Exhibit 99.2
Effective June 1, 2012, Commercial Metals Company (the “Company”) completed the sale of its Croatian Pipe Mill and wholly-owned subsidiary, CMC Sisak, d.o.o. (“CMC Sisak”), pursuant to a definitive purchase agreement (the “Agreement”) whereby CMC GH, LLC, a wholly-owned subsidiary of the Company sold all of the outstanding shares of CMC Sisak to the Danieli Group—Steel Making Division by the Danieli holding company, Industrielle Beteiligung SA (“Danieli”). Total consideration for the sale is approximately $30.4 million, of which approximately $3.1 million will be deferred until certain conditions are met. Pursuant to the Agreement, certain assets of CMC Sisak are excluded and the Company is continuing to market those assets.
The following unaudited pro forma condensed consolidated financial statements are presented to show the effect of the disposition of CMC Sisak on the historical condensed consolidated financial statements of the Company. The unaudited pro forma condensed balance sheet assumes the Agreement was consummated on February 29, 2012. The unaudited pro forma statements of operations assume the Agreement was consummated on September 1, 2009. The unaudited pro forma condensed consolidated financial statements are presented for illustration purposes only, in accordance with the adjustments and estimates set forth below, and are not necessarily indicative of the financial position or results of operations that would have occurred had the Agreement been consummated on the dates as of, or at the beginning of the period, which, the Agreement is being given effect, nor are they necessarily indicative of future operating results or financial position of the Company.
Certain information and notes normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission governing pro forma information. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the unaudited consolidated financial statements of the Company contained in its February 29, 2012 Form 10-Q and its consolidated financial statements of the Company contained in its 2011 Annual Report on Form 10-K.
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
FEBRUARY 29, 2012
| | | | | | | | | | | | | | | | |
| | | | | | Pro Forma Adjustments | | | | |
(in thousands) | | Historical CMC | | | Sisak
Disposition (a) | | | Other | | | Pro Forma CMC | |
Assets | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 216,182 | | | $ | (8,511 | ) | | $ | 15,044 | (b) | | $ | 222,715 | |
Accounts receivable, net | | | 862,942 | | | | — | | | | 3,110 | (c) | | | 866,052 | |
Inventories | | | 880,288 | | | | — | | | | — | | | | 880,288 | |
Other | | | 290,066 | | | | (46,345 | ) | | | 16,597 | (d) | | | 260,318 | |
| | | | | | | | | | | | | | | | |
Total current assets | | | 2,249,478 | | | | (54,856 | ) | | | 34,751 | | | | 2,229,373 | |
| | | | |
Net property, plant and equipment | | | 1,024,095 | | | | — | | | | — | | | | 1,024,095 | |
| | | | |
Goodwill | | | 77,410 | | | | — | | | | — | | | | 77,410 | |
| | | | |
Other assets | | | 174,385 | | | | — | | | | — | | | | 174,385 | |
| | | | | | | | | | | | | | | | |
| | $ | 3,525,368 | | | $ | (54,856 | ) | | $ | 34,751 | | | $ | 3,505,263 | |
| | | | | | | | | | | | | | | | |
Liabilities and stockholders’ equity | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | |
Accounts payable-trade | | $ | 450,878 | | | $ | — | | | $ | — | | | $ | 450,878 | |
Accounts payable-documentary letters of credit | | | 176,804 | | | | — | | | | — | | | | 176,804 | |
Accrued expenses and other payables | | | 329,993 | | | | (32,475 | ) | | | 2,500 | (e) | | | 300,018 | |
Notes payable | | | 48,871 | | | | — | | | | — | | | | 48,871 | |
Current maturities of long-term debt | | | 3,870 | | | | — | | | | — | | | | 3,870 | |
| | | | | | | | | | | | | | | | |
Total current liabilities | | | 1,010,416 | | | | (32,475 | ) | | | 2,500 | | | | 980,441 | |
Deferred income taxes | | | 1,412 | | | | — | | | | — | | | | 1,412 | |
Other long-term liabilities | | | 107,174 | | | | — | | | | — | | | | 107,174 | |
Long-term debt | | | 1,164,249 | | | | — | | | | — | | | | 1,164,249 | |
| | | | |
Stockholders’ equity attributable to CMC | | | 1,241,959 | | | | (22,381 | ) | | | 32,251 | (f) | | | 1,251,829 | |
Stockholders’ equity attributable to noncontrolling interests | | | 158 | | | | — | | | | — | | | | 158 | |
| | | | | | | | | | | | | | | | |
| | $ | 3,525,368 | | | $ | (54,856 | ) | | $ | 34,751 | | | $ | 3,505,263 | |
| | | | | | | | | | | | | | | | |
The accompanying notes are an integral part of this unaudited pro forma condensed consolidated balance sheet.
