EXHIBIT 99.3
UNITED ROAD SERVICES, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The following unaudited pro forma combined financial statements give effect
to certain acquisitions completed by United Road Services, Inc. since its
inception in July 1997. All of these acquisitions were accounted for using the
purchase method of accounting.
The September 30, 1998 unaudited pro forma combined balance sheet gives
effect to the acquisition by United Road Services, Inc. of MPG Transco, Ltd.
("MPG") and Pilot Transport, Inc. ("Pilot"), which were consummated on January
11, 1999 and December 9, 1998, respectively. The unaudited pro forma combined
balance sheet gives effect to these acquisitions as if they had occurred on
September 30, 1998. The unaudited pro forma combined statements of operations
give effect to the acquisitions of MPG and Pilot as if they had occurred on
January 1, 1997.
The unaudited pro forma combined statements of operations also give effect
to the acquisitions by United Road Services, Inc. of Northland Auto
Transporters, Inc. and Northland Fleet Leasing, Inc., Falcon Towing and Auto
Delivery, Inc., Smith-Christensen Enterprises, Inc. and subsidiary, Caron Auto
Works, Inc. and Caron Auto Brokers, Inc., Absolute Towing and Transporting,
Inc., ASC Transportation Services and subsidiary and Silver State Towing &
Recovery, Inc. (collectively, the "Founding Companies"), which were consummated
simultaneously with United Road Services, Inc.'s initial public offering
completed on May 6, 1998, as if such acquisitions had occurred on January 1,
1997. Additionally, the unaudited pro forma combined statements of operations
also give effect to the acquisitions by United Road Services, Inc. of E&R Towing
& Garage, Inc. and Subsidiaries (E&R"), Environmental Auto Removal, Inc.
("EAR"), Neil's Used Truck & Car Sales, Incorporated ("Neil's"), 5-L Corporation
and ADP Transport, Inc. ("5L/ADP"), Car Transporters Corporation ("CTC"),
Schroeder Auto Carriers, Inc. (Schroeders"), Keystone Towing ,Inc. ("Keystone"),
Fast Towing, Inc. ("Fast") and Alert Auto Transport , Inc. ("Alert")
(collectively the `Selected Acquired Companies") as if such acquisitions had
occurred on January 1, 1997.
To the extent the former owners of the Founding Companies, MPG, Pilot and
Selected Acquired Companies have agreed to reductions in salary, bonuses and
benefits, these reductions have been reflected in the unaudited pro forma
combined statements of operations.
The pro forma adjustments are based on estimates, available information and
certain assumptions, and may be revised, as additional information becomes
available. The pro forma financial information does not purport to represent
what United Road Services, Inc.'s financial position or results of operations
would actually have been had such transactions occurred on these dates and are
not necessarily indicative of United Road Services, Inc.'s financial position or
results of operations for any future period. Since United Road Services, Inc.,
the Founding Companies, MPG, Pilot and the Selected Acquired Companies were not
under common control or management during the periods presented, historical
combined results may not be comparable to, or indicative of, future performance.
The unaudited pro forma combined financial statements should be read in
conjunction with the other financial statements and notes thereto included
elsewhere herein.
UNITED ROAD SERVICES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
(IN THOUSANDS)
UNITED
ROAD
SERVICES, PRO FORMA PRO FORMA
INC. MPG PILOT ADJUSTMENTS COMBINED
---- --- ----- ----------- --------
ASSETS
Cash and cash equivalents....................... $ 2,290 348 181 (1,952)(a)(b) 867
Accounts receivable............................. 16,096 2,058 1,945 -- 20,099
Less: allowance............................. 1,317 100 -- -- 1,417
------- ----- --- ------ ------
Accounts receivable, net........................ 14,779 1,958 1,945 -- 18,682
Accounts receivable from related parties and 285 42 -- -- 327
employees.......................................
