EX-99.3 4 tm2026697d1_ex99-3.htm EXHIBIT 99.3

 

Exhibit 99.3

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

The following unaudited pro forma condensed combined financial information has been prepared to reflect adjustments to the financial condition and results of operations of WillScot Corp. (“WillScot,” and now called “WillScot Mobile Mini Holdings Corp.” or “WillScot Mini Holdings”) to give effect to the following items:

 

i.the estimated effects of the merger of Mobile Mini, Inc. (“Mobile Mini”) with and into Picasso Merger Sub, Inc. (“Merger Sub”), one of WillScot’s wholly-owned subsidiaries (the “Merger”), inclusive of the effects of the assumption and subsequent repayment of the Mobile Mini’s revolving credit facility (“Mobile Mini ABL Facility”) and Mobile Mini's outstanding senior notes due 2024 (“Mobile Mini 2024 Notes”), both of which are deemed to be debt assumed as of the acquisition date;

 

ii.the extinguishment of WillScot's existing revolving credit facility (“WillScot ABL Facility”) and a contemporaneous arrangement to enter into the new revolving credit facility (“New ABL Facility”), with an increased commitment; and

 

iii.the issuance of secured notes to qualified institutional buyers in a private placement transaction and the use of the proceeds therefrom and the extinguishment of WillScot’s outstanding senior secured notes due 2022 (“WillScot 2022 Senior Secured Notes”)(collectively with items above, the “Transactions”)

 

Upon completion of the Merger, WillScot changed its name to WillScot Mini Holdings and filed an amended and restated certificate of incorporation, which reclassified all outstanding shares of WillScot’s Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), and converted such shares into shares of WillScot Mobile Mini common stock, par value $0.0001 per share (the “Common Stock”). Unless the context otherwise requires, all references herein to “WillScot,” refer to WillScot Corporation, at or prior to the completion of the Merger and without giving effect to the name change and all references to “WillScot Mini Holdings,” refer to WillScot Mobile Mini Holdings Corp., after giving effect to the Merger and the name change.

 

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of WillScot and Mobile Mini described below. In preparing the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019, the six months ended June 30, 2019, and the six months ended June 30, 2020 certain reclassifications were made to the reported financial information of Mobile Mini to conform to the reporting classifications of WillScot.

 

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019, is based on, derived from, and should be read in conjunction with, WillScot’s historical audited financial statements as set forth in WillScot's 2019 Annual Report on Form 10-K (the “WillScot 10-K”). The aforementioned pro forma financial statements are also based on, derived from, and reclassified from Mobile Mini’s historical audited financial statements for the fiscal year ended December 31, 2019 and they should be read in conjunction with Mobile Mini’s historical audited financial statements as set forth in Mobile Mini’s 2019 Annual Report on Form 10-K (the “Mobile Mini 10-K”).

 

The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2019, and for the six months ended June 30, 2020, as well as the unaudited pro forma condensed balance sheet as of June 30, 2020, are based on, derived from, and should be read in conjunction with, WillScot’s historical unaudited financial statements as set forth in WillScot Mini Holdings' Form 10-Q for the six months ended June 30, 2020 (the “WillScot 10-Q”). The aforementioned pro forma financial statements are also based on, derived from, and should be read in conjunction with Mobile Mini’s historical unaudited financial statements as set forth in the Form 10-Q for the six months ended June 30, 2019, and in the Form 8-K filed by WillScot Mini Holdings on August 10, 2020.

 

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019, the six months ended June 30, 2019, and the six months ended June 30, 2020, assume that the Transactions occurred on January 1, 2019. The unaudited pro forma condensed combined balance sheet as of June 30, 2020 assumes that the Transactions occurred on June 30, 2020. The unaudited pro forma condensed combined financial information has been prepared by WillScot Mini Holdings management for illustrative purposes only and is not necessarily indicative of the combined financial position or results of operations that would have been realized had the Transactions occurred as of the dates indicated, nor is it meant to be indicative of any anticipated combined financial position or future results of operations of WillScot Mini Holdings. In addition, the accompanying unaudited pro forma condensed combined statements of operations do not include any expected cost savings or restructuring actions which may be achievable or which may occur in the future. Furthermore, the accompanying unaudited pro forma condensed combined statements of operations also do not include the impact of any non-recurring activity and one-time transaction related costs arising from the Transactions. The historical combined financial information has been adjusted in the accompanying unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the Transactions related thereto, (2) factually supportable and (3) with respect to the unaudited pro forma condensed combined statements of operations, are expected to have a continuing impact on the combined results.

 

1

 

 

The Merger will be accounted for as a business combination using the acquisition method of accounting under the provisions of Accounting Standard Codification No. 805, “Business Combinations,” (“ASC 805”) and applying the pro forma assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. Under ASC 805, WillScot Mini Holdings values assets acquired and liabilities assumed in a business combination at their fair values as of the acquisition date. Fair value measurements can be highly subjective and the reasonable application of measurement principles may result in a range of alternative estimates using the same facts and circumstances. The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions by management, including estimating future cash flows, and developing appropriate discount rates. Under ASC 805, transaction costs are not included as a component of consideration transferred, and are expensed as incurred. The final valuation is expected to be completed as soon as practicable but no later than one year after the consummation of the Merger. The assignment of purchase price to assets acquired and liabilities assumed is subject to completion of the final analysis of the fair value of the assets and liabilities of Mobile Mini as of the effective date of the Merger. Accordingly, the assignment of purchase price in the unaudited pro forma condensed combined financial statements is preliminary and adjustments could be material. The preliminary fair values assigned to the assets to be acquired and liabilities to be assumed are based on reasonable estimates and assumptions developed using currently available data.

 

2

 

 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JUNE 30, 2020

(In thousands)

 

   Historical
WillScot as of
June 30, 2020		   Historical Mobile
Mini (as
reclassified) as of
June 30, 2020		   Combined
Historical
Financial
Statements as of
June 30, 2020		   Debt Adjustments
 (see Note 3)		      Merger Adjustments
(see Note 4)		      Pro Forma
Combined		 
Assets                                    
Cash and cash equivalents  $9,061   $17,170   $26,231   $932,413   (3a)  $(913,007)  (4a)  $45,637 
Restricted Cash   655,087    -    655,087    (655,087)  (3a)   -       - 
Trade receivables, net of allowance for doubtful accounts   231,007    91,764    322,771    -       -       322,771 
Inventories   14,800    9,034    23,834    -       -       23,834 
Prepaid expenses and other current assets   21,392    11,891    33,283    -       (5,424)  (4b)   27,859 
Assets held for sale   9,332    -    9,332    -       -       9,332 
Total current assets   940,679    129,859    1,070,538    277,326       (918,431)      429,433 
                                     
