EXHIBIT 99.3
On March 26, 2007, pursuant to the terms of the Agreement and Plan of
Merger, dated as of February 9, 2007, by and among BMCA Acquisition Inc.
("Parent"), BMCA Acquisition Sub Inc. ("Purchaser"), an indirect wholly-owned
subsidiary of Building Materials Corporation of America ("BMCA" or the
"Company")), and ElkCorp ("Elk"), Purchaser was merged with and into Elk (the
"Merger"), and all remaining common stock, par value $1.00 per share (the
"Shares"), not tendered into the previously commenced tender offer by Parent,
Purchaser and BMCA (other than Shares held by Purchaser or its affiliates or
stockholders who properly perfected appraisal rights under Delaware law) were
cancelled and converted into the right to receive $43.50 cash per Share, without
interest. Elk is the surviving corporation and is now an indirect wholly-owned
subsidiary of BMCA.
The following Unaudited Pro Forma Condensed Combined Financial Statements
contained herein (the "Statements") are presented to illustrate the effects of
the acquisition of Elk on the historical financial position and operating
results of BMCA. The Unaudited Pro Forma Condensed Combined Balance Sheet is
based on historical data of the separate companies, and reflects adjustments as
if the acquisition had occurred on December 31, 2006. The Unaudited Pro Forma
Condensed Combined Statement of Operations for the twelve months ended December
31, 2006 is based on historical data of the separate companies and reflects
adjustments as if the acquisition had occurred on January 1, 2006. The Unaudited
Pro Forma Condensed Combined Statement of Operations for the three months ended
April 1, 2007 is based on historical data of the separate companies and reflects
adjustments as if the acquisition had occurred on January 1, 2007. The Unaudited
Pro Forma Condensed Combined Statement of Operations for the three months ended
April 2, 2006 is based on historical data of the separate companies and reflects
adjustments as if the acquisition had occurred on January 1, 2006.
The Statements include adjustments having a continuing impact on the
combined company as a result of accounting for the acquisition under the
purchase method of accounting in accordance with Statement of Financial
Accounting Standards No. 141, "Business Combinations" ("SFAS No. 141"). The pro
forma adjustments are described in the notes accompanying the Statements (the
"Notes").
The Statements have been prepared based on available information, using
assumptions that BMCA's management believes are reasonable. Under the purchase
method of accounting, the total consideration payable in the acquisition will be
allocated to Elk's tangible and intangible assets and liabilities based on their
estimated fair values at the date of acquisition. The purchase price allocation
herein is preliminary and, accordingly, the actual purchase accounting
adjustments may differ from the pro forma adjustments reflected herein. The
Statements do not purport to represent the actual financial position or results
of operations that would have occurred if the acquisition had taken place on the
dates specified, nor is it necessarily indicative of the results of operations
that may be achieved in the future. The Statements do not reflect any
adjustments for the effect of operating synergies or potential cost savings
which may result from the acquisition. The Statements include certain
reclassifications to conform the historical financial information of Elk to the
presentation of BMCA.
The assumptions used and adjustments made in preparing the Statements are
described in the Notes, which should be read in conjunction with the Statements.
The Statements and related Notes contained herein should be read in conjunction
with the Consolidated Financial Statements and related notes included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006
and the Unaudited Condensed Consolidated Financial Statements and the related
notes included in the Company's Quarterly Report on Form 10-Q for the three
months ended April 1, 2007, both filed with the Securities and Exchange
Commission, and the Consolidated Financial Statements of Elk and the related
notes included in Elk's Annual Report on Form 10-K for the fiscal year ended
June 30, 2006, and the Unaudited Consolidated Financial Statements of Elk and
the related notes included in Elk's Quarterly Report on Form 10-Q for the three
month and six month periods ended December 31, 2006 and December 31, 2005, which
are incorporated by reference in Item 9.01(a) of this Current Report on Form
8-K/A.
