EX-99.2 4 l41129exv99w2.htm EX-99.2 exv99w2
EXHIBIT 99.2
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet as of June 30, 2010 gives effect to the purchase of certain assets and assumption of certain liabilities of the Assembly Component Systems business unit (“ACS”) of Assembly Component Systems, Inc. by Supply Technologies LLC, a wholly owned subsidiary of Park-Ohio Industries, Inc., a wholly owned subsidiary of Park-Ohio Holdings Corp.(the “Company”) effective August 31, 2010, as if it had occurred on June 30, 2010. The following unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2009 and the six months ended June 30, 2010 give effect to the purchase of ACS as if it occurred on January 1, 2009. The Company’s condensed consolidated statement of operations information for the year ended December 31, 2009 was derived from the consolidated statement of operations included in its 2009 Annual Report on Form 10-K. The Company’s condensed statement of operations information for the six months ended June 30, 2010 was derived from its Quarterly Report on Form 10-Q for the six months ended June 30, 2010. ACS’s statement of operations information for the year ended December 31, 2009 was derived from the audited statement of net revenues and direct costs and expenses included in Exhibit 99.1 to this Current Report on Form 8-K/A. ACS’s statement of operations information for the six months ended June 30, 2010 were derived from the unaudited statement of net revenues and direct costs and expenses included in Exhibit 99.1 of this Form 8-K/A.
The unaudited, pro forma condensed consolidated statement of operations and condensed consolidated balance sheet contained herein include adjustments having a continuing impact on the consolidated company as a result of using the acquisition method of accounting for the transaction under ASC 805, “Business Combinations.” Under the acquisition method of accounting, the total purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed in connection with the purchase, based on their estimated fair values as of the effective date of the purchase. The preliminary allocation of the purchase price was based upon management’s preliminary valuation of tangible and intangible assets acquired and liabilities assumed and such estimates and assumptions are subject to further adjustments as additional information becomes available and as additional analyses are performed.
The unaudited pro forma condensed consolidated financial information has been prepared by the Company’s management for illustrative purposes only and is not necessarily indicative of the condensed consolidated financial position or the results of operations in future periods or the results that actually would have been realized had the Company and ACS been consolidated during the specified periods. The pro forma adjustments are based upon assumptions that the Company believes are reasonable. The pro forma adjustments are based upon the information available at the time of the preparation of the unuadited pro forma condensed consolidated financial statements. These statements, including any notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Report on Form 10-Q for the six months ended June 30, 2010 filed with the Securities and Exchange Commission.

 

 

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share data)
                                 
    June 30, 2010  
    As             Pro Forma        
    Reported (1)     ACS     Adjustments     Pro Forma  
ASSETS
                                
Current Assets
                                
Cash and cash equivalents
   $ 27,866     $ 0     $ 0  (2)   $ 27,866  
Accounts receivable, net
     119,878       9,174               129,052  
Inventories
     169,115       16,972       (525 )(5)     185,562  
Deferred tax assets
     8,104       0               8,104  
Unbilled contract revenue
     15,263       0               15,263  
Other current assets
     10,171       51               10,222  
 
                        
 
                                
Total Current Assets
     350,397       26,197       (525 )     376,069  
 
                                
Property, Plant and Equipment
     246,763       183               246,946  
Less accumulated depreciation
     176,534       81               176,615  
 
                        
 
     70,229       102               70,331  
 
                                
Other Assets
                                
Goodwill
     3,738                       3,738  
Other
     79,657               990  (6)     80,647  
 
                        
 
     83,395       0       990       84,385  
 
                        
 
   $ 504,021     $ 26,299     $ 465     $ 530,785  
 
                        
 
                                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                
Current Liabilities
                                
Trade accounts payable
   $ 83,692     $ 4,702             $ 88,394  
Accrued expenses
     46,895       282               47,177  
Current portion of long-term debt
     11,882       0       1,000  (3)     12,882  
Current portion of other postretirement benefits
     2,197       0               2,197  
 
                        
Total Current Liabilities
     144,666       4,984       1,000       150,650  
 
                                
Long-Term Liabilities, less current portion
                                
8.375% Senior Subordinated Notes due 2014
     183,835                       183,835  
Revolving credit maturing on April 30, 2014
     117,300               16,000  (2)     133,300  
Other long-term debt
     4,562       0       1,160  (4)     5,722  
Deferred tax liability
     7,200               1,375  (8)     8,575  
Other postretirement benefits and other long-term liabilities
     23,562       0               23,562  
 
                        
 
     336,459       0       18,535       354,994  
 
                                
Shareholders’ Equity
                                
Capital stock, par value $1 a share:
                                
Serial Preferred Stock
     0                       0  
Common Stock
     13,284                       13,284  
Additional paid-in capital
     67,153       21,315       (21,315 )(7)     67,153  
Retained deficit
     (28,749 )             2,245  (9)     (26,504 )
Treasury stock, at cost
     (18,209 )                     (18,209 )
Accumulated other comprehensive (loss)
     (10,583 )     0               (10,583 )
 
                        
Shareholders’ Equity
     22,896       21,315       (19,070 )     25,141  
 
                        
 
   $ 504,021     $ 26,299     $ 465     $ 530,785  
 
                        
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

 

