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EX-99.2 - EX-99.2 - BEACON ROOFING SUPPLY INCd429741dex992.htm
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EX-23.1 - EX-23.1 - BEACON ROOFING SUPPLY INCd429741dex231.htm
8-K - FORM 8-K - BEACON ROOFING SUPPLY INCd429741d8k.htm

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial statements present the combination of the historical financial statements of Beacon and Allied, adjusted to give effect to the Allied Transactions. As used herein, the term “Allied Transactions” refers to the following proposed transactions: (i) a $300.0 million public offering of shares of Beacon’s common stock; (ii) the Debt Financing (as defined herein); (iii) the Convertible Preferred Stock Purchase (as defined herein); (iv) the closing of the Allied Acquisition (as defined herein); (v) the repayment of certain existing indebtedness of Beacon; and (vi) the payment of estimated premiums, fees and expenses in connection with the proposed $300.0 million public offering of shares of Beacon’s common stock, the proposed Debt Financing, the Allied Acquisition and the Convertible Preferred Stock Purchase.

The unaudited pro forma condensed combined balance sheet information gives effect to the Allied Transactions as if they had been consummated on June 30, 2017 and includes pro forma adjustments based on Beacon management’s preliminary valuations of certain acquired tangible and intangible assets. Beacon’s fiscal year ends on September 30, while Allied’s last three fiscal years ended on December 31, 2016, January 2, 2016 and December 27, 2014. The unaudited pro forma condensed combined statement of operations information for the fiscal year ended September 30, 2016 gives effect to the Allied Transactions as if they had been consummated on October 1, 2015 and combines Beacon’s historical results for the fiscal year ended September 30, 2016 with Allied’s historical results for the fiscal year ended December 31, 2016. As Allied’s fiscal year end is within 93 days of Beacon’s fiscal year end, the unaudited pro forma condensed combined statement of operations information for the fiscal year ended September 30, 2016 includes Allied’s annual operating results for its respective fiscal year ended December 31, 2016. The unaudited pro forma condensed combined statement of operations information for the nine months ended June 30, 2017 gives effect to the Allied Transactions as if they had been consummated on October 1, 2016 and combines Beacon’s historical results for the nine months ended June 30, 2017 with Allied’s historical results for the six months ended July 1, 2017 and the three months ended December 31, 2016.

The final terms of the Allied Transactions, including the Debt Financing, will be subject to market conditions and may change materially from the assumptions described in the following unaudited pro forma condensed combined financial statements. Changes in assumptions with respect to the Allied Transactions would result in changes to various components of the unaudited pro forma condensed combined balance sheet, including stockholders’ equity and total debt, and various components of the unaudited pro forma condensed combined statements of operations, including interest expense and earnings per share. Depending on the nature of the changes, the impact on the unaudited pro forma condensed combined financial information could be material.

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting for business combinations under the guidance of Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). Under ASC 805, assets acquired and liabilities assumed are recorded at fair value, with any excess purchase price allocated to goodwill.    The fair value of identifiable tangible and intangible assets acquired and liabilities assumed are preliminary and are based upon available information and certain assumptions described in the accompanying notes to the unaudited pro forma condensed combined financial statements that Beacon’s management believes are reasonable under the circumstances. The final purchase price allocation for the Allied Transactions will be performed after the closing of the Allied Acquisition and will depend on the actual net tangible and intangible assets that exist as of the closing of the Allied Acquisition. Any final adjustments may change the allocation of purchase price, which could result in a change to the unaudited pro forma condensed combined financial information, including goodwill. The result of the final purchase price allocation could be materially different from the preliminary allocation set forth herein.

