EXHIBIT 99.2
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated balance sheet as of June 30, 2010 gives effect to the acquisition of substantially all of the assets of Rome Die Casting LLC (“Rome”) on September 30, 2010 by General Aluminum Mfg. Company (“GAMCO”), a wholly owned subsidiary of Park-Ohio Industries, Inc., a wholly owned subsidiary of Park-Ohio Holdings Corp. (the “Company”), and to the purchase of certain assets and assumption of certain liabilities of the Assembly Component Systems business unit (“ACS”) of Assembly Component Systems, Inc. by Supply Technologies LLC, a wholly owned subsidiary of Park-Ohio Industries, Inc., a wholly owned subsidiary of the Company, effective August 31, 2010, as if such acquisitions had occurred on June 30, 2010. The following unaudited pro forma condensed consolidated statements of operations for the year ended December 31, 2009 and the six months ended June 30, 2010 give effect to the purchase of Rome and ACS as if they occurred on January 1, 2009. The Company’s condensed consolidated statement of operations information for the year ended December 31, 2009 was derived from the consolidated statement of operations included in its Annual Report on Form 10-K for the year ended December 31, 2009. The Company’s condensed statement of operations information for the six months ended June 30, 2010 was derived from its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010. Rome’s statement of operations information for the year ended December 31, 2009 was derived from the audited statement of operations included in Exhibit 99.1 to this Current Report on Form 8-K/A. Rome’s statement of operations information for the six months ended June 30, 2010 was derived from the unaudited statement of operations included in Exhibit 99.1 of this Current Report on Form 8-K. ACS’s statement of operations information for the year ended December 31, 2009 was derived from the audited statement of net revenues and direct costs and expenses, and ACS’s statement of operations information for the six months ended June 30, 2010 was derived from the unaudited statement of net revenues and direct costs and expenses, which both were filed as Exhibit 99.1 to the Form 8-K of Park-Ohio Holdings Corp. filed on November 15, 2010.
The unaudited pro forma condensed consolidated statement of operations and condensed consolidated balance sheet contained herein include adjustments having a continuing impact on the consolidated company as a result of using the acquisition method of accounting for the transactions under ASC 805, “Business Combinations.” Under the acquisition method of accounting, the total purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed in connection with the purchase, based on their estimated fair values as of the effective date of the purchase. The preliminary allocation of the purchase price was based upon management’s preliminary valuation of tangible and intangible assets acquired and liabilities assumed and such estimates and assumptions are subject to further adjustments as additional information becomes available and as additional analyses are performed.
The unaudited pro forma condensed consolidated financial information has been prepared by the Company’s management for illustrative purposes only and is not necessarily indicative of the condensed consolidated financial position or the results of operations in future periods or the results that actually would have been realized had the Company, Rome and ACS been consolidated during the specified periods. The pro forma adjustments are based upon assumptions that the Company believes are reasonable. The pro forma adjustments are based upon the information available at the time of the preparation of the unuadited pro forma condensed consolidated financial statements. These statements, including any notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements of the Company included in its Annual Report on Form 10-K for the year ended December 31, 2009 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share data)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share data)
