EX-99.1 2 wms-ex991_62.htm EX-99.1 wms-ex991_62.htm

Exhibit 99.1

 

 

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

On July 31, 2019, the Company, Merger Sub, Infiltrator and 2461461 Ontario Limited, entered into the Merger Agreement, pursuant to which Merger Sub merged with and into Infiltrator, with Infiltrator continuing as the surviving corporation and a wholly-owned subsidiary of the Company (the “Acquisition”). The closing of the Acquisition took place simultaneously upon the execution of the Merger Agreement. The Company paid an aggregate purchase price of approximately $1,128,489 thousand in cash including cash acquired of $48,489 thousand in connection with the Acquisition (the “Merger Consideration”), subject to certain post-closing purchase price adjustments as described in the Merger Agreement.

On the Acquisition Closing Date, the Company entered into the Credit Agreement by and among the Company, as borrower, Barclays Bank PLC, as administrative agent, the several lenders from time to time party thereto, Barclays Bank PLC and Morgan Stanley Senior Funding, Inc., as joint lead arrangers, joint bookrunners, syndication agents and documentation agents. The Credit Agreement provides for a Term Loan Facility in an initial aggregate principal amount of up to $1.3 billion, a Revolving Credit Facility in an initial aggregate principal amount of up to $350 million, a letter of credit sub-facility in the initial aggregate available amount of up to $50 million, as a sublimit of such Revolving Credit Facility and a swing line sub-facility in the aggregate available amount of up to $50 million, as a sublimit of the Revolving Credit Facility. On the Acquisition Closing Date, the Company borrowed under the Credit Agreement which was used to (i) finance the Merger Consideration paid in connection with the closing of the Acquisition, (ii) repay the total outstanding amount as of the Acquisition Closing Date under the Company’s PNC Credit Agreement, (iii) repay outstanding amounts of existing indebtedness incurred by Infiltrator under its outstanding credit facility in effect prior to the Acquisition, and (iv) pay certain transaction fees and expenses associated with the Acquisition and the Credit Agreement.

On September 10, 2019, the Company offered 10,350,000 shares of common stock, including 1,350,000 shares of common stock pursuant to the underwriters’ option to purchase additional shares that the underwriters exercised at purchase price of $29.75 per share, resulting in aggregate offering proceeds of $308 million, the net proceeds of which the Company intends to use to repay a portion of the outstanding indebtedness under the Senior Secured Credit Facility and for general corporate purposes.

The following unaudited pro forma combined financial information assumes the Company is issuing $350 million aggregate principal amount of Senior Notes due 2027. The Company intends to use the aggregate principal amount to repay a portion of the outstanding indebtedness under the Senior Secured Credit Facility.

The following unaudited pro forma combined financial information of the Company, including the explanatory notes (collectively, the “pro forma financial information”) are presented to illustrate the effects of the (i) Acquisition, (ii) the Company’s borrowings under the Senior Secured Credit Facility, (iii) the issuance of shares of common stock in the Common Stock Offering and use of proceeds received, and (iv) the issuance of notes in this offering and use of proceeds received therefrom (collectively, the “Transactions”).

The pro forma financial information was based on, and should be read in conjunction with, the following historical consolidated financial information and accompanying notes included elsewhere in this offering memorandum:

 

•

Audited historical consolidated financial statements of the Company, and the related notes for the fiscal year ended March 31, 2019;

 

•

Audited historical consolidated financial statements of Infiltrator, and the related notes for the fiscal year ended December 28, 2018;

 

•

Unaudited historical condensed consolidated financial statements of the Company, and the related notes for the fiscal quarter ended June 30, 2019; and

 

 

•

Unaudited historical condensed consolidated financial statements of Infiltrator, and the related notes for the six-months ended July 5, 2019.

The unaudited pro forma combined statements of operations for the year ended March 31, 2019, for the three months ended June 30, 2019 and for the twelve months ended June 30, 2019 assume the Transactions occurred on April 1, 2018, the beginning of the Company’s fiscal year ended March 31, 2019. The unaudited pro forma combined balance sheet as of June 30, 2019 assumes the Transactions occurred on June 30, 2019.

The historical combined financial information has been adjusted in the pro forma financial information to give effect to pro forma events that are: (i) directly attributable to the Transactions, (ii) factually supportable, and (iii) with respect to the statements of operations, are expected to have a continuing effect on the combined operating results. In the opinion of management, all adjustments

 

 

 

necessary to present fairly the pro forma financial information have been reflected. The assumptions underlying the pro forma adjustments are described fully in the accompanying notes, which should be read in conjunction with the pro forma financial information. The accompanying unaudited pro forma combined statement of income does not include any pro forma adjustments to reflect one-time transaction related costs and any non-recurring activity such as debt issuance costs incurred in conjunction with the Senior Secured Credit Facility, the Common Stock Offering and this offering.

The unaudited combined pro forma financial information are unaudited and are not necessarily indicative of the combined financial position or results of operations that would have been realized had the Transactions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations that the Company will experience after the Transactions. In addition, the accompanying unaudited pro forma combined statements of operations do not include any expected cost savings, operating synergies, or revenue enhancements that may be realized subsequent to the Transactions, or the impact of any non-recurring activity and transaction-related or integration-related costs.

The unaudited combined pro forma financial information, except for the financing adjustments, was prepared in advance of closing of the Acquisition; the final amounts recorded upon, or after, the closing of the Acquisition may differ materially from the information presented. The unaudited combined pro forma financial information has been prepared using the acquisition method of accounting under U.S. generally accepted accounting principles, which are subject to change and interpretation. The acquisition accounting is dependent upon certain valuations and other studies that have yet to be completed. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited combined pro forma financial information. Differences between these preliminary estimates and the final acquisition accounting may occur and these differences could have a material impact on the accompanying unaudited combined pro forma financial information and the Company’s future results of operations and financial position.

