EXHIBIT 99.1
INDEX TO UNAUDITED PRO FORMA FINANCIAL DATA
PAGE
----
Basis of Presentation .................................................................................... P-2
Pro Forma Consolidated Statement of Operations for the years ended:
December 31, 1999 ..................................................................................... P-3
December 31, 2000 ..................................................................................... P-4
Notes to Unaudited Pro Forma Financial Data .............................................................. P-5
Computation of Pro Forma Earnings to Fixed Charges Ratios ................................................ P-12
P-1
UNAUDITED PRO FORMA FINANCIAL DATA
BASIS OF PRESENTATION
The following unaudited pro forma financial data for DeCrane Aircraft
Holdings, Inc. is based on our historical consolidated financial statements,
adjusted to reflect our acquisitions of Carl F. Booth & Co. and ERDA, Inc.
during the year ended December 31, 2000, as required by Securities and Exchange
Commission rules. In addition, the pro forma financial data is also adjusted to
reflect three other less significant acquisitions we completed during 2000.
Supplementally, we have also provided unaudited pro forma data for the
year ended December 31, 1999. The 1999 pro forma data is adjusted to reflect our
2000 acquisitions and our 1999 PATS, Precision Pattern, Custom Woodwork, PCI
NewCo., International Custom Interiors and Infinity acquisitions.
Our 1999 and 2000 acquisitions are described in the notes accompanying
our financial statements. Unaudited pro forma consolidated statements of
operations are presented for each of the years in the two-year period ended
December 31, 2000. The statements reflect our acquisitions as if they had
occurred as of January 1, 1999. All of our 1999 and 2000 acquisitions had
occurred by December 31, 2000 and are therefore reflected in our historical
balance sheet as of that date.
The pro forma adjustments are based upon available information and
assumptions management believes are reasonable under the circumstances. The
unaudited pro forma financial data and accompanying notes should be read in
conjunction with our historical audited financial statements and related notes
and the historical audited financial statements and related notes of the
companies we have acquired and filed with the Securities and Exchange Commission
on Forms 10-K and 8-K. The pro forma financial data does not purport to
represent what our actual results of operations or actual financial position
would have been if the transactions described above in fact occurred on such
dates or to project our results of operations or financial position for any
future period or date.
P-2
UNAUDITED PRO FORMA FINANCIAL DATA
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
HISTORICAL RESULTS
------------------------
DECRANE COMPANIES ACQUISITION
AIRCRAFT (1) ACQUIRED (2) ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
Revenues .............................................. $ 244,048 $ 94,384 $ (2,890) (3) $ 335,542
Cost of sales ......................................... 165,871 66,091 (2,890) (4) 229,072
----------- ----------- ----------- -----------
Gross profit ....................................... 78,177 28,293 -- 106,470
Selling, general and administrative expenses .......... 40,157 11,692 (3,769) (5) 48,080
Amortization of intangible assets ..................... 13,073 363 4,404 (6) 17,840
----------- ----------- ----------- -----------
Operating income ................................... 24,947 16,238 (635) 40,550
Interest expense ...................................... 27,918 1,084 10,519 (7) 39,521
Other expenses (income), net........................... 447 (54) -- 393
----------- ----------- ----------- -----------
Income (loss) before provision for income taxes ....... (3,418) 15,208 (11,154) 636
Provision for income taxes (benefit) .................. 952 (457) 2,162 (8) 2,657
----------- ----------- ----------- -----------
Net income (loss) ..................................... (4,370) 15,665 (13,316) (2,021)
Accrued preferred stock dividends and
redemption value accretion ......................... -- -- (4,714) (9) (4,714)
----------- ----------- ----------- -----------
Net income (loss) applicable to
common stockholder ................................. $ (4,370) $ 15,665 $ (18,030) $ (6,735)
=========== =========== =========== ===========
See accompanying Notes to Unaudited Pro Forma Financial Data.