June 30, 2010 | |||||||||||||||||||||||||
As | Pro Forma | Pro Forma | |||||||||||||||||||||||
Reported (1) | ACS | Adjustments | Rome | Adjustments | Pro Forma | ||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||
Current Assets | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 27,866 | $ | 0 | $ | 0 | 0 | $ | 0 | $ | 27,866 | ||||||||||||||
Accounts receivable, net | 119,878 | 9,174 | 1,988 | 131,040 | |||||||||||||||||||||
Inventories | 169,115 | 16,972 | (525 | )(5) | 1,194 | 186,756 | |||||||||||||||||||
Deferred tax assets | 8,104 | 0 | 8,104 | ||||||||||||||||||||||
Unbilled contract revenue | 15,263 | 0 | 15,263 | ||||||||||||||||||||||
Other current assets | 10,171 | 51 | 51 | 10,273 | |||||||||||||||||||||
Total Current Assets | 350,397 | 26,197 | (525 | ) | 3,233 | 379,302 | |||||||||||||||||||
Property, Plant and Equipment | 246,763 | 183 | 2,053 | 747 | (15) | 249,746 | |||||||||||||||||||
Less accumulated depreciation | 176,534 | 81 | 999 | (999 | )(15) | 176,615 | |||||||||||||||||||
70,229 | 102 | 1,054 | 1,746 | (15) | 73,131 | ||||||||||||||||||||
Other Assets | |||||||||||||||||||||||||
Goodwill | 3,738 | 3,981 | (19) | 7,719 | |||||||||||||||||||||
Other | 79,657 | 990 | (6) | 165 | (9,911 | )(16) | 70,901 | ||||||||||||||||||
83,395 | 0 | 990 | 165 | (5,930 | ) | 78,620 | |||||||||||||||||||
$ | 504,021 | $ | 26,299 | $ | 465 | $ | 4,452 | ($4,184 | ) | $ | 531,053 | ||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||
Current Liabilities | |||||||||||||||||||||||||
Trade accounts payable | $ | 83,692 | $ | 4,702 | $ | 1,825 | $ | 90,219 | |||||||||||||||||
Accrued expenses | 46,895 | 282 | 678 | 47,855 | |||||||||||||||||||||
Current portion of long-term debt | 11,882 | 0 | 1,000 | (3) | 25,293 | (25,293 | )(17) | 12,882 | |||||||||||||||||
Current portion of other postretirement benefits | 2,197 | 0 | 0 | 2,197 | |||||||||||||||||||||
Total Current Liabilities | 144,666 | 4,984 | 1,000 | 27,796 | (25,293 | ) | 153,153 | ||||||||||||||||||
Long-Term Liabilities, less current portion 8.375% Senior Subordinated Notes due 2014 | 183,835 | 183,835 | |||||||||||||||||||||||
Revolving credit maturing on April 30, 2014 | 117,300 | 16,000 | (2) | 0 | 133,300 | ||||||||||||||||||||
Other long-term debt | 4,562 | 0 | 1,160 | (4) | 0 | 5,722 | |||||||||||||||||||
Deferred tax liability | 7,200 | 1,375 | (8) | 0 | 8,575 | ||||||||||||||||||||
Other postretirement benefits and other long-term liabilities | 23,562 | 0 | 0 | 23,562 | |||||||||||||||||||||
336,459 | 0 | 18,535 | 0 | 354,994 | |||||||||||||||||||||
Shareholders’ Equity | |||||||||||||||||||||||||
Capital stock, par value $1 a share: | |||||||||||||||||||||||||
Serial Preferred Stock | 0 | 0 | |||||||||||||||||||||||
Common Stock | 13,284 | 13,284 | |||||||||||||||||||||||
Additional paid-in capital | 67,153 | 21,315 | (21,315 | )(7) | 0 | 67,153 | |||||||||||||||||||
Retained deficit | (28,749 | ) | 2,245 | (9) | (23,344 | ) | 23,344 | (17) | (28,739 | ) | |||||||||||||||
1,746 | (18) | ||||||||||||||||||||||||
(3,981 | )(19) | ||||||||||||||||||||||||
Treasury stock, at cost | (18,209 | ) | (18,209 | ) | |||||||||||||||||||||
