Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Quanex Building Products CORP | d705907d8k.htm |
| EX-10.1 - EX-10.1 - Quanex Building Products CORP | d705907dex101.htm |
Exhibit 99.1
Unaudited Pro Forma Condensed Consolidated Financial Information
Basis of Presentation
The accompanying unaudited pro forma condensed consolidated balance sheet and statements of income (loss) were prepared based on the Company’s historical financial information, and gives effect to the sale of Nichols to the Buyer on April 1, 2014, for $110.0 million in cash, subject to customary purchase price adjustments. The Company will provide certain transition services through May 31, 2014. No pro forma adjustments are presented herein with respect to the transition services agreement, as the amount is not deemed to be significant to the Company.
The unaudited pro forma balance sheet at January 31, 2014, reflects the pro forma effect of the Nichols disposition as if the transaction was consummated on that date. The unaudited pro forma condensed consolidated statements of income (loss) for the three months ended January 31, 2014 and the years ended October 31, 2013, 2012 and 2011, reflect the pro forma effect of the Nichols disposition as if the transaction was consummated on November 1, 2010. The historical balance sheet and statement of income (loss) for the three months ended January 31, 2014 were included in the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2014. The historical statements of income (loss) for the years ended October 31, 2013, 2012 and 2011 were provided in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2013. The accompanying unaudited pro forma condensed consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the referenced filings.
The unaudited pro forma condensed consolidated balance sheet and statements of income (loss) are presented in tabular format as follows: (i) historical consolidated results, as previously filed; (ii) less results of Nichols (the disposal group); (iii) plus pro forma adjustments, to arrive at the pro forma results. The results for Nichols were adjusted for LIFO inventory reserve, incurred but not reported costs related to workers’ compensation insurance and an effective tax rate adjustment in order to present the disposal group on a stand-alone basis for this pro forma presentation.
The unaudited pro forma condensed consolidated balance sheet and statements of income (loss) include pro forma adjustments which reflect transactions and events that are directly attributable to the sale and are factually supportable. These pro forma adjustments are described in the notes which accompany these unaudited pro forma condensed consolidated financial statements.
QUANEX BUILDING PRODUCTS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JANUARY 31, 2014
| Consolidated As Reported |
Disposal Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| (In thousands) | ||||||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 25,807 | $ | 2 | $ | 110,000 | (a) | $ | 135,805 | |||||||
| Accounts receivable, net |
72,459 | 31,110 | — | 41,349 | ||||||||||||
| Inventories, net |
74,498 | 21,314 | — | 53,184 | ||||||||||||
| Deferred income taxes |
24,769 | 2,102 | — | 22,667 | ||||||||||||
| Prepaid and other current assets |
7,352 | 5,970 | — | 1,382 | ||||||||||||
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| Total current assets |
204,885 | 60,498 | 110,000 | 254,387 | ||||||||||||
| Property, plant and equipment, net |
160,531 | 50,342 | — | 110,189 | ||||||||||||
| Deferred income taxes |
13,277 | 7,713 | — | 5,564 | ||||||||||||
| Goodwill |
71,838 | — | — | 71,838 | ||||||||||||
| Intangible assets, net |
76,969 | — | — | 76,969 | ||||||||||||
| Other assets |
13,543 | 8,179 | — | 5,364 | ||||||||||||
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| Total assets |
$ | 541,043 | $ | 126,732 | $ | 110,000 | $ | 524,311 | ||||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Current liabilities: |
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| Accounts payable |
$ | 67,278 | $ | 29,702 | $ | — | $ | 37,576 | ||||||||
| Accrued liabilities |
29,679 | 7,997 | 2,500 | (a) | 24,182 | |||||||||||
| Income tax payable |
— | — | 9,930 | (a) | 9,930 | |||||||||||
| Current maturities of long-term debt |
187 | 24 | — | 163 | ||||||||||||
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| Total current liabilities |
97,144 | 37,723 | 12,430 | 71,851 | ||||||||||||
| Long-term debt |
721 | 35 | — | 686 | ||||||||||||
| Deferred pension and postretirement benefits |
4,506 | 310 | — | 4,196 | ||||||||||||
| Liability for uncertain tax positions |
5,435 | — | — | 5,435 | ||||||||||||
| Non-current environmental reserves |
8,862 | 8,862 | — | — | ||||||||||||
| Other liabilities |
12,114 | 673 | — | 11,441 | ||||||||||||
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| Total liabilities |
128,782 | 47,603 | 12,430 | 93,609 | ||||||||||||
| Commitments and contingencies |
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| Stockholders’ equity |
412,261 | 79,129 | 97,570 | (a) | 430,702 | |||||||||||
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| Total liabilities and stockholders’ equity |
$ | 541,043 | $ | 126,732 | $ | 110,000 | $ | 524,311 | ||||||||
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See accompanying notes to unaudited pro forma condensed consolidated financial statements
