Taylor Morrison Condensed Historical |
William Lyon Homes Condensed Historical |
Pro Forma Merger Adjustments |
Pro Forma Combined |
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Assets |
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Cash and cash equivalents |
$ | |
$ | |
$ | ( |
) (a) |
$ | |
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Restricted cash |
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Total cash, cash equivalents, and restricted cash |
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( |
) | |
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Owned inventory |
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( |
) (b) |
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Real estate not owned |
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Total real estate inventory |
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( |
) | |
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Land deposits |
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(c) |
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Mortgage loans held for sale |
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( |
) (d) |
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Investments in unconsolidated entities |
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Deferred tax assets, net |
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(e) |
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Operating lease right of use assets |
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Property and equipment and other assets, net |
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( |
) (f) |
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Goodwill |
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(g) |
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Total assets |
$ | |
$ | |
$ | ( |
) | $ | |
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Liabilities |
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Accounts payable |
$ | |
$ | |
$ | |
$ | |
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Accrued expenses and other liabilities |
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( |
) (h) |
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Operating lease liabilities |
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(i) |
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Income taxes payable |
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(j) |
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Customer deposits |
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Estimated development liability |
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Total debt, net |
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(k) |
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Liabilities attributable to real estate not owned |
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Total liabilities |
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Total stockholders’ equity |
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( |
) (l) |
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Total liabilities and stockholders’ equity |
$ | |
$ | |
$ | ( |
) | $ | |
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(a) Adjustments to Cash and Cash Equivalents |
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In accordance with the Merger Agreement, Taylor Morrison will pay holders of William Lyon Homes common stock aggregate Merger Consideration consisting of an estimated total of $ shares of Taylor Morrison common stock based on a conversion ratio as described in footnote 3 - Preliminary Purchase Price and (ii) $ in cash per share of William Lyon common stock. Refer to footnote 3 - Preliminary Purchase Price for a reconciliation of all consideration transferred |
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William Lyon Homes basic shares of common stock outstanding as of September 30, 2019 |
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|||
Purchase price per share of common stock outstanding |
$ | |
||
Portion of purchase price assumed to paid in cash |
$ | |
||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified William Lyon Homes escrow proceeds receivable from Property and equipment and other assets, net to cash and cash equivalents |
|
|||
Total Adjustment to Cash and cash equivalents |
$ | ( |
) | |
(b) Adjustments to Owned Inventory |
||||
To reflect Taylor Morrison management’s preliminary estimate of fair value adjustments of inventories owned by William Lyon Homes (excluding homes in backlog) in accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures |
$ | ( |
) | |
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the land deposit balance of William Lyon Homes from Owned Inventory to Land Deposits. See Footnote C below |
( |
) | ||
Total Adjustment to Owned Inventory |
$ | ( |
) | |
(c) Adjustments to Land Deposits |
||||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the land deposit balance of William Lyon Homes from Owned Inventory to Land Deposits |
$ | |
||
(d) Adjustments to Mortgage loans held for sale |
||||
To reflect the elimination of goodwill associated with William Lyon Homes’ financial services segment recorded by William Lyon Homes within mortgage loans held for sale to conform with Taylor Morrison’s financial statement presentation |
$ | |
||
(e) Adjustments to Deferred Income Taxes, net |
||||
To reflect the valuation impact of the portion of the purchase price allocated to the assets and liabilities that is non-deductible for income tax purposes |
$ | |
||
(f) Adjustments to Property and equipment and other assets, net |
||||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified William Lyon Homes escrow proceeds receivable from Property and equipment and other assets, net to cash and cash equivalents |
