Attached files

file filename
EX-99.2 - EX-99.2 - U.S. SILICA HOLDINGS, INC.d263939dex992.htm
EX-99.1 - EX-99.1 - U.S. SILICA HOLDINGS, INC.d263939dex991.htm
EX-23.1 - EX-23.1 - U.S. SILICA HOLDINGS, INC.d263939dex231.htm
8-K/A - FORM 8-K/A - U.S. SILICA HOLDINGS, INC.d263939d8ka.htm

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

On August 16, 2016, U.S. Silica Holdings, Inc., a Delaware corporation (“U.S. Silica” or the “Company”), completed the Merger of New Birmingham, Inc., a Nevada corporation (“NBI”), the holding company of New Birmingham Resources, LLC (“NBR”). The Merger was completed pursuant to the terms of the previously announced Agreement and Plan of Merger, by and among the Company, New Birmingham Merger Corp., a Nevada corporation and wholly owned subsidiary of the Company (“Merger Sub 1”), NBI Merger Subsidiary II, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub 2”), NBI, and each of David Durrett and Erik Dall as representatives of the sellers and option holders (the “Merger Agreement”), pursuant to which the Company acquired all of the outstanding capital stock of NBI through the Merger of Merger Sub 1 with and into NBI, followed immediately by the Merger of NBI with and into Merger Sub 2 (collectively, the “Merger”).

The consideration paid by the Company to the stockholders of NBI at the closing of the Merger consisted of $106,509,000 of net cash, subject to customary post-closing adjustment and 2,630,513 shares of common stock of the Company. A portion of the cash consideration has been deposited into escrow to support the post-closing purchase price adjustments and the sellers’ indemnification obligations.

The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, “Business Combinations”, with the Company treated as the legal and accounting acquirer. The following tables set forth unaudited pro forma combined financial data as of June 30, 2016, for the six months ended June 30, 2016, and for the twelve months ended December 31, 2015. The unaudited pro forma condensed combined balance sheet as of June 30, 2016 gives effect to the Merger as if it had occurred on that date. The pro forma balance sheet data is derived from the unaudited historical financial statements of U.S. Silica and NBI as of June 30, 2016. The unaudited pro forma combined statement of operations for the year ended December 31, 2015, and for the six months ended June 30, 2016 have been prepared to illustrate the effects of the Merger, as if it had occurred on January 1, 2015. The pro forma operations data is derived from the audited financial statements of U.S. Silica for the year ended December 31, 2015, the unaudited financial statements of U.S. Silica for the six months ended June 30, 2016, the audited financial statements of NBI for the year ended December 31, 2015, and the unaudited financial statements of NBI for the six months ended June 30, 2016.

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to events that are (i) directly attributable to the Merger, (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined company. The unaudited pro forma combined statements of operations do not reflect any non-recurring charges directly related to the Merger that the combined company may have incurred upon completion of the Merger. Further, the tax rate used for these unaudited pro forma condensed combined financial statements is an estimated effective tax rate, which will likely vary from the actual effective rate in periods subsequent to the completion of the Merger.

The unaudited pro forma condensed combined financial statements have been prepared for informational purposes only and are not necessarily indicative of what the combined company’s condensed consolidated financial position or results of operations actually would have been had the Merger been consummated prior to June 30, 2016, nor are they necessarily indicative of our future results of operations. In addition, the unaudited pro forma combined financial statements do not purport to project the future financial position or operating results of the combined company. The fair value of NBI’s identifiable tangible and intangible assets acquired and liabilities assumed are based on preliminary estimates. As of the date of filing of the Current Report on Form 8-K/A to which the following unaudited pro forma combined financial statements are attached, the Company has not completed the detailed valuation work necessary to finalize the required estimated fair values of the NBI assets acquired and liabilities assumed and related allocation of purchase price. The purchase price allocation and related depreciation, depletion


