Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The unaudited pro forma condensed combined financial data set forth below
gives effect to the acquisition of Newmark International, Inc. and Pfleiderer
Leasing USA, Inc. (collectively, "Newmark") (the "Acquisition") on April 16,
2004 by the application of the pro forma adjustments to the historical
consolidated financial statements of Valmont Industries, Inc. ("Valmont"). The
unaudited pro forma condensed financial data should be read in conjunction with
the audited and unaudited historical consolidated financial statements and notes
of Valmont and the historical audited combined financial statements and notes of
Newmark.
The unaudited pro forma condensed combined balance sheet as of December 27,
2003 gives effect to the Acquisition as if it had occurred on such date. The
unaudited pro forma condensed combined statement of operations gives effect to
the Acquisition as if it occurred as of December 29, 2002. The unaudited pro
forma condensed combined financial data do not purport to represent what
Valmont's results of operations or financial position would have been if the
Acquisition had occurred as of the dates indicated or what such results will be
for any future periods.
The unaudited pro forma condensed combined financial data have been
prepared giving effect to the Acquisition, which is accounted for as a purchase
business combination in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations." The total purchase price
for Newmark was allocated to the net assets based upon preliminary estimates of
fair value. The purchase price allocations for the Acquisition are preliminary
and further refinements are likely to be made based on the results of final
valuations and the resolution of any post-closing purchase price adjustments
pursuant to the stock purchase agreement.
The unaudited pro forma adjustments are based upon available information
and certain assumptions that Valmont believes are reasonable, which assumptions
are described in the accompanying notes. The unaudited pro forma condensed
combined statement of operations excludes certain non-recurring charges that
will be incurred in connection with the Acquisition including an inventory fair
value step-up from the Acquisition expected to increase fiscal 2004 cost of
sales by $1.0 million.
Unaudited Pro Forma Condensed Combined Statement of Operations
Fiscal Year Ended December 27, 2003
Newmark
Valmont International, Elimination of Acquisition and Pro forma for
Industries, Inc. Businesses Not Financing the Acquisition
Inc. Combined Acquired (a) Adjustments and Financing
(dollars in thousands, except per share amounts)
Net sales $837,625 $ 86,365 $ (8,542) $ - $915,448
Cost of sales 629,635 65,093 (8,187) 1,000(b) 687,541
------- ------- ------ ------- -------
Gross profit 207,990 21,272 (355) (1,000) 227,907
Selling, general and
administrative expenses 153,367 11,273 (1,087) 1,000(b) 164,553
-------- ------- ------- ----- -------
Operating income 54,623 9,999 732 (2,000) 63,354
Interest expense 9,897 1,130 (114) 2,195(c) 13,108
Interest income (1,095) - - - (1,095)
Other expense (income) 276 (18) (1) - 257
---- ---- --- ---- ---
Earnings before income taxes 45,545 8,887 847 (4,195) 51,084
Income tax expense 16,534 3,608 350 (1,531)(d) 18,961
------- ------- ----- -------- ------
Earnings before minority interest,
equity in losses of
nonconsolidated subsidiaries and
cumulative effect of change in
accounting principle 29,011 5,279 497 (2,664) 32,123
Minority interest (2,222) - - - (2,222)
Equity in losses of
nonconsolidated subsidiaries
(936) - - - (936)
----- ---- ---- ----- -----
Income from continuing operations 25,853 5,279 497 (2,664) 28,965
Cumulative effect of change in
accounting principle (366) - - - (366)
----- ---- ---- ----- -----
Net earnings $ 25,487 $ 5,279 $ 497 $(2,664) $ 28,599
========= ========= ===== ========= ========
Earnings per common share:
Basic $1.07 $1.20
Diluted $1.05 $1.17
Weighted average shares outstanding:
Basic 23,805 23,805
Diluted 24,358 24,358
Unaudited Pro Forma Condensed Combined Balance Sheet
Fiscal Year Ended December 27, 2003
Newmark
Valmont International, Elimination of Acquisition Pro forma for
Industries, Inc. Businesses Not and Financing the Acquisition
Inc. Combined Acquired (a) Adjustments and Financing
(dollars in thousands)
Current assets:
Cash $ 33,345 $ 1,563 $ - $ - $ 34,908
Receivables, net 151,765 14,061 (1,489) - 164,337
Inventories 116,475 11,004 (1,701) 1,000(e) 126,778
Recoverable and deferred income
taxes 10,903 481 (39) - 11,345
Other current assets 8,622 933 (40) - 9,515
