Attached files
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| 8-K/A - FORM 8-K/A - BARNES GROUP INC | form8-kaproforma.htm |
Exhibit 99.3
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
On April 22, 2013, Barnes Group Inc. (the “Company”) completed the previously announced sale of its North American distribution business (the "BDNA Business") to MSC Industrial Direct Co., Inc. ("MSC") pursuant to the terms of the Asset Purchase Agreement dated February 22, 2013 (the "APA") between the Company and MSC. Pursuant to the terms of the APA, the total cash consideration for the BDNA Business was $550 million before adjustments for its estimated net working capital, subject to certain post closing adjustments.
The attached unaudited pro forma combined condensed financial information has been prepared to illustrate the effect of the sale of the BDNA Business. The unaudited pro forma combined condensed statements of income for the years ended December 31, 2012, 2011 and 2010, and the unaudited pro forma combined condensed balance sheet as of December 31, 2012, have been derived from the historical consolidated financial statements of the Company, which are included in its Annual Report on Form 10-K for the year ended December 31, 2012. The unaudited pro forma combined condensed statements of income reflect the Company's results as if the sale of the BDNA Business had occurred as of January 1, 2010. The unaudited pro forma combined condensed balance sheet as of December 31, 2012 reflects the Company's position as if the sale of the BDNA Business had occurred on that date.
The historical financial information has been adjusted to give effect to matters that are (1) directly attributable to the sale of the BDNA Business, (2) factually supportable, and (3) with respect to the statements of income, expected to have a continuing impact on the operating results of the combined company. The unaudited pro forma combined condensed financial information should be read in conjunction with the accompanying Notes to the unaudited pro forma combined condensed financial information and the historical audited financial statements of the Company included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and filed with the Securities and Exchange Commission (“SEC”) on February 25, 2013.
The unaudited pro forma combined condensed financial information is presented for informational purposes only. It has been prepared in accordance with the regulations of the SEC and is not necessarily indicative of what our financial position or results of operations actually would have been had we completed the sale of the BDNA Business at the dates indicated, nor does it purport to project the future financial position or operating results of the Company.
Barnes Group Inc.
Unaudited Pro Forma Combined Condensed Statement of Income
Year Ended December 31, 2012
(Dollars in thousands)
Barnes Group Inc. | Less: Sale of the BDNA Business (1) | Pro Forma Adjustments | Notes | Pro Forma Combined | |||||||||||||
Net Sales | $ | 1,229,959 | $ | (301,179 | ) | $ | — | $ | 928,780 | ||||||||
Cost of sales | 812,192 | (156,539 | ) | — | 655,653 | ||||||||||||
Selling and administrative expenses | 281,211 | (115,215 | ) | — | 165,996 | ||||||||||||
Operating Income | 136,556 | (29,425 | ) | — | 107,131 | ||||||||||||
Interest expense | 12,238 | — | — | 12,238 | |||||||||||||
Other expense (income), net | 2,671 | (41 | ) | — | 2,630 | ||||||||||||
Income from continuing operations before income taxes | 121,647 | (29,384 | ) | — | 92,263 | ||||||||||||
Income taxes | 23,350 | (10,918 | ) | — | 12,432 | ||||||||||||
Income from continuing operations | $ | 98,297 | $ | (18,466 | ) | $ | — | $ | 79,831 | ||||||||
Earnings per Share of Common Stock from continuing operations: | |||||||||||||||||
Basic | $ | 1.80 | $ | 1.46 | |||||||||||||
Diluted | $ | 1.78 | $ | 1.44 | |||||||||||||
Dividends | $ | 0.40 | $ | 0.40 | |||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 54,626,453 | 54,626,453 | |||||||||||||||
Diluted | 55,224,457 | 55,224,457 | |||||||||||||||
See accompanying notes to the unaudited pro forma combined condensed financial information.
Barnes Group Inc.
Unaudited Pro Forma Combined Condensed Statement of Income
Year Ended December 31, 2011
(Dollars in thousands)
Barnes Group Inc. | Less: Sale of the BDNA Business (1) | Pro Forma Adjustments | Notes | Pro Forma Combined | |||||||||||||
Net Sales | $ | 1,169,355 | $ | (304,277 | ) | $ | — | $ | 865,078 | ||||||||
Cost of sales | 772,398 | (157,067 | ) | — | 615,331 | ||||||||||||
Selling and administrative expenses | 269,402 | (121,234 | ) | — | 148,168 | ||||||||||||
Operating Income | 127,555 | (25,976 | ) | — | 101,579 | ||||||||||||
Interest expense | 10,271 | — | — | 10,271 | |||||||||||||
Other expense (income), net | 395 | (62 | ) | — | 333 | ||||||||||||
Income from continuing operations before income taxes | 116,889 | (25,914 | ) | — | 90,975 | ||||||||||||
Income taxes | 25,316 | (9,296 | ) | — | 16,020 | ||||||||||||
Income from continuing operations | $ | 91,573 | $ | (16,618 | ) | $ | — | $ | 74,955 | ||||||||
Earnings per Share of Common Stock from continuing operations: | |||||||||||||||||
Basic | $ | 1.66 | $ | 1.36 | |||||||||||||
Diluted | $ | 1.64 | $ | 1.34 | |||||||||||||
Dividends | $ | 0.34 | $ | 0.34 | |||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 55,214,586 | 55,214,586 | |||||||||||||||
Diluted | 55,931,882 | 55,931,882 | |||||||||||||||
See accompanying notes to the unaudited pro forma combined condensed financial information.
