EXHIBIT 99
ALBERTO-CULVER COMPANY
UNAUDITED CONDENSED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma financial information relates to the disposition by Alberto-Culver Company (the “Company”), through its wholly owned subsidiary Alberto Culver Aktiebolag (“ACAB”) of all of the issued and outstanding shares (the “Shares”) of Cederroth International AB (“CIAB”) to Cederroth Intressenter AB (“Purchaser”), a company owned by two funds controlled by CapMan. CIAB, through its wholly-owned subsidiaries, owns the Cederroth business (“Cederroth”), an operating business segment of the Company. CapMan is an asset manager operating in the Nordic countries. Purchaser was organized by CapMan for the purpose of acquiring the Shares.
The unaudited condensed pro forma consolidated balance sheet of the Company reflects the unaudited condensed consolidated historical balance sheet as of March 31, 2008 as if the transaction had occurred on that date. The unaudited condensed pro forma consolidated statements of earnings of the Company reflect the operations of the Company for the six months ended March 31, 2008 and the year ended September 30, 2007 as if the transaction had occurred on October 1, 2006. Certain reclassifications have been made to the historical presentation of the Company to conform to the presentation used in the unaudited condensed pro forma consolidated financial statements.
The pro forma adjustments are based upon available information and assumptions that the Company’s management believes are reasonable; however, such adjustments are subject to change. In addition, such adjustments are estimates and may not prove to be accurate.
The unaudited condensed pro forma consolidated statements of earnings presented below do not reflect any gain from the disposition, including the effect of the foreign currency translation gain which will be realized in connection with the sale, or any one-time charges or changes in certain costs expected to result from the transaction. These items have been excluded from the unaudited condensed pro forma consolidated statements of earnings in accordance with Regulation S-X. The estimated pre-tax, one-time charges that have been excluded from the unaudited condensed pro forma consolidated statement of earnings for the year ended September 30, 2007 include transaction expenses of $8.5 million.
The unaudited condensed pro forma consolidated balance sheet presented below excludes the effects of the deal continent Euro forward contract entered into by the Company in connection with the transaction. For pro forma purposes, the proceeds from the sale of Cederroth are estimated using the March 31, 2008 spot rate for the Euro to U.S. dollar translation. The actual amount received at the July 31, 2008 closing from the deal contingent Euro forward contract was $8.3 million less than the amount included in the pro forma balance sheet based on the March 31, 2008 spot rate.
The unaudited condensed pro forma consolidated financial statements are for illustrative purposes only and do not reflect what the Company’s consolidated financial position or results of operations would have been had the transaction occurred on the dates indicated and are not indicative of the Company’s future financial position and future results of operations.
The unaudited condensed pro forma consolidated financial statements should be read in conjunction with the accompanying notes, as well as the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2007 and the unaudited consolidated financial statements and notes thereto included in the Quarterly Report on Form 10-Q for the six-month period ended March 31, 2008.
ALBERTO-CULVER COMPANY
UNAUDITED CONDENSED PRO FORMA
CONSOLIDATED BALANCE SHEET
As of March 31, 2008
(In thousands)
| | | | | | | | | | | | | | |
| | | Historical
Alberto-
Culver | | Historical
Cederroth
(1) | | | Sub-Total | | | Pro
Forma
Adjustments | | | Pro Forma
Alberto-
Culver |
Assets | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 378,872 | | (30,129 | ) | | 348,743 | | | 270,583 | (2) | | 619,326 |
Receivables, net | | | 260,715 | | (45,582 | ) | | 215,133 | | | — | | | 215,133 |
Inventories | | | 202,466 | | (44,226 | ) | | 158,240 | | | — | | | 158,240 |
Other current assets | | | 42,516 | | (3,157 | ) | | 39,359 | | | — | | | 39,359 |
| | | | | | | | | | | | | | |
Total current assets | | | 884,569 | | (123,094 | ) | | 761,475 | | | 270,583 | | | 1,032,058 |
Property and equipment, net | | | 236,797 | | (28,435 | ) | | 208,362 | | | — | | | 208,362 |
Goodwill | | | 224,243 | | (66,490 | ) | | 157,753 | | | — | | | 157,753 |
