Exhibit 99.2
ACUITY BRANDS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2007
(In thousands, except per-share data)
Historical | Discontinued Operations Adjustments (A) | Continuing Operations | ||||||||||
Net Sales | $ | 2,530,668 | $ | (565,887 | ) | $ | 1,964,781 | |||||
Cost of Products Sold | 1,460,775 | (240,309 | ) | 1,220,466 | ||||||||
Gross Profit | 1,069,893 | (325,578 | ) | 744,315 | ||||||||
Selling, Distribution, and Administrative Expenses | 812,958 | (291,066 | ) | 521,892 | ||||||||
Special Charge | — | — | — | |||||||||
Impairment Charge | — | — | — | |||||||||
Operating Profit | 256,935 | (34,512 | ) | 222,423 | ||||||||
Other Expense (Income): | ||||||||||||
Interest expense, net | 30,140 | (289 | ) | 29,851 | ||||||||
Gain on sale of businesses | — | — | — | |||||||||
Miscellaneous expense (income), net | (1,092 | ) | (522 | ) | (1,614 | ) | ||||||
Total Other Expense | 29,048 | (811 | ) | 28,237 | ||||||||
Income before Provision for Income Taxes | 227,887 | (33,701 | ) | 194,186 | ||||||||
Provision for Income Taxes | 79,833 | (14,334 | ) | 65,499 | ||||||||
Net Income | $ | 148,054 | $ | (19,367 | ) | $ | 128,687 | |||||
Earnings Per Share: | ||||||||||||
Basic Earnings per Share | $ | 3.48 | $ | 3.02 | ||||||||
Basic Weighted Average Number of Shares Outstanding | 42,585 | 42,585 | ||||||||||
Diluted Earnings per Share | $ | 3.37 | $ | 2.93 | ||||||||
Diluted Weighted Average Number of Shares Outstanding | 43,897 | 43,897 | ||||||||||
ACUITY BRANDS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2006
(In thousands, except per-share data)
Historical | Discontinued Operations Adjustments (A) | Continuing Operations | ||||||||
Net Sales | $ | 2,393,123 | $ | (552,084 | ) | $ | 1,841,039 | |||
Cost of Products Sold | 1,423,096 | (234,894 | ) | 1,188,202 | ||||||
Gross Profit | 970,027 | (317,190 | ) | 652,837 | ||||||
Selling, Distribution, and Administrative Expenses | 772,326 | (271,900 | ) | 500,426 | ||||||
Special Charge | — | — | — | |||||||
Impairment Charge | 292 | — | 292 | |||||||
Operating Profit | 197,409 | (45,290 | ) | 152,119 | ||||||
Other Expense (Income): | ||||||||||
Interest expense, net | 33,231 | (214 | ) | 33,017 | ||||||
Gain on sale of businesses | — | — | — | |||||||
Miscellaneous expense (income), net | 425 | (146 | ) | 279 | ||||||
Total Other Expense | 33,656 | (360 | ) | 33,296 | ||||||
Income before Provision for Income Taxes | 163,753 | (44,930 | ) | 118,823 | ||||||
Provision for Income Taxes | 57,191 | (18,039 | ) | 39,152 | ||||||
Net Income | $ | 106,562 | $ | (26,891 | ) | $ | 79,671 | |||
Earnings Per Share: | ||||||||||
Basic Earnings per Share | $ | 2.43 | $ | 1.82 | ||||||
Basic Weighted Average Number of Shares Outstanding | 43,884 | 43,884 | ||||||||
Diluted Earnings per Share | $ | 2.34 | $ | 1.75 | ||||||
Diluted Weighted Average Number of Shares Outstanding | 45,579 | 45,579 | ||||||||
ACUITY BRANDS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2005
(In thousands, except per-share data)
Historical | Discontinued Operations Adjustments (A) | Continuing Operations | ||||||||||
Net Sales | $ | 2,172,854 | $ | (534,952 | ) | $ | 1,637,902 | |||||
Cost of Products Sold | 1,324,311 | (223,113 | ) | 1,101,198 | ||||||||
Gross Profit | 848,543 | (311,839 | ) | 536,704 | ||||||||
Selling, Distribution, and Administrative Expenses | 718,134 | (268,991 | ) | 449,143 | ||||||||
Special Charge | 23,000 | (3,595 | ) | 19,405 | ||||||||
Impairment Charge | 664 | — | 664 | |||||||||
Operating Profit | 106,745 | (39,253 | ) | 67,492 | ||||||||
Other Expense (Income): | ||||||||||||
Interest expense, net | 35,731 | (39 | ) | 35,692 | ||||||||
Gain on sale of businesses | (538 | ) | 538 | — | ||||||||
Miscellaneous expense (income), net | (3,280 | ) | 2,405 | (875 | ) | |||||||
Total Other Expense | 31,913 | 2,904 | 34,817 | |||||||||
Income before Provision for Income Taxes | 74,832 | (42,157 | ) | 32,675 | ||||||||
Provision for Income Taxes | 22,603 | (14,604 | ) | 7,999 | ||||||||
Net Income | $ | 52,229 | $ | (27,553 | ) | $ | 24,676 | |||||
Earnings Per Share: | ||||||||||||
Basic Earnings per Share | $ | 1.21 | $ | 0.57 | ||||||||
Basic Weighted Average Number of Shares Outstanding | 43,135 | 43,135 | ||||||||||
Diluted Earnings per Share | $ | 1.17 | $ | 0.55 | ||||||||
Diluted Weighted Average Number of Shares Outstanding | 44,752 | 44,752 | ||||||||||
ACUITY BRANDS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF AUGUST 31, 2007
Historical | Discontinued Operations Adjustments (A) | Pro Forma Adjustments | Pro Forma | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 222,816 | $ | (9,142 | ) | $ | 67,100 | (B), (C) | $ | 280,774 | ||||||
Accounts receivable, less reserve for doubtful accounts of $4,864 (historical) and $1,361 (pro forma) | 388,646 | (93,102 | ) | — | 295,544 | |||||||||||
