EX-99.2 4 y59743ex99-2.txt UNAUDITED PRO FORMA FINANCIAL INFORMATION Exhibit 99.2 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma condensed consolidated balance sheet as of December 31, 2001 and the unaudited pro forma condensed consolidated statement of operations for the fiscal year ended December 31, 2001 is based on historical financial statements of us as of and for the fiscal year ended December 31, 2001, ACL Holdings as of and for the year ended December 28, 2001, GMS as of and for the fiscal year ended December 31, 2001 and Vessel Leasing as of and for the fiscal year ended December 28, 2001 and have been prepared to illustrate the effects described in the next paragraph. The unaudited pro forma condensed consolidated financial information should be read in conjunction with "Selected Financial Data -- Danielson Holding Corporation," "Selected Financial Data -- American Commercial Lines Holdings LLC," "About ACL -- Management's Discussion and Analysis of Financial Condition and Results of Operations -- ACL" included elsewhere in this prospectus supplement, our audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and incorporated by reference herein and the audited consolidated financial statements and related notes of ACL Holdings, the audited consolidated financial statements and related notes of GMS and the unaudited consolidated financial statements and related notes of Vessel Leasing, each filed as an exhibit to our Current Report on Form 8-K filed with the Commission on April 19, 2002 and incorporated by reference herein. The pro forma adjustments to the unaudited pro forma condensed consolidated balance sheet as of December 31, 2001 and the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2001 give effect to: - our purchase price of $80,580,030 for 100% of ACL Holdings, $1,290,000 for 5.4% of GMS (following which we will indirectly own 55.4% of GMS, 50% of which through ACL) and $2,768,869 for 50% of Vessel Leasing (following which we will indirectly own 100% of Vessel Leasing, 50% of which through ACL). The purchase price of ACL Holdings is comprised of $58,493,000 face amount of ACL existing notes, discounted to a preliminary estimate of fair value of $41,530,030, that are held by us and our subsidiaries and that will be contributed to ACL Holdings, $25,000,000 cash which will be used to reduce ACL's outstanding indebtedness, $7,000,000 cash which will be exchanged for the preferred membership interests in ACL Holdings and $7,050,000 in fees and expenses related to the restructuring. The purchase price of GMS and Vessel Leasing are comprised solely of cash; - cash of $43,526,095 raised through the rights offering, $9,500,000 received from the exercise of the 1999 warrants, $1,038,407 received from the exercise of options in 2002 under our 1995 Stock and Incentive Plan, the $1,000,000 backstop fee to be paid to SZ Investments and $400,000 in expenses related to the rights offering; and - the other aspects of the restructuring as described in further detail in the Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements. The unaudited pro forma condensed consolidated financial information is provided for comparative purposes only and is not indicative of the results of operations or financial position of the combined companies that would have occurred had the transactions been consummated at the beginning of the period presented or on the date indicated, nor is it indicative of future operating results or financial position. The unaudited pro forma adjustments are based upon currently available information and upon certain preliminary assumptions that management believes are reasonable under the circumstances. The pro forma adjustments are subject to revision once appraisals and other evaluations of the fair value of the assets acquired and liabilities assumed are completed. Accordingly, actual purchase accounting adjustments could differ materially from the pro forma adjustments presented in this prospectus supplement. 46 DANIELSON HOLDING CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
