2. Pro Forma Adjustments - AAG Acquisition Transactions
(a) The Company’s fiscal year end is September 30 while the AAG fiscal year end is December 31. The AAG historical financial information for the statement of operations covering the period from October 1, 2014 through May 20, 2015, the date the AAG Acquisition was completed, has been derived by adding the unaudited results for the three month period ended March 31, 2015 and the period from April 1, 2015 through May 20, 2015 to the audited results for the fiscal year ended December 31, 2014 and deducting the unaudited results for the nine months ended September 30, 2014, as follows:
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| | | | | | | | | | | | | | | | | | | | | | | |
| (a) | | (b) | | (c) = (a) - (b) | | (d) | | (e) | | (c) + (d) + (e) |
| Twelve months ended
December 31, 2014 | | Nine months ended September 30, 2014 | | Three months ended
December 31, 2014 | | Three months ended
March 31, 2015 | | Period from
April 1, 2015 -
May 20, 2015 | | Period from October 1, 2014 - May 20, 2015 |
Revenues: | | | | | | | | | | | |
Net consumer and other product sales | $ | 410.0 |
| | $ | 341.6 |
| | $ | 68.4 |
| | $ | 119.4 |
| | $ | 88.0 |
| | $ | 275.8 |
|
Operating costs and expenses: | | | | | | | | | | | |
Cost of consumer products and other goods sold | 226.0 |
| | 185.2 |
| | 40.8 |
| | 68.1 |
| | 45.5 |
| | 154.4 |
|
Selling, acquisition, operating and general expenses | 92.6 |
| | 74.4 |
| | 18.2 |
| | 18.7 |
| | 46.6 |
| | 83.5 |
|
Impairments and bad debt expense | 7.0 |
| | — |
| | 7.0 |
| | — |
| | — |
| | 7.0 |
|
Amortization of intangibles | 47.1 |
| | 34.6 |
| | 12.5 |
| | 12.3 |
| | 6.8 |
| | 31.6 |
|
Total operating costs and expenses | 372.7 |
| | 294.2 |
| | 78.5 |
| | 99.1 |
| | 98.9 |
| | 276.5 |
|
Operating income (loss) | 37.3 |
| | 47.4 |
| | (10.1 | ) | | 20.3 |
| | (10.9 | ) | | (0.7 | ) |
Interest expense | (71.5 | ) | | (52.1 | ) | | (19.4 | ) | | (19.3 | ) | | (46.5 | ) | | (85.2 | ) |
Other expense, net | (1.3 | ) | | (1.0 | ) | | (0.3 | ) | | (0.4 | ) | | (0.4 | ) | | (1.1 | ) |
(Loss) income from continuing operations before income taxes | (35.5 | ) | | (5.7 | ) | | (29.8 | ) | | 0.6 |
| | (57.8 | ) | | (87.0 | ) |
Income tax (benefit) expense | (11.0 | ) | | (0.5 | ) | | (10.5 | ) | | 0.2 |
| | (1.3 | ) | | (11.6 | ) |
Net (loss) income | (24.5 | ) | | (5.2 | ) | | (19.3 | ) | | 0.4 |
| | (56.5 | ) | | (75.4 | ) |
Less: Net (loss) income attributable to noncontrolling interest | (10.4 | ) | | (2.2 | ) | | (8.2 | ) | | 0.2 |
| | (24.0 | ) | | (32.0 | ) |
Net (loss) income attributable to controlling interest | $ | (14.1 | ) | | $ | (3.0 | ) | | $ | (11.1 | ) | | $ | 0.2 |
| | $ | (32.5 | ) | | $ | (43.4 | ) |
(b) The Company estimates cost of sales will increase by approximately $18.8 during the first inventory turn subsequent to the acquisition date as a result of the sale of inventory that was written-up to fair value in purchase accounting. This cost has been excluded from the pro forma adjustments as this amount is considered non-recurring.
(c) Adjustment reflects decreased depreciation expense of $0.3 associated with the adjustment to record the AAG property, plant and equipment at fair value for the period from October 1, 2014 through May 20, 2015.
(d) Adjustment reflects decreased amortization expense of $25.1 associated with the adjustment to record the AAG intangible assets at fair value for the period from October 1, 2014 through May 20, 2015.
(e) Adjustment reflects the reversal of $25.5 of pre-acquisition costs incurred by AAG.
(f) Adjustment reflects the reversal of $8.4 of pre-acquisition accelerated stock based compensation incurred by AAG in conjunction with the AAG Acquisition.
(g) Adjustment reflects the reversal of $21.8 of acquisition and integration-related charges incurred of acquisition and integration-related charges incurred by Spectrum Brands in conjunction with the AAG Acquisition.
