Exhibit 99.3
TEAM, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of May 31, 2007
(in thousands, except share and per share data)
| Team Historical | Aitec Historical | Pro Forma Adjustments Aitec Acquisition | Pro Forma Adjustments Sale of Weldsonix | Team Pro Forma | ||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
Current Assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 4,335 | $ | 443 | $ | — | f | $ | (311 | ) | $ | 4,467 | ||||||||||||
Receivables, net of allowance | 84,496 | 13,062 | — | f | (1,820 | ) | 95,738 | |||||||||||||||||
Inventories | 11,518 | 383 | — | — | 11,901 | |||||||||||||||||||
Deferred income taxes | — | — | — | — | — | |||||||||||||||||||
Prepaid expenses and other current assets | 7,164 | 692 | — | f | (406 | ) | 7,450 | |||||||||||||||||
Total Current Assets | 107,513 | 14,580 | — | (2,537 | ) | 119,556 | ||||||||||||||||||
Property, plant and equipment, net | 35,166 | 2,631 | — | — | 37,797 | |||||||||||||||||||
Intangible assets, net of accumulated amortization | 458 | 71 | a | (71 | ) | — | 458 | |||||||||||||||||
Goodwill | 26,452 | 2,134 | a | (2,134 | ) | — | 26,452 | |||||||||||||||||
Other assets, net | 1,465 | — | — | — | 1,465 | |||||||||||||||||||
Unallocated purchase price | — | — | a | 22,947 | f | 1,558 | 24,505 | |||||||||||||||||
Total Assets | $ | 171,054 | $ | 19,416 | $ | 20,742 | $ | (979 | ) | $ | 210,233 | |||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
Current Liabilities: | ||||||||||||||||||||||||
Current portion of long-term debt | $ | 4,862 | $ | 9,755 | b | $ | (9,755 | ) | $ | — | $ | 4,862 | ||||||||||||
Accounts payable | 10,560 | 3,251 | — | f | (279 | ) | 13,532 | |||||||||||||||||
Other accrued liabilities | 15,906 | 2,454 | c | 500 | f | (700 | ) | 18,160 | ||||||||||||||||
Insurance note payable | 4,734 | — | — | — | 4,734 | |||||||||||||||||||
Current income taxes payable | — | 65 | — | — | 65 | |||||||||||||||||||
Deferred income taxes | 1,222 | 1 | — | — | 1,223 | |||||||||||||||||||
Total Current Liabilities | 37,284 | 15,526 | (9,255 | ) | (979 | ) | 42,576 | |||||||||||||||||
Deferred income taxes | 486 | 99 | — | — | 585 | |||||||||||||||||||
Related party loans | — | 6,514 | b | (6,514 | ) | — | — | |||||||||||||||||
Long-term debt | 48,774 | 473 | b,d | 33,315 | — | 82,562 | ||||||||||||||||||
Total Liabilities | 86,544 | 22,612 | 17,546 | (979 | ) | 125,723 | ||||||||||||||||||
Minority interest | 307 | — | — | 307 | ||||||||||||||||||||
Redeemable preferred shares | — | 5,636 | e | (5,636 | ) | — | — | |||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||
Stockholders’ Equity: | ||||||||||||||||||||||||
Preferred stock | — | — | — | — | — | |||||||||||||||||||
Common stock | 2,984 | 1 | e | (1 | ) | — | 2,984 | |||||||||||||||||
Additional paid-in capital | 49,159 | 13 | e | (13 | ) | — | 49,159 | |||||||||||||||||
Retained earnings (deficit) | 36,447 | (6,253 | ) | e | 6,253 | — | 36,447 | |||||||||||||||||
Accumulated other comprehensive gain (loss) | 645 | (2,593 | ) | e | 2,593 | — | 645 | |||||||||||||||||
Treasury stock at cost | (5,032 | ) | — | — | — | (5,032 | ) | |||||||||||||||||
Total Stockholders’ Equity | 84,203 | (8,832 | ) | 8,832 | — | 84,203 | ||||||||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 171,054 | $ | 19,416 | $ | 20,742 | $ | (979 | ) | $ | 210,233 | |||||||||||||
See notes to unaudited pro forma condensed consolidated financial statements.
TEAM, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year ended May 31, 2007
(in thousands, except per share data)
| Team Historical | Aitec Historical | Pro Forma Adjustments Aitec Acquisition | Pro Forma Adjustments Sale of Weldsonix | Team Pro Forma | ||||||||||||||||||
Revenues | $ | 318,348 | $ | 57,759 | $ | — | k | $ | (10,683 | ) | $ | 365,424 | ||||||||||
Operating expenses | 208,186 |
| 42,951 |
| — | k | (9,229 | ) |
| 241,908 | ||||||||||||
Gross margin | 110,162 |
| 14,808 |
| — | (1,454 | ) |
| 123,516 | |||||||||||||
Selling, general and administrative expenses: | ||||||||||||||||||||||
SG&A | 79,825 |
| 16,747 |
| g | (6,700 | ) | k | (1,350 | ) |
| 88,522 | ||||||||||
Impairment and other | — | 2,235 | h | (2,235 | ) | — | — | |||||||||||||||
Operating income (loss) | 30,337 |
| (4,174 | ) | 8,935 | (104 | ) |
| 34,994 | |||||||||||||
Interest expense, net | 4,204 | 654 | i | 1,872 | k | (155 | ) | 6,575 | ||||||||||||||
Earnings (loss) before income taxes | 26,133 |
| (4,828 | ) | 7,063 | 51 |
| 28,419 | ||||||||||||||
Provision for income taxes | 10,618 | 359 | j |
| 523 |
| j | 47 |
| 11,547 | ||||||||||||
Income (loss) from continuing operations | $ | 15,515 | ($ | 5,187 | ) | $ | 6,540 | $ | 4 | $ | 16,872 | |||||||||||
Net income from continuing operations per common share: | ||||||||||||||||||||||
Basic | $ | 1.77 | $ | 1.92 | ||||||||||||||||||
Diluted | $ | 1.64 | $ | 1.79 | ||||||||||||||||||
Weighted averages shares outstanding: | ||||||||||||||||||||||
Basic | 8,770 | 8,770 | ||||||||||||||||||||
Diluted | 9,433 | 9,433 | ||||||||||||||||||||
See notes to unaudited pro forma condensed consolidated financial statements.
