Exhibit 99.2
Pro Forma Financial Information
In June 2017, the Board of Commercial Metals Company (the “Company”) approved a plan to exit the International Marketing and Distribution segment. As an initial step in this plan, on June 12, 2017, the Company and its wholly owned subsidiary, CMC Cometals International Sarl, signed a definitive agreement (the “Agreement”) to sell its raw materials trading division, CMC Cometals, to Traxys North America L.L.C. and Traxys Europe S.A., which are affiliates of Carlyle Investment Management L.L.C. The transaction closed on August 31, 2017.
The following unaudited pro forma condensed consolidated financial statements are presented to show the effect of the sale of CMC Cometals which is a significant disposition, as defined under RegulationS-X Rule 210.11. The unaudited pro forma condensed consolidated balance sheet assumes this disposition was consummated on May 31, 2017. The unaudited pro forma condensed consolidated statement of earnings assumes the disposition was consummated on September 1, 2013. The unaudited pro forma condensed consolidated statements of earnings for the years ended August 31, 2014, 2015, and 2016 were presented in a previous filing on Form8-K on June 26, 2017. The information filed in that Form8-K has not changed significantly.
The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of RegulationS-X and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States (“GAAP”). Pro forma information is intended to provide information about the continuing impact of a transaction by showing how a specific transaction or group of transactions might have affected historical financial statements. Pro forma financial information illustrates only the isolated and objectively measurable (based on historically determined amounts) effects of a particular transaction, and excludes effects based on judgmental estimates of how historical management practices and operating decisions may or may not have changed as a result of the transaction. Therefore, pro forma information does not include information about the possible or expected impact of current actions taken by management in response to the pro forma transactions, as if management’s actions were carried out in previous reporting periods.
This unaudited pro forma condensed consolidated financial information is presented for illustration purposes only and does not purport to be indicative of the financial position or results of operations that would have occurred had the disposition been consummated on the dates as of, or at the beginning of the period, which, the disposition is being given effect, nor are they necessarily indicative of future operating results or financial position of the Company.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MAY 31, 2017
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| | | | | | Pro Forma Adjustments | | | | |
| (in thousands, except per share data) | | Historical
CMC | | | Cometals
(a) | | | Cometals
Adjustments | | | Pro Forma
CMC | |
Assets | | | | | | | | |
Current Assets: | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 275,778 | | | $ | — | | | $ | 165,218 | (b) | | $ | 440,996 | |
Accounts receivable, net | | | 869,970 | | | | (90,630 | ) | | | 14,502 | (c) | | | 793,842 | |
Inventories, net | | | 798,013 | | | | (141,726 | ) | | | — | | | | 656,287 | |
Other | | | 108,248 | | | | (5,374 | ) | | | 3,657 | (e) | | | 106,531 | |
| | | | | | | | | | | | | | | | |
Total Current Assets | | $ | 2,052,009 | | | $ | (237,730 | ) | | $ | 183,377 | | | $ | 1,997,656 | |
Property, plant and equipment, net | | | 1,016,875 | | | | (2,203 | ) | | | 2,175 | (e) | | | 1,016,847 | |
Goodwill | | | 66,764 | | | | — | | | | — | | | | 66,764 | |
Other assets | | | 138,951 | | | | (6,459 | ) | | | 105 | (e) | | | 132,597 | |
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Total assets | | $ | 3,274,599 | | | $ | (246,392 | ) | | $ | 185,657 | | | $ | 3,213,864 | |
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Liabilities and stockholders’ equity | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | |
Accounts payable-trade | | $ | 345,974 | | | $ | (63,697 | ) | | $ | 34 | (e) | | $ | 282,311 | |
Accounts payable-documentary letters of credit | | | 566 | | | | — | | | | — | | | | 566 | |
Accrued expenses and other payables | | | 258,288 | | | | (6,549 | ) | | | 16,029 | (d) | | | 267,768 | |