1
BUILDING MATERIALS CORPORATION OF AMERICA
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 2006
(DOLLARS IN THOUSANDS)
PRO FORMA REFINANCING
ACQUISITION PRO FORMA PRO FORMA
BMCA ELKCORP ADJUSTMENTS ADJUSTMENTS BMCA
----------- ----------- ----------- ----------- -----------
ASSETS
Current Assets:
Cash and cash
equivalents $ 7,777 $ 1,762 $(1,189,580) (1)(5) $ 1,182,897 (1)(5) $ 2,856
Short-term investments -- 27,200 (27,200) (1) -- --
Accounts receivable,
trade 190,859 130,164 -- -- 321,023
Accounts receivable,
other 5,599 -- -- -- 5,599
Tax receivable from
parent corporation 9,132 -- -- -- 9,132
Inventories, net 238,709 132,772 (5,785) (3) -- 365,696
Deferred income tax
assets, net 21,710 9,334 1,923 (3) -- 32,967
Other current assets 12,209 9,770 -- -- 21,979
Discontinued
operations -
current assets -- 2,844 -- -- 2,844
----------- ----------- ----------- ----------- -----------
Total Current Assets 485,995 313,846 (1,220,642) 1,182,897 762,096
Property, plant
and equipment, net 411,729 301,394 119,513 (2)(3) -- 832,636
Goodwill, net of
accumulated
amortization 64,794 17,009 565,660 (3)(7) -- 647,463
Intangible assets -- 13,390 -- -- 13,390
Other noncurrent
assets 67,323 6,063 31,908 (4)(6) 30,133 (4) 135,427
Discontinued
operations -
noncurrent assets -- 1,770 (415) (3) -- 1,355
----------- ----------- ----------- ----------- -----------
Total Assets $ 1,029,841 $ 653,472 $ (503,976) $ 1,213,030 $ 2,392,367
=========== =========== =========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current maturities of
long-term debt $ 102,918 $ 25,972 $ (25,000) (1) $ (87,692) (1) $ 16,198
Accounts payable 90,951 27,109 -- -- 118,060
Payable to related
parties 5,952 -- -- -- 5,952
Loans payable to
parent corporation 52,840 -- -- -- 52,840
Accrued liabilities 101,382 32,847 (20,157) (3)(5) (7,338) (5) 106,734
Product warranty
claims 9,000 -- 4,500 (5) -- 13,500
Discontinued
operations -
current liabilities -- 560 371 (3) -- 931
----------- ----------- ----------- ----------- -----------
Total Current
Liabilities 363,043 86,488 (40,286) (95,030) 314,215
Long-term debt less
current maturities 484,406 176,246 (170,000) (1) 1,315,256 (1) 1,805,908
----------- ----------- ----------- ----------- -----------
Product warranty
claims 17,972 -- 9,424 (5) -- 27,396
----------- ----------- ----------- ----------- -----------
Deferred income tax
liabilities 39,551 51,024 45,216 (3) -- 135,791
----------- ----------- ----------- ----------- -----------
Other liabilities 62,664 -- 34 (6) -- 62,698
----------- ----------- ----------- ----------- -----------
Stockholders' Equity (Deficit):
Series A Cumulative
Redeemable Convertible
Preferred Stock -- -- -- -- --
Class A Common Stock 1 -- -- -- 1
Class B Common Stock -- -- -- -- --
Common Stock -- 20,621 (20,621) (7) -- --
Paid-in capital -- 81,777 (81,777) (7) -- --
Loans receivable from
parent corporation (56,031) -- -- -- (56,031)
Retained earnings 118,201 237,373 (246,023) (7)(8) (7,196) (8) 102,355
Less - Treasury Stock -- (57) 57 (7) -- --
Accumulated other
comprehensive income 34 -- -- -- 34
----------- ----------- ----------- ----------- -----------
Total Stockholders'
Equity (Deficit) 62,205 339,714 (348,364) (7,196) 46,359
----------- ----------- ----------- ----------- -----------
Total Liabilities and
Stockholders'
Equity (Deficit) $ 1,029,841 $ 653,472 $ (503,976) $ 1,213,030 $ 2,392,367
=========== =========== =========== =========== ===========
2
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(1) Represents the sources and uses of funds from the Refinancing Transactions:
$325 million Junior Lien Term Loan Facility (the "Junior Lien Term Loan") $ 325,000
$975 million Term Loan Facility (the "Term Loan") 975,000
Borrowings under the new $600 million Senior Secured Revolving Credit Facility 234,967
Repurchase of a portion of the BMCA 8% Senior Notes due 2008 (149,961)
Repayment of amounts outstanding under the then outstanding BMCA Senior
Secured Revolving Credit Facility (60,000)
Reclass of $9,750 Term Loan debt from long-term debt to current
portion of long-term debt (9,750)
-----------
Increase in long-term debt related to Refinancing Pro Forma Adjustments 1,315,256
-----------
Reclass of $9,750 of Term Loan debt from long-term debt to current
portion of long-term debt 9,750
Repurchase of a portion of the BMCA 8% Senior Notes due 2007 (97,442)
-----------
Decrease in current portion of long-term debt related to Refinancing
Pro Forma Adjustments (87,692)
-----------
Increase in total debt related to Refinancing Pro Forma Adjustments 1,227,564
Repayment of ElkCorp then outstanding current portion senior notes (25,000)
Repayment of ElkCorp then outstanding long-term senior notes (170,000)
-----------
Increase in total debt 1,032,564
Purchase of outstanding ElkCorp shares, net of differential on
BMCA beneficially owned shares (974,300)
Elk change of control payment to escrow (32,574)
Elk senior notes make whole premium (13,400)
Liquidation of ElkCorp short-term investments 27,200
Cash paid for interest accrued on ElkCorp debt (a) (1,506)
Cash paid for interest accrued on repurchased portion of BMCA 8% Senior
Notes due 2007 and 2008 (2,804)
Estimated deferred financing fees related to the Junior Lien Term Loan, the
Term Loan and the new Senior Secured Revolving Credit Facility (33,674)
Cash paid for tender premium related to repurchase of a portion of
BMCA 8% Senior Notes due 2007 and 2008 (8,189)
-----------
Net decrease to cash and cash equivalents $ (6,683)
===========
(a) Consists of ElkCorp then outstanding senior notes.
(2) Represents the adjustment to the value of the property, plant and
equipment of ElkCorp to fair market value. $ 119,513
===========
(3) Represents adjustments to Goodwill as follows:
Purchase of outstanding ElkCorp shares, net of differential on BMCA
beneficially owned shares $ 974,300
Acquisition and repayment of ElkCorp debt 195,000
Less net assets acquired (a) (603,640)
-----------
Pro Forma Acquisition Adjustments for Goodwill $ 565,660
===========
3
(a) Net assets acquired of ElkCorp:
Total Assets less total liabilities, excluding ElkCorp debt paid at
closing $ 534,714
Pro Forma Acquisition Adjustment to property, plant and equipment 119,513
Pro Forma Acquisition Adjustment to write-down ElkCorp inventory (5,785)
Pro Forma Acquisition Adjustment to write-up ElkCorp discontinued
operation liability (371)
Pro Forma Acquisition Adjustment to write-up ElkCorp accrued
liabilities (723)
Pro Forma Acquisition Adjustment to reflect gross up in ElkCorp
deferred tax assets 1,923
Pro Forma Acquisition Adjustment to reflect gross up in ElkCorp
deferred tax liabilities (45,216)
Pro Forma Acquisition Adjustment to write-off ElkCorp discontinued
operation asset (415)
-----------
Net assets acquired of ElkCorp $ 603,640
===========
(4) Represents deferred financing fees related to the refinancing transactions
and write-offs of unamortized deferred financing fees and discounts
related to the repurchased portion of the 8% Senior Notes due 2007 and 8%
Senior Notes due 2008, and the repayment of the then outstanding Senior
Secured Revolving Credit Facilities and the ElkCorp senior notes.