 

- 2 -

 

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

AS OF JUNE 30, 2019

(In thousands)

 

 

Historical
ADS

 

IWT as
adjusted
for ADS

 

Acquisition
Adjustments

 

Reference

 

Financing
Adjustments

 

Reference

 

Pro
Forma

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash

$9,357

$48,489

$(1,140,989)

4a

$1,098,092

5a

$14,949

Receivables (less allowance for doubtful accounts)

    231,829

    28,860

(8,059)

4b

    —

 

    252,630

Inventories

    230,284

    37,619

    —

 

    —

 

    267,903

Other current assets

    9,185

    2,196

    —

 

    —

 

    11,381

 

 

 

 

 

 

 

 

Total current assets

    480,655

    117,164

(1,149,048)

 

    1,098,092

 

    546,863

Property, plant and equipment, net

    396,280

    82,424

    —

 

    —

 

    478,704

Other assets:

 

 

 

 

 

 

 

Goodwill

    102,844

    205,859

    372,850

4c

    —

 

    681,553

Intangible assets, net

    35,733

    248,311

    226,689

4d

    —

 

    510,733

Other assets

    52,903

    14,410

    —

 

    —

 

    67,313

 

 

 

 

 

 

 

 

Total assets

$1,068,415

$668,168

$(549,509)

 

$1,098,092

 

$2,285,166

 

 

 

 

 

 

 

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current maturities of debt obligations

$25,939

$2,450

$(2,450)

4e

$(12,000)

5b

$13,939

Current maturities of finance lease obligations

    22,695

    —

    —

 

    —

 

    22,695

Accounts payable

    106,413

    12,556

(8,059)

4b

    —

 

    110,910

Other accrued liabilities

    76,267

    11,608

(419)

4e

    —

 

    87,456

Accrued income taxes

    12,669

    2,750

    —

 

    —

 

    15,419

 

 

 

 

 

 

 

 

Total current liabilities

    243,983

    29,364

(10,928)

 

(12,000)

 

    250,419

Long-term debt obligation (less unamortized debt issuance costs)

    230,337

    326,390

(326,390)

4e

    834,501

5b

    1,064,838

Long-term finance lease obligations

    56,368

    —

    —

 

    —

 

    56,368

Deferred tax liabilities

    48,745

    65,207

    44,639

4f

    —

 

    158,591

Other liabilities

    28,641

    2,877

    —

 

    —

 

    31,518

 

 

 

 

 

 

 

 

Total liabilities

    608,074

    423,838

(292,679)

 

    822,501

 

    1,561,734

Commitments and contingencies

 

 

 

 

 

 

 

Mezzanine equity:

 

 

 

 

 

 

 

Redeemable convertible preferred stock

    279,816

    —

    —

 

    —

 

    279,816

Deferred compensation—unearned ESOP shares

(31,659)

    —

    —

 

    —

 

(31,659)

 

 

 

 

 

 

 

 

Total mezzanine equity

    248,157

    —

    —

 

    —

 

    248,157

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock

    11,439

    186

(186)

 

    104

5c

    11,543

Paid-in capital

    501,046

    189,289

(189,289)

 

    293,192

5c

    794,238

Common stock in treasury, at cost

(10,162)

    —

    —

 

    —

 

(10,162)

Accumulated other comprehensive loss

(24,470)

    —

    —

 

    —

 

(24,470)

Retained (deficit) earnings

(278,727)

    54,855

(67,355)

 

(17,705)

5b

(308,932)

 

 

 

 

 

 

 

 

Total ADS stockholders’ equity

    199,126

    244,330

(256,830)

4g

    275,591

 

    462,217

Noncontrolling interest in subsidiaries

    13,058

    —

    —

 

    —

 

    13,058

 

 

 

 

 

 

 

 

Total stockholders’ equity

    212,184

    244,330

(256,830)

 

    275,591

 

    475,275

 

 

 

 

 

 

 

 

Total liabilities, mezzanine equity and stockholders’ equity

$1,068,415

$668,168

$(549,509)

 

$1,098,092

 

$2,285,166

 

 

 

 

 

 

 

 

 

- 3 -

 

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE FISCAL YEAR ENDED MARCH 31, 2019

(In thousands, except per share data)

 

 

Historical
ADS

 

IWT as
adjusted
for ADS

 

Acquisition
Adjustments

 

Reference

 

Financing
Adjustments

 

Reference

 

Pro
Forma

 

Net sales

$1,384,733

$292,781

$(69,064)

6a

$—

 

$1,608,450

Cost of goods sold

    1,057,766

    182,278

(69,064)

6a

    —

 

    1,170,980

 

 

 

 

 

 

 

 

Gross profit

    326,967

    110,503

    —

 

    —

 

    437,470

Operating expenses:

 

 

 

 

 

 

 

Selling

    96,335

    11,572

    —

 

    —

 

    107,907

General and administrative

    89,692

    27,135

(289)

6b

    —

 

    116,538

Loss on disposal of assets and costs from exit and disposal activities

    3,647

    22

    —

 

    —

 

    3,669

Intangible amortization

    7,880

    31,090

    10,537

6c

    —

 

    49,507

 

 

 

 

 

 

 

 

Income from operations

    129,413

    40,684

(10,248)

 

    —

 

    159,849

Other expense:

 

 

 

 

 

 

 

Interest expense

    18,618

    20,812

(20,812)

6d

    56,304

7a

    74,922

Derivative gains and other income, net

(815)

    382

    —

 

    —

 

(433)

 

 

 

 

 

 

 

 

Income before income taxes

    111,610

    19,490

    10,564

 

(56,304)

 

    85,360

Income tax expense

    30,049

    4,210

    2,747

6e

(14,639)

7b

    22,367

Equity in net loss of unconsolidated affiliates

    95

    —

    —

 

    —

 

    95

 

 

 

 

 

 

 

 

Net income

    81,466

    15,280

    7,817

 

(41,665)

 

    62,898

Less: net income attributable to noncontrolling interest

    3,694

    —

    —

 

    —

 

    3,694

 

 

 

 

 

 

 

 

Net income attributable to ADS

$77,772

$15,280

$7,817

 

$(41,665)

 

$59,204

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

    57,025

 

 

 

 

 

    67,375

Diluted

    57,611

 

 

 

 

 

    67,962

Net income per share:

 

 

 

 

 

 

 

Basic

$1.23

 

 

 

 

 

$0.80

Diluted

$1.22

 

 

 

 

 

$0.80

 

- 4 -

 

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2019

(In thousands, except per share data)

 

 

Historical
ADS

 

IWT as
adjusted
for ADS

 

Acquisition
Adjustments

 

Reference

 

Financing
Adjustments

 

Reference

 

Pro
Forma

 

Net sales

$413,708

$90,184

$(19,948)

