Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - Alexander & Baldwin, Inc. | trcexhibit991.htm |
| 8-K/A - 8-K/A - Alexander & Baldwin, Inc. | form8-ka.htm |
Exhibit 99.2
ALEXANDER & BALDWIN, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma financial information of Alexander & Baldwin, Inc. (the "Company") is based on the historical financial statements of the Company. The unaudited pro forma condensed consolidated balance sheet is presented as if the acquisition of the Properties had occurred on December 31, 2017. The unaudited pro forma condensed consolidated statement of operations of the Company for the year ended December 31, 2017 has been prepared as if the acquisition of the Properties had occurred on January 1, 2017.
Such unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements of the Company filed with the Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations of the Company that would have occurred if the acquisition of the Properties had been completed on the dates indicated, nor does it purport to represent the Company’s results of operations as of any future date or for any future period. The pro forma condensed consolidated statement of operations of the Company has been adjusted to include the acquisition of the Properties. In addition, the pro forma condensed consolidated statement of operations is based upon pro forma allocations of the purchase price of the Properties using preliminary estimates of fair value of the assets acquired and liabilities assumed in connection with the acquisition. Initial allocation may be adjusted in the future upon finalization of these preliminary estimates. Management believes all material adjustments necessary to reflect the effect of the acquisition have been made to the unaudited pro forma financial information.
ALEXANDER & BALDWIN, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2017
(In millions; unaudited)
A&B Historical (A) | Acquisition of the TRC Portfolio (B) | A&B Pro Forma | |||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | 68.9 | $ | (68.9 | ) | $ | — | ||||
Accounts receivable, net | 34.1 | — | 34.1 | ||||||||
Contracts retention | 13.2 | — | 13.2 | ||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 20.2 | — | 20.2 | ||||||||
Inventories | 31.9 | — | 31.9 | ||||||||
Real estate held for sale | 67.4 | — | 67.4 | ||||||||
Income tax receivable | 27.7 | — | 27.7 | ||||||||
Prepaid expenses and other assets | 11.4 | — | 11.4 | ||||||||
Total current assets | 274.8 | (68.9 | ) | 205.9 | |||||||
Investments in Affiliates | 401.7 | — | 401.7 | ||||||||
Real Estate Developments | 151.0 | — | 151.0 | ||||||||
Property – Net | 1,147.5 | 218.3 | 1,365.8 | ||||||||
Intangible Assets – Net | 46.9 | 38.1 | 85.0 | ||||||||
Deferred Tax Asset | 16.5 | — | 16.5 | ||||||||
Goodwill | 102.3 | — | 102.3 | ||||||||
Restricted Cash | 34.3 | (34.3 | ) | — | |||||||
Other Assets | 56.2 | — | 56.2 | ||||||||
Total assets | $ | 2,231.2 | 153.2 | $ | 2,384.4 | ||||||
LIABILITIES AND EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Notes payable and current portion of long-term debt | $ | 46.0 | — | $ | 46.0 | ||||||
Accounts payable | 43.3 | — | 43.3 | ||||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 5.7 | — | 5.7 | ||||||||
Accrued interest | 6.5 | — | 6.5 | ||||||||
Deferred revenue | 0.9 | — | 0.9 | ||||||||
Indemnity holdback related to Grace acquisition | 9.3 | — | 9.3 | ||||||||
HC&S cessation-related liabilities | 4.6 | — | 4.6 | ||||||||
Accrued dividends | 783.0 | — | 783.0 | ||||||||
Accrued and other liabilities | 27.5 | — | 27.5 | ||||||||
Total current liabilities | 926.8 | — | 926.8 | ||||||||
Long-term Liabilities: | |||||||||||