QUANEX BUILDING PRODUCTS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED JANUARY 31, 2014
| Consolidated As Reported |
Disposal Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales |
$ | 202,362 | $ | 79,491 | $ | 3,508 | (b) | $ | 126,379 | |||||||
| Cost and expenses: |
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| Cost of sales (exclusive of items shown separately below) |
171,904 | 80,319 | 3,508 | (b) | 95,093 | |||||||||||
| Selling, general and administrative |
24,767 | 2,264 | 221 | (c) | 22,724 | |||||||||||
| Depreciation and amortization |
10,294 | 1,750 | — | 8,544 | ||||||||||||
| Asset impairment charges |
510 | 505 | — | 5 | ||||||||||||
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| Operating income (loss) |
(5,113 | ) | (5,347 | ) | (221 | ) | 13 | |||||||||
| Non-operating income (expense): |
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| Interest expense |
(158 | ) | (17 | ) | — | (141 | ) | |||||||||
| Other, net |
96 | — | — | 96 | ||||||||||||
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| Income (loss) before income taxes |
(5,175 | ) | (5,364 | ) | (221 | ) | (32 | ) | ||||||||
| Income tax benefit (expense) |
1,275 | 1,984 | 77 | (c) | (632 | ) | ||||||||||
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| Net income (loss) |
$ | (3,900 | ) | $ | (3,380 | ) | $ | (144 | ) | $ | (664 | ) | ||||
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| Earnings(loss) per common share: |
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| Basic |
$ | (0.11 | ) | $ | (0.02 | ) | ||||||||||
| Diluted |
$ | (0.11 | ) | $ | (0.02 | ) | ||||||||||
| Weighted-average common shares outstanding: |
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| Basic |
37,003 | 37,003 | ||||||||||||||
| Diluted |
37,003 | 37,003 | ||||||||||||||
| Cash dividends declared per share |
$ | 0.04 | $ | 0.04 | ||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
QUANEX BUILDING PRODUCTS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE YEAR ENDED OCTOBER 31, 2013
| Consolidated As Reported |
Disposal Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales |
$ | 952,642 | $ | 410,380 | $ | 12,718 | (b) | $ | 554,980 | |||||||
| Cost and expenses: |
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| Cost of sales (exclusive of items shown separately below) |
799,077 | 391,948 | 12,718 | (b) | 419,847 | |||||||||||
| Selling, general and administrative |
109,325 | 10,357 | 2,172 | (c) | 101,140 | |||||||||||
| Depreciation and amortization |
60,504 | 6,983 | — | 53,521 | ||||||||||||
| Asset impairment charges |
1,465 | — | — | 1,465 | ||||||||||||
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| Operating income (loss) |
(17,729 | ) | 1,092 | (2,172 | ) | (20,993 | ) | |||||||||
| Non-operating income (expense): |
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| Interest expense |
(640 | ) | (19 | ) | — | (621 | ) | |||||||||
| Other, net |
168 | (2 | ) | — | 170 | |||||||||||
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| Income (loss) before income taxes |
(18,201 | ) | 1,071 | (2,172 | ) | (21,444 | ) | |||||||||
| Income tax benefit (expense) |
6,498 | (391 | ) | 760 | (c) | 7,649 | ||||||||||
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| Net income (loss) |
$ | (11,703 | ) | $ | 680 | $ | (1,412 | ) | $ | (13,795 | ) | |||||
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| Earnings(loss) per common share: |
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| Basic |
$ | (0.32 | ) | $ | (0.37 | ) | ||||||||||
| Diluted |
$ | (0.32 | ) | $ | (0.37 | ) | ||||||||||
| Weighted-average common shares outstanding: |
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| Basic |
36,864 | 36,864 | ||||||||||||||
| Diluted |
36,864 | 36,864 | ||||||||||||||
| Cash dividends declared per share |
$ | 0.16 | $ | 0.16 | ||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
QUANEX BUILDING PRODUCTS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE YEAR ENDED OCTOBER 31, 2012
| Consolidated As Reported |
Disposal Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales |
$ | 828,976 | $ | 362,315 | $ | 11,917 | (b) | $ | 478,578 | |||||||
| Cost and expenses: |
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| Cost of sales (exclusive of items shown separately below) |
703,844 | 360,092 | 11,917 | (b) | 355,669 | |||||||||||
| Selling, general and administrative |
111,577 | 10,692 | 1,812 | (c) | 102,697 | |||||||||||
| Depreciation and amortization |
37,596 | 7,621 | — | 29,975 | ||||||||||||
| Asset impairment charges |
912 | — | — | 912 | ||||||||||||
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| Operating income (loss) |
(24,953 | ) | (16,090 | ) | (1,812 | ) | (10,675 | ) | ||||||||
| Non-operating income (expense): |
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| Interest expense |
(454 | ) | (23 | ) | — | (431 | ) | |||||||||
| Other, net |
222 | (3 | ) | — | 225 | |||||||||||
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| Income (loss) before income taxes |
(25,185 | ) | (16,116 | ) | (1,812 | ) | (10,881 | ) | ||||||||
| Income tax benefit (expense) |
8,651 | 6,143 | 634 | (c) | 3,142 | |||||||||||
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| Net income (loss) |
$ | (16,534 | ) | $ | (9,973 | ) | $ | (1,178 | ) | $ | (7,739 | ) | ||||
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| Earnings(loss) per common share: |
