Attached files
| file | filename |
|---|---|
| EX-10.4 - EX-10.4 - COMMERCIAL METALS Co | d407881dex104.htm |
| EX-10.3 - EX-10.3 - COMMERCIAL METALS Co | d407881dex103.htm |
| EX-10.2 - EX-10.2 - COMMERCIAL METALS Co | d407881dex102.htm |
| EX-10.1 - EX-10.1 - COMMERCIAL METALS Co | d407881dex101.htm |
| 8-K - FORM 8-K - COMMERCIAL METALS Co | d407881d8k.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
In June 2017, the Board of Directors of Commercial Metals Company (the “Company”) approved a plan to exit the International Marketing and Distribution Segment. As an initial step in this plan, on June 12, 2017, the Company and its wholly owned subsidiary, CMC Cometals International S.à r.l. (f/k/a CMCLUX, S.à r.l.), signed a definitive agreement to sell its raw materials trading division (“CMC Cometals”) to Traxys North America L.L.C. and Traxys Europe S.A., which are affiliates of The Carlyle Group. The transaction is expected to close in the fourth quarter of fiscal 2017 and is subject to customary closing conditions and regulatory approvals. In addition, the Company announced its plan to pursue a sale of its CMC Cometals Steel division, as well as a restructuring and sale of the remaining trading operations located in Asia and Australia, collectively “Other M&D Entities.”
The following unaudited pro forma condensed consolidated financial statements are presented to show the effect of the sale of CMC Cometals, which is a significant disposition, and the effects of the other significant probable dispositions of the Other M&D Entities, as defined under Regulation S-X Rule 210.11. The unaudited pro forma condensed consolidated balance sheet assumes these dispositions were consummated on February 28, 2017. The unaudited pro forma condensed consolidated statements of operations assume the dispositions were consummated on September 1, 2013.
The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and do not include all of the information and note disclosures required by GAAP. Pro forma information is intended to provide information about the continuing impact of a transaction by showing how a specific transaction or group of transactions might have affected historical financial statements. Pro forma financial information illustrates only the isolated and objectively measurable (based on historically determined amounts) effects of a particular transaction, and excludes effects based on judgmental estimates of how historical management practices and operating decisions may or may not have changed as a result of the transaction. Therefore, pro forma information does not include information about the possible or expected impact of current actions taken by management in response to the pro forma transactions, as if management’s actions were carried out in previous reporting periods.
This unaudited pro forma condensed consolidated financial information is presented for illustration purposes only and does not purport to be indicative of the financial position or results of operations that would have occurred had the disposition been consummated on the dates as of, or at the beginning of the period, which, the disposition is being given effect, nor are they necessarily indicative of the Company’s future operating results or financial position.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF FEBRUARY 28, 2017
| Pro Forma Adjustments | ||||||||||||||||||||||||||||||||
| (in thousands) | Historical CMC |
Cometals(a) | Cometals Adjustments |
Other M&D(g) | Other M&D Adjustments |
Pro Forma CMC | ||||||||||||||||||||||||||
| Assets |
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| Current Assets: |
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| Cash and cash equivalents |
$ | 395,546 | $ | — | $ | 172,191 | (b | ) | $ | — | $ | 203,165 | (h | ) | $ | 770,902 | ||||||||||||||||
| Accounts receivable, net |
774,286 | (77,900 | ) | 14,886 | (c | ) | (125,830 | ) | — | 585,442 | ||||||||||||||||||||||
| Inventories |
720,786 | (126,265 | ) | — | (124,829 | ) | — | 469,692 | ||||||||||||||||||||||||
| Others |
96,422 | (6,210 | ) | 1,304 | (d | ) | (4,899 | ) | — | 86,617 | ||||||||||||||||||||||
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| Total Current Assets |
$ | 1,987,040 | $ | (210,375 | ) | $ | 188,381 | $ | (255,558 | ) | $ | 203,165 | $ | 1,912,653 | ||||||||||||||||||
| Net property, plant and equipment |
940,344 | (2,238 | ) | 2,226 | (d | ) | (1,046 | ) | — | 939,286 | ||||||||||||||||||||||
| Goodwill |
66,530 | — | — | (1,925 | ) | — | 64,605 | |||||||||||||||||||||||||
| Other assets |
137,919 | (7,051 | ) | 117 | (d | ) | (9,786 | ) | — | 121,199 | ||||||||||||||||||||||
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| Total Assets |