The unaudited pro forma condensed combined financial information is provided for informational and illustrative purposes only and is not intended to represent or be indicative of the consolidated results of operations or financial position of Beacon that would have been reported had the Allied Transactions been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial position of Beacon following the consummation of the Allied Transactions. We therefore caution you not to place undue reliance on the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information should be read in conjunction with:

 

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


    the audited consolidated financial statements and the notes related thereto for Beacon for the fiscal years ended September 30, 2016, 2015 and 2014 and as of September 30, 2016 and 2015, which are filed with Beacon’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016 on file with the United States Securities and Exchange Commission (the “SEC”);

 

    the unaudited consolidated interim financial statements and the notes related thereto for Beacon as of and for the nine months ended June 30, 2017 and 2016, which are filed with Beacon’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 on file with the SEC;

 

    the audited combined financial statements and the notes related thereto for Allied as of and for the fiscal years ended December 31, 2016, January 2, 2016 and December 27, 2014, which are included as Exhibit 99.1 to this Current Report on Form 8-K; and

 

    unaudited condensed combined interim financial statements and the notes thereto for Allied as of and for the six months ended July 1, 2017 and July 2, 2016, which are included as Exhibit 99.2 to this Current Report on Form 8-K.


Beacon Roofing Supply, Inc.

Unaudited Pro Forma Condensed Combined Statements of Operations

For the Nine Months Ended June 30, 2017

 

     Historical      Pro Forma     Note      Pro Forma  
     Beacon      Allied1      Adjustments     Reference      Combined  
     (in thousands, other than share and per share amounts)  

Statement of Operations Data:

             

Net sales

   $ 3,086,802      $ 1,871,490      $ —          $ 4,958,292  

Cost of products sold

     2,333,504        1,376,043        —            3,709,547  
  

 

 

    

 

 

    

 

 

      

 

 

 

Gross profit

     753,298        495,447        —            1,248,745  

Operating expense

     624,526        402,121        64,235       4(a), 4(b)        1,090,882  
  

 

 

    

 

 

    

 

 

      

 

 

 

Income from operations

     128,772        93,326        (64,235        157,863  

Interest expense, financing costs, and other

     39,239        2,747        81,483       4(c), 4(d)        123,469  
  

 

 

    

 

 

    

 

 

      

 

 

 

Income before provision for income taxes

     89,533        90,579        (145,718        34,394  

Provision for income taxes

     33,800        35,915        (56,301     4(e)        13,414  
  

 

 

    

 

 

    

 

 

      

 

 

 

Net income

   $ 55,733      $ 54,664      $ (89,417      $ 20,980  
  

 

 

    

 

 

    

 

 

      

 

 

 

Dividend on preferred shares

                18,000  
             

 

 

 

Net income attributable to common stockholders

              $ 2,980  
             

 

 

 

Weighted-average common stock outstanding:

             

Basic

     60,131,546           5,985,634       4(f)        66,117,180  

Diluted

     61,163,591           5,985,634       4(f)        67,149,225  

Net income per share:

             

Basic

   $ 0.93         $ (0.88     4(g)      $ 0.05  

Diluted

   $ 0.91         $ (0.87     4(g)      $ 0.04  

 

(1) The unaudited pro forma condensed statement of operations data of Allied for the nine months ended June 30, 2017 includes the historical statement of operations of Allied for the three months ended December 31, 2016. The historical statement of operations data of Allied for the three months ended December 31, 2016, is also included in the unaudited pro forma condensed combined statement of operations for the fiscal year ended September 30, 2016. Condensed historical statement of operations data of Allied for the three months ended December 31, 2016 is as follows (in thousands):

 

     Three Months Ended  
     December 31, 2016  

Revenue

   $ 625,879  

Expenses

     601,286  
  

 

 

 

Net income

   $ 24,593  
  

 

 

 


Beacon Roofing Supply, Inc.

Unaudited Pro Forma Condensed Combined Statements of Operations

For the Fiscal Year Ended September 30, 2016

 

     Historical      Pro Forma     Note      Pro Forma  
     Beacon      Allied1      Adjustments     Reference      Combined  
     (in thousands, other than share and per share amounts)  

Statement of Operations Data:

             

Net sales

   $ 4,127,109      $ 2,560,404      $ —          $ 6,687,513  

Cost of products sold

     3,114,040        1,883,061        —            4,997,101  
  

 

 

    

 

 

    

 

 

      

 

 

 

Gross profit

     1,013,069        677,343        —            1,690,412  

Operating expense

     808,085        536,367        83,057          1,427,509  
  

 

 

    

 

 

    

 

 

      

 

 

 

Income from operations

     204,984        140,976        (83,057     4(a), 4(b)        262,903  

Interest expense, financing costs, and other

     58,452        7,993        106,444          172,889  
  

 