Trade names | | | 115,401 | | (40,630 | ) | | 74,771 | | | — | | | 74,771 |
Long-term investments | | | 74,333 | | — | | | 74,333 | | | — | | | 74,333 |
Other assets | | | 69,967 | | (497 | ) | | 69,470 | | | — | | | 69,470 |
| | | | | | | | | | | | | | |
Total assets | | $ | 1,605,310 | | (259,146 | ) | | 1,346,164 | | | 270,583 | | | 1,616,747 |
| | | | | | | | | | | | | | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | |
Current portion of long-term debt | | $ | 120,916 | | (691 | ) | | 120,225 | | | — | | | 120,225 |
Accounts payable | | | 145,883 | | (23,058 | ) | | 122,825 | | | — | | | 122,825 |
Accrued expenses and income taxes | | | 140,485 | | (15,373 | ) | | 125,112 | | | 10,151 | (3) | | 135,263 |
Due from Cederroth | | | — | | (15,672 | ) | | (15,672 | ) | | 15,672 | (4) | | — |
| | | | | | | | | | | | | | |
Total current liabilities | | | 407,284 | | (54,794 | ) | | 352,490 | | | 25,823 | | | 378,313 |
Long-term debt | | | 2,709 | | (1,929 | ) | | 780 | | | — | | | 780 |
Income taxes | | | 27,176 | | (14,495 | ) | | 12,681 | | | — | | | 12,681 |
Other liabilities | | | 68,273 | | (19,532 | ) | | 48,741 | | | — | | | 48,741 |
| | | | | | | | | | | | | | |
Total liabilities | | | 505,442 | | (90,750 | ) | | 414,692 | | | 25,823 | | | 440,515 |
Stock options subject to redemption | | | 8,596 | | (302 | ) | | 8,294 | | | — | | | 8,294 |
Total stockholders’ equity | | | 1,091,272 | | (168,094 | ) | | 923,178 | | | 244,760 | (5) | | 1,167,938 |
| | | | | | | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 1,605,310 | | (259,146 | ) | | 1,346,164 | | | 270,583 | | | 1,616,747 |
| | | | | | | | | | | | | | |
Notes to Unaudited Condensed Pro Forma Consolidated Balance Sheet as of March 31, 2008
| (1) | Represents the removal of historical Cederroth from the historical financial statements of the Company. |
| (2) | Represents the following pro forma adjustments to the Company’s cash in accordance with the Share Sale and Purchase Agreement (in thousands): |
| | | | |
Estimated proceeds from the sale of Cederroth in accordance with the terms of the Agreement, using the March 31, 2008 spot rate of 1.58 to convert the Preliminary Purchase Price of 159.5 million Euros to U.S. dollars. | | $ | 252,054 | |
Payoff of an intercompany loan by Cederroth to a wholly-owned subsidiary of the Company prior to the closing of the transaction (converted to U.S. dollars using the March 31, 2008 spot rate) | | | 14,810 | |
Estimated payment from Cederroth to ACAB to adjust its cash balance to the amount that will remain with Cederroth after the closing of the transaction (25 million SEK), in accordance with the terms of the Agreement (converted to U.S. dollars using the March 31, 2008 spot rate) | | | 11,111 | |
Payment of estimated transaction expenses | | | (7,392 | ) |
| | | | |
| | $ | 270,583 | |
| | | | |
| (3) | Primarily represents the income tax liability for the portion of the gain on the sale of Cederroth that is expected to be taxable in the U.S. |
| (4) | Represents the settlement or elimination of the net intercompany receivable from Cederroth, including a $14.8 million intercompany loan owed to a wholly-owned subsidiary of the Company. |
| (5) | Represents the following pro forma adjustments that adjust the Company’s stockholders’ equity in accordance with the terms of the Agreement (in thousands): |
| | | | |
Increase in the Company’s equity for the estimated proceeds from the sale of Cederroth | | $ | 252,054 | |
Other impacts on the Company’s equity, including the settlement of intercompany amounts and cash true-up adjustments, the income tax liability related to the sale and the payment of transaction expenses | | | (7,294 | ) |
| | | | |
| | $ | 244,760 | |
| | | | |
ALBERTO-CULVER COMPANY
UNAUDITED CONDENSED PRO FORMA
CONSOLIDATED STATEMENT OF EARNINGS
for the Six Months Ended March 31, 2008
(In thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Historical
Alberto-
Culver | | | Historical
Cederroth
(1) | | | Sub-Total | | | Pro
Forma
Adjustments | | | Pro Forma
Alberto-
Culver | |
Net sales | | $ | 813,458 | | | (120,902 | ) | | 692,556 | | | | | | 692,556 | |
Cost of products sold | | | 382,297 | | | (62,583 | ) | | 319,714 | | | | | | 319,714 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 431,161 | | | (58,319 | ) | | 372,842 | | | — | | | 372,842 | |
Advertising, marketing, selling and administrative expenses | | | 345,433 | | | (58,425 | ) | | 287,008 | | | 1,281 | (2) | | 288,289 | |
Restructuring and other | | | 6,859 | | | — | | | 6,859 | | | — | | | 6,859 | |
