Attached files
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| 8-K - FORM 8-K - SHAW GROUP INC | shaw_8k-010413.htm |
Exhibit 99.1
The Shaw Group Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Financial Statements
The following pro forma consolidated balance sheet information as of November 30, 2012 is based on the historical financial statements of The Shaw Group, Inc, including certain pro forma adjustments, and has been prepared to illustrate the pro forma effect of NEH’s sale of its 20% equity interest in Westinghouse on January 4, 2013 as if settlement had occurred on November 30, 2012. The pro forma adjustments reverse Shaw’s 20% equity investment in Westinghouse due to the exercise of the put right, reflect the repayment of the Westinghouse Bonds, interest and associated interest rate swap and adjust Shaw’s income tax payable and deferred tax asset for the related tax impact.
The unaudited pro forma consolidated statements of operations for the year ended August 31, 2012 and the three months ended November 30, 2012 are based on the historical financial statements of the Company, including certain pro forma adjustments, and assume that the cash settlement of the Put Options occurred as of the beginning of the period presented. The pro forma adjustments reverse equity earnings related to Shaw’s 20% equity investment in Westinghouse, including foreign currency remeasurement gains (losses) and interest expense associated with the Westinghouse Bonds.
The unaudited pro forma condensed consolidated financial information has been prepared based upon available information. The pro forma financial information is not necessarily indicative of the financial position or results of operations that might have occurred had the disposition occurred as of the respective dates stated above. The pro forma adjustments are described in the notes.
The unaudited pro forma consolidated financial information should be read in conjunction with the financial statements and notes and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2012 and the Company’s Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2012.
THE SHAW GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 2012
(In thousands, except share amounts)
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Historical
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Pro Forma Adjustments
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Unaudited Pro Forma Balance Sheet
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| ASSETS | ||||||||||||
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Current assets:
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Cash and cash equivalents
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$ | 941,431 | $ | (66,365 | ) | $ | 875,066 | |||||
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Restricted and escrowed cash and cash equivalents
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12,985 | (1,212 | ) | 11,773 | ||||||||
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Short-term investments
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255,591 | — | 255,591 | |||||||||
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Restricted short-term investments
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19,882 | — | 19,882 | |||||||||
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Accounts receivable, including retainage, net
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473,372 | — | 473,372 | |||||||||
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Inventories
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277,618 | — | 277,618 | |||||||||
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Costs and estimated earnings in excess of billings on uncompleted contracts, including claims
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446,154 | — | 446,154 | |||||||||
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Deferred income taxes
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296,447 | (217,387 | ) | 79,060 | ||||||||
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Investment in Westinghouse
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996,211 | (996,211 | ) | — | ||||||||
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Prepaid expenses and other current assets
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69,379 | 1,885 | 71,264 | |||||||||
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Total current assets
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3,789,070 | (1,279,290 | ) | 2,509,780 | ||||||||
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Investments in and advances to unconsolidated entities, joint ventures and limited partnerships
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4,861 | — | 4,861 | |||||||||
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Property and equipment, net of accumulated depreciation of $390.3 million
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504,803 | — | 504,803 | |||||||||
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Goodwill
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404,659 | — | 404,659 | |||||||||
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Intangible assets
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2,770 | — | 2,770 | |||||||||
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Deferred income taxes
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5,153 | — | 5,153 | |||||||||
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Other assets
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81,264 | — | 81,264 | |||||||||
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Total assets
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$ | 4,792,580 | $ | (1,279,290 | ) | $ | 3,513,290 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable
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$ | 592,856 | $ | — | $ | 592,856 | ||||||
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Accrued salaries, wages and benefits
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115,038 | — | 115,038 | |||||||||
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Other accrued liabilities
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173,021 | (22,669 | ) | 150,352 | ||||||||
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Advanced billings and billings in excess of costs and estimated earnings on uncompleted contracts
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1,125,461 | — | 1,125,461 | |||||||||
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Japanese Yen-denominated bonds secured by Investment in Westinghouse
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1,570,976 | (1,570,976 | ) | — | ||||||||
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Interest rate swap contract on Japanese Yen-denominated bonds
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6,375 | (6,375 | ) | — | ||||||||