 

    

 

 

    

 

 

      

 

 

 

Income before provision for income taxes

     146,532        132,983        (189,501     4(c), 4(d)        90,014  

Provision for income taxes

     56,615        52,507        (74,017        35,105  
  

 

 

    

 

 

    

 

 

      

 

 

 

Net income

   $ 89,917      $ 80,476      $ (115,484     4(e)      $ 54,909  
  

 

 

    

 

 

    

 

 

      

 

 

 

Dividend on preferred shares

                24,000  
             

 

 

 

Net income attributable to common stockholders

              $ 30,909  
             

 

 

 

Weighted-average common stock outstanding:

             

Basic

     59,424,372           5,985,634       4(f)        65,410,006  

Diluted

     60,418,067           5,985,634       4(f)        66,403,701  

Net income per share:

             

Basic

   $ 1.51         $ (1.04     4(g)      $ 0.47  

Diluted

   $ 1.49         $ (1.02     4(g)      $ 0.47  

 

(1) Represents Allied statement of operations data for the year ended December 31, 2016. There were no significant transactions outside the ordinary course of business for Allied in the three months ended December 31, 2016


Beacon Roofing Supply, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of June 30, 2017

 

     Historical      Pro Forma     Note      Pro Forma  
     Beacon     Allied      Adjustments     Reference      Combined  
     (in thousands)  

Balance Sheet Data:

            

Assets

          

Current assets:

            

Cash and cash equivalents

   $ 33,055     $ 6,145      $ (6,145     5(a), 5(e)      $ 33,055  

Accounts receivable

     670,977       393,652        —            1,064,629  

Inventories, net

     641,425       366,281        —            1,007,706  

Prepaid expenses and other current assets

     221,477       58,093        —            279,570  
  

 

 

   

 

 

    

 

 

      

 

 

 

Total current assets

     1,566,934       824,171        (6,145        2,384,960  

Property and equipment, net

     156,951       116,360        29,000       5(b)        302,311  

Goodwill

     1,256,014       433,094        1,108,548       5(b)        2,797,656  

Intangibles, net

     442,962       12,282        898,000       5(b)        1,353,244  

Other assets, net

     1,511       2,269        —            3,780  
  

 

 

   

 

 

    

 

 

      

 

 

 

Total Assets

   $ 3,424,372     $ 1,388,176      $ 2,029,403        $ 6,841,951  
  

 

 

   

 

 

    

 

 

      

 

 

 

Liabilities and Stockholders’ Equity

            

Current liabilities:

            

Accounts payable

   $ 387,579     $ 376,033      $ —          $ 763,612  

Accrued expenses

     280,315       89,658        24,103       5(c)        394,076  

Current portions of long-term debt

     13,762       —          —            13,762  

Indebtedness to related parties

     —         16,889        (16,889     5(e)        —    
  

 

 

   

 

 

    

 

 

      

 

 

 

Total current liabilities

     681,656       482,580        7,214          1,171,450  

Borrowings under revolving lines of credit, net

     449,615       —          142,902       5(d)        592,517  

Long-term debt, net

     721,685       —          1,795,323       5(d)        2,517,008  

Deferred income taxes, net

     142,116       13,847        318,414       5(b)        474,377  

Long-term obligations under equipment financing and other, net

     28,412       772        —            29,184  

Indebtedness to related parties

     —         82,475        (82,475     5(e)        —    
  

 

 

   

 

 

    

 

 

      

 

 

 

Total liabilities

     2,023,484       579,674        2,181,378          4,784,536  
  

 

 

   

 

 

    

 

 

      

 

 

 

Commitments and contingencies

            

Convertible preferred stock

     —         —          398,025       5(a)        398,025  

Stockholders’ equity:

            

Common stock

     603       —          60       5(a), 5(e)        663  

Preferred stock

     —         2,475        (2,475     5(e)        —    

Additional paid-in capital

     714,608       449,607        (160,917     5(a), 5(e)        1,003,298  

Retained earnings

     703,055       356,420        (386,668     5(c), 5(e)        672,807  

Accumulated other comprehensive loss

     (17,378     —          —            (17,378
  

 

 

   

 

 

    

 

 

      

 

 

 

