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EXHIBIT 20.1
EGL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
give effect to the merger of EGL and Circle to be accounted for as a pooling of
interests. The unaudited pro forma condensed combined balance sheet presents the
combined financial position of EGL and Circle as of June 30, 2000 assuming that
the proposed merger had occurred as of June 30, 2000. Such pro forma information
is based upon the historical balance sheet data of EGL and Circle as of that
date.
The unaudited pro forma condensed combined statement of income gives effect
to the proposed merger of EGL and Circle by combining the results of operations
of EGL for the three years ended September 30, 1999 with the results of
operations of Circle for the three years ended December 31, 1999. In July 2000,
EGL determined to change its fiscal year end to December 31 and will file its
first annual report on that basis for the year ending December 31, 2000. The
periods have been labeled year ended December 31 to be more consistent with the
combined company's future year-end. EGL's results of operations for the six
months ended June 30, 2000 and 1999 have been combined with Circle's results of
operations for the six months ended June 30, 2000 and 1999, respectively, and
accordingly, EGL's operating results for the three months ended December 31,
1999 have been omitted from the information presented. EGL's revenues, net
revenues, net income and basic and diluted earnings per share for the period
October 1, 1999 through December 31, 1999 were $187,365,000, $78,170,000,
$9,960,000, $0.35 and $0.33, respectively.
These unaudited pro forma condensed combined financial statements should be
read in conjunction with the historical consolidated financial statements,
including the notes thereto, of EGL and Circle, which are incorporated by
reference in this document. The unaudited pro forma financial statements are
presented for illustration purposes only, in accordance with the assumptions set
forth below, and are not necessarily indicative of the operating results or
financial position that would have occurred if the merger had been completed.
Nor is it necessarily indicative of future operating results or the financial
position of the combined enterprise. The unaudited pro forma condensed combined
statements of income do not reflect any adjustments to reflect any cost savings
or other synergies anticipated as a result of the merger or any future
merger-related restructuring or integration expenses.
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EGL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2000
(IN THOUSANDS)
PRO FORMA
EGL CIRCLE ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
ASSETS:
Current assets:
Cash and cash equivalents..................... $ 19,977 $ 52,490 $ 72,467
Short-term investments........................ -- 11,260 11,260
Accounts receivable-trade, net................ 134,447 292,369 426,816
Prepaid expenses and other assets............. 8,587 16,538 25,125
-------- -------- -------- --------
Total current assets.................. 163,011 372,657 535,668
Property and equipment, net..................... 38,481 105,761 144,242
Investments in unconsolidated subsidiaries...... -- 45,630 45,630
Goodwill, net................................... 38,624 31,001 69,625
Other assets.................................... 3,669 6,540 10,209
-------- -------- -------- --------
Total assets.......................... $243,785 $561,589 $805,374
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable trade and accrued
transportation costs....................... $ 40,299 $196,146 $236,445
Other accrued liabilities..................... 30,297 50,801 $ 9,750(a) 90,848
-------- -------- -------- --------
Total current liabilities............. 70,596 246,947 9,750 327,293
Deferred income taxes........................... 3,104 12,820 15,924
Long-term debt.................................. 3,321 43,435 46,756
-------- -------- -------- --------
Total liabilities..................... 77,021 303,202 9,750 389,973
Minority interest............................... -- 9,325 9,325
Stockholders' equity:
Preferred stock, $0.001 par value (EGL)....... -- -- --
Preferred stock, $1.00 par value (Circle)..... -- -- --
Common stock, $0.001 par value (EGL).......... 30 -- 18(b) 48
Common stock, $1.00 par value (Circle)........ -- 40,918 (40,918)(b) --
Additional paid-in capital.................... 92,462 -- 40,900(b) 133,362
Unearned compensation......................... (1,592) -- (1,592)
Retained earnings............................. 101,328 227,737 (9,750)(a) 319,315
Accumulated other comprehensive income
(loss)..................................... (912) (19,593) (20,505)
Treasury stock................................ (24,552) -- (24,552)
-------- -------- -------- --------
166,764 249,062 (9,750) 406,076
-------- -------- -------- --------
Total liabilities and stockholders'
equity.............................. $243,785 $561,589 $ -- $805,374
======== ======== ======== ========
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
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EGL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA
EGL CIRCLE ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
Revenues........................................ $402,490 $453,201 $855,691
Cost of transportation.......................... 237,500 277,413 514,913
-------- -------- -------- --------
Net revenue..................................... 164,990 175,788 340,778
Operating expenses:
Personnel costs............................... 88,484 95,584 184,068
Other selling, general and
administrative expenses.................... 54,730 66,116 120,846