6a

$—

 

$483,944

Cost of goods sold

    307,256

    52,162

(19,948)

6a

    —

 

    339,470

Cost of goods sold—ESOP special dividend compensation

    168,610

    —

    —

 

    —

 

    168,610

 

 

 

 

 

 

 

 

Gross profit

(62,158)

    38,022

    —

 

    —

 

(24,136)

Operating expenses:

 

 

 

 

 

 

 

Selling

    26,365

    3,415

    —

 

    —

 

    29,780

General and administrative

    31,433

    6,979

(4,207)

6b

    —

 

    34,205

Selling, general and administrative—ESOP special dividend compensation

    78,142

    —

    —

 

    —

 

    78,142

Loss on disposal of assets and costs from exit and disposal activities

    707

    —

    —

 

    —

 

    707

Intangible amortization

    1,542

    7,855

    3,152

6c

    —

 

    12,549

 

 

 

 

 

 

 

 

Income from operations

(200,347)

    19,773

    1,055

 

    —

 

(179,519)

Other expense:

 

 

 

 

 

 

 

Interest expense

    5,264

    5,307

(5,307)

6d

    13,246

7a

    18,510

Derivative (gains) loss and other (income) expense, net

(96)

    85

    —

 

    —

 

(11)

 

 

 

 

 

 

 

 

(Loss) income before income taxes

(205,515)

    14,381

    6,362

 

(13,246)

 

(198,018)

Income tax expense

    22,370

    2,513

    1,654

6e

(3,444)

7b

    23,093

Equity in net income of unconsolidated affiliates

(434)

    —

    —

 

    —

 

(434)

 

 

 

 

 

 

 

 

Net (loss) income

(227,451)

    11,868

    4,708

 

(9,802)

 

(220,677)

Less: net loss attributable to noncontrolling interest

(1,095)

    —

    —

 

    —

 

(1,095)

 

 

 

 

 

 

 

 

Net (loss) income attributable to ADS

$(226,356)

$11,868

$4,708

 

$(9,802)

 

$(219,582)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

    57,576

 

 

 

 

 

    67,926

Diluted

    57,576

 

 

 

 

 

    67,926

Net loss per share:

 

 

 

 

 

 

 

Basic

$(4.06)

 

 

 

 

 

$(3.34)

Diluted

$(4.06)

 

 

 

 

 

$(3.34)

 

- 5 -

 

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

FOR THE TWELVE MONTHS ENDED JUNE 30, 2019

(In thousands, except per share data)

 

Historical
ADS

 

IWT as
adjusted
for ADS

 

Acquisition
Adjustments

 

Reference

 

Financing
Adjustments

 

Reference

 

Pro
Forma

 

Net sales

$1,410,594

$300,209

$(69,459)

6a

$—

 

$1,641,344

Cost of goods sold

    1,076,866

    182,132

(69,459)

6a

    —

 

    1,189,539

Cost of goods sold—ESOP special dividend compensation

    168,610

    —

    —

 

    —

 

    168,610

 

 

 

 

 

 

 

 

Gross profit

    165,118

    118,077

    —

 

    —

 

    283,195

Operating expenses:

 

 

 

 

 

 

 

Selling

    98,535

    12,216

    —

 

    —

 

    110,751

General and administrative

    99,743

    29,054

(4,496)

6b

    —

 

    124,301

Selling, general and administrative—ESOP special dividend compensation

    78,142

    —

    —

 

    —

 

    78,142

Loss on disposal of assets and costs from exit and disposal activities

    3,250

    —

    —

 

    —

 

    3,250

Intangible amortization

    7,438

    31,150

    10,193

6c

    —

 

    48,781

 

 

 

 

 

 

 

 

(Loss) income from operations

(121,990)

    45,657

(5,697)

 

    —

 

(82,030)

Other expense:

 

 

 

 

 

 

 

Interest expense

    20,080

    21,006

(21,006)

6d

    54,899

7a

    74,979

Derivative (gains) loss and other (income) expense, net

(97)

    359

    —

 

    —

 

    262

 

 

 

 

 

 

 

 

(Loss) income before income taxes

(141,973)

    24,292

    15,309

 

(54,899)

 

(157,271)

Income tax expense

    38,135

    4,681

    3,980

6e

(14,274)

7b

    32,522

Equity in net income of unconsolidated affiliates

(472)

    —

    —

 

    —

 

(472)

 

 

 

 

 

 

 

 

Net (loss) income

(179,636)

    19,611

    11,329

 

(40,625)

 

(189,321)

Less: net (loss) attributable to noncontrolling interest

    1,228

    —

    —

 

    —

 

    1,228

 

 

 

 

 

 

 

 

Net (loss) income attributable to ADS

$(180,864)

$19,611

$11,329

 

$(40,625)

 

$(190,549)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

    57,269

 

 

 

 

 

    67,619

Diluted

    57,269

 

 

 

 

 

    67,619

Net loss per share:

 

 

 

 

 

 

 

Basic

$(3.31)

 

 

 

 

 

$(2.95)

Diluted

$(3.31)

 

 

 

 

 

$(2.95)

 

- 6 -

 

ADVANCED DRAINAGE SYSTEMS, INC.

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

1. Basis of Presentation

The unaudited pro forma combined financial information and related notes were based upon ADS’s fiscal year end reporting, which ends on March 31 of each calendar year. IWT’s fiscal year is a 52- or 53-week period, which ends the Friday on or about December 31. Due to the differing fiscal period ends, and in order to present results for comparable periods, the unaudited pro forma combined statement of operations for the year ended March 31, 2019 derives IWT’s results from its audited consolidated statement of operations for the fiscal year ended December 28, 2018, plus its unaudited consolidated financial data for the three months ended April 5, 2019, less its unaudited consolidated financial data for the three months ended March 30, 2018. For purposes of the unaudited pro forma combined statement of operations for the three months ended June 30, 2019, results for IWT were derived from its unaudited consolidated statement of operations for the six months ended July 5, 2019 less its unaudited consolidated financial data for the three months ended April 5, 2019. For purposes of the unaudited pro forma combined statement of operations for the twelve months ended June 30, 2019, results for IWT were derived from its audited consolidated statement of operations for the fiscal year ended December 28, 2018, plus its unaudited consolidated financial data for the six months ended July 5, 2019, less its unaudited consolidated financial data for the six months ended June 29, 2018.