Rental equipment, net   1,908,299    958,155    2,866,454    -       185,784   (4c)   3,052,238 
Property, plant and equipment, net   142,454    152,367    294,821    -       2,330   (4d)   297,151 
Operating lease assets   146,721    91,807    238,528    -       -       238,528 
Goodwill   233,829    710,013    943,842    -       (16,755)  (4e)   927,087 
Intangible assets, net   126,125    49,088    175,213    -       545,912   (4f)   721,125 
Other non-current assets   3,433    1,395    4,828    (1,610)  (3b)   -       3,218 
Total long-term assets   2,560,861    1,962,825    4,523,686    (1,610)      717,271       5,239,347 
Total assets  $3,501,540   $2,092,684   $5,594,224   $275,716      $(201,160)     $5,668,780 
                                     
Liabilities                                    
Accounts payable  $87,847   $27,791   $115,638   $-      $-      $115,638 
Accrued liabilities   101,212    19,995    121,207    -       (30,663)  (4g)   90,544 
Accrued interest   16,772    7,776    24,548    (2,276)  (3c)   (7,776)  (4h)   14,496 
Deferred revenue and customer deposits   89,258    39,728    128,986    -       -       128,986 
Operating lease liabilities - current   30,438    17,126    47,564    -       -       47,564 
Finance lease liabilities - current   -    15,637    15,637    -       -       15,637 
Current portion of long-term debt   265,398    -    265,398    (265,398)  (3d)   -       - 
Total current liabilities   590,925    128,053    718,978    (267,674)      (38,439)      412,865 
              -                      
Long-term debt   1,971,010    806,254    2,777,264    564,679   (3d)   (806,254)  (4h)   2,535,689 
Deferred tax liabilities   69,044    203,596    272,640    (5,174)  (3e)   95,980   (4i)   363,446 
Deferred revenue and customer deposits   12,284    -    12,284    -       -       12,284 
Operating lease liabilities - non-current   117,159    76,688    193,847    -       -       193,847 
Finance lease liabilities - non-current   -    61,060    61,060    -       -       61,060 
Other non-current liabilities   36,028    -    36,028    -       -       36,028 
Long-term liabilities   2,205,525    1,147,598    3,353,123    559,505       (710,274)      3,202,354 
Total liabilities   2,796,450    1,275,651    4,072,101    291,831    `    (748,713)      3,615,219 
                                     
Commitments and Contingencies                                    
Class A common stock   12    507    519    -       (496)  (4j)   23 
Additional paid-in-capital   2,471,312    644,915    3,116,227    -       718,402   (4j)   3,834,629 
Accumulated other comprehensive (loss) / income   (84,807)   (80,737)   (165,544)   -       80,737   (4j)   (84,807)
Retained earnings / (accumulated deficit)   (1,681,427)   430,665    (1,250,762)   (16,115)  (3f)   (429,407)  (4j)   (1,696,284)
Treasury stock   -    (178,317)   (178,317)   -       178,317   (4j)   - 
Total shareholders' equity   705,090    817,033    1,522,123    (16,115)      547,553       2,053,561 
Non-controlling interest   -    -    -    -       -       - 
Total equity   705,090    817,033    1,522,123    (16,115)      547,553       2,053,561 
Total liabilities and invested equity  $3,501,540   $2,092,684   $5,594,224   $275,716      $(201,160)     $5,668,780 

 

See notes to unaudited pro forma condensed combined financial statements

 

3

 

 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR TWELVE MONTHS ENDED DECEMBER 31, 2019

(In thousands, except share and per share data)

 

   Historical WillScot
for the
twelve months
ended December
31, 2019		   Historical
MobileMini
(as reclassified)
for the
twelve months
ended December
31, 2019		   Debt
Adjustments
 (see Note 3)		   Merger
Adjustments
(see Note 5)		   Pro Forma
Combined		 
Revenues:                         
Leasing and service revenue:                         
Modular leasing  $744,185   $440,242   $-   $-   $1,184,427 
Modular delivery and installation   220,057    141,415    -    -    361,472 
Sales:                         
New units   59,085    17,255    -    -    76,340 
Rental units   40,338    13,713    -    -    54,051 
Total revenues   1,063,665    612,625    -    -    1,676,290 
                          
Costs:                         
Cost of leasing and services:                         
Modular leasing   213,151    60,003    -    -    273,154 
Modular delivery and installation   194,107    99,634    -    -    293,741 
Cost of sales:                         
New units   42,160    10,885    -    -    53,045 
Rental units   26,255    9,480    -    -    35,735 
Depreciation of rental equipment   174,679    31,802    -    4,918 (5a)    211,399 
Gross profit   413,313    400,821    -    (4,918)   809,216 
                          
Expenses:                         
Selling, general and administrative   271,004    208,098    -    1,553 (5b)    480,655 
Other depreciation and amortization   12,395    38,781    -    15,677 (5c)    66,853 
Impairment losses on long-lived assets   2,848    -    -    -    2,848 
Lease impairment expense and other related charges   8,674    -    -    -    8,674 
Restructuring costs   3,755    -    -    -    3,755 
Currency (gains) losses, net   (688)   274    -    -    (414)
Other (income) expense, net   (2,200)   100    -    -    (2,100)
Operating income (loss)   117,525    153,568    -    (22,148)   248,945 
Interest expense   122,504    41,366    7,823 (3g)    (39,672) (5d)   132,021 
Loss on extinguishment of debt   8,755    123    -    -    8,878 
Income / (loss) before income tax   (13,734)   112,079    (7,823)   17,524    108,046 
Income tax expense (benefit)   (2,191)   28,345    (1,995) (3h)    4,469(5e)   28,628 
Net income / (loss)   (11,543)   83,734    (5,828)   13,055    79,418 
Net loss attributable to non-controlling interest, net of tax   (421)   -    -    421 (5f)    - 
Total income / (loss) attributable to WSC  $(11,122)  $83,734   $(5,828)  $12,634   $79,418 
                          
Net (loss) income per share attributable to WSC                         
Basic  $(0.10)                 $0.35 
Diluted   (0.10)                  0.35 
Weighted Average Shares                         
Basic   108,683,820              117,067,547 (5g)   225,751,367 
Diluted   108,683,820              121,347,284(5g)     230,031,104 

 

  See notes to unaudited pro forma condensed combined financial statements

 

4

 

 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR SIX MONTHS ENDED JUNE 30, 2019

(In thousands, except share and per share data)

 

  

Historical WillScot
for the six months

ended June 30, 2019

   Historical
MobileMini (as
reclassified)for the
six months ended
June 30, 2019		   Debt Adjustments
 (see Note 3)		    Merger Adjustments
(see Note 5)		    Pro Forma Combined 
Revenues:                           
Leasing and service revenue:                           
Modular leasing  $363,110   $214,163   $-    $-    $577,273 
Modular delivery and installation   105,966    69,916    -     -     175,882 
Sales:                           
New units   26,348    8,727    -     -     35,075 
Rental units   21,974    7,036    -     -     29,010 
Total revenues   517,398    299,842    -     -     817,240 
                            
