Attached files
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| 8-K - 8-K - NORTEK INC | d23628d8k.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 31, 2015, Nortek, Inc. (“Nortek” or the “Company”), through certain of its wholly owned subsidiaries, entered into an agreement and completed the sale of all of the issued and outstanding common stock of TV One Broadcast Sales Corporation, TV One Limited and Magenta Research Ltd., the entities through which Nortek operated its video, audio and multimedia processing operations (the “TV One Business”), to certain entities owned and controlled by a consortium of members of management of the TV One Business. Nortek will have no ongoing involvement or obligations with respect to the TV One Business and no indemnification obligations in connection with the transaction. There was no substantial cash consideration received in connection with the transaction.
The following unaudited pro forma condensed consolidated financial statements include the unaudited pro forma condensed consolidated balance sheet as of June 27, 2015 and the unaudited pro forma condensed consolidated statements of operations for the six months ended June 27, 2015 and the year ended December 31, 2014. The unaudited pro forma condensed consolidated financial statements give pro forma effect, where applicable, to the sale of the TV One Business, as noted above.
The unaudited pro forma condensed consolidated balance sheet as of June 27, 2015 has been prepared by adjusting the actual consolidated balance sheet of the Company as if the sale of the TV One Business had occurred on June 27, 2015.
The unaudited pro forma condensed consolidated statements of operations for the six months ended June 27, 2015 and the year ended December 31, 2014 have been prepared by adjusting the actual results of the Company as if the sale of the TV One Business had occurred on January 1, 2014.
Nortek expects to record a net loss on the sale of the TV One Business of approximately $3.0 million to $4.0 million in the third quarter of 2015. The accompanying unaudited pro forma condensed consolidated balance sheet as of June 27, 2015 includes a pro forma net loss of $3.0 million related to the sale of the TV One Business. No pro forma net loss is included in the unaudited pro forma condensed consolidated statements of operations for the six months ended June 27, 2015 or the year ended December 31, 2014 as the loss is non-recurring. The Company has concluded that the sale of the TV One Business does not meet the criteria to be reported as a discontinued operation.
The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and are not necessarily indicative of the financial condition or results of operations that would have occurred had the transactions described above taken place on the dates indicated above, nor are they necessarily indicative of the Company’s future results of operations.
NORTEK, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 27, 2015
| Nortek Pro Forma |
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| Nortek Historical |
Sale of the TV One Business |
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| (Amounts in millions) | ||||||||||||||
| Unaudited | ||||||||||||||
| ASSETS | ||||||||||||||
| Current Assets: |
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| Unrestricted cash and cash equivalents |
$ | 26.2 | $ | (2.5 | ) | (a) | $ | 23.7 | ||||||
| Restricted cash |
0.3 | – | 0.3 | |||||||||||
| Accounts receivable, net |
422.4 | (1.4 | ) | (b) | 421.0 | |||||||||
| Inventories |
394.4 | (2.3 | ) | (c) | 392.1 | |||||||||
| Prepaid expenses and other current assets |
41.9 | – | 41.9 | |||||||||||
| Deferred tax assets |
37.5 | – | 37.5 | |||||||||||
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| Total current assets |
922.7 | (6.2 | ) | 916.5 | ||||||||||
| Property and equipment, net |
228.1 | – | 228.1 | |||||||||||
| Goodwill |
499.5 | – | 499.5 | |||||||||||
| Intangible assets, net |
630.7 | – | 630.7 | |||||||||||
| Deferred debt expense |
15.1 | – | 15.1 | |||||||||||
| Other long-term assets |
15.2 | – | 15.2 | |||||||||||
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| Total assets |
$ | 2,311.3 | $ | (6.2 | ) | $ | 2,305.1 | |||||||
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| LIABILITIES AND STOCKHOLDERS’ INVESTMENT | ||||||||||||||
| Current Liabilities: |