Current maturities of long-term debt | | | 311,654 | | | | — | | | | — | | | | 311,654 | |
| | | | | | | | | | | | | | | | |
Total current liabilities | | $ | 916,482 | | | $ | (70,246 | ) | | $ | 16,063 | | | $ | 862,299 | |
Deferred income taxes | | | 61,492 | | | | (303 | ) | | | 303 | (e) | | | 61,492 | |
Other long-term liabilities | | | 126,864 | | | | — | | | | — | | | | 126,864 | |
Long-term debt | | | 751,676 | | | | — | | | | — | | | | 751,676 | |
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Total liabilities | | | 1,856,514 | | | | (70,549 | ) | | | 16,366 | | | | 1,802,331 | |
Stockholders’ equity attributable to CMC | | | 1,417,912 | | | | (175,843 | ) | | | 169,291 | (f) | | | 1,411,360 | |
Stockholders’ equity attributable to noncontrolling interests | | | 173 | | | | — | | | | — | | | | 173 | |
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Total liabilities and stockholder’s equity | | $ | 3,274,599 | | | $ | (246,392 | ) | | $ | 185,657 | | | $ | 3,213,864 | |
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
NINE MONTHS ENDED MAY 31, 2017
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| | | | | | Pro Forma
Adjustments | | | | |
| (in thousands, except per share data) | | Historical CMC | | | Cometals (g) | | | Pro Forma CMC | |
Net Sales | | $ | 3,607,300 | | | $ | 298,606 | | | $ | 3,308,694 | |
Cost of Goods Sold | | | 3,142,697 | | | | 268,827 | | | | 2,873,870 | |
SG&A Expenses | | | 324,789 | | | | 15,984 | | | | 308,805 | |
Interest Expense | | | 38,108 | | | | — | | | | 38,108 | |
| | | | | | | | | | | | |
Total Expenses | | | 3,505,594 | | | | 284,811 | | | | 3,220,783 | |
Earnings from continuing operations before income taxes | | | 101,706 | | | | 13,795 | | | | 87,911 | |
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Income taxes | | | 25,284 | | | | 2,124 | | | | 23,160 | |
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Net earnings from continuing operations | | | 76,422 | | | | 11,671 | | | | 64,751 | |
Less net earnings attributable to noncontrolling interests | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Earnings from continuing operations attributable to CMC | | $ | 76,422 | | | $ | 11,671 | | | $ | 64,751 | |
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Basic earnings per share from continuing operations attributable to CMC | | $ | 0.66 | | | | | | | $ | 0.56 | |
Diluted earnings per share from continuing operations attributable to CMC | | $ | 0.65 | | | | | | | $ | 0.55 | |
Average basic shares outstanding | | | 115,574,289 | | | | | | | | 115,574,289 | |
Average diluted shares outstanding | | | 117,087,341 | | | | | | | | 117,087,341 | |
UNAUDITED NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet
| | (a) | The adjustments represent the elimination of the historical assets, liabilities and equity of CMC Cometals. |
| | (b) | The adjustment represents the cash portion, at closing, of the total proceeds from the sale of CMC Cometals. |
| | (c) | The adjustment represents the deferred purchase price from the sale of CMC Cometals, which is subject to certain working capital adjustments. |
| | (d) | The adjustment represents historical CMC Cometals accruals of $4.1 million related to employee costs and tax liabilities which will remain obligations of the Company after the sale of CMC Cometals. Additionally, one time nonrecurring transaction costs of approximately $11.9 million related to the CMC Cometals sale will be incurred. These costs will be included in the statements of earnings of the Company within 12 months following the closing. |
| | (e) | The adjustments represent certain property, plant and equipment and other assets and liabilities excluded from the Agreement. The excluded assets will continue to be classified as held and used. Additionally, the adjustment includes a deferred tax asset of $2.9 million related to the estimated loss on sale. |
| | (f) | The adjustment represents the net impact of items (b) - (e) above. |
Condensed Consolidated Statement of Earnings
| | (g) | The adjustments eliminate the historical results of CMC Cometals as if the transaction occurred on September 1, 2013. 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 Cometals. The adjustments also do not include eliminations for intercompany sales transactions. |