Long-term debt | 585.2 | 150.9 | 736.1 | ||||||||
Deferred income taxes | — | — | — | ||||||||
Accrued pension and post-retirement benefits | 19.9 | — | 19.9 | ||||||||
Other non-current liabilities | 40.2 | 2.3 | 42.5 | ||||||||
Total long-term liabilities | 645.3 | 153.2 | 798.5 | ||||||||
Total liabilities | 1,572.1 | 153.2 | 1,725.3 | ||||||||
Commitments and Contingencies | |||||||||||
Redeemable Noncontrolling Interest | 8.0 | — | 8.0 | ||||||||
Equity: | |||||||||||
Common stock - no par value; authorized, 150 million shares; outstanding, 49.3 million shares at December 31, 2017 | 1,161.7 | — | 1,161.7 | ||||||||
Accumulated other comprehensive loss | (42.3 | ) | — | (42.3 | ) | ||||||
Distributions in excess of accumulated earnings | (473.0 | ) | — | (473.0 | ) | ||||||
Total A&B shareholders' equity | 646.4 | — | 646.4 | ||||||||
Noncontrolling interest | 4.7 | — | 4.7 | ||||||||
Total equity | 651.1 | — | 651.1 | ||||||||
Total liabilities and equity | $ | 2,231.2 | 153.2 | $ | 2,384.4 | ||||||
See accompanying notes to pro forma financial information
ALEXANDER & BALDWIN, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2017
(In millions, except per share amounts; unaudited)
A&B Historical (A) | Acquisition of the TRC Portfolio (B) | A&B Pro Forma | |||||||||
Operating Revenue: | |||||||||||
Commercial Real Estate | $ | 136.9 | $ | 13.5 | $ | 150.4 | |||||
Land Operations | 84.5 | — | 84.5 | ||||||||
Materials & Construction | 204.1 | — | 204.1 | ||||||||
Total operating revenue | 425.5 | 13.5 | 439.0 | ||||||||
Operating Costs and Expenses: | |||||||||||
Cost of Commercial Real Estate | 75.5 | 11.7 | 87.2 | ||||||||
Cost of Land Operations | 60.4 | — | 60.4 | ||||||||
Cost of Materials & Construction | 166.1 | — | 166.1 | ||||||||
Selling, general and administrative | 66.4 | — | 66.4 | ||||||||
REIT evaluation/conversion costs | 15.2 | — | 15.2 | ||||||||
Impairment of real estate assets | 22.4 | — | 22.4 | ||||||||
Total operating costs and expenses | 406.0 | 11.7 | 417.7 | ||||||||
Operating Income | 19.5 | 1.8 | 21.3 | ||||||||
Income related to joint ventures | 7.2 | — | 7.2 | ||||||||
Reductions in solar investments, net | (2.6 | ) | — | (2.6 | ) | ||||||
Interest and other income, net | 2.1 | — | 2.1 | ||||||||
Interest expense | (25.6 | ) | (5.1 | ) | (30.7 | ) | |||||
Income (Loss) from Continuing Operations Before Income Taxes and Gain on Sale of Improved Properties | 0.6 | (3.3 | ) | (2.7 | ) | ||||||
Income tax benefit | 218.2 | — | 218.2 | ||||||||
Income (Loss) from Continuing Operations Before Gain on Sale of Improved Properties | 218.8 | (3.3 | ) | 215.5 | |||||||
Gain on the sale of improved properties, net of income taxes | 9.3 | — | 9.3 | ||||||||
Income (Loss) from Continuing Operations | 228.1 | (3.3 | ) | 224.8 | |||||||
Income from discontinued operations, net of income taxes | 2.4 | — | 2.4 | ||||||||
Net Income (Loss) | 230.5 | (3.3 | ) | 227.2 | |||||||
Income attributable to noncontrolling interest | (2.2 | ) | — | (2.2 | ) | ||||||
Net Income (Loss) Attributable to A&B Shareholders | $ | 228.3 | $ | (3.3 | ) | $ | 225.0 | ||||
Basic Earnings Per Share of Common Stock: | |||||||||||
Continuing operations available to A&B shareholders | $ | 4.63 | $ | (0.07 | ) | $ | 4.56 | ||||
Discontinued operations available to A&B shareholders | 0.05 | — | 0.05 | ||||||||
Net income available to A&B shareholders | $ | 4.68 | $ | (0.07 | ) | $ | 4.61 | ||||
Diluted Earnings Per Share of Common Stock: | |||||||||||
Continuing operations available to A&B shareholders | $ | 4.30 | $ | (0.07 | ) | $ | 4.23 | ||||
Discontinued operations available to A&B shareholders | 0.04 | — | 0.04 | ||||||||
