Exhibit 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information gives effect to the acquisition by Perini Corporation (the “Company”) of Rudolph & Sletten, Inc. (“Rudolph & Sletten”). This unaudited pro forma combined financial information has been prepared from the historical consolidated financial statements of the Company and of Rudolph & Sletten and should be read in conjunction therewith.
On October 3, 2005, the Company completed its acquisition of Rudolph & Sletten pursuant to a Stock Purchase Agreement dated October 3, 2005, whereby the Company purchased 100% of Rudolph & Sletten’s capital stock for approximately $55 million in cash. The transaction was financed with cash on hand, a portion of which was subsequently refinanced with a new $30 million term loan under the Company’s amended and restated credit agreement.
The accompanying unaudited pro forma combined financial information is presented to illustrate the effects of the acquisition on the historical financial position and operating results of the Company and Rudolph & Sletten. The unaudited pro forma condensed combined balance sheet as of September 30, 2005 gives effect to the acquisition as if it had occurred on that date, and combines the unaudited historical condensed balance sheet of the Company as of September 30, 2005 with the audited balance sheet of Rudolph & Sletten as of September 30, 2005. The unaudited pro forma combined statement of income for the fiscal year ended December 31, 2004 gives effect to the acquisition as if it had occurred on January 1, 2004, and combines the audited historical statement of income of the Company and the unaudited historical statement of income of Rudolph & Sletten for the year ended December 31, 2004. The unaudited pro forma combined statement of income for the nine months ended September 30, 2005 gives effect to the acquisition as if it had occurred on January 1, 2004, and combines the unaudited historical statements of income of the Company and of Rudolph & Sletten for the nine months ended September 30, 2005.
The unaudited pro forma combined financial information does not include the realization of potential cost savings from operating efficiencies, synergies or from other future events that may occur after completion of the acquisition.
The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had been consummated as of the dates indicated, nor is it necessarily indicative of future operating results or financial position. The pro forma adjustments are based upon information and assumptions available at the time of filing this document. The pro forma information should be read in conjunction with the accompanying notes thereto, the Company’s historical financial statements and related notes thereto as filed with the Securities and Exchange Commission, and Rudolph & Sletten’s historical financial statements and related notes included elsewhere in this filing. The acquisition will be accounted for using the purchase method of accounting. The Company has not yet completed the final allocation of the purchase price to tangible and intangible assets of Rudolph & Sletten. Pending the outcome of third party valuations of the assets acquired, the preliminary purchase price allocation could change.
PERINI CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 2005
(in thousands)
Perini Rudolph & Perini
Corporation Sletten Pro Forma Corporation
(historical) (historical) Adjustments Note 2 Pro Forma
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ASSETS
Cash and Cash Equivalents $100,099 $ 1,863 $ (55,485) (a) $ 76,477
30,000 (c)
Short-term Investments - 32,293 32,293
Accounts Receivable, including retainage 345,030 170,392 515,422
Unbilled Work 93,932 6,971 100,903
Deferred Tax Asset 3,594 55 324 (b) 3,973
Other Current Assets 7,105 2,889 9,994
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Total Current Assets 549,760 214,463 (25,161) 739,062
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Property and Equipment, net 53,224 14,837 256 (b) 68,317
Goodwill 12,678 - 16,414 (b) 29,092
Intangible and Other Assets 2,351 1,758 6,700 (b) 10,809
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$618,013 $ 231,058 $ (1,791) $ 847,280
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Maturities of Long-term Debt $ 10,641 $ - $ 6,000 (c) $ 16,641
Accounts Payable, including retainage 278,294 170,320 448,614
Deferred Contract Revenue 57,115 8,544 65,659
Accrued Expenses 20,689 15,523 36,212
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Total Current Liabilities 366,739 194,387 6,000 567,126
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Long-term Debt, less current maturities included above 17,429 - 24,000 (c) 41,429
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Other Long-term Liabilities 37,909 2,803 2,077 (b) 42,789
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Stockholders' Equity:
Preferred Stock 56 - 56
Stock Purchase Warrants 461 - 461
Common Stock 25,629 11 (11) (d) 25,629
Additional Paid-in Capital 114,997 6,283 (6,283) (d) 114,997
Retained Earnings 81,897 27,554 (27,554) (d) 81,897
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223,040 33,848 (33,848) 223,040
