PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data reflects our historical
results as adjusted on a pro forma basis to give effect to Atlas Pipeline
Partners, L.P. April 2004 offering of common units, the completion of the
Spectrum acquisition and APL's July 2004 offering of common units. The unaudited
pro forma balance sheet is prepared as though these transactions occurred as of
March 31, 2004. The unaudited pro forma statement of operations for the year
ended September 30, 2003 is prepared as though these transactions occurred as of
October 1, 2002. The unaudited pro forma statement of operations for the six
months ended March 31, 2004 is prepared as though these transactions occurred as
of October 1, 2003. The acquisition and offering adjustments are described in
the notes to the unaudited pro forma financial data. The unaudited pro forma
financial data and accompanying notes should be read together with our
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our and Spectrum's historical financial statements and related
notes included elsewhere, or incorporated by reference, in this filing.
We accounted for the acquisition of Spectrum in the unaudited pro forma
financial statements using the purchase method in accordance with the guidance
of Statement of Financial Accounting Standards No. 141, "Business Combinations."
For purposes of developing the unaudited pro forma financial information, we
have allocated the purchase price to Spectrum's gas gathering and transmission
facilities based on fair market value.
The unaudited pro forma financial statements presented are for informational
purposes only and are based upon available information and assumptions that we
believe are reasonable under the circumstances. You should not construe the
unaudited pro forma financial statements as indicative of the combined financial
position or results of operations that we and Spectrum would have achieved had
the transaction been consummated on the dates assumed. Moreover, they do not
purport to represent our and Spectrum's combined financial position or results
of operations for any future date or period.
EXHIBIT 99.2
ATLAS AMERICA, INC.
PRO FORMA BALANCE SHEETS (UNAUDITED)
MARCH 31, 2004
(IN THOUSANDS)
Historical Pro forma
Atlas Historical Pre-offering Offering Pro forma
America Spectrum Adjustments Consolidated Adjustments Consolidated
------- -------- ----------- ------------ ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents... $ 11,908 $ $ (6,659) (a)(b) $ 5,249 $ 11,352 (i) $ 16,601
Accounts receivable......... 8,620 9,430 18,050 18,050
Inventories................. - 334 334 334
Prepaid expenses............ 1,237 115 1,352 1,352
Other....................... - 338 (10) (b) 328 328
----------- ----------- ----------- ----------- ----------- ---------
Total current assets...... 21,765 10,217 (6,669) 25,313 11,352 36,665
Property and equipment, net.... 153,686 49,596 94,366 (b) 297,648 297,648
Goodwill....................... 37,470 37,470 37,470
Deferred income taxes.......... 1,645 (1,645) (b) - -
Intangible assets, net......... 7,720 7,720 7,720
Other assets................... 6,890 1,613 3,152 (b) 11,655 11,655
----------- ----------- ----------- ----------- ----------- ---------
$ 227,531 $ 63,071 $ 89,204 $ 379,806 $ 11,352 $ 391,158
=========== =========== =========== =========== =========== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current portion of long-term
debt...................... $ 56 $ 4,992 $ (4,992) (b) $ 56 $ $ 56
Accounts payable and
accrued liabilities....... 17,613 13,186 (2,392) (b) 28,407 28,407
Liabilities associated with
drilling contracts........ 15,465 15,465 15,465
----------- ----------- ----------- ----------- ----------- ---------
Total current liabilities. 33,134 18,178 (7,384) 43,928 - 43,928
Long-term debt................. 40,610 42,433 62,833 (b) 145,876 (45,266) (i) 100,610
Advance from parent............ 2,453 2,453 2,453
Deferred income taxes.......... 22,364 22,364 22,364
