Unaudited pro forma condensed
combined financial information
The following unaudited pro forma condensed combined financial data are based on
our historical financial statements and the historical financial statements of
AMICO. The information included in the "Gibraltar historical" column of the
unaudited pro forma condensed combined financial data sets forth our historical
balance sheet data as of September 30, 2005 and our historical statement of
income data for the year ended December 31, 2004 and the nine months ended
September 30, 2004 and 2005, which data are derived from our audited and
unaudited consolidated financial statements. The information included in the
"AMICO historical" column of the unaudited pro forma condensed combined
financial data sets forth AMICO's historical balance sheet data as of September
30, 2005 and AMICO's historical statement of operations data for the year ended
December 31, 2004 and the nine months ended September 30, 2004 and 2005, which
data are derived from AMICO's audited and unaudited consolidated financial
statements.
The information included in the "Gibraltar historical" column and the "AMICO
historical" column for the twelve months ended September 30, 2005 has been
calculated by subtracting the applicable unaudited consolidated statement of
income data for the nine months ended September 30, 2004 from the sum of (1) the
applicable audited consolidated statement of income data for the year ended
December 31, 2004 and (2) the applicable unaudited consolidated statement of
income data for the nine months ended September 30, 2005.
The information contained in the "Pro forma" column of the unaudited pro forma
condensed combined balance sheet as of September 30, 2005 gives effect to the
following (collectively, the "transactions") as if they had occurred on
September 30, 2005:
o the acquisition of AMICO; and
o the incurrence of new long-term debt and the use of proceeds thereof.
The information included in the "Pro forma" column of the unaudited pro forma
condensed combined statements of income for the year ended December 31, 2004 and
the nine months ended September 30, 2004 and 2005 gives effect to the events
described in the bullet points above as if they had occurred on January 1, 2004.
The pro forma statement of income for the twelve months ended September 30, 2005
has been derived by subtracting the unaudited pro forma condensed combined
statement of income data for the nine months ended September 30, 2004 from the
sum of (1) the unaudited pro forma condensed combined statement of income data
for the year ended December 31, 2004 and (2) the unaudited pro forma condensed
combined statement of income data for the nine months ended September 30, 2005.
The unaudited pro forma adjustments are based on available information and
certain assumptions that we believe are reasonable. However, these unaudited pro
forma adjustments do not include an allocation of the purchase price of AMICO
based on fair market value. Therefore, all the acquired assets and liabilities
are reflected at their historical book values with the excess consideration
recorded as goodwill. The allocation of the purchase price to our acquired
assets and liabilities will be completed as soon as reliable information is
available. Preliminary pro forma adjustments have been recorded:
o to record inventory of AMICO under the same accounting method as our
company; and
o to exclude the assets and liabilities not acquired as part of the AMICO
acquisition from the unaudited pro forma financial data.
The adjustments with respect to the new long-term debt reflect the estimated
interest rates plus amortization of estimated financing costs. The final
interest rates, financing costs incurred and application of proceeds will be
determined on the date the new long-term debt is actually incurred and may
differ from those reflected in the unaudited pro forma financial data.
Our unaudited pro forma financial data do not purport to present what our actual
financial position or results would have been if the events described above had
occurred as of the dates indicated and are not necessarily indicative of our
future financial position or results. For example, we expect our future results
to be affected by the following factors, among others:
o In connection with our acquisition of AMICO in October 2005, we must record
AMICO's inventory on our consolidated balance sheet at fair market value.
Our margins from the AMICO business will be depressed in the fourth quarter
of 2005 as we sell the inventory acquired. Additionally, the recording of
AMICO's acquired inventory at fair market value may result in additional
deferred tax assets or liabilities.
o We will be required to record identifiable intangible assets and property,
plant and equipment acquired in the AMICO acquisition on our consolidated
balance sheet at fair market value. Any resulting write-up of assets will
increase our depreciation and amortization expense when we depreciate or
amortize the acquired assets and will reduce gross profit, operating
income, income from continuing operations and net income, and such
reductions may be significant. Based upon our past acquisitions and the
nature of the assets acquired in the AMICO acquisition, we expect to
recognize, when we complete our fair market value calculations,
identifiable intangible assets such as trademarks/patents, unpatented
technology and customer relationships. We will not complete our fair market
value calculations of these assets until early 2006, and we cannot quantify
the amount of the write-up of the acquired assets at this time.