$ | 3,131,833 | $ | (219,664 | ) | $ | 190,724 | $ | (268,315 | ) | $ | 203,165 | $ | 3,037,743 | ||||||||||||||||||
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| Liabilities and stockholders’ equity |
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| Current liabilities: |
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| Accounts payable-trade |
$ | 307,488 | $ | (42,479 | ) | $ | 34 | (d | ) | $ | (52,823 | ) | — | $ | 212,220 | |||||||||||||||||
| Accrued expenses and other payables |
220,433 | (5,492 | ) | 2,552 | (e | ) | (12,224 | ) | — | 205,269 | ||||||||||||||||||||||
| Current maturities of long-term debt |
312,200 | — | — | — | — | 312,200 | ||||||||||||||||||||||||||
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| Total current liabilities |
$ | 840,121 | $ | (47,971 | ) | $ | 2,586 | $ | (65,047 | ) | $ | — | $ | 729,689 | ||||||||||||||||||
| Deferred income taxes |
55,625 | (313 | ) | 313 | (d | ) | (103 | ) | — | 55,522 | ||||||||||||||||||||||
| Other long-term liabilities |
121,930 | — | — | — | — | 121,930 | ||||||||||||||||||||||||||
| Long-term debt |
752,137 | — | — | — | — | 752,137 | ||||||||||||||||||||||||||
| Stockholders’ equity attributable to CMC |
1,361,848 | (171,380 | ) | 187,825 | (f | ) | (203,165 | ) | 203,165 | (h | ) | 1,378,293 | ||||||||||||||||||||
| Stockholders’ equity attributable to noncontrolling interests |
172 | — | — | — | — | 172 | ||||||||||||||||||||||||||
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| Total liabilities and stockholders’ equity |
$ | 3,131,833 | $ | (219,664 | ) | $ | 190,724 | $ | (268,315 | ) | $ | 203,165 | $ | 3,037,743 | ||||||||||||||||||
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 2017
| (in thousands, except per share data) |
Historical CMC |
Pro Forma Adjustments | Pro Forma CMC |
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| Cometals (i) | Other M&D (j) | |||||||||||||||
| Net Sales |
$ | 2,224,684 | $ | 194,892 | $ | 333,333 | $ | 1,696,459 | ||||||||
| Cost of goods sold |
1,933,502 | 174,612 | 314,971 | 1,443,919 | ||||||||||||
| Selling, general and administrative expenses |
215,986 | 10,075 | 14,365 | 191,546 | ||||||||||||
| Impairment of assets |
— | — | — | — | ||||||||||||
| Interest expense |
25,740 | — | (25 | ) | 25,765 | |||||||||||
| Loss on debt extinguishment |
— | — | — | — | ||||||||||||
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| Total expenses |
2,175,228 | 184,687 | 329,311 | 1,661,230 | ||||||||||||
| Earnings from continuing operations before income taxes |
49,456 | 10,205 | 4,022 | 35,229 | ||||||||||||
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| Income taxes |
12,643 | 1,735 | 881 | 10,027 | ||||||||||||
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| Earnings from continuing operations |
36,813 | 8,470 | 3,141 | 25,202 | ||||||||||||
| Less net earnings attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
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| Net earnings from continuing operations attributable to CMC |
$ | 36,813 | $ | 8,470 | $ | $3,141 | $ | 25,202 | ||||||||
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| Basic earnings per share from continuing operations attributable to CMC |
$ | 0.32 | $ | 0.22 | ||||||||||||
| Diluted earnings per share from continuing operations attributable to CMC |
$ | 0.31 | $ | 0.22 | ||||||||||||
| Average basic shares outstanding |
115,415,662 | 115,415,662 | ||||||||||||||
| Average diluted shares outstanding |
117,007,958 | 117,007,958 | ||||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 29, 2016
| Historical CMC |
Pro Forma Adjustments | Pro Forma CMC |
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| (in thousands, except per share data) | Cometals (i) | Other M&D (j) | ||||||||||||||
| Net sales |
$ | 2,174,556 | $ | 224,191 | $ | 262,578 | $ | 1,687,787 | ||||||||
| Cost of goods sold |
1,882,118 | 204,437 | 253,137 | 1,424,544 | ||||||||||||
| Selling, general and administrative expenses |
195,826 | 9,225 | 13,435 | 173,166 | ||||||||||||
| Impairment of assets |
— | — | — | — | ||||||||||||
| Interest expense |
34,929 | 97 | (594 | ) | 35,426 | |||||||||||
| Loss on debt extinguishment |
11,365 | — | — | 11,365 | ||||||||||||
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| Total expenses |
2,124,238 | $ | 213,759 | $ | 265,978 | 1,644,501 | ||||||||||
| Earnings from continuing operations before income taxes |
50,318 | 10,432 | (3,400 | ) | 43,286 | |||||||||||
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| Income taxes |
13,836 | 1,972 | (1,434 | ) | 13,298 | |||||||||||
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| Earnings from continuing operations |
36,482 | 8,460 | (1,966 | ) | 29,988 | |||||||||||