Total stockholders’ equity

     1,400,888       808,502        (550,000        1,659,390  
  

 

 

   

 

 

    

 

 

      

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 3,424,372     $ 1,388,176      $ 2,029,403        $ 6,841,951  
  

 

 

   

 

 

    

 

 

      

 

 

 


Notes to Unaudited Pro Forma Condensed Combined Financial Information

 

1. Description of Transaction

On August 24, 2017, Beacon entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Oldcastle, Inc. and Oldcastle Distribution, Inc., pursuant to which Beacon will acquire for approximately $2.625 billion in cash (subject to a working capital and certain other adjustments as set forth in the Stock Purchase Agreement) (the “Purchase Price”) all of the issued and outstanding shares of capital stock of Allied Building Products Corp. and an affiliated entity (together with its and their respective subsidiaries, “Allied”), on the terms and subject to the conditions set forth in the Stock Purchase Agreement (the “Allied Acquisition”).

To finance this transaction, Beacon has entered into a commitment letter with lenders for the following debt financing facilities:

 

    a $970.0 million seven-year senior secured term loan “B” facility (“Term Loan B”);

 

    a $1.3 billion senior-secured asset-based revolving line of credit (“ABL revolver”); and

 

    a $1.3 billion senior unsecured bridge facility (the “Bridge loan”).

In connection with the aforementioned debt financing (the “Debt Financing”), Beacon plans to enter into the following equity financing transactions to further finance the Allied Acquisition:

 

    a $400.0 million sale (the “Convertible Preferred Stock Purchase”) of Series A Cumulative Convertible Participating Preferred Stock to CD&R Boulder Holdings, L.P (“convertible preferred stock”); and

 

    a $300.0 million public offering of shares of common stock.

 

2. Basis of Presentation

The unaudited pro forma condensed combined financial information has been prepared pursuant to the rules and regulations of the SEC. Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations.

The unaudited pro forma condensed combined balance sheet information gives effect to the Allied Transactions as if they had been consummated on June 30, 2017 and includes pro forma adjustments based on Beacon management’s preliminary valuations of certain tangible and intangible assets. Beacon’s fiscal year ends on September 30, while Allied’s last three fiscal years ended on December 31, 2016, January 2, 2016 and December 27, 2014. The unaudited pro forma condensed combined statement of operations information for the fiscal year ended September 30, 2016 gives effect to the Allied Transactions as if they had been consummated on October 1, 2015 and combines Beacon’s historical results for the fiscal year ended September 30, 2016 with Allied’s historical results for the fiscal year ended December 31, 2016. As Allied’s fiscal year end is within 93 days of Beacon’s fiscal year end, the unaudited pro forma condensed combined statement of operations information for the fiscal year ended September 30, 2016 includes Allied’s annual operating results for its respective fiscal year ended December 31, 2016. The unaudited pro forma condensed combined statement of operations information for the nine months ended June 30, 2017 gives effect to the Allied Transactions as if they had been consummated on October 1, 2016 and combines Beacon’s historical results for the nine months ended June 30, 2017 with Allied’s historical results for the six months ended July 1, 2017 and the three months ended December 31, 2016.

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting for business combinations under the guidance of Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). Under ASC 805, assets acquired and liabilities assumed are recorded at fair value, with any excess purchase price allocated to goodwill. The fair value of identifiable tangible and intangible assets acquired and liabilities assumed are preliminary and are based upon available information and certain assumptions described in the accompanying notes to the unaudited pro forma condensed combined financial statements that Beacon’s management believes are reasonable under the circumstances. The


final purchase price allocation for the Allied Transactions will be performed after the closing of the Allied Acquisition and will depend on the actual net tangible and intangible assets that exist as of the closing of the Allied Acquisition. Any final adjustments may change the allocation of purchase price, which could result in a change to the unaudited pro forma condensed combined financial information, including goodwill. The result of the final purchase price allocation could be materially different from the preliminary allocation set forth herein.

 

3. Accounting Policies

Following the Allied Acquisition, Beacon will conduct a review of accounting policies of Allied in an effort to determine if differences in accounting policies require reclassification of results of operations or reclassification of assets or liabilities to conform to Beacon’s accounting policies and classifications. As a result of that review, Beacon may identify differences among the accounting policies of the companies that, when conformed, could have a material impact on the unaudited pro forma combined financial information.