TEAM, INC
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET AND STATEMENT OF OPERATIONS
| 1. | Basis of Presentation: |
Included in this report are a pro forma balance sheet and statement of operations reflecting the pro forma effect of Team, Inc.’s (“Team,” “we,” “our,” “us” or the “Company”) acquisition of Aitec, Inc. and related companies (“Aitec Holdings Group” or “Aitec”), and the subsequent disposition of the Weldsonix subsidiary of Aitec, as if the transactions had occurred on June 1, 2006.
The unaudited pro forma condensed statement of operations for the twelve months ended and balance sheet as of May 31, 2007, are derived from:
| • | the historical financial statement (audited) of Team as of and for the 12 months ended May 31, 2007; and |
| • | the historical financial statements (audited) of Aitec as of and for the 8 month period ended May 31, 2007 and the historical books and records (unaudited) of Aitec as of and for the 4 month period ended September 30, 2006. |
The Company’s historical statement of operations does not include the results of Aitec as of May 31, 2007. Accordingly, the pro forma adjustments represent the period from June 1, 2006 to May 31, 2007, with pro forma adjustments based on assumptions we have deemed appropriate.
The acquisition and the related adjustments are described in the accompanying notes. In the opinion of Company management, all adjustments have been made that are necessary to present fairly, in accordance with Regulation S-X, the pro forma condensed balance sheet and statement of operations.
The unaudited pro forma condensed balance sheet and statement of operations is presented for illustrative purposes only, and does not purport to be indicative of the results that would actually have occurred if the acquisition had occurred as presented in such statement or that may be obtained in the future. In addition, future results may vary significantly from the results reflected in such statement due to factors described in Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended May 31, 2007 filed with the Securities and Exchange Commission. The following unaudited pro forma condensed balance sheet and statement of operations should be read in conjunction with our historical consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended May 31, 2007.
The pro forma statements should also be read in conjunction with the historical combined statements of operations and combined balance sheet for Aitec incorporated by reference herein at Exhibit 99.2.
| 2. | Acquisition Date: |
The acquisition of Aitec was completed and effective on June 1, 2007 for approximately $37 million CDN (approximately $34 million USD, based upon the currency exchange rate at closing). On June 2, 2007 we disposed of the Weldsonix subsidiary of Aitec by selling all stock of the subsidiary to Weldsonix management.
| 3. | Preliminary Purchase Price Allocation: |
We are in the early stages of determining the fair values of the assets and liabilities assumed. The following table presents the preliminary purchase price for Aitec:
| (unaudited) | |||
Cash | $ | 443 | |
Accounts receivable | 13,062 | ||
Inventories | 383 | ||
Prepaids and other current assets | 692 | ||
Property, plant and equipment | 2,631 | ||
Unallocated purchase price | 22,947 | ||
Total assets acquired | 40,158 | ||
Accounts payable | 3,251 | ||
Accrued liabilities and other | 3,020 | ||
Deferred taxes | 99 | ||
Total liabilities assumed | 6,370 | ||
Net assets acquired | $ | 33,788 | |
| 4. | Pro Forma Adjustments: |
As noted above, the results of Aitec are included in the results of the Company effective June 1, 2007. The pro forma statement of operations includes adjustments to reflect the acquisition as if it had occurred on June 1, 2006. The unaudited pro forma combined balance sheet and statement of operations has been adjusted to:
| (a) | Establish unallocated purchase price pending establishment of fair values for assets and liabilities acquired. |
| (b) | Reflect repayment of debt with sale proceeds. |
| (c) | Record accrued liabilities for estimated professional fees and other costs associated with the transaction. |
| (d) | Reflect incremental increase in long-term debt utilized to fund the acquisition. |
| (e) | Purchase of Aitec shares. |
| (f) | Reflect sale of Weldsonix subsidiary of Aitec on June 2, 2007. |
| (g) | Eliminate compensation related expenses pertaining to former management. |
| (h) | Eliminate the impact of impairment charges to goodwill and long term assets relating to the Weldsonix subsidiary of Aitec. |
| (i) | Record incremental interest expense of $1.9 million based on annual interest expense associated with incremental Team debt of approximately $34 million. |
| (j) | Adjust the overall pro-forma effective tax rate to reflect the Team effective rate of 41%. |
| (k) | Eliminate the results of operations pertaining to the Weldsonix subsidiary of Aitec. |
We do not expect to incur any significant incremental increase in general and administrative expense as a result of this acquisition.