$ | ( |
) | |
(g) Adjustments to Goodwill |
||||
To eliminate goodwill from William Lyon Homes’ balance sheet as of September 30, 2019 |
$ | ( |
) | |
To reflect the excess of the purchase price over the fair value of the William Lyon Homes net assets acquired. Refer to footnote 3 - Preliminary Purchase Price for a reconciliation of preliminary fair value of the William Lyon Homes assets acquired |
|
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Net adjustment to goodwill |
$ | |
||
(h) Adjustments to Accrued Expenses and Other Liabilities |
|
|||
Reflects Taylor Morrison estimated non-recurring expenses resulting directly from the Merger |
$ | |
||
Reflects William Lyon Homes estimated non-recurring expenses resulting directly from the Merger |
|
|||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified lease obligations from William Lyon Homes’ Accrued expenses and other liabilities to Operating lease liabilities |
( |
) | ||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified warehouse facilities relating to William Lyon Homes’ financial services segment from William Lyon Homes’ Accrued expenses and other liabilities to Total debt, net |
( |
) | ||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the amount relating to William Lyon Homes’ income taxes payable from Accrued expenses and other liabilities to Income taxes payable |
( |
) | ||
Net adjustment to Accrued Expenses and Other Liabilities |
$ | ( |
) | |
(i) Adjustments to Operating lease liabilities |
|
|||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified lease obligations from William Lyon Homes’ Accrued expenses and other liabilities to Operating lease liabilities |
$ | |
||
(j) Adjustments to Income taxes payable |
|
|||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the amount relating to William Lyon Homes’ income taxes payable to Income taxes payable |
$ | |
||
(k) Adjustments to Total Debt , Net |
|
|||
To reflect the increase in estimated fair value of William Lyon Homes senior notes using quoted or estimated market prices |
$ | |
||
To reflect the reclassification of William Lyon’s warehouse facilities relating to their financial services segment to Total debt, net, in order to conform with Taylor Morrison’s financial statement presentation |
|
|||
To reflect borrowings on Taylor Morrison’s revolving credit facility to repay William Lyon Homes’ revolving credit facility at the Effective Time |
|
|||
To reflect the repayment of William Lyon Homes’ revolving credit facility |
( |
) | ||
Net adjustment to Accrued Expenses and Other Liabilities |
$ | |
||
( l ) Adjustments to Total Stockholders’ Equity |
|
|||
To reflect Taylor Morrison’s estimate of non-capitalizable expenses for the Merger. See Footnote h |
$ | ( |
) | |
To reflect the portion of the purchase price assumed to be paid in Taylor Morrison common stock. (1) |
|
|||
To reflect elimination of William Lyon Homes total stockholder’s equity, excluding noncontrolling interest, as of September 30, 2019 |
( |
) | ||
Net adjustment to total stockholders’ equity |
$ | ( |
) | |
(1) | Pursuant to the Merger Agreement, a portion of consideration transferred will be an exchange of Taylor Morrison common stock for William Lyon Homes common stock. The value of the exchange is based on the number of shares of Taylor Morrison common stock issued at a conversion ratio of |
Taylor Morrison Condensed Historical |
William Lyon Homes Condensed Historical |
Pro Forma Merger Adjustments |
Pro Forma Combined |
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Home and land closings revenue, net |
$ | |
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(m) |
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Financial services revenue |
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Amenity and other revenue |
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(m) |
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Total revenues |
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(m) |
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Cost of home and land closings |
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(m) |
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Financial services expenses |
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Amenity and other expenses |
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(m) |
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Total cost of revenues |
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(m) |
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Gross margin |
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(m) |
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Sales, general and administrative expenses |
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Equity in income of unconsolidated entities |
( |
) | ( |
) | |
( |
) | |||||||||
Interest income and other expenses, net |
( |
) | ( |
) | |
(n) |
( |
) | ||||||||
Transaction expenses |
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Loss on extinguishment of debt |
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Income before income taxes |
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Income tax provision |
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(o) |
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Net income before allocation to non-controlling interests |
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Net income attributable to non-controlling interests |
( |
) | ( |
) | |
( |
) | |||||||||
Net income available to Taylor Morrison Home Corporation/William Lyon Homes |
$ | |
$ | |
$ | |
$ | |
||||||||
Earnings per common share |
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Basic |
$ | |
$ | |
$ | |