Accumulated Other Comprehensive Income (Loss) (27,104) 20 (20) (27,104)
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Total Stockholders' Equity 195,936 33,868 (33,868) 195,936
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$618,013 $ 231,058 $ (1,791) $ 847,280
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PERINI CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(in thousands, except per share data)
Perini Rudolph & Perini
Corporation Sletten Pro Forma Corporation
(historical) (historical) Adjustments Note 3 Pro Forma
-------------- --------------- -------------- ------ --------------
Revenues $ 1,130,251 $ 463,847 $ - $ 1,594,098
Cost of Operations 1,058,040 435,840 1,493,880
-------------- --------------- -------------- -------------
Gross Profit 72,211 28,007 - 100,218
General and Administrative Expenses 40,982 24,320 (2,938) (e) 62,364
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INCOME FROM CONSTRUCTION OPERATIONS 31,229 3,687 2,938 37,854
Other Income (Expense), Net (638) 4,708 (649) (c) (1,113)
(3,624) (d)
(910) (a)
Interest Expense (1,091) (87) (1,139) (b) (2,317)
-------------- --------------- -------------- --------------
Income before Income Taxes 29,500 8,308 (3,384) 34,424
946 (f)
Provision for Income Taxes (11,538) (696) (2,482) (g) (13,770)
-------------- --------------- -------------- --------------
NET INCOME $ 17,962 $ 7,612 $ (4,920) $ 20,654
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Less: Accrued Dividends on $21.25 Preferred Stock (891) - (891)
-------------- --------------- -------------- --------------
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS $ 17,071 $ 7,612 $ (4,920) $ 19,763
============== =============== ============== ==============
BASIC EARNINGS PER COMMON SHARE $ 0.67 $ 0.78
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DILUTED EARNINGS PER COMMON SHARE $ 0.66 $ 0.76
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 25,392 25,392
Effect of Dilutive Stock Options, Warrants and Restricted
Stock Units Outstanding 623 623
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DILUTED 26,015 26,015
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PERINI CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2004
(in thousands, except per share data)
Perini Rudolph & Perini
Corporation Sletten Pro Forma Corporation
(historical) (historical) Adjustments Note 3 Pro Forma
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Revenues $1,842,315 $ 711,205 $ - $2,553,520
Cost of Operations 1,748,933 678,379 2,427,312
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Gross Profit 93,382 32,826 - 126,208
General and Administrative Expenses 43,049 28,485 (3,570) (e) 67,964
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INCOME FROM CONSTRUCTION OPERATIONS 50,333 4,341 3,570 58,244
Other Income (Expense), Net (4,703) 686 (352) (c) (5,602)
(1,233) (a)
Interest Expense (704) (84) (1,873) (b) (2,661)
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Income before Income Taxes 44,926 4,943 112 49,981
(514) (f)
Provision for Income Taxes (8,919) (724) (1,167) (g) (11,324)
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NET INCOME $ 36,007 $ 4,219 $ (1,569) $ 38,657
============= ============= ============== ==============
Less: Accrued Dividends on $21.25 Preferred Stock (1,188) - - (1,188)
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NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS $ 34,819 $ 4,219 $ (1,569) $ 37,469
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BASIC EARNINGS PER COMMON SHARE $ 1.47 $ 1.58
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DILUTED EARNINGS PER COMMON SHARE $ 1.39 $ 1.50
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 23,724 23,724
Effect of Dilutive Stock Options, Warrants and Restricted
Stock Units Outstanding 1,337 1,337
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DILUTED 25,061 25,061
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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(1) General
| | Perini Corporation (the “Company”) will account for the acquisition using the purchase method of accounting. The unaudited pro forma combined financial information presented reflects the preliminary allocation of the purchase price as detailed in Note 2 below. The Company has not yet completed the final allocation of the purchase price to tangible and intangible assets of Rudolph & Sletten at this time and, pending the outcome of third party valuations of the assets acquired, the preliminary purchase price allocation could change. |
(2) Unaudited Pro Forma Condensed Combined Balance Sheet
| | The unaudited pro forma condensed combined balance sheet as of September 30, 2005 gives effect to the acquisition as if it had occurred on that date, and combines the unaudited historical condensed balance sheet of the Company as of September 30, 2005 with the audited historical balance sheet of Rudolph & Sletten as of September 30, 2005. |