Inventory....................................... 564 -- -- -- 564
Notes receivables............................... 430 -- -- -- 430
Prepaid and other current assets................ 2,078 283 616 -- 2,977
------- ----- --- ------ ------
Total Current Assets........................ 20,426 2,631 2,742 (1,952) 23,847
Property and equipment, net..................... 37,094 10,630 3,681 (341)(a) 51,064
Other non-current assets, net................... 1,592 347 -- -- 1,939
Goodwill........................................ 137,516 -- -- 41,930 (a) 179,446
------- ----- --- ------ ------
Total Assets................................ $ 196,628 13,608 6,423 39,637 256,296
========= ====== ===== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installment of notes payable............ $ 170 2,005 -- -- 2,175
Current installment of lease obligations........ 1,435 -- -- -- 1,435
Borrowings under lines of credit................ -- 986 2,005 -- 2,991
Payable to related parties...................... 1,134 -- -- -- 1,134
Accounts payable................................ 10,011 818 240 -- 11,069
Income taxes payable............................ 616 740 -- -- 1,356
Payable to stockholders......................... 1,064 24 -- -- 1,088
Other accrued liabilities....................... 4,761 891 1,065 -- 6,717
------- ----- --- ------ ------
Total Current Liabilities................... 19,191 5,464 3,310 -- 27,965
Credit facility borrowings...................... 26,000 -- -- 19,000 (b) 45,000
Notes payable, excluding current installments... -- 1,422 -- -- 1,422
Capital lease obligations, excluding current 2,253 -- -- -- 2,253
installments....................................
Deferred income taxes........................... 2,736 1,462 -- (136)(a) 4,062
------- ----- --- ------ ------
Total Liabilities........................... 50,180 8,348 3,310 18,864 80,702
Stockholders' Equity:
Common stock.................................... 14 1 10 (9)(a) 16
Additional paid-in capital...................... 144,413 1,417 -- 27,727 (a) 173,557
Retained earnings............................... 2,021 3,842 3,103 (6,945)(a) 2,021
------- ----- --- ------ ------
Total Stockholders' Equity.................. 146,448 5,260 3,113 20,773 175,594
------- ----- --- ------ ------
Total Liabilities and Stockholders' Equity. $ 196,628 13,608 6,423 39,637 256,296
========= ====== ===== ======= =======
The accompanying notes are an integral part of these unaudited pro
forma combined financial statements.
UNITED ROAD SERVICES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
TOTAL
UNITED FOUNDING PRO
ROAD COMPANIES SELECTED FORMA
SERVICES, 1/1/98 - PRO FORMA PRO FORMA ACQUIRED PRO FORMA COMBINED
INC. 5/5/98 MPG PILOT ADJUSTMENTS COMBINED COMPANIES ADJUSTMENTS AS ADJUSTED
---- ------ --- ----- ----------- -------- -------- ----------- -----------
Net revenue................... $44,842 19,035 17,082 14,405 -- 95,364 35,418 (1,400)(g) 129,382
Cost of revenue............... 32,073 13,851 11,639 8,906 (610)(b) 65,859 26,787 (2,326)(b)(g) 90,320
------- ------- ------- ------ ----- ------ ------ -------- ------
Gross profit................ 12,769 5,184 5,443 5,499 610 29,505 8,631 926 39,062
Selling general and
administrative 7,565 3,525 3,420 3,091 (1,604)(a) 15,997 6,054 (1,900)(h) 20,151
expenses....................
Goodwill amortization......... 883 -- -- -- 1,160 (c) 2,043 -- 922 (i) 2,965
------- ------- ------- ------ ----- ------ ------ -------- ------
Income (loss) from operations. 4,321 1,659 2,023 2,408 1,054 11,465 2,577 1,904 15,946
Other income (expense):
Interest expense............ (526) (451) (292) (114) (1,205)(d) (2,588) (423) -- (3,011)
Interest income............. 615 19 19 -- -- 653 96 -- 749
Gain (loss) on sale of assets -- (24) (325) (32) -- (381) (87) -- (468)
Other....................... -- (232) (2) -- -- (234) 66 -- (168)
------- ------- ------- ------ ----- ------ ------ -------- ------
Income (loss) before income 4,410 971 1,423 2,262 (151) 8,915 2,229 1,904 13,048
taxes.........................
