UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma consolidated condensed statements of
operations give effect to the acquisition of CarnaudMetalbox under the
purchase method of accounting. The unaudited pro forma consolidated condensed
statements of operations for the six months ended June 30, 1995 and for the
year ended December 31, 1995 combine the historical consolidated statements of
operations of the Company and CarnaudMetalbox giving effect to the acquisition
as if it had occurred on January 1, 1995. The unaudited pro forma consolidated
condensed statement of operations for the six months ended June 30, 1996
combines the historical consolidated statements of operations of the Company
and CarnaudMetalbox giving effect to the acquisition as if it had occurred on
January 1, 1996.
The unaudited pro forma consolidated condensed statements of operations are
for illustrative purposes only and have been presented to meet the
requirements of the SEC. They are not necessarily indicative of the results of
operations that might have occurred had the acquisition actually taken place
on such dates, or of future results of operations of the Company.
The unaudited pro forma consolidated condensed statements of operations are
based on the historical consolidated financial statements of the Company and
CarnaudMetalbox and should be read in conjunction with such historical
financial statements and the notes thereto, which are, in the case of
CarnaudMetalbox, included as part of the Company's Current Report on Form 8-K
filed on March 1, 1996, as amended (the "CarnaudMetalbox Financial
Statements"), and, in the case of the Company, filed with the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and the Company's
Quarterly Report on Form 10-Q for the quarterly periods ended March 31, 1996
and June 30, 1996, as amended, respectively (and which, in the case of the
Company's 1996 quarterly results, include balance sheet and income statement
data reflecting historical results of the CarnaudMetalbox acquisition since
the acquisition date of February 22, 1996). Certain reclassifications have been
made to CarnaudMetalbox's historical consolidated financial statements to
conform with the presentation of the Company's historical consolidated financial
statements. Furthermore, the historical financial statements for
CarnaudMetalbox, prepared in accordance with French law and presented in French
francs, have for purposes of preparing these unaudited pro forma consolidated
condensed statements of operations been conformed to comply with U.S. generally
accepted accounting principles and, in accordance with SFAS No. 52, have been
translated to U.S. dollars at actual average exchange rates equal to FF
4.992/$1.00 for the pro forma statement of operations for the six months ended
June 30, 1995, FF 4.982/$1.00 for the pro forma statement of operations for the
year ended December 31, 1995 and FF 5.007/$1.00 for the pro forma statement of
operations for the period beginning January 1, 1996 and ending on the
acquisition date of February 22, 1996. See Note 1-B of the CarnaudMetalbox
Financial Statements for the reconciliation of CarnaudMetalbox's 1995, 1994 and
1993 net income and shareholders' equity to U.S. generally accepted accounting
principles. Such translations should not be construed as representations that
French franc amounts have been or could be converted into U.S. dollars at that
or any other rate. The use of exchange rates different from those used in the
unaudited pro forma consolidated condensed statements of operations could have a
material impact on the information presented therein.
In accordance with the purchase method of accounting, the total purchase
price has been allocated to the assets and liabilities of CarnaudMetalbox
based upon their fair values. The accompanying unaudited pro forma
consolidated condensed statements of operations reflect the preliminary
allocation of purchase price to assets and liabilities. Accordingly, the final
allocations may differ from the amounts reflected herein.
The unaudited pro forma consolidated condensed statements of operations
reflect a $3.6 billion excess of purchase price over net assets acquired,
which is being amortized over 40 years at a rate of $90 million per year in
accordance with generally accepted accounting principles, which require that
acquired intangibles be amortized over lives not to exceed 40 years.
Intangible assets acquired principally represent CarnaudMetalbox's customer
base and CarnaudMetalbox's European market presence, assets with indefinite
lives which have historically appreciated in value over time. In addition, the
acquisition facilitates the continued expansion of current lines of business
as well as the development of new businesses via the cross-selling of
packaging product offerings of both the Company and CarnaudMetalbox to
existing and potential customers as well as other factors. The Company believes
it will benefit from the acquisition for a period of at least 40 years and,
therefore, a 40-year amortization period is appropriate.
The Company has obtained appraisals and other studies of the significant
assets, liabilities and business operations of CarnaudMetalbox. The unaudited
pro forma consolidated condensed statements of operations reflect the
preliminary results of these reviews, including the Company's estimate of
known restructuring costs and expenses. The final allocation of the purchase
price will be completed in the first quarter of 1997 when final appraisals,
other studies and additional information become available.
