 3,396,042 | ||||||||||||||
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| Income before income taxes and income (loss) related to associated companies |
1,088,715 | (407,312) | — | 681,403 | ||||||||||||||
| Income (loss) related to associated companies |
(74,901) | — | 108,596 | (g) | 33,695 | |||||||||||||
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| Income before income taxes |
1,013,814 | (407,312) | 108,596 | 715,098 | ||||||||||||||
| Income tax provision |
760,967 | (118,662) | 39,963 | (h) | 682,268 | |||||||||||||
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| Net income |
252,847 | (288,650) | 68,633 | 32,830 | ||||||||||||||
| Net loss attributable to the noncontrolling interests |
3,455 | — | — | 3,455 | ||||||||||||||
| Net (income) loss attributable to the redeemable noncontrolling interests |
(84,576) | 85,277 | — | 701 | ||||||||||||||
| Preferred stock dividends |
(4,375) | — | — | (4,375) | ||||||||||||||
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| Net income attributable to Jefferies Financial Group Inc. common shareholders |
$ | 167,351 | $ | (203,373) | $ | 68,633 | $ | 32,611 | ||||||||||
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| Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders: |
||||||||||||||||||
| Net income |
$ | 0.45 | $ | 0.09 | ||||||||||||||
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| Number of shares used in calculation |
368,197 | 368,197 | ||||||||||||||||
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| Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders: |
||||||||||||||||||
| Net income |
$ | 0.45 | $ | 0.09 | ||||||||||||||
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| Number of shares used in calculation |
370,701 | 370,701 | ||||||||||||||||
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See accompanying notes to unaudited pro forma condensed consolidated financial statements.
JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2016
(In thousands, except per share amounts)
| Pro Forma Adjustments | ||||||||||||||||||
| Jefferies Historical |
National Beef Historical (b) |
National Beef Equity Pickup |
Pro Forma | |||||||||||||||
| Revenues: |
||||||||||||||||||
| Beef processing services |
$ | 7,021,902 | $ | (7,021,902) | $ | — | $ | — | ||||||||||
| Commissions and other fees |
611,574 | — | — | 611,574 | ||||||||||||||
| Principal transactions |
603,822 | — | — | 603,822 | ||||||||||||||
| Investment banking |
1,193,973 | — | — | 1,193,973 | ||||||||||||||
| Interest income |
926,255 | (166) | — | 926,089 | ||||||||||||||
| Net realized securities gains |
29,542 | — | — | 29,542 | ||||||||||||||
| Other |
488,186 | (5,175) | — | 483,011 | ||||||||||||||
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| Total revenues |
10,875,254 | (7,027,243) | — | 3,848,011 | ||||||||||||||
| Interest expense of Jefferies Group LLC |
812,637 | — | — | 812,637 | ||||||||||||||
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| Net revenues |
10,062,617 | (7,027,243) | — | 3,035,374 | ||||||||||||||
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| Expenses: |
||||||||||||||||||
| Cost of sales |
6,850,807 | (6,513,768) | — | 337,039 | ||||||||||||||
| Compensation and benefits |
1,730,585 | (39,271) | — | 1,691,314 | ||||||||||||||
| Floor brokerage and clearing fees |
167,205 | — | — | 167,205 | ||||||||||||||
| Interest expense |
108,703 | (12,946) | — | 95,757 | ||||||||||||||
| Depreciation and amortization |
211,593 | (94,482) | — | 117,111 | ||||||||||||||
| Selling, general and other expenses |
831,892 | (37,754) | — | 794,138 | ||||||||||||||
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| Total expenses |
9,900,785 | (6,698,221) | — | 3,202,564 | ||||||||||||||
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|||||||||||
| Income (loss) before income taxes and income related to associated companies |
161,832 | (329,022) | — | (167,190) | ||||||||||||||
| Income related to associated companies |
154,598 | — | 90,276 | (g) | 244,874 | |||||||||||||
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|||||||||||
| Income before income taxes |
316,430 | (329,022) | 90,276 | 77,684 | ||||||||||||||
| Income tax provision |
122,109 | (95,904) | 33,222 | (h) | 59,427 | |||||||||||||
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| Net income |
194,321 | (233,118) | 57,054 | 18,257 | ||||||||||||||
| Net loss attributable to the noncontrolling interests |
1,426 | — | — | 1,426 | ||||||||||||||
| Net (income) loss attributable to the redeemable noncontrolling interests |
(65,746) | 68,811 | — | 3,065 | ||||||||||||||
| Preferred stock dividends |
(4,063) | — | — | (4,063) | ||||||||||||||
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| Net income attributable to Jefferies Financial Group Inc. common shareholders |
$ | 125,938 | $ | (164,307) | $ | 57,054 | $ | 18,685 | ||||||||||
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| Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders: |
||||||||||||||||||
| Net income |
$ | 0.34 | $ | 0.05 | ||||||||||||||
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|||||||||||||||
| Number of shares used in calculation |
371,211 | 371,211 | ||||||||||||||||
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|||||||||||||||
| Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders: |
||||||||||||||||||
| Net income |
$ | 0.34 | $ | 0.05 | ||||||||||||||
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|||||||||||||||
| Number of shares used in calculation |
371,518 | 371,518 | ||||||||||||||||
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|
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See accompanying notes to unaudited pro forma condensed consolidated financial statements.
JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2015
(In thousands, except per share amounts)
| Pro Forma Adjustments | ||||||||||||||||||
| Jefferies Historical |
National Beef Historical (b) |
National Beef Equity Pickup |
Pro Forma | |||||||||||||||
| Revenues: |
||||||||||||||||||
| Beef processing services |
$ | 7,396,869 | $ | (7,396,869) | $ | — | $ | — | ||||||||||
| Commissions and other fees |
659,002 | — | — | 659,002 | ||||||||||||||
| Principal transactions |
642,824 | — | — | 642,824 | ||||||||||||||
| Investment banking |
1,417,807 | — | — | 1,417,807 | ||||||||||||||
| Interest income |
955,240 | (20) | — | 955,220 | ||||||||||||||
| Net realized securities gains |
62,957 | — | — | 62,957 | ||||||||||||||
| Other |
549,228 | (5,530) | — | 543,698 | ||||||||||||||
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|
|||||||||||
| Total revenues |
11,683,927 | (7,402,419) | — | 4,281,508 | ||||||||||||||
| Interest expense of Jefferies Group LLC |
797,469 | — | — | 797,469 | ||||||||||||||
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|
|||||||||||
| Net revenues |
10,886,458 | (7,402,419) | — | 3,484,039 | ||||||||||||||
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|
|
|
|
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|
|||||||||||
| Expenses: |
||||||||||||||||||
| Cost of sales |
7,677,233 | (7,347,874) | — | 329,359 | ||||||||||||||
| Compensation and benefits |
1,665,465 | (34,781) | — | 1,630,684 | ||||||||||||||
| Floor brokerage and clearing fees |
199,780 | — | — | 199,780 | ||||||||||||||
| Interest expense |
115,804 | (16,633) | — | 99,171 | ||||||||||||||
| Depreciation and amortization |
224,133 | (89,317) | — | 134,816 | ||||||||||||||
| Selling, general and other expenses |
757,788 | (37,729) | — | 720,059 | ||||||||||||||
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|
|||||||||||
| Total expenses |
10,640,203 | (7,526,334) | — | 3,113,869 | ||||||||||||||
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|
|
|
|
|
|
|
|
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| Income (loss) from continuing operations before income taxes and income (loss) related to associated companies |
246,255 | 123,915 | — | 370,170 | ||||||||||||||
| Income (loss) related to associated companies |
110,281 | — | (48,994) | (g) | 61,287 | |||||||||||||
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|
|
|
|
|
|
|
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| Income (loss) from continuing operations before income taxes |
356,536 | 123,915 | (48,994) | 431,457 | ||||||||||||||
| Income tax provision (benefit) |
109,947 | 35,526 | (17,986) | (h) | 127,487 | |||||||||||||
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|
|
|
|
|
|
|
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| Income (loss) from continuing operations |
246,589 | 88,389 | (31,008) | 303,970 | ||||||||||||||
| Income from discontinued operations, including gain on disposal, net of taxes |
5,522 | — | — | 5,522 | ||||||||||||||
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|
|
|
|
|
|
|
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| Net income (loss) |
252,111 | 88,389 | (31,008) | 309,492 | ||||||||||||||
| Net loss attributable to the noncontrolling interests |
4,996 | — | — | 4,996 | ||||||||||||||
| Net loss attributable to the redeemable noncontrolling interests |
26,543 | (26,465) | — | 78 | ||||||||||||||
| Preferred stock dividends |
(4,063) | — | — | (4,063) | ||||||||||||||
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|
|
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| Net income (loss) attributable to Jefferies Financial Group Inc. common shareholders |
$ | 279,587 | $ | 61,924 | $ | (31,008) | $ | 310,503 | ||||||||||
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| (continued) |
||||||||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations, continued
For the year ended December 31, 2015
(In thousands, except per share amounts)
| Jefferies Historical |
Pro Forma | |||||||||||
| Basic earnings per common share attributable to Jefferies Financial Group Inc. common shareholders: |
||||||||||||
| Income from continuing operations |
$ | 0.73 | $ | 0.81 | ||||||||
| Income from discontinued operations, including gain on disposal |
0.01 | 0.01 | ||||||||||
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|
|
|
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| Net income |
$ | 0.74 | $ | 0.82 | ||||||||
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|
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| Number of shares used in calculation |
372,430 | 372,430 | ||||||||||
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| Diluted earnings per common share attributable to Jefferies Financial Group Inc. common shareholders: |
||||||||||||
| Income from continuing operations |
$ | 0.73 | $ | 0.81 | ||||||||
| Income from discontinued operations, including gain on disposal |
0.01 | 0.01 | ||||||||||
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|
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| Net income |
$ | 0.74 | $ | 0.82 | ||||||||
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|
|
|
|
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| Number of shares used in calculation |
372,431 | 372,431 | ||||||||||
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|
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See accompanying notes to unaudited pro forma condensed consolidated financial statements.
