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8-K/A - FORM 8-K/A - WEYERHAEUSER CO | d578607d8ka.htm |
EX-99.1 - EX-99.1 - WEYERHAEUSER CO | d578607dex991.htm |
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information is based upon the historical consolidated financial information of Weyerhaeuser for the year ended December 31, 2012 and as of and for the six month periods ended June 30, 2013 and 2012, included in the Companys annual report on Form 10-K for the year ended December 31, 2012 and the Companys quarterly report on Form 10-Q for the respective periods, and Longview Timber LLC (Longview or Longview Timber) included or incorporated by reference in this Report on Form 8-K/A.
The unaudited pro forma condensed combined balance sheet as at June 30, 2013, is presented as if the Additional Common Shares Offering (as defined below) and the acquisition by Weyerhaeuser of all of the outstanding equity interests in Longview Timber (the Acquisition) were completed on that date. The unaudited pro forma condensed combined statements of operations data for the six month periods ended June 30, 2013 and 2012, and the year ended December 31, 2012, assume that the Prior Offerings (as defined below) and the Acquisition were completed on January 1, 2012. The historical consolidated financial information has been adjusted to give effect to estimated pro forma events that are (1) directly attributable to the Prior Offerings and the Acquisition, (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the combined results of operations.
The unaudited pro forma condensed combined financial information should be read in conjunction with the historical consolidated financial statements and accompanying notes of Weyerhaeuser and Longview.
The unaudited pro forma condensed combined financial information contained in this Form 8K/A is presented for illustrative purposes only, contains a variety of adjustments, assumptions and preliminary estimates, is subject to numerous other uncertainties and does not reflect what the combined companys financial position or results of operations would have been had the Transactions (as defined below) been completed as of the dates assumed for purposes of that pro forma financial information nor does it reflect the financial position or results of operations of the combined company following the Acquisition. The pro forma adjustments are based on the preliminary information available at the time of the preparation of this Form 8K/A. For purposes of the unaudited pro forma condensed combined financial information, the Acquisition consideration has been preliminarily allocated to the assets acquired and liabilities assumed based on limited information presently available to Weyerhaeuser to estimate fair values. The Acquisition consideration has been allocated among the relative fair values of the assets acquired and liabilities assumed based on their estimated fair values as of the date of the Acquisition. The final allocation is dependent upon certain valuations and other analyses that could not be completed prior to the Acquisition and are required to make a definitive allocation. The actual amounts recorded upon completion of the valuation and other analyses related to the values as of July 23, 2013, the closing date of the Acquisition, may differ materially from the information presented in the accompanying unaudited pro forma condensed combined financial information. Additionally, the unaudited pro forma condensed combined financial information does not reflect the cost of any integration activities or benefits from synergies that may be derived from any integration activities nor does it include any other items not expected to have a continuing impact on the consolidated results of operations. In addition, the pro forma adjustments for the Acquisition do not include any post-closing adjustments that may occur pursuant to the Purchase Agreement (as defined below), which may include adjustments of the purchase price, and any such post-closing adjustments may be material.
The unaudited pro forma condensed combined financial information contained in this Report on Form 8K/A assumes that we elect to pay any and all dividends with respect to the Mandatory Convertible Preference Shares (as defined below) in cash.
Certain amounts in the historical consolidated financial statements of Longview will be reclassified to conform to Weyerhaeusers financial statement presentation. Management will also continue to assess Longviews accounting policies for adjustments in addition to those reflected in the pro forma condensed combined information that may be required to conform Longviews accounting policies to those of Weyerhaeuser.