| | | | | | | | | | | | | | | | |
Operating earnings | | | 78,869 | | | 106 | | | 78,975 | | | (1,281 | ) | | 77,694 | |
Interest income, net of interest expense | | | (5,380 | ) | | 364 | | | (5,016 | ) | | — | | | (5,016 | ) |
| | | | | | | | | | | | | | | | |
Earnings from continuing operations before provision for income taxes | | | 84,249 | | | (258 | ) | | 83,991 | | | (1,281 | ) | | 82,710 | |
Provision for income taxes | | | 26,364 | | | 615 | | | 26,979 | | | (448 | )(3) | | 26,531 | |
| | | | | | | | | | | | | | | | |
Earnings from continuing operations | | $ | 57,885 | | | (873 | ) | | 57,012 | | | (833 | ) | | 56,179 | |
| | | | | | | | | | | | | | | | |
Basic earnings per share from continuing operations | | $ | 0.59 | | | NA | | | 0.58 | | | NA | | | 0.57 | |
| | | | | | | | | | | | | | | | |
Diluted earnings per share from continuing operations | | $ | 0.57 | | | NA | | | 0.56 | | | NA | | | 0.55 | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 98,840 | | | NA | | | 98,840 | | | NA | | | 98,840 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 101,316 | | | NA | | | 101,316 | | | NA | | | 101,316 | |
| | | | | | | | | | | | | | | | |
Notes to Unaudited Condensed Pro Forma Consolidated Statement of Earnings for the Six Months Ended March 31, 2008
| (1) | Represents the removal of historical Cederroth from the historical financial statements of the Company. The advertising, marketing, selling and administrative expense amount includes $1.9 million of actual transaction-related expenses incurred during the period. |
| (2) | Represents a pro forma adjustment to add back corporate expenses which were allocated to Cederroth in the historical financial statements. These corporate expenses will not be automatically eliminated as a result of the transaction. |
| (3) | Represents the income tax effect of the preceding pro forma adjustment using an estimated average statutory rate of 35%. |
ALBERTO-CULVER COMPANY
UNAUDITED CONDENSED PRO FORMA
CONSOLIDATED STATEMENT OF EARNINGS
for the Year Ended September 30, 2007
(In thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Historical
Alberto-
Culver | | | Historical
Cederroth
(1) | | | Sub-Total | | | Pro
Forma
Adjustments | | | Pro Forma
Alberto-
Culver | |
Net sales | | $ | 1,541,581 | | | (226,132 | ) | | 1,315,449 | | | | | | 1,315,449 | |
Cost of products sold | | | 739,124 | | | (114,188 | ) | | 624,936 | | | | | | 624,936 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 802,457 | | | (111,944 | ) | | 690,513 | | | — | | | 690,513 | |
Advertising, marketing, selling and administrative expenses | | | 659,010 | | | (101,069 | ) | | 557,941 | | | 2,609 | (2) | | 560,550 | |
Restructuring and other | | | 34,645 | | | (1,546 | ) | | 33,099 | | | — | | | 33,099 | |
| | | | | | | | | | | | | | | | |
Operating earnings | | | 108,802 | | | (9,329 | ) | | 99,473 | | | (2,609 | ) | | 96,864 | |
Interest income, net of interest expense | | | (4,160 | ) | | 242 | | | (3,918 | ) | | — | | | (3,918 | ) |
| | | | | | | | | | | | | | | | |
Earnings from continuing operations before provision for income taxes | | | 112,962 | | | (9,571 | ) | | 103,391 | | | (2,609 | ) | | 100,782 | |
Provision for income taxes | | | 31,735 | | | (2,604 | ) | | 29,131 | | | (913 | )(3) | | 28,218 | |
| | | | | | | | | | | | | | | | |
Earnings from continuing operations | | $ | 81,227 | | | (6,967 | ) | | 74,260 | | | (1,696 | ) | | 72,564 | |
| | | | | | | | | | | | | | | | |
Basic earnings per share from continuing operations | | $ | 0.85 | | | NA | | | 0.77 | | | NA | | | 0.76 | |
| | | | | | | | | | | | | | | | |
Diluted earnings per share from continuing operations | | $ | 0.83 | | | NA | | | 0.75 | | | NA | | | 0.74 | |
| | | | | | | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 95,896 | | | NA | | | 95,896 | | | NA | | | 95,896 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 98,358 | | | NA | | | 98,358 | | | NA | | | 98,358 | |
| | | | | | | | | | | | | | | | |
Notes to Unaudited Condensed Pro Forma Consolidated Statement of Earnings for the Year Ended September 30, 2007
| (1) | Represents the removal of historical Cederroth from the historical financial statements of the Company. |
| (2) | Represents a pro forma adjustment to add back corporate expenses which were allocated to Cederroth in the historical financial statements. These corporate expenses will not be automatically eliminated as a result of the transaction. |
| (3) | Represents the income tax effect of the preceding pro forma adjustment using an estimated average statutory rate of 35%. |