 

4. Unaudited Pro Forma Combined Statement of Operations Adjustments

 

  (a) In accordance with ASC 805, the estimated purchase price of Allied has been allocated on a preliminary basis to the fair value of its assets and liabilities. The preliminarily determined fair value for Allied definite-lived intangible assets (customer relationships) is approximately $800.0 million. This adjustment increases operating expenses for the incremental expense that will be incurred based on the amortization of acquired definite-lived intangible assets, and was calculated as follows (in thousands):

 

     Nine Months Ended  
     June 30, 2017  

Estimated pro forma amortization

   $ 65,137  

Historical amortization

     (5,885
  

 

 

 

Total incremental amortization

   $ 59,252  
  

 

 

 
     Year Ended  
     September 30, 2016  

Estimated pro forma amortization

   $ 86,850  

Historical amortization

     (10,437
  

 

 

 

Total incremental amortization

   $ 76,413  
  

 

 

 

Definite lived intangible assets consisting of amounts assigned to customer relationships are expected to be amortized over their estimated life of 20 years on an accelerated basis. Estimated future amortization for the five year period following the closing date of the Allied Acquisition is $86.8 million, $122.5 million, $108.3 million, $91.8 million, and $75.5 million for the years ending September 30, 2017, 2018, 2019, 2020, and 2021, respectively.

 

  (b) In accordance with ASC 805, the estimated purchase price of Allied has been allocated on a preliminary basis to the fair value of its assets and liabilities. The preliminarily determined fair value for Allied property, plant, and equipment is approximately $145.0 million. This adjustment increases operating expenses for the incremental expense that will be incurred based on the depreciation of acquired property, plant, and equipment. The incremental depreciation expense for the nine months ended June 30, 2017 and year ended September 30, 2016 was $5.0 million and $6.6 million, respectively. These amounts were calculated based on an estimated $29.0 million of incremental fair value depreciated over a range of 1.6 to 8.0 years.


  (c) To consummate the Allied Acquisition, Beacon intends to incur approximately $2.0 billion of incremental new indebtedness. Based on the assumed interest rates on the Debt Financing in connection with the Allied Acquisition the pro forma adjustment to interest expense was calculated as follows (in thousands):

 

     Nine Months Ended  
     June 30, 2017  

Estimated interest expense on financing incurred in connection with the Allied Acquisition

   $ 98,551  

Less: Interest expense recorded in Beacon’s historical results related to interest expense

     (20,129

Estimated amortization of deferred financing costs recorded in connection with the Allied Acquisition

     5,571  

Less: Interest expense recorded in Beacon’s historical results related to deferred financing costs

     (2,509
  

 

 

 

Total pro forma adjustment to interest expense related to debt financing

   $ 81,484  
  

 

 

 
     Year Ended  
     September 30, 2016  

Estimated interest expense on financing incurred in connection with the Allied Acquisition

   $ 131,401  

Less: Interest expense recorded in Beacon’s historical results related to interest expense

     (29,846

Estimated amortization of deferred financing costs recorded in connection with the Allied Acquisition

     7,429  

Less: Interest expense recorded in Beacon’s historical results related to deferred financing costs

     (2,539
  

 

 

 

Total pro forma adjustment to interest expense related to debt financing

   $ 106,445  
  

 

 

 

Beacon estimates the weighted-average interest rate on the new indebtedness to be approximately 4.6%. A hypothetical 1/8 percent increase or decrease in the expected weighted-average interest rate, including from an increase in LIBOR, would increase or decrease interest expense on Beacon’s financing by approximately $35.8 million annually.

 

  (d) In connection with the Allied Acquisition, Beacon intends to obtain at least $400.0 million of equity financing via the Convertible Preferred Stock Purchase. The preferred stock will be convertible perpetual participating preferred stock of Beacon, with an initial conversion price of $41.26 per share, and will accrue dividends at a rate of 6.0% per annum (payable in cash or in-kind, subject to specified limitations). Assuming an outstanding convertible preferred stock value of $400.0, the common stock equivalent of the preferred stock upon conversion would be approximately 9.7 million shares of common stock. Estimated deferred financing costs related to this equity financing are approximately $2.0 million. These costs net down the total value of the preferred stock on the balance sheet.