Amortization periods to be used for these identifiable intangible assets
and property, plant and equipment acquired will be based primarily upon the
estimated useful lives of the assets, which at this point are not
determinable. Additionally, the identification of intangible assets and the
recording of the acquired property, plant and equipment at fair market
value may give rise to additional deferred tax assets and liabilities.
o In connection with the transaction, we paid a prepayment premium of $6.7
million to retire our private placement notes. We also wrote off the
deferred financing fees of $0.7 million related to this debt. These charges
are not reflected in the unaudited pro forma condensed combined statements
of income because they are not considered on-going and will not have a
recurring impact on our results of operations. We also will incur charges
in our fourth quarter relating to non-capitalized expenses arising out of
the AMICO acquisition.
Unaudited pro forma condensed combined
balance sheet as of September 30, 2005
Gibraltar AMICO Pro forma
(Dollars in thousands) historical historical adjustments Pro forma
Assets
Current assets:
Cash and cash equivalents $ 8,149 $ 3,429 $ (3,429)(1) $ 8,149
Accounts receivable, net 174,269 41,070 -- 215,339
Inventories 166,727 24,327 8,488(2) 199,542
Other current assets 14,368 1,107 -- 15,475
Deferred income taxes -- 1,167 -- 1,167
Assets held for sale -- 246 -- 246
___________ ___________ ___________ ___________
Total current assets 363,513 71,346 5,059 439,918
Property, plant and equipment, net 256,503 41,993 -- 298,496
Goodwill 292,438 7,022 149,333(3) 448,793
Investments in partnerships 6,806 -- -- 6,806
Other assets 14,567 3,059 10,298(4) 27,924
___________ ___________ ___________ ___________
$ 933,827 $ 123,420 $ 164,690 $ 1,221,937
___________ ___________ ___________ ___________
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable $ 71,657 $ 15,903 -- $ 87,560
Accrued expenses 46,679 7,014 $ (1,700)(5) 51,993
Income taxes payable -- 4,012 (2,842)(6) 1,170
Notes payable--revolver -- 6,640 (6,640)(1) --
Current maturities of long-term debt 8,659 -- (8,460)(5) 199
Current maturities of related party
debt 5,833 -- -- 5,833
___________ ___________ ___________ ___________
Total current liabilities 132,828 33,569 (19,642) 146,755
Long-term debt 238,414 11,691 256,169(1)(5) 506,274
Deferred income taxes 67,621 6,113 3,360(2) 77,094
Other non-current liabilities 5,190 1,410 -- 6,600
Shareholders' equity 489,774 70,637 (75,197)(6) 485,214
___________ ___________ ___________ ___________
$ 933,827 $ 123,420 $ 164,690 $ 1,221,937
___________ ___________ ___________ ___________
Notes to the unaudited pro forma condensed
combined balance sheet
(1) Reflects the balance sheet adjustments for assets which will not be acquired
and liabilities which will not be assumed in the AMICO acquisition, as reflected
in the following table:
(Dollars in millions)
Assets:
Cash $ 3.4
Liabilities:
Notes payable--revolver 6.6
Long-term debt 11.7
_______
Net liabilities not acquired $ (14.9)
_______
(2) Represents the adjustment to inventory and the related deferred tax
liabilities as a result of the alignment of inventory accounting policies of
AMICO with those of our company. At acquisition, AMICO changed its inventory
policy from LIFO to FIFO, which will result in taxable income relating to the
reversal of the LIFO reserve that our company will recognize for tax purposes
over a four-year period.