Income tax expense (benefit).. 2,215 437 591 -- 689 (e) 3,932 274 1,879 (e) 6,085
------- ------- ------- ------ ----- ------ ------ -------- ------
Net income (loss)............. $ 2,195 534 832 2,262 (840) 4,983 1,955 25 6,963
======== ======== ======= ===== ======= ===== ===== ===== =====
Basic earnings per share (f).. -- -- -- -- -- $0.50 -- -- $ 0.64
===== ======
Diluted earnings per share (f) -- -- -- -- -- $0.49 -- -- $ 0.63
===== ======
The accompanying notes are an integral part of these unaudited pro
forma combined financial statements
UNITED ROAD SERVICES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
UNITED
ROAD TOTAL SELECTED PRO FORMA
SERVICES, FOUNDING PRO FORMA PRO FORMA ACQUIRED PRO FORMA COMBINED
INC. COMPANIES MPG PILOT ADJUSTMENTS COMBINED COMPANIES ADJUSTMENTS AS ADJUSTED
---- --------- --- ----- ----------- -------- --------- ----------- -----------
Net revenue................ $ -- 42,599 21,745 17,119 -- 81,463 64,768 (2,800)(g) 143,431
Cost of revenue............ -- 31,258 15,416 10,067 (1,028)(b) 55,713 49,795 (4,369)(b)(g) 101,139
------- ------ ------ ------ ------ ------ ------ ------ -------
Gross profit........... -- 11,341 6,329 7,052 1,028 25,750 14,973 1,569 42,292
Selling general and
administrative expenses.. 174 8,070 5,536 4,009 (3,451)(a) 14,338 11,831 (3,220)(h) 22,949
Goodwill amortization...... -- -- -- -- 2,207 (c) 2,207 -- 1,562 (i) 3,769
------- ------ ------ ------ ------ ------ ------ ------ -------
Income (loss) from (174) 3,271 793 3,043 2,272 9,205 3,142 3,227 15,574
operations.................
Other income (expense):
Interest expense....... -- (835) (569) (168) (1,524)(d) (3,096) (1,078) -- (4,174)
Interest income........ -- 48 8 -- -- 56 91 -- 147
Gain (loss) on sale of
assets............... -- 207 (92) (167) -- (52) 157 -- 105
Other.................. -- 201 (13) -- -- 188 (115) -- 73
------- ------ ------ ------ ------ ------ ------ ------ -------
Income (loss) before income
taxes.................... (174) 2,892 127 2,708 748 6,301 2,197 3,227 11,725
Income tax expense
(benefit)............... -- 826 68 -- 2,339 (e) 3,233 334 2,320 (e) 5,887
--- ------ ------ ------ ------ ------ ------ ------ -------
Net income (loss).......... $ (174) 2,066 59 2,708 (1,591) 3,068 1,863 907 5,838
======= ===== ====== ===== ===== ===== ===== ====== =====
Basic earnings per share(f) -- -- -- -- -- $0.31 -- -- $0.54
===== =====
Diluted earnings per -- -- -- -- -- $0.31 -- -- $0.53
share(f)................... ===== =====
The accompanying notes are an integral part of these unaudited pro
forma combined financial statements
UNITED ROAD SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. GENERAL:
United Road Services, Inc. was founded in July 1997 to become a leading
national provider of motor vehicle and equipment towing, recovery and transport
services. United Road Services, Inc. acquired the Founding Companies
simultaneously with its initial public offering and acquired the Selected
Acquired Companies subsequent to its initial public offering.
The historical financial data reflect the financial position and results of
operations of United Road Services, Inc., the Founding Companies, MPG, Pilot and
the Selected Acquired Companies and were derived from their respective financial
statements, included in reports filed with the Securities and Exchange
Commission. The information included in these financial statements for MPG is as
of October 31, 1998 and for the nine-month period ended September 30, 1998 and
for the twelve-month period ended December 31, 1997. The information included in
these financial statements for the Founding Companies is for the period January
1, 1998 through May 5, 1998 and for the years ended December 31, 1997, with the
exception of Caron Auto Works, Inc. and Caron Auto Brokers, Inc. for which the
information is as of and for the six months ended June 30, 1998 and for the
fiscal year ended September 30, 1997. The information included in these
financial statements for the Selected Acquired Companies is as of and for the
nine-months ended September 30, 1998 and for the year ended December 31, 1997,
with the exception of E&R, EAR, Neil's, 5-L/ADP, CTC, Schroeder, Keystone and
Fast Tow which are for the six-month period ended June 30, 1998 and for the year
ended December 31, 1997, and Alert for which the information is as of and for
the six-month period ended May 31, 1998 and for the twelve-month period ended
February 28, 1998.