Costs:                           
Cost of leasing and services:                           
Modular leasing   102,308    30,569    -     -     132,877 
Modular delivery and installation   91,811    50,165    -     -     141,976 
Cost of sales:                           
New units   18,877    5,651    -     -     24,528 
Rental units   14,516    5,001    -     -     19,517 
Depreciation of rental equipment   85,071    15,894    -     2,459 (5a)   103,424 
Gross profit   204,815    192,562    -     (2,459     394,918 
                            
Expenses:                           
Selling, general and administrative   143,704    106,127    -     776 (5b)   250,607 
Other depreciation and amortization   5,733    19,576    -     7,931 (5c)   33,240 
Impairment losses on long-lived assets   2,638    -    -     -     2,638 
Lease impairment expense and other related charges   4,605    -    -     -     4,605 
Restructuring costs   3,288    -    -     -     3,288 
Currency (gains) losses, net   (670)   166    -     -     (504)
Other (income) expense, net   (2,241)   102    -     -     (2,139)
Operating income (loss)   47,758    66,591    -     (11,166     103,183 
Interest expense   62,783    21,352    3,282(3g)    (20,520 )(5d)   66,897 
Loss on extinguishment of debt   7,244    123    -     -     7,367 
Income / (loss) before income tax   (22,269)   45,116    (3,282)    9,354     28,919 
Income tax expense (benefit)   (802)   12,973    (837)(3h)    2,386 (5e)   13,720 
Net income / (loss)   (21,467)   32,143    (2,445)    6,968     15,199 
Net loss attributable to non-controlling interest, net of tax   (1,590)   -    -     1,590 (5f)   - 
Total income / (loss) attributable to WSC  $(19,877)  $32,143   $(2,445)    5,378     15,199 
                            
Net (loss) income per share attributable to WSC                           
Basic  $(0.18)                   $0.07 
Diluted   (0.18)                    0.07 
Weighted Average Shares                           
Basic   108,609,068               117,067,547 (5g)   225,676,615 
Diluted   108,609,068               118,761,567 (5g)   227,370,635 

 

See notes to unaudited pro forma condensed combined financial statements

 

5

 

 

WILLSCOT CORPORATION

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR SIX MONTHS ENDED JUNE 30, 2020

(In thousands, except share and per share data)

 

   Historical
WillScot for the
six months ended
June 30, 2020		   Historical
MobileMini (as
reclassified) for
the six months
ended June 30,
2020		   Debt
Adjustments
 (see Note 3)		     Merger
Adjustments
(see Note 5)		     Pro Forma
Combined		 
Revenues:                             
Leasing and service revenue:                             
Modular leasing  $378,495   $205,063   $-     $-     $583,558 
Modular delivery and installation   102,710    60,054    -      -      162,764 
Sales:                             
New units   19,376    8,549    -      -      27,925 
Rental units   12,102    7,465    -      -      19,567 
Total revenues   512,683    281,131    -      -      793,814 
                              
Costs:                             
Cost of leasing and services:                             
Modular leasing   97,556    25,274    -      -      122,830 
Modular delivery and installation   87,388    42,677    -      -      130,065 
Cost of sales:                             
New units   12,534    5,457    -      -      17,991 
Rental units   7,609    4,625    -      -      12,234 
Depreciation of rental equipment   91,442    15,360    -      2,459  (5a)   109,261 
Gross profit   216,154    187,738    -      (2,459)     401,433 
                              
Expenses:                             
Selling, general and administrative   140,240    112,769    -      (24,463) (5b)   228,546 
Other depreciation and amortization   5,957    19,695    -      7,923  (5c)   33,575 
Lease impairment expense and other related charges   3,055    -    -      -      3,055 
Restructuring costs   689    -    -      -      689 
Currency (gains) losses, net   518    39    -      -      557 
Other (income) expense, net   (745)   186    -      -      (559)
Operating income (loss)   66,440    55,049    -      14,081      135,570 
Interest expense   56,776    16,950    7,826  (3g)  (15,921) (5d)   65,631 
Income / (loss) before income tax   9,664    38,099    (7,826)     30,002      69,939 
Income tax expense (benefit)   505    12,556    (1,996) (3h)  7,650  (5e)   18,715 
Net income / (loss)   9,159    25,543    (5,830)     22,352      51,224 
Net loss attributable to non-controlling interest, net of tax   1,213    -    -      (1,213) (5f)   - 
Total income / (loss) attributable to WSC  $7,946   $25,543   $(5,830)    $23,565     $51,224 
                              
Net (loss) income per share attributable to WSC                             
Basic  $0.07                      $0.23 
Diluted   0.07                       0.22 
Weighted Average Shares                             
Basic   110,174,536                117,008,431  (5g)   227,182,967 
Diluted   112,209,212                117,585,783  (5g)   229,794,995 

 

See notes to unaudited pro forma condensed combined financial statements

 

6

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(in thousands, except per share data)

 

1. Mobile Mini Merger

 

On March 1, 2020, WillScot, Mobile Mini and Merger Sub, entered into the Merger Agreement. On July 1, 2020, in accordance with the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the applicable provisions of the Delaware General Corporation Law (the “DGCL”), Merger Sub merged with and into Mobile Mini (the “Merger”). At the effective time of the Merger (the “Effective Time”), the separate corporate existence of Merger Sub ceased and Mobile Mini continued its existence under Delaware law, as the surviving corporation in the Merger and a wholly-owned subsidiary of WillScot. In connection with the Merger, each share of Mobile Mini common stock, par value $0.01 per share (the “Mobile Mini Common Stock”) issued and outstanding immediately prior to the Effective Time (other than shares held by Mobile Mini as treasury shares or owned by a subsidiary of Mobile Mini), was converted into the right to receive 2.4050 shares of WillScot Class A Common Stock (the “Merger Consideration”). Immediately following Mobile Mini stockholders’ receipt of the Merger Consideration and upon the filing of the amended and restated certificate of incorporation of WillScot at the Effective Time, which is the certificate of incorporation of WillScot Mini Holdings (the “A&R Charter”), all issued and outstanding shares of WillScot’s Class A Common Stock were reclassified as and converted into shares of WillScot Mini Holdings’ Common Stock.

 

Upon completion of the Merger, each outstanding and unexercised option to purchase shares of Mobile Mini Common Stock was assumed by WillScot Mini Holdings and became an option to purchase shares of WillScot Mini Holdings’ Common Stock, on the same terms and conditions as applied to each such option immediately prior to the Effective Time, except that (A) the number of shares of WillScot Mini Holdings’ Common Stock subject to such option equaled the product of (i) the number of shares of Mobile Mini Common Stock that were subject to such option immediately prior to the Effective Time multiplied by (ii) 2.4050, rounded down to the nearest whole share, and (B) the per-share exercise price was equal the quotient of (i) the exercise price per share of Mobile Mini Common Stock at which such option was exercisable immediately prior to the Effective Time, divided by (ii) 2.4050, rounded up to the nearest whole cent.