and amortization included in the unaudited pro forma combined financial statements are preliminary and have been made solely for purposes of preparing these unaudited pro forma condensed combined financial statements. Management anticipates that the values assigned to the assets acquired and liabilities assumed will be finalized during the one-year measurement period following the date of completion of the Merger. Differences between these preliminary estimates and the final acquisition accounting may occur and these differences could have a material impact on the unaudited pro forma condensed combined financial statements and the combined company’s future results of operations and financial position. In addition, certain reclassifications have been made to NBI’s historical financial statements to conform to the presentation used in the Company’s historical financial statements. Such reclassifications had no effect on NBI’s previously reported financial position or results of operations.

The unaudited pro forma condensed combined financial statements do not include any adjustments for the anticipated benefits from cost savings or synergies of U.S. Silica and NBI operating as a combined company or for liabilities resulting from integration planning, as management is in the process of making these assessments. However, liabilities ultimately may be recorded for additional costs in subsequent periods related to both companies, including severance, relocation or retention costs related to employees of both companies, as well as other costs associated with integrating and/or restructuring the companies. The ultimate recognition of such costs and liabilities would affect amounts in the unaudited pro forma combined financial statements, and such costs and liabilities could be material.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the:

 

    accompanying notes to the unaudited pro forma condensed combined financial statements;

 

    audited historical consolidated financial statements of the Company as of and for the year ended December 31, 2015, included in U.S. Silica’s Annual Report on Form 10-K for the year ended December 31, 2015.

 

    unaudited historical consolidated financial statements of the Company as of and for the six months ended June 30, 2016, included in U.S. Silica’s Quarterly Report on Form 10-Q for the six months ended June 30, 2016;

 

    audited historical consolidated financial statements of NBI as of and for the year ended December 31, 2015, included in this Form 8-K/A; and,

 

    unaudited historical consolidated financial statements of NBI as of and for the six months ended June 30, 2016, included in this Form 8-K/A.


UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 30, 2016

(dollars in thousands)

 

    U.S. Silica
Holdings, Inc.
Historical
June 30, 2016
    New
Birmingham,
Inc.
Historical
June 30, 2016
    Pro Forma
Adjustments
   

Note

  Pro Forma
Combined
Company
 
    (unaudited)     (unaudited)                  
ASSETS          

Current Assets:

         

Cash and cash equivalents

  $ 454,208      $ 9,517      $ (116,026   4(a)(1)   $ 347,699   

Restricted cash

    —          464        (363   4(a)(2)     101   

Accounts receivable, net

    54,293        1,175        —            55,468   

Inventories, net

    67,158        933        3,242      4(b)(1)     71,333   

Note receivable, current

    —          165        (165   4(b)(2)     —     

Prepaid expenses and other current assets

    8,899        200        (200   4(b)(3)     8,899   

Income tax deposits

    1,145        4,516        3,484      4(b)(4)     9,145   
 

 

 

   

 

 

   

 

 

     

 

 

 

Total current assets

    585,703        16,970        (110,028       492,645   
 

 

 

   

 

 

   

 

 

     

 

 

 

Property, plant and mine development, net

    555,487        38,056        175,524      4(b)(5)     769,067   

Goodwill

    68,647        —          79,248      4(b)(6)     147,895   

Definite lived intangibles

    14,474        —          1,600      4(b)(7)     16,074   

Customer relationships, net

    6,205        —          —            6,205   

Deferred income taxes, net

    1,314        —          (1,314   4(b)(8), 4(b)(13)     —     

Other assets

    17,323        7,363        (7,363   4(b)(9)     17,323   
 

 

 

   

 

 

   

 

 

     

 

 

 

Total assets

  $ 1,249,153      $ 62,389      $ 137,667        $ 1,449,209   
 

 

 

   

 

 

   

 

 

     

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY          

Current Liabilities:

         