Deferred financing fees on the Junior Lien Term Loan, the Term Loan and the
new Senior Secured Revolving Credit Facility $ 33,674
Write-off of deferred financing fees on repurchased portion of BMCA 8%
Senior Notes due 2007 (134)
Write-off of discount on repurchased portion of BMCA 8% Senior Notes due 2007 (59)
Write-off deferred financing fees on then outstanding BMCA Senior Secured
Revolving Credit Facilities (2,573)
Write-off of deferred financing fees on repurchased portion of BMCA 8%
Senior Notes due 2008 (619)
Write-off of discount on repurchased portion of BMCA 8% Senior Notes due 2008 (156)
-----------
Total increase to other noncurrent assets related to Refinancing Pro Forma
Adjustments 30,133
ElkCorp change of control payment to escrow 32,574
Represents interest related to ElkCorp change of control escrow 34
Write-off of deferred financing fees on the then outstanding ElkCorp senior
notes (700)
-----------
Total increase to other noncurrent assets related to Pro Forma Acquisition
Adjustments 31,908
-----------
Net increase to other non-current assets $ 62,041
===========
(5) Represents cash paid for accrued interest related to the repurchased
portion of BMCA 8% Senior Notes due 2007, the BMCA 8% Senior Notes due
2008 and the repayment of the ElkCorp then outstanding senior notes, and
the tax impact of the write-off of the related deferred financing fees and
discounts to such debt. See Notes (4) (8).
Cash paid for interest accrued on the repurchased portion of BMCA 8% Senior
Notes due 2007 $ (1,650)
Cash paid for interest accrued on the repurchased portion of BMCA 8% Senior
Notes due 2008 (1,154)
Tax impact of the write-off of the BMCA deferred financing fees, discounts
and the cash paid for tender premium (4,534)
-----------
Total decrease to accrued liabilities related to Refinancing Pro Forma
Adjustments (7,338)
Cash paid for interest accrued on the then outstanding ElkCorp senior notes (1,506)
Represents the reclass of $13,924 from ElkCorp accrued liabilities, which
includes $4,500 to the current portion of product warranty claims and
$9,424 to the long-term portion of product warranty claims (13,924)
Represents the write-up of ElkCorp accrued liabilities of $723. 723
Tax impact of the cash paid for ElkCorp senior notes make whole premium and
the write-off of deferred fees related to such debt (5,450)
-----------
Total decrease to accrued liabilities related to Pro Forma Acquisition
Adjustments (20,157)
----------
Net decrease to accrued liabilities $ (27,495)
===========
(6) Represents interest related to ElkCorp change of control escrow 34
-----------
Net increase to other liabilities $ 34
===========
4
(7) Eliminate ElkCorp's Common Stock, Paid-in-Capital, Retained Earnings and
Treasury Stock as follows:
Common Stock $ (20,621)
Paid-in capital (81,777)
Retained Earnings (237,373)
Treasury Stock 57
(8) Reflects the tax impact of the write-off of BMCA deferred financing fees
and discounts, ElkCorp deferred financing fees and the impact on retained
earnings related to such debt:
BMCA
- ----
Write-off of deferred financing fees on the repurchased portion of BMCA 8%
Senior Notes due 2007 $ (134)
Write-off of discount on the repurchased portion of BMCA 8% Senior Notes
due 2007 (59)
Write-off of deferred financing fees on the then outstanding BMCA Senior
Secured Revolving Credit Facilities (2,573)