(3) Reflects estimated additional goodwill resulting from the AMICO acquisition,
as if the AMICO acquisition had occurred on September 30, 2005. The
determination of the final purchase price, following any post-closing working
capital adjustments, for the AMICO acquisition has not been made. For purposes
of the unaudited pro forma condensed combined balance sheet, we have used the
preliminary purchase price paid in connection with the AMICO acquisition. We
have not completed an allocation of the purchase price to our assets and
liabilities; such allocation will be completed within one year and, in addition
to identifying intangible assets, may give rise to additional deferred tax
assets or liabilities. Therefore, all the acquired assets and liabilities are
reflected at their historical book values with the excess consideration recorded
as goodwill. The purchase price and goodwill have been calculated as follows:
(Dollars in millions)
Purchase price(a) $ 240.0
Less: net value of assets acquired(b) 83.6
_________
Goodwill balance 156.4
Less: Historical goodwill of AMICO 7.1
_________
Pro forma adjustment $ 149.3
_________
(a) Excludes the impact of any post-closing working capital adjustments, which
have not yet been determined.
(b) The net book value of assets acquired has been calculated as follows:
Assets acquired $ 121.4
Liabilities assumed (37.8)
_________
Net book value of assets acquired $ 83.6
(4) Reflects the capitalization of deferred financing fees incurred in
connection with the incurrence of new long-term debt and the write-off of
historical deferred financing fees.
(Dollars in millions)
Capitalization of deferred financing charges $ 11.0
Less: Historical deferred charges related to the redeemed
private placement notes of Gibraltar (0.7)
________
Pro forma adjustment $ 10.3
________
(5) Reflects adjustments for the following changes in borrowings:
Net
Actual balance borrowings/ Pro forma balance
(Dollars in millions) September 30, 2005 (payments) September 30, 2005
_____________________________________ ___________________ _________ __________________
Revolving credit facility $ 105.2 $ (30.2) $ 75.0
New term loan -- 230.0 230.0
Private placement notes 115.0 (115.0) --
Other new long-term
debt -- 200.0 200.0
Existing acquisition notes 31.2 (25.4) 5.8
Existing revenue bonds 1.5 -- 1.5
_____________________________________ ___________________ ___________ __________________
$ 252.9 $ 259.4 $ 512.3
_____________________________________ ___________________ ___________ __________________
Net
Actual balance borrowings/ Pro forma balance
September 30, 2005 (payments) September 30, 2005
__________________ __________ __________________
Short-term $ 14.5 $ (8.5) $ 6.0(a)
Long-term 238.4 267.9 506.3
_________ ________ _________
$ 252.9 $ 259.4 $ 512.3
_________ ________ _________
(a) Consists of the remaining acquisition note and $0.2 million of the revenue
bond.
(6) Reflects (i) the elimination of the historical AMICO shareholders' equity
due to the AMICO acquisition and (ii) the write-off of our deferred financing
fees in the amount of $0.7 million and the prepayment premium of $6.7 million,
both paid in connection with the early redemption of our private placement
notes. The tax effect of the write-off of the deferred financing fees and
prepayment was approximately $2.8 million.