For purposes of the unaudited pro forma combined statement of operations for the twelve months ended June 30, 2019, results for ADS were derived from its audited consolidated statement of operations for the fiscal year ended March 31, 2019, plus its unaudited condensed consolidated statement of operations for the three months ended June 30, 2019, less its unaudited condensed consolidated statement of operations for the three months ended June 30, 2018.

The unaudited pro forma combined balance sheet as of June 30, 2019 and the pro forma combined information of operations for the fiscal year ended March 31, 2019, the three months ended June 30, 2019, and the twelve months ended June 30, 2019 were prepared using the acquisition method of accounting under the provisions of Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”). Under ASC 805, all assets acquired and liabilities assumed are recorded at their acquisition date fair value. The Company has not yet completed a detailed valuation analysis necessary to arrive at the required fair value estimates for IWT assets acquired and liabilities assumed. To prepare the unaudited pro forma combined financial information herein, ADS adjusted IWT’s assets and liabilities to their estimated fair values based on a preliminary valuation. Completion of a detailed valuation analysis could have a significant impact on the unaudited pro forma combined financial information contained herein and our future results of operations and financial position.

2. Accounting Policy Alignment and Reclassification Adjustments

The Company has performed a preliminary assessment of the accounting policies of IWT for alignment with ADS. In addition, certain balances were reclassified from the IWT historical financial statements so its presentation would be consistent with that of ADS.

On April 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers (“ASC 606”), and all related amendments using the modified retrospective transition method. IWT would have applied ASC 606 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. Management does not expect the adoption of ASC 606 for IWT to have a material impact on its combined financial position or results of operations. As such, no adjustments to IWT have been made in the unaudited pro forma financial statements of operations for the fiscal year ended March 31, 2019, the three months ended June 30, 2019 or the twelve months ended June 30, 2019.


- 7 -

 

 

On April 1, 2019, the Company adopted ASC 842, Leases (“ASC 842”), using the transition method in the July 2018 ASU which does not require adjustments to comparative periods or require modified disclosures for those periods and includes transition relief practical expedients. IWT would have applied ASC 842 to annual reporting periods beginning after December 15, 2019, and interim reporting periods within annual reporting periods beginning after December 15, 2020. The unaudited pro forma combined financial information for the year ended March 31, 2019 does not reflect adjustments for ASC 842 as this standard was not adopted by the Company at this time, whereas the unaudited pro forma combined financial information for the three months ended June 30, 2019 has been prepared in accordance with ASC 842. Management has completed a preliminary assessment of the financial statement impact of adoption of ASC 842 for IWT and has reflected an adjustment to the unaudited combined pro forma balance sheet as of June 30, 2019. No adjustment was required for the unaudited pro forma combined statement of operations for the three months ended June 30, 2019 and twelve months ended June 30, 2019 to reflect IWT’s adoption of ASC 842.

These adjustments and reclassifications are based on management’s preliminary analysis. When ADS completes its detailed review of IWT’s accounting policies, including a detailed assessment of ASC 606 and ASC 842, additional differences could be identified that, when conformed, could have a material impact on the combined company’s financial information.

Refer to the table below for a summary of accounting policy and reclassification adjustments made to IWT’s consolidated balance sheet as of July 5, 2019 to conform its presentation to that of ADS.

 

ADS Presentation

IWT Presentation

 

Historical
IWT at July 5, 2019

 

Accounting
policy and
reclassification
adjustments

 

Note

 

IWT as
adjusted
for ADS

 

IWT as
adjusted
for ADS

 

 

 

(actuals)

 

 

(actuals)

(thousands)

ASSETS

 

 

 

 

 

 

Cash

Cash and cash equivalents

$48,489,491

$—

 

$48,489,491

$48,489

Receivables (less allowance for doubtful accounts)

Accounts receivable—net of allowance for doubtful accounts

    28,279,965

    579,936

(i)

    28,859,901

    28,860

 

Income tax receivable

    534,721

(534,721)

(i)

    —

    —

Inventories

Inventories

    37,618,851

    —

 

    37,618,851

    37,619

Other current assets

Other current assets

    2,240,768

(45,215)

(i)

    2,195,553

    2,196

Property, plant and equipment, net

Property, plant and equipment, net

    82,423,765

    —

 

    82,423,765

    82,424

Goodwill

Goodwill

    205,858,706

    —

 

    205,858,706

    205,859

Intangible assets, net

Other intangible assets—net

    248,310,619

    —

 

    248,310,619

    248,311

Other assets

Other assets

    9,532,966

    4,877,198

(ii)

    14,410,164

    14,410

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current maturities of debt obligations

Current portion of long-term debt

$2,450,000

$—

 

$2,450,000

$2,450

Accounts payable

Accounts payable

    12,555,770

    —

 

    12,555,770

    12,556

 

Payable to David Presby Trust

    2,712,702

(2,712,702)

(iii)

    —

    —

Accrued income taxes

Income tax payable

    2,749,841

    —

 

    2,749,841

    2,750

Other accrued liabilities

Accrued Expenses

    6,710,864

    4,896,358

(ii)(iii)

    11,607,222

    11,608

Long-term debt obligations (less unamortized debt issuance costs)

Long-term debt—less current portion

    326,390,277

    —

 

    326,390,277

    326,390

Deferred tax liabilities

Deferred income taxes

    65,207,357

    —

 

    65,207,357

    65,207

Other liabilities

Other liabilities

    182,330

    2,693,542

(ii)

    2,875,872

    2,877

Common stock

Common stock

    186,126

    —

 

    186,126

    186

Paid-in capital

Additional paid-in capital

    189,289,180

    —

 

    189,289,180

    189,289

Retained earnings (deficit)

Accumulated deficit

    54,855,405

    —

 

    54,855,405

    54,855

 

(i)

Represents a reclassification of income tax receivables and miscellaneous receivables to receivables (less allowance for doubtful accounts).

(ii)

Represents an adjustment to present IWT in accordance with ASC 842, which includes the recognition of right-of-use assets and corresponding liabilities ($2,184 thousand within other accrued liabilities and $2,694 thousand within other liabilities).

(iii)

Represents a reclassification of the David Presby Trust payable to other accrued liabilities.