-------- -------- -------- --------
Operating income................................ 21,776 14,088 35,864
Interest and other income, net.................. 1,090 1,116 2,206
-------- -------- -------- --------
Income before provision for income
taxes......................................... 22,866 15,204 38,070
Provision for income taxes...................... 9,127 5,504 14,631
-------- -------- -------- --------
Net income...................................... $ 13,739 $ 9,700 $ 23,439
======== ======== ======== ========
Basic earnings per share........................ $ 0.48 $ 0.55 $ 0.51
Basic weighted-average shares
outstanding................................... 28,719 17,574 (c) 46,293
Diluted earnings per share...................... $ 0.46 $ 0.55 $ 0.49
Diluted weighted-average shares
outstanding................................... 29,728 17,741 (d) 47,469
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
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EGL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
PRO FORMA
EGL CIRCLE ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
Revenues........................................... $283,548 $378,068 $661,616
Cost of transportation............................. 161,902 220,451 382,353
-------- -------- ------- --------
Net revenue........................................ 121,646 157,617 279,263
Operating expenses:
Personnel costs.................................. 62,726 84,773 147,499
Other selling, general and
administrative expenses....................... 39,487 64,867 104,354
-------- -------- --------
Operating income................................... 19,433 7,977 27,410
Interest and other income, net..................... 1,402 2,566 3,968
-------- -------- ------- --------
Income before provision for income
taxes............................................ 20,835 10,543 31,378
Provision for income taxes......................... 8,007 3,848 11,855
-------- -------- ------- --------
Net income......................................... $ 12,828 $ 6,695 $ 19,523
======== ======== ======= ========
Basic earnings per share........................... $ 0.45 $ 0.39 $ 0.43
Basic weighted-average shares
outstanding...................................... 28,238 17,130 (c) 45,368
Diluted earnings per share......................... $ 0.44 $ 0.39 $ 0.42
Diluted weighted-average shares
outstanding...................................... 29,187 17,218 (d) 46,405
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
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EGL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED
YEAR ENDED YEAR ENDED DECEMBER 31, 1999
SEPTEMBER 30, 1999 DECEMBER 31, 1999 PRO FORMA
EGL CIRCLE ADJUSTMENTS COMBINED
------------------ ----------------- ----------- -----------------
Revenues......................... $595,173 $814,077 $1,409,250
Cost of transportation........... 340,090 482,085 822,175
-------- -------- -------- ----------
Net revenue...................... 255,083 331,992 587,075
Operating expenses:
Personnel costs................ 128,942 173,431 302,373
Other selling, general and
administrative expenses..... 81,149 131,348 212,497
-------- -------- -------- ----------
Operating income................. 44,992 27,213 72,205
Interest and other income, net... 2,473 9,342 11,815
-------- -------- -------- ----------
Income before provision for
income taxes................... 47,465 36,555 84,020
Provision for income taxes....... 18,967 13,343 32,310
-------- -------- -------- ----------
Net income....................... $ 28,498 $ 23,212 $ 51,710
======== ======== ======== ==========
Basic earnings per share......... $ 1.01 $ 1.35 $ 1.14
Basic weighted-average shares
outstanding.................... 28,291 17,213 (c) 45,504
Diluted earnings per share....... $ 0.98 $ 1.34 $ 1.11
Diluted weighted-average shares
outstanding.................... 29,116 17,365 (d) 46,481
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
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EGL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED
YEAR ENDED YEAR ENDED DECEMBER 31, 1998
SEPTEMBER 30, 1998 DECEMBER 31, 1998 PRO FORMA
EGL CIRCLE ADJUSTMENTS COMBINED
------------------ ----------------- ----------- -----------------
Revenues........................ $417,083 $737,678 $1,154,761
Cost of transportation.......... 233,257 435,998 669,255
-------- -------- -------- ----------
Net revenue..................... 183,826 301,680 485,506
Operating expenses:
Personnel costs............... 97,584 158,382 255,966
Other selling, general and
administrative expenses.... 54,022 119,469 173,491
-------- -------- -------- ----------
Operating income................ 32,220 23,829 56,049
Interest and other income,
net........................... 1,776 7,616 9,392
-------- -------- -------- ----------
Income before provision for
income taxes.................. 33,996 31,445 65,441
Provision for income taxes...... 12,964 12,930 25,894
-------- -------- -------- ----------
Net income...................... $ 21,032 $ 18,515 $ 39,547
======== ======== ======== ==========
Basic earnings per share........ $ 0.75 $ 1.09 $ 0.88
Basic weighted-average shares
outstanding................... 28,101 17,040 (c) 45,141
Diluted earnings per share...... $ 0.72 $ 1.07 $ 0.85
Diluted weighted-average shares
outstanding................... 29,061 17,260 (d) 46,321
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
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EGL, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED
YEAR ENDED YEAR ENDED DECEMBER 31, 1997
SEPTEMBER 30, 1997 DECEMBER 31, 1997 PRO FORMA
EGL CIRCLE ADJUSTMENTS COMBINED
------------------ ----------------- ----------- -----------------