-------------------------------------------------------------------------- AS OF DECEMBER 28, 2001 AS OF DECEMBER 31, 2001 -------------------------------------------------------------------------- ACL HISTORICAL HOLDINGS PRO FORMA HISTORICAL ACL PRO FORMA ACL VESSEL HISTORICAL HISTORICAL HOLDINGS ADJ HOLDINGS LEASING GMS DHC ---------- --------- --------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) ASSETS CURRENT ASSETS Investment securities..... -- -- -- -- -- $148,512 Cash and cash equivalents............. 47,253 -- 47,253 12 821 17,866 Restricted cash........... 5,801 Premiums and fees receivable.............. -- -- -- -- -- 14,876 Reinsurance recoverable on paid losses............. -- -- -- -- -- 2,142 Reinsurance recoverable on unpaid losses........... -- -- -- -- -- 17,733 Prepaid reinsurance premiums................ -- -- -- -- -- 2,078 Deferred policy acquisition costs....... -- -- -- -- -- 2,209 Accounts receivable, net..................... 54,785 -- 54,785 -- 5,987 -- Materials and supplies.... 31,335 -- 31,335 -- -- -- Other current assets...... 29,633 -- 29,633 86 3,339 2,498 --------- --------- -------- ------- ------- -------- Total Current Assets.... 163,006 0 163,006 5,899 10,147 207,914 Properties-net.............. 464,133 111,930 (1) 576,063 43,101 38,198 957 Pension asset............... 26,067 (4,823)(2) 21,244 -- -- -- Other assets................ 104,730 (24,475)(3) 80,255 5,921 29,527 -- --------- --------- -------- ------- ------- -------- TOTAL ASSETS.............. $ 757,936 $ 82,632 $840,568 $54,921 $77,872 $208,871 ========= ========= ======== ======= ======= ======== LIABILITIES CURRENT LIABILITIES Unpaid losses and loss adjustment expenses..... -- -- -- -- -- 105,745 Unearned premiums......... -- -- -- -- -- 21,117 Reinsurance premiums payable................. -- -- -- -- -- 763 Funds withheld on ceded reinsurance............. -- -- -- -- -- 1,666 Payable for securities sold not yet purchased............... -- -- -- -- -- 2,247 Accounts payable.......... 29,737 -- 29,737 -- 4,420 -- Accrued claims and insurance premiums...... 24,200 -- 24,200 -- -- -- Accrued interest.......... 18,659 (14,870)(4) 3,789 161 Short-term debt........... 84,000 (50,000)(5) 34,000 -- -- -- Current portion of long-term debt.......... 608,519 (602,079)(6) 6,440 2,885 4,600 -- Other current liabilities............. 79,565 14,819(7) 94,384 2,517 1,485 2,870 --------- --------- -------- ------- ------- -------- Total Current Liabilities........... 844,680 (652,130) 192,550 5,563 10,505 134,408 Long-term debt.............. -- 534,797(8) 534,797 39,695 41,168 -- Pension liability........... 18,907 (18,907)(9) 0 -- -- ------------------------- AS OF DECEMBER 31, 2001 ------------------------- DHC PRO FORMA CONSOLIDATED ADJ PRO FORMA --------- ------------ (DOLLARS IN THOUSANDS) ASSETS CURRENT ASSETS Investment securities..... $(31,952)(12) $ 116,560 Cash and cash equivalents............. 9,556(13) 75,508 Restricted cash........... 5,801 Premiums and fees receivable.............. -- 14,876 Reinsurance recoverable on paid losses............. -- 2,142 Reinsurance recoverable on unpaid losses........... -- 17,733 Prepaid reinsurance premiums................ -- 2,078 Deferred policy acquisition costs....... -- 2,209 Accounts receivable, net..................... -- 60,772 Materials and supplies.... -- 31,335 Other current assets...... -- 35,556 --------- ---------- Total Current Assets.... (22,396) 364,570 Properties-net.............. 26,566(14) 684,885 Pension asset............... -- 21,244 Other assets................ (43,495)(15) 72,208 --------- ---------- TOTAL ASSETS.............. $(39,325) $1,142,907 ========= ========== LIABILITIES CURRENT LIABILITIES Unpaid losses and loss adjustment expenses..... -- 105,745 Unearned premiums......... -- 21,117 Reinsurance premiums payable................. -- 763 Funds withheld on ceded reinsurance............. -- 1,666 Payable for securities sold not yet purchased............... -- 2,247 Accounts payable.......... -- 34,157 Accrued claims and insurance premiums...... -- 24,200 Accrued interest.......... 3,950 Short-term debt........... -- 34,000 Current portion of long-term debt.......... -- 13,925 Other current liabilities............. -- 101,256 --------- ---------- Total Current Liabilities........... -- 343,026 Long-term debt.............. -- 615,660 Pension liability........... -- --
