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8-K/A - FORM 8-K/A - PARK OHIO HOLDINGS CORPl41335e8vkza.htm
EX-99.1 - EX-99.1 - PARK OHIO HOLDINGS CORPl41335exv99w1.htm
EX-23.1 - EX-23.1 - PARK OHIO HOLDINGS CORPl41335exv23w1.htm
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 acquisition of substantially all of the assets of Rome Die Casting LLC (“Rome”) on September 30, 2010 by General Aluminum Mfg. Company (“GAMCO”), a wholly owned subsidiary of Park-Ohio Industries, Inc., a wholly owned subsidiary of Park-Ohio Holdings Corp. (the “Company”), and 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 the Company, effective August 31, 2010, as if such acquisitions 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 Rome and ACS as if they 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 Annual Report on Form 10-K for the year ended December 31, 2009. 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 quarterly period ended June 30, 2010. Rome’s statement of operations information for the year ended December 31, 2009 was derived from the audited statement of operations included in Exhibit 99.1 to this Current Report on Form 8-K/A. Rome’s statement of operations information for the six months ended June 30, 2010 was derived from the unaudited statement of operations included in Exhibit 99.1 of this Current Report on Form 8-K. 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, and ACS’s statement of operations information for the six months ended June 30, 2010 was derived from the unaudited statement of net revenues and direct costs and expenses, which both were filed as Exhibit 99.1 to the Form 8-K of Park-Ohio Holdings Corp. filed on November 15, 2010.
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 transactions 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, Rome 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 quarterly period ended June 30, 2010.


 

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             Pro Forma        
    Reported (1)     ACS     Adjustments     Rome     Adjustments     Pro Forma  
 
                                               
ASSETS
                                               
 
                                               
Current Assets
                                               
Cash and cash equivalents
  $ 27,866     $ 0     $ 0     0     $ 0     $ 27,866  
Accounts receivable, net
    119,878       9,174               1,988               131,040  
Inventories
    169,115       16,972       (525 )(5)     1,194               186,756  
Deferred tax assets
    8,104       0                               8,104  
Unbilled contract revenue
    15,263       0                               15,263  
Other current assets
    10,171       51               51               10,273  
 
                                     
 
                                               
Total Current Assets
    350,397       26,197       (525 )     3,233               379,302  
 
                                               
Property, Plant and Equipment
    246,763       183               2,053       747 (15)     249,746  
Less accumulated depreciation
    176,534       81               999       (999 )(15)     176,615  
 
                                     
 
    70,229       102               1,054       1,746 (15)     73,131  
 
                                               
Other Assets
                                               
Goodwill
    3,738                               3,981 (19)     7,719  
Other
    79,657               990 (6)     165       (9,911 )(16)     70,901  
 
                                     
 
    83,395       0       990       165       (5,930 )     78,620  
 
                                   
 
  $ 504,021     $ 26,299     $ 465     $ 4,452       ($4,184 )   $ 531,053  
 
                                   
 
                                               
LIABILITIES AND SHAREHOLDERS’ EQUITY                                                
 
                                               
Current Liabilities
                                               
Trade accounts payable
  $ 83,692     $ 4,702             $ 1,825             $ 90,219  
Accrued expenses
    46,895       282               678               47,855  
Current portion of long-term debt
    11,882       0       1,000 (3)     25,293       (25,293 )(17)     12,882  
Current portion of other postretirement benefits
    2,197       0               0               2,197  
 
                                   
Total Current Liabilities
    144,666       4,984       1,000       27,796       (25,293 )     153,153  
 
                                               
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)     0               133,300  
Other long-term debt
    4,562       0       1,160 (4)     0               5,722  
Deferred tax liability
    7,200               1,375 (8)     0               8,575  
Other postretirement benefits and other long-term liabilities
    23,562       0               0               23,562  
 
                                     
 
    336,459       0       18,535       0               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)     0           67,153  
Retained deficit
    (28,749 )             2,245 (9)     (23,344 )     23,344 (17)     (28,739 )
 
                                    1,746 (18)        
 
                                    (3,981 )(19)        
Treasury stock, at cost
    (18,209 )                                     (18,209 )
Accumulated other comprehensive (loss)
    (10,583 )     0                               (10,583 )
 