Write-off of deferred financing fees on repurchased portion of BMCA
8% Senior Notes due 2008 (619)
Write-off of discount on the repurchased portion of BMCA 8% Senior Notes due
2008 (156)
Cash paid for tender premium related to BMCA 8% Senior Notes due 2007 and 2008 (8,189)
-----------
Total (11,730)
Tax effect @ 38.65%, See Note (5) above 4,534
-----------
Total decrease to retained earnings related to Refinancing Pro Forma
Adjustments $ (7,196)
===========
ELK
- ---
Write-off of the deferred financing fees on the then outstanding ElkCorp senior
notes (700)
Cash paid for make whole premium related to then outstanding ElkCorp
senior notes (13,400)
-----------
Total (14,100)
Tax effect @ 38.65%, See Note (5) above 5,450
-----------
Total decrease to retained earnings related to Pro Forma Acquisition
Adjustments $ (8,650)
===========
5
BUILDING MATERIALS CORPORATION OF AMERICA
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 2006
(DOLLARS IN THOUSANDS)
PRO FORMA REFINANCING
ACQUISITION PRO FORMA PRO FORMA
BMCA ELKCORP ADJUSTMENTS ADJUSTMENTS BMCA
----------- ----------- ----------- ----------- -----------
Net sales $ 1,969,170 $ 896,208 $ -- $ -- $ 2,865,378
----------- ----------- ----------- ----------- -----------
Costs and expenses, net:
Cost of products sold 1,396,376 737,739 2,542 (1) -- 2,136,657
Selling, general and
administrative 447,655 88,000 -- -- 535,655
Merger related expenses -- 3,000 -- -- 3,000
Other (income) expense, net 282 (85) -- -- 197
----------- ----------- ----------- ----------- -----------
Total costs and expenses 1,844,313 828,654 2,542 -- 2,675,509
----------- ----------- ----------- ----------- -----------
Income (loss) before interest
expense and income taxes 124,857 67,554 (2,542) -- 189,869
Interest income (expense), net (61,509) (12,696) 13,329 (2) (103,635) (2)(3) (164,511)
----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes 63,348 54,858 10,787 (103,635) 25,358
Income tax (expense) benefit (24,598) (19,239) (4,169) 38,205 (9,801) (4)
----------- ----------- ----------- ----------- -----------
Net income (loss) $ 38,750 $ 35,619 $ 6,618 $ (65,430) $ 15,557
=========== =========== =========== =========== ===========
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(1) Reflects adjustments to depreciation expense for the purchase accounting
step-up to fair value for property, plant and equipment acquired. Buildings
are depreciated over 40 years less the average life to date, machinery and
equipment are depreciated over 30 years less the average life to date and
land improvements are depreciated over 40 years less the average life to
date.
Pro Forma Acquisition depreciation expense $ 29,054
Less: ElkCorp LTM historical depreciation expense (26,512)
------------
PRO FORMA ACQUISITION ADJUSTMENT DEPRECIATION EXPENSE $ 2,542
============
(2) Reflects adjustments to give effect to the interest expense and related
deferred financing fees on the Junior Lien Term Loan, the Term Loan and the
new Senior Secured Revolving Credit Facility. These adjustments are offset
by the reduction in interest expense related to the repurchased portion of
the BMCA 8% Senior Notes due 2007 and the BMCA 8% Senior Notes due 2008,
the then outstanding BMCA Senior Secured Revolving Credit Facilities and
the then outstanding current and long-term debt of ElkCorp.
