EX-99.4 9 ex99-4proforma.htm PRO FORM COMBINED CONDENSED BALANCE SHEET ex99-4proforma.htm
Exhibit 99.4
 
 
On March 31, 2008, AZZ incorporated entered into an Asset Purchase Agreement to acquire substantially all of the assets AAA Industries, Inc. The purchase price of the transaction was approximately $81.5 million, subject to adjustment as more fully described in the Asset Purchase Agreement filed on Form 8-K on April 2, 2008. The purchased assets included six galvanizing plants (three plants located in Illinois, one plant located in Indiana, one plant located in Minnesota and one plant located in Oklahoma) and related equipment and supplies.
 
The following is a condensed balance sheet showing the fair values of the assets acquired and the liabilities assumed as of the date of acquisition:

Current Assets
   $ 18,086  
Property and Equipment
   $ 32,934  
Intangible Assets
   $ 16,070  
Goodwill
   $ 15,574  
Total Assets
   $ 82,664  
Current Liabilities
   $ (1,193 )
Net Assets Acquired
   $ 81,471  

Of the $16.1 million of intangible assets acquired, $1.8 million, $1.2 million and $13.1 million were assigned to non-compete agreements, trade names and customer relationships, respectively. These intangible assets are being amortized and have a weighted average life of 13.8 years. Goodwill of $15.6 million arising from the acquisition will be allocated to the Galvanizing Services Segment and will be deductible for income tax purposes.

The following pro forma information is based on the assumption the acquisition took place on March 1, 2007 for the income statement. The pro forma Condensed Balance Sheet is as of February 29, 2008, based upon AAA Galvanizing, Inc. historical balance sheet as of March 31, 2008.


 
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of 2/29/08

   
AZZ
Historical
    
AAA
Historical
    
Pro Forma
Adjustments
        
Combined
Pro Forma
  
ASSETS
                            
                             
CURRENT ASSETS
                            
     CASH AND CASH EQUIVALENTS
   $ 2,226,941     $ (868,089 )    $ 19,397,249   (1)      $ 20,756,101  
     ACCOUNTS RECEIVABLE (NET OF ALLOWANCE)
     38,901,577       7,959,334       -           46,860,911  
     INVENTORIES
     43,426,468       11,155,674       (1,128,742 ) (2)      53,453,400  
     REVENUE IN EXCESS OF BILLINGS ON
                                    
        UNCOMPLETED CONTRACTS
     13,044,076       -       -           13,044,076  
     DEFERRED INCOME TAXES
     4,391,398       -       -           4,391,398  
     PREPAID EXPENSES AND OTHER
     1,004,383       99,537       -           1,103,920  
                                     
        TOTAL CURRENT ASSETS
     102,994,843       18,346,456       18,268,507           139,609,806  
                                     
PROPERTY, PLANT AND EQUIPMENT (NET)
     48,284,910       33,543,641       271,878   (3)      81,218,862  
                                     
     GOODWILL
    40,962,104       -       15,573,941   (4)        56,536,045  
     OTHER ASSETS (NET OF ACCUMULATED AMORTIZATION)
     1,077,423       856,624       15,213,376   (5)      17,147,423  
                                     
        TOTAL ASSETS
   $ 193,319,280     $ 52,746,721     $ 49,327,702         $ 294,512,136  
                                     
LIABILITIES AND SHAREHOLDER'S EQUITY
                                    
                                     
CURRENT LIABILITIES
                                    
     ACCOUNTS PAYABLE
   $ 16,035,932     $ 553,481     $ -         $ 16,589,413  
     INCOME TAX PAYABLE
     706,966       -       -           706,966  
     ACCRUED SALARIES & WAGES
     4,919,804       271,000       -           5,190,804  
     OTHER ACCRUED LIABILITIES
     10,285,285       11,334,123       (10,965,748 )          10,653,660  
     CUSTOMER ADVANCE PAYMENT
     2,115,330       -       -           2,115,330  
     BILLINGS IN EXCESS OF REVENUE ON
                                 -  
        UNCOMPLETED CONTRACTS
     3,798,179       -       -           3,798,179  
     COMPENSATION EXPENSE RELATED TO SARS
     4,834,325       -       -           4,834,325  
                                     