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Short-term debt and current maturities of long-term debt
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10,140 | — | 10,140 | |||||||||
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Total current liabilities
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3,593,867 | (1,600,020 | ) | 1,993,847 | ||||||||
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Long-term debt, less current maturities
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5,189 | — | 5,189 | |||||||||
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Deferred income taxes
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58,444 | — | 58,444 | |||||||||
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Other liabilities
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52,565 | — | 52,565 | |||||||||
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Total liabilities
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3,710,065 | (1,600,020 | ) | 2,110,045 | ||||||||
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Shaw shareholders’ equity:
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Preferred stock, no par value, 20,000,000 shares authorized; no shares issued and outstanding
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— | — | — | |||||||||
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Common stock, no par value, 200,000,000 shares authorized; 93,227,119 shares issued; and 66,635,878 shares outstanding
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1,362,464 | — | 1,362,464 | |||||||||
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Retained earnings
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597,140 | 260,934 | 858,074 | |||||||||
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Accumulated other comprehensive loss
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(123,198 | ) | 59,796 | (63,402 | ) | |||||||
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Treasury stock, 26,591,241 shares
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(791,868 | ) | — | (791,868 | ) | |||||||
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Total Shaw shareholders’ equity
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1,044,538 | 320,730 | 1,365,268 | |||||||||
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Noncontrolling interests
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37,977 | — | 37,977 | |||||||||
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Total equity
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1,082,515 | 320,730 | 1,403,245 | |||||||||
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Total liabilities and equity
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$ | 4,792,580 | $ | (1,279,290 | ) | $ | 3,513,290 | |||||
THE SHAW GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2012
(In thousands, except per share amounts)
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Historical
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Pro Forma Adjustments
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Unaudited Pro Forma Statement of Operations
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Revenues
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$ | 6,008,435 | $ | — | $ | 6,008,435 | ||||||
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Cost of revenues
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5,580,471 | — | 5,580,471 | |||||||||
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Gross profit
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427,964 | — | 427,964 | |||||||||
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Selling, general and administrative expenses
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276,338 | — | 276,338 | |||||||||
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Gain on disposal of E&C assets
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83,315 | — | 83,315 | |||||||||
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Impairment of note receivable
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— | — | — | |||||||||
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Operating income (loss)
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234,941 | — | 234,941 | |||||||||
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Interest expense
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(6,315 | ) | — | (6,315 | ) | |||||||
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Interest expense on Japanese Yen-denominated bonds including accretion and amortization
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(40,633 | ) | 40,633 | — | ||||||||
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Interest income
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5,436 | — | 5,436 | |||||||||
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Foreign currency transaction gains (losses) on Japanese Yen-denominated bonds, net
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40,837 | (40,837 | ) | — | ||||||||
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Other foreign currency transaction gains (losses), net
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255 | — | 255 | |||||||||
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Other income (expense), net
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5,530 | — | 5,530 | |||||||||
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Income (loss) before income taxes and earnings (losses) from unconsolidated entities
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240,051 | (204 | ) | 239,847 | ||||||||
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Provision (benefit) for income taxes
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44,971 | (79 | ) | 44,892 | ||||||||
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Income (loss) before earnings (losses) from unconsolidated entities
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195,080 | (125 | ) | 194,955 | ||||||||
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Income from 20% Investment in Westinghouse, net of income taxes
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12,334 | (12,334 | ) | — | ||||||||
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Earnings (losses) from unconsolidated entities, net of income taxes
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3,909 | — | 3,909 | |||||||||
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Net income (loss)
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211,323 | (12,459 | ) | 198,864 | ||||||||
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Less: Net income (loss) attributable to noncontrolling interests
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12,407 | — | 12,407 | |||||||||
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Net income (loss) attributable to Shaw