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In Thousands, Except per Share Data)
                                 
    Six Months Ended June 30,2010  
                    Pro Forma        
    As Reported (10)     ACS     Adjustments     Pro Forma  
Net sales
   $ 390,004     $ 25,858             $ 415,862  
Cost of products sold
     327,368       19,002               346,370  
 
                          
Gross profit
     62,636       6,856               69,492  
Selling, general and administrative expenses
     43,305       6,062       33  (14)     49,400  
 
                        
 
                                
Operating income
     19,331       794       (33 )     20,092  
 
                                
 
                     53  (12)        
Interest expense
     11,603       0       115  (13)     11,771  
 
                        
 
                                
Income before income taxes
     7,728       794       (201 )     8,321  
Income taxes
     2,247       0       0       2,247  
 
                        
Net income
   $ 5,481     $ 794     $ (201 )   $ 6,074  
 
                        
 
                                
Amounts per common share:
                                
Basic
   $ 0.49                     $ 0.54  
Diluted
   $ 0.47                     $ 0.52  
 
                                
Common shares used in the computation
                                
Basic
     11,229                       11,229  
Diluted
     11,747                       11,747  
     See accompanying Notes to the Unaudited Pro Forma Condensed Financial Statements.

 

 

PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In Thousands, Except per Share Data)
                                 
    Year Ended December 31,2009  
    As             Pro Forma        
    Reported (11)     ACS     Adjustments     Pro Forma  
Net sales
   $ 701,047     $ 46,427             $ 747,474  
Cost of products sold
     597,200       37,461               634,661  
 
                          
Gross profit
     103,847       8,966               112,813  
Selling, general and administrative expenses
     87,786       12,919       66  (14)     100,771  
Restructuring and impairment charges
     5,206       224               5,430  
 
                          
 
                                
Operating income (loss)
     10,855       (4,177 )     (66 )     6,612  
Gain on purchase of 8.375% senior subordinated notes
     (6,297 )     0               (6,297 )
Other income/expense, net
     0       0               0  
 
                   144  (12)        
Interest expense
     23,189       0       229  (13)     23,562  
 
                        
 
                                
Income before income taxes
     (6,037 )     (4,177 )     (439 )     (10,653 )
Income taxes
     (828 )     0       0       (828 )
 
                        
Net loss
   $ (5,209 )   $ (4,177 )   $ (439 )   $ (9,825 )
 
                        
 
                                
Amounts per common share:
                                
Basic
   $ (0.47 )                   $ (0.90 )
Diluted
   $ (0.47 )                   $ (0.90 )
 
                                
Common shares used in the computation
                                
Basic
     10,968                       10,968  
Diluted
     10,968                       10,968  
     See accompanying Notes to the Unaudited Pro Forma Condensed Financial Statements.

 

 

Park-Ohio Holdings Corp. and Subsidiaries
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
(In Thousands)
     1 .Transaction
               Effective August 31, 2010, the Company completed the acquisition of certain assets and assumed specific liabilities relating to ACS for $16,000 in cash and a $2,160 subordinated promissory note payable in equal quarterly installments over three years. ACS is a provider of supply chain management solutions for a broad range of production components through its service centers throughout North America.
               The allocation of the purchase price to the fair values of the assets acquired and liabilities assumed as if the transaction had occurred on June 30, 2010 is presented below (in thousands). The purchase price allocations and pro forma adjustments are based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed which are based on estimates and assumptions that are subject to change, the preliminary estimated purchase price is allocated as follows:
         
Accounts receivable
   $ 9,174  
Inventories
     16,447  
Prepaid expenses and other current assets
     51  
Property, plant and equipment
     102  
Customer relationships
     990  
Accounts payable
     (4,702 )
Accrued expenses
     ( 282 )
Deferred tax liability
    (1,375 )
Gain on acquisition
     (2,245 )
 
      
Total estimated purchase price
   $ 18,160  
 
      
     2. Pro Forma Adjustments
               The pro forma adjustments included in the unaudited pro forma condensed consolidated financial statements are as follows:
     1) Represents balances as reported on the unaudited Condensed Consolidated Balance Sheet included in the Company’s Form l0-Q for the quarter ended June 30, 2010.
     2) Represents the amount borrowed on the Company’s revolving credit facility for the cash payment to the seller on September 1, 2010.
     3) Represents the current portion of the note payable to the seller.
     4) Represents the long-term portion of the note payable to the seller.
     5) Represents the fair value adjustment to inventory.
     6) Represents the fair value of the customer relationships.
     7) Represents the adjustment for the equity of ACS.
     8) Represents the deferred tax liability relating to the acquisition.
     9) Represents the amount the fair value of the net assets acquired exceeded the purchase price resulting in a gain on the acquisition.

 

 

     10) Represents the results of operations on the unaudited Condensed Consolidated Statements of Operations included in the Company’s Form 10-Q for the Six months ended June 30, 2010.
     11) Represents results of operations on the Consolidated Statements of Operations included in the Company’s Form 10-K for the year ended December 31, 2009.
     12) Represents interest expense on the note payable to the seller.
     13) Represents interest expense on the revolving credit facility.
     14) Represents amortization expense on the customer relationships.