Inventories | 192,070 | (45,534 | ) | — | 146,536 | |||||||||||
Deferred income taxes | 21,772 | (6,576 | ) | (423 | ) | (D) | 14,773 | |||||||||
Prepayments and other current assets | 42,681 | (3,828 | ) | — | 38,853 | |||||||||||
Total current assets | 867,985 | (158,182 | ) | 66,677 | 776,480 | |||||||||||
Property, plant, and equipment, net of accumulated depreciation $363,405 (historical) and $282,632 (pro forma) | 213,738 | (51,727 | ) | — | 162,011 | |||||||||||
Investment in Subsidiary | — | 130,889 | (130,889 | ) | (E) | — | ||||||||||
Other assets: | ||||||||||||||||
Goodwill | 384,809 | (31,864 | ) | — | 352,945 | |||||||||||
Intangible assets | 118,892 | (118 | ) | — | 118,774 | |||||||||||
Deferred income taxes | 2,165 | (6,216 | ) | 5,782 | (D) | 1,731 | ||||||||||
Defined benefit plan intangible assets | 2,587 | — | — | 2,587 | ||||||||||||
Other long-term assets | 22,332 | (58 | ) | — | 22,274 | |||||||||||
Total other assets | 530,785 | (38,256 | ) | 5,782 | 498,311 | |||||||||||
Total assets | $ | 1,612,508 | $ | (117,276 | ) | $ | (58,430 | ) | $ | 1,436,802 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Current maturities of long-term debt | $ | 296 | $ | (296 | ) | $ | — | $ | — | |||||||
Accounts payable | 247,176 | (36,774 | ) | — | 210,402 | |||||||||||
Accrued compensation | 79,835 | (15,688 | ) | — | 64,147 | |||||||||||
Accrued pension liabilities, current | 1,268 | — | — | 1,268 | ||||||||||||
Other accrued liabilities | 141,821 | (31,877 | ) | — | 109,944 | |||||||||||
Total current liabilities | 470,396 | (84,635 | ) | — | 385,761 | |||||||||||
Long-term debt, less current maturities | 371,027 | (7,150 | ) | — | 363,877 | |||||||||||
Accrued pension liabilities, less current portion | 22,043 | — | — | 22,043 | ||||||||||||
Deferred income taxes | 12,491 | (413 | ) | 5,359 | (D) | 17,437 | ||||||||||
Self-insurance reserves, less current portion | 16,404 | (7,747 | ) | — | 8,657 | |||||||||||
Other long-term liabilities | 48,181 | (4,014 | ) | — | 44,167 | |||||||||||
Stockholders’ equity | 671,966 | (13,317 | ) | (63,789 | ) | (B), (C) (E) | 594,860 | |||||||||
Total liabilities and stockholders’ equity | $ | 1,612,508 | $ | (117,276 | ) | $ | (58,430 | ) | $ | 1,436,802 | ||||||
ACUITY BRANDS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Based on the spin-off transaction, the Company identified no material adjustments to the Consolidated Statements of Operations. Pro forma adjustments to the Condensed Consolidated Balance Sheet are as follows:
(A) | This adjustment reflects the elimination of the financial results, assets, liabilities, and accumulated other comprehensive income amounts associated with the specialty products business and the distribution of Zep Inc. shares to Acuity Brands shareholders. |
(B) | This adjustment reflects the dividend paid from Zep Inc. to Acuity Brands in accordance with the Distribution Agreement, assuming a dividend of $67.5 million and a distribution of Zep cash balances in excess of $5 million at the Distribution Date. This does not include adjustments, required by the Distribution Agreement, based on actual cash on hand as of the Distribution Date or net cash flow of the specialty products business, Acuity Brands intends to use proceeds from this dividend to finance currently authorized share repurchases, and the receipt of the dividend is therefore not expected to impact the indebtedness of Acuity Brands. As the price at which the share repurchase would occur is not readily available, Acuity Brands has not adjusted the weighted average shares for the expected share repurchase, but rather reflected the dividend as cash. |
(C) | This adjustment to pro forma cash and equity reflects estimated non-recurring separation costs of $4.5 million which are expected to be incurred during fiscal year 2008 and will be recorded in discontinued operations. Non-recurring separation costs of $2.1 million were recognized by the Company during fiscal year 2007 and are eliminated in theSelling, Distribution, and Administrative Expenses line item in the discontinued operations presentation. Non-recurring separation costs primarily include external financial advisory, legal and accounting fees to effect the spin-off. |
(D) | This adjustment reflects the reclassification of current and non-current deferred income tax balances based on the continuing operations of Acuity Brands, in accordance with Statement of Financial Accounting Standards No. 109: “Accounting for Income Taxes.” This adjustment has no impact on the net deferred tax balance on a continuing operations basis. |
(E) | This adjustment reflects the elimination of Acuity Brands investment in subsidiary and the forgiveness of remaining intercompany balances. |