Accounts payable

  $ 48,217      $ 970      $ (114   4(b)(10)   $ 49,073   

Dividends payable

    4,080        —          —            4,080   

Accrued liabilities

    11,538        —          —            11,538   

Accrued interest

    57        —          —            57   

Current portion of long-term debt

    3,336        1,872        —            5,208   

Current maturities of obligations under capital leases

    —          1,548        —            1,548   

Deferred revenue

    4,622        —          —            4,622   
 

 

 

   

 

 

   

 

 

     

 

 

 

Total current liabilities

    71,850        4,390        (114       76,126   
 

 

 

   

 

 

   

 

 

     

 

 

 

Long-term debt, net of current maturities

    486,705        16,676        (444   4(b)(11)     502,937   

Capital lease obligations, net of current maturities

    —          2,016        (1,089   4(b)(12)     927   

Deferred revenue

    67,537        —          —            67,537   

Liability for pension and other post-retirement benefits

    63,887        —          —            63,887   

Deferred income taxes, net

    —          8,599        62,750      4(b)(8),4(b)(13),4(c)     71,349   

Other long-term obligations

    17,828        —          710      4(b)(14)     18,538   
 

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities

    707,807        31,681        61,813          801,301   

Stockholders’ Equity:

         

Preferred stock

    —          —          —            —     

Common stock

    639        65        (39   4(d)(1)     665   

Additional paid-in capital

    381,349        1,140        105,396      4(d)(2)     487,885   

Retained earnings

    190,964        29,503        (29,503   4(d)(3)     190,964   

Treasury stock, at cost

    (10,850     —          —            (10,850

Accumulated other comprehensive loss

    (20,756     —          —            (20,756
 

 

 

   

 

 

   

 

 

     

 

 

 

Total stockholders’ equity

    541,346        30,708        75,854          647,908   
 

 

 

   

 

 

   

 

 

     

 

 

 

Total liabilities and stockholders’ equity

  $ 1,249,153      $ 62,389      $ 137,667        $ 1,449,209   
 

 

 

   

 

 

   

 

 

     

 

 

 


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2016

(dollars in thousands)

 

    U.S. Silica
Holdings, Inc.
Historical
June 30, 2016
    New
Birmingham,
Inc.
Historical
June 30, 2016
    Reclassification
Adjustments
    Pro Forma
Adjustments
   

Note

  Pro Forma
Combined
Company
 
    (unaudited)     (unaudited)     Note 1                  

Sales

  $ 239,504      $ 12,228      $ —        $ —          $ 251,732   

Cost of goods sold (excluding depreciation, depletion and amortization)

    209,458        5,110        (1,783     —            212,785   

Operating expenses

              —     

Selling, general and administrative

    30,088        1,307        (94     (540   5(a)     30,761   

Depreciation, depletion and amortization

    29,765        3        1,783        723      5(b)     32,274   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 
    59,853        1,310        1,689        183          63,035   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Operating income (loss)

    (29,807     5,808        94        (183       (24,088

Other income (expense)

              —     

Interest expense

    (13,290     (630     —          —            (13,920

Other income, net, including interest income

    2,398       633        (94     —            2,937   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 
    (10,892     3        (94     —            (10,983
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) before income taxes

    (40,699     5,811        —          (183       (35,071

Income tax benefit (expense)

    18,048        1,986        —          (4,252   5(c)     15,782   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Net income (loss)

  $ (22,651   $ 7,797      $ —        $ (4,435     $ (19,289
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Loss per share:

           

Basic

  $ (0.38           $ (0.31

Diluted

  $ (0.38           $ (0.31

Weighted average shares outstanding:

           

Basic

    58,900            2,631      5(d)     61,531   

Diluted

    58,900            2,631      5(d)     61,531   

Dividends declared per share

  $ 0.13              $ 0.13   


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2015

(dollars in thousands)

 

    U.S. Silica
Holdings, Inc.
Historical
December 31,
2015
    New
Birmingham,
Inc.
Historical
December 31,
2015
    Reclassification
Adjustments
    Pro Forma
Adjustments
   