Barnes Group Inc.
Unaudited Pro Forma Combined Condensed Statement of Income
Year Ended December 31, 2010
(Dollars in thousands)
Barnes Group Inc. | Less: Sale of the BDNA Business (1) | Pro Forma Adjustments | Notes | Pro Forma Combined | |||||||||||||
Net Sales | $ | 1,028,617 | $ | (286,876 | ) | $ | — | $ | 741,741 | ||||||||
Cost of sales | 678,186 | (151,846 | ) | — | 526,340 | ||||||||||||
Selling and administrative expenses | 264,033 | (125,078 | ) | — | 138,955 | ||||||||||||
Operating Income | 86,398 | (9,952 | ) | — | 76,446 | ||||||||||||
Interest expense | 19,984 | (20 | ) | — | 19,964 | ||||||||||||
Other expense (income), net | 2,609 | 57 | — | 2,666 | |||||||||||||
Income from continuing operations before income taxes | 63,805 | (9,989 | ) | — | 53,816 | ||||||||||||
Income taxes | 9,827 | (3,795 | ) | — | 6,032 | ||||||||||||
Income from continuing operations | $ | 53,978 | $ | (6,194 | ) | $ | — | $ | 47,784 | ||||||||
Earnings per Share of Common Stock from continuing operations: | |||||||||||||||||
Basic | $ | 0.97 | $ | 0.86 | |||||||||||||
Diluted | $ | 0.96 | $ | 0.85 | |||||||||||||
Dividends | $ | 0.32 | $ | 0.32 | |||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 55,259,732 | 55,259,732 | |||||||||||||||
Diluted | 55,925,187 | 55,925,187 | |||||||||||||||
See accompanying notes to the unaudited pro forma combined condensed financial information.
Barnes Group Inc.
Unaudited Pro Forma Combined Condensed Balance Sheet
December 31, 2012
(Dollars in thousands)
Barnes Group, Inc. | Less: Sale of the BDNA Business (1) | Pro Forma Adjustments | Notes | Pro Forma Combined | ||||||||||||||
Assets | ||||||||||||||||||
Current assets | — | |||||||||||||||||
Cash and cash equivalents | $ | 86,356 | $ | — | $ | 550,000 | (2 | ) | $ | 636,356 | ||||||||
Accounts receivable, less allowances | 253,202 | (34,690 | ) | — | 218,512 | |||||||||||||
Inventories | 226,220 | (48,967 | ) | — | 177,253 | |||||||||||||
Deferred income taxes | 33,906 | — | (4,095 | ) | (3 | ) | 29,811 | |||||||||||
Prepaid expenses and other current assets | 18,856 | (1,348 | ) | — | 17,508 | |||||||||||||
Total current assets | 618,540 | (85,005 | ) | 545,905 | 1,079,440 | |||||||||||||
Deferred Income Taxes | 29,961 | — | 5,428 | (3 | ) | 35,389 | ||||||||||||
Plant, property and equipment | 634,464 | (55,182 | ) | — | 579,282 | |||||||||||||
Less: accumulated depreciation | (401,367 | ) | 37,858 | — | (363,509 | ) | ||||||||||||
233,097 | (17,324 | ) | — | 215,773 | ||||||||||||||
Goodwill | 579,905 | (134,875 | ) | — | 445,030 | |||||||||||||
Other intangible assets | 383,972 | (113 | ) | — | 383,859 | |||||||||||||
Other assets | 23,121 | (433 | ) | — | 22,688 | |||||||||||||
Total assets | $ | 1,868,596 | (237,750 | ) | $ | 551,333 | $ | 2,182,179 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||
Current liabilities | ||||||||||||||||||
Notes and overdraft payable | $ | 3,795 | $ | — | $ | — | $ | 3,795 | ||||||||||
Accounts payable | 99,037 | (19,324 | ) | 122,000 | (3 | ) | 201,713 | |||||||||||
Accrued liabilities | 96,364 | (2,477 | ) | 10,000 | (4 | ) | 103,887 | |||||||||||
Long-term debt - current | 699 | — | — | 699 | ||||||||||||||
Total current liabilities | 199,895 | (21,801 | ) | 132,000 | 310,094 | |||||||||||||
Long-term debt | 642,119 | — | — | 642,119 | ||||||||||||||
Accrued retirement benefits | 159,103 | (29 | ) | — | 159,074 | |||||||||||||
Deferred income taxes | 48,707 | — | — | 48,707 | ||||||||||||||
Other liabilities | 18,654 | (109 | ) | — | 18,545 | |||||||||||||
Commitments and contingencies | ||||||||||||||||||
Stockholders' equity | ||||||||||||||||||
Common stock | 592 | — | — | 592 | ||||||||||||||
Additional paid-in capital | 332,588 | — | — | 332,588 | ||||||||||||||
Treasury stock | (99,756 | ) | — | — | (99,756 | ) | ||||||||||||
Retained Earnings | 633,446 | (222,305 | ) | 550,000 | (2 | ) | 830,474 | |||||||||||
(120,667 | ) | (3 | ) | |||||||||||||||
(10,000 | ) | (4 | ) | |||||||||||||||
Accumulated other non-owner changes to equity | (66,752 | ) | 6,494 | — | (60,258 | ) | ||||||||||||