REFINANCING PRO FORMA ADJUSTMENTS RELATED TO INTEREST EXPENSE:
- --------------------------------------------------------------
Interest expense on the repurchased portion of BMCA 2007 8% Senior Notes $ 7,800
Interest expense on the repurchased portion of BMCA 2008 8% Senior Notes 12,009
Interest expense on then outstanding BMCA Senior Secured Revolving
Credit Facilities 12,079
Interest expense on the Junior Lien Term Loan (36,563)
Interest expense on the Term Loan (80,437)
Interest expense on additional borrowings under the new Senior Secured
Revolving Credit Facility (16,448)
Amortization of deferred financing fees related to the repurchased portion of
BMCA 2007 8% Senior Notes 165
Amortization of deferred financing fees related to the repurchased portion of
BMCA 2008 8% Senior Notes 325
Amortization of deferred financing fees on then outstanding BMCA Senior Secured
Revolving Credit Facilities 2,441
Amortization of the discounts related to the repurchased portion of BMCA
2007 8% Senior Notes 73
Amortization of the discounts related to the repurchased portion of BMCA
2008 8% Senior Notes 81
Amortization of deferred financing fees related to the Term Loan (2,624)
Amortization of deferred financing fees related to the Junior Lien Term Loan (1,051)
Amortization of deferred financing fees related to the new Senior Secured
Revolving Credit Facility (1,485)
------------
TOTAL INCREASE TO REFINANCING PRO FORMA ADJUSTMENT INTEREST EXPENSE $ (103,635)
============
PRO FORMA ACQUISITION ADJUSTMENTS RELATED TO INTEREST EXPENSE:
- --------------------------------------------------------------
Interest expense on ElkCorp July 2007 4.69% Notes $ 1,558
Interest expense on ElkCorp June 2009 6.99% Notes 4,194
Interest expense on ElkCorp June 2012 7.49% Notes 4,437
Interest expense on ElkCorp November 2014 6.28% Notes 3,140
------------
TOTAL DECREASE TO PRO FORMA ACQUISITION ADJUSTMENT INTEREST EXPENSE $ 13,329
============
7
(3) Interest rates on the Junior Lien Term Loan and the Term Loan are at
variable rates. The Company has utilized an expected rate of the Eurodollar
rate (LIBOR) (5.50%) plus a specified fixed rate of (5.75%) as of December
31, 2006 for purposes of estimating our interest expense on the Junior Lien
Term Loan throughout the duration of the loan. The Company has utilized an
expected rate of (LIBOR) (5.50%) plus a specified fixed rate of (2.75%) as
of December 31, 2006 for purposes of estimating its interest expense on the
Term Loan throughout the duration of the loan. A change in these rates due
to changes in the prevailing market rates would result in a plus or minus
adjustment to interest expense of approximately $3.0 million relating to
the Junior Lien Term Loan and $8.3 million relating to the Term Loan.
(4) The statutory tax rate for the pro forma combined company is 38.65%.
8
BUILDING MATERIALS CORPORATION OF AMERICA
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED APRIL 1, 2007
(DOLLARS IN THOUSANDS)
PRO FORMA REFINANCING
ACQUISITION PRO FORMA PRO FORMA
BMCA ELKCORP ADJUSTMENTS ADJUSTMENTS BMCA
------------ ------------ ------------ ------------ ------------
Net sales $ 529,990 $ 73,728 $ -- $ -- $ 603,718
------------ ------------ ------------ ------------ ------------
Costs and expenses, net:
Cost of products sold 393,294 75,562 391 (1) -- 469,247
Selling, general and
administrative 110,803 14,255 -- -- 125,058
Other expense, net 419 13,635 -- -- 14,054
------------ ------------ ------------ ------------ ------------
Total costs and expenses 504,516 103,452 391 -- 608,359
------------ ------------ ------------ ------------ ------------
Income (loss) before interest
expense and income taxes 25,474 (29,724) (391) -- (4,641)
Interest income (expense), net (49,278) (1,977) 3,133 (2) (13,363)(2) (61,485)
------------ ------------ ------------ ------------ ------------
Income (loss) before income
taxes (23,804) (31,701) 2,742 (13,363) (66,126)
Income tax (expense) benefit 8,522 11,617 (1,060) 6,479 25,558 (3)
------------ ------------ ------------ ------------ ------------
Net income (loss) $ (15,282) $ (20,084) $ 1,682 $ (6,884) $ (40,568)
============ ============ ============ ============ ============
9
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(1) Reflects adjustments to depreciation expense for the purchase accounting
step-up to fair value for property, plant and equipment acquired. Buildings
are depreciated over 40 years less the average life to date, machinery and
equipment are depreciated over 20 years less the average life to date and
land improvements are depreciated over 25 years less the average life to
date.