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| Basic |
$ | (0.45 | ) | $ | (0.21 | ) | ||||||||||
| Diluted |
$ | (0.45 | ) | $ | (0.21 | ) | ||||||||||
| Weighted-average common shares outstanding: |
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| Basic |
36,622 | 36,622 | ||||||||||||||
| Diluted |
36,622 | 36,622 | ||||||||||||||
| Cash dividends declared per share |
$ | 0.16 | $ | 0.16 | ||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
QUANEX BUILDING PRODUCTS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS)
FOR THE YEAR ENDED OCTOBER 31, 2011
| Consolidated As Reported |
Disposal Group |
Pro Forma Adjustments |
Pro Forma | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Net sales |
$ | 848,294 | $ | 440,495 | $ | 12,459 | (b) | $ | 420,258 | |||||||
| Cost and expenses: |
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| Cost of sales (exclusive of items shown separately below) |
712,091 | 408,785 | 12,459 | (b) | 315,765 | |||||||||||
| Selling, general and administrative |
83,994 | 8,075 | 133 | (c) | 76,052 | |||||||||||
| Depreciation and amortization |
33,932 | 8,542 | — | 25,390 | ||||||||||||
| Asset impairment charges |
1,799 | — | — | 1,799 | ||||||||||||
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| Operating income |
16,478 | 15,093 | (133 | ) | 1,252 | |||||||||||
| Non-operating income (expense): |
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| Interest expense |
(449 | ) | (19 | ) | — | (430 | ) | |||||||||
| Other, net |
(514 | ) | (4 | ) | — | (510 | ) | |||||||||
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| Income from continuing operations before income taxes |
15,515 | 15,070 | (133 | ) | 312 | |||||||||||
| Income tax benefit (expense) |
(6,437 | ) | (5,580 | ) | 47 | (810 | ) | |||||||||
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| Income from continuing operations |
9,078 | 9,490 | (86 | ) | (498 | ) | ||||||||||
| Loss from discontinued operations, net of taxes |
(12 | ) | — | — | (12 | ) | ||||||||||
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| Net income |
$ | 9,066 | $ | 9,490 | $ | (86 | )(c) | $ | (510 | ) | ||||||
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| Basic earnings per common share: |
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| Basic earnings from continuing operations |
$ | 0.24 | $ | (0.01 | ) | |||||||||||
| Basic earnings (loss) from discontinued operations |
— | — | ||||||||||||||
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| Basic earnings per share |
$ | 0.24 | $ | (0.01 | ) | |||||||||||
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| Diluted earnings per common share: |
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| Diluted earnings from continuing operations |
$ | 0.24 | $ | (0.01 | ) | |||||||||||
| Diluted earnings (loss) from discontinued operations |
— | — | ||||||||||||||
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| Diluted earnings per share |
$ | 0.24 | $ | (0.01 | ) | |||||||||||
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| Weighted-average common shares outstanding: |
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| Basic |
37,007 | 37,007 | ||||||||||||||
| Diluted |
37,537 | 37,007 | (d) | |||||||||||||
| Cash dividends declared per share |
$ | 0.16 | $ | 0.16 | ||||||||||||
See accompanying notes to unaudited pro forma condensed consolidated financial statements
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
The following adjustments are included in the unaudited pro forma condensed consolidated balance sheet and/or statements of income (loss):
| (a) | The unaudited pro forma condensed consolidated balance sheet at January 31, 2014 presents anticipated proceeds from the sale of $110.0 million, less net assets (presented as an adjustment to stockholders’ equity), less estimated transaction fees of $2.5 million, resulting in a gain on the sale, with tax effect recorded at the statutory rate of 35%. The impact of this net gain on net income, estimated at $18.5 million, is a component of the change in stockholder’s equity at January 31, 2014. However, this net gain is not included in the unaudited pro forma condensed consolidated statements of income (loss) presented as the transaction does not have a continuing impact to the ongoing operations of the Company. |
| (b) | Historically, intercompany sales between Nichols and other subsidiaries of the Company have been eliminated in consolidation. The Nichols historical results include these intercompany sales. Therefore, an adjustment is required to add back the sales and a corresponding amount for cost of sales, in order to properly present the pro forma consolidated results. |
| (c) | Historically, the Company has allocated certain information technology (IT) and other costs to Nichols. This adjustment increases the Company’s pro forma consolidated expense equal to the amount of this allocation, and records the related tax effect calculated at the statutory rate of 35%. |
| (d) | Diluted weighted-average share calculations include the dilutive effect of employee stock options and unvested restricted stock. For the year ended October 31, 2011, after pro forma adjustments, the Company is in a loss position, so these stock-based compensation instruments are deemed anti-dilutive and have been removed from the weighted-average share calculation for that year. |