P-3
UNAUDITED PRO FORMA FINANCIAL DATA
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2000
HISTORICAL RESULTS
------------------------
DECRANE COMPANIES ACQUISITION
AIRCRAFT (1) ACQUIRED (2) ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
Revenues .............................................. $ 347,379 $ 25,512 $ (1,307) (3) $ 371,584
Cost of sales ......................................... 232,048 17,388 (1,936) (4) 247,500
----------- ----------- ----------- -----------
Gross profit .......................................... 115,331 8,124 629 124,084
Selling, general and administrative expenses .......... 45,394 4,994 (2,659) (5) 47,729
Amortization of intangible assets ..................... 17,948 171 1,237 (6) 19,356
----------- ----------- ----------- -----------
Operating income ...................................... 51,989 2,959 2,051 56,999
Interest expense ...................................... 41,623 608 617 (7) 42,848
Other expenses, net ................................... 482 -- -- 482
----------- ----------- ----------- -----------
Income before provision for income taxes .............. 9,884 2,351 1,434 13,669
Provision for income taxes (benefit) .................. 6,282 (308) 2,338 (8) 8,312
----------- ----------- ----------- -----------
Net income ............................................ 3,602 2,659 (904) 5,357
Accrued preferred stock dividends and
redemption value accretion ......................... (2,274) -- (3,162) (9) (5,436)
----------- ----------- ----------- -----------
Net income (loss) applicable to
common stockholder ................................. $ 1,328 $ 2,659 $ (4,066) $ (79)
=========== =========== =========== ===========
See accompanying Notes to Unaudited Pro Forma Financial Data.
P-4
UNAUDITED PRO FORMA FINANCIAL DATA
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA
(1) Reflects our historical consolidated results of operations for the years
ended December 31, 1999 and 2000 derived from our historical audited
financial statements.
(2) Reflects the historical results of operations of companies we acquired
that are not included in our historical results. The results of
operations for the companies we acquired are for the periods from the
beginning of the period presented to the dates indicated below. For
periods subsequent to those dates, their respective results of operations
are included in our historical results.
COMPANY ACQUIRED REFLECTS PRO FORMA HISTORICAL RESULTS THROUGH
---------------------------------------------------- ----------------------------------------------------
1999 ACQUISITIONS
PATS January 21, 1999
Precision Pattern April 22, 1999
Custom Woodwork & Plastics August 4, 1999
PCI NewCo October 5, 1999
International Custom Interiors October 7, 1999
Infinity December 16, 1999
2000 ACQUISITION
Carl Booth May 1, 2000
ERDA June 30, 2000
Tables summarizing the acquired companies' results of operations for the
years ended December 31, 1999 and 2000 appear below.
TOTAL 2000 ACQUISITIONS
1999 CARL --------------------------------------
YEAR ENDED DECEMBER 31, 1999 ACQUISITIONS BOOTH ERDA (a) OTHERS (b) TOTAL
---------------------------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
Revenues ................................. $ 52,834 $ 13,757 $ 21,476 $ 6,317 $ 94,384
Cost of sales ............................ 36,440 10,163 16,783 2,705 66,091
----------- ----------- ----------- ----------- -----------
Gross profit ............................. 16,394 3,594 4,693 3,612 28,293
Selling, general and administrative
Expenses ............................... 5,324 1,237 2,270 2,861 11,692
Amortization of intangible assets ........ 124 -- 239 -- 363
----------- ----------- ----------- ----------- -----------
Operating income ......................... 10,946 2,357 2,184 751 16,238
Interest expense (income) ................ 152 (65) 997 -- 1,084
Other income, net ........................ (29) (25) -- -- (54)
----------- ----------- ----------- ----------- -----------
Income before provision for
income taxes ........................... 10,823 2,447 1,187 751 15,208
Provision for income taxes (benefit) ..... (827) -- 389 (19) (457)
----------- ----------- ----------- ----------- -----------
Net income ............................... $ 11,650 $ 2,447 $ 798 $ 770 $ 15,665
=========== =========== =========== =========== ===========
- --------------------------
(a) Excludes the operating results of ERDA's majority owned subsidiary
not acquired.