- 8 -

 

 

Refer to the table below for a summary of accounting policy and reclassification adjustments made to IWT’s statements of operations for the twelve months ended April 5, 2019, the three months ended July 5, 2019 and the twelve months ended July 5, 2019 to conform its presentation to that of ADS.

 

 

 

Historical IWT

 

 

 

 

 

ADS Presentation

IWT Presentation

 

Fiscal year
ended
December 28,
2018

 

Three months
ended
April 5, 2019

 

Three
months
ended
March 30,
2018

 

Twelve
months
ended
April 5, 2019

 

Accounting
policy and
reclassification
adjustments

 

Note

 

IWT as
adjusted
for ADS

 

IWT as
adjusted
for ADS

 

 

 

(actuals)

(actuals)

(actuals)

(actuals)

(actuals)

 

(actuals)

(thousands)

Net sales

Net sales

$275,198,104

$70,728,941

$53,146,404

$292,780,641

$—

 

$292,780,641

$292,781

Cost of goods sold

Cost of goods sold

    173,252,075

    43,193,040

    34,167,470

    182,277,645

    —

 

    182,277,645

    182,278

 

Selling, general and administrative

    27,999,625

    7,198,046

    6,267,454

    28,930,217

(28,930,217)

(i)

    —

    —

Selling

 

    —

    —

    —

    —

    11,572,087

(i)

    11,572,087

    11,572

General and administrative

 

    —

    —

    —

    —

    27,135,134

(i)(ii)

    27,135,134

    27,135

 

Transaction-related expenses

    252,153

    109,917

    —

    362,070

(362,070)

(ii)

    —

    —

 

Legal settlement

    7,500,000

    —

    —

    7,500,000

(7,500,000)

(ii)

    —

    —

Intangible amortization

Amortization expense related to intangible assets

    31,179,984

    7,704,866

    7,794,996

    31,089,854

    —

 

    31,089,854

    31,090

 

Research and development

    1,938,529

    293,578

    317,173

    1,914,934

(1,914,934)

(ii)

    —

    —

Loss on disposal of assets and costs from exit and disposal activities

 

 

Loss on sale of property, plant and equipment

  

 

22,505

  

—

  

71

  

22,434

  

—

 

  

22,434

  

22

Interest expense

Interest expense-net

(19,580,450)

(5,766,342)

(4,535,287)

(20,811,505)

    —

 

(20,811,505)

(20,812)

Derivative gains and other income, net

Other expense-net

(318,628)

(113,881)

(50,730)

(381,779)

    —

 

(381,779)

(382)

Income tax
expense

Income tax expense (benefit)

    3,334,097

    1,504,959

    628,820

    4,210,236

    —

 

    4,210,236

    4,210

Net income

Net income (loss)

    9,820,058

    4,844,312

(615,597)

    15,279,967

    —

 

    15,279,967

    15,280

 

 

 

Historical IWT

 

 

 

 

 

ADS Presentation

IWT Presentation

 

Six months
ended
July 5, 2019

 

Three
months
ended
April 5,
2019

 

Three
months
ended
July 5, 2019

 

Accounting
policy and
reclassification
adjustments

 

Note

 

IWT as
adjusted
for ADS

 

IWT as
adjusted
for ADS

 

 

 

(actuals)

(actuals)

(actuals)

(actuals)

 

(actuals)

(thousands)

Net sales

Net sales

$160,913,413

$70,728,941

$90,184,472

$—

 

$90,184,472

$90,184

Cost of goods sold

Cost of goods sold

95,354,603

43,193,040

52,161,563

—

 

52,161,563

52,162

 

Selling, general and administrative

15,735,814

7,198,046

8,537,768

(8,537,768)

(i)

—

—

Selling

 

—

—

—

3,415,107

(i)

3,415,107

3,415

General and administrative

 

—

—

—

6,979,200

(i)(ii)

6,979,200

6,979

 

Transaction-related expenses

1,165,298

109,917

1,055,381

(1,055,381)

(ii)

—

—

Intangible amortization

Amortization expense related to intangible assets

15,559,731

7,704,866

7,854,865

—

 

7,854,865

7,855

 

Research and development

1,094,736

293,578

801,158

(801,158)

(ii)

—

—

Interest expense

Interest expense-net

(11,073,547)

(5,766,342)

(5,307,205)

—

 

(5,307,205)

(5,307)

Derivative gains and other income, net

Other expense-net

(199,819)

(113,881)

(85,938)

—

 

(85,938)

(85)

Income tax expense

Income tax expense

4,017,538

1,504,959

2,512,579

—

 

2,512,579

2,513

Net income

Net income (loss)

16,712,327

4,844,312

11,868,015

—

 

11,868,015

11,868


- 9 -

 

 

 

 

 

Historical IWT

 

 

 

 

 

ADS Presentation

IWT Presentation

 

Fiscal year
ended
December 28,
2018

 

Six months
ended
July 5, 2019

 

Six months
ended
June 29, 2018

 

Twelve
months
ended
July 5, 2019

 

Accounting
policy and
reclassification
adjustments

 

Note

 

IWT as
adjusted
for ADS

 

IWT as
adjusted
for ADS

 

 

 

(actuals)

(actuals)

(actuals)

(actuals)

(actuals)

 

(actuals)

(thousands)

Net sales

Net sales

$275,198,104

$160,913,413

$135,902,729

$300,208,788

$—

 

$300,208,788

$300,209

Cost of goods sold

Cost of goods sold

173,252,075

95,354,603

86,475,105

182,131,573

—

 

182,131,573

182,132

 

Selling, general and administrative

27,999,625

15,735,814

13,196,487

30,538,952

(30,538,952)

(i)

—

—

Selling

 

—

—

—

—

12,215,581

(i)

12,215,581

12,216

General and administrative

 

—

—

—

—

29,053,761

(i)(ii)

29,053,761

29,054

 

Transaction- related expenses

252,153

1,165,298

252,153

1,165,298

(1,165,298)

(ii)

—

—

 

Legal settlement

7,500,000

—

—

7,500,000

(7,500,000)

(ii)

—

—

Intangible
amortization

Amortization expense related to intangible assets

31,179,984

15,559,731

15,589,992

31,149,723

—

 

31,149,723

31,150

 

Research and development

1,938,529

1,094,736

968,173

2,065,092

(2,065,092)

(ii)

—

—

Loss on disposal of assets and costs from exit and disposal activities

Loss on sale of property related to intangible assets

22,505

—

22,505

—

—

 

 

—

 

—

Interest expense

Interest expense-net

(19,580,450)

(11,073,547)

(9,647,971)

(21,006,026)

—

 

(21,006,026)

(21,006)

Derivative gains and other income, net

Other expense-net

(318,628)

(199,819)

(159,800)

(358,647)

—

 

(358,647)

(359)

Income tax expense

Income tax expense

3,334,097

4,017,538

2,670,142

4,681,493

—

 

4,681,493

4,681

Net income

Net income (loss)

9,820,058

16,712,327

6,920,401

19,611,984

—

 

19,611,984

19,611

 

(i)

Represents the bifurcation of IWT’s selling, general, and administrative financial statement line item into selling and into general and administrative.