------ ---- ---- ------ -----
Total current assets 321,110 28,042 (3,269) 1,000 346,883
Property, plant and equipment, net 190,103 31,263 (2,857) 5,000(e) 223,509
Goodwill 56,022 2,769 - 45,187(e) 103,978
Other intangible assets 14,358 - - 30,000(e) 44,358
Other assets 23,204 - - - 23,204
------- ---- ---- -------- -------
$604,797 $ 62,074 $ (6,126) $ 81,187 $ 741,932
========= ========= ========= ======== =========
Current liabilities:
Current portion of long-term debt $ 15,009 $ 109 $ - $ (109)(e) $ 15,009
Notes payable 15,500 8,000 - (8,000)(e) 15,500
Bridge loan facility - - - 27,936(e) 27,936
Accounts payable 63,256 5,837 (663) - 68,430
Accrued expenses 55,856 2,062 (219) - 57,699
Dividends payable 1,921 - - - 1,921
------ -- ---- ----- ------
Total current liabilities 151,542 16,008 (882) 19,827 186,495
Long-term debt:
Existing revolving credit facility 40,000 - - 90,000(e) 130,000
Promissory notes 66,143 - - - 66,143
Other 28,510 2,827 - (2,827)(e) 28,510
Deferred income taxes 22,748 3,516 (459) 9,125 (e) 34,930
Other long-term liabilities 22,116 12,000 (12,000) - 22,116
Minority interest 8,244 - - - 8,244
Shareholder's equity 265,494 27,723 7,215 (34,938)(e) 265,494
--------- --------- --------- --------- ----------
$604,797 $ 62,074 $ (6,126) $ 81,187 $ 741,932
========= ========= ========= ========= ==========
Notes to Unaudited Pro Forma Condensed Combined Financial Data
(a) Reflects the elimination of businesses of Newmark that were not acquired in
the Acquisition. The specific items adjusted for include the fiberglass
business unit and liabilities not being assumed which include $12.0 million
in dividends payable to Newmark's parent company that were cancelled
pursuant to the acquisition agreement.
(b) Reflects adjustments to record additional depreciation and amortization
expenses associated with the fair market value adjustments to property,
plant and equipment (included in costs of sales) and finite-lived
intangible assets (included in selling, general and administrative
expenses):
Property, plant and equipment $ 1,000
Finite-lived intangible assets $ 1,000
(c) Represents adjustments to interest expense as follows:
Bridge loan facility
(2.85% adjustable rate) (i) $ 796
Revolving credit facility
(2.25% adjustable rate) (ii) 2,025
Elimination of Newmark's interest expense (1,016)
Amortization of financing costs on bridge
loan facility(iii) 390
------------
$ 2,195
============
(i) Represents the interest on the amount drawn on the bridge loan
facility at LIBOR plus 175 basis points.
(ii) Represents the interest on the amount drawn on the existing revolving
credit facility at LIBOR plus 125 basis points.
(iii)Represents fees associated with the bridge loan facility at 50 basis
points on the total commitment and 50 basis points on the amount drawn
on the bridge loan facility.
(d) Represents the tax effect of the pro forma adjustments at an estimated
36.5% tax rate.
(e) The Unaudited Pro forma Condensed Combined Financial Data include
adjustments based upon the preliminary purchase price allocation, and
further adjustments may be made based on the completion of final valuation
and other studies. Specifically, following the closing of the Acquisition,
Valmont will complete a valuation of fixed assets and intangible assets.
The final purchase price is dependent on a number of factors, including the
change in net book value of Newmark as of the closing date. The following
table summarizes the net assets acquired and pro forma purchase price based
on Newmark's December 31, 2003 financial statements.
Net book value of Newmark $ 27,723
Plus: assets not acquired and liabilities not assumed (b) 7,215
Plus: Repayment of assumed Newmark revolving credit 8,000
Plus: Repayment of assumed Newmark notes payable 2,827
Plus: Repayment of assumed Newmark current portion of
long-term debt 109
------------
45,874
------------
Purchase consideration:
Bridge loan facility 27,936
Revolving credit facility 90,000
------------
117,936
------------
Purchase price adjustment $ 72,062
============
Preliminary purchase price allocation:
Inventory 1,000
Property, plant and equipment 5,000
Finite lived intangible assets 20,000
Tradename 10,000
Goodwill 45,187
Deferred income taxes (9,125)
------------
$ 72,062
============
We expect to allocate a portion of the purchase price to property, plant and
equipment and finite lived intangible assets. Assuming a weighted average life
of 10 years, for each $10.0 million allocated to property, plant and equipment
and finite lived intangible assets, pro forma net earnings would decrease by
$635,000.