| Less net earnings attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
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| Net earnings from continuing operations attributable to CMC |
$ | 36,482 | $ | 8,460 | $ | (1,966 | ) | $ | 29,988 | |||||||
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| Basic earnings per share from continuing operations attributable to CMC |
$ | 0.32 | $ | 0.26 | ||||||||||||
| Diluted earnings per share from continuing operations attributable to CMC |
$ | 0.31 | $ | 0.26 | ||||||||||||
| Average basic shares outstanding |
115,725,896 | 115,725,896 | ||||||||||||||
| Average diluted shares outstanding |
117,002,822 | 117,002,822 | ||||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2016
| Historical | Pro Forma Adjustments | Pro Forma | ||||||||||||||
| (in thousands, except per share data) | CMC | Cometals (i) | Other M&D (j) | CMC | ||||||||||||
| Net Sales |
$ | 4,610,526 | $ | 462,610 | $ | 610,303 | $ | 3,537,613 | ||||||||
| Cost of Goods Sold |
3,974,513 | 420,952 | 587,936 | 2,965,625 | ||||||||||||
| Selling, general and administrative expenses |
437,084 | 21,332 | 27,648 | 388,104 | ||||||||||||
| Impairment of assets |
40,028 | — | — | 40,028 | ||||||||||||
| Interest Expense |
62,231 | 109 | (851 | ) | 62,973 | |||||||||||
| Loss on debt extinguishment |
11,480 | — | — | 11,480 | ||||||||||||
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| Total Expenses |
4,525,336 | $ | 442,393 | $ | 614,733 | 3,468,210 | ||||||||||
| Earnings from continuing operations before income taxes |
85,190 | 20,217 | (4,430 | ) | 69,403 | |||||||||||
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| Income taxes |
12,647 | 2,345 | (2,448 | ) | 12,750 | |||||||||||
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| Earnings from continuing operations |
72,543 | 17,872 | (1,982 | ) | 56,653 | |||||||||||
| Less net earnings attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
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| Net earnings from continuing operations attributable to CMC |
$ | 72,543 | $ | 17,872 | $ | (1,982 | ) | $ | 56,653 | |||||||
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| Basic earnings per share from continuing operations attributable to CMC |
$ | 0.63 | $ | 0.49 | ||||||||||||
| Diluted earnings per share from continuing operations attributable to CMC |
$ | 0.62 | $ | 0.49 | ||||||||||||
| Average basic shares outstanding |
115,211,490 | 115,211,490 | ||||||||||||||
| Average diluted shares outstanding |
116,623,826 | 116,623,826 | ||||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2015
| Historical CMC |
Pro Forma Adjustments | Pro Forma CMC |
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| (in thousands, except per share data) | Cometals (i) | Other M&D (j) | ||||||||||||||
| Net Sales |
$ | 5,988,605 | $ | 611,991 | $ | 1,066,984 | $ | 4,309,630 | ||||||||
| Cost of Goods Sold |
5,311,756 | 529,438 | 1,030,401 | 3,751,917 | ||||||||||||
| Selling, general and administrative expenses |
443,275 | 26,889 | 33,296 | 383,090 | ||||||||||||
| Impairment of assets |
9,839 | — | — | 9,839 | ||||||||||||
| Interest Expense |
77,760 | 1,304 | 3,141 | 73,315 | ||||||||||||
| Loss on debt extinguishment |
— | — | — | — | ||||||||||||
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| Total Expenses |
5,842,630 | 557,631 | 1,066,838 | 4,218,161 | ||||||||||||
| Earnings from continuing operations before income taxes |
145,975 | 54,360 | 146 | 91,469 | ||||||||||||
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| Income taxes |
46,844 | 15,710 | (997 | ) | 32,131 | |||||||||||
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| Earnings from continuing operations |
99,131 | 38,650 | 1,143 | 59,338 | ||||||||||||
| Less net earnings attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
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| Net earnings from continuing operations attributable to CMC |
$ | 99,131 | $ | 38,650 | $ | 1,143 | $ | 59,338 | ||||||||
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| Basic earnings per share from continuing operations attributable to CMC |
$ | 0.85 | $ | 0.51 | ||||||||||||
| Diluted earnings per share from continuing operations attributable to CMC |
$ | 0.84 | $ | 0.50 | ||||||||||||
| Average basic shares outstanding |
116,527,265 | 116,527,265 | ||||||||||||||
| Average diluted shares outstanding |
117,949,898 | 117,949,898 | ||||||||||||||
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2014
| Historical CMC |
Pro Forma Adjustments | Pro Forma CMC |
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| (in thousands, except per share data) | Cometals (i) | Other M&D (j) | ||||||||||||||
| Net Sales |
$ | 6,790,438 | $ | 704,545 | $ | 1,251,561 | $ | 4,834,332 | ||||||||