48
-------------------------------------------------------------------------- AS OF DECEMBER 28, 2001 AS OF DECEMBER 31, 2001 -------------------------------------------------------------------------- ACL HISTORICAL HOLDINGS PRO FORMA HISTORICAL ACL PRO FORMA ACL VESSEL HISTORICAL HISTORICAL HOLDINGS ADJ HOLDINGS LEASING GMS DHC ---------- --------- --------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) Minority interest in GMS.... -- -- -- -- -- Other long-term liabilities............... 37,292 (4,651)(10) 32,641 313 5,191 -- --------- --------- -------- ------- ------- -------- TOTAL LIABILITIES......... 900,879 (140,891) 759,988 45,571 56,864 134,408 --------- --------- -------- ------- ------- -------- Preferred members' interest (mandatory redemption value of $1,037,230)............. 311,292 (311,292)(11) -- -- -- -- Members'/stockholders' equity.................. Common members' interest.. 4,463 76,117(11) 80,580 5,236 21,008 -- Preferred members' interest................ -- -- -- 4,190 -- -- Common stock.............. -- -- -- -- -- 1,952 Unearned compensation..... -- (1,695)(11) (1,695) -- -- -- Additional paid in capital................. 70,899 (69,204)(11) 1,695 63,115 Retained earnings......... (527,740) 527,740(11) -- (76) -- 3,746 Accumulated other comprehensive income.... (1,857) 1,857(11) -- -- -- 5,716 Treasury stock............ -- -- -- -- -- (66) --------- --------- -------- ------- ------- -------- TOTAL MEMBERS'/ STOCKHOLDERS' (DEFICIT) EQUITY.................. (454,235) 534,815 80,580 9,350 21,008 74,463 --------- --------- -------- ------- ------- -------- --------- --------- -------- ------- ------- -------- TOTAL LIABILITIES PREFERRED MEMBERS' INTEREST, & MEMBERS'/ STOCKHOLDERS' EQUITY.... $ 757,936 $ 82,632 840,568 $54,921 $77,872 $208,871 ========= ========= ======== ======= ======= ======== ------------------------- AS OF DECEMBER 31, 2001 ------------------------- DHC PRO FORMA CONSOLIDATED ADJ PRO FORMA --------- ------------ (DOLLARS IN THOUSANDS) Minority interest in GMS.... 9,370(16) 9,370 Other long-term liabilities............... -- 38,145 --------- ---------- TOTAL LIABILITIES......... 9,370 1,006,201 --------- ---------- Preferred members' interest (mandatory redemption value of $1,037,230)............. -- -- Members'/stockholders' equity.................. Common members' interest.. (106,824)(19) -- Preferred members' interest................ (4,190)(19) -- Common stock.............. 1,130(17) 3,082 Unearned compensation..... (1,695) Additional paid in capital................. 51,535(18) 116,345 Retained earnings......... 11,582(19) 15,252 Accumulated other comprehensive income.... (1,928)(20) 3,788 Treasury stock............ -- (66) --------- ---------- TOTAL MEMBERS'/ STOCKHOLDERS' (DEFICIT) EQUITY.................. (48,695) 136,706 --------- ---------- --------- ---------- TOTAL LIABILITIES PREFERRED MEMBERS' INTEREST, & MEMBERS'/ STOCKHOLDERS' EQUITY.... $(39,325) $1,142,907 ========= ==========
49 DANIELSON HOLDING CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------------------- YEAR ENDED DECEMBER 28, 2001 ------------------------------------------------- ACL HISTORICAL HOLDINGS PRO FORMA HISTORICAL ACL PRO FORMA ACL VESSEL HOLDINGS ADJ HOLDINGS LEASING ---------- --------- --------- ---------- (DOLLARS IN THOUSANDS) REVENUES Gross premiums earned....... -- -- -- Ceded premiums earned....... -- -- -- Net premiums earned......... -- -- -- Operating Revenue -- marine transportation & services.................. 788,501 -- 788,501 1,705 Net investment income....... -- -- -- Net realized investment gains..................... -- -- -- Other income................ -- -- -- -------- -------- ------- ------ TOTAL REVENUES................ 