 

  (e) The adjustment to the unaudited pro forma condensed combined balance sheet as of June 30, 2017 gives effect to the recording of the fair value of the estimated net deferred tax assets acquired from Allied, and the recording of a deferred tax liability associated with the difference in the financial reporting and tax basis in the customer relationship intangible recorded as part of the acquisition method of accounting described in Note 5(b).

For purposes of the unaudited pro forma condensed combined statement of operations, the combined United States federal and state statutory tax rate of 39.0% has been used for all periods presented. This does not reflect Beacon’s effective tax rate, which includes other tax items such as tax charges or benefits, and does not take into account any historical or possible future tax events that may impact Beacon in the future.

 

  (f) In connection with the Allied Acquisition, Beacon intends to obtain approximately $300.0 million of equity financing through a public offering of shares of our common stock. Utilizing the Beacon common stock closing price of $50.12 as of September 8, 2017, the pro forma adjustment to basic and diluted weighted-average common stock outstanding for the nine months ended June 30, 2017 and year ended September 30, 2016 is an increase of approximately 6.0 million shares.

Assuming a full conversion of the preferred stock outstanding at the beginning of the period (see Note 4(d)), the pro forma adjustment to diluted weighted-average common stock outstanding for the nine months ended June 30, 2017 and year ended September 30, 2016 would be increases of approximately 14.6 million shares and 14.7 million shares, respectively.

 

  (g) The pro forma adjustment to net income per share (“EPS”) is derived by dividing the pro forma net income attributable to common stockholders by the pro forma basic and diluted weighted-average shares outstanding (“WASO”) and comparing the respective totals to historical net income per share.

 


Assuming no conversion of preferred stock in the period and an assumed 6% annual dividend on the convertible preferred shares outstanding, the following represents the calculation of the pro forma adjustment to net income per share for the respective periods presented (in thousands, except share and per share amounts):

 

     Nine Months Ended  
     June 30, 2017  

Pro Forma Net Income

   $ 20,980  

Less: Dividends on preferred shares

     (18,000
  

 

 

 

Net income attributable to common stockholders

   $ 2,980  
  

 

 

 

Pro forma Basic WASO

     66,117,180  

Pro forma Diluted WASO

     67,149,225  

 

     Pro Forma EPS      Unadjusted EPS      Pro Forma
EPS Adjustment
 

Pro forma Basic EPS

   $ 0.05      $ 0.93      $ (0.88

Pro forma Diluted EPS

   $ 0.04      $ 0.91      $ (0.87

 

     Year Ended  
     September 30, 2016  

Pro Forma Net Income

   $ 54,909  

Less: Dividends on preferred shares

     (24,000
  

 

 

 

Net income attributable to common stockholders

   $ 30,909  
  

 

 

 

Pro forma Basic WASO

     65,410,006  

Pro forma Diluted WASO

     66,403,701  

 

     Pro Forma EPS      Unadjusted EPS      Pro Forma
EPS Adjustment
 

Pro forma Basic EPS

   $ 0.47      $ 1.51      $ (1.04

Pro forma Diluted EPS

   $ 0.47      $ 1.49      $ (1.02


Assuming full conversion of preferred stock at the beginning of the period, the following would represent the calculation of the pro forma adjustment to net income per share for the respective periods presented (in thousands, except share and per share amounts):

 

     Nine Months Ended  
     June 30, 2017  

Pro Forma Net Income

   $ 20,980  

Less: Dividends on preferred shares

     —    
  

 

 

 

Net income attributable to common stockholders

   $ 20,980  
  

 

 

 

Pro forma Basic WASO

     66,117,180  

Pro forma Diluted WASO

     75,811,799  

 

                   Pro Forma  
     Pro Forma EPS      Unadjusted EPS      EPS Adjustment  

Pro forma Basic EPS

   $ 0.32      $ 0.93      $ (0.61

Pro forma Diluted EPS

   $ 0.28      $ 0.91      $ (0.63

 

     Year Ended  
     September 30, 2016  

Pro Forma Net Income

   $ 54,909  

Less: Dividends on preferred shares

     —    
  

 