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2011
| | | | | | | | | | | | |
(in thousands, except share and per share data) | | Historical CMC | | | Sisak
Disposition (g) | | | Pro Forma CMC | |
Net sales | | $ | 7,918,430 | | | $ | 55,085 | | | $ | 7,863,345 | |
Cost of goods sold | | | 7,301,815 | | | | 88,141 | | | | 7,213,674 | |
Selling, general and administrative expenses | | | 537,113 | | | | 15,398 | | | | 521,715 | |
Impairment of assets | | | 118,795 | | | | 94,329 | | | | 24,466 | |
Interest expense | | | 70,806 | | | | 986 | | | | 69,820 | |
| | | | | | | | | | | | |
Total expenses | | | 8,028,529 | | | | 198,854 | | | | 7,829,675 | |
Earnings (loss) from continuing operations before taxes | | | (110,099 | ) | | | (143,769 | ) | | | 33,670 | |
Income taxes | | | 19,328 | | | | 1,760 | | | | 17,568 | |
| | | | | | | | | | | | |
Net earnings (loss) from continuing operations | | | (129,427 | ) | | | (145,529 | ) | | | 16,102 | |
Less net earnings attributable to noncontrolling interests | | | 213 | | | | — | | | | 213 | |
| | | | | | | | | | | | |
Net earnings (loss) from continuing operations attributable to CMC | | $ | (129,640 | ) | | $ | (145,529 | ) | | $ | 15,889 | |
| | | | | | | | | | | | |
Basic earnings (loss) per share from continuing operations attributable to CMC | | $ | (1.13 | ) | | | | | | $ | 0.14 | |
Diluted earnings (loss) per share from continuing operations attributable to CMC | | $ | (1.13 | ) | | | | | | $ | 0.14 | |
| | | |
Average basic shares outstanding | | | 114,995,616 | | | | | | | | 114,995,616 | |
Average diluted shares outstanding | | | 114,995,616 | | | | | | | | 116,111,123 | |
The accompanying notes are an integral part of this unaudited pro forma condensed consolidated statement of operations.
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2010
| | | | | | | | | | | | |
(in thousands, except share and per share data) | | Historical CMC | | | Sisak
Disposition (g) | | | Pro Forma CMC | |
Net sales | | $ | 6,306,102 | | | $ | 29,174 | | | $ | 6,276,928 | |
Cost of goods sold | | | 5,911,065 | | | | 59,692 | | | | 5,851,373 | |
Selling, general and administrative expenses | | | 520,369 | | | | 7,927 | | | | 512,442 | |
Impairment of assets | | | 3,766 | | | | — | | | | 3,766 | |
Interest expense | | | 75,508 | | | | 1,327 | | | | 74,181 | |
| | | | | | | | | | | | |
Total expenses | | | 6,510,708 | | | | 68,946 | | | | 6,441,762 | |
Loss from continuing operations before taxes | | | (204,606 | ) | | | (39,772 | ) | | | (164,834 | ) |
Income taxes (benefit) | | | (38,118 | ) | | | 25,099 | | | | (63,217 | ) |
| | | | | | | | | | | | |
Net loss from continuing operations | | | (166,488 | ) | | | (64,871 | ) | | | (101,617 | ) |
Less net earnings attributable to noncontrolling interests | | | 236 | | | | — | | | | 236 | |
| | | | | | | | | | | | |
Net loss from continuing operations attributable to CMC | | $ | (166,724 | ) | | $ | (64,871 | ) | | $ | (101,853 | ) |
| | | | | | | | | | | | |
Basic loss per share from continuing operations attributable to CMC | | $ | (1.47 | ) | | | | | | $ | (0.90 | ) |
Diluted loss per share from continuing operations attributable to CMC | | $ | (1.47 | ) | | | | | | $ | (0.90 | ) |
| | | |
Average basic shares outstanding | | | 113,524,836 | | | | | | | | 113,524,836 | |
Average diluted shares outstanding | | | 113,524,836 | | | | | | | | 113,524,836 | |
The accompanying notes are an integral part of this unaudited pro forma condensed consolidated statement of operations.