788,501 -- 788,501 1,705 OPERATING LOSSES AND EXPENSES Gross losses and loss adj exp....................... -- -- -- Ceded losses and loss adj exp....................... -- -- -- Net losses and loss adj exp....................... -- -- -- Policyholder dividends...... -- -- -- Policy acquisition expenses.................. -- -- -- General and administrative exp....................... -- -- -- Cost of sales and services.................. Materials, supplies and other..................... 341,606 (1,164)(21) 340,442 -- Rent........................ 56,711 -- 56,711 -- Labor and fringe benefits... 166,041 3,632(22) 169,673 -- Fuel........................ 93,560 -- 93,560 -- Deprec and amort............ 55,497 7,965(23) 63,462 731 (Gain) loss on property disposition............... (16,498) -- (16,498) -- Taxes, other than income tax....................... 26,223 -- 26,223 -- Other....................... -- -- 5 -------- -------- ------- ------ TOTAL OPERATING LOSSES AND EXPENSES.................... 723,140 10,433 733,573 736 OPERATING INCOME.............. 65,361 (10,433) 54,928 969 OTHER EXPENSE (INCOME) Minority interest in net income of GMS............. -- -- -- Interest expense............ 70,932 (9,672)(24) 61,260 1,109 Interest income............. (1,311) -- (1,311) (64) Equity in earnings of joint ventures.................. -- -- -- Foreign exchange gain....... -- -- -- Other....................... 720 -- 720 -- -------- -------- ------- ------ 70,341 (9,672) 60,669 1,045 INCOME (LOSS) BEFORE INCOME TAXES....................... (4,980) (761) (5,741) (76) INCOME TAX.................... 118 -- 118 -- -------- -------- ------- ------ NET INCOME (LOSS)(1).......... $ (5,098) $ (761) (5,859) $ (76) ======== ======== ======= ====== Loss Per Share of Common Stock(1).................... -- -- -- --------------------------------------------------- YEAR ENDED DECEMBER 31, 2001 --------------------------------------------------- DHC HISTORICAL HISTORICAL PRO FORMA CONSOLIDATED GMS DHC ADJ PRO FORMA ---------- ---------- --------- ------------ (DOLLARS IN THOUSANDS) REVENUES Gross premiums earned....... -- $ 90,767 -- $ 90,767 Ceded premiums earned....... -- (8,913) -- (8,913) -------- -------- Net premiums earned......... -- 81,854 -- 81,854 Operating Revenue -- marine transportation & services.................. 46,599 -- (1,705)(25) 835,100 Net investment income....... -- 9,448 -- 9,448 Net realized investment gains..................... -- 1,558 1,558 Other income................ -- 1,242 -- 1,242 ------- -------- -------- -------- TOTAL REVENUES................ 46,599 94,102 (1,705) 929,202 OPERATING LOSSES AND EXPENSES Gross losses and loss adj exp....................... -- 78,295 -- 78,295 Ceded losses and loss adj exp....................... -- (1,801) -- (1,801) -------- -------- Net losses and loss adj exp....................... -- 76,494 -- 76,494 Policyholder dividends...... -- (81) -- (81) Policy acquisition expenses.................. -- 20,795 -- 20,795 General and administrative exp....................... 6,505 9,733 -- 16,238 Cost of sales and services.................. 28,092 28,092 Materials, supplies and other..................... -- -- -- 340,442 Rent........................ -- -- (1,705)(25) 55,006 Labor and fringe benefits... -- -- -- 169,673 Fuel........................ -- -- -- 93,560 Deprec and amort............ 5,332 1,422 1,114(26) 72,061 (Gain) loss on property disposition............... 29 -- -- (16,469) Taxes, other than income tax....................... -- -- -- 26,223 Other....................... -- -- 5 ------- -------- -------- -------- TOTAL OPERATING LOSSES AND EXPENSES.................... 39,958 108,363 (591) 882,039 OPERATING INCOME.............. 6,641 (14,261) (1,114) 47,163 OTHER EXPENSE (INCOME) Minority interest in net income of GMS............. -- -- 1,075(27) 1,075 Interest expense............ 4,384 -- (290)(28) 66,463 Interest income............. (27) -- 290(28) (1,112) Equity in earnings of joint ventures.................. (163) -- -- (163) Foreign exchange gain....... (14) -- -- (14) Other....................... (21) -- 978(29) 1,677 ------- -------- -------- -------- 4,159 -- 2,053 67,926 INCOME (LOSS) BEFORE INCOME TAXES....................... 2,482 (14,261) (3,167) (20,763) INCOME TAX.................... 71 73 -- 262 ------- -------- -------- -------- NET INCOME (LOSS)(1).......... $ 2,411 $(14,334) $ (3,167) $(21,025) ======= ======== ======== ======== Loss Per Share of Common Stock(1).................... -- $ (0.74) -- $ (0.68)