 

In connection with the Merger, on March 1, 2020, WillScot also entered into a commitment letter (as amended and restated from time to time, for the purpose of joining additional financial institutions, the "Commitment Letter") pursuant to which certain financial institutions committed to provide a $2.4 billion revolving credit facility, consisting of: (i) a senior secured asset-based US dollar revolving credit facility in the aggregate principal amount of $2 billion (the “US Facility”) and (ii) a senior secured asset-based multicurrency revolving credit facility (together with the US Facility, the “New ABL Facility”). The proceeds of the New ABL Facility were available to (i) repay in full the existing WillScot ABL Facility and the Mobile Mini ABL Facility, (ii) redeem the existing Mobile Mini 2024 Notes, (iii) pay the fees, costs and expenses incurred in connection with the Transactions, and (iv) other general corporate purposes. On July 1, 2020, in connection with the completion of the Merger, Williams Scotsman Holdings Corp (“WSHC”), WSII (as defined below) and the guarantors named therein, entered into the New ABL Facility credit agreement, in accordance with the terms of the Commitment Letter.

 

Furthermore, in anticipation of the Merger, on June 15, 2020 Picasso Finance Sub, Inc., a newly-formed finance subsidiary of Williams Scotsman International Inc. (“WSII”) and Delaware corporation (the “Escrow Issuer”), completed a private offering of $650.0 million in aggregate principal amount of its senior secured notes due 2025 (the “2025 Notes”). On July 1, 2020, the Escrow Issuer merged with and into WSII, with WSII as the surviving entity in such merger (the “Escrow Issuer Merger”). In connection with the Escrow Issuer Merger, WSII, each of WSII’s direct and indirect domestic subsidiaries and Williams Scotsman Holdings Corp. (together with the direct and indirect domestic subsidiaries of WSII (including Mobile Mini and its domestic subsidiaries), the “Note Guarantors”) and the Trustee entered into a supplemental indenture (the “2025 Notes Supplemental Indenture”) pursuant to which WSII assumed all of the Escrow Issuer’s obligations and rights under the 2025 Notes Indenture and the Note Guarantors unconditionally guaranteed the 2025 Notes.

 

7

 

 

The following table summarizes the components of the estimated total purchase price included in the pro forma condensed combined financial statements as if the Merger had been completed on June 30, 2020:

 

In thousands, except share and per share amounts    
Mobile Mini common stock outstanding   44,252,275 
Share conversion ratio (per Mobile Mini share)   2.4050 
Estimated total WillScot Class A Common Stock to be issued   106,426,722 
WillScot Class A Common Stock per share price as of July 1, 2020  $12.53 
Fair value of shares of WillScot Class A Common Stock issued  $1,333,527 
Cash paid for fractional shares   30 
Fair value of Mobile Mini Options converted to WillScot Options   34,129 
Estimated total purchase price  $1,367,686 

 

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting under the provisions of ASC 805 and was based on the historical financial information of WillScot and Mobile Mini. Under the acquisition method of accounting, the total estimated purchase price of an acquisition is assigned to the net tangible and intangible assets to be acquired based on their estimated fair values as of the date the acquisition is consummated. Such fair values are based on available information and certain assumptions that we believe are reasonable. Management has made a preliminary assignment of the estimated purchase price to the tangible (including rental equipment) and intangible assets acquired and liabilities assumed based on various preliminary assumptions and estimates. The final determination of these estimated fair values, the assets’ useful lives and the amortization methods are subject to completion of an ongoing assessment and will be available as soon as practicable but no later than one year after the consummation of the Merger. Fair value measurements can be highly subjective and the reasonable application of measurement principles may result in a range of alternative estimates using the same facts and circumstances. The results of the final assignment could be materially different from the preliminary assignment set forth in these unaudited pro forma condensed combined financial statements, including but not limited to, the assignment related to identifiable intangible assets, rental equipment, property, plant and equipment, operating lease assets, inventories, deferred taxes, goodwill, operating lease liabilities, finance lease liabilities, debt, and the resulting impacts on, among others, depreciation and amortization, interest expense and income taxes.

 

8

 

 

The following table summarizes the preliminary estimated purchase price assignment, as if the Merger had been completed on June 30, 2020:

 

In thousands    
Purchase Price  $1,367,686 
Cash and cash equivalents   17,170 
Trade receivables, net   91,764 
Inventories   9,034 
Prepaid expenses and other current assets   11,891 
Rental equipment   1,143,939 
Property, plant and equipment, net   154,697 
Operating lease assets   91,807 
Intangible assets   595,000 
Other non-current assets   1,395 
Total identifiable assets acquired  $2,116,697 
Accounts payable   (27,791)
Accrued liabilities   (19,995)
Accrued interest   (7,776)
Deferred revenue and customer deposits   (39,728)
Operating lease liabilities   (93,814)
Finance lease liabilities   (76,697)
Debt   (818,678)
Deferred tax liabilities   (357,790)
Total identifiable liabilities assumed   (1,442,269)
Goodwill Identified  $693,258 

 

2. Accounting Policies and Reclassifications

 

During the preparation of these unaudited pro forma condensed combined financial statements, WillScot Mini Holdings made a preliminary assessment as to any material differences between accounting policies of the two companies. These unaudited pro forma condensed combined financial statements do not present any material differences in accounting policies between the two companies based on this preliminary assessment.

 

Financial information presented in the “Historical Mobile Mini” column in the unaudited pro forma condensed combined balance sheet and statements of operations has been reclassified to conform to the historical presentation of WillScot as follows (primarily related to classification of current and non-current amounts):

 

9

 

 

Historical Mobile Mini Balance Sheet as of June 30, 2020

 

       (As reclassified ) 
   As of June 30 ,   as of June 30 , 
   2020   2020 
   (in 000's )   (in 000s ) 
Assets          
Cash and cash equivalents  $17,170   $17,170 
Trade receivables, net   92,465    91,764 
Inventories   9,034    9,034 
Prepaid expenses and other current assets   -    11,891 
Total current assets        129,859 
Rental equipment, net   958,155    958,155 
Property, plant and equipment, net   152,367    152,367 
Operating lease assets   91,807    91,807 
Other assets   16,979    1,395 
Goodwill   710,013    710,013 
Intangible assets, net   49,088    49,088 
Total long-term assets        1,962,825 
Total assets  $2 ,097,078   $2,092,684 
           