Accumulated other comprehensive (loss) | (10,583 | ) | 0 | (10,583 | ) | ||||||||||||||||||||
Shareholders’ Equity (deficit) | 22,896 | 21,315 | (19,070 | ) | (23,344 | ) | 21,109 | 22,906 | |||||||||||||||||
$ | 504,021 | $ | 26,299 | $ | 465 | $ | 4,452 | ($4,184 | ) | $ | 531,053 | ||||||||||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In Thousands, Except per Share Data)
Six Months Ended June 30, 2010 | |||||||||||||||||||||||||
Pro Forma | Pro Forma | ||||||||||||||||||||||||
As Reported (10) | ACS | Adjustments | Rome | Adjustments | Pro Forma | ||||||||||||||||||||
Net sales | $ | 390,004 | $ | 25,858 | $ | 10,769 | $ | (2,495 | )(21) | $ | 424,136 | ||||||||||||||
Cost of products sold | 327,368 | 19,002 | 11,769 | (2,495 | )(21) | 355,644 | |||||||||||||||||||
Gross profit (loss) | 62,636 | 6,856 | (1,000 | ) | 0 | 68,492 | |||||||||||||||||||
Selling, general and administrative expenses | 43,305 | 6,062 | 33 | (14) | 1,265 | 0 | 50,665 | ||||||||||||||||||
Operating income (loss) | 19,331 | 794 | (33 | ) | (2,265 | ) | 0 | 17,827 | |||||||||||||||||
53 | (12) | 0 | |||||||||||||||||||||||
Interest expense | 11,603 | 0 | 115 | (13) | 993 | (993 | )(20) | 11,771 | |||||||||||||||||
Income (loss) before income taxes | 7,728 | 794 | (201 | ) | (3,258 | ) | 993 | 6,056 | |||||||||||||||||
Income taxes | 2,247 | 0 | 0 | 0 | 0 | 2,247 | |||||||||||||||||||
Net income (loss) | $ | 5,481 | $ | 794 | ($201 | ) | ($3,258 | ) | $ | 993 | $ | 3,809 | |||||||||||||
Amounts per common share: | |||||||||||||||||||||||||
Basic | $ | 0.49 | $ | 0.34 | |||||||||||||||||||||
Diluted | $ | 0.47 | $ | 0.32 | |||||||||||||||||||||
Common shares used in the computation | |||||||||||||||||||||||||
Basic | 11,229 | 11,229 | |||||||||||||||||||||||
Diluted | 11,747 | 11,747 |
See accompanying Notes to the Unaudited Pro Forma Condensed Financial Statements.
PARK-OHIO HOLDINGS CORP. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In Thousands, Except per Share Data)
Year Ended December 31, 2009 | ||||||||||||||||||||||||
As | Pro Forma | Pro Forma | ||||||||||||||||||||||
Reported (11) | ACS | Adjustments | Rome | Adjustments | Pro Forma | |||||||||||||||||||
Net sales | $ | 701,047 | $ | 46,427 | $ | 8,847 | $ | (2,094 | )(21) | $ | 754,227 | |||||||||||||
Cost of products sold | 597,200 | 37,461 | 9,493 | (2,094 | )(21) | 642,060 | ||||||||||||||||||
Gross profit (loss) | 103,847 | 8,966 | (646 | ) | 112,167 | |||||||||||||||||||
Selling, general and administrative expenses | 87,786 | 12,919 | 66 | (14) | 1,133 | 0 | 101,904 | |||||||||||||||||
Restructuring and impairment charges | 5,206 | 224 | 0 | 5,430 | ||||||||||||||||||||
Operating income (loss) | 10,855 | (4,177 | ) | (66 | ) | (1,779 | ) | 0 | 4,833 | |||||||||||||||
Gain on purchase of 8.375% senior subordinated notes | (6,297 | ) | 0 | �� | 0 | (6,297 | ) | |||||||||||||||||
144 | (12) | |||||||||||||||||||||||
Interest expense | 23,189 | 0 | 229 | (13) | 1,738 | (1,738 | )(20) | 23,562 | ||||||||||||||||
Income (loss) before income taxes | (6,037 | ) | (4,177 | ) | (439 | ) | (3,517 | ) | 1,738 | (12,432 | ) | |||||||||||||
Income taxes | (828 | ) | 0 | 0 | 0 | 0 | (828 | ) | ||||||||||||||||
Net loss | ($5,209 | ) | ($4,177 | ) | ($439 | ) | ($3,517 | ) | $ | 1,738 | ($11,604 | ) | ||||||||||||
Amounts per common share: | ||||||||||||||||||||||||
Basic | ($0.47 | ) | ($1.06 | ) | ||||||||||||||||||||
Diluted | ($0.47 | ) | ($1.06 | ) | ||||||||||||||||||||
Common shares used in the computation | ||||||||||||||||||||||||
Basic | 10,968 | 10,968 | ||||||||||||||||||||||
Diluted | 10,968 | 10,968 |
See accompanying Notes to the Unaudited Pro Forma Condensed Financial Statements.