Asset retirement obligation.... 3,371 3,371 3,371
Minority interest.............. 43,163 25,000 (a) 68,163 67,833 (i) 135,996
Preferred equity subject to
redemption.................. 11,215 (b) 11,215 (11,215) (i)
Commitments and contingencies.. - - - -
Stockholders' equity:
Preferred stock............. - 13,856 (13,856) (b) - -
Common stock................ 107 27 (27) (b) 107 107
Additional paid-in capital.. 38,619 3,149 (3,149) (b) 38,619 38,619
Treasury stock.............. - (10,010) 10,010 (b) - -
Deferred compensation....... - (43) 43 (b) - -
Accumulated other
comprehensive loss........ - (310) 310 (b) - -
Retained earnings (deficit). 43,710 (4,209) 4,209 (b) 43,710 43,710
----------- ----------- ----------- ----------- ----------- ---------
Total stockholders' equity 82,436 2,460 (2,460) 82,436 - 82,436
----------- ----------- ----------- ----------- ----------- ---------
$ 227,531 $ 63,071 $ 89,204 $ 379,806 $ 11,352 $ 391,158
=========== =========== =========== =========== =========== =========
See notes to pro forma financial statements
ATLAS AMERICA, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED SEPTEMBER 30, 2003
(IN THOUSANDS)
Historical Pro forma
Atlas Historical Pre-offering Offering Pro forma
America Spectrum Adjustments Consolidated Adjustments Consolidated
------- -------- ----------- ------------ ----------- ------------
REVENUES
Well drilling $ 52,879 $ $ $ 52,879 $ $ 52,879
Gas and oil production...... 38,639 38,639 38,639
Well services............... 7,634 7,634 7,634
Transportation.............. 5,901 98,772 104,673 104,673
Gas marketing............... - - -
Other....................... 636 (843) (207) (207)
------------ --------- ------- ----------- ----------- -----------
105,689 97,929 - 203,618 - 203,618
COSTS AND EXPENSES
Well drilling............... 45,982 45,982 45,982
Gas and oil production and
exploration................ 8,485 8,485 8,485
Well services............... 3,774 3,774 3,774
Transportation.............. 2,444 85,089 87,533 87,533
Gas marketing............... - - -
Provision for possiblelosses - - -
General and administrative.. 6,532 4,322 10,854 10,854
Depreciation, depletion and
amortization............... 11,595 16,050 (7,071) (d) 20,574 20,574
Interest.................... 1,961 2,725 3,503 (c)(e) 8,189 (2,205) (j)(k)(l) 5,984
Minority interest in Atlas
Pipeline Partners, L.P..... 4,439 (4,959) (f) (520) 3,046 (n) 2,526
------------ --------- ------- ----------- ----------- -----------
$ 85,212 $ 108,186 $(8,527) $ 184,871 $ 841 $ 185,712
============ ========= ======= =========== =========== ===========
Income (loss) from continuing
operations before income taxes
and cumulative effect of change
in accounting principle..... $ 20,477 $ (10,257) $ 8,527 $ 18,747 $ (841) $ 17,906
Provision for income taxes..... 6,757 (4,303) 3,258 (g) 5,712 196 (o) 5,908
------------ --------- ------- ----------- ----------- -----------
Income (loss) from continuing
operations before
cumulative effect of change
in accounting principle..... 13,720 (5,954) 5,269 13,035 (1,037) 11,998
Preferred stock dividends...... - (1,054) (382) (h) (1,436) 1,436 (m) -
Discontinued operations........ 192 - 192 192
------------ --------- ------- ----------- ----------- -----------
Net income (loss) attributable
to Common shareholders...... $ 13,912 $ (7,008) $ 4,887 $ 11,791 $ 399 $ 12,190
============ ========= ======= =========== =========== ===========
NET INCOME (LOSS) PER
COMMON SHARE - BASIC AND
DILUTED:
From continuing operations.. $ 1.28 $ 1.22 $ 1.12
Preferred stock dividends... - (.13) -
Discontinued operations..... .02 .02 .02
Cumulative effect of change
in accounting principle .. - - -
------------ ----------- -----------
Net income per common share. $ 1.30 $ 1.11 $ 1.14
============ =========== ===========
Weighted average common shares 10,688,333 10,688,333 10,688,333
outst anding................. ============ =========== ===========
See notes to pro forma financial statements
ATLAS AMERICA, INC.
