EX-99.1 2 mm03-0512_8kea1991.htm EX.99.1- UNAUDITED PRO FORMA FINANCIALS mm03-0512_8kea1991.htm
EXHIBIT 99.1


UNAUDITED PRO FORMA FINANCIAL INFORMATION


On December 30, 2011, the Company completed the acquisition of 78.9% of National Beef for aggregate net cash consideration of $867,869,000 (the "Acquisition"), pursuant to a Membership Interest Purchase Agreement (the “Agreement”) among the Company, National Beef, U.S. Premium Beef, LLC (“USPB”), NBPCo Holdings, LLC (“NBPCo”), TKK Investments, LLC (“TKK”), TMKCo, LLC (“TMKCo”) and TMK Holdings (“TMK”).  The Agreement provided that the following transactions occur in sequence on the closing date and are reflected in the unaudited pro forma financial information.

1.  
The Company purchased 76.1% of National Beef from USPB and NBPCo for aggregate cash consideration of $875,369,000.
2.  
TKK and TMKCo exercised their put rights with respect to their aggregate 5.1% interest in National Beef and National Beef redeemed such interest for aggregate cash consideration of $75,947,000.  National Beef borrowed funds under its revolving credit facility to finance this redemption.  Upon completion of the redemption, the Company’s interest in National Beef increased to 79.6%.
3.  
TMK purchased a 0.7% interest in National Beef from the Company for cash consideration of $7,500,000, reducing the Company’s interest to 78.9%.

The accompanying unaudited pro forma consolidated statement of operations for the year ended December 31, 2011 (the “Pro Forma Financial Statement”) is presented to reflect the Acquisition as if it had occurred on January 1, 2011.  Historically, National Beef’s fiscal year has consisted of the 52 or 53 week period ending on the last Saturday in August, while the Company’s fiscal year is the calendar year.  In order to prepare the Pro Forma Financial Statement, National Beef’s historical consolidated operating results for the 52 week period ending November 26, 2011 were added to the Company’s historical consolidated statement of operations for the year ended December 31, 2011.  The preparation of pro forma financial information is governed by Article 11 of Regulation S-X, which requires a recasting of National Beef’s fiscal year end to a date that is within 93 days of the Company’s year end.

The accompanying Pro Forma Financial Statement should be read in conjunction with the Company's audited historical consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and the audited historical consolidated financial statements and notes thereto of National Beef, which were previously filed on the Company’s Current Report on Form 8K/A on February 13, 2012.  The Pro Forma Financial Statement is presented for informational purposes only and is not necessarily indicative of actual results had the foregoing transactions occurred as described above, nor does it purport to represent results of future operations.
 
The Pro Forma Financial Statement has been prepared based upon a preliminary purchase price allocation for National Beef.  Differences between the preliminary and final purchase price allocation, if any, could result in adjustments to acquired working capital amounts and offsetting adjustments to goodwill.

 
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Leucadia National Corporation and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2011
(In thousands, except per share amounts)


   
The Company
   
National Beef
   
Pro Forma
       
Pro Forma
 
   
Historical
   
Historical
   
Adjustments
       
As Adjusted
 
Revenues:
                           
Beef processing
  $     $ 7,037,862               $ 7,037,862  
Manufacturing
    244,918                         244,918  
Oil and gas drilling services
    133,782                         133,782  
Gaming entertainment
    117,217                         117,217  
Investment and other income
    433,375       674                 434,049  
Net securities gains
    641,476                         641,476  
      1,570,768       7,038,536     $           8,609,304  
                                     
Expenses:
                                   
Cost of sales:
                                   
  Beef processing
            6,701,108                   6,701,108  
  Manufacturing
    215,963                           215,963  
Direct operating expenses:
                                   
  Oil and gas drilling services
    100,639                           100,639  
  Gaming entertainment
    84,795                           84,795  
Interest
    111,877       11,400       1,671    
(c)
    123,574  
                      (1,374 )  
(d)
       
Salaries and incentive compensation
    83,171               26,424    
(e)
    109,595  
Depreciation and amortization
    75,480       49,272       (49,272 )  
(f)
    152,995  
                      77,515    
(g)
       
Selling, general and other expenses
    217,855       52,364       (26,424 )  
(e)
    243,795  
      889,780       6,814,144       28,540           7,732,464  
                                     
                                     
Income from continuing operations before income
                                   
taxes and loss related to associated companies
    680,988       224,392       (28,540 )         876,840  
Income tax provision
    270,253       2,757       64,605    
(h)
    337,615  
                                     