Total stockholders' equity | 800,118 | (215,811 | ) | 419,333 | 1,003,640 | |||||||||||||
Total liabilities and stockholders' equity | $ | 1,868,596 | $ | (237,750 | ) | $ | 551,333 | $ | 2,182,179 | |||||||||
See accompanying notes to the unaudited pro forma combined condensed financial information.
Basis of Presentation
The unaudited pro forma combined condensed financial information has been prepared to illustrate the effect of the sale of the North American distribution business (the "BDNA Business"). The unaudited pro forma combined condensed statements of income for the years ended December 31, 2012, 2011 and 2010, and the unaudited pro forma combined condensed balance sheet as of December 31, 2012, have been derived from the historical consolidated financial statements of the Company, which are included in its Annual Report on Form 10-K for the year ended December 31, 2012. The unaudited pro forma combined condensed statements of income reflect the Company's results as if the sale of the BDNA Business had occurred as of January 1, 2010. The unaudited pro forma combined condensed balance sheet as of December 31, 2012 reflects the Company's position as if the sale of the BDNA Business had occurred on that date.
Pro Forma Adjustments
On April 22, 2013, Barnes Group Inc. (the “Company”) completed the previously announced sale of its BDNA Business to MSC Industrial Direct Co., Inc. ("MSC") pursuant to the terms of the Asset Purchase Agreement dated February 22, 2013 (the "APA") between the Company and MSC. Pursuant to the terms of the APA, the total cash consideration for the BDNA Business was $550 million before adjustments for its estimated net working capital, subject to certain post closing adjustments.
The following pro forma adjustments are included in the unaudited pro forma combined statements of income for the twelve months ended December 31, 2012, 2011 and 2010 and the unaudited pro forma combined condensed balance sheet as of December 31, 2012:
(1) The "Sale of the BDNA Business" column includes amounts representing the revenues, expenses, assets, liabilities and equity attributable to the BDNA Business which were included in the Company's historical financial statements. In accordance with generally accepted accounting principles in the United States, the amounts eliminated on the unaudited pro forma combined condensed statements of operations do not include certain indirect corporate overhead included in general and administrative as such amounts would have been absorbed by the Company in the absence of the BDNA Business.
(2) The proceeds, net of related transaction costs, and the resulting net gain from the sale of the BDNA Business has been summarized below:
Proceeds from sale of the BDNA Business | $ | 550,000 | |
Estimated transaction expenses (see (4) below) | (10,000 | ) | |
Net proceeds | 540,000 | ||
Net assets sold | (222,305 | ) | |
Gain on sale before taxes | 317,695 | ||
Income tax provision (see (3) below) | (120,667 | ) | |
Net gain on sale | $ | 197,028 | |
The above balances are preliminary and are subject to adjustments in future periods.
(3) Amounts represent the income tax provision and the taxes payable on the estimated pre-tax gain related to the sale of the BDNA Business. Taxes payable were impacted by the recognition of deferred taxes that had been earlier established and the utilization of net operating losses in the US and Canada. The income tax provision is based on the respective statutory rates effective for the transaction and reflects the impact of the non-deductible goodwill at the BDNA Business and the utilization of fully reserved net operating losses in Canada.
(4) The calculation of the gain on the sale of the BDNA Business includes estimated transaction costs that are directly attributable to the sale, but are not reflected in the accompanying unaudited pro forma combined condensed consolidated statements of income. Transaction costs include professional fees and other costs directly related to the sale of the BDNA Business.