(ii)

Represents a reclassification of certain transaction related expenses, legal settlement fees, and research and development expenses into general and administrative.

3. Preliminary Purchase Price Allocation

The preliminary Merger Consideration as shown in the table below is allocated to the tangible and intangible assets acquired and liabilities assumed of IWT based on their preliminary fair values. As mentioned above, ADS has not yet completed a detailed valuation analysis necessary to arrive at the required fair value estimates for IWT assets acquired and liabilities assumed. Accordingly, assets acquired and liabilities assumed are preliminary based on available information and certain assumptions, which ADS believes are reasonable. Actual results may differ materially from the assumptions within the unaudited pro forma combined financial statements.

The following table summarizes the preliminary Merger Consideration paid, net of cash acquired. The amounts below are preliminary and are subject to change.

 

 

 

(in thousands)

Amount

 

Total fair value of consideration transferred

$1,128,489

Less: Cash acquired

(48,489)

 

 

Total net consideration paid

$1,080,000

 

 

 


- 10 -

 

The following table sets forth the preliminary allocation of the Merger Consideration transferred to the preliminary fair value of the identifiable tangible and intangible assets acquired and liabilities assumed using IWT’s unaudited condensed consolidated balance sheet as of July 5, 2019, with the excess recorded to goodwill.

 

(in thousands)

Amount

 

Cash

48,489

Total current assets, net of cash

68,675

Property, plant and equipment, net

82,424

Goodwill

578,709

Intangible assets, net

475,000

Other assets

14,410

Total current liabilities

(26,495)

Deferred tax liabilities

(109,846)

Other liabilities

(2,877)

 

 

Total fair value of consideration transferred

$1,128,489

 

 

Total consideration transferred includes cash of $794,179 thousand for the entire outstanding share capital of IWT plus cash of $334,310 thousand to repay outstanding amounts of existing indebtedness incurred by IWT under its outstanding credit facility in effect prior to the Acquisition. The cash to be paid remains subject to final post-closing adjustments as outlined in the Merger Agreement.

4. Unaudited Pro Forma Combined Balance Sheet Adjustments Related to the Acquisition

(a)

Reflects the adjustment to cash as a result of the Acquisition:

 

(in thousands)

Amount

 

Note

 

Cash consideration

$(1,128,489)

 

Payment of Acquisition-related costs

(12,500)

(i)

 

 

 

Pro forma adjustment to cash

$(1,140,989)

 

 

 

 

 

 

(i)

These charges include financial advisory fees, legal, accounting, and other professional fees which relate directly to the Acquisition. The impact of these direct, incremental transaction costs are not reflected in the unaudited pro forma combined statement of operations as they are nonrecurring in nature.

(b)

Reflects the elimination of certain balances between ADS and IWT that are included within the historical financial statements. This includes trade receivables and payables as well as certain other assets related to certain manufacturing and distribution agreements.

(c)

Reflects the adjustment to remove IWT’s historical goodwill of $205,859 thousand and record goodwill associated with the Acquisition of $578,709 thousand.

(d)

Reflects the adjustment to record the preliminary fair value of the identifiable intangible assets:

 

(in thousands)

Preliminary fair
value

 

Estimated useful lives

 

Customer relationships

$270,000

15 years

Patents and developed technology

140,000

10 years

Tradename and trademarks

65,000

20 years

 

 

 

 

475,000

 

Less: IWT historical intangible assets balance

(248,311)

 

 

 

 

Pro forma net adjustment to intangible assets

$226,689

 

 

 

 


- 11 -

 

 

The fair value estimates for identifiable intangible assets are preliminary and are based upon assumptions that market participants would use in pricing an asset. The indicated fair value of the customer relationships was estimated using the multi-period excess earnings method, which estimates value based on the expected future excess earnings stream attributable to a particular asset. The indicated fair values of the patents and developed technology and the tradename and trademarks were estimated using the relief from royalty method, which uses the net present value of hypothetical forecast after-tax royalties to calculate the value of the asset.

Some of the more significant inputs and assumptions inherent in the estimation of the identifiable intangible asset valuations include the long-term cash flow projections and profitability, the cash flow period estimated for the particular asset, the discount rate selected in order to estimate the inherent risk in each future cash flow stream, the selected royalty rate (if applicable), the annual obsolescence or attrition rate applicable to the cash flows of the asset, and the net book value of certain tangible assets. No assurances can be given that the underlying inputs and assumptions used to prepare the preliminary calculations of intangible asset value will not change as ADS completes its detailed valuation analysis. For these and other reasons, actual results may vary significantly from estimated results.

(e)

Reflects the extinguishment of IWT’s historical long-term debt in accordance with the terms of the Merger Agreement, including the current portion and related accrued interest.

(f)

Reflects the adjustment to deferred tax liabilities resulting from the Acquisition. The estimated increase in deferred tax liabilities results primarily from the recognition of deferred tax liabilities as a result of the fair value adjustments for non-deductible intangible assets calculated using an estimated combined state and federal statutory tax rate of 26%. The adjustment is partially offset by the recognition of deferred tax assets resulting from acquired tax benefits stemming from certain costs incurred by IWT as a result of the Acquisition.

This adjustment to deferred tax liabilities is preliminary and remains subject to management’s final determination of the fair value of assets acquired and liabilities assumed by jurisdiction. Recognition of additional deferred tax assets and liabilities as well as adjustments to established deferred tax assets and liabilities upon a detailed analysis of the acquired assets and assumed liabilities may occur in conjunction with the finalization of the purchase accounting. These items could be material.

