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Actionable news in CSWC: Capital Southwest Corporation,

Capital Southwest: Unaudited Pro Forma Condensed Consolidated Balance Sheet

The following excerpt is from the company's SEC filing.

(Dollar amounts in thousands, except share and per share data)

Historical

Transaction

Adjustments

Pro Forma

Assets

Investments at market or fair value

Companies more than 25% owned

495,653

(465,320

30,333

Companies 5% to 25% owned

Companies less than 5% owned

45,791

Total investments

547,405

82,085

Cash and cash equivalents

212,623

(15,055

197,568

Receivables

Dividends and interest

Income tax receivable

Deferred income tax assets

Net pension assets

10,412

(10,412

Other assets

Total assets

776,137

(489,299

286,838

Liabilities

Other liabilities*

Accrued restoration plan liability

Deferred income tax liabilities

(2,030

Total liabilities

Net Assets

Common stock, $0.25 par value: authorized, 25,000,000 shares; issued, 17,922,844 shares at June 30, 2015

Additional capital

299,079

(26,396

272,683

Accumulated net investment loss

(8,762

(5,018

(13,780

Accumulated net realized gain

23,104

Unrealized appreciation of investments

474,821

(458,339

16,482

Treasury stock - at cost, 2,339,512 shares

(23,937

Total net assets

768,786

(489,753

279,033

Total liabilities and net assets

Net asset value per share (15,583,332 shares outstanding at June 30, 2015)

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet

Pro Forma Adjustments:

Represents the elimination the fair market value of the CSWI Businesses as of June 30, 2015 as if the Share Distribution took place on June 30, 2015. The elimination of the combined fair market value of these entities was $465,320,000 at June 30, 2015, which includes a cost basis of $6,981,139 and an unrealized gain of $458,338,861.

Represents cash adjustments as if the Share Distribution took place on June 30, 2015. These adjustments include (a) the contribution of $13,000,000 of cash from the Company to CSWI; and (b) the estimated additional spin-off professional fees of $2,054,527 incurred between June 30, 2015 and September 30, 2015, which reduce net investment income.

Represents adjustments for deferred income tax assets and liabilities (assuming a tax rate of 35%) due to changes in temporary differences, which included (a) CSWI’s assumption of CSWC’s Qualified Retirement Plan, which resulted in a deferred tax asset of $3,644,215; (b) CSWI’s assumption of its transferred employees’ Restoration Plan, which resulted in a deferred tax liability of $22,695; (c) CSWI’s assumption of its transferred employees’ individual incentive award liabilities, which resulted in a deferred tax liability of $108,875; (d) one-third of the cash component of the Executive Compensation Plan liabilities, which resulted in a deferred tax asset of $158,589; and (e) CSWI’s assumption of a CSWC insurance program, which resulted in a deferred tax liability of $153,012.

Represents CSWI’s assumption of CSWC’s Qualified Retirement Plan, which resulted in a transfer of $10,412,043 of net pension assets from the Company to CSWI.

Represents accrued liabilities adjustments as if the Share Distribution took place on June 30, 2015, which included (a) $2,406,744 of financial advisory fees; (b) one-third of the cash component of the Executive Compensation Plan estimated to be $453,110 based on a stock price of $46.87 per share; and (c) CSWI’s assumption of its transferred employees’ individual incentive award liabilities of $311,071. Accrued liabilities adjustments (a) and (b) also reduce net investment income.

Represents CSWI’s assumption of its transferred employees’ Restoration Plan liabilities of $64,843.

Represents additional capital adjustments as if the Share Distribution took place on June 30, 2015, which included (a) the contribution of $13,000,000 of cash from the Company to CSWI; (b) CSWI’s assumption of CSWC’s Qualified Retirement Plan, net of a deferred tax impact of 35%, estimated to be $6,767,828; (c) the investment cost of the CSWI Businesses at $6,981,139, offset by (d) CSWI’s assumption of its transferred employees’ Restoration Plan liabilities, net of a deferred tax impact of 35%, estimated to be $42,148, and CSWI’s assumption of its transferred employees’ individual incentive award liabilities of $311,071.

The actual cash outlay and stock based compensation expense for the Executive Compensation Plan may differ from our projections. The actual cash component and stock based compensation expense will be computed based on the actual weighted average share price of both of the Company's stock and the CSWI's stock for...


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