Liabilities          
Accounts payable  $32,416   $27,791 
Accrued liabilities   62,874    19,995 
Accrued interest   -    7,776 
Deferred revenue and customer deposits   -    39,728 
Operating lease liabilities   93,814    17,126 
Finance lease liabilities   76,697    15,637 
Total current liabilities        128,053 
Lines of credit   563,202    - 
Long-term debt   247,446    806,254 
Deferred tax liabilities   203,596    203,596 
Operating lease liabilities   -    76,688 
Finance lease liabilities   -    61,060 
Long-term liabilities        1,147,598 
Total liabilities   1,280,045    1,275,651 
           
Commitments and contingencies          
Common stock   507    507 
Additional paid-in capital   644,915    644,915 
Accumulated other comprehensive (loss)   (80,737)   (80,737)
Retained earnings   430,665    430,665 
Treasury stock   (178,317)   (178,317)
Total equity   817,033    817,033 
Total liabilities and equity  $2,097,078   $2,092,684 

 

10

 

 

Historical Mobile Mini Statement of Operations for the twelve months ended December 31, 2019

 

   Historical MobileMini for
the twelve months ended		   (As reclassified) for the twelve
months ended		 
   December 31, 2019   December 31, 2019 
   (in 000's)   (in 000's) 
Revenues          
Rental revenue  $581,657   $- 
Modular leasing   -    440,242 
Modular delivery and installation   -    141,415 
Sales revenue   30,394    - 
New units   -    17,255 
Rental units   -    13,713 
Other revenue   574    - 
Total revenues   612,625    612,625 
           
Costs          
Cost of leasing and services - Modular leasing   -    60,003 
Cost of leasing and services - Modular delivery and installation   -    99,634 
Cost of sales   18,675    - 
Cost of sales - New units   -    10,885 
Cost of sales - Rental units   -    9,480 
Depreciation of rental equipment   -    31,802 
Gross profit   -    400,821 
           
Expenses          
Selling, general and administrative    -    208,098 
Rental, selling and general expenses   369,525    - 
Depreciation and amortization   70,583    - 
Other depreciation and amortization    -    38,781 
Currency (gains) losses, net   274    274 
Other (income) expense, net   -    100 
Operating income (loss)   153,568    153,568 
Interest expense   41,378    41,366 
Interest income   (12)   - 
Deferred financing costs write-off   123    - 
Loss on extinguishment of debt   -    123 
Income before income tax   112,079    112,079 
Income tax provision   28,345    28,345 
Net income   $83,734   $83,734 

 

11

 

 

Historical Mobile Mini Statement of Operations for the six months ended June 30, 2019

 

   Historical
MobileMini for		   (As reclassified)
for the six		 
   the six months
ended June		   months
ended June 30,		 
   30, 2019 (in 000's)   2019
(in 000's)		 
Revenues          
Rental revenue  $284,078   $- 
Modular leasing   -    214,163 
Modular delivery and installation   -    69,916 
Sales revenue   15,358    - 
New units   -    8,727 
Rental units   -    7,036 
Other revenue   406    - 
Total revenues   299,842    299,842 
           
Costs          
Cost of leasing and services - Modular leasing   -    30,569 
Cost of leasing and services - Modular delivery and installation   -    50,165 
Cost of sales   9,646    - 
Cost of sales - New units   -    5,651 
Cost of sales - Rental units   -    5,001 
Depreciation of rental equipment   -    15,894 
Gross profit        192,562 
           
Expenses          
Selling, general and administrative   -    106,127 
Rental, selling and general expenses   187,969    - 
Depreciation and amortization   35,470    - 
Other depreciation and amortization   -    19,576 
Currency (gains) losses, net   166    166 
Other (income) expense, net   -    102 
Operating income (loss)   66,591    66,591 
Interest expense   21,352    21,352 
Interest income   -    - 
Deferred financing costs write-off   123    - 
Loss on extinguishment of debt   -    123 
Income before income tax   45,116    45,116 
Income tax provision   12,973    12,973 
Net income  $32,143   $32,143 

 

12

 

 

Historical Mobile Mini Statement of Operations for the six months ended June 30, 2020

 

   Historical
MobileMini for		   (As reclassified) for the six 
   the six months
ended June 30,
2020 (in 000's)		   months ended
June 30, 2020
(in 000's)		 
Revenues        
Rental revenue  $265,117   $- 
Modular leasing   -    205,063 
Modular delivery and installation   -    60,054 
Sales revenue   15,867    - 
New units   -    8,549 
Rental units   -    7,465 
Other revenue   147    - 
Total revenues   281,131    281,131 
Costs          
Cost of leasing and services - Modular leasing   -    25,274 
Cost of leasing and services - Modular delivery and installation   -    42,677 
Cost of sales   9,808    - 
Cost of sales - New units   -    5,457 
Cost of sales - Rental units   -    4,625 
Depreciation of rental equipment   -    15,360 
Gross profit        187,738 
Expenses          
Selling, general and administrative   -    112,769 
Rental, selling and general expenses   181,180    - 
Depreciation and amortization   35,055    - 
Other depreciation and amortization        19,695 
Currency (gains) losses, net   39    39 
Other (income) expense, net        186 
Operating income (loss)   55,049    55,049 
Interest expense   16,974    16,950 
Interest income   (24)   - 
Deferred financing costs write-off        - 
Loss on extinguishment of debt        - 
Income before income tax   38,099    38,099 
Income tax provision   12,556    12,556 
Net income  $25,543   $25,543 

 

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3. Debt Related Pro Forma Adjustments

 

The following summarizes the pro forma adjustments related to WillScot Mini Holdings’ borrowings under the New ABL Facility entered into in connection with the Merger as well as the proceeds from the issuance of the 2025 Notes, which were held in escrow at June 30, 2020 and classified as restricted cash on the condensed consolidated balance sheet. On July 1, 2020, proceeds from the New ABL Facility borrowings and the issuance of the 2025 Notes were used to repay (1) the WillScot ABL Facility, (2) the Mobile Mini ABL Facility, (3) Mobile Mini 2024 Notes and (4) WillScot 2022 Senior Secured Notes, in each case, outstanding as of July 1, 2020. Pursuant to the redemption notice (the "Mobile Mini Redemption Notice") delivered prior to July 1, 2020, certain proceeds from the Transactions were paid to the trustee of the Mobile Mini 2024 Notes for payment to bond holders upon completion of the 30 day redemption period. Repayment of the Mobile Mini ABL Facility borrowings and redemption of the Mobile Mini 2024 Notes is presented in note 4 (Merger Related Pro Forma Condensed Combined Balance Sheet Adjustments).

 

The Transactions are presented as of June 30, 2020, assuming an extinguishment of the WillScot 2022 Senior Secured Notes, which resulted in a write-off of $4,602 of deferred financing costs recorded in the current portion of long-term debt. Extinguishment of the WillScot ABL Facility and a contemporaneous arrangement to enter into the New ABL Facility, resulted in a write-off of $6,054 of deferred financing costs, $4,444 recorded in long-term debt and $1,610 recorded in other long-term assets. The presentation of the WillScot ABL Facility extinguishment, which occurred on July 1, 2020, is preliminary and subject to change as additional information becomes available to finalize the accounting treatment.

