EXHIBIT 99.3
INERGY, L.P.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
The following Unaudited Pro Forma Condensed Combined Statements of Income
of Inergy, L.P. ("Inergy") give effect to the December 19, 2001 acquisition by
Inergy's operating company of Independent Propane Company Holdings ("IPC") and
subsidiaries under the purchase method of accounting. The pro forma adjustments
are based upon available information and assumptions that management believes
are reasonable. The Unaudited Pro forma Condensed Combined Statements of Income
do no purport to represent what the results of operations of Inergy would have
been if the purchase transaction had occurred on the dates indicated below, nor
do they purport to project the results of operations of Inergy for any future
period.
The Unaudited Pro Forma Condensed Combined Statements of Income for the
periods presented were prepared by combining Inergy's consolidated statement of
income for fiscal year ended September 30, 2001, with IPC's consolidated
statement of income for the fiscal year ended September 30, 2001, and Inergy's
consolidated statement of income for the three months ended December 31, 2001,
with IPC's consolidated statement of income for the three months ended December
31, 2001, to give effect to the acquisition as though it had occurred on October
1, 2000. In addition, the Unaudited Pro Forma Condensed Combined Statements of
Income also give effect to Inergy's issuance of 18,252 common units to certain
members of IPC management, who remain as employees of Inergy, L.P., for
approximately $0.5 million in cash at the time of the acquisition. The
Unaudited Pro Forma Condensed Combined Statements of Income do not give effect
to any savings or other operating efficiencies that are expected to result from
the integration of the operations of IPC with Inergy.
The Unaudited Pro Forma Condensed Combined Statement of Income for the
fiscal year ended September 30, 2001 is broken into two periods; from October 1,
2000 to July 31, 2001 and August 1, 2001 to September 30, 2001. The results of
operations from October 1, 2000 to July 31, 2001 are attributable to Inergy's
predecessor, Inergy Partners, LLC. The results of operations from August 1,
2001 to September 30, 2001 reflect Inergy's results of operations following the
initial public offering. Therefore, IPC's results of operations for the fiscal
year ended September 30, 2001, and pro forma adjustments are presented in this
same manner.
The historical consolidated statement of income of Inergy for the fiscal
year ended September 30, 2001, is derived from audited consolidated financial
statements included in the Form 10-K filed by Inergy on December 28, 2001, with
the SEC. The historical consolidated statement of income of Inergy for the
three months ended December 31, 2001, is derived from the unaudited consolidated
financial statements included in the Form 10-Q filed by Inergy on February 14,
2002, with the SEC. The historical consolidated statement of income of IPC for
the fiscal year ended September 30, 2001, is derived from information included
in the audited consolidated financial statements contained in this Current
Report and from its accounting records. The historical consolidated statement of
income of IPC for the period from October 1, 2001 to December 19, 2001
(immediately prior to the acquisition) is derived from IPC's accounting records.
The results of operations from December 20, 2001 through December 31, 2001 are
included in the Inergy's financial statements for the three months ended
December 31, 2001.
You should read the Unaudited Pro Forma Condensed Combined Statements of
Income along with Inergy's consolidated financial statements and accompanying
notes included in its prior SEC filings and with IPC's consolidated financial
statements and accompanying notes included in this Current Report.
