Exhibit 99.1
Unaudited Pro Forma Combined Financial Information
Notes
(thousands of U.S. dollars)
7. Differences between United States and Canadian generally accepted accounting principles
Both IPSCO Inc. and NS Group, Inc. report their financial results in accordance with U.S. GAAP. The significant differences between U.S. and Canadian GAAP are described in the notes to IPSCO Inc.’s annual financial statements and have been reflected in the pro forma information which follows.
Unaudited Pro Forma Combined Balance Sheet
September 30, 2006
(thousands of U.S. dollars)
|
| U.S. GAAP |
| Canadian |
| Canadian |
| |||
|
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|
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|
|
| |||
Current Assets |
|
|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 21,128 |
| $ | 233 |
| $ | 21,361 |
|
Accounts receivable, net |
| 450,949 |
| 790 |
| 451,739 |
| |||
Inventories |
| 980,086 |
| 173 |
| 980,259 |
| |||
Prepaid expenses |
| 13,836 |
| 25 |
| 13,861 |
| |||
Deferred income taxes |
| 34,431 |
| — |
| 34,431 |
| |||
|
| 1,500,430 |
| 1,221 |
| 1,501,651 |
| |||
Non-Current Assets |
|
|
|
|
|
|
| |||
Capital assets |
| 1,295,761 |
| 7,411 |
| 1,303,172 |
| |||
Amortizable intangible assets |
| 705,459 |
| — |
| 705,459 |
| |||
Goodwill |
| 600,858 |
| — |
| 600,858 |
| |||
Other |
| 65,563 |
| 3,864 |
| 69,427 |
| |||
|
| 2,667,641 |
| 11,275 |
| 2,678,916 |
| |||
Total Assets |
| $ | 4,168,071 |
| $ | 12,496 |
| $ | 4,180,567 |
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Current Liabilities |
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Bank indebtedness |
| $ | 100,000 |
| $ | — |
| $ | 100,000 |
|
Accounts payable |
| 426,502 |
| (11,056 | ) | 415,446 |
| |||
Taxes payable |
| 6,231 |
| — |
| 6,231 |
| |||
Current portion of long-term debt |
| 20,879 |
| (6,164 | ) | 14,715 |
| |||
|
| 553,612 |
| (17,220 | ) | 536,392 |
| |||
Long-Term Liabilities |
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|
|
|
|
|
| |||
Long-term debt |
| 892,175 |
| (110,320 | ) | 781,855 |
| |||
Other |
| 57,694 |
| (44,538 | ) | 13,156 |
| |||
Deferred income taxes |
| 500,757 |
| 66,411 |
| 567,168 |
| |||
|
| 1,450,626 |
| (88,447 | ) | 1,362,179 |
| |||
Shareholders’ Equity |
|
|
|
|
|
|
| |||
Common shares |
| 414,499 |
| (40,733 | ) | 373,766 |
| |||
Contributed surplus |
| 22,202 |
| — |
| 22,202 |
| |||
Retained earnings |
| 1,744,297 |
| 33,235 |
| 1,777,532 |
| |||
Accumulated other comprehensive loss |
| (17,165 | ) | 125,661 |
| 108,496 |
| |||
|
| 2,163,833 |
| 118,163 |
| 2,281,996 |
| |||
Total Liabilities and Equity |
| $ | 4,168,071 |
| $ | 12,496 |
| $ | 4,180,567 |
|
Unaudited Pro Forma Combined Statement of Income
For the Nine Months Ended September 30, 2006
(thousands of U.S. dollars)
|
| U.S. GAAP |
| Canadian |
| Canadian |
| |||
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Sales |
| $ | 3,360,188 |
| $ | (107,451 | ) | $ | 3,252,737 |
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Cost of sales |
| 2,362,371 |
| (95,427 | ) | 2,266,944 |
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Gross income |
| 997,817 |
| (12,024 | ) | 985,793 |
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|
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Selling, general and administration |
| 141,280 |
| — |
| 141,280 |
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|
|
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Operating income |
| 856,537 |
| (12,024 | ) | 844,513 |
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Other income (expense) |
|
|
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|
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Interest on long-term debt |
| (49,789 | ) | 6,337 |
| (43,452 | ) | |||
Interest income, net |
| 5,147 |
| — |
| 5,147 |
| |||
Foreign exchange |
| 1,262 |
| — |
| 1,262 |
| |||
Other |
| 618 |
| (353 | ) | 265 |
| |||
Income before income taxes |
| 813,775 |
| (6,040 | ) | 807,735 |
| |||
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Income taxes |
| 292,649 |
| (2,330 | ) | 290,319 |
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Net Income |
| $ | 521,126 |
| $ | (3,710 | ) | $ | 517,416 |
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Earnings per share |
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Basic |
| $ | 10.97 |
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|
| $ | 10.89 |
| |
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Diluted |
| $ | 10.87 |
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|
| $ | 10.79 |
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Weighted average shares outstanding (000’s) |
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Basic |
| 47,497 |
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|
| 47,497 |
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Diluted |
| 47,949 |
|
|
| 47,947 |
|
Unaudited Pro Forma Combined Statement of Income
For the Year Ended December 31, 2005
(thousands of U.S. dollars)
|
| U.S. GAAP |
| Canadian |
| Canadian |
| |||
|
|
|
|
|
|
|
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Sales |
| $ | 3,633,622 |
| $ | (89,652 | ) | $ | 3,543,970 |
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|
|
| |||
Cost of sales |
| 2,547,944 |
| (77,984 | ) | 2,469,960 |
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|
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|
|
| |||
Gross income |
| 1,085,678 |
| (11,668 | ) | 1,074,010 |
| |||
|
|
|
|
|
|
|
| |||
Selling, general and administration |
| 161,783 |
| — |
| 161,783 |
| |||
|
|
|
|
|
|
|
| |||
Operating income |
| 923,895 |
| (11,668 | ) | 912,227 |
| |||
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Other income (expense) |
|
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|
|
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Interest on long-term debt |
| (82,152 | ) | 8,770 |
| (73,382 | ) | |||
Interest income, net |
| 2,959 |
| (5 | ) | 2,954 |
| |||
Foreign exchange |
| 9,448 |
| — |
| 9,448 |
| |||
Loss on early extinguishment of debt |
| (16,423 | ) | — |
| (16,423 | ) | |||
Gain on assets held for sale |
| 1,863 |
| — |
| 1,863 |
| |||
Other |
| 10,071 |
| 144 |
| 10,215 |
| |||
Income before income taxes |
| 849,661 |
| (2,759 | ) | 846,902 |
| |||
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Income taxes |
| 244,342 |
| (1,032 | ) | 243,310 |
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Net Income |
| $ | 605,319 |
| $ | (1,727 | ) | $ | 603,592 |
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Earnings per share |
|
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Basic |
| $ | 12.47 |
|
|
| $ | 12.43 |
| |
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Diluted |
| $ | 12.35 |
|
|
| $ | 12.32 |
| |
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Weighted average shares outstanding (000’s) |
|
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Basic |
| 48,548 |
|
|
| 48,548 |
| |||
|
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Diluted |
| 49,001 |
|
|
| 49,001 |
|