Twelve Months Pro Forma Acquisition depreciation expense $ 29,054
Less: ElkCorp LTM historical depreciation expense (26,512)
------------
TWELVE MONTHS PRO FORMA ACQUISITION ADJUSTMENT DEPRECIATION EXPENSE $ 2,542
============
FIRST QUARTER IMPACT OF PRO FORMA ACQUISITION ADJUSTMENT DEPRECIATION EXPENSE $ 391
============
(2) Reflects adjustments to give effect to the interest expense and related
deferred financing fees on the Junior Lien Term Loan, the Term Loan and the
new Senior Secured Revolving Credit Facility. These adjustments are offset
by the reduction in interest expense related to the repurchased portion of
the BMCA 8% Senior Notes due 2007 and the BMCA 8% Senior Notes due 2008,
the then outstanding BMCA Senior Secured Revolving Credit Facilities and
the then outstanding current and long-term debt of ElkCorp.
REFINANCING PRO FORMA ADJUSTMENTS RELATED TO INTEREST EXPENSE:
- --------------------------------------------------------------
Interest expense on the repurchased portion of BMCA 2007 8% Senior Notes $ 1,200
Interest expense on the repurchased portion of BMCA 2008 8% Senior Notes 1,848
Interest expense on then outstanding BMCA Senior Secured Revolving
Credit Facilities 1,385
Interest expense on the Junior Lien Term Loan (5,626)
Interest expense on the Term Loan (12,377)
Interest expense on additional borrowings under the new Senior Secured
Revolving Credit Facility (2,530)
Amortization of deferred financing fees related to the repurchased portion of
BMCA 2007 8% Senior Notes 132
Amortization of deferred financing fees related to the repurchased portion of
BMCA 2008 8% Senior Notes 602
Amortization of deferred financing fees on then outstanding BMCA Senior Secured
Revolving Credit Facilities 2,587
Amortization of the discounts related to the repurchased portion of BMCA
2007 8% Senior Notes 58
Amortization of the discounts related to the repurchased portion of BMCA
2008 8% Senior Notes 152
Amortization of deferred financing fees related to the Term Loan (404)
Amortization of deferred financing fees related to the Junior Lien Term Loan (162)
Amortization of deferred financing fees related to the new Senior Secured
Revolving Credit Facility (228)
------------
TOTAL INCREASE TO REFINANCING PRO FORMA ADJUSTMENT INTEREST EXPENSE $ (13,363)
============
10
PRO FORMA ACQUISITION ADJUSTMENTS RELATED TO INTEREST EXPENSE:
Interest expense on ElkCorp July 2007 4.69% Notes $ 355
Interest expense on ElkCorp June 2009 6.99% Notes 1,002
Interest expense on ElkCorp June 2012 7.49% Notes 1,026
Interest expense on ElkCorp November 2014 6.28% Notes 750
------------
TOTAL DECREASE TO PRO FORMA ACQUISITION ADJUSTMENT INTEREST EXPENSE $ 3,133
============
(3) The statutory tax rate for the pro forma combined company is 38.65%.
11
BUILDING MATERIALS CORPORATION OF AMERICA
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
THREE MONTHS ENDED APRIL 2, 2006
(DOLLARS IN THOUSANDS)
PRO FORMA REFINANCING
ACQUISITION PRO FORMA PRO FORMA
BMCA ELKCORP ADJUSTMENTS ADJUSTMENTS BMCA
----------- ----------- ----------- ----------- -----------
Net sales $ 504,975 $ 243,194 $ -- $ -- $ 748,169
----------- ----------- ----------- ----------- -----------
Costs and expenses, net:
Cost of products sold 359,480 200,917 636 (1) -- 561,033
Selling, general and
administrative 114,598 23,476 -- -- 138,074
Other income, net (326) -- -- -- (326)
----------- ----------- ----------- ----------- -----------
Total costs and expenses 473,752 224,393 636 -- 698,781
----------- ----------- ----------- ----------- -----------
Income (loss) before interest
expense and income taxes 31,223 18,801 (636) -- 49,388
Interest income (expense), net (14,526) (2,700) 3,317 (2) (26,989) (2) (40,898)
----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes 16,697 16,101 2,681 (26,989) 8,490
Income tax (expense) benefit (6,345) (5,955) (1,036) 10,055 (3,281) (3)
----------- ----------- ----------- ----------- -----------
Net income (loss) $ 10,352 $ 10,146 $ 1,645 $ (16,934) $ 5,209
=========== =========== =========== =========== ===========
12
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(1) Reflects adjustments to depreciation expense for the purchase accounting
step-up to fair value for property, plant and equipment acquired. Buildings
are depreciated over 40 years less the average life to date, machinery and
equipment are depreciated over 20 years less the average life to date and
land improvements are depreciated over 25 years less the average life to
date.