1
EXHIBIT 99.3
INERGY, L.P. AND SUBSIDIARY
(SUCCESSOR TO INERGY PARTNERS, LLC AND SUBSIDIARIES)
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FISCAL YEAR ENDED SEPTEMBER 30, 2001
(IN THOUSANDS EXCEPT PER UNIT DATA)
Independent
Propane
Company Pro Forma Pro Forma
Inergy, L.P. Holdings Adjustments Adjusted
------------- --------------- --------------- -------------
Revenue:
Propane $212,441 $67,358 $279,799
Other 10,698 9,062 19,760
----------------------------------- -----------------
223,139 76,420 299,559
Cost of product sold 182,582 37,761 220,343
----------------------------------- -----------------
Gross profit 40,557 38,659 79,216
Expenses:
Operating and administrative 23,501 22,322 45,823
Depreciation and amortization 6,532 7,019 $(2,334) (a) 11,217
------------------------------------------------------ -----------------
Operating income 10,524 9,318 2,334 22,176
Other income (expense):
Interest expense (6,670) (6,297) 145 (b) (12,822)
Gain (loss) on sale of property, plant and 37 - 37
equipment
Finance charges 290 - 290
Other 168 - 168
------------------------------------------------------ -----------------
Income before income taxes 4,349 3,021 2,479 9,849
Provision for income taxes - - -
------------------------------------------------------ -----------------
Net income $ 4,349 $ 3,021 $ 2,479 $ 9,849
====================================================== =================
Net income for the period from October 1, 2000
through July 31, 2001 attributable to Inergy,
L.P.'s predecessor $ 6,664 $ 4,735 $ 2,066 $ 13,465
====================================================== =================
Net loss for the period from August 1, 2001
through September 30, 2001 attributable to
Inergy, L.P. following initial public offering $ (2,315) $(1,714) $ 413 $ (3,616)
====================================================== =================
2
EXHIBIT 99.3
INERGY, L.P. AND SUBSIDIARY
(SUCCESSOR TO INERGY PARTNERS, LLC AND SUBSIDIARIES)
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FISCAL YEAR ENDED SEPTEMBER 30, 2001
(IN THOUSANDS EXCEPT PER UNIT DATA)
(CONTINUED)
Partners' interest information for the period from
August 1, 2001 through September 30, 2001:
Non-managing general partners' interest in net loss $ (46) $ (72)
======== =========
Limited partners' interest in net loss:
Common unit interest:
Allocation of net loss $ (729) $ (1,427)
Less beneficial conversion value allocated to senior
subordinated units (8,600) (8,600)
-------- ---------
Net common unit interest (9,329) (10,027)
Senior subordinated interest:
Allocation of net loss (1,313) (1,805)
Plus beneficial conversion value allocated to senior
subordinated units 8,600 8,600
-------- ---------
Net senior subordinated unit interest 7,287 6,795
Junior subordinated unit interest (227) (312)
-------- ---------
Total limited partners' interest in net loss $(2,269) $ (3,544)
======== =========
Net loss per limited partner unit - basic and diluted $(0.40) $(0.54)
======== =========
Weighted average limited partners' units outstanding -
basic and diluted 5,726 778 (c) 6,504
======== =========
See accompanying Notes to Unaudited Pro Forma Condensed Combined
Statements of Income.
3
EXHIBIT 99.3
INERGY, L.P. AND SUBSIDIARY
(SUCCESSOR TO INERGY PARTNERS, LLC AND SUBSIDIARIES)
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED DECEMBER 31, 2001
(IN THOUSANDS EXCEPT PER UNIT DATA)
Independent
Propane
Company Pro Forma Pro Forma
Inergy, L.P. Holdings (d) Adjustments Adjusted
------------- --------------- -------------- -------------
Revenue:
Propane $58,989 $11,562 $70,551
Other 3,046 1,974 5,020
-------------------------------- -----------------
62,035 13,536 75,571
Cost of product sold 46,200 5,404 51,604
-------------------------------- -----------------
Gross profit 15,835 8,132 23,967
Expenses:
Operating and administrative 8,292 4,455 12,747
Depreciation and amortization 1,774 1,649 $(622)(e) 2,801
-------------------------------------------------- -----------------
Operating income 5,769 2,028 622 8,419
Other income (expense):
Interest expense (1,238) (842) 37 (f) (2,043)
Gain (loss) on sale of property, plant and (90) - (90)
equipment
Finance charges - - -
Other 56 3 59
-------------------------------------------------- -----------------
Income before income taxes 4,497 1,189 659 6,345
Provision for income taxes 32 - 32
-------------------------------------------------- -----------------
Net income $ 4,465 $ 1,189 $ 659 $ 6,313
================================================== =================
4
EXHIBIT 99.3
INERGY, L.P. AND SUBSIDIARY
(SUCCESSOR TO INERGY PARTNERS, LLC AND SUBSIDIARIES)
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED DECEMBER 31, 2001
(IN THOUSANDS EXCEPT PER UNIT DATA)
(Continued)
Partners' interest information for the three
month period ended December 31, 2001:
Non-managing general partners' interest in net income $ 89 $ 126
====== ======
Limited partners' interest in net income:
Common unit interest $1,458 $2,490
Senior subordinated interest 2,488 3,152
Junior subordinated unit interest 430 545
------ ------
Total limited partners' interest in net income $4,376 $6,187
====== ======
Net income per limited partner unit:
Basic $ 0.75 $ 0.95
====== ======
Diluted $ 0.74 $ 0.94
====== ======
Weighted average limited partners' units
outstanding:
Basic 5,827 676(g) 6,503
====== ======
Diluted 5,898 685(h) 6,583
====== ======
See accompanying Notes to Unaudited Pro Forma Condensed Combined Statements of
Income.