(b) Reflects our acquisition of Coltech and two product lines during
2000.
P-5
UNAUDITED PRO FORMA FINANCIAL DATA
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA (CONTINUED)
1999 ACQUISITIONS
---------------------------------------------------------------------------
CUSTOM INT'L
YEAR ENDED DECEMBER 31, 1999 PRECISION WOOD PCI CUSTOM
(CONTINUED) PATS PATTERN WORK NEWCO. INTERIORS INFINITY TOTAL
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
Revenues ...................... $ 451 $ 12,757 $ 4,972 $ 6,692 $ 4,753 $ 23,209 $ 52,834
Cost of sales ................. 1,229 8,435 2,203 4,747 3,057 16,769 36,440
--------- --------- --------- --------- --------- --------- ---------
Gross profit (loss) ........... (778) 4,322 2,769 1,945 1,696 6,440 16,394
Selling, general and
administrative expenses ..... 611 944 262 520 492 2,495 5,324
Amortization of intangible
assets ...................... -- 124 -- -- -- -- 124
--------- --------- --------- --------- --------- --------- ---------
Operating income (loss) ....... (1,389) 3,254 2,507 1,425 1,204 3,945 10,946
Interest expense (income) ..... 23 127 (11) (2) (19) 34 152
Other expenses (income), net .. 11 (33) -- (3) (4) -- (29)
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before
provision for income
taxes ....................... (1,423) 3,160 2,518 1,430 1,227 3,911 10,823
Provision for income
taxes (benefit) ............. (1,244) -- -- -- 417 -- (827)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) ............. $ (179) $ 3,160 $ 2,518 $ 1,430 $ 810 $ 3,911 $ 11,650
========= ========= ========= ========= ========= ========= =========
2000 ACQUISITIONS
---------------------------------------------------
CARL BOOTH ERDA (a) OTHERS (b) TOTAL
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
Revenues .............................................. $ 5,983 $ 14,354 $ 5,175 $ 25,512
Cost of sale .......................................... 3,110 11,984 2,294 17,388
----------- ----------- ----------- -----------
Gross profit .......................................... 2,873 2,370 2,881 8,124
Selling, general and administrative expenses .......... 588 2,499 1,907 4,994
Amortization of intangible assets ..................... -- 171 -- 171
----------- ----------- ----------- -----------
Operating income (loss) ............................... 2,285 (300) 974 2,959
Interest expense (income) ............................. (33) 641 -- 608
----------- ----------- ----------- -----------
Income (loss) before provision for income taxes ....... 2,318 (941) 974 2,351
Provision for income taxes (benefit) .................. -- (308) -- (308)
----------- ----------- ----------- -----------
Net income (loss) ..................................... $ 2,318 $ (633) $ 974 $ 2,659
=========== =========== =========== ===========
- ------------------------
(a) Excludes the operating results of ERDA's majority owned subsidiary
not acquired.
(b) Reflects our acquisition of Coltech and two product lines during
2000.
P-6
UNAUDITED PRO FORMA FINANCIAL DATA
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA (CONTINUED)
(3) Reflects the elimination of intercompany sales.
(4) Reflects a net decrease in cost of sales attributable to the follow:
YEAR ENDED DECEMBER 31,
-------------------------
1999 2000
----------- -----------
(DOLLARS IN THOUSANDS)
Elimination of intercompany sales ............................................... $ (2,890) $ (1,307)
Reorganization of manufacturing process (a)...................................... -- (529)
Reversal of intercompany profit in inventory (b) ................................ -- (100)
----------- -----------
Decrease in cost of sales.................................................... $ (2,890) $ (1,936)
=========== ===========
- ------------------------
(a) Reflects costs incurred, subsequent to the acquisition date, for a
reorganization of the manufacturing process at ERDA. We planned for
the reorganization prior to acquisition and began implementing the
plan immediately after acquisition. The reorganization was completed
during 2000.
(b) Eliminated in our historical results.