 

a)Adjustment to cash and cash equivalents, and restricted cash consists of the following:

 

In thousands  As of June 30, 2020 
Restricted cash reclassified to cash and cash equivalents (i)  $655,087 
Amount borrowed under the New ABL Facility   1,466,820 
Cash paid to redeem the WillScot ABL Facility   (865,000)
Cash paid to redeem the WillScot 2022 Secured Notes   (270,000)
Cash paid for accrued interest associated with the WillScot ABL Facility   (1,331)
Cash paid for accrued interest associated with the WillScot 2022 Secured Notes   (945)
Cash paid for deferred financing costs associated with the New ABL Facility   (41,585)
Cash paid for redemption premium associated with WillScot 2022 Secured Notes   (10,633)
        Net adjustment to cash  $932,413 

 

(i) The restrictions on the escrow account resulted in the proceeds of the 2025 Notes and required interest deposited therein being classified as Restricted cash which deposits, were released at the Merger and used to repay the WillScot 2022 Senior Secured Notes, the Mobile Mini 2024 Notes, and fees and expenses of the Transactions.

 

b)Adjustment to other non-current assets represents the elimination of deferred financing costs associated with the WillScot ABL Facility, specifically related to the Canadian portion of the WillScot ABL Facility which had no borrowings at June 30, 2020.

 

c)Adjustment to accrued interest represents accrued interest that is repaid in connection with the repayment of the WillScot 2022 Senior Secured Notes and repayment of the WillScot ABL Facility.

 

d)Adjustment to long-term debt and the current portion of long-term debt represents the following:

 

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In thousands  As of June 30, 2020 
Outstanding borrowings of the WillScot 2022 Secured Notes repaid  $(270,000)
Elimination of deferred financing costs associated with the WillScot 2022 Secured Notes   4,602 
Net adjustment to current portion of long-term debt  $(265,398)
      
Amount borrowed under the New ABL Facility  $1,466,820 
Outstanding borrowings on the WillScot ABL Facility repaid   (865,000)
Elimination of deferred financing costs associated with the WillScot ABL Facility   4,444 
Cash paid for deferred financing costs related to the New ABL Facility   (41,585)
Net adjustment to long-term debt  $564,679 

 

e)Adjustment represents the tax effect on the elimination of deferred financing costs associated with i) WillScot’s 2022 Senior Secured Notes and ii) WillScot ABL Facility.

 

f)Adjustment to accumulated deficit represents the following:

 

In thousands  As of June 30, 2020 
Elimination of all deferred financing costs associated with the WillScot ABL Facility  $(6,054)
Elimination of deferred financing costs associated with the WillScot 2022 Secured Notes   (4,602)
Redemption premium associated with WillScot 2022 Secured Notes   (10,633)
Tax impact associated with elimination of deferred financing costs associated with the WillScot ABL Facility   4,000 
Tax impact associated with elimination of deferred financing costs associated with the WillScot 2022 Secured Notes   1,174 
Net adjustment to accumulated deficit  $(16,115)

 

g)Adjustment to interest expense represents the following:

  

In thousands  For the six months ended June 30, 2019   For the twelve months ended December 31, 2019   For the six months ended June 30, 2020 
Interest expense related to the New ABL Facility  $15,006   $30,011   $15,006 
Interest expense related to the Willscot 2025 Notes   19,906    39,812    19,906 
Interest expense related to the WillScot 2025 Notes already recognized   -    -    (1,769)
Amortization of deferred financing costs for the New ABL Facility   5,122    10,243    5,122 
Amortization of deferred financing costs for the 2025 Secured Notes   1,435    2,870    1,435 
Interest expense on WillScot’s ABL Facility   (21,643)   (43,781)   (16,278)
Interest expense on WillScot’s 2022 Secured Notes   (11,813)   (21,656)   (10,631)
Amortization of deferred financing costs on WillScot ABL Facility   (4,099)   (8,203)   (4,090)
Amortization of deferred financing costs on WillScot' 2022 Secured Notes   (632)   (1,473)   (875)
Net adjustment to interest expense  $3,282   $7,823   $7,826 

  

Interest on outstanding borrowings of the New ABL Facility are based off the London Interbank Offered Rate (LIBOR). The 2.05% per annum rate used in the above calculation assumes the one month USD LIBOR interest rate as of July 1, 2020 of 0.17%, and a 1.875% spread as specified by the New ABL Facility commitments. A 1/8% change in interest rate to the drawn portion of the New ABL Facility which is subject to a variable interest rate would increase or decrease the pro forma cash interest expense on the $1.46 billion New ABL Facility borrowings by approximately $1.8 million annually.

 

h)Adjustment to recognize the income tax impacts of the pro forma adjustments for which a tax expense is recognized using a U.S. federal and state statutory tax rate of 25.5%. This rate may vary from the effective tax rates of the historical and combined businesses.

  

4) Merger Related Pro Forma Condensed Combined Balance Sheet Adjustments

 

The following summarizes the pro forma adjustments in connection with the Merger to give effect as if it had been completed on June 30, 2020 for the purposes of pro forma condensed combined balance sheet:

 

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a)Adjustment to cash consists of the following:

 

 

In thousands  As of June 30, 2020 
Repayment of Mobile Mini’s ABL Facility assumed   (563,202)
Repayment of Mobile Mini’s 2024 Notes assumed   (250,000)
Repayment of Mobile Mini’s accrued interest associated with ABL Facility   (432)
Repayment of Mobile Mini’s accrued interest associated with 2024 Notes   (7,344)
Redemption premium on repayment of Mobile Mini 2024 Notes   (7,350)
Estimated non-recurring transaction costs to be paid with proceeds from New ABL Facility borrowings   (84,649)
Cash payment for fractional Mobile Mini shares  $(30)
Net adjustment to cash  $(913,007)

 

b)Adjustment to prepaid expenses and other current assets represents the reclassification of certain transaction costs previously deferred as financing costs and equity issuance costs.

 

c)Adjustment to recognize the estimated step-up in fair value of rental equipment acquired. We have preliminarily assigned the purchase price to the net tangible and intangible assets based upon their estimated fair values at the closing date of the Merger. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

 

d)Adjustment to recognize the estimated step-up in fair value of property, plant and equipment acquired, net of $5.3 million of previously capitalized assets reclassified and recognized as an intangible asset in the Pro Forma Condensed Combined Balance Sheet of WillScot Mini Holdings. We have preliminarily assigned the purchase price to the net tangible and intangible assets based upon their estimated fair values at the closing date of the Merger. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

 

e)Represents an adjustment to goodwill to reflect the balance that would have been recorded if the Merger occurred on June 30, 2020. We have preliminarily assigned the purchase price to the net tangible and intangible assets based upon their estimated fair values at the closing date of the Merger. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired has been recorded as goodwill as of June 30, 2020. The calculated value is preliminary and subject to change and could vary materially from the final purchase price assignment.