Revenues........................ $291,767 $716,989 $1,008,756
Cost of transportation.......... 163,616 438,945 602,561
-------- -------- -------- ----------
Net revenue..................... 128,151 278,044 406,195
Operating expenses:
Personnel costs............... 67,813 147,931 215,744
Other selling, general and
administrative expenses.... 34,639 97,740 132,379
-------- -------- -------- ----------
Operating income................ 25,699 32,373 58,072
Interest and other income,
net........................... 1,693 8,537 10,230
-------- -------- -------- ----------
Income before provision for
income taxes.................. 27,392 40,910 68,302
Provision for income taxes...... 10,594 14,578 25,172
-------- -------- -------- ----------
Net income...................... $ 16,798 $ 26,332 $ 43,130
======== ======== ======== ==========
Basic earnings per share........ $ 0.63 $ 1.57 $ 0.99
Basic weighted-average shares
outstanding................... 26,688 16,823 (c) 43,511
Diluted earnings per share...... $ 0.60 $ 1.53 $ 0.95
Diluted weighted-average shares
outstanding................... 28,023 17,191 (d) 45,214
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
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EGL, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
On July 2, 2000, EGL, EGL Delaware and Circle entered into a merger
agreement. Under the merger agreement, EGL Delaware would merge with and into
Circle, and Circle, as the surviving corporation, would become a wholly owned
subsidiary of EGL. Under the terms of the merger, each Circle common share
issued and outstanding immediately prior to the effective time of the merger
will be converted into the right to receive one EGL common share. The business
combination will be accounted for using the pooling of interests method of
accounting. There are no material adjustments necessary to conform the
accounting policies of EGL and Circle.
Because the transaction has not been completed, costs of the merger can
only be estimated at this time. The pro forma condensed combined statements of
income exclude:
- the positive effects of potential cost savings and synergies that may be
achieved upon combining the resources of the companies, and
- estimated transaction costs of approximately $9.75 million (net of
related income tax benefits of $0.75 million), including investment
banking, legal and accounting fees and contractual executive severance
payments.
Additionally, EGL and Circle are developing a plan to integrate the
operations of EGL and Circle after the merger. In connection with that plan, EGL
anticipates that significant non-recurring charges will be incurred in
connection with the integration, including, among other things, severance costs,
office and facility relocation costs and costs to convert to common information
systems. EGL cannot factually identify the timing, nature and amount of these
charges as of the date of this joint proxy statement/prospectus. However, any
charge could affect EGL's results of operations in the period in which charges
are recorded. The unaudited pro forma condensed combined financial statements do
not reflect any integration charges related to the merger.
2. PRO FORMA ADJUSTMENTS
There were no intercompany transactions that required elimination from the
pro forma condensed combined balance sheet or statements of income.
(a) Other accrued liabilities -- The pro forma adjustment reflects the
expected incurrence of approximately $9.75 million (net of related income tax
benefits of $0.75 million) for one-time, estimated transaction costs directly
related to the merger that will be expensed at the time the merger is completed
as required under the pooling of interests accounting method. These charges
represent estimated direct merger costs, which include financial advisor fees of
approximately $6.6 million, outside legal and accounting fees and filing costs
of approximately $1.5 million, contractual executive severance payments
totalling approximately $1.9 million that will be directly attributable to the
consummation of the merger and various other costs and filing fees of $0.5
million.
(b) Stockholders' equity -- The capital accounts have been adjusted to give
effect to the anticipated issuance of 17,679,890 EGL common shares in exchange
for all the outstanding Circle common shares. The excess of the par value of
Circle common shares exchanged over the par value of EGL common shares issued
has been credited to additional paid-in capital. The number of EGL common shares
to be issued in the merger will be based upon the actual number of Circle common
shares outstanding at that time.
(c) Shares used in per share calculations -- Pro forma combined
weighted-average common shares outstanding for all periods presented are based
upon EGL's and Circle's combined historical weighted-average shares outstanding
in accordance with Statement of Financial Accounting Standards No. 128. As each
Circle
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common share will be exchanged for one EGL common share, no adjustment of
Circle's historical weighted-average common share data is considered necessary.
(d) Shares used in per share calculations -- Pro forma combined
weighted-average common shares outstanding used in the fully diluted calculation
have been adjusted to assume a dilutive effect related to common share
equivalents of the combined companies in accordance with Statement of Financial
Accounting Standards No. 128. As each Circle common share and common share
equivalent will be exchanged for one EGL common share and common share
equivalent, no adjustment of Circle's historical weighted-average fully diluted
common share data is considered necessary.
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