--------------- (1) Before extraordinary item, cumulative effect of accounting changes, and preferred members' interest accretion. 50 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET 1. To adjust ACL properties-net to their relative fair values by $190,102 based on a third-party appraisal prepared on ACL's marine assets and preliminary estimates made by management of the fair values of ACL's other property and equipment and to allocate ($78,172), representing the excess of fair value over cost, in proportion to the relative fair value of assets acquired. 2. To adjust ACL's pension asset to fair value based on third-party actuarial calculations. 3. To reverse unamortized debt issuance costs of $16,442 from previous ACL debt facilities, and to establish new debt issuance cost of $4,175. To increase ACL investments in subsidiaries to fair value by $982, to eliminate goodwill of $838, to reduce favorable lease intangibles to fair value by $2,203 and to allocate the excess of fair value over cost in proportion to restated fair values by reducing other assets by $10,149. Management of ACL has estimated that ACL has no intangible assets, other than the favorable lease intangibles, which have fair values in excess of their historical carrying values. 4. To eliminate accrued bond interest of $14,870 according to the terms of ACL's debt restructuring. 5. To remove $50,000 of existing revolving credit loans according to the terms of ACL's debt restructuring. 6. To reclassify outstanding indebtedness under ACL's senior notes and term loans, other than $6,250 in term loans, from current to long term. 7. To accrue ACL transaction fees of $14,800 and to adjust ACL's non-qualified pension plan liability to fair value based on third party actuarial calculation. 8. To reclassify indebtedness under ACL's senior notes and term loans of $602,079 from current to long term, to convert $50,000 in existing revolving credit loans to new term loan A, to reduce outstanding senior note indebtedness by $58,493 from the contribution and cancellation of existing notes held by us and our subsidiaries, to reduce outstanding indebtedness under the term loans from the contribution of $25,000 in cash by us and/or one or more of our subsidiaries and to record additional new senior notes of $11,922 from the conversion of existing accrued senior note interest. To discount the new senior notes and the new senior subordinated notes by $45,711 to a preliminary estimate of fair value. 9. To eliminate the ACL pension plan liability in accordance with adjusting the plan to fair value. 10. To adjust ACL's post-retirement medical plan liability to fair value based on third-party actuarial calculations. 11. To eliminate the preferred members interest of $311,292 and the common members interest of $4,463, to eliminate other paid-in-capital of $70,899, to eliminate $527,740 retained deficit after debt restructuring and $(1,857) accumulated other comprehensive loss and to establish new members interest of $80,580 based upon the fair value of the consideration contributed by us and/or one or more of our subsidiaries. To record our 399,039 shares of restricted common stock with a value of $1,695 issued to ACL management, which will vest over the next three years. 12. To eliminate existing notes held by us and/or one or more of our subsidiaries. We will recognize a gain of $11,506 when the notes are contributed. Such gain has not been reflected in our unaudited pro forma condensed consolidated statement of operations. 13. Cash raised by us through the rights offering, the exercise of options and the exercise of warrants less cash paid by us in connection with the acquisitions and the rights offering. 14. To adjust GMS properties-net to fair value by $30,829 based on management estimates and to allocate ($4,263) representing the excess of fair value over cost in proportion to adjusted fair value. 