Income from continuing operations before loss related
                                   
to associated companies
    410,735       221,635       (93,145 )         539,225  
Loss related to associated companies, net of income tax
    (394,041 )                         (394,041 )
Income from continuing operations
    16,694       221,635       (93,145 )         145,184  
(Income) loss from continuing operations attributable to the
                                   
noncontrolling interest
    275       (564 )     (41,215 )  
(i)
    (41,504 )
Income from continuing operations attributable to
                                   
Leucadia National Corporation common shareholders
  $ 16,969     $ 221,071     $ (134,360 )       $ 103,680  
                                     
Basic earnings per common share attributable to
                                   
Leucadia National Corporation common shareholders:
                                   
Income from continuing operations
  $ 0.07                         $ 0.42  
Number of shares used in calculation
    244,425                           244,425  
                                     
Diluted earnings per common share attributable to
                                   
Leucadia National Corporation common shareholders:
                                   
Income from continuing operations
  $ 0.07                         $ 0.42  
Number of shares used in calculation
    244,573                           244,573  
 
 

 
 
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Notes to Unaudited Pro Forma Consolidated Statement of Operations
(Dollars in thousands)


         
(a)
Cash paid to Sellers
  $ 875,369  
 
Less cash received on sale of 0.7% to TMK
    (7,500 )
 
Aggregate net cash consideration
  $ 867,869  
     
 
The Company used cash and cash equivalents and sold securities from its current investment portfolio to fund the purchase price.
 
     
 
(b)
The purchase price has preliminarily been allocated to acquired assets and liabilities as indicated in the chart below.  If applicable, estimated useful lives and amortization periods are shown next to the amount allocated to the particular asset; all intangible and tangible assets are depreciated on the straight-line method over their respective lives.
   
 
     
Amount
 
Useful Life
 
             
 
Intangible assets, net and goodwill:
         
 
Noncontractual customer relationships
  $ 405,180  
18 years
 
 
Tradename
    260,059  
20 years
 
 
Cattle supply contracts
    143,500  
15 years
 
 
Non-compete agreements
    830  
10 years
 
 
Goodwill
    8,915      
 
Total intangible assets, net and goodwill
    818,484      
 
Property, equipment and leasehold improvements, net:
           
 
Buildings and improvements
    178,680  
15 to 25 years
 
 
Machinery and equipment
    218,306  
3 to 8 years
 
 
Other
    49,180      
 
Total property, equipment and leasehold improvements, net
    446,166      
 
Working capital accounts and other assets and liabilities, net
    243,342      
 
Long-term debt
    (328,267 )    
 
Fair value of net assets acquired
  $ 1,179,725      
               
 
Redeemable noncontrolling interest in subsidiary:
           
 
Fair value of net assets acquired
  $ 1,179,725      
 
Less, cash paid to Sellers
    (875,369 )    
 
Initial redeemable noncontroling interest
    304,356      
 
  Redemption of TKK and TMK interests
    (75,947 )    
 
  Sale of LUK interest to TMK
    7,500      
 
Redeemable noncontrolling interest in subsidiary
  $ 235,909      
     
 
(c)
Reflects additional interest expense for the borrowing under National Beef’s revolving credit facility to redeem the TKK and TMK interests.  A change in the interest rate of 0.125% would have changed pro forma, as adjusted income from continuing operations attributable to Leucadia National Corporation common shareholders by approximately $50,000.
   
(d)
Eliminates amortization expenses related to National Beef’s historical deferred debt issuance costs.
   
(e)
Reclassifies National Beef’s historical salaries and incentive compensation expenses to conform to the Company’s classification.
   
(f)
Eliminates the historical depreciation and amortization expenses of National Beef
   
(g)
Records depreciation and amortization expenses based on the preliminary purchase price allocations and useful lives in note (b) above.
   
 
 
 
 
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(h)
Records a tax provision for the pro forma adjustments and for National Beef’s historical pre-tax income using a combined statutory income tax rate of 40%.  A tax provision needs to be applied to National Beef’s historical results since National Beef did not provide income tax expense on substantially all of its income as it is a pass-thru entity for income tax purposes.  However, due to the availability of the Company’s net operating loss carryforwards, no federal income tax would have been due and payable.  Income tax expense has not been provided on income attributable to the noncontrolling interest since National Beef remains a pass thru entity for income tax purposes.
   
(i)
Records an adjustment for National Beef’s historical income, net of pro forma adjustments, attributable to the noncontrolling interest since the Company is not purchasing 100% of National Beef as described in note (a) above.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
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