2. ACQUISITION OF MPG, PILOT AND THE SELECTED ACQUIRED COMPANIES:
United Road Services, Inc. acquired MPG, Pilot and the Selected Acquired
Companies in transactions accounted for using the purchase method of accounting.
The following table sets forth the consideration paid in cash and in shares
of Common Stock to the stockholders of MPG, Pilot and the Selected Acquired
Companies.
SHARES OF
CASH COMMON STOCK
(DOLLARS IN THOUSANDS)
MPG ............................................. $ 10,363 996,351
Pilot............................................ 10,589 1,000,000
Selected Acquired Companies...................... 44,597 1,032,930
------- ---------
Total....................................... $65,549 3,029,281
======= =========
UNITED ROAD SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
3. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS:
(a) Reflects the acquisitions of MPG and Pilot by United Road Services,
Inc. for an aggregate purchase price of $50.0 million consisting of $21.0
million in cash and 1,996,351 shares of Common Stock. The aggregate purchase
price less the net assets acquired, including an adjustment for property and
equipment to reflect fair market value, including the resulting tax effect,
results in aggregate goodwill of $41.9 million. Based upon management's
preliminary analysis, it is anticipated that the historical value of the assets
and liabilities of the acquired companies, with the exception of the adjustments
made for property and equipment, will approximate fair value. Management has not
identified any other material tangible or intangible assets to which a portion
of the purchase price could be reasonably allocated.
(b) Reflects $19.0 million of credit facility borrowings utilized to
fund the acquisitions of MPG and Pilot.
4. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS:
Nine-months ended September 30, 1998 and year ended December 31, 1997
(a) Reflects the reductions in salaries, bonuses and benefits to which
the former stockholders of the Founding Companies, MPG and Pilot have agreed in
the amounts of $774,000, $247,000 and $583,000 for the nine-months ended
September 30, 1998, respectively, and $2.3 million, $329,000 and $777,000 for
the year ended December 31, 1997, respectively.
(b) Adjusts the depreciation of vehicles based upon adjusted carrying
values utilizing lives of 10 to 15 years.
(c) Reflects the amortization over a 40-year estimated life of goodwill
to be recorded as a result of the acquisition of the Founding Companies, MPG and
Pilot of $383,000, $374,000 and $403,000 for the nine-months ended September 30,
1998, respectively, and $1.2 million, $499,000 and $549,000 for the year ended
December 31, 1997, respectively.
(d) Reflects the interest expense of $1.3 million for the nine months
ended September 30, 1997 and $1.7 million for the year ended December 31, 1997
relating to the $19.0 of credit facility borrowings utilized to fund
acquisitions of MPG and Pilot. The reduction in interest expense related to $1.6
million and $1.5 million of debt of the Founding Companies at December 31, 1997
and September 30, 1998, respectively which has been repaid.
(e) Reflects the incremental provision for federal and state income
taxes relating to all entities being combined and other statements of operations
adjustments including the non-deductibility of goodwill at an estimated rate of
38%.
(f) The number of shares used in the calculations of basic and diluted
earnings per share have been derived as follows:
PRO FORMA
PRO FORMA COMBINED
COMBINED AS ADJUSTED
-------- -----------
Shares issued in connection with the formation of United Road Services, Inc. 2,604,000 2,604,000
Shares issued in January 1998 218,736 218,736
Shares issued in the initial public offering 2,594,863 2,594,863
Shares issued in connection with the acquisitions of the Founding Companies,
MPG, Pilot and the Selected Acquired Companies 4,372,092 5,405,022
--------- ----------
Basic shares estimated to be outstanding 9,789,691 10,822,621
Incremental effect of options on shares outstanding 159,117 159,117
========= ==========
Diluted shares estimated to be outstanding 9,948,808 10,981,731
========= ==========
UNITED ROAD SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(g) Reflects the elimination of $1.4 million and $2.8 million of
intercompany revenue and related cost of revenue between E&R and EAR for the
nine-months ended September 30, 1998 and the year ended December 31, 1997,
respectively.
(h) Reflects the reductions in salaries, bonuses and benefits to which
the former stockholders of the Selected Acquired Companies have agreed in the
amounts of $1.9 million and $3.2 million for the nine-months ended September 30,
1998 and for the year ended December 31, 1997, respectively.
(i) Reflects the amortization over a 40-year estimated life of goodwill
to be recorded as a result of the acquisition of the Selected Acquired
Companies.