EX-99.3 4 dex993.txt PRO FORMA CONDENSED FINANCIAL STATEMENTS EXHIBIT 99.3 INERGY, L.P. UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME The following Unaudited Pro Forma Condensed Combined Statements of Income of Inergy, L.P. ("Inergy") give effect to the December 19, 2001 acquisition by Inergy's operating company of Independent Propane Company Holdings ("IPC") and subsidiaries under the purchase method of accounting. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable. The Unaudited Pro forma Condensed Combined Statements of Income do no purport to represent what the results of operations of Inergy would have been if the purchase transaction had occurred on the dates indicated below, nor do they purport to project the results of operations of Inergy for any future period. The Unaudited Pro Forma Condensed Combined Statements of Income for the periods presented were prepared by combining Inergy's consolidated statement of income for fiscal year ended September 30, 2001, with IPC's consolidated statement of income for the fiscal year ended September 30, 2001, and Inergy's consolidated statement of income for the three months ended December 31, 2001, with IPC's consolidated statement of income for the three months ended December 31, 2001, to give effect to the acquisition as though it had occurred on October 1, 2000. In addition, the Unaudited Pro Forma Condensed Combined Statements of Income also give effect to Inergy's issuance of 18,252 common units to certain members of IPC management, who remain as employees of Inergy, L.P., for approximately $0.5 million in cash at the time of the acquisition. The Unaudited Pro Forma Condensed Combined Statements of Income do not give effect to any savings or other operating efficiencies that are expected to result from the integration of the operations of IPC with Inergy. The Unaudited Pro Forma Condensed Combined Statement of Income for the fiscal year ended September 30, 2001 is broken into two periods; from October 1, 2000 to July 31, 2001 and August 1, 2001 to September 30, 2001. The results of operations from October 1, 2000 to July 31, 2001 are attributable to Inergy's predecessor, Inergy Partners, LLC. The results of operations from August 1, 2001 to September 30, 2001 reflect Inergy's results of operations following the initial public offering. Therefore, IPC's results of operations for the fiscal year ended September 30, 2001, and pro forma adjustments are presented in this same manner. The historical consolidated statement of income of Inergy for the fiscal year ended September 30, 2001, is derived from audited consolidated financial statements included in the Form 10-K filed by Inergy on December 28, 2001, with the SEC. The historical consolidated statement of income of Inergy for the three months ended December 31, 2001, is derived from the unaudited consolidated financial statements included in the Form 10-Q filed by Inergy on February 14, 2002, with the SEC. The historical consolidated statement of income of IPC for the fiscal year ended September 30, 2001, is derived from information included in the audited consolidated financial statements contained in this Current Report and from its accounting records. The historical consolidated statement of income of IPC for the period from October 1, 2001 to December 19, 2001 (immediately prior to the acquisition) is derived from IPC's accounting records. The results of operations from December 20, 2001 through December 31, 2001 are included in the Inergy's financial statements for the three months ended December 31, 2001. You should read the Unaudited Pro Forma Condensed Combined Statements of Income along with Inergy's consolidated financial statements and accompanying notes included in its prior SEC filings and with IPC's consolidated financial statements and accompanying notes included in this Current Report. 1 EXHIBIT 99.3 INERGY, L.P. AND SUBSIDIARY (SUCCESSOR TO INERGY PARTNERS, LLC AND SUBSIDIARIES) UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FISCAL YEAR ENDED SEPTEMBER 30, 2001 (IN THOUSANDS EXCEPT PER UNIT DATA)