Weyerhaeuser Company
Unaudited Pro Forma Condensed Combined Balance Sheet
As at June 30, 2013
(In millions)
Weyerhaeuser (Historical) |
Longview (Historical) |
Adjustments for the Additional Common Shares Offering |
Purchase Accounting Adjustments |
Pro Forma Combined |
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ASSETS |
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Forest Products |
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Current assets: |
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Cash and cash equivalents |
$ | 908 | $ | 32 | $ | | $ | (34 | ) | $ | 860 | |||||||||
(32 | ) | |||||||||||||||||||
(11 | ) | |||||||||||||||||||
(2 | ) | |||||||||||||||||||
(1 | ) | |||||||||||||||||||
Receivables |
632 | 11 | | (2 | ) | 641 | ||||||||||||||
Inventories |
561 | 6 | | | 567 | |||||||||||||||
Prepaid expenses |
96 | 4 | | | 100 | |||||||||||||||
Deferred tax assets |
144 | | | | 144 | |||||||||||||||
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Total current assets |
2,341 | 53 | | (82 | ) | 2,312 | ||||||||||||||
Property and equipment |
2,706 | 2 | | | 2,708 | |||||||||||||||
Construction in progress |
72 | | | | 72 | |||||||||||||||
Timber and timberlands |
3,949 | 1,491 | | 1,245 | 6,685 | |||||||||||||||
Cash and cash equivalents designated for the Purchase of Longview Timber LLC |
1,450 | | 117 | (1,567 | ) | | ||||||||||||||
Investments in and advances to equity affiliates |
186 | 1 | | | 187 | |||||||||||||||
Other assets |
455 | 5 | | (5 | ) | 468 | ||||||||||||||
11 | ||||||||||||||||||||
2 | ||||||||||||||||||||
Restricted financial investments held by variable interest entities |
615 | | | | 615 | |||||||||||||||
Real Estate assets |
2,134 | | | | 2,134 | |||||||||||||||
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Total assets |
$ | 13,908 | $ | 1,552 | $ | 117 | $ | (396 | ) | $ | 15,181 | |||||||||
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LIABILITIES AND EQUITY |
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Forest Products |
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Current liabilities: |
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Notes payable |
$ | 2 | $ | | $ | | $ | | $ | 2 | ||||||||||
Current maturities of long-term debt |
163 | | | | 163 | |||||||||||||||
Accounts payable |
341 | 7 | | (2 | ) | 346 | ||||||||||||||
Accrued liabilities |
573 | 12 | | | 585 | |||||||||||||||
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Total current liabilities |
1,079 | 19 | | (2 | ) | 1,096 | ||||||||||||||
Long-term debt |
3,842 | 1,070 | | 70 | 4,982 | |||||||||||||||
Long-term debt (nonrecourse to the company) held by variable interest entities |
511 | | | | 511 | |||||||||||||||
Due to related party |
| 19 | | (19 | ) | | ||||||||||||||
Deferred income taxes |
38 | | | | 38 | |||||||||||||||
Deferred pension and other postretirement benefits |
1,785 | | | | 1,785 | |||||||||||||||
Other liabilities |
446 | | | | 446 | |||||||||||||||
Real Estate liabilities |
301 | | | | 301 | |||||||||||||||
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Total liabilities |
8,002 | 1,108 | | 49 | 9,159 | |||||||||||||||
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Equity: |
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Weyerhaeuser shareholders interest: |
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Mandatory Convertible Preference Shares |
14 | | | | 14 | |||||||||||||||
Common Shares |
722 | | 5 | | 727 | |||||||||||||||
Other capital |
6,290 | | 112 | | 6,402 | |||||||||||||||
Retained earnings |
350 | | | (1 | ) | 349 | ||||||||||||||
Cumulative comprehensive loss |
(1,508 | ) | | | | (1,508 | ) | |||||||||||||
Members equity |
| 444 | | (444 | ) | | ||||||||||||||
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Total Weyerhaeuser shareholders interest |
5,868 | 444 | 117 | (445 | ) | 5,984 | ||||||||||||||
Noncontrolling interests |
38 | | | | 38 | |||||||||||||||
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Total equity |
5,906 | 444 | 117 | (445 | ) | 6,022 | ||||||||||||||
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Total liabilities and equity |
$ | 13,908 | $ | 1,552 | $ | 117 | $ | (396 | ) | $ | 15,181 | |||||||||
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See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
Weyerhaeuser Company
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2013