| Cost of Goods Sold |
6,096,196 | 658,213 | 1,192,640 | 4,245,343 | ||||||||||||
| Selling, general and administrative expenses |
448,943 | 24,121 | 35,232 | 389,590 | ||||||||||||
| Impairment of assets |
3,305 | — | — | 3,305 | ||||||||||||
| Interest Expense |
77,037 | 1,366 | 1,311 | 74,360 | ||||||||||||
| Loss on debt extinguishment |
— | — | — | — | ||||||||||||
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| Total Expenses |
6,625,481 | 683,700 | 1,229,183 | 4,712,598 | ||||||||||||
| Earnings from continuing operations before income taxes |
164,957 | 20,845 | 22,378 | 121,734 | ||||||||||||
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| Income taxes |
47,351 | 3,523 | 7,430 | 36,398 | ||||||||||||
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| Earnings from continuing operations |
117,606 | 17,322 | 14,948 | 85,336 | ||||||||||||
| Less net earnings attributable to noncontrolling interests |
— | — | — | — | ||||||||||||
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| Net earnings from continuing operations attributable to CMC |
$ | 117,606 | $ | 17,322 | $ | 14,948 | $ | 85,336 | ||||||||
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| Basic earnings per share from continuing operations attributable to CMC |
$ | 1.00 | $ | 0.73 | ||||||||||||
| Diluted earnings per share from continuing operations attributable to CMC |
$ | 0.99 | $ | 0.72 | ||||||||||||
| Average basic shares outstanding |
117,496,270 | 117,496,270 | ||||||||||||||
| Average diluted shares outstanding |
118,607,106 | 118,607,106 | ||||||||||||||
UNAUDITED NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
Unaudited Condensed Consolidated Balance Sheet
| (a) | The adjustments represent the elimination of the historical assets, liabilities and equity of CMC Cometals. |
| (b) | The adjustment represents the estimated cash portion of the total proceeds at closing from the sale of CMC Cometals of $172.2 million. This amount was determined based on the terms of the purchase agreement using the most recently available financial statement information. The amount of the actual proceeds could vary from the amount presented depending on working capital balances at the date of the closing. |
| (c) | The adjustment represents the deferred purchase price from the sale of CMC Cometals, which is subject to certain working capital adjustments. |
| (d) | The adjustments represent certain property, plant and equipment and other assets and liabilities excluded from the purchase agreement for the sale of CMC Cometals. The excluded assets will continue to be classified as held and used. |
| (e) | The adjustment represents historical CMC Cometals accruals related to employee costs and tax liabilities which will remain with the Company after the sale of CMC Cometals. The Company estimates that one time nonrecurring transaction costs in the range of $8.0 to $12.0 million related to the CMC Cometals sale will be incurred; however, these costs have not been included in the pro forma financial statements due to variable uncertainty of the expenses. |
| (f) | The adjustment represents the impact of items (b) - (e) above. |
| (g) | The adjustments represent the elimination of the historical assets, liabilities and equity of the Other M&D Entities. |
| (h) | For purposes of the unaudited pro forma condensed consolidated balance sheet, proceeds to be received from the sale or wind down of the Other M&D Entities are currently assumed to be at least equal to the net assets of the entities. It is expected that the Company will incur additional charges, including but not limited to impairments, severance and other transaction related costs, which are not currently reasonably estimable and therefore these costs or charges have not been reflected in the unaudited pro forma condensed consolidated balance sheet. |
Unaudited Condensed Consolidated Statement of Operations
| (i) | The adjustments eliminate the historical results of CMC Cometals as if the transaction occurred on September 1, 2013. In accordance with GAAP, the amounts eliminated do not include corporate overhead and intercompany interest, which for segment reporting purposes, had been allocated to CMC Cometals. The adjustments also do not include eliminations for intercompany sales transactions. |
| (j) | The adjustments eliminate the historical results of the Other M&D Entities as if the respective disposition transactions occurred on September 1, 2013. In accordance with GAAP, the amounts eliminated do not include corporate overhead and intercompany interest, which for segment reporting purposes, had been allocated to the Other M&D Entities. The adjustments also do not include eliminations for intercompany sales transactions. |