Note

  Pro Forma
Combined
Company
 
    (audited)     (audited)     Note 1                  

Sales

  $ 642,989      $ 40,779      $ —        $ —          $ 683,768   

Cost of goods sold (excluding depreciation, depletion and amortization)

    495,066        20,983        (3,012     —            513,037   

Operating expenses

              —     

Selling, general and administrative

    62,777        3,630        —          —            66,407   

Depreciation, depletion and amortization

    58,474        5        3,012        2,380     

5(a)

    63,871   

Gain on sale of assets

    —          (8,495     8,495        —            —     
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 
    121,251        (4,860     11,507        2,380          130,278   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Operating income (loss)

    26,672        24,656        (8,495     (2,380       40,453   

Other income (expense)

              —     

Interest expense

    (27,283     (1,830     —          —            (29,113

Other income, net, including interest income

    728        297        8,495        —            9,520   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 
    (26,555     (1,533     8,495        —            (19,593
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) before income taxes

    117        23,123        —          (2,380       20,860   

Income tax benefit (expense)

    11,751        (8,133     —          2,153     

5(c)

    5,771   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Net income (loss)

  $ 11,868      $ 14,990      $ —        $ (227     $ 26,631   
 

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Earnings (loss) per share:

           

Basic

  $ 0.22              $ 0.48   

Diluted

  $ 0.22              $ 0.47   

Weighted average shares outstanding:

           

Basic

    53,344            2,631     

5(d)

    55,975   

Diluted

    53,601            2,631      5(d)     56,232   

Dividends declared per share

  $ 0.44              $ 0.44   


NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

1. Basis of Presentation

The unaudited pro forma condensed combined financial statements are prepared in accordance with Article 11 of SEC Regulation S-X. The historical financial information has been adjusted to give effect to the events that are (i) directly attributable to the Merger, (ii) factually supportable and (iii) with respect to the unaudited pro forma condensed combined statements of income, expected to have a continuing impact on the operating results of the combined company. The historical financial information of U.S. Silica and NBI is presented in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

The acquisition accounting adjustments relating to the Merger are preliminary and subject to change, as additional information becomes available and as additional analyses are performed. There can be no assurances that the final valuations will not result in material changes to this preliminary purchase price allocation. The unaudited pro forma condensed combined financial statements do not give effect to the potential impact of any anticipated benefits from cost savings or synergies that may result from the Merger or to any future integration costs. The unaudited pro forma condensed combined financial statements do not purport to project the future operating results or financial position of the combined company following the Merger.

Certain reclassifications have been made to NBI’s historical financial statements to conform to the presentation used in U.S. Silica’s historical consolidated financial statements, including depreciation, depletion and amortization, and gain or loss on sales of assets. Such reclassifications had no effect on NBI’s previously reported financial position or results of operations.

 

2. Calculation of Purchase Price

Pursuant to the Merger Agreement, U.S. Silica paid $106,509,000 (net of $9,095,000 cash acquired) cash consideration and $106,562,000 in stock consideration. The calculation of the purchase price is as follows:

 

(in thousands, except shares)           As of
August 16, 2016
 

Purchase price

     

Cash consideration paid for NBI common shares

      $ 115,604   

Number of U.S. Silica common shares delivered

     2,630,513      

Multiplied by closing market price per share of U.S. Silica common stock on August 16, 2016

   $ 40.51      
  

 

 

    

Total value of U.S. Silica common shares delivered

      $ 106,562   

Less, cash acquired

        (9,095
     

 

 

 

Total purchase price 

      $ 213,071   
     

 

 

 


3. Preliminary Estimated Purchase Price Allocation

The following table sets forth a preliminary allocation of the purchase price to NBI’s identifiable tangible and intangible assets acquired and liabilities assumed by the Company:

 

     (in thousands)  

Allocation of Purchase price:

  