Independent Propane Company Pro Forma Pro Forma Inergy, L.P. Holdings Adjustments Adjusted ------------- --------------- --------------- ------------- Revenue: Propane $212,441 $67,358 $279,799 Other 10,698 9,062 19,760 ----------------------------------- ----------------- 223,139 76,420 299,559 Cost of product sold 182,582 37,761 220,343 ----------------------------------- ----------------- Gross profit 40,557 38,659 79,216 Expenses: Operating and administrative 23,501 22,322 45,823 Depreciation and amortization 6,532 7,019 $(2,334) (a) 11,217 ------------------------------------------------------ ----------------- Operating income 10,524 9,318 2,334 22,176 Other income (expense): Interest expense (6,670) (6,297) 145 (b) (12,822) Gain (loss) on sale of property, plant and 37 - 37 equipment Finance charges 290 - 290 Other 168 - 168 ------------------------------------------------------ ----------------- Income before income taxes 4,349 3,021 2,479 9,849 Provision for income taxes - - - ------------------------------------------------------ ----------------- Net income $ 4,349 $ 3,021 $ 2,479 $ 9,849 ====================================================== ================= Net income for the period from October 1, 2000 through July 31, 2001 attributable to Inergy, L.P.'s predecessor $ 6,664 $ 4,735 $ 2,066 $ 13,465 ====================================================== ================= Net loss for the period from August 1, 2001 through September 30, 2001 attributable to Inergy, L.P. following initial public offering $ (2,315) $(1,714) $ 413 $ (3,616) ====================================================== =================
2 EXHIBIT 99.3 INERGY, L.P. AND SUBSIDIARY (SUCCESSOR TO INERGY PARTNERS, LLC AND SUBSIDIARIES) UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME FISCAL YEAR ENDED SEPTEMBER 30, 2001 (IN THOUSANDS EXCEPT PER UNIT DATA) (CONTINUED) Partners' interest information for the period from August 1, 2001 through September 30, 2001: Non-managing general partners' interest in net loss $ (46) $ (72) ======== ========= Limited partners' interest in net loss: Common unit interest: Allocation of net loss $ (729) $ (1,427) Less beneficial conversion value allocated to senior subordinated units (8,600) (8,600) -------- --------- Net common unit interest (9,329) (10,027) Senior subordinated interest: Allocation of net loss (1,313) (1,805) Plus beneficial conversion value allocated to senior subordinated units 8,600 8,600 -------- --------- Net senior subordinated unit interest 7,287 6,795 Junior subordinated unit interest (227) (312) -------- --------- Total limited partners' interest in net loss $(2,269) $ (3,544) ======== ========= Net loss per limited partner unit - basic and diluted $(0.40) $(0.54) ======== ========= Weighted average limited partners' units outstanding - basic and diluted 5,726 778 (c) 6,504 ======== =========
See accompanying Notes to Unaudited Pro Forma Condensed Combined Statements of Income. 3 EXHIBIT 99.3 INERGY, L.P. AND SUBSIDIARY (SUCCESSOR TO INERGY PARTNERS, LLC AND SUBSIDIARIES) UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME THREE MONTHS ENDED DECEMBER 31, 2001 (IN THOUSANDS EXCEPT PER UNIT DATA)
Independent Propane Company Pro Forma Pro Forma Inergy, L.P. Holdings (d) Adjustments Adjusted ------------- --------------- -------------- ------------- Revenue: Propane $58,989 $11,562 $70,551 Other 3,046 1,974 5,020 -------------------------------- ----------------- 62,035 13,536 75,571 Cost of product sold 46,200 5,404 51,604 -------------------------------- ----------------- Gross profit 15,835 8,132 23,967 Expenses: Operating and administrative 8,292 4,455 12,747 Depreciation and amortization 1,774 1,649 $(622)(e) 2,801 -------------------------------------------------- ----------------- Operating income 5,769 2,028 622 8,419 Other income (expense): Interest expense (1,238) (842) 37 (f) (2,043) Gain (loss) on sale of property, plant and (90) - (90) equipment Finance charges - - - Other 56 3 59 -------------------------------------------------- ----------------- Income before income taxes 4,497 1,189 659 6,345 Provision for income taxes 32 - 32 -------------------------------------------------- ----------------- Net income $ 4,465 $ 1,189 $ 659 $ 6,313 ================================================== =================