See the notes to the unaudited pro forma consolidated condensed statements
of operations for a description of the principal assumptions made in the
preparation of the pro forma information. The unaudited pro forma consolidated
condensed statements of operations do not reflect the financial results of the
Company or CarnaudMetalbox after June 30, 1996.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT
OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996(A)
----------------------------------------------------------------------
HISTORICAL AMOUNTS PRO FORMA
----------------------------------- ---------------------------------
COMPANY CARNAUDMETALBOX ADJUSTMENTS CONSOLIDATED
---------------- ----------------- ------------- ----------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Net Sales............... $ 3,905 $ 606 $ 4,511
Cost of products
sold................. 3,170 486 3,656
Depreciation and amor-
tization............. 230 36 $ (1)(B) 265
Selling and adminis-
trative expense...... 176 57 233
Provision for restruc-
turing............... 30 15 45
Interest expense...... 173 17 19 (C) 209
Interest income....... (35) (3) (38)
Translation and ex-
change adjustments... (39) (39)
---------------- --------------- -------- ----------------
Income from operations
before income taxes.... 200 (2) (18) 180
Income taxes.......... 54 3 (4)(D) 53
Equity in earnings of
affiliates........... (5) (5)
Minority interests.... (6) 2 (4)
---------------- --------------- -------- ----------------
Net income.............. 135 (3) (14) 118
Preferred Stock divi-
dends.................. (8) (4)(E) (12)
---------------- --------------- -------- ----------------
Net income available for
common shareholders.... $ 127 $ (3) $ (18) $ 106
================ =============== ======== ================
Earnings per share...... $ 1.09 $ (0.03) $ 0.83
Average number of common
shares outstanding..... 116,623,109 86,202,056 128,100,284
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT
OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
------------------------------------------------------
HISTORICAL AMOUNTS PRO FORMA
---------------------------- -------------------------
COMPANY CARNAUDMETALBOX ADJUSTMENTS CONSOLIDATED
----------- --------------- ----------- ------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Net Sales............... $ 2,513 $ 2,460 $ 4,973
Cost of products
sold................. 2,086 1,919 4,005
Depreciation and
amortization......... 129 146 $ (5)(B) 270
Selling and
administrative
expense.............. 72 234 306
Provision for
restructuring........ 20 18 38
Interest expense...... 74 58 69 (C) 201
Interest income....... (6) (12) (18)
Translation and
exchange
adjustments.......... 1 2 3
Preference share
dividends and other.. (21) (21)
----------- ----------- ---- ------------
Income from operations
before income taxes.... 137 116 (64) 189
Income taxes.......... 41 16 (13)(D) 44
Equity in earnings of
affiliates........... 3 2 5
Minority interests.... (10) (1) (11)
----------- ----------- ---- ------------
Net income.............. 89 101 (51) 139
Preferred Stock divi-
dends.................. (12)(E) (12)
----------- ----------- ---- ------------
Net income available for
common shareholders.... $ 89 $ 101 $(63) $ 127
=========== =========== ==== ============
Earnings per share...... $ 0.99 $ 1.19 $ 1.00
Average number of common
shares outstanding..... 89,920,245 84,605,561 127,221,063
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995(F)
-----------------------------------------------------------------
HISTORICAL AMOUNTS PRO FORMA
--------------------------------- -------------------------------
COMPANY CARNAUDMETALBOX ADJUSTMENTS CONSOLIDATED
-------------- ----------------- ------------- ---------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
Net Sales............... $ 5,054 $ 4,939 $ 9,993
Cost of products
sold................. 4,311 3,926 8,237
Depreciation and amor-
tization............. 256 292 $ (10)(B) 538
Selling and adminis-
trative expense...... 139 415 554
Provision for restruc-
turing............... 103 55 158
Interest expense...... 149 130 138 (C) 417
Interest income....... (13) (25) (38)
Translation and ex-
change adjustments... (1) 2 1
Preference share divi-
dends and other...... (13) (13)
-------------- -------------- -------- ---------------
Income from operations
before income taxes.... 110 157 (128) 139
Income taxes.......... 25 11 (26)(D) 10
Equity in earnings of
affiliates........... 4 1 5
Minority interests.... (14) 3 (11)
-------------- -------------- -------- ---------------
Net income.............. 75 150 (102) 123
Preferred Stock divi-
dends.................. (23)(E) (23)
-------------- -------------- -------- ---------------
Net income available for
common shareholders.... $ 75 $ 150 $ (125) $ 100
============== ============== ======== ===============
Earnings per share...... $ 0.83 $ 1.76 $ 0.78
Average number of common
shares outstanding..... 90,233,518 85,327,985 127,534,336
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
A. Historical amounts for the Company include the results from operations of
CarnaudMetalbox from the date of acquisition, February 22, 1996. Historical
amounts for CarnaudMetalbox include the results from operations of
CarnaudMetalbox for the preacquisition period beginning January 1, 1996 and
ending on the acquisition date. Pro forma adjustments relate only to such
preacquisition period.
B. To reflect the net decrease in depreciation and amortization expense due
to (a) amortization of the excess purchase price over net tangible assets
acquired on a straight-line basis over 40 years, net of elimination of
CarnaudMetalbox historical amortization of excess acquisition costs over the
values assigned to net assets acquired in prior acquisitions, (b) additional
amortization resulting from basis assigned to intangible assets other than
goodwill, (c) net decrease in depreciation resulting from change in asset
basis and lives identified in the appraisal process, and (d) decreased
depreciation resulting from property and equipment written-off under existing
plans of restructuring.
C. To reflect the increase in interest expense resulting from the use of new
borrowings to finance a portion of the purchase price. The interest rate on
new borrowings of $1.84 billion is assumed to be 7.5% per annum.
D. Income tax effect of increased interest net of decreased depreciation at
the statutory tax rate of 37%. The Company expects that its effective income
tax rate may be higher in the future since a significant portion of the
purchase price will be non-deductible for tax purposes.
E. To reflect dividends on Preferred Stock of $1.88 per share per annum on
12,432,622 outstanding shares.
F. The unaudited pro forma consolidated condensed statement of operations
for the year ended December 31, 1995 has been updated from that included in
the Company's Current Report on Form 8-K/A filed on May 7, 1996, principally
to reflect increased pro forma goodwill amortization arising from changes in
the estimated fair value of net tangible assets acquired and the acquisition
in the second quarter of 1996 of the remaining 1.3% minority interest in
CarnaudMetalbox.