Exhibit 99.2
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 1998
(dollars in thousands)
GEO Rhodia Gallium TRIMET
Historical Historical Historical
January 1, 1998 January 1, 1998 January 1, 1998 Pro Forma Pro Forma
through through through Adjustments Combined
December 31, 1998 December 31, 1998 (1) July 31, 1998 (1)
----------------- --------------------- ----------------- ------------ ------------
Net sales $ 126,560 $ 15,380 $ 18,089 $ 578 (2) $ 160,607
Cost of goods sold 101,638 10,476 11,166 3,002 (3) 127,952
------------- ----------- ----------- ---------
1,670 (4)
------
4,672
Gross margin 24,922 4,904 6,923 (4,094) 32,655
Selling & administrative
costs 14,092 1,000 2,482 (933)(5) 16,641
------------- ----------- ----------- -------- ---------
Operating income 10,830 3,904 4,441 (3,161) 16,014
Other income (expense)
Interest expense (9,097) (52) - (5,550)(6) (14,699)
Other (118) 171 (30) - 23
------------- ----------- ----------- --------- ----------
Total other expense (9,215) 119 (30) (5,550) (14,676)
------------- ----------- ----------- --------- ----------
Income before taxes and
extraordinary items 1,615 4,023 4,411 (8,711) 1,338
Provision for income
taxes 667 1,673 1,791 (3,609)(7) 522
------------- ----------- ----------- --------- ----------
Income before
extraordinary loss $ 948 $ 2,350 $ 2,620 $ (5,102) $ 816
============= =========== =========== ========= ==========
(1) GEO acquired the TRIMET Technical Products Division of Mallinckrodt Inc. on
July 31, 1998. The TRIMET acquisition was accounted for as a purchase. GEO
acquired the stock of Rhod Six S.A., a subsidiary of Rhodia Chimie S.A., on
September 8, 1999, retroactive to August 31, 1999. The Rhodia Gallium
acquisition was accounted for as a purchase.
(2) With respect to Rhodia Gallium, reflects the net difference in the
commissions paid to related party sales agents during the historical period
presented and the new sales agreement with an unrelated third party, as if
the agreement with the third party had been in effect since January 1, 1998.
(3) Reflects depreciation and amortization for the fair value of assets
purchased (excluding current assets and liabilities) in conjunction with the
Rhodia Gallium acquisition. The cash purchase price of $21.5 million was
allocated as follows: $6.3 million of property and equipment, $10.1 million
of current assets net of assumed current liabilities, $0.1 million of other
assets and $1.3 million of other long-term liabilities, resulting in excess
of cost over fair value of assets acquired of $6.3 million. Additional
depreciation and amortization for the period from January 1, 1998 through
December 31, 1998 (assuming the Rhodia Gallium acquisition was consummated
on January 1, 1998) for the Rhodia Gallium assets (excluding current assets
and liabilities) is as follows:
Depreciation/
Years Fair Value Amortization
----- -------------- ------------
(in thousands)
Industrial buildings and improvements 40 1,690 $ 42
Infrastructure 40 508 13
Technical equipment 12 4,006 334
Office equipment 10 59 6
Construction in progress N/A 32 -
Know how 15 812 54
Patents 3-10 4,058 2,922
Excess cost over fair value 15 1,453 97
------
3,468
Less: Depreciation and amortization included in historical
Rhodia Gallium financial statements 466
------
Pro forma adjustment for depreciation and amortization $3,002
======
(4) Reflects depreciation and amortization for the fair value of assets
purchased (excluding current assets and liabilities) in conjunction with the
TRIMET acquisition. The cash purchase price of $61.1 million was allocated
as follows: $24.5 million of property and equipment, $4.7 million of
current assets net of assumed current liabilities, and $0.2 million of other
assets, resulting in excess of cost over fair value of assets acquired of
$31.7 million. Additional depreciation and amortization for the period from
January 1, 1998 through July 31, 1998 (assuming the TRIMET acquisition was
consummated on January 1, 1998) for the TRIMET assets (excluding current
assets and liabilities) is calculated as follows:
Depreciation/
Years Fair Value Amortization
----- -------------- ------------
(in thousands)
Building 40 $ 1,590 $ 23
Land N/A 1,150 -
Land improvements 20 460 14
Machinery and equipment 12 21,041 1,023
Office furniture and equipment 6-10 256 23
Excess cost over fair value 15 31,721 1,241
------
2,324
Less: Depreciation and amortization included in historical
TRIMET financial statements (654)
------
Pro forma adjustment for depreciation and amortization $ 1,670
=======
(5) The only asset not acquired in the purchase price of TRIMET was certain
real estate with known ground water and soil contamination. Mallinckrodt
Inc. has indemnified GEO for future remediation costs with respect to the
TRIMET property which arise out of acts that occurred prior to the closing.
In connection therewith, the pro forma adjustments reflect a reduction of
selling, general and administrative costs relating to environmental
remediation expenditures which were incurred by TRIMET during the period on
the property not acquired.