 

 

Net income attributable to common stockholders

   $ 54,909  
  

 

 

 

Pro forma Basic WASO

     65,410,006  

Pro forma Diluted WASO

     75,104,625  

 

                   Pro Forma  
     Pro Forma EPS      Unadjusted EPS      EPS Adjustment  

Pro forma Basic EPS

   $ 0.84      $ 1.51      $ (0.67

Pro forma Diluted EPS

   $ 0.73      $ 1.49      $ (0.76

 

5. Unaudited Pro Forma Combined Balance Sheet Adjustments

 

  (a) A summary of the expected sources and uses resulting from the Allied Acquisition and related financing transactions is as follows (in thousands):

 

Sources of funds

  

Total debt financing

   $ 2,901,568  

Issuance of preferred stock

     400,000  

Issuance of common stock

     300,000  
  

 

 

 

Total sources of funds

   $ 3,601,568  
  

 

 

 

Use of funds

  

Cash consideration for Allied

   $ 2,625,000  

Repayment of existing Beacon debt

     887,240  

Transaction fees

     24,103  

Deferred financing fees

     65,225  
  

 

 

 

Total use of funds

   $ 3,601,568  
  

 

 

 

 

  (b) The unaudited pro forma condensed combined balance sheet has been adjusted to reflect the preliminary allocation by Beacon management of the purchase price for Allied to the identifiable tangible and intangible net assets acquired, with the excess purchase price allocated to goodwill. Under the acquisition method of accounting, the total estimated purchase price is allocated to Allied’s net tangible and intangible assets based on their estimated fair values at the date of the completion of the acquisition.


Below is a preliminary allocation of the total purchase price and the pro forma adjustments to the unaudited pro forma condensed combined balance sheet as of June 30, 2017 (in thousands):

 

Purchase Price Allocation

  

Net working capital

   $ 243,000  

Inventory

     358,000  

Fixed assets

     145,000  

Other assets

     2,000  

Trade name

     110,000  

Customer relationships

     800,000  

Goodwill

     967,000  
  

 

 

 

Total

   $ 2,625,000  
  

 

 

 

The adjustments to the historical combined net assets as a result of the allocation of the estimated purchase price for Allied are as follows (in thousands):

 

     Historical      Preliminary      Pro forma  
     book value      fair values      adjustment  

Trade name

   $ —        $ 110,000      $ 110,000  

Customer relationships

     12,282        800,000        787,718  

Intangible assets, net

     —          910,000        910,000  

Goodwill

     433,094        967,000        533,906  

Deferred income taxes

     13,847        331,871        318,024  

Upon completion of the fair value assessment, the Company anticipates that the final purchase price allocation will differ from the preliminary assessment provided above. Any changes to the initial estimates of the fair value of the assets and liabilities will be recorded as adjustments and the residual amounts will be allocated as an increase or decrease to goodwill.

 

  (c) Beacon and Allied anticipate incurring transaction costs associated with the Allied Acquisition of approximately $24.1 million. This adjustment reflects the accrual of those anticipated costs.

 

  (d) The adjustments to historical combined long-term debt are comprised of the following (in thousands):

 

Paydown of existing Beacon revolver lines of credit

   $ (449,615

Paydown of existing Beacon Term Loan B

     (437,625

ABL revolver1

     593,717  

Term Loan B1

     970,000  

Bridge loan1

     1,300,000  
  

 

 

 

Net change in long term debt

   $ 1,976,477  
  

 

 

 

 

(1) Amounts represent debt financing commitments entered into by Beacon. Actual allocation of these amounts upon closing of the Allied Acquisition may change based on the results of the equity financing Beacon plans to obtain in connection with these debt financing transactions.

Deferred financing fees of approximately $52.0 million have been recorded against the gross long-term debt balances. Deferred financing fees will be amortized over the contractual term of the respective facilities. Deferred financing fees of $13.8 million relating to Beacon’s existing long-term debt have been eliminated from total assets with a corresponding decrease to retained earnings for the amounts related to Beacon. No adjustment has been made to the unaudited pro forma combined statements of operations for these costs, as they are non-recurring.

 

  (e) Adjustment to eliminate (settle) Allied’s intercompany debt and stockholder’s equity.