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Diluted |
$ | |
$ | |
$ | |
(q) | |||||||||
Weighted average number of shares of common stock: |
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Basic |
|
|
( |
) (r) |
|
|||||||||||
Diluted |
|
|
( |
) (r) |
|
Taylor Morrison Condensed Historical |
AV Homes Condensed Historical |
Pro Forma Merger Adjustments (s) |
Taylor Morrison / AV Homes Pro Forma Combined |
William Lyon Homes Condensed Historical |
Pro Forma Merger Adjustments |
Pro Forma Combined |
||||||||||||||||||||||
Home and land closings revenue, net |
$ | |
$ | |
|
$ | |
|
|
(m) |
|
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Financial services revenue |
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Amenity and other revenue |
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(m) |
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Total revenues |
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(m) |
|
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Cost of home and land closings |
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(m) |
|
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Financial services expenses |
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Amenity and other expenses |
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(m) |
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Total cost of revenues |
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(m) |
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Gross margin |
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( |
) | |
|
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(m) |
|
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Sales, general and administrative expenses |
|
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Equity in income of unconsolidated entities |
( |
) | |
|
( |
) | ( |
) | |
( |
) | |||||||||||||||||
Interest income and other expenses, net |
|
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( |
) | |
( |
) | |
(n) |
|
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Transaction expenses |
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Loss on extinguishment of debt |
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( |
) | |
( |
) | |||||||||||||||||||
Income before income taxes |
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|||||||||||||||||||||
Income tax provision |
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(o) |
|
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Net income before allocation to non-controlling interests |
|
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|
|||||||||||||||||||||
Net income attributable to non-controlling interests |
( |
) | |
|
( |
) | ( |
) | ( |
) (p) |
( |
) | ||||||||||||||||
Net income available to Taylor Morrison Home Corporation/William Lyon Homes |
$ | |
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | |
||||||||||||||
Earnings per common share |
||||||||||||||||||||||||||||
Basic |
$ | |
$ | |
|
$ | |
$ | |
$ | |
|||||||||||||||||
Diluted |
$ | |
$ | |
|
$ | |
$ | |
$ | |
(q) | ||||||||||||||||
Weighted average number of shares of common stock: |
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Basic |
|
|
( |
) | |
|
( |
) (r) |
|
|||||||||||||||||||
Diluted |
|
|
( |
) | |
|
( |
) (r) |
|
For the nine months ended September 30, 2019 |
For the twelve months ended December 31, 2018 |
|||||||
(m) Adjustments within Total Revenues and Total Cost of Revenues |
||||||||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the portion of William Lyon land closings revenue from Interest income and other expenses, net to home and land closings revenue, net |
$ | |
$ | |
||||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the portion of apartment and commercial revenue from interest income and other expenses, net to amenity and other revenue |
$ | |
$ | |
||||
Adjustment to Total Revenues |
$ | |
$ | |
||||
Adjustment to cost of home and land closings to reflect the amortization of the capitalized William Lyon Homes senior notes fair value premium resulting from purchase accounting |
$ | ( |
) | $ | ( |
) | ||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the portion of costs of land closings from interest income and other expenses, net to cost of home and land closings |
$ | |
$ | |
||||
Adjustment to cost of home and land closings |
|
|
|
|
|
|
|
|
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the portion of costs of apartment and commercial sales from interest income and other expenses, net to amenity and other expenses |
$ | |
$ | |
||||
Adjustment to Total cost of revenues |
$ | |
$ | |
||||
Adjustment to Gross Margin |
$ | |
$ | |
||||
(n)Adjustments to Interest Income and Other Expenses, Net |
||||||||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the portion of land closings revenue from Interest income and other expenses, net to Home and land closings revenue, net |
$ | |
$ | |
||||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the portion of apartment and commercial revenue from interest income and other expenses, net to amenity and other revenue |
$ | |
$ | |
||||
Adjustment to Total Revenues |
$ | |
$ | |
||||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the portion of costs of land closings from Interest income and other expenses, net to Cost of home and land closings |
$ | ( |
) | $ | ( |
) | ||
To reflect a reclassification in order to conform with Taylor Morrison’s financial statement presentation, Taylor Morrison reclassified the portion of costs of apartment and commercial sales from interest income and other expenses, net to amenity and other expenses |
$ | ( |
) | $ | ( |
) | ||
Adjustment to Total cost of revenues |
$ | ( |
) | $ | ( |
) | ||
Adjustment to interest income and other expenses, net to reflect the reclassification to gross margin |