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$ | 198,916 | (12,459 | ) | $ | 186,457 | ||||||
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Net income (loss) attributable to Shaw per common share:
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Basic
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$ | 2.95 | $ | (0.19 | ) | $ | 2.76 | |||||
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Diluted
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$ | 2.90 | $ | (0.18 | ) | $ | 2.72 | |||||
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Weighted average shares outstanding:
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Basic
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67,462 | 67,462 | 67,462 | |||||||||
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Diluted
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68,536 | 68,536 | 68,536 | |||||||||
THE SHAW GROUP INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2012
(In thousands, except per share amounts)
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Historical
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Pro Forma Adjustments
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Unaudited Pro Forma Statement of Operations
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Revenues
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$ | 1,369,204 | $ | — | $ | 1,369,204 | ||||||
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Cost of revenues
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1,254,338 | — | 1,254,338 | |||||||||
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Gross profit
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114,866 | — | 114,866 | |||||||||
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Selling, general and administrative expenses
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63,699 | — | 63,699 | |||||||||
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Operating income
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51,167 | — | 51,167 | |||||||||
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Interest expense
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(1,731 | ) | — | (1,731 | ) | |||||||
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Interest expense on Japanese Yen-denominated bonds including accretion and amortization
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(9,891 | ) | 9,891 | — | ||||||||
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Interest income
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1,634 | — | 1,634 | |||||||||
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Foreign currency transaction gains (losses) on Japanese Yen-denominated bonds, net
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67,828 | (67,828 | ) | — | ||||||||
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Other foreign currency transaction gains (losses), net
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(341 | ) | — | (341 | ) | |||||||
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Other income (expense), net
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1,048 | — | 1,048 | |||||||||
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Income (loss) before income taxes and earnings (losses) from unconsolidated entities
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109,714 | (57,937 | ) | 51,777 | ||||||||
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Provision (benefit) for income taxes
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41,795 | (22,306 | ) | 19,489 | ||||||||
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Income (loss) before earnings (losses) from unconsolidated entities
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67,919 | (35,631 | ) | 32,288 | ||||||||
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Income from 20% Investment in Westinghouse, net of income taxes
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4,245 | (4,245 | ) | — | ||||||||
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Earnings (losses) from unconsolidated entities, net of income taxes
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(1,252 | ) | — | (1,252 | ) | |||||||
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Net income (loss)
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70,912 | (39,876 | ) | 31,036 | ||||||||
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Less: Net income (loss) attributable to noncontrolling interests
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1,143 | — | 1,143 | |||||||||
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Net income (loss) attributable to Shaw
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$ | 69,769 | (39,876 | ) | $ | 29,893 | ||||||
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Net income (loss) attributable to Shaw per common share:
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Basic
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$ | 1.05 | $ | (0.60 | ) | $ | 0.45 | |||||
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Diluted
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$ | 1.03 | $ | (0.59 | ) | $ | 0.44 | |||||
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Weighted average shares outstanding:
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Basic
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66,504 | 66,504 | 66,504 | |||||||||
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Diluted
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67,932 | 67,932 | 67,932 | |||||||||
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
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1.
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Basis of Pro Forma Presentation
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The accompanying unaudited pro forma consolidated financial statements have been adjusted to reflect the removal of the historical impacts resulting from Shaw’s Investment in Westinghouse and the Westinghouse Bonds. Further, the pro forma balance sheet has been adjusted to: a) remove the Westinghouse investment for the cash settlement of the Put Options, which occurred on January 4, 2013, b) reflect the payment of the Westinghouse Bonds and associated interest, which payment is required to occur on March 15, 2013, from the proceeds generated from NEH’s sale of its 20% equity interest in Westinghouse and from Shaw’s required payment of the remaining 3.3% shortfall of the principal amount of the Westinghouse Bonds, which represents the difference between the Toshiba payment and the original JPY-equivalent purchase price, c) increase retained earnings for the difference between the carrying value of the Westinghouse investment and Westinghouse Bonds, and d) reduce accumulated other comprehensive loss to reflect the impact of the reversal of cumulative deferred losses recognized from an interest rate swap whose settlement coincides with the payment of the bonds.