Cash and cash equivalents - restricted

   $ 101   

Accounts receivable, net

     1,175   

Inventories

     4,175   

Income tax deposits

     8,000   

Property, plant and mine development

     213,580   

Identifiable intangible assets

     1,600   

Goodwill

     79,248   
  

 

 

 

Total assets acquired

     307,879   
  

 

 

 

Accounts payable, accrued expenses and other current liabilities

     856   

Notes payable

     18,104   

Capital lease liabilities

     2,475   

Asset retirement obligations

     710   

Deferred tax liabilities

     72,663   
  

 

 

 

Total liabilities assumed

     94,808   
  

 

 

 

Net assets acquired

   $ 213,071   
  

 

 

 

Property, plant and mine development

Property, plant and mine development has been adjusted to its estimated fair value as discussed further in Note 4 below. The related depreciation and depletion costs are reflected as a pro forma adjustment in the unaudited pro forma condensed combined statements of operations, as further described in Note 5(b).

Identifiable intangible assets

Preliminary identifiable intangible assets in the pro forma financial information consist of anticipated intangibles derived from customer relationships with an estimated useful life of 15 years. The amortization related to these identifiable intangible assets is reflected as a pro forma adjustment in the unaudited pro forma condensed combined statements of operations, as further described in Note 5(b). The table below indicates the estimated fair value of customer relationships and estimated useful life:

 

     Approximate Fair
Value
     Estimated
Useful Life
 
     (in thousands)      (in years)  

Customer relationships

   $ 1,600         15   
  

 

 

    

Total fair value of identifiable intangible assets and useful life

   $ 1,600      
  

 

 

    

Goodwill represents the excess of the purchase price over the fair value of the underlying net assets acquired. Goodwill in this transaction is attributable to planned growth in regional sand markets and synergies expected to be achieved from the combined operations of U.S. Silica and NBI.

Both customer relationships and goodwill are not expected to be deductible for tax purposes.


4. Notes to Unaudited Pro Forma Condensed Combined Balance Sheet

Pro Forma Adjustments

 

  (a) Represents the impact from the cash portion of the purchase price and transactions costs paid concurrent with or immediately subsequent to the closing of the Merger.

 

 

4(a)(1)

      (in thousands)  
  Cash consideration paid for NBI common shares   $ (115,604
  Less, cash and cash equivalents acquired - Fair value     9,095   
  Cash and cash equivalents - Elimination of historical     (9,517
   

 

 

 
  Net cash outflow   $ (116,026
   

 

 

 

Represents the impact from use of restricted cash paid concurrent with or immediately subsequent to the closing of the Merger.

 

 

4(a)(2)

         
  Restricted cash - Elimination of historical   $ (464
  Restricted cash - Fair value     101   
   

 

 

 
 

Net restricted cash outflow

  $ (363
   

 

 

 

 

  (b) Reflects the application of the Acquisition method of accounting based on the estimated fair value of the tangible assets of NBI and the fair value of intangible assets acquired as discussed in Note 3 above.

 

 

4(b)(1)

      (in thousands)  
  Inventories - Elimination of historical   $ (933
  Inventories - Fair value     4,175   
   

 

 

 
 

Net adjustment

  $ 3,242   
   

 

 

 

 

4(b)(2)

         
  Note receivable - Current - Not acquired and eliminated   $ (165
  Note receivable - Post-merger balance     —     
   

 

 

 
 

Net adjustment

  $ (165
   

 

 

 

 

4(b)(3)

         
  Other current assets - Current - Not acquired and eliminated   $ (200
  Other current assets - Post-merger balance     —     
   

 

 

 
 

Net adjustment

  $ (200
   

 

 

 

 

4(b)(4)

         
  Income tax deposits - Elimination of historical   $ (4,516
  Income tax deposits - Fair value     8,000   
   

 

 

 
 

Net adjustment

  $ 3,484   
   

 

 

 


 

4(b)(5)