 

f)Adjustment to recognize the estimated step-up in fair value of intangible assets acquired consisting of a trade name, acquired technology, and customer relationships. The fair value of the intangible assets acquired is as follows:

 

In thousands  As of June 30, 2020 
Trade name  $301,000 
Customer relationships   263,000 
Technology   31,000 
Fair value of intangible assets acquired   595,000 
Mobile Mini historical carrying value of intangible assets   (49,088)
Total adjustment to intangible assets, net  $545,912 

 

The ranges of calculated values for the trade name and developed technology were determined using the relief-from-royalty method of the income approach. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. In estimating ranges of calculated values, management utilized various assumptions in order to assess the reasonableness of the selection of a royalty rate and life of the intangible asset. The selected calculated value for the trade name intangible asset reflects the calculated value under an indefinite-life assumption, which is subject to change based on a final determination grounded in both the terms of the merger agreement and assumed market participant treatment of the acquired trade name.

 

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The range of calculated values for the customer relationships intangible asset was determined using the multi-period excess earnings method of the income approach. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax cash flows solely attributable to the intangible asset, following the application of post-tax contributory asset charges that reflect the return on other assets that contribute to the generation of the forecasted cash flows. The above calculated values are preliminary and subject to change and could vary materially from the final purchase price assignment.

  

g)Represents an adjustment to reflect the reversal of Merger transaction costs incurred as of June 30, 2020.

 

h)Represents the repayment of Mobile Mini’s long-term debt, payment of a redemption premium on the Mobile Mini 2024 Notes, elimination of deferred financing costs and repayment of accrued interest in connection with the Merger. In addition to the adjustments to long-term debt outlined below, accrued interest of $7,776 was repaid in connection with repayment of the Mobile Mini ABL Facility and Mobile Mini 2024 Notes. Adjustment to long-term debt consists of the following:

  

In thousands  As of June 30, 2020 
Elimination of deferred financing costs associated with Mobile Mini's ABL Facility  $4,394 
Elimination of deferred financing costs associated with Mobile Mini's 2024 Notes   2,554 
Redemption Premium on repayment of Mobile Mini 2024 Notes   7,350 
Repayment of Mobile Mini’s ABL Facility assumed   (563,202)
Repayment of Mobile Mini’s 2024 Notes assumed   (257,350)
        Net adjustment to long-term debt  $(806,254)

  

i)The identified basis differences between both (a) the fair value and historic carrying value and (b) as a result of recording or recognition of non-recurring transaction costs, which have been tax effected at the appropriate jurisdictional statutory tax rates, primarily, 25.5% for U.S. Federal and state rate and the removal of the historical WillScot valuation allowance (see 4j (vi) below for additional details). These rates may vary from the effective tax rates of the historical and combined businesses. The estimate of deferred tax balances is preliminary and is subject to change based upon certain factors including tax attribute limitation analysis and final determination of the fair value of assets acquired and liabilities assumed by taxing jurisdiction. In addition, deferred taxes associated with deductible non-recurring items as described in note 4g are included in the balance sheet at the statutory tax rates of the applicable jurisdictions.

 

WillScot’s results for income taxes presented herein is WillScot’s best estimate based on the factors described herewith. The tax results may differ from the actual tax balances and effective tax rates of WillScot Mini Holdings and is dependent on several factors including fair value adjustments and post-combination restructuring actions.

 

j)The changes to equity as of June 30, 2020 are as follows:

  

   Class A
common
stock		   Additional
paid-in
capital		   Accumulated
other
comprehensive
income (loss)		   Accumulated
earnings /
(deficit)		   Treasury
stock		   Total
stockholders
equity		 
(i)Elimination of Mobile Mini’s equity  $(507)  $(644,915)  $80,737   $(430,665)  $178,317   $(817,033)
(ii) Issuance of WillScot Class A Common Stock, par value $0.0001 per share   11    1,333,516                   1,333,527 
(iii) Non recurring transaction costs estimate                  (46,458)        (46,458)
(iv) Fair value of Mobile Mini Options exchanged for WillScot Options        34,129                   34,129 
(v) Non-recurring equity issuance costs estimate        (4,328)                  (4,328)
(vi) Federal valuation allowance                  47,716         47,716 
   $(496)  $718,402   $80,737   $(429,407)  $178,317   $547,553 

 

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i)Represents the adjustment to eliminate Mobile Mini’s historical stockholder’s equity.

 

ii)Represents the adjustment to reflect the issuance of 106,426,722 shares of WillScot Class A Common Stock based on the closing price of $12.53 per share on Nasdaq on July 1, 2020.

 

iii)Represents an adjustment to accumulated deficit for non-recurring transaction costs, as adjusted for the impact of the associated deferred tax asset (presented as a component of the deferred tax liabilities).

 

iv)Represents the exchange of all Mobile Mini vested options outstanding for 2.4050 stock options reflecting the right to acquire Common Stock of the Company. Note that the adjusted exercise price is equal to the exercise price at which such stock option was exercisable immediately prior to the Merger, divided by 2.4050 (subject to rounding).

 

v)Represents an adjustment to additional paid-in capital to record equity issuance costs of $4.3 million, incurred in connection with the Merger.

 

vi)WillScot’s historical Federal valuation allowance on net operating losses (“NOLs”) and business interest limitation was provisionally removed for pro forma purposes based on the combined tax attributes of the merged companies which is subject to final determinations of fair value of assets and liabilities and completion of certain tax attribute calculations.

 

5. Merger Related Pro Forma Combined Condensed Statement of Operations Adjustments

 

a)Adjustment to recognize depreciation expense associated with the estimated step-up in fair value of rental equipment acquired. The average estimated remaining useful lives of the rental equipment acquired ranges from 12 to 19 years.

 

b)Adjustment to selling, general and administrative expense represents the estimated equity based compensation expense associated with the executive retention agreements entered into in connection with the Merger for the twelve months ended December 31, 2019, for the six months ended June 30, 2019, and for the six months ended June 30, 2020. The underlying executive employment agreements have terms of 24 to 36 months, and the respective equity based awards vest over 36 to 48 months. For the six months ended June 30, 2020, the adjustment also includes the elimination of non-recurring transaction costs incurred by WillScot Mini Holdings as shown in the table below.

 

In thousands  For the six months
ended June 30, 2020		 
Equity based compensation expense associated with retention agreements  $776 
Non-recurring transaction costs expensed for the three months ending March 31, 2020   (25,239)
Net adjustment to Selling, general and administrative expense  $(24,463)

 

c)Adjustment to recognize depreciation expense on property, plant and equipment and amortization expense on intangible assets, relating to the fair value purchase accounting adjustments, as shown below. Estimated Fair Value of the Property, plant and equipment is net of $5.3 million of previously capitalized assets eliminated and recognized as an intangible asset in the Pro Forma Condensed Combined Balance Sheet of WillScot Mini Holdings.