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 2009
| | | | | | | | | | | | |
(in thousands, except share and per share data) | | Historical CMC | | | Sisak
Disposition (g) | | | Pro Forma CMC | |
Net sales | | $ | 6,409,376 | | | $ | 45,359 | | | $ | 6,364,017 | |
Cost of goods sold | | | 5,712,347 | | | | 75,973 | | | | 5,636,374 | |
Selling, general and administrative expenses | | | 612,563 | | | | 9,616 | | | | 602,947 | |
Impairment of assets | | | 5,568 | | | | 2,151 | | | | 3,417 | |
Interest expense | | | 76,964 | | | | — | | | | 76,964 | |
| | | | | | | | | | | | |
Total expenses | | | 6,407,442 | | | | 87,740 | | | | 6,319,702 | |
Earnings (loss) from continuing operations before taxes | | | 1,934 | | | | (42,381 | ) | | | 44,315 | |
Income taxes (benefit) | | | 747 | | | | (5,972 | ) | | | 6,719 | |
| | | | | | | | | | | | |
Net earnings (loss) from continuing operations | | | 1,187 | | | | (36,409 | ) | | | 37,596 | |
Less net loss attributable to noncontrolling interests | | | (550 | ) | | | — | | | | (550 | ) |
| | | | | | | | | | | | |
Net earnings (loss) from continuing operations attributable to CMC | | $ | 1,737 | | | $ | (36,409 | ) | | $ | 38,146 | |
| | | | | | | | | | | | |
Basic earnings per share from continuing operations attributable to CMC | | $ | 0.02 | | | | | | | $ | 0.34 | |
Diluted earnings per share from continuing operations attributable to CMC | | $ | 0.02 | | | | | | | $ | 0.33 | |
| | | |
Average basic shares outstanding | | | 112,391,180 | | | | | | | | 112,391,180 | |
Average diluted shares outstanding | | | 113,880,375 | | | | | | | | 113,880,375 | |
The accompanying notes are an integral part of this unaudited pro forma condensed consolidated statement of operations.
COMMERCIAL METALS COMPANY AND SUBSIDIARIES
UNAUDITED NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet
| | (a) | The adjustments represent the historical elimination of CMC Sisak’s historical assets, liabilities and equity. As of February 29, 2012, CMC Sisak’s assets and liabilities were presented as held for sale and included in other current assets and accrued expenses and other payables. |
| | (b) | The adjustment represents the cash portion of the total proceeds received from the sale of Sisak of $27.3 million, less amounts used to retire the balance outstanding under CMC Sisak’s financing agreement and net liabilities not assumed by Danieli. |
| | (c) | The adjustment represents the deferred purchase price from the sale, which will be paid when certain conditions contained in the Agreement are met. |
| | (d) | The adjustment represents certain property, plant and equipment excluded from the Agreement of $13.2 million and the deferred tax asset of $3.4 million related to the estimated loss on sale of such assets. The excluded assets will continue to be classified as held for sale. |
| | (e) | The adjustment represents an accrual for one time nonrecurring transaction related costs, which will be included in the statements of operations of the Company within 12 months following the closing. |
| | (f) | The adjustment represents the above items and result in an estimated after-tax loss on sale of $6.3 million, which includes a pre-tax loss relating to currency translation of $16.2 million. The net effect on the balance sheet relating to the pre-tax currency translation loss is only the impact of taxes as both the retained earnings and accumulated other comprehensive income are components of stockholders’ equity. The estimated loss on sale may fluctuate based on changes in foreign currency rates on the closing date. |
Condensed Consolidated Statements of Operations
| | (g) | The adjustments eliminate the historical results of CMC Sisak as if the transactions occurred on September 1, 2009. In accordance with accounting principles generally accepted in the United States, the amounts eliminated do not include corporate overhead and intercompany interest, which for segment reporting purposes, had been allocated to CMC Sisak. The tax adjustment for the year ended August 31, 2011 relates to the tax impact on the previously mentioned allocations as CMC Sisak had a full valuation allowance on its deferred tax assets. |