In connection with NEH’s exercise of the put right, the Company may recognize a non-operating gain or loss once the Put Options are settled, resulting principally from foreign exchange movements. If the bonds would have been repaid at November 30, 2012 from an early exercise of the Put Options and related settlement of the interest rate swap, the gain would have been approximately $260.9 million after tax. The actual gain or loss will be determined at settlement and has been excluded in the pro forma consolidated statement of operations presented.
Pro forma adjustments are reflected as if the adjustments had occurred as of the beginning of the period presented in the pro forma statements of operations for the year ended August 31, 2012 and the three months ended November 30, 2012 and on November 30, 2012 in the pro forma balance sheet. The pro forma adjustments represent management’s estimates based on information available as of the date of this Form 8-K and are subject to revision as additional information becomes available.
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2.
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Pro Forma Adjustments
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Pro Forma Adjustments to Consolidated Balance Sheet
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a.
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To reverse Shaw’s 20% equity investment in Westinghouse due to the exercise of Shaw’s put right, reflect the repayment of the Westinghouse Bonds, interest and associated interest rate swap, and adjust Shaw’s income tax payable (classified in other accrued liabilities) and deferred tax asset for the related tax impact.
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Increase (decrease)
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Put Option Exercise
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Bond Redemption
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Interest and Swap Repayment
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Total
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Cash and cash equivalents
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$ | (1,969 | ) | $ | (50,572 | ) | $ | (13,824 | ) | $ | (66,365 | ) | ||||
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Restricted and escrowed cash
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1,519,192 | (1,520,404 | ) | — | (1,212 | ) | ||||||||||
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Deferred income taxes
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(28,804 | ) | (186,116 | ) | (2,467 | ) | (217,387 | ) | ||||||||
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Investment in Westinghouse
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(996,211 | ) | — | — | (996,211 | ) | ||||||||||
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Other current assets
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2,028 | — | (143 | ) | 1,885 | |||||||||||
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Other accrued liabilities
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173,507 | (186,116 | ) | (10,060 | ) | (22,669 | ) | |||||||||
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Japanese Yen-denominated long-term bonds
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— | (1,570,976 | ) | — | (1,570,976 | ) | ||||||||||
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Interest rate swap on Japanese Yen-denominated bonds
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— | — | (6,375 | ) | (6,375 | ) | ||||||||||
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Accumulated other comprehensive income
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55,917 | — | 3,879 | 59,796 | ||||||||||||
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Retained earnings
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264,813 | — | (3,879 | ) | 260,934 | |||||||||||
Pro Forma Adjustments to Consolidated Statements of Operations
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b.
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To reverse equity earnings related to Shaw’s 20% equity investment in Westinghouse, including foreign currency remeasurement gains (losses) and interest expense associated with the Westinghouse Bonds.
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Impact from the reversal of:
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Pro Forma
Year Ended
August 31, 2012
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Pro Forma
Three Months Ended
November 30, 2012
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Interest expense on Japanese Yen-denominated bonds
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$ | 40,633 | $ | 9,891 | ||||
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Foreign currency remeasurement gain (loss) on Japanese Yen-denominated bonds, net
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$ | (40,837 | ) | $ | (67,828 | ) | ||
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Income from 20% Investment in Westinghouse, net of income taxes
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$ | (12,334 | ) | $ | (4,245 | ) | ||
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c.
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To record the tax effect on pro forma adjustments (excluding adjustments to equity earnings, which are presented net of tax) at an estimated statutory rate of 38.5%.
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