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| Short-term bank obligations |
$ | 0.3 | $ | – | $ | 0.3 | ||||||||
| Current maturities of long-term debt |
7.9 | – | 7.9 | |||||||||||
| Accounts payable |
293.2 | (1.7 | ) | (d) | 291.5 | |||||||||
| Accrued expenses and taxes |
216.7 | (1.3 | ) | (e) | 215.4 | |||||||||
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| Total current liabilities |
518.1 | (3.0 | ) | 515.1 | ||||||||||
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| Deferred income taxes |
117.5 | (0.2 | ) | (f) | 117.3 | |||||||||
| Other long-term liabilities |
177.7 | – | 177.7 | |||||||||||
| Notes, mortgage notes and obligations payable, less current maturities |
1,473.8 | – | 1,473.8 | |||||||||||
| Stockholders’ Investment: |
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| Preferred stock |
– | – | – | |||||||||||
| Common stock |
0.2 | – | 0.2 | |||||||||||
| Additional paid-in capital |
254.5 | – | 254.5 | |||||||||||
| Accumulated deficit |
(133.3 | ) | (3.0 | ) | (g) | (136.3 | ) | |||||||
| Accumulated other comprehensive loss |
(39.1 | ) | – | (39.1 | ) | |||||||||
| Less: Treasury stock |
(58.1 | ) | – | (58.1 | ) | |||||||||
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| Total stockholders’ investment |
24.2 | (3.0 | ) | 21.2 | ||||||||||
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| Total liabilities and stockholders’ investment |
$ | 2,311.3 | $ | (6.2 | ) | $ | 2,305.1 | |||||||
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See Notes to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
NORTEK, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 27, 2015
| Nortek Historical | Sale of the TV One Business |
Nortek Pro Forma |
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| Six Months Ended June 27, 2015 |
Six Months Ended June 27, 2015 |
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| (Amounts in millions, except per share data) | ||||||||||||||||
| Unaudited | ||||||||||||||||
| Net sales |
$ | 1,276.6 | $ | (7.8 | ) | (a) | $ | 1,268.8 | ||||||||
| Cost of products sold |
911.7 | (4.5 | ) | (b) | 907.2 | |||||||||||
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| Gross profit |
364.9 | (3.3 | ) | 361.6 | ||||||||||||
| Selling, general and administrative expense, net |
289.4 | (6.9 | ) | (c) | 282.5 | |||||||||||
| Impairment of long-lived assets and goodwill |
1.2 | (1.2 | ) | (d) | – | |||||||||||
| Amortization of intangible assets |
31.9 | – | (e) | 31.9 | ||||||||||||
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| Operating earnings |
42.4 | 4.8 | 47.2 | |||||||||||||
| Interest expense, net |
(52.1 | ) | – | (52.1 | ) | |||||||||||
| Loss on debt retirement |
(14.8 | ) | – | (14.8 | ) | |||||||||||
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| (Loss) earnings before (benefit) provision for income taxes |
(24.5 | ) | 4.8 | (19.7 | ) | |||||||||||
| (Benefit) provision for income taxes |
(8.3 | ) | 1.9 | (f) | (6.4 | ) | ||||||||||
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| Net (loss) earnings |
$ | (16.2 | ) | $ | 2.9 | $ | (13.3 | ) | ||||||||
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| Basic loss per share |
$ | (1.02 | ) | $ | (0.83 | ) | ||||||||||
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| Diluted loss per share |
$ | (1.02 | ) | $ | (0.83 | ) | ||||||||||
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| Weighted Average Common Shares: |
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| Basic |
15.9 | 15.9 | ||||||||||||||
| Diluted |
15.9 | 15.9 | ||||||||||||||
See Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Operations
NORTEK, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2014
| Nortek Historical |
Sale of the TV One Business |
Nortek Pro Forma |
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| Year Ended Dec. 31, 2014 |
Year Ended Dec. 31, 2014 |
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| (Amounts in millions, except per share data) | ||||||||||||||||
| Unaudited | ||||||||||||||||
| Net sales |
$ | 2,546.1 | $ | (20.3 | ) | (a) | $ | 2,525.8 | ||||||||
| Cost of products sold |
1,805.0 | (9.8 | ) | (b) | 1,795.2 | |||||||||||
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| Gross profit |
741.1 | (10.5 | ) | 730.6 | ||||||||||||
| Selling, general and administrative expense, net |