Park-Ohio Holdings Corp. and Subsidiaries
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
(In Thousands)
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
(In Thousands)
1 .Transactions
On September 30, 2010, GAMCO entered into a Bill of Sale with Rome, a producer of aluminum high pressure die castings, pursuant to which Rome agreed to transfer to GAMCO substantially all of its assets in exchange for the notes receivable due from Rome.
The allocation of the purchase price to the fair values of assets acquired and liabilities assumed as if the transaction had occurred on June 30, 2010 is presented below (in thousands). The purchase price allocations and pro forma statements are based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed which are based on estimates and assumptions that are subject to change. The preliminary estimated purchase price is allocated as follows:
Accounts receivable | $ | 1,988 | ||
Inventories | 1,194 | |||
Property, plant and equipment | 2,800 | |||
Goodwill | 3,981 | |||
Accounts payable | (1,825 | ) | ||
Accrued expenses | (678 | ) | ||
Total purchase price | $ | 7,460 | ||
Effective August 31, 2010, Supply Technologies LLC, a subsidiary of Park-Ohio Industries, Inc., completed the acquisition of certain assets and assumed specific liabilities relating to ACS for $16,000 in cash and a $2,160 subordinated promissory note payable in equal quarterly installments over three years. ACS is a provider of supply chain management solutions for a broad range of production components through its service centers throughout North America.
The allocation of the purchase price to the fair values of the assets acquired and liabilities assumed as if the transaction had occurred on June 30, 2010 is presented below (in thousands). The purchase price allocations and pro forma adjustments are based on management’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed which are based on estimates and assumptions that are subject to change. The preliminary estimated purchase price is allocated as follows:
Accounts receivable | $ | 9,174 | ||
Inventories | 16,447 | |||
Prepaid expenses and other current assets | 51 | |||
Property, plant and equipment | 102 | |||
Customer relationships | 990 | |||
Accounts payable | (4,702 | ) | ||
Accrued expenses | (282 | ) | ||
Deferred tax liability | (1,375 | ) | ||
Gain on acquisition | (2,245 | ) | ||
Total estimated purchase price | $ | 18,160 | ||
2. Pro Forma Adjustments
The pro forma adjustments included in the unaudited pro forma condensed consolidated financial statements are as follows:
1) Represents balances as reported on the unaudited Condensed Consolidated Balance Sheet included in the Company’s Form l0-Q for the quarterly period ended June 30, 2010.
2) Represents the amount borrowed on the Company’s revolving credit facility for the cash payment to the seller on September 1, 2010.
3) Represents the current portion of the note payable to the seller.
4) Represents the long-term portion of the note payable to the seller.
5) Represents the fair value adjustment to inventory.
6) Represents the fair value of the customer relationships.
7) Represents the adjustment to remove the equity of ACS.
8) Represents the deferred tax liability relating to the acquisition.
9) Represents the amount the fair value of the net assets acquired exceeded the purchase price resulting in a gain on the acquisition.
10) Represents the results of operations on the unaudited Condensed Consolidated Statements of Operations included in the Company’s Form 10-Q for the quarterly period ended June 30, 2010.
11) Represents results of operations on the Consolidated Statements of Operations included in the Company’s Form 10-K for the year ended December 31, 2009.
12) Represents interest expense on the note payable to the seller.
13) Represents interest expense on the revolving credit facility.
14) Represents amortization expense on the customer relationships.
15) Represents the fair value adjustment to property, plant and equipment.
16) Represents elimination of GAMCO’s note receivable from Rome.
17) Represents elimination of Rome’s notes payable to GAMCO.
18) Represents the adjustment for the deficit of Rome.
19) Represents the amount the purchase price exceeded the fair value of the net assets acquired from Rome.
20) Represents elimination of interest expense on notes payable to GAMCO by Rome.
21) Represents elimination of Rome’s sales to GAMCO.