         
  Property, plant and mine development - Elimination of historical   $ (38,056
  Property, plant and mine development - Fair value     213,580   
   

 

 

 
 

Net adjustment

  $ 175,524   
   

 

 

 

 

4(b)(6)

         
  Goodwill - Elimination of historical   $ —     
  Goodwill on purchase acquisition     79,248   
   

 

 

 
 

Net adjustment

  $ 79,248   
   

 

 

 

 

4(b)(7)

         
  Identifiable intangible assets - Elimination of historical   $ —     
  Identifiable intangible assets - Fair value     1,600   
   

 

 

 
 

Net adjustment

  $ 1,600   
   

 

 

 

 

4(b)(8)

         
  Deferred tax assets - Reclassification to Deferred tax liabilities   $ (1,314
  Deferred tax liabilities - Post-merger balance     —     
   

 

 

 
 

Net adjustment

  $ (1,314
   

 

 

 

 

4(b)(9)

         
  Note receivable - Long term - Not acquired and eliminated   $ (7,363
  Note receivable - Post-merger balance     —     
   

 

 

 
 

Net adjustment

  $ (7,363
   

 

 

 

 

4(b)(10)

         
  Accounts payable - Elimination of historical   $ (970
  Accounts payable - Fair value     856   
   

 

 

 
 

Net adjustment

  $ (114
   

 

 

 

 

4(b)(11)

         
  Long term debt - Current - Elimination of historical   $ (1,872
  Long term debt - Long term - Elimination of historical     (16,676
  Long term debt - Current - Fair value     1,872   
  Long term debt - Long term - Fair Value     16,232   
   

 

 

 
 

Net adjustment

  $ (444
   

 

 

 

 

4(b)(12)

         
  Capital leases - Current - Elimination of Historical   $ (1,548
  Capital leases - Long term - Elimination of Historical     (2,016
  Capital leases - Current - Fair value     1,548   
  Capital leases - Long term - Fair value     927   
   

 

 

 
 

Net adjustment

  $ (1,089
   

 

 

 


 

4(b)(13)

         
  Deferred tax assets - Reclassification to Deferred tax liabilities   $ (1,314
  Deferred tax liabilities - Elimination of historical     (8,599
  Deferred tax liabilities - Arising from the Merger     72,663   
   

 

 

 
 

Net adjustment

  $ 62,750   
   

 

 

 

 

4(b)(14)

         
  Other long-term obligations - Elimination of historical   $ —     
  Other long-term obligations - Fair value     710   
   

 

 

 
 

Net adjustment

  $ 710   
   

 

 

 

 

  (c) Adjustments to record deferred tax liabilities, which represent the estimated future tax effects, based on enacted tax laws, of temporary differences between the value of assets and liabilities acquired in the Merger for financial reporting and for tax purposes. These adjustments are based on estimates of the fair value of NBI’s assets to be acquired, the liabilities to be assumed, and the related allocations of purchase price.

 

 

4(c)

  Summary   (in thousands)  
  Deferred tax liabilities - Property, plant and mine development and intangible assets   $ 72,663   
   

 

 

 
    $ 72,663   
   

 

 

 

 

  (d) Reflects the following adjustments to shareholders’ equity applicable to the Merger.

 

 

4(d)(1)

      (in thousands)  
  Common stock - Elimination of NBI historical   $ (65
  Common stock - Merger consideration - Par value     26   
   

 

 

 
 

Net adjustment

  $ (39
   

 

 

 

 

4(d)(2)

         
  Additional paid-in capital - Historical elimination of NBI     (1,140
  Additional paid-in capital - Merger consideration     106,536   
   

 

 

 
 

Net adjustment

  $ 105,396   
   

 

 

 

 

4(d)(3)

         
  Retained earnings - Elimination of historical NBI   $ (29,503
  Retained earnings - Post-merger balance     —     
   

 

 

 
 

Net adjustment

  $ (29,503
   

 