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED MARCH 31, 2004
(IN THOUSANDS)
Historical Pro forma
Atlas Historical Pre-offering Offering Pro forma
America Spectrum Adjustments Consolidated Adjustments Consolidated
------- -------- ----------- ------------ ----------- ------------
REVENUES
Well drilling $ 48,207 $ $ $ 48,207 $ $ 48,207
Gas and oil production......... 21,995 21,995 21,995
Well services.................. 4,060 4,060 4,060
Transportation................. 3,179 51,673 54,852 54,852
Gas marketing.................. - - -
Other.......................... 499 (660) (161) (161)
------------ ----------- ----------- ----------- ----------- -----------
77,940 51,013 - 128,953 - 128,953
COSTS AND EXPENSES
Well drilling................ 41,919 41,919 41,919
Gas and oil production and
exploration.................. 5,008 5,008 5,008
Well services................. 2,062 2,062 2,062
Transportation................ 1,216 43,698 44,914 44,914
Gas marketing................. - - -
Provision for possible losses. - - -
General and administrative.... 2,159 3,276 5,435 5,435
Depreciation, depletion and
amortization................. 6,779 2,578 1,819 11,176 11,176
Interest...................... 960 1,562 1,365 3,887 (718) 3,169
Minority interest in Atlas
Pipeline Partners, L.P....... 2,595 (3,439) (844) 1,003 159
------------ ----------- ----------- ----------- ----------- -----------
$ 62,698 $ 51,114 $ (255) $ 113,557 $ 285 $ 113,842
============ =========== =========== =========== =========== ===========
Income (loss) from continuing
operations before income taxes
and cumulative effect of change
in accounting principle....... $ 15,242 $ (101) $ 255 $ 15,396 $ (285) $ 15,111
Provision for income taxes....... 5,182 (341) 149 4,990 (147) 5,137
------------ ----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle..................... 10,060 240 106 10,406 (432) 9,974
Preferred stock dividends........ - (523) (195) (718) 718 -
------------ ----------- ----------- ----------- ----------- -----------
Net income (loss) attributable to
Common shareholders........... $ 10,060 $ (283) $ (89) $ 9,688 $ 286 $ 9,974
============ =========== =========== =========== =========== ===========
NET INCOME (LOSS) PER COMMON
SHARE - BASIC AND DILUTED:
From continuing operations.... $ .94 $ .97 $ .93
Preferred stock dividends..... - (.07) -
------------ ----------- -----------
Net income per common share... $ .94 $ .90 $ .93
============ =========== ===========
Weighted average common shares
outstanding................... 10,688,333 10,688,333 10,688,333
============ =========== ===========
See notes to pro forma financial statements
ATLAS AMERICA, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
a. Reflects the net proceeds from the sale of 750,000 common units by APL in April 2004.
b. Reflects the purchase of 100% of the common stock of Spectrum for $148.9 million, including estimated
transaction costs. The acquisition was financed by the $12 million preferred equity investment by our
parent, Resource America and APL's operating subsidiary, the $25 million of net proceeds from APL's
April 2004 common unit offering, a $100 million term loan and $5.3 million revolving loan under APL's
new credit facility and $6.5 million of cash from us. Transaction costs include a $750,000 commitment
fee payable to Resource America in connection with their commitment to purchase the preferred equity.
Adjustments include the payment of $3.3 million of estimated financing costs which appear in the pro
forma balance sheet as other assets.
c. Reflects the adjustment to interest expense resulting from $105.3 million of borrowing under APL's
new credit facility bearing interest at the London Interbank Offered Rate, or LIBOR, plus 375 basis
points, assumed to be 5.51% for the six months ended March 31, 2003, 5.00% for the six months ended
September 30, 2003 and 4.90% for the six months ended March 31, 2004.
d. Reflects the adjustment to depreciation expense based upon the cost of the acquired gas gathering and
transmission facilities using depreciable lives ranging from 3 to 26.5 years and using the
straight-line method.
e. Reflects the amortization of deferred financing costs related to APL's new credit facility to finance
the acquisition.
f. Reflects the adjustment to minority interest to eliminate income attributed to the public unitholders
of APL.
g. Reflects the elimination of federal and state income taxes following the conversion of Spectrum,
formerly a C-corporation, to a limited liability company concurrent with its acquisition by APL and
the adjustment to our taxes.
h. Reflects the elimination of preferred stock dividends by Spectrum paid prior to our acquisition and
payment of dividends on the preferred equity of our operating subsidiary.
i. Reflects net proceeds of $69.2 million after offering costs of $3.8 million from APL's July 2004
common unit offering, used to repurchase the $12.6 million preferred equity from Resource America
(including a $600,000 repurchase premium) and repay $45.3 million of borrowings under APL's credit
facility.
j. Reflects the adjustment to interest expense resulting from the issuance of common units and the
repayment of debt incurred to finance the Spectrum acquisition.
k. Reflects a write-off of deferred financing costs in connection with a permanent $40 million repayment
of the $100 million term loan.
l. Reflects the adjustment to amortization as a result of the write-off of deferred financing costs due
to the partial repayment of the $100 million term loan.
m. Reflects the elimination of dividends paid on the preferred equity of our operating subsidiary as a
result of its repurchase from the net proceeds of this offering.
n. Reflects the adjustment to minority interest as a result of the offering of common units of APL.
o. Reflects the adjustment to our taxes.