 

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In thousands  Estimated
Useful Life		  Estimated
Fair Value		   Depreciation and
Amortization
expense for the
six months ended
June 30, 2019		   Depreciation and
Amortization
expense for the
twelve months ended
December 31,
2019		   Depreciation and
Amortization
expense for the
six months ended
June 30, 2020		 
Trade name  Indefinite  $301,000   $-   $-   $- 
Customer relationships  13 years   263,000   $10,116   $20,230   $10,116 
Technology  15 years   31,000   $1,033   $2,067   $1,033 
Mobile Mini historical amortization expense          $(3,222)  $(6,555)  $(3,080)
Pro forma adjustment for amortization          $7,927   $15,742   $8,069 
Property, plant and equipment  Various  $154,697   $16,358   $32,161   $16,469 
Mobile Mini historical depreciation expense          $(16,354)  $(32,226)  $(16,615)
Pro forma adjustment for depreciation          $4   $(65)  $(146)
Net adjustment to other depreciation and amortization          $7,931   $15,677   $7,923 

 

d)Represents the elimination of Mobile Mini’s interest expense associated with its historical ABL Facility and the Mobile Mini 2024 Notes repaid in connection with the Merger.

 

e)Adjustment to record the income tax impacts of the pro forma adjustments using a statutory tax rate of 25.5% for the twelve months ended December 31, 2019, for the six months ended June 30, 2019, and for six months ended June 30, 2020. These rates do not reflect WillScot Mini Holdings’ effective tax rate, which includes foreign taxes and other items and may differ from the rates assumed for purposes of preparing these statements. Because the tax rates used for these unaudited pro forma condensed combined financial statements are an estimate, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the Merger. Further, WillScot Mini Holdings’ ability to use NOL carryforwards to offset future taxable income for U.S. federal income tax purposes is subject to limitations. In general, under Section 382 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. Based on the information available WillScot Mini Holdings provisionally expects the ability to utilize all tax attributes, subject to a formal Section 382 analysis upon closing.

 

f)Reflects the pro forma adjustment for the extinguishment of non-controlling interest as a result of the exchange of all issued and outstanding shares of WSHC common stock held by Sapphire Holding S.a r.l. (“Sapphire Holding”) for newly-issued shares of WillScot Class A Common Stock at an exchange ratio of 1.3261 times and the resulting cancellation of all issued and outstanding shares of WillScot Class B Common Stock, on June 30, 2020, as provided by the Merger Agreement and the Voting Agreement (as defined therein).

 

g)Pro forma earnings per common share for the year ended December 31, 2019, the six months ended June 30, 2019, and the six months ended June 30, 2020, have been calculated based on the estimated weighted average number of common shares outstanding on a pro forma basis, as described below. The pro forma weighted average number of common shares outstanding has been calculated as if the Merger shares had been issued and outstanding on January 1, 2019.

 

The following table sets forth the computation of pro forma weighted average common and diluted shares outstanding as of June 30, 2019:

 

In thousands  As of June 30,
2019		 
Historical WillScot weighted average shares   108,609,068 
Shares of WillScot Class A common stock issued as Merger Consideration   106,426,722 
WillScot Class A shares issued in exchange for shares of WSHC shares of common stock (i)   10,640,825 
Pro forma weighted-average shares used in computing net earnings per share – basic   225,676,615 
Dilutive Securities - WillScot Dilution (ii)   1,016,195 
Dilutive Securities - Mobile Mini Stock options (iii)   677,825 
Pro forma weighted-average shares used in computing net earnings per share – diluted   227,370,635 

 

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The following table sets forth the computation of pro forma weighted average common and diluted shares outstanding as of December 31, 2019:

 

In thousands  As of December 30,
2019		 
Historical WillScot weighted average shares   108,683,820 
Shares of WillScot Class A common stock issued as Merger Consideration   106,426,722 
WillScot Class A shares issued in exchange for shares of WSHC shares of common stock   10,640,825 
Pro forma weighted-average shares used in computing net earnings per share – basic   225,751,367 
Dilutive Securities - WillScot Dilution (ii)   3,551,053 
Dilutive Securities - Mobile Mini Stock options (iii)   728,684 
Pro forma weighted-average shares used in computing net earnings per share – diluted   230,031,104 

 

The following table sets forth the computation of pro forma weighted average common and diluted shares outstanding as of June 30, 2020:

 

In thousands  As of June 30,
2020		 
Historical WillScot weighted average shares   110,174,536 
Shares of WillScot Class A common stock issued as Merger Consideration   106,426,722 
WillScot Class A shares issued in exchange for shares of WSHC shares of common stock (i)   10,581,709 
Pro forma weighted-average shares used in computing net earnings per share – basic   227,182,967 
Dilutive Securities - WillScot Dilution   2,034,676 
Dilutive Securities - Mobile Mini Stock options (iii)   577,352 
Pro forma weighted-average shares used in computing net earnings per share – diluted   229,794,995 

 

i.WillScot Class A shares were issued on June 30, 2020 in exchange for shares of WSHC common stock. The exchanged shares are included in historical WillScot’s weighted average shares calculation for 1 day of the six months ended June 30, 2020. As a result, the exchanged share amount has been adjusted to take into account the number of additional WillScot Class A shares already included in the historical WillScot weighted average shares count for the six months ended June 30, 2020.

 

ii.WillScot’s Historical Consolidated Statement of Operations for the six months ended June 30, 2019, and for the year ended December 31, 2019 were in a net loss position, thus WillScot’s stock options and stock awards were excluded from the computation of diluted EPS because their effect would have been anti-dilutive. This adjustment represents the dilutive impact of WillScot’s securities which are no longer anti-dilutive, as the pro forma condensed combined statement of operations has net income attributable to the WillScot Mini Holdings. The impact of dilutive shares was calculated based on average share price for the respective periods and may not reflect dilution under current market conditions.

 

iii.Represents the dilutive impact of Mobile Mini’s stock options on Mobile Mini’s Consolidated Statement of Operations for the year ended December 31, 2019, for the six months ended June 30, 2019, and the six months ended June 30, 2020, multiplied by the 2.4050 Merger exchange ratio respectively. Each stock option of Mobile Mini was exchanged into 2.4050 stock options reflecting the right to acquire shares of WillScot Mini Holdings Common Stock, with the adjusted exercise price equal to the exercise price at which such stock option was exercisable immediately prior to the Merger, divided by 2.4050 (subject to rounding). The impact of dilutive shares was calculated based on average share price for the respective periods and may not reflect dilution under current market conditions.

 

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