(g)

Reflects the adjustment to equity as a result of the following:

 

(in thousands)

Amount

 

Remove historical equity of IWT

$(244,330)

Acquisition-related costs

(12,500)

 

 

Pro forma adjustment to equity

$(256,830)

 

 


- 12 -

 

 

5. Unaudited Pro Forma Combined Balance Sheet Adjustment Related to Financing

(a)

Reflects cash proceeds from the Credit Agreement, the Common Stock Offering, the Senior Notes due 2027, and the repayment of certain outstanding ADS debt as shown in the table below:

 

(in thousands)

Face value

 

Original issue
discount

 

Issuance costs

 

Net balance

 

Note

 

Proceeds from Term Loan Facility

$1,300,000

$13,000

$20,769

$1,266,231

(i)

Proceeds from Revolving Credit Facility

100,000

—

5,347

94,653

 

Proceeds from Common Stock Offering

307,913

—

14,617

293,296

 

Proceeds from Senior Notes due 2027 offered hereby

350,000

—

6,592

343,408

 

 

 

 

 

 

 

Total Proceeds

$2,057,913

$13,000

$47,325

$1,997,588

 

Less: Repayment of outstanding ADS debt

 

 

 

(256,200)

(ii)

Less: Pay down of Term Loan Facility- Common Stock Offering

 

 

 

(250,000)

(iii)

Less: Pay down of Revolving Credit Facility-Common Stock Offering

 

 

 

(43,296)

(iii)

Less: Pay down of Term Loan Facility- Senior Notes due 2027 offered hereby

 

 

 

(350,000)

(iv)

 

 

 

 

 

 

Pro forma adjustment to cash

 

 

 

$1,098,092

 

 

 

 

 

 

 

 

 

(i)

In connection with the Acquisition, the Company entered into and drew down a total of $1.3 billion under the Term Loan Facility and incurred original issue discount and debt issuance costs of $13,000 thousand and $20,769 thousand, respectively.

 

(ii)

As part of the Transactions, ADS repaid certain of its outstanding debt. This repayment included the balance of the Secured Bank Loans as well as the senior notes, which had an outstanding balance of $256,200 thousand.

 

(iii)

After the execution of the Common Stock Offering, the Company will conduct a partial repayment of proceeds from the Common Stock Offering of $250,000 thousand with the remaining $43,296 thousand to pay down the Revolving Credit Facility.

 

(iv)

After completion of this notes offering, the Company will conduct a partial repayment of the Term Loan Facility using the aggregate gross proceeds from the Senior Notes due 2027 offered hereby of $350,000 thousand for purposes of the pro forma financial information. Accordingly, the face value of the Term Loan Facility is presented within the pro forma financial information, net of the repayment from the proceeds of the Common Stock Offering and Senior Notes due 2027 offered hereby, as $700,000 thousand.


- 13 -

 

 

(b)

Reflects the increase in maturities of debt obligations from borrowings under the Credit Agreement net of the repayment of certain outstanding ADS debt as shown in the table below:

 

(in thousands)

Amount

 

Note

 

Term Loan Facility—current portion

$13,000

 

Revolving Credit Facility—current portion

—

 

 

 

 

Total current debt

13,000

 

 

 

 

Less: Repayment of outstanding ADS debt

(25,000)

 

 

 

 

Pro forma adjustment to current maturities of debt obligations

$(12,000)

 

 

 

 

Term Loan Facility—non-current portion

1,253,231

 

Revolving Credit Facility—non-current portion

94,653

 

Senior Notes due 2027 offered hereby (net of debt issuance costs)

343,408

 

 

 

 

Total non-current debt

1,691,292

 

 

 

 

Less: Repayment of outstanding ADS debt, net of unamortized debt issuance costs

(229,081)

(i)

Less: Pay down of Term Loan Facility—Common Stock Offering

(243,506)

(ii)

Less: Pay down of Revolving Credit Facility—Common Stock Offering

(43,296)

 

Less: Pay down of Term Loan Facility—Senior Notes due 2027

(340,908)

(iii)

 

 

 

Pro forma adjustment to maturities of long-term debt obligations

$834,501

 

 

 

 

 

 

(i)

Inclusive of associated unamortized debt issuance costs of $2,119 thousand as of June 30, 2019, which were written off to equity.

 

(ii)

Inclusive of associated unamortized debt issuance costs and debt issuance costs of approximately $2,500 thousand and $3,994 thousand, respectively related to the Term Loan Facility, which were written off to equity.

 

(iii)

Inclusive of associated unamortized debt issuance costs and debt issuance costs of approximately $3,500 thousand and $5,592 thousand, respectively related to the Term Loan Facility, which were written off to equity.

(c)

Reflects the increase to equity attributable to the Offering based on the following:

 

(in thousands)

Amount

 

Note

 

Estimated value of ADS common stock issued at par value

$104

(i)

 

 

 

Pro forma adjustment to common stock

$104

 

 

 

 

Estimated value of ADS common stock issued in excess of par value

$307,809

(i)

Less: Offering issuance costs

(14,617)

(i)

 

 

 

Pro forma adjustment to paid-in capital

$293,192

 

 

 

 

 

 

(i)

Represents the issuance of 10,350 thousand shares of common stock (par value $0.01) at a per share purchase price of $29.75, for gross proceeds in the amount of $307,913 thousand prior to offering costs of $14,617 thousand.

6. Unaudited Pro Forma Combined Statements of Operations Adjustments Related to Acquisition

(a)

Reflects the removal of historical sales and the related cost of goods sold between ADS and IWT related to previously existing contract manufacturing and distribution agreements.

(b)

Reflects the removal of transaction-related costs related to the Acquisition incurred by ADS and IWT, which were reflected in the historical statements of operations, as these costs are nonrecurring in nature.