(5) Reflects the net decrease in selling, general and administrative expenses
attributable to the following:
YEAR ENDED DECEMBER 31,
-------------------------
1999 2000
----------- -----------
(DOLLARS IN THOUSANDS)
Bonuses and employment contract termination expenses (a) ........................ $ (3,031) $ (1,708)
Acquisition related expenses (b) ................................................ (716) (951)
Other, net (c) .................................................................. (22) --
----------- -----------
Decrease in selling, general and administrative expenses ...................... $ (3,769) $ (2,659)
=========== ===========
- ----------------------------
(a) Reflects a reduction in expenses attributable to employment contract
termination expenses and nonrecurring bonuses awarded prior to, and
in anticipation of, our acquisitions of PATS, Infinity and Coltech.
(b) Reflects a reduction for non-capitalizable acquisition expenses
incurred by PATS, Infinity and ERDA on behalf of their stockholders
related to their respective acquisitions by us.
(c) Reflects cost savings attributable to employee benefit plans
implemented at the companies we acquired.
P-7
UNAUDITED PRO FORMA FINANCIAL DATA
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA (CONTINUED)
(6) Reflects the net increase in amortization expense pertaining to the
amortization of goodwill and other intangible assets related to the
companies we have acquired as follows:
INTANGIBLE ESTIMATED YEAR ENDED DECEMBER 31,
ASSET USEFUL -------------------------
AMOUNT LIFE (a) 1999 2000
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
Elimination of predecessor basis
amortization (b)..................................... $ (363) $ (171)
Amortization attributable to companies acquired (c):
Goodwill ............................................ $ 152,543 30 3,031 675
FAA certifications .................................. 15,425 15 906 448
Customer contracts .................................. 8,390 7 100 --
Engineering drawings ................................ 5,482 15 216 95
Assembled workforce ................................. 4,980 7 514 190
----------- -----------
Net increase in amortization expense .............. $ 4,404 $ 1,237
=========== ===========
- --------------------------
(a) Amortized on a straight-line basis over the respective estimated
useful lives.
(b) Reflects the elimination of amortization expense recorded by
Precision Pattern and ERDA for periods prior to their acquisition.
(c) Reflects adjustments for all of our 1999 and 2000 acquisitions from
the beginning of the period presented to their respective acquisition
dates; subsequent to those dates, amortization expense is included in
our historical results.
(7) Reflects the net increase in interest expense, including deferred
financing cost amortization and commitment fees, as a result of our 1999
and 2000 acquisitions as if they all had occurred on January 1, 1999.
The components of pro forma interest expense are summarized in a table on
the next page.
P-8
UNAUDITED PRO FORMA FINANCIAL DATA
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA (CONTINUED)
The components of pro forma interest expense are summarized in the table
below.
YEAR ENDED DECEMBER 31,
-------------------------
RATE OR TERM AMOUNT 1999 2000
-------------------------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
Senior credit facility (a):
Revolving credit facilities .......... LIBOR (b) + 2.75% (c) $ 84 $ 28
Term facilities:
Term A ............................. LIBOR (b) + 2.75% (d) 3,345 3,526
Term B ............................. LIBOR (b) + 3.5% (e) 11,930 13,458
Term D ............................. LIBOR (b) + 4.0% (f) 8,668 9,717
Senior subordinated notes .............. 12.00% $ 100,000 12,000 12,000
Customer advance ....................... 7.50% (g) 380 247
Other long-term obligations ............ 4.7% to 25.7% (h) 251 1,042
Deferred financing cost amortization:
Senior revolving credit facilities ... 6 years (i) 1,277 213 213
Senior term facilities:
Term A ............................. 6 years (j) 1,141 343 314
Term B ............................. 7 years (j) 4,211 679 672
Term D ............................. 6 years (j) 3,100 481 477
Senior subordinated notes ............ 10 years (j) 6,317 632 632
Commitment fees and expenses ........... 515 522
----------- -----------
Pro forma interest expense (k) ..... $ 39,521 $ 42,848
=========== ===========
- ----------------------------
(a) Reflects our senior credit facility as amended for all of our 1999
and 2000 acquisitions, as if all events had occurred on January 1,
1999.