(Dollars in millions)
Elimination of historical AMICO shareholders' equity $ (70.6)
Prepayment premium private placement notes (6.7)
Historical deferred charges related to the redeemed private
placement notes (0.7)
________
Tax effect of the prepayment premium and the write-off of the
historical deferred charges above 2.8
________
Pro forma adjustment $ (75.2)
________
Unaudited pro forma condensed combined statement of
income for the year ended December 31, 2004
(Dollars in thousands, Gibraltar AMICO Pro forma
except per share data) historical historical adjustments(1) Pro forma
___________________________________________ ___________ ___________ ___________ _____________
Net sales $ 976,255 $ 288,354 $ -- $ 1,264,609
Cost of sales 774,970 209,766 (13,835)(2) 970,901
___________ ___________ ___________ _____________
Gross profit 201,285 78,588 13,835 293,708
Selling, general and administrative
expense 111,737 37,519 -- 149,256
___________ ___________ ___________ _____________
Income from operations 89,548 41,069 13,835 144,452
Other (income) expense:
Equity in partnerships' (income) loss (4,846) -- -- (4,846)
Interest expense 12,915 5,115 19,380(3) 37,410
___________ ___________ ___________ _____________
Total other expense 8,069 5,115 19,380 32,564
___________ ___________ ___________ _____________
Income before taxes 81,479 35,954 (5,545) 111,888
Provision for income taxes 31,768 13,455 (2,162)(4) 43,061
___________ ___________ ___________ _____________
Income from continuing operations $ 49,711 $ 22,499 $ (3,383) $ 68,827
___________ ___________ ___________ _____________
Income per share from continuing
operations - Basic $ 1.69 $ 2.34
Weighted average shares outstanding - Basic 29,362 29,362
Income per share from continuing
operations - Diluted $ 1.68 $ 2.33
Weighted average shares outstanding -
Diluted 29,596 29,596
___________ ___________ ___________ _____________
Unaudited pro forma condensed combined statement of
income for the nine months ended September 30, 2005
(Dollars in thousands, Gibraltar AMICO Pro forma
except per share data) historical historical adjustments(1) Pro forma
__________________________________________ ___________ ___________ ____________ _____________
Net sales $ 844,108 $ 239,815 $ -- $ 1,083,923
Cost of sales 683,504 174,331 7,367(2) 865,202
___________ ___________ ___________ _____________
Gross profit 160,604 65,484 (7,367) 218,721
Selling, general and administrative
expense 85,353 23,530 -- 108,883
___________ ___________ ___________ _____________
Income from operations 75,251 41,954 (7,367) 109,838
Other (income) expense:
Equity in partnerships' loss/other expense 469 72 -- 541
Interest expense 11,102 3,478 13,476(3) 28,056
___________ ___________ ___________ _____________
Total other expense 11,571 3,550 13,476 28,597
___________ ___________ ___________ _____________
Income before taxes 63,680 38,404 (20,843) 81,241
Provision for income taxes 24,395 14,751 (7,985)(4) 31,161
___________ ___________ ___________ _____________
Income from continuing operations $ 39,285 $ 23,653 $ (12,858) $ 50,080
___________ ___________ ___________ _____________
Income per share from continuing
operations - Basic: $ 1.33 $ 1.69
Weighted average shares outstanding - Basic 29,600 29,600
Income per share from continuing
operations - Diluted: $ 1.32 $ 1.68
Weighted average shares outstanding -
Diluted 29,789 29,789
___________ ___________ ___________ _____________
Unaudited pro forma condensed combined statement of
income for the nine months ended September 30, 2004
(Dollars in thousands, Gibraltar AMICO Pro forma
except per share data) historical historical adjustments(1) Pro forma
__________________________________________ ____________ ___________ ___________ ___________
Net sales $ 721,045 $ 218,708 $ -- $ 939,753
Cost of sales 563,436 157,159 (13,529)(2) 707,066
___________ ___________ ___________ ___________
Gross profit 157,609 61,549 13,529 232,687
Selling, general and administrative
expense 84,923 26,460 -- 111,383
___________ ___________ ___________ ___________
Income from operations 72,686 35,089 13,529 121,304
___________ ___________ ___________ ___________
Other (income) expense:
Equity in partnerships' (income)
loss/other expense (3,492) 138 -- (3,354)
Interest expense 9,523 3,867 14,686(3) 28,076
___________ ___________ ___________ ___________
Total other expense 6,031 4,005 14,686 24,722
___________ ___________ ___________ ___________
Income before taxes 66,655 31,084 (1,157) 96,582
Provision for income taxes 26,329 11,549 (457)(4) 37,421
___________ ___________ ___________ ___________
Income from continuing operations $ 40,326 $ 19,535 $ (700) $ 59,161
