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TransWestern Publishing Company LLC
Unaudited Pro Forma Combined Condensed Balance Sheets
December 31, 1998
(in thousands)
TransWestern United Pro Forma
Publishing Directory Adjustments Combined Pro
Company LLC Services, Inc. (Note 5) Forma
------------- --------------- ------------- ------------
Assets
Current assets:
Cash $ 14,067 $ 627 $ (627) (a) $ 14,067
Trade receivables, net 20,931 1,054 (1,054) (a) 20,931
Deferred directory costs 8,935 1,678 (991) (a) 9,622
Other current assets 805 2 (2) (a) 805
------------- --------------- ------------- ------------
Total current assets 44,738 3,361 (2,674) 45,425
Property, equipment and leasehold
improvements, net 2,977 54 (54) (a) 2,977
Acquired intangibles, net 34,486 - 17,770 (b) 52,256
Other assets, primarily debt
issuance costs, net 8,629 2 (2) (a) 8,629
------------- --------------- ------------- ------------
Total assets $ 90,830 $ 3,417 $ 15,040 $109,287
Liabilities and members' or
shareholders' equity
Current liabilities:
Accounts payable $ 4,241 $ 5 $ (5) (a) $ 4,241
Salaries and
benefits payable 3,980 29 (29) (a) 3,980
Accrued acquisition costs 450 - 720 (d) 1,170
Accrued interest 1,470 - - 1,470
Other accrued liabilities 1,063 7 (7) (a) 1,063
Customer deposits 16,139 1,672 (956) (a) 16,855
Current portion,
long-term debt 2,207 - - 2,207
------------- --------------- ------------- ------------
Total current
liabilities 29,550 1,713 (277) 30,986
Long term debt:
Promissory note 2,000 - 4,750 (c) 6,750
Revolving loan - - 12,271 (c) 12,271
Senior credit facility 66,165 - - 66,165
Series B and Series
C 9 5/8% senior
subordinated notes 141,784 - - 141,784
Shareholders' equity - 1,704 (1,704) (e) -
Member's deficit (148,669) - - (148,669)
------------- --------------- ------------- ------------
Total liabilities and members'
or shareholders equity $ 90,830 $ 3,417 $ 15,040 $109,287
============= =============== ============= ============
See accompanying notes to unaudited pro forma combined condensed financial
statements.
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TransWestern Publishing Company LLC
Unaudited Pro Forma Combined Condensed Statement of Operations
For the twelve months ended December 31, 1998
(in thousands)
TransWestern United
Publishing Directory Pro Forma Combined Pro
Company LLC Services, Inc. Adjustments Forma
------------- --------------- ------------ ------------
Net revenues $108,889 $ 5,756 $ - $114,645
Cost of revenues 20,930 2,272 - 23,202
------------- --------------- ------------ ------------
Gross profit 87,959 3,484 - 91,443
------------- --------------- ------------ ------------
Operating expenses:
Sales and marketing 44,968 2,636 - 47,604
General and
administrative 18,106 647 3,554 (a) 22,307
------------- --------------- ------------ ------------
Total operating
expenses 63,074 3,283 3,554 69,911
------------- --------------- ------------ ------------
Income (loss) from operations 24,885 201 (3,554) 21,532
Other income (expense), net 347 (44) - 303
Interest expense (17,785) - (1,250) (b) (19,035)
------------- --------------- ------------ ------------
Income (loss) from
continuing operations per
member unit (Note 6) $ 7,447 $ 157 $ (4,804) $ 2,800
============= =============== ============ ============
(a) Adjustment to reflect the twelve month amortization of acquired
intangibles based on the allocation of the assumed purchase price in the
December 31, 1998 pro forma balance sheet of TransWestern Publishing
Company LLC.
(b)Adjustment to reflect the incremental interest expense TransWestern
Publishing Company LLC would have incurred on the additional debt resulting
from the acquisition of United Directory Services, Inc., calculated using
the applicable borrowing rates during the period outstanding.
See accompanying notes to unaudited pro forma combined condensed financial
statements.
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Note 1.
Effective May 1, 1998 as reported on Form 8-K dated May 12, 1998,
TransWestern Publishing Company LLC ("TWP") elected to change its fiscal
year from April 30 to December 31. Accordingly, the Company began
reporting interim results on a calendar year basis. The unaudited pro
forma combined condensed statement of income for the twelve months ended
December 31, 1998 includes the unaudited four month period ended April
1998.
Note 2.
The unaudited pro forma combined condensed financial statements reflect
the following acquisition:
On January 5, 1999, TWP purchased certain tangible and intangible assets
totaling $18,457 of United Directory Services, Inc. ("United"). The
purchase price, which includes estimated transaction costs of $720 was
allocated as follows:
Acquired customer lists $17,770
Deferral directory costs 687
Customer deposits and other liabilities (716)
-------
$17,741
=======
Note 3.
The unaudited pro forma condensed financial statements have been
prepared by TWP based upon the historical financial statements of United
and TWP and may not be indicative of the results that may have actually
occurred if the combinations had been in effect on the date indicated
or for the periods presented or which may be obtained in the future.
The unaudited pro forma condensed statement of operations include the
statement of operations of TWP and United for the twelve months ended
December 31, 1998. The pro forma condensed financial statements should
be read in conjunction with the audited financial statements and notes
of United included elsewhere in this filing.
Note 4.
The unaudited pro forma combined condensed statements of operations of
TWP and United for the year ended December 31, 1998 assumes the purchase
of United had been consummated on January 1, 1998. The pro forma
information is based on this historical financial statements of TWP and
United giving effect to the transaction under the purchase method of
accounting and the assumptions and adjustments in the accompanying
footnotes to the pro forma financial statements.
16
Note 5.
The unaudited pro forma condensed balance sheet assumes the purchase of
United had been consummated on December 31, 1998. The pro forma
information is based on the historical financial statements of TWP and
United giving effect to the transaction under the purchase method of
accounting and the assumptions and adjustments as summarized below:
(a) Represents the elimination of assets and liabilities not included in
the Asset Purchase Agreement.
(b)Represents the purchase price assigned to the fair value of the
intangibles acquired (customer list)
(c) Represents the additional borrowings under the revolving loan and
seller promissory notes to fund the acquisition of United.
(d)Represents the accrual of estimated acquisition costs to be incurred
by TWP.
(e)Represents the elimination of shareholders' equity of United at the
date of acquisition.
Note 6.
TWP's equity interest consists of a single class of authorized common
units (the "Member Units"). TransWestern Publishing Company, L.P. is the
sole member of TWP and accordingly holds all of the issued and
outstanding Member Units.