(b) Calculations based on the historical LIBOR rates charged during the
respective periods. The weighted average historical LIBOR rates were
as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1999 2000
--------- --------
Revolving credit facilities .............................................. 5.374% 6.709%
Term A facility .......................................................... 5.365% 6.582%
Term B facility .......................................................... 5.369% 6.603%
Term D facility .......................................................... 5.396% 6.636%
(c) Reflects revolving credit facility borrowings of $5.8 million at
December 31, 1998 plus $2.7 million pro forma additional borrowings
as of January 1, 1999 for our 1999 and 2000 acquisitions. The pro
forma weighted average borrowings outstanding under the revolving
credit facilities were $1.0 million for the year ended December 31,
1999 and $296,000 for the year ended December 31, 2000.
(d) Reflects Term A facility borrowings of $34.5 million at December 31,
1998 plus $7.5 million pro forma additional borrowings as of January
1, 1999 for our Infinity and Carl Booth acquisitions, reduced by
quarterly principal payments of $500,000 on March 31, 1999, $531,000
on June 30 and September 30, 1999 and $1.1 million commencing
December 31, 1999. The pro forma weighted average borrowings
outstanding under the Term A facility were $41.2 million for the year
ended December 31, 1999 and $37.8 million for the year ended December
31, 2000.
P-9
UNAUDITED PRO FORMA FINANCIAL DATA
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA (CONTINUED)
(e) Reflects Term B facility borrowings of $44.9 million at December 31,
1998 plus $90.0 million pro forma additional borrowings as of January
1, 1999 for our PATS and Precision Pattern acquisition, reduced by
quarterly principal payments of $163,000 on March 31, 1999 and
$338,000 commencing June 30, 1999. The pro forma weighted average
borrowings outstanding under the Term B facility were $134.5 million
for the year ended December 31, 1999 and $133.2 million for the year
ended December 31, 2000.
(f) Reflects Term D facility pro forma additional borrowings of $92.5
million as of January 1, 1999 for our Infinity and Carl Booth
acquisitions and to repay then existing revolving credit facility
borrowings as of January 1, 1998, reduced by quarterly principal
payments of $100,000 on March 31, 1999 and $231,000 commencing June
30, 1999. The pro forma weighted average borrowings outstanding under
the Term D facility were $92.3 million for the year ended December
31, 1999 and $91.4 million for the year ended December 31, 2000.
(g) Reflects a $5.0 million customer advance related to our PATS
acquisition, pro forma as of January 1, 1999, reduced by principal
payments of $975,000 on November 30, 1999 and $1.2 million on May 31
and November 30, 2000. The pro forma weighted average advance
outstanding was $4.9 million for the year ended December 31, 1999 and
$3.2 million for the year ended December 31, 2000.
(h) Reflects historical interest expense related to capital lease
obligations and equipment term debt financing.
(i) Deferred financing costs are amortized on a straight-line basis over
the term of the agreement.
(j) Deferred financing costs are amortized using the effective interest
method.
(k) A 0.125% change in the interest rates charged on variable rate
borrowings would change interest expense and net income (loss) by:
YEAR ENDED DECEMBER 31,
-------------------------
1999 2000
----------- -----------
(DOLLARS IN THOUSANDS)
Interest expense......................................................... $ 341 $ 343
Net income (loss)........................................................ 207 208
(8) Represents an increase in the provision for income taxes as a result of
reflecting a pro forma provision for income taxes on the income of
Precision Pattern, Custom Woodwork, PCI NewCo, Infinity and Carl Booth
which were taxed as S Corporations or partnerships prior to their
acquisitions, partially offset by a decrease in pro forma taxable income.
The effective tax rate differs from the U.S. federal statutory rate
primarily due to goodwill amortization related to acquisitions not
deductible for income tax purposes and state and foreign income taxes.
The difference in effective tax rates between periods is mostly a result
the relationship of non-deductible expense to income before taxes.
