Exhibit 99.2
Unaudited Pro Forma Consolidated Condensed Financial Statements
The following unaudited pro forma consolidated condensed financial statements
give effect to the acquisition of CarnaudMetalbox ("CMB") under the purchase
method of accounting. The unaudited pro forma consolidated condensed balance
sheet combines the historical consolidated balance sheets of Crown Cork & Seal
Company, Inc. ("Crown") and CMB giving effect to the acquisition as if it had
occurred on December 31, 1995. The unaudited pro forma consolidated condensed
statement of operations for the year ended December 31, 1995 combines the
historical consolidated statements of operations of Crown and CMB giving effect
to the acquisition as if it had occurred on January 1, 1995.
The unaudited pro forma consolidated condensed financial statements are for
illustrative purposes only and have been presented to meet the requirements of
the Securities and Exchange Commission. They are not necessarily indicative of
the results of operations that might have occurred had the acquisition actually
taken place on January 1, 1995 or the actual financial position that might have
resulted had the acquisition been consummated on December 31, 1995, or of future
results of operations or financial position of Crown.
The unaudited pro forma consolidated condensed financial statements are based on
the historical consolidated financial statements of Crown and CMB and should be
read in conjunction with such historical financial statements and the notes
thereto, which are, in the case of CMB, included as Exhibit 99.1 to this Form
8-K (the "CMB Financial Statements"), and, in the case of Crown, filed with
Crown's Annual Report on Form 10-K for the year ended December 31, 1995. Certain
reclassifications have been made to CMB's historical consolidated financial
statements to conform with the presentation of Crown's historical consolidated
financial statements for the year ended December 31, 1995. Furthermore, the
historical financial statements for CMB, prepared in accordance with French law
and presented in French francs, have for purposes of preparing these unaudited
pro forma consolidated condensed financial statements been conformed to comply
with U. S. GAAP and, in accordance with SFAS No. 52, have been translated to U.
S. dollars at an assumed exchange rate equal to FF 4.982/$1.00 (the average 1995
rate) for the pro forma statement of operations for the year ended December 31,
1995 and FF 4.904/$1.00 (the December 31, 1995 closing rate) for the pro forma
balance sheet as of December 31, 1995. See Note 1-B of the CMB's Financial
Statements for the reconciliation of CMB's 1995, 1994 and 1993 net income and
shareholders' equity to U. S. GAAP. Such translations should not be construed as
representations that French franc amounts represent, 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 financial statements could have a material impact on the information
presented therein.
Unaudited Pro Forma Consolidated Condensed Financial Statements (Continued)
In accordance with the purchase method of accounting, the total purchase price
has been allocated to the assets and liabilities of CMB based upon their
relative fair values. The accompanying unaudited pro forma consolidated
condensed financial statements reflect the preliminary allocation of purchase
price to assets and liabilities. Accordingly, the final allocations will differ
from the amounts reflected herein.
The $3.2 billion pro forma excess of purchase price over net assets acquired as
of December 31, 1995 is being amortized over 40 years at a rate of $80 million
per year, in accordance with generally accepted accounting principles, which
require that acquired intangibles be amortized over lives not to exceed 40
years. Crown believes that the intangible assets acquired, representing
principally CMB's customer base and CMB's European market presence, represent
assets with indefinite lives, which have historically appreciated in value over
time. In addition, the acquisition will facilitate 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 Crown and CMB to existing
and potential customers. Crown believes it will benefit from the acquisition for
a period of at least 40 years and, therefore, a 40-year amortization period is
considered appropriate.
Crown has commenced appraisals and other studies of the significant assets,
liabilities and business operations of CMB. The unaudited pro forma consolidated
condensed financial statements reflect the preliminary results of these reviews,
including Crown's initial estimate of known restructuring and rationalization
efforts. Crown expects to incur further restructuring costs and expenses in
connection with the acquisition which are not currently determinable.
A final allocation of the purchase price, including allocation to tangible
assets, liabilities, identifiable intangible assets and goodwill will be
completed during the year when appraisals, other studies and additional reviews
are completed.
Crown will perform periodic reviews of the goodwill and other intangible assets
arising from the acquisition, to ensure that they are carried at recoverable
amounts in light of current business conditions.