- 14 -

 

 

(c)

Reflects an adjustment to amortization expense as follows:

 

 

 

Amortization expense

 

 

(in thousands)

Preliminary fair
value

 

Fiscal year
ended
March 31, 2019

 

Three months
ended
June 30, 2019

 

Twelve months
ended
June 30, 2019

 

Note

 

Customer relationships

$270,000

$25,796

$6,694

$25,157

 

Patents and developed technology

    140,000

    14,000

    3,500

    14,000

 

Tradename and trademarks

    65,000

    3,250

    813

    3,250

 

 

 

 

 

 

 

Total identifiable intangible assets

$475,000

$43,046

$11,007

    42,407

(i)

 

 

 

 

 

 

Less: Historical IWT amortization

 

(31,090)

(7,855)

(31,150)

 

Less: Historical amortization related to previously existing ADS/IWT arrangement

 

(1,419)

    —

(1,064)

(ii)

 

 

 

 

 

 

Pro forma adjustment to intangible amortization

 

$10,537

$3,152

$10,193

 

 

 

 

 

 

 

 

 

(i)

Reflects amortization expense resulting from the identifiable intangible assets. Amortization expense has been calculated on a preliminary basis. Customer relationships is amortized using the 1.5x declining balance method. Patents and developed technology and tradename and trademarks are amortized using the straight-line method over their estimated useful lives.

The effect of a 10% increase or decrease in the preliminary estimated fair value of definite-lived intangible assets would result in an increase or decrease of amortization expense of $4,305 thousand, $1,100 thousand and $4,240 thousand for the year ended March 31, 2019, the three months ended June 30, 2019 and the twelve months ended June 30, 2019, respectively.

 

(ii)

Reflects the removal of historical amortization expense related to previously existing ADS and IWT agreements.

(d)

Reflects the elimination of interest expense on IWT’s historical long-term debt that was extinguished per the terms of the Merger Agreement.

(e)

Reflects the income tax effect of the Acquisition pro forma adjustments using an estimated combined state and federal statutory tax rate of 26%. Because the adjustments contained in the unaudited pro forma combined financial information are based on estimates, the effective tax rate herein will likely vary from the effective rate in periods subsequent to the Acquisition.


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7. Unaudited Pro Forma Combined Statements of Operations Adjustments Related to Financing

(a)

Reflects an adjustment to interest expense as follows:

 

 

 

 

Interest expense

 

(in thousands)

Face value

 

Effective
interest rate

 

Fiscal year
ended
March 31,
2019

 

Three months
ended
June 30,
2019

 

Twelve months
ended June 30,
2019

 

Note

 

Term Loan Facility

$700,000

5.69%

$39,991

$9,881

$ 39,915

(i)

Revolving Credit Facility

    56,704

6.91%

    3,982

    1,001

    3,982

(ii)

Proceeds from Senior Notes due
2027

    350,000

 

    25,734

    6,469

    25,734

 

 

 

 

 

 

 

 

Total debt

$1,106,704

 

$69,707

$17,351

    69,631

(iii)

 

 

 

 

 

 

 

Less: Historical ADS interest
expense

 

 

(13,403)

(4,105)

(14,732)

 

 

 

 

 

 

 

 

Pro forma adjustment to interest expense

 

 

$56,304

$13,246

$ 54,899

 

 

 

 

 

 

 

 

 

 

(i)

As mentioned in footnote 5a(iv), the face value of the Term Loan Facility is presented within the pro forma financial information, net of the repayment from the proceeds of the Common Stock Offering and the Senior Notes due 2027 offered hereby, as $700,000 thousand as result of the partial pay down. Interest for the Term Loan Facility was affected using an assumed LIBOR rate as of September 9, 2019 of 2.05% plus a margin of 3.25%. When combined with the additional amortization of original issue discount and debt issuance costs, the effective interest rate of the Term Loan Facility is approximately 5.69%.

 

(ii)

The face value of the Revolving Credit Facility is presented within the pro forma financial information net of the partial repayment as $56,704 thousand, as mentioned in footnote 5a(iii). Interest for the Revolving Credit Facility was affected using an assumed LIBOR rate from September 9, 2019 of 2.05% plus a margin of 3.00%. When combined with the additional amortization of debt issuance costs, the effective interest rate of the Revolving Credit Facility is approximately 6.91%.

 

(iii)

A 1/8% increase or decrease in interest rates of Senior Secured Credit Facility would result in a change in interest expense of approximately $951 thousand, $235 thousand, and $949 thousand for the fiscal year ended March 31, 2019, for the three months ended June 30, 2019, and for the twelve months ended June 30, 2019, respectively.

(b)

Reflects the income tax effect of the financing pro forma adjustments using an estimated combined state and federal statutory tax rate of 26%. Because the adjustments contained in the unaudited pro forma combined financial information are based on estimates, the effective tax rate herein will likely vary from the effective rate in periods subsequent to the Acquisition.


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8. Earnings Per Share

The unaudited pro forma combined basic and diluted earnings per share calculations are based on the consolidated basic and diluted weighted average shares of ADS.

 

(in thousands, except per share amounts)

Fiscal year ended
March 31, 2019

 

Three months ended
June 30, 2019

 

Twelve
months
ended
June 30,
2019

 

Net income per share—Basic:

 

 

 

Net income attributable to ADS

$59,204

$(219,582)

(190,549)

Adjustment for:

 

 

 

Dividends paid to redeemable convertible preferred shareholders

(2,047)

(6,841)

(8,391)

Dividends paid to unvested restricted stockholders

(69)

(328)

(382)

 

 

 

 

Net income available to common stockholders and participating securities

    57,088

(226,751)

(199,322)

Undistributed income allocated to participating securities

(2,910)

    —

    —

 

 

 

 

Net income available to common stockholders—Basic

    54,178

(226,751)

(199,322)

 

 

 

 

Historical weighted average number of common shares outstanding—Basic

    57,025

    57,576

    57,269

Shares of common stock to be issued per Offering

    10,350

    10,350

    10,350

 

 

 

 

Pro forma weighted average number of common shares outstanding—Basic

    67,375

    67,926

    67,619

 

 

 

 

Net income per common share—Basic

$0.80

$(3.34)

(2.95)

 

 

 

 

Net income per share—Diluted:

 

 

 

Net income available to common stockholders—Diluted

    54,178

(226,751)

(199,322)

 

 

 

 

Pro forma weighted average number of common shares outstanding—Basic

    67,375

    67,926

    67,619

Assumed restricted stock—nonparticipating

    40

    —

    —

Assumed exercise of stock options

    547

    —

    —

 

 

 

 

Pro forma weighted average number of common shares outstanding—Diluted

    67,962

    67,926

    67,619

 

 

 

 

Net income per common share—Diluted

$0.80

$(3.34)

$(2.95)

Potentially dilutive securities excluded as anti-dilutive

    5,966

    10,824

    11,242

 

 

 

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