(In millions, except per share data)
Weyerhaeuser (Historical) |
Longview (Historical) |
Adjustments for Prior Offerings |
Purchase Accounting Adjustments |
Pro Forma Combined |
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Net sales and revenues |
$ | 4,092 | $ | 160 | $ | | $ | (53 | ) | $ | 4,199 | |||||||||
Cost of products sold |
3,197 | 129 | | (53 | ) | 3,232 | ||||||||||||||
(41 | ) | |||||||||||||||||||
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Gross margin |
895 | 31 | | 41 | 967 | |||||||||||||||
Selling, general and administrative expenses |
331 | 6 | | | 337 | |||||||||||||||
Research and development expenses |
15 | | | | 15 | |||||||||||||||
Charges for restructuring, closures and impairments |
10 | | | | 10 | |||||||||||||||
Other operating income, net |
(28 | ) | (2 | ) | | | (30 | ) | ||||||||||||
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Operating income |
567 | 27 | | 41 | 635 | |||||||||||||||
Interest income and other |
21 | | | | 21 | |||||||||||||||
Interest expense, net of capitalized interest |
(163 | ) | (29 | ) | | 4 | (188 | ) | ||||||||||||
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Earnings before income taxes |
425 | (2 | ) | | 45 | 468 | ||||||||||||||
Income taxes |
(83 | ) | (2 | ) | | | (85 | ) | ||||||||||||
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Net earnings |
342 | (4 | ) | | 45 | 383 | ||||||||||||||
Dividends on preference shares |
(2 | ) | | (20 | ) | | (22 | ) | ||||||||||||
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Net earnings attributable to Weyerhaeuser common shareholders |
$ | 340 | $ | (4 | ) | $ | (20 | ) | $ | 45 | $ | 361 | ||||||||
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Earnings per share attributable to Weyerhaeuser common shareholders: |
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Basic |
$ | 0.62 | $ | 0.62 | ||||||||||||||||
Diluted |
$ | 0.61 | $ | 0.62 | ||||||||||||||||
Weighted average shares outstanding (in thousands): |
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Basic |
549,159 | 580,426 | ||||||||||||||||||
Diluted |
554,301 | 585,568 |
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
Weyerhaeuser Company
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Six Months Ended June 30, 2012
(In millions, except per share data)
Weyerhaeuser (Historical) |
Longview (Historical) |
Adjustments for Prior Offerings |
Purchase Accounting Adjustments |
Pro Forma Combined |
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Net sales and revenues |
$ | 3,287 | $ | 124 | $ | | $ | (32 | ) | $ | 3,379 | |||||||||
Cost of products sold |
2,806 | 116 | | (32 | ) | 2,856 | ||||||||||||||
(34 | ) | |||||||||||||||||||
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Gross margin |
481 | 8 | | 34 | 523 | |||||||||||||||
Selling, general and administrative expenses |
292 | 9 | | | 301 | |||||||||||||||
Research and development expenses |
15 | | | | 15 | |||||||||||||||
Charges for restructuring, closures and impairments |
16 | | | | 16 | |||||||||||||||
Other operating income, net |
(119 | ) | | | | (119 | ) | |||||||||||||
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Operating income |
277 | (1 | ) | | 34 | 310 | ||||||||||||||
Interest income and other |
23 | 2 | | | 25 | |||||||||||||||
Interest expense, net of capitalized interest |
(173 | ) | (30 | ) | | 3 | (200 | ) | ||||||||||||
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Earnings before income taxes |
127 | (29 | ) | | 37 | 135 | ||||||||||||||
Income taxes |
(2 | ) | (1 | ) | | | (3 | ) | ||||||||||||
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Net earnings |
125 | (30 | ) | | 37 | 132 | ||||||||||||||
Dividends on preference shares |
| | (22 | ) | | (22 | ) | |||||||||||||
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Net earnings attributable to Weyerhaeuser common shareholders |
$ | 125 | $ | (30 | ) | $ | (22 | ) | $ | 37 | $ | 110 | ||||||||
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Earnings per share attributable to Weyerhaeuser common shareholders: |
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Basic |
$ | 0.23 | $ | 0.19 | ||||||||||||||||
Diluted |
$ | 0.23 | $ | 0.19 | ||||||||||||||||
Weighted average shares outstanding (in thousands): |
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Basic |
537,667 | 571,017 | ||||||||||||||||||
Diluted |
539,880 | 573,230 |
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