| | In accordance with Statement of Financial Accounting Standards No. 141 – Business Combinations, the purchase price will be allocated to assets purchased and liabilities assumed based on their relative fair values with the excess recorded as goodwill. The following information of the components and allocation of the purchase price is based on the Company’s preliminary evaluation and review of the assets acquired and liabilities assumed. The Company has not yet completed the final allocation of the purchase price to tangible and intangible assets of Rudolph & Sletten and, pending the outcome of third party valuations of the assets acquired, the preliminary purchase price allocation could change. |
| | The following table summarizes the components of the estimated purchase price and the preliminary allocation of the purchase price to the assets acquired and liabilities assumed in the acquisition based on the Company’s initial evaluation and review. |
Amount
(in thousands)
Components of purchase price:
Cash paid $ 53,299
Purchase price adjustment payable 1,967
Estimated transaction costs 219
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Total Purchase Price $ 55,485
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Allocation of purchase price:
Cash and cash equivalents $ 1,863
Short-term investments 32,293
Accounts receivable 170,392
Unbilled work 6,971
Prepaids and other current assets 2,889
Deferred tax asset 379
Property and equipment, net 15,093
Other long-term assets 1,758
Intangible assets 6,700
Goodwill 16,414
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Total assets acquired 254,752
Accounts payable 170,320
Deferred contract revenue 8,544
Accrued expenses 15,523
Deferred tax liability 2,077
Other long-term liabilities 2,803
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Total liabilities assumed 199,267
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Net Assets Acquired $ 55,485
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Identifiable intangible assets acquired:
Amortization
Amount Period
(in thousands)
Construction contract backlog $ 2,290 3 years
Customer relationships 2,580 10 years
Non-compete agreements 960 5 years
Rudolph & Sletten trademark 850 n.a.
Construction permits and licenses 20 1 year
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Total intangible assets acquired $ 6,700
==================| | The unaudited pro forma condensed combined balance sheet reflects the following adjustments: |
| | (a) To record the cash paid for the acquisition. |
| | (b) To record the estimated preliminary allocation of the purchase price to the assets acquired and liabilities assumed in the acquisition. |
| | (c) To record the $30 million term loan used to subsequently refinance a portion of the purchase price. |
| | (d) To record the elimination of Rudolph & Sletten's equity at acquisition. |
(3) Unaudited Pro Forma Condensed Combined Statement of Income
| | The unaudited pro forma combined statement of income for the fiscal year ended December 31, 2004 and for the nine months ended September 30, 2005 give effect to the acquisition as if it had occurred on January 1, 2004. The Company's fiscal year end is December 31 and Rudolph & Sletten's fiscal year end is September 30. Accordingly, the pro forma combined statement of income for the year ended December 31, 2004 combines the audited historical statement of income of the Company for its fiscal year ended December 31, 2004 and the audited historical statement of income of Rudolph & Sletten for its fiscal year ended September 30, 2004, as adjusted to reflect the twelve months ended December 31, 2004 by adding and subtracting the appropriate unaudited interim periods. Similarly, the unaudited pro forma combined statement of income for the nine months ended September 30, 2005 combines the unaudited historical statement of income of the Company for the nine months ended September 30, 2005 and the audited historical statement of income of Rudolph & Sletten for its fiscal year ended September 30, 2005, as adjusted to reflect the nine months ended September 30, 2005 by subtracting the appropriate unaudited interim period. |
| | The unaudited pro forma condensed combined statements of income reflect the following adjustments: |
| | (a) To record the amortization of acquired intangible assets based on the straight-line method of amortization and the estimated economic lives as detailed in Note 2. |
| | (b) To record interest expense related to the new $30 million term loan used to refinance a portion of the purchase price. |
| | (c) To record the reduction in interest income related to the cash expended for the acquisition in excess of the new $30 million term loan used to refinance a portion of the purchase price. |
| | (d) To record the elimination of the gain on sale of certain real estate properties by Rudolph & Sletten as required by the terms of the stock purchase agreement. |
| | (e) To record the elimination of compensation and payroll burden expense of certain Rudolph & Sletten executives who resigned in accordance with the terms of the stock purchase agreement. |
| | (f) To record the effect of a statutory income tax rate of 38.25% on the applicable pro forma income adjustments made. |
| | (g) To record the effect of a statutory income tax rate of 38.25% on the historical pretax income of Rudolph & Sletten. |