Twelve Months Pro Forma Acquisition depreciation expense $ 29,054
Less: ElkCorp LTM historical depreciation expense (26,512)
------------
TWELVE MONTHS PRO FORMA ACQUISITION ADJUSTMENT DEPRECIATION EXPENSE $ 2,542
============
FIRST QUARTER IMPACT OF PRO FORMA ACQUISITION ADJUSTMENT DEPRECIATION EXPENSE $ 636
============
(2) Reflects adjustments to give effect to the interest expense and related
deferred financing fees on the Junior Lien Term Loan, the Term Loan and the
new Senior Secured Revolving Credit Facility. These adjustments are offset
by the reduction in interest expense related to the repurchased portion of
the BMCA 8% Senior Notes due 2007 and the BMCA 8% Senior Notes due 2008,
the then outstanding BMCA Senior Secured Revolving Credit Facilities and
the then outstanding current and long-term debt of ElkCorp.
REFINANCING PRO FORMA ADJUSTMENTS RELATED TO INTEREST EXPENSE:
- --------------------------------------------------------------
Interest expense on the repurchased portion of BMCA 2007 8% Senior Notes $ 1,950
Interest expense on the repurchased portion of BMCA 2008 8% Senior Notes 3,002
Interest expense on then outstanding BMCA Senior Secured Revolving
Credit Facilities 1,779
Interest expense on Junior Lien Term Loan (9,142)
Interest expense on the Term Loan (20,109)
Interest expense on additional borrowings under the new Senior Secured
Revolving Credit Facility (4,112)
Amortization of deferred financing fees related to the repurchased portion of
BMCA 2007 8% Senior Notes 41
Amortization of deferred financing fees related to the repurchased portion of
BMCA 2008 8% Senior Notes 81
Amortization of deferred financing fees on then outstanding BMCA Senior Secured
Revolving Credit Facilities 772
Amortization of the discounts related to the repurchased portion of BMCA
2007 8% Senior Notes 19
Amortization of the discounts related to the repurchased portion of BMCA
2008 8% Senior Notes 20
Amortization of deferred financing fees related to the Term Loan (656)
Amortization of deferred financing fees related to the Junior Lien Term Loan (263)
Amortization of deferred financing fees related to the new Senior Secured
Revolving Credit Facility (371)
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TOTAL INCREASE TO REFINANCING PRO FORMA ADJUSTMENT INTEREST EXPENSE $ (26,989)
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PRO FORMA ACQUISITION ADJUSTMENTS RELATED TO INTEREST EXPENSE:
- --------------------------------------------------------------
Interest expense on ElkCorp July 2007 4.69% Notes $ 384
Interest expense on ElkCorp June 2009 6.99% Notes 1,048
Interest expense on ElkCorp June 2012 7.49% Notes 1,100
Interest expense on ElkCorp November 2014 6.28% Notes 785
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TOTAL DECREASE TO PRO FORMA ACQUISITION ADJUSTMENT INTEREST EXPENSE $ 3,317
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(3) The statutory tax rate for the pro forma combined company is 38.65%.
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