51 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) 15. To remove goodwill on GMS of $24,970 and establish goodwill of $189 for Vessel Leasing. To eliminate ACL's investment in GMS of $11,942 and Vessel Leasing of $6,772 upon consolidation. 16. To reflect DHC's acquired 55.4% (50% owned by ACL) ownership of GMS and record a 44.6% minority interest in GMS. 17. New common stock issued as a result of the rights offering, the exercise of warrants and the exercise of options and the restricted stock issued to ACL management. 18. To record additional paid in capital resulting from the rights offering, the exercise of warrants and the exercise of options less fees related to rights offering. 19. To eliminate common members' interest in ACL Holdings, GMS and Vessel Leasing, to eliminate preferred members' interest in Vessel Leasing, to eliminate Vessel Leasing retained earnings and to record a gain of $11,506 realized on the existing notes contributed by us and/or one or more of our subsidiaries. 20. To eliminate our other comprehensive income on our investment in existing notes upon realization of gain. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 21. To eliminate $1,164 of non-recurring consulting and legal fees directly related to ACL's debt restructuring. 22. To increase ACL's pension and post-retirement medical expenses as a result of adjusting the plans to fair value based on third-party actuarial calculations by $3,067 and to record $565 in expense for the vesting of 1/3 of our restricted common stock. 23. To record additional depreciation of $9,027, based on an average remaining life of approximately nine years, to reduce amortization of software by $296, to reduce amortization of the intangible favorable lease asset by $557 and to eliminate goodwill amortization of $209 as a result of adjusting assets to the cost of the acquisition. 24. To eliminate interest expense and debt amortization from ACL's existing senior credit facility and the existing notes of $68,257 and to record interest expense and debt amortization on the new senior credit facility, the new senior notes and the new senior subordinated notes of $52,490 and to amortize the discount of $6,095 on the new senior notes and the new senior subordinated notes under the straight-line method which approximates the effective interest rate method. Interest is calculated based on current market rates. A 1/8% change in the interest rate would have a $465 impact on interest expense due to 52 NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (DOLLARS IN THOUSANDS) variable rates in the new senior credit facility. The components of the new debt, interest expense and amortization of debt issuance costs are as follows:
VARIABLE INTEREST INTEREST & RATE PRINCIPAL RATE AMORTIZATION CHANGE --------- -------- ------------ -------- Term Loan A...................................... $ 46,560 5.78% $ 2,691 $ 58 Term Loan B...................................... 134,046 6.03 8,083 167 Term Loan C...................................... 157,723 6.28 9,905 197 Revolver......................................... 34,000 5.78 1,965 43 New Senior Notes................................. 131,922 11.25 14,841 -- New Subordinated Senior Notes (compounded semi- annually)...................................... 116,507 12.00 14,400 -- Fair value discount of New Senior Notes and New Senior Subordinated Notes...................... (45,711) -- 6,095 -- New Debt Issuance Costs -- Bank Fees (6.5 year life).......................................... 2,375 365 -- New Debt Issuance Costs -- Other Fees (7.5 year life).......................................... 1,800 240 -- ------- ---- $58,585 $465 ======= ====
25. To eliminate intercompany charter revenue recognized by Vessel Leasing and charter expense recognized by ACL. 26. To record additional depreciation of $2,079 related to the increase in value of properties for GMS and to eliminate goodwill amortization of $965 for GMS. 27. To record a 44.6% minority interest in net income of GMS. 28. To eliminate intercompany interest expense recognized by Vessel Leasing and interest income recognized by ACL. 29. To eliminate ACL's equity in net income in GMS of $1,016 and Vessel Leasing of $(38) upon consolidation. 53