5
EXHIBIT 99.3
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN THOUSANDS)
Fiscal Year Ended September 30, 2001:
(a) Eliminate historical depreciation and amortization expense of Independent Propane Company $(7,019)
Holdings
Depreciation and amortization reflecting allocation of purchase price:
Depreciation expense on allocated property, plant and equipment 2,791
Amortization expense on customer accounts and non-compete agreement intangibles 1,894
-------
$(2,334)
=======
(b) Eliminate interest expense on Independent Propane Company Holdings debt $(6,297)
Add interest expense on Bank Credit Agreement borrowings and assumed debt 5,543
Add amortization of debt issuance cost 609
-------
$ (145)
=======
(c) To reflect issuance of 394,601 Inergy, L.P. common units issued to IPCH
Acquisition Corp. in conjunction with the acquisition 395
To reflect issuance of 365,019 Inergy, L.P. common units issued to former
Independent Propane Company Holdings shareholders 365
To reflect issuance of 18,252 Inergy, L.P. common units issued to certain members of Independent
Propane Company Holdings management who continue as employees of Inergy, L.P 18
-------
778
=======
6
EXHIBIT 99.3
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN THOUSANDS)
(Continued)
Three Months Ended December 31, 2001:
(d) Include the historical consolidated statement of income of Independent Propane Company Holdings for the period
from October 1, 2001 to December 19, 2001 (immediately prior to the acquisition). The results of operations from
December 20, 2001 through December 31, 2001 are included in the Inergy's financial statements for the three
months ended December 31, 2001.
(e) Eliminate historical depreciation and amortization expense of Independent Propane Company $(1,649)
Holdings
Depreciation and amortization reflecting allocation of purchase price:
Depreciation expense on allocated property, plant and equipment 612
Amortization expense on customer accounts and non-compete agreement intangibles 415
-------
$ (622)
=======
(f) Eliminate interest expense on Independent Propane Company Holdings debt $ (842)
Add interest expense on Bank Credit Agreement borrowings and assumed debt 672
Add amortization of debt issuance cost 133
-------
$ (37)
=======
(g) To reflect issuance of 394,601 Inergy, L.P. common units issued to IPCH Acquisition Corp. in
conjunction with the acquisition, weighted for the period from October 1, 2001 through
December 19, 2001 prior to the acquisition 343
To reflect issuance of 365,019 Inergy, L.P. common units issued to former Independent Propane
Company Holdings shareholders, weighted for the period from October 1, 2001 through
December 19, 2001 prior to the acquisition 317
To reflect issuance of 18,252 Inergy, L.P. common units issued to certain members of Independent
Propane Company Holdings management who continue as employees of Inergy, L.P,
weighted for the period from October 1, 2001 through December 19, 2001 prior to the acquisition 16
-------
676
=======
(h) Units reflected as issued per basic calculation in (g) 676
To reflect the additional diluted units resulting from the issuance of options to certain
members of Independent Propane Company Holdings management, weighted for the period from
October 1, 2001 through December 19, 2001 prior to the acquisition 9
-------
685
=======
7