Weyerhaeuser Company
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2012
(In millions, except per share data)
Weyerhaeuser (Historical) |
Longview (Historical) |
Adjustments for Prior Offerings |
Purchase Accounting Adjustments |
Pro Forma Combined |
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Net sales and revenues |
$ | 7,059 | $ | 245 | $ | | $ | (68 | ) | $ | 7,236 | |||||||||
Cost of products sold |
5,810 | 230 | | (68 | ) | 5,904 | ||||||||||||||
(68 | ) | |||||||||||||||||||
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Gross margin |
1,249 | 15 | | 68 | 1,332 | |||||||||||||||
Selling, general and administrative expenses |
630 | 19 | | | 649 | |||||||||||||||
Research and development expenses |
32 | | | | 32 | |||||||||||||||
Charges for restructuring, closures and impairments |
32 | | | | 32 | |||||||||||||||
Other operating income, net |
(180 | ) | | | | (180 | ) | |||||||||||||
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Operating income |
735 | (4 | ) | | 68 | 799 | ||||||||||||||
Interest income and other |
52 | | | | 52 | |||||||||||||||
Interest expense, net of capitalized interest |
(348 | ) | (60 | ) | | 6 | (402 | ) | ||||||||||||
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Earnings before income taxes |
439 | (64 | ) | | 74 | 449 | ||||||||||||||
Income taxes |
(55 | ) | (2 | ) | | | (57 | ) | ||||||||||||
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Net earnings |
384 | (66 | ) | | 74 | 392 | ||||||||||||||
Net loss attributable to noncontrolling interests |
1 | | | | 1 | |||||||||||||||
Dividends on preference shares |
| | (44 | ) | | (44 | ) | |||||||||||||
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Net earnings attributable to Weyerhaeuser common shareholders |
$ | 385 | $ | (66 | ) | $ | (44 | ) | $ | 74 | $ | 349 | ||||||||
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Earnings per share attributable to Weyerhaeuser common shareholders: |
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Basic |
$ | 0.71 | $ | 0.61 | ||||||||||||||||
Diluted |
$ | 0.71 | $ | 0.61 | ||||||||||||||||
Weighted average shares outstanding (in thousands): |
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Basic |
539,140 | 572,490 | ||||||||||||||||||
Diluted |
542,310 | 575,660 |
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Basis of Presentation
On June 14, 2013, we entered into a purchase agreement (the Purchase Agreement) with Longview Timber Holdings, Corp. and certain of its security holders, other related agreements to acquire, with cash, all of the equity interests in Longview Timber for an aggregate purchase price of $2.65 billion (which amount includes the assumption of Longviews senior secured fixed and floating rate loans in an aggregate principal amount of $1.07 billion under the Amended and Restated Loan Agreement dated as of November 4, 2008, as further amended, among Longview Timber Corp., Longview Timberlands LLC and Metropolitan Life Insurance Company (collectively, the Longview Existing Debt), and is subject to adjustment based on Longviews net working capital and net cash at the closing date of the Acquisition in accordance with the terms of the Purchase Agreement. To finance the Acquisition, Weyerhaeuser issued the following:
| 29,000,000 of our common shares, par value $1.25 per share (the Common Shares), on June 24, 2013, at the price of $27.75 per common share for net proceeds of $781 million (the Common Shares Offering); |
| 13,800,000 6.375% Mandatory Convertible Preference Shares, Series A, par value $1.00 and liquidation preference of $50.00 per share (the Mandatory Convertible Preference Shares), on June 24, 2013, for net proceeds of $669 million (the Mandatory Convertible Preference Shares Offering and, together with the Common Shares Offering and the Additional Common Shares Offering, the Prior Offerings); and |
| 4,350,000 common shares on July 8, 2013, at the price of $27.75 per share for net proceeds of $117 million, in connection with the exercise by the underwriters of the Common Shares Offering of the additional common shares purchase option (the Additional Common Shares Offering). |
Net proceeds received from the issuances of shares are recorded in Cash and cash equivalents designated for the purchase of Longview Timber LLC in the Unaudited Pro Forma Condensed Combined Balance Sheet. The Acquisition closed on July 23, 2013.