___________ ___________ ___________ ___________
Income per shares from continuing
operations - Basic: $ 1.38 $ 2.02
Weighted average shares outstanding -
Basic 29,302 29,302
Income per share from continuing
operations - Diluted $ 1.37 $ 2.00
Weighted average shares outstanding -
Diluted 29,539 29,539
___________ ___________
Unaudited pro forma condensed combined statement of
income for the twelve months ended September 30, 2005
(Dollars in thousands, Gibraltar AMICO Pro forma
except per share data) historical historical adjustments(1) Pro forma
______________________________________ _____________ ___________ ____________ _____________
Net sales $ 1,099,318 $ 309,461 $ -- $ 1,408,779
Cost of sales 895,038 226,938 7,061(2) 1,129,037
_____________ ___________ ____________ _____________
Gross profit 204,280 82,523 (7,061) 279,742
Selling, general and administrative
expense 112,167 34,589 -- 146,756
_____________ ___________ ____________ _____________
Income from operations 92,113 47,934 (7,061) 132,986
Other (income) expense:
Equity in partnerships' (income)/other
(income) (885) (66) -- (951)
Interest expense 14,494 4,726 18,170(3) 37,390
_____________ ___________ ____________ _____________
Total other expense 13,609 4,660 18,170 36,439
Income before taxes 78,504 43,274 (25,231) 96,547
Provision for income taxes 29,834 16,657 (9,690)(4) 36,801
_____________ ___________ ____________ _____________
Income from continuing operations $ 48,670 $ 26,617 $ (15,541) $ 59,746
_____________ ___________ ____________ _____________
Income per share from continuing
operations - Basic: $ 1.64 $ 2.02
Weighted average shares
outstanding - Basic 29,600 29,600
Income per share from continuing
operations - Diluted: $ 1.63 $ 2.01
Weighted average shares
outstanding--Diluted 29,789 29,789
_____________ _____________
Notes to the unaudited pro forma
condensed combined statements of income
(1) For purposes of the unaudited pro forma condensed combined statement of
income, we have used the preliminary purchase price paid in connection with
the AMICO acquisition (see footnote 1 of the Notes to the unaudited pro forma
condensed combined balance sheet). We have not completed an allocation of the
purchase price to our assets and liabilities; such allocation will be completed
within one year. Therefore, all the acquired assets and liabilities are
reflected at their historical book values with the excess consideration recorded
as goodwill. We will be required to record identifiable intangible assets and
property, plant and equipment acquired in the AMICO acquisition on our
consolidated balance sheet at fair market value. Any resulting write-up of
assets will increase our depreciation and amortization costs when we depreciate
or amortize the acquired assets and will reduce gross profit, operating income,
income from continuing operations and net income, and such reductions may be
significant.
(2) Represents the cost of sales impact of the alignment of inventory accounting
policies. AMICO changed its inventory policy to FIFO from LIFO in order to align
its accounting policies with those of our company. Assuming consistent inventory
levels, in a period of rising raw material prices the FIFO method results in a
higher ending inventory balance and higher gross profit than the LIFO method.
(3) Represents the estimated increase in interest expense for the periods
indicated incurred as part of the financing for the transactions, assuming the
transactions had occurred as of January 1, 2004.
Year ended Nine months ended Twelve months ended
December 31 September 30, September 30,
(Dollars in millions) 2004 2004 2005 2005
______________________________________________ _______________ _________ ___________ _________________
Pro forma interest expense of
transaction debt 36.7 27.5 27.5 36.7
Less: historical interest expense and
amortization of deferred charges on
repaid debt and AMICO debt not
acquired (17.3) (12.8) (14.0) (18.5)
_______________ _________ ___________ _________________
Net adjustment to interest expense $ 19.4 $ 14.7 $ 13.5 $ 18.2
_______________ _________ ___________ _________________
A one-eighth percent change in interest rates of the total debt incurred as part
of the transactions would have the following effect on pro forma interest
expense:
Year ended Nine months ended Twelve months ended
December 31, September 30, September 30,
(Dollars in millions) 2004 2004 2005 2005
_____________________ ________ _______ _________ _________
Total $ 0.6 $ 0.5 $ 0.5 $ 0.6
_____________________ ________ _______ _________ _________
(4) Reflects the tax effect of our pro forma adjustments at the statutory rate
of the period to which the adjustments pertain.