        TOTAL CURRENT LIABILITIES
     42,695,821       12,158,604       (10,965,748 )          43,888,677  
                                     
     LONG TERM DEBT DUE AFTER ONE YEAR
     -       24,416,151       75,583,849  
(6) 
       100,000,000  
                                     
     DEFERRED INCOME TAXES
     4,466,834       -       -           4,466,834  
                                     
     SHAREHOLDERS' EQUITY
                                    
        COMMON STOCK, $1 PAR VALUE
                                    
        SHARES AUTHORIZED-25,000,000
                                    
        SHARES ISSUED 12,609,160
     12,609,160       16,171,966       (16,171,966 )  (7)       12,609,160  
     CAPITAL IN EXCESS OF PAR VALUE
     16,369,938       -       -           16,369,938  
     RETAINED EARNINGS
     119,549,115       -       -           119,549,115  
     LESS COMMON STOCK HELD IN TREASURY ( 480,188 AND 954,996 SHARES AT COST RESPECTIVELY)
     (2,371,588 )     -       -           (2,371,588 )
                                     
     TOTAL SHAREHOLDERS' EQUITY
     146,156,625       16,171,966       (16,171,966 )          146,156,625  
                                     
     TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
   $ 193,319,280     $ 52,746,721     $ 48,446,135         $ 294,512,136  

 
(1)
Excess cash from $100,000,000.00 Senior Notes secured for the purchase of AAA Galvanizing, Inc.
 
(2)
Inventory adjusted to market costs as compared to FIFO inventory cost basis.
 
(3)
Property, plant, and equipment adjusted to fair value per independent appraisal.
 
(4)
Goodwill resulting from purchase price accounting.
 
(5)
Other assets include intangibles for non-compete agreements, trade name, and customer relationships in the amounts of $1.8 million, $1.2 million and $13.1 million respectfully.
 
(6)
Senior notes secured for the purchase of AAA Galvanizing, Inc.
  (7) Elimination entries required for liabilities and equity not acquired. 




 
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AZZ incorporated
  
UNAUDITED PROFORMA CONDENSED INCOME STATEMENTS
  
                             
   
TWELVE MONTHS ENDED
                  
   
AZZ
    
AAA
    
Proforma
        
Combined
  
   
2/29/08
    
2/29/08
    
Adjustments
            
   
(AUDITED)
    
HISTORICAL
                  
                             
NET SALES
    $ 320,193,104      $ 58,185,987     $ -          $ 378,379,091  
                                     
COSTS AND EXPENSES
                                    
COST OF SALES
     239,651,058       48,168,203       1,579,323   (1)        289,398,584  
SELLING, GENERAL AND ADMINISTRATIVE
     36,261,642               (1,743,305 ) (2)        34,518,337   
INTEREST EXPENSE
     1,494,731       1,956,580       4,283,420   (3)        7,734,731  
NET (GAIN) LOSS ON SALE OF PROPERTY, PLANT AND EQUIPMENT
     32,211       -       -           32,211  
OTHER (INCOME)
     (1,079,431 )     (90,000 )     -           (1,169,431 ) 
      276,360,211       50,034,783       4,119,438           330,514,432  
                                     
INCOME BEFORE INCOME TAXES
     43,832,893       8,151,204       (4,119,438 )         47,864,659  
INCOME TAX EXPENSE
     16,145,304       180,452       1,304,599   (4)        17,630,355  
                                     
                                     
NET INCOME
    $ 27,687,589      $ 7,970,752      $ (5,424,037 )        $ 30,234,304  
                                     
EARNINGS PER COMMON SHARE
                                    
BASIC EARNINGS PER  SHARE
    $ 2.30                          $ 2.52  
                                     
DILUTED EARNINGS PER  SHARE
    $ 2.26                          $ 2.47  
                                     
WEIGHTED AVERAGE COMMON SHARES
    $ 12,012,789                            12,012,789   
                                     
WEIGHTED AVERAGE COMMON SHARES AND POTENTIALLY DILUTIVE COMMON SHARES    $ 12,227,212                           $ 12,227,212   

 
(1)
Additional depreciation and amortization expense in the amount of $1.6 million was included due to the revaluation of fixed assets and intangibles asset appraisals to fair value per independent appraisers report.
 
(2)
Selling and General and Administrative costs were reduced to reflect Compensation expense that will not be continued.
 
(3)
Interest expense was increased to reflect additional debt through Senior Notes to purchase AAA Galvanizing, Inc.
 
(4)
Income taxes were increased to reflect the combined effective tax rates after completion of the acquisition.

 

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