 

 


Summary       

Elimination of pre-merger NBI equity balances

  

Common stock

   $ (65

Additional paid-in capital

     (1,140

Retained earnings

     (29,503

Value of U.S. Silica common shares delivered

  

Common stock consideration paid - par value

   $ 26   

Common stock consideration paid - additional paid-in capital

     106,536   
  

 

 

 

Net summary adjustment

   $ 75,854   
  

 

 

 

 

5. Notes to Unaudited Pro Forma Condensed Combined Statements of Operations

The unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2015 and for the six months ended June 30, 2016 have not been adjusted for non-recurring transaction costs incurred after the date of these financial statements or any other items that are expected to have a one-time impact on the pro forma combined net income in the twelve months following the Merger.

Pro Forma Adjustments

 

  (a) Represents adjustment to eliminate non-recurring transactions costs incurred by NBI of $167 thousand and of $373 thousand by U.S. Silica, during the six months ended June 30, 2016. There were no non-recurring transaction costs incurred by NBI or U.S. Silica during the year ended December 31, 2015. $0.9 million of non-recurring transactions costs were incurred by U.S. Silica after June 30, 2016 or are expected to be incurred within the next 12 months after the closing date of August 16, 2016, and will be reflected in its financial reports. They are not included in this pro forma presentation.

 

        Pro Forma
Year Ended
December 31, 2015
    Pro Forma
Six Months Ended
June 30, 2016
 

 

5(a)

      (in thousands)  
 

Non-recurring transaction costs - NBI - Eliminated

  $ —        $ 167   
 

Non-recurring transaction costs - U.S. Silica - Eliminated

    —          373   
   

 

 

   

 

 

 
 

Total non-recurring transaction costs incurred and eliminated

  $ —        $ 540   
   

 

 

   

 

 

 

 

  (b) Represents adjustments to record incremental depreciation and depletion expenses related to the fair value adjustment of property, plant and mine development, and amortization expense related to identifiable intangible assets calculated on a straight-line basis:

 

        Pro Forma
Year Ended
December 31, 2015
    Pro Forma
Six Months Ended
June 30, 2016
 

 

5(b)

      (in thousands)  
 

Depreciation and depletion of property, plant and mine development - Elimination of historical

  $ (3,017   $ (1,786
 

Depreciation and depletion of property, plant and mine development - Fair value

    5,452        2,456   
 

Amortization of identifiable intangible assets - Elimination of historical

    —          —     
 

Amortization of identifiable intangible assets - Fair value

    107        53   
   

 

 

   

 

 

 
 

Total incremental depreciation and depletion expense

  $ 2,542      $ 723   
   

 

 

   

 

 

 


  (c) Adjustments to the pro forma combined provision for income taxes reflects estimated income tax rates applicable for each tax jurisdiction. The estimated income tax rates are based on the applicable enacted statutory rates adjusted for certain permanent tax differences. The combined company’s pro forma effective tax rate was (12%) for 2015 and 46% for 2016.

 

        Pro Forma
Year Ended
December 31, 2015
    Pro Forma
Six Months Ended
June 30, 2016
 

 

5(c)

      (in thousands)  
  Income tax benefit (expense)   $ 2,315      $ (4,252
   

 

 

   

 

 

 
 

Net adjustment

  $ 2,315      $ (4,252
   

 

 

   

 

 

 

 

  (d) Pro forma adjustments of weighted average shares outstanding is comprised of the following:

 

        Pro Forma
Year Ended
December 31, 2015
    Pro Forma
Six Months Ended
June 30, 2016
 

 

5(d)

      (in thousands)  
  Shares issued as part of the Merger consideration     2,631        2,631   
   

 

 

   

 

 

 
 

Adjustment to weighted average shares outstanding - basic

    2,631        2,631   
   

 

 

   

 

 

 
 

Adjustment to weighted average shares outstanding - diluted

    2,631        2,631