Net income available to A&B shareholders | $ | 4.34 | $ | (0.07 | ) | $ | 4.27 | ||||
Weighted-Average Number of Shares Outstanding: | |||||||||||
Basic | 49.2 | — | 49.2 | ||||||||
Diluted | 53.0 | — | 53.0 | ||||||||
Amounts Available to A&B Shareholders: | |||||||||||
Continuing operations available to A&B shareholders, net of income taxes | $ | 227.7 | $ | (3.3 | ) | $ | 224.4 | ||||
Discontinued operations available to A&B shareholders, net of income taxes | 2.4 | — | 2.4 | ||||||||
Net income available to A&B shareholders | $ | 230.1 | $ | (3.3 | ) | $ | 226.8 | ||||
See accompanying notes to pro forma financial information
ALEXANDER & BALDWIN, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND
STATEMENT OF OPERATIONS
(Unaudited)
(A) Derived from the Company's consolidated balance sheet and statement of operations as of and for the year ended December 31, 2017, respectively.
(B) To reflect the acquisition of the TRC Portfolio as if it were acquired on January 1, 2017 for $254.1 million, including assumed debt of $62.0 million. The purchase price was preliminarily allocated to tangible and identifiable intangible assets and liabilities based on their fair values as follows (in millions):
Fair value of assets acquired and liabilities assumed | ||||
Assets acquired: | ||||
Property, plant and equipment | $ | 218.3 | ||
Intangible assets | 38.1 | |||
Total assets acquired | 256.4 | |||
Liabilities assumed: | ||||
Intangible liabilities | 2.3 | |||
Total liabilities assumed | 2.3 | |||
Net assets acquired | $ | 254.1 | ||
The pro forma information assumes the purchase was funded with approximately $34.3 million of §1031 proceeds, $68.9 million of cash and cash equivalents, $62.0 million of assumed debt, and $88.9 million from the Company's revolving credit facility. The pro forma adjustments include the pro forma operations of the Properties for 2017, which were based on pro forma purchase price allocation adjustments, such as amortization of above and below market leases and incremental depreciation arising from increases in asset bases as a result of recording assets at their fair value in purchase accounting. The amounts allocated to buildings and improvements are depreciated on a straight line basis over 12 to 40 years. Tenant improvements are depreciated over the shorter of the respective lease terms or remaining life. Amounts allocated to lease intangible assets and liabilities are amortized over the lives of the leases, which have a remaining average life of 7 years and 12 years, respectively. The purchase price allocation to acquired lease assets and liabilities is preliminary and subject to adjustment by the Company.
Adjustments to derive pro forma revenues and expenses include a $0.5 million decrease in revenues for the pro forma net amortization of above- and below-market leases and a $8.5 million increase in depreciation and amortization expenses related to the purchase price allocation.
Interest expense reflects estimated interest costs incurred for the portion of the purchase price financed on a pro forma annual basis, and is based on the assumption of a mortgage note in the amount of $62.0 million, that has a fixed rate of 3.93%) and assumed borrowings of $88.9 million on the Company's revolving senior credit facility (LIBOR plus 1.65%, based on pricing grid). Historic LIBOR rates ranged from 0.68% to 1.44% during the period from January 1, 2017 through December 31, 2017. The interest rate on the Company's revolving credit facility was assumed to be 3.08%, based on the one-month LIBOR rate in effect at December 31, 2017. An increase of 0.125% in the LIBOR rate would increase interest expense by approximately $0.1 million for the year ended December 31, 2017.