$ | |
$ | |
||||
For the nine months ended September 30, 2019 |
For the twelve months ended December 31, 2018 |
|||||||
(o) Adjustments to Income Tax Provision |
||||||||
To reflect the impact to the income tax provision for the pro forma adjustments at the estimated combined pro forma effective tax rate of |
$ | |
$ | |
||||
(p)Adjustments to Net Income Attributable to Non-Controlling Interests |
||||||||
For the year ended December 31, 2018, a portion of net income attributable to non-controlling interests is based on the Former Principal Equityholders’ weighted average ownership percentage of Taylor Morrison. The adjustment presented reflects the pro forma net income associated with the Former Principal Equityholders’ ownership and subsequently the adjusted net income available to the pro forma combined Taylor Morrison and William Lyon Homes company.(1) |
$ | |
$ | |
(1) | Former principal equityholders of Taylor Morrison consisted of affiliates of TPG Global, LLC (“TPG”), investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”), and current and former members of Taylor Morrison’s management. As of January 17, 2018, TPG and Oaktree no longer had an investment in Taylor Morrison and therefore there is no pro-forma adjustment for the nine months ended September 30, 2019. |
|
For the nine months ended September 30, 2019 |
For the twelve months ended December 31, 2018 |
||||||
(q) Diluted Earnings Per Share Reconciliation |
|
|
||||||
Numerator: |
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|
||||||
Net income Available to Taylor Morrison Home Corporation/William Lyon Homes |
$ | |
$ | |
||||
Net income attributable to non-controlling interests -Former Principal Equityholders |
$ | |
$ | |
||||
Loss fully attributable to public holding company - Taylor Morrison Home Corporation |
$ | |
$ | |
||||
Net Income—diluted |
$ | |
$ | |
||||
Denominator: |
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|
||||||
Weighted average shares—diluted |
|
|
||||||
Calculated earnings per share—diluted |
$ | |
$ | |
||||
(r) Adjustments to Weighted Average Shares |
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|
||||||
To reflect the pro forma shares outstanding after issuance of Taylor Morrison common stock related to the acquisition and cancellation of William Lyon Homes’ common stock : |
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|
||||||
Issuance of Taylor Morrison common stock |
|
|
||||||
Cancellation of William Lyon Homes common stock |
( |
) | ( |
) | ||||
Basic Weighted Average Number of Shares |
( |
) | ( |
) | ||||
Issuance of Taylor Morrison common stock |
|
|
||||||
Issuance of Taylor Morrison Warrants |
|
|
||||||
Cancellation of William Lyon Homes common stock and warrants |
( |
) | ( |
) | ||||
Diluted Weighted Average Number of Shares |
( |
) | ( |
) | ||||
(s) Adjustments to AV Homes Condensed Historical Statement of Operations for the year ended December 31, 2018 |
|
|
||||||
On October 2, 2018 Taylor Morrison completed the acquisition of AV Homes. In accordance with Article 11 of Regulation S-X, Taylor Morrison included the historical results for AV Homes for the period presented and made the following adjustments: |
|
|
||||||
To reflect the capitalization of AV Homes’ interest expense incurred relating to homebuilding operations and subsequent amortization of such expense. All interest expense incurred by AV Homes will be capitalizable as a result of sufficient qualifying assets following the merger. |
|
|
||||||
Adjustment to cost of home closings to reflect the capitalization of interest expense for the periods presented. |
$ | ( |
) | |||||
Adjustment to amortization to reflect the amortization of interest expense for the periods presented. |
|
|||||||
Basic Weighted Average Number of Shares. |
|
|||||||
Cancellation of AV Homes Common Stock. |
( |
) | ||||||
Diluted Weighted Average Number of Shares. |
|
|||||||
Cancellation of AV Homes Common Stock. |
( |
) |
( Dollars in thousands ) |
Unconverted William Lyon Homes Share Counts |
Conversion Ratio |
Converted William Lyon Homes Shares to Taylor Morrison Shares |
|||||||||
Basic shares of common stock outstanding as of September 30, 2019 |
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|
|||||||||
Dilutive securities outstanding as of September 30, 2019 |
|
|
|
|||||||||
Total diluted shares of common stock outstanding as of September 30, 2019 |
|
|
||||||||||
William Lyon Homes basic shares of common stock outstanding as of September 30, 2019 |
|
|||||||||||
$ |
$ |
|
||||||||||
Consideration attributable to cash |
$ |
|
||||||||||
Total William Lyon Homes diluted shares of common stock converted to Taylor Morrison shares of common stock outstanding as of September 30, 2019 |
|
|||||||||||
Per share price of consideration |
$ |
|
||||||||||
Consideration attributable to Taylor Morrison common stock (1) |
$ |
|
||||||||||
Total purchase price |
$ |
|
||||||||||
(1) |
A |
(Dollars in thousands) |
||||
Total purchase price |
$ | |
||
William Lyon Homes assets acquired: |
||||
Cash and cash equivalents |
$ | |
||
Owned inventory |
|
|||
Real estate not owned |
|
|||
Land Deposits |
|
|||
Property and equipment and other assets, net |
|
|||
Deferred tax assets, net |
|
|||
Operating lease right of use assets |
|
|||
Goodwill |
|
|||
Total William Lyon Homes assets acquired |
$ | |
||
William Lyon Homes liabilities assumed: |
||||
Accounts payable |
$ | |
||
Accrued expenses and other liabilities |
|
|||
Operating lease liabilities |
|
|||
Income taxes payable |
|
|||
Total debt, net |
|
|||
Liabilities attributable to real estate not owned |
|
|||
Total William Lyon Homes liabilities assumed |
$ | |
||
Minority interest in consolidated entities |
|
|||
William Lyon Homes net assets acquired |
$ | |
||