(6) Reflects interest expense on a pro forma basis for (a) interest costs
associated with the issuance of $120.0 million of senior subordinated notes;
(b) interest costs associated with draws outstanding under GEO's senior
credit facility; (c) interest costs associated with an existing $0.8 million
subordinated note payable; and (d) amortization of $5.1 million deferred
financing costs related to the offering of the senior subordinated notes.
(in thousands)
--------------
Interest expense on the senior subordinated notes $12,150
Interest expense on senior credit facility 1,588
Interest expense on the subordinated note payable 78
Interest expense on cash pool of Ingal Stade 52
Amortization of debt issuance costs and senior credit facility fees 631
Bank fees related to the senior subordinated notes and senior credit facility 200
-------
Pro forma interest expense $14,699
=======
Interest on the senior subordinated notes is based on the rate of 10.125%
per annum. The senior credit facility has a floating rate which was 7.3125%
at December 31, 1998. Interest on the subordinated note payable is 2% above
the prime lending rate, which was 9.75% at December 31, 1998. The debt
issuance costs are amortized over the ten year term of the senior
subordinated notes, and the financing fees related to the senior credit
facility are amortized over the five year term of the senior credit
facility.
(7) Reflects the tax effect of the pro forma adjustments as well as the effect
of the combined companies effective tax rate of 39%.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the nine months ended September 30, 1999
(dollars in thousands)
GEO Rhodia Gallium
Historical Historical
January 1, 1999 January 1, 1999
through through Pro Forma Pro Forma
September 30, 1999 August 31, 1999 (1) Adjustments Combined
------------------ ------------------ ------------- ----------
Net sales $ 108,152 $ 8,071 $ 283 (2) $116,506
Cost of goods sold 82,172 4,548 2,011 (3) 88,731
------------ ----------- --------- ---------
Gross margin 25,980 3,523 (1,728) 27,775
Selling & administrative
costs 13,788 831 - 14,619
------------ ----------- --------- ---------
Operating income 12,192 2,692 (1,728) 13,156
Other income (expense)
Interest expense (9,802) (30) (1,084)(4) (10,916)
Other (28) 187 - 159
------------ ----------- --------- ---------
Total other expense (9,830) 157 (1,084) (10,757)
------------ ----------- --------- ---------
Income before taxes and
extraordinary items 2,362 2,849 (2,812) 2,399
Provision for income
taxes 1,006 1,158 (1,228)(5) 936
------------ ----------- --------- ---------
Income before
extraordinary loss $ 1,356 $ 1,691 $ (1,584) $ 1,463
============ =========== ========= =========
(1) GEO acquired the stock of Rhod Six S.A., a subsidiary of Rhodia Chimie S.A.,
on September 8, 1999, effective retroactively to August 31, 1999. The
Rhodia Gallium acquisition was accounted for as a purchase.
(2) With respect to Rhodia Gallium, reflects the net difference in the
commissions paid to a related party sales agent during the historical period
presented and the new sales agreement with an unrelated third party, as if
the agreement with the third party had been in effect since January 1, 1998.
(3) Reflects depreciation and amortization for the fair value of assets
purchased (excluding current assets and liabilities) in conjunction with the
Rhodia Gallium acquisition. The cash purchase price of $21.5 million was
allocated as follows: $6.3 million of property and equipment, $10.1 million
of current assets net of assumed current liabilities, $0.1 million of other
assets and $1.3 million of other long-term liabilities, resulting in excess
of cost over fair value of assets acquired of $6.3 million. Additional
depreciation and amortization for the period from January 1, 1998 through
December 31, 1998 (assuming the Rhodia Gallium acquisition was consummated
on January 1, 1998) for the Rhodia Gallium assets (excluding current assets
and liabilities) is as follows:
Depreciation/
Years Fair Value Amortization
----- ---------- ------------
(in thousands)
Industrial buildings and improvements 40 $1,690 $ 28
Infrastructure 40 508 8
Technical equipment 12 4,006 223
Office equipment 10 59 4
Construction in progress N/A 32 -
Know how 15 812 36
Patents 3-10 4,058 1,948
Excess cost over fair value 15 1,453 65
------
2,312
Less: Depreciation and amortization included in historical
Rhodia Gallium financial statements 301
------
Pro forma adjustment for depreciation and amortization $2,011
======
(4) Reflects interest expense on a pro forma basis for (a) interest costs
associated with the issuance of $120.0 million of senior subordinated notes;
(b) interest costs associated with draws outstanding under GEO's senior
credit facility; and (d) amortization of $5.1 million deferred financing
costs related to the offering of the senior subordinated notes.
Interest expense on the senior subordinated notes 9,130
Interest expense on senior credit facility 1,249
Interest expense on cash pool of Ingal Stade 30
Amortization of debt issuance costs and senior credit facility fees 355
Bank fees related to the senior subordinated notes and senior credit facility 152
-------
Pro forma interest expense $10,916
=======
Interest on the senior subordinated notes is based on the rate of 10.125%
per annum. The senior credit facility has a floating rate which was 7.75% at
September 30, 1999. The debt issuance costs are amortized over the ten year
term of the senior subordinated notes, and the financing fees related to the
senior credit facility are amortized over the five year term of the senior
credit facility.
(5) Reflects the tax effect of the pro forma adjustments as well as the effect
of the combined companies effective tax rate of 39%.