4 EXHIBIT 99.3 INERGY, L.P. AND SUBSIDIARY (SUCCESSOR TO INERGY PARTNERS, LLC AND SUBSIDIARIES) UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME THREE MONTHS ENDED DECEMBER 31, 2001 (IN THOUSANDS EXCEPT PER UNIT DATA) (Continued)
Partners' interest information for the three month period ended December 31, 2001: Non-managing general partners' interest in net income $ 89 $ 126 ====== ====== Limited partners' interest in net income: Common unit interest $1,458 $2,490 Senior subordinated interest 2,488 3,152 Junior subordinated unit interest 430 545 ------ ------ Total limited partners' interest in net income $4,376 $6,187 ====== ====== Net income per limited partner unit: Basic $ 0.75 $ 0.95 ====== ====== Diluted $ 0.74 $ 0.94 ====== ====== Weighted average limited partners' units outstanding: Basic 5,827 676(g) 6,503 ====== ====== Diluted 5,898 685(h) 6,583 ====== ======
See accompanying Notes to Unaudited Pro Forma Condensed Combined Statements of Income. 5 EXHIBIT 99.3 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (IN THOUSANDS) Fiscal Year Ended September 30, 2001: (a) Eliminate historical depreciation and amortization expense of Independent Propane Company $(7,019) Holdings Depreciation and amortization reflecting allocation of purchase price: Depreciation expense on allocated property, plant and equipment 2,791 Amortization expense on customer accounts and non-compete agreement intangibles 1,894 ------- $(2,334) ======= (b) Eliminate interest expense on Independent Propane Company Holdings debt $(6,297) Add interest expense on Bank Credit Agreement borrowings and assumed debt 5,543 Add amortization of debt issuance cost 609 ------- $ (145) ======= (c) To reflect issuance of 394,601 Inergy, L.P. common units issued to IPCH Acquisition Corp. in conjunction with the acquisition 395 To reflect issuance of 365,019 Inergy, L.P. common units issued to former Independent Propane Company Holdings shareholders 365 To reflect issuance of 18,252 Inergy, L.P. common units issued to certain members of Independent Propane Company Holdings management who continue as employees of Inergy, L.P 18 ------- 778 =======
6 EXHIBIT 99.3 NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (IN THOUSANDS) (Continued) Three Months Ended December 31, 2001: (d) Include the historical consolidated statement of income of Independent Propane Company Holdings for the period from October 1, 2001 to December 19, 2001 (immediately prior to the acquisition). The results of operations from December 20, 2001 through December 31, 2001 are included in the Inergy's financial statements for the three months ended December 31, 2001. (e) Eliminate historical depreciation and amortization expense of Independent Propane Company $(1,649) Holdings Depreciation and amortization reflecting allocation of purchase price: Depreciation expense on allocated property, plant and equipment 612 Amortization expense on customer accounts and non-compete agreement intangibles 415 ------- $ (622) ======= (f) Eliminate interest expense on Independent Propane Company Holdings debt $ (842) Add interest expense on Bank Credit Agreement borrowings and assumed debt 672 Add amortization of debt issuance cost 133 ------- $ (37) ======= (g) To reflect issuance of 394,601 Inergy, L.P. common units issued to IPCH Acquisition Corp. in conjunction with the acquisition, weighted for the period from October 1, 2001 through December 19, 2001 prior to the acquisition 343 To reflect issuance of 365,019 Inergy, L.P. common units issued to former Independent Propane Company Holdings shareholders, weighted for the period from October 1, 2001 through December 19, 2001 prior to the acquisition 317 To reflect issuance of 18,252 Inergy, L.P. common units issued to certain members of Independent Propane Company Holdings management who continue as employees of Inergy, L.P, weighted for the period from October 1, 2001 through December 19, 2001 prior to the acquisition 16 ------- 676 ======= (h) Units reflected as issued per basic calculation in (g) 676 To reflect the additional diluted units resulting from the issuance of options to certain members of Independent Propane Company Holdings management, weighted for the period from October 1, 2001 through December 19, 2001 prior to the acquisition 9 ------- 685 =======
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