JEFFERIES FINANCIAL GROUP INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Note 1. Basis of Presentation
The Company’s Unaudited Pro Forma Condensed Consolidated Statement of Financial Condition is presented as if the sale of 48% of National Beef had occurred as of the most recently filed Consolidated Statement of Financial Condition (as of March 31, 2018). The Company’s Unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and the years ended December 31, 2017, 2016 and 2015 are presented as if the sale of 48% of National Beef had occurred immediately prior to the first day of the earliest period presented (prior to January 1, 2015).
The pro forma adjustments reflect the sale of 48% of National Beef and subsequent deconsolidation from the Company’s consolidated financial statements as well as pro forma adjustments for the Company’s retained 31% of National Beef that will be accounted for under the equity method. Retained earnings in the Unaudited Pro Forma Condensed Consolidated Statement of Financial Condition includes the after-tax gain on sale that would have been recorded if the transaction had occurred on March 31, 2018. The estimated gain (including related estimated transaction costs) is not included in the Unaudited Pro Forma Condensed Consolidated Statements of Operations as it represents a non-recurring item.
Note 2. Adjustments to Unaudited Pro Forma Condensed Consolidated Financial Statements
| (a) |
Represents the increase in cash and cash equivalents resulting from the consideration received ($908 million), net of estimated transaction costs ($24 million), less National Beef’s cash at March 31, 2018 ($13 million). |
| (b) |
Represents the deconsolidation of National Beef’s historical financial information. |
| (c) |
Represents the Company’s post-closing 31% interest in National Beef at fair value. |
| (d) |
Adjustment to record tax effect of pro forma gain at a combined federal and state statutory tax rate of 23%. |
| (e) |
Represents the cumulative increase in fair value of National Beef’s redeemable noncontrolling interests charged to Additional paid-in capital since the purchase of National Beef in December 2011. When a subsidiary with redeemable noncontrolling interest is deconsolidated, any previous fair value adjustments to the carrying amount of the noncontrolling interest are reset to zero prior to deconsolidation. |
| (f) |
To record the pro forma after-tax gain of $529 million that would have been recorded if the transaction had occurred on March 31, 2018. As such, this pro forma gain is based on the net book value of National Beef as of March 31, 2018 and does not reflect activity subsequent to that date. The Company estimates that it will recognize a pre-tax gain from the sale of about $860 - 880 million ($660 - 676 million after-tax) in the second quarter of 2018, subject to typical post-closing adjustments. |
| (g) |
To record income (loss) related to associated companies as follows (dollars in thousands): |
| Three Months Ended March 31, 2018 |
Year Ended December 31, 2017 |
Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
|||||||||||||
| National Beef’s stand-alone historical net income (loss) |
$ | 68,638 | $ | 405,073 | $ | 326,857 | $ | (125,713) | ||||||||
| Jefferies post-closing percentage ownership |
31% | 31% | 31% | 31% | ||||||||||||
| Income (loss) related to associated companies based on National Beef’s stand-alone historical net income (loss) |
$ | 21,396 | $ | 126,267 | $ | 101,886 | $ | (39,187) | ||||||||
| Pro forma adjustment to amortize basis difference |
(4,616) | (17,671) | (11,610) | (9,807) | ||||||||||||
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| Income (loss) related to associated companies |
$ | 16,780 | $ | 108,596 | $ | 90,276 | $ | (48,994) | ||||||||
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As part of the preliminary valuation analysis, the Company adjusted the historical basis of National Beef’s assets and liabilities to fair value. The preliminary basis difference between the estimated fair value and the underlying book value of National Beef’s customer relationships, tradenames, cattle supply contracts and property, plant and equipment is being amortized over
their respective estimated useful lives (weighted average life of 15 years). The valuation analysis is preliminary based on all information available to the Company at the present time and is subject to change, and such change could be material. The Company continues to review the underlying assumptions and valuation techniques utilized to calculate the fair values of the intangible assets and property, plant and equipment.
| (h) |
Adjustment to record the tax effect of the pro forma adjustments at a combined federal and state statutory tax rate of 23% for the three months ended March 31, 2018 and 37% for each of the years ended December 31, 2017, 2016 and 2015. |
| (i) |
For the pro forma three months ended March 31, 2018, 4,162,200 shares related to the mandatorily redeemable convertible preferred shares were not included in the computation of diluted per share amounts as the effect was antidilutive; these shares were included in the computation of diluted per share amounts in the Jefferies historical column as they were dilutive. |