                                   
Shareholders’ Equity (deficit)
    22,896       21,315       (19,070 )     (23,344 )     21,109       22,906  
 
                                   
 
  $ 504,021     $ 26,299     $ 465     $ 4,452       ($4,184 )   $ 531,053  
 
                                   
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             Pro Forma        
    As Reported (10)     ACS     Adjustments     Rome     Adjustments     Pro Forma  
Net sales
  $ 390,004     $ 25,858             $ 10,769     $ (2,495 )(21)   $ 424,136  
Cost of products sold
    327,368       19,002               11,769       (2,495 )(21)     355,644  
 
                                       
Gross profit (loss)
    62,636       6,856               (1,000 )     0       68,492  
Selling, general and administrative expenses
    43,305       6,062       33 (14)     1,265       0       50,665  
 
                                   
 
                                               
Operating income (loss)
    19,331       794       (33 )     (2,265 )     0       17,827  
 
                                               
 
                    53 (12)             0          
Interest expense
    11,603       0       115 (13)     993       (993 )(20)     11,771  
 
                                   
 
                                               
Income (loss) before income taxes
    7,728       794       (201 )     (3,258 )     993       6,056  
Income taxes
    2,247       0       0       0       0       2,247  
 
                                   
Net income (loss)
  $ 5,481     $ 794       ($201 )     ($3,258 )   $ 993     $ 3,809  
 
                                   
 
                                               
Amounts per common share:
                                               
Basic
  $ 0.49                                     $ 0.34  
Diluted
  $ 0.47                                     $ 0.32  
 
                                               
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             Pro Forma        
    Reported (11)     ACS     Adjustments     Rome     Adjustments     Pro Forma  
Net sales
  $ 701,047     $ 46,427             $ 8,847     $ (2,094 )(21)   $ 754,227  
Cost of products sold
    597,200       37,461               9,493       (2,094 )(21)     642,060  
 
                                       
Gross profit (loss)
    103,847       8,966               (646 )             112,167  
Selling, general and administrative expenses
    87,786       12,919       66 (14)     1,133       0       101,904  
Restructuring and impairment charges
    5,206       224               0               5,430  
 
                                       
 
                                               
Operating income (loss)
    10,855       (4,177 )     (66 )     (1,779 )     0       4,833  
Gain on purchase of 8.375% senior subordinated notes
    (6,297 )     0               0               (6,297 )
 
                                               
 
                    144 (12)                      
Interest expense
    23,189       0       229 (13)     1,738       (1,738 )(20)     23,562  
 
                                   
 
                                               
Income (loss) before income taxes
    (6,037 )     (4,177 )     (439 )     (3,517 )     1,738       (12,432 )
Income taxes
    (828 )     0       0       0       0       (828 )
 
                                     
Net loss
    ($5,209 )     ($4,177 )     ($439 )     ($3,517 )   $ 1,738       ($11,604 )
 
                                   
 
                                               
Amounts per common share:
                                               
Basic
    ($0.47 )                                     ($1.06 )
Diluted
    ($0.47 )                                     ($1.06 )
 
                                               
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 .Transactions
           On September 30, 2010, GAMCO entered into a Bill of Sale with Rome, a producer of aluminum high pressure die castings, pursuant to which Rome agreed to transfer to GAMCO substantially all of its assets in exchange for the notes receivable due from Rome.
          The allocation of the purchase price to the fair values of 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 statements 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
  $ 1,988  
Inventories
    1,194  
Property, plant and equipment
    2,800  
Goodwill
    3,981  
Accounts payable
    (1,825 )
Accrued expenses
    (678 )
 
     
 
       
Total purchase price
  $ 7,460  
 
     
           Effective August 31, 2010, Supply Technologies LLC, a subsidiary of Park-Ohio Industries, Inc., 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 quarterly period 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 to remove 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 quarterly period 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.
15) Represents the fair value adjustment to property, plant and equipment.
16) Represents elimination of GAMCO’s note receivable from Rome.
17) Represents elimination of Rome’s notes payable to GAMCO.
18) Represents the adjustment for the deficit of Rome.
19) Represents the amount the purchase price exceeded the fair value of the net assets acquired from Rome.
20) Represents elimination of interest expense on notes payable to GAMCO by Rome.
21) Represents elimination of Rome’s sales to GAMCO.