Pro Forma Consolidated Condensed Statement of Operations
For the Year Ended December 31, 1995
Unaudited
( US Dollars in millions, except per share data)
Historical Amounts Pro Forma
Crown CMB Adjustments Consolidated
Net Sales $ 5,054 $ 4,939 $ 9,993
Costs of products sold 4,311 3,926 8,237
Depreciation and amortization 256 292 $ (18) (A) 530
Selling and administrative expense 139 415 554
Provision for restructuring 103 55 158
Interest expense 149 130 135 (B) 414
Interest income (13) (25) (38)
Translation and exchange adjustments (1) 2 1
Preference share dividends and other (13) (13)
------------- ------------- ------------- -------------
Income from operations before
income taxes 110 157 (117) 150
-
Income taxes 25 11 (26) (C) 10
Equity in earnings of affiliates 4 1 5
Minority interests (14) 3 (3) (D) (14)
------------- ------------- ------------- -------------
Net income 75 150 (94) 131
Crown Acquisition Preferred Stock dividends (23) (E) (23)
------------- ------------- ------------- -------------
Net income available for common stock $ 75 $ 150 $ (117) $ 108
============= ============= ============= =============
Earnings per share $ 0.83 $ 1.76 $ 0.85
Average number of common shares
outstanding 90,233,518 85,327,985 127,534,336
NOTES TO PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
A. To reflect the net decrease in depreciation and amortization expense due to
(i) amortization of the excess purchase price over net tangible assets
acquired on a straight-line basis over 40 years, net of elimination of CMB
historical amortization of excess acquisition costs over the values
assigned to net assets acquired in prior acquisitions, (ii) additional
amortization resulting from basis assigned to intangible assets other than
goodwill, (iii) net decrease in depreciation resulting from change in asset
basis and lives identified in the preliminary appraisal process, and (iv)
decreased depreciation resulting from property and equipment written-off
under known plans of restructuring.
B. 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 $1.8 billion is assumed to be 7.5%.
C. Income tax effect of increased interest net of decreased depreciation at
the statutory tax rate of 37%. The Company expects its effective income tax
rate to be higher in the future since a significant portion of the purchase
price will be non-deductible for tax purposes.
D. To reflect minority interests of approximately 1.3% in CMB.
E. To reflect dividends on Crown Acquisition Preferred Stock of $1.88 per
share per annum on 12,432,622 outstanding shares.
Pro Forma Consolidated Condensed Balance Sheet
December 31, 1995
Unaudited
( US Dollars in millions)
Historical Amounts Pro Forma
Crown CMB Adjustments Consolidated
Assets
Cash and cash equivalents $ 68 $ 539 $ (53)(A) $ 554
Receivables 744 1,080 1,824
Inventories 812 749 1,561
Prepaid expenses and other current assets 85 85
Long-term receivables 64 64
Investments 57 56 113
Excess of purchase price over net assets
acquired, net of amortization 1,096 1,239 1,910 (B) 4,245
Property, plant and equipment 2,006 1,785 139 (C) 3,930
Other non-current assets 120 201 111 (D) 432
-------- -------- -------- --------
Total assets $ 5,052 $ 5,649 $ 2,107 $ 12,808
======== ======== ======== ========
Liabilities and shareholders' equity
Short-term debt and current portion of long-term
debt $ 608 $ 323 $ 931
Accounts payable and accrued liabilities 668 1,259 1,927
Other current liabilities 3 43 46
Long-term debt, excluding current maturities 1,490 1,175 $ 1,790 (E) 4,455
Postretirement and pension liabilities 591 130 721
Other non-current liabilities 112 348 379 (F) 839
Minority interests 119 276 (50) 345
Crown Aquisition Preferred Stock 521 (G) 521
Common stock 593 176 10 (H) 779
Retained Earnings 1,049 998 (998)(H) 1,049
Cumulative translation adjustment (192) (550) 550 (H) (192)
Other shareholders' equity 11 1,471 (95)(H) 1,387
-------- -------- -------- --------
Total liabilities and shareholders' equity $ 5,052 $ 5,649 $ 2,107 $ 12,808
======== ======== ======== ========
A. The pro forma adjustment to cash represents transaction expenses estimated
at approximately $53 million.
B. To reflect the excess of acquisition cost over the estimated fair market
value of net assets acquired (goodwill).
C. To reflect the step-up in property, plant and equipment values to
preliminary appraised fair market value. Included within the pro forma
adjustment are gross step-up in asset values of $354 million and write-off
of asset values of $215 million. The write-off of asset value relates to
appraised fair market values being less than carrying value and also to
those assets which are included within a known and approved plan of
restructuring whose estimated recovery value is less than carrying value.
D. To reflect estimated net deferred income tax assets arising from the pro
forma adjustments. Included within the pro forma adjustment to other
non-current assets is $50 million related to the estimated fair market
value of intangible assets acquired.
E. To reflect the borrowings to finance the cash portion of the purchase
price.
F. To reflect fair market value adjustments to the carrying value of other
non-current liabilities, unfavorable leases, contracts and commitments and
restructuring accruals. Restructuring accruals include the costs associated
with plant rationalizations and employee terminations to eliminate
duplicate facilities and excess capacity.
G. To reflect Crown Acquisition Preferred Stock issued in consideration of the
purchase price.
H. To reflect the elimination of the shareholders' equity accounts of CMB and
to reflect the issuance of Crown common stock in consideration of the
purchase price.