(9) Reflects an increase in accrued preferred stock dividends and redemption
value accretion. We sold 16% mandatorily redeemable preferred stock and
used the proceeds to partially fund the ERDA acquisition.
P-10
UNAUDITED PRO FORMA FINANCIAL DATA
NOTES TO UNAUDITED PRO FORMA FINANCIAL DATA (CONTINUED)
(10) Supplemental pro forma financial information is as follows:
YEAR ENDED DECEMBER 31,
-------------------------
1999 2000
----------- -----------
(DOLLARS IN THOUSANDS)
Net cash provided by (used for):
Operating activities .......................................................... $ 26,701 $ 20,725
Investing activities .......................................................... (214,882) (53,896)
Financing activities .......................................................... 187,693 33,549
EBITDA (a) ...................................................................... 78,455 89,160
Depreciation and amortization (b) ............................................... 25,512 29,212
Capital expenditures:
Paid in cash .................................................................. 9,283 23,492
Financed with capital lease obligations ....................................... 2,388 109
Cash interest expense ........................................................... 37,173 40,540
Ratio of earning to fixed charges (c) ........................................... 1.0x 1.3 x
- -------------------------
(a) EBITDA is defined as earnings before interest, income taxes,
depreciation and amortization, restructuring and asset impairment
charges, acquisition related charges and other noncash and
nonoperating charges. EBITDA, as defined, is the primary measurement
we use to evaluate our operating groups' performance and is
consistent with the manner in which our lenders and ultimate
investors measure our overall performance.
EBITDA is not a measure of performance or financial condition under
generally accepted accounting principles. EBITDA is not intended to
represent cash flow from operations and should not be considered as
an alternative to income from operations or net income computed in
accordance with generally accepted accounting principles, as an
indicator of our operating performance, as an alternative to cash
flow from operating activities or as a measure of liquidity. The
funds depicted by EBITDA are not available for our discretionary use
due to funding requirements for working capital, capital
expenditures, debt service, income taxes and other commitments and
contingencies. We believe that EBITDA is a standard measure of
liquidity commonly reported and widely used by analysts, investors
and other interested parties in the financial markets. However, not
all companies calculate EBITDA using the same method, and the EBITDA
numbers we report may not be comparable to EBITDA reported by other
companies.
(b) Reflects depreciation and amortization of plant and equipment,
goodwill and other intangible assets. Excludes amortization of
deferred financing costs, which are classified as a component of
interest expense.
(c) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent net income before income taxes, minority interests
in the income of majority-owned subsidiaries, extraordinary items
and fixed charges. Fixed charges consist of:
- interest, whether expensed or capitalized;
- amortization of debt expense and discount or premium relating to
any indebtedness, whether expensed or capitalized; and
- one-third of rental expenses under operating leases which is
considered to be a reasonable approximation of the interest
portion of such expense.
P-11
UNAUDITED PRO FORMA FINANCIAL DATA
COMPUTATION OF PRO FORMA EARNING TO FIXED CHARGES RATIOS
YEAR ENDED DECEMBER 31,
-------------------------
1999 2000
----------- -----------
(DOLLARS IN THOUSANDS)
EARNINGS:
Income before provision for income taxes ............................................... $ 636 $ 13,669
Minority interest in income of subsidiary with fixed charges ........................... 197 228
Fixed charges .......................................................................... 40,901 44,148
----------- -----------
Total earnings .................................................................... $ 41,734 $ 58,045
=========== ===========
FIXED CHARGES:
Interest expense, including amortization of debt discounts
and issuance costs (1) .............................................................. $ 39,521 $ 42,848
Interest component of rentals (2) ...................................................... 1,380 1,300
----------- -----------
Total fixed charges ............................................................... $ 40,901 $ 44,148
=========== ===========
RATIO OF EARNINGS TO FIXED CHARGES:
Ratio .................................................................................. 1.0x 1.3x
Deficiency ............................................................................. $ -- $ --
- ---------------------------
(1) None capitalized.
(2) Reflects one-third of rental expense under operating leases considered to
represent interest costs.
P-12