Weyerhaeuser will account for the Acquisition as a purchase in accordance with accounting principles generally accepted in the United States. Under the purchase method, the assets and liabilities of Longview will be recorded as of the date of the Acquisition at their respective fair values.
2. Pro Forma Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet
The following table presents the preliminary purchase accounting adjustments to the net book value of the assets acquired and liabilities of Longview assumed based on the preliminary estimates of fair values of the assets acquired and liabilities assumed as if the Acquisition occurred at June 30, 2013.
Net cash paid |
$ | 1,601 | ||
Less book value of Longview net assets |
(444 | ) | ||
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Excess purchase price to be allocated |
$ | 1,157 | ||
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Fair market value adjustments: |
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Eliminate Longview cash |
$ | (32 | ) | |
Timber and timberlands |
1,245 | |||
Eliminate deferred debt costs |
(5 | ) | ||
Eliminate related party payables |
19 | |||
Long-term debt |
(70 | ) | ||
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Total allocations |
$ | 1,157 | ||
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Purchase accounting adjustments have been reflected to eliminate the historical Longview equity balances. Receivable and accounts payable balances related to Longview sales to Weyerhaeuser have been eliminated. Weyerhaeuser paid an $11 million deposit related to interest on the assumed Longview debt that is reflected as a long-term asset and $2 million to transfer the debt to Weyerhaeuser from Longview, which is reflected as a long-term asset and will be amortized over the life of the debt. A purchase accounting adjustment has been reflected on the retained earnings line to include estimated other transaction expenses of $1 million.
No deferred income taxes have been provided on the fair market value adjustments because Longview operates as a REIT and almost all of its income will continue to be distributed to shareholders without first paying corporate level tax.
3. Pro Forma Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations
The adjustment to net sales and revenues and cost of products sold includes the elimination of Longview sales to Weyerhaeuser. Additionally, cost of products sold includes a net reduction in combined depletion expense. Longview computed depletion rates by dividing the carrying amount of merchantable timber by the volume of merchantable timber estimated to be available by region in Oregon and Washington. Weyerhaeuser computes depletion rates by dividing the net carrying value of timber by the related volume of timber estimated to be available over the growth cycle. Further, Weyerhaeuser calculates depletion in the West in a Western depletion pool, as opposed to by region in Oregon and Washington. Conforming Longviews depletion method to Weyerhaeusers depletion method results in a decrease in Longviews historical depletion for the periods presented. This is partially offset by an increase in Weyerhaeusers historical depletion as a result of including the fair value basis of the Longview timber in Weyerhaeusers Western depletion pool. Total depletion under the two depletion methods will be the same amount over the harvest cycle.
The adjustment to interest expense, net of capitalized interest, reflects the elimination of amortization of losses recognized by Longview on terminated interest rate swaps and the elimination of amortization of Longviews deferred loan costs. During second quarter 2013, we paid $11 million in fees related to a bridge loan commitment obtained in connection with the Acquisition. Upon closing of the Acquisition on July 23, 2013, we terminated the bridge loan commitment, which was unfunded, and the fees associated therewith will be expensed in third quarter 2013.
For purposes of calculating pro forma condensed combined basic and diluted earnings per share, we gave effect to the Prior Offerings and used the actual dividend rate of 6.375% on the Mandatory Convertible Preference Shares, or $3.1875 per Mandatory Convertible Preference Share annually. Accordingly, dividends on the Mandatory Convertible Preference Shares would have been $22 million for each of the six month periods ended June 30, 2013 and 2012, and $44 million for the year ended December 31, 2012, and were subtracted from net earnings attributable to Weyerhaeuser common shareholders, or $0.04 and $0.08 per Common Share, respectively, during such periods. The Mandatory Convertible Preference Shares are initially convertible into a maximum of 20,720,721 Common Shares, assuming mandatory conversion based on an applicable market rate (as determined pursuant to the terms of the Mandatory Convertible Preference Shares) for our Common Shares equal to $33.30 per Common Share. We have assumed that none of the Mandatory Convertible Preference Shares have been converted for purposes of calculating pro forma combined diluted earnings per share because conversion would have had an antidilutive effect. We have also assumed that we elect to pay all dividends on the Mandatory Convertible Preference Shares in cash.