557.8 | (13.8 | ) | (c) | 544.0 | |||||||||||
| Impairment of long-lived assets and goodwill |
80.4 | (19.4 | ) | (d) | 61.0 | |||||||||||
| Amortization of intangible assets |
60.0 | (1.2 | ) | (e) | 58.8 | |||||||||||
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| Operating earnings |
42.9 | 23.9 | 66.8 | |||||||||||||
| Interest expense, net |
(105.6 | ) | – | (105.6 | ) | |||||||||||
| Loss on debt retirement |
(2.3 | ) | – | (2.3 | ) | |||||||||||
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| (Loss) earnings before (benefit) provision for income taxes |
(65.0 | ) | 23.9 | (41.1 | ) | |||||||||||
| (Benefit) provision for income taxes |
(19.4 | ) | 5.3 | (f) | (14.1 | ) | ||||||||||
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| Net (loss) earnings |
$ | (45.6 | ) | $ | 18.6 | $ | (27.0 | ) | ||||||||
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| Basic loss per share |
$ | (2.92 | ) | $ | (1.73 | ) | ||||||||||
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| Diluted loss per share |
$ | (2.92 | ) | $ | (1.73 | ) | ||||||||||
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| Weighted Average Common Shares: |
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| Basic |
15.6 | 15.6 | ||||||||||||||
| Diluted |
15.6 | 15.6 | ||||||||||||||
See Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Operations
NORTEK, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
| As of June 27, 2015 Pro Forma Adjustments |
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| (Dollar amounts in millions) | ||||
| (a) Unrestricted cash and cash equivalents: |
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| Eliminate TV One Business cash |
$ | (2.5 | ) | |
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| (b) Accounts receivable, net: |
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| Eliminate TV One Business accounts receivable |
$ | (1.4 | ) | |
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| (c) Inventories: |
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| Eliminate TV One Business inventories |
$ | (2.3 | ) | |
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| (d) Accounts payable: |
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| Eliminate TV One Business accounts payable |
$ | (1.7 | ) | |
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| (e) Accrued expenses and taxes: |
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| Eliminate TV One Business accrued expenses |
$ | (1.3 | ) | |
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| (f) Deferred income taxes |
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| Tax impact of the sale of the TV One Business |
$ | (0.2 | ) | |
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| (g) Accumulated deficit: |
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| Net loss on sale of the TV One Business |
$ | (3.0 | ) | |
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NORTEK, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIODS PRESENTED
| For the Six Months Ended June 27, 2015 |
For the Year Ended Dec. 31, 2014 |
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| (Dollar amounts in millions) | ||||||||||
| (a) |
Net sales | |||||||||
| Eliminate TV One Business net sales | (7.8 | ) | (20.3 | ) | ||||||
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| (b) |
Cost of products sold: | |||||||||
| Eliminate TV One Business cost of products sold |
(4.5 | ) | $ | (9.8 | ) | |||||
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| (c) |
Selling, general and administrative expense, net | |||||||||
| Eliminate TV One Business selling, general and administrative expense, net | (6.9 | ) | (13.8 | ) | ||||||
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| (d) |
Impairment of long-lived assets and goodwill | |||||||||
| Eliminate TV One Business impairment of long-lived assets and goodwill | (1.2 | ) | (19.4 | ) | ||||||
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| (e) |
Amortization of intangible assets: | |||||||||
| Eliminate TV One Business amortization of intangible assets | – | $ | (1.2 | ) | ||||||
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| (f) |
(Benefit) provision for income taxes: | |||||||||
| Adjustment to (benefit) provision for income taxes | 1.9 | $ | 5.3 | |||||||
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